Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

I rise to speak on Appropriation Bill (No. 3) 2005-2006 and Appropriation Bill (No. 4) 2005-2006. First, I want to traverse a number of issues about the adequacy of financial disclosure of budget information under the Howard government. There are a number of issues that I believe we need to address. Secondly, I want to refer to a specific example that illustrates one of those particular issues. Thirdly, I want to deal with the pattern of government spending, in particular the excessive government spending that has characterised the Howard government for the last four or five years. Finally, I want to make some general observations about the state of the Australian economy.

Late last year, the Labor Party established a consultation process with a substantial range of experts—commentators, economists and academics—who have considerable knowledge about the budget processes and the financial disclosure of the Commonwealth. We dubbed it Operation Sunlight. The purpose of this exercise is to obtain expert advice on a program of serious reform of the presentation of the budget and appropriations materials in order to ensure that we have genuine transparency and accountability and that it is possible for the Australian people generally, but particularly those who are the interpreters of budget information—expert commentators, economists, financial market people and other people who have to interpret and understand the budget information—to get genuinely accessible, meaningful financial information.

There is a list of particular issues that I wish to run through very quickly to indicate the kind of terrain that we are traversing. We are well advanced in our process of consultation and will hopefully, in the not too distant future, be announcing a set of proposed reforms that will become Labor’s commitment to greater transparency and accountability in government.

The outcomes and outputs framework that was introduced by the government a number of years ago is still fairly undeveloped. The elements are poorly linked across portfolios and in many cases the outcomes have little substantive meaning. For example, in Family and Community Services there is an outcome which reads as follows:

Families and children have choices and opportunities

Services and assistance that: help children have the best possible start to life; promote healthy family relationships; and help families adapt to changing economic and social circumstances and take an active part in the community.

That is an outcome that none of us could quibble with but ultimately, in the context in which it is put forward, it is effectively meaningless. It is a very general, bland statement of broad intent which anybody, no matter what their political viewpoint is, could happily sign up to. It does not really tell you anything in detail about what the particular aspects of the budget in this portfolio are. There is a problem with the outputs and outcomes framework.

The links between the appropriation legislation, which we are dealing with this evening, the portfolio budget statements and the budget itself are very poor. We have particular categories of expenditure which are highly aggregated so that in many cases it is not possible to tell how much is being spent on specific programs and in many cases it is very difficult to track the expenditure and the financial commitments from one set of financial documents to another across the appropriations legislation, the portfolio budget statements and the budget.

Intergenerational issues and the longer term implications of particular entitlements or spending categories are dealt with very inadequately. The government is commonly making new commitments, introducing new spending items, without any serious accounting for the longer term implications that they carry for the budget. There is insufficient detail with respect to spending in many areas. Particular programs are not identified separately and are subsumed within very broad outcome categories so that it is often very difficult to establish precisely what is going to be spent on a particular program or a particular agency.

Accuracy of estimation is a major problem. We received some information late today indicating that the level of error in estimating the amount of expenditure for particular programs is very high. These are dubbed parameter variations when subsequent budget documents such as the midyear economic and fiscal outlook papers are put forward. In reality, they are mistakes. They are errors in estimation of the total cost of financial commitments or likely revenue. They are getting worse and worse.

Tax expenditures—and there is an example that I want to refer to specifically in my contribution shortly—are very seriously inadequately accounted for in the budget. They do not have anything like the degree of scrutiny and examination that a spending commitment has. Whereas a particular spending commitment will be properly accounted for and there will be projections into the future, a tax expenditure is simply reported upon very perfunctorily, even though the net effect is really the same. That makes it very difficult to compare and contrast a particular form of assistance to a section of the community or a particular initiative that is done by way of tax expenditure with one that is done by way of direct expenditure by the Commonwealth. If for no other reason than to understand priority choices, it is very important to be able to compare and contrast the two.

Standing appropriations, where there is in effect an automatic continuing appropriation outside the budget process, have become much more prevalent under the Howard government. Because they are not subject to the same level of scrutiny as the annual budget and the appropriations legislation, they, by definition, tend to detract from the degree of transparency and accountability that we see in the process of parliamentary scrutiny.

There is still an ongoing debate about which accounting standard, GFS or AAS—that is, government financial statistics or Australian accounting statistics—should apply. What tends to occur, although often you will get both being applied, is that governments tend to pick and choose which one they use according to which suits a particular political case. There is a long overdue need for us to rationalise this issue and to get to a point where there is a single agreed standard that is the benchmark on which all issues are dealt with.

There is a need for greater continuous disclosure of financial information. There is a need to reform the extent to which commercial-in-confidence is used by the government as a means of hiding things that are politically embarrassing—even in some cases where the commercial party to a contract may not be particularly concerned if they are revealed. There is, of course, the infamous description of the GST as a state tax, when the Auditor-General and the Australian Bureau of Statistics both agree that it should be accounted for as a Commonwealth tax which is then passed on to the states. Finally, there are serious questions with respect to the contingency reserve, which is the subject of relatively opaque and very limited reporting, even though it is encompassing a very substantial amount of money in any given year.

They are the issues that we are dealing with. The Labor Party, after due consideration of the very worthwhile suggestions we are currently receiving—we have received some quite detailed submissions from a number of people—will be putting out a specific program of budget reforms that are designed to ensure that more financial information is available, that it is more transparent, that there is a greater degree of accountability and that people have the ability to get the information that they feel they need.

I now turn to the specific matter that I think is a very good illustration of some of these problems—in this case, the misuse of a particular tax expenditure. One of the major weaknesses in budget reporting is the minimal information provided with respect to tax expenditures. I want to raise a specific example. On 20 June 2003 then Assistant Treasurer Senator Helen Coonan announced that the Constitution Education Fund Australia would be granted deductible gift recipient status. The Income Tax Assessment Act was duly amended to provide for tax deductibility with respect to donations to CEFA. DGR status is usually very difficult to obtain and is available only to organisations which undertake activities of direct benefit to the community, such as charitable or educational activities. Organisations engaged primarily in political campaigning or advocacy do not qualify.

Close examination of the CEFA reveals that it is not quite what it seems. Its address is the same as the address of Australians for Constitutional Monarchy—Level 13, 189 Kent Street, Sydney. Its executive director is Kerry Jones, who, until very recently, was executive director of ACM. Her deputy in CEFA, Phuong Dong Van, has recently been notified to ASIC as Kerry Jones’s replacement at ACM. Both ACM and CEFA engage Kerry Jones Strategic Management Services Pty Ltd to run their affairs. KJSMS is also domiciled at Level 13, 189 Kent Street, Sydney.

According to the 2004-05 CEFA annual report, KJSMS raises funds for CEFA, manages its activities and pays its expenses. KJSMS has a very similar arrangement with ACM. The national convener of ACM, Professor David Flint, is a trustee of CEFA and is the signatory on the trustee’s report in the CEFA 2004-05 annual report. According to an answer to a question on notice from the member for Banks provided by the Treasurer on 17 November 2004, Professor Flint wrote to Senator Coonan in April 2003 seeking tax deductibility for donations to CEFA. CEFA and ACM have the same auditors—Bandle McAneney of Canberra. Neither ACM nor ARM, as political lobby groups, have tax deductibility.

The story gets really interesting when you take a look at the CEFA and ACM accounts. In 2002-03, the year before donations to CEFA were made tax deductible, ACM received $450,597 in donations. In 2003-04, this fell to $203,271, less than half that amount. CEFA received $348,545 in donations in 2003-04, all of it tax deductible. A similar pattern can be seen in ACM expenses. Between 2002-03 and 2003-04, ACM labour costs fell from $198,141 to $110,655. Promotions and events costs fell from $127,955 to $61,061 and office expenses fell from $102,632 to $48,634. CEFA expenses for 2003-04 totalled $293,727. A whopping 85 per cent of its total outgoings was spent on wages, rent and office administration. A mere $14,104 was spent on direct activities for which CEFA was supposedly established—the Governor-General’s prizes.

Things were not much different for 2004-05, when 81 per cent of total outgoings of $456,589 were spent on wages, rent and office administration. Expenditure on direct activities rose to a still very meagre $62,600. Interestingly, in the 2004-05 CEFA annual report, Kerry Jones stated:

All funds being raised for CEFA 2003-2005 are clearly designated for specific operational projects which meet the objectives of the trust. Donors can be assured that administration expenses are kept to the necessary minimum.

The CEFA 2004-05 annual report contains a statement of personal endorsement from Prime Minister John Howard. Apart from Kerry Jones and David Flint, CEFA’s board is a waxwork museum of crusty old monarchists such as Sir Harry Gibbs, Lloyd Waddy, Digger James, Geoffrey Blainey, David Smith, Hugh Morgan and Dame Leonie Kramer. The board includes two or three token republicans who are definitely not representative of the ARM or the broader republican movement.

On 11 May, CEFA was publicly promoted by controversial right-wing Liberal member of parliament David Clark in a speech to the New South Wales Legislative Council. Governor-General Michael Jeffery is the patron of CEFA. According to an article posted on New Matilda on 9 February 2005 by the ARM’s John Warhurst and Allison Henry, CEFA has made no approach to the ARM about contributing to its activities, even though it is supposedly non-partisan in constitutional debates.

At the ACM-CEFA offices at 189 Kent Street, Sydney there is virtually no distinction between the two organisations. They share common facilities, including reception. When a member of the public visited these offices recently and asked for CEFA information on the republic debate, he was offered ACM material. When he stated that he specifically wanted CEFA material, the response was, ‘I think we’ve got some around here somewhere.’

Only one conclusion can be drawn from these facts: the ACM is engaged in a brazen tax scam, with the direct connivance of the Howard government. CEFA is simply an ACM front organisation, which exists solely as a filter through which donations to the ACM can become tax deductible. While CEFA undertakes a bare minimum of genuine activities to give it some outward legitimacy, in fact a large slab of ACM donations and expenses has simply been switched to CEFA. It operates from the same location as ACM, it is run by the same people and it has the same auditors. It is little more than a shell.

This is nothing less than a fraud on Australian taxpayers. Hundreds of thousands of dollars of tax which would otherwise be payable by ACM donors has been evaded by the use of this elaborate sham. While it is theoretically possible that there is some innocent explanation behind these facts, I find it very hard to conceive of one. If there is such an explanation, I urge the ACM to make use of their right of reply in the parliament.

The government should withdraw CEFA’s tax deductibility immediately. It should come clean on how this outrageous scam came about and why it failed to adequately police its own tax deductibility arrangements. That well-known republican Peter Costello might explain how this monarchist tax rort occurred on his watch. The former ARM leader and current federal member for Wentworth might also outline his view of this arrangement. Those ACM donors who benefited from the scam should pay the tax they rightfully owe.

I now turn to the issue of government spending generally. On a number of fronts, spending under the Howard government is out of control. I refer to the second reading amendment, which stands in my name and which I duly move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House is of the view that:

(1)

despite record high commodity prices the Government has failed to secure Australia’s long term economic fundamentals and that it should be condemned for its failure to:

(a)

stem the widening current account deficit and trade deficits;

(b)

reverse the reduction in public education and training investment;

(c)

address critical structural weaknesses in health such as workforce shortages and rising costs;

(d)

expand and encourage research and development to move Australian industry and exports up the value-chain; and

(e)

address falling levels of workplace productivity; and

(2)

the Government’s extreme industrial relations laws will lower wages and conditions for many workers and do nothing to enhance productivity or economic growth; and

(3)

the Government’s Budget documents fail the test of transparency and accountability”.

We all recall the revelations late last year about Tumbi Creek; the Karratha Caravan Park, funded with a few hundred thousand dollars from the federal government; the hotel in Atherton; and various other projects, such as the steam train in Beaudesert that never ran. They are just the tip of the iceberg of the vast amount of waste and misuse of public funds by the Howard government: Networking the Nation, the Centenary of Federation fund, the Natural Heritage Trust and many others have all been vehicles for doling out largesse to people in marginal seats—particularly National Party held marginal seats—in order to prop up the government. How politically effective this is I think is uncertain. It is difficult to know without very intensive research, but it is economically appalling. It is a waste of taxpayers’ money and it is a misuse of taxpayers’ money. Bit by bit, the tally is mounting.

We have also seen an extraordinary misuse of the Commonwealth’s advertising budget, which mysteriously ramps up dramatically in the six to 12 months prior to an election, in order to advance the government’s political cause. The most recent example of this was the advertising to the tune of over $50 million in respect of the government’s industrial relations legislation, well before the legislation had even been finalised, much less tabled.

As we look around the various departments of state in the Commonwealth, we can see that there is a culture of waste and mismanagement—nowhere more so than in the Department of Defence. Having been a member of the Joint Committee of Public Accounts and Audit for extended periods, it is something of a depressing routine to be regularly dealing with the Department of Defence about waste, poor accountability, lack of financial management and all the kinds of things that you would hope are central to the appropriate management of such a crucial department as the Department of Defence.

In recent times the government has also acquired a habit of making new commitments to particular favoured constituencies, which inevitably will blow out in cost in five to 10 years time. A range of commitments such as the mature-age tax offset, the utilities allowance, the exemption from capital gains tax of retiring small business owners and the $1,500 co-contribution with respect to superannuation have relatively modest impacts on the budget—significant but not enormous—but it is inevitable that, because of demographic change, within five or 10 years the impact that those commitments will have on the budget will be enormous, just as it is equally inevitable that the current huge surpluses that are being driven by the commodity price boom will fade away.

It is worth noting that the current figures with respect to government spending as a proportion of gross domestic product are artificially favourable to the government because they do not take into account the impact of the new tax system in 2000—the introduction of the GST and all of the changes associated with that. In particular, they do not take into account the abolition of financial assistance grants.

Debate interrupted; adjournment proposed and negatived.

In particular, the figures for the percentage of gross domestic product taken up by federal government spending no longer include any equivalent of financial assistance grants. The last year that they did, the amount concerned was about $18 billion. That was paid by the Commonwealth to the states and therefore counted as Commonwealth expenditure.

Fortunately, in the budget papers there is a yearly figure of a notional payment to the states figure that would have applied had the old system still been operating, so it is possible to fairly easily do an apples-to-apples comparison. What that shows is that federal government spending is still around 23.7 per cent of GDP once you factor in the equivalent of those financial assistance grants, which, of course, are now subsumed within the payments of GST revenue to the states. Interestingly enough, that is a substantially higher figure than the equivalent figure in the late eighties under the Hawke government and prior to the recession, which inevitably blew out the percentage of federal spending as a proportion of GDP, because GDP shrank and, by definition, spending increased. When you compare it with the equivalent period in the late eighties, you will see that federal government spending at that time was 22.4 per cent of GDP. If the Howard government were spending at the same level as the Hawke government in the late eighties, its expenditure would be $11½ billion lower than it currently is—so much for the party of small government, so much for the party of the market, so much for the party of fiscal responsibility.

It is also interesting to note that very recently the lack of due process and the lack of true accountability on financial matters and expenditure in the Howard government were exposed by the Auditor-General. Section 31 of the Financial Management and Accountability Act empower the finance minister to enter into agreements with individual agencies that enable them to spend particular categories of money—for example, moneys that they receive through direct payments from the public such as charges and things of that nature. The opposition has no complaint with this. What we do have a complaint with, though, is the fact that the Auditor-General found in many cases that no such agreements had been entered into but that the agencies were behaving as if they had been.

The net effect of this is that billions of dollars of money have been expended without proper appropriation by the parliament. Under the Constitution, quite correctly, the government is unable to spend money unless this is approved by parliament, which is done, of course, by the legislation that we have before us tonight or by specific appropriations or, in some cases, by the minister—the finance minister, in this case—where they are given the delegated power to authorise particular kinds of appropriations.

That is just one small example of the Howard government’s lack of attention to detail and its lack of concern about how it handles taxpayers’ money. It is an indication that the Howard government regards your money as its money and is quite slapdash about how it accounts for it, very opaque in how it reports what it is doing with it and particularly keen to make use of it to increase its chances of being re-elected.

Finally, I want to make some general observations about the state of the Australian economy—observations which are appropriate in the context of a debate on appropriation. We all know that, superficially, the economic indicators are mostly positive; that growth has been continuous for the best part of 15 years; that unemployment is the lowest it has been for some time; that business investment, after a period of stagnation, has improved recently; and of course, most particularly, that commodity prices have soared and are therefore introducing substantial new flows of money into the economy just at a time when the unsustainable levels of consumer demand that have prevailed for a couple of years—six per cent per annum growth—have fortunately flattened off a bit.

The difficulty is that, while the superficial indicators have been mostly positive and generally there is a good feeling within the community about the state of the economy, underneath the fundamentals that are crucial to delivering longer term prosperity are rotting. The Howard government is sitting back complacently and idly thanking its lucky stars that a combination of intelligent stewardship by the Reserve Bank, major structural reforms in the eighties and nineties under the Hawke and Keating governments, a global economy that for the first time in decades has all the major economies in the world growing together and, of course, the engine of China driving demand for commodities are superficially keeping the Australian economy strong. But, at the same time as these things are occurring and we are enjoying the short-term fruits of them, underneath the fundamentals are rotting.

Our current account deficit is still around the six per cent mark and, unlike previous periods when we have had major current account deficits, we now have a huge trade deficit to go with it. Productivity has been declining for 18 months. Perhaps more disturbingly, since 1998 the ratio of Australian productivity to American productivity has been going backwards. Throughout the latter part of the eighties and well into the nineties, the gap between Australian productivity and American productivity narrowed substantially.

We managed to get our productivity up to a level of about 86 per cent of the American level—and that is quite good, because there are a range of issues, particularly scale, which will always have us a little bit behind—but since that time we have gone back to about 81 per cent. Partly, that can be explained by the extraordinarily poor performance that Australia and the Howard government have manifested in things like the roll-out of broadband. We are still well behind in the use of and access to broadband in this country compared with nations like the United States and Canada. We have very serious infrastructure problems, of which broadband is perhaps the most crucial example. Our household saving rate has now got into the negatives and appears to be entrenched in the negatives. Public expenditure on education and training is going backwards, and we are the only developed nation in the world where that is occurring.

We have been fortunate that various factors have kept the economy ticking over, particularly that debt-driven burst of consumer demand a couple of years ago, the increase in commodity prices and the fact that we have a strongly growing world economy that looks as if it will probably continue to grow, at least for some time. But, one way or another, as is always the case, the crunch is coming. I do not know when, but inevitably, when fundamentals are out of alignment so badly, the crunch will come.

What tends to happen in circumstances like these is that people start thinking that the laws of economics have this time somehow been suspended, that somehow it is all different—that, in this case, perhaps globalisation, China, India or whatever other alibi you can think of means that there will not be a day of reckoning. One way or another, there is going to be a day of reckoning for the Australian economy, when the fundamentals are so much out of whack, when so little effort is being made to invest in the core things that will deliver longer term prosperity and when we are so exposed, with a huge and growing foreign debt, a huge current account deficit, an enormous trade deficit and a big decline in household savings. These are all signs of a nation that is living it up, having a good time and not thinking about the future. The key reason for that is that we have a government that is very happy to live it up, to splash money around and to turn a blind eye to the fact that the fundamentals are rotting.

The government’s only response to this critique is to talk about its industrial relations legislation. Australia already has one of the more deregulated labour markets in the world. In reality, the only net economic impact that is going to emerge from the government’s industrial relations legislation will be a reduction in living standards for a significant proportion of Australian workers, particularly lower paid workers with less bargaining power. It will not mean higher productivity; it will simply mean a transfer from one section of the community to another section of the community. Sadly, the people who are losing out are people who already do not have very much. It will mean greater inequality, greater tension in workplaces and, as a general principle, it will not have a significant beneficial impact on productivity.

That is the government’s only answer. That is its only reform agenda: to divide Australia, to punish those people who already have very little, when the fundamentals of our economy—investment, education, training, research and development, innovation, exporting—are all rotting. Those things are all in effect going backwards. We have to turn that around. (Time expired)

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Robert McClelland (Barton, Australian Labor Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Melbourne has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

I am particularly pleased to be able to join in the debate on Appropriation Bill (No. 3) 2005-2006 and Appropriation Bill (No. 4) 2005-2006. In preparing for this debate, I looked very closely at the papers before the chamber, and quite frankly I can understand why the member for Barton was somewhat reluctant to second the amendment moved by the honourable member for Melbourne. The member for Barton is, I believe, a person of great ability, great capacity and great understanding, and I am surprised that he would choose to lend his name to such a facile second reading amendment which is so far from the truth. But I suspect that the member for Barton might well be doing so in the interests of socialist solidarity.

Debating appropriation bills provides one of the few opportunities in the chamber when members are able to rise and talk about issues of concern to their local electorates. Sure, there is an opportunity to talk about the important issue of sound economic management, which the Howard-Costello government has conducted in this country since it was elected in 1996. If I have time, I may well return to that particular issue. But I am a member for an area where the population is going to double over the next 15 years, and we do have a major problem of ongoing infrastructure needs. The member for Melbourne mentioned that we have infrastructure needs as a country, and undoubtedly he is correct. But one of the difficulties we have on the Sunshine Coast is that people move from what I like to refer to as the ‘rust belt’ areas of southern Australia to the sun belt in ever-increasing numbers, and unfortunately it takes a long time for the infrastructure which our additional population requires to follow people from the areas where they previously were.

I have been a great campaigner for increasing the size of the Bruce Highway from Brisbane to the Sunshine Coast to six lanes. The worst bottleneck between the Sunshine Coast and Brisbane—that is, the area from Caboolture to Brisbane—is being removed by upgrading the Bruce Highway to six lanes, at least as far as Caboolture. This government is spending well in excess of $200 million in improving the access of the Sunshine Coast motorway from Caboolture to Brisbane to six lanes from four lanes. That will of course mean that people travelling from Brisbane to the Sunshine Coast for holidays, to live and to work will be able to do so much more quickly.

But, unfortunately, often our infrastructure needs tend to lag behind the increase in our population. I have been in touch with the Minister for Local Government, Territories and Roads, asking that the area from Caboolture to the Sunshine Coast proper have the size of the Bruce Highway upgraded from four to six lanes. Basically, I have almost camped at the minister’s door, but I regret to say that so far I have been singularly unsuccessful in getting the minister to agree to commit the additional funding necessary to improve the size of the Bruce Highway from Caboolture to the Sunshine Coast from four to six lanes. My major concern—that is, the amount of time it takes to travel from Brisbane to the Sunshine Coast—has been somewhat allayed because, by upgrading the Bruce Highway as far as Caboolture, we have dramatically reduced the worst bottleneck, which occurred when people travelling from Bribie Island, Caboolture and Kilcoy joined the Bruce Highway. But, having said that, particularly on Sundays and particularly at peak hours it is taking people far too long to travel from Brisbane to the Sunshine Coast.

So I thought, at this opportunity, I would rise in the chamber and plead with the minister to find the additional funds necessary to give the Sunshine Coast an improved access road from Caboolture to the Sunshine Coast by increasing the size of the Bruce Highway from four to six lanes. Were this to happen, of course, it would mean that the 80 per cent of people who travel to and from the Sunshine Coast by road would be able to do so in a much faster way, many more people would come to the Sunshine Coast, many more people would holiday there, there would be a boost to our local economy, there would be an improving local employment situation and the government would get much benefit, I believe, as a result of the additional financial investment in providing much needed infrastructure.

I know the national highway is the responsibility of the national government. But, increasingly, state governments are receiving a bonanza and a windfall from GST revenue. One of the other local problems we have on the Sunshine Coast is that the Beattie state Labor government, which has so singularly failed the Queensland community in the area of health, is also failing to spend the amount of money it needs to on local roads. So, on the one hand, we have got the difficulty of getting from Caboolture to the Sunshine Coast. That is the responsibility of the Australian government—I will be the first to admit that. I will be camping at the door of the minister for roads to make sure that we do get the additional funding, ultimately, to increase the size of that highway from four to six lanes. On the other hand, once you get to the Sunshine Coast there are so many state roads that provide bottlenecks. Regrettably, our state Labor members do not seem to have the capacity to adequately lobby the Premier of Queensland, Mr Beattie, to get the additional funding we need to improve our own local infrastructure, which is a responsibility of the state government.

As I said at the outset, in a debate of this nature one is able to traverse over a few areas. Recently I called for the abolition of the single-desk marketing of AWB Ltd. The single desk, I believe, is outdated, a relic of agrarian socialism and inappropriate in 2006. The single desk is hampering some alternative grain-marketing firms reaching into new international markets. It is important to keep close watch on export activities in what is clearly a volatile and cutthroat market internationally. But I believe it is quite wrong in 2006 to restrict those alternative companies that have the skills to market our grains to untouched and niche markets in order to maximise returns to growers. After I called publicly for an abolition of the single desk, I must say I was very pleased to receive support from a number of people in the industry. It is important, bearing in mind that this government has been in office for 10 years, that we ought not continue with an outdated socialist situation where we have a single desk. It is important to bring free market sensibilities into what remains a very important Australian export industry.

All of us would be concerned at the revelations in relation to AWB Ltd, but we have also heard that this company—and it is now a private company; the Labor Party would want us all to think that it was still the Australian Wheat Board—has used its monopoly position to charge high prices for its services. Media reports seem to suggest that rival grain traders support the use of legal action to break the monopoly. This sort of internal unrest in the industry is counterproductive. It cannot be good for the industry.

Many people believe that the National Party ought to have a veto on this issue. The Liberal Party holds more rural seats in the Australian parliament than The Nationals. I think that clearly indicates that neither party should have a veto on the issue. It should be a whole-of-government decision. The National Party is 13 per cent of the coalition—a very important 13 per cent, because without that 13 per cent the government would not be able to operate. But in 2006 it is important to look at free market realities. Thirteen per cent of the coalition ought not to have a veto over this issue. We as a government should sit down and think about this. It is important that we put the economic health of the entire nation first and foremost. It is important that we do away with what really is a residue of agrarian socialism.

The current inquiry into alleged kickbacks paid to the Saddam Hussein regime has only helped to suggest shortcomings in the current monopoly system. I just think this is one of the issues that will not go away for the government. I do not believe the government has done anything wrong, but the fact that we read about these revelations concerning AWB Ltd and we hear about them in question time indicates to me that we just do not need a single desk anymore. We are well beyond that. We should be able to compete in the international marketplace. We have got a lot of companies which would like to compete in the international marketplace. AWB Ltd is holding them to ransom, and it is important to put the single desk behind us once and for all.

I would like to turn to a very important part of living on the Sunshine Coast, and that is surfing. I do not know whether you surf, Mr Deputy Speaker Jenkins. You may surf the net. I do not know whether you surf on the wonderful beaches of the Sunshine Coast. The Sunshine Coast boasts one of the most liveable natural environments in Australia. I know the honourable member for Wentworth, the parliamentary secretary at the table, is looking at me enviously over the fact that I represent, undoubtedly, what even he would admit is the most beautiful part of Australia. We have got wonderful beaches, glorious mountains ranges and year-round warm weather. This of course makes the Sunshine Coast ideal for one of Australia’s most popular sporting activities, surfing.

Surfing is not only a great activity that promotes a healthy lifestyle for all groups; it also generates local business through surfing schools, tour operators, retail outlets and local clubs. The introduction of surfing as a school sport on the Sunshine Coast has paved the way for some of the nation’s elite professionals. Australians have been consistently rated as the best surfers in the world. I do know, given the generosity the member for Wentworth has expressed in the direction of some of his own local surf clubs, that he is well aware of the importance of this industry, not only to the Sunshine Coast but to other parts of the country where people also like to surf. The Sunshine Coast has many point and beach breaks that provide high-quality, well-shaped waves. The surf breaks, by large, are not as busy as those further south on the Gold Coast, which have seen regular incidents of surf rage due to overcrowding in the water.

The Australian government encourages surfing through the Australian Sports Commission with its Project CONNECT, which stands for Creating Opportunities Nationally through Networks in Education, Classification and Training, and the national sporting organisation Surfing Australia is creating athlete pathways for people with a disability, breaking down the barriers within disability- and non-disability-specific sport structures for people with a disability.

Project CONNECT is an initiative of the Australian Sports Commission. It assists national sporting organisations, including those for the disabled, develop and implement disability action plans specific to their sports. These plans aim to create pathways and break down the barriers in sport for people with a disability, ensuring their inclusion in generic sporting structures. Surfing Australia has been involved in Project CONNECT for over two years and, together with the Australian Sports Commission, it has developed and is well on the path to implementing an inclusion action plan for the sport of surfing.

I think it is important to recognise that Surfing Australia not only supports this wonderful sport but also is a very responsible social citizen. Surfing Australia supports the right of all people, regardless of age, gender, background, ability and/or disability, to be involved in all facets of surfing, including full and equitable participation in grassroots- to elite-level surfing. This includes all individuals involved in the sport—for example, volunteers, coaches, administrators, officials and surfers, both recreational and competitive. Project CONNECT provides an excellent opportunity for Surfing Australia to work closely with its affiliates and the Australian Sports Commission to provide the best possible opportunities for ‘sporters’ with a disability. Numbers of organisations on the Sunshine Coast are part of this organisation, and I want to commend in particular two local clubs—the Alexandra Heads Malibu Club and the Caloundra Malibu Club—which are members of this organisation.

I think most people in the community, regardless of where they stand politically, would want to commend the Liberal government for our ongoing success in maintaining what has been an incredibly successful period of ongoing positive economic activity, which has helped to maintain a stable economy, low interest rates, low unemployment and considerably stronger Australian living standards. I listened very carefully to the contribution made by the member for Melbourne. The member for Melbourne does have bursts of honesty, which at times do not necessarily suit him politically or in the community, but he did recognise publicly that we do have a very sound economy. He did not quite give credit to the current government for our role in ensuring that we guarantee that the country does not spend more than it earns, but he recognised that we have a whole series of economic fundamentals out there that show that Australia is powering along fairly well.

Appropriation Bill (No. 3) 2005-2006 and Appropriation Bill (No. 4) 2005-2006 initiate modifications to the budget by providing additional financial support to various government programs. There is additional spending of somewhere near $2.63 billion, which is offset by about $603.9 million in savings. This rounds down, when one does the economic calculations, to spending of about $2 billion. Despite this extra spending, which is set out in the two bills, the government remains on track to wipe out totally the general government net debt within six months. Regardless of where you stand politically, you have to admit that this government during the last 10 years has done quite a remarkable job towards eliminating the debt of some $96 billion that was left behind by the Keating government for the Liberal government to clean up. Is it any wonder that the Australian people voted out of office a financially floundering Labor government in 1996? What has been done towards eliminating the $96 billion in the red that was left to us by Labor has been achieved by sensible management by the Liberal led government.

In my previous manifestation as Parliamentary Secretary to the Minister for Finance and Administration, I was very much involved each year in legislation relating to additional appropriations. Appropriation Bill (No. 3) initiates much needed expenditure for various portfolios—from $110 million for employment and workplace initiatives through to primary industry support services and Defence initiatives, which will further build our international reputation as a supporter of peoples in need and so on. This Defence appropriation includes $40 million for a special forces task group to be sent to Afghanistan and $16 million for helicopters and other support initiatives also for that country. Foreign Affairs will receive additional allocations, including $10 million to assist further the Red Cross in ongoing work to relieve the effects of Hurricane Katrina in the United States of America. Allocations under this bill will also go towards the Australian Federal Police—who, I might say, do a wonderful job—to continue to strengthen security at our airports and build counter-terrorism measures. Assistance through Appropriation Bill (No. 3) will go also to environmental areas, including spending to help the Great Barrier Reef and funds for the detention and prosecution of illegal fishermen.

Appropriation Bill (No. 4) facilitates additional spending payments to the states and territories, including $346 million in GST payments, $304 million for farmers suffering from the effects of ongoing drought, and funding for the Tasmanian forest agreement. Expenditure modifications also include $131 million for the Department of Health and Ageing to help with the preparations for a possible pandemic of bird flu—and that has to be a scenario which all of us would have a concern about. Also among the allocations is a further $290 million to assist the Roads to Recovery program. On the Sunshine Coast, we have been extraordinarily successful in attracting funds under this program.

The two additional appropriation bills that are currently before the House continue to build on the government’s record of sound economic management while also providing the appropriate support for those important areas of need. In many respects, Australia is an anomaly in the world in that, under the Liberal government, we have been able to cut taxes while still maintaining important spending priorities, building an impressive surplus and, as I mentioned earlier, reducing debt—and ultimately we will eliminate government debt. On behalf of my constituents, I would congratulate the government for its impressive ability to balance the needs of this ongoing commitment to our spending program while at the same time maintaining a balance sheet that has supported low interest rates and low inflation. Of course, that has to be good news for the Australian people. I am particularly pleased to commend these two bills to the House.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

As shadow minister for public accountability, one of my tasks is to promote the importance for Australia of high standards of ministerial conduct and public accountability and to draw to public attention government departures from appropriate standards of accountability. Sadly, it is the case that the Howard decade has seen a serious decline in standards of ministerial accountability. The writer Shaun Carney referred to this in the Age on Saturday and academic Patrick Weller referred to it in the Australian today. Patrick Weller commenced his article with this lament:

How is it that we have in theory a system of responsible government, though no one is prepared to accept responsibility when things go wrong?

Shaun Carney concluded his article, titled ‘The end of responsibility’, by saying:

Direct responsibility at the ministerial level is almost certainly dead in federal politics.

What the AWB affair shows is not so much that ministers are now responsible for nothing beyond the perimeters of their personal workspace but that it is becoming a matter of outraged amusement for most ministers should anyone dare suggest that it should be otherwise.

It has not always been so. The start of the Howard decade was characterised by the rigorous enforcement of the code of ministerial conduct. It saw ministers and parliamentary secretaries go down like ninepins for breaches of the code and failure to properly handle conflicts of interest. So the Prime Minister simply stopped enforcing his code, and we started hearing more and more about the escape clauses. For example, A guide on key elements of ministerial responsibility states that ministerial responsibility does not mean that ministers bear individual liability for all actions of their departments. It says that, where they neither knew nor should have known about matters of departmental administration which come under scrutiny, it is not unreasonable to expect that the secretary or some other senior officer will take the responsibility.

The flip side of this, of course, is that if ministers should have known about matters of departmental administration which come under scrutiny they must accept responsibility. But things have now degenerated to the point where this is completely ignored and the Prime Minister demands proof that ministers have actually read documents addressed to them. The government revels in its incompetence. It does not matter how strong the evidence is that Howard government ministers knew or should have known of the AWB kickbacks. For example—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Order! Member for Wills, we have a bill before the House—

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

It is the appropriation bill, Mr Deputy Speaker.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

In what part of this are you talking to the appropriation?

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, in a debate on an appropriation bill all members of the House are able to comment on matters of public importance. The member before me spoke to the AWB matter and so am I. It does not matter how strong the evidence is that Howard government ministers knew or should have known of these kickbacks, and it does not matter how often the gun is found in their hands; they say, ‘Show us the smoke.’ As a result, ministerial standards continue to decline. For example, the Department of Foreign Affairs and Trade put out a statement to say that it knew nothing of kickbacks paid by AWB, and Minister Downer says that he relies on that as evidence. But such a press release could only have any credibility if there were a possibility that the department would put out a press release contradicting the minister—and that idea is ludicrous. Permanent heads are no longer permanent; they are on three- to five-year contracts which can be terminated at the decision of the Prime Minister.

But we can see here that Minister Downer is attempting to put so much distance between himself and his department that they put out their own press releases, as though ministers are not even nominally responsible for their actions. A key problem in this breakdown of ministerial accountability has been the explosion of ministerial advisers. These are political appointments whose growth in numbers has two serious consequences for public accountability. Firstly, they contribute to the politicisation of the Public Service by interfering at ever more junior levels of decision making—ministers used to have to work through departmental heads but now, through their advisers, they are everywhere. Secondly, the advisers now constitute a key line of defence for ministers when the balloon goes up. People can say that they have written to ministers—and departmental minutes and correspondence can be found—but ministers allege that they personally did not know, despite the matter having gone to their office. The advisers only speak to the media or to the public when it suits them and cannot be called by Senate estimates committees, so the old principle of neutral, impartial public servants giving advice which ministers accept or reject—accepting responsibility for the consequences—has gone. We now live in a shadowy nether world where finding out what ministers personally knew or what they personally did is like finding a white mouse in a snowstorm.

Let me provide the House with some examples. Presently, this country is engaged in a war of aggression in Iraq which is without the sanction of the United Nations. When the Prime Minister gave an address to the nation on 20 March 2003 announcing Australia’s decision to participate in the invasion of Iraq, he said:

I want to assure all of you that the action we are taking is fully legal under international law. Back in the early 1990s resolutions were passed by the Security Council authorising military action against Iraq.

That action was only suspended on condition that Iraq gave up its weapons of mass destruction.

The Prime Minister went on to say:

Clearly we all know this has not happened.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Wills, an appropriation bill is an opportunity for members to range across the government’s appropriation and talk about all sections of the appropriation. It is not an opportunity to attack the Prime Minister or ministers. That must be done by substantive motion. I bring you back—

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, I will be taking this matter up with the Speaker. I regard that as an outrageous ruling.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

You may. I have ruled on this.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I have never heard members of this House being pulled up for raising issues to do with the Prime Minister in the appropriation debate.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

If the member for Wills wants to argue with me, I will sit him down.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

The appropriation includes money for expenditure on defence, it includes money for expenditure on the war in Iraq and therefore I am in order in speaking about the war in Iraq.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills has been told he can discuss those issues but he cannot attack individual ministers or the Prime Minister. That must be done by substantive motion.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, clearly Iraq did not have weapons of mass destruction. We can only conclude, therefore, that the invasion of Iraq was in fact illegal under international law. You would think there would be consequences; you would think there would be recriminations; you would think heads would roll—you would be wrong: no heads rolled. The Prime Minister and his ministers claimed they were acting on advice from their security chiefs, so they could not be held to account. This advice never materialised, and no security chiefs, if any of them really did provide this false advice, were ever brought to account.

No-one was responsible for this debacle. Perhaps society was to blame. Responsibility just sat out there in the murky nether world between departmental officials and ministers, as it so often does with this government. The Prime Minister’s address to the nation of 20 March 2003 also expressly accused the government of Iraq of being a funder of terrorism. The Prime Minister said:

Iraq has long supported international terrorism. Saddam Hussein pays 25—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills continues to ignore the chair. He will resume his seat.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I am quoting the Prime Minister. Is it no longer in order for me to quote the Prime Minister in this House?

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills is named.

Robert McClelland (Barton, Australian Labor Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

If I could take a point of order on that, Mr Deputy Speaker: with respect, the member for Wills was not making imputations against the character, or being defamatory, of the Prime Minister or any other minister in that respect. He was commenting more broadly on the issues affecting matters of national interest and public policy. Certainly in my 10 years of opposition, that has been a commonplace event in terms of debating the appropriation bills. While your ruling in respect of making imputations and attacking any minister or the Prime Minister’s character is appropriate, I would submit that that was not the case in respect of the argument at that time being presented by the member for Wills.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I thank the member. The member for Wills, even though he might think differently, has no right to argue with the chair and certainly has no right to tell the chair where he is wrong or whatever. Does the opposition whip want to raise a point of order?

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I was listening to your response.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

If the member for Wills wishes to continue, he will come back to the appropriation bill. My ruling stands.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, I have raised in this House the issue of this government’s involvement in the war in Iraq, which is an entirely legitimate topic in relation to the appropriation debate.

I want to raise with the House just how it is that the Australian Wheat Board has not breached the government’s own Suppression of the Financing of Terrorism Act 2002. On 28 September 2001, just a fortnight after the September 11 attacks by al-Qaeda, UN Security Council resolution 1373 called on member states to: first, prevent and suppress the financing of terrorist acts; second, criminalise the financing of terrorist acts; and, third, prohibit their nationals or any persons or entities within their territories from making any assets available to terrorists or entities associated with terrorism.

The Howard government implemented this resolution through the Suppression of the Financing of Terrorism Bill 2002. That bill passed through this House in March 2002 and the Senate in June 2002 and came into law on 6 July 2002. The act establishes the offence of financing terrorism, providing that anyone who provides funds, regardless of whether the funds will be used to facilitate or engage in a terrorist act, is guilty of an offence. The offence can be anywhere in the world. It is not limited to Australia. It can be committed by a corporation like the AWB, where the penalty is a fine of up to $1.1 million, or by an individual, where the maximum penalty is imprisonment for life. There is now no doubt that AWB provided kickbacks to the Iraqi regime and no doubt that it did so after July 2002.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills continues to read his speech. He will resume his seat.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, I am entitled to speak to these matters—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills will resume his seat. I call the member for Ryan.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I raise a point of order, Mr Deputy Speaker: on what basis have you sat me down? I am entitled to speak, in the appropriations debate, to these matters.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Standing order 75 states:

(a)

The Speaker, after having called attention to the conduct of a Member who has persisted in irrelevance or tedious repetition, either of his or her own arguments or of the arguments used by other Members in debate, may direct the Member to discontinue his or his speech.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, you may not like what I have to say.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills may take this up with the Speaker but he will resume his seat.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

You may not like what I have to say but I still have a right to say it—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

He will resume his seat. I call the member for Ryan.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak in the parliament tonight on the appropriation bills. This is an important—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Ryan will resume his seat.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I wish to move dissent from your ruling.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

You will have to do that in writing. If you want to put it to the test, you could move the motion that you be further heard, which will put it to the test of a vote.

Robert McClelland (Barton, Australian Labor Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

I move:

That the member for Wills be further heard.

A division having been called and the bells having been rung—

Mr Deputy Speaker, I rise on a point of order. I note the issues debated prior to this division in the House. Without judging the issue, and in spite of that argument, it seems to me that the practicalities were explored in his speech. Noting your argument that—

If the member for Wills draws his speech back to the bill, I would accept that. I will call off the division. The division has been called off.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

The chickens of this failed policy are now coming home to roost. The Iraqi government has suspended all wheat imports from Australia. So it is Australian farmers who will now pay the price for this cowboy foreign policy, the bribes and kickbacks entered into by AWB, and the culture of cover-up—don’t ask, don’t tell—which has become the hallmark of this government. If anyone at all still believes that the AWB thought it was complying with the UN sanctions, they should have a look at the BHP Tigris deal. BHP and AWB concocted a scheme to recover a debt from a BHP wheat shipment—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Surely the member for Wills can link this to something in the bill in order to help me out, because at present he is continuing to read a speech.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, I draw your attention to standing order 76(c), ‘Exceptions to confining debate to the question’. It says that one of the three exceptions—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wills has no right to argue with the chair. Would he please link his comments to the appropriation bill.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, given that this House has spent $1.2 billion in appropriations for the war in Iraq, it is an entirely legitimate subject for discussion in relation to this legislation. Let me point out standing order 76(c). It says that one of the three exceptions is:

on the motion for the second reading of the Main Appropriation Bill, and Appropriation or Supply Bills for the ordinary annual services of government, when public affairs may be debated.

It is an express exception to the rule about confining debate to the subject matter of the bill. That is why I have had a far and wide-ranging speech in relation to this bill, and so have other members speaking on the appropriation bill. I can recall myself and many other members talking much further and wider in relation to issues of public administration than I am doing here. I am talking about matters of public administration. I am saying exactly what this government has been up to in relation to the war in Iraq and the conduct of the Australian Wheat Board. That is why I have raised the conduct of the Wheat Board and the fact that the government was clearly aware of the problems associated with those bribes and those kickbacks.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

My understanding is that the Australian Wheat Board is not funded by the government.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, I draw your attention again to standing order 76(c), which says that public affairs may be debated. The conduct of the Wheat Board is a public affair. I know that there are some members in this house who do not want to hear about the Australian Wheat Board, but it is a legitimate matter of public importance and that is why we should be talking about it now, and other members should be talking about it as well. The member for Fisher, who spoke before me, proposed that the single desk be abolished. No-one pulled him up and said, ‘You’re not speaking in relation to the appropriation bill.’

If anyone at all still believes that the AWB thought it was complying with the UN sanctions, they should have a look at the BHP Tigris deal. BHP and the AWB concocted a scheme to recover a debt from a BHP wheat shipment to Iraq. For a recovery fee of $500,000, the AWB secretly inflated wheat contracts under the oil for food program to help recover BHP’s debt. They did this despite a federal government ruling expressly telling them that trying to recover money for the wheat would contravene the UN sanctions program.

BHP had been given approval to provide the wheat to Iraq only on the basis that it was a gift. Anything else would breach the sanctions regime. Subsequently, it decided to recover $US5 million for the wheat with interest. The Department of Foreign Affairs and Trade expressly told BHP executives Tom Harley and Mr Charles Stott, then of the Wheat Board, that trading with Iraq was banned, so seeking payment for the wheat would breach sanctions. Mr Stott was not happy. He said, ‘This sanctimonious position is inhibiting our trading relationship with Iraq and has resulted in lost opportunities’ for AWB.

So instead of dropping the matter, Mr Harley and Mr Stott worked on getting around the UN sanctions and recovering the money anyway. Mr Harley from BHP is a very well connected Liberal Party figure. Meetings of one of the Liberal Party factions have been held at his home and the Howard government appointed him to chair the Australian Heritage Commission. What is BHP going to do about Mr Harley, who is now covered in the stench of the stinking, rotting carcass of the Tigris deal? This was a straight up and down attempt to deceive the UN by BHP and AWB. These companies put out bucket loads of flowery words about their commitment to ethics and high standards of corporate governance—all that blah blah blah. Let us see some action to match those words.

Then there is the Wheat Export Authority. It admitted it had examined reported kickbacks from AWB to Iraq, contrary to the evidence it gave to a Senate committee in November. But the authority found no evidence of illegal payments, with chairman Tim Besley declaring it had given AWB a ‘clean bill of health’. Again, this is not good enough. Both the failure to discover and the failure to disclose are indicative that the Wheat Export Authority has failed in its primary mission to safeguard Australia’s wheat trading reputation. What is the government going to do about this? Turn the usual blind eye, I suppose. Lord Nelson has nothing on those opposite.

I want to take the House back to the Prime Minister’s statement of 31 January, when he said:

There were no alarm bells, there was no suggestion, there was no evidence before us that AWB was paying any bribes ...

Can the Prime Minister tell us what would constitute an alarm bell for him? We had the issue raised with us by the UN in 2002, after the Canadians raised it with them, for the very good reason that the Iraqis had asked them to pay the same sorts of bribes they were getting from AWB. How was this not an alarm bell? Then in 2003 the American lobby group US Wheat Associates made a formal complaint to US Secretary of State Colin Powell. How was this not an alarm bell? There is a quaint if somewhat vulgar expression in Melbourne: he wouldn’t know if a tram was up him till the conductor rang the bell! To hear the Prime Minister say there were no alarm bells ringing about AWB kickbacks—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Order! Member for Wills, I do not think that is parliamentary language.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I withdraw. I am nevertheless reminded of that expression. Those photos of AWB officials posing with guns in Iraq speak volumes about a cowboy outfit with a frontier mentality and a contempt for the international rule of law.

Of course, we have seen this all before. In March last year we saw pictures of the gun-toting $US20,000-carrying Liberal Senator Ross Lightfoot in Iraq. The Prime Minister refused to hold an inquiry into that matter, and boldly stated that he accepted Senator Lightfoot’s explanation of the matter, even though Senator Lightfoot had changed his story about the incident more than once. We never did get to the truth of the matter, although I did compose a limerick to try and tell the story. (Time expired)

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

The Australian public have just heard a complete diatribe—absolute claptrap—from the shadow minister over there. He is paid to represent an electorate with good representation. All he has been able to do is focus on completely irrelevant matters not relating to these bills. This debate is about Appropriation Bill (No. 3) 2005-2006 and Appropriation Bill (No. 4) 2005-2006. These bills are about the funding of the Commonwealth government and I am pleased to speak on them in a more substantive manner.

The scope and originality of these bills range across whole areas of Commonwealth government: mental health, drought assistance, bolstering our defence commitments and preserving Tasmanian forests. All these areas demonstrate that the Howard government is absolutely focused and committed to representing the people of Australia. That is why in October 2004 the people of Australia—and, in my case, as the federal member for Ryan—overwhelmingly re-elected the Howard government. At the past four elections the people of Australia have re-elected a coalition government. They have done so without equivocation. They have invested in their future; they have invested in the future of their children and of their grandchildren.

We saw no other reason why they did that than what we saw just a few minutes ago, because all we had from the shadow minister were words of complete irrelevance to the people of Australia. There was nothing about interest rates, nothing about mortgages, nothing about education and nothing about the quality of the health system. In particular, I remind any Queenslanders who might be listening that the shadow minister is not at all interested in the health of your family, your relatives and your friends—not one iota of interest from the shadow minister; not one skerrick of interest from the shadow minister, from his colleagues or indeed from the Labor Party opposition. Whereas, we on this side of the parliament are very focused and very committed and are keeping our eyes on the ball. That is why we have been re-elected. That is why the people of Australia have reinvested heavily in this government.

Since 1996 the coalition government has concentrated on delivering very real and very practical benefits for the overwhelming majority of Australians. One of the major issues has been national security. But, critically, the economy and the creation of jobs are all issues that have been at the heart and soul of why this government has been re-elected—strong leadership, focused leadership, a united government, a united coalition. Over the past 10 years some 1.7 million-plus new jobs have been created, most of them full time. Australia’s unemployment rate today sits at a record low level. We have a 30-year record low level of unemployment, something that would have been unimaginable during the Hawke-Keating years. There has been a huge improvement from the 10½ to 11 per cent unemployment we had when the current Leader of the Opposition was the relevant minister for employment—or, as we all know, the relevant minister for unemployment.

The Howard government will be celebrating 10 years in office in early March. One reason why we will be doing that is that, as I have alluded to, the people of Australia overwhelmingly re-elected the Howard government and gave us a majority in the Senate. One reason why they did so was that the alternative was unpalatable. Can the Australian people for just one moment imagine what it would have been like had the former member for Werriwa, the former Leader of the Opposition, become the Prime Minister of this country? As the Treasurer touched on in question time the other day, if he can damage a camera and smash it to pieces, what would he have done to interest rates in this country? What would he have done to the reputation and the integrity of this country? What would he have done to the stability of the US alliance? That is something that all of us on this side of the House know he has absolutely little concern for.

Those on his own side of politics now rue the fact that they elected him. I am not sure if the shadow minister at the table, the member for Barton, cast his vote in favour of the former Leader of the Opposition or the current Leader of the Opposition. Who knows? I am sure he has given it a lot of thought since. I suspect that he was very weak in his deliberations and turned his focus to the former member for Werriwa, Mr Latham. (Quorum formed) Once again we have a federal Labor member turning his attention to distracting the parliament and distracting coalition members when they are speaking on important policy matters. If only Labor members decided to focus on policy, they might just win an extra seat or two. But I doubt it very much, because all they are interested in is party infighting and challenging shadow ministers.

I turn my attention now, since an opposition member kindly reminded me of this, to the former leader of the federal Labor Party and his contribution to this parliament. I want to turn the House’s attention, and indeed that of the public, to some of the fine words of wisdom from the former Leader of the Opposition. On page 186 of his book, where he talks about the contribution of the unions—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Ryan, I hardly think anything from the former Leader of the Opposition has anything to do with this debate. It is a debate on the appropriation bills, and I would draw you back to the appropriation bills.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I am happy to link this to the appropriation bills in this sense. The Howard government’s contribution to the national economy would have been very different had the Labor Party won office. The alternative Prime Minister that was put up by federal Labor at the time was the former member for Werriwa. It is important that the people of Australia know the judgment capacity of the Labor members sitting in this parliament. This goes to the very question of their judgment. That is why it is important. They put up in the former member for Werriwa someone to be Prime Minister of this country, and therefore it is very important—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Ryan, this has nothing to do with the appropriation bills. Come back to the appropriation bills.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I am happy to come back to the policies and the substance of these appropriation bills, because that is why the people of Australia re-elected the Howard government in October 2004. We know that many of the initiatives covered by these appropriation bills have been spoken to by other members of the parliament, including those on the coalition side. Let me turn my attention to some of those matters. The Howard government remains very focused on delivering to the Australian people the security of a strong economy—security that was absent under the previous Labor government—to allow people to provide the very best for their families and to confidently plan for the future. As the member for the federal seat of Ryan in the western suburbs of Brisbane, I know just how important issues like interest rates and the mortgage payments of families are to ordinary and everyday constituents in my electorate.

One of the mandates that the people gave to the Howard government was to continue to work hard and to ensure that interest rates are kept as low as possible. The Labor economic record speaks for itself. When it left office, Labor’s final budget in 1995-96 was a deficit to the tune of two per cent of this country’s GDP—in excess of $10 billion, the equivalent of almost $20 billion in today’s terms. In its last five budgets Labor deficits totalled some $70 billion.

The Howard government was able to restore the budget to surplus in the 1997-98 budget, a year ahead of predictions. Since then the Howard government, with the Treasurer having responsibility for economic management, has contributed surplus budgets for the benefit of the Australian people. The 2005-06 budget was in surplus by $8.9 billion.

Job creation has been a top priority of the Howard government. We know exactly where the Labor Party stood when it was in office. I touched on the comparisons earlier in my presentation. Almost one million Australians were unemployed in 1992, when Mr Keating was Prime Minister of this country. Since 1996, when Mr Howard came to office, leading a coalition government back into office, 1.7 million new jobs have been created and the unemployment rate has fallen to its lowest rate in three decades.

We all know that tax reform is very important to the continuing prosperity and economic development of this country. This government has a major focus on discussion and dialogue about the rates of taxation and where the balance is right for it to be able to service its needs as the government of the day whilst always remembering that taxes belong to the Australian people. It is the people’s money. It is the money of the people of my electorate of Ryan. It does not belong to a government as such. Any revenue collected by a government is always the people’s money. The government has a commission to act in the best interests of the Australian people.

We know that the opposition voted against $21.7 billion worth of tax cuts in the 2005-06 budget. This is despite the fact that now, as a result of successive tax cuts in the 2003-04, 2004-05 and 2005-06 budgets, over 80 per cent of taxpayers will face a top marginal tax rate of 30 per cent or less and taxpayers will not reach the highest marginal tax rate until they earn approximately three times the average weekly earnings. Let us turn our minds back to last year when the Treasurer delivered his budget. We did not get the full support of the federal Labor Party. In fact, they stood shoulder to shoulder voting against any tax cuts that this government wanted to put through. The Australian people will remember that very well indeed.

A report on Australian social attitudes released by the Australian Bureau of Statistics in 2005 found that some 80 per cent of people surveyed said that they were very proud of Australia’s economic achievements. Indeed, they have every right to be proud. They have invested in this government. Through the re-election of the Howard government they have invested very strongly and very confidently in the leadership of this country.

The magnitude of Australia’s successes under this government is particularly stark when ranked against the management of this country when Labor was last in office. I remind the people of Ryan that, if they ever have any doubt, if they ever have any reservation about what the Labor Party could do to the economy, they should turn their minds back to interest rates that were double digit, 20 per cent plus. If people were in small business, it was almost 25 per cent or 26 per cent. I well recall my parents facing great stress when they had to come to terms with paying interest rates for the home that they now own.

Fifteen years ago, Australia’s income per capita had fallen to 19th in the developed world. Today Australia is roughly the eighth highest. In today’s Australian my electorate of Ryan is ranked sixth for general levels of happiness and satisfaction among constituencies across the country.

Philip Ruddock (Berowra, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

It must be the quality of their member.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I am sure that they are delighted that their federal representative is a hardworking, dedicated and very committed Liberal member, but I will be modest enough to say that it is because of the confidence that the government of Australia has been able to create by its strong national leadership in all affairs of state—from the economic management of this country to protecting our borders through strong national security legislation. I am delighted that the Attorney-General is in the House this evening. I am honoured that he is here as I make my presentation on the appropriation bills.

As the federal member for Ryan, I have the privilege of representing the constituents of Ryan. I find it very important to remind them what Labor did when it was in office. Were Labor ever to get back into office, there would be no sympathy whatsoever for the deep pockets that would have to be found amongst the people of Ryan because of what would follow—a skyrocketing of interest rates, something that the overwhelming majority of Australians and Australian families had to face very significantly previously.

We know that the net government debt that the Howard government had to deal with was quite substantial as a result of the Labor legacy. There was an average government debt across the OECD nations of approximately 50 per cent of GDP. This has now been almost eliminated. Total household disposable income has grown in real terms by more than a third over the last decade. Over the same period, real private sector wealth per capita has more than doubled.

Due to the combination of the relatively low levels of taxes paid by the poor and Australia’s very progressive policies, OECD research has shown that Australia redistributes more to the poorest 20 per cent of its population than virtually any other developed country. We can be very proud that we give enormous emphasis to those Australians who are less fortunate than ourselves and who need as much assistance as possible.

I want to say to the people of Ryan that it is a great pleasure—a great honour—to represent them in the Australian parliament. The Howard government will not forget the faith that they have placed in the coalition government. I am sure that all my colleagues on this side of the parliament will fully acknowledge that we have a great honour in representing the people of Australia as their government. In this new year of 2006 it is incumbent upon us to rededicate ourselves to the hard work that lies ahead in keeping on track the economic progress and economic successes acquired in the last decade.

We do not want to have a recession. We do not want to have ‘the recession we had to have’ that was the handiwork of the Labor Party and former Prime Minister Keating. I am delighted to be able to say that the Howard government will continue to focus on reform. Reform fatigue is not part of this government’s vocabulary. Reform fatigue, quite remarkably, is something that belongs to the federal Labor Party. One would think that in opposition your focus would be entirely on coming up with policies and ideas and rejuvenation. Yet all we have is the opposite. All we have is federal Labor members at each other’s throats, with former leaders of the Labor Party criticising current leaders and indeed a former federal Labor leader fighting for his political skin.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Ryan, I fail to see how this has anything to do with the appropriation bills.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I commend the appropriation bills to the House. I am delighted that the national economy will continue to be in the hands of a coalition government.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

As I rise this evening to speak on Appropriation Bill (No. 3) 2005-2006 and Appropriation Bill (No. 4) 2005-2006 I suggest that it is difficult to provide a detailed critique of them, given the loose descriptions of the outcomes and outputs in the budget documents. Moreover, this is part of a long-term trend towards lower standards of transparency and accountability in budget documents and fiscal disclosure.

It is no wonder: this government has a lot to cover up—and not just the Australian Wheat Board scandal. Much of its spending has been brazenly wasteful and politically motivated. I refer particularly to the exorbitant propaganda campaign provided for by these appropriation bills to sell the Howard government’s draconian industrial laws to the Australian people using taxpayers’ money—their money. There was the Regional Partnerships Program, which was nothing but a pork-barrelling campaign for the coalition in the lead-up to the last election. I will also remind the House this evening that this is a government that blew $66 billion to get itself re-elected in 2004.

This is a big-spending government, living for today, ignoring intergenerational issues and the prospect of a shrinking tax base, and failing to invest in the important things for tomorrow, particularly education, skills and training for Australian workers. This is a government that spends more than nine per cent of GDP on welfare but directs it to rich families. It is a government that makes access harder for those who really need it. This is a government that pays welfare to millionaires. It pays millionaire wives to stay at home but expects poor single mothers to go out to work for $3 an hour.

As my colleague the member for Rankin has expressed and exposed, 76 millionaire families received welfare payments last year alone, along with 38,000 families on incomes above $100,000 per annum. In the next few years is it any wonder that Australia’s total welfare bill is likely to reach $100 billion a year? This is a bill the nation cannot afford. It is a bill the nation should not have to pay at a time when unemployment is low and the country is riding the wave of a resources led boom. Welfare dependency should be falling, not rising to the highest levels ever seen in Australia’s history. I agree with the member for Rankin when he says that Australia’s welfare state is out of control.

Meanwhile, with welfare at unprecedented levels, the biggest threat to the economy is the lack of skilled labour. Workforce participation is not as high as it should be. Recurrent public spending on vocational education and training dropped by 3.1 per cent in 2004. This government has turned away 300,000 Australians from TAFE places since 1998. Spending on health is spiralling out of control—at nearly 10 per cent of GDP. Nothing has been done to address the critical structural weaknesses and workforce shortages.

Before I discuss workforce shortages specifically this evening, I ask the House to contemplate the gravity of the health and welfare cost burden and to consider its unsustainability. Almost 20 per cent of Australia’s GDP is gobbled up in health and welfare spending every year. It is one-fifth of our production and the bill is growing. That is what it amounts to. Returning to the issue of workforce shortages, this government’s answer to the problem of the shortage of doctors is to increase full-fee-paying places for medical training. It is a policy measure that will only encourage Australian trained doctors to chase the big money overseas to pay off their exorbitant debts or to restrict access to the rich. The reality is that we need more HECS places for Australian students and we need programs that will encourage young people into training and retain those Australians most likely to fill chronic shortages back home in Australia—and also those especially important shortages in remote and regional areas. The people for those areas are not likely to come from the inner urban rich. They may well be bright kids from poor rural households who just need a fair go to get a start in life.

In my own portfolio, resources, the same thing unfortunately applies with respect to skilled labour. The facts show that we are not training enough people in engineering, science and trades who are prepared to work and live in remote and regional Australia where our mines, resources, forest industries and oil and gas industries are—industries that we are so dependent on.

When I gave my speech on the 2004-05 supplementary appropriation bills just two days short of a year ago, I suggested to the House that little had changed. Australia was then riding the back of a resources boom. That remains the case today. A year ago I said in the House that if this government were really serious about job creation and economic growth it would do something about the skills shortage in this country—a shortage which unions and employer groups both said was holding back economic growth. I said then that:

... $20 billion worth of major infrastructure and resource projects could be in jeopardy as a result of skills shortages primarily in trades and engineering areas.

I said the skills shortages were placing a serious capacity constraint on the economy. A year has passed but nothing has changed. The only difference is that today it is not me, the member for Batman and shadow minister for resources and tourism, saying it; it is the Reserve Bank of Australia. The Reserve Bank has acknowledged in its quarterly statement on monetary policy that skills shortages flowing through to labour costs are putting pressure on inflation. That is an issue of major concern to the Australian community. What it did not say was that this is a bad sign for investment and for new and expanded infrastructure and resource projects—the projects that underpin the economic health of Australia at the moment. Yet as far as skills and training is concerned, all we got from COAG last week was spin and no solutions.

I believe that this is a government of inertia—a government that is failing to properly and urgently invest in skills and in the training of Australian workers. This is a government that has failed the test of national leadership and allowed COAG to fall into the same inertia trap, with review after review. You just need to go through the list of outcomes from last Friday to see committee after committee and task force after task force, with more layers of oversight and more rhetoric, but no action and no real reform. That is the conclusion one gets from reading the outcomes of COAG from last Friday.

It is worth taking a hard look at COAG because we really have to think about where we are going as a nation. When I read the human capital component of the national reform agenda, what struck me most was that Australians would be surprised that it is suggested that this is a new agenda. We would all agree that the principles are honourable, but that is no more than we should all expect of good governance. In particular I note the commitment to a national approach to early childhood development and a focus on health promotion and disease prevention. However, the COAG communique is lacking any significant level of detail that would identify what action will be taken over the next few years to make serious inroads into these goals—although we have been promised various reviews and implementation reports some time down the track.

The next plank in the national reform agenda is competition. Competition with respect to energy, which is one of my portfolio responsibilities, must be a priority. Whilst the commitment to a progressive national roll-out of smart meters from 2007 is to be commended, it is highly qualified. Again, only time will tell whether the initiative is truly national in character. Beyond that, we have been promised a recommitment to earlier COAG reform proposals and a new ‘high-level expert energy reform implementation group’. I must say that is interesting, given the history of so-called energy reform in Australia. This new committee is due to report back to COAG before the end of 2006 on a range of energy market issues, including options for a national grid—I have heard that before—structural weaknesses in the electricity market and financial and market pressures to support energy markets. What the communique does not say is that this new committee is the Prime Minister’s latest attempt to address the inertia of his energy minister; the Ministerial Council of Energy, which also reflects some criticism of state and territory energy ministers; and the National Electricity Market Ministers Forum on real energy policy issues. Collectively, they have done virtually nothing over the last five years to progress these issues. This is an exceptionally important point, because we are no further advanced on the national energy market reform than we were when the Parer review was announced in June 2001, along with the establishment of the ministerial council and the national energy market.

The Parer review was released in December 2002 and only a handful of its recommendations have ever been implemented. It was August 2002 when the Productivity Commission review of the gas access regime was released. COAG now promises a response by the end of 2006. Guess what: a full 2½ years later—and people suggest that this government does not suffer from inertia! Then we go to post Parer, in 2002. Legislation was introduced in mid-June 2004, at the eleventh hour, to set up the Australian Energy Regulator and the Australian Energy Market Commission. It took another year to agree on who would head it, where it would be located and how it would interface with the ACCC, with operations not actually commencing until July 2005. I would hate to see a government that was in a big hurry. And this government tends to suggest it is committed to reform! This government’s answer to the problem is to go back to June 2001 and make the same mistakes again: another national body, a review of the same issues and still no action or leadership at the national level.

I remind the House of these issues this evening because nothing has changed in the last year. It is almost as if today is groundhog day. A year ago, I said:

Internationally competitive supplies of energy are critical to Australia’s global competitiveness in a range of manufacturing and value adding industries, and while the success of the reforms of the 1990s cannot be denied, nor can the fact that much more needs to be done.

And that is the challenge to the House. COAG recognised this by commissioning the Parer report, but little action has been taken by the government. The Parer report correctly identified all the deficiencies in our energy markets but unfortunately barely any of its recommendations have been implemented. Our electricity and gas sectors remain burdened by excessive regulation, overlaps in regulatory roles, slow and cumbersome code change processes, anticompetitive marketing practices, poor market design and poor, if any, planning mechanisms. It is time for this government to get moving on both the Parer and the Productivity Commission recommendations.

I recall my colleague the member for Hunter saying this many times during the course of the last parliament when he was the shadow minister responsible for energy, as I am now. While we are still at groundhog day, let me remind the House that I put it to the House last year that a serious debate on financing and pricing of new transport infrastructure needs to take place in this parliament and in the relevant ministerial councils of this country. One year later, I am pleased that COAG has finally committed to asking the Productivity Commission to develop proposals for efficient pricing of transport infrastructure by the end of 2006, but the list of reviews and new committees from last Friday’s COAG outcome goes on. In fact, in the competition section of COAG alone, at least 37 reviews were mooted—and as many as 64, depending on the interpretation of the communique. This is what the government calls action.

Yes, it is a government in action—with committees and reviews—but no amount of reviews or changing of the guard will deliver reform. Real reform requires us as a nation to face up to tough decisions. It requires leadership from the national government, it requires cooperation with state and territory governments and it requires joint action. In the area of health, I am pleased to at least note that COAG has a focus on health promotion, on disease prevention and on mental health. That is an exceptionally important breakthrough, and the state and territory governments and the Commonwealth government are to be commended on that front.

Let me also remind the House that it has been federal Labor that has led the way by putting prevention at the heart of our health system, especially with respect to the issue of mental health. It is two years since my colleague the member for Lalor advocated wellness checks in a speech at the National Press Club. Just last week she launched Labor’s health promotion and illness prevention for Australian children initiatives. In the area of mental health, the COAG communique is long overdue and it recognises that mental health is a major problem in this country. We cannot afford delays in detailed action plans and I, for one, will be watching closely to see that the 2006 deadline is met. That might be an appropriate time to stop, given the hour of the day. I seek leave to continue my remarks.

Leave granted; debate interrupted.