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

I must admit to being rather bemused to hear the member for Prospect supposedly advocating tax reform and trying to criticise the government for the length of time taken to implement our tax policy. This opposition wants to go to the election without a tax policy, yet it has the hide to criticise us for somehow delaying tax reform. The Labor Party opposition has opposed this government’s tax reform and our substantial tax cuts in the past, has procrastinated on supporting other tax cuts and has begrudgingly and reluctantly taken eight months to support the massive cuts to taxation on superannuation, which, I must say, should sound alarm bells. Those opposite very reluctantly supported the removal of taxation and the substantial cuts to taxation on superannuation. Alarm bells ought to be ringing on what Labor would do to taxation on superannuation were it to be elected. Talk about hypocritical nonsense! The Labor Party wants to go to the election without a tax policy. It has opposed this government’s tax reforms and tax cuts, yet it wants to come in and lecture us about delays in implementing tax policy.

Last year when I spoke on the appropriation bill I suggested that there are four key criteria on which we ought to evaluate a budget. I want to return to that because I think those four criteria still apply. A good budget is one that meets all four criteria: firstly, it is fiscally sound and responsible; secondly, it targets priority areas of expenditure; thirdly, its taxation and redistributive policies equitably allow all members of our community to share in the nation’s prosperity; and, fourthly, it invests for the country’s future. Last year’s budget clearly, emphatically and strongly passed on each of these criteria. I would unequivocally say that this year’s budget does so even more definitely. On all four of those criteria, this year’s budget clearly passes with flying colours.

Let me return to each of these criteria in a bit more detail. The first question is: is this budget fiscally sound? Does its macro-economic impact create the right balance between generating and stimulating growth in the economy, but doing it in a way that does not cause the economy to overheat or add to inflationary pressures? The answer is clearly yes. The projections in the budget are for an estimated growth over the next year of 3.75 per cent in GDP—strong growth but not growth that is too strong. The estimated inflation figures are 2½ per cent, which is right smack in the middle of the Reserve Bank’s target range for inflation. In terms of macroeconomic settings, this budget is about right. It will generate strong growth but not inflationary growth and, therefore, not growth that will put upward pressure on interest rates. In this context, it clearly continues the government’s sound economic record in this regard, a record that has delivered us 4.4 per cent unemployment—the lowest level of unemployment in 35 years. Let us compare where we are now with where we were 13 years ago. There was 4.4 per cent unemployment compared with the average of 8½  per cent throughout Labor’s 13 years, inflation of 2½ per cent compared with the average of over five per cent throughout Labor’s 13 years and interest rates currently at eight per cent compared with the 12.75 per cent averaged throughout Labor’s 13 years. The contrast between sound economic management and the dismal record of the government that preceded us could not be clearer.

In this context I think it is worth addressing three myths that members of the Labor Party are trying to propagate about economic management. The first myth is that somehow the economy manages itself, that the prosperity that we are experiencing in Australia at the moment is the norm and that it happens automatically regardless of what government is in office and regardless of what a government does. Nothing could be further from the truth. Again, compare where we are now with where we were 13 years ago. What we have now is the result of a myriad of responsible, genuine and well targeted decisions, starting back in 1996, and some very difficult decisions to get the budget back in balance, to remove the $10½ billion deficit that Labor had in their last year and to repay the $96 billion debt that Labor left. That was the result of disciplined, tough economic management, not just in tough times but also in times of surplus and prosperity. It would be very easy to be out there throwing money around and spending like drunken sailors as those on the other side used to do, but the discipline needs to continue even in times of prosperity and surplus.

The second myth that the Labor Party would have us believe is that our prosperity is the result of the mining boom. We keep hearing this nonsense from the other side—‘The budget is balanced, tax revenues are high and the country is doing well only because of the mining boom.’ Nonsense! We started getting the budget back in order in 1996, and we persevered with that. We did that in spite of the Asian financial crisis and meltdown in 1997, which would have dragged us under had we not already started to correct the mess that Labor left us. We did it in spite of the recession being experienced by many of our major trading partners. We did it in spite of the disruptions caused to the world economy by September 11 and by SARS. We have done it in tough times as well as in good times. It is nonsense that we are hearing from the other side that it is all the result of the mining industry, which only generates 5.6 per cent of our GDP and which only employs 1.3 per cent of the country’s workers. So let us have none of this nonsense from the other side.

The third myth that I would like to address is the story we are hearing from those on the other side that somehow they have managed the books and that the Leader of the Opposition has undergone a conversion experience and is now an economic conservative. This is in spite of their record, in spite of what they left behind 13 years ago and in spite of 13 years of opposing this government’s attempts at reform. Let us look at Labor in opposition. They have opposed all significant reforms that we have put up in this place that are part of responsible economic management. They opposed measures all along the way that we introduced to try and get the budget back into the black, into balance and into surplus. They opposed the reforms to the waterfront which have done so much to lift crane rates, improve productivity and help our exporters. They opposed taxation reform and the cuts to income tax that came with the introduction of the GST. They opposed the industrial relations reforms which are generating jobs throughout this country at an almost unprecedented rate and are generating increased wages.

So not only can we look at Labor’s record when they were in office—a record that, by the way, for their last five years produced deficits averaging $13.6 billion a year. Imagine if we had a deficit now of $13.6 billion. Imagine the outcry there would be! But Labor in government, for their last five years in a row, notched up $68 billion worth of deficits that we had to repay. So do not only look at their record then; look at their record over the last 13 years in opposition. Or if that is not enough, let us look at the example of a Labor government closest to home. Look at the New South Wales Labor government, the absolute shambles—the utter incompetence—of Labor in government in New South Wales. It compels me to ask the question: do we want that level of incompetence transferred to Canberra? Do we want the Australian economy mismanaged as badly as the New South Wales economy is? Do we want that level of incompetence repeated at a national level? There is a massive risk that that could happen if Labor gets its way.

The first criterion then is: is the budget fiscally sound? Absolutely, emphatically, yes. It continues our strong record. The second criterion is that a good budget needs to target essential areas of expenditure. I could talk all night about some of those initiatives in the budget, but let me just quickly summarise what I see as those essential areas of expenditure, the priorities very appropriately targeted with increased funding in this budget.

Firstly, there is education. There is an extra $1.7 billion over the next four years for higher education, on top of what is already being spent. On top of that—in addition to that—there is the great new initiative of the Higher Education Endowment Fund, $5 billion, which will be added to with subsequent budget surpluses, providing the coalition is still in government, and will be added to by private sector investment, which will build an endowment fund to set up our higher education for quality research, quality capital and quality teaching in the future. In that, can I proudly say there is an allocation of $65 million for the dental school for Charles Sturt University, something which I have been pushing, working with Charles Sturt University for the last six months. I was delighted to see that $65 million allocated to Charles Sturt University, which will add to the supply of dentists in New South Wales and, critically, in the area of acute shortage in regional and rural New South Wales. So there is substantially increased funding for higher education.

There is increased funding for vocational education and training as well: an extra $549 million over the next four years addressing skills shortages and continuing this government’s strong commitment to vocational education and training. We had the opposition in the reply to the budget the week before last trying to present the view that they were the first people to discover vocational education and training. This government has been focused on vocational training for years, addressing the skills shortage. Already 25 Australian technical colleges have been established and in this budget another three are announced, including one that will service my part of Western Sydney—an Australian technical college to be established at Penrith.

It is worth pointing out that because of this government’s focus on skills training and trades, because of the strong economy and because of the strong growth and growth in jobs, the number of apprenticeships in this country is now 2½ times what it was under Labor. Labor had let apprenticeships run down to a 30-year low.

Thirdly, in the education budget schools have an extra $834 million over the next four years, bringing the total for the next four years to $33 billion spending on schools. That is an increase of 160 per cent in spending on schools under the coalition government. There are a number of initiatives there to improve the quality of teaching, professional development and national consistency across the country.

I could talk about health. In this budget there is $51.8 billion added to health, compared to $20 billion in 1996. It is a massive increase of 150 per cent in expenditure on health, including $486 million over the next year for medical research. There is $2 billion in extra support for child care. It is worth pointing out that childcare places have almost doubled since we were elected in 1996. On spending for Indigenous Australians there is a record $3.5 billion over the next year to address education, housing, employment and health. There is massive extra spending on defence to continue this government’s proud record and commitment to securing Australia, including extra money for recruitment, for procurement, for defence equipment and for our antiterrorism capabilities, correcting, as we have been continuing to do, a very serious neglect that had occurred under Labor and would occur under Labor were they to be re-elected. There is $10 billion for water to safeguard our water resources and a range of other environment programs and measures such as drought assistance measures and other measures to support farmers.

All of these measures have one thing in common, and that is that they are only affordable because the government has its finances in order. We are no longer wasting $8½ billion a year of taxpayers’ money, as we were in 1995—the last year of Labor—just to service government debt. Because that debt has been removed, that servicing cost is no longer there, so the money can actually be spent on things that matter. It can be spent on increased education, it can be spent on increased health, it can be spent on more child care, it can be spent on stronger defence and security and it can be spent on environment programs. These things are only possible because we have been able to manage the economy well and to manage our finances well. And all is at risk under a return to Labor.

The third key criterion is tax cuts, where they can be afforded. For the fifth year in a row we are able in this budget to deliver tax cuts. What a contrast, when under Labor at a federal level and in New South Wales we have had year after year of increasing taxes. Each year Labor presented its budget, we would have people lined up, fearful of which taxes would be raised next. Under this government we have had five years in a row of very substantial cuts in income tax.

This year a tax cut was announced of $31.5 billion over the next four years. Last year it was $36.7 billion over four years. Those numbers might not mean a lot in a macro sense but they do when boiled down to specific people. For instance, a taxpayer earning $35,000 a year is now paying half the tax they were just three years ago, as is a taxpayer on average weekly earnings, a bit over $50,000 a year. When Labor was in office, a taxpayer earning $50,000 a year was paying 47 per cent marginal tax rate. Instead, they now pay only a 30 per cent marginal rate. In fact, we have reached the point now where 80 per cent of taxpayers face a marginal tax rate of 30 per cent or less. Add to that the massive reforms to superannuation announced in last year’s budget, which will take effect from July this year—changes very reluctantly and begrudgingly supported by Labor which will be at risk if Labor were elected.

Contrast the tax cuts we have had for five years in a row under this government with the tax rises we frequently had under Labor and the tax rises we have year after year under the appalling New South Wales Labor government. Compare that with the policy that the member for Lilley, the shadow Treasurer, is telling us Labor will go to the election with—that is, no tax policy, which, in other words, is a hidden policy to raise taxes. It is astonishing that for half of the budget, the revenue side, they could say, ‘We’ve got no policy for that side of the budget’—little wonder when in times past we have had members of the opposition frontbench advocating marginal tax rates as high as 60 per cent.

The fourth criterion of a good budget is that it needs to invest for the future, and this budget does that. It further contributes substantially to the Future Fund in a way we have never seen before, a Future Fund which, by the end of next year, will have $52 billion allocated—committed, invested—to securing the future of our ageing population. What a contrast. This government is building investments for the future; the last Labor government was building debt for future generations. The contrast could not be clearer. In terms of investing for the future, there is $22.3 billion to build long-term road and rail infrastructure, $5 billion for the Higher Education Endowment Fund and $10 billion to secure our water future. Also, there are numerous incentives to encourage people to be committed to saving for their own retirement and superannuation.

This budget clearly delivers on all four criteria and is fiscally responsible. It addresses key priorities for expenditure, delivers substantial tax cuts and invests for the future. The contrast could not be clearer—with Labor’s record when they were last in government, with their record in opposition and with their track record in New South Wales. The message clearly is: do not listen to what Labor say; look at what they do. Look at what they did when they were in government. After raising taxes and selling off a great mass of assets, they left us with a massive debt of $96 billion. Look at what Labor did in opposition and look at what Labor are doing in New South Wales. The last thing we need in this country is for Australia to be mismanaged in the way Labor are mismanaging New South Wales. This budget passes a test on all of those four criteria. Pity help us if the other side get their hands on the budget.

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