Alan Tudge (Aston, Liberal Party, Assistant Minister to the Prime Minister) Share this | Hansard source

I think almost everybody in Australia except for the Labor Party understands that we have a fiscal problem, that the expenditure of governments, despite all of the work that this government has already done, is still well in excess of the revenue which the government collects. Almost everybody in Australia knows this. They know that, after all the work we have done, our expenditure is still about 10 per cent higher than the revenue which is collected. They know you just cannot continue along the path of having expenditure exceed your revenue and, consequently, having budget deficits. In some respects, it is common sense that you cannot have budget deficits indefinitely into the future. Everybody in Australia, except, it seems, the Labor Party, understands that that is just not a sustainable position.

Of course, everybody in Australia also understands that it was the Rudd-Gillard government that put us in such a difficult position, that turned the budget position from being in a great surplus—with $20 billion worth of surpluses each year—to having very severe deficits. In their very short amount of time in office—too long for most Australians—they clocked up $191 billion worth of budget deficits and they locked in expenditure of 3.7 per cent going forward. In the forward outlooks, there was billions of dollars of deficit as far as the eye could see. It was not sustainable and it is not sustainable. As a nation, we simply cannot sustain having ongoing large budget deficits.

If the opposition do not want to listen to us in making this point, then hopefully they will listen to the Treasury Secretary, who just a week ago made this point very clear. He said that if we do not get on top of the fiscal repair job, particularly on the expenditure side, then future living standards will be at risk. He said that very clearly. I will quote what he said. He said:

Why should the living standards of future generations be compromised just because we were not willing to make sacrifices to the unsustainable growth of government expenditure?

He squarely pointed out, very clearly, that it is the future living standards of our children that are at stake when we talk about budget repair. That is what is at issue and that is the underlying context of these bills before us today.

There are a number of ways you can think about and address a fiscal problem. First, you can just put your head in the sand, as Labor seems to do. Second, you can constantly raise taxes to try and chase an ever-increasing expenditure. Third, you can get expenditure under control and concurrently grow the economy faster. Perhaps the greatest difference between the two parties at the moment is our differing approach to this problem and which options we pursue. It is quite clear that the Labor Party is pursuing accommodation of options 1 or 2—put your head in the sand in relation to the fact that we even have a problem or constantly propose new taxes to chase ever-increasing budget expenditure. We, on the other hand, strongly favour option 3—that is, budgetary expenditure restraint combined with making the economy grow more rapidly.

Of all the contributions we have heard from the Labor Party today, almost none admitted that there was actually a budget problem to start with. I do not think any of them did. Despite the bill itself been called the 'budget repair bill', I do not think a single contributor from the other side said that we have a problem and that we need to deal with that problem. Yes, there are some who admit that there is perhaps a problem in terms of the sustainability of our fiscal finances. But their solution is of course just more taxes. We have already had from the Labor Party this year additional taxes for superannuation, despite their saying that there would be no changes; additional taxes for cigarettes; and additional taxes on companies. And, no doubt, there will be many more policy proposals for more taxes from the Labor Party between now and the election. That is their approach to the fiscal problem—either ignore it altogether and say it does not exist or constantly increase taxes to chase the tale of expenditure.

Our approach is not that. Our approach is expenditure restraint. When you look at the data it is actually the expenditure side of the equation which is the problem rather than the revenue side of the equation. On the revenue side our revenue as a percentage of GDP is roughly where the 10-year average is, whereas the expenditure side of the equation is still at GFC levels. It is still well above the long-term average at 25.9 per cent of GDP, whereas the longer term average is about 23 per cent of GDP. That is why we believe it is the expenditure side which must be restrained, and that is what we are doing. And we are not just doing that but also growing the economy more rapidly. We are putting in place policies that will do that, including of course our infrastructure plans, lowering some of our taxes and our innovation agenda. And, right now, we are going through a tax reform process to again try to stimulate the economy and get it to grow faster.

Of course, if you do those two things—if you have expenditure restraint, which we are putting in place, and you grow the economy faster—then over time you get control of the budget and get back into surplus. We are doing exactly that and we are doing it successfully. We have stopped expenditure growth. There was 3.5 per cent real growth under the Labor Party and it is now below two per cent ongoing. Meanwhile, we now have the fastest growing economy in the G7 at about 2½ per cent. It needs to be faster, but it is still about 2½ per cent. Consequently, if you are growing the economy faster than your expenditure growth, over time your expenditure as a percentage of GDP declines and you have the budget under control. That is our economic and fiscal strategy in relation to the budget. I think it is sensible. We are doing it carefully and we are managing it well.

The Social Services Legislation Amendment (Budget Repair) Bill 2015 is very much within that strategy. It proposes further measures for modest restraint to the largest section of the budget, which is the welfare section. As you probably know, Mr Deputy Speaker Vasta, the social services element of the budget is about a third of the entire budget and is growing more rapidly than any other elements of the budget. If we are not addressing that element and trying to restrain expenditure then we will have great difficulty getting on top of the expenditure problem overall. Again, we have already put through many measures in this area, and Christian Porter, the social services minister, is doing a terrific job going through the entire portfolio and finding more savings that can be made in a sensible, responsible way.

The measures in this bill in front of us today continue in that vein. Perhaps I could mention just a few of them that I think are sensible measures and that are done within that context of necessary budget restraint. For example, from 1 January 2017 the government will tighten proportionality requirements for pensioners. This measure reduces from 26 to six weeks the amount of time a full pension is paid to pensioners who are absent from Australia. This measure treats all people who have spent less than 35 years of their working lives in Australia the same, whether they were born in Australia or overseas. Those who have spent more than 35 years of their working lives in Australia remain unaffected. This measure does not impact on the length of the portability period. The age pension and a limited number of other pensions will continue to be payable overseas indefinitely. Only the amounts that may be received after a six-week absence will change.

This measure will reinforce and strengthen the residence based nature of Australia's social security system. There are already about 30 international social security arrangements to support people who are living and working in more than one country. Generally these agreements allow Australian residents to maximise their income by helping them to claim payments from other countries where they have spent part of their working life. This is a further measure in that vein of expenditure restraint. It saves in the vicinity of $168.4 million over the forward estimates, and we think it is a reasonable proposal, given the stresses on the budget.

The additional measures include the cessation of the pensioner education supplement and the education entry payment, which would save Australian taxpayers around $300 million over the forward estimates. The pensioner education supplement was introduced in 1987 to assist single parents with the ongoing costs of education. Despite its name, the pensioner education supplement is not actually available to people receiving the age pension. Rather, it tends to be received by people who are on parenting payments, disability support pensions and carer payments. It is provided to about 46,000 people. When this payment was introduced, both of the payments aimed to assist long-term income support recipients who had been out of the workforce for a long period of time by helping them improve or rebuild their skills to be more competitive in the labour market. However, since the introduction of these payments several policies have been introduced to reduce the length of time that income support recipients, including single parents who have capacity to work, remain out of the workforce. Policy changes include varied eligibility and participation requirements for parenting payments, recognising that parents' capacity to work increases as their children age.

I think these measures are reasonable savings measures in the context of our fiscal challenges. None of the savings measures that we put forward in this House are easy or straightforward. Expenditure restraint is never easy. It is much easier to spend money than it is to exercise expenditure restraint. But the fact of the matter is, as I outlined at the beginning of my remarks, that we have an obligation—a responsibility as members of parliament—to the Australian people to act in their long-term interests. And acting in their long-term interests means we must get control of the government's expenditure. I know the Labor Party does not accept this, and I wish they would listen more closely to people such as the Treasury secretary, who has made this very clear.

These bills go towards those ends. They are reasonable measures. They are not straightforward measures, but they are reasonable measures in that context. If we do not put in place measures like this—which do get control of the budget, which do mean that our overall expenditure growth maintains at a reasonable level below economic growth—then we will have a very serious financial challenge on our hands in the future and the living standards of our children will be lower. That is what is at stake with the budget measures we are putting in place. I commend this bill to the House.

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