Angus Taylor (Hume, Liberal Party) Share this | Hansard source

We just had 10 minutes from Labor that was supposed to be about economic management and economic planning, and we did not hear anything about economics—nothing at all. So let us get back to talking about the economics of government policy, the economics of good policy, and perhaps then we can get to the bottom of what it will really take, what it is really taking, to plan for a better Australia, for a higher income Australia, for a higher wage Australia and for an Australia with more employment.

At the heart of our plan are innovation, productivity and access to fast-growing markets. These are things which those opposite understand nothing about, and I will come back to that in a moment. But what we have from Labor is a plan to make us all poorer and to make them feel better by whacking anyone with aspiration, whacking everyone with aspiration. That is what they are after. They want to see a plan that makes aspirational Australians worse off. They want to see a plan that thwarts opportunities for every Australian that wants to have a go.

What is at the heart of Labor's plan? I call it the 'tax, spend and shrink' plan. It is a plan that is designed to make the Australian economy smaller. Let us look at the numbers. We saw in the Press Club presentation which they referred to a moment ago a chart, on page 22, which every person opposite should take very close notice of. The chart is entitled 'Tax and spend is no plan for jobs and growth'. There are a couple of numbers on that chart that I really want to emphasise. The chart tells us that, for every extra dollar of tax and spend, you shrink the economy by 40c. Labor crow that they are going to tax and spend $100 billion more. That is their number—$100 billion more. Every Australian needs to understand that their plan is to shrink the economy by $40 billion. That is their plan. They are the numbers. They are Treasury numbers and they are very clear. You can see them on page 22 of the excellent presentation made by the Treasurer at the Press Club last week. So it is tax, spend and shrink. Every Australian needs to understand that those opposite want less income for Australia, fewer jobs for Australians and less wealth for Australians.

It is worthwhile spending a moment to talk about the taxes that are going to deliver that extra $100 billion of tax and spend. What are those taxes? We have heard today that at the top of the list are negative gearing and capital gains tax. I have never struck an economist who thinks that taking one-third of demand out of the market is not going to crash the market.

It is worth spending a moment to understand these figures. The Australian housing market is worth over $5 trillion. If you took 20 per cent out of that market that would be a trillion dollars out of the market. The average Australian household is carrying about $200,000 to $250,000 of household debt. That is $2 trillion in mortgage debt, and you want to wipe up to a trillion dollars off the housing market by imposing negative gearing on the market. At the end of the day a party that wants to destroy the wealth of every Australian household having a go, that wants to destroy the income and the aspiration of every Australian wanting to have a go, is a party that does not deserve to be in government.

The second tax that I want to spend a moment on is the smoking tax. In the last week or so we have heard that Treasury has been forced to write down future tobacco excise revenue by $700 million just two years from the forecast set out in the 2015 budget. This is a real problem for Labor's costings. We know the reason for that is that when you raise taxes you reduce smoking incidents and you increase chop-chop—you increase illegal tobacco. So Labor cannot even get their basic numbers right.

In 20 years as a management consultant I have always felt that the best way to understand whether someone's plan is worth looking at is to look at the track record of the person making the claims, and the track record of Labor in understanding plans and markets is pretty interesting. We heard earlier today something about Labor's achievements on the live cattle export market. If we look at this market we see that before Labor destroyed the market it was worth $4 a kilo. By 2012—six months after they had cut the live export market—we saw the price fall from $4 to $3, which is a 25 per cent reduction. Then when we got back into power we saw it rise to $5 then to $6. This is Labor at its best. This is Labor trying to understand and plan for markets, and trying to understand how best to deliver wealth for Australians. We saw exactly the same in the mining tax debacle. This was Labor's attempt to deliver to Australians better schools and hospitals, but it was a tax that delivered absolutely nothing.

Let us move to the contrast. We understand what is at the heart of economic management. I will quote Paul Krugman. It turns out Paul Krugman is an economist that those from the left tend to revere. He said:

Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.

What we see is that productivity delivers real wages that are higher, incomes that are higher and more opportunity for wealth creation.

At the heart of the coalition's policy for the economy is innovation: innovation in the private sector and innovation in the public sector. That is something that those opposite will never understand. That is something that those opposite will never be able to deliver, because none of them have been involved in delivering that in the private sector or in the public sector. Innovation delivers productivity because it delivers more with less. Paul Krugman, an economist from the left, understands that well.

The second big driver of innovation is investment. What we have seen under a coalition government is a switch from mining investment to non-mining investment. We are seeing that picking up pace now. We are seeing part of it occurring in the private sector and part of it occurring in infrastructure investment in the public sector.

Finally, right at the heart of our policy for economic growth is free trade. Every economist knows that the best opportunities for productivity, the best opportunities for improved terms of trade and the best opportunities for rising incomes are provided by free trade. Ours is a party that watched Labor deliver absolutely nothing on free trade agreements in its time in government. In our relatively short time in government we have delivered China, Korea and Japan and we are well on the way to delivering the TPP. In time, I am very confident that our new trade minister, with the support of the old trade minister, will deliver on India as well.

Right at the centre of free trade is the ability of a country to specialise in what it does best. We are watching in front of our eyes—in markets like cattle and dairy—Australians do what they do best and sell those products and services to the world. That is made possible by free trade. That is made possible by specialising and focusing on what we absolutely do better than any other country in the world.

Labor has a plan to shrink the economy. Labor has a plan to make every Australian poorer. Labor has a plan for lower income, lower wages and fewer jobs. We have a plan for higher wages, higher income, more wealth creation and more opportunity for every Australian.

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