Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

It gives me great pleasure this evening to speak on appropriation bills Nos 1 and 2 and the Appropriation (Parliamentary Departments) Bill (No. 1). I would like to start off by asking a question that the member for Rankin so kindly asked at the dispatch box. He asked: 'What was the biggest single achievement of the coalition over the last 12 months?' The answer to that is very simple: it was keeping the Labor Party off the treasury bench. That is what we have done. It may have been narrow, but our biggest achievement has been making sure that that mob that sit over there are not sitting on this side of the parliament. The speech by the member for Rankin is a perfect example of why the best thing that the coalition can do is to keep Labor—with their reckless and wasteful spending, their history of mismanagement of this economy—away from the treasury bench.

I also thought the member for Rankin was making a bit of a comedy statement there. In his speech, he talked about the 'good work' of the former Treasurer, Wayne Swan, the member for Lilley—that he knew what he was doing. And I note the member for Lilley is in the chamber. The member for Rankin said the former Treasurer knew what he was doing. I have here the former Treasurer's budget speech, delivered on 8 May 2012. It says:

The four years of surpluses I announce tonight are a powerful endorsement of the strength of our economy, resilience of our people, and success of our policies. …

This budget delivers a surplus this coming year, on time, as promised, and surpluses each year after that, strengthening over time.

If ever there was a Treasurer that did not know what he was doing, it was the member for Lilley when he was standing at the dispatch box and he read out that speech. Yet we have the member for Rankin coming in here and saying the former Treasurer knew what he was doing. It is another perfect example of why the greatest achievement of this coalition government was to make sure that Labor are not sitting on this side of the chamber.

There are a couple of other things the member for Rankin raised. He talked about his great policy of a royal commission into financial services. That is simply a chance to give tens if not hundreds of millions of dollars in legal fees to lawyers for achieving nothing. A royal commission will tell us nothing that we do not know. There are issues in the banking industry; they are issues that we should be working on across the chamber. I believe that there is a strong argument that we should act on penalty fees for late credit card payments following the High Court decision. That is something we know mutually that we should work on across the chamber and try and come up with something.

The real concern that I had with the member for Rankin's speech was how he perceived that the reduction in the rate of company tax was somehow taking money away from other people. This is the fundamental flaw that we see with Labor time after time. They see the size of the economy as a fixed pie, and it is just a matter of arguing how you cut it up. We see that in a completely different way. We understand that our goal is to grow the size of the pie to make sure that everyone's slice of the pie is larger. Let us just have a look at the recent history of the corporate tax rate to show exactly how that is done. I hope members on the other side are actually listening. They might learn something from this.

Back in 1986-87 and 1987-88, we had a corporate rate of tax in this country of 49 per cent, and we lowered that. Up until recently, the last reduction was in the year 2001, when we reduced it to 30 per cent. Now, what do you think would happen, Mr Deputy Speaker Coulton, if the corporate tax rate was 49 per cent and you lowered it to 30 per cent? If you follow the logic of the opposition, that would mean giving all that money to big businesses. But look at what actually happened, Mr Deputy Speaker. When the corporate tax rate was at 49 per cent, we were getting 2.4 per cent as a percentage of GDP in 1986-87, and 2.7 per cent in the following year. So an average of around 2.5 or 2.6 per cent of GDP was the corporate tax that we were taking in for the Treasury to pay for all those schools, hospitals, aged care, kids with disabilities and for all the things we want to do in this parliament. So, what actually happened? In dollar numbers in 1987-88, we were collecting $8.8 billion in company tax. Then we lowered that rate down to 30 per cent. What happened to the tax that we were getting as a percentage of GDP? If you believe what Labor are telling us, there would have been a reduction. But, remarkably, exactly the opposite thing happened.

We know that over the previous decade, from 2000 to 2010, when we had a corporate tax rate of 30 per cent, as a percentage of GDP we were getting double. At a lower corporate rate of tax, we were getting double what we were getting when it was 49 per cent. It has happened throughout the last 30 years, under both the Labor governments of Keating and Hawke and the Liberal government of Howard and Costello. Every time we have lowered the rate of company tax we have got more tax.

Mr Swan interjecting—

I hear the former treasurer laughing over there. I would encourage you, former treasurer, to go and get the numbers and have a look. You might learn something and understand why the policy that you bought here for six years was so disastrous and sent this economy backwards so much.

If we lower the corporate tax rate again, will exactly the same thing happen? No-one has a crystal ball to tell what the future is. There is an argument that company tax is already about 4½ to five per cent of GDP, which is already one of the highest in the world. There is an argument that it is harder to push it any higher than that. That is a legitimate argument. But we are not hearing that from the Labor Party. What we are hearing is, 'If you decrease the corporate tax rate, that simply takes money off someone else.' What a flawed economic argument that is! When it is explained to the former treasurer he laughs. Is it any wonder that the way this country was run was such a mess during the previous years of the Labor government?

Getting back to some of the overall numbers, as we are talking about appropriation bills, it is always important to know where we came from. If we go back to 1996, we know that this country was $96 billion in debt from accumulated deficits of the previous government. Over the term of the Howard-Costello government, each year they whittled that debt away. They achieved a surplus; they put that surplus into reducing the debt; and they paid back that $96 billion. What gets forgotten is that not only did they pay back the $96 billion, but along the way there was an interest bill of $54 billion that had to be paid. So they paid the $96 billion and the $54 billion in interest, and then they put another $40 billion in the bank. That was $200 billion that had to be taken out of the economy to retire debt and pay interest, that could otherwise have been spent on the things that we all hold dearer.

Then we had what was called the global financial crisis. There was an argument then that the country should go into debt and borrow money, but the argument at the time was that that borrowing and debt were to be short term and temporary. In 2008-09 we borrowed $31 billion. The accumulated surpluses and savings had disappeared. If it had been just that year, we could explain that to future generations of Australians. But what happened? The following year we borrowed $56 billion. The next year, in 2010-11, we borrowed another $51 billion. In 2011-12 we borrowed another $47 billion. There was nothing temporary about this. It was because Labor was great at spending the money and giving the money away. We saw it with the school halls, the pink batts and waste after waste after waste. We have very little to show for it apart from a big pile of debt. Because the Senate has been controlled by the Greens, Labor and the Independents, every time we have tried to take some of the hard decisions, the hard decisions that are difficult but responsible to try and wind that debt back, we get blocked.

So this year, today, we will borrow another $100 million, which will go on to our debt and will simply mean that our children and grandchildren will have higher taxes and fewer government services. Already, this coming year, we are going to have to pay the interest bill. The interest bill is over $12 billion. That is a billion dollars every month that goes out the door in interest payments, all because both sides of this parliament could not control their expenditure, could not wind it back and could not live within our means. It should be incumbent upon both sides of this House to work together to do everything we possibly can to bring the budget back to a balance and then start paying the debt off. But instead, we have speeches like that from the member for Rankin, whingeing about illusory cuts that do not exist, whingeing about all the hard decisions that we have to make as the coalition. The Australian people deserve better than that.

One of the other concerns that I have, which we need to drive home and emphasise, is that if we are going to increase the living standards of Australians we have to become more productive and more efficient. We have to discover new products, new ways of doing things, new methods of production, new distribution channels. The only way that can be achieved is that people in the private sector take risks with their ideas. But if we have a corporate tax rate that is much higher than many places in the rest of the world—if the rate of corporate tax is 30 per cent in Australia, but 15 and 17 per cent in Hong Kong and Singapore and 20 per cent in the UK—we will not get that innovation. We will not get that risk taking and that improvement in our living standards. That is what our coalition policies are about: increasing the productivity, the innovation and the risk taking in this nation, so we can become more productive and more efficient, so we can grow our living standards and grow the size of the economic pie so we have all the more of the things that really count.

I would like to finish my 15 minutes with a quote from Deirdre McCloskey, who wrote in The New York Times:

… by the standard of basic comfort in essentials, the poorest people on the planet have gained the most. In places like Ireland, Singapore, Finland and Italy, even people who are relatively poor have adequate food, education, lodging and medical care — none of which their ancestors had. Not remotely.

…   …   …

In the last 40 years, the World Bank estimates, the proportion of the population living on an appalling $1 or $2 a day has halved. Paul Collier, an Oxford economist, urges us to help the "bottom billion" of the more than seven billion people on earth. Of course. It is our duty. But he notes that 50 years ago, four billion out of five billion people lived in such miserable conditions.

…   …   …

What, then, caused this Great Enrichment?

Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called "the liberal plan of equality, liberty and justice." … Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.

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