Mark Vaile (Lyne, National Party) Share this | Hansard source

I am going to do something that is a little unusual this evening: I am actually going to talk about the structure and substance of the budget. Since the Treasurer introduced the budget a number of weeks ago, we have seen an enormous amount of rhetoric and spin from the government—that they are a Labor government of fiscal conservatives; that they have produced a magnificent budget surplus; and that they are going to be the saviours of the nation and the only bulwark to stand up on behalf of the nation against the demon of inflation. We need to set a few facts straight.

This government was elected in November last year and walked into some incredibly strong economic circumstances as far as the finances of Australia were concerned. At the time of the election last year, the Treasury prepared for both parties contesting the election a forecast of what the budgetary circumstance for 2007-08 would be at the conclusion of the fiscal year. Treasury forecast that there was likely to be an increase of $8 billion in the surplus. Little wonder that the Treasurer and the new government were able to produce a budget surplus of $21.7 billion!

If you compare the key circumstances and the key indicators that the Rudd Labor government encountered when they were elected to the key circumstances and key indicators that we walked into when we were elected in 1996, you could not have a greater divergence of circumstance. In 1996 there was a $10 billion budget deficit. In 1996 there was a $96 billion public sector debt. That was a debt that was owed by every man, woman and child in Australia. There was an incredibly high level of unemployment. The general disposition of Australians was that they were not very confident about themselves, about the direction the nation was going and about the economic circumstances within Australia. Therefore, there were not those inflationary pressures then that are being exerted by the level of confidence of consumers today. Interest rates were actually higher. Yes, we have had a series of increases in interest rates in the last couple of years, but they were off a very low base. That needs to be recognised and understood in historical terms. We hear on a daily basis about the number of interest rate rises that have taken place in the last couple of years, but they came off a very low base.

Contrast some of those statistics to those that were inherited by the current government when elected last year. I mentioned the budget circumstance. There was forecast to be an incredibly strong position by the end of the 2007-08 fiscal year, regardless of what savings were produced in this year’s budget. In lieu of there being that massive level of public sector debt, there were actually quite significant net savings. Capital savings had been put aside by our government into the Future Fund, the health fund, the Higher Education Endowment Fund and the former perpetual Communications Fund, which has been ripped off by the current government. The Minister for Broadband, Communications and the Digital Economy, Senator Conroy, has raided that fund. He has stolen that money from the people of regional Australia and has maintained that he is going to invest it in the current government’s broadband program, which fundamentally is about bolstering broadband in urban areas in capital cities in Australia. That is being funded with taxpayers’ dollars when it should be being paid for by the operators in the marketplace. These markets are commercially viable.

The structure we had in place, as far as communications were concerned, and the reason that we established the perpetual Communications Fund with core funding of $2 billion, was to ensure that there was an ongoing cash flow available in perpetuity for consumers in regional Australia to keep up with modern communications technology where the market was not going to provide it. There is no such safety net left now. It has been taken away. The Labor Party and Senator Conroy have taken that away. They have stolen a $2 billion safety net from all those people who live in regional and remote Australia.

So, in the future, when new technology becomes available, those of us who live in parts of Australia where the market will provide it are going to be better off than those who live in regional and remote Australia, where the market will not provide it and there is no safety net. So it will be incumbent upon those people, and those who represent them, to come to government to make specific requests for new programs to fund that technology—and fund it on budget: to create a budget program to fund it. We had taken it off budget. We had provided a safety net. We had provided an amount of money that, since the time it was invested a couple of years ago, has probably generated between $400 million and $500 million worth of revenue that was going to be allocated into different parts of regional Australia by the committee chaired by Dr Bill Glasson, who, I understand, is still operating that committee and is going to report to government. But there is no fund and no safety net left.

The Labor Party have not just ripped off $2 billion from the bush; they have ripped off probably more like $2½ billion from the bush and are going to plough that into their broadband program, which we have grave doubts will end up servicing the people that we were intending to look after with that perpetual Communications Fund. But the point I make is that, when the Labor Party were elected to office, there was no debt; debt was zero. There were in fact net savings of probably $60 billion to $70 billion in the Future Fund, $5-odd billion that we had put into the Higher Education Endowment Fund, $2 billion in the perpetual Communications Fund, and the funding that had been put into the Rural Medical Infrastructure Fund. These were all savings that were made out of a lot of hard work.

I recall the days when there was a significant challenge confronting the government of the day that had to seriously find savings, not just make-believe savings where the pitch to the electorate was, ‘We are making all these savings,’ but really the subtext was, ‘We’ll get rid of as many coalition policies as we can and we will call them savings and then we will go and spend on our programs.’ There has been $15 billion worth of savings on one hand and $30 billion worth of expenditure on the other. It is very easy to claim fiscal responsibility when you have the bank account full of money and a chequebook full of cheque leaves ready to go, and you know that you can spend on your programs and you can, under the guise of fiscal responsibility, get rid of all the programs that you want to get rid of from the previous government and call it a great budget.

I suppose we sure ought to be grateful for small mercies—that a Labor government actually did produce a surplus budget. They could have really gone on a drunken binge and spent all of that. But the reality is that, for the first budget in over a decade—in fact, in over 12 years—there have been tax increases and the introduction of new taxes. Twenty-one million Australians came to rely on the fact that every year at budget time—they would know it might be tough; they would know there might not be expenditure in their particular area of need or interest—their government was not going to introduce any new taxes and was not going to increase any taxes. In fact, the Howard government continued to reduce taxes. We changed the threshold rates for the income taxation system. We brought down the top rate of tax. We improved the circumstance of those in the lower percentile, if you like, of the PAYE taxpayers in Australia and at the same time we continued to produce surplus budgets.

If you want to talk about a tough challenge, the budgets in 1996 and 1997 were a tough challenge. We had to try to convert a deficit budget situation first into a balanced budget and then into a surplus budget situation. We had to make serious cuts, difficult decisions, before starting to rebuild the economy. And at no stage were there tax increases or the introduction of new taxes.

The first Labor government for 12 years cannot help themselves but introduce new taxes into the Australian system—because, they claim, ‘We need to do it; we need to fight inflation, so we are increasing taxes.’ That is the mantra being levelled by the Treasurer and the Prime Minister. So we see in some quite amazing areas increases in taxes. There are increases in the tax on alcohol under the guise of a health measure: ‘We are going to deal with binge drinking.’ But the statistics belie the fact—that is, the Treasury statistics that were brought out indicated that the revenue was going to increase, that consumption was going to increase. If you look at the cross-section of those people in the community who actually drink these drinks, you see that it is not just the young people that the government are trying to target as far as binge drinking is concerned who will be affected. We all support the spirit of that endeavour, but we do not believe that this is the way to do it. Then there is the increase in the luxury car tax: ‘Just nip it up a little bit; keep the threshold at $57,000 but take it up to 30-odd per cent.’

Then there are the increases in energy costs. The government have said, ‘The gas industry can afford to pay this now.’ But they were not there when as a government we were trying to encourage Australian companies to invest billions of dollars into the oil and gas industry to achieve the fantastic export results that we have today. It took a lot of courage by many people in those industries. It took support from government. And one of the measures that we provided supported the development of those gas fields that are now generating tens of billions of dollars worth of export revenue for Australia—we had to provide concessions so that they would invest. One of those has now been taken away, and it comes straight off the bottom line of the company. There are obvious arguments on both sides of that equation, but at the time that that was introduced it was needed because we needed to see that investment in a new industry, an industry which is now one of Australia’s great success stories as an export industry—that is, the LNG production industry in the North West Shelf of Western Australia.

So there is a whole raft of new measures in the budget that are increased taxes and new taxes. Of course, the doozy of them all—and, as sure as night follows day, this will come back to haunt the Labor Party—is the changes as far as the private health insurance rebate is concerned. There are some very compelling statistics on this. I know, because I was first elected to this place in 1993 and spent my first three years in opposition. One of the key issues when I was campaigning in 1993, wherever I went, concerned the people in my electorate who were not the well-to-do or the middle class in the electorate. These people were pensioners or on part-pensions or were self-funded retirees on the margins, and they desperately needed to keep their health insurance going because they needed to be able to get access to hospital when they needed it. They could not rely on the public hospital system. If you go back to 1983, when the Labor Party was elected to office with the Hawke government, over 50 per cent of Australians were covered by private health insurance. By the time Labor left office, that figure had fallen to just over 30 per cent of Australians.

When we were elected in 1996, we introduced measures that would encourage and provide an incentive for people to take out private health insurance because we knew that we needed to do that to help take the pressure off the public hospital system. By the time we left office at the end of last year, 9.477 million Australians, or 44.6 per cent of the population, were covered by private health insurance. So there was a significant shift back to one in two. It started off at one in two, it dropped right off during the Hawke years and we raised it back up to one in two. Now we forecast that the outcome of this budget measure by the Labor government is going to see it revert to those other figures. All it is going to do is increase pressure on the public hospital system.

I know the retort will be: ‘But in the budget we’re handing over more money to the states for their public hospitals, their health systems and their education systems. We’re handing over money so that they can create tech ed type processes in every high school in Australia.’ Well, it will be like a drop of ink on blotting paper, because it will not achieve the desired result. We have confronted all these things in this country and it has not worked. It is one of the failings of the federal structure in this country. We have experienced state governments of both political persuasions—both ours and yours, both conservative and Labor—and neither of them have been any better than the other in that the only way that you could deal with them was if you turned up with a chequebook and handed them the money. Then you had absolutely no confidence that that money was going to end up being spent where you expected it to be spent or that the services that you expected them to deliver would be delivered. That is why with so many of the policy decisions we took over the last 12 years we tried to circumvent that by going straight to the taxpayers of Australia and delivering a number of programs and services directly to the taxpayers of Australia.

There are fallacies in this budget. There is a lot of rhetoric and spin about what it is. But I will end where I started and say to the government: hopefully, given the fantastic economic start you inherited when elected to office, during your time in office your government does not fall into the trap of previous Labor governments and continue to tax and spend and end up running the budget back into deficit. Hopefully you will continue what we started and maintain budget surpluses, continue to save for future generations and focus on delivering services to the broader community from the Commonwealth, because that is where you have control of what you are doing. If you delegate too much to the states—and this is probably ending up a little bit like a centralist speech, but this comes from experience—I am sorry, but you will not get the outcome that you expect. Ultimately—and your predecessors in previous Labor governments found this out—you will find that the only way to achieve the outcomes that any Commonwealth government wants is to deliver a lot of those programs yourselves.

The government, notwithstanding the spin that the Treasurer and the Prime Minister have put on this, are very fortunate: they inherited a strong budgetary situation on embarking upon their time in office. It is vastly different to that which we inherited in 1996, when we had to do some serious heavy lifting to address the budget deficit, to retire $96 billion worth of debt, to drive unemployment down to the four-percentile range, where it is today, and to create the economic prosperity in this country that has given rise to so much confidence amongst the consumers and taxpayers in Australia. That is why people continue to spend: they are confident about the structure in this country and confident about their jobs in the future. I am sure they would all like to maintain confidence in the management of the economy of Australia into the future. This budget is about spin and rhetoric. It is a tax and spend budget. (Time expired)

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