Senate debates

Monday, 19 June 2017


Appropriation Bill (No. 1) 2017-2018, Appropriation Bill (No. 2) 2017-2018, Appropriation (Parliamentary Departments) Bill (No. 1) 2017-2018; Second Reading

12:19 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—


Appropriation Bill (No. 1) 2017 -2018, together with Appropriation Bill(No.2)2017-2018 and Appropriation (Parliamentary Departments) Bill (No.1) 2017-2018, form the principal Bills underpinning the Government's Budget.

Appropriation Bill (No. 1) 2017 -2018 seeks approval for appropriations from the Consolidated Revenue Fund of just under $89 billion.

I now outline the significant items provided for in this Bill.

First, the Department of Defence will receive just over $32 billion to keep our nation safe and pursue our national interests. This includes over $900 million for major Defence operations including Operations OKRA, ACCORDION, HIGHROAD, RESOLUTE and MANITOU.

Second, the Health portfolio will receive just over $11 billion, which includes around $3 billion for the Home Support and Care Program to provide support for older people to remain living at home and connected to their communities for longer; about $1 billion to ensure Australia has the workforce necessary to meet the needs of a sustainable health system under the Health Workforce Program; and just under $1 billion to continue the delivery of health services under the Aboriginal and Torres Strait Islander Health Program, including the Indigenous Australians Health Program.

Third, the Department of Social Services will receive over $5 billion. This includes approximately $840 million for the provision of demand-driven Disability Employment Services, about $225 million for other disability and carer services and around $51 million for community organisations to develop and maintain a cohesive Australian community with improved independence and self-sufficiency.

Fourth, the Department of Human Services will receive just under $5 billion which includes around $68 million to continue Income Management in all current locations.

Details of the proposed expenditure are set out in the Schedule to the Bill and the Portfolio Budget Statements tabled in the Parliament.


Appropriation Bill (No. 2) 2017 -2018, along with Appropriation Bill(No.1)2017-2018 and Appropriation(Parliamentary Departments)Bill(No.1)2017-2018, are the Budget Appropriation Bills for this financial year.

This Bill seeks approval for appropriations from the Consolidated Revenue Fund of over $15 billion.

I now outline the significant items provided for in this Bill.

First, the Department of Communication and the Arts will receive just over $9 billion. This will be used to provide NBN Co. with a Government loan on commercial terms to support the completion of the National Broadband Network.

Second, the Department of Defence will receive over $2 billion to enable the purchase of military equipment and the construction of support facilities, as announced in the 2016 Defence White Paper.

Third, the Department of Human Services will receive approximately $162 million, which includes just under $24 million in Information and Communications Technology capital investments to support the Veteran Centric Reform measure.

Details of the proposed expenditure are set out in the Schedules to the Bill and the Portfolio Budget Statements tabled in the Parliament.


Appropriation (Parliamentary Departments) Bill (No. 1) 2017 -2018 provides appropriations for 2017-18 for the operations of:

          This Bill seeks approval for appropriations from the Consolidated Revenue Fund of just over $326 million.

          The Department of Parliamentary Services will receive just under $124 million to maintain the integrity and amenity of Parliament House.

          Details of the proposed expenditure are set out in the Schedule to the Bill and the Portfolio Budget Statements tabled in the Parliament.

          12:20 pm

          Photo of Katy GallagherKaty Gallagher (ACT, Australian Labor Party) Share this | | Hansard source

          I rise to make a few comments on the appropriation bills for 2017-18. I will start by saying what a disappointment this government has been on economic management, and that disappointment is measured on its own standards. The hypocrisy of this is really quite astounding. After the hype about a budget emergency and a debt and deficit disaster before they came to government, last week's gross debt reached a record high in this country of half a trillion dollars. That is right: half a trillion dollars, on the Liberal's watch. That is roughly $20,000 for each Australian man, woman and child.

          This embarrassing milestone comes despite Mr Turnbull, the Prime Minister, claiming in opposition that up to $300 billion in projected debt was 'frightening, gigantic and an almost inconceivable level of debt'. As recently as last week the Assistant Treasurer described the debt under the Liberals as 'a truckload of debt' and 'an extraordinary, an absolutely extraordinary, amount of debt'. No wonder the government tried to downplay its need to increase the gross debt cap in the budget papers. The government will have to increase the debt ceiling again, because it now expects that gross debt will hit over $600 billion in 2019-20. It then expects gross debt to continue to rise to $725 billion in 2027-28, with no peak in sight. Net debt has also blown out by over $100 billion since the government came to power, and net debt will be at record highs for another three years. This cannot be seen as good economic management in anyone's book.

          The government's failings on economic policy do not stop with debt and deficit. Unfortunately they are also directly impacting the cost of living for Australian households and businesses, particularly small and medium businesses. Real wages have stagnated, but simultaneously the cost of living is going up—energy prices, education expenses, healthcare costs and housing costs. And this government, in the budget that the appropriation bills contain, is doing nothing about it.

          In relation to energy costs the government's complete failure on energy is leaving Australians facing significant increases in energy prices. AGL recently announced that on 1 July electricity prices in New South Wales will go up by 16 per cent, or $300 per year for a typical household. Here in my community of the ACT prices will go up by almost 19 per cent—18.95 per cent—on 1 July, a $333 per year increase on the average household bill. That is a lot to a pensioner who is living on less than $900 a fortnight. It is a lot to a family that is struggling to make ends meet on an average wage. What is worse is that it did not have to be this way.

          The Liberals' energy policy vacuum has led to investment strikes, rising prices, falling energy security and growing pollution. On energy policy the government is as divided and dysfunctional as ever—and we saw that last week—incapable of providing the policy leadership the country needs. Even Senator Cormann has acknowledged that if the status quo were to continue then energy prices would continue to go up and up and up, and the stability of the system would continue to be at risk.

          Sadly, not only is this government failing to take action to address higher energy prices, but also this budget tries to unfairly cut the energy supplement for new pensioners, people with a disability, carers and people on Newstart. A single pensioner would see their pension cut by $14.10 per fortnight, or $365 a year, because of this government's changes, and coupled pensioners would be $21.20 a fortnight worse off, or around $550 a year, all against the background of significant increases in energy prices.

          The government is also failing to address health costs. We know that 804,000 Australians delay seeing a GP because of cost, with some forced to make the choice between caring for their health and putting dinner on the table for their family. Since the government imposed the freeze in the 2014 midyear economic forecast, out-of-pocket costs are now at an all-time high. Non-referred GP attendances are now $37, up $7, and specialist attendances are now $82, up $14 in just three months. Yet in this budget the government is continuing to attack Medicare, and the freeze on the Medicare rebate is for another three years.

          Students could have their opportunities decreased as the government, who should be supporting students' needs and nurturing their ability, fails to deliver the funding required, particularly to address inequality across the system. With insufficient funding, teachers, who work around the clock to provide our kids with a quality education, will be forced to teach with fewer resources. In a country which values education and believes in equal opportunity for all, the government will be cutting $3.8 billion from universities and making students pay more and pay off their student debt earlier. University students will start their careers in more debt and be made to start paying it off when they earn a salary just above the minimum wage. Students may think twice about pursuing tertiary education as they watch this government gut resources from universities and expect students to fork out more for less.

          With the current mockery made of young people and the stereotype that the majority of them are latte-sipping, avocado-eating millennials, the harsh reality of their daily lives is overshadowed. This budget does not address one of the biggest problems young people face today: housing affordability. With house prices and rents increasing, young people are being locked out of the housing market. The government has no plans to counter this, unless the Prime Minister's instruction to parents to shell out for their kids is the grand plan. But, unfortunately, not everybody has rich parents. According to a previous Liberal Party minister, all you need is a good job to be able to afford a house. But, unfortunately, good jobs are not accessible to all Australians either, and, with the prices of houses these days, sometimes even a good job will not cut it. There was an opportunity in this budget for the government to take decisive action on negative gearing and capital gains tax, but it has shown yet again that it does not have the courage to do what is right and indeed what will need to be done at some point in time.

          At its heart this budget is unfair. It is increasing taxes on people earning less than $87,000 per year, while at the same time giving everyone earning more than $180,000 a tax cut. Under this government, families, who are already facing stagnating real wages, will now also have to pay higher taxes. That is in addition to the loss of penalty rates for up to 700,000 Australians. All the while the government continues with its plan to give big business and the banks a big tax cut. The government strips money away from students, young people, families, low-income earners and pensioners, but is proceeding to give a $65 billion tax cut to big business. The government's increasing of the pension age to 70 will see low-income earners forced to work into their old age. This should be a time for older people to spend with their families and friends; instead they will now be worrying about financially supporting themselves during a time in which they may have additional health needs, and with no support from the government.

          The Liberal government will always prioritise their millionaire mates over the people they claim to represent. The government's focus on the big end of town is letting down Australia's small businesses, who are critical to our economy. As I meet with more and more small businesses, the message is clear: they are concerned about rising energy costs, inadequate broadband infrastructure, and late or delayed payments. While Labor support the extension of the small business instant asset write-off, we are disappointed that the government has not acted to stimulate jobs growth or address the all-important issue of cash flow for small business. Waiting for payment for supplies or services delivered is debilitating for small business right across Australia. Regrettably this budget has made absolutely no effort to address the payment terms problem exposed in the Australian Small Business and Family Enterprise Ombudsman's recent report into the practice.

          In order to compete in a global economy, small business need access to high-speed internet to grow their business and sell their products, but this budget provides no solutions other than the Prime Minister's own substandard National Broadband Network. This inaction simply makes it inevitable that Australian small businesses will continue to struggle with one of the slowest and most expensive internet services in the developed world. The latest Akamai State of the Internet report shows that Australia now has the embarrassing global rank of 50th for internet speeds, behind key trading partners South Korea, Japan, Taiwan, the United States and New Zealand.

          The budget also leaves small business to fend for themselves against increasing energy prices. Again the total vacuum of leadership in the government on energy policy is having a real impact not just on households and low-income households but on small businesses, and means that even higher energy prices and uncertainty for their operations will inhibit their ability to grow and employ. This is something that comes up every time I meet with a small business. They are worried about the prices they pay now and they are also worried about the prices they are going to have to pay into the future. Wholesale power prices have doubled under this government and will continue to rise unless the Prime Minister develops a real national energy policy. Their budget was an opportunity for the government to prioritise small business, but the budget has failed that test.

          The budget also confirms what we knew at the election, and that was that the government's slogan of 'jobs and growth' was just that: a slogan. This budget forecasts a hundred thousand fewer jobs. While the Liberals say they care about jobs they will happily cut jobs from Human Services and give public servants like those working at the APVMA two choices: move to a regional area that cannot support you or your family's needs, or take a redundancy. And there is a knock-on effect. As the government continues to cut funding, the number of people affected will continue to grow.

          We see this with the ongoing Centrelink crisis, with over 42 million calls receiving an engaged signal between June last year and April this year. Millions of vulnerable Australians spend hours trying to get through to someone who cannot help them, yet this issue remains unaddressed by the government, who, instead, continues to attack those who actually need additional assistance.

          Budgets are around priorities. The Turnbull government prioritises tax cuts for big business and banks over families, pensioners, students and small business. Labor does not. We do not support a $65 billion tax cut for large companies. We would not cut the energy supplement which pensioners rely on, particularly when prices are rising. We would unfreeze Medicare rebates immediately.

          We oppose unfair cuts to universities, increases to student fees and the changes to the repayment threshold that hit women, Indigenous Australians and the lowest paid the hardest. We will never cheat hardworking young Australians out of the chance to get a degree, because we believe that a university education is an opportunity you earn, not a privilege you inherit. Labor would fund TAFE and apprenticeship programs properly. This is because we believe in providing opportunities for all Australians to gain the skills they need to enter the workforce and that will create jobs for them to do so. We believe that every child in every classroom, regardless of where they live or who their parents are, deserves every opportunity, and Labor would restore the $22 billion to properly fund our schools.

          We would also have the courage to do what is right for housing affordability and tackle negative gearing and capital gains tax exemptions. We believe in a fair tax system, where those who are well off pay more tax than those who are struggling. We will support a 0.5 percentage point increase in the Medicare levy, but only for Australians in the top two tax brackets. Labor's plan would deliver more revenue than the government over the medium term, without putting the burden onto families on modest incomes who need that income to support their families. We would also retain the deficit repair levy. This year's budget deficit is 10 times bigger than the Liberal's first budget predicted. Labor does not support spending $19.4 billion on the wealthiest two per cent of Australians.

          Labor, of course, would also protect penalty rates. Penalty rates continue to be an important part of a strong safety net for Australian workers. They enable low-income workers and workers in highly casualised industries to share in the nation's economic prosperity. Labor believes that the government should be doing everything it can to ensure we live in a fair and equitable society where we support the needs of all Australians, not just a few at the top end. Labor will support the passage of the appropriation bills in the usual way.

          12:33 pm

          Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

          I will not speak for very long today on Appropriation Bill (No. 1) 2017-2018, Appropriation Bill (No. 2) 2017-2018 and Appropriation (Parliamentary Departments) Bill (No. 1) 2017-2018. I want to make a really important point about this budget. I have made it in here before; in fact my party has been making it for a number of years—that is, we wanted the Treasurer, in the budget papers, to separate debt into recurrent expenditure and capital expenditure, or capital spending. I want to say today how pleased I am that the government has adopted this Greens policy. It is not just our policy; a number of respected financial commentators have been making similar points. I have consistently asked this question to various Treasury secretaries. I am very genuinely pleased that now we have budget papers that allow us to much more easily ascertain how much debt has been put aside.

          The Treasurer calls it 'good debt'. It could be good debt if it was spent the right way on long-term infrastructure projects that we know enhance productivity, where there is transparency around the selection process and, of course, independent cost-benefit analysis.

          The Greens would like to go a step further on good debt. I chaired a select inquiry that went around the country. It took nine months of evidence on how we could best finance and fund infrastructure in this country. The committee report recommended a restructuring of Infrastructure Australia that would essentially create a government infrastructure bank that would work with the private sector and allocate government funds on community projects as well as monetising and securitising financing for different infrastructure project working with the private sector that clearly had an independent process between the funding and financing and project selection. In other words, we looked for a process that depoliticised, as much as possible, infrastructure spending in Australia. I know that it is impossible—there is nothing politicians like more than cutting ribbons when infrastructure projects are finished—but, at the end of the day, the system is broken and it needs to be fixed. An important first step is to have a much clearer understanding of where the debt is going.

          The flip side is that the Treasurer has called recurrent expenditure bad debt. The Greens do not agree with that. It is way too simplistic to say that the money we are spending in this country on education and health care—the kinds of things you might find in the recurrent tables in the budget—are bad debt. They are investments in human capital. They are investments in our communities. They are investments in our youth and children's future. So it is very important that we get our language right in this discussion.

          I want to say today just how disappointed I am that, since the budget, this issue has been consistently raised by the Labor Party. I understand why you, Mr Acting deputy President, would raise this issue. You believe in small government and small debt, and you have been very clear about that issue. But it does surprise me that the Labor Party, the 'progressive' side of politics, is pretty much a mirror image of what your old party used to be: at every opportunity they get, they talk about debt and deficits and how bad that is for this country. Well, can we please raise the standard of conversation in this country around debt. I mean, not all debt is bad. Households leverage and businesses leverage. It is a standard part of life and economics and business. And there is no reason why governments cannot borrow—especially now, at record low interest rates—for long-term investment in our communities and in our economy, especially in infrastructure projects that we know stack up and actually get the tick of approval.

          In fact, at a weak time in our economy, it is classic Keynesian economics: our government has a role to play by stimulating jobs and growth—and I hate to use those two words—by sustainable infrastructure investment. The head of the Reserve Bank—who in my opinion has been a fantastic commentator in recent years because the Reserve Bank is independent of government—has been out there saying things like the best possible investment we can have in this country in affordable housing is better infrastructure spending, investing in public transport corridors and a whole range of infrastructure initiatives. The Productivity Commission has also said that, right around the country, bundling small infrastructure projects—in regional Australia, in outlying suburbs and communities in this country—and putting them in portfolios for investment can create enormous benefits and is a really clever way of going about financing debt in Australia.

          So can we please move on from this 'all debt is bad' shallow political debate, which I genuinely feel has held back this country. My committee spoke to business people and investors. It spoke to some of the biggest infrastructure investors in this country—like the Canadian pension funds. They all said the same thing. The reason they are not investing is because they see the politicisation of this issue as being prohibitive for them. They have risk premiums built into their expected rates of return that reflect the political risk of investing in infrastructure. But this is a good first step in this budget.

          Senator Cormann, through you, Mr Acting Deputy President: last time I spoke on this my points were completely misrepresented by your side of the chamber. I am very careful to say that we want to see infrastructure spent the right way. We do not want to see money wasted. In fact, that is exactly why we want to see Infrastructure Australia and the whole process depoliticised as much as possible and restructured. Budget cuts and expenditure cuts, when they are aimed at the most vulnerable in our society, are not going to deliver any economic benefits; quite the opposite: they will deliver significant pain to Australians who are most vulnerable. There are other ways of skinning a cat, and I believe this budget is at least a good step in the right direction.

          12:40 pm

          Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

          I thank those senators who contributed to this debate on the appropriations bills and commend the bills.

          Photo of Cory BernardiCory Bernardi (SA, Australian Conservatives) Share this | | Hansard source

          The question is that the bills be now read a second time.

          Question agreed to.

          Bills read a second time.