Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Hansard source

I rise with pleasure to follow the member for Fraser, with whom I did a lot of work in the last term on advocating the notion behind this bill, to support the Future Fund Bill 2005 but to point to its deficiencies—hence the need for the second reading amendment moved by the member for Melbourne and spoken on today by the member for Chisholm and the member for Kingsford Smith. The reason that Labor supports the Future Fund is that it was Labor’s initiative. But the form of the fund proposed in this bill does not go far enough.

There are two basic concerns with this bill. The first relates to the governance of the Future Fund. It does not have independence from government and it will be subject to direction from and possible abuse by the government. We have seen that abuse in the ‘regional rorts’ program, and I will come to that in a minute. The second is that the aims and investment policy associated with this fund are too narrow. Essentially it seeks to apply the proceeds of the fund only to the unfunded superannuation liability of public servants. Dealing with it in normal budgetary terms, this is an issue which itself has not been a problem to date but, significantly, it is now a diminishing problem for the future because of the move to close the defined benefit schemes associated with the public sector and to introduce accumulation accounts for all future public servants.

But the real question that has to be asked here is this: if we are to set up a Future Fund—in other words, to take the proceeds of the nation’s prosperity and put them aside to be invested in productive investments that make better returns than simply putting them in the bank—if that concept is right and we support and advocate it, why should the proceeds only go to public servants in Canberra? Why shouldn’t the notion be used to advance the interests of all of the nation? Why shouldn’t the proceeds be used to advance the nation-building agenda that this country so desperately needs, which has been so deficient in the last 10 years of this government’s tenure?

That is the reason we move the second reading amendment, not to oppose the concept but to strengthen it. If you are going to adopt Labor’s policy, adopt it in full. Do not just go about it in a piecemeal way: have the courage of your convictions, admit it is a good idea, but do it properly—not this half-baked, piecemeal approach that will only benefit one section of the community. And, most importantly, it is their government as employer that gets the benefit from this—why not the whole of the nation?

I do welcome the fact that the Treasurer and the government are finally doing something about the intergenerational challenges facing this nation. The House will recall that the Treasurer issued the so-called Intergenerational report back in 2002. He thought his job was done—he had commissioned the report; he had received it—and he did it all with great fanfare but, as always, he did not have a clue about what the policy implications were and what sort of public policy he should be putting in place. It is useful also to remind the House that, 17 years ago, a Labor government introduced the most significant intergenerational policy of our generation: compulsory superannuation. We did it in cooperation with the workforce in the country, an agreement whereby workers in this nation agreed to forgo present income—cuts to wages, if you like, or not as big an increase as they otherwise would have been seeking—to secure future income. It was a sensible trade-off. It was underpinned by government legislation guaranteeing compulsory superannuation. That is the scheme that we have today. It is lauded around the world as being one of the great initiatives of a government addressing an intergenerational challenge.

Sure, there are still issues to be dealt with in it: the member for Fraser has talked about the taxation issue, the contribution tax, and Labor went to the last election proposing an initiative. Why, if we are talking about tax cuts and the ability to deliver tax cuts because of the surplus, should we just be looking at tax cuts on present income and not on superannuation income? Of course it should be looked at in both directions. Tax, after all, influences disposable income: it either increases your take-home pay if you get a tax cut on present income, or it increases your accumulation account if there is less being taken out of the contributions going in. This, of course, was an initiative that finance minister Nick Minchin took up some weeks ago—again embracing a Labor policy—but he was slapped down immediately by the Treasurer, who is incapable of thinking about comprehensive policy solutions.

So here we have the great intergenerational challenge being responded to in a positive way when we were in government, having established superannuation, but this government has done nothing to advance that issue in its 10-year reign. Everything that exists of compulsory superannuation today happened because of a program put in place by a Labor government. All this government did was introduce a new tax on superannuation, which it recently abolished, but it has not advanced the basic adequacy of superannuation in this country. Going into the 1996 election, Labor had in place a co-contribution policy. It had introduced it into the parliament: three per cent from the employee matched by three per cent from the government. It would have taken the nine per cent to 15 per cent. The Howard opposition went to the election promising to keep that co-contribution, and effectively scrapped that promise in its first budget. That is Honest John for you, but it is also a wasted opportunity.

Had that policy been implemented, we would have been in a greater adequacy frame in terms of superannuation in this country today. But whose policy was it? It was Labor’s. Just as Labor has consistently been the party of the pensioner, it is the only party for the superannuant in this country, the only party that has taken the initiatives necessary to underpin secure retirement incomes in this country. If you want it to be advanced, you will have to elect another Labor government, because we are the only ones who have ever done anything in that regard.

The intergenerational challenges that we face today are still about superannuation and individuals, but they are much more. What we need today is a policy response that is tackled with a coherent strategy that puts aside savings today to address tomorrow’s problems. So when you have surpluses you are putting them aside to deal with problems that come up in the future. Secondly, we need to make investments today that reduce the fiscal problems of tomorrow. I think there is a fairly simple proposition involved in this concept: if you have a surplus, why would you put it in the bank if you can get a better rate of return by investing it and at the same time securing the future of the nation? As the member for Fraser has pointed out, the work that the Labor Party had commissioned in its previous term—work by Ric Simes and David Gruen—demonstrated that there could be a greater return for the nation by investing the proceeds wisely rather than just squirrelling it away and putting it in the bank.

Our ability to front up to these sorts of issues is a test of our willingness to provide for the future. As a nation, it is clear that we are not saving or investing enough. That is the great challenge to us as a nation. But, just as Labor introduced compulsory superannuation for workers, budgets too have got to reflect that principle. Budgets should put aside funds to deal with future pressures. If you like, it is superannuation for the nation. The policy imperative is then to invest in the drivers of economic growth—in education, in skills, in a strong competition regime, in research and development and in our infrastructure. These are the things that will drive and sustain this economy much more strongly. The reason that we are not doing them is not that we cannot afford to do them; it is that the government has different priorities, and they are the wrong priorities. But the nation is held back as a consequence. It is essentially wasted opportunity.

Back in 2004 when I responded to the Treasurer’s 2004 budget I said that some action was required, that the government should make provision for the future and that it should establish a fund and invest for the future. As the member for Fraser has already pointed out, when I made that announcement the Treasurer, Peter Costello, ridiculed it. He said the money was not there, dismissed it out of hand and said it could not be done. He said that this was stupid, that it was the magic pudding approach to policy. Not only how wrong has he been proven; but how inconsistent has he become? The very thing that he ridiculed he now embraces as his own and says: ‘It’s the great solution. It’s the great way forward.’

I know that people understand that both sides of politics keep having a go at each other, but I think it is important that when good ideas occur it does not matter where they come from—they should be acknowledged. There should be a preparedness to work together to try and implement it in the best possible way. Not only did the Treasurer not even acknowledge the inconsistency and the backflip in his position; he did not have the good sense to try and work with us to get bipartisan support to achieve the best possible outcome in relation to this fund. He was actually even more cynical than that. He announced his commitment to the fund during the election campaign on the day that it had been agreed there would be an embargo on new policy announcements. It happened just after the Jakarta bombings. The Treasurer dropped his initiative on the Future Fund when the Leader of the Opposition and the Prime Minister had agreed there should be no policy announcements. So not only has he been hypocritical; he exploits all of the wrong opportunities to make the point.

The Treasurer said in his second reading speech that the bill would ‘put in place arrangements for future generations to allow them to deal with the massive changes that the ageing of the population will bring’. There is no doubt that the ageing of the population will bring massive changes to our health and education systems, to our workforce and to the very structure of our society. People are living longer because we have better health systems. People are retiring earlier because they have more disposable income and they are developing a financial capacity to retire because of the superannuation scheme we put in place. This is going to require us to meet big challenges in not just the economic infrastructure that takes us forward but the social infrastructure—the affordability of it, the availability of decent health and education to look after us individually but also to collectively advance us as a nation. We should be investing now and we should be planning now for these changes, yet all this bill does is to make provision to fund the unfunded superannuation liability of Commonwealth public servants. It is a deficient response of a Treasurer who has proven himself on the policy front to be deficient on policy initiatives, to be visionary and to develop a strategy forward for this nation.

I have a great passion for unleashing the potential of our regions. I have responsibility for this shadow portfolio and firmly believe that the Commonwealth government must play an active role in regional development. Our government of the day says there is no constitutional role for regional economic development. I disagree most strongly. All governments have a responsibility to work with regions to give them better access to the range of programs at federal, state and local government levels and to tap into the leadership, the direction and the strategic approach that leaders in the community have developed.

When I was Minister for Employment, Education and Training I established a structure of area consultative committees around the country. They still exist and they exist because people of goodwill and vision are prepared to give of their time voluntarily. What they need is access to resources to make things happen in a way that responds to their regional needs—not someone in Canberra thinking they know what is best for a region but the region itself saying, ‘These are our priorities; this is what we need.’ It is what I would call location responsive government policies: having to respond to the needs that the region identifies. We have to tap into these structures.

I and other members of the Labor caucus on our Regional Development Committee have been travelling the country and talking with these bodies to identify their priorities and looking, in turn, at the raft of government proposals and programs. It does not necessarily need more money; what it does need is for those regions to have access and know they have access to the range of programs—and for their word to be taken sensibly, not as this government has done through its so-called Regional Partnerships program, which just became a rort that saw $5 million going to a steam train that ran out of steam and $1 million going to an ethanol plant that has not even produced one litre of ethanol. That is the government’s approach to regional development: pork-barrel when an election comes up rather than be strategic about it. I believe if we get this future fund concept right and widen its scope, it will be another source through which the regions can be helped to realise their potential. That is why I want to see the policy behind this Future Fund really developed fully.

The final point I would make about the Future Fund goes to the question of governance. I have talked already of the rorts and the pork-barrelling that this government has perpetrated around election time. If the provisions of the bill, which I outlined earlier, are to ensure that we get a better rate of return by investing the money than by simply banking it, that has to be subject to independent analysis and recommendation. It has to be an arms-length recommendation so pork-barrelling cannot occur. That is the other deficiency in relation to this Future Fund: independence from government and the ability of the government to direct certain uses of the fund at the last minute. We have seen where it directs funds: to its own political survival. That sort of decision making has to be taken out of it. We cannot allow the Future Fund to become another cache for the National Party pork-barrel or to prop up Liberal members in marginal seats.

That is why, when we argue for the widening of the scope of what the Future Fund can be used for, we also argue for strengthening the governance procedures to stop the pork-barrelling. This has the potential to be a great thing to help us build the nation. I want to make sure that it is available not just for the infrastructure and skills that we have talked about but also to unleash the potential of our regions, because if the regions are helped to grow it does not just benefit them; it benefits the nation as a whole. Here is an opportunity which could get bipartisan support. It is a pity the government has embraced just the name that Labor proposed and not the concept behind it. I urge the government to adopt our amendment.

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