Laurie Ferguson (Werriwa, Australian Labor Party) Share this | Hansard source

The previous speaker in relation to the budget spoke of entitlement spending and the fact that we should not let it get out of control. I want to say that one of the little commented upon aspects of this budget is the structural damage that the previous Liberal government did to the long-term budgetary situation in this country; of course, there are a variety of sources that we can cite in regard to this. Stephen Koukoulas noted in 2013:

If the current Labor government delivered growth in real government spending during its first five years in office at the same pace the Howard government had in the years from 2000-01, government spending would be almost 6% (or around $20 billion) greater in 2012-13 than is the case.

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Had Labor spent at the same pace as the Howard government did from 2000-01, there would be no chance of a budget surplus in any year of the forward estimates out to 2015-16. The level of government debt, to the extent it matters, would be more than 50% larger by 2014-15.

He further noted:

Never once did the Howard government deliver a cut in real spending in any of its 12 budgets.

He also noted:

In simple terms, the facts show that in the five years from 2000-01, the Howard government increased real government spending by around 23%. In the five years from 2007-08, when Labor has controlled the budget purse strings, growth in real government spending has been a tick over 17%, including the 12.7% increase in 2008-09 when the GFC was bearing down on the Australian economy …

Quite clearly, that quote makes two points. The first is the reality of the global financial crisis. Paul Volcker, the former chair of the US Reserve Bank, had to put a book out in the last few months, apologising to the world for his understating of what was going to occur in the US due to the housing credit market collapse. He actually did notice a global financial crisis. Southern Europe is still enduring those problems. In Australia, a government had to act to protect jobs, to make sure people were trained, to make sure that when we did actually try to counter this international crisis that it was done through worthwhile construction. Koukoulas's comments, as I say, go to one point—the question of the previous Liberal government's contribution to our current economic problems, and the fact that the Labor figures have to be seen in the context of the global financial crisis and countering it. He is not the only person to make this point about a liberal dereliction of duty in regard to government expenditure.

The IMF—not necessarily a favourable institution to Labor Party philosophy—commented that real government spending grew faster in the last four years of the Howard government than at any time since the 1990s recession. The IMF noted statistically that only one spending decision of $1 billion or greater was made in the first Howard government budget but that somehow, miraculously, for some unknown reason, by the final budget they had reached a number of nine. One thinks somehow that this was perhaps due to the electoral cycle.

The profligacies of 2003 through to 2005-07 have been noted as among the worst instances of government spending in this country historically. That is from the IMF. They actually favour cutting back on welfare and support market deregulation and many other initiatives that are close to the hearts of those opposite, but they have said, in being objective, being analytical, looking at the real facts, that the long-term budget problems in this country have much to do with what happened during that period when the Howard government, for re-election, basically expanded the entitlements that the previous member talked about and extended them to people whereby the average Australian would find it quite questionable. On 11 January 2013, Leith van Onselen commented on the same matter that:

The Howard Government presided over the biggest private debt boom in Australia’s history and, in its later years, one of the biggest terms-of-trade booms.

That is fact. That is part of why there was, supposedly, such a miraculous effort by this government and how they could, in some ways, balance budgets. Not much to do with their IQs, or their education or their competence, but more to do with the realities of the Australian economy which were beyond their controls. Van Onselen went on to note:

These two events meant that the Australian economy grew strongly and fostered strong growth in both employment and incomes. Importantly, it also flooded the Government with tens of billions of dollars worth of extra taxation

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They … looked like sound managers by virtue of the fact that their revenue base expanded inexorably and their budgets remained in surplus, despite a raft of questionable (and costly) spending decisions.

That is a series of people with some credibility making that point. On 18 May 2011, Ross Gittins spoke of the questionable decision for superannuation payments to be tax-free for those aged over 60. He cited the baby bonus; he noted the 30-per-cent tax rebate on private health insurance—which by 2013 had grown to $5 billion a year, a policy to subsidise a product that many people in the Australian electorate do not want; a deliberate policy by this government to help those companies, basically favouring a particular product that people do not desire; and he talked about the minimally tested Family Tax Benefit and the augmentation of that to an income level of $150,000.

We have a series of writers who have spoken of a profligate policy by the government, and a situation where the government had boundless money coming in—not from revenue from the minerals boom; not because of their own expertise—and they were able to do enormous long-term damage to the Australian economy. This budget to hit poorer Australians is very much based around a scare campaign, and around an argument that, 'if we don't do this, it is the collapse of Western civilisation'. The member for Fairfax is one of many people who have cited the reality that the government debt is at around 12 per cent while the average government debt in advanced countries is around 73 per cent. I remember Peter Costello saying for years that Labor was comparing this country to Malawi, to Botswana and to Burkina Faso—but that is what the coalition are doing now. If we look at the reality, in the advanced countries the level of government debt is far higher than in this country—because they believe that society is worthwhile, and that people should have decent health, transport, education, et cetera. What we are seeing here is a massive change of direction, being justified by this scare campaign. And I am not the only person saying that this is class-based: we have NATSEM modelling, cited in The Sydney Morning Herald on 23 May, which makes this point: 'the poorest 20 per cent of households would contribute $2.9 billion over four years to the government's fiscal repair effort, while the richest 20 per cent would contribute $1.8 billion'.

Mr Abbott says it is a tough budget but, quite frankly, it is tougher for people in south-west Sydney, in seats such as my own and the adjacent seat of Macarthur. It is tougher for unemployed people; young people in particular. And I have been surprised that one of the ready-ups I have had from this budget has been the significant number of older people—who often don't have too much sympathy for younger Australians, particularly when it is their kids—coming to my office and raising the precarious situation young people face. One person last week spoke of his son. He has bought a house for him; the father is not too badly off. But his son is a person who has a very poor employment record because of problems that he faces. The father is setting up a small business for him to try and make sure he is not dependent on paid employment, but he is coming to me and asking me about the outcome for his son, who is facing this spiral: six months with no pay whatsoever, and then six months of working for the dole and, possibly, if he misses a few interviews—and he does have disability issues—another two months because he missed interviews and then, maybe—because he did not get a job—going another six months without anything. We know that other people in youth unemployment have had their incomes slashed from a miserable $13,000 a year to about $10,000—a 20 per cent reduction in their incomes, when this government argues simultaneously that the big end of town is suffering so much—which is, as we know, for a very short period and a smaller proportion of their income—because of this so-called debt tax. That person is concerned about what is going to happen to him and also for his chef son-in-law, who just got a job in a restaurant. 'What happens if the restaurant burns down?' he is saying to himself. They are the situations that the people in the real world in south-west Sydney, long distant from this parliament, endure because of this budget, which is based on a false premise, an overexaggeration of the importance of government debt.

In that article in The Sydney Morning Herald, it was further noted by the Prime Minister's office that the 'average family will be $550 a year better off when the carbon tax is scrapped'. I just want to say on that that I have just had a delegation from the Edmund Rice Centre: Maina Talia from Tuvalu, Teresa Nakankwien from Papua New Guinea and Tebby Tiannere from Kiribati. They are really questioning where this government is going in regard to foreign aid in the Pacific and in regard to climate change. One of the only things that they are really emotional about is the 'nonexistence' of climate change and the idea that it does not affect them. Last week, international experts said that the western Antarctic ice area is totally collapsing.

Further on the question of whether this budget is class based, I refer again to Ross Gittins in The Sydney Morning Herald on 21 May. He says:

It works out that low income-earners—generally the old, the young and the unemployed—are heavily dependent on government spending, and genuinely middle income-earners with dependent kids are significantly reliant on government spending.

This question was further elaborated upon in The Australian Financial Review of 23 May, this time from a different source, the Grattan Institute. It noted:

The group worst affected by bracket creep is the 1.2 million earning $38,000 to $46,000—

I repeat those figures: those earning $38,000 to $46,000 a year—

who will pay an extra 1.4 per cent of their income, or $565 a year, by 2016-17.

Those on $46,000 to $56,000 will pay an extra 1.1 per cent, but will face the same increase in dollar terms because of the way marginal tax rates are structured.

In the article titled 'Analysis confirms that poorest of families will pour $1.1b more into government coffers than the richest', we again have comments from the National Centre of Social and Economic Modelling, whose finding is cited:

Families with school-age children are the hardest hit. Across all income groups, they will lose $15.9 billion over four years, more than 90 per cent of the total.

So there is a systemic analysis which says that this budget, which is based on this overexaggeration of the crisis to justify very real cuts to poorer working class families, will make sure that they find it very difficult to go to university, with enhanced repayments for fees and deregulation of the universities. This will certainly undermine the University of Western Sydney as opposed to the leading eight universities. There is a massive reduction in rail expenditure in this budget, more than halving the rail transport budget for people in south-west Sydney, who, because of their distance from Sydney are more dependent than others on transport. The deal they have in life is that they get out there and get a cheaper house, if they are lucky, but in return they will be extremely distant from employment centres. In this budget, not only have the government increased the price of petrol in reality but they have dramatically cut rail transport expenditure.

Look at the realities in that region. The south-west Sydney region has 9.1 per cent unemployment currently, and there is only one urban region higher than that in New South Wales. The youth unemployment rate there is 20 per cent. Just going back to transport, the actual figures in rail are $1,025 million in 2012-13 down to a miserable $319 million in 2017-18. In only four of the 28 districts in Sydney are the unemployment rates above eight per cent. As I said, in south-west Sydney, it is 9.1 per cent.

I want to particularly say that, whilst there has been much concentration upon the reality that pensioners face, a new indexation scheme, the government say they have not reduced the pension, but we know that for the average pension it is realistic to understand that, long term, this change in the way it is indexed means that pensioners are going to receive less money for their attempts to live in this country.

We have got a situation where people in the manual trades are being asked to work to 70 years of age. It might be very comfortable for clerical workers and it might be very comfortable for university lecturers and people in the finance sector, but to ask people in the manual trades, after years of hard labour, to go this long is very questionable.

The budget has hurt many people. It has hurt those people who aspire to go to university, it has hurt those people who are unemployed, it has hurt those people who are dependent on public transport, it has realistically meant major change in standards of living for these people, and, as I say, it is based upon a premise that it is necessary, which has not been substantiated by a government whose ancestors basically created the problem. (Time expired)

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