Senate debates

Monday, 17 September 2018


Productivity Commission Amendment (Addressing Inequality) Bill 2017; Second Reading

11:17 am

Photo of Anne UrquhartAnne Urquhart (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to speak on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. I introduced the bill last year in Senator McAllister's absence, and I make it clear to the Senate that Senator McAllister will be closing the debate on this bill, not me. Without doubt, economic inequality is the major issue people are coming to talk to us about at the moment, whether it is equality of opportunity for people to live their dreams or equality of outcomes in terms of a happy and healthy life for people and their families. Economic inequality is biting in this country. We need governments that are serious about identifying the causes and putting in place policies to address them. Since the great reforms after the Second World War, all Australians have had the chance to dream big, to work hard and to achieve their goals. Social mobility has been within reach of all of us. Australia's society has been defined by the fair go for all, where people have both an equality of opportunity and an equality of outcomes across a range of measures.

But this fair go is slipping. The Chifley Research Centre has done some great work identifying the facts on inequality. Labour earnings are the largest component of income for most Australians and, therefore, the most important driver of income inequality. The labour earnings share of national income has been steadily declining since the 1980s, and average wages today are growing more slowly than productivity, which is contributing to inequality in the short term and threatening future productivity growth in the long term. It means slower growth for all and stagnant living standards for all.

Worse, time and time again our rural, remote and regional areas are ignored by this government. It is a government that makes countless promises for the regions but whose actions are completely out of step with what regional Australia needs. It is a government that talks big about supporting the regions but which fails to make headway in improving the lives of workers in regional Australia.

In my home region, the north-west and west coasts of Tasmania, our people have access to the most fertile soils, the cleanest airs, predictable seasons, rich mineral resources and the most picturesque coastline. It should be a place where people live an honest life, work hard, earn a decent wage, afford a home and raise a family in safety and comfort, and where their children can dream big and achieve those dreams. While this is still the case for many, there is a rising number for whom this is getting out of reach. While it's a beautiful place for many, they're trapped and isolated. Our services are stretched, education and health outcomes are low, wage growth is low, unemployment is high, casualisation of the workforce is high and people face difficulties securing a home, securing a place to live and somewhere to base their family. This leads to unimaginable stress entrenching inequality and disadvantage, making our homes and communities less safe and less happy.

So what do we do? First of all, we must acknowledge the problem. We must be firm that tackling inequality is a priority for our society and we must get to work, understanding what drives inequality and what can be done to reduce it—not to take more off some but to ensure that, when the pie grows, everyone has a chance to get more. We heard Prime Minister Morrison, when he was Treasurer, saying that inequality isn't getting worse, despite his chief macroeconomic adviser, the Governor of the Reserve Bank, saying the exact opposite. Time and time again, ideology over outcome prevails for the Liberals and Nationals; political expediency over people. In this case, it is a blind allegiance to trickle-down free market economics, an ideology that hurts working people, is bad for economic growth and is bad for our standard of living going forward. The Reserve Bank Governor was clear. When asked if he thought inequality was rising or getting better in Australia, Dr Lowe said, 'Well, it's risen,' and Dr Lowe addressed the critical issue: the Chifley Research Centre has also identified that wealth inequality has become more pronounced in the last few years. People who own certain assets have seen their value shoot up, while those with little or no assets effectively fall behind.

What we saw in the recent Braddon by-election should be a wake-up call to Prime Minister Morrison: support this bill, support working Australians and stop prioritising the big end of town. The debate of the by-election was between a Shorten Labor Party that pledged greater investment in our hospitals, schools and TAFEs, greater support for pensioners and greater support for our communities, compared to the Liberals and Nationals whose priority was a $17 billion taxpayer funded handout to the big banks at the expense of working people and retirees. While the Liberals and Nationals are prepared to just fob off inequality as something that doesn't matter, Labor is interested in actually identifying the problems and working across the community to identify pathways to fixing them. Instead of working together, Prime Minister Morrison just turns his back at a problem we all know is getting worse—a problem about which we know we need more data. At present, despite the countless reports reams of economic analysis published every year, there isn't one body in Australia charged with examining economic inequality and its impacts on our community. Without collating and analysing such data from an inequality perspective, governments will struggle to respond effectively and the community may remain unaware of the extent of the problems. This bill will fix that.

The five-yearly inequality report will do three things. First, it will lead to the establishment of measures for economic inequality. Second, it will assess the effects of economic inequality on the economy and on individuals. Finally, the report will assess the effect of existing government programs on economic inequality. This is a critical part of the policy development cycle. Simply, are the programs reducing or increasing in equality and are the programs creating any unintended circumstances?

Which body should conduct this analysis? This bill proposes the Productivity Commission do so. Currently, the Productivity Commission Act includes a set of policy guidelines that the commission must have regard to. This includes a wide variety of social, environmental and economic considerations. I want to stress that, given the political nature of the concept of inequality, this bill doesn't prescribe a specific definition. We don't need to be exclusive in our definition here. The proposed inequality report should consider matters relating to both inequality of opportunity and inequality of outcome.

The Productivity Commission must take a holistic approach and examine a range of measures and a range of factors in their research and analysis. If the government can take the time to understand that, perhaps they could agree to support this bill, because surely they are hearing the same concerns from the Australian public: that inequality is on the rise and that government must support further understanding of both the causes and outcomes associated with inequality. Instead of the divisive politics of fear, why not try the inclusive politics of hope? Instead of marginalising some of the most vulnerable in our community and instead of attacking whole ethnic and religious minorities, why not try to build connections? Why start with hate? The Longman and Braddon by-elections demonstrated that the current rhetoric from the Liberals and Nationals isn't working. It does them no good and it definitely does our communities no good.

11:26 am

Photo of Amanda StokerAmanda Stoker (Queensland, Liberal Party) Share this | | Hansard source

Oh, the irony! Labor proposes the Productivity Commission Amendment (Addressing Inequality) Bill 2017 to do what it says will help address inequality in this nation while simultaneously opposing the measures this government has been fighting for. The measures are all about getting people who are doing it tough a much better deal. Labor do it with a straight face, citing the statistics from the partisan Chifley Research Centre, an arm of the Labor movement.

Mr Shorten, peddling the lie that is the heart of envy and division, just will not cut it with Australians. It's a sad reflection of how Labor has fallen. In the 1980s, under Hawke and Keating, Labor focused on market based reform to grow Australia's economic pie. But today all that interests Labor is dividing that pie up and tearing others down.

Inequality has become something of an obsession for the current Labor Party. The consultation draft for Labor's national platform mentions the word 'inequality' some 49 times. It mentions inequality more than twice as often as other important themes such as living standards, wages or electricity prices. Under Mr Shorten's leadership, Labor has started singing from the same songbook as Mr Sanders in the United States or Mr Corbyn in the United Kingdom, peddling the politics of division and envy. Mr Shorten has nominated inequality as one of Labor's top economic priorities, should it win office next year, but the logic that underpins this plan is clear and scary. Put simply: it's that the path to making society fairer and more equal is to pull people down rather than lift everyone up. This regressive tax grab is not a positive plan. The outlook that animates this philosophy isn't optimistic; it's decidedly downcast. It's hard to see anything positive about a philosophy that's about punishing success rather than rewarding merit. To my mind, Labor's notion, that the best way we can improve the lot of others in life is through the heavy hand of government redistribution, is incredibly disempowering. When Mr Shorten says that inequality is creating a sense of powerlessness or is killing hope, what he's really saying is that Australians would be better off as dependents of a welfare state.

This bill is about entrenching the victim mentality that inequality in Australia is endemic. Listening to our Labor representatives when they are interviewed or when they speak in the chamber, you'd be forgiven for thinking that life in Australia has never been worse. Maybe all of those people lining up to migrate to Australia should be getting a warning about how bad it is here. Of course, we know that's not true. Australia is one of the best countries in the world to live. Interest in coming and living here from people overseas shows that it is a great place to make home. Often I'm asked by constituents about how I can help bring family members to this country, qualified always with the comment that this is the best country in which to live.

However, our capacity to remain the destination of choice for many people, and for all Australians, is dependent on our capacity to maintain a high standard of living and services that support a First World economy. The challenge for Australia is to maintain a high level of economic growth—growing our gross domestic product and creating jobs in the process. We live in a society that values personal endeavour and entrepreneurialism. It's this feature that leads to a growing economy and job creation.

The reciprocal of inequality, or the flip side of the coin, is equality. But what does it mean, and what is suggested to achieve it without killing off the incentive for personal endeavour? Some people in our society are going to become wealthy, but these people are the serious drivers of wealth creation for everyone. Their ability to identify opportunities and create jobs benefits all of us. It lifts all of us up. And, if some people think that taking money off some and giving it to others works, then they haven't studied a thing about the failures of socialism. Perhaps they need to compare the economic position and the quality of life of those in the former East Germany and West Germany. There's a reason people risked death to escape the east and its socialist paradise: it's because it doesn't work.

Labor seeks to, under Mr Shorten, take from those who create jobs, impose higher taxes and kill off the job-creating capacity of those who would otherwise invest in us. But it's worse than that: this pillaging of income is not restricted to the perceived wealthy. They also have their hand in the pocket of self-funded retirees and ordinary Australian families who have an aspiration to make a life that is better for themselves—to back themselves, to take a risk, to start a small business or to take on a local person as an employee. Once productivity is reduced and the incentive to improve your lot is removed, you'll see growth but it's inequality.

In any market based economy, sure, there will always be differences in what some people have and don't have. But let's get serious about the facts of the situation. What is the real level of inequality in Australia? And let's go to some real data, not the Mickey Mouse statistics cooked up by the intellectual arm of Labor Party and the Chifley centre. The HILDA Survey, the Household, Income and Labour Dynamics in Australia survey, produced by an arm of the respected University of Melbourne, that was released in July 2018 found that relative poverty is at the lowest point in the history of the survey while absolute poverty is close to record lows. From 2001 to 2016, the percentage of Australia's population in absolute poverty decreased not by a little but by approximately 70 per cent—down from 12.6 per cent to 3.6 per cent—while the percentage in relative poverty, with the poverty line set at 50 per cent of median income, fell from 12.6 per cent to 9.4 per cent.

All of the recent data supports the notion that income inequality measures in Australia have stabilised since the GFC. According to the ABS, the Gini coefficient, which many will know is regarded as the most reliable income inequality measurement—it represents the income or wealth distribution among a nation's residents and it's the most commonly cited measure of inequality for people within one country—fell from 0.333 in 2013-14 down a point in the 2015-16 year. The HILDA survey estimates there has been little net change in inequality from 2001 to 2016 with the Gini coefficient remaining stable. In 2016, the Gini coefficient reached its lowest level since 2005.

Here's another uncomfortable or inconvenient fact for those opposite: in 2015-16, 3.6 million Australian households received more in government payments than they contributed. That means 40 per cent of Australian households do not pay any net tax once you take into account the benefits they have received. By contrast, in 2015-16 the top 10 per cent of taxpayers paid 45 per cent of all personal income tax.

So now that we know that the situation is not the fake class war envy picture that's been painted by those opposite, let's get down to the practical stuff. The Coalition has a plan to strengthen our economy, which will continue to improve the quality of life for people who are at the rougher end of the equality spectrum. But it's not about taking from the top. This plan is about creating the right environment to lift everyone up, to help all Australians reach their full potential. Let's talk about some of the features of this plan. Australia has a progressive tax system, a broad social safety net and a welfare system that is one of the most well targeted in the world. It's worth noting that it's also the largest expense our nation's budget faces each year. This need to target our support well is part of the reason why we have reformed our aged pension system to give more to people who are living on the lowest incomes after a lifetime of contributing to our economy. We know that the best way to help Australians to get ahead is to ensure that every Australian who can work is able to get a decent job. That's why all our efforts are directed at growing the economy, getting more Australians into work and tightening the labour market to increase incomes for all right across the country. In contrast, Mr Shorten believes that for some to do better others have to do worse; others have to be punished. He wants to punish the job-creating parts of the economy.

The main thing we're doing to improve income equality is to generate jobs, because nothing helps people quite like going from not having a job to having good, stable work. The fact that 400,000 people have got a job in the last year for the very first time helps a great deal. This has been acknowledged by the Reserve Bank of Australia. A million jobs have been created—more than that—since this government came to office. In contrast, Labor has little to offer. It's abandoned any pretence of fairness or taking any real action to reduce the levels of poverty in Australia in favour of catchy slogans, political expedients and convenience. A party that once claimed to believe in needs based school funding now rejects the implementation of true Gonski based funding models in favour of a sequence of special deals that aren't fair and that cut different terms for different places. The Labor Party has no plan to grow the economy; rather, it wants to tax it to death, introducing new taxes on retirees, housing, investment, income for family businesses and savings. All businesses, small, medium and large, will pay, with the consequence that they won't be able to create as much opportunity for all of us. The Labor Party wrecks and resists, every step of the way, this strong economic plan to repair the budget, grow the economy and create jobs. It was Labor who opposed our tough measures to crack down on multinational tax avoiders when they opposed the 2015 multinational anti-avoidance legislation. Their great shame is to have voted for leaving $2 billion in the pockets of multinationals instead of supporting our efforts to deliver it to the budget bottom line to fund essential services for hardworking Australians. It's Labor who opposed our efforts to boost investment, to increase earnings and to grow the economy by their decision to vote against the Enterprise Tax Plan. It's a crazy thing, because Labor know, deep down in their heart, that all of those good things would be achieved if the enterprise tax plan could be implemented, because they've said it themselves time and time again. Mr Shorten said:

Reducing the corporate tax rate sees more capital flowing into our domestic economy, which will flow on to workers in the form of higher wages, thereby improving the standard of living.

Yet he did all he could to stop that improvement in the standard of living for Australians. How about the member for McMahon? He said:

It's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.

And yet he too stands in the way of this opportunity-driving plan. The member for Rankin said last year:

Australia would go well out of a lower company rate than it is right now.

And he said:

You're right that Bill said that in the medium term it would be a good aspiration to have a lower company rate.

I could keep going on and on, but I don't think I need to.

The plan, they have made very clear, is one about which we should all be quite disturbed. It's a plan to reverse the legislated tax cuts for small and medium sized businesses and it's a plan to continue to deny the reductions in tax that we know will only deliver more opportunity for Australian people. It's Labor's plan that will involve higher taxes, higher deficits and a huge risk to the growth that has been seen in the economy in recent years. At the 2016 election, the Parliamentary Budget Office confirmed that Labor's election commitments would have resulted in higher deficits to the tune of $16.5 billion. Higher taxes, higher debt and higher deficits are the worst prescription you could write for the Australian economy. Labor are a AAA threat to our AAA credit rating. They do not have a single policy that would help a single business to invest a single dollar or create a single job.

On housing, Labor's plan is only for higher taxes, but we all know higher taxes don't build houses, they don't get young people into work and they don't encourage small business to take on a young person, give someone an apprenticeship or perhaps buy some equipment from a local business. Labor's plan is simply to tax more so that they can dole out more for the many more people who will require welfare because of their failure to grow this country. They've got no plan to address housing supply so that more hardworking Australians can own their home; no plan to help Australians fulfil their aspirations.

Our achievements in implementing a national economic plan stand in stark contrast to those opposite, who show no sign of waking up to the economic challenges facing hardworking Australian families and businesses. This bill needs to be rejected because it would entrench into the work of the Productivity Commission the kind of ideological nonsense that must be fought against, and that is the idea that we must think of Australians perpetually as victims and that we must be focused always on the politics of envy and division in thinking about equality and inequality when the real game is in growing opportunity and providing wealth and choice to all Australians.

11:44 am

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party, Shadow Minister for Disability and Carers) Share this | | Hansard source

In Senator Stoker's own words: let's get serious. After that contribution, I'm sure that anyone listening to this debate would be completely mystified as to what the actual bill before us sets out to do. The Productivity Commission Amendment (Addressing Inequality Bill) 2017 asks that the Productivity Commission takes into account, in the exercise of its functions, regularly reporting on the extent of inequality in Australia. That's what it seeks to do. It's not about the politics of envy. It's not about, as Senator Stoker said in her contribution, pulling people down. It's about the Productivity Commission looking at, in their work, inequality. That's what it does.

Senator Stoker asks the Labor Party to get behind the government's proposals. Well, we didn't back the cash handouts to the big four banks, and we're not going to. We didn't back the billions of dollars cut from education, and we're not going to. We didn't back the hundreds of millions of dollars taken out of the health system, and we're not going to. So I would just like to say that I'm very proud to speak in support of this bill, because it attempts to raise awareness of one of the defining issues of the life of this parliament. Senator Stoker, in her contribution, also said that the issue around inequality was one that only the Chifley centre has been raising. What that tells me is that Senator Stoker certainly has not been listening, which means that she's like the rest of the Liberal senators and members—they're just not listening.

I want to explain to those listening exactly what this bill seeks to do. The Productivity Commission is more than just an advisory body. Its work sets out the national agenda and it provides a basis for substantial change. The Productivity Commission is not required to take inequality into account, although its enabling legislation currently requires it to have regard to a wide variety of factors, such as the need to promote regional development or to ensure development is ecologically sustainable, but there is no reference to inequality.

This bill raises the issue of inequality and requests that the Productivity Commission takes it into consideration in its work. Unfortunately, this bill is needed because inequality has been increasing in Australia. Perhaps the only silver lining to this growing problem is that inequality has now reached the point where this parliament can no longer ignore it. In fact, almost 75 per cent of Australians agree with the statement: 'Differences in income are too high.' Australians want to see something done about this. Behind the land of the fair go, it's only natural that Australians expect a certain level of equality. It's a part of our way of life. We believe that Australia shouldn't be a land of extremes; it should be a land where anyone has a chance of achieving happiness and prosperity. But that's the insidious thing about inequality: it erodes our opportunities and restricts our chances of achieving happiness. It undermines the very economic system that we seek to build in our free society.

That's why even conservative economic institutions such as the IMF and the OECD are all acknowledging the negative impact that inequality is having on economic growth, and they're acknowledging the threat that it poses to our standard of living. In a fiscal monetary report released last year, the IMF said that Australia has experienced amongst the highest growth in income inequality in the world over the past 30 years. Not only this, but the Director of Fiscal Affairs, Vitor Gaspar, went further and warned, 'Income inequality tends to be highly correlated with wealth inequality, inequality of opportunity and gender inequality.' Inequality of opportunity and gender inequality—at precisely the time when Australia is working to build a fairer, more open society that encourages equality across genders and across socioeconomic groups. Disparities in wealth and income threaten to harm the very gains that we are making in these areas.

Doubtless, that's why those opposite are against this bill. It's also why I commend Senator McAllister for bringing this bill before the chamber. It's also why I commend Senator McAllister for bringing this bill before the chamber. It shows a true appreciation for the nature of this issue and the tools that we have to address it. It shows an understanding of the need to act now and to use the resources that we have before are us to do what we can to fight against inequality.

As one of our leading economic analysis agencies, the Productivity Commission is an agency that performs a critical role looking at a range of different issues and the impact that these can have on industry and productivity more broadly. Indeed, in my own portfolio of disability and carers and the portfolio of the shadow cabinet minister, Linda Burney, it was the Productivity Commission that laid much of the economic foundation for the NDIS. It's the same Productivity Commission that has looked at markets and resourcing in this sector. It's this organisation that made a case for adequately resourcing the Public Service, rather than relying upon outdated principles such as the arbitrary staffing cap on the Public Service. It appreciates that a well-resourced public sector delivers highly effective public services and that it's public services that is can create a more productive and cohesive society. It's these public services that ensure that no Australian is left behind, that every Australian can rely on the basic social safety nets, so if they lose their job or they need access to essential medicines or live with disabilities, that we will be a society that will ensure that we have an adequate safety net.

That's why much of the Productivity Commission's work already looks at matters that counteract inequality, and that's why placing inequality at the core of what the commission considers is not only important but also a logical and achievable next step in the work of the commission. In last year's five-year productivity review, the commission called for reforms that promote 'the non-market economy and rebuilding confidence in public institutions'. The report argued that, and I quote:

… limiting inequality extends beyond its intrinsic value to the desirability of avoiding too great a dispersion in incomes, given evidence that this can, in its own right, adversely affect productivity growth. Public support is also more likely for reforms that offer benefits to the bulk of people.

It's clear that the commission already appreciates the importance of inequality and of acting now to limit its impact on society.

It's clear that, unlike the claims of those opposite, this bill would not lead to the imposition of an onerous burden of one of our leading economic institutions. Instead it would simply ensure that inequality would be a cross-cutting consideration for future analysis done by the commission. It would ensure that future commission reports would not just consider inequality but also propose real actions that current and future governments can take to address this problem. As the report noted:

Public support is also more likely for reforms that offer benefits to the bulk of people.

This bill would help governments develop a reform agenda that is not only sensible and important but also well supported in the public. With more than 15 per cent of Australians living in the lowest income quintile with three or more chronic illnesses compared to only six per cent of those living in the highest quintile, Australians understand the pervasive effects of inequality and they expect political leaders to address this.

Certainly, economic growth is important. It's a necessary but not sufficient step for addressing some of the challenges that we face. As Australia continues into its 27th year of uninterrupted growth, it unfortunately continues a 75-year high for inequality as wealth at the top grows more rapidly elsewhere in society. It's not enough to simply note that this is a problem. It's not enough even to write reports that acknowledge and assess the scale of the challenge. But, without beginning, at least at this point, how will governments know where to begin? This bill grants the commission licence to delve deeply into the matters of inequality. If we look at the topics assessed currently, we see that so many of these are challenges that are only exacerbated by inequality.

Currently, the commission has inquiries being undertaken across the fields of disability, superannuation, veterans affairs and transport. In literally every single one of these areas, inequality ensures that challenges faced by Australians are particularly difficult for the less advantaged Australians. Those opposite would argue that this is no problem—that, to counter this, all we need to do is focus on jobs and on economic growth. But that's to miss the point entirely. Without addressing inequality, one cannot solely focus on jobs or on growth. We've seen how, despite 27 years of economic growth, incomes for those at the bottom have almost entirely stagnated, with earnings for the top 10 per cent rising nearly four times faster than for those in the bottom 10 per cent. That's why ignoring inequality isn't just a bad idea—it's self-defeating.

To try and create good jobs and create equality of opportunity means necessarily working to fix the issue of inequality. Labor has long been a party that calls for exactly the kinds of policies that work to close the gap on inequality. I'm proud to be part of a party that brought Australia Medicare and the NDIS and that supports universal education. I'm proud that Labor members and senators have already been advocating for policies that fight against inequality for many years. That's why this bill is the continuation of a long and proud policy tradition.

This bill seeks to extend the research base and the economic foundations of much of what we do. It seeks to ensure that our public institutions place this topic at the centre of their policy development and work towards a more equal Australia. This bill acknowledges that, without fighting inequality, much of what we seek to do in this parliament is made more difficult. It acknowledges the critical work of our public institutions and seeks to build on the work of the Productivity Commission to ensure that its work remains relevant to the evolving challenges that we face in the 21st century. I commend this bill to the chamber, and I'm proud to be able to vote in support of this bill.

11:57 am

Photo of Slade BrockmanSlade Brockman (WA, Liberal Party) Share this | | Hansard source

There were so many straw men from Senator Urquhart and Senator Brown that I was wondering whether we were in Oz rather than Australia. There are a couple of real fallacies in the proposition that those opposite have put forward in this bill, and I'll address them both. One is the issue of inequality and equality itself. There are some real fallacies around that. There's some real cherrypicking of the data, some deliberate misunderstanding of the economics of equality and inequality and a misuse, politically, of those, which is why Senator Stoker was exactly right when she described this as just more of the politics of envy from those opposite.

The other serious fallacy we have here is that the Productivity Commission is in any way constrained in looking at these issues. In fact, the Productivity Commission has looked at these issues very recently and in great detail. The Productivity Commission was central to the creation of the NDIS. At the core of the Productivity Commission report was the issue of equality and access to services in our economy by people with a disability. The idea that the Productivity Commission is hamstrung in any way is such a nonsense that it reveals what is at the core of this bill and what the reason is that this bill is being put forward by those opposite. That reason is that it plays into their very tired narrative of class warfare, of trying to create divisions in society and of trying to present themselves in a certain way as defenders of the poor when, in actual fact, what this government knows, and what this government has acted on very clearly, is the clear knowledge that opportunity is vital. Jobs and work are a source of opportunity and dignity for people, and creating jobs is the most valuable thing that an economy can do for all its citizens.

So what does the Productivity Commission do? The Productivity Commission is tasked to:

… conduct public inquiries at the request of the Australian Government on key policy or regulatory issues bearing on Australia's economic performance and community wellbeing.

Community wellbeing is what the Productivity Commission is tasked to look at. The idea that the Productivity Commission does not look at issues of equality and inequality when looking at economic issues is a blatant effort to mislead. It's just a nonsense, as I've said. The Productivity Commission has a long and proud track record of tackling issues that have proven to be very difficult. It has cast light on serious economic inefficiencies in our society and has given governments of all colours a chance to address serious issues about the economic structure of Australia— to improve that structure to give more people an opportunity and to give more people the chance to get a job and live their lives to their maximum potential. The Productivity Commission should not be interfered with in a political way, as this bill seeks to do. It pushes a particular line that is currently the flavour of the month with the Labor Party but adds very little to the debate on the future of the Australian economy—the future of helping the most people make the most out of their lives.

One of the key points that's been missed here—and I believe it was Senator Brown who talked about this—is that Australia is not a land of extremes. I agree with that. Australians in the main take a very middle-of-the-road approach to these things. But, in that light, it's important to always remember that the top 10 per cent of taxpayers actually pay 45 per cent of the income tax collected. I've said it before in this place, and I'll repeat it: the top 10 per cent of taxpayers pay 45 per cent of the income tax collected. We have a highly redistributive economy from those who can to those who need the assistance. After taking into account government benefits, 45 per cent of households do not pay any net tax. We have a highly redistributive system that enables a society that is fair and that gives people opportunity, and that is something that all Australians value. But if you listened to those opposite, you'd think the opposite was the case; you'd think that the top 10 per cent of taxpayers pay 10 per cent of income tax when, in actual fact, the pay 45 per cent.

Those on this side understand that the quickest way to equality of opportunity, to people realising the most out of their lives, is to be able to get off welfare and get into a job. That's why we've done things like reinvigorate the Work for the Dole program. There are 71,000 participants. That's why we've trialled things like the cashless welfare card, trying to assist people in breaking cycles of dependency—welfare dependency, alcohol dependency, drug dependency, potentially gambling dependency—to be able to get their lives to some semblance of order so they can move into the workplace, get a job and get the dignity that flows from being at work as well as, obviously, the income.

We recently passed the cashless debit card trial expansion bill, which added the Bundaberg and Hervey Bay region as our fourth trial site and expanded the total number of participants up to 15,000. That's a wonderful opportunity to look at something new in a space that has proven to be very intractable and to try to make some positive change. These are trials. They will be evaluated. Nobody has pretended that cashless debit cards are a silver bullet, but initial reports from the trial sites where it has been ongoing have been positive. I've been to the trial site in the Goldfields a number of times over the past 12 months, and we continue to get very positive reports on the ground. I look forward to seeing the full evaluation of those trial sites in the future. In Bundaberg and Hervey Bay, this is particularly important because it's targeting a younger cadre of people, who are exactly the sort of people we do not want to get locked into a cycle of welfare dependency. It is the most destructive cycle that families can enter, being dependent on welfare for multiple generations. It reduces their opportunities, it reduces their potential for the future and it is a cycle that we need to break, and this government has done some remarkable work in breaking it. Let's just go briefly to the job figures.

When this government came into power, we said we had a goal of creating a million new jobs within five years. In fact, we delivered that, with the economy creating, as of September 2018, 1,144,500 jobs. Over half of these were full-time jobs and the vast majority of all these jobs were in the private sector. These are real jobs for real people that have taken people off welfare, given them hope, given them opportunity, reduced their risk of ongoing welfare dependency and generational welfare dependency, which is so clearly proven to be such a destructive thing for families and individuals. Those one million-plus jobs represent hundreds of thousands of families that now have an opportunity they did not have before those jobs were created.

In 2017 alone, 412,000 more jobs were created, the most jobs created in any calendar year on record. Recent ABS figures show 95,000 jobs for the 15 to 24-year-old age group being added in the year to June 2018—again, the strongest result for a financial year since 1989. This is a track record of really addressing inequality by giving people opportunities, by giving people a chance to change their lives, to get into the workforce. The unemployment rate has declined to 5.3 per cent—the lowest level since 2012, below the levels inherited from the Labor government in September 2017. Youth unemployment is at its lowest level in over six years. Again this is down on the level we inherited in September 2013. We would all love both these rates to be lower. We would all love to see particularly more young people in work. But the fact is that these are very positive numbers and particularly add to a positive trend of creating jobs, getting people off welfare and getting people into work. Senator Brown also talked about gender inequality, but in actual fact recently released statistics show that the gender pay gap continues to narrow, particularly for graduates, so we're seeing clear progress on that area.

I think one of the key things about tackling intergenerational dependency, particularly with at-risk groups, is it not only changes lives—a job changes a family's future—but it also significantly impacts the budget bottom line, which, in turn, frees up money for important things that the government does need to spend money on, and it also frees up money for very important tax cuts to make sure our economy remains efficient.

The latest data released in July 2018 revealed the reduction in the number of people accessing welfare payments has led to a $43 billion decrease in Australia's total future lifetime welfare costs. And I will repeat that number—a $43 billion decrease in total future lifetime welfare costs because of the trajectory that this government has created in our welfare roles. By putting people back into work, we've obviously taken people off welfare and that in turn flows into a budget bottom line improvement of, in this particular area, $43 billion in total lifetime welfare costs. That is a significant amount of money. But it's not just the money that matters. What really matters is the fact that that $43 billion decrease in total future lifetime welfare costs represents individuals and families who have now got a chance in the economy that they did not have before. They've got a chance to break out of the cycle of generational welfare dependency to get them and their families back into a position where they're have much more control over their own lives and are able to play an active part in economic life. That is a very positive thing, and there's plenty of evidence to show that one of the most important things you can have for health, mental health and future opportunities is to be in the workforce.

When we're talking about inequality, it is important again to recognise the fact that Labor are running what is a highly political line in this area. So, they can't pretend they come to this with clean hands and, 'Oh, it's just about giving the Productivity Commission the power to look at inequality, a power that clearly it already has.' They are running a highly political line trying to reinvent and reinvigorate class warfare and the politics of envy that, quite frankly, I thought had been relegated to the long-distant past.

The fact that we're back having the same debates that were had in the 1970s is almost too hard to believe, but that's where we are with the current Labor Party. We are pretending that the current level of redistribution in the economy isn't there when, I'll say it again: 10 per cent of taxpayers pay 45 per cent of income tax. We're trying to pretend that we don't have an economy that is heavily geared towards giving people a chance for support while they get their lives back in order and get a job. We ignore the fact that this government's created a million jobs-plus, giving people opportunity and hope by doing so. Instead, we play the class warfare card; we play the politics of envy.

The McKell Institute and the ACTU have both recently released reports about rising inequality in Australia. The McKell report claims that inequality in Australia is at a 75-year high, and I believe that statistic was quoted by one of the senators opposite earlier today. Again, this is a completely meaningless indicator of outcomes—a 75-year high. When my dad was a boy, and I talked about this last week, he rode a horse to school. There was no electricity on the farm. What there was we generated ourselves. The idea of having an electric refrigerator was something that was a dream well into the future. Go back 10 generations and a very large part of society was actually growing the food they needed to live.

How do you judge equality or inequality in a society where one person theoretically owns or controls everything in that society, which is exactly what you had under absolute monarchs and was the norm not that many generations ago. The idea that a simple measure of equality of income which takes into account nothing to do with standard of living and nothing to do with access to goods and services in society—like Medicare, a free education system, access to health, access to many services in society that we all support—we all take for granted to some degree. But we have to factor these things in when we're talking about equality. We cannot simply look at basic measures of income which reveal nothing about the way people live their lives. It's only 20 years ago that none of us had a mobile phone to use in the way that we use them today. It's extraordinary to think how things have changed just in the last 20 to 30 years. If you go back even—we're talking about the McKell report—75 years, it was a completely differently structured economy and a completely different level of opportunity and standard of living. That is not taken into account by this rhetoric of envy, this rhetoric of class warfare or this rhetoric of the haves and the have-nots and the big end of town. The methodology involved in these kinds of reports ignores non-monetary transfers, provision of health care, provision of education and provision of infrastructure. This government is investing $75 billion into infrastructure. It completely ignores that and all the other services that are provided by government.

What are some of the other lines that are being run? One is that the minimum wage is declining. That is demonstrably false. Since 1998 the minimum wage has increased by more than 20 per cent in real terms. In fact, Australia has the second-highest minimum wage in the OECD. There's also plenty of data that says that wealth inequality in Australia is not rising. There's a recent report from Credit Suisse saying that Australia has the third-most equal distribution of wealth in the developed world, behind only Japan and Belgium. I said this last week and I will say it again: this is hardly a crisis. The facts do not support the conclusion that inequality is on the rise in Australia. This bill is just another signalling attempt from those opposite to try and raise these issues to try and raise an ugly class-warfare mentality back into the Australian political debate which, I think, we'd all hoped had been well and truly relegated to the past.

12:14 pm

Photo of Dean SmithDean Smith (WA, Liberal Party) Share this | | Hansard source

I'm also—'delighted' might be too strong a word—interested in making a contribution this morning on this private senator's bill, the Productivity Commission Amendment (Addressing Inequality) Bill 2017. This bill seeks to do a number of things. It seeks to utilise the excellent resources at the Productivity Commission to bring attention to what is an important issue in our country—no-one is denying that—which is the issue, or suggestion, of rising levels of inequality.

My contribution is brief, but I look forward to continuing this when we next debate the private senator's bill. It is an interesting bill. I don't doubt Senator McAllister's motivation with regard to this, but there are a number of important points. Firstly, the bill is technically flawed—I'll come to that in a moment. Secondly, the bill is thematically flawed. Thirdly, it's interesting that none of the contributions from the Labor senators this morning have drawn attention to the very recent work—in just the last few weeks—and findings of the Productivity Commission on the issue of inequality. It's very interesting that none of them have sought to draw attention to the work the Productivity Commission publically released only a few weeks ago on the issue of inequality in our country, or, importantly, that none of them have sought to draw attention to the very clear findings that the Productivity Commission made.

That report, released in the last few weeks by the Productivity Commission, was called Rising inequality? A stocktake of the evidence.What that Productivity Commission led report sought to do was put light on some of the myths that have been allowed to abound in what has become a very significant and important political campaign. Indeed, we heard from Senator Brown that the issue of inequality is a campaign priority. It's a campaign emphasis of Bill Shorten's, the Leader of the Opposition's, attempts to get into the Lodge and win the next election.

What was it that that Productivity Commission report actually said? It said five important things. The first was that, over the last three decades, inequality has risen only slightly in Australia. Secondly, it's said that sustained growth has delivered significantly improved living standards for the average Australian in every income decile. Thirdly, it said Australia's progressive tax and highly targeted transfer system substantially reduced inequality in our country. Fourthly, it said that economic mobility is high in Australia, with almost everyone moving across the income distribution over the course of their lives. Fifthly, it said some Australians do experience entrenched economic disadvantage.

Debate interrupted.