Kerry Bartlett (Macquarie, Liberal Party) Share this | Hansard source

This is an excellent budget. Despite the efforts of the opposition to convince themselves and others otherwise, they know it is an excellent budget. It meets the four essential criteria of a good budget, and it well and truly passes the test. Firstly, it is fiscally sound. The fiscal setting meets the macroeconomic objectives in the current economic context. Secondly, it meets essential areas of expenditure; funding is allocated to the key priorities. Thirdly, through its taxation and redistribution policies, this budget allows all to share in the country’s current economic prosperity. Fourthly, this budget plans for the future to ensure that prosperity continues. This budget passes those four key criteria with flying colours. Before I come back to each of those in detail, let me say that this is an incredible contrast, firstly, with the policy inertia of the opposition; secondly, with the dismal record of Labor when they were last in office; and, thirdly, with the debacle that is supposed to be a government in New South Wales.

Let me return to those four key criteria in more detail. Firstly, the budget is fiscally sound. It delivers a $10.8 billion surplus, the ninth surplus in 11 years. The fundamental rule by which the government operate is that we have to live within our means and that we cannot spend money we do not have. That is a lesson that is still foreign to the opposition; it certainly was shown to be so when they were last in government. Not only are we living within our means but we are also repaying the accumulated debt. Last month was the debt-free month, when, finally, we wiped away $96 million worth of debt that we inherited from the Labor Party.

The contrast between fiscal responsibility and fiscal profligacy could not be clearer. Just look at the last five years of the last government and compare that with the last five years of this government. During the last five years of Labor’s term of office there was a deficit in 1991 of $11.5 billion; a deficit in 1992 of $17 billion; a deficit in 1993 of $17.1 billion; a deficit in 1994 of $13.1 billion; and a deficit in 1995 of $10 billion. That is an incredible legacy that ran up $68 billion—$68,000 million—worth of debt in just five years. Compare those five years with the last five years of this government: in 2002-03, there was a $7.4 billion surplus; in 2003, an $8 billion surplus; in 2004, a $13.6 billion surplus; in 2005, a $14.8 billion surplus; and, in 2006, a $10.8 billion surplus—five surpluses to pretty much match the five deficits of the last years of Labor. We hear Labor trumpeting on, ‘Yes, we believe in surpluses,’ but they just could not deliver. They say, ‘We believe in surpluses,’ but they opposed almost every saving measure this government brought in in its early years to deliver those services.

This is a responsible budget that continues a responsible approach to fiscal balances in the context not only of saving, of putting money aside, and of living within our means but of ensuring that the level of fiscal stimulus in the economy is right. People say, ‘You have a big surplus; why don’t you spend more?’ But the fact is that in a strong, buoyant economy we need a surplus to balance a fairly expansionary monetary policy. This is the right fiscal balance in the context of where the economy is at the moment. Again, we have Labor saying, ‘We believe in low inflation; we believe in low interest rates.’ Sure, they might believe in them but their record clearly shows that their spending policies never allowed them to deliver on those things.

The other point that needs to be made time and time again about this is that, as a result of paying off that debt, we are now saving $8.4 billion a year in interest. When we came into office in 1996, $8.4 billion a year of taxpayers’ money was going not to infrastructure, tax cuts, health or education but simply to servicing the debt run up by Labor. As a result of this government’s responsible management in repaying that debt, that $8.4 billion a year can now be used for essential services for infrastructure, health, education or tax cuts. These are the dividends; these are the benefits of years of responsible and careful management.

The second criterion of a good budget is that it allocates spending to essential areas, to important priorities. There are too many dimensions, but let me mention what I see as some of the key areas of spending in this budget. Firstly, there is a big boost in health spending with another $3 billion to health, which now brings the total health budget under this government to $48 billion. When we came into office, $20 billion a year was allocated to health. There has been an increase of 140 per cent on health since then, to $48 billion in the next year, and there will be some excellent new initiatives as part of this.

There is an increase of $1.9 billion to work with the states on a suite of measures to improve mental health—initiatives that will mean the difference in detection, treatment, care and support for the mentally ill in our country. There is another $905 million over the next four years for medical research, which will mean that, by the year 2009-10, we will be spending five times—that is, 500 per cent—the amount that was being spent on medical research by Labor in its last year. There are a number of other key areas within the health portfolio, such as boosting the number of doctors and nurses, more money for aged care, more money for tackling drug and alcohol abuse, increased availability of new drugs on the PBS system—and on it goes.

This has not gone unnoticed. Let me remind the House of what Catholic Health Australia said about this health budget. They said:

This is a good health budget. It’s practical, it’s investing in people. It’s to be supported.

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This is what ordinary families needed because state Labor governments are raising charges far beyond household budgets.

I can go on. There is an extra $2.3 billion for road and rail infrastructure over the next four years, bringing it to $15 billion in the five years between 2004 and 2009. It is part of the integrated, coordinated AusLink program to upgrade Australia’s land transport system. A part of this is the extra funding this financial year under the Roads to Recovery program. My two local councils are delighted. The mayor of the Hawkesbury council is delighted to be receiving an extra $726,000 this financial year, and the mayor of the Blue Mountains council is delighted to be receiving an extra $590,000 this year. They are both thrilled with this government initiative. And what has the Australian Local Government Association said about this? The association said:

This is what nation building is all about—investing in infrastructure ...

…         …         …

We’re very pleased to see the Australian Government recognise the need for additional investment in road infrastructure ...

We could go on. This year we will spend an extra $878 million on the environment, which will bring the total to $3.9 billion. This is a far greater amount than any government in the past has spent on our environment. I was astonished to read in this morning’s Australian Labor’s member for Melbourne, one of the shadow frontbench, saying that the government has squandered billions of dollars through Networking the Nation, Regional Partnerships and the Natural Heritage Trust—squandered money on the environment. I can tell the member for Melbourne that people in my electorate have greatly appreciated the government’s spending on the environment. Several million dollars have been spent in recent years on the Hawkesbury-Nepean catchment system, and over the next three years, as part of the investment blueprint for the Hawkesbury-Nepean catchment area, there will be $12.9 million out of the Natural Heritage Trust allocated. Yet the member for Melbourne calls that investment in the environment ‘squandering’. Shame on the member for Melbourne. My constituents, the people of Macquarie, want to see that money being spent.

I could talk about education. Total spending on education this year is $16.6 billion. Since this government came to office, spending on education has risen by $5.8 billion. That includes an increase of 8.9 per cent for schools and VET funding up to $2.5 billion, which is an increase from $1.5 billion to $2.5 billion in just the last six years. Members opposite talk about a shortage in skill training. We have lifted apprenticeships from a 30-year low under Labor. Now at over 397,000, they are more than double what they were when we came into office.

I could mention the extra funding for defence. This continues our commitment of a three per cent increase in real funding every year and extends it now from 2011 to 2015. That includes an extra $2.2 billion to acquire C17 heavy-lift aircraft. Air Lift Group is stationed in my electorate and I am determined to see it continue to be stationed there. I am delighted to see this increase in capacity for Air Lift Group, which I like to call the sharp end of our defence. Another $1.5 billion of extra funding has been allocated over the next three years to secure Australia against terrorism, which brings the total of new initiatives to $8.1 billion in the eight years from 2001 to 2009. That is what we are spending on those key priority areas.

The third criterion of a good budget is that tax deductions and spending initiatives allow all Australians to benefit from our growing prosperity. We have had 10 years of solid growth—10 years of rising living standards. It has been very interesting to see that in the last 10 years, in terms of GDP per capita, we have moved in the world from No. 13 to No. 8. In the last 10 years, because of the prosperity of this country through the good management of this government, we have overtaken Japan, Denmark, the Netherlands, Belgium, France, Germany and Canada to move up in terms of our living standards.

Part of this budget is to ensure that the benefits of increased prosperity are available to all. We are doing it with tax cuts; we continue to build on the tax cuts of recent years. We are doing it by continuing to build on family tax benefits, which we have increased in recent years. We are doing it with a number of other initiatives.

Just to mention tax cuts, over the next four years there will be $36.7 billion of tax cuts—and that is an extension of the $6 billion of net tax cuts in 2000, the $10.7 billion in tax cuts over four years announced in 2003, the $14.7 billion in tax cuts over four years announced in 2004 and the $21.7 billion announced in 2005. We are continuing to repay to hardworking Australians the benefits of a prosperous economy.

It is worth pointing out that Labor opposed the tax cuts that we tabled as part of last year’s budget and it is still confused about what to do with the government’s tax cut initiatives. Unlike Labor, the coalition believes in returning dividends to hardworking Australians. Australia now has the eighth lowest level of taxes of the 30 OECD countries. If you look at the tax tables, it is pretty obvious. Prior to the new tax system in the year 2000, someone on average weekly earnings was on a marginal tax rate of 43 per cent; now they would be on a marginal tax rate of 30 per cent. Add to that family tax benefits, the low-income tax offset and the senior Australian tax offset, and Australians are measurably substantially better off than they were before.

In the opposition leader’s response to the budget, we had his so-called ‘pact with middle Australia’. I just remind the House that, when the Leader of the Opposition was the finance minister and Deputy Prime Minister in the last government, an Australian worker on $50,000 a year would have been on a marginal income tax rate of 47c in the dollar. Now, on $50,000 a year, they would be on a marginal tax rate of only 30c in the dollar. They have gone from 47c in the dollar down to 30c in the dollar, which is far beyond anything that indexation could have done. So much for the rhetoric about a pact with middle Australia. The evidence is in the record. Under our government, we have had a substantial reduction of marginal tax rates. The Leader of the Opposition can talk all he likes about pacts with middle Australia; the runs are on the board for this government. Under the former government, those opposite did not even get out of the dressing room.

We could go on. In this budget we have the initiative to relax the assets test for seniors, which is a very substantial improvement. Many additional retirees who just miss out on the pension will be eligible now for the pension, by the government cutting by half, over that threshold, the taper rate of the assets test. So single home-owning retirees, as a result of their hard work and having saved up, now will be able to own another $165,000 in assets before losing eligibility for the pension. Retiree couples will be able to own another $275,000 in assets before losing eligibility for the pension.

As well as income tax, I could talk about business tax cuts. We cut the company tax rate several years ago from 36c to 30c in the dollar. In this budget we announced an extra $3.7 billion in accelerated depreciation for business, in addition to another $435 million over the next four years to help business by reducing taxes for business. The point is this: in cutting taxes for business, for families and for retirees and in increasing family tax benefits, this government has the runs on the board and is proving itself to be family friendly. The Australian Family Association put it very simply when it said, ‘It is giving the power to families to properly budget by giving them the money.’ And this budget again delivers.

The fourth criterion of a good budget is that it must plan for the future and, again, this budget does that by adding to the Future Fund. We are saving money for the obligations that the government will have to an ageing population. We are saving for the future, a concept that was foreign to the opposition. Yes, they talked about the future but budget after budget they put us into hock by running massive deficits. Talk about the future eaters—the book The Future Eaters could equally apply to the Labor opposition and their policies of hocking the future by spending more than they had. We are saving for the future for an ageing population.

This is a budget that clearly, having paid off Labor’s debt, now puts money aside for the future. It is a future-looking budget in its incentives for businesses—the $3.7 billion I mentioned—to invest to increase productivity. We have heard a lot from the other side about productivity. One of the best things we can do is to give these incentives—the accelerated depreciation allowance is up from 150 per cent to 200 per cent—to encourage businesses to invest and increase productivity.

By no means last are the dramatic changes to superannuation. They increase the incentives for people to save for their retirement and for people to work beyond 55 and 60 so that the shrinking share of taxpayers who are working will not have the massive burden of paying for the pensions of a larger retired population. These are dramatic changes that will significantly simplify the superannuation rules, give greater certainty for retirees in planning their retirement and cut substantially taxes on superannuation. The changes will remove totally the exit tax, whether on lump sum or pension, for retirees taking money out of a taxed fund and substantially reduce taxes for public servants and others moving out of untaxed funds.

This is a forward-looking budget that provides for the future by encouraging investment, by encouraging saving, by encouraging people to work and by the government putting aside money out of the Future Fund. This budget delivers in spades the four criteria of a good budget: it is fiscally sound, it allocates funding to those essential areas of spending, it delivers to all Australians the benefits of our prosperity and it looks to and plans for the future to continue that prosperity.

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