Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to Senator Conroy, in his capacity representing the Treasurer. Can the minister explain to the Senate how the budget will address the inflation challenge facing the Australian economy? What measures has the government put in place to reduce the financial pressure on working families?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank the good senator for his question. This budget marks the beginning of a new era of responsible economic management. The opposition left this government with a serious inflation problem. We now have the highest domestic inflation in 16 years. Headline inflation recently hit 4.2 per cent and underlying inflation is running at a similar pace. The former government neglected warnings from the Reserve Bank and Treasury that their spending policies were fuelling inflation. The current opposition do not understand that high inflation is a drag on growth, it distorts investment and it erodes the living standards of families.

The Rudd government, however, has made fighting the war on inflation and addressing cost-of-living pressures a priority. This is the responsible budget that Australia needs at this time of high inflation at home and international turbulence abroad. The budget will fight inflation and deliver for working families on a number of fronts. The Rudd government has delivered a strong budget surplus of $21.7 billion for 2008-09, 1.8 per cent of GDP. This is the largest budget surplus as a proportion of GDP since 1999-2000 and the second highest in 35 years. It honours and exceeds the 1.5 per cent target set by the Rudd government in January without relying on revenue windfalls.

A strong budget surplus ensures that fiscal policy is playing its part to take pressure off inflation and that the heavy lifting is not left to the Reserve Bank. This surplus is built on a disciplined approach to spending. After years and years of short-term political bribes and profligate and irresponsible spending, this government has restored a disciplined approach to spending. Growth in real spending has been reined in to 1.1 per cent in 2008-09. This is the lowest real growth rate in nine years. It is significantly lower than the four per cent growth in spending over the preceding four years. That is right—four per cent growth delivered by those opposite.

In this budget, spending and taxation have been reprioritised to meet the needs of modern Australia and to assist working families under pressure. This budget delivers a $55 billion working families support package across tax, child care and education expenses. The budget tips the scales back in favour of working families, who are the backbone of the Australian economy. The government is putting the fairness back into the tax and benefits system to ensure assistance is directed to where it is most needed. With the tax cuts and child care and education initiatives, a typical family— (Time expired)

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

My question is to the Minister for Innovation, Industry, Science and Research, Senator Carr. How does the abolition of the highly successful and cost-effective $700 million Commercial Ready program assist Australian industry and small business to innovate and grow jobs?

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

It was never any secret that this budget was going to be very tough. It was never any secret—except, I am sorry to say, to the opposition—that we had a major inflationary problem in this country. We had members of the opposition telling us that inflation was a fairytale. We had this expectation that we should go on providing assistance and various other measures to millionaires, that we should not be cutting spending and that we should not be undertaking measures to ensure that we could improve the economy of this country.

What we have is a budget that contains disciplinary tax savings. It contains measures that demonstrate our commitment to fiscal responsibility, our commitment to modernising government spending, putting downward pressure on spending and ensuring that we put pressure on inflation. We understand that inflation is in fact real and that it does hurt working families. I will say this to the chamber: closing Commercial Ready was a very tough call, but it will allow us to get on with the job of implementing a new, streamlined set of programs, following the Review of the National Innovation System. All existing commitments under Commercial Ready—that is, $200 million over four years—will be met. All regional AusIndustry offices, which of course were established under Commercial Ready funding, will remain open. This is a budget which is about reordering priorities.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Away from innovation.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I note Senator Abetz’s interjection. I note that he supported the Productivity Commission when it said that there were too many projects funded under Commercial Ready which would have proceeded without funding assistance. Do you still hold that view? Do you still hold that view in support?

Alan Ferguson (President) Share this | Link to this | Hansard source

Senator Carr, I suggest that you address your remarks through the chair.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

A very reasonable point, Mr President. I ask, Mr President, is it the case that the opposition supports Senator Abetz when he attacks the AiG and Heather Ridout for supporting this budget? The AiG said:

By more than offsetting new spending with savings and by running a large surplus, the Government has adopted a responsible approach, which should be helpful in addressing inflation.

Senator Abetz responded to that endorsement by saying that Heather Ridout and the AiG would have a lot of explaining to do to its members. Is that the official position of the opposition?

The government clearly are in the business of reordering priorities. We have initiated new, multibillion dollar commitments to climate change programs. We are using three-quarters of the savings from the Commercial Ready program in the period 2008-09, which will go into clean business programs—which of course is fulfilling an election commitment. These programs, which include Climate Ready, support innovation in water recycling, waste recovery, small-scale renewable energy, green building materials and efficient energy use in appliances. Our Climate Ready grants will match company spending on research and development on proof-of-concept and commercialisation activities, and they will do that on a dollar for dollar basis. Funding for that program will begin in July. (Time expired)

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. As I cannot move an extension of time for the minister, I will ask a supplementary question. Doesn’t this reckless decision to abolish the Commercial Ready program make a mockery of the minister’s much-vaunted Review of the National Innovation System, headed by Dr Terry Cutler? Was Dr Cutler consulted prior to these cuts being made? Hasn’t this review in fact received hundreds of submissions, including calls to expand the Commercial Ready program? For example, does not the Australian biotechnology organisation AusBiotech describe this Liberal government initiative as ‘highly successful, cost-effective and the preferred form of government support’? Why are all these people wrong and the minister so right?

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

The government is pursuing very tough fiscal discipline. We are imposing upon ourselves a very tough regime. This is one of those decisions. This is a decision which I think will have to be acknowledged by all concerned as a very tough decision. However, this provides opportunities for new programs, in terms of innovation, which are being pursued by the department: some $240 million of new programs to ensure that climate change programs are available to assist industry in adapting to the new conditions, some $200 million with regard to the Enterprise Connect centres, a researchers in business program; in total, support for some $917 million worth of new projects. (Time expired)