Danna Vale (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on the Appropriation Bill (No. 1) 2009-2010 and cognate bills. In my speech in the 29 May 2006 budget-in-reply debate, I spoke on the magnificent milestone of the coalition eliminating the $96 billion of debt that Labor left to the Australian people when it was last voted out of office in 1996. Now, after only the second Rudd Labor government budget, the numbers are much worse; in fact, it has been an extraordinary fiscal turnaround. When the coalition government came to office in 1996 it took over 10 years to pay off Labor’s $96 billion black hole and yet it has taken Labor less than 18 months to give Australia a new debt of even greater proportions. This is no small feat for a Prime Minister who once described himself as a ‘fiscal conservative’.

While we are all aware that we are in challenging times and while there may be an argument for appropriate stimulus spending within the Australian economy, this budget and previous cash splashes are expected to leave us with a $58 billion deficit for the 2009-10 financial year. The Prime Minister and Treasurer have finally admitted that we are going to end up with at least a $315 billion debt. Given the size of all the spending and the size of the debt it will create, it would be neglectful if such spending were not rigorously scrutinised by the opposition. After all, as one of the important mechanisms of our government, vigorous scrutiny is exactly what an opposition is about. Yet this government constantly criticises us for it.

There is a case to be made that restrained and targeted government spending in certain economic circumstances is a responsible approach but the concern I have with this budget and the previous cash splashes is that I am not convinced that it is at all restrained or in the least targeted to achieve the desired economic outcome. In these challenging times, the objective of government should be to strengthen the economy, particularly through the creation and preservation of jobs. After the 2007 election, with a $20 billion surplus, the Rudd Labor government had an excellent opportunity to provide productivity capacity upon which to build future growth. Yet in just over 18 months this Labor government has squandered this opportunity at an alarming rate. All we will end up with—or should I say all our children will end up with—is another monstrous Labor debt.

One of the curious aspects of this budget is that the Labor government has borrowed not just for investment but for consumption. Once the one-off handouts are spent they are spent, and many of the recipients have not spent their cash handout but, understandably, have used it to pay off a household debt, thus thwarting the government’s hope of stimulating the economy.

It was disturbing to read the latest retail turnover figures published by the ABS on Monday. If we compare April this year with April last year, fuelled by Labor’s deficit, spending on alcohol has surged to an incredible 19.3 per cent. Also, if we compare the five months since December 2008, the period when the stimulus package kicked in, with the same five-month period the previous year, across the nation expenditure on alcohol has increased a truly incredible $460 million. The only conclusion is that the reckless spending of the Labor government has financed the greatest booze-up in the nation’s history, with this extra $460 million being spent on alcohol. And now, all that those Australian working families will be left with is one mighty hangover of debt that will last for generations to come.

How is this government going to explain to future generations when they ask why we do not have the hospital services or the infrastructure that we so badly need? How will the Labor government explain that in 2009 the Prime Minister, in a great cash splash, sent out free money to all, and $460 million of it ended up being merely splashed against the wall in a massive surge of alcohol sales? We can see the cash splashes were not about fiscal rectitude or sound economic management. They were really about the next election, which will probably occur sooner rather than later. They were also about keeping people dependent on government in a grand return to big government, Labor style.

Looking further into the breakdown of retail sales, the failure of this government is plain to see. They came to office with a fanfare and a promise that they would take action to lower supermarket prices; all they have delivered is the farce of GroceryWatch—$13 million of taxpayers’ funds frittered away on a stunt. What has really happened to the supermarket prices? According to Craig Kelly, the President of the Southern Sydney Retailers Association, the price at the supermarket checkout continues to go up while the price paid to our farmers continues to go down. If we compare the five months since December 2008, when the stimulus package kicked in, to the same five-month period in the previous year, across the nation expenditure in supermarkets has increased by $2.5 billion. As a nation we are not consuming $2.5 billion in additional quantities of food; simply, the supermarket duopoly has jacked up prices and siphoned off a significant part of the stimulus package. This, according to Mr Kelly, has left small business, the backbone of the economy—especially in the retail sector—behind the eight ball.

So, while the liquor stores and the big supermarkets rake in billions, thousands of small cafes in my electorate of Hughes and across the nation, and thousands of small business retailers of furniture, floor coverings, footwear, newspapers, books, stationery and recreational goods, are experiencing a decline in sales as compared to last year. For the small businesses of Australia the stimulus package has been a failure. In 2009 it is the people who run small businesses who are the real workers in Australia. They risk their capital, often their own homes. They work over 100 hours a week, often on weekends, and rarely take holidays. Most importantly, they employ many fellow Australians. Yet it is these small businesses, these working Australians, who are going to pay the highest price for Labor’s debt.

I was interested to read the Wall Street Journal article ‘Canberra budget blowout: a record deficit won’t buy economic growth for Australia’. This article took a particularly negative view of the Rudd Labor government’s budget. It said:

This is an extraordinary fiscal turnaround from a year ago, when Australia turned in a budget surplus of $19.7 billion. The country entered the global economic downturn with historically low unemployment, muted inflation and very little debt, thanks to an uplift from strong global growth—especially from China—and prudent fiscal management by the former Liberal government and its treasurer, Peter Costello.

Tuesday’s sea of red comes largely courtesy of Labor’s political agenda, not the global recession. Over the last fiscal year, the Rudd government has announced a spree of cash handouts, infrastructure programs and pet projects.

Also, according to an article in the Australian, it seems that Reserve Bank director Professor Warwick McKibbin had some concerns. The article said:

Reserve bank director Professor Warwick McKibbin has warned that global government spending to stimulate the economy is being dominated by political agendas that will saddle future generations with debt and slow economic growth.

In stark contrast to the Treasurer, the Leader of the Opposition in his contribution to this debate talked about how Australia should have a budget that marked a path out of the current downturn, offering confidence and hope for a better future. He also emphasised the importance of small business in its crucial role as the engine room of our economy.

The coalition’s plan for recovery is built on four key principles to help Australia recover and grow: (1) protecting and creating jobs for all Australians, (2) keeping debt as low as possible, (3) targeting spending at jobs and economic infrastructure, and (4) supporting private enterprise and small businesses, the drivers of economic growth. The coalition’s plan for recovery puts forward measures that are practical, affordable, pragmatic and job focused and that would greatly assist the economy in this difficult period. They include a tax loss carry-back for businesses, new insolvency laws, cutting red tape and encouraging training.

The coalition believes that if businesses make operating losses this year or next year they should be able to carry them back against previous years’ profits and recover up to $100,000 of taxes paid by them over the past three years. This tax refund would bolster cash flows for businesses struggling in the current market. New insolvency laws like those in the United States would provide fairer rules to deal with troubled businesses. A change to our laws to emphasise the reconstruction of troubled businesses could save thousands of jobs that would otherwise have been lost. Also, the coalition strongly believes in cutting red tape and making it easier to do business with government. The coalition would reduce this burden to the lowest in the OECD and join state and local governments to deliver a one-stop online portal for filings.

But I believe that there is even more that we can do to help small businesses. Other major developed economies protect competition and consumers from the evils of geographical price discrimination. In the United States, the home of free market capitalism, they have section 13(a) of the Clayton Antitrust Act, which states:

It shall be unlawful for any person engaged in commerce, in the course of such commerce … to sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States;

Any person violating any of the provisions of this section shall, upon conviction thereof, be fined … or imprisoned not more than one year, or both.

This has been the law of the land in the United States of America since 1936 but, regrettably, for Australian small businesses an equivalent provision remains missing from the Australian Trade Practices Act.

Any Australian housewife is well aware of the current situation as she shops for her family. She is aware that the Australian supermarket sector has degenerated into a state of hyperconcentration, with small business denied a level playing field, forcing them out of the market, leaving just two giant firms acting as gatekeepers to more than 80 per cent of Australia’s supermarket shelves, a level of concentration unparalleled anywhere else in the world except perhaps for North Korea. This level of concentration has been to the detriment of and harmful to small businesses and the Australian farmer but also it has been harmful to the average Australian family, those working families who have suffered with the developed world’s fastest accelerating supermarket prices.

We have crossed the tipping point. We need a complete rethink on the Trade Practices Act and competition, and we should start with geographic price discrimination. All Australian consumers, all those Australian working families who are Australian consumers, deserve to enjoy the full benefits of competitive markets regardless of where they live. It should not be acceptable in Australia, the land of the fair go, for a large retailer with hundreds of stores to charge higher prices in areas where they face no competition and then leverage profits to lower the prices of their goods in certain communities where they face competition from small business with the intent to destroy and make unprofitable the businesses of their smaller competitors. Such a system or practice is so manifestly unfair and unjust, not only to small business competitors who are directly driven to ruin or bankruptcy by such practices but also to Australian families.

The present Trade Practices Act must be supplemented by making this particular form of discrimination a specific offence under our law. Such an effective law to deal with the evils of geographical price discrimination will enable small businesses to invest in the knowledge that they can set up shop and succeed or fail on merit without fear that a larger competitor might drive them from the market using the anticompetitive practices of geographic price discrimination.

What is the government doing to restore competition to the supermarket sector? Indeed, what is the government doing to take pressure off working families and to provide equality of competitive opportunity to small businesses? It does not appear to be doing anything. Perhaps the Minister for Competition Policy and Consumer Affairs, Mr Bowen, could start looking at his own backyard rather than continuing to waste taxpayers’ funds on the stunt of GroceryWatch. As Channel 9 news demonstrated last week, right under the nose of the competition minister, within a stone’s throw of his electoral office at Fairfield, which is not far from my electorate, a major supermarket chain had used geographical price discrimination to destroy competition and to exploit consumers. As soon as the major supermarket chain had destroyed competition, forcing their more efficient small business competitors to shut their doors, they jacked up prices almost 100 per cent. All this happened right under the nose of our competition minister.

An effective prohibition on geographic discrimination is needed. It will provide a fair go—a level playing field. It will restore competition and it has the potential to create an entrepreneurial boom and to drive Australia’s excessive grocery prices down across the nation.

In conclusion, the coalition is committed to responsible spending and to ensuring future generations are not burdened by mountains of debt. The government of the day has a moral responsibility to ensure that any deficit spending is invested wisely for the benefit of future generations. Unfortunately Australians are now paying the price for Labor’s reckless spending. Australia needs a coalition government committed to keeping debt low, encouraging small business, securing jobs and ensuring a bright, debt-free future for all Australians, and that can only be based on a solid economic foundation.

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