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

It is a pleasure for me to talk on the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008. It is a pleasure for me to talk on it because I thank the government for implementing coalition policy. We have just had the member for Maribyrnong give us an entertaining, although sadly largely inaccurate, speech. I wonder if he can spell ‘hyperbole’ because there is such a thing as metaphorical overreach and I think he really scored gold on that measure here today. This is a good policy because it has been cut and pasted from the policy that we the coalition took to the people at the 2007 election. It is a policy where the Labor Party said: ‘Yes, me too. That looks pretty good; we’ll take that.’

Astonishingly, the Labor Party went into the 2007 election without a tax policy. That is a pretty fundamental policy for an opposition party to take before the Australian people, yet the Labor Party—extraordinarily—had no tax policy before the 2007 election. What they did was wait for us to release our tax policy. Then their brains trust got together, sat down, pulled out the coalition tax policy, walked up to the photocopier and pressed ‘copy’. Then they came out and said, ‘This too is Labor policy.’ Unfortunately, this sort of copy-and-paste policy is part of the evidence that we see here on a daily basis about the government’s lack of experience in managing the economy. It shows the Treasurer’s, the finance minister’s and the Prime Minister’s lack of capability in handling our economy. The Treasurer’s inexperience—and, indeed, I think it is fair to say his poor grasp of economic fundamentals—is all too apparent to everybody who sits in this place.

We have heard a lot from the government in this debate about the coalition’s record when it was in government, and I would like to take this opportunity to remind the House of why it is that the coalition has such strong economic credentials. Under the coalition, Australia’s economy grew by 40 per cent in real terms and real household wealth more than doubled. That is an extraordinary record. Australia’s growth rate during the period of the coalition government was amongst the strongest in the developing world and compared favourably to those of almost all of our OECD competitors. Coalition policy delivered the lowest level of unemployment in Australia for 30 years, with the creation of 2.2 million jobs. By 1990, Australia’s income per capita had fallen to the bottom third among our fellow members of the OECD, but under the coalition economic policies our per capita income recovered to be in the top third of the OECD. The coalition brought down the highest number of surplus budgets of any government in the history of Australia.

Of course, Labor have absolutely no credible record of budget surpluses. They opposed the measures that we took to deliver a balanced budget and for the last three years the coalition government achieved budget surpluses of more than 1½ per cent of GDP. What we will get is the government running around making a big noise and saying how competent they are because they will deliver a surplus of 1½ per cent of GDP. What we all know is that they would be able to do that standing on their heads. All they actually have to do is sit there and benefit from the economic management of the previous government and this surplus will, of course, magically appear. Yet they are making a big noise about how their fiscal discipline will achieve that. It will be achieved because the hard yards were done by the coalition. The coalition paid off $96 billion worth of Labor’s debt and that saved Australians about $9 billion a year in interest payments. Imagine what that money did and continues to do for the Australian people. That is $9 billion a year extra to spend on schools, hospitals and roads.

I would like to take a minute to have a look at what has happened since Labor came into office. What happened is that business confidence levels fell almost immediately. In February, the National Australia Bank’s monthly business survey found that business confidence had fallen by nine points. This is the worst result that the NAB survey has found since the terrorist attacks in the United States on September 11 2001. The survey attributed this big fall in business confidence to uncertainty in global financial markets and to tighter domestic financial conditions. This was followed by the Sensis survey of small to medium businesses, which showed, quite alarmingly I think, that support for the government’s policies has slumped dramatically. The approval indicator—what small and medium business think of what the government is doing—fell by 34 per cent and, significantly I think, the Sensis business survey found that small and medium business feared that the government will take too much notice of the unions.

Added to these surveys are the Treasurer’s and the Prime Minister’s statements about the inflation genie being out of the bottle. This seems to be a constant refrain from the new government. They talk about the inflation genie being out of the bottle. The Treasurer says it, the Prime Minister says it and the finance minister says it. Astonishingly, the foreign affairs minister went to New York and told a group of prospective investors in Australia that the inflation genie was out of the bottle. When you have got a government going around talking down the economy, is it any wonder that business confidence has been so dramatically impacted? The reality is that it is totally irresponsible for the government to go around spooking companies and investors, not to mention hardworking Australians, about inflationary pressures. The shadow Treasurer said it best when he said that the new Treasurer has a very ham-fisted approach to economic management. The Australian has also belled the cat on this new government strategy. In an editorial on 5 March this year it said:

The federal Government’s actions to forcefully brand Australia’s inflation problem on to the hide of the Howard government for future political use has added to the problem of inflation expectations.

This behaviour—this running around like Chicken Little saying that the sky is going to fall in—simply underlines their inexperience as capable economic managers. The Prime Minister, the Treasurer and the Minister for Finance and Deregulation should be condemned for this scaremongering. They should be condemned for creating fear amongst the Australia community, particularly amongst people who are deserving of our utmost support. They have created an atmosphere of anxiety among the needy and they have created an atmosphere of anxiety for everyone in Australia who holds a mortgage or has a superannuation account.

Astonishingly, this is the mob that tried to tell the Australian people that they were capable economic managers. I have got news for the Prime Minister: it actually takes more than cutting an ad to become an economic conservative. The Labor Party ran ads in Western Australia—I assume they ran in other parts of Australia as well—where the Prime Minister said, ‘Some people like to call me an economic conservative.’ Which people? Who likes to call him an economic conservative—Hawker Britton? Nobody who has any familiarity with this Prime Minister’s record would call him an economic conservative. Indeed, if you had any familiarity with his record, you could only conclude that he is an economic illiterate. In the time that he has spent in this House, from 1998, he opposed all the important reforms of the coalition years. I think—and this has been given wide airplay in this chamber—his comments about tax reform are probably the most instructive. The Prime Minister called the introduction of the much needed tax reform that we took to the people in 1998—the GST—‘a day of fundamental injustice’ against the Australian people. He has an opportunity now he is Prime Minister, if he believes that the GST was a ‘fundamental injustice’ perpetrated against the Australian people, to change all of that. But, of course, he doesn’t. He has said that he will copy the coalition’s economic policies, and what the government have done today within this bill is, of course, doing exactly that.

I will turn to the coalition’s record on tax reform because it is, indeed, a very impressive record. Throughout our years in office, we lowered the company tax rate; we halved capital gains tax for individuals; we removed end benefits for taxation on superannuation—and that reform is now currently under threat by the new government; we replaced the complex wholesale sales tax system; we reduced petrol excise; and we moved from a 150 per cent diminishing value rate on business assets to a 200 per cent diminishing rate to encourage investment in plant, equipment and technology. We did these things because the coalition were mindful of the need to make the tough but necessary decisions to make Australia more competitive and to create jobs. The coalition’s tax policy, which has so enthusiastically been embraced by the government, was designed to do exactly that. It is indisputable that the tax cuts which were proposed by the coalition, which we are discussing in this bill, will create even more jobs in Australia. Indeed, it is estimated that they will encourage about 65,000 new people into the workforce. The tax cuts that are contained in this bill, as well as the increases in the low income earners tax offset, build on the tax cuts that were so successfully delivered by the coalition over their years in office. These tax cuts start with the historic new tax system introduced on 1 July 2000—the introduction of which the Prime Minister described as a ‘fundamental injustice’ against the Australian people—a system that required real political courage to implement.

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