Dick Adams (Lyons, Australian Labor Party) Share this | Hansard source

I am not going to be nice to him because I am just about to point out why he is a bit fiery today. The Minister for Infrastructure, Transport, Regional Development and Local Government has pointed out in a press release put out in the electorate of the member for Parkes that he was in the House and voted against money for black spots in his own electorate. He voted against money that would have saved lives in his electorate of Parkes. The member for Parkes has been caught out in his own papers about what he did.

I have been listening to the criticism of this Labor government in what the Labor government is doing to try to avert the complete meltdown of this country. There is, of course, a financial crisis happening in the world. People are nervous and are not spending in case they lose their jobs. They are buying less and companies are not renewing or expanding as they would normally do. They are waiting and are a bit nervous. Some companies, in the worst instances, are going out of business, especially those that have not renewed and kept up with changes in process or their markets. Those who study history may know that this scenario of a world financial crisis has happened several times before to varying degrees. Governments have reacted in different ways in the past—deep cuts in spending, pensioners’ incomes cut, people laid off from the public sector, countries putting up tariffs to increase protection and credit being denied. All this occurred as countries tried to isolate themselves from the continuing world crisis going on around them. It became crisis management and everybody brought the shutters down and attempted to wait it out.

This, of course, made the situation worse and, since the Great Depression and Wall Street crashes, economists have attempted to find the answers to keep economies stable in turbulent times. It should be understood that this could happen and has happened again. What happens in the international money market is not under the control of this nation. The question is: how do we, in Australia, deal with it? I have had a look at how we have traditionally developed our budget in Australia. According to Owen E Hughes in Australian Politics, 3rd edition, 1998:

Finance is the essential commodity of government; being able to direct the flow of government money is the single difference between government and opposition …

as you always know when you are in opposition. Following traditional lines through the budget process, what they call ‘stabilisation’ has been the key point in dealing with current economic times. Hughes goes on to point out that stabilisation policy is where the government aims to improve the overall economy through budgetary process. All government spending and taxing decisions have a marked effect on the private sector as well. So, by varying these policies and the aggregate levels, an attempt can be made indirectly to influence the health of the entire economy. Of course, since 1945 governments have really accepted at the federal level the responsibility of promoting full employment, price stability, economic growth and a stable balance of payments. I do not think anyone on that side would disagree with us on this point. Spending and taxing have economic effects of their own and the net balance between them—the deficit and the surplus—is of major importance.

Keynesian economic theory argues that if the budget is in deficit the overall effects are multiplied, so that the whole economy can be stimulated. If the economy is overheated, then government can in theory budget for a surplus, which will slow the economy. This is the traditional position most Western countries have adopted to keep stability. There have been changes and moves away from the pure Keynesian position, to try to allow for the market to be involved and for government to take a backward step. When the economy is in dire straits and threatening to free-fall, as in the US, urgent measures must be taken. We now see the US government playing a role in the recycling of some of the major auto industries in that country.

Once the Great Depression was on us, the state governments in Australia tried to stimulate their economies. Some of the schemes in the past were make-work schemes. We just need to look back to the depression of the late 1920s and early 1930s when some of our long-term infrastructure projects were born. A project often talked about still in Tasmania is the road up Mount Wellington—all done by labour that had become unemployed in the depression. There is a great story of unemployed people being given a pair of boots by the then Labor Premier to do the work. The road to the summit was constructed in the early 1930s in a relief scheme for the unemployed—an idea initiated by the then Premier of Tasmania, Mr A G Ogilvie. While the road is officially known as ‘Pinnacle Road’, it was for some time also widely known amongst residents of Hobart as ‘Ogilvie’s scar’, no doubt by the conservative side of politics. At the time the road was constructed, the mountain was heavily logged and almost bare, and the road was an all-too-obvious scar across the already denuded mountain.

Today the trees have grown again but the scar that most people see is not actually the road but a line of large rocks with no trees 50 to 100 metres above the road. The road itself was opened in August 1937 after nearly two years of work. It was opened by the governor, Sir Ernest Clark. Again in the 1970s there was the RED scheme that picked up the unemployed and tried to put them into meaningful work. This led later into Working Nation, one of the most successful work development and training schemes for the country.

It is now also a time to reskill people for the next stage in the economy. Many who were displaced from the workforce are from industries that are disappearing because technology and community expectations are changing. I can only point out the petrol driven car and its current difficulties. Governments are meant to anticipate change and look for stimulation of the economy that will provide long-term advantage for the future while keeping jobs alive and the skills that are needed in the new era. So projects such as road building, renewing rail networks, building houses, looking at new ideas and developing innovation products are all part of this. This budget is full of references to these sorts of activities. I applaud the Treasurer, the Minister for Finance and Deregulation and the Prime Minister for seizing the bear by its neck and making it pay attention to the government with these moves to stimulate the Australian economy.

This time we are increasing pensions, not cutting them. Governments all over the world are stimulating their economies. In Australia we are spending money on infrastructure, which lays the foundation for future recovery and gives us the stimulus to help jobs continue at present. What Australians should fear is unemployment going to 25 per cent, housing prices falling by 40 per cent and companies disappearing. Under the other side’s policies this was probably where the country was heading. This government had to borrow to make sure that we stimulated the economy. The simplistic argument from the opposition is that Labor has put the country into debt. But we ask: what would they do?

There are some issues I particularly want to comment on in this appropriations debate. There was some confusion in my electorate about some of the welfare measures in the pensioners area and the tertiary education area. Age pensioners currently receive a GST supplement, telephone allowance, pharmaceuticals allowance and utilities allowance on top of the base rate of their pension. Some of these, like the GST supplement, are paid at the same time as the pension, while others, like the utilities allowance, are paid separately to the pension on a quarterly basis. To make things easier for pensioners, all of these allowances have been rolled into one payment, called the pension supplement. The pension supplement will be paid fortnightly, along with the base rate of the pension. Age pensioners will no longer receive the utilities allowance in a separate payment. Instead, it will be a part of the new pension supplement. Both single and couples pensioners will be paid the pension supplement in each fortnightly payment in addition to the base rate of the pension. These changes will start from 20 September 2009. Single pensioners will receive a $20-a-week increase in the base rate of the pension, along with a $2.49 increase in the pension supplement. Couples pensioners will receive a $10.40 increase in the pension supplement, and these increases are on top of the allowances that age pensioners already received.

This means that from 20 September 2009 single pensioners will receive $1,462.76 per year, paid fortnightly, through the pension supplement on top of the base rate of the age pension. Currently, the combined allowances are around $1,320.20. This is an increase of around $142 in the total allowances paid. Single pensioners will also receive the $30-per-week increase in the base rate of the pension. For couples, the pension supplement will be $2,199.60 per year, paid fortnightly on top of the base rate of the age pension. Currently, the combined allowances paid are around $1,660.20 per year. This is an increase of around $539 in the total allowances paid. The pension supplement increases and replaces the utility allowance, the GST supplement, the pharmaceutical benefits allowance and the telephone allowance. After July 2010, pensioners will be able to receive up to about half of their pension supplement in quarterly instalments if they choose.

The government is acting to reform student income support to better help students from low socioeconomic backgrounds access university education. This reform is critical to Labor’s agenda to boost national productivity. The government will spend an additional $559.9 million over four years to increase the parental income test threshold for youth allowance. The income test threshold taper rate will be far more generous and will mean thousands more Tasmanian students will be able to access the youth allowance. Many students who previously would have had to work to gain youth allowance will now be able to access the payment automatically because of the increase in the parental income test. For example, a 19-year-old student living away from home with a 23-year-old sibling living away from home will be able to receive the youth allowance as long as their parents’ combined income does not exceed $139,388. The previous cut-out point was $75,324. This will allow an additional 67,800 students to access the youth allowance in 2010 and will see 34,600 existing recipients get a higher payment.

In addition, every student who receives youth allowance will receive a $2,254 student start-up scholarship every year they are in receipt of the youth allowance. This is a huge boon for students and will help them with the lump-sum costs of education, including expensive textbooks. Every student in receipt of youth allowance will get this scholarship for every year they are studying—that is 146,600 students in 2010 alone. In addition to this payment, eligible students who have to relocate to go to university will get a $4,000 relocation scholarship in their first year and $1,000 every year thereafter. This payment will assist with accommodation costs for students living away from home. There will be $6,254 in the first year and $3,254 in every following year of study. The relocation scholarship will be available to 28 per cent more students than currently have access to the existing Commonwealth accommodation scholarships—that is, 6,100 more students will be able to receive this scholarship.

The government are also acting to progressively lower the age of independence from 25 to 22. This will see an extra 7,600 new recipients of student income support in 2012 and give 12,100 existing recipients higher payments. The personal income test will also be lifted from $236 to $400 a fortnight, allowing students to earn more before their payments are reduced. For the first time, this rate will be increased in line with the consumer price index. This measure will also allow students to take on more casual work without losing their entitlements, and this will mean students have more take-home pay. This measure comes at a total cost to the budget of $287.3 million over three years.

These extra initiatives have to be paid for. The government will save $1.8 billion over three years by tightening the workforce participation criteria for assessing independence under the youth allowance. The workforce participation criteria that allow students to access youth allowance if they earn $19,532 over a period of 18 months will no longer apply. This is in line with recommendations of the Bradley review of higher education. It was never intended that school leavers should be considered independent under youth allowance because they take a gap year, live at home or work casually to earn this money. This is not an appropriate assessment of whether a student is independent of their parents.

The opposition have taken liberties with what has been developed in this budget and they have been disingenuous. We all know that we have to borrow money to put safety nets in place. While the opposition always takes liberties with the truth—I guess oppositions have a right to do that—they will also be judged at the next voting day. I support the budget. I support these bills and I certainly think that the country can avoid the worst of the recession with a budget as good as this. We can begin to haul back and get our economy back in balance again.

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