Paul Fletcher (Bradfield, Liberal Party, Parliamentary Secretary to the Minister for Communications) Share this | Hansard source

I am very pleased to speak on the Labor 2013-14 Budget Savings (Measures No.1) Bill 2014, which is an important bill that repeals the second round of the carbon tax related personal income tax cuts that, in the absence of this bill passing into law, would take effect from 1 July this year. In the time available to me, I would like to make three points. Firstly, I would like to highlight the hypocrisy and the irresponsibility that, sadly, we have seen from the opposition when it comes to the matter of the budget. Secondly, I would like to focus on the measures contained in this bill that are designed to hold the Labor Party to its promise, made before the last election, that it would repeal the second round of carbon tax related personal income tax cuts. Thirdly, I would like to highlight more broadly why it is vitally important that we have, from both major political parties, a responsible approach to budgetary management.

Therefore, firstly, let me turn to the proposition that what we have seen, sadly, from the opposition Labor Party is a staggering display of hypocrisy and irresponsibility when it comes to the matter of the management of the Commonwealth budget. It is very hard to take senior figures from the opposition seriously on the question of the management of the budget. Over eighteen months we have heard a range of airy generalities about fairness and the future. In the lead-up to the budget this year, the Shadow Treasurer gave the impression that he was concerned about the budget deficit. For example, he was quoted in the Australian Financial Review in April this year, saying:

… the deficit is blowing out again under Joe Hockey's watch in the upcoming budget …

In fact, despite what the Shadow Treasurer was warning in that article, in the budget delivered in May this year the Treasurer laid out a credible path back to surplus. In response to that, what we heard from the opposition Labor Party was a series of airy generalities about fairness and the future, such as claims that the budget:

… wasn't a plan for the future …

and that:

… it still retains some of the unfairness of last year.

I fear that we cannot treat seriously comments from any Labor figures on the question of budget repair, and for three reasons we ought to treat such comments with withering scepticism. The first is the record of inept budget mismanagement that we saw in the Rudd-Gillard-Rudd government. It is worth reminding ourselves that the present Leader of the Opposition and the present Shadow Treasurer were senior figures in the Rudd-Gillard-Rudd government. That government inherited a strong and healthy budget, with surpluses in 2006-07 and 2007-08 of $17 billion and $20 billion respectively. But once Wayne Swan and, subsequently, Chris Bowen got their hands on the policy levers, surpluses quickly disappeared. In the next six years we saw a grim and growing run of deficits, reaching almost a quarter of a trillion dollars in total. Under the previous Labor government, we saw a series of deficits of negative $27 billion, negative $54 billion, negative $48 billion, negative $43 billion, negative $18 billion and negative $50 billion.

The second reason that the Labor Party simply cannot be taken seriously on this issue is its grossly irresponsible behaviour concerning the measures that it had planned to implement when in government. These measures, delivering combined savings of $5 billion over the forward estimates, were included in the costings that Labor took to the 2013 election. For example, Labor included in its 2013-14 budget, delivered in May 2013, a series of savings measures for higher education delivering total savings exceeding $2 billion, such as converting the Student Start-up scholarships to income contingent loans. Naturally enough, therefore, the Treasurer, the member for North Sydney, included these measures in his budget brought down in May 2014. After all, if Labor had already promised to introduce these measures, surely it could naturally be relied upon to support them if the coalition legislated to implement them, could it not? Would that not be the most reasonable proposition in the world?

Sadly, it turned out that, no, Labor could not be relied upon to achieve even this minimal degree of consistency. It has reversed its position on these measures. Despite the fact that it announced them in 2013-14 and despite the fact that it included the savings from these measures in the 2013-14 budget, it has subsequently refused to support legislation to give effect to these measures, notwithstanding the fact that if Labor has continued in government after the 2013 election it would have needed to introduce legislation in exactly the same terms. If Labor cannot even bring itself to offer a minimal degree of assistance in the budget repair task by being prepared to support measures which, in government, it said it would introduce, then it simply has no credibility in even talking about the budget repair task. Perhaps the third and most fundamental reason why Labor has no credibility on budget repair is that, if the Labor Party seriously considers that budget repair were a worthwhile policy objective, it has the power in its hands to achieve that objective.

Let me remind the House of the basic arithmetic that operates in the other place. There are 76 senators. Of those, 25 of them are Labor senators. The coalition has 33 senators. Together, that makes a comfortable majority in the Senate. To achieve budget repair, all Labor needs to do is support the coalition's budget repair measures. If it does not want to do that, it could come forward with its own measures and there could be a serious dialogue—as befits serious national political parties—about how to achieve the budget repair task. Instead, we have Labor on the one hand claiming to be concerned about the budget deficit but on the other hand failing to engage on measures that would do something about it.

Let me turn now to what this bill before the House this evening does. The purpose of this bill is to hold Labor to its word. This bill is designed to facilitate the Labor Party keeping its election policies. The effect of this bill is to implement the policy committed to by Labor in the 2013-14 budget of repealing the second round of carbon tax related personal income tax cuts that are due to take effect—in the absence of this legislation—on 1 July this year. If that repeal were to proceed, then the tax-free threshold will remain at $18,200, rather than increasing to $19,400; the second personal marginal tax rate will remain at 32.5 per cent, rather than increasing to 33 per cent; the maximum value of the low-income tax offset will remain at $445, rather than falling to $300; and the withdrawal rate of the low-income tax offset will remain at 1.5 per cent, rather than falling to one per cent.

In opposition, the coalition committed to keeping the first round of personal income tax cuts and associated pension and benefit increases, and they have been retained. We went on to promise and give effect to our promise of removing the carbon tax, which is saving the typical Australian family $550 this year alone. What this bill before the House this evening does is implement a measure which was announced and committed to by the Labor Party when in government. In the final budget handed down by Wayne Swan on 14 May 2013, the former government deferred a second round of personal income tax cuts, resulting in a $1.5 billion saving over the then forward estimates. Due to the addition of two further years to the forward estimates since then, the measure is now worth $2.8 billion to the budget over the next four years.

The previous government never got around to legislating this measure, the financial benefits of which it included in its 2013-14 budget. This was one of nearly 100 announced but unimplemented taxation measures left to the Abbott government by the previous Labor government. This bill is intended to give effect to the measures that Labor announced but never implemented. I am sorry to have to inform the House that this is not the first time we have sought to legislate this measure, which Labor committed to when it was in government. On more than one occasion, Labor has voted against legislation containing this particular measure, notwithstanding the fact that it committed to this measure when it was in government. The hypocrisy and the irresponsibility of this is frankly staggering and remarkably disappointing.

There are a range of measures that Labor announced and committed to when in government that it now opposes. These total $6.5 billion, in addition to the $2.8 billion measure that is the subject of the bill before the House this evening. There is the change to the treatment of student start-up scholarships, where there was a $2.1 billion savings measure committed to by Labor when in government; a decision by Labor in government to apply an efficiency dividend to university funding, worth $1.2 billion in savings; and the abolition of the discount for paying HECS fees upfront, which was a $336 million savings measure. All of these measures, with a total value of $6.5 billion, were committed to by Labor in government. It now refuses to support legislation to give effect to these measures that it announced that it was committed to when in government.

Let me make the point in the brief time remaining to me that budget responsibility is a matter of the highest importance. This government has inherited an extraordinary budgetary mess thanks to the rank and serial incompetence of the Rudd-Gillard-Rudd governments. The consequence of the huge blow-out in debt and deficit under those governments is that this year we are paying around $14.2 billion in gross interest costs, which works out to be about $40 million every single day. There is a very important task ahead of this government and ahead of the nation, which is to restore the Commonwealth budget to a sustainable state. That is why it is so important that we have a credible path back to surplus. That is the credible path back to surplus that is committed to by the Treasurer in the recent budget.

For the sake of our nation and for the sake of our people, there is a serious job to do on budget repair. The Abbott government is methodically getting on with the task. It would be hoped that the other major political party in this place would demonstrate responsibility of a nature that goes with the stature that it holds of as a party and responsibility of the kind that significant and substantial Labor governments have demonstrated in the past. I am sorry to say this, but the current parliamentary Labor Party is simply not up to the standard of previous Labor parliamentary parties. It has refused to engage seriously on the budget repair task that faces this nation. It is about time the Labor Party addressed this matter with some seriousness. The bill before the House is designed to hold Labor to account to do what it promised it would do prior to the last election. I commend the bill to the House.

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