Eric Hutchinson (Lyons, Liberal Party) Share this | Link to this | Hansard source

At the time that this debate was adjourned, I was referring to a case in Launceston, northern Tasmania, where a gaming venue, having been made aware of the first of the $900 cheques being distributed, decided it would be worthwhile in attracting potential punters into the venue to offer free breakfast to anyone who purchased $25 in poker machine credits. The result was that there was a $75,000 net benefit to the business as a result of additional business that occurred due to the $900 cheques being spent in that particular venue.

Coming from Tasmania, where we have an unemployment rate by far the worst in the country and well above the national average, I know just how effective this program has been. Nothing is more important in Tasmania than jobs. In September 2013 we went to the election with our economic growth plan and we are delivering on that plan. I know and I believe that Tasmanians are also soon ready to elect a Hodgman government after so many years of economic mismanagement under Labor and more recently under Labor and the Greens.

We opposed this package at the time because it was simply unaffordable. History shows that the legislation was passed. We are now trying to clean up the mess—with little help from those opposite. Even last financial year, four years after the legislation was passed, 15,000 cheques were issued, totalling $13 million of borrowed money. Since its introduction, more than 16,000 stimulus payments have been sent directly to taxpayers living overseas, at a cost of more than $14 million. The total amount of borrowed government money spent on stimulus payments to date is estimated to be around $7.7 billion. What extraordinary waste. We are stopping the waste and will clean up the mess. I commend the repeal bill to the House.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

This is, on so many levels, an embarrassing bill. The bill itself is 10 pages long while the explanatory memorandum, for those sitting in the gallery, is 17 pages. It takes more to explain how little this bill actually does than the bill itself. When you look at the bill you see how little this is supposed to save. We have had a whole lot of claims being made through the course of this debate, but in actual fact this bill represents an absence of substance in the extreme. They concocted a reasoning or justification for the bill, but you have to go through what it does, especially in the context of how it has been brought to the parliament.

We have had those opposite say that there has been a budget emergency—that we need to find savings, that we need to be much more frugal with our spending. This is from those opposite who actually handed over to the Reserve Bank $9 billion in one hit. It did not even meet the need for that to happen. The Reserve Bank in a public hearing before the Economics Committee—a committee of which I am a member—said that they had no view about whether it had to be delivered all at once or spread out over time. But those opposite, when they talk about a budget emergency, provide the Reserve Bank $9 billion. Mind you, under questioning it became clear that it is not going to be paid now; it is likely going to be paid through the course of the next few months. We are told we have to give all this money to the Reserve Bank; they get the money and guess what happens? They provide us with a dividend in August—straightaway. This is from a mob that says we have to be frugal with our spending, we have to be wise with what we do. They can just hand that over. They have handed over $9 billion. What did they do to offset that? Well, they have brought this piece of legislation forward to the House, which will save a grand total of $0.25 million over four years. It will save over the four years $250,000. This is what they are putting forward. They are saying that this is what is required to help bring the budget to surplus.

They said all sorts of things. They said that the debt was out of control; it was not. In actual fact, when we were in office we got AAA ratings not from one agency, not from two, but from three agencies. On any other measure, when you look at other countries and compare where we were at to where they are at, we did remarkably well. We were told the economy was underperforming; it was not. In actual fact, it was one of the few advanced economies to grow. If you look at the economies that we look at—the US, Japan and even our neighbour across the Tasman—our economy actually grew. We were one of three out of 34 advanced economies to actually sidestep the GFC and a recession. By the way, those opposite try to airbrush away the existence of the GFC. They will always tell you about the Asian financial crisis—the one that was the worst in 75 years; the one that they still deliver lectures on in various universities across the globe and talk about financial markets and the impact it had on world economies. But you will never hear about the GFC from our Prime Minister or our Treasurer.

We are told we need to create more jobs. They have actually done the opposite. They have managed in their short time in office to see one job go every three minutes. The coalition encouraged a tepid, lukewarm response to the GFC. The now Prime Minister suggested we should spend in line with what New Zealand did. New Zealand had economic growth that was lower and had trouble holding onto jobs—and we were told we needed to copy them.

On the basis of the model put forward by Labor in government, we were one of three out of 34 advanced economies to sidestep the GFC. The now Prime Minister suggested we follow the New Zealand model. In fact, they just wanted the country to stumble along; for them, it was easy to put out that prescription that we just do what New Zealand did, because it is all care, no responsibility. They are not the ones forced to consider the devastating impact of unemployment not just on families but on communities across the country. Particularly in Western Sydney, we are always mindful of the impact of job losses on the people that we represent. But, again, it is all care, no responsibility from those opposite.

We also need to bear in mind their own record. The IMF absolutely scorched the Howard government when they looked at the level of spending of governments from 1960 through to 2013, outside of the GFC. In their report the IMF labelled the Howard government as the most profligate. They looked at all the spending that had occurred and it was clear that spending was out of whack when those who now occupy the treasury bench were last in government. We inherited a tax system where tax to GDP stood at 23.7 per cent and we were able to get that down to 22.1 per cent, so tax was lower as a proportion of GDP. They bragged about surpluses—you will get that a lot from those opposite. They conveniently forget that they spent less on health, they spent less on education, they spent less on infrastructure—the things that matter to the people who depend on government to work effectively.

The previous speaker in this debate said that this bill formed part of an economic response that was reflective of waste, but this payment that was extended to people through the course of the GFC was designed primarily to inject money into the system at a point in time when what was missing within financial markets was the element of trust as subprime mortgages and the scandal that ensued started to bring down longstanding financial institutions. As that unravelled before our eyes through 2007-08 there was a genuine concern that the whole financial system would freeze. Ensuring that we did not head for recession depended on government being able to inject money into the system quickly. I remind people that, as a result of the types of things that we put in place, we were one of only three advanced economies out of 34 that sidestepped recession. What did we have? We had people who looked at what Australia did, and I want to quote again a comment that was quoted by the shadow Treasurer in his contribution in this debate because it is important to reinforce it. Joseph Stiglitz, Nobel prize winning economist, said:

You were lucky to have, probably, the best designed stimulus package of any of the countries, advanced industrial countries, both in size and in design, timing and how it was spent—and I think it served Australia well.

During the global recession, Kevin Rudd's government implemented one of the strongest Keynesian stimulus packages in the world.

Stiglitz went on to say the package:

… was delivered early, with cash grants that could be spent quickly, followed by longer term investments that buoyed confidence and activity over time. In many other countries stimulus was simply too small and arrived too late, after jobs and confidence were already lost.

I want to reflect on that point because that is the point at which this type of investment by government needs to occur. There is no point after the horse has bolted. We have seen that in economic contractions in time past, when you spend too late and the effects of the long-term unemployed mean that the amount of money that has to be spent to bring them out that situation is much larger. It is better to keep people in jobs to ensure that their skills are maintained and that the overall economic activity is maintained as well. That is an important point. Mr Stiglitz goes on to say:

In Australia the stimulus helped avoid a recession and saved up to 200,000 jobs. And new research shows that stimulus may have actually reduced government debt over time. Evidence from the crisis suggests that when the economy is weak, the long-run tax revenue benefits of keeping businesses afloat and people in work can be greater than the short-run expenditure on stimulus measures. That means that a well-targeted fiscal stimulus might actually reduce public debt in the long run.

This from a person who is Nobel prize-winning economist. And these are important things to recognise.

Previous speakers have said that this was part of a wasteful period of spending, when in fact it helped save the economy. We also have the explanatory memorandum making a reflection in part on this in justifying what is being done. That is the explanatory memorandum of 17 pages for a bill that is 10 pages. The explanatory memorandum says:

Given that stimulus to the economy is no longer required the government considers that further payments are not warranted and represent an opportunity to remove government waste.

That is $250,000 that they describe as waste. I ask the question: do they really think that the economy will not require stimulus? Look at what this government has managed to achieve in a short space of time: one job lost every three minutes. It makes decisions that refuse to allow investment in this country. The biggest example of that was the refusal to allow investment in GrainCorp, which GrainCorp wanted. The government said, 'We don't want it.' The government said to the car manufacturers, 'We're not going to work with you, you're on your own,' and they shut. The government said to SPC food-processing workers that they are not going to invest with them. I reflected earlier on the remarks of Joseph Stiglitz that there is sometime benefit in being able to move quickly on things, and there is an element there that can be considered in the context of these closures, particularly in regional areas.

Any regional member of the government who thinks it is a great idea not to work with business to stimulate economic activity in their regions has to ask themselves what they are doing to stand up for people in their regions. There is value both for people who live in cities and for people who live in regional areas to see economic activity lift outside of the cities. A modest investment can ensure people do not get stuck in the rut of long-term unemployment that will require more government spending over the longer term. It is important that economic activity occurs in the regions so that people who feel there are no economic opportunities in regional Australia do not have to move to the cities to chase a job, because that puts pressure on infrastructure and services that, more often than not, those opposite have a track record of failing to support.

There are a whole range of things. For example, if people are not in work, they are not contributing to the national savings pool through their superannuation. There are a whole range of reasons why it is smart to co-invest with businesses. But since this government have come in they have been willing to block money coming into the country and they have been willing to stop money from staying in the country by pushing it out through the jobs that they are willing to see go.

They are talking now of massively contracting spending in this economy. We can see it from what has been flagged with the Commission of Audit, which they sit on and refuse to release—approximately 900 pages worth of cuts that they are refusing to show to the general public. They are building us up for a budget in May that is likely to cut spending further, and you wonder what will happen to the economy.

They know what is going to happen. They say in MYEFO, the Mid-Year Economic and Fiscal Outlook, that unemployment will go to 6.25 per cent and stay there for a while. Bear in mind that through the entire GFC we did not hit that level of unemployment, not once. While other countries were going into double-digit unemployment—Spain at 22 per cent, the United States getting close to 10 per cent and other parts of the world completely slowing down—and people were wondering what would happen in the eurozone and in particular were looking at what would happen in Greece, we were able to sidestep it.

This bill is a make-work excuse for this government. They claim that they are making savings when in fact the reality says something completely different. It says two things: firstly, this is not a fair dinkum bill; and, secondly, it speaks more to their inability to be able to move with the economic times when they were in opposition and now that they are in government.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

I like the member for Chifley—he is a good guy—but he wants to have it both ways. He says that the cutting of the bill will result in the saving of only $250,000 but, if we do cut it, we risk stalling the economy. This is the government that came in in 2007 and said that, for every regulation in, there would be one out. For every regulation out now, there are about 18½ thousand in. I always like it when the member for Chifley gets up and speaks. If you have ever seen The Best Little Whorehouse in Texas there is the governor's song about sidestepping issues. The member for Chifley spent 15 minutes on that issue and did not actually address the thing. What we are about is repealing a bill that is no longer needed.

There was a rallying call by members opposite all the way through the 43rd Parliament. Whenever the issue of debt and deficit was raised, they said, 'The Liberals don't think there ever was a GFC.' For the record, I was not here during the GFC. I was trying to eke out a living as an auctioneer. The loss of confidence in any market is a very telling moment and I lived through that, trying to keep a company going and sales happening. So again, for the record, I truly believed there was a GFC.

But so too did the then coalition opposition. We stood shoulder to shoulder with the government when they proposed the first round of stimulus. We had, after all, cash in the bank and we could afford it. We knew our banking system was in better shape and better regulated than those of the US and Europe, which folded and/or needed massive government bailouts. Still in lock-step, we agreed that the government of the day had a significant role to play in this. We believed that government needed to assure Australians that we were on top of this. We agreed to lift spending with the first stage of the stimulus to help retail and to assist with bills. We agreed that Australia needed to prime its economy just enough to make sure it did not stop altogether.

Where we parted company was on the second round of stimulus. History has shown, I believe, that the second round of stimulus which included the pink batts and school hall projects was a spend-a-thon and waste-a-thon of epic proportions. The lack of checks and balances at the time led to all sorts of calamities, and I do not propose to rake over those coals. Part of that second round of stimulus was the bill we now seek to repeal. The $900 cheques provided some Australians with some stimulus. Like so many things the previous government tried to roll out, the words were great and profound. It was the delivery, or the lack thereof, which will forever be a hallmark of Labor's abysmal economic credibility.

Too many people paid down debt with the money which was supposed to wash through the economy. The basic tenet of the scheme was stimulus and this action went directly against that measure. To many, it seemed like panic was setting in and people began to batten the hatches. Too many people, with the advantage of the high dollar, used the money to go home to New Zealand or overseas for a holiday. This had the obscure effect of using money borrowed from overseas lenders to stimulate the economy of overseas economies! We even sent these cheques to people who lived in countries overseas, stimulating even more international economies but leaving ours without stimulus and with a debt to repay. Dead people were sent cheques. There were a whole lot of other issues where this program was poorly conceived and even more poorly delivered.

Labor borrowed $400 million to roll out this flawed program. The GFC emergency had passed well and truly before I entered this place in 2010, let alone being still around now in 2014. Yet last financial year the then Labor government continued to post out $900 cheques to 15,000 Australians. The money was still being borrowed and farmed out to people long after the need had ended.

I am not opposed to debt or spending, but there is good debt and there is bad debt. There is good spending and there is bad spending. When it is warranted, targeted and focused on improving the overall economy, you get a great result. Where you throw money out the window as you drive along, there will be some lucky enough to be used correctly, but a lot will just be wasted. So it is with Labor's $900 cheques.

We as a government and as a parliament must now face the truth and share that truth with the Australian people. As a government and a parliament, just as in our own households, we must prioritise our spending to ensure we get the best possible result from the money we get in through the door. In the household, that is normally through wages or business takings from hard work and long hours. In government, we get money from the people of Australia through tax. They give it to us begrudgingly, and we owe it to them to treat it with respect.

The first rule of government is 'to do no harm'. The second will always be 'respect the taxpayers' dollar'. With this program Labor broke both these rules. Just like households around the country, we have to work out what we must have, what we want to have and what would be nice to have. No successful family budget starts with the pub and the movies; it starts with the necessities of life. Food, clothing, mortgage payments, power and rates, filling the car and school fees are all listed first. Then there is trying to put some away for the family holiday as well or for that rainy day when something bad could happen.

Similarly, no federal budget should start with random cash splashes. The problem with the previous government was that they just kept spending, on anything. It is easy to spend money. It can be very hard, though, to stop that spending habit. Metaphorically, the previous Labor government started their budget with the pub and the movies, and they did that for six years in government. They did not pay the mortgage or put money aside. When they spent all the money in the bank, they went and got another credit card, then another and another. They were, by the election last year, cash advancing payments—those who have done it tough will understand and know exactly what I mean by 'cash advancing payments'. You had better make sure that you do not fall into arrears on your account. If you put money into your Bankcard or Visa account and you cash advance the payment straight back out you are going to pay interest and, sooner or later, it catches up with you. But it keeps them away from the door for a while. And when you get to that stage, it only ever ends badly, or you must really cop the hurt to get back on track.

The thing about spending without thinking of the consequences is that sooner or later you run out of money, and Labor ran out of other people's money. The consequences of large debt are tough and hard, and Labor never faced these decisions or consequences. They just kept going, making other people pay. So while Labor bashed the single parent pension, forcing them onto Newstart and out of their homes, they kept sending out $900 cheques; while Labor cut $2.8 billion from higher education, they kept sending out $900 cheques; while Labor cut billions from public hospitals and basic health, they kept sending out $900 cheques; while Labor cancelled the Chronic Disease Dental Scheme, a scheme which benefits the poorest and most disadvantaged in all our communities, they kept sending out $900 cheques; while Labor slashed Defence spending to its lowest level as a percentage of GDP since 1938, they kept sending out $900 cheques; while Labor short-changed the NDIS initial trial by more than $3 billion, against the recommendations of the Productivity Commission, they kept sending out $900 cheques; while Labor short-changed the Gonski education funding reforms and loaded them to the back end of the next parliament—not this one—as someone else's problem, they kept sending out $900 cheques; and while all this was happening, they kept sending out $900 cheques—long after the emergency passed.

We have had over $120 billion in accumulated Labor deficits since 2008. If left unchecked, as Treasurer JB Hockey has stated, Labor would never have delivered a surplus and we would be heading toward $667 billion of gross debt. To quote a former Labor Prime Minister, 'This reckless spending must stop.' We have to stop sending these cheques out; we have to end the waste—it is that simple. We have to start living within our means—it is that simple. We cannot simply keep on spending and passing the debt on to our children to repay simply because we just cannot do the hard yards. We must pay back Labor's debt—it is that simple. We must roll back legislation that is no longer needed; the Australian public expects it. We must respect the Australian taxpayer's dollar, because the taxpayer demands it. We must make sure that we do the right thing. It is the time for conviction politics and the time when we have to stand up and be counted. It is the time for hard decisions.

Anyone can stand up here and say, 'We are going to spend some more money and make everyone happy.' What we must be doing as a parliament is focusing on what we have to do, focusing on making sure that we do respect that taxpayer dollar—and that will be a recurring theme throughout this parliament. And thank goodness that we have come to a time when we will be respecting the taxpayer dollar.

Previously, the member for Chifley said that the Howard government was profligate. What they did, though, was pay off all the debt. They had money in the bank. You will find in your own household that on that magical day, sometime soon—sometime in the very far future for myself—when you do pay off your house that your spending on luxuries will increase, because you can afford it. But the spending that the Howard government did, by and large, was affordable, because that was the time and the place. You cannot tell me that from 1996 to 1998—and you know that period particularly well, Mr Deputy Speaker Broadbent—was a time of all fun and glory, where everyone was just throwing money out the window. Some good people lost their seats in that 1998 election because hard decisions had to be made and we had to change the focus.

So we have to start living within our means; it is that simple. Once again, we simply cannot keep on spending and passing the debt on to our children simply because we could not do the hard yards. We must pay back Labor's debt. The rollback and outright cancellation of bad and redundant programs and legislation starts with this bill. It must start now. We have to be fair dinkum about it, and it is as simple as that.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

It is with a level of pride that I follow the member for Herbert in this debate on the Tax Bonus for Working Australians Repeal Bill 2013, because he gave, I think, an exemplary illustration of where mainstream Australia is as far as payments to the Australian population through the global financial crisis go.

The entire world struggled with the new challenge that we faced in late 2008, and Australia was no different at the time—caught up in the maelstrom in September of that year of collapsing international financial institutions and the confidence that went with them. Australia had some predispositions that left us in a very strong and confident place, even though at the time we did not realise how well we would negotiate the difficult times to come. With the benefit of retrospect in looking at the way in which we handled ourselves through that period, one thing is very clear but not often detailed: both sides of this chamber in 2008 were unified on the important role for an appropriately sized, timed and targeted stimulus payment. I remember our then leader, Malcolm Turnbull, saying just that: it was not the debate around stimulus so much as the size, the quantum, of the stimulus that mattered.

When you look at the global effort to combat the crisis of 2008 and 2009, sure Australia was at the head of the pack but it was within the pack as far as designing a stimulus payment. It is important to stimulate, but the moment you start stimulating your economy more than your neighbours you simply start to get a flow-on effect where you start stimulating your neighbours' economies at the expense of yours. The best possible example of that was the paying of large, effectively cash transfers to the population in one-off, untied and untargeted payments because, no matter how well-meaning we are as individuals, we know there are people who will purchase large, Korean flat screen TVs with their money. That does wonders for the Korean economy and their efforts to escape their financial crisis but does virtually nothing for ours because all that $1,000 effectively does is purchase a television from Korea and pay for the delivery guy to drive from Harvey Norman to your house. That is an absolutely minute proportion of that stimulus helping our economy. That is called the economic multiplier.

The question one has to ask when planning a stimulus package is: how much of that money will be reinjected into the economy leading to greater economic infrastructure that in turn will strengthen the economy? It is easy for money to leak away to other economies. That helps other countries escape their financial crisis. That is precisely what Australia did.

It is interesting that Australia did not invent the idea of the cash payments that we debate today. No, it was the United States. There was an extensive study by UCSD looking at where these payments went. It showed that, when you looked at household consumption, there was barely any impact in stimulating the economy from making direct cash payments to people—certainly not direct cash payments to backpackers and certainly not direct cash payments to backpackers who have already gone home. There is no economic multiplier impact from that. We know that people who were no longer living and able to spend money were receiving payments. We know there was all sorts of chaos around the payments that was never rectified when the now opposition were in government.

The other great analysis that can be done now in retrospect is on why Australia went so well. I respect that the Australian Labor Party will tell you that it was because Kevin Rudd was our Prime Minister, but if we ask for some economic advice on why we did so well we will be told that there are three major areas that can explain that. The first one was that the Howard government left Australia in a significant surplus position. I will come back to the use of the word 'surplus' in a minute. We left this country with enough fuel in the tank to be able to stimulate the economy when it mattered so that over the cycle Australia was not going to be left in a precarious debt position. That is the first one.

The second one is that we had resilient banking services. Our four major banks are all regarded in the top 22 AA-rated banks in the world. We are one of the only countries, together with Canada, that have such a resilient, high-quality banking sector that holds the reserves so that confidence can remain that, even when these incredible economic ructions grip the financial sectors in the Northern Hemisphere, Australia will not suffer the same fate.

Finally, we know that Australia has a commodity based economy. It seems simple, doesn't it? As long as we are loading ships and employing people to dig up the ore that ends up in them we are going to be okay. That is to a point. So long as the recession is short and sharp your employees do not lose their skills but, if you face a long-term recession, you have the significant risk that people will lose their skills in unemployment and be harder to reemploy. Australia, fortunately, had what we call a short, sharp recession. That short period of stimulus was just what we needed—had it been the right amount—to get us through a short, sharp recession.

Where countries face three-to-five-year or seven-year recessions or economic slowdowns like we witnessed in the 1990s in Japan then it becomes more sensible to have significant and longer term stimuli to keep people working, keep them trained and keep people with their lively routines and not become long-term reliant on welfare. That is not what happened in Australia. We are still the world's leading commodity exporter. Sure, we believe about 75,000 jobs were shed in mining but, no sooner had these people been laid off, Australia was fulfilling longer term contracts, prices had adjusted somewhat and mining companies were beginning to rehire again and whatever jobs, for instance, were lost in one sector were simply picked up in other sectors. Gas is a fantastic example of where employment has significantly grown over that time.

Over the last few decades Australia has been able to rely on not just what is above the land but what is below. You may say that one day these limited non-renewable resources will run out. I can assure you that Australia has plenty of other valuable non-renewable commodities that will last us to the end of this century. No matter what the world will need next, it is quite likely that Australia has it under the ground. We are extremely well placed not to become utterly reliant or beholden but to use our commodity sector to the best possible benefit of the Australian population now. I do not think anyone has any interest in leaving commodities in the ground until the point is reached where they have no worth any more and you say, 'I wish we had dug them up when they were valuable.' Of course we have to go as hard, as effectively and as efficiently as we can to be deriving GDP for this nation and providing jobs to our children who need them. That was the third element that got us through the GFC.

There has been interesting analyses done by the IMF, who took the counternarrative and asked: which were the countries that truly suffered in the GFC? I diverge slightly from these cash payments, but I will come back to them. Summers at the IMF found that nations that were utterly reliant or significantly reliant on high-tech manufacturing were the ones that had the greatest job losses. To put it another way: this was the iPod crisis. The countries with high-tech manufacturing were finding that through the GFC people said, 'I will just pause on the purchase of high-tech goods and see where the economy goes.' They felt the 10 per cent falls in GDP; they felt the eight per cent falls in employment. Many of these were the south-east Asian tiger economies and, together with the US and some of the financial economies, they felt massive falls in GDP and in employment. So Australia did well.

We can entertain ourselves for a decade talking about whether it was the Labor government that was responsible for saving jobs or whether, as most economists worldwide would say, Australia just simply had the prerequisites to survive and negotiate its way. But there is one thing that is virtually not debated; there is one thing you will find agreement on—from students of economics 101 all the way through to governors of the Fed Reserve—and that is: if you want an economic multiplier from the money that you spend, it certainly is not best to do it in open, broad cash payments.

Now payment is one thing but, to use an Orwellian term, a 'tax bonus' is quite another. I find it ironic that the former Labor government actually used to refer to paying Australians 'bonuses'. Every person listening to this speech today would say that a bonus should be a reward for top performance. How can you continue to possibly pay bonuses when you are failing in your job of simply balancing a budget? As I have said before: if you have consecutive budget deficits, which is all that Labor ever achieved while it was in government for six years, isn't that just intergenerational theft? Isn't running a deficit budget, year in and year out, with no intention to ever ameliorate the situation, fix it up, run surpluses at some time in the future or ever balance the budget over the longer term cycle just thieving money from the next generation? Isn't it simply saying, 'Our concerns are greater than those of your children, and I will spend your money on my problems, using the most patronising of language, because I want to spend the money now for my political purposes'? And is there a better example of this than dressing it up in a bill called 'a tax bonus for working Australians'? It is like the bonus that comes in is for working Australians, because there is something truly special in the eyes of the Labor Party about working Australians that means that they deserve a bonus over and above all of that great work they do from a rapidly deteriorating budget bottom line. No, it still called it a 'budget bonus payment'.

In the end this was—and history will recount it for decades—a government addicted to paying out bonuses to people who did not even realise why they were getting them. What other government would pay a schoolkids bonus and liquid paper out the requirement to spend the money on your schoolkids? Only a Labor government could possibly pay a schoolkids bonus and say: 'We don't actually care where you spend the money. Don't keep your paperwork. Here's your payment anyway.' If you were seriously interested in having the money spent on the things that matter, you would have just the one basic requirement to do so. I was appalled that it rubbed it out. If you are going to pay a bonus to Australians at a time when you are running the economy well, under the absolutely legitimate pretext that you are reinvesting the dividends, say, of higher than expected tax takings, then absolutely return it into the economy in the most effective and powerful way possible. What you had exemplar from the other side of this chamber, when it was in government, was the worst possible way of doing it. It was just effectively paying a pre-election bribe.

Now, look: everyone in this chamber can make up a story about how hardworking Australians are and how much we all deserve more money. There is no argument from me on that. Of course, if a cheque arrives in the post, like everyone else I will cash it. But at some point there has to be a conversation about what happens when the music stops, when this money has to be paid back and when our overseas creditors simply say, 'We're sick of giving you more money if all you're going to do is spend it on tax bonuses for working Australians.' I know we do not have massive levels of government debt, but we had moved from being a nation running disciplined and regular surpluses and sending a very powerful message to the market and to the global economy that Australia can handle its economic situation to a situation where you never knew what was going to happen next. A surplus was promised and not delivered. We had ridiculous deterioration in this debate where it then focused on how long away the next surplus would be: 'Whether it's 2018 or 2019, all you've got to do is vote for us three times and we promise you'll see just one surplus in your lifetime.' It became pathetic; it became absolutely unsustainable. But it is true that governments in distress, in utter chaos, ultimately lignify. They are unable to offend without losing political support, and they get to that point where they simply cannot say no to people. That is what we reached with the former Labor government.

So there it was, leading into election 2013, that almost invidious challenge for Australians and for the then opposition Liberal Party to come out and say: 'You know what? We know the music is going to stop, so before an election we will commit to stopping these schoolkid bonuses.' That was an extremely brave commitment to make by the then opposition Treasurer, and I back that kind of courage. I also back that plenty of people in High Street in my electorate, plenty of people living, working and commuting in my electorate of Bowman, will also say: 'You know what? This means I don't get a cheque for $900, but I can see why this government has to, at some point, say enough is enough.' We have been asking, since 2009, for precisely when these forms of ill-disciplined and poorly targeted payments would stop. That is not a difficult question for this chamber to consider, but there was no hope, so long as we retained a Labor government in this country, that we would ever see any form of cessation of these vague and Orwellian tax payments to working Australians at exactly the same time that our economy was in decline.

I have said before that we had three major criteria for why we evaded most of the impact of the GFC. The lesson we did not learn is that our payments need to be targeted. The US made that mistake; we then made it twice more. This legislation was the fourth time, and I am glad that today we embark on its repeal.

Steven Ciobo (Moncrieff, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

It is a pleasure to rise to speak on the coalition's delivery of its commitment in relation to this bill, the Tax Bonus for Working Australians Repeal Bill 2013. I must say, as numerous coalition speakers have in this debate, that this bill signifies the difference between the coalition and the previous Labor government. This bill encapsulates the difference of approach between the coalition and what we saw from Labor over the past six years. In many respects this is summed up in the pious amendment put forward by the shadow Treasurer. The amendment he seeks to make includes the words:

That all the 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 opinion that the $900 payments, along with infrastructure investments including in schools, roads and social housing, prevented recession and saved hundreds of thousands of jobs and small businesses following the Global Financial Crisis”.

I am not surprised that Labor still, all these years later, is grasping on to that little sentence. Their line is that they were the visionaries who saved Australia from the GFC. What I hear repeated in talking points, across the length and breadth of this great brown land, is this: if it were not for the Labor Party's strong, decisive action, Australia would have tumbled into recession. The extraordinary thing is they just whitewash the real facts out of Australia's history on an ongoing basis.

The Labor Party does not like being reminded of the real facts. The Labor Party does not like being reminded of the fact that it was under their watch, when they had control of the Treasury benches, that we saw Australia's situation deteriorate from having net assets of billions of dollars—of having money put aside in the higher education fund and the Future Fund, and no net debt—to the Labor Party bequeathing to the next generation of Australians decades of debt in six short years because of their reckless spending. That is the legacy of the Australian Labor Party. We know that right now Australia is on track to reach $500 billion of debt. We know that, over the forward estimates, Labor left behind a forecast of $123 billion of budget deficits. And we know that, if we do nothing and keep to the same trajectory Labor placed this country on, we will reach a peak debt level of $667 billion. So when Labor moves silly, pious amendments like this one, when they pat themselves on the back and say, 'Weren't we great? Weren't we Labor Party visionaries? Look at the vision we had: we chained the next generations of Australians to decades of debt and saved the nation', I do not think the Labor Party's legacy is that great.

Australians see straight through the Australian Labor Party and that is why so many of them decided to support the coalition at the last federal election. Labor can run around all they want in an attempt to whitewash over the history of the last six years and say, 'Look at the Labor Party! We saved Australia from recession,' but they left it to my children and children across the country to pay back not only hundreds of billions of dollars of capital owing but also, probably, $100 billion or more of interest over the next 20 years. So when Labor talks about infrastructure such as investment in schools, investment in roads and investment in hospitals, I ask one simple question: how much more could we as a nation be investing if we did not have to repay $450 billion worth of debt? How much more could we as a nation be investing in roads, hospitals, health and schools if we did not have to pay back over $10 billion a year in interest? That is what Labor left behind.

The bill before the House today—the bill that coalition members have spoken so eloquently about—encapsulates the difference of approach between the coalition and the Labor Party. That difference is this: under us, the reckless spending stops. We will make sure we have turned our back on the failed approach of the Australian Labor Party—an approach that failed not only in this country but in jurisdictions around the world. We have seen the consequences of the approach of those in the Centre Left—the Socialists, the quasi-socialists and social democrats all around the world—as they spent and spent. They said, 'It's okay—we'll keep spending and we'll get there in the end.' But all they succeeded in doing was effectively bankrupting people across the planet. Now, as we see unemployment rates break through 20-plus per cent—despite the fact that those countries were spending and spending, just as Labor would have us do—we know their approach is a failed approach. For that reason, the coalition is very pleased to be implementing this bill to repeal the Tax Bonus for Working Australians Act and to ensure that the Commissioner of Taxation does not make any further tax bonus payments.

The government made a commitment to end this waste during the 2013 federal election and this repeal bill delivers on that commitment. Tax bonuses were paid to Australian residents who paid tax in the 2007-08 income year and met certain income tests. The payments were designed to provide stimulus to the Australian economy at the height of the global financial crisis, according to the Australian Labor Party. Eligible taxpayers received: $900 where their taxable income was up to and including $80,000; $600 where their taxable income was between $80,000 and $90,000; and $250 where their taxable income was between $90,000 and $100,000. Most payments were made in 2009 but a number of payments have continued to be made, through either the late banking of cheques or the issuing of an amended assessment for the 2007-08 income year where the taxpayer had an outstanding entitlement to the tax bonus. In fact, more than 430,000 cheques totalling more than $375 million were issued for the financial year following the year in which the stimulus payments were intended to be made. Nearly 24,000 cheques, totalling more than $20 million, were issued nearly two years after the global financial crisis. In fact, in the last financial year, more than 15,000 cheques were issued, totalling nearly $13 million—three years after the stimulus payments were first issued. At the time of introduction, in 2009, the total amount to be spent on tax bonus payments was estimated at around $8 billion.

In 2009, the government opposed the entire economic stimulus package of the then opposition, including the payments authorised by the tax bonus bill, on the grounds that the package was poorly targeted, ineffective in supporting employment and unaffordable. It was no surprise that the member for McMahon—the shadow Treasurer—and other opposition members continually quoted Professor Stiglitz about the stimulus package. After all, Stiglitz co-authored a book with Andrew Charlton, who was Prime Minister Rudd's senior economic adviser when the Rudd government was splashing the cash.

Given that stimulus to the economy is no longer required, this government considers that further payments are not warranted. This represents an opportunity to stop government waste and reckless spending. The ATO has ceased issuing cheques in most circumstances, except where it has been requested by the taxpayer. To ensure that further tax bonus payments cannot be made by the ATO, this bill repeals the tax bonus act. The removal of tax bonus payments will prevent $900 cheques being sent out to people four years after the global financial crisis. The coalition does not support the amendment moved by the opposition, that I outlined earlier, for the reasons I have already discussed. We can no longer afford to borrow money for this type of spending.

Government spending has never returned to the levels it was at prior to the global financial crisis. In the 2008-09 financial year alone, real government spending grew by more than 12 per cent. The government is now spending $100 billion a year more than in the final year of the Howard government. That is why this government is proceeding with a commission of audit, tasked to assess the role and scope of government as well as to ensure that taxpayers' money is spent wisely and in an efficient manner.

The Mid-Year Fiscal and Economic Outlook ruled on Labor's economic record. MYEFO showed what a mountain of debt and what sort of legacy has been left behind. As I said, it projects $123 billion of deficits over the forward estimates to 2016-17, and a peak debt load of $667 billion, or two-thirds of a trillion dollars, within a decade. That is what will occur unless changes are made. That is why the coalition are unapologetic about ending Labor's waste. That is why the coalition are unapologetic about ceasing the kind of reckless spending typified by the $900 cheques. That is why the coalition is unapologetic about refusing to continue down the path that Labor set us on—borrowing hundreds of billions of dollars just to spend frivolously and run around the community saying, 'Look at what we did.' Every time a Labor member stood up at a school assembly and said to Australian kids, 'Aren't we great because we've built this school hall?' the coalition said, 'No, that's not great, because those kids will be paying off that school hall for the next 20 or 30 years.' That is the legacy that Labor left behind, and it is the pinnacle of the reasons why we have brought forward this repeal bill. I commend it to the House.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

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

Question negatived.

Original question agreed to.

Bill read a second time.