Alan Tudge (Aston, Liberal Party, Assistant Minister to the Prime Minister) Share this | Hansard source

Everybody in this country understands that we have a fiscal problem—that the expenditure of the government is still well in excess of the revenue generated. Everybody understands that, it seems, except for the Labor Party. They understand that, despite all the work that we have done, our expenditure is still about 10 per cent higher than the revenue we earn. They understand that and they know it is not a sustainable position. The Australian public know that you cannot continue to have long-term budget deficits forever and a day and that, ultimately, if you continue down that path you will follow the path some European countries such as Greece have gone down. Everybody knows that, it seems, apart from the Labor Party.

This is the context of the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015, because it presents to us another set of reasonable savings measures that we are putting forward. In some respects, they are savings measures which are difficult. They are difficult-to-put-forward measures, which inevitably means that some of the benefits to some people will not be as great as they were receiving last year. But the bottom line here is that, if you are a responsible government, you cannot continue to spend more than you earn. It is a very common-sense proposition. If they do not believe me, perhaps the Labor Party would listen to one of their supposed greats in Paul Keating. Paul Keating himself said that we have to get control of the expenditure side of the budget—that is what he said and that is what this bill is aimed towards.

Of course, the Australian public also know that, yes, we have a fiscal problem and they know, deep in their veins, that the Labor Party created this fiscal problem and are creating obstacles to us fixing this problem today. When the Labor Party took over the government benches in 2007, the budget surplus was $20 billion, and, when they left, the budget was in deep deficit, with deficits as far as the eye could see. In their very short time in government, they had clocked up $191 billion worth of budget deficits. The five largest budget deficits in Australian political history occurred during the six-year reign of the Rudd-Gillard government. What sort of record is that? I do not know if the member for Chifley, who is sitting at the table, is proud of that record. I think something that he, maybe, is ashamed about is that Labor oversaw the five largest budget deficits in Australian political history—and that is the issue that we have to grapple with now. When they left office, they not only left enormous budget deficits as far as the eye could see; they had locked in government expenditure at 3.7 per cent per annum real growth, year on year. Of course, if your expenditure is growing at that rate and your GDP is only growing at perhaps two to three per cent, it means that, overall, you are going to have a fiscal problem. You cannot grow government more than the growth of the economy; otherwise you end up with very big fiscal problems. They were the challenges that we had to face and we continually have to face as a responsible government now, after those six dreadful years of Labor government.

I would like to refer to the Treasury secretary, who really makes these points very clearly. He did so just recently in a speech that he made at the Sydney Institute, where he went through the overall global economic challenges and some of the challenges which Australia has to face. He said, very squarely:

Why should the living standards of future generations be compromised just because we were not willing to make sacrifices to address the unsustainable growth of government expenditure?

That is what the Treasury secretary said. He put this down very squarely by saying that not only is there an economic challenge to us but, at the heart of it, there is actually a moral challenge as well.

This is a moral issue because in essence, if we rack up very large budget deficits today, we are stealing from the future and we will cause the living standards of our children to be lower. That is what is at stake. Yes, there is a deep economic challenge of running large budget deficits indefinitely, but it is also a moral challenge and it is something the Labor Party will just refuse to face up to. If they continually block our savings measures if and they continually ensure that there are budget deficits for as far as the eye can see, they are actually stealing from our children's future because they are the ones that will have to pay it back. It means that they will have a lower standard of living, as the Treasury secretary himself said, if we continue down this path. It is a moral issue as much as it is an economic issue. The correct moral course of action is to live within our means. That is the correct moral course of action, so that we are not leaving these huge budget deficits for future generations to pay for.

There are a number of ways we can think about this budgetary challenge that we have. First, you can almost put your head in the sand, as it seems the Labor Party wants to do, and just not even accept that we have a fiscal challenge. The second way is to raise taxes and just continually raise taxes to follow the ever-increasing expenditure. Some members of the Labor Party want to follow that strategy. The third strategy is actually to reduce your expenditure and at the same time grow your economy. Out of those three strategies—put your head in the sand or raise taxes to follow expenditure or get control of your expenditure—the Labor Party are firmly in option 1 or option 2. We on the other hand are in option 3. We firmly believe that in order to get control of the budget we should be restraining expenditure, and that is exactly what we have been doing.

Already, in terms of some of the budget measures we have put through, we have now reduced the real growth of government expenditure from 3.7 per cent down to below two per cent. That means that it is now below the rate of GDP growth and, if the GDP is growing faster than your expenditure growth, then over time our deficits as a percentage of GDP and our debt as a percentage of GDP will start to decline. In essence that is the core of our fiscal repair strategy: (1) get expenditure under control, (2) grow the economy more rapidly. Everybody knows the expenditure repair jobs we have already done, including in the 2014 budget. They know that hard work has already been done. It needs to continue.

I think they are also aware of the efforts we are undertaking to grow the economy more rapidly so that there is more wealth generated—so that there are more jobs generated and that contributes to the overall budget repair effort. So that is our approach: restrain expenditure and grow the economy. The Labor approach is a very different one: increase taxes to chase the tail of the ever-increasing expenditure or, if they do not follow that, to literally put their heads in the sand and not even face up to the fact that there is a budgetary problem.

It is fascinating. We have had a number of bills in recent days which have sought to restrain expenditure, and I cannot think of a single contribution on the other side where a member has said that there is a fiscal challenge and that there is a rationale for putting forward a bill that seeks to restrain expenditure further. I cannot think of a single member. I know the member for Fowler is going to be speaking after me. Perhaps he will be the first member to make such a contribution, to acknowledge that we do have a fiscal problem in this country that does need to be addressed. Perhaps he will be the first Labor member in many days to acknowledge that. I hope he is, because he is a good member. And he may well make that contribution today.

Getting to this particular bill, it concerns—like a number of bills have over the last few days—several measures which contribute to the restraining of our overall social security legislation. It is of course vital for us to have some expenditure restraint, because it represents about one-third of the budget. The social security area—and I am standing next to the Minister for Human Services who oversees many of these payments—represents about one-third of the overall budget and it has been growing by 5.7 per cent per annum. Again: that is an unsustainable growth rate, clearly. One-third of the budget growing at 5.7 per cent per annum is clearly unsustainable. You cannot continue to grow at that rate; it would eat up the entire budget. Already, eight out of 10 taxpayers have to use all of their income tax to effectively pay for those social security expenditures.

So this bill before us the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill is a further effort to restrain expenditure in the social services portfolio. They are difficult measures. They phase out some supplements. They amend the rules and introduce a new rate structure for family tax benefit part B. But they also have some additional increases as well for certain payments in family tax benefit part A. But collectively they add significant savings to the forward estimates and contribute, like many of our other budget measures, to that overall effort of repairing the fiscal deficit and getting our budget back on track.

Let me just touch on a few of the specific measures. I mentioned that we would be phasing out through this bill family tax benefit part A and part B supplements. Again these are difficult decisions we have to make but we think that phasing out those supplements is a reasonable decision in the current fiscal climate.

It is reasonable because, in essence, those supplements were introduced, in the first instance, to take account of the fact that sometimes people did not estimate their income particularly well in advance and therefore had a larger payment owing at the end of the year. That problem has been resolved largely because we are better able to connect people's weekly income to the welfare payment system, so they do not tend to have those problems at the end of the year. Therefore, we do think that this is a reasonable measure—not an easy measure, but a reasonable measure in the context. We also think that amending the rules and introducing a new rate structure for family tax benefit part B is, again, a reasonable measure. Not only do those measures go towards the fiscal repair effort but also the savings which are made from that will go into our overall childcare package as well. There is also a small expenditure measure in here, which is that the family tax benefit part A fortnightly rates will be increased by about $10 for each family tax benefit child in the family aged up to 19.

That series of measures represents several hundred million dollars worth of savings. As I said, they are tough measures for us to do. We realise that they will not always be popular with some people but, as a responsible government, we think that it is the right thing to do to find what are reasonable savings in the overall social services space and we think that these are, indeed, reasonable savings and will contribute to that budget repair effort.

Let me finish where I started, and that is: our budget fiscal problem is an economic problem. It is. People know that. But it is also a moral problem. It is a moral problem which this side of the parliament is willing to face up to. We do not want to leave enormous debt and deficit to our children of the future who will have to suffer lower living standards if we do not get on top of our fiscal challenges today.

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