David Coleman (Banks, Liberal Party) Share this | Hansard source

The Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 is a particularly important piece of legislation, so I am very pleased to have the opportunity to speak in support of it. I wanted to speak firstly about something which is so important to our economy; indeed, all of these economic debates really occur within the context of this issue. That issue is productivity, because, at the end of the day, the way that living standards rise in nations over time is through productivity increases. Of course, productivity is one of those words that we hear thrown around—it appears in textbooks and so on—but at its heart it is a very simple concept. It simply means that, over time, for living standards to grow, nations need to produce more goods and services effectively in the same amount of time. So for a unit of time we need to get more done, because, if we just keep doing the same thing that we did 20 or 30 or 40 years ago, then living standards will not rise. It is absolutely incumbent upon government to always have productivity growth very firmly in its sights when it frames policy.

Government can help productivity growth in a number of ways. One is by minimising tax, because obviously if you have a whole lot of tax it does not encourage investors and small-business people to go out and do new and productive things, many of which entail risk. So you have to minimise tax. You also, as a government, have to keep a strong balance sheet. By that I mean you have to not get into massive amounts of debt, and we will come to that in a moment. One of the many reasons why it is important not to go into huge amounts of debt is that governments that are servicing a large interest burden have much reduced firepower to respond to economic circumstances and potential crises as they arise. We see a very clear correlation around the world—Western and Southern Europe in particular—between high levels of debt and declining living standards, and that is something that governments must always stay away from. You want to encourage investment through sound regulatory policy—you want people out there doing things, not constrained by government regulation. This government is absolutely committed to productivity growth—ultimately driving, as productivity growth does, wealth in the long run. There is no more important thing than productivity.

We are doing it in a number of ways. In the budget there are initiatives around workforce participation, particularly for mothers who perhaps have been out of the workforce for a while. There is a huge asset base of skills in Australian families—mothers and fathers who have taken time off work to care for children—and it is incredibly important that those skills are not lost to the economy. Those people generally have some significant experience—they are often very accomplished and highly productive employees—and it is important for the economy that those employees keep going up that curve of skill, so to speak, and of productivity. That is why the measures that the social services minister announced were so important, to encourage people back into the workforce. We also want people to set up businesses because it is through the establishment of businesses and the investment in new frontiers that we also drive productivity. The small business minister has had a range of initiatives allowing small businesses to expense all of their start-up costs rather than depreciating them over four or five years, which basically means in a cash sense that it is cheaper to start a business today than it was a few weeks ago. That is really important because we need new businesses to drive productivity growth.

We also need big, high-value projects to happen. They tend to be highly productive projects; they tend to have high levels of output. That is why we have had a trillion dollars worth of environmental approvals since the start of this government, to really enable the private sector to get cracking on some of these massive projects around Australia and, indeed, in the Australian waters, because these really are important projects. We also need a huge growth in infrastructure. Why does infrastructure matter for productivity growth? It matters because infrastructure basically allows people to get from A to B more quickly, and if you can get from A to B more quickly you can get more done in the day. If you can get more done in the day you are more productive, and that is ultimately the source of wealth creation in the long run.

On the tax side we also have the $20,000 instant asset write-off for small businesses—again, encouraging them to go out and invest in productive equipment and other assets for their business, and we are cutting the tax rate for small businesses by 1.5 per cent for incorporated companies or putting a five per cent reduction on the tax bill for non-incorporated businesses. These are all incredibly important productivity measures. The other thing we have done is taken away bad taxes: the carbon tax, the mining tax. We have discussed them a lot in this place, and rightly so because the carbon tax basically brought investment in many sectors of the Australian economy to a halt. The mining tax basically raised no money but created an enormous amount of uncertainty and a sense of malaise in the Australian mining sector, which indeed is so important to your home state, Deputy Speaker Goodenough, and to the entire nation. So there is a whole range of very important initiatives to drive productivity, because ultimately it all does come back to productivity.

We do need to contrast that with what the Labor Party did when in power. There is a very simple request in today's legislation. All we are really saying to those opposite is: 'You, when in government, proposed but did not legislate for a range of savings.' We say today: 'Here they are. These are things that you, the opposition, actually proposed.' It is a feat of great intellectual dexterity to be able to propose a set of savings measures, advocate them publicly, have your opponents effectively say, 'Do you know what? We'll support that idea. We think that's actually sensible,' and then turn around and say, 'Actually, we're not going to do it.' That is the absurdity of the situation that we face today. Of course, the problem with the previous government, amongst many, was a complete failure to understand the driver that is productivity and the counterproductive activities that they pursued. And $50 billion in cash in the bank when they came in and net debt of $200 billion when they came out means a large debt servicing burden. A debt servicing burden means that governments have less to invest in the important affairs of the nation. That cannot be a good thing for the economy, and of course it is not. It is a very consistent theme for Labor governments from the 1970s onwards. The Whitlam government ran up a huge debt, which was cleaned up by the incoming Fraser government. Labor in the 1990s left a very large debt, which Prime Minister Howard and Treasurer Costello cleaned up. And now, after this short but brutal six years, we have a very substantial debt that needs to be addressed, and address it we will.

So, how did it get so bad under Labor? There were so many different examples. I have said this before, but the NBN will go down in the annals of Australian government as an extraordinary example of how not to run public administration in this country. This is actually frightening, when you look at what happened. On a whim—or, as my friend the member for Wannon said, on the back of a beer coaster, and I think that is doing a disservice to beer coasters, because they are often very well constructed—the previous government, flying around the country, in a few snatched conversations here and there, committed to something that they first said was going to cost $4.7 billion. Then they said it was going to cost $43 billion. And it turns out it was going to cost $73 billion. So, effectively, from the initial grandiose statement of the National Broadband Network by then Prime Minister Rudd to the actual reality of the rollout that the previous government was proposing, there was a gap of about $68 billion. It is just extraordinary. As I said, this is something that will always be remembered in our history as an appalling example of how not to manage things.

On border security, we saw some very poor administration. Two consequences were an appalling humanitarian consequence and an appalling financial consequence, with a huge blow-out of $11 billion. So we got to this position where the incoming government faces this terrible trajectory when coming into office: debts of $123 billion over the forward estimates. If that was left unchecked, if they were left to their own devices, if it was left to the Rudd-Swan-Gillard business plan, the country was heading for a total debt of $667 billion—that is two-thirds of $1 trillion; that is 'trillion', with a T, just completely unsustainable and completely unacceptable.

So we have had to do a range of things to get spending back under control so that government debt does not become this millstone around the neck of the nation, dragging down productivity growth. As part of a wide range of reforms under which we see real government spending growth go from about 3.6 per cent under Labor to about 1.5 per cent under us, we say, 'Here are a number of initiatives that Labor proposed when in government'—an admittedly modest list of savings measures—'We'll support the previous government's plans on those things and we'll put those to the parliament.' One of those was some income tax cuts associated with the carbon tax, which Labor effectively put off towards the end of its term in government. There is a saving of about $2.8 billion there, and that is what we seek to pass through the parliament. There was obviously a change in the Start-up scholarships and the HECS from a grant to a loan. That initiative is about $2.1 billion—again, a Labor initiative. We say, 'That is a sensible initiative, given the financial circumstances we face, so here is that savings measure.' And obviously we would hope that the Labor Party would support those sensible measures. There was a $1.2 billion efficiency dividend from universities, which, again, Labor had announced but not legislated. We say we should legislate that, and Labor, despite actually proposing that, say they do not want to support it, which is quite extraordinary.

So, there is a track record of activities that have hurt the budget, that have been negative for productivity in the economy. We have a current debate where we are saying, 'Here are some ways to sensibly address this massive debt burden', which Labor rejects. And then if you look out to the future, at what Labor advocates for the future, there are more problems on the horizon. And then there is the superannuation tax—Labor's year of ideas, with a capital I. The big idea from Labor is to tax superannuation. Basically they are saying that if you save, if you do that hard work over decades, often in highly productive industries, contributing to the economy—precisely, in fact what we want, precisely what we need—then they are going to hit you with a very significant tax. That is going to hurt literally hundreds of thousands of people, and these are not people who should be punitively taxed; these are people who should be lauded, because people who have done that hard work and saved for superannuation not only are helping to boost productivity in their work years but also are reducing the cost to the budget through their lack of reliance on the age pension.

Labor has a notion of a multinationals tax based on so-called thin-capitalisation rules, which is basically about the level of debt you can expense in a business. This one is very flimsy. The government has consistently sought detailed analysis of how these figures came about, which has not been forthcoming. This is a really complex area. It is not about putting out a press release, because multinationals are by definition multinational; they are mobile, and it is easy for them to change their activities. You have to be sensible, as we have been, in how you approach this issue.

Back in that famous editorial in January the shadow Assistant Treasurer wept at the grave of the carbon tax and the mining tax and very clearly flagged that they would be coming back. That is the agenda of those opposite. It is an agenda that is bad for productivity. It was in the past, is today, and will be in the future. We reject that agenda and we encourage those opposite to support these sensible savings measures.

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