Nick Xenophon (SA, Independent) Share this | Hansard source

I indicate that I will be supporting the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and related bills, and I would like to outline the reasons for that. I will make reference to some commentators in this debate that I think have added to the public discourse, some on the conservative side of politics, some on the other side of politics—the progressive side, or however you want to put it—and some in the middle, because I think it is important that we put this in context.

I do not believe that there is a budget emergency in the terms set out by the government, but I do believe that we have some serious structural issues in relation to the budget and in respect of our economy that must be dealt with. It is interesting to see what Jennifer Westacott, the CEO of the Business Council of Australia, said in last weekend's The Australian. She said:

Let's get some facts on the table. By 2050, there will be fewer than three people working to every retiree, compared with about five people today. This will place huge pressure on our tax base, huge pressure on services, and huge pressure on our competitiveness.

I agree with what Ms Westacott has said. This is something that we need to consider as a nation. If we do not consider it, we are in a fool's paradise. I also agree with Ms Westacott when she says:

If we look at our competitiveness, we are currently 21st on the World Economic Forum ranking, down six places in the past five years and the first time Australia has ever slipped out of the top 20.

Another commentator, who is known as a conservative commentator—and I do not say that in a pejorative way—is Maurice Newman, who has a role on the Prime Minister's taskforce on business and productivity. He has made the point to me that our level of individual household and corporate debt is very high. I do not have the figures in front of me, but we have household debt at 100 per cent of GDP, which is the highest level since 1988 and among the highest in the developed world. So we need to take into account corporate and personal household debt.

Professor Richard Blandy from the University of South Australia, someone whom I have known for many years and whose advice I have valued—I particularly valued his advice during the electricity privatisation debate in South Australia in the 1990s—made the point in an opinion piece in The Australian towards the end of 2012 that Australian productivity growth was the third lowest amongst a list of 10 countries he set out, just nosing Spain into second last spot. South Korea's rate of productivity has been about 3.5 times Australia's across the past 20 years. Finland and Sweden's rates of productivity growth have been about double Australia's, and that of the US is about 70 per cent faster than Australia's. So we do have some real structural issues in our economy in terms of productivity and economic growth. It is worth mentioning that, when Donald Horne wrote The Lucky Countrywe usually just take the title of the book—what he actually said was:

Australia is a lucky country run mainly by second-rate people who share its luck.

So these are matters that we need to deal with.

Conservative commentator and economist Henry Ergas—it is a pity that Senator Cameron is not in the chamber, because any mention of Mr Ergas gets him going!—said in a recent opinion piece in The Australian:

The fiscal outlook speaks for itself: Labor left an unsustainable legacy. With spending growth primed to explode, gross debt was set to reach $700 billion by 2023-24, at which time more would be spent on interest payments than on aged care: and that optimistically assumed economic expansion would continue unchecked.

And he was critical of former Treasurers Swan and Bowen, who, he says:

… craftily shifted the steepest increases to just beyond the forward estimates, with spending projected to rise by 5.9 per cent in 2017-18 alone, a rate of growth only exceeded in the massive fiscal stimulus of 2008-09.

These are some of the issues that we must face as an economy.

The reason I support this measure is that I think it is important that we share the load reasonably and evenly. I do not think this budget does that. This is just one small part of it where I think it is fair that higher income earners—those that earn $180,000 a year or more—pay more in income tax. And I would not have a problem with this levy going beyond three years. I say that because, if you look at the context of this budget, there are some real issues of inequality. It is worth referring to a piece by Peter Hartcher, the political editor of The Sydney Morning Herald:

… as Britain's conservative prime minister, David Cameron, said in 2009: "Per capita GDP is much less significant for a country’s life expectancy, crime levels, literacy and health than the size of the gap between the richest and poorest in the population."

I have a real concern that this budget will actually make the level of inequality in Australian society much greater, that it will widen the gap between the richest and poorest in this nation, and I do not think that is a good thing for the long-term societal and economic benefit of this nation.

The work that has been done by NATSEM at the University of Canberra is valuable if we need to put this into perspective. NATSEM provided modelling for the coalition government, at the time of the advent of the GST, about the impact of the GST. It was something that the coalition government back then relied on. NATSEM also costed election promises for the coalition back in 2010. I think the Prime Minister has said publicly that they are the best modelling agency around. They are a credible body that do some very good work, and I am grateful for the contribution they make to the public discourse in this country. NATSEM are very concerned about the way the budget has targeted some of these welfare cuts. The evidence indicates that, while the cuts to welfare will be permanent, this levy is only temporary. It is worth also noting that the poorest fifth of families would contribute $1.1 billion more to the government's budget repair task than the richest fifth, according to NATSEM. That is not fair. If we are going to share the burden, we should do it in a way that is much more equitable than this. I believe that Australians have a strong, innate sense of what is fair, and I believe that there are many aspects of this budget that are not fair. But I acknowledge the government does have some real structural issues to deal with.

In terms of structural issues, Richard Dennis from the Australia Institute—categorised as a left-wing or left-of-centre think tank—has made a considered and valuable contribution to public debate, in the same way that people like Henry Ergas make important contributions to the public debate about how we deal with economic issues. Richard Dennis has made the point—and I have met with him in relation to this—that tax concessions for superannuation are projected by Treasury to grow at an average of 12 per cent over the next five years. He says that, if, like the Commission of Audit, we simply assume that things grow at their trend rates indefinitely, then, by 2050, tax concessions for superannuation will cost $2 trillion per year, which would be almost 100 per cent of Commonwealth revenue. Clearly that is not sustainable.

Peter Costello, in his first budget, imposed a tax on superannuation funds for high income earners and I think that is something we need to look at. We need to look at some structural reforms of super that are fair and are considered but that avoid what appears to be a rort in some circumstances for people who are particularly high-income earners and who have particularly large super funds. That is what is killing the budget and that is something we need to address as a matter of some urgency.

It is also worth noting that there are other budget measures that, I believe, will lead to greater inequality, lead to a much greater sense of unfairness and lead to greater levels of unemployment. I unashamedly support the automotive sector in my home state of South Australia. I note Senator Madigan's work in his home state of Victoria in this. The decision was made by Holden, Ford and Toyota to leave Australia as original car manufacturers. They will still be here as strong brands—and that is a good thing—but they will not be making cars here in Australia after the end of 2017. The automotive component sector makes up 33,000 jobs, the vast majority of jobs in the automotive sector. There are 140 businesses ranging from 50 employees to 500 or 600 employees that are involved in this sector.

Slashing the Automotive Transformation Scheme will mean that those companies will not be able to retool, reengineer, find new markets or find innovative new products to produce. The Automotive Transformation Scheme ought to be supported. By failing to support it, my fear is that we will see mass unemployment in this sector in the next two to three years and that there will be a so-called 'valley of death' next year when the funding is cut from $300 million to $100 million. We need to restructure the Automotive Transformation Scheme to take into account the realities of car manufacturers leaving this country and to support those small and medium businesses to be able to do something else.

We need to have a debate in this country, not an ideological debate but a debate about what works for us best in an Australian context. It is quite interesting what they are doing in Nordic countries. I agree with an editorial in the Economist of February last year which made the point that politicians from both left and right could learn from the Nordic countries, where they have all sorts of innovative programs, where they are not shy of having higher tax rate if there is a reason for it. The Economist makes the point:

The main lesson to learn from the Nordics is not ideological but practical. The state is popular not because it is big but because it works. A Swede pays tax more willingly than a Californian because he gets decent schools and free health care. The Nordics have pushed far-reaching reforms past unions and business lobbies. The proof is there. You can inject market mechanisms into the welfare state to sharpen its performance. You can put entitlement programmes on sound foundations to avoid beggaring future generations. But you need to be willing to root out corruption and vested interests. And you must be ready to abandon tired orthodoxies of the left and right and forage for good ideas across the political spectrum.

I believe that is the sort of approach we need. We need to go beyond ideology to see what would work here in an Australian context.

I want to finish off by making reference to Ella Wilcox's poem, which, I believe, might be the basis of the 'lifters and leaners' comments by the Treasurer during the budget speech. Ella Wilcox, a great American poet, who was born in 1850 in Wisconsin, wrote:

There are two kinds of people on earth today,

Just two kinds of people, no more, I say.

Not the good and the bad, for ’tis well understood

That the good are half-bad and the bad are half-good.

No! The two kinds of people on earth I mean

Are the people who lift and the people who lean

There are two kinds of people on earth today

What I suggest to those who may be followers of Miss Wilcox's poetry is this: sometimes people need to lean because of injury, illness or other personal circumstances. By all of us giving them support then they in turn will no longer need to lean and they can, in turn, become lifters. If there are people in future who need our support, who are disadvantaged, who have fallen on hard times, who for whatever reason are struggling then we can, as a broader community, give them that support as lifters. This budget has too much emphasis on knocking those who lean and does not take into account the circumstances in which they have become leaners—for want of a better term. I think it is a pejorative term in the context that it was used. I support this budget measure because it means that those who can afford it can make their contribution for dealing with structural issues in the budget.