Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Hansard source

On behalf of the Minister for Finance and Deregulation, I am pleased to bring the second reading debate on Appropriation Bill (No. 1) 2008-2009 and the cognate bills to a close. The government’s first budget delivers on election commitments to ease pressure on working families by helping them deal with rising living costs. It outlines far-sighted steps to address the long-term challenges for education and skills, infrastructure, health and climate change. We are keeping our election promise to reduce inflationary government spending, by introducing an economically responsible budget. We are delivering a strong surplus of 1.8 per cent of GDP in 2008-09, to put downward pressure on inflation and to help build a strong economy in the face of difficult global financial conditions.

By honouring our election promises, we have kept faith with the Australian people—and this is no minor matter. Over the years, our opponents eroded the trust between electors and their elected representatives with their distinction between ‘core’ and ‘non-core’ election promises. That exercise in bad faith resulted in a certain amount of voter cynicism and alienation from the democratic purpose. It is important, therefore, that we deliver on our election promises in this budget. In doing so, we are helping to restore trust and confidence in Australia’s political processes and institutions.

As the Treasurer explained on budget night, we have delivered a coherent package of reforms based on four principles: delivering for working families, meeting our commitments, investing in the future, and beginning a new era of economic responsibility. The government is delivering on its commitment to help working families to cope with day-to-day cost of living pressures through its Working Families Support Package. This package, costing $55 billion over four years, contains targeted initiatives in tax, child care, education, housing and other essential components of the family budget—and I will go through a number of those.

First, we will be implementing on time and in full our personal income tax cuts, as promised at the election, totalling $47 billion, including increasing the 30 per cent threshold from $30,001 to $34,001 and increasing the low-income tax offset from $750 to $1,200. Second, we are introducing, at a cost of $4.4 billion, the 50 per cent education tax refund, which will help parents invest in their children’s education. The childcare tax rebate will increase from 30 per cent to 50 per cent and will be paid quarterly, at a cost of $1.6 billion. The housing affordability package, costing $2.2 billion, will assist first home buyers and renters and includes enhanced first home saver accounts, the National Rental Affordability Scheme and the Housing Affordability Fund. Further, the Teen Dental Plan will help families meet the cost of dental check-ups for teenage children, and that will cost $490 million.

The government has also proposed an additional $100 million in Appropriation Bill (No. 6) 2007-2008 to provide to state and territory governments in 2007-08, the current financial year, under the Commonwealth state/territory disability agreement. This funding will increase the availability of supported accommodation for people with a disability where their carers are ageing.

I now turn to our undertaking to meet our commitments to Australia’s future. The government is meeting its commitments to the country’s future by investing in education and skills, infrastructure, health and hospitals and environmental sustainability to provide practical solutions to immediate problems. The government’s education revolution, costing $5.9 billion over five years, will provide quality learning opportunities for all Australians. It will help boost productivity and participation and reduce entrenched disadvantage.

This is an area where the economy truly meets society, where good economic policy is good social policy. I will go through just a few of those initiatives. Through the budget the government is providing $1.2 billion over five years for the digital education revolution, which will provide up to $1 million per school to deliver computers and communications technologies to all students in years 9 to 12. The budget provides $2.5 billion over 10 years to provide secondary schools with grants between half a million dollars and $1.5 million to build or upgrade trade training facilities to enhance vocational training for students in years 9 to 12. Further, the budget provides $1.9 billion over five years to improve skills by delivering up to 630,000 additional training places in the vocational education and training sector to help address current and future skills shortages. This was the subject of some debate during question time today: the necessity to ease the capacity constraints that were identified again just yesterday by the Reserve Bank and that are causing some of the inflationary problems that we are experiencing in this country.

The budget also provides a $3.2 billion national health and hospitals reform plan which will revitalise the public health system. I will again go through some of the initiatives under this plan. The budget provides up to $600 million over four years to reduce elective surgery waiting lists, including $150 million to conduct 25,000 additional procedures in 2008. The budget also provides $490 million over five years to assist families to cover the cost of an annual preventative dental check-up for eligible teenagers aged between 12 and 17 years. The budget provides $290 million over three years to reduce public dental waiting lists by funding up to one million additional dental consultations with the Commonwealth Dental Health Program. It also provides $275 million over five years for GP superclinics, bringing GPs and allied health professionals together in one place to improve chronic disease management. Also in the health arena, the budget provides $249 million over five years for the government’s comprehensive National Cancer Plan, to foster a holistic approach to tackling the many aspects of this disease. Finally, the budget provides $391 million over five years to invest in upgrading hospital and community health infrastructure and improving access to essential medical equipment.

The government is moving quickly to implement its comprehensive framework for tackling climate change. The 2008-09 budget includes measures costing $2.3 billion over five years, from 2007-08, to help reduce Australia’s greenhouse gas emissions, adapt to unavoidable climate change and ensure that Australia shows global leadership in the transition to a low-emission economy. I draw the opposition’s attention to the tangible measures that we have announced to modernise the economy for the future and help reduce Australia’s greenhouse gas emissions. Some of those initiatives are as follows. The budget provides $500 million over eight years for the National Clean Coal Fund, to support projects and activities that accelerate the development and deployment of clean coal and low-emission technologies. The budget also provides $500 million over six years for the Renewable Energy Fund, to accelerate the development and commercialisation of renewable technologies in Australia and support the renewable energy target. Further, the budget provides $150 million over four years for the Energy Innovation Fund, to support the development of clean energy technologies in Australia, including the establishment of the Australian Solar Institute. The budget also provides $240 million over four years to support business in making the transition to a low-carbon economy through the Clean Business Australia program. These initiatives are in addition to other measures, such as green loans, to help families reduce emissions and assist Australian households to take practical action on water and energy efficiency at home, which will cost $300 million over five years.

The effects of climate change mean most Australian cities and towns will have less water, and we cannot rely on rainfall to supply all of our drinking water anymore. National leadership is required to respond to this challenge, and the government is providing that leadership by supporting Australian cities and towns as they seek to diversify their water supply.

The government’s new 10-year, $12.9 billion national water policy framework, Water for the Future, brings a strategic and coordinated approach to address the significant urban and rural water challenges facing the nation. The budget improves Australia’s water security by establishing the $1 billion National Urban Water and Desalination Plan to attract up to $10 billion worth of investment in desalination, water recycling and major stormwater projects. In addition, $255 million will be provided for the National Water Security Plan for Cities and Towns to work in partnership with government and local water authorities to minimise water loss and invest in more efficient water infrastructure.

Australia will be better placed to meet future environmental challenges through the Caring for Our Country program, costing $2.2 billion over five years. This provides further evidence of the government’s commitment to protect Australia’s unique environment through sustainable natural resources management. Caring for Our Country will cut red tape and focus natural resource investment on national priorities. Communities will be empowered to put their energy into practical, on-ground action rather than into filling out forms.

This budget marks the beginning of long-term, responsible planning and investment in Australia. It starts to deal with the big, over-the-horizon issues. The government will establish three new nation-building funds. The first is the Building Australia Fund, to help finance the current shortfall in critical economic infrastructure in transport and communications—such as roads, rail and port facilities—to ease urban congestion and enable growth in trade and broadband internet. The second fund is the Education Investment Fund, which will provide financing for capital investment in higher education and vocational education and training. The third fund is the Health and Hospitals Fund, for capital investment in health facilities, including renewal and refurbishment of hospitals, medical technology equipment and major medical research facilities and projects.

Subject to final budget outcomes, the government intends to make initial contributions to these funds from the 2007-08 and 2008-09 budget surpluses, once realised. Including transfers from the Higher Education Endowment Fund and the Communications Fund, this will provide in the order of $40 billion for future capital investment to modernise and reinvigorate the Australian economy. Contrary to the opposition’s claim that these funds constitute nothing more than an election war chest, all projects financed from the funds will need to satisfy rigorous evaluation criteria and will be assessed by independent bodies. Where funds are used to finance projects with the states, they will be channelled to the states through the new Council of Australian Governments Reform Fund. The COAG Reform Fund will also channel funding provided in future budgets to the states for recurrent expenditure in areas of COAG national reforms through National Partnership payments.

To ensure that total spending from the funds is consistent with the government’s macroeconomic goals, the Loan Council will provide advice to governments on whether the proposed spending envelope from funds each year can be delivered in the prevailing economic conditions without prejudicing the government’s inflation target. The Loan Council will not approve or advise on individual infrastructure projects.

The final principle upon which this budget is based is that it is economically responsible. The budget delivers a strong budget surplus and reprioritises spending to sustain growth in the long term while putting downward pressure on inflation. The opposition has got itself into a muddle—’Malcolm in a muddle’—in its attempts to portray this budget as irresponsible. It would have the Australian people believe the two contradictory propositions that it is putting at the same time. The Leader of the Opposition and the shadow Treasurer have claimed that the budget is a big-spending budget, while a procession of opposition members have come into this place to catalogue and lament the budget cuts that have been made to their favourite programs. Our opponents cannot have it both ways.

The truth is that the Rudd government’s razor gang has delivered $33 billion in cash savings over four years, including $7.3 billion in 2008-09. These savings will reduce inflationary pressures in the economy by cutting the wasteful, election-driven spending of the previous government. They will also safeguard the fiscal position against economic shocks and allow taxes to remain at levels consistent with supporting long-term economic growth. The 2008-09 underlying cash surplus is the largest budget surplus as a proportion of GDP since 1999-2000 and the second highest in 35 years. On a consistent accounting basis, which includes Future Fund earnings, it is the highest budget surplus as a percentage of GDP since way back in 1970-71. A strong budget surplus ensures fiscal policy is playing its part to take pressure off inflation.

All new policy for 2008-09 announced since the election, including the government’s election commitments, has been more than offset by razor-gang savings. These savings, plus revenue measures, more than offset election commitments and other spending priorities across the forward estimates. Real spending is estimated to grow by only 1.1 per cent in 2008-09. That is a very substantial reduction in real spending growth from the previous year and, indeed, from the previous period from 2000 overall. This reprioritisation of spending in the establishment of the nation-building funds allows us to channel government spending towards those activities that address constraints on the economy—in particular, the areas of infrastructure and human capital.

In conclusion, this is a budget for working families. We are keeping our election commitments to reduce inflationary government spending, while providing tax cuts for working Australians hit hard by rising living costs. We have trimmed the fat from this budget, and we will use the savings to invest in the future—tackling long-term challenges like climate change, infrastructure bottlenecks and skill shortages. This is the end of short-term, irresponsible spending and the beginning of long-term, responsible investment. The Rudd Labor government has delivered a tight, well-managed budget that focuses on practical solutions to immediate problems and on long-term planning and investment for future challenges. I commend the bills to the House.

Question agreed to.

Bill read a second time.

Debate (on motion by Mr Hayes) adjourned.

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