Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

It is good to follow the member for Lalor in this debate because I think the matters that she raised go to the heart of what Appropriation Bill (No. 3) 2016-2017 and Appropriation Bill (No. 4) 2016-2017 are all about. After almost four years in office, the Turnbull government—firstly, led by former Prime Minister Abbott and now by Prime Minister Turnbull—has clearly demonstrated to the Australian people that it cannot manage its budget and has lost control of its finances. This government cannot continue to tell the Australian people that the state of the budget is all the fault of the previous Labor government. It might have been able to get away with that for maybe its first six months, perhaps even the first year. But when it has been in office for nearly four years, it is time the government took responsibility for its own budget. The truth of the matter is that it has lost control of its finances.

If we look at the figures, the deficit has trebled from the government's first year in office and now is about to hit $36.5 billion. The national debt has gone up by almost $100 billion to $317 billion. The reason the deficit and the debt have blown out is because the government simply cannot manage the economy. If you have a strong economy then your finances usually end up in good shape. But if you cannot manage the economy, and this government has shown that it cannot, then you end up on a downward spiral.

It is clear from my own observations and observations of many others that this is a government that does not have a coherent economic strategy. In turn, both the Prime Minister and the Treasurer of the day jump from one thought bubble to another, trying to find savings or new revenue-raising measures—revenue-raising measures that simply will not work or that will be totally rejected by the Australian people. Indeed, every time this government has come up with a thought bubble it has very quickly, after testing public opinion out there, retreated from it and dropped the idea—just as we saw happen again last week. Last week, we saw the Prime Minister and the Treasurer refusing to commit to the $50 billion in corporate tax cuts, and yet this week we see that it is back on the table. Again, it was a case of the government wanting to go in one direction and then getting spooked and doing the opposite.

The other clear observation about this government is that it is a government that simply does not understand the unfairness of many of the measures that it wants to pursue. What this government has still not worked out is that every time payments are cut to low-income Australians, the economy is harmed even further. Every time jobs are lost, the economy is harmed even further. It should have been clear to this government, from what happened overseas in many other countries, that austerity measures simply do not work. And then you add to all of that the Turnbull government's ideological stupidity in refusing to acknowledge some of the good ideas that Labor has put forward, ideas that have been supported by many other sectors within society as being sensible and reasonable, that would, in turn, help with the budget repair. But because Labor initiated them, this government says, 'No, we can't do that.' Again, it is their foolish ideology!

From my observations, Australians are not blind to the Turnbull government's spin when it comes to the budget and the economy. That is probably why they have stopped listening to this government and, in particular, to this Prime Minister. People do not accept or believe in this government's trickle-down economics because the reality is that it does not happen. People do not believe that increased company profits mean that there will be more jobs created. They do not believe that cutting penalty rates will result in more jobs. They do not believe that giving big business another $50 billion in tax cuts, much of which will go offshore in the first place, will add, in any way, to the Australian economy. And they do not believe that because most people are aware of the realities of what is happening in life. These tax cuts, in many cases, will go to companies that are already doing very well; entities like the big banks who, over recent decades, have not only made massive profits but simultaneously offshored jobs. They have not created jobs; they have reduced their workforce by offshoring jobs to places where they can get the work done much cheaper. That would suggest to me that if they were to make even higher profits, it would not result in more jobs being created in this country.

What it might result in are greater payments for the already overpaid CEOs and other highly paid executives because their incomes and their salaries are quite often directly attached to the bottom line of the entities' profit at the end of the year. So if the entities make more money then they get bigger bonuses or higher salaries. That is who will benefit from this, and that is who this government continues to listen to as though those people speak for the whole sector they represent. Perhaps the government should take a reality check. The people the government speaks to speak for themselves and not for the rest of their organisation. And I have no doubt that they do not speak for the workers they employ.

The other matter that this government seems to be obsessed with but does not want to face the reality of is its spin in respect of the free trade agreements. If the free trade agreements were as good as the government claims, and has been claiming for the last three years, why is it that our economy is still struggling? After all, in the last three or four years we have signed free trade agreements with our major trading partners—with Japan, with China and with the USA prior to that, the three countries that we do most of our trade with. We, supposedly, should be doing better because we have now entered into free trade agreements. The reality is that they were our strongest trading partners before the free trade agreements and they would have continued to be, just as trade with China had been increasing well and truly before the free trade agreement was signed. I accept that there may be some entities and some Australian firms that will benefit even further from free trade agreements, but the truth of the matter is there will also be many that will lose out, and it is the losers, in most cases, that were employing mainly Australians within their businesses. So, if we are going to make a realistic assessment of free trade agreements, then we need to look at the net effect of the agreement and not just look at one particular sector—which the government always does and then crows loudly about, without looking at the global picture that has been created.

The truth of the matter is that from my observations—and I have not done this in recent months, but some months ago I did do an exercise where I looked at the trade figures before the free trade agreements and after—in most cases the real beneficiaries of those free trade agreements are the other countries and not Australia. We live in a globalised world and the reality is that, if we have a product that another country wants, it will buy it regardless of whether there is a free trade agreement or not. It comes down to availability of the product, whether it is fit for purpose and whether it is sold at a cost that the other country can afford to pay. If it is, those other countries will buy our products, as they always did before the free trade agreements came into effect. What these agreements often do, in fact, is result in us having to be tied to international rules and regulations which in turn do not do our own economy very much good at all.

The other concern that I have with the way this government manages the economy—and it has been a trend of conservative governments in this country for a long time—is that it has relied on the sale of our resources, in particular, in recent years, gas and mineral resources, to prop up the Australian economy. That was well and good when those resources were highly priced and there was a lot of money coming into Australia, because Australia is, indeed, blessed with resources, whether it is gas, oil, coal, iron ore or the like, but the reliance by governments on those resources to prop up our economy has been foolish because, when the price of those resources falls, as it has in recent times, then our economy also suffers and suffers badly. It is also what I would term as lazy economics. It is the kind of economics you do when you cannot really manage your economy. We should be looking for a stable economy where things like our resources become a bonus and not relying on resources to ensure that we have a sustainable economy, as we have done.

We now hear, almost every day from members opposite, that our high energy prices are also undermining our own industries in this country. This is also a matter of real concern because the truth is our industries here in Australia are competing globally and, therefore, energy prices are one of the core costs of every industry that operates both here and overseas. It is not the only cost, and I have to say I am not entirely convinced that it is just energy prices that are causing industries difficulty in this country, but I, nevertheless, accept it is an important issue. It seems to be an extraordinary position to have in this country when we are blessed with coal, blessed with gas and blessed with sunlight and wind energy options, and yet we are now in a situation where we are paying more for our energy than the very people we supply the oil, the gas and the coal to. That is, again, because of lazy economics and the fact that we do not have an energy policy from this government. Again, the government has been in office for four years—where is our energy policy? It was about four or five years ago that this became the important economic issue of the day. It is not as though it only arose two or three months ago; it is an issue that should have been brought to the attention of this government from the day it took office, and yet it has been sitting back doing absolutely nothing.

It seems to me that what we now have is a Prime Minister who is not only beholden to the four major banks; he is also now beholden to the gas companies, as we saw a couple of weeks ago when the best he could do was say that he would talk to them about gas prices. Indeed, it goes further than that. It seems to me that one of the reasons the gas companies are holding out on supplying Australian gas is that they want to put pressure on the state governments to lift their bans on fracking, Therefore, by creating a shortage, they are putting the pressure on the state governments to lift those bans. And who was the greatest salesman for the gas companies in doing that—the Prime Minister. He is the one who has been going around the country saying that the state governments need to lift the bans on fracking. He is doing the gas companies' bidding for them.

But there is another critical issue associated with all of this, which time will hopefully allow me to talk about. I want to refer to an article by Ian Verrender that was published only a couple of weeks ago. Ian is an ABC Business editor:

AGL is actively considering buying Australian gas in Japan and shipping it back home. And why not? It's cheaper there.

That means energy-rich Australia is subsidising Asian manufacturers while penalising our own, a situation likely to force many to the wall …

Just to rub salt into the wound, the ramp-up in exports has not delivered the resources rent tax bonanza once promised by US giant Chevron. In fact—

and this is the critical point—

… thanks to a shifty cash shuffle, ExxonMobil, Chevron and Shell until two years ago were booking around $3 billion a year in profit, tax free.

That's seen our Petroleum Resources Rent Tax proceeds, which in the past delivered around $2 billion a year, plummet. In fact, by the time we overtake Qatar for global gas domination, it's anticipated our resources tax will collect just $800 million.

Qatar, on the other hand, is expected to receive $26.6 billion in royalties that same year for roughly the same volume of exports.

The critical point there is this: this is the government that went in to bat for the big mining companies over the tax that we were hoping that they would pay on top of their profits each year, and yet these very companies are now not even paying to this government the royalties and the taxes that one might have expected them to pay had they not been shifting their profits overseas. They have turned on the very political party that supported them when we were talking about the superprofits tax a few years ago.

The fact that we are not even getting from these companies the $2 billion a year that we were getting from them only a few years ago is part of the reason why this government cannot manage its budget. That is money that is being lost because of this government's incompetence, and because of this government's support for the very people who are literally pulling the rug out from under their feet.

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