Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Hansard source

The three bills before the House—the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008, the Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and the Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009deliver the $10.4 billion Economic Security Strategy that was announced by the Prime Minister and the Treasurer last month. The strategy is unashamedly aimed at trying to protect the Australian economy as far as is possible from the impact of the global financial crisis. The government is taking action to strengthen the Australian economy with five key measures contained within these bills. Firstly, there is $4.8 billion for an immediate down payment on long-term pension reform. Secondly, there is $3.9 billion in support payments for low- and middle-income families—the people who need that support the most. Thirdly, there is $1.5 billion in investment to help first home buyers purchase their first home. Fourthly, there is $187 million to create 56,000 new training places in 2008-09—a huge commitment. Finally, there is the acceleration of the implementation of the government’s three nation-building funds and the bringing forward of the commencement of investment in nation-building projects to 2009. That, on any measure, is a significant package of support for the Australian economy, designed to support jobs and economic growth.

The legislation that the House is debating goes to the first four elements of that particular strategy. The fiscal stimulus is clearly needed in these very difficult financial times to ensure that demand in the economy is sustained as strongly as possible. Even though the fundamentals of the Australian economy remain sound, it is inevitable that the loss of confidence and willingness to provide credit that has been caused by the global financial crisis will continue to impact on Australia.

It should be noted, particularly in response to some of the comments I heard from the member for McMillan only a moment ago, that the government is only able to provide this $10.4 billion injection because, in the preparation of the last budget in May, it reintroduced discipline to the budgetary process, whereas the former government had a very poor level of fiscal discipline with unsustainably strong growth in government expenditure. Difficult decisions were made. A $22 billion surplus was delivered in the May budget and it is only because of the hard work that took place in the development of that budget that we are now able to ensure that the government can provide this package in economic security.

The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 will deliver immediate and much needed financial support to pensioners, seniors—including self-funded retirees—people with disabilities, carers, veterans and families with dependent children. The scope and breadth of this package is unprecedented. The financial support to pensioners, carers and seniors is in the form of a $1,400 payment to singles and a $2,100 payment for couples. The payments will be delivered in early December, only several weeks away, easing some of the extra financial demands that occur at this time of year. It is worth noting that the payments to pensioners also constitute an immediate down payment on long-term pension reform, something that the previous government failed in 12 years to deliver. The payments to pensioners will also provide relief until more long-term measures are delivered next year.

In my own electorate of Charlton—and a number of other speakers have commented on the significance of this package to their own electorates, including some of the speakers opposite, who sound as if they oppose the package but welcome the payments—this package means that 25,000 pensioners will enjoy these one-off payments. I think that the member for McMillan, the previous speaker, said that the government was somehow shamed into making these payments and did nothing in the last budget. It is important to recall a couple of things. Firstly, the previous government failed in 12 years to engage in long-term pension reform. Various bonuses were paid but no structural improvements were made to the pension system. They did nothing. It is worth reflecting on the reasons why, after 12 years of the previous government, so many pensioners are doing it so tough. It is because the Liberal Party failed in government to deliver sufficient support for the pensioners in our community. That is the evidence; it is incontrovertible. The evidence is also that in the lead-up to and in the May budget this year this government did support pensioners with the payment of an additional bonus and also committed to a long-term pension review. I will say more about that in a moment.

It is indisputable that working families and other households are being squeezed by higher living costs and by the effects of the global financial crisis. The Economic Security Strategy and especially the social security bill will deliver relief to people. Unlike the previous government, we are committed to supporting working families and pensioners. Furthermore, unlike the opposition, we will, as I said a moment ago, undertake long-term reform of the pension which will be based on a sound analysis of the issues accompanied by rational, thought-out policy prescriptions.

The opposition’s attempts in this field in more recent months have been farcical. At any particular time, there were several different policy proposals flying about. The suggestion that a $30 increase in the pension was not funded and was discriminatory in how it was applied was purely a piece of political theatre. The government, in contrast, is doing the detailed work of looking at long-term pension reform. But the opposition’s policy was also incredibly divisive on the issue of the pension. The opposition’s proposal excluded two million carers, people with a disability and married pensioner couples—a ridiculous position to put forward. Under Labor’s Economic Security Strategy, over 5.2 million pensioners, carers and families will receive one-off payments. In contrast, the coalition’s pension proposal would have excluded over 4.3 million people in the categories that the government is making payments to. 5.2 million people are eligible for payments under our package; 4.3 million of those would be excluded by the coalition’s pension proposal.

Under the government’s package, for the first time the lump sum payments are being extended to include disability support pensioners. This neglected group of pensioners often face pressure as great as if not greater than other recipients of government support. It is lamentable in the extreme that disability support pensioners were ignored under the previous government on a consistent basis. The support for pensioners in this package is worth $4.8 billion and complements the $7.5 billion in support provided in the May budget. Since the election of this government in November last year, there has been no less than $12.3 billion in additional spending on pensioners, seniors and carers. That is extremely strong evidence of the commitment of this government and the values that it represents in supporting people most in need in the community.

Carers are not neglected in the package. People who receive the carer allowance will get a separate $1,000 payment for each eligible person cared for. Self-funded retirees in receipt of a seniors card will receive the $1,400 and $2,100 bonuses for the first time. The member for Moncrieff was carrying on in the chamber earlier on about the alleged exclusion of self-funded retirees from the government’s consideration. I would invite him and his colleagues to have a look at some of the details of the package, because self-funded retirees in receipt of the seniors card are eligible for the bonuses.

Families with dependent children will also be beneficiaries of the Economic Security Strategy package, and a payment of $1,000 will be made for each child who attracts family tax benefit part A. Again, in my own electorate of Charlton almost 12,000 families will be eligible for this important payment. We understand, of course, the financial strain that many working families are experiencing, and this will be of significant benefit. One woman who has three children rang my electorate office after the announcement of the package and her family is eligible under family tax benefit part A. Just imagine how important a $3,000 payment from government is for them and many others. The sociodemographic nature of my electorate means that many families will benefit from this payment in a significant way. The same $1,000 payment will be made for each dependent child who either attracts or receives youth allowance, Abstudy, living allowance or an education allowance under the Veterans’ Children Education Scheme or the Military Rehabilitation and Compensation Act Education and Training Scheme.

I turn to Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009, which is one of the bills before the House. The first appropriation bill seeks a total appropriation of $146 million, $117 million of which will be used to fund the 56,000 additional productivity job seeker places in this financial year. This funding is for training at certificate II, III and IV levels. In the next two years the government will fund an additional commitment of over $187 million to develop skills that Australian industry needs. I know from my own involvement in the defence industry just how absolutely necessary that investment by government is. This commitment doubles the number of productivity places from 57,000 places to 113,000 places this year alone and takes the government’s total investment in training places to more than $400 million since April this year. These, on any analysis, are very significant commitments made by the government to boost the level of training. With a slowing global economy, ensuring that job seekers have access to as much training as possible that is relevant to the labour market is essential to supporting employment.

These new places will help maintain the momentum we have begun in training since the government assumed office almost a year ago. Increasing productivity and investing in skills is also central, of course, to the government’s longer-term economic platform. Almost 1,000 job seekers that were referred to training by employment service providers have already changed jobs under a number of the initiatives taken by the government to date. Included in the 56,000 places are 10,000 places allocated as structural adjustment places. These places will be devoted to providing retraining opportunities and targeted support to displaced workers. This is a very important commitment at times of continuing structural adjustment in the economy as it is inevitable, perhaps, that some industries will come under more competitive pressure due to the global financial crisis than others. In these industries it is vital that any worker who may be displaced be offered as much support as is possible and practical to establish the skills to attain employment in other parts of the economy. The cumulative impact of this measure is to take the Labor government’s commitment to the Productivity Places Program to more than $2 billion in financial commitment, thereby creating a total of 700,000 new training places over the next five years.

Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009 is directed at the third measure in the Economic Security Strategy, which is the extension of the first home owner scheme. This bill will appropriate $1.2 billion to introduce the first home owners boost. The boost will double the $7,000 grant first home buyers receive when they purchase an established home. Importantly, the grant for first home buyers who purchase a newly constructed home will be $21,000. This boost will apply to the end of the financial year and it will implement and perform two vital functions. Firstly, it will increase the affordability of housing for first home buyers in the market. Secondly, it will support demand in the residential housing industry. This is extremely important because, as many members would be aware, the indicators in the housing market are that levels of investment in the development of new construction are under pressure as a result of the credit crisis. Whatever the government can do to support demand in this important sector of the economy is surely an important contribution. Again, although I gather it is welcomed by some of the members opposite—or those I have heard speaking on these bills—you would take from the tenor of the argument that there is somehow some regret about it or indeed some opposition to it.

These are extremely important measures in difficult times like this when credit for the business community is difficult to attain. To sustain investment in the residential construction industry, it is very important that the government provides this form of support. It is estimated that over 150,000 first home buyers will benefit from this scheme. It will be part of the Labor government’s broader initiatives to increase housing affordability, and the policy initiatives on that front continue to include a National Rental Affordability Scheme to build 50,000 new affordable rental properties, a Housing Affordability Fund to reduce the cost of bringing new homes to the market and the first home saver accounts to encourage young people to save for a new home. By the way, these are proving to be popular in the Hunter region, where a number of the mortgage providers and banks are marketing them quite strongly.

Housing affordability is an issue that affects a great number of Australians and yet again the previous government ignored this pressure. The Labor government is committed to reversing that policy neglect and making housing more affordable for Australians. Affordable housing should be considered a right in our community and it demands the attention of government. How you could be in government for 12 years, neglect the rising pressures in the housing market and on housing affordability, see housing rates under such pressure and vacancy rates in the rental sector so low and rents climbing and ignore that as a public policy matter for 12 years escapes me.

At the time the first home owners boost is introduced it will help overcome some of the subdued demand in the housing market. According to the Australian Bureau of Statistics, lending for housing has declined this year by 26 per cent compared to 2007. That is a very worrying figure. The housing market is particularly subdued in the eastern states and is having a significant impact on economic activity. I know that in my home state of New South Wales this is particularly the case.

The global financial crisis will impact on this issue by reducing confidence and by restricting credit available to homebuyers. The first home owners boost will help address this issue—as I have described—as will the decision by the government to support competition in mortgage lending by directing the Australian Office of Financial Management to invest in AAA rated Australian residential mortgage backed securities in two initial tranches of $2 billion each. The residential mortgage backed security market is an extremely important market in the domestic economy in terms of raising funds that assist mortgage providers to make available the lending for people to buy homes. Once that residential mortgage backed securities market comes under pressure, and as a result less credit is available for home lending, it is inevitable that there will be great downward pressure on the level of lending for housing. The initiative by the government to make available two tranches of $2 billion each is already having an effect in restoring confidence in that market and enabling the availability of credit for mortgage lending.

Only by acting in a whole-of-government manner can we overcome these challenges and maintain confidence in the Australian economy. That is relevant to the final measure in the government’s Economic Security Strategy because we must look overall at the measures being taken by the government. The final measure involves the acceleration of the implementation of the three nation-building funds announced in the budget. This will bring forward the commencement of investment in a number of nation-building projects to 2009. At the moment ministers of the government are bringing forward their interim infrastructure reports so that work can commence in 2009 on projects in education and research; health and hospitals; and transport and communications. These nation-building projects will have two purposes, one short term and one long term. In the short term the early commencement of these projects will provide a significant stimulus to the national economy. In the long term these important infrastructure projects will begin to reverse the decade-long neglect of investment in infrastructure that we saw under the previous government. They will help boost the productive potential of the economy and contribute to Australia’s international competitiveness. The societal impacts will also be significant. By reinvesting in hospitals, schools and higher education institutions we will help build the social fabric—the social infrastructure—of the nation. These projects will improve the quality of life of working families, and there can be no higher duty for a government than that.

In conclusion, the Economic Security Strategy will strengthen the economy in the face of the gravest global financial crisis since the Great Depression. It is naive to think that the present crisis can be limited to financial markets. The impact of the financial crisis is already being felt in the real economy, in diverse areas such as a loss of confidence, falling retirement incomes, declining commodity prices and restricted credit for business investment—it is a lengthening list. The Rudd government is acutely aware of the lessons of history. We know that strong, decisive action is required of governments in these circumstances. That is the commitment of this government. The opposition does not demonstrate any understanding of what needs to be done. The government intends getting on with the business.

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