Thursday, 15 September 2016
Budget Savings (Omnibus) Bill 2016; Second Reading
The Budget Savings (Omnibus) Bill 2016 has been heralded as delivering $6 billion of budget savings over four years. It does not. Saving is what happens when you do not spend. This bill cuts back on spending plans by $5 billion over four years, so, at most, the government can claim to be saving $5 billion. Even this is a bit of a stretch, because over the four years in question annual government spending is still estimated to rise by $78 billion—even after accounting for the impact of this bill. Suppose someone were spending more than his income, but still planned to increase his spending in the years ahead. If the person said, 'I had planned to increase my weekly spending by $83, but now I only plan to increase my weekly spending by $78,' would you think that he was doing any saving at all? I do not think so.
This bill is said to deliver $6 billion of budget savings, but more than half a billion of this represents tax hikes, not the paring back of spending plans. I oppose these tax hikes. The tax burden is already too high and it is expected to grow even without these tax hikes. Our tax burden has grown decade after decade, even after accounting for inflation and population growth. And it is not as if the money is being so well spent that we should be paying extra!
There are four tax hikes in this bill. The bill imposes the Medicare levy surcharge on more Australians. This is a tax of between one and 1½ per cent on the incomes of Australians without private health insurance. Those without health insurance will pay more tax. The bill increases tax on Australians whose wages include fringe benefits. If they incur medical expenses, have dependants, live in remote areas, serve overseas for our defence forces or make low income superannuation contributions—and if they claim the associated tax offsets—they will find that their tax offsets will be reduced, and their tax burden will rise. The bill also reduces the research and development tax offset by 1½ percentage points and so raises the tax burden on businesses that innovate. The loss of a tax offset is a tax increase. The bill requires employers of more than 20 people to pay pay-as-you-go withholding and superannuation obligations in line with payroll cycles, rather than up to three months later. This may reduce compliance costs, but if the government were motivated by a desire to help business it would make the change optional. Alternatively, the government would compensate businesses for the loss of cash flow—but it has not. The government only has its eyes on the money, meaning it is a tax grab, plain and simple.
While I oppose each of these tax hikes, I support each of the spending cuts in this bill. Spending is out of control. Real government spending per person has never been higher, and over the past 22 years government spending as a share of GDP has only ever been this high once before—in 2009-10, when Kevin Rudd's emergency spending plan was in full swing. The fact that we are spending at what were once considered emergency levels should be of huge concern to all parties.
The government is living beyond its means. Continual budget deficits are causing our net debt to rise faster than GDP. This is not just concerning because we are borrowing to spend rather than invest and because the billion-dollar monthly interest bill is money down the gurgler; it is concerning because net debt to GDP cannot rise indefinitely without the consequence of a Greek- or Argentinian-style economic collapse. We cannot rely on rosy predictions of budget restraint and falling net debt some years down the track. To ensure our economic security, we need to cut government spending now. So, while I support the spending cuts in this bill, I urge the government to go further.
I urge it to talk to the responsible members of Labor to support spending cuts, to put pressure on the Senate crossbench to take some responsibility rather than letting them just throw pot shots from the sidelines, to look at the more saleable areas in which to cut, such as welfare and taxpayer funded benefits for people who are not poor, and to take advantage of the parliament's convention of passing the government's budget bills by delivering as many spending cuts in these bills as it can. Because while the bill before us today improves the budget position by $6 billion dollars over four years, the deficits over those four years are still expected to add up to $84 billion. We have taken one step. We have got fourteen more to go.