Julia Irwin (Fowler, Australian Labor Party) Share this | Hansard source

In what will be my last speech on a budget in this House, I am pleased to see that this budget represents a real contrast to earlier budgets. The first of Labor’s budgets in government began to correct the imbalance in priorities that the previous 12 budgets of the coalition cemented into place in Australia. Labor’s second budget was framed in the wake of the global financial crisis and, as we look back on the decisions taken at that time, we should appreciate the correctness of the policy decisions which saved Australia from the worst consequences of the economic downturn that affected developed countries around the world.

At a time when more economic storm clouds are gathering, this year we have a budget which builds on the better than expected outcomes, going by last year’s figures, and will see Australia back in a surplus position within three years. It is a responsible budget. Given that this is an election year, unlike budgets under coalition governments, there are no rash handouts. Instead, this budget and programs announced by the government provide a plan for Australia’s future.

While the previous government could never see past the next election, the government’s plans in this budget will place Australia in the best position to meet the challenges of the next decade and beyond. The previous government boasted about surpluses which it had gained through the sale of public assets and by slashing expenditure in vital areas of spending—slashing funding for universities and vocational education and then boosting skilled migration to make up for the skills shortages that its policies had produced. The coalition government managed the strangling of our hospital system by holding back the Commonwealth’s share of funding for so many health services and failed to address the infrastructure needs that have led to so many bottlenecks in our export industries and in our expanding cities. These are not the sorts of budget strategies that we can expect should a coalition government be elected next year.

You could refer to the previous government’s record in office as ‘a tale of lost opportunities’. From the time it took office, the coalition government has squandered the legacy of the Keating and Hawke governments. At that time Australian manufacturing industries were gaining confidence and a foothold in world markets, but we have seen them shrink to a shadow of their place in the Australian economy. The once thriving inbound tourism industry now stutters along and there is a cloud over the future of our once booming education exports.

This Labor government’s vision of what Australia could be 10 years from now is very different from that of the opposition. For a start, the government acknowledges that we have a two-speed economy—something any observer would notice if they travel from one side of Sydney to the other or from one side of Australia to the other. The Treasurer, when speaking of the budget’s key challenges, referred to ‘a return to full capacity in a two-speed economy’. This is the first time I can recall a Treasurer acknowledging this fact. At last we have a Treasurer with the eyes to see that not every part of the Australian economy is going gangbusters. Better still, we have a Treasurer and a government that have the courage to adopt policies that can ensure a prosperous future for all Australians, not just those in the mining industry but those in other parts of the traded goods sector—our farmers, our agricultural producers, our tourism industry, our import-competing industries, our manufacturers and service providers facing increased competition from overseas based firms, our building industry in non-mining areas and our financial services sector.

To have a stable and vigorous economy we cannot place all our investment eggs in one basket. We need a diverse range of industries if we are to develop the full potential of our nation and all its resources, not just the ones that can be dug out of the ground. We know from experience in Australia in past decades and from the recent experience in overseas countries that reliance on mining alone can produce distortions in the economy, which are not in the long-term interests of development. We know from the work of Professor Bob Gregory in the 1970s that mining investment draws investment away from other domestic industries. We know that dependency on mining incomes can leave an empty shell in regional economies when commodity price falls lead to mine closures or when the resource runs out.

The Leader of the Opposition has described the mining industry as ‘the goose that lays the golden eggs’. Well, that is a bird-brained approach to our national economy. The mining industry is not a goose that lays golden eggs; it is a cuckoo that lays its eggs in the nest of other birds and deserts its young to be raised by unsuspecting parents. The cuckoo chick then flies at the expense of the legitimate chicks, leaving the deceived parents with no live offspring to continue with. That would be the fate of other Australian industries if the opposition and their mates in the mining industry had control of the Australian economy. Their approach belongs in cloud cuckoo land, not in our great country Australia.

I mentioned the fate of Australia’s rural industries. As mineral exports and higher commodity prices force up the value of the Australian dollar, our rural exports yield less in Australian dollar terms and force producers out of business. But where are the cries of ‘We’ll all be ruined’ that we have heard so often from the National Party? In this debate there is not just silence but enthusiastic support for the mining lobby. To mention another bird, they are like turkeys voting for Christmas. But we all know that the National Party sold its soul to the miners decades ago—and they wonder why Independent members are successful in their former strongholds!

But just how does a two-speed economy affect people from different parts of Australia involved in different industries? If you look at the Sydney real estate market over the last 12 months, you will see that prices at the top end of the market have increased by 17 per cent while prices in the most affordable suburbs have increased by seven per cent. Significantly, first home buyers now make up only 16 per cent of the market compared to 30 per cent in the previous year, and while the closing of the government’s more generous first home buyers scheme is partly responsible for this drop, the six interest rate rises since last October must also be having an effect. With only the blunt instrument of interest rates to cool down inflation in mining states, all Australian borrowers, including homebuyers and small businesses, are forced to share the burden. That makes the Treasurer’s challenge to return to full capacity in a two-speed economy all the more difficult.

While the media have focused on mineworkers’ claims that they will be ruined, I have yet to see anyone interview building workers in New South Wales to ask about the effects of the 13 interest rate rises we saw under the Howard government. This month, when the Reserve Bank again increased interest rates, the building industry in New South Wales was flatlining. If it were not for the much maligned Building the Education Revolution, the building industry would be in deep, deep recession. That is the challenge of managing a two-speed economy.

If we must share the pain of higher interest rates, why shouldn’t we share the bounty of our mineral wealth, and how should we use that mineral wealth for the benefit of all Australians? The program proposed by the government addresses three key areas. Firstly, it phases in an increase in the superannuation guarantee levy, increasing the minimum employer contribution from nine per cent to 12 per cent. This is a measure that will significantly boost the retirement savings of millions of working Australians, particularly those on lower incomes. It will enable millions of working Australians to share in the wealth of this country and, importantly, it will give them access to that wealth on their retirement from work. You can make a huge difference to the retirement incomes of so many low- and middle-income earners. As well, the money invested in superannuation boosts Australian savings and provides a pool of funds for investment projects around Australia.

Who would oppose such a worthwhile measure? The opposition, of course. They have always opposed superannuation for ordinary Australian workers. They opposed compulsory superannuation when Labor introduced the scheme 20 years ago and, in their time in government, they did nothing to increase contributions. Let us not forget Labor’s long-term commitment to increase the levy to at least 12 per cent. What did the opposition do about increasing the levy? We all remember the L-A-W tax cut promise by the Keating government in 1993—I remember it well. There was a second part to that, which was to be delivered as an increase in the superannuation levy. But too many members opposite have forgotten that the coalition government pocketed that tax cut and saved it for election year handouts. The opposition has never wanted universal superannuation. The only thing superannuation policies mean to them is a way of providing even more lucrative perks for high-income earners. An increase in the superannuation levy is an overdue measure and an effective way of sharing our nation’s wealth. It will benefit all working Australians by improving their retirement incomes.

As well as this retirement savings measure, I am pleased to see that this budget includes the 50 per cent discount on the first $1,000 of interest earned on deposits held in banks, building societies or credit unions and on bonds, debentures and annuity products. This is another example of a Labor government providing tax relief for low- and middle-income earners rather than perks for high-wealth individuals that was common under the previous government. Changes which increase the amount persons over 50 can contribute to top up their super, which is limited to those with balances of less than $500,000, is another example of treating superannuation as a retirement income base for all rather than the preserve of the wealthy. This treatment allows for what is becoming common practice for many low- and middle-income Australians at a time in their lives when they no longer have dependent children and can commit more of their income to provide for their retirement.

The second measure to address the challenge of managing a two-speed economy is the reduction in the level of company tax from 30 per cent to 28 per cent and the earlier introduction of the changes for small business, including the instant write-off of assets costing less than $5,000. The opposition, which paints itself as the saviour of small business, is strangely very silent on this issue. These are measures which provide direct benefit to small business. The $5,000 instant write-off is far more realistic than the much lower levels which applied. This will allow many small businesses to upgrade equipment and improve productivity.

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