John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Hansard source

I would like to thank all those who have contributed to the debate on Appropriation Bill (No. 3) 2007-2008 and Appropriation Bill (No. 4) 2007-2008 and seek the leave of the Senate to have other remarks concluding the second reading debate incorporated in Hansard. The usual courtesies of providing these comments have been extended to the opposition.

Leave granted.

The remarks read as follows—

I rise to bring the debate on Appropriation Bill (No. 3) 2007-2008 and Appropriation Bill (No. 4) 2007-2008 to a close, and I thank those members who have made a contribution.

The Additional Estimates Bills seek appropriation authority from Parliament for the additional expenditure of money from the Consolidated Revenue Fund, in order to meet requirements that have arisen since the last Budget. The total additional appropriation being sought through Additional Estimates Bills 3 and 4 this year is $3.3 billion.

This proposed appropriation arises from:

• changes in the estimates of program expenditure, due to variations in the timing of payments and forecast increases in program take-up,
• the reclassifications of certain appropriations; and
• policy decisions taken by the Government since the last Budget.

The Government has promised to apply sensible fiscal restraint to put downward pressure on inflation and interest rates, and boost investment in the productive capacity of the Australian economy. The Additional Estimates Appropriation Bills deliver a modest first instalment on these objectives.

I want to speak first about the Government’s savings initiatives and their effect on the Additional Estimates Appropriations. The appropriations proposed in these Bills reflect the effect of part-year savings in estimates resulting from the Government’s election promise to identify savings in budget outlays. A comprehensive review has commenced and has achieved initial savings from a number of sources, some of which I outline below.

The Government has decided not to proceed with some measures announced by the previous Government; for example, we will not be proceeding with are contributions to the Rugby League Hall of Fame and the Australian Rugby Academy producing a cash saving to the Budget this year of $35 million.

The first part-year instalment on the Government’s election promise to deliver an additional two per cent efficiency dividend will be achieved this financial year, with an estimated saving in expenses against annual departmental appropriations of around $100 million in 2007-08. These savings have served partially to offset an increase in departmental appropriations in the Additional Estimates. Efficiency dividend savings are estimated to increase to around $430 million in 2008-09.

In addition, the Government is also requiring a 30 per cent reduction in Ministerial and opposition staff, yielding a net saving of $15.4 million this year.

More efficient administration will also arise this year from the transition from Australian Workplace Agreements to collective enterprise agreements and statutory individual contracts. The Workplace Authority will achieve a funding reduction of $30 million in 2007-08 as a result of the simplified administration.

The Government is also redirecting savings in annual appropriations to superior policy outcomes including, to name but a few:

• Redirecting the savings from cancelling the previous Government’s Skills for the Future program work skill vouchers to fund our better plan for more Vocational Education and Training places as part of our Skilling Australia for the Future program. A part-year saving of $16.3 million will be achieved this year;
• Abolishing the Access Card project providing a saving this year of $250.6 million; and
• Abolishing Australian Industry Productivity Centres, saving $10.2 million this year and redirect the savings to a better targeted program.

A review of a number of programs has identified savings, including:

• a saving of $33 million this year for the Renewable Remote Power Generation Program;
• a review of the Ethanol Production Subsidy and Ethanol Distribution Programs has identified scope to reduce funding by $15.8 million while still meeting the objectives of the programs of increasing the availability of ethanol in the community;
• an examination of the Child Support Reforms communication strategy has identified a saving of $4.9 million for some activities that do not need to proceed, or can be delivered more cost effectively;
• a saving of $45.0 million has been identified for the Murray-Darling Basin Authority due to delays in the Authority’s establishment arising from delays in the passage of the Water Act 2007; and
• a saving of $5 million in departmental funding for the Bureau of Meteorology resulting from delays in recruitment arising from delays in the passage of the Water Act 2007 and the Bureau taking on its new water information functions.

These modest savings, which are a harbinger of more substantial savings to come, have served to contain the additional appropriation sought in these Bills.

I now take the opportunity to outline the more significant measures contained in the Bills.

• The Department of Education, Employment and Workplace Relations will be provided with additional funding including:
• $100 million to establish the National Secondary Schools Computer Fund, which will provide grants of up to $1 million for schools to assist them to provide for new or upgraded information and communications technology for secondary school students in years 9 to 12; and
• $33.3 million for the Government’s Skilling Australia for the Future program which will provide a total of 450,000 additional training places over four years at a cost of $1.3 billion. Funding in 2007-08 will deliver 20,000 Vocational Education and Training places that are aimed at people currently outside the workforce.
• The Department of Infrastructure, Transport, Regional Development and Local Government will be provided with $2.5 million to establish Infrastructure Australia to ensure genuine rigor and accountability in infrastructure spending.
• Additional funding is proposed for the Department of Health and Ageing for investing in hospitals and community health under the Better Outcomes for Hospitals and Community Health program. This includes funds for specific commitments announced during the election such as:
• $10 million for the Flinders Medical Centre clinical teaching facilities upgrade; and
• $15 million for the Launceston Integrated Cancer Care Centre.
• The Department of Health and Ageing will also be provided with $33.1m to provide upfront capital grants and recurrent funding for the establishment of 31 GP Super Clinics around Australia, and to provide incentive payments to GPs and allied health providers to relocate to these clinics.
• The Department of Families, Housing, Community Services and Indigenous Affairs will be provided:
• $57.9 million in Appropriation Bill No. 3 to provide: additional in-home support for people with disabilities being cared for by carers; additional supported employment places; and to ensure support is available to people in disability business services; and
• an increase of $30 million for the Commonwealth State and Territory Disability Agreement, to allow grants to the States for people with disabilities and their carers.

These Bills are important pieces of legislation which underpin the Government’s new direction – in both spending priorities and fiscal restraint and deserve widespread support.

I am not convinced, after listening to the members of the Opposition in the Senate Estimates hearings, that they actually appreciate the importance of these Bills and this new direction.

Their questions and comments suggest that the Opposition members have not only failed to grasp the seriousness of the inflation challenge – a headline inflation running at a level not seen in 16 years – but they are also in denial about their own responsibility for delivering this risk to the Australian economy and the Australian people. And this is after 10 interest rate rises, and 20 plus warnings from the Reserve Bank about critical capacity constraints in our economy.

In government, the Coalition had no regard for the budget process, no regard for the ERC and was about as familiar with a budget savings process as it was with a fair AWA. It showed no fiscal restraint during its 11 years in government and during the election campaign this record blew out even further.

There is no clearer picture of the Coalition’s fiscal record than the former Prime Minister spending a record $9 billion in the campaign launch – just weeks after the first time the RBA was forced to raise rates during the election campaign.

There is no clearer record of the Coalition’s fiscal record than their legacy of big government, with the cost of running government almost doubling over the ten years to 2007-08. This supposed party of small government was responsible for delivering:

• the most regulated and expensive industrial relations system this country has ever known;
• the biggest spend on advertising;
• the biggest spend on consultants even though public service employment has grown much faster than overall employment since 2000 (excluding Defence, ASI4 and AFP personnel, public service employment has grown by 25.3 per cent over that time – total employment growth has been 15.1 per cent);
• an increase in the number of senior public servants by 44 per cent; and
• an increase in the number of ministerial staff by 30 per cent.

Labor must now confront the serious task of re-focusing government on fiscal policy. We cannot rely on monetary policy alone to protect the Australian economy and its households from the inflation challenge.

Labor will confront the inflation legacy of the previous government by delivering a budget surplus of 1.5 per cent of GDP. To meet his task spending will need to be cut by $3 to $4 billion on top of savings announced during the election campaign.

Fiscal restraint and tough decisions on spending are required to ensure that the government does all it can to combat inflation. Choices must be made to ensure that downward pressure is placed on inflation – this means that lower order priorities or priorities of the previous government will be subject to close scrutiny.

This task has already commenced in these additional estimates bills. We stand by the difficult decisions we have had to make to start delivering on our promise to rein in inflation. We do not falter in the face of questions from Opposition Senators – particularly those who were on the staff of the former Treasurer or those who were former Sports Ministers and accustomed to taking the easy options and showing no restraint – the so-called “cheque was in the mail” culture.

The Government does not oppose the Second reading amendment moved by Senator Murray on behalf of the Australian Democrats. The Government has a clear policy to enhance budget transparency. This was set out in our Operation Sunlight policy document which complements the recommendations of the Senate Finance and Public Administration Committee in its March 2007 report. Much work has been done on improving budget transparency and the Government expects to respond to the Senate Committee shortly. The Government is also committed to dealing, as soon as practicable, with the issue raised by the Senate Appropriations and Staffing Committee about the treatment of the ordinary annual services of the Government in the appropriation Bills.

I commend the Additional Estimates Bills to the Senate.

Question agreed to.

Original question, as amended, agreed to.

Bills read a second time.