Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

I welcome the opportunity to speak on Appropriation Bill (No. 3) 2007-2008 and Appropriation Bill (No. 4) 2007-2008. They are a part of the great tradition where this parliament authorises the expenditure of the executive, and I would very much like to use the opportunity of speaking on these bills to contribute to the wider economic debate that has been ongoing since this parliament resumed. I would particularly like to debunk some of the complete and utter snake oil that we are seeing being peddled by the government about the state of the economy that they inherited.

I think that the Labor Party has learnt from long experience that if you repeat something over and over again, regardless of its basis in fact, over time it will gain currency. I think this is what we are seeing when the Labor Party continually talks down the incredibly strong economy that it has inherited from the coalition. The shadow treasurer, I think very rightly, has described Labor’s attempts to rewrite history as Orwellian. What we have heard in this chamber tonight certainly would have done Napoleon the pig proud. It really is quite audacious that, despite all the evidence to the contrary, this new government continues to mount the argument that it inherited a bad economy.

I think we need to be extraordinarily clear: no government in the history of our federation has inherited an economy with this strength. Let us go through the facts of why that is the case. In fact, it actually bears repeating: no government in the history of our federation has inherited such a strong economy. Here are the facts. The previous government restored Australia’s AAA credit rating. We delivered more jobs. Unemployment is at record lows—lows not seen since the heyday of the Australian economy in the sixties. The previous government lowered interest rates. We lowered taxes. We improved Australians’ real wages. We improved productivity. We gave senior Australians and other Australians on pensions higher pension rates. We spent more money on important priorities, such as health, education, defence, transport and, of course, the environment. We also gave more money to the state governments to spend on providing services in the jurisdictions for which they are responsible—although, again, you would not believe that to be the case listening to some of the snake oil that we have heard peddled in this chamber recently.

On top of that, the Howard government reformed the tax system. We increased participation through the Welfare to Work program. We reformed an underperforming waterfront. The costs that were associated with the corrupt and inefficient waterfront flowed through to the whole economy, and reforming it was a hard thing to do. The minister at the time faced enormous opposition in bringing Australia’s waterfront up to world-class standards; he faced enormous opposition from the Labor Party when they were in opposition.

That is the thing about this Labor Party, even though they are very keen to now present themselves as economic conservatives, as fiscal conservatives. When the coalition was making these hard decisions in government, we never received any support from the Labor Party—in marked contrast to the support that the then Liberal opposition gave to the Hawke and Keating governments when they were reforming the Australian economy in those early days.

On top of the measures that I have mentioned, the coalition took other tough but necessary decisions. We established the Future Fund. For the first time, the unfunded superannuation liabilities of the government will now be funded. This removes the burden that would have affected younger generations, who would have had to pay the bill for this unfunded liability. In conjunction with reforming the tax system through the establishment of the goods and services tax came the largest tax relief in Australia’s history. This was followed up by further tax relief in the 2003 budget, the 2004 budget, the 2005 budget, the 2006 budget and, of course, the 2007 budget. When the current Treasurer brags in the 2008 budget about his tax cuts, everybody in this House will know that that was a coalition initiative.

During our years in government, the coalition further encouraged enterprise initiatives and savings. We lowered company tax, halved capital gains tax and removed benefit taxes on superannuation. I will return to this point later because it is a very important point. We replaced the complex wholesale sales tax, reduced petrol excise and moved from a 150 per cent diminishing value rate on business assets to a 200 per cent rate of depreciation which, in turn, encouraged investment in plant, equipment and technology. We created a more flexible workplace relations system, which helped deliver nine of the 10 most industrially cooperative years on record. Indeed, they were the best years since records started being kept in 1913—2006 being the best year on record for the lack of industrial disputation.

We also invested in key infrastructure like roads through the AusLink program. We invested $38 billion over 10 years in a program that would have been ongoing to 2013-14 through the largest innovation package in our history—Backing Australia’s Ability. We promoted competition—for example, in the airlines. I am on record as saying that we might have done more in that area. We also promoted competition in energy and telecommunications. We boosted the work ethic of the community through programs such as Work for the Dole and Welfare to Work—programs that were instrumental in increasing participation—and we now have the highest participation rates in Australia’s history. We pursued the idea of free trade and negotiated free trade agreements with a number of countries bilaterally. This has helped boost exports and helped Australian business.

We took a more strategic approach to immigration with a greater emphasis on skills. Australia is the best place in the world to live and, quite frankly, we should take the pick of anyone we need. Of all the people who would like to come to Australia, it would make sense that we would take our pick of skilled migrants who are looking to make a better life for themselves.

Probably the most telling point of all is that, during the 11 years of the Howard government, the average wealth of Australians doubled. That is an extraordinary statistic. Contrast this remarkable achievement with what we are hearing today from the Labor Party. They have come to government and been left a ‘V8’ economy, noted as being ‘the wonder down under’ in the Economist magazine. Contrast that situation with when we came to office in 1996. We inherited a $10 billion annual deficit and $96 billion of accumulated debt—debt that the coalition completely eliminated. We inherited levels of government spending that were equal to about 25 per cent of Australia’s gross domestic product. It is now equal to about 21.2 per cent. We inherited the unfunded superannuation liability that we have now addressed through the Future Fund.

During the time when the coalition was doing all these things, when we were reforming the economy, the ALP opposed us every step of the way. These fiscal conservatives that we are now hearing about in this chamber opposed our balancing of the budget. They opposed tax reform. Yet now they come in here and have the gall to masquerade as fiscal conservatives, as an economically responsible government. They opposed all the measures we took to create this economy and now they want to claim credit and try to pretend that the economy they inherited was not first rate.

In these appropriation bills the government will be spending $3.334 billion. The Minister for Finance and Deregulation and some of his colleagues seem terribly impressed with themselves for ‘wielding the axe’ on government expenditure. But, like everything with this government, the hype never lives up to the reality. To ‘wield the axe’ to save $150 million per year over four years is a drop in the ocean when it comes to a $1.1 trillion economy that is the Australian economy. So, like everything with the new Rudd government, what the Australian people will soon learn is: always look at what they do and not at what they say because their spin machine works overtime.

The Minister for Finance and Deregulation has indicated that there may be more savings at a later stage. I want to turn to my concerns about where this government might find some of these savings, because the government seems to be going down a path now that would be extraordinarily detrimental to millions of Australians, and that is the uncertainty that it has created around the better superannuation system that was instituted as one of the great reforms of the Howard years. That system took what had been a relatively complicated system and simplified it. It essentially said that when money went into superannuation it would be taxed at 15 per cent and that was it—you could take the money out and there was no further tax. That replaced a set of arrangements that were reasonably complicated and convoluted. I know, from my own experience of talking to superannuants, that it was a wonderful reform for them. I am deeply concerned that this government is now softening Australians up to change these arrangements, to add that complexity back into the system. Australians will be rightfully angry if the government does do that because it was an option that it categorically ruled out prior to the last election.

I will read for the House some of the statements ministers in this government made prior to the election and what they are saying now, after the election, because there has been a marked change of emphasis that should be of great concern to Australians who are living on superannuation. Prior to the election, on 19 November 2007, the present Treasurer was asked on the Sunrise program, with Mel and Kochie, about superannuation and whether in government he would make any changes to the wonderful system that the coalition has brought in, and I quote:

KOCH: Superannuation. Wayne Swan, will you guarantee that there will be no changes to superannuation that will water down the attractiveness of it?

SWAN: I made that guarantee in the Parliament, we are the authors of the superannuation system and we are very supportive of it.

KOCH: So you won’t fiddle, you guarantee there will be no watering down.

SWAN: I absolutely guarantee there will be no changes at all.

I will contrast this with the language he is now using after the election. We in this place all recognise weasel words when we see them and, quite frankly, this is a brilliant example. People who are around politics understand what is happening when a direct question is put to a minister and the minister uses weasel words and refuses to directly engage with that question. And when ministers are asked to rule something out and they do not explicitly rule it out, we all know that they are ruling it in. Let me contrast the Treasurer’s commitment that he gave prior to the election with what he is now saying. The Treasurer was interviewed on Meet the Press on Sunday, 10 December, and I quote:

BONGIORNO: On Wednesday, the Finance Minister signalled he has tax concessions in his sights and says measures will be announced by the end of the year. The biggest concessions are for retirement savings; superannuation tax cuts will cost around $27 billion this year and are forecast to keep going.

They then played a grab from the shadow minister for finance, saying:

There is great uncertainty for Australians in retirement at the moment who are drawing money either in a lump sum or a pension from their superannuation funds, tax free, and he needs to rule out any imposition of new taxes on those people.

The journalist Fran Kelly then directly asked the Treasurer:

Treasurer, will you rule that out amidst all this talk of having to inflict pain and restraint on everybody, will you guarantee that the tax benefits within super will be quarantined?

The Treasurer then said—and these are classic weasel words:

Well, we certainly ruled out the allegation that he was making—that there was going to be some increase in the super guarantee.

Notice that he does not actually address the question. He then went on to say:

We stand by all of our election commitments. I mean, this is just sort of desperation from the Opposition. We are very, very supportive of superannuation. We will do anything we can to enhance incentives in superannuation that are economically responsible into the future.

The point is that he was asked a direct question to rule out fiddling with the current arrangement and adding complexity to the current arrangements and he used classic weasel words to get out of it.

Sadly, this is obviously a whole-of-government approach. I will contrast what the Prime Minister promised prior to the election with what his finance minister is now saying. On 27 April on Mornings with Kerri-Anne, Kerri-Anne asked the Prime Minister—it was a hard-hitting interview—whether he would change the current superannuation requirements, and the Prime Minister said:

No, we won’t.

So I think the message that the Prime Minister was conveying to the Australian people was pretty clear, and on other occasions he promised similar sorts of things. Let us contrast this with what the finance minister is now saying—and, again, we have classic weasel words. At his Press Club speech on 6 February, the finance minister was asked by Shane Wright, the economics reporter at the West Australian, a direct question about superannuation. Mr Wright asked:

About three weeks ago you released the tax expenditure report for 07 and you noted today you are looking at tax concessions going forward ... Your report indicated that superannuation was by far the largest tax difficulty facing the budget and it has grown very quickly. Is that an area that you will have to look at if you are serious about bringing tax concessions under control?

He was asked a direct question from Mr Wright about whether Labor is going to fiddle with this very important area of retirement savings for Australians, and the finance minister—exactly like the Treasurer—resorted to weasel words. He said:

It is important to note that the report I released—I cannot recall exactly how many weeks ago it was—is effectively in that regard something that is routinely released every year and is a statement among other things of the effective cost of a variety of tax concessions throughout the overall budget.

It rarely changes much from year to year and it certainly has not changed significantly this year to the best of my knowledge. I am not going to speculate about potential target areas for the razor gang exercise. We will be sticking to our election commitments. That obviously constrains what we can do.

But, of course, he does not say that this was an election commitment of theirs, even though they have explicitly told the Australian people that. He went on say:

We will be honouring contracts and we will also be taking very seriously the situation where money has already been spent and where if the program is to cease then that money would be then away.

That is a quote from the transcript I have, but I think we get the picture. The picture is of a government that went out of its way to reassure the Australian people that this very significant reform of the Howard government would not be touched. What we have now is the government back-pedalling at 100 miles an hour on this commitment. Every Australian with a superannuation fund and every Australian who requires certainty in their superannuation investments needs to be concerned that this government is softening them up to change those arrangements.

I also think that some of the cuts that are in this so-called razor-gang review are relatively unfortunate. I respect that the government has a right to find savings—even though I think that $150 million a year is pretty pathetic and piddling, quite frankly—but I do think that it should reconsider, in particular, expenditure that it has cut in relation to encouraging new migrants to become Australian citizens. The electorate I represent is extraordinarily diverse, and I think that that program has been very successful in improving the take-up rate for people to become Australian citizens—something that I think is terribly important.

Labor has absolutely no economic credibility, coming into this chamber and pretending that it inherited anything other than the strongest economy in history since Federation. We need to put an end to this political game playing. We need to put an end to the lies that are being peddled by the government and we need to say very loudly and very clearly in this House that Labor has inherited the best economy that any government has ever inherited in the history of our federation. I urge Labor to acknowledge that and stop spreading this nonsensical snake oil. (Time expired)

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