House debates

Monday, 22 May 2017


Appropriation Bill (No. 1) 2017-2018, Appropriation Bill (No. 2) 2017-2018, Appropriation (Parliamentary Departments) Bill (No. 1) 2017-2018; Second Reading

1:02 pm

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am very pleased to see that there is a very large cohort of opposition members here in the chamber who came especially to listen to my speech on these appropriation bills. I thank you. Tonight is the 75th anniversary of the famous speech by Sir Robert Menzies known as The Forgotten People. I would like to quote a few words directly from it. Menzies talked about the people he represented in parliament: the salary earners, the shopkeepers, the skilled artisans, professional men and women, farmers and so on. He said:

These are, in the political and economic sense, the middle class. They are for the most part unorganised and unself-conscious. They are envied by those whose benefits are largely obtained by taxing them.

I would advise every Australian to take the opportunity to read in full that speech of Sir Robert Menzies. He concludes with the words:

Individual enterprise must drive us forward. …

But what really happens to us will depend on how many people we have who are of the great and sober and dynamic middle-class - the strivers, the planners, the ambitious ones. We shall destroy them at our peril.

Sir Robert Menzies gave a warning in that speech. He warned about those who sought to divide the Australian people into classes. He talked about:

our greatest political disease - the disease of thinking that the community is divided into the relatively rich and the relatively idle, and the laborious poor, and that every social and political controversy can be resolved into the question: What side are you on?

The other warning he gave was that 'to discourage ambition, to envy success' are things that we must avoid. He also said:

Now, the last thing that I would want to do is to commence or take part in a false war of this kind. In a country like Australia the class war must always be a false war.

Sadly, that brings me to the speech on the appropriation bill by the opposition leader. It was nothing other than class warfare rhetoric. Half a dozen times, he made derogatory referral to so-called millionaires. But it seems that he defines anyone who earns over $87,000 as a millionaire. What is really concerning, when you look at the details of his speech, is how he is actually encouraging class warfare with false statements.

I will quote the opposition leader's speech:

A Labor budget would stand up for middle-class and working-class families, instead of taking their money in raised taxes and giving it to millionaires …

He went on in another part of his speech to say that the coalition's budget 'goes out of its way to give taxpayer money to millionaires'. In another part he talks about taking money from the middle-class and spending it on millionaires. I am at a complete loss about how and where the government is taking money from one sector of the community and giving it to millionaires. This is just completely and utterly false!

What the opposition leader was referring to was the two per cent temporary tax increase in the marginal tax rate for those above $180,000. Employing that tax on them is simply confiscating money earned and created by those people. That money does not belong to the government. This is what we see from the Labor Party, time after time. They seem to think that the wealth of the people, created in this country by hardworking Australians, belongs to the government. It belongs to the people who earned that wealth. And if they want to take that wealth from them they have to admit that they are confiscating their money. They are taking money from them to be redistributed. They are not taking money from others and giving it to so-called millionaires.

That is why the speech by the opposition leader was so recklessly dangerous, with its false class warfare rhetoric. It gives us a window into what a future Labor government would be like. They would give us uncompetitive rates of company tax. They would give us an uncompetitive personal marginal rate of tax and they would give us uncompetitive energy prices that would deter economic growth in this nation. We know that class warfare has always been the mortal enemy of economic growth and jobs. Let's just have a look at a few of these things.

Firstly, the opposition leader's speech also referred to Paul Keating—in praise. He said:

Bob Hawke and Paul Keating changed Australia from industrial museum to a modern, outward looking, competitive economy.

What has Paul Keating had to say about Labor's plans? It is interesting: he actually slammed a 49½ per cent highest marginal tax rate as a tax gouge. He said—and I am happy to quote Paul Keating:

I believe the top rate of tax in Australia should be no higher than 39 per cent at the most.

He talked about what Labor's plans were for 49½ per cent and he described them as too punitive. He said that it is at a level where the state is confiscating almost half of people's income. And, although I hate to say it, I must admit that on this subject Paul Keating is exactly right. If we have a top marginal tax rate in this country set at 49½ per cent for those above $180,000, it means that once you get to that level of income then 50 per cent of every single extra dollar that you earn goes to the government. And with what you have left, what you spend, you must also then account for a 10 per cent GST, so that more than half of the extra money that you earn goes to the government in higher rates of tax. This is a disincentive on the job creators and wealth creators of this nation.

We only have to look at how this rate compares internationally. We know the global average of the top rate of marginal tax around the world is 33 per cent. That is exactly what it is in New Zealand. In the US it is 39.6, in India it is 35, in Hong Kong it is 15 and in Singapore it is 22. Where those marginal tax rates are slightly higher, they are set at greater multiple levels of average income. We set our highest rate of marginal tax at 2.2 times the level of average income. In comparison, in Switzerland it is 3.5 and in the United Kingdom it is 4.1—4.1 times average income until you reach the highest level of marginal tax. In Canada it is 4.3 and in the US it is eight times the average income. Yet ours is 2.2. In an economy where Australian citizens have a greater opportunity to travel and to work around the world, Australia cannot simply have the prosperity we need and the wealth creation we need if we are to have a 49½ per cent highest rate of marginal tax cutting in at 2.2 times the average income.

We have not only an uncompetitive rate of marginal tax but an uncompetitive rate of company tax. Capital has never been more mobile. If those on the opposition side think we can maintain the standard of living and investments we need when the US cuts their corporate tax rate to 15 and when the UK's rate is 20 they are fooling themselves, but it does not fit their class warfare rhetoric to say so. At the very minimum, we need to reduce the company rate of tax in this nation to 25 per cent for all companies. If we think we can get away with that rate of 30 per cent when all other nations are lowering it, we are fooling ourselves.

Then it comes to how we would see under a Labor government uncompetitive energy prices. There was a white paper in 2004 which I came across. It talked about Australia's competitive advantage in energy. It said:

Access to low-cost reliable energy is a source of competitive advantage for Australia. This low cost is driven by ready access to relatively inexpensive sources of energy, especially coal.

It goes on:

Australia enjoys some of the lowest stationary energy prices in the developed world. These prices have been an important factor in Australia’s national prosperity, underpinning energy-intensive industry and providing cheap reliable energy to businesses and households.

That is what has underwritten the wealth of our nation, but the policies of the Labor party have sacrificed Australia's competitive advantage in industry. To think that we can have a modern industrial base and high paying jobs and that we can create wealth and attract investment around the world if we generate 50 per cent of our electricity from wind turbines is one of the most dangerous fallacies out there in our country today.

Dr Leigh interjecting

It is a dangerous fallacy, and the member sitting at the desk knows that. Perhaps amongst all the members of the Labor Party, he most understands the importance of having industry that is internationally competitive. We have taken energy prices in this country from the lowest in the OECD to one of the highest. Only the renewable energy king, Germany, has higher electricity prices than this nation.

That also brings me to the comments made by the member for Port Adelaide, who, in an interview on ABC—where else?—recently said:

The demand for thermal coal exports around the world is in rapid decline … Indeed, the demand for thermal coal exports from Australia is actually in decline …

I thought that was a bit strange. I thought, 'Maybe the member for Port Adelaide knows more about thermal coal exports than everyone else does.' So I went and just had a look at a few things to see how accurate he was. Firstly, a report published by no less than the Sierra Club and Greenpeace, hardly friends of the coal industry, says that currently around the world there are 842,000 megawatts of coal-fired capacity under construction. I will say that again: 842,000. Take into account that Hazelwood was a 1,600-megawatt power station. Around the world now, under active development, there are the equivalent of not 10, 50 or 100 but 542 power stations equivalent to Hazelwood. They are under active development today. Yet we have the member for Melbourne saying that thermal coal exports are in decline, so I thought I would go and have a look at the exact figures. The best place to have a look at those figures is some commentary by the coal industry themselves. They said:

The value of Australia's thermal coal exports is expected to grow by 28 per cent in 2016-17 and total $19 billion.

That is according to official statistics. Hang on. There is expected to be a 28 per cent increase, to $19 billion, and we have the member for Port Adelaide saying it is in rapid decline. Something here does not add up.

So I went further to see what information I could find. There is the Department of Industry, Innovation and Science—trust the science. What do they say about Australia's thermal coal exports? Their latest report, the Resources and energy quarterly from March 2017, says:

The outlook for growth in Australia's thermal coal exports is positive over the medium term. Significant gains in export values are expected in the short term … Moderate increases in thermal coal export volumes are expected to offset … resulting in strong export earnings. Australia's thermal coal export volumes are forecast to increase …

Where does the member for Port Adelaide get this? I think that the Australian public deserve to have the member for Port Adelaide come into this chamber and admit that he misled them and was completely wrong on thermal coal exports around the world. If we are to have debates on these issues, we have to be debating on facts, not falsehoods propagated by the member for Port Adelaide. (Time expired)


Tibor Majlath
Posted on 25 May 2017 5:22 pm

The member makes simplistic comparisons between countries when it comes to energy prices.

To quote "The price of energy in the EU depends on a range of different supply and demand conditions, including the geopolitical situation, import diversification, network costs, environmental protection costs, severe weather conditions, or levels of excise and taxation."

To blame high energy prices solely on renewable energy policies is naive in the extreme.