Kim Wilkie (Swan, Australian Labor Party) Share this | Hansard source

I rise to speak in the debate on the Appropriation Bill (No. 1) 2006-2007 and cognate bills. Before I do, I would like to comment on one of the areas that the member for Parkes talked about. That is in relation to the money available for water for the Murray-Darling Basin. It is my understanding that, while the government might have allocated almost $2 billion for this project, none of that money has actually been spent. So it is another case of smoke and mirrors by this government in the Murray-Darling Basin, where it has  said this money is there but there is such conflict between the man who chairs the committee that oversees the allocation of the money and the minister that no-one can agree on where that money should be spent. To come into this place and say that you are allocating money to deal with the Murray-Darling Basin and associated water problems is an absolute furphy. It is just another case of the sort of smoke and mirrors that goes on whenever you hear this government talk.

I would like to take the opportunity of this debate to speak about some important economic issues that are pertinent to the state of the Australian economy and also my electorate of Swan. Let me start by commenting in an overall sense on the budget. While this budget gives long-overdue and much needed tax cuts together with some additional support to Australian families, and while it also reduces tax on superannuation, it fails to address Australia’s longer term economic challenges by insuring us against the day when the Chinese boom ends and we can no longer depend on our resources sector to the same extent we have over the past several years. As a former pig farmer, I was particularly struck by the editorial in the Australian that appeared the day after the Treasurer presented his budget to the parliament. The editorial states:

This budget brings home some taxcut bacon, but it also hocks the pig on the assumption that the Australian and world economies will continue to benignly suit Peter Costello’s political ambitions.

While the budget includes tax relief, there is no real income tax reform. Taxpayers are simply getting back the increased taxes they have paid through bracket creep, and for this our arrogant Treasurer expects them to be grateful. The truth is these tax cuts are quickly being eroded by spiralling petrol prices and rising interest rates. Added together, the impact of the hikes in petrol prices and increasing interest rates is quickly eating away any benefits of the tax cuts for the people in my electorate and for families across the country.

While the Treasurer makes much of his generosity in giving us tax cuts, the fact remains that the taxpayers of Swan are paying for his policy failures elsewhere. It is clear from the Reserve Bank’s recent statements that the bank remains concerned about the capacity constraints confronting Australian industry, in particular in terms of infrastructure and training policies. Whatever happened to the reforms that are necessary to ensure that in the longer term our economy’s capacity is maximised so that we can better withstand any downturns in international markets? Is there evidence in this budget of the government’s commitment to reform beyond its next parliamentary term? Apart from the superannuation tax relief, you would have to say this budget is very light on in terms of reform.

There is scant regard for the urgent need to fix Australia’s transport infrastructure. Last year the Prime Minister commissioned a task force chaired by Brian Fisher of the Australian Bureau of Agriculture and Resource Economics to advise him on the necessary changes to infrastructure policy to improve the competitiveness of Australian exports. The task force report was released last May. Aside from regulatory issues, one of the major constraints to efficiency identified by the task force was the lack of long-term planning and coordination in land transport policy. According to that report, it is quite clear that considerable efficiencies could be gained from the establishment of a national coordinating planning agency for infrastructure.

Of course, the Australian Labor Party has recognised this deficiency in current transport policy and has announced that when elected a Beazley government will establish Infrastructure Australia as an independent statutory authority to report to the minister for infrastructure. Infrastructure Australia would develop a strategic blueprint for Australian infrastructure and facilitate its implementation with state and territory governments. Infrastructure Australia would ensure that our nation’s infrastructure networks are developed to enhance and improve the competitiveness of our industries. The efficiency cost to all of our industries and our exports in the absence of national coordination and planning are substantial. This means that investment and work opportunities are being impeded. The current transport and energy networks are simply not working to their potential, and this failure is not doing the right thing by businesses and workers throughout Australia.

Why won’t the government implement a national framework for infrastructure? It seems eminently reasonable and sensible to acknowledge the problem, which the Prime Minister’s task force has done, and then to develop policy responses to fix it. But no—this government has once again squibbed this issue. We have had the Reserve Bank, the OECD and the Business Council of Australia calling for urgent responses from this government to our infrastructure crisis. But their calls fall on deaf ears. It seems that this misguided government is willing to attack the wages and working conditions of Australian workers, all the time claiming that these changes are necessary reforms, and yet, when it comes to a policy response as beneficial as establishing national coordination and clear criteria for infrastructure projects, this government will simply not deliver.

We know that the Prime Minister can be pragmatic when it suits him. He can quite happily reverse government decisions, even if it means humiliating his ministers, as he did on the Snowy project. So why won’t he address infrastructure concerns and implement the reforms that have been identified by the opposition, business, the OECD and the Reserve Bank? The answer, sadly, is that when it comes to transport funding the Prime Minister knows that he can buy peace with his coalition partners as long as they have a nice big fund from which to allocate funds to their road and rail projects.

Let me be very clear about my position on this: there are many road and rail projects which have been funded under AusLink that help to improve the efficiency and quality of our national infrastructure. But there are many potentially more beneficial projects which have not been approved. Unfortunately, because transport policy is a fiefdom of the National Party, expenditure has often been hijacked to fund some infrastructure projects which frankly would not be funded if rigorous cost-benefit analysis had been applied. As a result, these other potentially more beneficial projects have been given a lower priority.

Just before the Treasurer brought down the budget, there was a leak in the press about the additional $1 billion road-funding package. It was important to the hapless leader of the National Party, particularly following his abysmal performance before the Cole commission and his betrayal by Senator McGauran, that he and his colleagues were seen to have had a win in the budget, and this was it. Unfortunately, this means that the increased transport spending in this budget will not be allocated entirely on a merit basis. That means that good old National Party pork-barrelling will have undue influence in the determination of priorities for this funding.

In my home state of Western Australia, the problem is further exacerbated by the fact that we have no National Party members or senators to give our rural residents as much of a share in the pork barrel as those in the east. We have instead the member for O’Connor, and he goes against the express desires and wishes of his own electorate in advocating the dismantling of the single desk for wheat marketing. We have the member for Tangney, who is so enamoured of the nuclear industry that he embraces the idea of a nuclear plant in his own electorate. These are the types of coalition members we have in Western Australia: no National MPs to place their noses in the trough or in National Party slush funds but Liberal members who are completely out of touch with the wishes of their own electorates.

Given the extraordinary revenues the government is receiving from the resources boom, this budget was a golden opportunity to ensure that significant funding was dedicated to building up our industries’ competitiveness so that we can better weather any storms ahead. In particular, from the perspective of my electorate, my home state of Western Australia is putting $28 billion into federal coffers in the form of tax revenue and from the resources boom while we get back $24 billion in transfers. I call on the Western Australian members of the Liberal Party to get in there and start fighting for WA so that we can get that $4 billion back and put it into much needed projects in Western Australia. On any person’s arithmetic, WA is missing out. We are subsidising the states on the eastern seaboard. How is it fair that the state which is generating the export income and flooding Canberra with funds does not receive sufficient funds to finance much needed economic and social infrastructure?

In Western Australia, the Great Eastern Highway, for example, is the major arterial road linking Perth to the eastern states and the major thoroughfare linking Perth airport with the city. It is the lifeblood of Perth’s transport industry. In my electorate, the section of highway that causes the greatest concern is between Redcliffe and Rivervale and this is in urgent need of road widening for efficiency and safety reasons. But this government has unilaterally deemed that this section not be part of the AusLink national network.

The Southern Gazette community newspaper has been at the vanguard of calls for the need for the Belmont section of the Great Eastern Highway to be widened. Local residents are justifiably angry that their calls for funding to be made available have fallen on deaf ears in the federal government. The state government has commenced an assessment of the full cost of the works. I intend to pursue the federal government for a commitment to this project as soon as the cost study is completed. It seems to me that the residents of the city of Belmont, who are affected by the safety problems, congestion and time delays occurring in the absence of the widening of this vital road, are being treated as second-class citizens by the federal government. They are suffering the social and economic costs of a substandard road and this situation should not be allowed to continue.

Apart from infrastructure, the other fundamental flaw in this budget is the fact that it ignores skills and training. Instead of spending more on vocational education in the 2006 budget to address the skills crisis, the Howard government has actually reduced the percentage of the budget spent on skills and training. Peter Costello only mentioned skills funding once in his budget speech. Unfortunately for the nation, it was to reannounce the same money he promised in the last budget.

When the Reserve Bank lifted interest rates the week before the budget, it identified the shortage of skilled workers as one of the most significant constraints to our economy that is putting pressure on inflation and upward pressure on interest rates. According to the budget papers, spending on training has declined as a percentage of government budget expenditure to 0.73 per cent in 2006-07. In 2005-06 it was 0.75 per cent of government budget expenditure. This decline in investment in training is forecast to continue, dropping to 0.71 per cent in 2007-08, 0.68 per cent in 2008-09 and 0.67 per cent in 2009-10. This is nothing short of a national disgrace. More than that, it is an extraordinary display of arrogance and incompetence when everyone from the Reserve Bank to the OECD and the business community is sounding alarm bells on the dangers of ignoring the skills crisis.

Interestingly, just two weeks after the budget was brought down, the latest skilled vacancy figures were released, on 24 May, and confirmed that the shortage of skilled tradespeople and professionals is continuing to hurt the Australian economy. According to the skilled vacancy index of the Department of Employment and Workplace Relations, skilled vacancies continue to rise, with a 1.8 per cent increase for May. The index rose in all areas, with the trades vacancies up 2.9 per cent, associate professionals up 3.5 per cent and professionals up 0.1 per cent. This is clear evidence of the Howard government’s failure to invest in training in the 2006 budget and will, according to the Reserve Bank’s analysis, put further upward pressure on interest rates.

Make no mistake: Australia’s skills crisis is the result of bad economic management by the Howard government. Unfortunately, this budget is another lost opportunity, with Peter Costello continuing to import foreign workers rather than train young Australians. This illustrates that the Howard government is out of fresh ideas on education and training, unlike the opposition, which has spent the past year putting forward concrete proposals to address the skills crisis. We will address the skills crisis by introducing fee-free TAFE for traditional trades and child-care workers. We will equip our kids with the latest technology skills which they will need for the challenges of the future. Labor will also put our emphasis on training young Australians instead of importing foreign apprentices. Unlike the Howard government, Labor’s priority is to train Australians first and train them now. It is unforgivable that this government is treating with contempt the advice of the Reserve Bank to address the infrastructure and skills problems. Failure to heed these warnings will result in even higher interest rates.

Whatever the government’s rhetoric, this budget is not about reform. This budget should have been about putting in place the reforms which will build Australia’s capacity in both infrastructure and skills, thereby strengthening our economy and putting the brakes on interest rates in the future. But the government has failed to deliver a budget appropriate for our circumstances or one which serves Australia well.

Let us inject some facts into an issue which is often surrounded by coalition mythology. The fact is that interest rates in Australia are not low, compared to those in other industrialised countries. According to the OECD, Australia’s short-term interest rates are now higher than those in the United States, Japan, Germany, France, the United Kingdom, Canada and South Korea, along with many others. Moreover, the OECD forecasts that interest rates in Australia will continue to be higher than in all of these countries in 2007. In many cases, Australian interest rates are not only higher but significantly higher than those of other OECD countries. Far from believing that this budget sets in concrete his path to the Lodge, the Treasurer should hang his head in shame.

I read an interesting column about the budget by the Age’s economics editor, Tim Colebatch, published the day after the budget. In his column Mr Colebatch makes a number of salient comments. First of all he states:

There may have been worse budgets than this one for their times, but they were long ago.

He goes on to decry the budget for failing to address infrastructure, skills, export growth and industry development, finally concluding by saying:

This is a Government in economic drift. It is awash with tax revenues, yet it is so obsessed with buying votes that it is prepared to burn our future rather than build it. What a waste.

I fully concur with Mr Colebatch’s statements. But in my view there is another imperative in the budget which the government has ignored. Those of us who have run businesses in the past know that to keep our businesses profitable we have to constantly seek efficiencies, including using the latest technologies, to maintain our profitability.

To apply this approach in the context of government finances, departments and agencies should be under pressure to make sure that they are providing their taxpayer funded services as efficiently as possible. In the past, governments of both political persuasions at federal and state levels often sought an efficiency dividend from the public service to impose a cost-saving, efficiency-improving discipline. I am not saying that such an efficiency dividend should be applied to and within all portfolios across the board, but I believe that it is useful to seek such dividends from many departments and agencies. I know that the businesses and workers of my electorate are under pressure to deliver productivity improvement, so why not the federal Public Service? It is almost as though the government could not be bothered to ensure best and most efficient practices in its own Public Service. As Laura Tingle of the Australian Financial Review commented the day after the budget:

This budget has confirmed a general impression of policy laziness and sloppiness, matched by an unparalleled attention to political expediency ...

In conclusion, it concerns me and the people who live in my electorate that the government’s mismanagement of the economy is manifesting itself in higher interest rates, that economic reform in terms of a much-needed national infrastructure agenda has stalled and that urgently needed skills and training policies have been ignored. The people of Swan, and all Australians, deserve better. On behalf of my constituents I will continue to press the case in parliament for these issues to be addressed as a matter of urgency.

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