Wednesday, 11 February 2009
Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009; Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009; Household Stimulus Package Bill 2009; Tax Bonus for Working Australians Bill 2009; Tax Bonus for Working Australians (Consequential Amendments) Bill 2009; Commonwealth Inscribed Stock Amendment Bill 2009
Bills—by leave—taken together and as a whole.
I have asked the Senate to go into committee to consider these bills and, so as to provide some order, I would also suggest that the committee consider the bills in the following order: Household Stimulus Package Bill 2009 and then each of the appropriation bills in order, followed by the Tax Bonus for Working Australians Bill 2009 and related bill and then the Commonwealth Inscribed Stock Amendment Bill 2009.
I suggest that we have a general discussion first, because there are clearly a lot of matters that cross over between the bills and then, if need be, go to the specifics. But I would have thought a cognate debate would be of assistance to everybody, and that would be my proposal.
I think that is an excellent suggestion. I am happy to deal with the bills in a cognate way to provide a discussion on general matters first and then the bills in the order that I have outlined. I think that would be a sensible way of proceeding. I thank the opposition for their input.
The Greens have indicated that we will be taking this package seriously. We have been taking it seriously for the last week, and I can say to the committee that we are still engaged in discussions with the government about changes to it which we believe would improve the outcome, in particular the employment prospects from the delivery of the $42 billion package.
Our greatest concern is with the tax bonus component of the package. That is some several billion dollars of bonus whereby $950 will be directed to all taxpayers below $80,000 and then a lesser bonus to taxpayers who have a taxable income below $100,000. It has no condition. It has no direction. It is not targeted in any specific way. What we are generally saying to the government is that it can target expenditure in this package better without slowing down the money going into the economy.
But let me go back to the setting of this package. We are in an international economic crisis. The government is moving to stimulate the economy through this mechanism. The real question is about the size of the package. We have listened in the committee stages to Treasury as well as to a number of other economists. At the end of the day, you cannot say exactly how big the package should be. It is our asseveration that government and Treasury have a high responsibility to be able to deliver a package which is going to prevent this country going into recession next year. And when you look at the projections that is what the package is about. We are projected to go into a technical recession next year. That has huge ramifications for jobs in this country.
We are dealing in this legislation with the potential loss of hundreds of thousands of Australian jobs. I can indicate to the committee that one of the immediate components we want to see put into this legislation is the removal of the liquid assets test for Australians who are being sacked through no fault of their own—those who are losing their jobs because of the economic crisis—so that they do not have to spend their savings before they are able to get assistance from government. It is a small item but it has a huge impact on those who are losing their jobs and it is a critical one for this committee to be looking at.
So we will potentially have a number of amendments to put to the committee as soon as possible. But let me be honest about this. We are discussing the matter with government; it is happening while the committee is sitting to deliberate on this matter. I do not like that particularly, but we have set a completion time on this of midnight tomorrow night. We will try everything we can to get to this committee as soon as we can any of the changes to the package that we have agreed to, or come up with or come to some sort of cognisance about with the government.
Can I make an intervention at this stage for the orderly conduct of the committee stages. I understand that a number of Labor senators want to, in effect, give speeches during the committee stages. That is their right and it is appropriate, should they want to do so. But if that is the case what I am suggesting to the committee is that possibly a time limit be allocated to that because, for example, if I were to ask a question of the minister it would then be open, if the minister did not respond, for a Labor senator to get up and give a 10- or 15-minute speech—whatever the time allocation is—and I think it would be very disjointed. Some might say that this tactic—if that is right—is a bit of a filibuster of their own bill. I will not go down that track other than to say that, for the orderly conduct of the committee stages, if people do want to give speeches can we get them out of the way by arrangement and by agreement at the beginning so that we can then have questions and answers, because I have a whole host of basically one-line questions that I want to ask of the government. But if they are being interrupted with what I am sure will be very worthwhile contributions by government senators then it just seems that the flow will be lost. I am wondering whether I could have the indulgence of Senator Ludwig for some sort of agreement on that. If we cannot, then so be it and we will try to proceed, but I think it will be disjointed for everybody.
That is beyond my control. The rules of the committee are set in standing orders. I suggest that you have discussions with Senator Ludwig and see if you can come to some arrangement privately. But it is certainly not something I can control from the chair.
To give a short response: we are here, we are in committee and we are happy to deal with the bills as a package. I suggested an order; Senator Abetz asked for some general matters to be dealt with first and the government is ready to proceed.
All right, in that case if we are going to deal with general matters first can I ask a few questions then to get the show underway. I first of all refer the minister to the document Updated Economic and Fiscal Outlook dated February 2009. I was wondering if the minister could confirm for us that on page 71 the reference to the Department of Treasury should in fact read ‘the Department of Families, Housing, Community Services and Indigenous Affairs’? I am also wondering whether the minister can confirm that in the documentation of the UEFO there is in fact a $97 million error. If he can confirm those two things for us, can I ask if an erratum or a corrigendum has been provided and if there are any other matters that need to be corrected in what I would consider to be the foundation document of this package of bills that is currently before us.
In dealing with some of these questions I will have to refer to the relevant officials who will deal with the various parts. In going to specifics such as that question, I of course always bear in my mind whether they should be part of the household stimulus package or each of the appropriations. But for the more general question I can take it on notice and provide an answer in a very short while. We are obviously keen to start dealing with them and we will be able to be responsive as soon as I can get an answer in relation to those specific questions.
Can I inquire—and this is no criticism—as to whether the minister is waiting on departmental advisers, because if he is might I respectfully suggest that, since Senator Polley is ready to give a speech, we allow her to proceed until the government is ready with its officials to answer questions.
I rise to speak on the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and the related bills. This is a critical set of bills. I will first make some general comments. I would like to initially place on my record my thanks to the secretariat and the staff involved—and I understand that there were some additional staff—in helping us while we analysed this group of bills. They enabled us to present our final report of the Senate Standing Committee on Finance and Public Administration. I would like to thank Christine Macdonald and her team.
Although we are here to do our jobs and we continued through this week to do them, and will continue to proceed to do the jobs that we are here and have responsibility for, I must say that, in light of the tragedies in Victoria, it was difficult. The cooperation I received from committee members was greatly appreciated. I am sure that, in light of the circumstances in Victoria, the community would understand that our minds were elsewhere thinking of not only those people who lost their lives and the victims in hospitals but also the emergency service personnel. As has been said around the corridors of this place so many times, it is an unbelievable situation. It is one that we as a country will be continuing to deal with for, I would suggest, many years to come.
It is appropriate to touch on the hearings that we had and to place on record my thanks to the witnesses, particularly for those who gave evidence on Monday, when we had to reschedule the hearings. The evidence that was brought forward to us enabled us to bring down our report and recommend that this group of bills be passed as a matter of urgency. Without doubt, we are facing the most unprecedented times that the Australian economy has had to deal with in my lifetime. This legislation is very important to the Australian economy and to Australian families and so it is important that we deal with this as quickly as possible.
I stand here today as a proud member of the nation-building Australian Labor Party and a member of the Rudd Labor government, which is putting in place measures and strategies to enable Australia to deal effectively and decisively with the global financial crisis. This nation and this government face important choices in our response to the global financial crisis, and the Rudd government has responded in a way that gives Australians hope that one day—when the global crisis has passed—a stronger, financially secure and well-equipped nation will remain.
The government has proposed measures which will deliver $28.8 billion in direct investment in schools, housing, roads and other essential local infrastructure, including a $2.7 billion temporary tax rebate expansion for small business to encourage private sector investment. It will also provide $12.7 billion in direct payments to low- and middle-income earners. Although there was some criticism from some members during our inquiry in relation to the funding going to our primary schools, I am sure that all elected members across this country—and, I know, those at state level—appreciate the fact that that injection of funds is greatly needed by our primary schools across Tasmania. I am very proud of the fact that we have chosen that as one of our key planks.
The people of Tasmania and of Australia have had enough of the federal opposition and can see that they are now so out of touch with ordinary Australians that they are withholding essential stimulus measures designed to not only boost the economy and support jobs but also deliver relief to families and working Australians doing it tough. Only the Rudd Labor government has the best interests of Australia and Australians at the centre of their economic strategy. Malcolm Turnbull and the opposition have been trying to make political opportunities for themselves. Australia is looking for leadership at this critical time.
What the Australian people will remember is that it was this government that took decisive action in the face of a worsening global crisis that has already seen the United States, the United Kingdom, Germany and Japan fall into recession. These are tough economic times and the Nation Building and Jobs Plan strikes the right balance between supporting growth and jobs now and delivering the investments needed to strengthen the economy for the long term. We cannot afford to sit back and wait and see what happens.
The economic crisis started in the United States on Wall Street and has spread across the world, slowing growth dramatically in China. It has caused a rapid unwinding of the mining boom, with major consequences for Australian revenues, growth and jobs. That is why this decisive action by the Rudd government is so critical for supporting economic growth and Australian jobs.
The Nation Building and Jobs Plan builds on the measures already put in place to support economic activity and jobs. The $10.4 billion Economic Security Strategy and the $300 million program to build local community infrastructure in local council areas are supporting growth in the short term. The $15.2 billion COAG funding package and the $4.7 billion nation-building package will strengthen investment in road, rail, health and education infrastructure—all key areas of our economy. Australia is better placed than most countries to respond to this crisis. We all need to work in a cooperative manner to get through these difficult times; we all have to pull together.
The insulation packages that are available for Australian families and the rebates of $1,600 for solar hot water will, I believe, be very welcomed within the community. At times there were some flippant comments in relation to Pink Batts, but generally the Australian community has acknowledged that there are issues in relation to climate change. They want leadership on this issue and this is an excellent part of the package that the Rudd government is putting forward.
Families will receive a back-to-school bonus of $950 to help with the costs of children returning to school. Students and people looking for work will receive a training and learning bonus of $950 to support their study costs. Farmers and small businesses affected by the drought will receive a hardship payment of $950. I believe those packages will be very well received within the community. Those 8.7 million Australians whose taxable income was less than $100,000 in 2007-08 will also receive up to $950.
This is an economy-boosting plan from a government that is determined to take the decisive action needed to support families and jobs. Under the plan, 2.7 million school-age children attract a $950 back to-school bonus; 1.5 million single-income family households get a $950 single-income family bonus; and families relying on the housing and construction sectors can feel a little more confident knowing that 21,000 jobs are going to be supported by the government’s $6.4 billion investment in the social housing sector. When ACOSS and representatives of Catholic and Anglican church groups—those that are at the coalface of dealing with housing issues on a daily basis—appeared before the committee, they were overwhelmingly in support of this package. I think it was fair to say that Frank Quinlan of Catholic Social Services Australia was very clear in his support for this package. He sees this as a stimulus package and not yet part of a rescue package that he believes we need to secure the future for low-income families and those most in need in our community.
I take the example of the 1.5 million single-income family households who will receive a $950 single-income family bonus. This will directly benefit 39,662 families in Tasmania alone and will mean so much to those who are doing it tough, even without the global recession that is looming. In my state of Tasmania, 6,135 young people on youth allowance and 20,879 on Newstart allowance will receive the training and learning bonus. These are the people that the Leader of the Opposition wants to attack and from whom he wants to take away the support that this stimulus package will provide. These are the people that need this money, and they need it as soon as possible.
It concerns me that the opposition has not been prepared to support our package and these bills. I believe that that is a decision for them. We have to show leadership, and I believe the Prime Minister has shown great strength in taking on this global financial crisis with the package that has been put together. Both the Prime Minister and the Treasurer should be congratulated. Industry groups and social organisations across the country have spoken out in support of the need for these stimulus measures. Overwhelmingly, they are saying that we need it, and we need it now, and there should be no delay. These measures have the wide-ranging support of groups like the Business Council of Australia and Anglicare. They all understand why this plan needs to be supported.
The global economic outlook has deteriorated significantly and the weight of the global recession is now bearing down on the Australian economy. Without further significant and timely policy stimulus, Australia would face a more severe slowdown. These stimulus measures are essential to ensure that Australian working families and the Australian economy are in as strong a position as possible going into this global recession. We will place ourselves so that we will bounce out of it so much more quickly than our international counterparts.
The International Monetary Fund has cut its forecasts for global growth three times in just four months and is now expecting a deep global recession. Economic growth is expected to slow to one per cent in 2008-09 and ¾ of a per cent in 2009-10. Employment growth is forecast to be hard hit by the global recession, even with the solid boost provided by the fiscal stimulus. The unemployment rate is forecast to be seven per cent by June 2010. This will unfortunately not be able to stop some people having to lose their jobs but we will certainly strengthen our resolve to protect as many jobs as we possibly can.
It is important for senators to note that Australia is better placed than most other economies, but we cannot completely resist the pull of global economic forces. That is why the Rudd government acted decisively to bolster Australia’s economic growth and support jobs during this crisis. I say again that it is so important and significant that we act in a very timely manner on these bills. Nobody can be certain whether this package will prevent recession but we can be certain that growth would be much weaker and unemployment higher if we do not act. We will not sit idly by and watch this unfold; we the Rudd Labor government have taken action to secure and retain Australian jobs and the Australian economy.
The Nation Building and Jobs Plan strikes the right balance between supporting growth and jobs now and delivering the lasting investments needed to strengthen the economy for the future. The International Labour Organisation is already predicting that unemployment could rise by up to 50 million as a result of the global recession. Again, I draw senators’ attention to this point: it is certain that employment growth would be much weaker without this stimulus package.
As I said earlier, almost all advanced economies around the world are already in recession, including the United States, the United Kingdom and Japan. I understand that President Obama is now encouraging his colleagues in the House of Representatives and the Senate to be sure that their package is passed as a matter of urgency. China and India are now slowing sharply, and the global mining boom has already taken into effect the financial crisis. I can appreciate this also from a personal point of view as my two sons-in-law both work in that industry. One is the manager of a laboratory— (Time expired)
The coalition has no objection whatsoever to a stimulus package to assist the Australian community to get through the beginnings of the global financial crisis as it affects Australia. What we do have a lot of objections to are some of the crazy aspects of this package that have been put forward. The Leader of the Opposition has told the government on numerous occasions that we are more than happy to discuss a prudent, sensible package that will assist in genuinely helping to build and continue to build the Australian economy. But this package is not the way to do it.
I would like to speak to a couple of the measures that are proposed, particularly in Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009. The first one relates to the package designed to put insulation into 2.7 million existing homes in Australia. I will talk a little bit about how foolish this package is and how distorting this package is. To do that, I would like to go back and look at what happened to the rainwater tank industry in Australia. I think everyone would remember that rainwater tank rebates were certainly the flavour of the month, at all levels of government, over the past five years in various forms. Most of these rebates have been withdrawn from residential housing because they got too expensive for the groups providing them or simply because there was nothing left to do in that area.
The rainwater tank industry, at its height, turned over $1.7 billion. We are talking about less than two years ago. It now turns over about half that amount. And perhaps we should look a little bit at the industry itself. There are many venerable, old and solid companies working in this area. They have provided tanks, primarily to the rural and semi-rural markets, for generations. But the rainwater tank rebate brought lots and lots of other players into this market. Some of them were people cashing in their superannuation and buying machines to make rainwater tanks. They were using machines they did not know how to operate and materials they did not how to mould to make products for a market they did not understand. A lot of people lost much of their superannuation through this. I am aware of three people that this happened to.
But there was another segment of this market—some rainwater tank installers who were, in anyone’s terms, ‘cowboys’. They got into the industry because they saw that it was a way to make a buck. They knew as much about rainwater tanks and rainwater tank installation as an accountant would; they knew nothing about the industry. Most of them, dozens and dozens of them, in every capital city in Australia have now failed. Of course, when they failed they did not just lose their own money; they left suppliers with debts that will never be paid and they left customers with orders for tanks that have been paid for but will never be installed. So the damage and distortion caused by concentrating your rebates into one area of the energy efficiency equation and the water efficiency equation is foolish. That is well demonstrated and it has been very recently demonstrated by the damage done to the rainwater tank manufacturers, suppliers and installers of Australia by rebates that come and go at the whim of various levels of government.
The same, of course, is going to happen with the insulation installers. One business person in Brisbane jokingly commented to me this week: ‘Oh well, we know where all the rainwater tank installers will turn up next. They’ll turn up as insulation installers.’ Of course, half of these are people who rushed out and got a training certificate under the training levy introduced by the Hawke government. So can we please began to realise that one-off approaches that target one little spot of an industry are worse than useless, they are damaging. There is no point whatsoever in concentrating on just this one little part of the energy efficiency and water efficiency equation. When you look at the proposal, we are talking about all the homes that are not currently insulated, 2.7 million homes, getting insulation over a 2½ year period. Of course this is going to cause a frenzy of activity in the market, but for what purpose? It is one small section of a market. It will attract, as I said, people who do not have a clue what they are doing, and it will attract people who are dishonest. We will have dozens and dozens of stories of pensioners who are ripped off by people who go up into their roofs, apparently fiddle around for a while and then leave. It will be months before they discover that they did not get what they paid for; they will be lucky if they get anything. So even the effect on energy efficiency could in many cases be limited.
The need to develop energy and water efficiency packages for housing is a very great need and it is also a very right way to attempt to stimulate the economy. But you do not do it by focusing on one tiny little segment of it. Let us look, for example, at the New South Wales government—which, with its current woeful performance, is not exactly the government you would think to look at. About eight years ago the New South Wales government developed a policy called BASIX. It is a list of things that home owners, home builders, can have in their house that will give them varying degrees of energy and water efficiency. It assesses each household design against energy and water reduction targets. Every new residence must meet the targets by putting together a sensible list of energy and water efficient products for that house.
BASIX does not limit itself to one industry but spreads the demand across energy and water efficiency initiatives to any industry involved in producing products that increase efficiency. The homeowner ultimately makes the decision as to which product would be installed in the new home, so it encourages the orderly development of a number of markets across the energy and water efficiency production area. It does not skew the market in one direction. It encourages competition between products that are produced for energy and water efficiency and, by doing so in an orderly fashion, where people can see that the market will be sustained, it encourages innovation and effective and efficient market pricing. The other thing about the BASIX program is that it incorporates regional variations into the rating system. It looks at things like the climate, the soil type, the rainfall and the evaporation rates in particular areas when determining what the efficiency targets for new homes in a particular region might be. It does not just concentrate on one product.
The New South Wales government states that BASIX provides greater market certainty for sustainable industries such as manufacturers of solar hot water systems, rainwater tanks, insulation, performance glass and stormwater and waste water systems. I had an email during the week from a gentleman suggesting that, if we are worried about energy efficiency for houses, better curtains would be a good starting point for many houses. You might not be surprised to hear that this gentleman actually makes and sells curtains. Nevertheless, he has a point. If you cannot afford the curtains that block sunlight to keep your house cool or the curtains that hold in heat to keep your house warm, there is very little point in having the insulation in the roof. The two go together.
What would have been a vaguely sensible way to go about this stimulus would have been to develop a list of products that householders and homeowners could have chosen from as to what they particularly saw to be the best option for improving the energy or water efficiency of their home. It could have been developed on exactly the same basis as this, with a part subsidy paid depending on which product was chosen off the list. This would have had the benefit of assisting the construction supply industry in an orderly and sensible way, not just encouraging every cowboy in town who went broke on the last fad to become an insulation installer. I should perhaps add here that in that industry there have been many, many good participants for a long time, but they and their industry will be diminished by the cowboys who have no doubt already set themselves up, ready to make a motza out of yet another poorly planned scheme.
I would also like to talk briefly in the time I have left about the proposal to put extra funding into schools. Again, from a practical perspective, there are some very bizarre things being said about this program. I think we have already covered many of the issues: what does a school that has these facilities do, and what does a school do that does not have the land to do this? We have already talked about the fact that there is not a lot of encouragement to be gained from the way the government tried to go about rolling out computers in schools for how they will manage to handle this schools program.
But I think one of the most bizarre things I have heard was evidence recently that it is the small builders who will build the school halls and libraries and the large builders who will build the houses covered by the social housing component. I am not quite sure what the department of housing thinks a small builder looks like, but certainly I am aware of thousands and thousands of small builders who run one-man businesses. They would employ perhaps one other person and an apprentice—that would be it. These are not the companies who are going to build the school halls and libraries. It is going to be the much larger builders than that who will win those contracts. For a start, those small builders do not even have the insurance cover that would be necessary to build those school halls and libraries.
So the group of builders that we are most trying to help, the people who employ one or two others but will not employ one or two others if they do not continue to have work, are apparently going to be left out of this scheme—completely, according to the department of housing’s view on it. Perhaps they would come in as employees of other builders, but once again we have this complete skewing of how an industry will work. We are going to pump over $5 billion or $6 billion into this for two years, and then what? We will build up businesses just to let them fall down again. There is no attempt whatsoever to see this as a gradual increase or a sustainable increase. It will just keep going up and down like a yoyo.
One hopes that there can be some jobs dragged into the market if this package is passed, but again the funding is all at the wrong end. We have a small amount of funding coming out quickly and we have a large amount of funding coming out that the government thinks might hit the ground within 12 months but which will be very lucky to hit the ground within two years. By that stage, the economy will need twice as much stimulating as it currently does if it is to survive. It is a bizarre package. It needs radical overhaul, and until it is overhauled and until the government is prepared to discuss the issue with the coalition we will be absolutely opposing all the very poor elements of this package.
I will respond to the question that Senator Abetz raised. Before I do, regarding a couple of matters that Senator Boyce raised, I have asked for information as to the efficiency savings from a building where insulation is installed but there are no curtains and the efficiency savings that result where there are curtains. I will attempt to obtain some specific response—the officials are not nodding, so we should get a response on that. I understand broadly that there is a saving whether there are or are not curtains, but I will see if I can get some specifics on that.
I turn to the issue raised by Senator Abetz, which referred to page 71 of the UEFO. I acknowledge that Senator Abetz raised this at the committee hearing on 6 February. On page 2 of the Hansard Senator Abetz questioned Mr Geoff Leeper, deputy secretary of FaHCSIA:
Mr Leeper—I have that page in front of me. It certainly says Treasury, but the money is being appropriated to FaHCSIA.
Senator ABETZ—So the money is being appropriated to FaHCSIA—
Mr Leeper—That is my understanding, and it is in our portfolio supplement additional estimates statements at page 8. That is where our part of the appropriation bills is reconciled.
As Senator Abetz noted, on page 71 of the Updated Economic and Fiscal Outlook, which I have in front of me, it does indicate that the Department of the Treasury would receive funding for reduced homelessness and meeting priority needs. Then, on page 8 of FaHCSIA’s portfolio supplement, it indicates they would receive the funding. There is no error. The UEFO measure description was drafted to reflect what is expected to happen in practice in the post-COAG Commonwealth-state funding arrangements for this type of program. However, in drafting the appropriations legislation it was considered prudent to allocate the appropriation to the relevant portfolio, which in this case is FaHCSIA, until the legislation necessary to implement the new Commonwealth-state funding arrangements has been passed into law. The new intergovernmental agreement is effective from 1 January 2009 and provides that all payments to the states will be made through one-monthly payments from the Commonwealth Treasury to state treasuries. However, the intergovernmental agreement also provides for a transitional period to 30 June 2009 in recognition that it will take time to implement fully the new arrangements.
I am informed, Senator Abetz, that legislation to implement the new intergovernmental agreement will be introduced by the Treasurer this week in the House of Representatives. However, because of the obviously urgent nature of the Nation Building and Jobs Plan, rather than waiting for that new framework these appropriations for payments to the states through parliament are consistent with the current method in current law of appropriating payments to the states rather than under the new federal financial framework. This means that appropriations are allocated to the relevant portfolio departments rather than to the Treasury.
Further, it is prudent on the part of the government not to pre-empt passage of the new arrangement through parliament. When the federal financial relations bill is introduced by the Treasurer—as I have indicated, that will be this week—it will provide replacement appropriations for payments to the states and those appropriations will be consistent with the new federal financial framework.
I have a number of follow-up questions. Clearly, it is unsustainable for the government to assert that no error has been made. When the legislative framework on which they are relying has not passed the parliament, to suggest that they are not pre-empting is in fact incorrect. Either this document pre-empts the passing of that legislation, and is wrong on the current structure of the legislative framework in this country, or it reflects current practice. You cannot have it both ways, I would have thought. The appropriation bills should match up with the UEFO, and if this, rather than a mistake, was the explanation one would have anticipated a footnote at the very least in relation to the UEFO to explain this.
It seems passing strange that Senator Sherry told us that the legislation somehow had been carried and came into effect on 1 January this year but that there is now another bill around the place that we still have to pass. I am not sure where that fits in, but given that this is a government that knows everything and never makes mistakes I will simply put on record that any objective observer of this document in comparison to the appropriation bills will see that there is an error in the documentation. But, of course, Mr Rudd and the new regime are not willing to make any acknowledgement that they might be fallible.
I refer the minister to page 67 of the UEFO and ask whether there is some new intergovernmental agreement that is about to be legislated which would explain the $97 million for 2009-10 on that page under the heading ‘Nation Building and Jobs Plan—Single Income Family Bonus—One-off Lump Sum Payment of $950 per FTB-B Family’.
While the government seeks to respond to Senator Abetz’s question on this matter, I might use the occasion of the committee stage to reflect on some comments that I did not have the opportunity to address earlier. Senator Abetz has raised a question which we dealt with during the committee hearing stage, so I know the information will shortly be available to him. Rather than waste the Senate’s time, I think this is probably a good opportunity for me to make some general comments in relation to the overall package.
Firstly, I would like to take a brief moment to reflect on the situation in Victoria and the disaster that has occurred there, which is, I am sure, dampening the mood of all senators in this place, particularly those, like me, from Victoria. The tragedies that have occurred have touched many, if not almost all, of us who know people who have been involved. The circumstances around the crisis and the issues that government faces in managing the crisis into the future are another significant challenge for us, in connection with the issues that we are dealing with here as well. The Prime Minister made it clear overnight that the federal government is looking at, quite aside from this stimulus package, arrangements to help rebuild Victoria, along with the Victorian government. I applaud those efforts. The general stimulus that the federal government is looking at for the country as a whole will also be a useful vehicle. But, as the Prime Minister made clear overnight, a response to the Victorian situation is a very important and critical matter that the federal government will be dealing with quite separately.
I want in this discussion to go back to the broad framework of what we are dealing with in the stimulus package. Sitting here listening to Senator Boyce and some of the other opposition speeches in the second reading debate, I became quite concerned that a number of senators in this place really do not seem to comprehend the broader context of what we face. That was certainly the case in discussions about the debt situation with respect to this package. There was a lack of understanding of where Australia sits in the global environment in terms of the debt that is being managed in this process. There were also a range of other elements mentioned that I will take the opportunity to deal with now.
Senator Coonan, in our committee hearings, went to what has been called the ‘three Ts’. I think they are a very helpful summary of what we are dealing with. I could spend several minutes on them now, but I might deal with them a little bit later and, firstly, go through why we have this stimulus package, this urgent and very significant need to act. Indeed, Senator Polley highlighted some of those issues in her comments earlier. We cannot afford not to act and not to act very quickly. That is mainstream international economic advice. You would be struggling very seriously to find someone who does not agree that that is what we need to do. That is the first point.
Going back to the three Ts, let us flesh them out a little bit further, even going back to Senator Boyce’s points. When you go back and reflect on those three Ts, you understand why the package has been designed as it has been. The first of them is: timely. During discussion in the committee hearings we had a lot of reflection on the sorts of delivery mechanisms that were being used, that one-off payments were being used and that there might be more effective ways of generating consumption. There were a whole range of issues raised that seemed to miss one critical point: what we are doing now must be immediate. It needs to be immediate. The tax bonuses and the payments based on family tax benefit A and family tax benefit B are our delivery mechanisms to ensure that that boost to consumption can happen now. It is our most effective, most efficient way of dealing with the next T, which is: targeted. This is targeted to those households that we know will principally consume the payments.
Before I move on to the second T in detail, I will talk about the other elements of ‘timely’. We have been asked questions such as: why are we looking at social infrastructure rather than what is termed economic infrastructure? Why are we looking at schools as opposed to railways, road projects and suchlike? That is not to deny that we do have road projects that will be carried out through the local government arrangements in this package. But the point that seems to have been missed by a number of senators is that these social infrastructure projects are the ones that we are most likely to be able to get out quickly. The term ‘shovel-ready’ has been used. But it is not just the shovel-ready aspect that helps us get these projects out quickly; it is because they are already in the community. They can activate the community and they are more likely to be labour intensive and generate those jobs that we know we will need.
Going to the points on jobs, I despair at the level of semantics that has occurred in the discussion on this package to date. We listen to the economists trying to predict how many jobs will be created by various measures. Probably no-one knows the full scope of the unemployment that we are going to confront. We are focused on injecting into the economy measures that will best support people currently in employment and on developing projects that will employ more people, pick up those who end up being displaced or prevent people being displaced at all. Any attempt to encapsulate that in an estimate of numbers is a very, very risky exercise. There are assumptions that various economists make and models that they use, and I think most of us understand there are probably more than a handful of different ways to estimate some of these things. But if you go back to the basics, which is what this package is designed to do, they are about what we can do now which will be timely, targeted and temporary. And that third point—temporary—is because we are mindful of the debt situation. We want to give the economy a boost, but we do not want it to be done in such a way that we carry the burden into the future. That is the point about being temporary. That is why the one-off payments have been made. That is why we are putting them out as quickly as we possibly can. And it is those payments which we anticipate will boost the economy and help Australia through this global financial crisis.
I was astounded to hear some of the opposition speeches in the second reading debate suggesting that we are in this mess because of the current Labor government. I do not know how any opposition senator can plausibly suggest such a thing. Are they in absolute denial? As well as climate change sceptic, should we now coin the description of ‘global financial crisis sceptic’? The content of the opposition speeches on this package really left me astounded. Even in this committee stage debate, we heard the suggestion from Senator Boyce that the government needs to talk to the opposition because they are the ones with the ideas. Anyone who listened to the second reading discussion on this bill knows the nature of those ideas. As I said, the suggestion that we are in this mess because we have a Labor government is incredible. I suspect opposition senators might want to reconsider the rhetoric that they pump into this debate. Fortunately, the Senate has responded appropriately to the circumstances that currently face us because of the natural disasters. Perhaps opposition senators should take stock and reflect more seriously about the global financial crisis and what some of their speeches or contributions will look like in six months time.
Let us apply some of that to some of the other issues that have been raised during the course of the committee consideration. The scope of the individual payments was an issue that was canvassed. Senator Fielding, for instance, came forth with a range of stories of people who will miss out. Unfortunately, in the delivery of social payments, benefits and bonuses there will always be what economists call outliers. No delivery mechanism is perfect. We know that. In much the same way, we know there will always be some level—hopefully, a very small level—of misuse in the delivery of services. Senator Boyce talked about the potential misuse of the insulation arrangements. We know these things occur. The job of government is to manage those and make them as minimal as possible. And we know that, because of the urgency of this matter, we are yet to develop some of the guidelines for the implementation of some of these schemes. But I have confidence that the relevant Commonwealth departments that are dealing with these matters will be very mindful of the sorts of concerns that Senator Boyce expressed.
As an aside, because I also got the email about insulation from the curtain maker, I would say that perhaps an education program might not hurt as part of improving people’s domestic energy consumption and response to heat. When Senator Boyce was talking about insulation I reflected that not only had I received the same email but that on the day of the disaster in Victoria I was home and my husband put two thick blankets and doonas over our reasonably thick curtains in the one main room of our house that was not well cooled. It is amazing how you can improvise if you have the basic knowledge about what works effectively. I also reflected that we have heard in discussions on the radio that wall insulation is often quite helpful as well—something I think I aspire to for the second storey in our house. But the basic facts about the insulation package are that it will help support Australian jobs—we know that—and that it is targeted at those Australian households that lack ceiling insulation, which is a pretty critical point. If you are going to have a program that targets the most basic need for energy efficient homes, what would be one of the most critical issues for energy efficiency and managing extremes in the climate? Certainly there are other measures you can take, but the most basic of considerations is ceiling insulation.
Senator Boyce says there are other things we should consider and other things we should do. There is absolutely no doubt about that. But at some point you have to accept that we need to act quickly, act immediately, act now. We cannot afford the time involved for the opposition to get their act together and make sensible proposals here. If the opposition had a serious plan that outlined their claim—and that is all it is at this stage: a claim—that there is a better way, then that might be worthy of some general public consideration. But there is no opposition plan about a better way to achieve what this package does. This package will deliver the boost to our economy in a timely, targeted and temporary fashion. (Time expired)
I want to respond to Senator Abetz’s point and also hopefully cover off—if I can use the expression—on the curtains issue. Senator Abetz, you were at the hearing. Looking at the transcript of the Standing Committee on Finance and Public Administration, pages 41 and 42 is where the explanation was given. In summary, because I do not want to go right through the exchange that occurred, Treasury noted to the committee that the $97 million should not have been included in the table so that the appropriation bills were correct.
On the curtain issue, I have requested some information from Treasury. Do we have studies on curtains versus insulation? Yes, Treasury does. We have information on different types of energy efficiency treatments for households including draught-proofing, curtains and insulation. Consultants and latest industry advice confirm that insulation and solar hot water are the most cost-effective treatments across the board to decrease household energy use.
I think Senator Collins is quite right: there is only so much you can do, certainly theoretically. If we wanted to have totally energy-efficient homes in Australia, many would have to rebuild their entire homes. There is only so much government can do. We have put forward what has been identified as the most effective energy efficiency treatment that is practical in the circumstances—and that is insulation.
On this issue of energy efficient homes, there were three other questions posed by senators to which no response was given at the committee hearings and I will give a response now. Senator Abetz and Senator Milne, there is a question each here, and Senator Joyce also asked a question about insulation matters, so I can provide answers to those questions.
Yes, I will do that. Just to run through, Senator Joyce asked about the 2.2 million homes anticipated to be insulated; what was the sample size? We have got a response to that; I will have that circulated. Senator Abetz, your question: did the projected cost of insulation measures and low-emission plans include all aged-care facilities? The answer is yes. Senator Milne asked about the average Australian house size and there are a couple of paragraphs, so I will have that sent around to you as soon as possible. If I could hopefully conclude the issue—
The Temporary Chairman:
We can circulate them as well.
The answers read as follows—
Responses to questions arising during the Senate Enquiry
1. Senator Joyce asked:
In relation to the 2.2 million homes anticipated for insulation - what was the sample size used in the ABS survey to determine current levels of household insulation?
The 2008 Australian Bureau of Statistics publication, Environmental Issues: Energy Use and Conservation, used to source information about insulation distribution across the household sector was a supplement survey to the monthly Labour Force Survey, with 12,965 fully responding households.
2. Senator ABETZ asked:
Did the projected cost of the insulation measures (insulation and Low Emissions Plan for Renters) include all the aged-care facilities?
3. Senator MILNE asked:
What is the average Australian house size?
The current average includes new housing stock that have been subject to more stringent building code provisions with higher levels of insulation. The estimated average size of houses to be insulated through this measure is 160 square metres.
The last major survey of housing characteristics was undertaken by the ABS in 1986. The 1986 National Energy Survey found the average floor size of the detached housing stock was 119.3m2. From this time, only statistics on the average floor size of new homes has been collected. These have shown significant increases in floor size over time for the typical Australian home, with the average floor size of new homes built in 2005 at 230m2. For the proposed program the average floor size was estimated at 160m2. The program will primarily be applicable to older housing stock which was not subject to more stringent building code provisions resulting in higher levels of insulation in houses built in the last decade. The estimate of average applicable floor size for the program is also supported by analysis work commissioned by the Department of the Environment, Water, Heritage and the Arts from Energy Efficient Strategies in the publication “Energy Use in the Residential Sector: 1986-2020” published in 2008. The modelling for the publication was peer reviewed by an independent panel of experts across the energy efficiency field.
I have just one final point before senators raise other issues. I come back to the curtain issue because I think, with due respect to Senator Boyce, that curtains, and shutting the curtains, is an appropriate way of summing up the opposition’s approach to the current economic crisis: shut the curtains and ignore it. That is their approach: pull down the blinds, shut the curtains.
I am not going to be lengthy, Senator Abetz, in my response but I think I can make an occasional observation. The observation of the shadow Treasurer, Ms Bishop on Radio National was: ‘We should wait to see how this global recession pans out and how it affects Australia.’ To sit and ‘wait to see’ is quite an extraordinary approach from the shadow Treasurer, Ms Bishop.
This is what I refer to as the ‘shut the blinds, close the curtains’ approach to a very significant and severe world financial and economic crisis. And the best that the shadow Treasurer, Ms Bishop, can come up with is the curtain defence: just do nothing, wait and see, let us see how bad it gets. Clearly, things are going to get worse—how much worse? But the catchcry, and the explanation, is the curtain defence: shut your eyes, do nothing. It is quite an extraordinary approach from the shadow Treasurer, Ms Bishop: wait and see. So we have to wait and see the impacts of slower economic growth, higher unemployment, and the significant social dislocation that will bring. And the answer of the shadow Treasurer, Ms Bishop, is to wait and see how bad it gets before anything is done. It is quite an extraordinary attitude. That attitude led to the Great Depression. I was not alive when the Great Depression was around, fortunately.
It was that as well, Senator Abetz. This was the attitude of conservatives during the Great Depression: wait and see, do nothing, the market will sort it out. That is how we got into the Great Depression. I did not live through the Great Depression but I certainly heard enough stories. I certainly heard the lectures from my father about the outcome of the Great Depression.
This is a decisive and strong Labor government that believes in intervening when markets fail—as they clearly have in the United States and Europe—when the financial systems face collapse, when the economies of most comparable countries go into recession and when the China boom ends. With all of this, you cannot shut the curtains and ignore it; you have got to act strongly and decisively to underpin the Australian economy and employment, and that is what this package does.
I rise to make some remarks on the energy efficiency part of the package. I welcome the retrofit of more than two million homes with ceiling insulation and solar hot water. However, if the government had sought some advice in a broader context, we might have gone a lot further in maximising the jobs outcome and the manufacturing outcome. I will start by saying that the remarks in the chamber today about curtains are pertinent, because we need around the country a group of people trained as energy auditors. People do not know the best thing to do in their home because in many cases they have not really thought about it. Energy prices are going to go up by virtue of the carbon price, and people are going to be sitting around in their homes saying, ‘I’m just not sure what the best thing to do in my house is.’ The first thing we need to do is have TAFE colleges around the country offer courses for people to train as energy auditors. It is not something that you need a string of degrees to do. You can be taught how to do an energy audit of a home.
Anyone would tell you that the most effective thing to do is install ceiling insulation and solar hot water. But with these retrofits we should also make sure that building codes are changed so that no new homes or renovations can be constructed without full insulation—that is, in ceilings and walls—and solar hot water. We should ensure that people cannot buy new electric units. We should not only retrofit but also prevent the problem in the future. The first thing would be to get people trained so that people can ring up and get an auditor to come to their home and say, ‘This is what I recommend to you with a 10-year payback.’ They could start with that. They could say, ‘Ceiling insulation and solar hot water.’ According to Professor Alan Pears, who gave evidence to the committee, you would look next at draught proofing the house. You would get advice on that. The next thing he said you would do is shade the glazing—in other words, have shade over windows. The best thing you can do is double glaze, but that is a very expensive option. You can have awnings and in some cases you can use vegetation—although in the context of the fires that is an arguable point.
If you have large window areas in your house, curtains will help. Another way of assisting in putting people to work is in constructing pelmets. Pelmets are incredibly important and make a big difference. If you have curtains without pelmets then you are missing a big opportunity for energy savings and insulation. But no builder will build you half a dozen pelmets for your house, because it is a small job. Most of our tradespeople are already fully employed and, because of this stimulus package, building firms will go for the much bigger projects. This is where some of the community organisations could come in. I know in Tasmania some community organisations looked at teaching people how to build very simple pelmets. Then a person could ring up and say, ‘I want someone to come in, measure up and build pelmets for my house.’ That is where some community groups—if they got some funding and some training money—could maximise people’s opportunities.
Once you had glazing shading, the next thing would be wall insulation. A lot of people do not appreciate the value of wall insulation. Then you could go to under-floor insulation. There is no end to the number of things you can do. Also, you can change to energy-efficient appliances. People say, ‘Look what I’ve done: I’ve just replaced my old fridge with a new, energy-efficient fridge.’ But, if they then put the old gas-guzzler in the garage and keep it running for their drinks, pet food or whatever, they are actually making the problem worse because they are using not only that volume of energy but additional energy for their new and more efficient fridge. Now that the government has introduced a program for energy efficiency in houses, it is a good opportunity to match that with a community education program and some training money to maximise the benefit. We are going to have people unemployed. They could have the opportunity to train as energy auditors. That would build them a future. You would not be able to get an energy audit now. If I sat down in Tasmania today and tried to ring up someone to come and do an energy audit of my house this week, I would be hard pressed to get someone to come in that time frame.
Last year I got a solar hot water system, and it sat in my driveway for three months while I waited for a plumber to come and put it on the roof. Tradespeople in Tasmania are pretty hard to get. That was my point in the Senate inquiry when I asked Treasury about the capacity to have solar hot water systems installed. Indeed, across the whole infrastructure spend, where are we going to get the tradespeople to build the new buildings in every primary school in the country and to build the community housing, when we already have a shortage of people in the trades? That is why I asked whether we have the capacity to upgrade across the country the training places in the trades to support this infrastructure rollout.
The government should be thinking about what should be funded in the coming budget. The issue here, as we have said, is being timely and immediate. Obviously this training cannot be immediate, but if we are thinking about capacity building Treasury said there was aggregate capacity across the country to deliver the infrastructure spend. As I pointed out to Dr Henry, and he concurred, of course there is not going to be even capacity everywhere in the country but the infrastructure spend is going to be even because it is for every primary school across the country and every school is going to have maintenance. Presumably there will be a pro rata amount of public housing around the country as well. So in areas of the country where there is not much capacity, I am interested to know how the government intends to address the fact that you may not be able to get this infrastructure up as quickly as you might like. I put that to the government and also link the opportunity now provided with broadening the complementary employment opportunities and upskilling and training that might go with it on the whole energy efficiency front. I ask the minister to explain—and this concerns me, since we have said that time is the issue—the $2.7 billion insulation program. According to the Age today:
The Rudd Government’s first budget in May also included a scheme to install insulation in rental properties—
that was last May—
and guidelines for the scheme promised in 2007 were still being finalised when the expanded insulation scheme was announced last week.
No insulation has been delivered into those rental properties from the last May budget and here we are coming into the next budget. If the guidelines still have not been developed for what was promised last May, I would like to know how we are going to get this insulation spend and delivery out there fast. Is there going to be a rebate scheme for the first few months while you go into partnership arrangements with insulation companies who will then deliver for people? When would you expect the insulation scheme to begin? I would like some details from the government about that.
In relation to the government’s agreement with the states, I also note that the government has confirmed that just 500 of the nation’s more than 9,000 schools have made claims for funds under Labor’s Solar Schools program. The minister’s office would not say how many claims had been approved but a department spokesperson said the figure amounted to about a million. According to this article—and I would like to have some confirmation:
… an obstacle has been state governments intervening to take control of tendering processes. It is understood some governments are insisting they oversee the bulk-purchase of solar equipment.
If that is the case, can the minister explain to me how the tendering processes are intended to work. Will state governments handle the tender for the schools, for the social housing in their states, for the maintenance programs in their states and also for the building trade training centres? Also, is insulation and solar hot water going to be handled straight from the federal department? Will the states have any role in that? If we go back to saying that the states are going to have a hand in managing the tenders for the minor works and the major works in schools and the social housing, what guarantee could we possibly have that the states have the competence and the capacity to deal with this level of infrastructure spend in those tendering processes in the time frame?
Senator Milne, you have raised some important issues. I do not have a response now, but I will get it for you in the next 10 or 15 minutes. Aside from the specific issues, the whole of the energy auditing efficiency issues you raised are important. Looking at a whole range of changes that can be made to a particular house in addition to insulation, I have already indicated that insulation is a very effective but large part—it is only a part—of the solution. I have been told I will have some more specific responses to the issues you raise.
As Senator Abetz indicated when we commenced, we are working across legislation and issues. I normally deal with Treasury matters so when issues are not my direct representational responsibility I am having to get further advice. I am attempting to obtain the information as quickly as possible.
Unfortunately, it appears that Labor is embarking on an exercise of filibustering. I think everybody around this place knows now that the government, the Greens and Independents are in negotiations to try to stitch up a deal. As a result, this package of legislation—which so urgently needed to be passed by last Friday, otherwise the country would go to rack and ruin—is being delayed by the wilful actions of the government. I want to put that on record because it is becoming quite obvious that rather than contributions by way of question and answer, which is normally the committee way in this place, we are getting speeches. Given that we have already had two speeches—one was particularly mischievous—I need to place, from the coalition point of view, a few things on the record. Do we say the economic circumstances that Australia finds itself in now are worse than they would otherwise have been but for Labor’s hand on the lever over the past 12 months? We absolutely say yes to that: Labor has made the problem worse.
Why do we say to that? Remember that at the last election—we accept we lost it; we accept that—our policy was: go for growth. In his election speech at the time, Mr Rudd thundered that the reckless spending that the coalition were proposing must stop. That money was out of a surplus—but that reckless spending must stop! Indeed, the coalition had so overheated the economy, we were told, that we had to hoover out of the economy an extra $20 billion by way of taxation in the May budget. Labor kept on with the mantra that we had recklessly overheated the economy; they said it time and time again.
What are we debating today? We are debating injecting billions and billions of dollars into the economy. In fact, it is all very well for Labor and the Greens to be talking about side issues like insulation but the stimulus package comes with a bill of $200 billion attached to it—$9,500 per man, woman and child. So I say to those listening: the $950 cheque that you may get if this package passes will be a positive for you, but, as for the negative, it will be a $9,500 debt plus interest accruing year by year on the other side of the ledger. Let us say you go to a pawnbroker with your watch and the pawnbroker says to you, ‘I’ll give you $950 for that.’ You then ask, ‘If I want to redeem that watch, how much would I have to pay?’ and the pawnbroker says, ‘$9,500 plus interest.’ I reckon most people would walk out of the premises and go to somewhere where they could get a better deal.
I say to the people of Australia that, whilst they might be getting a sugar-coated pill—something that initially tastes sweet, looks good—there is a very, very bitter centre which will leave a lasting taste in the economic mouth of this country, and that is the $200 billion debt that will be left to our children. Just keep in mind that it took the Hawke-Keating era 13 years to run up a debt of $96 billion. It took 10 years during a mining boom to pay it off. Within 13 months—not 13 years—Mr Rudd has budgeted for this country to go into $200 billion worth of debt—twice as much as the Hawke-Keating era and that debt took 13 years to run up. From 1996, it took us 10 years to pay it off. How long will it take us to pay off $200 billion? The government cannot answer it; Treasury could not answer it. We were told, ‘When business somehow gets better.’
Paying bonuses to people is an appropriate thing to do when your business is running well. When there is a surplus, you give back and you share the profitability amongst your workers or your fellow Australians. But how many people, as their businesses are going out the backdoor financially, knock on the door of their banker and say, ‘I need an extension on the overdraft so I can pay a bonus’? Most bankers would say, ‘I don’t think that is a good investment for the long term of your business, let alone the long term of the workers in your business, because it is more likely that you will have to shut down earlier than you otherwise would have had to.’
So we make no apologies for saying that the problems we face as a country today are worse because of the knee-jerk reactions of this government. And just keep in mind that the Investing in Our Schools Program, which was part of the ‘reckless spending’ that Labor axed out of their last budget, has now been reintroduced under another name. It is somehow no longer reckless if you borrow the money for it. But, if you pay for it out of surpluses, somehow that is reckless. Remember the solar rebate—promised, axed, now reintroduced?
It was not means tested then it was means tested. There is a legacy here of knee-jerk reactive policy decisions that are based not on a long-term economic overview but on the short-term political spin cycle. Can I simply say that we as a coalition are very concerned about the mismanagement of the economy by the current government.
In response to the comment by Senator Collins that ‘Everybody supports the need for this type of package’, can I say with great respect that recently in the New York Times there was an advertisementsigned by 200 economists, including three Nobel laureates—not Johnny-come-latelies in relation to the economic debate—being critical of the Obama package. The Obama package, as with every other package in the world, includes tax cuts—not included in this package. Funding for innovation for the future, which is a genuine investment for the future, is in all the other packages—not included in the Australian package. And that is on the back of the stupid, short-sighted decision of the government to axe the Commercial Ready program in the last budget. In relation to Senator Sherry’s comment about Ms Bishop, can I say that comments taken out of context do not build you up as a minister or as a contributor to parliamentary debates. I do not think Senator Sherry did himself or, indeed, the government’s case any benefit in relation to that.
I cannot help but ask Senator Milne, albeit rhetorically, whether or not the pelmets that she is suggesting might be made out of wood, and if they were to be made out of wood I would be interested to know where that wood might be harvested from. But that is just a rhetorical flourish.
I hear an interjection ‘out of plantations’—out of those plantations that she opposes.
Can I also say that it is now quite apparent that this is a very ham-fisted approach by this government to the issues. It is typical of Labor; it is the one-size-fits-all, Canberra-knows-best approach. So if you have just built a house and installed insulation in the roof but you are saving your pennies for window treatments, bad luck, you miss out. Whereas, if a family say, ‘We prefer our privacy so we will go for curtains and drapes now and whenever we can save our money we will install the insulation,’ they will be subsidised by the taxpayer. That is the ham-fisted approach that Canberra knows best—that everybody will have insulation whether they like it or not or need it or not, and somehow we are going to have a Pink Batt revolution in this country.
It is the same with boom gates—they are somehow going to be the economic saviour. It is the same with the so-called revolution in our schools. We have got a situation where every school will have to have a particular type of building. What happens to a school that does have a science laboratory, a general hall and a gymnasium but does not have a music room? Bad luck. It does not fit the Canberra one-size-fits-all approach. Surely the schools should have been given the opportunity to determine their own needs—to allow the school community to determine what the need is—and then have that fulfilled. But no, it is the Kevin Rudd approach: I know everything best.
And it is this ‘I know everything best’ approach that brings me back to the issue, which of course is that there is a mistake in the UEFO of $97 million. Senator Sherry and Labor just simply cannot come to the point of saying, ‘Yes, we do make mistakes.’ They just cannot bring themselves to do it. It is an error, and what is the shame in acknowledging that you have made an error, unless you have rushed it and you do not want to be exposed as having rushed it?
We now know, Minister, that this booklet in fact went to the printers at six o’clock on the Monday morning. I would like to ask you, Minister, when cabinet signed off on the package. I also want to know this: who or which minister or which ministerial office proof-read this document before it went to the printer and at what time was that work finished? I have just got a hunch here that most people would not be getting up at five o’clock in the morning to be in the office by 5.30 am to make sure that they could email or electronically pass on a document to a printer at six o’clock in the morning. You would think that that would normally happen at about the nine o’clock mark or even possibly eight o’clock. There was an—
Thank you, Senator Coonan. There was an unseemly haste, it would appear, and I think the Australian people are entitled to an explanation because we have been told that this was a well-thought-out package.
So whilst the minister tells us that, he might also tell us why the leader of the government in this place asserted that this package of bills had to be through parliament by last Friday, because the uncontradicted evidence to the Senate committee, on which Senator Coonan and I and others served, by Mr Pratt and other officials was that if this package were to be passed by this Friday they would still deliver everything according to the timetable of 11 March. So why the bullying and why the hectoring? Indeed, why the misleading of the Australian people and the Senate in trying to rush this through rather than allowing a proper analysis, which has already exposed two errors in the UEFO document? I suspect there are some more that I have not stumbled across as yet. So, Minister, if you would address the issue of whether you are willing to admit that the $97 million was in fact a mistake—that might be a good start—but also then tell us about the timetable as to when final sign-off was given for the document prior to it going to the printer.
Firstly, on the general point Senator Abetz raised about a filibuster, I reject that. Senator Boyce, his own colleague, made a generalist contribution to the debate.
Which I have responded to—I responded to a couple of issues she raised. I am responding to issues as they are raised; I cannot do it immediately—I have indicated that I will come back with information, and I have some material for Senator Milne. So Senator Boyce’s contribution and indeed the contribution you have just made, Senator Abetz, were general economic/political critiques with some questions at the end. And this is a general debate, which you indeed requested yourself. This issue is of major importance to the future of the country and some of my own colleagues have wanted to make some general observations and, I might say, they are doing it very well.
Senator Abetz, I will come back with answers to the questions about the timing of the proof reading, if we can obtain them. I will certainly try to obtain that information about cabinet. Once we move beyond this generalist discussion I understand that Senator Evans himself will be dealing with one of the bills, the household stimulus package, and specific committee amendments, if there are any.
I will make one other general observation and then come to the responses to Senator Milne. Senator Abetz was misleading when he referred to a $200 billion debt. Let us make this clear: this package is costed at $42 billion. The budget would go into deficit—
It is $42 billion, not $200 billion. The budget would go into deficit without this package. Why? Because of the $115 billion loss in revenue. Over the forward estimates $115 billion will be lost in revenue. We outlined that prior to the announcement of this package. There will be a $115 billion loss in revenue because of the downturn in the world economy. The Liberal opposition are in total denial about the fact that the world financial and economic crisis is having a serious impact on other comparable world economies and is having a serious impact on the economy of this country. It is a having a serious impact on revenue—an impact of approximately $115 billion. It is somewhat misleading to allege that this package is leading to a $200 billion debt. It is not.
You are right in your interjection to the extent that there is a borrowing requirement. We are seeking authority to borrow up to $200 billion. If we look at the actions of this government, every other government in the world—
Every conservative government. There is a conservative government in Canada that has announced a fiscal stimulus package, although I do not have the details of it here.
It is much smaller? It may be much smaller, but we have determined, as a decisive government, that this package is necessary to underpin the economy and jobs.
The other point that I want to make is that there are still tax cuts in the forward estimates. I will give the details of those when I get them. There are still tax cuts coming. Just in the general macroeconomic debate, Senator Abetz’s contribution was misleading.
The other macro issue is that if you look back at the last 10 years and the payment down of government debt, what happened to private debt—personal debt—in this country? I do not have the figures here, but I know that it skyrocketed. The personal, private debt of individuals in this country increased very significantly. That is having an impact in the current circumstances. What did the former government do about the skyrocketing level of private debt in this country? They just let it go. On reflection, it seems to me that they did not exercise any effective macro and micro levers.
Are you saying that the level of credit card debt in this country was sustainable? Are you saying that the level of increase in housing prices and stock exchange movements of 20 to 25 per cent was sustainable? If you are saying that that was all sustainable then you are living in a very strange world.
You were in government at a time when private and personal debt skyrocketed—and I will get the figures. You were in government at a time when we saw a lot of irresponsible lending. What did you do about that? Nothing.
If you want to get into details, I will outline what this government intends to do about irresponsible lending practices in this country.
With due respect, you need to open your eyes to what is happening in the rest of the world, with the collapse of the financial system and the economies of every comparable country around the world. Do not deny that that has had a major impact on Australia’s economy, our circumstances and our budget.
Turning to the specific issues that Senator Milne has raised, the guidelines for the low-emission plan for renters and the homeowner insulation program will be available on 26 February. Applications for the landlord rebate can be accepted after those guidelines are released. The homeowner insulation program will be initially run as a rebate reimbursement program until a regional delivery partnership model can be put in place around July 2009. Reimbursement for this new program can be accepted when the new systems are built, which is expected to be in April or May.
On energy audit training for supporting in-house assessments, the government supports the need for better household energy education to help households identify other opportunities, including curtains and draught proofing. Under the green loans program, the government is supporting close to 400,000 energy audits and is working with a range of organisations to train assessors to meet this need. The government is also working with the states and territories through COAG to refocus existing resources, targeting insulation to household audit programs. The states and territories already have programs that are supporting some half a million assessments across the country.
The government has had numerous discussions with a range of industry groups, including manufacturers and their associations and groups, focused on insulation. A detailed workshop to finalise the guidelines and develop training plans and further assess manufacturing capacity is scheduled for next week. Industry have signalled strong support for the package and the ability to meet the requirements if they are involved in the detailed planning, as they will be. The government also has funding for green skills under a range of programs managed by the Department of Education, Employment and Workplace Relations that can assist to meet training and capacity expansion for energy efficient home packages.
Senator Milne asked: when will the energy insulation scheme begin and will the states have a role in managing insulation and hot water? The energy-efficient homes package has two insulation elements. The first is the low-emissions plans for renters. As was indicated, the original program was announced as part of our last election commitment. It has been improved with a doubling of the rebate and an increase in the number of rebates available. Program guidelines will be finalised and publicly available by 26 February. The program will then commence. Rebates will be available directly from the Commonwealth Department of the Environment, Water, Heritage and the Arts.
The second element is homeowner insulation. Again, the program guidelines will be available on 26 February. Households who have insulation installed can keep their receipts and claim their costs from the department once the first stage of the program is operational in the next few months. From 1 July 2009, households will need to call only the call centre. The Commonwealth will be running the tender process for this program, not the states. The call centre is already operational. Stakeholder engagement is already underway. The program will be operational from 1 July 2009. The total value of tax cuts announced is some $9.8 billion for 2009-10 and $13.9 billion for 2010-11. So there are going to be tax cuts, and we look forward to the opposition supporting this.
I want to make one other point. When people receive lump sum payments, there is an underlying theme and critique from the opposition about people misspending the money on gambling, alcohol, smoking and McDonald’s. That was the underlying critique and theme that we have had from a number of opposition senators. Frankly, I find it very offensive.
I will tell you why. I do not know of any government in the world other than North Korea that attempts in a Stalinist way to say to citizens who get tax cuts or lump sum payments, ‘You shouldn’t spend the money here or there.’ I am sure some money was spent on McDonald’s and on alcohol but the vast majority of the money was spent responsibly—
Yes. But, when the tax cuts are delivered, are we going to have higher income earners criticised for spending their money, their tax cuts, on overseas holidays, on alcohol or on fancy cars? That is what really offends me about this Liberal Party critique. It is effectively reverse class warfare. Have a go at the low- and middle-income earners who dare to spend some money on cigarettes, alcohol or McDonald’s. I find it very offensive.
Cigars and champagne are all right for higher income earners—that’s okay! We will not say that higher income earners who get a tax cut waste the money because they spend it on a fancy car, an overseas holiday or champagne. I would not make that critique of higher income earners. At the end of the day, how individuals in our society spend their money is up to them. We do not attempt in a Stalinist way to lecture them and say to them, ‘You shouldn’t spend money here or there.’ Sure, we can have proactive campaigns in the area of smoking and gambling—and we should have them—but do not lecture people from a low- or middle-income background about having some moral responsibility in this area in that way. I find it very offensive. Frankly, I hope we would have less money—
The point is that your critique of a group of people in society and what they choose to do with their money was very offensive. That is my point. It has been coming through from a number of opposition senators. We have seen it. The point I make is that it is inappropriate, as it would be inappropriate to criticise high-income earners for spending their tax cuts in whatever way they wished to. I would like to see more done about smoking, particularly because I smoke. I would like to see more effective programs to discourage smoking, because it has not worked for me so far, sadly. I would like to see less money spent on gambling—I worked in a casino for the first three years of my working life and I did not like what I saw. But do not lecture people who may occasionally go in and spend $10 or whatever it is. Do not lecture them in that way. It is highly offensive. I have actually had quite a number of comments from people in the community about this persistent theme coming through from the Liberal-National Party about this particular issue. They do not want to be lectured that they cannot go to McDonald’s and buy a meal for their kids. They do not want that sort of lecture. They do not want to be lectured that at Christmas they cannot have an extra couple of beers. I hope that that sort of criticism ceases.
The discussion this morning in this stage of the Committee of the Whole is certainly ranging far and wide. There are some very significant questions that we on the opposition side would like to ask the government that were unable to be asked during the inquiry of the Senate Standing Committee on Finance and Public Administration. It comes back to Senator Sherry’s earlier point about the level of government debt. Excessive debt, as we all know, has been the cause of the global financial crisis, so I must say that we on this side of the chamber are somewhat concerned and bemused about the prospect of a significant increase in public debt, which is the inevitable consequence of this package if it is passed in its current form.
Not to put too fine a point on it, the Updated Economic and Fiscal Outlook shows that accumulated deficits between 2008-09 and 2011-12 are projected to be $118 billion. Of that, policy decisions taken since the May budget make up the majority—that is, policy decisions that have been taken by the Labor government have accounted for almost all of that figure: $67 billion over the forward estimates, including $29 billion in 2008-09. The government’s own figures show that, in the absence of its policy decisions—and we are highly critical of the policy decisions because we do not think they are targeted or timely, and we certainly do not think they are going to have a temporary effect—the budget would still be in surplus in 2008-09.
This Rudd Labor government has simply run up Commonwealth debt. Its amendments to the Commonwealth Inscribed Stock Act, which we are being asked to look at as part of this examination of the bills in the Senate, seek authority for borrowing up to $200 billion. We had evidence from Mr Ray from Treasury that almost all of that figure is accounted for and will be needed to support the stimulus packages.
Whichever way you look at this, it shows us two things. First of all, it is an absolutely unprecedented amount for Australia. So, rather than Senator Sherry raving on about whether somebody spends their $950 on the pokies, at McDonald’s or wherever they want, let us concentrate on where this country is heading. We are heading for an unprecedented bill of $200 billion, which, as I think Senator Abetz said a little earlier, is $9,500 for every man, woman and child in Australia. People who want to receive $950 and have discretion over how they spend it will find that it will cost them $9,500 for whatever they might choose to do with it. That is certainly not good for the people individually and it is certainly not good for the economy more broadly. It is a burden on Australian taxpayers that will simply reduce Australia’s growth. This is really the nub of it.
The concerning thing is that Treasury was unable, in the time frame given, to provide an estimate of the interest cost of the debt. I want to ask for that now as part of this debate. We have all done some calculations—even in the press. I note that David Crowe, in the Australian Financial Review yesterday, estimated that the interest cost of the proposed debt would rise to $7 billion a year. It will probably be more. It clearly shows that the net deterioration in the Commonwealth’s budget position between 2007-08 and 2008-09 is projected to be three per cent of GDP. Whichever way you look at it, and however you want to crunch these figures, it is similar to the deterioration under the Whitlam government, where they went from a surplus of 1.9 per cent of GDP in 1973-74 to a deficit of 1.8 per cent of GDP in 1975-76. The interesting point—I think Senator Abetz made it earlier—is that, under the current government, the deterioration is projected to occur over the course of a single year. That is twice as fast as the deterioration under the now infamous Whitlam government.
The important thing about this argument, I think, is that we are about to plunge this country into an unprecedented level of borrowing. We do not yet have a clear idea from Treasury, and certainly not from anything that we have heard from any government minister, what the interest rate will be, nor how long it is expected to last—and I will come back to that in another contribution. It is important that we have a very clear idea of just what it is we are being asked to face.
Senator Sherry, in his last contribution, did not mention the highly prescriptive nature of this package, whereas we noticed earlier—and it was said earlier in contributions from Senator Milne and Senator Abetz—that really there are many aspects of this package that are just ‘one size fits all’. If you happen to come within it, good luck to you; if you happen to fall outside of it, you are going to miss out. So we on this side of the chamber think it is incumbent upon the government to actually make a clear statement about what the level of indebtedness will be, what this chamber is being asked to pass in terms of the authorised increase in the cap on borrowing up to $200 billion and precisely what the interest rate will be. What will the interest rate be over, say, the next 10 years? Could I have those figures?
It is certainly very difficult to please the opposition. We on the government side were criticised by Senator Abetz for making general contributions to this debate in this third reading stage, yet members of the opposition criticised the government for not contributing to the second reading stage. I am not quite sure how we can win on that one. But certainly I am very happy to make a contribution to this debate. We have been hearing some very contradictory remarks from the opposition, who, when it suits them, wilfully fail to accept that there is an international problem with our financial markets and growth in the world’s economies.
You never become a hero by pre-empting a crisis … and that’s what happened in Japan. Japanese GDP never fell during the last 18 years compared to the peak of the bubble. But that was because of all the pre-emptive fiscal spending … we saw our commercial real estate prices fall 87 per cent from the peak … but we managed to keep our GDP from falling … our unemployment rate never went above 5.5 per cent. All that suggests that Japan was doing the right thing … what the Japanese have proven is that, even with massive collapse in asset prices, as long as you have a pre-emptive fiscal stimulus to keep GDP from falling, then people have the income to pay down debt … Japan has proven that it can be done without first experiencing a massive depression or even a war, which was often the way many countries came out of these recessions in the past.
I think looking at the situation of Japan in the nineties, which did have a massive slowdown in growth—stagflation, it was called—is very helpful to us in this time. Of course this is a massive stimulus by the Rudd government, and the opposition questions whether it is needed. I think it is clear that it is needed, and the Japanese example provides us with exactly that illustration.
The government, and particularly the Prime Minister, have been referring to the need to protect jobs, so I will emphasise again that, as Richard Koo suggests, because of the economic and fiscal stimulus that was undertaken in Japan, the unemployment rate never went above 5.5 per cent. Protecting jobs is one of the key aims of this stimulus package, and one which the opposition also claim to support, but here we have the opposition refusing to agree to this stimulus package without explaining how we should support our economy through these extremely difficult global economic times. We have the example of the way these stimulus packages work in what has happened in Japan over the last 18 years. But the opposition refuse to accept that because it is not convenient for their argument. They continue to talk along the lines of: ‘Why do we need it?’ Why do we need to go into this debt?’ They talk about whether the debt is too large.
I have confirmation from across the chamber that the opposition believe it is too large, and I have some evidence to the Senate Standing Committee on Finance and Public Administration from Mr Saul Eslake, an economist who has been quoted by government members. He said during that evidence:
The measures proposed by the government at the beginning of this month amount to about 3½ per cent of one year’s GDP … and are thus broadly commensurate with those envisaged on average in other countries.
He later said:
The budget deficits envisaged in the Updated Economic and Fiscal Outlook are … not excessive by historical or international standards. The government forecast the deficit to peak at 2.9 per of GDP in 2009-10. That is below peaks during previous recessions of 4.1 per cent in 1992-93 and 3.3 per cent of GDP in 1984-85. They are a lot lower than the OECD’s most recent forecast of OECD area budget deficits peaking at 4.1 per cent of GDP in 2010 …
So it is difficult for the opposition to claim, firstly, that this stimulus package is not needed and, secondly, that it is excessive. As in many other occupations, I think you will be able to dredge up economists who disagree with the prevailing orthodoxy, but it is very clear that the prevailing orthodoxy is that we do need this stimulus package urgently to protect our jobs, to protect our businesses and to protect our economy; and, secondly, that the fiscal stimulus package proposed by the Rudd government is not excessive either by world terms or by Australian terms based on past recessions.
That is very clear. The opposition feel it suits them politically to refute those kinds of observations, but it does not assist the country to have the opposition hold up these bills, because it is important that they be implemented, and implemented as quickly as possible. As many, many senators have talked about, it is important that these measures are timely. For the sake of our economy, we need to get things going very quickly. We need a stimulus package whose effects will be felt within a very short time frame in order to have the economy respond in the right way.
Senator Fifield says it needs to be right, and that is true. Certainly government members believe that this package is right, because it has payments targeted to people who will be most assisted by payments at this time—people who have children at school and people on lower and middle incomes—so they will spend that money. That is the first, very quick and very direct stimulus that will be felt. Secondly, we have infrastructure and environmental packages that will be an immediate stimulus but also have effects well into the future, and these are in areas that the economy has been crying out for for some time, such as education and social housing.
I think it was Senator Abetz who took exception to the Rudd government having talked about reckless spending during the election campaign and then spending money in a $42 billion package, but again the opposition, perhaps wilfully, refuses to place enough emphasis on the adjective in ‘reckless spending’. The former government’s spending was reckless in a lot of instances because the money was spent on programs and packages that had no long-lasting effect on our economy or on our infrastructure. There was not enough spending on training. There was not enough spending on the kind of infrastructure that would improve our productivity and that would improve our education. So the Rudd government redresses that problem in this current stimulus package. That is the key difference between the reckless spending of the Howard government and the spending that the government is undertaking now.
I certainly commend the architects of this package for, in a short period, developing something that will not only provide that important stimulus for our economy and improve confidence in our economy but also result in long-term benefit to the Australian public. In particular, regarding the education package, many senators here would have been on school council committees or would have spent many hours attending school councils and would know how important these kinds of measures are. For many years I attended school councils and listened to them talk about the need for the improvements and upgrades to their schools that are addressed in this package.
Members of the opposition have talked about the debt that will have to be paid by the children and grandchildren of senators. The children and grandchildren of current senators will benefit extraordinarily by not having to raise funds or deal with these issues of maintenance and infrastructure that have plagued schools for the last 20 years at least. That will in itself be a very significant benefit for our children and grandchildren. The education and infrastructure improvements will release funds for even more curriculum development in schools. The Labor Party has been talking for the past 10 or 11 years about the crying need to improve education in this country. Compared to other countries in the world we have slipped behind in our spending on education at a time when we desperately need to introduce innovations in education and be a smart country. We all know that it often comes back to the critical building blocks, and one of those critical building blocks is the state of our school system. There we have the key.
Social housing and the environment are also critical areas of need in this country. This package will stimulate building activity in our country, but, as just part of our environmental package, it will also improve insulation in homes. What is the problem with this?
Mr Temporary Chairman, I did not ask for your observation; I asked for a ruling on the level of interjection occurring in the chamber. Frankly, Mr Temporary Chairman, you should be exercising your authority.
Mr Temporary Chairman, on the point of order, Senator Sherry seems to be canvassing what appears to me to be a very clear statement by you of a ruling on the matter. As we know, in these kinds of exchanges it is free-flowing and it always has been. I can remember being exactly where Senator Sherry is sitting and Senator Sherry, Senator Conroy and various other people were constantly interjecting and heckling. To conclude my point of order, I can appreciate that it is embarrassing for the Labor Party to have to be filibustering while they find out what is happening with their amendments—I can understand all of that—but, for goodness sake, there is no point of order, with respect.
On a further point of order, Mr Temporary Chairman, is it correct that the only person who can draw the attention of the chair to an unruly state of the chamber is in fact the person who is being interjected upon? Isn’t it correct that any senator can call the attention of the chair to unruly behaviour in the chamber?
The opposition are trying to make a joke out of insulating houses in this country, but the opposition have to ask themselves whether that is resonating in the community. Have you heard anything to that effect? That is not my experience. My experience is that householders are very grateful for this assistance, which enables them to save money on energy and to comply with environmental standards. So the opposition have to ask themselves whether it is not they who are the joke. People are laughing at you, not with you, in this instance.
I congratulate the government on this stimulus package. It will deliver the results claimed and I urge everyone in this chamber to vote for it.
I have a couple of specific responses to some questions that have been raised. A number of Liberal-National Party senators have come into the chamber and have chosen to interject, in part because they have alleged a filibuster. I would suggest that you were not present earlier. It was Senator Abetz, your own deputy leader, who suggested a general debate. It was not the Labor Party. It was Senator Abetz who suggested a general discussion, a general debate, not the Labor government. That is what is occurring. It is not a filibuster.
Okay, you did hear. That is even worse, because you would have heard the contributions from Senator Abetz and Senator Boyce, which were extremely general in nature. Some questions have been posed and I am responding to those questions as I receive answers, which is appropriate. Senator Coonan has raised an issue, and Senator Joyce asked the same question at the finance and public administration committee hearing. Senator Joyce’s and Senator Coonan’s questions went to the same issue: could the calculation of how the $2.66 billion was reached be tabled? It was not tabled at the hearing, but I can now give the answer. The estimated interest receipts to government in 2011-12 are $4.8 billion. The estimated interest payments in 2011-12 are some $7.5 billion. The estimated net interest payments in 2011-12—obviously, I am sure—equal estimated interest payments less estimated interest receipts. For example, $7.5 billion minus $4.8 billion is $2.66 billion, and the slight discrepancy is due to rounding.
Related to that, Senator Bob Brown asked at the committee hearing, with respect to the bond market:
… what the cost will be of raising the $125 billion … on the bond market?
He also asked: ‘What impact will the need to repay this debt through tax raising have on economic growth in the future?’ The cost of raising funds in the bond market depends on market conditions. Currently, the average interest rate applied by the government on new borrowings is around four per cent. As the economy recovers and grows above trend, the government will take action to return the budget to surplus by (a) allowing the level of tax receipts to recover naturally as the economy improves, while maintaining the government’s commitment to keep taxation as a share of GDP below the 2007-08 level on average, and (b) holding the level of real spending growth to two per cent a year until the budget returns to surplus. As soon as the budget returns to surplus, the government has said it will draw upon the surplus to pay down debt as rapidly as economic conditions permit.
Finally, I have an answer to an issue raised by Senator Milne. Some answers I have already given, but I have a further answer to another question she raised. She asked: ‘Will the states be involved in the tendering process for the insulation program?’ The answer is no. At the COAG meeting the states agreed to maintain existing energy efficiency funding levels and redirect state funding for other energy efficiency programs, such as insulation programs, to home energy advice programs. I know that the Prime Minister made it very clear at the recent meeting with the states and has made it very clear publicly that states attempting to shift existing planned expenditure, current expenditure, and redirect funding will not be tolerated. There is a process being put in place to ensure that does not happen.
Whilst I am on the states, there is a Liberal state government in Western Australia. I seem to recall that the new Liberal government of WA has actually endorsed this decisive package to stimulate the economy and jobs.
I am happy to take all the interjections across the chamber. For people listing to the broadcast, unfortunately there are numerous Liberal-National Party senators interjecting and shouting across the chamber. They should reflect on themselves and the way they want to conduct the debate. It is a very important debate. It is particularly important to have a generally respectful tone in this debate. So we are not going to interject across the chamber. This is a very, very important and considered debate.
Really, you can continue to fire interjections in the way that you are doing, but Senator Abetz invited a general contribution. If you want to make a contribution, that is fair enough, but make it in the proper way. Stand up and make a considered response, as Senator Abetz himself invited. Make a general contribution. Let us have a little bit of respect for the size of the issue and the circumstances we are currently debating, please.
Just on that point, it seems surprising that we are getting this sermon that is standing in proxy for a debate, for the purpose of filibustering on a package that was supposed to be urgent. I am sure the people watching the broadcast can clearly define the tactics of the Labor Party. They are desperately trying to stitch up Senator Fielding and that is why we are going through this whole charade in here.
But just on the issue here, it now appears there is a little ‘rounding’ error. They have said there is $4.8 billion in receipts and $7.5 billion in payments, so that is about $2.7 billion. But that means that their little rounding error—and this is what a fiasco this package is—is $40 million. It is a little $40 million rounding error. For the Labor government, $40 million is a little bit of small change that you just drop on the floor—a lazy $40 million. People out there would like to know how many hospitals we could improve for $40 million, how much cancer treatment we could deliver for $40 million, how many things we could actually put on the table for the $40 million which is now, in Labor parlance, a rounding error.
Let us look at this $7.5 billion in interest. That is definitely locked in. They are going to pay $7.5 billion—and, I would suggest, a lot more in the very near future. That is $7.5 billion that we could have turned into so many other outcomes in this nation. There could have been the delivery of real infrastructure. There could have been a start on dealing with the water issues of the south. There could have been a start on dealing with such things as inland rail. And then the government had the hide to link that into $4.8 billion worth of receipts. Minister Tanner talked the other night about where this $4.8 billion worth of receipts was going to come from—the HECS debt, amongst other things. So let us drill down into that. He has a belief in a reliable, continual income stream from such things as the HECS debt and the Future Fund, in the middle of a recession, and the building capital fund. Let me remind you that the interest from the Future Fund is supposed to become part of the corpus of that fund and continue to build it up.
So how you are going to net it off and use it, gosh only knows. So we will actually have to find the $7.5 billion. Let us look at the HECS debt so elegantly put forward by Mr Tanner. I think the HECS liability out there at the moment is about $17 million—or maybe it is $17 billion; I will have to find out—but I know what has been paid back: only one. That is a six per cent return, principal and interest, so one would suggest the interest component of that is dramatically less. This is the sort of economics we are getting.
I would ask the minister to be more decisive—we are getting a lot of that in the lingua franca—in clearly spelling out exactly where the interest receipts are going to come from to net off the debt. We have the ridiculous scenario now where they are saying: ‘On the bond market we will owe the world close to $200 billion, but we are going to net that off against the Future Fund, with an indeterminate income stream, and we are going to net it off against the HECS debt, with an indeterminate income stream, and other issues with an indeterminate income stream.’ That is like saying, ‘I went to the bank the other day and borrowed $200 billion and then I saw a friend down at the local hotel and lent him $100 billion, so my position in the world is I am only out there for the balance, for $100 billion.’ They are completely different outcomes. Your whole concept of netting two indeterminate flows, of linking two disarticulated issues, is bizarre. How can you manage to link these two things together?
So I ask: can you please now definitively and decisively tell us, the Australian people, what makes up the interest component of the $4.8 billion in receipts? What reliability is there in that income stream? Is there actually a guarantee of any income stream from that $4.8 billion? Does it have the same requirements as what will be the definitive and decisive payment that you will have to make for the $7.5 billion as we hock up our nation’s credit card to a $200 billion limit? For the sake of expediency I will not, as the Labor Party are doing, hold this debate up for 15 minutes. I just want an answer.
It is always a pleasure to give you an answer, Senator Joyce—and I have to say, frankly, I am surprised that as an accountant you do not know. The calculation of net interest payments is made, Senator Joyce, in exactly the same way that your government did it for 12 years—same basis, same formula. There is no difference with this government’s calculation. Treasury have calculated it independently. It is exactly the same approach as under your government. As to the detailed breakdown of estimated interest receipts, I will certainly endeavour to obtain that detailed breakdown for you.
I will obtain the figures for you. We have six bills. We have quite a number of advisers. I have taken questions on notice and will come back as soon as the information is given to me. I have done that continuously all morning. I do not really know how you can complain that I do not have the figure right here in front of me. I will take advice and I have said I will get the figure and I will come back to you with it, as I have done all morning.
On the issue of net debt—and there has been quite a bit of discussion about net debt—Australia’s net debt in 2010 will be 5.2 per cent. I am not going to go down the list of all the countries and their net debt but I will just highlight a couple of them. Japan’s net debt in 2010 will be 93.7 per cent. As I say, Australia’s will be 5.2 per cent. Italy will be 90.1 per cent; the UK, 43 per cent; the US—where all this financial and economic crisis commenced—57.8 per cent net government debt. Australia’s will be 5.2 per cent. We have just seen the end of a conservative eight years in the United States, and their net debt in 2010 is estimated to reach 57.8 per cent. The point has been made time and time again that the net debt, in respect of GDP, of Australia in 2010 compared to those of other comparable economies is very good in the international context. We have the capacity and we have identified that the package is appropriate to urgently underpin the Australian economy, build the nation and support jobs.
I will conclude on this point. The opposition have been alleging that the Labor government is somehow responsible for all of this. We have an international financial and economic crisis that has its genesis in the United States. Frankly, I do not know where members of the Liberal-National Party opposition have been when we have seen bank after bank collapse in the US and the UK.
No, it has not happened in Australia, because this Labor government provided a bank guarantee. We acted decisively and that is a very good example of a forward-thinking Labor government acting decisively, before the financial systems started collapsing. What we saw in the US and other European countries was that their governments, particularly in the US, have struggled to act decisively after their financial systems started collapsing. This Labor government believes that it is necessary, given the serious financial and economic circumstances developing in the rest of the world that have now flowed on to China. And Chinese growth is down significantly, which obviously is very important in the context of the significant drop in mineral prices which flows through to our economy, so acting is appropriate because this government believes in decisive action and forward thinking.
If other governments around the world want to try and pick the pieces up after the show has fallen to pieces, that is up to them. But this Labor government is determined to act decisively to minimise the impacts of what we see unfolding around the world. Certainly, it is the worst financial and economic crisis since the Great Depression. In those circumstances, the approach of the opposition, as outlined by the shadow minister, Ms Bishop—that we should wait and see how bad things get—is just plain wrong. That was the approach in the US; they waited to see how bad things were going to get, with the banking system collapsing, and then decided to intervene. They are still trying to work it out in the US.
Credit must go to Senator Obama, now President of the US. We cannot blame the new President. He is still trying to come to grips with and get on top of all of these issues, after eight years of conservative rule under former President Bush, who controlled the congress for six years of his eight years. Look where it got the US. There will still be some apologies for the reckless economic management of the US under the former President. It was reckless: the level of debt, the level of irresponsible lending that occurred, the reckless failure to effectively—
Who was responsible for regulating the financial markets in the last eight years? Clinton did not appoint the head of the regulatory authorities in the US in the last eight years. I have met a couple of them. They were appointed by former President Bush. But that is a debate in the US. The relevance of that to our circumstances is that there is a significant financial and economic crisis. It had its genesis in the US, it spread to Europe and the impact is spreading right around the world and is hurting Australia as well. This government is acting decisively because we believe that we should act—
Senator Coonan keeps saying, ‘It’s too big; it’s too big.’ But we made a judgment as a responsible government that it is important that we underpin the economy of Australia through this nation building and jobs program. All I can say, on the evidence we have seen from comparable countries around the world, the US and Europe, is that they have not done a particularly flash job to date. In the US, hundreds of thousands of jobs a month are being lost. I just do not believe that the sense of urgency and decisiveness that is needed in these circumstances is recognised by the Liberal-National Party opposition. They do not appear to believe that this is a very serious set of circumstances we face caused by factors beyond this country’s control, through Europe and the US.
I rise to pick up on some points made by Senator Collins earlier and to ask some questions of the government. In doing so, I do welcome Labor senators to this debate. It only took them a week. No doubt last week the spin machine in the government told Labor senators not to participate in this debate. This week, the deal makers in the back room have told them to come out here and, essentially, present the government’s propaganda. In the history of the Commonwealth, when future generations of Australians will look at what happened in this chamber during this debate, it is, quite frankly, not going to be a very good reflection on Labor senators. They were absent from the debate when they should have been a part of it, and now they are participating in the debate for all the wrong reasons and in totally the wrong way.
Senator Collins earlier accused senators opposite her of being ‘global financial crisis sceptics’. She said, ‘Perhaps senators on the coalition side of the chamber are not only climate change sceptics but also global financial crisis sceptics.’ Inadvertently—and I am sure it was inadvertent—Senator Collins put her finger right on the heart of the lack of consistency and the flawed logic of the government’s argument on this package given some of the other policy initiatives they are pursuing. The total inconsistency is this. The government are telling us—and the minister told us five minutes ago—that this is the worst economic crisis since the Great Depression and that we need a $42 billion spending spree to deal with it. We happen to think that that is the wrong way of going about dealing with it. We do not think that a cash splash is the answer. But let us leave that to one side for a moment.
If the government really believe this, why at the same time do they not tell us that they will also review all of their other major policy initiatives that are going to have a major impact on the Australian economy? In Senate question time last week I asked a question of the Minister representing the Treasurer. I asked whether, given the revised Treasury forecast, the government would conduct further Treasury modelling into the impact of the proposed Carbon Pollution Reduction Scheme on the Australian economy. I was sneered at by the minister. The minister essentially said, ‘The premise of the question is flawed and as such it doesn’t deserve an answer.’ The reality is this. The government will not deny that Treasury modelling did not assess the impact of the so-called global financial crisis on the outcomes of its modelling on the Carbon Pollution Reduction Scheme. There is no argument about that. But we are talking about an unprecedented spending spree, which the government initially wanted the parliament to commit to within 36 hours, because we are told we are facing the most significant economic crisis since the Great Depression. But, when we ask some very serious questions about other major public policy initiatives of the government and whether the government is prepared to review their impact on the Australian economy, we are told: ‘No, it doesn’t really matter. It won’t be a problem.’ The minister and the government have on previous occasions said, ‘We have conducted the most extensive modelling in history but we the government have not assessed the impact of the Carbon Pollution Reduction Scheme on the Australian economy in the context of the global financial crisis.’
We are not global financial crisis sceptics. We understand that these are very serious times and that we need to come up with a considered way forward for Australia. But we are Rudd government sceptics. We are very sceptical of the way the Rudd government is managing the economy. We are very sceptical of the way the Rudd government has managed the economy right from the word go. Before the last election, the now Prime Minister sold himself as an economic conservative but now we are getting concentrated socialism. The government tells us that taking cash from over here and distributing it over there somehow is going to provide sustainable stimulus to the economy. Let me tell you that a government can never inject new money into an economy; the government can only ever take cash from over here and spend it somewhere else. This government is proposing to not only take cash from over here and distribute it over there but also borrow from future generations of Australians to spend on consumption. Any household or business will tell you that it is completely irresponsible to borrow money to spend on consumption. You ought to borrow money to invest in infrastructure, to invest in things that the future generations that will have to repay will draw benefit from. That is not what this government is proposing. This government is proposing to borrow money to facilitate people across Australia going on a spending spree. That is not responsible economic policy.
The major point that I want to make, going on from the question I asked the government, is this. Given the ongoing rhetoric and statements of the government in this chamber today about this being the worst economic crisis since the Great Depression, will the government today advise the Senate that Treasury will conduct some further economic modelling of the impact of its proposed Carbon Pollution Reduction Scheme on the Australian economy and on jobs, in particular in the context of what the government describes as the worst economic crisis since the Great Depression?
I would like to continue commenting on the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and related bills. On the contribution made by the opposition, I think I can summarise why they are opposed to these bills. I will quote from the Canberra Times of Monday, 9 February—which was a unique day for this country. ACT Senator Gary Humphries, when explaining his stance on ABC local radio, said, ‘We’—meaning the opposition—‘would never support in opposition anything we had not proposed in government.’ For the people of Australia listening today, that is a pretty succinct explanation of why they are opposing this. I cannot reiterate more strongly that these are unprecedented times. We have heard from the opposition during this debate how $42 billion is an unprecedented amount of expenditure. Yes, it is. That is because the Rudd Labor government has made the decision to act decisively and to act now in the interests of the Australian economy, Australian workers and our families.
I would like to pick up from where I left off in my earlier contribution. The Howard government, which for 11½ years held the reins of the Treasury offices, did not invest in infrastructure or training. That helped lead to the situation whereby the mining industry—which they lived off for a long period of time—is already having an impact. I would have thought the former speaker, Senator Cormann, would know very well what is happening within the mining industry in Western Australia, where people are already losing their jobs.
My son-in-law manages a laboratory which is beholden for its business to a large company in the mining industry which operates not only in this country but globally, in other countries. They are already having to lay people off. The global financial crisis has already impacted and will continue to have an impact on this country. We are not saying that this is going to save all those jobs but we are saying that this will underpin up to 90,000 jobs, to keep them here.
As a Tasmanian senator, I know that you, Temporary Chairman Carol Brown, would share my concerns for what is ahead for our local industries—the Atlantic salmon, abalone and crayfish industries, the tourism and forestry industries. Because of the global financial crisis, the proposed pulp mill to be developed in Northern Tasmania is obviously not finding it easy to attract finance.
Those few comments help to underpin the essential nature of these bills and the fact that we have to act now. We are showing leadership and we have to be decisive. There are two important choices facing the leadership of Australia: either to take a steadfast and determined approach to seek to reduce the impact of this global recession on Australians or to sit on the sidelines and do nothing while we get sucked down with the rest of the global economies.
There was mention in the debate this morning on numerous occasions, which astounded me, that the shadow Treasurer and the opposition would be suggesting—as they have in the past—that we should sit back, close our eyes and hope it all goes away. Senator Sherry outlined the concerns that the Australian people would have with the sort of attitude that was clearly outlined by the shadow Treasurer. Once again, the opposition is sceptical not only about climate change but also about the global recession and its impact on the Australian community.
From the contributions made this morning, it is very clear that those opposite have buried their heads in the sand. They want to sit on the fence. They want to whinge. They want to oppose the job-saving measures because they believe that in the short term that would suit their political best interests. The Australian people should never be underestimated. While we are debating these issues and the opposition are taking the stance of opposing these bills, they are showing the Australian people once again their true colours.
I take offence at the comment that Labor senators have not made a contribution. During the committee hearings last Thursday, Friday and Monday, we were there listening to what the Treasury and Finance and Deregulation experts were telling us. I took great interest in the questions from the Independents and the Greens. At times some good questions were coming from the opposition, which is their job, but the political stance of grabbing headlines about pink batts and boom gates astounds me. A senator from Queensland condemned the government for investing in boom gates in his state of Queensland, in outback Australia. For somebody who espouses that he is a regional person who understands the people on the land, I would have thought he would support those safety measures. I found that quite offensive during the committee. Everyone is entitled to their own views and Australian families will make their decision about what is important to them. My position is very clearly that I am here supporting the Rudd government because I believe in these measures. We have to act now.
During the debate today it has been enlightening to hear about things in relation to insulation of our homes. Some of the contribution by Senator Milne this morning was very valuable and pertinent to Tasmania. The opposition attacked her claims about pelmets and where the timber was coming from. Very seldom on issues to do with forestry would I concur with Senator Milne but on this occasion I can see real benefits in providing opportunities to train people. When she was talking about community groups being involved in small projects or in raising money, I thought immediately of the Scottsdale men’s shed in north-east Tasmania and the beneficial things they do within the community. There is a fantastic opportunity not only to help their local communities but also to inject some badly needed funds into that organisation.
This set of bills has demonstrated once again not only to those in the chamber but also to those in the community and those who are listening to the debate that the opposition are clearly out of touch. They have learnt nothing over the last 14 months. Many families in the Australian community are struggling. So the injection of funds from the $950 that so many families and individuals are going to receive is going to be a welcome contribution. In contributions in this debate and also in the committee hearings, an assertion was made that Australian families—families in rural Australia, in regional Australia and in cities—will put the money they get through poker machines and takeaway stores. I think that is just amazing. Then they tried to bring in the festive season, saying that there was more money spent on alcohol. There are some families where the only little bit of luxury they have available to them is to have a drink and celebrate the festive season. Some of them may visit poker machines but that does not mean they all have gambling problems and to assert—which is the same attitude the opposition had when they were in government—that Australian families do not know how best to utilise their income is a very sad reflection.
As chair of the Senate Standing Committee on Finance and Public Administration, I recommend very strongly that people read the report on these bills. We need to act decisively and as quickly as possible to pass these bills and have them enacted, to make sure that we spring back to a strong economy.