Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

The Appropriation Bill (No. 1) 2007-2008 and cognate bills are the routine bills that put in place the government’s spending requirements arising from the 2007 budget, and I have pleasure in providing a response from the opposition with respect to the detailed arrangements for budget spending that are set out in the bills.

It is always wise in considering the budget papers every year to head to Budget Paper No. 1, and particularly to table 2 in Budget Paper No. 1, because that provides you with an assessment of how things have changed over the past six months, both with respect to revenue and with respect to expenditure. In particular, it incorporates the expenditure impact of new commitments that were announced in the budget relative to the overall spending proposals that were in place roughly six months earlier, as documented in the Mid-Year Economic and Fiscal Outlook papers.

This year, that table demonstrates that the government is drowning in money. Because of the minerals boom and the fact that it has created a knock-on effect which is rippling through most of the Australian economy and showing up in a variety of tax receipts, and also because for the first time in 30 years the wider global economy is growing in tandem—all of the major economies of the world are growing, some of them quite strongly—these benign economic circumstances are drowning the Howard government in money. You can see this most starkly in the estimate of revenue for the next three financial years, which is contained in Budget Paper No. 1, table 2, compared with the estimates for the same period as recently as December last year. The difference between the two aggregated is about $47.7 billion—$47.7 billion more that the government had at its disposal for the forthcoming three years than it estimated only six months ago.

Equally, it is an interesting exercise to examine the new spending proposals and their impact on overall spending—and, indeed, tax initiatives as well—to see what the government is doing with this largesse. Surprise, surprise! They are basically blowing the lot. The new spending and tax initiatives in the budget effectively use $47.1 billion of the additional $47.7 billion that the mining boom and benign global circumstances have rained on the government.

We in the opposition support many of the initiatives that are in the budget. We believe that, for once, the tax cuts are reasonably well structured. It is amazing what an election can do. It is extraordinary what the pressure of facing the Australian people at the polls can do to a government that has consistently in previous budgets, particularly in the last two, handed out very generous tax cuts biased very heavily towards higher income earners. This time, the structure of the tax cuts is more balanced and, in Labor’s view, a reasonable approach to dealing with the circumstances on tax that face the government.

Similarly, with respect to spending initiatives you would have to say that with the amount of money the government has had at its disposal it would be difficult for it to get everything wrong. Inevitably, there are spending propositions in the budget that we support. Some of them bear a very remarkable resemblance to things that Labor has advocated in recent years. In areas like education—which the government has touted as the big, dominant theme, the major message of the budget—a number of initiatives are remarkably similar to proposals Labor has advocated in recent times.

However, they are only snapshots; they are not the whole picture—the whole education revolution that Australia requires. If ever you want a statistic that demonstrates what is still wrong with the Howard government—why it is not fair dinkum about having a genuine education revolution—that statistic is that spending on education as a proportion of total government spending is anticipated to fall over the next four years. So, notwithstanding the increase that has occurred, it is relatively modest in the overall scheme of things. It is helpful. It is good that there is a belated recognition of the importance of education, but, relative to the wider budget, the proportion of government resources dedicated to education over the next four years is actually going to fall slightly.

It is also very important to look at the wider picture on the budget to get some idea of what is occurring at the macro level. This tells an interesting story, both on the tax side and on the spending side. On the tax side, in the financial year that is about to end it is estimated that taxation as a proportion of GDP is at 22.8 per cent—22.8 per cent of the Australian economy is taken up in federal taxation. It is important to note that that excludes the GST, which is an artificial exclusion that we do not accept, and neither do the ABS nor the Auditor-General. But that is the government’s own estimate of tax as a proportion of GDP. That is estimated to go down to 22.5 per cent over the next financial year. Government revenue will drop from 22.8 per cent to 22.5 per cent. Then, the following year, it will be back up at 22.8 per cent and then, the year after that, it will be 23.1 per cent. So, in other words, notwithstanding the tax cuts, government revenue as a proportion of GDP—in effect, the tax take—will only drop slightly for one year. Why? Because in effect what the government is doing, as Peter Hendy from the Australian Chamber of Commerce and Industry correctly identified, is predominantly handing back bracket creep—the impact of inflation on people gradually being pushed more and more into the higher tax brackets.

You can see a similar record with respect to spending. In 2005-06, government spending as a proportion of our total economy was 21.3 per cent. The government’s own projections show that in the five years concluding 2010-11 it will hit 21.8 per cent. In highly positive economic circumstances, with growth over that period being relatively robust, globally economic growth being very strong and huge government revenues, spending as a proportion of the total economy is continuing to increase—this from a supposedly economically conservative government.

If you want a point of comparison, it is instructive to look at the 1989-90 budget under Bob Hawke—the last Labor budget in similar economic circumstances. Inevitably the recession from 1990, 1991 and 1992 blows out spending as a proportion of GDP just by the natural order of things, because GDP is shrinking and there are automatic factors that cause that. So the best available comparison is the late eighties, when there were similar economic circumstances. What we see when comparing spending as a proportion of GDP in the late eighties to now is that it was almost two per cent lower as a proportion of the total economy in 1989-90 than it will be in a couple of years if the Howard government is re-elected and its spending projections come into being. What that means in today’s money is about $20 billion. In other words, if John Howard were spending at the same rate Bob Hawke was at the end of the eighties, government spending would be $20 billion lower than it currently is. That is a big difference.

What we can also see is the ever-growing reliance on company tax as a source of revenue because of the impact of the mining boom, record levels of profitability in corporate Australia and a record profit share of the total economy. Company tax in the early eighties made up about nine per cent of government revenue. As late as 1998-99 it made up about 14 per cent. It is due to hit 27 per cent, and, even when you adjust for the impact of the GST deal, which probably brings the equivalent figure to compare pre-2000 with down to about 24 per cent, that is still a very substantial proportion of the total government revenue that is dependent upon a tax that historically is more likely to be volatile and will be particularly volatile in a recession and also, of course, is subject to strong international competition because of falling company tax rates in other jurisdictions.

On the spending front, once again we have no sign of a razor gang. An additional $60 million has been handed out to a variety of government departments, including the Department of the Treasury, the Department of Finance and Administration and the Department of Human Services, with virtually no explanation as to what it is for—not even an excuse as to why additional resources are required for these various departments simply to do their job. It is notable that, after the initial cuts in the federal Public Service in 1996-97, we have seen a steady increase in the Public Service to a point where the total numbers for the federal Public Service are almost the same as they were when John Howard first became Prime Minister. But the proportion of people at the upper executive level has almost doubled to about 25 per cent compared with the early nineties. And, of course, the expenditure on consultants—people doing de facto public sector work where it has been outsourced—has soared to a point where in nominal terms it is now 2½ times the highest level that it hit in any one year under Labor and, in real terms, probably around double.

In this budget we have also seen the further advance of a novel approach to budgeting, which, no doubt, creative accountants out in the private sector will be watching with some interest. It is what I call ‘retro-budgeting’, where, rather than focusing on expenditure commitments for the forthcoming budget period, what you do is focus on expenditure at the end of the existing budget period—in other words, shovel the money out at the last moment just before the financial year is due to close, in the same kind of way that public servants in the bad old days used to try and spend all of the unallocated money in their budgets by 30 June to ensure that they would not lose in the budget allocations for the forthcoming year.

To illustrate this point, new spending initiatives announced in this year’s budget for the 2006-07 financial year, which is about to end, totalled almost $4 billion. By way of comparison, the new spending initiatives for that financial year that were announced in last year’s budget, the budget when you would expect new spending initiatives for that financial year to be announced, were only a little over—you guessed it!—$4 billion. This year the expenditure commitments for the forthcoming financial year announced in the budget were about $6 billion for the one financial year. In other words, increasingly we are moving to a new pattern of retro-budgeting, where the announcements about spending initiatives made by the government in the budget process relate in fact to the last financial year, not to the forthcoming financial year.

It was also extraordinary to see that there was another $5 billion allocated to the establishment of the new Higher Education Endowment Fund. I have not even mentioned that in the context of retro-budgeting, but that was another example of it. That money had previously been promised to the Future Fund. So the same people—the Treasurer, the Prime Minister and the finance minister—who went absolutely apoplectic about Labor’s broadband proposal, which involved drawing down a maximum of $2.7 billion worth of Telstra shares held in the Future Fund in order to finance the building of a high-speed national broadband network, have nicked $5 billion that was on its way out the Treasury door and about to hit the Future Fund. They of course claim that, because it had not quite got to the Future Fund, it is totally different. That is an absolutely specious playing with words which any reasonable observer is simply going to laugh at. Within weeks of criticising Labor for seeking to invest a small proportion of the Future Fund’s Telstra shares in a new telecommunications investment to benefit the nation, the government have effectively taken double the amount that Labor was proposing for another kind of investment and are still continuing with their rhetoric about alleged raids on the Future Fund. Interestingly enough, after having promised that this year’s surplus would go to the Future Fund and reneging on that promise by creating the Higher Education Endowment Fund, the Treasurer is now refusing to commit to putting the balance of the surplus in the forthcoming year into the Future Fund.

It is worth noting on spending that, yet again, the government is up to its arms in massive wasteful spending on government advertising that is designed to further the political interests of the Howard government and not the long-term economic interests of the nation. The highest spend on total advertising in one year under Labor was $84 million. Last year, the Howard government hit $208 million—almost 2½ times the highest on record under Labor. Even if you take inflation into account, that is still roughly double in real terms the highest amount in a year under Labor. The way things are going with their Work Choices campaign, the education propaganda campaign, climate change advertising and all of these political messages designed to persuade people to vote the Howard government back in, they are going to break their own record in the forthcoming year.

It is worth noting that, yet again, there is no reform of the presentation of budget information. There is still a dearth of serious information about programs and about where money is going. You still cannot find out, for example, how much the quarantine service spends. You still cannot find out detailed projections of the cost of tax concessions, which run into the multiple billions. It is still very difficult to connect the portfolio budget statements with the budget papers so that you can track where the money is going, and there are still meaningless outcomes in many areas that are supposedly measures of what the government is doing but in practice mean very little. Labor is committed to massive reform in this area and to introducing genuine transparency to ensure that we as a nation—the media, the people and the parliament—can understand what our money is being dedicated to, where it is going and what uses it is being put to.

I was delighted to have been able to announce a couple of weeks ago that Senator Andrew Murray of the Democrats has agreed to conduct a review of all of these issues for an incoming Labor government, should we be elected, in order to give us an independent, objective parliamentarian’s view about where the problems are and what needs to be done to fix them. We will be doing that in a genuine attempt to ensure that we have full transparency and full reporting of financial transactions to the parliament so that all Australians can see where their money is going.

Finally, I want to make reference to Labor’s commitments to extracting expenditure savings. A few months ago I announced a package of $3 billion worth of savings initiatives which were a variety of initiatives designed to ensure that Labor can fund its promises. That is only a first instalment. Inevitably we are going to announce more savings because the Howard government has been spending so much money on so many low-priority and wasteful things that the opportunity is there for an incoming government to get really serious about wasteful expenditure and to do something to redirect those moneys into more serious commitments. We have announced that we will drastically slash things like government advertising, expenditure on consultants, opinion polling and focus groups. We will cut back the printing allowance for members of parliament that the government has massively increased. We will get rid of tax deductibility for political donations, reform the Public Service air travel arrangements, which the Auditor-General recommended to provide savings for the government, but very little has been done about it, and also cut back on programs that we feel are simply wasteful and not a high enough priority—for example, the Community Business Partnership and Invest Australia. There are a number of initiatives of that kind.

We will ensure that Public Service departments are not simply being given money every time they turn up with a new proposition or something new that they want to do. It is significant that the former head of the budget division of the Department of Finance and Administration, Professor Stephen Bartos, stated to a Senate inquiry recently that departments have effectively been able to get away with double dipping. They are getting funded specifically for new activities like putting in new IT systems but, at the same time, they get depreciation funding as a matter of routine which should be covering those kinds of things. He cited the new and notorious IT system in Customs as an illustration of this point.

We will also be saving a very substantial amount of money by not proceeding with the government’s Work Choices spending. It is an extraordinary thing. Whether or not you support Work Choices, any taxpayer who is listening should be horrified at the hundreds and hundreds of millions of dollars that have been pumped into promoting Work Choices. When Peter Reith introduced his legislation in 1996, which Labor fought tooth and nail against, to his credit the total hit on the budget at that time for legislation that was as sweeping in its impact as Work Choices was only about $11 million or $12 million. Similarly, when Labor did sweeping reforms of industrial relations legislation in 1993, the cost to the budget was only about $11 million. Yet, under John Howard, the Work Choices cost is about $600 million, the bulk of which is still available to be saved.

So the budget is a classic budget of a government in cruise control. It is not investing in the future. It is not there for the long term. It is simply spending our money with its eye on political survival, on getting John Howard across the line one more time. He does not have a long term but Australia does. We should be investing as a nation for that long term. I move:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House is of the view that:

(1)

despite record high commodity prices from surging demand from India and China and rising levels of taxation, the Government has failed to secure Australia’s long term economic fundamentals and should be condemned for its failure to:

(a)

address Australia’s flagging productivity growth;

(b)

stem the widening current account deficit and trade deficits;

(c)

attend to the long term relative decline in education and training investment undercutting workplace productivity;

(d)

provide national leadership on infrastructure including a high speed national broadband network for the whole country;

(e)

expand and encourage research and development to move Australian industry and exports up the value-chain; and

(f)

reform our health system to equip it for a future focused on prevention, early intervention and an ageing population;

(2)

the Government’s failure to address the damaging consequences of climate change is endangering Australia’s future economic prosperity;

(3)

the Government’s extreme industrial relations laws will lower wages and conditions for many workers and do nothing to enhance productivity, participation or economic growth; and

(4)

the Government’s Budget documents fail the test of transparency and accountability”.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I am delighted to speak in support of the Appropriation Bill (No. 1) 2007-2008 and the related budget bills. The 2007-08 budget is a good budget and has been well received by the community. It is a budget that builds on the Howard government’s reforms of the past to prepare for the future. It is economically responsible. It puts downward pressure on interest rates and delivers assistance for families through cuts in the tax burden and assistance for child care.

This budget delivers a surplus of $10.6 billion in 2007-08 with further surpluses projected for future years, providing a downward pressure on inflation and increasing national savings. This is a responsible result, the 10th budget surplus in 12 budgets, and puts Australia in a strong position for further sustained economic growth. By way of international comparison, the budget papers demonstrate that the average collective fiscal position amongst OECD nations has been 11 deficits in 12 years, with OECD nations expected on average to remain in deficit by almost two per cent of GDP in 2007-08. Australia is a stand-out example of good economic management. Surpluses do not just happen, no matter what the opposition would have you believe. It takes hard work and discipline to deliver budget surpluses, and the Howard government has a proven record in this regard.

There is an interesting graph in the budget papers, comparing general government sector net debt levels in selected nations over the 10 years from 1998 to 2008. OECD nations, the United Kingdom and the United States are maintaining net debt positions around 40 per cent of their GDP. Japan’s debt position is approaching 100 per cent of GDP. Australia stands out in stark contrast with these nations because we have eliminated government debt and are recording credit results. I seek leave to incorporate the graph in my speech.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Is leave granted?

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

I grant leave but indicate that the Speaker has previously indicated that, with respect to documents currently available to the House and tabled here, we should not give leave. But, because he is such a good fellow, I will give him leave!

Leave granted.

The graph read as follows—

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

Thank you. It does clearly demonstrate the point I am making in the speech, which members of the public will be able to identify more clearly. I thank those opposite.

In addition to the maintenance of surplus budgets, the Treasurer should be commended for his policy to provide for the future superannuation liabilities of public servants and Defence Force personnel by investing in the Future Fund. The government has resisted the temptation to spend the surplus and instead we have invested the surplus to pay off the liabilities incurred today that will fall due in the future. Australia’s unfunded superannuation liability is expected to grow to around $148 billion by 2020 and over $200 billion by 2046-47. Through the Future Fund we are ensuring that we are not imposing a higher tax burden on future generations to pay for our largesse. It is important to win the Future Fund public debate and stop the opposition from spending the retirement savings of government and defence employees. Our responsible policies are paying dividends in keeping inflation low despite a growth economy. Inflation is forecast to be 2½ per cent in 2007-08, down slightly from 2¾ per cent this year and well within the Reserve Bank’s target band.

The national economy is forecast to grow more strongly at 3¾ per cent in 2007-08, up from 2½ per cent this year, and GDP growth is projected to remain at three per cent for the forward estimates. Australia’s long-term prosperity is highly dependent upon its growth prospects. No economy is able to expand without fundamental growth and productivity improvements. At 3¾ per cent GDP growth, the Australian economy is projected to grow more strongly over the next year than the OECD nations, at 2¾ per cent, and than other key trading partners the United States and Japan, which have projected growth of three per cent and two per cent, respectively.

China and India are expected to drive further strong growth in the world economy over the next year. The global economy is anticipated to continue sustained growth at the level of five per cent GDP growth in the 2008 year. China is set to continue with growth in excess of 10 per cent. The budget papers show China achieved 10.7 per cent growth in 2006 and is forecast to report GDP growth of 10½ per cent and 10¼ per cent in the 2007 and 2008 years, respectively.

India is of growing importance to Australia as a trading partner and global economic power. The budget papers report that over the past five years India has been our fastest growing export market with our exports to India worth $7.4 billion in 2005-06. The budget papers report the Indian economy has enjoyed strong annual growth of six per cent on average over the past 25 years. Over this time India has grown from being the world’s ninth-largest economy in 1980 to being the fourth-largest economy currently. In 2006 the Indian economy grew by 9.1 per cent and strong growth is forecast to continue, albeit moderating slightly, at 8¼ per cent in 2007 and 7¾ per cent in 2008 due to tightened monetary conditions.

There is a good basis of shared history that can bring India and Australia closer together. Indians speak English and have a democratic system of government. I have had the pleasure of meeting the Prime Minister of India, Dr Singh, who, by way of background, is a market economist. He had an interesting conversation with a delegation to India that I was participating in. I was delighted to hear his assessment of the Indian economy at that time, and his points of view on the way in which India would develop to be a good economy if it adopted a more market orientated approach.

Despite the positive impacts of world economic growth and the resources boom on the Australian economy, we stand in good stead to maintain a sustainable growth rate. The budget papers project the wage-price index to grow at 4¼ per cent in 2007-08. The more flexible industrial relations system has ensured that wage pressures in some sectors, such as the resources and construction sectors, have not flowed over to create unsustainable pressures in other industries. I emphasise that point. On previous occasions—that is, in 1981 under Prime Minister Fraser—we had a wages breakout of massive proportions.

More than 326,000 new jobs have been created since the introduction of the government’s workplace relations reforms in March 2006 and the majority of these new jobs—more than 275,000—have been full time. Again I emphasise that feature. Over the life of this government more than two million jobs have been created. This means more Australian families are earning higher incomes and are in a more secure financial position. The unemployment rate has fallen to 4.4 per cent, the lowest since 1974, and employment growth is estimated at 2½ per cent for 2006-07. Employment growth is anticipated to moderate in 2007-08. It is particularly interesting to note that Treasury expects the national participation rate to rise to 65 per cent, which is partly explained as a result of the government’s Welfare to Work policies, which encourage people who are on disability support pensions and parenting payments who have the capacity to work to do so.

There has been much public debate about the shortage of skilled workers to meet the demands of industry in the current growth environment. It is important that we as a nation encourage more people who have the capacity to work to do so, and this is the intention of our welfare reforms. This budget, through providing increased incentives by cutting personal tax rates and increasing the rates of child care by 10 per cent, is making a further investment for the future in this regard.

I now turn to tax reform. The government has recognised the pressures on Australian families to juggle household costs and raise a family and has been able to deliver further reductions in income tax in this budget. Some people might suggest that when you have a strong economy and increased tax income the government should do more—spend more money. This is the way old-fashioned socialists think—as the member for Batman, who is at the table, would understand—and even old-fashioned Christian socialists think like that. But the Liberal Party and the Howard government believe that when you have met your financial obligations the surplus funds should be returned to taxpayers to do with as they choose in the form of tax cuts and higher take-home pay. Even the member for Batman would agree to higher take-home pay. He is smiling at the table; I am sure he would like more take-home pay for his former union members.

The budget provides $31.5 billion worth of personal income tax cuts over four years, building on previous reductions in tax. The threshold for the 30 per cent tax rate will rise from $25,000 to $30,000 income from 1 July 2007 and the low-income tax offset will also increase on this date. These reforms will particularly help low-income earners. I noticed the member for Melbourne commended that particular initiative; I am sure the member for Batman would be happy with it also. From 1 July 2008 the 30 per cent tax rate will apply for incomes up to $80,000 and the highest marginal tax rate will not cut in until incomes reach $180,001. As a result, only two per cent of taxpayers will pay the top rate, where incomes are 3½ times average weekly earnings. Again, this is a commendable initiative. Over the years I have been arguing the case that the cut-in factor of average weekly earnings was a very big difficulty for higher income earners. This particular change in the thresholds is a step in the right direction.

Media reports of the budget spoke about the new initiatives, while the government’s past achievements were overlooked. I therefore put on the record the massive change in personal income tax rates under the Howard government. The tax-free threshold has been increased to $6,000, and the low-income tax rate has been cut from 20 per cent down to 15 per cent. When we were elected, a 34 per cent rate applied to incomes above $20,700. From 1 July 2008 the 30 per cent rate cuts in at $30,001 income. From 1 July 2008 Australians will pay no more than 30c tax in the dollar for incomes up to $80,000. We inherited from Labor a top marginal rate of 47 per cent, which applied to incomes at $50,001. There has been a remarkable change in relativities. Our budget reforms will mean that, from next year, the top marginal tax rate of 45 per cent will apply only to incomes over $180,001.

It has only been through disciplined economic management and surplus budgets that the government has been able to achieve this outstanding reform of the personal income tax system. These reforms are removing barriers to workers receiving due rewards for their efforts by increasing the share of take-home pay and improving the incentive for people to be more productive and to move from welfare into paid employment. I seek leave to incorporate into Hansard the comparison between the rates as they were on 1 July 1996 and the new rates.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

Mr Deputy Speaker, given that it was the Labor government that reduced the top marginal tax rate of former Treasurer John Howard from 60c to 49c—

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

Order!

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

in the dollar, and that the tax tables reflect the Labor Party’s proposal—

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

Order! Is leave granted?

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

on tax cuts, the opposition accepts the tabling.

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

Order!

Leave granted.

The document read as follows—

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I would now like to move to the impact of the drought in Corangamite and in Australia. One of the remarkable things about Australia’s current strong economic condition is that it has occurred at the time of one of the most severe droughts on record. In south-west Victoria the drought is the worst in living memory for most farmers; in my own judgement, it is worse than the 1967 drought. Fodder is in very short supply or non-existent. Farm water is scarce; at some of the farms I have visited, it is non-existent. In past years, severe drought would have precipitated a significant economic slowdown, but the more flexible and diverse domestic economy established over the past 20 years, together with the disciplined economic policy of the current government, has enabled the nation to continue to grow and generate new jobs and wealth. The budget papers show that farm GDP is projected to fall by 20 per cent in the current year. Mr Deputy Speaker Adams, I would have thought it might be even more than that in your state of Tasmania and on the eastern seaboard, where the drought has been quite serious. A partial recovery from the drought on the back of more average seasonal conditions and rainfall is expected to add half a per cent to national GDP growth over the next year. The breaking of the drought would make a huge difference and be yet another factor contributing to a better economy.

Whilst the economy remains in good shape, our farmers have experienced the full impact of the drought. South-west Victoria has qualified for exceptional circumstances and eligible local farmers are able to apply for EC assistance to provide a helping hand to manage through and recover from the drought. The Howard government provided a combined total of $1.2 billion in EC drought assistance last year and this year; the budget provides for assistance of $688 million in 2007-08.

Rural Finance Victoria hosted an event for farmers at Colac last week. I learnt that 127 farmers across south-west Victoria had successfully applied for EC interest rate assistance valued at $3.4 million. There is an 81 per cent approval rate of farmers’ applications for EC interest rate subsidies in Victoria, with an average grant of $25,000 per farm. This assistance is making the difference for farmers who are receiving it, and in some cases they are on the breadline. An additional allocation of $205 million over four years has been provided in the budget to provide professional advice to drought affected farmers. I commend both of these initiatives strongly, and I have been pleased that the government has responded to the drought stricken farmers in my electorate of Corangamite.

It is important to recognise the important contribution our farmers make to managing Australia’s environment. The budget extends the Natural Heritage Trust until 2013, providing $2 billion to improve water quality and combat land degradation. An additional $112 million has been allocated to landcare in the budget. I commend that initiative, because the Howard government initiated the Natural Heritage Trust. It has been very effective in Corangamite and, in my judgement, the allocation of money has been very well utilised by the Corangamite Catchment Management Authority and also by farmers.

The government has strong credentials on practical environmental protection, as demonstrated by our ongoing commitment to the Natural Heritage Trust and landcare. These programs are providing for an army of people on the ground who are working to fix the environment, but often these initiatives are ignored by commentators and those who are alarmist about environmental matters. Last week I joined the board of the Corangamite Catchment Management Authority to inspect some of the works to which the Commonwealth has made a contribution in relation to the environment, water catchment and the removal of willows from the streamside in the depths of the Otways. These programs, which I saw firsthand, are helping the future of water catchments and the future quality of the water. The removal of 72 kilometres of willows along those catchment creeks was a very practical and sensible measure funded by both the state and the Commonwealth.

Fifty million dollars has been provided for a new long-term environmental stewardship program whereby farmers will be paid to help preserve and restore sensitive environmental assets. This is an innovative future-looking policy that has been welcomed by National Farmers Federation President David Crombie, who on 8 May said that it is:

… an historic partnership that acknowledges farmers’ important—and growing—contribution to the environmental, economic and social lifeblood of the nation.

I also add my support for this initiative whereby farmers and landholders are very much part of this program to encourage the stewardship of those natural assets. In the long run, it will be the encouragement of those landholders and stakeholders that will make these environmental policies work.

In closing, I would like to look at the Labor alternative. I listened very closely to the budget response by the Leader of the Opposition, and it was remarkable that Labor had no alternative budget to put forward. They accepted the Howard government’s budget—as indeed they should, because it is a very good document in the nation’s interest. Since that time, we have learnt that Labor has no income tax policy, as demonstrated in the parliament this afternoon, because the Prime Minister and the Treasurer have the tax balance right. The Leader of the Opposition received sympathetic and uncritical reporting of his budget response—in particular, his extraordinary claim that he would not outspend the government’s budget. This far-fetched claim was repeated again in today’s media. The cold hard truth is that, by accepting the budget and promising additional expenditure—as the Leader of the Opposition did in his budget response—Labor are in fact proposing to spend more and run down the surplus. Labor cannot hide behind the dubious savings concocted by the member for Melbourne, who made a contribution to the parliament a few moments ago. As a member of the former government, the member for Melbourne would know that savings are very difficult to achieve. His suggestion to the parliament that he could get $3 billion worth of savings is completely without foundation. (Time expired)

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

I welcome the opportunity to speak on the Appropriation Bill (No. 1) 2007-2008 and related appropriation bills for the 2007-08 budget. Twenty-five years ago the Australian people began what I think is now widely recognised as among the most far-reaching revolutions of our time. They set out on a long and difficult struggle to transform this country. They set out to rebuild the Australian economy as one which could compete with the best in the world. They set out to rebuild the Australian economy as one in which their children would find good, well-paying jobs; in which employers and employees would no longer be at each other’s throats; in which strikes would be uncommon; in which markets instead of governments could set prices; and in which business could compete rather than collude. They set out to rebuild the Australian economy as one of the best in the world.

It was a profoundly important moment in recent history and a supremely ambitious one. After all, a quarter of a century ago Australia was at the bottom of the deepest recession we had experienced since the Great Depression. Under the guidance of the then Treasurer, now Prime Minister, the honourable member for Bennelong, interest rates had hit the highest level they have ever reached before or since. Unemployment was headed to over 10 per cent of the workforce, even though inflation was over 12 per cent. Production was contracting and living standards were falling.

But Australians remembered that this had once been a prosperous country, proudly a full-employment economy with one of the highest living standards in the world. They turned to the task of recovering what we had lost. So we floated the dollar, deregulated banking and finance and cut tariffs. We introduced the accord to rebalance wage and profit shares in the economy and to rein in inflation. Then we transitioned from nearly a century of centralised wage arbitration to a wholly new system of enterprise bargaining. We implemented national competition policy to enhance the competitiveness of Australian businesses and government enterprises.

Australia joined the worldwide recession in the early nineties. Though less severe than the last in terms of output, it was nonetheless deeply damaging. But we emerged after nearly a decade of difficulty, with an economy in which inflation was low, in which productivity growth was accelerating, in which businesses competed on a level field and in which jobs growth was persistent. Fifteen and a half years ago we followed that difficult period of reform by beginning what would prove to be the longest upswing in our history. We then began the long and steady progress towards full employment, towards a well-paid and well-trained workforce and towards an increasing diversity of opportunity for young Australians, which had all along been the aim, the intention, the whole point of our decade-long transformation.

But now, after a 15½-year journey towards full employment, a journey preceded by a decade of the most difficult, contentious and painstaking preparations, we arrive near our goal of full employment only to find that this government has not done nearly enough to prepare us for that arrival. I accuse this government of the most unconscionable want of thought about the inevitable consequences of our long success, of a want of urgency and a clarity of purpose which has quite unnecessarily put at risk and tarnished the quality of everything we have worked for in the last 25 years. This of course is the legacy of the current Prime Minister and the current Treasurer. I see this failure to face up to the future economic challenges as a sad betrayal of Australian workers, businesses and policymakers who have worked hard over the last two decades to build our prosperity.

For at least a decade we knew that, if growth continued as it had been, we would eventually encounter skills shortages and capacity constraints accompanied by the risk of high inflation and higher interest rates. Yet, rather than take the steps necessary to address these constraints, this government sat back and applauded itself with smug declarations as unemployment continued to fall—basking in the sun of the mining boom rather than doing the heavy exercise required to secure our future prosperity. This government applauded itself as productivity growth began to decline, from an average of 3.2 per cent in the mid-nineties to 2.2 per cent at the turn of the decade—and it is expected to reach 1.5 per cent this decade. This government applauded itself as the growth in the volumes of our exports, impeded by this government’s lack of foresight, continued to fall, from an average growth rate of eight per cent a year over the nineties to less than 2½ per cent a year since the turn of the decade. This has occurred in the middle of a mining boom—a shameful record.

This government applauded itself as output growth began to slow, as employers reported critical skills shortages, as the queues of coal ships lengthened outside Dalrymple Bay and Port Waratah and as we began rationing railway rolling stock. This government applauded itself as month by month Australia raked up a record run of trade deficits, despite the most favourable global economic conditions in 30 years and the highest terms of trade in more than 50 years. This government applauded itself as our net foreign debt mounted so that it is now over half a trillion dollars. This government applauded itself as year by year the Reserve Bank of Australia increased interest rates. There have been eight successive interest rate increases from the Reserve Bank of Australia in the last five years—half of these coming since the last election, an election fought by this government on a pledge to keep interest rates at record lows. The Reserve Bank could see where we were heading, even if this government refused to look.

The Secretary to the Department of the Treasury repeatedly warned this government what 15 years of expansion would mean. Two successive heads of the Reserve Bank of Australia warned this government what a prolonged economic expansion would mean. They warned that, unless we addressed the skills shortages, the lack of capacity and the infrastructure constraints, it would mean slower output growth and the risk of higher inflation. The secretary to the Treasury warned that it might mean that manufacturing in other sectors of our economy must contract to make way for the expansion of mining. And still the government did nothing, lying back while the alarm bells went off. And, yes, its advisors are still warning. The Reserve Bank told this government last month that inflation would inevitably accelerate in 2008. The certain consequences will be still higher interest rates if this government is re-elected. It warned that our skill crisis had worsened and was further constraining output. The secretary to the Treasury told his officials two months ago that Australia was at a point where there was a serious risk to inflation from policy interventions by this government unless it turned its focus to lifting our nation’s productivity capacity.

But the warnings were unheeded by this government and this Treasurer. The preparations were not made. The opportunities were lost and squandered. This government applauded itself as, year by year, it became more and more evident that climate change was not only having a discernible effect on the planet but having a particularly difficult effect on Australia—on our farmers, our rural towns, our water supplies and our ability to sustain agriculture. For this government, climate change was not an issue for the Australian government; it was only an issue for foreign governments. For this government, skills training was something that the states alone should worry about. And, of course, for this government, education was something that the states alone should worry about. Infrastructure, we were told, was fine—and, where it was not fine, it was something for the states alone to worry about.

Riding high on 15 years of economic expansion and on the strongest world economic environment in three decades, this government was content to collect the money coming in and to hand it out in a cynical pattern of electoral manipulation. It refused to look ahead. It refused to lead. It refused to ensure that when we did arrive at near full employment we would have the policies in place to ease our capacity constraints, to sustain the growth and skills of our workforce and to permit this long and hard-won expansion to continue for decades to come.

Instead, it was prepared to bask in the prosperity which resulted from earlier policy struggles, earlier hard reforms and, more recently, the mining boom. It was prepared to encourage employers to drive down wages and conditions as if the final goal and end point of all our work over the decades had been the destruction of Australian living standards, not their improvement. But it did not have the foresight, or it was not willing, to take the steps necessary to prepare us for the inevitable consequences of this long-term expansion. That is exactly where we are today. We knew where we were heading, and as shadow Treasurer I have been warning of this for the last 2½ years. Now I am told by the government that we are remiss in our duty in not objecting to parts of this budget—in not opposing the income tax cuts, in not opposing using what might otherwise have gone into the Future Fund as a new fund for higher education, in not opposing some more spending on child care, and in not opposing some new spending on road and rail infrastructure.

I want to make it perfectly clear today that I do not oppose those measures. I support them; I welcome them. They are not enough; they are very late. It was five minutes to midnight before this government woke, but, after all, it is a start on exactly what Labor has been demanding for at least the last three years. So we are not going to complain about the government’s quasi conversion to our agenda. But I do say this: after a decade of neglect, when it comes to the productive drivers of our economy, these measures are not nearly enough. If we are to secure future prosperity we must direct our efforts to expanding the productive capacities of the nation. This means lifting productivity so that our economy can grow faster for longer without fuelling inflation and higher interest rates. It means taking the handbrake off our economy by tackling the infrastructure bottlenecks which are frustrating supply, and it means investing in the skills and training of our people.

It means tax reform. I am delighted that the government have adopted Labor’s policy set out two budgets ago. They condemned us at the time we put the policy forward. They have adopted it in this budget, and they still condemn us for supporting initiatives we put forward two budgets ago. What a tangled mess they weave when they practise to deceive! The same can be said, in some ways, for education. Labor believes that Australia must aspire to become the most highly educated and skilled nation on earth. Getting there will take foresight that last week’s budget simply did not contain. The budget was an eleventh-hour bid by the Howard government to reclaim lost ground and to steal some of Labor’s clothes. No-one was fooled.

For Labor education is something that we believe in. It has been a core value for over 100 years. We believe it is an end in itself and we see it as a great generator of opportunities for individuals, but we also recognise its importance to boosting national productivity. I was astounded to hear the Prime Minister dismissing this idea as a ‘soulless and narrow form of national economic service’. It is a measure of how out of touch he is about the demands of a modern economy and the aspirations of Australians, who believe in educating themselves and their children to get ahead.

Labor also welcomes new assistance for apprentices in this budget, but the government’s commitment to three more Australian technical colleges will not address our skills crisis. By the government’s own admission, Australia will face a shortage of 240,000 skilled workers by 2016. And the Howard government’s response to this crisis, its Australian technical colleges, will still only produce their first qualified tradesperson in another three years and will have fewer than 10,000 students by 2010. So it is clear that the Howard government does not have a plan to deliver the skilled workers it needs right now, let alone the skilled workforce it needs for the future. In contrast, Labor’s plan is for the next decade and beyond, not just the next six months. It is led by our most recent policy to invest $2.5 billion in our schools to help build or upgrade trade facilities, to lift school retention rates and to help provide real career paths to trades and apprenticeships.

And that brings me to the Higher Education Endowment Fund. Additional funding for higher education in the budget is also welcome, but it comes after a decade of neglect which has seen government funding to universities fall from 0.9 per cent of GDP in 1996 to just 0.6 per cent today. The government’s Higher Education Endowment Fund has merit, but let us put it into perspective. With its initial funding it will provide $300 million per year to upgrade university facilities, spread across each of our 38 universities. Mr Howard’s claims that this is the education revolution we have been calling for are simply not matched by the amount of money that will be delivered.

The government’s endowment fund has also destroyed any claims that Labor’s actions have undermined the Future Fund’s ability to meet its target of funding public sector superannuation liabilities. For months the government has been railing against our plans to re-invest in our national communications infrastructure the $2.7 billion of Telstra sale proceeds that had been notionally allocated to the Future Fund. The Treasurer claimed that our investment for the future was ‘stealing from the future’. That is the kind of rhetoric you would expect to hear from a government that is short on vision and ambition when it comes to our country’s future. But the Treasurer’s credibility has been categorically undermined by the government’s own financing mechanism for its Higher Education Endowment Fund. By taking $5 billion from the surplus that had otherwise been committed to the Future Fund the government has reduced the funds available to meet future public sector superannuation liabilities.

That brings me to infrastructure. Not only does the budget fail to invest the bounty of recent times in building our skills capacity but also it fails to address capacity constraints in our infrastructure, which is frustrating supply. As I travel around Australia, businesses and people constantly tell me how unhappy they are with the state of our roads, our ports, transport, our water supplies and our broadband speeds. This government has ignored persistent calls from businesses and industry groups for infrastructure planning and development to be nationally coordinated. The government still does not have a national infrastructure coordination body, which Australia needs to better plan our infrastructure needs and to help overcome the current infrastructure shortfall—a shortfall estimated to be in the order of $90 billion according to the Business Council of Australia. After the budget, the Business council stated:

... the key issue still appears to be the lack of long-term integrated planning to drive investment to address ongoing bottlenecks.

Labor is absolutely committed to providing national political leadership on infrastructure.

Both Labor and many in the business community also share a clear and common objective of pursuing reforms that will take the handbrake off our economy and allow Australian businesses to compete in an increasingly competitive global economy, and we need all Australians—those in the boardroom and in the lounge room—playing their part if we are to have further economic reform. Ensuring that working families do not bear a disproportionate burden from these economic reforms is part and parcel of this process. Equally, Labor recognises that businesses need flexibility when it comes to managing their employees. Labor will not be going back to centralised wage fixing. After all, it was Labor which moved away from nearly a century of centralised, arbitrated wage fixation in this country. Labor’s industrial relations system is about balancing the flexibility needed by business with security needed by employees and their families. It will be underpinned by workplace level collective enterprise bargaining where employees and employers can directly bargain over employment conditions and productivity improvements. We believe this is a critical way to drive productivity at the enterprise level. Alternatively, individual employers and employees may agree on common-law individual contracts that will continue to provide upward flexibility from modernised awards. There is a strong debate over the future of industrial relations in this country, but Labor is determined to work through the detail of the transitional arrangements to ensure we get the balance right for business, working families and the nation.

Securing Australia’s long-term prosperity also requires decisive action on climate change—something that was missing from the budget. The budget had a thin green veneer, but it failed to map out a comprehensive plan to substantially reduce Australia’s greenhouse emissions and protect our economy. Instead of decisive action, all we had from Peter Costello and John Howard were predictable attempts to divide the Australian people by pitching the economy against the environment. Of course, the economic reality of the 21st century—which they simply fail to grasp—is that a strong economy is predicated on a healthy and sustainable environment. This government’s inaction on climate change is endangering our future prosperity.

There were some welcome initiatives in this budget, and Labor is happy to endorse them. But, if we are to turn the prosperity we now enjoy into long-term economic security for the nation, we need more than short-term politics. It is time that we recognise and address the underlying weaknesses of our economy, stemming from this government’s failure to address capacity constraints in our economy and to invest in the drivers of productivity. It is time we recognise the threat that climate change poses for our economy and take the steps necessary to protect our environment and secure future prosperity. It is time for a Labor vision. (Time expired)

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

Following the member for Lilley is always a treat. ‘Slogan Central’ is where he gets his inspiration from, and we certainly had a happy little trip through all parts of government activity—but no tax policy. To paraphrase the great Sir James Killen, my predecessor in the seat of Moreton, the Australian Labor Party would like to propose a tax on brains because, after all, they know they will all be entitled to a refund every year. That was something Killen said in this place once, and it is very apt after listening to the member for Lilley.

Listening to him lamenting 15 years of solid economic growth made me wonder if there was a recession he wants us to have somewhere in his kitbag. Woe betide if this man should ever be the Treasurer of Australia. He talked about the accord—the accord of a quarter of a century ago when the Hawke and Keating governments got together with the ACTU. Maybe the member for Batman was at that meeting. They worked out how to freeze wages—actually, they worked out how to suppress wages growth in this country because it would be good for the economy if the average worker copped it in the neck and in the hip pocket!—whilst this government has presided over a growth in the economy that has delivered dividends on a weekly basis into the pay packets of workers.

One of the true things about the government’s Work Choices legislation is that we want good, productive workers to trade their skills and experience and earn more money. The Labor Party is frightened that there will be a liberation in the workplace where Australian workers with ability, experience and credentials will be able to earn more money—and they are doing it now in an economy with some 20 per cent growth in wages underpinned by improvements in productivity. There is a lot of money circulating in the economy. Real estate agents in my electorate are reporting record quarter takes in turnover and sales of real estate in the southern suburbs of Brisbane. I have no doubt that people expect the sort of direction and underpinning that this government has provided in Appropriation Bill (No. 1) 2007-2008 we are debating tonight. While the Labor Party cannot announce a tax policy and look at the idea of lowering wages through an accord type mechanism—longing for the idea of a recession they might want to have—this government has cut tax for the fifth consecutive year. In this budget, Australian families will benefit from $31.5 billion in tax cuts and the 30 per cent tax threshold will increase from $25,001 to $30,001. In other words, it is not until you earn $30,001 that you pay tax of 30c in the dollar.

For those eligible for the senior Australian tax offset, this government has made sure that there is no tax on incomes up to $25,867 for single persons or $43,360 for couples. For seniors, we have also made a one-off $500 bonus for concession card holders and those receiving the utilities allowance. Both eligible members of a couple will receive this bonus. There is a one-off $1,000 bonus for those receiving carers payment and a one-off $600 for those receiving the carers allowance, to recognise their dedication in helping those who suffer from a disability.

I make those points because, whilst the economy is motoring along and whilst workers with skills and ability are receiving the reward in their pay packets, it is important that we look at those with fixed incomes and look at ways to assist them—for example, the additional money, through the Medicare rebate, for those who need access to dental services. The state government in Queensland runs a dental scheme. If you went to the QEII Hospital hoping to get your dentures fixed, you would be waiting for five, six, seven or eight years. It is a parlous set of circumstances. Nevertheless, there are those who are suffering health problems as a complication of dental related problems. The government wants to increase their access to dental services and will assist them with Medicare rebates, provided that the doctor signs off that they need access to that. For the 350,000 hearing-impaired Australians, there is an additional $70.7 million investment in hearing services.

This government is also increasing payments by $50 a fortnight to veterans with a disability who are on the special rate pension and to those on the intermediate rate pension by $25 a fortnight from July, just a couple of months away. I would like to see another increase, particularly for those veterans with a disability. The government have made this additional step possible because our strong economic management has delivered a dividend that we want to share right across our economy and our society. We are doubling the funeral benefit paid under the Veterans’ Entitlements Act from $1,000 to $2,000 and providing an extra three months in which war widows and war widowers can claim a war widow’s or war widower’s pension. We know that this in itself says to those who have served our country: ‘When our democracy is put under test, we value all that you have done—the nation building, the nation defending.’

Managing Australia’s $1.1 trillion economy is not something you can do because you used to be an academic at the Queensland University of Technology, as the member for Lilley was. I remember interviewing him 20-odd years ago when I was a journalist at Channel 7. There was not a lot of insight, but there was always a lot of Labor Party rhetoric. It actually requires experience and discipline—and, from our point of view, we on this side of the chamber are very determined that the continuation of the strong economic management that we have brought and the discipline and the experience that we have gained are assets that we can bring to the table as we manage the way forward for Australia. The way in which the government has cut taxes for small business and further reduced compliance costs from 1 July—businesses with a turnover of less than $75,000 will not need to register for GST—is proof of the way in which it wants to retreat from the way it impacts upon the engine room of our economy and to provide the necessary room for those businesses to manoeuvre.

We also want to make certain that people who want to educate themselves can take advantage of the further opportunities to gain additional skills, so they can trade their skills and experience for higher wages that are possible under the Work Choices legislation. We are providing eligible apprentices with a $500 voucher for course fees and a $1,000 tax exempt payment to help with living costs. The $800 Tools for Your Trade grant—which never existed and was never imagined by those opposite, who pretend to represent the workers of Australia—continues to be paid to tens of thousands of people who are starting an apprenticeship.

I have talked to small businesses in my electorate—electricians, plumbers, carpenters and builders have been renovating my house, so I have spoken to quite a few of them—and a number of them have told me about the difference it has made to young blokes as they start their trade to know that the government’s contribution—the taxpayers’ contribution—is there. Many of those businesses have continued to do what good tradespersons in the past have done for them and have actually added to that $800. Many award conditions often reflect the need to also make a contribution, but businesses always go a step further. Quite frankly, in the current climate, if an employer does not want to take further steps to reward good workers then they do not deserve to keep those workers. They will walk down the road and get a job somewhere else. We are seeing that in the economy today. For many businesses these measures, such as the $800 tool kit, the cutting of taxes and providing eligible apprentices with these vouchers to study and train, are the difference on the margins when it comes to deciding whether to invest in somebody new.

The member for Lilley, and indeed the opposition leader, lamented the fact that the government has continued its rollout of Australian technical colleges. I know the member for Deakin knows a little bit about Australian technical colleges, and so do I. There are now 20 of them. There will be 21, with the one on the Pilbara coast operating very soon, and the additional three that have been announced. They are all centres of excellence. While the Australian Labor Party promise to fund skills centres in every school—and teachers all around my electorate are just bending over with laughter at this proposal—they are promising a system of mediocrity, of one size fits all, giving everybody work experience. They are admirable aims on paper, but the detail of the proposal needs a lot of examination. The Australian government, with its Australian technical college program, is extending centres of excellence, providing opportunities for local businesses to take up the challenge to provide the leadership that we expect of them, to ensure that the education and training fits into the work requirements of these young people involved.

Many people in this place do not represent electorates which are used to school based apprenticeships—a concept, again, which never existed until this government came to office. It was a proposal by the former member for Goldstein, Dr David Kemp, the former Minister for Education, Training and Youth Affairs. It was a proposition that was taken up by the Queensland coalition government in 1997. In fact, at that time, former Senator Santoro was the Queensland Minister for Training and Industrial Relations, and former Liberal Party leader Bob Quinn was the Minister for Education in Queensland. They wholly adopted the Australian government program for school based apprenticeships. The reason I tell this story is that, in Queensland, we are more experienced with school based apprenticeships—that is, year 11 and year 12 students contesting their workplace responsibilities, contesting their requirements to train at certificate III-and-above levels when it comes to training and still contesting their higher education certificate.

I know that I am incurring your wrath, Mr Deputy Speaker Barresi, and no doubt that of the member for Hotham, because, as two Victorians, you are both very proud of the way that the Victorian system operates. Victoria is now coming second to Queensland in providing school based apprenticeships. Victoria has also realised that there is a very real need to give kids the opportunity to study a trade while they are still at school.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

Mr Crean interjecting

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

I will acknowledge the interruption from the member for Hotham and also say that school based apprenticeships never existed until this government came to office. We have the Leader of the Opposition trying to pretend to get in on a bit of the action 10 years down the track. Every schoolteacher in my electorate who has spoken to me about this issue has said: ‘I’ve got a question: how are you going to find 2½ thousand extra plumbing teachers? How are you going to find 2½ thousand extra carpentry teachers? How are you going to find 2½ thousand extra electrical teachers and mechanical teachers? We all know from the way that the economy is motoring along—particularly in a state like Queensland with the mining industry and its support services that are generating a lot of activity and, of course, with the building industry as people leave states like Victoria and flood the north of the Tweed—that there we have a genuine shortage of people with trade skills. These people are not going to be available for the classrooms. They are going to be available at the work sites, being productive tax-paying members of our economy.’ The Leader of the Opposition is off on a veneer-thick tangent here, with no detail to back his rhetoric. It is doomed to failure. That is a great pity because the enormous vote of money that he is putting forward for this has merit. The reality is that it is actually what the Australian Education Union want, and that is for the teachers union to be in complete control of the destiny of the young people in this country. The Australian technical college program is all about liberating them.

On top of that, the Australian government, through Minister Bishop, is now providing an opportunity for teachers to expand their own personal kinds of excellence. One of the problems we have with teaching in Australia is that the very best teachers are paid at the same rate as the very worst teachers. A teacher has to leave the classroom to get better pay. The way the system operates in this country is enormously unfair to a teacher who works hard at their job, who prepares for their lessons, who arrives at school, say, an hour before class starts and who puts in a lot of effort so that at a minute past nine the kids are motoring along on their studies. But working in the classroom next to them is somebody who arrives at school at a minute to nine and who has their breakfast during the first half-hour of a class. You cannot say this does not happen; it does happen. Plenty of teachers have talked to me about it; they know it happens.

The budget contains a measure that says to teachers: ‘If you want to improve your skills, we’ll pay you a bonus’—a performance bonus proposal which is being rejected by one state government after another, I must say. However, the Queensland government has announced—no doubt using Commonwealth funds in a perverted way—another raft of buying out the worst teachers. The plan from the Queensland Minister for Education, Training and the Arts, Mr Welford, is that the poorest performing teachers in Queensland will have another opportunity to get a $50,000 bonus to leave teaching while the top performers will get absolutely nothing to stay. As a government, we are determined to pay performance bonus payments to teachers who want to put in the effort to improve their skills. We want to see the best teachers getting the opportunity to earn a better wage. This is not about time served; this is about competence and ability. We want the best teachers to stay in the classroom. We want the best teachers to offer their insight and experience in a positive and constructive way and to be paid good money for it.

If you listen to the state Labor governments or the federal Labor opposition, you will hear them mouthing the same rhetoric from the Australian education unions, which is that all teachers must be paid the same—good and bad teachers must all get paid the same. That is no way to run a school system. Is it any wonder that so many teachers are leaving the classroom? Is it any wonder that so many teachers are moving on to other positions? Yet you do not hear a peep from those opposite about a better pay rise for good teachers; it is simply a one-size-fits-all approach. Even tonight we heard the member for Lilley lamenting the need to maybe crash the economy and slow it down. ‘Slow down these 15 years of growth’ is what he said tonight. He laments the idea that maybe we need to slow things down.

I want to talk for a moment or two about a couple of specific items in the electorate of Moreton that have been well served by the government’s strong economic management. One of the big issues has been the heavy interstate vehicles—B-double trucks in the main—that travel through my electorate as a rat-run short cut between the Ipswich Motorway and the Gateway Motorway. These trucks use the Kessels Road continuum. It has been called the Griffith arterial corridor and the Brisbane urban corridor, but the locals know it as Granard Road, Riawena Road, Kessels Road and Mount Gravatt-Capalaba Road.

The state government has recently banned trucks above 4½ tonnes from travelling on that route, unless they are local trucks. This is a campaign success for me. It has taken 10 years for the state government to finally yield to community pressure and to the pressure that I have been applying. I am pleased about that. But what is of critical concern to me is that, while the government has announced in recent months the $2.3 billion Goodna bypass—which will hook trucks on the Warrego and Cunningham highways straight onto the Logan Motorway, thereby avoiding the electorate of Moreton—the federal Labor Party still has on its books a policy to widen the existing Ipswich Road corridor, starting at Granard Road, Rocklea, and heading west. Labor’s plan is very simple. It will continue to cement into place forever the Kessels Road corridor as the route for big trucks.

The federal government has spent $1.7 million on a night-time truck trial. It has taken the toll off the southern Brisbane bypass—the Logan and Gateway motorways—at night. For just $1.7 million over the last two years, there have been 221,000 fewer trucks on local roads between 10 at night and five in the morning. This government has also spent $14.3 million to upgrade the intersection at Granard Road and the Ipswich Motorway. It has constructed a new overpass and also fixed up the lane alignment. It has done all of this work; yet, if there is a change of government, the federal Labor Party will turn all of that around on its ear: they will waste all of that money completely and widen the Ipswich Motorway, starting at Rocklea and heading west. I would be delighted to say, ‘Well done,’ if they were to have any sense and cancel this policy, but they will not. They will listen to the member for Oxley and a few other misguided members on the other side. I call on the Australian Labor Party to cancel that policy. If they do not, people in my electorate will be consigned to heavy trucks being back on the roads, after campaigning for 10 years to get rid of this problem.

I also know that people in my local area are suffering from a failure to properly invest in water infrastructure. There is no point in banging on too long about the fact that decisions that should have been taken six years ago were not taken. I am pleased the state government is now putting in water pipelines that are going to link various dams and water storage facilities around south-east Queensland so we can try and even out the flow. I am concerned, though, that the Wolffdene dam was never built back in the late eighties or early nineties. The member for Griffith was in the cabinet office when he told Wayne Goss, ‘Don’t build the dam,’ and he will have to carry responsibility for that decision.

Equally, I am concerned that someone in authority like Kerry Rea, the Brisbane city councillor for Holland Park ward, who pretends that she wants to be a member in this place, told the council chamber some six years ago that even if it did not rain for five or six years we would still have plenty of water. She was wrong, and she is no doubt as misguided still today.

The point I make is that this government has put a national water policy in place, $10 billion for the national plan for water security, and yet locally it can also do things such as put in $49,000 so that Griffith University can use a recirculating water system to cool lasers and other scientific equipment in science labs. We are working with local communities to make a difference while looking at the national picture. Strong economic management has delivered on this. The dividends are being spread far and wide, and I congratulate the Treasurer on his ability, his prowess and his vision for the future.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

I rise to support the amendment moved by the member for Melbourne to the Appropriation Bill (No. 1) 2007-2008. This is a budget for the short-term survival of a desperate government. It is not a budget for the long-term future of the nation. The generosity contained in this budget is built on the proceeds of the resources boom and in particular China’s demand for those resources. It is also built on underspends and recycled broken promises by the government. The childcare rebate is a classic example. This is not a new initiative; it simply makes good a promise given before the last election but broken immediately after they were elected.

There are some good aspects in the budget, but it is a budget that continues to squander the resources boom and the opportunities that that presents for this nation. I welcome the Future Fund. I noticed the other day that the Treasurer said Labor and its leader did not have the wit to think of it. I remind the House that I in fact proposed such a fund after the 2004 budget. At the time that idea was ridiculed by both the Treasurer and the Prime Minister. So we welcome the government’s adoption of Labor policy, but we suggested back in 2004—and we continue to believe this—that the earnings of the fund should be used to pay for things other than the unfunded superannuation liabilities of Commonwealth public servants.

Why should everyone’s surplus—that is, the nation’s savings—just go to save the superannuation liabilities of Commonwealth public servants? Why not also invest the earnings in the drivers of the economy: in innovation, in infrastructure and in skills development? These are things that can return to the nation better than simply holding it in the bank. We were told by both the Treasurer and the person in charge of this fund, Mr David Murray, that such a policy would be irresponsible—that this would be raiding the Future Fund. But now, in this budget, we have a future fund for education, not just for Commonwealth public servants’ superannuation liabilities. And it is supposed to be a brilliant new idea by the Treasurer. Or was it the Minister for Education, Science and Training? Or was it David Murray himself? They all seem to want to claim credit for this fund, but they are claiming credit for what they previously argued was irresponsible.

As to the impact of this fund, I just point out that this comes after 11 years of the government disinvesting in the nation’s education and training. Despite the fund, funding in education as a proportion of GDP is expected to decline to 1.6 per cent next year from two per cent back in 1995-96, when Labor left office. So this fund is not even enough to make up the difference, and Australia’s overall investment in education, 5.8 per cent of GDP, is well behind 17 other OECD countries.

On the question of productivity—because much has been claimed by the government through its Work Choices proposals: that these will lift productivity—the reality is that the government has overseen a dramatic fall in labour productivity in this nation. In fact the budget reveals that, for total factor productivity, productivity growth will decline to zero by the end of the next financial year. How can we talk about sustaining prosperity when we are projecting zero productivity growth? And yet the government goes on—rabbits on—about how Work Choices is going to lift productivity in the nation. The budget papers put the lie to that.

The government claims that Work Choices will increase productivity, yet there is no evidence to back it up. Now, according to the government, the policy—the government dare not speak its name—will lift the government’s poor productivity performance. Instead of spending to get the policy right, it is spending on an advertising campaign to pretend that what it has created does not exist.

We know that Work Choices is an unfair system. It was designed to reweight the balance in favour of employers, not employees. It in fact offers no choice if the employer refuses to bargain in good faith. The government recently acknowledged the unfairness of the system by introducing a no disadvantage test, something they had previously promised but, when they won control of the Senate, abandoned. So why should they be believed now? Why, when they make this promise, should they be believed when they campaigned on the basis of it, had the opportunity to implement it, then ditched it? The reality is that the so-called new no disadvantage test does not apply to existing AWAs, and the government still have not developed what this new fairness test is supposed to involve.

In addition to its failing the fairness test, there is no economic case for the government’s Work Choices legislation. The government has no data, no figures and no backup to its claim that the legislation is good for the economy. As the Canberra Times, in its editorial of 3 May, said:

… claims that AWAs will help boost productivity cannot be tested because the Government has not undertaken any economic analysis to back such assertions.

The reality is that to manage the economy well the government of the day must be able to manage wages policy. It must manage it for fairness, for interest rate pressure and for inflationary pressure. It also must manage it to drive productivity. Such management was the experience and legacy of Labor’s period in office. The 1983 to 1986 period, which included numerous accords, laid the basis for initially lowering and then locking in low inflation in this country. That period also saw centralised wage fixing replaced by enterprise based collective bargaining which was linked to productivity improvement. That system in turn saw the biggest step up in productivity this nation has ever experienced. It was developed in cooperation with the trade union movement and the business community, and that cooperation produced big dividends for the economy through greater productivity. Between 1991 and 1996, annual growth in labour productivity jumped from 1.9 per cent to 2.5 per cent.

That big upward trend continued for four years with the change of government. Why? Because the government inherited our system and could not change it. They tried to change it. You might remember the attempts at the new waves of industrial relations by Peter Reith. Eventually they did change it, in two waves of Peter Reith’s reforms. And the result? Between 2000 and 2005, annual growth in labour productivity plummeted from 3.1 per cent to 1.7 per cent. It almost halved. When Labor left office our multifactor productivity was growing at an average annual rate of 2.9 per cent. Compare that to the zero that these budget papers forecast. What are the implications of this? The Productivity Commission has estimated that if productivity growth could have been maintained at the levels that we created in the 1990s the decline due to the ageing of the population could largely be contained. So Labor had the intergenerational solution; this government simply blew it.

On the question of how good AWAs are compared to collective agreements, compare the New Zealand result with ours. They went down the route of individual contracts and AWAs and got a far lesser result in productivity through the nineties than we did with collective agreements. It is not just a case of comparing countries. Have a look at some of the sectors of the economy that are involved. I recently visited the Bowen Basin in Queensland where coal production is booming. Yes, there are difficulties with capacity constraints and the exports of that coal, but productivity growth has been almost three per cent higher in the Queensland coal industry under collective agreements than in the AWA iron ore industry in WA and the gold-mining industry. For iron ore, there has been productivity of 0.3 per cent and for the gold industry it is actually negative. That is the comparison. Collective agreements properly developed can actually produce better productivity for the economy.

Labor will not be going back to the centralised wage-fixing system. After all, we broke it. We were the ones who collapsed it and said that you had to go with the enterprise focus—but, significantly, enterprise focus linked to productivity. Nothing the government has done in workplace relations can match it. Yes, there has to be flexibility within the system, but there also has to be fairness. Yes, we can accommodate individual flexibility so long as it does not erode people’s working standards—flexibility upwards, not downwards. Labor’s approach to workplace relations will restore genuine choice underpinned by fairness and flexibility to achieve better productivity for the nation.

On the skills question, I welcome the commitment that was made by the Leader of the Opposition in his response last Thursday week. In relation to training in schools—and I am sorry that the member for Moreton has gone out of this place because, quite frankly, there is something in his contribution that needs to be corrected for the record—our commitment is to embrace that training occurs in all 2,650 high schools, not just in 28 of them. That is the government’s approach. We have a commitment to targeting nearly a million students, not just 8,500 of them. The member for Moreton says there are no details of the program that we have announced. He should go back and look at the fact that we commenced this program back in 1994. It was done under Working Nation and I was the minister at the time. We established the Australian Student Traineeship Foundation, an initiative that was built on a proposal that came from the Dusseldorp Skills Forum, built on their very successful track model—a model that had a 90 per cent success rate in the placement of students in schools, whether they went on into further education or into jobs.

We also developed Netforce. As with the ASTF, it was set up to ensure relevant training programs were developed in close cooperation with industry, matching their demand needs with the realism of the supply. After just one year the number of young people looking for work fell by 14 per cent. We brought the long-term unemployment figure for 20- to 24-year-olds down by 30 per cent. In the 12 months to January 1996—just before we lost office—we saw the biggest fall in unemployment for 15- to 19-year-olds on record.

Then the government came to office. The member for Moreton mentioned the then member for Goldstein, who took over from me as employment minister. He kept the program. In 1997 this program had 38,000 students. In 2000 it had 60,000 students and almost 80,000 in 2002. It peaked in 2005 with 110,000 students. But in 2001 the government fiddled with the program. It abolished the foundation and, as a result, structured work placements fell to 65,000 in 2006. It almost halved. Nothing happened for three years after it abolished this program. Then we saw declining numbers. The government panicked just before the last election and announced a you-beaut solution: the 25 technical colleges. And the fact is only five of them have been completed. And now, as announced in the budget, it is going to construct another three.

I say to the House: look at the track record; look at what was proven; look at what worked; look at what had bipartisan support for a period of time. But then the government went down the route of simply looking for cost savings. You lost sight of where the successful programs were. You ditched what was a successful program. Labor is going to build on it because it is the right thing to do for the kids of this nation. It is the right thing to do for the productive capacity of the nation.

Skills shortages have a crippling impact on our regions. That is why, again under the Working Nation program, we established area consultative committees to allow skills audits in the regions, so that we could understand at the local level what the real demands were. These have been stripped out. The government have not utilised the area consultative committees in the way we did. In fact, they do not believe in empowering local communities; they simply believe in the pork-barrel approach. We know that there have been significant underspends in the regional programs—underspends that the budget says will be carried on to this year. Watch this space. This will simply be an addition to the war-chest mentality that the government are developing to fund their attempt at re-election this year.

This program has gone through the scrutiny of the parliament. It has recommended new initiatives to require greater accountability and transparency. The government has ignored all of that. The government has ignored initiatives that really empower local communities. Labor would break down the budget by regions. The member for McMillan is in the House. McMillan would be able to identify how much money was being spent in its region on health, training and schools so that it could compare itself with other regions. It is that spatial comparison that regions have to be able to get better information on. That is what the budget should be opened up to do. Then we should be looking at innovative programs within the mainstream portfolios, whereby realistic, creative proposals for better service delivery can be developed by those regional bodies. That is what Labor will do. That is what this budget has failed to do.

The other thing that it has failed to do is to connect the nation. It is pretty interesting. All of the evidence shows that the regions that have access to fast-speed broadband are the ones that go ahead. Those that do not have access get left behind. This budget leaves them behind. Through our fibre-to-the-node proposal, Labor will ensure no region misses out on the vital network. That is creative use of the budget, but this government ignores it. It ignores it at its peril, but, unfortunately, it is the regions that will suffer.

Earlier I spoke about our appalling trade performance, and I will not go over those figures. Suffice to say that, despite one of the largest resource booms in history, this government has recorded the longest string of trade deficits in our history—five years of them. Labor achieved strong and sustained export growth because we invested in infrastructure, skills, innovation and productivity. We succeeded in trade negotiations by focusing on the multilateral level, not on this bilateral fetish. We focused on service exports. Not only did we double the overall rate of export growth that this government has achieved; in the case of services we got annual growth of 9.3 per cent in services. That has been slowed under this government to 2.4 per cent. The government has also cut the Export Market Development Grants Scheme programs, which were trade assistance mechanisms to help us grow our exporters—the numbers of them and the ways in which they could get into markets. Why would you scrap a proposal that was a very successful multiplier effect, with multiples of between 12 and 18 times? This government has scrapped the program.

They are examples of where this government has squandered this nation’s opportunities—where it has let the nation down. Budgets are about choices, and this budget offered plenty of choices because of the prosperity that, in part, Labor laid the basis for and this government has continued to oversee. But the reality is that those opportunities have been squandered. (Time expired)

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

Whilst I cannot and do not agree with the content of the member for Hotham’s address to the House in this budget response, I do recognise the sincerity of his views and the experience he brings to the table—and his passion for apprenticeships is undeniable.

In this budget reply speech I am brought back to the last week of my life and the passing of Mrs Joyce Marshall. She was the wife of Len ‘Gunner’ Marshall. She was called ‘Aunty Joyce’ around our community. Her son Greg Marshall and his wife, Sarah, Kate and James from the UK, her sister Brenda and Brenda’s husband, Graham O’Brien, and Heath and Reagan were all at her funeral. There was a poignant moment when Greg Marshall looked at his mum’s casket and said, ‘Mum, you’re out of your misery.’ This woman suffered from dementia.

A very important part of the experience of the budget is how it interacts with local communities. This particular woman, Aunty Joyce, was part of the Bush Church Aid Society, taking the gospel right across the country. She had a 45-year badge with the fire brigade auxiliary, was a member for life of the Pakenham football and netball clubs and of the St James Anglican Church. On the day she died she had not resigned from any affiliate organisation. One not without the other, Aunty Joyce Marshall was one of the golden threads, one of the unsung heroes that binds community, family, township and district. As they sang the 23rd Psalm, I could not help but look around the room and see her sisters-in-law, Alma, Norma and Aunty Thel, and her brother, Stan, who had just given a rather remarkable talk about this much loved woman. They sang the last verse with the line, ‘Surely goodness and mercy shall follow me all the days of my life,’ and they did with Aunty Joyce Marshall.

People have suffered with dementia as Aunty Joyce did all the way to the federal parliament. Dementia is an issue that affects practically every family you can touch from Tasmania to the Northern Territory and from Brisbane to Perth. I am reminded of my father, who, in his latter years, also suffered from dementia. The issue that the federal government has to address, as I said, is its interaction with the community. While in the church, I looked around and saw how that community had come together to celebrate the life of an individual. We know that across the nation tonight people are dealing with someone with dementia in their household or they may be dealing with the need for a dementia unit in their community. They may even be dealing with loved ones much younger than they ever thought could be affected. I stood in my own community and remembered Aunty Joyce. I know that the member for Rankin has Aunty Joyces in his electorate, the member for McEwen has Aunty Joyces in her electorate and—being the age we are—we grew up with these people who are, as I said, not the heroes who are talked about every day. They perhaps do not get the Queen’s honours, but they get great community honours and they are greatly loved by their communities and their families. Every one of us knows one of those people in our generation who were so much a part of small communities, who supported their husbands in everything that they did, who supported their kids when they went to the footy and who were there for the tragedies of floods and fires.

Whilst I am responding to the budget of the nation, I recognise that the money that the federal government spends in every electorate right across the nation on the issue of dementia is important because it is important to families who have to face an ageing population. In my electorate, as I will come to later on, it is a little larger an issue than in most rural electorates across Australia, even though I extend from out of Melbourne. Dementia is a growing health and social issue. That is why, as local members, we try to be the bridge that goes from the electorate to the executive, where we pass on the experiences we have of the needs in our electorates and respond to our communities, because we are out there and we are faced with these situations every day. We see how the families struggle with this debilitating disease and we wonder how, into the future, we as a nation can address ourselves to these issues in a changing world that is, for someone with dementia, locked away in time. They are locked in a place they cannot escape from. As Greg Marshall said, only in death was his mother released.

Although only about one per cent of people aged 65 show symptoms of dementia, this increases to around 25 per cent in people aged over 85. This government currently invests more than $2.6 billion per year in dementia care, research and support. In recognition of its significance, dementia has been made an Australian government national health priority. This includes a total of $225 million to provide 2,000 Extended Aged Care at Home—EACH—dementia packages over four years. There are now a number of strands for looking after people with dementia with not only residential care, ageing in place care and the care that communities can give in the early stages but also direct in-home care to help families care for an individual in their home for as long as possible.

All of us are supporters of investment in aged care. There is not a member of the House of Representatives who does not have this firmly on their plate as they move around their electorate. I am pleased, through the representations that I have talked about, to be that bridge from the electorate to the executive—to be that bridge from the state to the parliament. Rose Lodge in Wonthaggi was a successful recipient in the 2006 aged-care funding round of a further 20 beds to help meet its increase in demand for dementia-specific areas. It will use that bed allocation for a specific dementia wing. As I mentioned, the other option for patients suffering dementia in McMillan—but this accords with the nation—is through organisations like Baptcare, who provide support to older Australians though in-home care programs. Baptcare, with whom I had a meeting recently, recognise the dementia demand and have applied in the 2007 aged-care funding round for an increase in their dementia community package programs in the Gippsland region.

The facts about the ageing of the Australian community are this: by 2051 Australia’s population is expected to reach 28 million, an increase of 37 per cent from today. Over the same time the number of people over 55 is expected to increase by 113 per cent from five million to around 10.7 million. The change will be even more marked among people aged 85 and over. At present this group represent about 1.4 per cent of the population. By 2051 they will account for between six per cent and nine per cent of the population.

My electorate is a snapshot of the ageing population figure—15.4 per cent of the population is in the 65 years and over bracket. That is higher than the average for Victorian rural electorates. Within the electorate of McMillan itself the figure varies widely, with the highest proportion of the 65-plus age group being in the South Gippsland region, in the south of my electorate, where the proportion is over 16 per cent. This is where the Rose Lodge beds went. McMillan has 24 aged-care services. Today that is 1,227 beds. In 1996, when the Howard government came to office, there were only 776 beds. The investment in aged care by the Howard government has been phenomenal. I do not like to use that word, but it has been. In expanding the outlays that we have, the millions of dollars poured into aged care, this government has made better the lives of families, of those caring for aged persons in their homes, of those caring for dementia patients in their homes and of those caring for them in fixed residential units.

This year’s budget, after all the outlays, continues the strong commitment to supporting older Australians. It contains more than $1.7 billion in new funding for further improvements to our aged-care system. I know we can always do more. If anything comes out of this address, I know this: we will always be looking for avenues where the federal government can do more to assist families, do more to assist people who need ageing support. Securing the future of aged care for Australians, this package will support the financial investment needed by the aged-care industry so that it can continue to grow and meet the demands of Australia’s ageing population.

It is incumbent upon me to consider how aged care particularly affects local communities—small communities like Toora and Foster. The nursing home in Toora is an older facility that needs support. One of the things that I will be drawing to my government’s attention is the fact that we need to put more money into those smaller communities, because they are the backbone and the lifeblood—they are some of the greatest carers in the world of older people. I have seen it firsthand. You have to be somebody pretty special, you know, to care for those people who have reached a great age. And their great sin is that they are old. They are not sick; they are old. Yet I see communities responding—in Foster, in Toora, in Pakenham, in Warragul, in Moe, in Trafalgar and in Wonthaggi. I watch every one of them and I see the care, the concern, the love and the sincerity that they are pouring into the care of those older people. And they know that there is somebody there caring for them, who will be there when they put their hands up. Even at the 100th birthday that I attended to read out the notices the other day here was this 100-year-old woman, bright as a button, cracking jokes in front of 300 of her family and friends who were all gathered. These are community events that we can only dream about here, but in which we can have some influence with the moneys that we provide.

All is not well in the whole of McMillan. There are places where we can do more and where we need to do more. If there is one thing we have in common across all our rural electorates—from Tasmania to Darwin, from the Northern Territory to Queensland and across to the west—it is a doctor shortage. I am no different from anybody else in my seat of McMillan. Even in areas where there is not a shortage as perceived by government bodies, there is, because we have an ageing population in our doctors as well. Many of them are due for retirement, particularly rural doctors, who have particular skills that affect local areas.

Though the budget includes new funding of $274 million to improve health services and equipment available to meet the healthcare needs of people living in rural and remote areas, the budget recognises that rural and remote areas continue to experience a shortage of GPs due to difficulties not only in recruiting them but also in retaining them. I said this shortage is not foreign to my electorate of McMillan. The Corner Inlet community, which includes the towns of Foster, Toora, Tarwin Lower, Fish Creek and Buffalo, has been experiencing a doctor shortage for over 12 months. Even though this community is not a declared area of workforce shortage, it has obtained a preliminary assessment of district workforce shortage. It is now seeking to extend that, and I have to talk to the minister about that. The Foster and Toora Medical Centre wrote to me recently and said:

I am writing to seek your support to help resolve our current crisis in medical workforce.

…            …            …

We urgently need to not only to continue our current classification as a District of Workforce Shortage but will also request that this classification is extended from one to two positions at our medical centre.

A recent … (Rural Workforce Agency of Victoria) forum has shown that 34.4% of the rural GP workforce are IMGs (International Medical Graduates) with 60% of new entrants since 2003 also being IMGs.

After some two years of active recruitment activities with no return, we see the only option in replacing our GP workforce—

in South Gippsland—

is to seek urgent access to IMGs to resolve our current crises.

Thus it is essential that we retain our District of Workforce classification and in recognition of our worsening workforce situation the number of allocated places needs to be expanded to at least two positions.

Other startling statistics show that 41% of Victorian GP’s are aged 50 and over (75% of our principal doctors are over the age of 44 for our clinic) and in the near future, we are expected to take a much larger role in undergraduate training with the local new Monash University Gippsland Medical Campus—

which we have been heavily involved in. They went on to say:

Furthermore, only 23% of the Victorian GP workforce are procedural GPs, the very skills that are required for our clinic’s type of diverse service.

It is not news to any of you that we have a doctor shortage. I know that in Tasmania people are working hard to get doctors to go to Tassie, and people in central New South Wales are working hard to retain their doctors. But there has to be some flexibility from government in provider numbers for GPs who go into country areas to provide a service—especially in areas where they have influxes of tourists in the summertime, which really adds enormous pressure. Some of the activities of those tourists put a bit more pressure on, too; some of the habits are fairly difficult to handle by local GPs, but they do it well.

If we are going to be able to provide the services to them and help recognise that, we have got to send a message that there is not a country-city divide. There are people who live in electorates far greater in size than the electorate of McMillan, and there is an expectation that they will have the services that people have in a suburb of Melbourne—let us say Heathmont—and that they are going to have those exact same services anywhere in Tasmania, remote New South Wales, remote Western Australia, remote Northern Territory or remote Queensland. While governments strive to provide those services, we have to come up with new and innovative ways. Yes, I do want new education facilities for doctors at the Leongatha hospital, and I will work towards that. Yes, we do want new educational facilities coming out of Monash University. I finish by saying this: for all members of parliament in this place there is always more to do, and it is up to us to progress that.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

This budget contains more elements of practical reform than most of the previous 11 Costello budgets. Ordinarily that sort of statement would get an opposition frontbencher in trouble, but it is not really a very big statement because previous Costello budgets have contained precious little reform, and the truth is that something is better than nothing. But under the Howard government, the reform stakes have failed to graduate beyond a class 1 midweek handicap. And if you think that a class 1 is high, it is in fact the lowest of the classes. There is also a class 2, 3, 4, 5 and 6 and then the horses graduate, if they are good enough, to a listed race or to a group 3 after that, then a group 2 or a group 1 race. Certainly this Treasurer is not competing in a group 1 race; he is back in the midweeks in the class 1 handicap.

However, this budget does contain some worthwhile reforms. For example, it has increased childcare benefit, which is a good measure both on social justice grounds and in order to lift workforce participation. All of the international and national research shows that if you increase childcare benefits to lower income earners—and that is to whom the childcare benefit is directed—then you will get a greater response in workforce participation by mothers returning to work or increasing their hours than you will if you target those benefits at higher income earners. So let us give credit where credit is due. It is a good measure. It is small, but it is welcome.

There is extra funding for remedial literacy and numeracy programs, and that is also good social policy and good economic policy. But I would add that the best way of delivering literacy and numeracy programs is through our schools rather than through the system that is proposed in this budget. Nevertheless, any benefit that goes to the disadvantaged young people in our community is certainly welcome.

In the area of the taxation, increasing the low-income tax offset from $600 to $750 per annum has the effect of increasing the tax-free threshold for low-income earners from $10,000 to $11,000 and I acknowledge that in the previous budget the low-income tax offset was increased from $235 to $600. The effect of all that is that it improves the incentives for people on low incomes to move from welfare to work by providing a substantially increased tax-free threshold for those earners and therefore stripping away 15 percentage points from effective marginal tax rates. They get to keep 15c more of every extra dollar earned. That is a good thing. We acknowledge that. There is another very good reason for acknowledging it and that is that it has been Labor Party policy for some considerable time. But if the government wants to pick up our good policies and take them as its own, that is the democracy in which we live and we will give credit where credit is due.

Also, increasing the income threshold at which the 30c rate cuts in from $25,000 to $30,000 is another area in which work incentives are improved because that cuts, again, 15c from the effective marginal tax rate over that income range, leaving people who are moving from a low-income job perhaps into overtime or extra hours another 15c in the dollar better off. So that is a good thing. The government has increased the threshold for the 40c rate but that has more to do with politics than it does with anything else. The reason I say that is that Access Economics produces a budget monitor just before the annual budget each year and it showed a huge spike in taxpayers earning incomes just beneath that threshold for the 40c rate. The government did not want those people swamping across the 40c rate in an election year so it increased the threshold. It was politically motivated, but I am sure it is very welcome as far as those taxpayers are concerned.

Beyond those few measures, it is difficult to think of a large number of other reforms contained in this budget. Labor does welcome the $5 billion that has been set aside for a Higher Education Endowment Fund. That will generate incomes of several hundreds of millions of dollars which will be used, we expect, to improve the quality of higher education in this country—something that Labor has been calling for for 11 years. I record here again my annoyance and frustration at government frontbenchers claiming time and time again that Labor frontbenchers and backbenchers are snobs for suggesting that we should invest more in higher education. It is a strange thing, an election year—the conversion on the road to Damascus has been quite spectacular. Suddenly, after 11 years, the government has found university education, and we may not hear any more about Labor’s alleged snobbery in arguing for increases in funding for higher education, an area of our society and economy that has been badly neglected. But again, we give credit where credit is due and we welcome that initiative.

That brings me to some of the initiatives that are within my portfolio of small business, and I am glad to see the Minister for Small Business and Tourism here tonight on chamber duty. The government has made a number of changes in relation to small business, and Labor will be supporting each and every one of those. An area where the government has time and time again ridiculed Labor policy is in the area of simplifying the business activity statement bookkeeping requirements.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

It is your unfair dismissals; that is the thing.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Treasurer Costello has done that for five years and when Labor leader Kevin Rudd in his National Press Club speech unveiled BAS Easy, which is a variation of an earlier ratio method that I developed, the Treasurer condemned that too. In an article in the Australian Financial Review titled ‘Costello sour on BAS sweetener’ it was reported that the Treasurer thought this was not worthy of support. Yet in the budget he has pretended to extend the simplified accounting method to a range of businesses and has actually said that any business that has a mixture of GST and non-GST sales and/or GST and non-GST purchases can now go to the tax office and ask the tax office to issue it a ratio. That sounds like the ratio method to me; that sounds like BAS Easy to me. But the Treasurer, just two weeks before the budget, had been reported in the newspaper as being sour on a BAS sweetener. So it does raise this question: is this just another example of political expediency? If this government were to be re-elected—and heaven forbid that—will the Treasurer instruct the tax office to issue a completely unfavourable ratio to any such business that applies, therefore relegating it back to the position of having to do all of the BAS bookkeeping?

Surveys conducted by MYOB identify the bookkeeping requirements of the BAS, the business activity statement, as the No. 1 bugbear of small business. The minister for small business interjected earlier saying, ‘The big issue is unfair dismissals.’ It is strange that small business report consistently that its No. 1 bugbear is the bookkeeping requirements of doing the BAS. Let us humanise this. This is often work that is done by the spouse of a tradesman—a woman who has parenting obligations as well. She is home on weekends doing hour after hour of BAS bookkeeping. And what does this government do? It completely dismisses—

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Give an example!

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Ah! Okay. That is very good. The minister has just asked me to give an example. I give an example from Glen Mobbs of Tully Motel, who has written to the minister. He concludes by saying: ‘Fran, frankly and honestly the government driven paperwork and attendant regulations and laws are out of control and growing. Somebody please help.’

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

That is only one!

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

She said, ‘Give me an example,’ and I have given her an example. Now she says that is only one. There is plenty of time, Minister, to give plenty more.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Fran Bailey interjecting

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

You certainly did lead with your chin on that one. I will go further, because the Tully Motel proprietor, in desperation, wrote to the tax office in these terms:

Dear Sirs

We recently received a notice of change to our PAYG withholding cycle, copy enclosed. I should like to take this opportunity to appeal against this change for the following and very simple reason.

I conduct all of the administrative activities for our small business.

That is a very typical situation. He went on to state:

There is no-one else available.

Why? Because it is a small business. He went on:

At the same time I also engage in maintenance on the property, re-furbishing and repainting etc and also spend considerable time in the “front office” welcoming guests to our motel and, in general, seeking to do what small business people constantly strive to achieve, i.e. improving our offer.

We also employ around 10 people in the business.

Since we bought the business I have noticed that, rather than reducing the time that state and federal government demand of me, the time commitment is increasing. For example, where we used to, not very long ago, subscribe to one super fund I now have to administer contributions to five.

In the budget reply, Labor leader Kevin Rudd laid out our plan that small businesses will only have to pay the superannuation guarantee one time into one place and that we will ensure that under super choice the money will then flow to the appropriate superannuation fund, elected by the employee. That was opposed by the Minister for Small Business and Tourism and opposed by the Treasurer, and the small business minister says, ‘Give me an example of anyone who’s upset.’ This is the small business minister who in this parliament said small business unanimously supports the Work Choices legislation. She has talked to 1.9 million small businesses around Australia and they are unanimously supporting Work Choices! Another MYOB survey indicated that 44 per cent of small businesses are dissatisfied with the performance of the minister and dissatisfied with the performance of the government—and the minister claims in the parliament that every one of the 1.9 million small businesses unanimously supports Work Choices.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I am loath to interrupt the opposition spokesperson on small business.

Harry Quick (Franklin, Independent) Share this | Link to this | Hansard source

Your point of order?

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

My point of order is one of relevance. He really does have to come back to the point.

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

The minister will resume her seat. The debate on this appropriation bill is wide ranging.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

It certainly does sound like the minister has a glass jaw! Mr Glen Mobbs of Tully Motel went on to say:

In short, since we bought this business the time that we spend actually working on the business has diminished in favour of increased time spent on government required activities that don’t generate wealth or wages. This is in addition to statutory requirements to collect various taxes for yourselves.

That brings me to the next point: only the Treasurer could have designed a GST that has to raise $185 billion—that is nearly 20 per cent of GDP, by the way—in order to collect $37 billion. There is a huge difference between $185 billion and $37 billion, and that gulf is represented by the GST compliance burden on small business, about which this government is virtually indifferent. The government says in the budget that it is going to make some changes. It said that it was really its idea in the first place. But it was not; it picked up the ideas in the ratio method, which the Treasurer had been ridiculing for five years and as recently as two weeks before the budget.

I will finish Mr Glen Mobbs’s letter. He says:

... with each step taken forward from increased administrative efficiency we seem to take two back from increased demands from various levels of government for information. It is becoming an increasingly heavy burden for one part-time administrator to bear.

Hear, hear, Mr Mobbs. Labor will introduce a clearing house so that small business does not have to grapple with the compliance burdens of superannuation choice. Why won’t the government support that? Because it is indifferent to the plight of small business. This government believes that the small business community is its own and that by running around saying, ‘Labor’s reintroduced unfair dismissal laws,’ all small business people will flock to this government. But they are smarter than that, because they know the biggest issues are the compliance nightmare, the huge burden that this government is imposing. That burden shows up right across the economy.

That is why Labor has said that we must lift productivity growth in this country by investing in education, including higher education; by investing in a national high-speed broadband network that is especially valuable for small businesses in regional areas; and by genuinely, truly cutting red tape for small business. Again, Labor leader Kevin Rudd, in his National Press Club speech, announced a series of measures where we will work with the states to reduce the small business compliance burden—as Charlie Bell called on this government to do 10 years ago. When responding to the Banks report last year this same government repeated the commitments that it had made 10 years beforehand—a commitment to cut red tape by 50 per cent in its first term, which it never intended to keep. It then introduced this GST that collects $185 billion in order to collect $37 billion. So much for cutting red tape for small business! It has absolutely inundated small business with red tape. No wonder our productivity growth has slumped—and it truly has slumped.

There was an article late last week in the Australian Financial Review by Mr Michael Knox. He suggested that maybe there is no productivity slump at all, because if we in fact deflated GDP not by the GDP deflator—which you would think you would—but by the CPI then there would be no productivity slump at all. This is the sort of argument or excuse that this government tries to get away with itself. The Treasurer said recently, on 1 November last year, that productivity growth is ahead of the previous productivity cycle so there is no problem. This fellow, Mr Knox, says there is no problem. I had a look at the consequence of deflating the numbers by the CPI rather than by the GDP deflator. This man has managed to wipe away the entire productivity miracle of the 1990s. Instead of productivity growth being well above two per cent during the 1990s, if you use Mr Knox’s preferred measure then it is only 1½ per cent. That is not particularly good at all. If you do a little bit of mathematical manipulation you get the result that the government wants—there is no productivity problem. If the government does not recognise that there is a problem with productivity growth, you can hardly expect it to do anything about it. And it does not—the government does not believe that there is any problem with productivity growth.

Then the Treasurer said, in response to Labor—to the shadow Treasurer and the opposition leader saying that the budget forecasts for this current year showed that productivity growth is zero this year and 1¾ per cent in the out years, after next year—‘You will not find anything in the budget papers revealing that.’ But at page 1-5, table 2, if you take, from growth in real GDP, growth in employment, you get, in the current year 2006-07, zero. Then you get a bounce-back of 2¼ per cent next year—that is understandable; if you are on the floor it is not hard to get off the floor—and then 1¾ per cent thereafter.

The Treasurer did not even know that these figures were in his own document. How on earth can you expect a government to do anything about productivity growth—tomorrow’s prosperity—if it does not even know what the figures are in its own budget and if it does not even agree there is a productivity problem in this country? There is, and it is only through the election of a Rudd Labor government that this country can expect any improvement in productivity growth or any improvement in prosperity beyond the mining boom, because this government’s best days are well and truly behind it. This government has sold out on small business and sold out on Australia’s future. (Time expired)

Harry Quick (Franklin, Independent) Share this | Link to this | Hansard source

Before I call the honourable member, I remind the minister at the table, the member for McEwen, of the obligation for members to be heard in silence.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I doubt very much that the minister would be interrupting me in the same manner. The debate on the Appropriation Bill (No. 1) 2007-2008 and its associated bills is a free-ranging debate. We all have our opinions, and this debate is about how we, as a government, spend our money. The 2007-08 budget provides great support for Australia. I do not think there is any doubt about that. The fact is that people in Australia, by and large, have felt this is a very good budget. In fact, for the 10th time it is in surplus—10 years in a row! That is something that Labor could dream of but could never deliver.

We have grown since March 1996, when we were first elected, averaging 3.5 per cent each year. The unemployment rate has reached a 33-year low, inflation remains low and stable, we are debt free in net terms, and our net interest payments are, of course, zero. The government is saving taxpayers $8.5 billion a year, which works out at something like $23½ million every day—or, to put that into perspective, $1 million every hour. So since I arrived here at eight o’clock this morning—it is now just after eight o’clock at night—we have saved $12 million in interest rate payments that were previously paid by the Labor government. That is a pretty big saving. And the great thing about that saving is that it is for ever and ever, unless the Labor Party gets back into government and gets us back into debt by running deficit budgets.

It is very interesting to look at the history of Australia. For the first 90 years of our Federation, from 1901 to 1991, as a nation we accumulated some $16 billion of debt. We had to deal with a couple of world wars and a few other wars—such as in Korea and Vietnam—we had to build a new capital, which does not come cheap in anyone’s terms, and we went through a depression, yet, over those first 90 years of our Federation we accumulated $16 billion worth of debt. For the next five years, Labor took that debt which we had taken 90 years to accumulate and repeated it every year for the next five years. So we went from $16 billion to $96 billion net debt in five years. We have now got rid of that debt, and I think that was one of the greatest achievements of this government. Because we are no longer paying interest into banks—in many cases overseas banks—we can now afford to do the things that this country wants us to do.

Australians, including many in my electorate, are concerned with agriculture. I have a very large agriculture base in my seat. The seat of Barker has often been termed the most agricultural seat in Australia. We produce nearly half of Australia’s wine, and that is a great part of the electorate, but we also have heavy agricultural industry in the traditional areas of beef cattle, dairy cattle, sheep, horticulture and forestry, which also takes up a very large part of my electorate—it covers a very large growing area. We certainly are very much the food bowl of South Australia, if not Australia. So what we have achieved for agriculture in this budget is very important to the constituents in my seat of Barker. We have provided more than $2.4 billion in new funding for agriculture. To put that in another perspective, that is about 30 per cent of the total savings, which we could not have used under Labor’s $96 billion debt.

Of that $2.4 billion of new funding for agriculture, there is $205.4 million over the next four years to continue the government’s Agriculture Advancing Australia policy package, $75.7 million over four years to build on the successes of the National Food Industry Strategy, $112.1 million over three years for landcare activities and $50 million for the new Environmental Stewardship Program and $1.975 billion over five years for natural resource management—both jointly delivered with the Department of the Environment and Water Resources—and $10.3 million to eradicate the Red Imported Fire Ant, which is probably not front-page news but for many of our industries is very important. There is another $12.7 million to strengthen Australia’s quarantine risk assessment. An additional $205 million over four years will fund professional advice for farmers in severe difficulty and will subsidise management training and education to provide re-establishment grants to assist those who wish to exit the industry. That is important when you consider that 90 per cent of my electorate is declared EC drought for the first time ever. Very few in my electorate have ever had to rely on the full exceptional circumstance strategy, but 90 per cent of them are doing that now. I am pleased to report that we have had some very good rains starting on 26 April this year. Over the last 3½ weeks we have had an exceptionally promising start to the season, so there is a little bit of light at the end of the tunnel for the farmers in my electorate.

Funding will assist in improving the successful FarmBis program, which provides education and training to farmers. The Farm Help program will also receive additional assistance over the next four years with previous Farm Help recipients having a second chance to obtain professional advice and training to access a re-establishment grant. There will be $11 million over three years to improve services for Australians affected by drought. Funding will be provided for additional mobile Centrelink services, which will improve existing services by responding to the increased demand in drought affected areas. One of the great things we have brought in is the drought bus, which has been going around my electorate over the last couple of weeks, meeting with farmers and helping them to get through their problems. There will be $30 million spent to provide drought related counselling support to irrigators and farmers in the Murray-Darling Basin and $75.7 million over four years will be spent to make Australia’s food industry more globally competitive. The program contains four key elements: the Food Innovation Grants Program worth $54.2 million, the Technical Market Access Program worth $15 million, the International Food Standards Initiative worth $2½ million and the Australian Food and Grocery Council worth $4 million.

We also have a comprehensive water plan which will secure and manage one of Australia’s most precious resources. I spoke in the chamber a couple of hours ago about what we are doing in the Murray-Darling Basin. There will be $10 billion over 10 years provided for the National Plan for Water Security. The Murray-Darling Basin region will benefit from more integrated and efficient management functions, including nearly $6 billion to modernise both on-farm and off-farm irrigation infrastructure to increase the efficiency of water use. On present understandings, that will save us about 3,000 gigalitres of water. Interestingly enough, that is about four times what industry, irrigators and households in all the cities supplied from the Murray-Darling Basin in South Australia use. It is four years worth of savings. Half of that will go back to the farmers on the basis that we are spending another $3 million to compensate them for buying back overallocated water resources, especially in the eastern states. Again, we are delivering 3,000 gigalitres—that is, 3,000 billion litres—back to the Murray-Darling over 10 years. It is going to be a big call, it is going to be a big program and it is going to take a while—but we have the plan. What is great about it is that it is not hurting our wealth-producing farmers but will return that water to the Murray-Darling system. $417 million will be spent to improve the quality of forecasting and obtaining water data to better inform future decisions regarding land and water use. The allocation of $585 million to reform the government’s arrangements for the Murray-Darling Basin Commission will ensure the responsible management of water into the future. There has never been a program like this in Australia’s history. There will also be funding of $201 million over six years to support the installation of water tanks and other water-saving devices by schools and community organisations. A further $200.7 million will extend the Community Water Grants program until 2012-13.

Since 1996, the government has invested $2 billion to develop practical responses to counter and reduce climate change. If you were to believe the Labor opposition, we have not done anything. The facts are in the budgets. Over the past few years we have invested $2 billion. For example, the government’s $500 million Low Emissions Technology Demonstration Fund is already driving the development of vital solar and clean coal technologies. $150 million will be provided to encourage homeowners to install solar panels across Australia. The current rebates will be doubled so that households will receive up to $8,000 for installing an average system which costs around $14,000—a rebate of over 50 per cent. Grants of up to $12,000 will be available for solar panels in schools and community buildings.

Forests play a key role in reducing greenhouse gases. I know that because the forest industry in my electorate alone provides almost $2 billion worth of income and wealth production. Of course, that is also spread across many other electorates around Australia. The costs of establishing qualifying carbon sink forests will be tax deductable, with immediate deductability for five years, commencing 1 July 2007, and with concessional depreciation arrangements after that. The budget also provides $197 million over five years for the Global Initiative on Forests and Climate.

Land transport and infrastructure will be made stronger and better by the government boosting its investment in road and rail infrastructure, with the second AusLink plan and total funding of $22.3 billion over five years from 2009-10. AusLink 2 will help reduce accidents on Australian roads. The black spot program will increase to $60 million per annum over five years from 2009-10. This is a program that Labor got rid of when they were in government. The Roads to Recovery program constructs and maintains local roads and will be funded with $1.8 billion. I know all the councils in my electorate are very happy about this. AusLink’s Strategic Regional Program supports the growth of regional industry and will be allocated $300 million. In order to bring forward construction of some of these strategic regional roads, the government will give an additional $250 million of supplementary funding to local councils, to be paid before 30 June. By way of example, we have been allocated $3.1 million for the Millicent heavy transport bypass. The people of Millicent are extraordinarily happy about getting that money.

Tax cuts will offer Australians some relief, with the low-income tax offset rising from $600 to $750. It will then begin to phase out from $30,000. This means that low-income earners who are eligible for the offset will not pay tax until their annual income exceeds $11,000. These income tax changes will ensure that more than 80 per cent of taxpayers face a top marginal tax rate of 30 per cent or less across the forward estimates period. There is also comfort for senior Australians who are eligible for the senior tax offset. They will now pay no tax on their annual income, up to $25,867 for single persons and up to $43,360 for couples.

Realising Our Potential is an investment in the future of universities, in vocational education and training and in the school sector. It delivers an unprecedented investment in the university sector, with a $5 billion Higher Education Endowment Fund, which is funded from the 2006-07 surplus. You cannot fund that from a deficit. This initial investment will earn income which can then be distributed on an annual basis to individual universities for capital works and research facilities. An amount of $222 million over four years will be provided for increased income support and for an extra 3,500 Commonwealth learning scholarships to assist students from low-income backgrounds and rural areas to attend universities.

Schools will also be ahead under the Realising Our Potential package, with $457.4 million being spent over four years to provide direct assistance to thousands of school students through national numeracy and literacy vouchers. This initiative will provide a $700 tutorial voucher per child to parents whose children do not achieve current numeracy and literacy benchmarks in years 3, 5 and 7. This will be extended to eligible year 9 students in 2009. In 2008 there will be a bonus of up to $50,000 available to schools which make significant improvements in their literacy and numeracy standards.

Importantly, Australia’s vocational education and training system will receive funding that builds on the $837 million investment in Skills for the Future. First- and second-year apprentices under age 30 will receive a tax-free $1,000 wage top-up. All apprentices will receive up to $500 each year, without any age restriction, towards TAFE and other training fees. This is about looking towards the future.

Part of helping families to balance work and parenthood is to assist with child care. Government assistance for child care in 2007-08 will be $3 billion, almost three times the level in 1996-97, when Labor were last in government. From 1 July 2007, the rates of childcare benefit will increase by 10 per cent, on top of indexation. This will increase the maximum rate of childcare benefit from $2.96 to $3.37 per hour. That means that a family on maximum rate assistance, with one child in long day care for 40 hours per week, will be eligible to receive $134.80 per week. This change will provide $728 million in extra assistance to more than 70,000 families Australia wide, including 5,000 families in the Barker electorate.

Families who incur out-of-pocket childcare costs in both 2005-06 and 2006-07 will receive two rebates in 2007-08, one through the tax system under existing arrangements and the other as a direct payment. The maximum payment will be $4,096 per child for 2005-06 and $4,211 per child for 2006-07.

The government are doing many things in this budget. We are boosting superannuation savings by paying a one-off additional co-contribution. We are also looking after older Australians, and we will spend  $51.8 billion on health and aged care. We are injecting $1.4 billion through the global integration program to assist Australian industry to build stronger links. This is a brilliant budget. (Time expired)

Bob McMullan (Fraser, Australian Labor Party, Shadow Minister for Federal/State Relations) Share this | Link to this | Hansard source

The debate on the Appropriation Bill (No. 1) 2007-2008 and cognate bills gives me an opportunity tonight to speak on three matters of my shadow portfolio: firstly, my constituents in the ACT; secondly, federal-state relations; and, thirdly, international development assistance.

The particular matter I want to refer to with regard to the Australian Capital Territory is the indication in the budget papers of a very substantial increase in Public Service numbers—more than 5,000 is forecast—during the forthcoming financial year. Given the structure and composition of those changes, it is likely that a high percentage of those people will be employed in the Canberra region. From a broad economic and development point of view of this area, I welcome that. It used to be the case that people in Canberra thought that, if they voted Labor, they would get a much faster rate of increase in the Public Service. Some people liked that; some did not. However, it was the significant motivation. It cannot be the case in this election. It would be physically impossible to grow the Public Service any faster than it is at the moment. We cannot get the staff to fill the vacancies that are being advertised now.

My concern is that the situation in Canberra will grow into a town-planning and social development free-for-all. This is exacerbating the car-parking crisis in Civic in particular, which is the matter I want to refer to. I call on the Howard government—but, if it is defeated at the next election, I commit myself to work on this in the event of a Rudd government—to return to an intelligent public sector employment location strategy in Canberra. Too high a proportion of our public servants are moving into high-cost areas such as Civic and Barton, but it is Civic that I am particularly concerned about. It would be cheaper and more efficient for the Commonwealth if there were better planning and coordination. It would also be better for the city if there were balanced development—and I particularly want to emphasise the importance of this in relation to the crisis of car parking in Civic. Many people are concerned about it, and properly so. It is a very difficult issue for the local ACT government to manage. In the main, it is their responsibility, and I leave it to them. But it is not appropriate for the Commonwealth government to exacerbate the problem, at some significant expense to Commonwealth taxpayers, with an inefficient and ineffective distribution of public sector employment. In terms of my own constituency, I look forward to decisions that will lead to the relocation of public servants in the Belconnen and Gungahlin town centres.

I now turn my attention to federal-state relations. While this is an issue that I have been dealing with extensively as a shadow minister, it came back to me in a very interesting way recently. Last week, I held one of my regular community meetings with constituents. I invite people to come in and see me at different times and places around the suburbs of my electorate. I always learn something at these meetings. There is always a constituent who raises a new issue or a different aspect to an issue. What was raised at last week’s meeting was significant in terms of the issue that I want to talk about tonight. There was concern about the cynical way in which the government tries to use people’s fears to strengthen its electoral position. My constituents were looking for an offer of hope that things might get better rather than this exploitation of fear whereby things might get worse. They are looking to me as their local representative and more broadly to the alternative government—the Labor opposition—to give them that hope.

At the meeting there was also significant cynicism about the political process. People were concerned about the manner in which fear has been exploited over the last decade or so. Another legacy from years of the clever and cunning Howard government is that Australians will take a long time to forget this, and it will take our political processes some time to recover from it as well. In particular, I refer to the impact of the cynical manipulation of the so-called blame game. Instead of solving problems, the enthusiasm of the government lies in blaming someone else. The Howard government blames the states, and often anybody else. The recent budget speech by the Treasurer and the budget reply by the Leader of the Opposition provide a vivid illustration of the sorts of concerns that were being raised at the meeting. The Treasurer only made references to the states and territories in his budget speech when he was blaming them for the inadequacy of the current dental services—notwithstanding the fact that his own government has cut $100 million from these state run programs.

By contrast, the two principal initiatives in the budget reply by the Leader of the Opposition were predicated on a cooperative federal-state approach. The announcement of new trades training centres and the national water security plan for towns and cities are both based on the emerging 21st century concept of cooperative federalism rather than the old-fashioned blame game of the past. In the words of my constituents: they were based on hope of doing things better rather than on fear and blame. It is this fear versus hope which highlights the fact that, at the 2007 election, we have a once-in-a-generation opportunity to reform the way in which the federation works and to put an end to the negativity of the blame game.

There are a number of reasons for that, and I do not have time to go through all of them this evening, but I want to highlight why I think there is a window of opportunity to reform the way our federation works and why it is important that we seize it. Opportunities like this do not come by very often. One of the reasons is the background, experience and enthusiasm of the Leader of the Opposition for the task. We have not had that for a very long time. Also, we have eight state and territory governments—and I am not talking about their political persuasions; I will refer to that in time—that have displayed in their work through COAG and through their initiative, the Council for the Australian Federation, a willingness to respond to reasonable proposals and to develop and advance the national reform agenda.

Parallel to that we have a very rare thing in Australia, where we have so many elections—far too many elections staggered throughout the electoral cycle. We have a very rare window of opportunity where there is no state election due for 18 months. That does not happen often in Australia, and it means that outside the context of somebody being under immediate electoral pressure we can perhaps get some substantive and continuing reforms.

On this question of reforming the federation, we have very powerful advocacy from the leaders of the business community, from academics and from independent commentators, who all say it is time to change federal-state relations. We have a growing body of domestic and international academic and bureaucratic reports on the strengths of federalism and the way it can work better. And finally we have enhanced recognition among Australians, reflected in my constituents at my most recent meeting with them, that the quality of the services they receive from government is affected by the blame game.

Given all these factors, it is hard to imagine a party running for election to govern Australia in 2007 that does not see the need for enhanced efficiency in the structure and operation of our federation. It is possible to see this challenge as a threat or an opportunity, and it seems to me that the Prime Minister sees this problem as a threat and the Leader of the Opposition sees it as an opportunity. It is an opportunity we need to seize.

Many people have cited the Business Council of Australia-Access Economics analysis, but there are plenty of others, including from many other business groups—AiG and the Victorian Employers Chamber of Commerce and Industry are similarly arguing for reform in this area. The Access Economics report commissioned by the Business Council illustrates the $9 billion of economic cost from the inefficiencies of our current federal-state relations. That is not all direct cost to the budget, but an analysis of that document shows that even a modest improvement in the operation of our federal-state relations will release significant public sector resources for higher priority use. So there is a way forward, but only one of the alternative governments going to this election is even looking at this issue.

Last week the Leader of the Opposition and I announced the formation of a high-level advisory group on federal-state relations to advise the Labor Party on policy in this area before the next election. I have been really pleased by the number of groups who have responded already, indicating their desire to participate in and contribute to that process. They reflect the general view in Australia that I see, that Australians do not want to see the federal structure damaged; they want to see it continue, but they want it to work better.

One of the first issues the advisory group will examine is that of specific purpose payments. There are more than 90 specific purpose payments to the states and territories and they each have cumbersome and time-consuming reporting requirements, in some cases costing more than the proposed payment. Some specific purpose payments require a level of detail that has no conceivable national policy use, which inhibits the capacity of the states to innovate in the delivery of their services. So we are looking to reform the way the federation works. We are looking to get an initial report from this advisory group about specific purpose payments by next month, and a more comprehensive review of the architecture of our federation more substantially by September. What I am hoping for out of that, and what I expect from that high-level group—which contains very experienced federal and state officials and academics—are reforms which will deliver us a federation in which the Commonwealth takes the lead on broad national policy directions and provides the funding, and the states and territories coordinate the delivery of services and provide policy and delivery innovation at a local level. If we can achieve that, we can leave the blame game behind and give Australians back the hope in the future that they are looking for.

The other thing I want to refer to in my remarks about the budget relates to my other area of responsibility, international development assistance. I have to say at the outset that I welcome the modest improvement to Australia’s aid program announced in the 2007 budget. It is easy to say the improvements are not as significant as the government is trying to paint them, but even a slight improvement to our pathetically inadequate aid program is welcome. However, I want to comment today on some key areas that have been missed and some wrong priorities that are reflected in the way the money is being spent.

In September 2000 the Howard government signed up to the Millennium Development Goals. These are a very important vision and framework designed to halve extreme poverty by 2015 and end it by 2025. Competent economists are saying we can mobilise the resources to do that if we have the will to do it, but there has been no focus in Australia’s aid program on the key tasks of implementing the Millennium Development Goals and there still is not.

It has taken the Howard government 11 years to arrive back at the point where it is starting to improve Australia’s overseas aid performance. Even now the aid program lags behind the international donor community and behind the level as a percentage of gross national income that it was when the Howard government came to office. The government claims to have increased aid expenditure, but in fact there has been no change in the ratio of aid as a percentage of gross national income. It is still stagnant at an embarrassingly low 0.3 per cent, way behind the international pack and still below the Labor government’s contribution to aid of 0.32 per cent in 1996 or the average OECD country effort of 0.46 per cent.

So in this welcome increase—I do not want to be churlish; I am glad to see it happening—the Howard government is filling in a hole it dug itself. It reduced this area of spending year after year until it started slowly to turn it round, and after 11 years we still have not got back to where we started. One of the problems we have, even with this modest improvement, is that there is an expansion of what activities are considered by the government as aid. It is really stretching the guidelines, for example, to include the detention centres in Nauru, which of course are not designed in the slightest for economic and social development in Nauru. They are designed to achieve domestic political purposes here in Australia.

I emphasise that I welcome the increase and I welcome the fact that the forward estimates suggest the increase is going to continue, but with the scaling up of the aid program I am concerned to ensure that these funds are spent effectively. It is difficult to determine how effective the aid program is or is likely to be, particularly because the much-vaunted first Annual Review of Development Effectiveness, which the Minister for Foreign Affairs with great enthusiasm stated would be produced last year, has still not been published and will not be published before the election. AusAID has made it clear that we will not get the first report during this parliamentary term. So the Prime Minister’s commitment to increasing the aid budget was conditional on the quality and effectiveness of aid and Minister Downer announced performance incentives based on appropriate reporting and assessment but without the annual review, which we will not get for this entire parliamentary term, how will this performance be assessed?

In the time available the other thing I will turn to is the question of priorities. When you are increasing spending you get the chance to make choices. These are choices that affect the lives and opportunities of the poorest people in our region. I think that in particular the government has its priorities seriously wrong in education. The focus in education should be on primary education. All the social evidence and economic analysis suggests that it is primary education that has the biggest effect. In some ways you could say it is preschool education, but at the very least, broadly defined, it is primary education. In fact, the proportion spent on basic education has fallen. UNICEF says:

A quality basic education will better equip girls and boys with knowledge and skills needed to adopt healthy lifestyles, to protect themselves from HIV/AIDS … to take an active role in social, economic and political decision-making as they transition to adolescence and adulthood.

It is a serious mistake for the long-term interests of Australia to be skewing our aid budget from primary education.

Similarly with infrastructure. It is not always fashionable for the aid budget to be invested in infrastructure, and I support the fact that the government has made this one of its priorities, but I am concerned that it is not addressing what I think is the priority infrastructure issue. The crisis is in the lack of access to clean water, the biggest cause of child death in the world. It is not that we are doing nothing, but the focus is moving away from that to other areas of infrastructure. Not everybody in the aid community says that infrastructure should be a priority. My view is that it should be, but water and sanitation are essential to poverty reduction, human health and economic growth. In our neighbouring region, a child dies every seven minutes from lack of access to clean water; 80,000 children under five years of age are dying from diarrhoea and 88 per cent of diarrhoeal disease is attributed to unsafe water supply and inadequate sanitation and hygiene. Our priority in infrastructure should be there.

As I said, when you increase spending—which I welcome—you have the chance to make choices. I think one area in which the choices do not reflect well on the government’s priorities is climate change. It is one of the greatest issues impacting our neighbouring region and it barely gets a mention. There is a lot to say here, but let me say for the moment that assisting our neighbours to adapt to the effects of climate change should be a major focus of Australia’s aid program. Climate change threatens to undermine Australia’s aid program and hard-won development gains. The Howard government’s token response of a one-off payment this year to financial institutions such as the World Bank is better than nothing, but it underestimates totally the response needed and shows a fundamental lack of understanding of what is involved.

In conclusion, this is a very disappointing budget. It is hard to understand how you can spend so much and achieve so little. China is driving a mining boom that is delivering the greatest revenue boost in Australia’s history, yet we are finding in federal-state relations, in international development assistance and generally that we cannot fund our priorities. If we cannot fund our priorities at the height of the boom, when will we be able to do so? It seems to me that this is a government that has lost its discipline, its focus and its sense of rising to the challenges of the 21st century. This budget shows that Australia needs a new government capable of fresh thinking and of responding to the 21st century challenges in international development assistance, federal-state relations and generally.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I will commence my contribution to Appropriation Bill (No. 1) 2007-2008 where the previous speaker, the member for Fraser, left off and deal with Commonwealth-state relations. Mr Deputy Speaker, I am sure you will remember the premiers conferences at which there was a pre-discussion statement by all premiers blaming the Commonwealth for disastrous management and claiming what their share of the pie should be. Every Premiers Conference during the time of Bob Hawke and Paul Keating, even though many of the states were Labor, was heralded by pre-Premiers Conference claims and counteraccusations. After the conference there were the traditional ‘we was robbed’ press statements from premiers. That has not happened for a long time in Australia. The concept of the Australian Labor Party that the blame game is active and alive in the Commonwealth government could not be further from the truth. I will always remember the decision that we took, following an election, to establish a consumer tax, the way in which the premiers signed up to that process and the huge cooperation there was in the tax-sharing arrangements. That was a landmark and historic example of cooperation and working together. There was no blame game there. It was a historic process of cooperation between the states and the Commonwealth.

The recent $10 billion water initiative has seen the states and the Commonwealth come together for the first time to solve the Murray-Darling problems. Never before have the states and the Commonwealth been able to agree on the Murray-Darling difficulties in the way they have recently. I know Premier Bracks still has some reservations, but it is wonderful to see that the Commonwealth and the states—even though the states are all Labor and we have a coalition federal government—have come together and, through the $10 billion water initiative, established for the first time a cooperative and workable arrangement for the management of our great water systems.

I would also like to point out to the House the way in which the states and the Commonwealth have cooperated in our management of the threat of terrorism. Our national police and security agencies have worked with state police to establish a system with the cooperative exchange of ideas and support. The Olympic Games is another example. There is example after example. This blame game nonsense that is being carried out by the Labor Party is a fabrication. There is nothing in it. When a state government like that of New South Wales is failing and is seen by everybody to be failing in the way it manages its affairs, it is fair enough to say so and to point out its shortcomings. The state governments do not hesitate to do that with all brands of Commonwealth government. They tend to say, ‘Give us the money and we’ll solve the problems.’ It is not a uniform process.

I have mentioned terrorism and the Olympic Games. What about the Tough on Drugs program? From the school and health systems, right through to the interception programs of Customs, the Australian Federal Police and the Department of Defence, everything has worked on a cooperative basis because Australians realise that we need to be tough on drugs if we are going to deal with the drugs problem. In general, there has been absolute cooperation between governments, even to the extent of personal income tax sharing to local governments and the roads programs. For the first time we have had a cooperative arrangement between the states and the Commonwealth and the funding of local government. There are not the rows there have been in the past. Peace and quiet reigns as people work together for the betterment of Australia with common goals and common objectives. It has never been like that. In my experience of this parliament there has never been better cooperation between the Commonwealth and the states, despite the political differences. Of course there will be point-scoring from time to time, but not with the viciousness and nastiness that there has been in the past.

I would like to break the budget down into the various community groups that are most affected by it. Such a massive budget is only realisable because of good management and the capacity to put down the foundations that allow Australians to succeed and our economy to build. If anything, the trouble with the budget is that it is so large and so diverse in its assistance, support and intelligent application to the needs of Australia that it is hard to get one’s head around every aspect of it. One approach I have tried—and I think it works for me and for my community—is to examine the budget on the basis of the groups of people that are affected by it.

For the electorate of Mitchell nothing is more significant than Australian families, and support for families is probably one of the most notable features of the budget. It has been a notable feature of all Howard government budgets. One needs to focus on the various needs of families as they go through the stages of home acquisition, the arrival of children—who then become teenagers—and moving on to becoming older Australians in retirement. I should begin by talking about the tax cuts and the way in which they affect families. For 2007-08, taxpayers with an income of $30,000 will receive a tax cut of $21.15 per week. It will stay at that level in 2008-09. The income range that I think is most affected by the budget and which relates to most families is $30,000 to $80,000 per year. For those on $80,000 a year, in 2007-08 there will be a tax cut of $14.42 per week, but in 2008-09 there will be a tax cut of $24 per week.

That is assisting families with money in the pocket to be able to use as they choose. This government has consistently passed back taxation where it does not need the funds. I think that is a laudable objective for governments. It is not something that has been general practice by the Commonwealth; the Commonwealth has tended to stick with every dollar it has collected, but that has not been the case for a long time under this current government. The low-income tax offset will allow $750 per year to return to families with incomes of under $30,000. That is a way of offsetting the incapacity to further lower taxation in that group, so there is almost a negative taxation process of giving funds to support those on lower incomes.

There is a $2.1 billion childcare investment, but what does it mean to families? Families eligible for the childcare tax rebate will receive two tax rebates this year, with one being brought forward. I think this is a very sensible approach, because I thought the 22-month delay before these rebates were paid was detrimental to the program. I have sought for some time for that to be rectified, and I am pleased that it has been in this budget. The childcare rebate has been brought forward, with a reimbursement of up to $4,200 per child per year. The rebates for last year and for the current year are being paid together so that there will be two payments in the one year. For families with two children under the age of five, it would be possible to be reimbursed over $16,000 for childcare costs. The childcare benefit will increase by 10 per cent, which will take it to $20.50 per week for low-income families with one child.

Debate interrupted.