Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

He was. Then we had the ridiculous situation a week or so ago where he said it was zero debt day. All this Treasurer has done is shift the burden to households. He has sold assets, he has put up his taxes, he has taken the lazy way out and Australian households are now indebted to a great extent. It goes right back to the policy prescriptions of this Treasurer. Households have racked up $1 trillion of debt and foreign debt has blown out to half a trillion dollars. As Peter Costello knows, as foreign debt rises so too does the risk to interest rates.

I should quote here the Treasurer’s own words from 1995. He was there in front of the debt truck. It had the numbers on it—$180 billion. He expressed his cold anger at a foreign debt of $180 billion. Where is the cold anger now, Treasurer? Where is the cold anger now that it has hit $500 billion? The half-trillion dollar man. Do you know what he said in 1995, when it was at $180 billion? He referred to:

… pressure on interest rates, on home buyers, on businesses, on those who have credit card bills, on those who are trying to pay off their cars and their mortgages.

That is what is happening out in the suburbs and the great towns and regional areas of this country, Treasurer. And you know very well, as the IMF has warned, that this does pose a threat to our interest rates. I will quote from the IMF:

... sustained current account deficits and the build-up of external debt ... could leave Australia potentially vulnerable to shifts in market sentiment ...

So, Treasurer, you are fairly blase about this problem. It is little wonder that you remarked on radio in Melbourne during the week that a rise in interest rates was not a problem for people with small mortgages. That was what our Treasurer said. The problem is there are no cheap houses and no small mortgages. This is a Treasurer who is completely out of touch. Who can forget when last year this Treasurer went on one of the current affairs programs and said, ‘Any interest rate with a single digit is okay.’ Does that mean that this Treasurer thinks an interest rate of 9.5 per cent is okay? Is that where he really thinks interest rates are heading? Is that why he is so blase about our level of foreign debt and the risk that it poses to interest rates in this country and the risk that it poses to sustainable prosperity in this country?

Of course, the Treasurer would claim that he has put forward a far-reaching tax reform package in the budget. I think if we look at that, we could call it a modest reform package. ‘Modesty’ is where he delivers a small amount of money to those in Middle Australia and on low incomes, but, of course, he is giving them back less than he has taken during the period that he has been in government. These people are currently facing the triple whammy. We have had two interest rate rises, we have record petrol prices and we have his industrial relations legislation which is eating away at the wages and working conditions of Australians. For those who lose their penalty rates that can mean over $200 a month. Someone receiving $10, $20 or even $30 from the Treasurer in this tax package can easily have that eaten up by rises in petrol prices, by the attack on their wages and working conditions and, of course, by rising interest rates, which he is very blase about.

But let us go back to the tax package. By next year, without any changes, average wage earners would have paid $13.40 per week more tax than the burden they faced in 1996. In the budget, he gives them less than $10 back. As I have said before, that is just $10 a week for someone on an average income and that is going to have to stretch a long way because the cost of servicing an average mortgage has increased by almost $13 a week since the last election. That is before you come to increases in the price of petrol. Let us have a look at the fairness of the tax package. This is a Treasurer who brought a tax package in here last year that absolutely ignored and treated with contempt low- and middle-income earners in this community. When we stood up and fought for them, all we got was the smirk and the ridicule because, once again, the Treasurer demonstrated last year just how out of touch he is with average Australians.

Labor is satisfied that this year’s tax proposals are fairer than those proposed last year. While last year’s tax cuts delivered only a third of the total relief on offer to those earning under $50,000 and two-thirds to those on incomes above, at least this year it delivers half and half. At least this year, half the tax cuts go to those below $50,000 and half go to those above $50,000. But the Treasurer says, ‘It’s a reform package.’ It is a bit of a reform package, but it has a way to go. Certainly, when we look at measures like the new $600 tax offset—a direct copy of what we put forward last year—which lifts the tax-free threshold to $10,000, that will certainly deliver for people moving from welfare to work and parents returning to work. But there is one problem in here and it shows you how sneaky this Treasurer is. Unlike Labor’s proposal at the last budget, the Treasurer’s proposal will not be available in the fortnightly pay packet when it is needed most. These are some of the lowest income earners in our community, but he has not been round crowing about that.

Similarly, the decision to lift the 30c threshold from $21,000 to $25,000 and reduce the Medicare levy shade-in will improve incentives for low-income earners. Notwithstanding these improvements, the tax measures announced last night fall short of systematically addressing punishingly high effective marginal tax rates. They are still in the system punishing, particularly, second-income earners who are predominantly women—so much for this Treasurer’s lofty rhetoric about being female friendly. He has constructed one of the most unfriendly tax systems in the world when it comes to women and he continues to do it. Middle-income families will face a tax grab on extra earnings of 51.5c in the dollar because the increase in the family tax benefit A threshold just shifts taper zones; it does not actually reduce them. Similarly, second-income earners will still routinely face marginal tax rates of up to 60c in the dollar on personal income between $10,000 and $20,000 per year. So it is not a perfect package, but it is certainly an improvement.

But what does all this add up to? What this adds up to is that the government only have one long-term plan to produce economic growth and lift productivity. That long-term plan is to slash wages. That long-term plan is to take the Australian workforce down the food chain, down the low-skilled, low-wage road. That is the plan they have to be more competitive—to compete against China and India, to compete in our region. That is their plan. But we have a different plan. We have a long-term plan. We have a belief in the Australian workforce. We believe we must train the Australian workforce. We believe we must educate the Australian workforce. We believe we must go forward for the long term in bold new initiatives when it comes to education and training, not back to the Dark Ages where this Treasurer wants to take Australian working conditions.

So there is a very clear and stark difference and it jumps out of the budget. You could see it in the budget speech. You open it up and, on the last page, there is a heading ‘Education’ with about five or six lines and that is it. In 4,000 words, the Treasurer could barely manage 100 words, or even 50. When it comes to the most critical element of boosting productivity in this society, of maintaining prosperity for the future, the Treasurer turned his back on the future; he went back to the past. He wants to go back to the industrial relations Dark Ages. He does not want to skill this workforce, he does not want to train this workforce and he does not want to invest in the future. That is why this budget does not provide for the long term. It is merely a short-term political document from someone who is not a serious Treasurer when it comes to reform—just a pretend PM. (Time expired)

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