Julie Owens (Parramatta, Australian Labor Party) Share this | Hansard source

I am delighted to stand to speak on Appropriation Bill (No. 1) 2009-2010 and cognate bills that support the budget 2009-10. When you judge a budget it is not just about what is in it or what is not in it but how effective it is for the circumstances that the nation faces at the time, and we do live in interesting times. The world has gone from the biggest global boom that we can recall to the worst global recession in 75 years over about a 12-month period, and governments all over the world have changed tack in response. That is all you can do in government: you look at the circumstances that the nation faces and you respond decisively to maximise the opportunity and minimise the downside for the nation. In the circumstances that the world faces, governments everywhere have gone from paying down debt to spending to stimulate their economies. That is absolutely the right thing to do.

This is a good budget, not just because of what is in it but because it is a budget for its time. If we delayed action on the global recession for even one year and delivered this kind of budget next year, the damage to our economy would already have been done. We would have seen significantly more job losses, family financial stress and the loss of previously viable businesses. Now is the time for this budget, particularly building, as it does, on the first two stimulus packages and the bank guarantee. It is a timely and responsible response to the worst global financial crisis in 75 years. Faced with that crisis, we are building for the future. We are stimulating the economy to help cushion Australia from the full impact of the global recession while investing in national infrastructure that we need for tomorrow.

The opposition would have us all believe that we the Labor government actually caused this recession. But we are just not that powerful. We did not all sneak off to the US, infiltrate financial companies and give out subprime loans. We did not do that. We did not cause it. It began in the US financial markets. It spread throughout the world and it moved into the real economies around the globe. The impact has been devastating. In fact, it is the deepest global recession since the Great Depression. The world economy is set to contract by 1½ per cent in 2009 and our major trading partners to contract by two per cent, which is a worse outcome than during the Asian financial crisis. Eight of our top 10 trading partners are expected to contract in 2009 and advanced economies in deep recession are expected to contract by between three and 3¾ per cent this year.

Because so much of the boom in Australia was the result of growth elsewhere over the last 15 years—and iron ore, coal and bauxite being sucked out of the resource rich states into China and India—we were particularly susceptible to global downturn as other economies that had been buying our commodities to fuel their own growth came to a grinding halt. They stopped buying the coal and the iron ore and so profit projections for companies fell. As a result of that, revenue forecasts for the government—in particular how much tax we would collect—collapsed as well. In fact, they collapsed by a lot.

The deficit is a direct consequence of the global recession, with projected revenue downgrades wiping out around $210 billion from revenues over the forward estimates—$23 billion in 2008-09, $49 billion in 2009-10, $55 billion in 2010-11 and $47 billion in 2011-12. These are substantial write-downs of revenue for Australia. But at the same time, of course, the government is committed to paying out on pensions, on the Department of Defence, on schools and on three- and five-year funding agreements. In other words, while our revenue collapses quite easily, the expenditure side of the budget is much more difficult to alter. When the tax base collapses, those costs remain and you get a shortfall; you get a deficit.

The alternatives here are to raise taxes and cut spending—in this case a lot of spending: $49 billion in the next financial year and $55 billion in the year after that. Of course you do not do that. No government has done that. If you did that, you would put further downward pressure on the economy, slowing it down even further and introducing much more pain at the individual level—higher unemployment and forced sales. Instead, you do something which some people find counterintuitive but, again, is the common response, and the recommended response, around the world. You step in to cushion families and business from the impact. You stimulate activity in the economy to support jobs. If you have to do that, and we do, then the way that you go about it, if you are a responsible government, is to invest in infrastructure that leaves behind valuable assets to support us in the future. You stimulate the economy by building schools, roads, rail, ports, local community infrastructure, hospitals, research centres or things that will make a difference in our battle against climate change. Seventy per cent of the government’s stimulus measures are going on just those things—on infrastructure. Those projects support jobs and small business today and invest in the infrastructure that we need for tomorrow.

The Rudd government’s response to the worst global recession in 75 years is the right one and it is fast enough and executed well enough to make a difference. The national accounts that came out yesterday support that view. The national accounts show that the Australian economy outperformed every other advanced economy in the March quarter, recording positive growth in the face of savage global recession. GDP rose by 0.4 per cent in the March quarter to be 0.4 per cent higher through the year, boosted by early and substantial policy action by the Rudd government and the Reserve Bank. Of the other 22 OECD economies that have reported March quarter outcomes, 20 have contracted. G7 economies contracted by an average of 2.2 per cent in the March quarter. Crucially, the Treasury estimates that Australia’s economy would have contracted in the March quarter by around 0.2 per cent without the government’s stimulus strategy.

What are we building in this nation-building exercise? What are we doing that is helping Australian businesses to keep their heads above water? The nation building in this budget builds on the first two stimulus phases. The first phase, in December last year, was in the form of much-overdue and much-needed cash payments to pensioners and a boost to the first home buyers grant. Both were immediate boosts, and the first one in particular helped to hold up retail spending over the Christmas period and held our national account in good stead in the final quarter of last year. Phase 2, which was announced earlier this year, was the shovel-ready infrastructure—schools, insulation, hot water tanks and social housing. These are projects of incredible value to our local communities and could be rolled out quickly so that money and jobs would flow through the communities over the 18-month period we are currently in.

The opposition takes the nice political line that it is all cash. And there was actually cash; it helped keep retail sales moving through December, which showed in the national account figures for the last quarter. But 70 per cent of it is nation-building infrastructure—those 35,000 construction jobs around the country which we hear talked about in parliament, extra Black Spot funding, rail crossings and council projects. This was all important work that we knew could be rolled out very quickly to support local jobs. Speed is very important in circumstances like these. Wealth may trickle down, but there is no doubt whatsoever that in hard times poverty creeps up. As a business goes under, it takes the families of its staff with it. They spend less in the local community and other businesses are, therefore, damaged. There are forced sales and that drives down prices. The last thing we want is for the recession to take hold so we acted fast. The first phases were cash, and then we moved to smaller-scale infrastructure projects that put jobs on the ground immediately. Those projects in schools and public housing estates and suburban soccer fields will roll out over the next 18 months.

Phase 3, which is delivered in this budget, is for larger-scale infrastructure, which takes time to plan and roll out. Fortunately the government started reviewing infrastructure needs as soon as we were elected. Infrastructure Australia was well established and the review, much maligned by the opposition, had been undertaken. They had already identified key issues in infrastructure. We had also been working with the states on health planning, the pension review had been completed and the Productivity Commission had reported on parental leave. We had basically been getting on and doing the work, and that work put us in a very good position to respond very quickly to best stimulate the economy while building for the future.

People in my electorate have asked me why we did not do health and roads in the first and second stimulus packages. The answer is quite simple: you cannot get projects of that size up quickly. So I am incredibly grateful that the government began the planning for these major projects early in our term so that we were ready to roll out these large projects much earlier than we otherwise might have been. We are building what the country needs and we are supporting jobs on the way.

Talking about infrastructure for a moment, we would all remember that we had a backlog in infrastructure towards the end of the term of the last government. We would all remember the Reserve Bank warnings about infrastructure bottlenecks, particularly in physical infrastructure and skills, and the impact that was having on rising inflation and rising interest rates. We all remember the 12 back-to-back interest rate rises. I think we are starting to forget exactly how much pain families were in in late 2007 because of rising prices and rising interest rates. I know that many in my electorate had their noses just above the water and repossession rates had doubled in some suburbs in the first half of 2007, and did so again in the six months leading up to the election.

So I am very pleased to see these major infrastructure projects supported in the budget. There is $4.6 billion for metropolitan rail networks, and I have to say that it is very good to see the federal government back into suburban and city based infrastructure after a decade of absence. We will be building more efficient metro rail networks to deliver economic and social benefits through faster travel times, less road congestion and lower greenhouse gas emissions. There are projects in Melbourne and the Gold Coast, there is the Gawler rail line and there is the Northridge rail line in Perth. There is also $91 million for the West Metro preconstruction work for a line that will run from Central to Westmead, in my electorate. That project is much needed and we welcome that $91 million.

There is $3.4 billion for the Network 1 road freight corridor. I have enough freight companies in and around Parramatta to know that this has been extremely well received. Network 1 is Australia’s largest freight route. It links Melbourne and Cairns. Upgrading the route will allow faster transit times, lower transportation costs and greater safety and ensure that Australian businesses remain globally competitive. There is also $380 million for port infrastructure in the crucial area of Western Australia. That will drive the recovery as our major trading partners recover.

Members will probably remember the deficit we had in skills. In fact, we were one of the few OECD countries whose expenditure on education actually went backwards over the last 10 years. That is an extraordinary fact given that education is one of the greatest drivers of growth in the long term. We were well and truly running up against our limits with the skill shortages towards the end of the previous government’s term. There was no support from the government for the skills and infrastructure that we needed to support the growth that was driven by the global boom and that was costing us all through rising prices and interest rates.

Now that the world economy has come to a halt some of the pressure has temporarily been taken off the skills and infrastructure crisis. That is not actually a good thing; it is actually a rather sad thing because it is reflected in the unemployment figures. Those structural problems will return. As the economy begins to grow again we will very quickly come up against the same infrastructure constraints that we had in the boom time unless we act very quickly. I am very pleased to see that we are delivering in this budget by investing in education and the skills of our people.

There is $2.6 billion over six years for infrastructure projects, including $613 million to fund 11 higher education and 12 vocational education and training projects as part of the second round of the Education Investment Fund. That fund was created in the last budget. Again we have brought forward some of the spending because of the circumstances. We are fortunate that the work was done last year and we can roll it out very quickly now. There will be $1.2 billion from that same fund for 30 priority research infrastructure projects, including $901 million for the Super Science initiative to build Australia’s capacity in areas such as astronomy, marine and climate science, and future industries. Having come from a creative industry, I am delighted to see the investment in innovation and R&D. We are an incredibly talented country when it comes to ideas. It is a part of our character which has been neglected for quite some time.

There is also $1.5 billion in recurrent funding for universities. This is incredibly important because it provides $491 million over four years to uncap the number of public university places from 2012. So if you are eligible for a place you will get a place. In my area of Western Sydney university enrolment rates are really quite low when compared to those for the rest of Sydney. We enrol at the rate of three per cent and the rest of Sydney enrols at the rate of 5.2 per cent. That is an underperformance which I am determined to turn around. This funding will go a long way towards achieving that. The budget also provides $394 million of new funding over four years to encourage greater participation of low-income students in higher education.

Unfortunately, I do not have time to go through all of the measures. If I did, I would be here for several hours. I strongly suggest that anyone interested in education have a look at what is in this budget in detail and the responses of the university sector to the work of the government. There is also greater support for lower income students funded by the savings from the tightening of the definition of ‘independent’ for the purposes of the Youth Allowance. That will see a far greater number of young people in my electorate receiving assistance from the government for their studies.

While Australia is doing well relative to the world and our national accounts are on the right side and we still have a AAA credit rating and we are still not in technical recession—in other words, relative to the rest of the world, things are looking for the moment quite optimistic—we still expect that unemployment will rise, because growth projections are not high enough to accommodate the number of people entering the workforce. We have measures in the budget that cushion that effect through the building of infrastructure, but we are also improving the safety net for those who do lose their jobs during this global recession. We have $1.5 billion over five years in the jobs and training compact to support young Australians, retrenched workers and local communities to get back to work, add to skills or learn the new skills required to obtain jobs. We have a $277 million compact with young Australians, guaranteeing an education or training place for every person under 25 who wishes to upskill.

We have also made quite significant changes to the support offered to retrenched workers. These have assisted the people from Pacific Brands in my electorate quite considerably. We have $299 million in the budget to give retrenched workers immediate access to intensive employment services. That is something that they previously had to wait several weeks for. We have doubled the safety net for the liquid assets test thresholds, meaning that rather than having to spend your savings down to $5,000 you are now eligible for Centrelink assistance at the $10,000 mark. That is a temporary measure to see us through, but it is a substantial contribution to people in these more difficult times.

I also want to talk very briefly about assistance to small business, because the best thing that you can do in a local community is to keep people employed in the first place. There are substantial benefits to small business in the budget. I am working very hard to make sure that my local businesses know about them. One of the important ones is the 50 per cent tax rebate for small businesses. It is up from the 30 per cent that we announced for the end of this financial year. It is now 50 per cent for eligible assets acquired between 13 December last year and 31 December 2009. There are many businesses in my electorate that install refrigeration equipment or counters that are telling me that the last few months have really been quite good for them because of that cash rebate.

We have also increased the pension. Wasn’t that needed, after 11 years of neglect? There is an increase of $32.49 per week for single full rate pensioners and an increase of $10.14 per week for couples from 20 September 2009. There are also some other changes that will see more security and certainty for pensioners, such as combining a number of payments into one and paying them weekly.

My time is running out, but I want to reinforce how proud that I am of this budget. It is budget of its time. It leaves us still with the lowest debt levels of the OECD. We have been in the bottom eight for the last 25 years, by the way; we have not had high debt levels relative to the rest of the OECD in the last 30 years. This budget leaves us in very good position to withstand these troubled financial times.

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