Gary Nairn (Eden-Monaro, Liberal Party, Special Minister of State) Share this | Link to this | Hansard source

I wish to address the Main Committee to close the second reading debate on Appropriation Bill (No. 1) 2006-2007 and the cognate bills: Appropriation Bill (No. 2) 2006-2007, Appropriation (Parliamentary Departments) Bill (No. 1) 2006-2007, Appropriation Bill (No. 5) 2005-2006 and Appropriation Bill (No. 6) 2005-2006. I am pleased to bring what has been a lively and extensive debate to a close. Once again, there has been broad participation in the debate, with more than 100 members contributing. This demonstrates the parliament’s ongoing keen interest in the government’s management of the economy and its strategies for the future. The public can be reassured that due consideration is being given to the needs of individuals and the broader Australian community in our great parliamentary forum.

I would like to thank all those members who have contributed to the debate. The discussion has focused on a broad range of issues, from the general state of the economy, to issues emerging in members’ electorates, and to more general policy issues such as tax reform, investing for the future and the availability of child care. Of course, we are all interested in what the opposition speakers have had to say about these bills and the broader budget but, not surprisingly, I and my colleagues in government do not agree with most of the opposition’s sentiments.

I would like to take this opportunity to provide an overview of the package of appropriation bills. I will start with the budget bills. These bills provide for substantial funding, totalling approximately $62.7 billion. They reflect the government’s commitment to build opportunities for the future by investing in families, the aged, defence and security, and transport and water. The initiatives which the budget provides include: funding of $48 billion on health and aged care, including a new $1.9 billion package over five years for mental health services; a comprehensive tax reform plan that provides another instalment in income tax reform, incorporates a major improvement in business tax and includes a proposal to simplify and streamline superannuation, which represents the most significant change in nearly 20 years; provision of additional assistance to almost half a million Australian families through the family tax benefits system, costing $993 million over four years; removing the limit on the number of subsidised outside school hours care and family day care places, which is expected to generate an additional 25,000 places by 2009; and $5 billion to enhance our training and skills under the new national training agreement, covering 2005 through to 2008.

Also included in the package of five appropriation bills are two supplementary additional estimates bills for this financial year, 2005-06. These bills propose expenditure of $3.6 billion for important initiatives that can be accommodated this financial year because of the strength of our fiscal position and the Australian economy generally. The funding in the supplementary additional estimates bills provides, amongst other things, increased funding of $2.1 billion for the AusLink program. This includes an additional $307.5 million for local roads as a supplement to the Roads to Recovery program. For example, in my electorate of Eden-Monaro, local councils receive almost $8 million to upgrade local roads, thanks to this program.

We provided an additional $521.2 million to extinguish the Australian government’s liability for the superannuation entitlements of former State Rail employees of South Australia and Tasmania; an injection of $500 million to the Murray-Darling Basin Commission to protect the resources of the basin and enhance environmental flows; an additional $310.4 million to fund a coordinated package of measures to assist those adversely affected by tropical Cyclone Larry; and grants totalling $265 million to a number of medical research facilities. I should comment that $50 million of that is going to the John Curtin School of Medicine at the ANU—something that I have certainly taken a great interest in—and an additional $75 million is going to the ANU for a general upgrade of infrastructure. There is also a payment of $270 million to the Australian Rail Track Corporation. While it is not listed in the budget, because it is a public-private partnership, we announced just recently the successful tenderer to begin work on the new $300 million Defence headquarters outside Queanbeyan. That is coinciding with the budget.

I emphasise that the significant level of expenditure proposed in the package of bills is only possible because of the government’s continued strong management of the economy and ongoing economic reform. Australia’s impressive economic performance over the last decade is set to continue. The outlook is for ongoing, solid economic growth, coupled with low unemployment and moderate inflation. Last week we saw the unemployment figure of 4.9 per cent—getting below five per cent for the first time in 30 years—and 4.6 per cent in my electorate of Eden-Monaro.

The opposition has questioned the sustainability of our budget initiatives and says that we are assuming a protracted commodities boom. We are not. Our budget projections show a step-down over the two years back to more normal levels. We have done that because we believe it will happen and because it is prudent not to base our budget on assumptions of a long-term change when it could be a short-term occurrence.

The opposition has also asserted that we have missed an opportunity in this budget to invest for the future. This observation is clearly wide of the mark. The Future Fund took its initial deposit last month of $18 billion. An additional deposit will shortly be made, representing the surplus from the 2005-06 budget, with a further deposit planned from the Telstra privatisation process. The fund will be well on its way to funding the government’s superannuation liability by 2020.

Through its commitment to sound financial management, the government has put the budget in surplus, retired government net debt and commenced saving for its future obligations. This has freed the next generation of Australians to meet their own challenges, unencumbered by the legacy of past Labor governments that spent beyond their means. The opposition has complained that the budget does not invest in Australia’s infrastructure. I challenge the opposition to name a budget that has invested more in infrastructure than this one has. As the Treasurer has observed, this is the biggest investing budget in a long time. The opposition has made misleading comments about the equity of the tax reforms announced in the budget. As the Treasurer has demonstrated, the largest tax cut in percentage terms is for people earning $10,000. They have a tax cut of 100 per cent. Of course, in dollar terms the tax cuts are greater for the higher income earners; that is because they are paying more tax. In distributional terms, the greatest tax cuts go to lower income earners.

Those who argue that we have not addressed bracket creep should remember that 80 per cent of taxpayers are on taxable incomes of $75,000 or less. As their income increases, they do not move to a higher marginal tax rate. The great bulk of taxpayers can move through the range of $25,000 to $75,000 without a change in their marginal rate, which means that most Australians will not be facing an increase in marginal tax rates over the course of their working lives. The tax cuts announced in the 2006-07 budget build on the reforms delivered through the new tax system announced in July 2000 and the initiatives contained in the 2003-04, 2004-05 and 2005-06 budgets. The combined effect of these tax reforms has been to deliver significant reductions in tax for all taxpayers.

The opposition has claimed that the child-care reforms announced in the budget will not result in additional child-care places. This is incorrect as well. The government invests heavily in child care, providing close to $2 billion annually. In the 2006-07 budget, the government will provide an additional $120.5 million in new child-care initiatives over four years. The initiatives announced in the budget will provide parents with unprecedented access to out of school hours care and family day care. From 1 July 2006, the cap on child-care places will be removed, with the result that 99 per cent of all child-care places will be uncapped. Under this arrangement, a child-care service provider will be able to set up or expand to meet demand in an area. By removing the cap on places, the market will be free to provide child-care places wherever that demand is.

The opposition has also made misleading claims about the effective marginal tax rate faced by families. Since coming to office, the government has put in place a range of policies to decrease families’ effective marginal tax rates. This budget will reduce the effective marginal tax rate of approximately 40,000 families, due to the relaxing of the first income threshold from $37,500 to $40,000 for family tax benefit part A, from 1 July 2006. This is in addition to the 40,000 families who were expected to face lower effective marginal tax rates under the 2005-06 budget measure, which was intended to reduce the first income threshold to $37,500 from 1 July for family tax benefit part A.

The opposition has claimed that the government has not invested in education and training, but the budget provides funding of $21.7 billion for 2006-07 for the Education, Science and Training portfolio to support a range of initiatives. This commitment, which builds on the record funding already provided in previous budgets, has a specific focus on our young people, ensuring that they are equipped with the right skills, knowledge, values and resources to achieve their objectives in a fast-changing world. We would be even better off if the New South Wales government, for instance, and other state governments increased funding to education at the same rate that we have. The disparity can be seen throughout my electorate. Every time a new school is built or expanded it seems that it is the federal government that is putting in the bulk of the funding. There is no greater example of that than the school where I live—Jerrabomberra school. The state Labor member constantly takes credit for it, but 92 per cent of funding for that new school was provided by the federal government—not the state government.

At the commencement of the debate the honourable member for Lilley moved an amendment to the second reading motion on Appropriation Bill (No. 1) 2006-2007. The government does not support the proposed amendment. The reasons for this should be clear. I have already dealt with many of the specific issues that were raised in the amendment. The budget bills and the supplementary additional estimates bills proposed by the government provide us with the means to address the significant changes currently faced by the Australian economy. The initiatives contained in the budget will ensure that the economy continues to prosper and will position us to meet the challenges that lie ahead.

In conclusion, the three budget bills for 2006-07 and the two supplementary additional estimates bills for 2005-06 are important pieces of legislation underpinning the government’s initiatives and reforms to be introduced over the next 12 months. I commend the budget bills and the supplementary additional estimates bills to the House.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Lilley has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.