Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

Of course Labor supports appropriation bills for appropriating moneys for the normal course of government to continue. But these appropriation bills are part of this government's budget. I would like to make some comments in the wider context of the budget. I think that the budget can be summed up in one sentence: it is a bad budget from a bad government. It will do more harm to Australia's economy than it will build for prosperity and growth. It is the wrong approach for an economy that is in uncertain and staggering times. The Australian people and businesses know this, and it is reflected in our nation's key economic indicators at the moment.

There has been economic growth of 0.5 per cent over the June quarter and 3.1 per cent over the year, for the latest national accounts. It is not a stunning result; it is not a bad result. It is somewhere in the middle. But if you look at it in the context of the fact that much of the growth in the last quarter of national accounts came from government spending, it is a poor result.

It is reflected in the approach of businesses to our economy at the moment and in the investments that they are making for the future. Private business sector investment in Australia has been tumbling for some years now. Total new private capital expenditure in the economy fell from 5.4 per cent in the June quarter. Over a year, that figure was 17.4 per cent. Over the last 12 months, business investment has fallen in Australia by 17½ per cent—a damning indictment on this government's policies and their approach to supporting business throughout the country. New private capital expenditure has now fallen by more than 30 per cent since this government was elected to power.

Real incomes for Australians—and many of those whom we represent are feeling it at the moment—have not grown for many years. In the June 2015-16 period, the Wage Price Index increased by 2.1 per cent. This is widely recognised as a measure similar to the CPI for prices. Unemployment is stubbornly remaining at 5.7 per cent. More importantly, underemployment—that is, people who want to work more but simply cannot get the hours—is at 8.4 per cent. Our economy is like a car that is struggling to start. It is turning over, but it just will not kick over. Instead of the government giving the necessary boost to support that kick over, we have got the government cutting the fuel line. We have cuts to health, cuts to education, cuts to research and development, the halting of the education and innovation drive throughout the country, a company tax cut plan that will do nothing to boost growth and jobs in the economy, a superannuation plan that is in tatters, and cuts to family payments and pensions that leave the most vulnerable in Australia worse off. Cuts to infrastructure funding and changes to the mandate of Infrastructure Australia could not come at a worse time for our nation.

This is a typical Conservative budget from a Conservative government: tax cuts for the wealthy and big business, cuts to health and education investment and cuts to expenditure that supports the vulnerable. It is trickle-down economics at its worst. We all know, and history has shown us, that this notion of trickle-down economics—you cut taxes for the most wealthy, and that will trickle down to the rest of the economy through increased economic activity—simply does not work. We are finding that out now in Europe and in other parts of the world. Those opposite are going to encourage an outdated, irrelevant and second-rate economy in Australia.

The fiscal position is not getting any better with this budget either. The budget deficit will increase by $26 billion. Net debt will increase by $100 billion since 2013, or 12.8 per cent of GDP, to 18.9 per cent of GDP at the end of this budget period. The company tax cut that this government is offering is all about supporting the well-off in our community. What the government is going to do is change the definition of a small business in the relevant legislation. The threshold for a business to be considered a small business will increase from its current level of a turnover of up to $10 million in 2016-17 to a turnover of up to $1 billion by 2022. In any Australian's book, a company with a turnover of $1 billion is certainly not a small business. That is what the government is going to do over the course of the next eight years. The tax rate for those businesses will gradually fall as well, from 28.5 per cent to 27.5 per cent initially, and then to 25 per cent by 2027. The government is not changing the definition of a small business; it is giving a tax cut to big business. That is the best way to characterise what the government is doing with this budget.

We have seen the cost of this. When it was initially announced, the Prime Minister, in an interview with David Speers, would not—on close to 40 occasions—answer the question of the cost of this policy to the national budget. We found out later, through leaked documents from Treasury, that the actual cost to the budget is $49 billion over the decade, according to the Parliamentary Budget Office. That is $49 billion coming out of our budget that could go to fund health, education, infrastructure, and research and development—public expenditure that would build the foundation for growth, prosperity and increasing living standards in our nation. The government's own Treasury modelling of this particular proposed tax cut delivers very little in terms of a growth dividend for our nation. The government's modelling indicates that, in terms of GDP growth, this tax cut will add 0.05 per cent per annum to our nation's economic growth. That is 0.05 per cent to GDP every year. It will add a 0.1 per cent advantage to employment over the next 20 years, and wages growth will only increase by 0.1 per cent per annum. There is very little benefit to our nation from this proposal, according both to the government's own Treasury estimates and to the independent Parliamentary Budget Office. It is a big cost to the budget and a big cost to fairness.

The other issue is how it is funded. Where does the government find the money to offer a $49 billion tax cut over the course of the next decade to the biggest businesses in our economy? According to the Treasury, it is certainly not funded by jobs and growth, because that is indicated in the modelling that I have just outlined. This would be funded by taxpayers, through bracket creep and spending cuts. So much for an economic plan! Slugging the most vulnerable through spending cuts and increasing bracket creep on hardworking Australians—that is how they will fund this tax cut. This is why I and my Labor colleagues are opposed to changing the threshold turnover for small businesses to beyond $2 million: there is no economic benefit from it and it will do social detriment.

What this economy needs at the moment is investment in infrastructure. It is opportune that the former, great minister for infrastructure in this country, and now the shadow minister—one of the longest serving infrastructure ministers—has walked into the chamber. I have no doubt that, in a moment, he is going to give those opposite a lesson about how to run a portfolio when it comes to investing in infrastructure. I thought it was instructive that, a couple of weeks ago, the new Governor of the Reserve Bank, in a hearing before the economics committee, made the point that Australia should be taking advantage of low interest rates throughout the world and investing in infrastructure, either through government investment in infrastructure or through encouraging the private sector, through planning laws and the like, to run that investment, taking advantage of historically low interest rates at the moment.

This government has done the opposite. They have cut investment in infrastructure. They have meddled with the mandate of Infrastructure Australia. That led Glenn Stevens, the former Governor of the Reserve Bank, to say to an Economics Society of Australia conference on 10 June that, in the past year:

Public final spending didn't grow at all. Public investment spending fell by eight per cent …

The key to our nation's economic spending is kicking it over and gathering pace, particularly as our terms of trade begin to fall. That has stopped declining at the moment; it has not got back up to the mining boom levels, but it has stopped falling. But this government will not invest in infrastructure.

When Labor was in government, we took investment in infrastructure to No. 1 in the world. In terms of the investment that a government was making in building productivity-enhancing infrastructure, Australia, during the Rudd and Gillard years and with the member for Grayndler as the minister, was the No. 1 in the world. This government has taken us backwards. They have meddled with Infrastructure Australia and changed its investment mandate. They changed the composition of the board and its independence. As a result of that, we got projects like WestConnex—which affects the member for Grayndler's electorate and my electorate. You have an interchange that will deposit an additional 30 million cars per week on local roads, which simply will not be able to cope. The biggest road transport project in the history of Sydney and the nation goes past the second biggest container port in the country but does not even connect up to it. This massive road project does not even connect up to the second biggest container port in the country, where the majority of freight coming out of it is on trucks—it goes right past it. The interchange is five kilometres further down the road, at St Peters-Tempe, on the other side of the airport, where you are going to deposit millions and millions of cars on a daily basis. Local roads simply will not be able to cope, and the airport simply will not be able to cope. It is nothing less than an unmitigated disaster, and it is what occurs when a government meddles with the investment mandate of infrastructure. Australia, that is what you get—lousy projects like the WestConnex.

I want to finish with the issue of superannuation. Australia has a very urgent issue to deal with, and that is the ageing of our population. Encouraging Australians—particularly those on low incomes—to save for their retirement is vitally important to the ongoing health of our nation and our budget. Superannuation and pension changes proposed by this government do exactly the opposite. The government does not have a policy. Although it outlined something on budget night, we have seen in the wake of that that it cannot get agreement on this issue within its own party room. There is still no agreement in the coalition on the details of the superannuation policy announced on budget night.

Labor has had a consistent approach to superannuation policy going back to 2014, when it was announced by the Leader of the Opposition in the budget reply speech in that year. That approach is to reduce the unsustainable tax concessions that exist for people on high incomes in Australia. A month ago, the Leader of the Opposition even offered to get the government out of the pickle that they are in at the moment, by proposing a compromise arrangement on superannuation, to reduce the high income superannuation threshold from $250,000 to $200,000 a year from 1 July 2017 but not make it retrospective, as was proposed by the government, because we have a fundamental opposition to retrospective taxation policies, and to oppose three of their measures. This would have saved the budget $238 million over the forward estimates and $4.4 billion over the decade. It was dismissed by the government without reading the details or even looking at it. The government could have come to an agreement with the opposition on one of the most important policies facing the nation, superannuation tax concessions, and they dismissed it without even looking at it. That says everything about the approach of the government and everything about the approach of the government's budget. It is not a budget that is fair at all. It is a budget that is bad for Australia, will cut investment in education, will cut investment in health, will cut investment in research and development, and will prove bad for growth and living standards into the future.

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