Senate debates

Monday, 18 March 2013


Appropriation Bill (No. 3) 2012-2013, Appropriation Bill (No. 4) 2012-2013; Second Reading

11:18 am

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

The bills before us—the Appropriation Bill (No. 3) 2012-2013 and the Appropriation Bill (No. 4) 2012-2013—seek a further appropriation of $1.27 billion in 2012-13 for government departments and agencies. What these bills do not tell us is how Labor proposes to fund its $120 billion worth of unfunded spending promises made so far. What these bills do not tell us is how the government plans to return the budget to surplus. What these bills do not tell us is what the budget position is going to be this financial year. What we do know is that this government in general and Treasurer Swan in particular have made a complete mess of our Australian government's public finances. This is a government which inherited a very strong budget position. This is a government which inherited a situation with no government net debt, with a $20 billion surplus and $70 billion of Commonwealth net assets. Just in its first four budgets, the most incompetent Treasurer in the history of the Commonwealth turned that around to a situation where we now have $172 billion of accumulated deficits and where we are heading to well in excess of $150 billion of Commonwealth net debt. The former Howard-Costello government was able to collect more than $1 billion in net interest payments; the current government is looking at spending nearly $30 billion over the forward estimates just to pay the interest on the debt that it has accumulated so far.

This year, 2012-13, was supposed to be the year we would see the first surplus delivered by a Labor government since 1989. None of us ever believed it would happen and of course it will not. In the shadow of Christmas, the Treasurer snuck out and gave a press conference, and 'fessed up to what all of us already knew—that is, in 2012-13, we will have yet another Labor deficit, the fifth budget deficit in a row under the current Treasurer, Mr Swan.

How Mr Swan is able to hold onto his job is beyond me. After Labor's broken promise not to introduce a carbon tax, the promise to deliver a surplus in 2012-13 was the second most emphatic promise made by this government. On more than 500 occasions, the Prime Minister and the Treasurer promised that in 2012-13, come hell or high water, the Gillard government would deliver a surplus. But of course it will not happen and we are now on track for accumulated deficits over the first five years of this Labor government approaching $200 billion.

Only last Friday, the government released its most recent monthly financial statement and there we can already see that the government's underlying cash position is $5 billion worse than what the Treasurer predicted in the budget in May last year. The Treasurer dishonestly, as he does, jumps up and down and says: 'Revenue is collapsing. There are all these things happening in the world that I cannot control. I am a victim and I cannot really influence any of these things. I am just trying to do the best I can when everybody is against me.' That is just not true. It is complete nonsense. Revenue is about six per cent higher than what it was last year.

The problem with this Treasurer is that at budget time he shamelessly, dishonestly and incompetently overestimates the revenue he thinks he will raise and when his shamelessly overoptimistic assumptions do not come true, he throws his hands up in the air and says: 'Shock, horror! Revenue has collapsed.' It has not collapsed and the predictions that Mr Swan made in the budget last year that revenue this year would increase by a staggering 11.8 per cent were never going to eventuate.

This is the Treasurer who signed up to a mining tax deal with the three biggest mining companies, telling us that in the first year that mining tax would raise $4 billion. That is what the Prime Minister and the Treasurer said when they signed on the dotted line—in the first year the mining tax was going to raise $4 billion; in the second year it was going to raise $6½ billion. At the time, nobody really believed what they were saying because they were keeping all of the detailed, underlying information secret. They told us their revenue estimates were based on information about commodity prices, production volumes and so on provided by the three biggest miners who signed on the dotted line, so that was commercial-in-confidence. None of us were allowed to know what those revenue assumptions were so that we could scrutinise them. Of course, clearly at the time the government overestimated commodity prices, overestimated a whole range of other variables, which is why in subsequent budget updates progressively the government has had to downgrade revenue estimates. The mining tax revenue estimate, which started at $4 billion, became $3 billion in the most recent budget, became $2 billion in the Mid-Year Economic and Fiscal Outlook. But guess what, after two quarterly payments out of three for this financial year have come in, the gross revenue from Labor's failed mining tax is $126 million. The reason I emphasise gross revenue is that revenue estimates published in the budget papers are net revenue estimates. So the $4 billion, when the Treasurer signed the deal, which became $3 billion in estimated mining tax revenue in the most recent budget, which became $2 million in MYEFO, is a net revenue estimate, which takes the so-called company tax effect into account.

I explain: when a company has to pay mining tax that becomes a deduction for company tax purposes. Out of the $126 million that the government have raised in mining tax revenue so far, 30 per cent would have been raised anyway—that is, about $38 million would have been raised anyway in company taxes. So the net revenue in the two quarters so far is $88 million. When you consider that the ATO so far has spent about $53 million administering the mining tax, that takes us down to revenue from the mining tax of $35 million. When you consider that the government have spent $38½ million promoting the supposed benefits of the mining tax, that puts the taxpayer $3.5 million in the red from the mining tax. This comes at a time when the government have already spent all of the money they thought it would raise, the $4 billion they thought it would raise, and more.

No wonder this government's budget is in a mess. When you have a government which comes up with a supposedly multibillion-dollar new tax which targets the most successful sector in our economy right now making it harder for miners to be successful into the future, spends all the money it thinks it will raise and more so that the budget ends up in a worse position, no wonder the budget is in a mess. When you have a government that makes it harder for an important industry to be successful, which makes it harder for us to grow the economy as strongly as we could and should, which leaves the economy worse off, which leaves jobs worse off, which leaves the federal budget worse off, no wonder this government has to come to this chamber again and again, cap in hand, asking for more money to waste. This is a government which has completely lost control of our public finances.

The mining tax is only one of the Swan initiated shambles. The carbon tax costings are not any better. We know that the carbon tax is a bad tax. It is a tax which we were promised we would never get. It is a tax which pushes up the cost of living and pushes up the cost of doing business. It makes us less competitive internationally because the costs imposed on manufacturers and businesses in Australia are not faced by manufacturers and businesses we are competing with in other parts of the world. We also know that it will not help the environment, that it will not help reduce emissions, but it will just shift emissions to other parts of the world. On top of all that, the carbon tax is another multibillion-dollar new tax which leaves the budget worse off. The government to this day has not come clean about the extent to which the carbon tax will leave the budget worse off, because this government dishonestly, incompetently and inappropriately continues to hold on to the unbelievable assumption that in 2015-16 the global carbon price will be $29 a tonne. It is not going to happen. There is absolutely no way that the carbon price in 2015-16, globally, will be $29 a tonne, yet the government's revenue estimates and the related spending estimates are based on an assumption that exactly that will happen. The Prime Minister, Ms Gillard, the Treasurer, Mr Swan, and the climate change minister, Mr Combet, are the only people in the whole wide world who still hang onto this dishonest, incompetent and inappropriate assumption that somehow in 2015-16 the carbon price will be $29 a tonne.

There is another multibillion-dollar black hole coming around the corner in our budget. If Mr Swan is still around in 2015-16, still the Treasurer and still having to be accountable for the failure of the carbon tax to raise the revenue he predicted it would raise, when he has already spent all the money he thought it would raise and more, I guess he will throw his hands up in the air again and say: 'Shock! Horror! Revenue has collapsed,' without putting down the footnote that revenue has collapsed only against his overly optimistic, shamelessly optimistic and never-realistic revenue assumptions. Revenue across Australia for the Australian government has not collapsed. The revenue for the Australian government continues to increase, but it is not increasing quite as fast as Mr Swan's most heroic assumptions have tried to make people believe in his various budget papers.

Because this government keeps coming up with new taxes which are failed taxes, which have a bad impact on the economy and which do not deliver the revenue the government said it would deliver when it has already spent all the money it thought it would raise—and more—this is why the government has to continually cast around for more cash. This is why, in the lead-up to the next budget in May, if Mr Swan is still the Treasurer then, we are now being told that there will be more new taxes. We are now being told that in order to fund the reckless and wasteful spending of the Gillard Labor government Australians saving for their retirement will be asked to pay the price. The Prime Minister and the Treasurer have made it very clear that they think people's retirement savings are an appropriate revenue target for the government. They can see it as a $1.35 trillion pot of savings—savings that people across Australia have worked very hard to accumulate; savings that are there to ensure that Australians can have a comfortable retirement. This government, in its desperate need for more cash, will make people's super savings the next revenue target.

We say, 'Don't do it.' People are doing the right thing by saving for their retirements to ensure that they can look after their own needs in retirement, to ensure that they do not have to be a burden on the public purse. They should be encouraged and incentivised, not punished. It is completely inappropriate for the Gillard government to look at people's retirement savings as if they are an ATM that the government can draw on every time the budget is under pressure, or that when every time it has spent too much it can say, 'Let's go and take some money out of people's savings accounts.' It is not on. It should not be allowed to happen and the parliament should resist every attempt that this government is putting forward to do that.

Over the last five years, as well as having delivered $172 billion of accumulated deficits, this government has already increased taxes on people's retirement savings by more than $8 billion. That tax grab includes a $3.3 billion hit on low-income earners. This government promised in the lead-up to the 2007 election that it would not make any changes to superannuation arrangements—'not one jot, not one tittle' is what the former Prime Minister and perhaps future Prime Minister Kevin Rudd said in the lead-up to the 2007 election. There was not going to be one jot or one tittle of change to superannuation arrangements, but, of course, under Prime Minister Rudd, followed by Prime Minister Gillard, there were more than $8 billion in new and increased taxes targeting Australians doing the right thing by saving for their retirement, including, as I have mentioned, more than $4.4 billion in taxes targeting lower-income Australians. The government reduced the super co-contribution benefit for lower-income Australians by $1,000. Under the Howard government there was a matching rate that for every dollar saved by people for their retirement they would get a benefit of $1½, up to $1,500. Now that has been reduced to a $500 matching rate. The current government, on the back of lower-income earners saving for their retirement, has collected $3.3 billion in additional taxes.

Then we have this attack on people trying to achieve self-funded retirement. Concessional contribution caps under the Howard government were $50,000 or $100,000 a year, depending on your age. The current government, after promising not to make any change—'not one jot, not one tittle'—took that down to $25,000. So, if you now want to save more than $25,000 a year to achieve a self-funded retirement, you have to pay more tax. In fact, not only do you have to pay more tax but also you have to pay the top marginal rate. Who is going to put more money into their savings, locking it away until they retire, if they have to pay 46.5 per cent tax on it? You might as well keep it outside.

These are the sorts of changes that this government has made, driven by the reckless and incompetent mismanagement of this Treasurer. People across Australia who are doing the right thing are paying the price of Mr Swan's incompetence. That is one of the key reasons that people in September, hopefully, will take the opportunity to achieve a change, because we need to have a government that lives within its means. We have to have a government that taxes people less and that will incentivise aspiration and success so that we can grow our economy more strongly.

If we get the tax settings right, if we get the incentives right, if we get ourselves into a more competitive and more productive position, then the economy will grow more strongly. One of the key benefits of that is that the government actually collects more tax without the need to increase existing taxes or introduce new taxes. Not only is it good for our prosperity as a nation, not only is it good for people across Australia, but also a more strongly growing economy is good for the government's revenue. That is the approach that an Abbott-led coalition government will take, should we be given the opportunity on 14 September.

11:38 am

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I am pleased to enter this debate on Appropriation Bill (No. 3) 2012-2013 and Appropriation Bill (No. 4) 2012-2013, bills that authorise additional spending by the Gillard government. We can well understand why these appropriations are so necessary and the extent of them at the present time. We woke this morning to hear the news of the highest level of small business bankruptcies on record—12 per cent higher than bankruptcies were for small business during the global financial crisis. Why is this? Sure, we do have a high exchange rate. Demand overseas for our manufacturing is falling. But added to all of this is the world's largest carbon tax—$23 a tonne, increasing to $39 a tonne and eventually to $300 a tonne—when our competitors overseas are paying, depending on what day it is in Asia and the United States, practically nothing and in Europe something between $5 and $10.

You can have a look at the basket case that is the European economies at the moment, but Australia already has a carbon tax of $23 per tonne and rising dramatically. How can Australian small business and Australian manufacturing operate in the face of competition from countries that do not have this cost embedded in everything they do? Every Australian knows that their electricity costs have gone up by at least 10 per cent as a result of the carbon tax and this has put enormous pressure on small business.

As Senator Cormann says, this government is incapable of managing the finances. I remember when we took over from the Keating government in 1996. First of all, we had been lied to at the time about the state of the budget in 1996. When the government changed and the books were opened up we found that there was a $10 million difference between what the Keating government was saying the annual reports were and what the actuality was. But, of course, when we added up the debt run up by the Keating government, it was some $96 billion.

Over the years of the Howard government we paid off that $96 billion. It was not easy, but we did it. And not only did we pay off that debt but we set Australia to the path of being one of the most admired, respected and envied economies of the world. When the government changed in 2007, we had some $80 billion in credit—$80 billion in credit!—in the bank for a rainy day, to pay superannuation entitlements to public servants and to do these things that need to be done. There were good times because of the Howard government's management and we were able to put $80 billion away. Here we are, five years later, and not only has the $80 billion all been blown and squandered by an inept and financially incompetent government but we have run up almost another $200 billion in debt. That is almost incredible.

A lot of people do not understand and they say, 'Oh, that's government—they can do that.' Well, sorry, they cannot! Governments are like your own household: if you borrow money you have to pay it back and until you pay it back you pay interest. The money that the Gillard government is paying in interest to overseas lenders would pay for the National Disability Insurance Scheme—they would not have to borrow a cent. It would pay for the talked-about Gonski reforms. But are either of those two things mentioned in the appropriation bills that we are dealing with at the moment? We were told that the NDIS—the National Disability Insurance Scheme—would cost something like $6, $7 or $8 billion. What has the Gillard government put aside, if anything? One billion dollars.

It is all about the talk, 'We are going to put in this insurance scheme; we are going to bring in education enhancements.' But are we funding it? Does it show in these appropriation bills? Of course not! It is just talk, talk, talk from the Labor Party, trying to fool the Australian public into thinking that they are actually doing something with disability insurance or with education enhancements.

Is there anything in these appropriation bills about the cost of setting up Senator Conroy's new media police? I cannot see anything in the appropriation bills about the cost of getting the regulator. We see that Senator Conroy is determined to fix the media up. You might recall that he told media barons that anything he says in Australia goes. I think his analogy was, 'You can wear your red underpants on your head if you find a case where what I say does not go in Australia.' He told some overseas media people that. These are the sorts of people who are running Australia.

Where in here do we hear about the media police that Senator Conroy is setting up? I heard Senator Furner the other day—last Thursday, I think—talking on a debate about the media, complaining about an article that I had read from the respected newspaper the Australian Financial Review on 16 November. It was a very good article by Grace Collier, who is a union insider and who opened the lid on what happens within the unions. We all knew it happened, but Grace Collier is a person who has worked in that area; she knew it was all about.

I read some excerpts from that article about just some of the deals between the Labor Party and the union movement. They were all fairly corrupt, as was pointed out in this excellent article, but what did Senator Furner get up and do last Thursday? He got up and criticised me for quoting Grace Collier and then proceeded to viciously attack this person under parliamentary privilege. Why do I raise that as part of the appropriation for these media police? What will happen when Senator Furner loses his seat at the next election—as he surely will, having been relegated by the Labor Party down the list on the ticket in Queensland? He may well be appointed as the watchdog of the media.

Can you imagine Senator Furner having a look at this article and saying to the Australian Financial Review, 'Oh no, look, I don't like that article. This woman has been attacking the unions all the time so we won't have that in.' You can also imagine Senator Furner, as the thought police chief, making a comment about this headline that appeared in the respected Courier Mail on 31 October 2009, some time ago: 'Senator linked to union cash', with a big photo of Senator Furner. Can you imagine that that would have been allowed in the Courier Mail if Senator Furner had been in charge of the media police? Of course it would not.

This article talks about some dodgy union dealings with a particular union in Queensland. It keeps changing its name but was then the NUW, whatever that stands for. It was something that Senator Furner had been associated with before he came to the Senate: something about signing some cheques and some bank accounts and money paid to a union official when he no longer had a job. He was to receive a redundancy equivalent of $35,000 for each year of service. Talk about Mr Craig Thomson and what he did with the Health Workers Union! It would be good to have a look at what happened in the NUW that allowed this guy to get $35,000 a year of union membership fees for work that he had done.

The point I am making here is that this article quite clearly has the quote:

Mark Furner has nothing to do with it—

so it was absolving Senator Furner. But it was an interesting article. It raised issues, it raised them fairly and it said, quite clearly, that Mr Furner was not involved. But that does not stop the Labor Party from wanting to control the media.

I say to my friends and colleagues in the Labor Party—not that there are too many of them who are my friends, I might say—if you are so upset about what the media do, and they print an article that is clearly wrong and is defamatory, you have remedies now. I relate my own experience, where I sued the Sunday Mail for a quite outrageous article that they wrote on me which was just full of lies and misinterpretations and was factually wrong. I took action under the laws of the land as they now stand and I was able to seek retribution; I was able to seek justice.

The Sunday Mail ended up publishing two apologies to me for that. They paid me some money, I might say, and the money did not cover legal bills that I had paid. You do have to be careful taking legal action, but you can do it. If you are right, as I was in that instance, you have your remedies now. You do not need the Labor Party initiating a sort of thought police that is reminiscent of what happened in Europe during the 1930s and 1940s. You do not have to introduce and implement the sort of scheme that we have seen in communist Russia during the years of the Cold War.

Not only are the legislation and proposals bad but they are going to cost money which is not referred to in these appropriation bills. The appropriation bills should be showing us how the Labor Party is getting back to, and discharging and honouring, the promise it, the Prime Minister and Mr Swan, the Treasurer, have made for the last couple of years—but certainly since the last budget—that they would definitely bring in a surplus this year. They said it once, they said it twice; I think it has been reported that they have said on 500 separate occasions that they would bring in a surplus budget. Everybody else knew that it was impossible, because you cannot keep spending, spending and spending and still bring in a surplus budget. But this was promised. On the day before the weekend that Mr Swan eventually conceded that this was unlikely to happen he had told all of his troops in the Labor Party to go out and repeat his promises that they were going to bring in a surplus. But did they? Of course, everybody knew, and Mr Swan eventually realised.

The point I make here is: is there anything that our current Prime Minister promises that you can believe? She has promised 14 September for the next election, so I would almost bet my house on the fact that it will not be on 14 September because if it is, it is the first promise that she has kept. Mr Acting Deputy President, you will remember the major promise before the last federal election, 'there will be no carbon tax under a government I lead'. And what happened? The first thing she did when she got back into power with the help of the Independents and the minor parties was that she introduced a carbon tax. Whether you agree with the carbon tax or not is secondary. The issue is: can we trust anything that this Prime Minister and her Treasurer say? Can we believe anything that is in the appropriation bills before us at the moment? I see Mr Shorten and others are wandering around the parliament saying, 'I'm not going to challenge for the leadership. There is no leadership challenge on. We all support Ms Gillard as the Labor Party leader'.

You might recall that for a couple of days in the week leading up to Ms Gillard's knifing of the then Prime Minister, Mr Rudd, she said on many occasions that there was no prospect of her challenging for the leadership. Those who follow AFL more closely than I might remember her comment that she had more chance of playing full forward for the Bulldogs than becoming Prime Minister. This was I think the day before she challenged the Prime Minister. How can you believe anything that she says? How can you believe Mr Shorten when he is out there today saying, 'At this point, no, I'm not going to challenge because of a number of reasons. I completely support Julia Gillard'. That is what Julia Gillard said when she was talking about Kevin Rudd when he was Prime Minister. Is there anything you can believe that this government, its leader, Ms Gillard, its Treasurer, Mr Swan, and any others on the front bench can say? If there is something that the Labor Party have promised that they have honoured, I would be interested to hear about it.

We heard just the other day from my colleague Senator Mason that there was this promise to connect up—what was it?—thousands or tens of thousands of school computers to the NBN. Senator Mason pointed out that, rather than hundreds of schools being connected, there had been around 20, I think, that had been connected. Thousands had been promised; 20 had actually occurred.

The shame of all this is that people go to the election, they go to the ballot box, and they cast their vote on the basis of these promises made by Labor Party politicians. Of course we would all love our children to have a computer on their desk in every school: 'Yes, we will vote for that.' But does it happen? Of course we do not want a carbon tax: 'Ms Gillard has promised we will not have a carbon tax, so we can feel confident voting for her.' What these lies from Labor Party leaders do is demean the whole instrument, the whole basis, of our democracy.

Time never permits us to go through the broken promises of the Labor Party, but the carbon tax is the broken promise of all broken promises. It was not as if it was a throwaway line. It was not as if it was something done on the spur of the moment. Ms Gillard promised on, I think, three separate occasions before the last election. And, on the day before the last election, the Treasurer, Mr Wayne Swan, said that those who were alleging that the government would introduce it were, in his words, 'hysterical'. He also assured us that there would be no carbon tax.

I often say to my Labor colleagues in the Senate here: if the carbon tax is as good as you now say it is, if climate change is one of the moral dilemmas of our time, as you once said it was, why then did Ms Gillard promise not to introduce it? I cannot work that out. If it is such a good thing as she now says, then why did she, a couple of days before the election, promise she would not bring it in? Didn't she understand then that the carbon tax would lead to huge cost-of-living increases for all Australians, and particularly for those on working salaries?

This brings me back to where I started, talking about these appropriation bills. We have a government that, based on a lie, introduced a tax that has not only destroyed so many Australian small businesses, a record number now, but has just about sounded the death knell for the Australian manufacturing industry. What manufacturing we did have in Australia has all gone overseas. So it is not just the broken promise and the lack of trust we have in the Prime Minister and the Treasurer; it is the fact that their broken promises are actually hastening the death of the Australian manufacturing industry.

One would hope that in passing these appropriation bills you would see a bit of honesty, a bit of hope for Australia that our finances might be brought into line; one would hope that we might be able to start spending within our means, that we might be able to stop paying the interest which would allow us to implement immediately a fully funded disability scheme. But I suspect that these appropriation bills will get the same treatment as any other financial decision of the Gillard government—that is, being ignored completely and be— (Time expired)

11:58 am

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

Madam Acting Deputy President, I thank you for the opportunity to rise to comment on the appropriation bills and reflect on the fact that, in this place today, a committee is meeting and hearing evidence as to whether or not there should be the worst gag, the worst ban, on the freedom of the media, the press, in this country at the same time that we are considering the appalling and abysmal record of this government with regard to its inability to manage money. One can only question whether indeed there is a link between the two.

It gives me no great pleasure to see, following the record of the Howard government and what this Labor government inherited in terms of surplus in the bank, no net debt in this country and the best terms of trade in Australia's history to record, where we are today in March 2013. The gross debt is around $300,000 million or $300 billion. Those people who have household debts and those who have business debts ought to know that the cost of the interest alone—and not the repayments on that debt—is $20 million per day.

Let me put that into some context in other aspects of who is being hurt and affected by this budget. Some months ago I had the opportunity to chair a committee of the Senate in which we looked at instances associated with Newstart and its capacity to support people. We understood that a move was required for many people off the parenting allowance to a lower Newstart allowance. Over a four-year period it was to save $750 million in this budget. If you reflect on the cost of $20 million a day interest, it would only have been 45 days interest and there would have been no need to move those people off the parenting allowance down into Newstart. I ask people to reflect on that figure of $20 million. We are borrowing $100 million a day at the moment from offshore interests. Often we do not know exactly who they are.

I mentioned earlier that there was a budget in surplus when the Labor Party came into government in November 2007. The figure at the end of 2011-12 of the accumulated deficit—that is each year's inability to ensure that expenditure matches revenue—was $171 billion. That is the deficit. That is what you do not earn against what you spend in a family or a business context. That is what breaks families up. That is what sends businesses to the wall.

This Treasurer's estimate was that we would have a surplus this year of $1 billion. You do not have to be a mathematician to work out that, even if Mr Swan had achieved his $1 billion, it was going to take him 171 years to actually repay the deficit that had accumulated since Labor came to government. But of course, as my preceding colleagues have said, Mr Swan admitted late last year everybody knew that there was no way in the world that this government was ever going to get anywhere near a surplus budget in 2012-13. In fact, the best estimate is about $30 billion deficit so by the end of this financial year that cumulated deficit will be $200 billion. That is real money.

Let me go to another of those famous areas in which our Prime Minister—and I know Senator Macdonald has made the same point—went to the election saying, 'There will be no carbon tax under a government I lead.' Let me explain what has been their impact of this carbon tax. The New South Wales government in the last few days said that it will cost them $1,000 million. There have been figures from the Australian Securities and Investments Commission only in the last few days telling us that there has been a 12 per cent higher failure of businesses and businesses being placed into administration than during the global financial crisis. Commentator after commentator, business consultant after business consultant, are saying that it is due to the carbon tax. It has been the straw that has broken the camel's back, as indeed senators and members on this side warned it would.

According to ASIC there have been 10,632 company collapses for the 12 months to 1 March, averaging 886 per month. These are real jobs. These are real businesses—with manufacturing businesses well distributed among them—that have been going for years and keeping families going for years. The principal of the Adelaide based insolvency firm Macks Advisory, Mr Peter Macks, said the carbon tax is quite debilitating for a number of hotel operators who have been struggling for a long time and that it is tough operating at a profit at this time. Todd Gammel, a partner in HLB Mann Judd, likened the carbon tax to pulling a leg out from under a chair.

New South Wales Treasurer Baird said:

There is no doubt the carbon tax is driving higher electricity prices for businesses across the state.

He added there is an estimated bill directly to the government of $580 million.

Australian Chamber of Commerce and Industry chief economist Evans only today said:

Rapidly escalating energy prices caused by the carbon tax and other green programs are taking their toll on Australian businesses.

That means Australian jobs, that means poorer competition with our overseas competitors, that means more competition in markets into which we are trying to export despite the high cost of the Australian dollar. That means more competition from companies in other countries that bring goods into this country to compete with us. That is the impact that we are seeing from this carbon tax. Campbell Jaski, a partner in PPB Advisory, said the carbon tax and the mining tax were also showing up as sovereign risk issues in discussions with foreign investors.

Having been on polling booths all last Saturday in the Western Australian election—as I know my colleague Senator Johnston was—I can say the message is loud and clear not just from Liberal or National Party voters but across the economy of our state. In the seat of Kalgoorlie, once a very proud Labor seat, the Labor candidate hardly got his investment back. The National and Liberal parties dominated Kalgoorlie. Why? Because the people in those communities understand the impact of the carbon tax and the mining resource rent tax where Australia's wealth is earned. Australia's wealth is earned now particularly in the states of Western Australia and Queensland. They understand the whole magnetite iron ore industry is now at risk simply because of the combined impact of a carbon tax and a mining tax, which higher electricity prices, higher transport prices are having a profound impact on. Why would the government impose on this country a carbon tax that is antibusiness, anti-employment, and anticompetition, particularly at a time when we know the so-called carbon price in Europe has collapsed, at a time when we know the Chicago futures market for carbon closed from lack of interest? Yet we are still being emasculated in this country and we are asked today by this government to approve even more allocation of funds for the purpose.

We have heard in this chamber today that the mining resource rent tax, exactly in accordance with what was warned from this side, would not actually be a tax to bring income into this government; it would be a net cost. Mr Paul Howes made the statement that the carbon tax was not a tax, it was a price on carbon and that the mining resource rent tax was supposed to deliver some $4 billion. This government, with its very, very poor fiscal management, went out and spent the money before it got it in. What household, what business would do its budgets thinking that they are going to earn another $300,000 to $400,000 or $30,000 to $40,000 or $3,000 to $4,000 or $300 to $400? Who would go out and spend money based on the expectation that greater revenue was going to come in when in fact it was very doubtful if it ever was? But they are the circumstances we find ourselves in. The government did go out and spend in advance, and what we have now is a circumstance in which there has been no effective benefit at all from the mining resource rent tax.

On this side of the chamber we have said and we will continue to say that should we be privileged with government later this year we will once again demonstrate that the best way of getting in extra revenue from major companies is to create a climate in which they earn more profit. Because when they earn more profit, they pay more tax. Do not worry about mining resource rent taxes; worry about corporate tax, worry about the income that will come in from personal income taxes as businesses employ more people and these people enjoy a better lifestyle and they enjoy a better form of income.

It does not matter which sector of the economy we look at, we see evidence of bad judgement and bad fiscal management. I will reflect very briefly on two areas associated with agriculture. The horrific impact that has now occurred across the north of Australia—in your territory of the Northern Territory, Madam Acting Deputy President Crossin, in Queensland and throughout Western Australia—of the ill-timed, ill-disciplined ban on live exports. And now we have the government, having made an appropriation in this year's budget, having to pay compensation and probably having to meet very, very expensive legal costs associated with that injudicious decision. And that is quite apart from the tremendous and horrific animal welfare issue that is confronting my state of Western Australia, where farmers are faced with no income, they are faced with no feed on the ground, they are faced with animals that they cannot feed, animals that should long ago have left Western Australia to eastern and Middle Eastern markets. Those animals will now be either shot or turned out onto rangelands in what will probably be one of the worst animal welfare disasters. And it was all preventable. It need never have happened. That is the thing that makes me so angry, Madam Acting Deputy President, and I know you have given great sympathy and support to pastoralists in the Northern Territory along the same area. But that is now going to lead to compensation charges, that is going to lead to the Australian taxpayer paying a significant amount of money in legal fees before it gets sorted out.

The second issue in the agricultural sector, which we have spoken about so often, is the debacle of the Abel Tasman, the vessel that Minister Burke, when he was the fisheries and agriculture minister, welcomed to Australian waters but who, in his capacity as environment minister, then put a ban on the vessel. So it has now left Australian waters, and once again the taxpayer is facing compensation payments, facing a lengthy period of legal conflict—all of which is unnecessary, all of which is going to cost the Australian taxpayer and ultimately the budget.

I turn briefly to the question of education, and we all saw the waste in a so-called Building the Education Revolution—$17,000 million spent. There was some value, I have no doubt at all, as well as significant areas in which there was waste, but most importantly—we can reflect on those for two or three hours if we had to; I sat in the committee that reviewed them—during that time, during that unheralded expenditure of $17 billion, education standards were actually falling. Education standards against other countries in the world, in numeracy and literacy, were actually falling. So all of that expenditure did nothing at all to improve learning, to improve teaching, to improve the very necessities, the building blocks of education. Senator Macdonald made comment on the rollout of PCs, and once again we see a circumstance in which inadequate expenditure was put forward and so the vast majority have not been linked up.

We now have Minister Garrett going to the states and talking about Gonski and all of the possible advantages of Gonski, saying to the state education ministers and premiers: 'Just sign up. Don't worry about the details, I won't tell you about the details, I can't tell you about the details because I don't have them, I don't know what they are. But don't worry, trust us, we are the Labor government.' I can assure you, from my own state and others, that there is no way in the wide world where that is going to be happening.

The other information which came out only in the past few days, which is very, very severe on my state of Western Australia, was the decline in GST allocations to Western Australia. If I may make the comment about the inequity of the horizontal fiscal equalisation program, it is mainly in the fact that at the moment there is no incentive for each state and territory to maximise its revenues and contain its expenditures. I fully support the efforts of my Tasmanian Liberal colleagues, where they quite correctly point at the failures of the Giddings Labor government—the Labor-Greens government—to maximise revenue in that state so that Tasmania would not need to be propped up to the extent that it is.

Let me give you some of the figures. I know Senator Johnston knows them well. For the first time ever Western Australia now will be getting less than 50c of each dollar that it contributes to the national purse. Premier Barnett commented recently that it is quite perverse that GST allocation from the Commonwealth is now becoming a minor proportion of the overall revenue for Western Australia. It must be the first time since Federation that a state or territory is not looking to the federal source to dominate its returns. Western Australia will get 44c in the dollar; the Australian Capital Territory will get $1.22; and your home territory of the Northern Territory, Acting Deputy President Crossin, will get $5.31. The Northern Territory government can, as I have pleaded with other states and territories, look at areas where they can maximise revenue, contain expenditure and see a far more fair distribution. Discussing in greater detail the relativities of GST allocation will be a topic for another time, but I do make those points.

I turn to other areas of Labor failure—health and immigration. All the hysterical debate in recent days by the Prime Minister about 457 visas for overseas workers has done is create instability and add to our sovereign risk. Nevertheless, that does not seem to matter with the Prime Minister. I invite the Prime Minister to go to Western Australia and speak to rural communities where the 457 visa bucket has dried up for doctors coming in from overseas. There are a number of towns now that do not have a doctor or that only have a medical service from midday Monday to Thursday evening. Southern Cross in the eastern wheat belt is already suffering enough in terms of the farming and cropping situation and the management of the live export of sheep, which I have spoken about. They now are also facing the prospect that people will be sent by ambulance each Friday to Merredin, which is 100 kilometres away, because there is no doctor in the town.

We see the inequity of the 457 visa scenario. This causes me to once again look at the absolutely confounding decision making of this government and to look at the decision of the immigration department, which I applaud. The number of foreign graduates on 485 skilled graduate visas soared 74 per cent last year. That is a wonderful figure. Those people will now be able to stay on for a three- or four-year period. There will be 38,200 under the 485 scheme allowed to stay and work in Australia. That equates to the number of unemployed young Australians between the ages of 20 and 24.

I can only plead with this government, which is, hopefully, in its dying months, that it does no more harm to the Australian economy. Every person we speak to everywhere we go, including everybody on polling booths and in every survey, is saying that the place is in limbo and the place has come to a halt. Nobody has confidence to employ, nobody has confidence to invest and nobody has confidence to spend. When we look at these appropriation figures there is little wonder why. It is necessary to bring this economy back and have an election and sort it out.

12:19 pm

Photo of David JohnstonDavid Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | | Hansard source

In dealing with Appropriation Bill (No. 3) 2012-13 and Appropriation Bill (No. 4) 2012-13 it is important to bring the government's economic record to account and look at what this government has achieved in just the last 12 months. The mismanagement is predominantly exampled by the minerals resource rent tax, a tax that raised no money in its first quarter and appears to be costing the government to administer. The first blush of receipts from this tax indicate that this concept of the Commonwealth has achieved what I do not think any other government in Australia's history has achieved—it has enacted a tax that has actually cost the taxpayer money.

The carbon tax is predicated on a $29 per tonne rate. It is clear when looking at Europe that that is going to be well short of the mark. I think we are running at something less than five euros a tonne at the moment. I have considerable interest in the Defence portfolio. Indeed, significant cuts have been made to that portfolio—more particularly, 10.5 per cent in the last Wayne Swan budget, which has in fact been predicated upon the delivery of a surplus this year. We all know, we are all predicting and we all understood that this promise of a surplus was in fact in line with every other promise that this government has made—a cruel deception on portfolios that have had to stump up the money. Indeed, no portfolio has had to fund the notional attempt at a surplus like the Defence portfolio has.

So we now find out that a 10.5 per cent cut in Defence in support of the pursuit of a budget surplus has been a complete waste of time. It has been a complete deception. No other portfolio has had to find such a cut. Indeed, in the last four years Defence has stumped up $25 billion from its annual budgets to support this government's profligacy. So mismanagement has been the order of the day in terms of economic management and expertise, in terms of economic governance.

In 2009 we had a Defence white paper that set out a clear and apparently funded plan to take Defence funding away from the highs and lows—the vacillations of politics—out to 2030 with a proper, funded bipartisan approach. It was bipartisan because the opposition came to the party and supported that plan. We were told that the plan was one where, in the first two or three years, there would be a contraction of resourcing for Defence but then we would ramp up to meet the requirements of some $275 billion worth of expenditure over the coming 15 or so years. The growth rate was supposed to be three per cent, indexed at 2.5 per cent out to 2017 and then 2.5 per cent thereafter. The fact is that the contraction took place and then the government, through its own ineptitude, complicity and incapacity, decided there would be no ramping up. So what we have seen is a massive run-down in Defence resourcing, and what we are witnessing today is the hollowing out and running down of Defence capability and the elimination of readiness to do things that this government or any future government may, in an emergency, call upon the Defence portfolio to achieve.

What really is of concern when I see appropriation documents come forward is, firstly, that this government has never, ever got one prediction right—not one, be it MYEFO, the annual budgetary figures, the deficit or the surplus. It has never even been close. May I make a prediction: when we look back—it will be after the next election—at what 2012-13 yielded in terms of a surplus or deficit, it will be a substantial deficit. It will be something like $20 billion.

The point about all of this is that there is an effect. There is a serious problem with respect to the responsibility that Canberra has for defence. Having said that $25 billion has come out of this portfolio in the last four years, I can tell you that the Department of Defence, through the minister, has admitted in a question on notice that $200 billion of future Defence funding is unfunded and is not appropriated, and nobody can say where the money is coming from.

So what does that mean for the future? Let us just deal with what is happening economically. The Gorgon gas project is 40 trillion cubic feet of gas, which is enough to keep a million people in electricity for 800 years. Next door to Gorgon is Wheatstone, at 36 trillion cubic feet. Above Gorgon, opposite Broome, out in the Timor Sea is Browse. Browse is three times as big as Gorgon. These are enormous gas deposits. They are going to provide vital energy for China, for South Korea—the Republic of Korea—for Japan and for Taiwan. One of the most important strategic things that we must consider is the fact that the vulnerability of our trading partners is tied up in ships on the surface of the water travelling between Australia and East Asia. Anybody wanting to do damage to our trading partners knows to snip off their supply of energy; it is that simple.

And what are we doing about it? What is this government doing about it? Let us just have a look. We have completely and utterly abrogated our responsibility to provide a serviceable Australian Navy. Currently we do not have a replenishment ship—that is, a ship that can refuel Australian naval vessels on the water. The reason is that HMAS Success is very badly broken. In line with what happened with Manoora and Kanimblawhen the minister suddenly wanted, at the request of the Deputy Commissioner of the Queensland Police Service, to provide an amphibious vessel to Queensland in the face of Cyclone Yasi—the minister suddenly became aware that our amphibious ship capability did not in fact exist. He was in fact told that even Tobruk was on 48-hour standby. Tobruk was not on 48-hour standby; it was in fact subsequently in repairs for almost nine months. So Manoora and Kanimbla have been cashiered because they are rusted out. Success is broken, and we are spending $10 million to have the Spanish bring their replenishment ship to Australia this year. HMAS Choules has blown up her transformer, so that is out of action till the end of May. What does this say about the Royal Australian Navy? It says that our capacity to provide security for energy into East Asia is very sadly depleted, and this is all in the face of a government that has taken $25 billion out of the Defence portfolio.

Just last November at MYEFO, the Mid-year Economic and Fiscal Outlook, the government said, 'Oh, we'll provide some new aircraft—some Growler electronic warfare kits—to the Royal Australian Air Force, and we'll provide some more Bushmasters, a total expenditure of about $1.6 billion.' That all sounds beautiful and we all say, 'Wow, that's nice,' but then the minister says very quietly in the fine print, 'But you've got to find that money from within your budget.' That is just a cut. That is a chop at the knee of the Defence portfolio.

For a trading nation to have massive defence cuts and to have a Navy that is badly broken—I have not even begun to talk about submarines, but I will in a moment—is a high-risk situation. Indeed, this year defence spending as a share of GDP is 1.56 per cent of GDP. We were last at 1.56 per cent of GDP in 1938. But it gets better—or worse as the case may be, depending on your political outlook. Next year we go to 1.49 per cent of GDP. We were last at that level in 1937. It is funny, isn't it—this government has taken us back to defence expenditure levels comparable to 1937 and 1938 as a share of gross domestic product. We all know what happened very quickly thereafter: we needed a lot of ships, we needed a lot of soldiers and we needed a lot of aircraft, all of which we virtually had to rely on the United States for. This government is putting us in exactly the same position.

Let us have a look at the Joint Strike Fighter. We signed up to the fifth-generation Joint Strike Fighter because it is a regionally dominant aircraft. It has phenomenal radar capability. It functions beyond visual range. It can detect a vertical launch at 800 nautical miles. We were supposed to buy 14 planes this year but we have bought two. The whole program, as set out in 2009, is stumbling and bumbling along in limbo. We have the P3C Orion aircraft—a beautiful aircraft that has served our country very well in terms of maritime surveillance. The fact is it is a 1959 design. Almost every other country operating this aircraft has had to spend money rewinging the aircraft because its airframe is so old. We are supposed to be acquiring the P8A to replace it. These are really very important considerations that require clear planning and a clear outlook, but what have we got from this government? The need to rewrite a white paper within about three years of having done a detailed one. The whole space is in utter confusion.

Let us turn, again looking at the maritime, to submarines. In the eighties the then ministers for defence—and we know who they were—decided that we would go with the Swedish socialist experiment with a Kockums submarine that no-one had ever seen or heard of before. We added about 1,500 tonnes to the size of the Swedish A17 submarine. We turned it into the Collins, which was at that time the biggest conventional submarine by submerged tonnes in the world. No-one else has a Collins class submarine. No-one else has the engines of a Collins class submarine. No-one else has the electric motors of a Collins class submarine. No-one has anything like a Collins Class submarine. It is running at $1 billion a year to sustain. We probably have, on a good day, two boats in the water and we are hoping to get to three, but it has been a very tortuous, painful ride for the last four years because this government has completely mismanaged these boats, as it does everything else.

Here we are with the whole of East Asia dependent upon Australia for energy, iron ore and coal, and what has happened? Our Navy is badly broken. It requires refunding, re-resourcing and refocusing because this government has decided that, of all the portfolios that can pick up the tab for the profligacy, the spending and the waste, Defence is the one that is so easy to reach into and grab that fistful of dollars from because our men and women in uniform are so disciplined and so loyal they will just cop it sweet—and they have. We will fix that, of course.

But there is the problem: we have a hollowed-out national security focus. The Defence portfolio, which was once running at about 19.8 per cent of GDP under John Howard—towards the end of the Howard government—is down to 14.9 per cent.

Photo of David FeeneyDavid Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | | Hansard source

So what are you going to spend on?

Photo of David JohnstonDavid Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | | Hansard source

I hear heckling from the other side. This is a gross embarrassment to them. They have dropped the ball. They hate Defence. They love to rip it off. They love to grab every bit of money and put all the plans into disarray. The Defence Capability Plan is an absolute scandal in its dysfunctionality. They do not stick to any of the milestones and they do not spend the money, so Australian industry is left wondering when it is ever going to be thrown a bone. This is a government that is chronically good at mucking things up and undermining stability in portfolios, particularly in the Defence portfolio. They are absolutely a gold-medal prospect when it comes to wasting and spending money. That is why we are here: these appropriation bills just give this government another blank cheque to waste more and more money.

What about industry? You would think this government would support Australian indigenous defence industry. They came up with priority industry capabilities—PICs, they are called in acronym form—and strategic industry capabilities—they are called SICs. You would think they would support Australian priority industry capability. They even said that the disruptive pattern combat uniform—that is, the camouflage uniform that our soldiers wear in battle—should be produced in Australia, and yet we caught them, red-handed, going off to China. Having developed low-observable infrared technology in the weave of this clothing, we gave the Chinese the specification. That is what this government does—its incompetence knows no bounds. We have actually shown potential adversaries the weakness and vulnerability of our technology which we took—and I got the evidence from the Defence Science and Technology Organisation—about 15 years to develop. The government gave it to the Chinese because they were looking to save a few bucks.

This is the level of incompetence of these people. They have absolutely no idea about national security. They have absolutely no idea about the cost of readiness and the capacity to respond not just to threats but to national disasters. And look at all the projects that are currently being delivered to the Australian Defence Force. For example, the landing helicopter dock ships—Brendan Nelson and Robert Hill did those. The Joint Strike Fighter—Robert Hill did that. The air warfare destroyer—Robert Hill did that. All of the great projects that are going to see us secure into the next decade have been delivered by Liberal ministers. What has this government done to Defence other than rip the financial rug out from underneath it and leave us ever so vulnerable at a 1937 level of spend? That is what their claim to fame is: 1937. And heaven help us if we have a problem in the next five years.

Debate adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.