Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I am delighted to contribute to the debate on Appropriation Bill (No. 1) 2006-2007 and cognate bills of the Commonwealth budget recently handed down by the Treasurer, the Hon. Peter Costello. The budget is an important element of the Howard government’s disciplined plan to strengthen our economy and make Australia more secure so families can plan for the future with confidence. The budget measures introduced in these appropriation bills should not be considered as a set of measures in isolation. The recent budget measures build on the reforms and tough decisions made by the Howard government over the past 10 years. The budget provides a prescription for a continuation of the sustained economic growth, job creation, low interest rates, reduced taxes and low inflation which have typified the national economy under the coalition government.

It is my assessment that the 2006 budget has been well received by the Australian community and by all serious commentators over the past two weeks. It is worth looking at the budget paper and putting on the record our pride in the achievement of the Howard government. Economic growth since 1996 has been 3.5 per cent per annum, and that economic growth is the basis of all prosperity for Australia. Gross domestic product has risen by 23 per cent in real terms since 1996 and we have the eighth highest living standards in the OECD. It is interesting that, if you look at the standard of living table, Australia has moved from 13th in 1995 to No. 8 in 2005. So here we have it on the record that the standard of living for all Australians has improved.

We have had sustained budget surpluses. The position for 2006-07 is $10.8 billion in surplus. This is particularly important as we face the challenges of our population, which is ageing rapidly. We have also seen the elimination of government debt: the $96 billion of Labor government debt from 1996 has come down to zero. This saves approximately $8 billion per year, which can be allocated to other areas of government activity. Low unemployment is a major factor. More Australians are now in jobs. The unemployment rate is now five per cent, its lowest level since 1976, whereas in the early 1990s we had an unemployment rate of 11 per cent. We have low interest rates. In March 1996 the standard variable mortgage interest rate was 10.5 per cent, whereas in 2006 it stands at about 7.5 per cent.

There has been a lot of comment on the budget about China and the impact of the commodity boom and I would like to make some comments on that important aspect of Australia’s current prosperity. Strong world economic growth, and in particular the growth of China, is driving demand for Australian commodities and forcing commodity prices higher. Higher prices for Australian resources have provided a boost to the national economy and are encouraging growth in business investment. Business investment has grown by 75 per cent over the past four years.

The budget papers show that demand for our resources by China and other economies has resulted in a huge rise in Australia’s terms of trade, representing the ratio of prices received for exports to prices paid for Australian imports. There is also a very intelligent discussion in Budget Paper No. 1 on the continuing strong growth in China and its potential impact on the world economy in future years. In particular there is analysis of the Chinese economic growth pattern relative to the rates of growth experienced in early years by Japan, the ASEAN four countries—Indonesia, Malaysia, the Philippines and Thailand—and the north-east Asian newly industrialised economies, and of the impact on Australia if growth continues. Members would recall the discussion in this parliament about the growth of Japan and other Asian economies—South Korea in particular—after the Second World War which had an impact on the Australian economy.

Whilst the general outlook for China is positive, with a beneficial flow-on for Australia, the budget papers do recognise that no-one has a crystal ball and predicting the future of commodity prices is a perilous activity. In this regard I noticed in a report in the Australian Financial Review of Friday, 12 May 2006 comments made by respected Wall Street trader Mr Bill Miller, the implications of which urge caution in estimating the longevity of the commodity boom. Mr Miller is quoted as stating:

The time to own commodities is, or at least has been, when they are down, when everybody has lost money in them, and when they trade below the cost of production … That time is not now.

This article reports that raw material prices rebounded in 2002 as a result of strong demand from China and other economies after 20 years of difficulty. Projections of a continued boom rely on an estimation that demand for commodities will remain strong despite higher prices. The Financial Review report concludes that ‘any deceleration in China’s growth rate could send raw material prices tumbling’.

As a farmer, I entirely agree with that assessment that commodity prices are very difficult to estimate and when they are at a high point, as they were with wool, cattle and other commodities, that is the time to be well prepared. Budget Paper No. 1 recognises the possibility of faltering growth in our resources export markets. It goes on to say:

Developments across the rest of the globe are also relevant to whether resource prices remain high for an extended period, and whether China and India continue to grow rapidly for many years to come … global demand and supply responses to the currently high resource prices may have a powerful moderating influence on prices, although with uncertain timing.

Nothing could be closer to the truth. None of us—in this parliament, in the financial circles or Australians generally—knows when the Chinese boom might come to an end. In fact, today’s Age newspaper reports on the Chinese concerns over the high price rises for iron ore being negotiated on the world market. The report quotes an editorial in the Chinese government owned China Daily:

… when overcapacity is looming in China’s steel industry, rising ore cost that further bites into domestic steelmakers’ profits could turn the current boom into a bust and no one will benefit.

There we have it from the other side of the globe. Even the Chinese government are concerned about this boom.

This comment from China emphasises some of the difficulty in forecasting the potential longevity of the resources boom which is underpinning economic growth in Australia and internationally. Whilst everyone in this House would hope for a prolonged, sustained growth in the economies of China and India, it is important that the Australian government take steps to establish a domestic economy that will be resilient and continue to grow in a sustained manner, irrespective of the unexpected shocks that the international economy can deliver.

Again, it is worth looking at the position of China as the second largest economy in the world. It is suggested in some of the budget papers that China could, in 15 years time, surpass the USA as the world’s biggest economy. Currently India is the fourth largest economy in the world. However, the budget papers indicate the share of international activity is rising rapidly in China—something of which we should be fully aware. Members of this House should also be very aware of the political and social stability of China which could suddenly change, given the massive project, the Three Gorges Dam, the 600 million peasants that have moved from the countryside to the cities and the fact that China has no real democracy and there is no accountability in the system. The one-child policy in China has meant that the working age population in 10 years time will be falling whereas in India the working age population will be rising for the next 40 years; likewise in the USA. There we have it: a fundamental factor in the wealth of Australia is these booming economies around the world, particularly those Asian nations.

I turn to the fundamentals of the budget. There is a strong $10.8 billion underlying cash surplus forecast for the 2006-07 year. This is the government’s ninth surplus in the last 10 budgets, unlike the previous Labor government that had a capacity to run most of their budgets in deficit, particularly in the latter years of the Keating government. By running surplus budgets, the Howard government has eliminated net debt. We have now completely paid off Labor’s $96 billion debt and by paying off that debt there will be $8 billion to spend each year, formerly spent on debt interest payments, that can be directed to help relieve the cost pressures in Australian families, to help older Australians and to secure and defend our country. Whilst the Labor Party put the government into huge debt, we have put the government onto a very strong footing for future generations.

Through good financial management, the government has established the Future Fund with an initial capital injection of $18 billion. Further contributions will be obtained from future budget surpluses and asset sales. I have said before it is important to note, in the context of the debate on these appropriation bills, that the Future Fund is a bold move by the government to invest funds today to meet the future costs of public service liabilities. I have made the point back in my electorate, and I make the point again in the House, that the Future Fund is a very courageous move by the Treasurer and the government. Historically, governments have not met these future superannuation liabilities; they have let the next generation of governments pay for them. It is not a vote winner, but this government has taken the responsible position of setting up the Future Fund to cover them, making sure that these public service liabilities will be met in future.

The Australian economy is estimated to grow stronger next year with economic growth estimated at 3¼ per cent in 2006-07 compared with a forecast of 2½ per cent real GDP this current year. Inflation, which is a very important factor, is estimated to remain at low levels, within the Reserve Bank of Australia target range, at 2¾ per cent next year. Unemployment, as I said earlier, is the lowest for 30 years at 5.1 per cent in April 2006 and further growth in employment is projected for 2006-07. I note the remarkable record of the government with over 1.7 million additional jobs created over the past decade.

I now turn to the taxation debate. There has been a big debate in the last six to nine months in Australia and in this parliament about the need for reform of the taxation system. The impact of Australia’s high marginal tax rate of 47 per cent, or 48.5 per cent with the Medicare levy, on the aspirations of our best, brightest and most skilled workers has been of significant concern to me and other commentators over the past few years. If Australia’s top marginal tax rates are too high, then we risk a brain drain out of this country as talented Australians leave to find high paid employment in lower tax countries, where they will be able to retain the benefits of their hard work and initiative. I emphasise that point. People can move around the world, they can take up work in particular occupations and they can enjoy certain tax advantages in some of the OECD countries that have a lower tax rate where their work will be appreciated and they will get considerably more benefits, whereas in the former taxation regime they were losing about half of their income at the highest tax rate level. The Treasurer announced cuts to personal income tax valued at $36 billion over four years. These tax cuts will benefit Australian families and improve their ability to meet living costs.

Mr Deputy Speaker, I seek leave to have incorporated in Hansard a table and graph showing Australian income tax rates and a comparison of the top tax rates and thresholds in the OECD.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Is leave granted? Leave is granted, subject to the Speaker’s guidelines.

The table and graph read as follows—

(Source: Budget Strategy and Outlook 2006-07: Budget Paper No. 1, page 1-10

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I understand that. Thank you. If we look at the tax system inherited from the Keating government, we see that the top tax threshold kicked in for an income of $50,000 compared with an income of $150,000 from 1 July 2006 under the Howard government’s budget proposal of 9 May. In the table, we can also see an across-the-board reduction in tax rates, meaning that Australians can now retain a higher percentage of their income after tax. These tax cuts will produce reductions in the taxation rates which will improve Australia’s competitiveness against other OECD countries. The 45 per cent top marginal tax rate plus the Medicare levy will be in line with the OECD average of 46.7 per cent. The increase in income level at which the top threshold is implemented will place Australia 10th in the OECD. That is recorded in the graph that I have incorporated in Hansard.

I have argued for many years that the tax rates in Australia were based on those in about 1960 when the higher tax rates were eight times average weekly earnings. With the impact of inflation since 1960, the highest tax bracket threshold got I think as low as 1¼ times average weekly earnings. These new measures mean that we are now back to a more reasonable position where the highest tax thresholds are three times average weekly earnings. I do not think anyone could argue with that. It is a reasonable position and is internationally competitive with other nations.

In the new tax rates from 1 July 2006 I particularly note the negligible tax rate of 15 per cent on $6,000 to $25,000 for lower income earners. From $25,000 to $75,000 it is 30c in the dollar. I note that 80 per cent of Australian taxpayers will pay only 30c in the dollar. For those earning higher incomes, $75,000 to $150,000, the tax rate is 40c in the dollar and those earning over $150,000 will pay 45c in the dollar. The rates are moving in the right direction. I commend the Treasurer and the government on making these changes after quite vigorous debate on both sides of the parliament. Even those opposite argued that some of the rates on overtime that hardworking Australians sustained were of a very high order, and that influenced the debate.

I would like to commend the budget for the allocation of $270 million to rail infrastructure. Personally I have taken a lot of interest in railway matters. I participated in the inquiry of the Standing Committee on Communications, Transport and Microeconomic Reform that produced the report Tracking Australia which looked at this whole debate.

Gary Hardgrave (Moreton, Liberal Party, Minister Assisting the Prime Minister) Share this | Link to this | Hansard source

An excellent committee.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

The Minister for Vocational and Technical Education at the table participated as well in that committee and made a great contribution at that time. The inquiry looked at the importance of rail infrastructure receiving some capital improvements. The Tracking Australia report, tabled in August 1998, recommended a national track standard gauge linking Brisbane and Perth and also investment in the national track infrastructure. It suggested that the Commonwealth invest $750 million to fix the worst deficiencies on the national track over the following three years and that it should invest $2 billion over the 10 years from 2001. The chairman of that committee was Mr Paul Neville, the member for Hinkler, who has been a strong supporter of railway infrastructure and has taken a great interest in these matters.

I am delighted that in this current budget, after lobbying from that committee in the early years and from the Australian Rail Association and others, the importance of the government, the private sector and the rail companies investing in rail infrastructure has been recognised. The government is going to invest $270 million from 2006 to 2009. The House of Representatives Standing Committee on Transport and Regional Services recently heard an outstanding presentation by Mr David Marchant, the CEO of the Australian Rail Track Corporation, in which he made the observation that with the introduction of some smaller capital amounts, relatively speaking, the north-south line from Brisbane to Melbourne could be improved and the times taken for those train journeys could be reduced quite dramatically.

This injection of capital will improve passing loops, communications systems, bridges and of course the rail infrastructure itself. It is interesting to note that 75 per cent of the freight on the east-west rail route goes by rail. It would be my hope that, with the freight task I think doubling by the year 2020, a large percentage of the north-south freight—that is, Brisbane to Melbourne via Sydney—will be moved back onto rail. I commend the government on that particular initiative. It does not get a lot of headlines, but in 20 years time I think people will be delighted.

Could I just recognise the funding of the Geelong ring road, the 120 places in the Deakin medical school and the $300 million allocated in Roads to Recovery to all the shires and municipalities around Australia. That is a great initiative. This is an outstanding budget. It is soundly based and it sets a blueprint for the future.

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

I welcome the opportunity to speak on the appropriation bills for the 2006-07 budget. There is no doubt in my mind that this budget was a squandered opportunity and is a budget that sold the country short. It is a budget that failed to invest in Australia’s future. It is a budget with the Treasurer’s eye on the Prime Minister’s job, not the Treasurer’s eye on the long-term economic interests of the nation. This government’s failure to invest in the skills of our people, its failure to provide political leadership on infrastructure and the failure to put more incentive into the tax and benefits systems, particularly for women, has not impressed the Australian people. The budget handed down on 9 May had a political horizon of 12 months and not much more. It did not deliver an economic strategy for this country well into the future, particularly when an ambitious economic strategy or vision was required to lift our productivity and competitiveness, to create wealth for the future and to maintain and protect our future prosperity.

Nevertheless, it has received some good headlines around the place, and plenty of people from the Liberal Party side of politics have a lot of good to say about it. So I guess the Treasurer must have choked on his Weeties this morning when he picked up the ACNielsen poll and saw the results of the post-budget poll—$60 billion in extra spending and the government goes backwards. That may not necessarily continue to be the case, but I do not think the Treasurer really got what he was looking for there, certainly if you are to believe the propaganda that is coming from the government. What this really shows is that voters have wised up and have had enough. They have had enough of the short-termism—of the short-term, politically motivated bubble and squeak that passes for an economic agenda under the Howard government. They have had enough of the dog breakfasts of political patronage, token gestures and big headline, small bottom line economic reforms that pass for an economic agenda under this government and under this Treasurer.

All of the Contiki tours of Liberal Party backslapping in the world cannot save this budget and the reception that it has received from the general public, who were desperately looking for a long-term economic agenda, an ambitious economic agenda, that would enable us to protect prosperity and invest in this country well into the future. All of those silly hats, the bright overalls and the boat burnings in the world will not change the fact that the general public knows that this budget has no plan for the future, has no plan to build future prosperity, has no plan to boost productivity and participation, has no plan to ensure we can continue to compete with the economies of China and India and the Asian region more generally, has no plan to ensure Australian workers move up the food chain with higher skills and higher wages—not down the food chain with lower skills and lower wages, which is this government’s vision for the future—and certainly has no plan to keep inflation and interest rates low. It is with that in mind that I move a second reading amendment which will be seconded by the member for Ballarat:

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 and rising levels of taxation 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)

provide national leadership in infrastructure including high speed broadband for the whole country;

(d)

further reduce effective marginal tax rates to meet the intergenerational challenge of greater workforce participation;

(e)

provide accessible and affordable long-day childcare for working families;

(f)

fundamentally reform our health system to equip it for a future focused on prevention, early intervention and an ageing population;

(g)

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

(h)

provide for the economic, social and environmental sustainability for our region, and

(i)

address falling levels of workplace productivity; and that

(2)

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

(3)

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

I would like to briefly deal with some of the spending measures in Appropriation Bill (No. 1) 2006-2007, Appropriation Bill (No. 2) 2006-2007 and Appropriation (Parliamentary Departments) Bill (No. 1) 2006-2007. Appropriation Bill (No. 1) deals with the ordinary general operating services of the government and seeks an appropriation of $53.3 billion in 2006-07. Appropriation Bill (No. 2) includes tied grants to the states under section 96 of the Constitution and non-operating equity injections and loans and seeks an appropriation of $9.2 billion. Appropriation (Parliamentary Departments) Bill (No. 1) seeks $171.6 million for the three parliamentary departments. There are some sizeable spending measures here which will be dissected in detail by later speakers—$792 million for the C17 heavy airlift aircraft, $106 million for Afghanistan reconstruction, $310 million for Iraq, $302 million for family tax benefit changes, $49.8 million for psychiatrists and psychologists, $43.4 million for health prevention and early intervention, $38 million for older patients in public hospitals, $29 million for medical research, $76.9 million for local roads, $122 million for national roads, $240 million to reverse the introduction of the heavy vehicle road user charge, $230 million saving from agreed reductions in GST budget balancing assistance payments to the states, and $70.6 million to pursue tax fraud by offshore entities.

The additional funding being sought in Appropriation Bill (No. 5) 2005-2006 includes $500 million for the Murray-Darling Basin Commission, $310 million for Cyclone Larry assistance and $243 million for the Australian Rail Track Corporation. Many of these measures are beneficial; some are not so good. My colleagues will spend some time going through those and dissecting them one by one, but together they do not amount to a plan for the future. They do not amount to a plan which invests in the drivers of growth that this country desperately needs.

Of course, there are a number of dubious measures that my colleagues will deal with. For example, there is $52 million to increase consumer awareness of the incentives and benefits associated with private health insurance—another government advertising campaign, I should imagine. Some worthy causes have been acknowledged: $1 million funding for the Donald Bradman memorabilia tour of India, an extra $1.5 million to the Stockman’s Hall of Fame and $900,000 allocated to encouraging young people of diverse backgrounds into surf lifesaving—quite worthwhile measures.

The central feature and problem with this budget is what is not in this budget. When you strip away all of these measures, all of the spending and all of the revenue, what you really see is that there is nothing additional in this budget when it comes to the skilling and the education of our people. Our most critical comparative advantage in the challenge that lies before us to create wealth is the challenge of competing in the region, particularly in the Asia-Pacific, through lifting our productivity and our competitiveness. That can only be done by playing to our central comparative advantage—the skills, the ingenuity, the innovation and the education more broadly of our people. That more than anything else sums up the failure of this budget to invest in the future, to invest in the long term and to put the political short term ahead of the long term.

We on this side of the House are not alone in making these criticisms of this budget. In their pre-budget submission, the Business Council of Australia warned:

Serious constraints and imbalances are emerging within the economy that in the absence of reform in key areas will slow growth, limit opportunities and undermine the economy’s capacity to deal with longer-term challenges.

In the wake of the budget, BCA head Michael Chaney has argued that our reform mindset needs to shift from piecemeal and reactive to forward looking and strategic. He stated:

This was a budget for the short term only ... the underlying issues that will shape our economy require us to think about, plan for and implement reform around anticipating change, rather than reacting to it.

Of course, this was not delivered in the budget. There were very substantial tax changes in the budget that at best amount to modest reform. I will not be talking about those in detail today, because they will be the subject of subsequent legislation in the House, but I would make the comment here that much more could have been or should have been done in that package to lift participation rates through lifting incentives, particularly for some of the lowest income earners in this community. More of that when those bills come back to the House this week, but even those measures tended to be infected with the government’s preoccupation with the here and now rather than reform to invest in participation for the future—the long-term challenges that we face.

Essentially, the Treasurer had a fantastic opportunity in this budget. What the budget shows is that, whilst we have alarm bells ringing in some key areas, when the Treasurer heard them or did not hear them he simply hit the snooze button. We are not addressing those. Given the revenues available, the opportunities that the government had were just stupendous. Consider this: from 2000-01 to 2006-07 the government has taken policy decisions that have cost the fiscal balance $172.5 billion over four years. It has had record revenue. That expenditure has been made possible by surging revenues from strong growth, record high commodity prices and record terms of trade. The 15 years of economic growth that have brought us to this position are the consequence of the economic reforms of the Hawke and Keating governments. On superannuation reform, tax reform, competition policy, labour market reform, financial market reform, the government may claim the credit but in every case Labor governments of the Hawke and Keating period put the foundations in place.

On top of these foundations, the government has been the beneficiary of very strong revenues from the commodity boom. Nothing demonstrates that more than this one figure: when the Treasurer released his Mid-Year Economic and Fiscal Outlook in December, it projected budget surpluses of $42 billion over four years. By the time the Treasurer delivered the budget, the envelope had swelled to $93 billion over the same period—before any new tax or spending measures had been announced. Never before has a Treasurer been presented with such an opportunity to shape our economic future. Of course, he did not take this opportunity in the key areas of skills and education, he did not take this opportunity in the key area of providing some national leadership on infrastructure and he did not take this opportunity to the extent needed in the key area of tax reform, particularly when it comes to putting participation and incentive into the system.

So the government had an opportunity to utilise the bounty of recent times to invest in the future. We saw from the government a very narrow view of the future. This government tends to see the economy solely through the mining sector, which has helped to produce record revenues. But seeing it exclusively through that sector is not enough to sustain our prosperity. Mining output represents less than five per cent of our GDP, which means that, under this scenario, mining exports will contribute about one-quarter of a per cent to annual GDP growth. That is very welcome, but it is not enough to sustain our prosperity.

This budget was dangerously silent on the other 95 per cent of Australia’s economy. What does the budget do for the millions of Australians employed in manufacturing and services? Where is the plan to ensure not only that they survive but that they thrive? A couple of days after the budget, we had a speech from the Deputy Secretary of the Treasury, who seemed to imply that, if our terms of trade remain high, the future of people employed in manufacturing in this country is one of lower real wages and less employment, and ditto for those employed in the services sector.

So what was the government doing to prepare us for the challenges in the region? Australian workers know that China is reshaping the economic landscape and they are worried about how their employers are going to compete—and not just against China’s unskilled labour. As China’s comparative advantage shifts from cheap, unskilled labour to cheap labour, there is an even bigger challenge. That is why this budget should have been about how we lift our productivity so that we can lift our competitiveness, protect employment into the future and create wealth to take advantage of the great opportunities arising through the growth and great challenges in the region.

But, as usual from this government, we can only see half the picture in the budget. It is true that unemployment has fallen, but it is also true that skill shortages are now the biggest obstacle to business lifting output and exports. Was that acknowledged in the budget? Absolutely not. It is true that private business investment is growing but, according to the BCA, it is also true that ‘the cost to Australia’s economy through lost growth from ongoing infrastructure bottlenecks will be in the order of $10 billion a year’. Did we see a plan for national infrastructure? We did not. It is also true that our interest rates are lower now than they have been in the past—as they have been throughout the developed world. But it is also true that Australia’s interest rates are higher now than in almost every other developed country. Once again, we only see half the picture.

And this is absolutely true when we come to the critical challenge of the level of our foreign debt. It is true that government net debt has been paid down, but it is also true that our net foreign debt—already double the government debt of 10 years ago—has gone up 2½ times. It is now worth half a trillion dollars—that is, $500 billion. On current trends, foreign debt will reach $1 trillion in 10 years and increase from 51 per cent of GDP to 65 per cent. Of course, the government says foreign debt is private debt. That is true, but it does not make it less of a problem. That is not just my view but the view of the IMF, which has said:

… the build-up of external debt, although mainly held by the private financial sector, could leave Australia potentially vulnerable to shifts in market sentiment …

Labor’s concern about foreign debt stems not from some doomsday scenario in which the world will abruptly stop lending to us and cripple our banking sector but from what the foreign debt says about our capacity to compete in the global economy and the risks that ever-increasing levels of foreign debt may mean for interest rates. Labor’s concern also stems from the fact that, on current trends, servicing foreign debt will place a burden on future generations that will be comparable to the burden of the ageing of our population.

So, as usual, the Treasurer is telling only half the story. He recognises that, in the absence of policy change, the ageing of the population threatens to force tax increases or spending cuts equivalent to five per cent of GDP, but he ignores the reality that unless we rein in foreign debt—our net income deficit—the cost of servicing our foreign liabilities could rise by a comparable share of GDP. No serious policymaker can afford to ignore foreign debt. The Treasurer does not and should not. Last week I called on the Treasurer to cost the debt service burden alongside the burden of the ageing population when he releases the second Intergenerational report in 2007. If he does not do it, Labor will in 2008.

So what should have been in the budget? We should have had in the budget a plan to lift our productivity and in particular our export performance, which has been very, very ordinary in recent times. This is what the Reserve Bank had to say about our recent export performance in its statement on monetary policy:

Australia’s export performance over recent years has been disappointing, considering the favourable economic conditions.

The truth is that this budget waves the white flag on manufacturing and services exports. Despite Treasury forecasts of virtually no export growth in these sectors, there are few additional measures in this budget to assist our services and manufacturing exporters. Throughout the nineties Australia became far more productive, but more recently labour productivity growth has virtually stalled. The government has only one solution. It does not want to take up the challenge and do the hard yards when it comes to skills, education more broadly, innovation, national leadership and infrastructure. It wants to rely on its lopsided approach to industrial relations. It just wants to cut wages and go down the low-skill road. A broad based approach to lifting productivity is entirely absent.

It is remarkable that during the Treasurer’s budget speech he did not mention the words ‘participation’ or ‘productivity’ even once, despite numerous lectures in this House over numerous years in which he said he somehow understood the magic of the Australian economy—which was the three Ps. We did not hear anything about two of those three Ps in the Treasurer’s budget speech. All we have is the government’s reliance on its extreme industrial legislation to slash wages and skills in our workforce. There is no plan to deal with that in the long run.

What Labor would, and should, have done for the future of this country, given the bounty that was available, was to put in place a long-term plan to invest in skills and education. It is scarcely believable that, at a time when people are our biggest comparative advantage, spending on skills and education has gone backwards.

Gary Hardgrave (Moreton, Liberal Party, Minister Assisting the Prime Minister) Share this | Link to this | Hansard source

Mr Hardgrave interjecting

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Minister for Vocational and Technical Education, sitting opposite, is responsible for this debacle where we are importing record numbers of workers because he has refused to train Australians. He has refused to invest in the future of this country, and that is why he is so sensitive to this. He is a symptom of the problem; he cannot ever be part of the solution.

It is almost incomprehensible that the Treasurer’s budget speech did not mention the word ‘education’ once. Nobel Prize winning economist James Heckman visited Australia this year with a simple but powerful message, one we in the Labor Party understand: investing in our young people produces the highest return on investment that any nation can make. Everywhere in the world, governments recognise that the skill of a nation’s workforce will determine who will capture high-value, high-growth markets, who will be out in front and who will fall behind. But in Australia we have this myopic government that does not have a plan to deliver the skilled workers it needs right now, let alone the skilled workforce it needs for the future.

And that of course applies to the government’s narrow view of child care, as we saw demonstrated in the House today, and their narrow approach particularly to our national infrastructure needs. There is no plan for innovation, no long-term plan to fix our crumbling infrastructure, clogged roads, slow internet connections, near-empty dams and overburdened ports. They had a plan to shore up The Nationals. That is a world away from a national infrastructure plan.

According to the BCA, a comprehensive infrastructure reform program would add an extra two per cent to GDP after five years, and Labor understands that funding is not the primary issue. The key obstacle is a lack of leadership and a lack of proper strategic planning, as once again is demonstrated by the ignorance of the minister sitting opposite. That is why a Beazley Labor government will establish Infrastructure Australia to drive infrastructure planning, development and investment, establish the Building Australia Fund and allow the fund to consider all investment opportunities suitable to its return and risk objectives. This budget also did nothing to address Australia lagging in the world in both available broadband speeds and broadband pricing, which is why the Leader of the Opposition put forward Labor’s alternative plan.

There are some welcome initiatives in this budget, and Labor is happy to endorse them, but the benefits will quickly disappear if we continue to neglect the long-term competitiveness of our economy. What was needed was a budget that uses the prosperity of today to build prosperity for tomorrow. What we were given was a short-term political document. A prosperous future for all Australians depends on locking in growth. I know one thing for sure: Labor would not have missed this opportunity.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The honourable member for Lilley moved an amendment. Is there a seconder for the amendment?

Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

It might be instructive to examine a couple of the Labor policies that were articulated by the Leader of the Opposition in the reply to the budget the other night. Let us talk about broadband. The Leader of the Opposition got up and made the extraordinarily populist claim that he will provide broadband to the whole of Australia. Do you know what he did? He talked about fibre to the node. What about all the other technologies that are available in Australia today? What about all the other technologies that are emerging in the provision of high-speed access to the web? The Leader of the Opposition did not mention them, did not consider them, did not think about it. It was a hastily concocted policy that was very, very narrow in its view, and it is one that Australia will not follow, no matter who is in government, because the private sector will provide all of the various options that are available to customers because they all have their place in the provision of high-speed broadband access. I think that is a damning indictment of the narrow thinking of the Australian Labor Party, and that is why they will not be in government in 2008.

We have two Queenslanders in the chamber at the moment. Under the Labor Party’s policy for child care, do you know how many centres we get in Queensland?

Gary Hardgrave (Moreton, Liberal Party, Minister Assisting the Prime Minister) Share this | Link to this | Hansard source

How many?

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Thirty-two. There are over 976 schools in Queensland and the Labor Party’s policy is to provide a child-care centre at 32 of them. Compare and contrast that with the government’s policy. What is the government’s policy? Uncapped child-care places. Wherever you want to provide a child-care place—uncapped child-care places—you can, anywhere in Queensland, at any one of those schools or anywhere else, if you want. But Labor come to the Australian electorate and say, ‘Well, Queenslanders, we’ll give you just 32 centres.’ I know which deal I would rather have, and I think the mums and dads of this community also understand which deal they would like to have.

Certainly in my electorate the government’s proposal to uncap child-care places has resulted in a number of people who are currently not in the child-care industry coming to see me, saying, ‘Look, here’s an opportunity. We’ll go and test the market where there is currently a demand for places—in the new housing estates, for example; in the inner CBD where there is a higher density of people—and we’ll provide child-care places there.’ That, I think, is the policy that the Australian people will warmly embrace, and they will warmly reject the Labor Party policy of such a narrow position.

The respected organisation KPMG have stated in their Federal budget brief 2005 that it is pleasing that the government is moving further with its marginal tax rate reforms and in particular is proposing to significantly simplify and reduce the tax burden on superannuation savings—and, golly, haven’t I had a lot of positive feedback about that. It has been fantastic. KPMG say:

The Federal Government has not lacked advice on how to spend its budget surplus—

we all know that—

the size of which has fuelled a popular tax reform debate.

It has also been fuelled, of course, by the fact that so many more people are working and paying taxes these days. It is a great economy when you have almost full employment. KPMG continues:

At times this debate has ignored the need to be ‘banking some money’ for the future given our major structural challenge of an ageing population. On the other hand, we must keep pace, if not lead, in a world where countries increasingly compete with each other to attract labour and capital.

That is what the Labor Party do not understand: the fact that we have to continue to strongly compete with other countries. We do not compete internally; we compete with other countries to make sure that our standard of living stays ahead of our competitors. In its summary KPMG says:

... comprehensive tax reform is about investing for the future by achieving ongoing structural changes to better ensure our future prosperity and our revenue raising capacity without the need for increased tax rates.

I guess that is what the government has delivered in this budget. The breadth of the tax cuts was quite extraordinary and certainly very welcomed in my electorate.

I would now like to turn to a number of electorate specific matters. They range across a number of issues, as they always do in electorates. First of all: Indigenous affairs. I want to congratulate Mal Brough, the Minister for Families, Community Services and Indigenous Affairs, for his courageous stand in relation to the problems in Indigenous communities. Mal has always been a fellow who calls a spade a spade. In this case he has been, with sleeves rolled up, into the Indigenous communities. I think he was just appalled at what he saw and he wants to do something about it. His first reaction, having seen the lawlessness, the lack of respect for law, which is at the root cause of the terrible things that are happening to children, was that he wanted to get together with the state and territory leaders. And what does the Chief Minister of the Northern Territory, who has a very significant Aboriginal population in her constituency, say? ‘No, I’m not coming.’ What kind of an attitude is that? I will tell you what kind of an attitude it is: it is the attitude of the Australian Labor Party. Their approach towards Indigenous Australians has been wanting for so many years now—lots of platitudes and no action.

Now we have a minister who wants to do something. He wants police in these communities. He wants Australians, no matter what the colour of their skin is, to be subject to the rule of law and to suffer the consequences if they break the law. The only way you are going to do that is to have the state and territory governments, who are responsible for police, putting police on the beat in these Aboriginal communities where these atrocities are happening. That is what we need. Mal Brough wants to see that. The government wants to see that. The Australian Labor Party will not attend a meeting to achieve it. That is disgraceful.

I ought to know about these things, because I have Palm Island in my electorate. The Guinness Book of Records claims it is the most dangerous place on earth. It is a hopeless, dysfunctional community. Do you know what its problem is? We have black racists on Palm Island. That is what they are. The other problem is there is no community leadership and there is no will to follow the community leadership, so nothing changes. I have been over there. I have talked pretty plainly to the women’s group. I have talked pretty plainly to the council. I have said, ‘Here’s your problems. I can’t tell you what to do, but I can make suggestions. You’ve got to have the will to do it.’ There is no will. They do not want the police there. They want the police out of the PCYC. They say, ‘This is our PCYC. We should control it and run it.’ You know what would happen if that were allowed: the thing would be trashed within 30 days. There would be no rule of law. There would be no respect. It is what they do to their houses. You have to stand up and say, ‘If you’re going to do that, perhaps we should make some alternative arrangements.’

But we do want to see the rule of law enforced. Kids should not suffer the sexual atrocities that occur in these communities, time after time after time. They should not. It is extraordinarily upsetting to all of us. And Mal Brough is going to do something about it. I am going to back Mal Brough in doing something about it and the government will back Mal Brough. But the state governments have to accept their responsibilities as well because, hope against hope, I want to see Indigenous Australians have some hope. There is no reason why an Indigenous Australian cannot stand beside any other Australian and be equal in everything—no reason whatsoever. We want to hope and pray that that will ultimately be the outcome.

In relation to road funding, this year’s budget delivered the largest ever boost to road funding to the Bruce Highway between Townsville and Cairns ever. It is an extraordinary amount of money: $222 million available immediately, not over four years. That money was in addition to $48 million on top of the $80 million for attention to the flood problems with the Bruce Highway in the Tully region. I put both the Queensland government and the federal government—that is, QDMR and DOTARS—on notice that I intend, and have already started, to make significant representation to see some of that $220 million spent on extending the four lanes of the Bruce Highway from the Bohle school, north to Veales Road in the city of Thuringowa.

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

What about the port access road?

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

I will talk about the port access road in just a minute. The member for Batman should not have raised that point. I have a letter here from Paul Lucas, the state minister for roads.

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

Mr Martin Ferguson interjecting

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Do you know what, member for Batman? A year ago I went and saw Paul Lucas and said, ‘Give me the ammunition to go and fight for this money for the port access road.’ That was a year ago, in July last year. Do you know what he said? ‘Happy to work with you. Happy to give you the information.’ Do you know what? Today, this letter arrived, a year later, after the budget, saying, ‘Oh, would you please fight for $190 million?’ Do you know how much the cost was five years ago? It was $10 million.

Five years later QDMR are saying, after the budget, it is to cost $190 million, and all your Labor colleagues up in North Queensland are saying, ‘Peter Lindsay didn’t deliver.’ What they are really saying is that neither your state minister in Queensland nor the Parliamentary Secretary to the Minister for Transport and Main Roads, Lindy Nelson-Carr, gave me the wherewithal. Wouldn’t you think she would come to me and say: ‘Hey, Pete, we need your help to get this money in the federal budget.’ She is the parliamentary secretary, she is in Townsville and she knows the importance of the port access road, yet she does not come to me and say, ‘Why don’t you go and get this sort of money?’ After the budget she came along and said, ‘Here’s the amount.’ We have this escalation going on.

On top of that, this letter says on stage 1 that ‘the state government is providing $8.147 million, as a 50 per cent contribution’. That means that the total cost of stage 1 is about $16 million. Then, on the second page of the minister’s letter, he says, ‘Well, the Stuart bypass stage 1 is actually accounting for $28.5 million.’ How hopeless is that? A state minister, the minister for main roads, on two different pages in this letter gives me two different figures that are $12 million apart. The incompetence of the state government on road funding is just breathtaking.

That is not the only funding for a road in Townsville that has blown out. Before the last election I was able to secure some money to complete the Townsville ring road. When I asked QDMR how much it would cost—because it is a road over flat country with only one small bridge—they said $35 million. Do you know what I did? I added $5 million without telling anybody and I went to the federal government and said: ‘This is going to cost $40 million. I want a commitment for $40 million.’ They did not know it was only $35 million, but I was building in a little buffer. I secured a commitment, and there was an election promise to spend $40 million completing the Townsville ring road. Do you know what the cost is 18 months later? Do you know what the cost is now? It is not $40 million, it is not $60 million, it is not $90 million; it is $117 million. What kind of competence is that? Now the Queensland Labor state government is coming to the federal government saying: ‘Well, we’ve made a mistake. How about we go halves?’ We made a commitment for $40 million and now QDMR want another $40 million on top of that initial commitment.

Do you know what? If a private contractor had got in there, they would have had the road completed in a year, on time and on budget. Do you know what the Queensland state government want to do? The state government have said: ‘I’m sorry, federal government. We want an extra $80 million and, by the way, we can’t finish it until 2009.’ It is hopelessly incompetent. The Labor Party say, ‘We’d be better managers of this country.’ Do not believe that.

A very significant project, the Chalco aluminium refinery, may come to Queensland. The proposal is that Chalco, a Chinese company, will mine bauxite up near Weipa. It will ship it around the coast and process that bauxite into alumina in either Gladstone; Abbot Point, near Bowen; or Townsville. All three communities are working hard to try to secure that project. It is not clear yet whether it will actually come to Queensland. It may yet go offshore. But, be that as it may, our communities have to work hard to try to win that project. If Townsville are going to win that project, we need to have a port access road. It is so disappointing to me—

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

Suddenly discovered it!

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

member for Batman, that the Queensland government apparently—and I think very cutely—wanted to hold back telling me how much money I should go for so they could give me a public flogging. It is not going to wash. The people of Townsville will know that this is the way the Queensland state government work. The Queensland government will want to announce their road funding as part of their election campaign, which probably will start straight after they deliver their budget next month. But the people of Townsville are no fools. They will know and understand that the state government have been holding this back so that they can make an announcement, whereas the federal government could not make an announcement because the design and construct authority would not give us the information. That is disgraceful. These multibillion-dollar projects are in jeopardy because of the politicking of the Queensland government.

Another budget matter is defence. Defence is pretty important to my electorate, as the minister at the table, the Minister for Small Business and Tourism, knows. She has been to Lavarack Barracks, Australia’s largest army base, home of the ready deployment force. We are the people who go when we need to go. Recently, we have been to the Solomons. I think it took us 12 hours from go to whoa to get there, which is an extraordinary result. The people in the 1st Battalion and the 2nd Battalion are so professional in their approach to being there when our nation needs them. The 1st Battalion went to the Solomons. Currently, the 2nd Battalion is going to SECDET in Baghdad. They are great people in what they do. The current 3rd Brigade commander, Brigadier Mick Slater, does an extraordinarily professional job—and a very busy job at the moment—in the way he manages the 1st Battalion, the 2nd Battalion, the 3rd Battalion and all of the other battalions and regiments under his command in Lavarack Barracks.

The reserves from 11th Brigade in Townsville, along with other reserves around the country, have done very well out of this budget. In an attempt to increase the readiness of the reserves, to bring them up to 28 days notice to move, the government has offered some very attractive conditions of service. For those in the highest state of readiness, there is an extra $7,500 tax-free a year, on top of their daily increase of, I think, $10 a day. For those on a lower level of readiness to respond it is a little less; nevertheless, it is very attractive. The government is being very prudent in making sure that we have the wherewithal to respond when we need to.

I have recently done a study trip, and I have seen a number of defence establishments and talked to a number of defence people around the world. They hold our Australian Defence Force in the highest regard. They think we are the most professional operation that you can find in the world today. And it is a great credit to Australia and a great credit to the men and women of our Australian Defence Force that we are held in such high regard.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

It was 12 months ago—almost to the day—that I stood in this place and delivered my first speech to the parliament. During that first speech I took time to share with other members a little about my electorate and the people that I represent—the aspirations of residents in Werriwa. The electorate of Werriwa is filled with young families and those young families want nothing more than opportunities to make the lives of their families better. Not only do they seek to make life incrementally better for themselves and their families but they use the resources they have available to them to improve the lives of their children, in the immediate and the longer term.

Mr Deputy Speaker Barresi, as—I gather—a parent, you would no doubt appreciate that a parent’s ambition is to give their kids a better position than the one that they grew up with, and I guess that is basically the general position behind society. The vast majority of residents in my electorate—and, I have no doubt, in Australia generally—are investing their time, their efforts, their energy and their financial resources to make their families’ futures better. They are using their family budgets to invest in the future for their families. They are looking towards their kids. They are looking towards the future.

Families throughout Australia—and families in my electorate are no different—carefully consider the resources available to them and what they have to develop. They are certainly taking every step to plan how they can best use their limited resources to improve their lot and the lot of their family into the future. Sure, this may include the purchase of a range of consumer items that lead to a general level of satisfaction, but more often than not it also encompasses investment in their kids’ education and their kids’ futures; for example, investment in computers and access to broadband—things that kids need to be able to equip themselves for the future. That is what families all over this country are doing.

It is interesting to contrast the behaviour of Australian families and what they are doing with their family budgets with the behaviour of this federal government in the budget that has just been delivered. The attitudes and approaches could not be further apart. While families are considering their budgets over the medium and long term, they are not being supported by budgets from this government—which, in any assessment, are being delivered with a time horizon not exceeding 12 months. This government is obsessed with the here and now. It is obsessed with approval ratings and with the Treasurer’s personal popularity.

Despite the tax cuts and increases in family payments, this budget failed the critical test of supporting Australia and Australian families as they look to incrementally improve their lives and the lives of their children. This budget has not delivered an economic strategy for the future and this government has not used this unique opportunity to shape our nation’s future and lock in the prosperity we are experiencing today.

Only recently, Michael Chaney of the Business Council of Australia stated after the budget: ‘This was a budget for the short term only ... The underlying issues that will shape our economy require us to think about, plan for and implement reform around anticipating change, rather than reacting to it.’ It is a sad reflection on the state of this government that it has not taken the opportunity presented to it—to use the budget to introduce a longer term strategy that will take us beyond the end of the election cycle and beyond the end of the forward estimates contained in the budget—to clearly address the future of all Australians.

The fact that the government has failed to use this opportunity to invest in the future, to use the budget to address the issues surrounding the skills of our workforce and to travel down the path of locking in our prosperity, sadly comes as no surprise. It is merely another example of this government looking to the short term while neglecting the long term. The contrast between the government and the opposition when it comes to education could not be more stark. Labor considers investing in people to be just as important as investing in our physical infrastructure. Investing in assets should be considered as on a par with investing in the education of our people. It all contributes to our economic strength.

By contrast, the government is more than willing to use short-term migration programs to paper over the cracks that are emerging in Australia’s economy. It believes that it is more important to get the immediate job done than to invest in education and training to make sure that we can always get that job done and always have that job completed by Australian workers.

The skills shortage and its impact on business is certainly not a new phenomenon. In a recent study, the Australian Industry Group identified seven out of 10 businesses that indicated that the inability to secure skilled staff was the single most important barrier to success. That was seven out of 10 major businesses in this country. The same study noted that eight out of 10 companies believe that building Australia’s skill base is the key to achieving international competitiveness. That is quite a telling piece of information. That is something that the Labor Party has been saying for quite some time. It is interesting that this is borne out by the Australian Industry Group itself, not necessarily friends of the Labor Party.

Given that, what is the government’s response? Their response is a reduction in public investment in education—not just over this year but over a number of years. Public investment in universities and TAFE has fallen by eight per cent since 1995. In isolation it is a telling statistic, but when you compare it with other OECD countries, the government’s dereliction of duty when it comes to education is really put into context. The next worse performing country has increased its investment by six per cent, while the others that make up that cohort have increased education investment by up to 38 per cent. Compare that to our fall of eight per cent over the period.

We have cut public investment in our universities and in our TAFEs. At the same time as the government has cut public investment in education, it has expanded short-term immigration. Last weekend’s Financial Review reported comments by academic Bob Birrell. I want to quote what Mr Birrell had to say:

The government is relying more and more on immigration to solve workforce problems, but we haven’t seen a crisis response in the education system ... It is obvious that we’re no longer addressing the skills of locals because there has been no support at all for opening up spaces at universities since they came to office. Nor do companies undertake training or education themselves.

While families are looking to take an already stretched family budget and stretch it a little more to improve the educational opportunities available to their children, they are not being supported by this government. This government, flush with cash, is doing nothing about the funding problems being experienced by TAFE and universities. It is doing nothing to invest in the training of Australian workers.

This budget has failed young people by refusing to invest in them. The budget spends $11.6 billion of new money in 2006-07 but only $40 million in apprenticeships. There is no new money going to TAFE colleges. The overall percentage of the federal budget spent on vocational education and training has been reduced and is set to decline over the next few years.

Despite the dramatic underspending on the Australian technical colleges, this government is persisting with its failed plan to introduce Australian technical colleges. The reason it is doing that and the reason why it is trying to duplicate the TAFE college system is simply that this government sees this as the opportunity to ram home its industrial relations through the staff at these new colleges. In setting these colleges up, this government has introduced a requirement that personnel who work in the new colleges, whether they be in administration or tutorial and teaching staff, will be on the government’s Australian workplace agreements. The government should admit defeat when it comes to the implementation of the Australian technical colleges and instead dedicate the money towards improvement in our TAFE system. Tackling the skills shortage, encouraging greater participation and locking in prosperity means making sure that people have the skills that they need not only to enter or return to the workforce but to develop in the Australian workforce. Sadly for Australia, this budget has failed on this measure.

The budget has also short-changed Australians on tax reform. Tax reform is often talked about in this place—as words—but, to a dispassionate bystander, it has not been delivered by this government. The only tax reform the government has managed to undertake is to add new taxes like the GST and to chop out a few redundant clauses from the old tax act. The introduction of new taxes and getting rid of some unused pages of the tax act hardly constitutes real tax reform.

Labor will be supporting the tax cuts proposed in this budget. It will be supporting the concept of Australians sharing some of the benefits that have accrued through the current resources boom with middle Australia. It will support giving back what the highest taxing government in Australia’s history has taken away from middle Australia. I will not be supporting the changes because I think they are enough or because I think that tinkering with rates and thresholds is all that can be done; I will be supporting them because it is about time that Australian taxpayers got something back.

It is interesting to note that the forward estimates reveal that, as a proportion of GDP, government receipts will be maintained, while the surplus measured as a proportion of GDP will gradually increase. The alleged tax reforms contained in this budget are nothing more than tax cuts dressed up as reform. It is about time that the highest-taxing government in Australia’s history decided to reduce the tax burden on middle Australia. In addition to reducing the burden on middle Australia, it is about time that the tax system were constructed in such a way as to reward effort. Australia needs a tax system that boosts productivity and participation.

It is interesting that many on the other side have spoken in the past about the need for tax reform, but when push comes to shove the government is gun shy. It has gotten away with merely handing back some of the surge in tax revenue experienced through the resources boom, and it has not taken the bold steps needed to put in place a tax system that will support Australia into the future.

As was reported in the Australian last week, for low- and middle-income earners the tax cuts contained in this budget will be gone within a couple of years unless bolder reforms are introduced. That was probably quite a conservative approach for the Australian to take. In my electorate, many of the tax cuts that were introduced were gone long ago with the increase in petrol prices and the change in interest rates that forced up mortgages for my constituents and for constituents throughout this country.

It is no longer good enough for this government to stand by and hope that the persistently high effective marginal tax rates experienced by many Australians will simply go away. The effective marginal tax rates upward of 50 per cent that are experienced by many Australians need to be fixed. They act as a disincentive. The tax rates experienced by many families crush incentive, and people start to question why they should continue to put in, why they should continue to take the extra shift and why they should do that little bit of overtime when they get only a few extra cents in the dollar in their pay packets as a consequence.

The changes to taxation arrangements contained in this budget—and I am reluctant to call them reforms because, in truth, they are poor facsimiles for reform—are best described as modest and do little to remove the tax grab from Australian families. Despite the Treasurer crowing about the impact that the combination of changes in the family tax benefit system and the tax system will have for Australian families, closer consideration leads one to the conclusion that there is a lot to be desired in our tax arrangements.

Australian families will still face an effective tax rate well above the new top rate of 45 per cent, because the change to the family tax benefit threshold shifts the taper zone rather than reduces it. The removal of these high effective marginal tax rates and the simplification of our system of taxation and family payments must be the priority for reform into the future if we are truly to have a tax arrangement that encourages participation and gives incentive.

This budget is a budget of distraction as well as a budget of inaction. There is no doubt in my mind that this budget was crafted with the sole purpose of distracting people’s attention away from some of the more insidious policies that this government has pursued in recent months. The one that requires most attention to be drawn away from it is, of course, the government’s extreme industrial relations agenda.

I mentioned earlier that there is a need to invest in education and skills development because that is the best way to improve our competitive position in the world and on world markets and to compete with emerging economies in China, India and elsewhere. Sadly, this government does not believe that Australians are up to the task. It has no faith in Australians to compete on the international stage at a level of endeavour well above that of our competitors; instead, this government believes that Australians are only capable of competing when they are paid less.

This government has no faith in working Australians. Instead of getting behind Australians and putting in place longer term strategies to take advantage of Australians’ natural abilities, this government believes that the only way Australians can compete on the world stage is by slashing take-home pay and removing people’s employment protections. The government believes that that is the only way forward if we are to compete with those emerging economies. This country needs an investment in our future and an investment in our people’s education, because they are the things that are going to help us to be competitive on the world stage. (Time expired)

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

This is an excellent budget. Despite the efforts of the opposition to convince themselves and others otherwise, they know it is an excellent budget. It meets the four essential criteria of a good budget, and it well and truly passes the test. Firstly, it is fiscally sound. The fiscal setting meets the macroeconomic objectives in the current economic context. Secondly, it meets essential areas of expenditure; funding is allocated to the key priorities. Thirdly, through its taxation and redistribution policies, this budget allows all to share in the country’s current economic prosperity. Fourthly, this budget plans for the future to ensure that prosperity continues. This budget passes those four key criteria with flying colours. Before I come back to each of those in detail, let me say that this is an incredible contrast, firstly, with the policy inertia of the opposition; secondly, with the dismal record of Labor when they were last in office; and, thirdly, with the debacle that is supposed to be a government in New South Wales.

Let me return to those four key criteria in more detail. Firstly, the budget is fiscally sound. It delivers a $10.8 billion surplus, the ninth surplus in 11 years. The fundamental rule by which the government operate is that we have to live within our means and that we cannot spend money we do not have. That is a lesson that is still foreign to the opposition; it certainly was shown to be so when they were last in government. Not only are we living within our means but we are also repaying the accumulated debt. Last month was the debt-free month, when, finally, we wiped away $96 million worth of debt that we inherited from the Labor Party.

The contrast between fiscal responsibility and fiscal profligacy could not be clearer. Just look at the last five years of the last government and compare that with the last five years of this government. During the last five years of Labor’s term of office there was a deficit in 1991 of $11.5 billion; a deficit in 1992 of $17 billion; a deficit in 1993 of $17.1 billion; a deficit in 1994 of $13.1 billion; and a deficit in 1995 of $10 billion. That is an incredible legacy that ran up $68 billion—$68,000 million—worth of debt in just five years. Compare those five years with the last five years of this government: in 2002-03, there was a $7.4 billion surplus; in 2003, an $8 billion surplus; in 2004, a $13.6 billion surplus; in 2005, a $14.8 billion surplus; and, in 2006, a $10.8 billion surplus—five surpluses to pretty much match the five deficits of the last years of Labor. We hear Labor trumpeting on, ‘Yes, we believe in surpluses,’ but they just could not deliver. They say, ‘We believe in surpluses,’ but they opposed almost every saving measure this government brought in in its early years to deliver those services.

This is a responsible budget that continues a responsible approach to fiscal balances in the context not only of saving, of putting money aside, and of living within our means but of ensuring that the level of fiscal stimulus in the economy is right. People say, ‘You have a big surplus; why don’t you spend more?’ But the fact is that in a strong, buoyant economy we need a surplus to balance a fairly expansionary monetary policy. This is the right fiscal balance in the context of where the economy is at the moment. Again, we have Labor saying, ‘We believe in low inflation; we believe in low interest rates.’ Sure, they might believe in them but their record clearly shows that their spending policies never allowed them to deliver on those things.

The other point that needs to be made time and time again about this is that, as a result of paying off that debt, we are now saving $8.4 billion a year in interest. When we came into office in 1996, $8.4 billion a year of taxpayers’ money was going not to infrastructure, tax cuts, health or education but simply to servicing the debt run up by Labor. As a result of this government’s responsible management in repaying that debt, that $8.4 billion a year can now be used for essential services for infrastructure, health, education or tax cuts. These are the dividends; these are the benefits of years of responsible and careful management.

The second criterion of a good budget is that it allocates spending to essential areas, to important priorities. There are too many dimensions, but let me mention what I see as some of the key areas of spending in this budget. Firstly, there is a big boost in health spending with another $3 billion to health, which now brings the total health budget under this government to $48 billion. When we came into office, $20 billion a year was allocated to health. There has been an increase of 140 per cent on health since then, to $48 billion in the next year, and there will be some excellent new initiatives as part of this.

There is an increase of $1.9 billion to work with the states on a suite of measures to improve mental health—initiatives that will mean the difference in detection, treatment, care and support for the mentally ill in our country. There is another $905 million over the next four years for medical research, which will mean that, by the year 2009-10, we will be spending five times—that is, 500 per cent—the amount that was being spent on medical research by Labor in its last year. There are a number of other key areas within the health portfolio, such as boosting the number of doctors and nurses, more money for aged care, more money for tackling drug and alcohol abuse, increased availability of new drugs on the PBS system—and on it goes.

This has not gone unnoticed. Let me remind the House of what Catholic Health Australia said about this health budget. They said:

This is a good health budget. It’s practical, it’s investing in people. It’s to be supported.

               …            …            …

This is what ordinary families needed because state Labor governments are raising charges far beyond household budgets.

I can go on. There is an extra $2.3 billion for road and rail infrastructure over the next four years, bringing it to $15 billion in the five years between 2004 and 2009. It is part of the integrated, coordinated AusLink program to upgrade Australia’s land transport system. A part of this is the extra funding this financial year under the Roads to Recovery program. My two local councils are delighted. The mayor of the Hawkesbury council is delighted to be receiving an extra $726,000 this financial year, and the mayor of the Blue Mountains council is delighted to be receiving an extra $590,000 this year. They are both thrilled with this government initiative. And what has the Australian Local Government Association said about this? The association said:

This is what nation building is all about—investing in infrastructure ...

…         …         …

We’re very pleased to see the Australian Government recognise the need for additional investment in road infrastructure ...

We could go on. This year we will spend an extra $878 million on the environment, which will bring the total to $3.9 billion. This is a far greater amount than any government in the past has spent on our environment. I was astonished to read in this morning’s Australian Labor’s member for Melbourne, one of the shadow frontbench, saying that the government has squandered billions of dollars through Networking the Nation, Regional Partnerships and the Natural Heritage Trust—squandered money on the environment. I can tell the member for Melbourne that people in my electorate have greatly appreciated the government’s spending on the environment. Several million dollars have been spent in recent years on the Hawkesbury-Nepean catchment system, and over the next three years, as part of the investment blueprint for the Hawkesbury-Nepean catchment area, there will be $12.9 million out of the Natural Heritage Trust allocated. Yet the member for Melbourne calls that investment in the environment ‘squandering’. Shame on the member for Melbourne. My constituents, the people of Macquarie, want to see that money being spent.

I could talk about education. Total spending on education this year is $16.6 billion. Since this government came to office, spending on education has risen by $5.8 billion. That includes an increase of 8.9 per cent for schools and VET funding up to $2.5 billion, which is an increase from $1.5 billion to $2.5 billion in just the last six years. Members opposite talk about a shortage in skill training. We have lifted apprenticeships from a 30-year low under Labor. Now at over 397,000, they are more than double what they were when we came into office.

I could mention the extra funding for defence. This continues our commitment of a three per cent increase in real funding every year and extends it now from 2011 to 2015. That includes an extra $2.2 billion to acquire C17 heavy-lift aircraft. Air Lift Group is stationed in my electorate and I am determined to see it continue to be stationed there. I am delighted to see this increase in capacity for Air Lift Group, which I like to call the sharp end of our defence. Another $1.5 billion of extra funding has been allocated over the next three years to secure Australia against terrorism, which brings the total of new initiatives to $8.1 billion in the eight years from 2001 to 2009. That is what we are spending on those key priority areas.

The third criterion of a good budget is that tax deductions and spending initiatives allow all Australians to benefit from our growing prosperity. We have had 10 years of solid growth—10 years of rising living standards. It has been very interesting to see that in the last 10 years, in terms of GDP per capita, we have moved in the world from No. 13 to No. 8. In the last 10 years, because of the prosperity of this country through the good management of this government, we have overtaken Japan, Denmark, the Netherlands, Belgium, France, Germany and Canada to move up in terms of our living standards.

Part of this budget is to ensure that the benefits of increased prosperity are available to all. We are doing it with tax cuts; we continue to build on the tax cuts of recent years. We are doing it by continuing to build on family tax benefits, which we have increased in recent years. We are doing it with a number of other initiatives.

Just to mention tax cuts, over the next four years there will be $36.7 billion of tax cuts—and that is an extension of the $6 billion of net tax cuts in 2000, the $10.7 billion in tax cuts over four years announced in 2003, the $14.7 billion in tax cuts over four years announced in 2004 and the $21.7 billion announced in 2005. We are continuing to repay to hardworking Australians the benefits of a prosperous economy.

It is worth pointing out that Labor opposed the tax cuts that we tabled as part of last year’s budget and it is still confused about what to do with the government’s tax cut initiatives. Unlike Labor, the coalition believes in returning dividends to hardworking Australians. Australia now has the eighth lowest level of taxes of the 30 OECD countries. If you look at the tax tables, it is pretty obvious. Prior to the new tax system in the year 2000, someone on average weekly earnings was on a marginal tax rate of 43 per cent; now they would be on a marginal tax rate of 30 per cent. Add to that family tax benefits, the low-income tax offset and the senior Australian tax offset, and Australians are measurably substantially better off than they were before.

In the opposition leader’s response to the budget, we had his so-called ‘pact with middle Australia’. I just remind the House that, when the Leader of the Opposition was the finance minister and Deputy Prime Minister in the last government, an Australian worker on $50,000 a year would have been on a marginal income tax rate of 47c in the dollar. Now, on $50,000 a year, they would be on a marginal tax rate of only 30c in the dollar. They have gone from 47c in the dollar down to 30c in the dollar, which is far beyond anything that indexation could have done. So much for the rhetoric about a pact with middle Australia. The evidence is in the record. Under our government, we have had a substantial reduction of marginal tax rates. The Leader of the Opposition can talk all he likes about pacts with middle Australia; the runs are on the board for this government. Under the former government, those opposite did not even get out of the dressing room.

We could go on. In this budget we have the initiative to relax the assets test for seniors, which is a very substantial improvement. Many additional retirees who just miss out on the pension will be eligible now for the pension, by the government cutting by half, over that threshold, the taper rate of the assets test. So single home-owning retirees, as a result of their hard work and having saved up, now will be able to own another $165,000 in assets before losing eligibility for the pension. Retiree couples will be able to own another $275,000 in assets before losing eligibility for the pension.

As well as income tax, I could talk about business tax cuts. We cut the company tax rate several years ago from 36c to 30c in the dollar. In this budget we announced an extra $3.7 billion in accelerated depreciation for business, in addition to another $435 million over the next four years to help business by reducing taxes for business. The point is this: in cutting taxes for business, for families and for retirees and in increasing family tax benefits, this government has the runs on the board and is proving itself to be family friendly. The Australian Family Association put it very simply when it said, ‘It is giving the power to families to properly budget by giving them the money.’ And this budget again delivers.

The fourth criterion of a good budget is that it must plan for the future and, again, this budget does that by adding to the Future Fund. We are saving money for the obligations that the government will have to an ageing population. We are saving for the future, a concept that was foreign to the opposition. Yes, they talked about the future but budget after budget they put us into hock by running massive deficits. Talk about the future eaters—the book The Future Eaters could equally apply to the Labor opposition and their policies of hocking the future by spending more than they had. We are saving for the future for an ageing population.

This is a budget that clearly, having paid off Labor’s debt, now puts money aside for the future. It is a future-looking budget in its incentives for businesses—the $3.7 billion I mentioned—to invest to increase productivity. We have heard a lot from the other side about productivity. One of the best things we can do is to give these incentives—the accelerated depreciation allowance is up from 150 per cent to 200 per cent—to encourage businesses to invest and increase productivity.

By no means last are the dramatic changes to superannuation. They increase the incentives for people to save for their retirement and for people to work beyond 55 and 60 so that the shrinking share of taxpayers who are working will not have the massive burden of paying for the pensions of a larger retired population. These are dramatic changes that will significantly simplify the superannuation rules, give greater certainty for retirees in planning their retirement and cut substantially taxes on superannuation. The changes will remove totally the exit tax, whether on lump sum or pension, for retirees taking money out of a taxed fund and substantially reduce taxes for public servants and others moving out of untaxed funds.

This is a forward-looking budget that provides for the future by encouraging investment, by encouraging saving, by encouraging people to work and by the government putting aside money out of the Future Fund. This budget delivers in spades the four criteria of a good budget: it is fiscally sound, it allocates funding to those essential areas of spending, it delivers to all Australians the benefits of our prosperity and it looks to and plans for the future to continue that prosperity.

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

In rising to speak this evening on Appropriation Bill (No. 1) 2006-2007 and, in doing so, to support the second reading amendment moved by the member for Lilley, I note that there has never been a federal government that has had such a good opportunity, in terms of the resources available, to build the foundations for Australia’s future. That is what this budget discussion ought to be about.

Never has a federal government had a better opportunity to address the important issues facing Australia today and over the next decade or two. These issues are fundamental to our future. They include intergenerational equity; the struggle of today’s age pensioners, who did not grow up in the superannuation age; and the forgotten people, the blacks and the whites barely surviving on welfare in dysfunctional communities, sometimes in the second and third generations, which is rather topical this evening. It goes to issues such as the decline in our skills base and the need to pave the way for the next generation of innovation and productivity improvements for our future economic security and to issues such as our reliance on the resources sector.

There are the implications of that reliance for the manufacturing, service and related sections of the Australian community and the danger of creating—and this is a very serious debate—a two-tier economy. That two-tier economy would be based on the resource-rich regions in the states versus the rest of Australia. There would be workers in resources benefiting from boom-time salaries and bonuses versus teachers, nurses, police officers, firefighters and all those other hardworking Australians being left behind on fixed incomes—so much for potential reform.

It is important that we actually have that reform, that we keep the pressure on the Australian community to front up to a process of change. For that reason I believe the budget is a wasted opportunity. The result is that potentially we are going to reduce the size of the Australian economy because we have not made the hard decisions that should have been made in this budget. Obviously, one would expect the easy options to be taken by the Howard government in the lead-up to the next election, which would have meant the budget of next year. The hard decisions should have been made in this budget. I raise this because the potential reform has to be confronted.

I want to talk about the seeming lack of support that the budget has received in the electorate. It shows how out of touch the Prime Minister and the Treasurer are with middle Australia, a fact which was so appropriately focused on by the Leader of the Opposition in his budget response last Thursday week. The reason they are out of touch is that they do not know what is being discussed around the kitchen table. I will tell you what is being discussed around the kitchen table, in the streets and in the suburbs of Australia: they are talking about the price of fruit and vegies in the supermarket, the weekly grocery bill, how much it costs to fill the petrol tank and the juggling of family finances to meet the monthly mortgage payment. It is not a question of the level of interest rates; it is a question of the level of debt. An increase of half a per cent in interest rates is probably equivalent to an increase of five or six per cent 10, 15 or 20 years ago. It is the level of debt that counts, not the level of interest rates. The problem in Australia at the moment is that we have lost control of the level of personal debt. Communities, ordinary people, mums, dads and elderly people are suffering.

Yes, the Prime Minister would lecture us that Australian mums and dads got a tax cut, but the truth is they do not feel any better about it. Go and talk to them in the streets, as I have over the last two weekends. They have not just talked about industrial relations but talked about the huge pressures on Australian families at the moment. One of the most serious responses has been from pensioners. They simply say to me in my local streets: ‘We got nothing, Mr Ferguson. We are the forgotten people yet again. Yet we were the people who laid the foundations of the economic prosperity that Australians are currently benefiting from. Why are we forgotten?’ I think it is a very serious question that ought to be responded to by the Howard government.

The same comes from people waiting to see a medical specialist, from people whose toddlers will be old enough to go to school before they can get a child-care place, from people whose teenagers cannot get an apprenticeship, TAFE or university place. They are being told by the Prime Minister and the Treasurer that the economy is booming. But, unless they work in the resources sector or live in Perth, they do not feel they are part of it. That is the truth. Just go around Australia and ask them.

I compare that to the executives at Macquarie Bank. At least one of those executives, as evidenced by public announcements last week, earns $58,000 a day, which is absolutely amazing. I am sure that if you work at Macquarie Bank, Mr Deputy Speaker, you are in no doubt that there is economic boom happening in Australia. They are but the beneficiaries of it. If you work in the resources sector, such as in north-west Western Australia, the average annual mining wage now stands at $85,000 per year. That is up a solid 7.6 per cent over the last 12 months. So they are doing quite well.

It is interesting to note that the average growth of the national wage was substantially lower than in the resources sector. The average growth was only 4.5 per cent, taking the national average annual wage to just under $54,000—interestingly, less than a Macquarie Bank executive earns in a day and just 63 per cent of the average annual mining wage. It is a lot tougher if you work in some of the other sectors such as the accommodation or cafe or restaurant sector, where the average annual wage is just $38,000. That is 44 per cent of the average annual mining wage.

So understand that there are two Australias at the moment, not just geographically but also related to the occupation you hold down in Australia. It is getting worse. Interestingly, it is not only getting worse in the area in which you work or the nature of the work you do but also, unfortunately, in the wage differential between men and women. We are going backwards on that front.

If you work in accommodation, cafes or restaurants, you cannot get child care for your kids when you need it and you are struggling to pay the petrol bill to get to and from work or to and from the child-care centre in peak public transport hours. You may well conclude that you are not getting a fair shake from the resources boom. That is what they are thinking at the moment when they hear all this talk about the resources boom.

Perhaps it is time, therefore, the question was asked: are Australians at large getting a fair return from their resources? The vast majority of taxation arrangements and strategic industry incentives that were entered into with the resources sector long ago precede the current boom. It raises the question: are they still relevant, when you look at the profits of some of these resource companies? Do we need to think about the regime that is in place from a government policy point of view governing their investment and returns at the moment?

We have seen the Minister for Employment and Workplace Relations full of bluff and bluster over the last week or two threatening to intervene in a New South Wales wages case. He says he is horrified about wage blowouts. What he really means is that it does not matter what is happening in the resources sector, but he does not want teachers, child-care workers, nurses, police officers, firefighters, hairdressers and bakers earning too much money. That is the bottom line: ‘Let’s keep them down, let’s keep them in poverty.’ That, therefore, raises the question: why is that his view of life? I believe it is because he knows that, if we pay hairdressers more, voters will pay more for a haircut. He knows that if we pay bakers more we will pay more for a loaf of bread. Unlike wages growth in the resources sector, we will feel the costs of wage rises in our own hip pockets. That is the nature of the system.

Wages growth in the resources sector is clearly draining labour from every other sector of the economy, putting public infrastructure costs under pressure as a result and threatening the next round of resource investments themselves. No wonder that, when you talk about road construction one year, when you actually come to do the cost estimates 12 or 18 months later it is completely different. It is the nature of the growth in the economy internationally—the price of cement and steel and the price of wages because of the shortage of labour. We are going to start to feel these impacts in our own government outlays in the very near future, just as we are experiencing them now.

Members of the House might also remember my warnings on a number of occasions. They are probably starting to tire of me raising this, but I have to continue to remind the House that, if Australia is not competitive in capital costs, infrastructure, availability of labour both skilled and unskilled, approval processes, the regulatory environment and so on, the big companies—the Woodsides, the Rios and the BHP Billitons of the world—will not wait for Australia to catch up. It is a very tough global market out there. If you lose investment today, then you have lost it forever. Once they start investing in alternative countries, then just by sheer weight and economies of scale they are not going to turn their back on that country in 12 or 18 months time. That is the nature of the resources boom. It is very competitive.

Negotiations about resource prices each year are also getting very tough. Last year we achieved an increase in the export price of iron ore of 71½ per cent. Last week we saw Japan settle potentially on another increase of 19 per cent for this year. The Chinese are going to try to resist that increase and try to make sure it is less than 19 per cent. We will see just how good they are at the negotiating table.

That just shows why investment is very much the order of the day for the purposes of developing these resource opportunities around the world. Our problem at the moment is that we are falling behind because of capital costs and a shortage of labour. We are going to see it disappear and we are never going to be able to get it back. That is a serious problem that should have been confronted in this budget.

These companies are going to take their money and invest somewhere else in the world, somewhere without capacity constraints. The debate not only in Australia but also internationally is about where it is good to invest so as not to have to confront capacity constraints. This effectively means that Australia’s future share in global trading resources will be diminished not just in the near term but for the decades over which these investments will be matured. And that is of real concern to me. Once you make these investments, you are going to basically pursue them for a long period because that is the return period on the cost of capital investment.

Meanwhile, industries like forestry and tourism are starting to struggle. They are starting to struggle to get the basic labour they need to carry on, as is the agricultural and the primary industries sector. They just cannot compete for the labour. Their problem is that we have a government that is not investing in our future in the supply of labour, so they see valuable employees lost to other industries, especially the resources and energy sector. The same story is being told in other businesses and industry sectors all around Australia, as House of Representatives committees inquiring into these issues are now being told on a regular basis. The lid is going to blow off this problem while the government is asleep at the wheel. It is not that the resources boom is about to end; the issue is that the Howard government has not prepared Australia properly for ongoing participation in it.

We are actually sharing in this resource boom at the moment, but we have to secure further opportunities for the future. This is a ‘once in a lifetime’ opportunity for Australia. If we do not take it now, we are going to miss it. There are other countries, especially in the developing world—you need only look at the energy exploration going on in Africa at the moment—that are potentially very attractive for investment, provided there is political stability in those countries. The cost of capital and labour in those countries is much lower than in Australia—which is a serious challenge to Australia.

That is important because we now have major structural problems and inequities emerging in the Australian economy that the Howard government is blind to. We hear at the dispatch box each question time the Minister for Employment and Workplace Relations talking about fairness and national consistency. I simply ask—and perhaps the minister can respond in his appropriations contribution: where is the national consistency in an average annual wage of $56,000 in New South Wales and an average annual wage of $48,000 in Tasmania, your own state, Mr Deputy Speaker Quick? I think it is a fair question. The price of oil, the price of petrol, is the same in each state. The price of veggies and fruit are effectively the same. Just look at the price of bananas at the moment due to the problems caused by the cyclone in Northern Australia—$10 and $11 a kilo. It is putting a lot of pressure on families. That is what families are talking about at the kitchen table.

Where is the fairness in a tradesman’s wage of $45,000 in Western Sydney and the same tradesman’s wage of $100,000 in Mackay? It is in the resource sector. Last week the Queensland Premier and Deputy Premier were in Sydney on a recruitment drive centred on exactly this premise. There are already big disparities across industries and states between male and female workers, and the Australian government’s Fair Pay Commission is not going to fix them. They are just going to get worse. The skills and labour crisis is the most pressing constraint we as a community have. On this debate, it is interesting that in last Friday’s Financial Review I read that Botswana is the only country with a skills shortage that is worse than Australia’s. That is pretty telling. Botswana is the only country in the world with a skills shortage worse than Australia’s. Our problem is that neither government nor industry is doing enough to address this shortage. I believe both must bear some responsibility for the situation we find ourselves in today.

It is an indictment of this budget that so little is being done to fund initiatives to lift Australia’s skills base, because that is the debate. I am pleased to see a number of companies in the resources sector—BHP, Rio and Xstrata, to name a few—now accepting their responsibilities to do more on this front. But we cannot just adopt a culture of buying trained labour from down the road or overseas; we have to do it ourselves. We need to get back to traditional trade training in Australia, to address transferability of trade qualifications and to commence more of our apprenticeships at school for our young people. If we do not do this, we are going to suffer. Where are we going to get the specialised high pressure welding and turning and engineering workers and the science and technology graduates? Where are we going to get the teachers and nurses if we do not invest in this training? We cannot rely on getting people on subclass 457 visas from overseas, aimed at putting pressure on the Australian trade union movement and at keeping wages down. The end result is exploitation in Australia.

It is about time we had a little less talk about our problems in the Indigenous community. If the government actually did something to work with the resources sector to invest in training and the education of those people, then you would create the labour force for these regional, remote and isolated areas of Australia, because that is where these people live. They want jobs, but we as a community have failed to deliver the services that would create the opportunities for them and, in doing so, overcome some of the skills shortages that exist in Australia.

We also have to accept that we have to do more as a nation in energy. We have to start fronting up to the issue of resource security. The Prime Minister is talking about the price of oil at the moment in the context of the nuclear debate. It also means that the gas to liquids option and the coal to liquids option are now serious options for Australia to invest in, provided there is government leadership and a response from the private sector to accept its responsibilities to do this in Australia, just like the industry’s competitors are doing in Qatar. They are doing it in Qatar. Why should they not do it in Australia? Why should we not invest in gas delivered projects to make clean transport fuels for the global market and for the domestic market? It is five years since the government’s own gas to liquids task force highlighted the potential significance of such an industry in Australia. Why is this investment not pursued in the budget, just as we should have pursued the urgent issue of trade training in Australia and more university places for our own young people? These investments by government and the leadership at a policy level actually bring the private sector forward in accepting their responsibilities. Action has to be taken now.

That is what the second reading amendment moved by the shadow Treasurer, the member for Lilley, is about. It is about the lost opportunities in this budget. Where are the child-care places? Where are the public education and training places? Where is broadband for the whole country? What are we as a nation doing to encourage research and development? What are we doing about what Labor achieved in government from 1983 through to 1996 on lifting workplace productivity? I commend the second reading amendment to the House. This is the debate we have not had because of government inaction in this budget. This budget endangers Australia’s long-term economic fundamentals when we have never had it so good in terms of the opportunities that are available as a result of the surplus that exists because of the resource boom. We all like a tax cut from time to time, but it is also the responsibility of leadership to invest in the provision of services that guarantee our future. That is where the government has failed.

Luke Hartsuyker (Cowper, National Party) Share this | Link to this | Hansard source

It gives me great pleasure to speak on Appropriation Bill (No. 1) 2006-2007 and cognate bills. This legislation implements a budget that is physically sound, that provides a balance between the provision of services and revenue and that sets the stage for the future growth of this country. This budget is not the result of the events of the last four months; it is a budget that has been delivered as a result of 10 years of solid economic management. It is a result of this government’s ability to pay back $96 billion in Labor debt, to keep real incomes rising, to keep inflation low, to lower unemployment and to create 1.7 million new jobs. It is a budget that reflects good management by this government. Gone are the days when we talked of the recession we had to have. This government believes in creating opportunity, and this budget goes down that path to continue creating opportunity.

Tonight I want to speak on six key areas: tax cuts, the changes the budget makes in the areas of superannuation and retirement, support for business, support for infrastructure, support for families and seniors, and the important area of health. There is something in this budget for every taxpayer. Some $36.7 billion in tax cuts will be delivered over the next four years. The low-income offset will increase to $600 and the phase-out will go up from $21,600 to $25,000. The 30 per cent tax threshold will increase. The 42 per cent marginal tax rate will be reduced to 40 per cent and the threshold will increase to $75,000. The 47 per cent marginal tax rate will be reduced to 45 per cent with the threshold increasing to $150,000. It is important that we create incentive for people to be productive. It is important that we create incentive for people to invest in their own professional development so that they can earn higher incomes. I believe the changes in the tax rates are an important step in creating incentive.

For senior Australians, the SATO threshold will increase to $24,867 for singles and $41,360 for couples. A family with two children will pay no net tax until their income exceeds $48,000. That is a very good figure. As a result of this budget, more than 80 per cent of taxpayers will face a top marginal rate of 30 per cent or less. In percentage terms, the lowest income earners get the greatest tax cut. The OECD noted that the top marginal rate was around the international average but cuts in at a relatively low income. This budget does a great deal to reduce the disincentive that high marginal rates cause. It is very important that we create incentive. It is very important that we maintain the momentum this government has developed so that people are encouraged to achieve and generate income for themselves and for the wider community.

I will now turn to superannuation. This government is very focused on the needs of an ageing population. The Intergenerational report has noted the startling statistics that the number of people aged above 65 will double by 2042 and the number of people aged above 85 will quadruple. The result will be a relatively smaller workforce to sustain a larger, ageing population. This government has put in place a range of measures to address this. Our retirement policies are based around three pillars: compulsory superannuation, encouraging savings for retirement and the safety net provided by the age pension. The budget builds on this approach. The abolition of tax on superannuation benefits from taxed funds will be a major benefit for older people in our community. I have certainly had a lot of positive comment on that. The abolition of the reasonable benefit limit, the extension of the co-contribution to the self-employed and the extension of the full tax deduction for contributions to the self-employed are all important measures.

The halving of the pension assets test taper rate is also a vitally important issue. People save for their retirement and accumulate assets. But what was the system doing? It was cutting their pension. Whilst we all concur with the view that people who are well off should have less access to social security, we think there is an equity issue and that people who have saved for their retirement should be supported as much as possible by the community. The reduction in the assets test taper rate will be welcomed by many senior Australians. The budget makes investing in superannuation far more inviting and it makes saving for retirement far more attractive. It provides a practical approach to the issue of retirement savings.

Another important thing I was very keen to see approved in this budget is the issue of curtilage. There is an anomaly in our social security system. If you live in a residential property in a major metropolitan centre or a regional city, that property is not included in the assets test, but if you live on a rural property—perhaps you are 80 years old, you have lived there all your life, you are too old to farm the land but you do not want to leave your property—except for the curtilage around the home, the agricultural land is deemed to be an asset for the purposes of the assets test. As a consequence of that, many rural families—elderly farmers—were basically living on the poverty line because they did not have access to the age pension.

The notion of extending the same sort of coverage to people who are using a property as basically a residence is a great and equitable step that was introduced by the budget. I would like to commend the current Minister for Families, Community Services and Indigenous Affairs. I also commend his predecessor, Senator Kay Patterson, for the great work that she did in pushing forward the notion of extending age pension eligibility to a much larger number of people in the rural community. Many people in my electorate will benefit from this change. It is welcome. It is a change that I have been working towards in my time in parliament.

This budget provides great support for business. We see a benefit to business of some $435 million over four years. There will be improved access to the small business capital gains tax concession by replacing the current controlling individual test with a 20 per cent significant individual test and increasing the net assets threshold from $5 million to $6 million. The incorporation fee will be halved. There will be more encouragement for venture capital investment and increased incentives for investment in new plant and equipment through accelerated depreciation. These are great measures that should substantially enhance business.

Infrastructure is another important area. I was delighted to see in the budget a contribution of $160 million to the Pacific Highway, which is to be matched by the New South Wales state government with a further $160 million—an additional $320 million being invested in the Pacific Highway. That means a total investment in the Pacific Highway over the years 2006 to 2009 of $1.3 billion—a very important expenditure indeed. It is a road that desperately needs upgrading. I am delighted that the federal government is able to assist the state government with that road. In my area, we have a number of vitally important projects, one being the Bonville deviation and a second project being the upgrade of the Sapphire to Woolgoolga stretch of the highway, which will be able to proceed apace through this additional funding that has been made available under this budget.

Roads are a very important matter, but we cannot just leave the issue with spending more money on our highways. It is important that we divert as much of the freight task as possible onto rail. Previously, this government announced $450 million to upgrade the rail line between Sydney and Brisbane, diverting some 120,000 containers a year off the road and onto rail by the year 2011—a very important step. If we did not do that, our roads would just clog up. If we do not attend to rail, if we do not get rail carrying its share of the freight task, we are going to see our roads clogged no matter how much money we invest in them. So I was delighted with that earlier announcement of some $450 million under AusLink. This budget complements that with $270 million being added to that allocation to upgrade the line between Melbourne and Brisbane. This is for vitally important work covering things such as upgrading signalling systems, reducing the gradients of hills, reducing the radii of curves and increasing the length of passing loops, making rail more efficient and giving it the opportunity to compete effectively with road—a vital part of this government’s strategy.

Also, local roads are vitally important. One in four jobs in regional Australia is created by exports, and all exports from regional Australia start their journey on a local road. It is important that we have good local road infrastructure. We have seen various state governments, particularly the New South Wales government, putting increasing responsibilities on local councils but not providing them with the sorts of financial resources to provide for those responsibilities. As a result of that, we see much of local council infrastructure in a very dilapidated state.

The Roads to Recovery program has been a great initiative of this government, and I was delighted to see that, as part of this budget, the councils in my electorate—as with councils right around the country—are receiving additional funding to provide for much needed upgrades of our local roads to provide for much safer travelling on our local roads and an improvement in the local government infrastructure. Coffs Harbour City Council, for instance, will receive an additional $768,000 from this measure; Bellingen Shire Council, an additional $337,000; Clarence Valley Council, an additional $1.3 million; Kempsey Shire Council, $712,000; and Nambucca Shire Council, $464,000.

This money is being paid direct to councils. No money is being skimmed off to cover overheads in Macquarie Street. This money is being paid directly to local councils so that they can spend on the priorities that they identify, that the community is telling them they need. I think that is part of the success of this program: upgrading local infrastructure in response to local needs, not some edict that has come down from on high from a state government or the federal government but from the people who really know what needs to be done—the local engineers and the local communities. It is a great initiative, and I commend it.

Families are the cornerstone of our community. Once again, the government has shown in this budget its commitment to families. In 2006-07, the government will spend some $28 billion in assistance for families with children. That is double what was spent in 1996-97. The maximum rate of family tax benefit part A per child has been increased by 75 per cent over the same period and is now at the rate of $4,200. From July, more families will receive the maximum rate and they will be able to earn up to $40,000 per year without having their entitlement reduced. More than 12,000 families receive this benefit in my electorate. Some will also benefit from the extension of the eligibility for the large family supplement of $248 to families with three children, as opposed to the previous level which was for families with four children or more. It allows for support for our larger families. It is a move which I commend. The government has also made provision for the cap on the number of outside hours care and family day care places to be removed, which should create another 25,000 places. This is great support for families, and I commend these changes.

The budget also contains $586 million to help older Australians and carers meet their living costs. There are a range of measures involved in this. There is the $102.80 utility payment to assist our older Australians to meet their various utility bills, and I know from the calls to my office that this is a welcome payment. Carers are real achievers in our communities. They always punch above their weight in the care that they give their loved ones. We are again supporting carers in this budget through the carer payment and carer allowance, with a one-off payment of $1,000 and $600 respectively being provided. Some 3,700 people in my electorate will benefit from that payment—a very welcome payment indeed.

I think that we cannot spend enough on health. I commend the initiatives that this government has taken in the field of health. We have seen great improvements in bulk-billing rates, for instance, as a result of the measures of this government, providing incentives to GPs to provide services on a bulk-bill basis. I welcome the huge increase in investment in medical research, increasing to more than $700 million. It is very welcome. The money we spend on research will create huge benefits downstream, relieve great suffering and provide tremendous economic benefit to our community.

I think also that the investment in additional training places, with 400 places for medical students, many of them bonded, will be welcomed in rural and regional areas. Labour force shortage, particularly in regional areas, is a vital issue. This government implemented the idea of the rural clinical school, one for training medical professionals in regional and rural areas with a view that they are more likely then to practise in regional and rural areas when their training is complete. It is a great initiative by this government, one that is commended very widely.

I think the mental health initiative is vitally important. The level of mental health services in this country has been very lacking. The $1.9 billion commitment by this government to improve mental health services is going to be welcomed around the country. There are huge problems in the delivery of mental health services. There is a great lack of provision of services for these people in need, and this initiative will go some way to improving mental health services. It is a great first step in what I think is going to be a long road in improving our mental health services over time.

In conclusion, this is a budget that has as its basis strong economic management over a long period of time. It is a budget that has been delivered by a government that is committed to reform. It is a budget that has been delivered by a government that is committed to keeping interest rates low, keeping this economy growing at a fast rate, ensuring that we continue to create jobs and ensuring that we continue to create opportunities. It is a budget that has been well received in the community. Many constituents in my electorate have complimented me repeatedly on the measures that are in this budget. It is a budget that delivers to people right across the spectrum of our community. It is a budget that is going to deliver into the future. It is a budget that sets the stage for the continued future growth of this country. I commend the bills to the House.

Brendan O'Connor (Gorton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to respond to the Treasurer’s statement on the budget and indeed to the member for Cowper, who just recently contributed to this debate on Appropriation Bill (No. 1) 2006-2007 and cognate bills. What you did not hear, of course, as the member for Cowper went through his shopping list of achievements and successes of this budget, was talk in any way, shape or form about industrial relations—the new radical, quite extreme and unfair set of laws that will make it a lot harder for ordinary working families. None of that was mentioned by the member for Cowper. But you can be assured of this, Mr Deputy Speaker: there are many workers in that electorate who are very concerned about the way they will be treated as a result of the legislation that was put through.

The member for Cowper is no different from any other government member who refuses to acknowledge that the extreme provisions of the Work Choices act will wreak havoc in certain workplaces, particularly those unorganised workplaces where people are most vulnerable. I think it is very important, therefore, that, when we debate the benefits or otherwise of the 2006-07 budget, we do put into the mix the adverse effects that are likely to flow as a result of those extreme industrial relations laws. As I said, that is something that you do not see government members wanting to debate.

I have had the good opportunity to travel to a series of seats throughout the country on behalf of the federal parliamentary Labor Party’s task force into the effects of the Work Choices act. I have had the great opportunity to listen to many people—workers, church groups, community organisations, small businesses, unions—tell me their stories about the concerns they have about the legislation, about the way it will change the workplace as we know it and indeed about the way it will cower our workforce. Faced with the choice between a $10 tax cut and having my right to challenge an unfair dismissal removed, I know as a worker which one I would want to receive: the protection afforded under law to challenge an unfair dismissal. An unfair dismissal may leave me without a job, which would not allow me to look after my family, to pay a mortgage, to pay rent and to put food on the table. On the other hand, I will receive a miserly $10 a week. And for many Australian workers, that is all they will receive as a result of this budget.

There is no doubt that there has been some tax relief as a result of the budget, but it has certainly not flowed through as a great windfall for people. This is the highest taxing government in Australia’s history. Therefore, all it is doing is giving some of the money back that it has been collecting over these last 10 years. So we should not get too carried away by the figures. It seems to me that the Treasurer was carried away with his own budget. Nobody seemed to be as happy about the budget as the Treasurer. Clearly, there are areas that were not addressed. In a time of economic prosperity, in an unprecedented time of wealth as a result of the minerals boom, the government should be looking at investing in our infrastructure, investing in our people and ensuring that we are well placed to grow as a society and as an economy into the future. I do not think the government addressed those things in the budget two weeks ago.

It is important to note the Leader of the Opposition’s budget reply speech. The Leader of the Opposition quite rightly said it is critical that we address the child-care shortage in this nation. The proportion of Australian women with children participating in the workforce is one of the lowest of that demographic amongst all OECD countries. There is a clear requirement that we increase the likelihood that that demographic—that is, women with children—are able to choose to go back into the workforce. That will not happen unless there is affordable, quality child care. The announcement of the Leader of the Opposition to provide $200 million to establish more than 250 child-care centres on primary school grounds seeks to fix a fundamental problem—that is, notwithstanding the number of notional child-care places that are allowed under the current system, there are not enough places for families to send their children. There are not sufficient child-care services to enable women in particular to return to the workforce and participate, ensuring that our economy is strong.

I guess that should not surprise us. The government’s view about child care is not a well thought out one. They have not had much regard for the notion of child-care services. They have not realised, for example, how difficult it is for child-care centres to attract quality staff, given the relatively low wage levels that they are able to pay. If you were to compare the wages of child-care workers—given the quality, responsibility and qualifications required to undertake the care of children—with those of any other professional group in society, they would be the loser on every count because historically they have not been valued by this country. The government have failed to address this fundamental problem in child care in our country by failing to understand that we need to elevate the importance and status of child carers to a point where they are seen as highly valued professionals. That is unfortunately not the case today.

It is also important to note that the Leader of the Opposition clearly brought into his budget reply speech industrial relations matters. You cannot talk about the benefits of a budget without looking at the difficulties that families will experience as a result of becoming precariously employed. Think about this for a moment. If unfair dismissal laws have been removed, which they have been pursuant to the Work Choices act for at least four to five million employees, will there be such a thing for those employees as permanent employment anymore? If an employer has the capacity to dismiss an employee for any or no reason and that employee has no recourse to challenge that decision on its fairness then what we have in this country is an extraordinary proportion of the workforce with no tenure whatsoever. They have no capacity to argue that they are permanently employed and therefore have the right to challenge their sacking if unfair.

As we know, the government’s new laws for unfair dismissal—which the Leader of the Opposition quite rightly said we would tear up if elected to government—are not about trying to sack every employee in Australia. What they are about is trying to threaten either implicitly or otherwise every employee in this country so that they do what the employer wishes when it comes to negotiating future employment conditions. It is important to note that the combination of the government removing a no-disadvantage test from the preceding act, the Workplace Relations Act 1996, and replacing it with the Australian Fair Pay Commission standard—therefore allowing employers to remove all but five basic minima from any employment conditions—providing the capacity to sack for any or no reason will compel employees to choose to trade down their conditions in order to maintain their employment. That is the evil twin effect, if you like, of those two industrial relations provisions, which are now in the very extreme, pernicious and unfair legislation introduced into the House last year.

It is therefore critical that, if we are to look at whether the government has been fair and decent to the community, if we are to compare how well it is governing and how fairly it is treating the citizens of this land, we look not just at what tax cuts there may have been but at how the families of this nation are faring as a result of other decisions that have a great bearing upon their future as employees as much as as taxpayers. In most circumstances you would feel yourself worse off if you picked up $10 in a tax cut but went to work knowing you could be sacked without cause by your employer or, indeed, knowing that you would have to accept wage and condition cuts. That will occur in many workplaces in the country.

We have a government—the highest taxing government in our history—which is willing to pay back some of that money in the form of tax cuts but which, whilst it is doing that, is enacting the most extreme, radical, fundamental change to our industrial relations system since Federation. And you will not hear a government member try to defend that in too many places.

Look at all the brochures that are put out by the government backbenchers across the country—brochures with the Prime Minister and those backbenchers on the front, with paragraphs describing certain policies of the government and the way in which the government is handling so many matters. I have yet to find one that mentions industrial relations—certainly not one that is going out to the electorate at large. There might be some targeted brochures going out to some constituents, but I have yet to see a brochure addressed to an electorate at large which tries to defend the Work Choices act in the community. They cannot defend the indefensible, and so they will not try.

This is critical because, whilst the act has now been in effect for only six or seven weeks, there is no doubt that there will be great changes to our workplaces throughout this year and next year as a result of the legislation. There is a long way to go, but already we are seeing signs of employers beginning to impose their will upon employees unfairly. That forces good employers to consider doing the same. We now have a very coercive regime, which allows bad employers to act badly and forces good employers to consider doing the same. That is the real nub of this legislation. It is coercive insofar as it forces employees to accept the worst. But, in some ways—unintentionally or otherwise—it is even worse than that, in that it forces good employers to consider doing bad things to their employees so they can maintain their business.

I have had discussions with a series of people from small businesses who have said to me, and to others, that they do not want to cut the wages and employment conditions of their staff. They know they have the whip hand; they know they can negotiate and are far more powerful than their employees in these small businesses, but they do not want to cut the conditions of their staff. They are concerned that if their competitors in that region, that town, that community choose to do so, then they are faced with this dilemma: do they cut conditions accordingly, in a similar fashion, or do they risk losing their business and, thereby, risk their employees losing their jobs?

The term ‘race to the bottom’—a catchcry we hear many a time—is not always explained to people. It is a term coined by economists that denotes driving wages down by effectively cutting labour costs and shifting those costs over to profits. You are beginning to hear it now in places that have probably never mentioned it before, because this country has had a history of maintaining a decent floor for minimum conditions and wages. We have had a history since Federation of believing in fairness when determining employment conditions under the federal and state systems.

So whilst the Treasurer may want to take great comfort in providing the tax cuts he did in the budget two weeks ago, I think it is fair to say that there has been a great level of angst amongst many families because of the changes in IR. The effects of that IR legislation have only just begun to be felt by many people in the community. As the consequences of the act unfold, there is no doubt that it is likely that it is going to get worse, not better, for many people.

It is also fair to say that some people have the capacity to negotiate conditions, but they are a very limited few. Some people have that capacity, because the scarcity or level of their skills or the remoteness in which they work may provide them an opportunity to bargain and maintain their employment conditions or possibly even to reach higher conditions. For the bulk of the workforce that will not be the case. And when there is an economic downturn, things will get very bad for those employees.

I do not have many people in my electorate who will receive the high tax cuts that media commentators and politicians—including myself—will receive. I represent an electorate in Western Melbourne with quite below-average household incomes, and they are not great beneficiaries of the Treasurer’s budget two weeks ago. I listened to the member for Cowper talk about the fantastic grants he is receiving in roads and other areas. I am not sure about you, Mr Deputy Speaker, but my electorate is receiving very few grants in the areas of transport and education and the like. I am sure we all do argue for our electorates, but I would argue on merit that my electorate and the constituents that reside within it do deserve some grants and some support in the areas of education, health and transport. But they are not in receipt of those grants which certainly seem to be going to Nationals’ seats and other seats of the government. That is of grave concern to me.

Having looked through the budget, the one thing that we really needed was the upgrade of the Calder Highway to remove the ground-level intersections. That never came about. Unfortunately, there will be more fatalities and injuries on that freeway as a result of the failure by the Commonwealth to spend the money—only $25 million—that would fix that problem.

That is just one problem. I could list a whole series of problems that could be addressed by this government, if it were not focusing on the marginals and were instead, as it should be doing, focusing on the marginalised. There has been a song and dance about the budget, but I have to say that it has not satisfied my electorate at all. (Time expired)

Bruce Baird (Cook, Liberal Party) Share this | Link to this | Hansard source

I listened with interest to the member for Gorton’s comments on the Appropriation Bill (No. 1) 2006-2007 and cognate bills. It is particularly interesting that the member for Gorton spent about half his time talking about the industrial relations reforms rather than the issue before the House, the budget. It reminds me of the debate in the search for the US president when George Bush Sr was standing and Bill Clinton was standing against him. The theme was ‘It’s the economy, stupid.’

Members opposite have been struggling to come to terms with that fact, as was indicated on the first day after the budget was brought down when they ran out of questions on the budget. They do not know quite where to go. They are in favour of tax cuts; they thundered long and loud about tax cuts before the budget was brought down. Then, after it was brought down, they said the tax cuts were too high and would exacerbate inflation and lead to further interest rate hikes. At the same time, they wanted more money spent on infrastructure, child-minding centres et cetera. I do not think those opposite know quite where they are in terms of the budget. After the address by the Leader of the Opposition, Mr Kim Beazley, the Sydney Morning Herald said:

When you put in, you get back. That was Kim Beazley’s rather awkward slogan in his reply to the budget. Sadly for the Opposition Leader, he did not put enough in, and will not get much back from the electorate ...

Mr Beazley abandoned any serious attempt to criticise the budget in favour of electioneering ...

The main task before Mr Beazley and Labor is plain: to convince the electorate they are good economic managers. Voters must be persuaded between now and the end of next year that despite more than a decade of prosperity—marked by strong growth, expanding employment and low inflation—the economy would be better off in the hands of Labor than the Coalition. Labor will not do this by being timid.

That is what the Sydney Morning Herald had to say. It continued:

However, Labor must do more than recite this familiar litany—

about how they feel in terms of the overall impact of the economy. The article continued:

If Labor has alternative strategies, it must explain them; if Labor has the answers to the problems Mr Beazley enumerates, it must set out affordable solutions ...

If the Government got it right on budget night, why vote Labor? A ‘me too’ Opposition offers no reason to change the Government.

That says it all about the approach of this government. The response to this budget has been very strong and very positive. In the business community it has been overwhelming. In my electorate, I have had many people say to me that it is an outstanding budget. They very much approve of the tax cuts and the superannuation changes. Those who live in country areas approve of the infrastructure changes.

It is in the whole question of the economic management of Australia that we find the strong difference between the opposition and the government. One of the key factors is the question of the net debt of Australia. The net debt was eliminated by this government by the time of the last budget. We repaid $96 billion in Labor debt. That saves over $8 billion per annum in net interest payments. That allows the government to provide the types of tax cuts we have seen and the superannuation incentives that are provided.

This is the first time in a long time that Australia has been debt free. Labor’s net debt peaked at 18.5 per cent of GDP. In terms of this budget, there is a big difference with the total repaying of Labor’s debt of $96 billion. Again, this is a surplus budget. It is the ninth surplus budget since 1996. Under Labor there were nine deficits in 13 years; it is not surprising that we racked up $96 billion in Labor debt. Let us look at the comments of the Australian about the budget. It says:

... there is a great deal that is good in the Treasurer’s 11th budget. Mr Costello has cut income tax and reduced outrageous imposts on superannuation. And he provides some new help to women with small children who want to work more and to other middle-income families with kids, the people on whose support the Government has bet its own, and the nation’s, future ...

Among the many positives in the budget, tax relief is foremost ...

Mr Costello’s real tax reforms apply to people on lower incomes. People will now have to earn more than $25,000 before they pay the 30 per cent rate, which will now apply to incomes up to $75,000, an increase of $12,000 in the range it covers and well above the $56,000 income of average full-time wage earners. And the 40 per cent bracket will apply on incomes between $75,000 and twice that amount. At present, the 47 per cent rate kicks in at $95,000 a year.

This is a major change. It means that some 80 per cent of the working population will now pay no more than 30 per cent in tax. The threshold has shifted very significantly over the last few years. Six years ago, the threshold for the top marginal rate was $50,000. If that threshold had been indexed in 1996, it would have stood below $64,000 by 1 July this year. By 1 July this year, that threshold will be $150,000. We have had a very significant change in our tax rates—the most significant amount that we have seen in many years. Over the next four years, this will cost some $36 billion, a significant amount. It provides real incentive to the taxpayers in our community.

Members opposite were singing long and loud about the need for tax cuts, and there is no doubt that the economy has been going very well. Australia has been a very lucky country in that our resources sector has experienced boom conditions and we are the beneficiaries. The government is passing on those benefits to the Australian taxpayers, which is right and proper. Across the nation, we will benefit from and share in the wealth that is being provided. But it does not happen by accident; it happens by careful management and planning. Even the low-income tax offset will increase from $235 to $600. It will phase out from $25,000 to $40,000. That means that a low-income earner will not pay income tax until their annual income exceeds $10,000.

It is true that not only have we seen significant personal tax cuts in this budget; we have also seen the creation of over 1.7 million jobs since March 1996. Of course, finding jobs for young people across Australia is all important. In my electorate there is an unemployment rate of some 2.5 per cent, which the people in my electorate appreciate very much. The unemployment rate is down to 5.1 per cent, at its lowest level in 30 years, and 115,700 new jobs have been created over the last year, most of which were full-time jobs. The participation rate is around record highs.

By comparison with the unemployment rate under this government of 5.1 per cent, the unemployment rate under Labor was 8.2 per cent when Labor lost office and peaked at 10.9 per cent in 1992, when over 900,000 Australians were unemployed. That is a significant difference and is really at the heart of economic management by this government. Inflation, which is now at three per cent and has been averaging 2.5 per cent since March 1996, peaked at 11.1 per cent and averaged 5.2 per cent under Labor.

Very significant changes to superannuation have been introduced by this government. I was speaking this very day to James Mackenzie, a partner in Tynan Mackenzie, which is one of this country’s major companies offering financial advice. It has between 3,000 and 4,000 clients and a portfolio of around $3 billion. James Mackenzie was being very enthusiastic. I asked him, ‘What would your comments be on the budget?’ and he said:

Individuals, like governments, must plan their future carefully. It’s only through self-reliance that we can also provide the less privileged with a better standard of living. There are no instant pudding solutions to wealth creation and, by providing incentives now, individuals will have goals to work towards.

He continued:

The budget is a winner for both small and large taxpayers alike. The biggest winners, however, are the self-funded retirees and those younger people still in the workforce and planning their retirement through superannuation. The recent announcements made in the federal budget mean a significant focus of individuals on wealth creation must be towards superannuation and the provision of self-funded income streams. Because large lump-sum super contributions are restricted, this means that the investment strategies of individuals must be long term, which is what generally also produces the best long term returns ... and which therefore should also take pressure off the social security purse.

Tynan Mackenzie endorses the government budget and sees this as the first step in redressing a tax system which is out of date.

That is the view of one of our major financial advisers on the significant changes in superannuation that we have seen in this budget.

The superannuation changes mean that those people who pay tax on the way in and on their superannuation investment itself will not pay tax on the way out. It is a great incentive for those people who are over 60, because it means they can continue to work and draw on their super account at the same time but not be taxed twice. It means that they can work and pay tax on their appreciating income but the tax on their superannuation benefits will be removed. There will be no tax on lump-sum payments. There will be no reasonable benefit limits placed on the amount that can be put in as a part income. That will also provide a real incentive.

We will not have the arbitrary limits and the technical differentiation. We are saying to those who are saving for their superannuation: ‘If you have worked hard, put your money aside, paid your 15 per cent tax surcharge on the way in and your fund has been paying the tax either through capital gains tax or through other taxing provisions on the investments that it has provided, you will not have to pay it on the way out.’ That is a huge incentive for people to save through their superannuation. For the older generation who have put in the hard yards and are now looking forward to retirement, this is a huge boost to their savings. This is a huge incentive for people to enjoy their life, and it also provides an opportunity for those who want to work.

We have a double bonus for the many people who want to take a part-time job but who think that by the time their superannuation payout and the income of that job are added together they will be on the top marginal rate and it will not be worth while. One is that the top marginal rate will be reduced significantly and the other is that the tax they would pay on their superannuation payout will be removed. This does not apply to all schemes, but it applies to those where taxation is paid on the way in and on the way out. Those in government schemes—government employees—will have a 10 per cent tax reduction with regard to what the government has contributed to the scheme. This is a huge plus, a huge bonus. This is what the Australian said about it:

The Treasurer’s other significant achievements are the budget’s salves to the present lacerating treatment of superannuation. By abolishing tax on superannuation lump sums and the benefits people over age 60 receive from their super funds, the Treasurer is giving all Australians a long overdue reason to save for their retirements. This is a commonsense approach and, while it has been too long coming, his cuts to super taxes are entirely commendable. As is the reduction in the rate at which retired people lose pension payments as invested income from their superannuation increases. The existing situation is a demonstrable disincentive for people to invest money in their old age.

I have to ask, as we listen to the members opposite: what have they had to say about these superannuation changes? Where was it part of their policies? And that goes back to the editorial in the Herald. What did Kim Beazley say in response with regard to superannuation? What did he say, other than rather tired rhetoric, as he came in to try to appease the backbenchers in his own caucus? The fact is that he did not put forward any worthwhile proposals or any incentives in terms of superannuation. This is despite the ageing of the Australian community. The percentage of people who are now over 65 in my electorate alone is now 18½ per cent. We need to address the issues that confront people who are retired or who wish to retire and we need to provide real incentives for them to stay in the workforce.

On a number of criteria, this government has moved very effectively. Mortgage rates are down from 10.5 per cent in 1996 to 7.55 per cent now. Under Labor they peaked at 17 per cent and averaged 12.75 per cent. They were 10.5 per cent when Labor left office. Real household wealth has more than doubled since March 1996. Household real net wealth has increased by 8.7 per cent per annum. Income has risen by close to 15 per cent under this government, but in the 13 years of Labor it increased by some three per cent.

People talk, as the member for Gorton has spoken about at length, about the IR reforms. But what is important to the Australian household? How much they earn—and, of course, household income has risen by 8.7 per cent under this government; it was 2.9 per cent under the Labor government. What is the number of jobs that have been created? Under this government, 1.7 million jobs have been created; under the previous government, the figure was often a minus. The income that has been created, the take-home pay, has gone up by close to 15 per cent under this government and only three per cent under Labor. Business investment has gone up by 8.9 per cent under the current government. Under Labor’s last 9½ years, new private investment grew by just 4.1 per cent, which is not surprising seeing that the then Prime Minister kept talking about banana republics.

It is an enviable track record. It is about successful management of the economy. It is about growth rates which are the envy of many of the OECD countries around the world. We have been averaging 3½ per cent growth per annum, and the forecast is that next financial year we can expect growth in excess of that. So we have been very fortunate, but it does not come by accident.

We have not only that but also major infrastructure growth in terms of this budget. In the five-year period from 2004-05 the government has allocated $12.7 billion to the AusLink program, and now there is an additional $2.3 billion—an increase of nearly 20 per cent—for that program. The largest allocation is to the Hume Highway, and the Pacific Highway will get $160 million. AUSTRAC will get $550 million to upgrade the interstate network between Perth and the Queensland border, and an additional $270 million will be allocated for the north-south rail corridor between Melbourne and Brisbane. There are so many features of this budget that commend themselves to the Australian public.

Tax cuts over the next four years will amount to some $36 billion. Taxes will be eliminated for people over 60 receiving lump sum superannuation payments. There are major infrastructure proposals. Also, the tax changes will mean that the highest rate of tax will be for those earning more than $150,000, which is two per cent of the population. Eighty per cent of the working population will be paying 30 per cent or less, and the rates are being reduced from 47c to 45c and from 42c to 40c. This is real economic management. It is about getting the economy right and the management of Australia as well. (Time expired)

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

I also rise tonight to speak on Appropriation Bill (No. 1) 2006-2007 and cognate bills. You have to marvel at the institution of federal parliament. This morning I was speaking on a motion in fierce agreement with the member for Cook and now I follow him this evening in fierce disagreement with his position on the budget before us. I think this budget suffers from sins of omission, because there is so little in it. There was so much money to spend yet the government have not spent it. They have given away tax cuts—and, yes, the Labor Party welcome those tax cuts; we asked for them 12 months ago. Indeed, if you had given the tax cuts to families 12 months ago, you might have assisted those families, but now the tax cuts are being given with one hand and taken away with the other. They are being swallowed up by petrol prices and the recent interest rate hike. Sadly, they may again be swallowed up by interest rate hikes if we do nothing about curbing the money going back into consumer spending.

I always marvel at this government’s crowing about its great economic management and its fantastic record on budgets and all the rest of it, because it is all on consumer spending. Eventually the day of reckoning will come when the credit card bills come rocking in and someone has to pay them off. There is record household wealth, mainly in the bricks and mortar people are living in—and it is all well and good to have a house that is worth anywhere between $200,000 and $700,000, but you are not going to sell your house to recognise it. You are paying it off day in and day out and you are mortgaged to the hilt; you are geared to the hilt. So any little movement in the interest rate is an absolute killer for the ordinary family.

These tax cuts are welcomed by Labor, but they should have been given a long time ago. There should have been more assistance in this budget for families. Tax cuts, though they have been given, will not help with families’ costs of daily living. This budget has done nothing to address this country’s spiralling record household debt. It has done nothing to address our spiralling credit card debt. It has done nothing to put a damper on consumer spending. Indeed, the government boasts that consumer confidence is up. These tax cuts will go back on the government’s credit card, which one of these days will have to be paid off.

The budget was a huge missed opportunity and tonight I want to address some specific and glaring areas of missed opportunity. For me, the No. 1 missed opportunity was child care. Here is this government saying that it has done many great things for child care, but there was not one dollar in this budget for child care. It lifted the cap—whoopdedoo! The budget has done nothing. The government has lifted the cap on family day care and outside hours care. That may help in some areas, but it will not help in my electorate of Chisholm. We already have a massive waiting list for family day care. So the cap has been lifted. So what? No-one has the skills or the willingness to provide family day care throughout my two municipalities. So lifting the cap will not help. The outside hours care may assist—I will acknowledge that—but, at the same time, places that have not been utilised by centres could easily have been swapped around. But for ages the government has said, ‘No, we can’t do that.’ There was a very simple fix.

There is a child-care crisis in Australia and this budget has not fixed it one iota. Child care is one of the biggest issues affecting local families in Chisholm, yet the Howard government continues to ignore the problem. This budget does nothing for child care. It promises a lot, but it is all smoke and mirrors. It fails to guarantee one extra child-care place in the Chisholm electorate—or anywhere else in Australia, for that matter. It also fails to address the issue of child-care affordability, which is the No. 1 issue in my electorate. I have been contacted by several parents who are struggling to find child care and to afford good quality child care. By ignoring child care, the Howard government is ignoring Australian families. The government is ignoring the Herring family of Chadstone, who emailed me at the end of last year in absolute panic because the father works full time and the mother was set to return to work and they could not find child care for their baby. They wrote:

Dear Ms Burke,

We require your help in finding child care for our six-month-old daughter.

Even though we signed up to our preferred child care provider four months before the birth of our daughter, we have been advised that there are so few places we may have to wait another year. At the time of putting our name on the waiting list, we were encouraged to believe that early 2006 was a realistic possibility.

As you can understand, in today’s society it is not always possible for either the mother or father to stay at home, and no grandparents are available to help out. A nanny cannot be considered due to financial constraints.

The lack of government or council provided child care is a source of distress for us, as it must be for many young families. The current government is encouraging us to have children, and is taking some responsibility for the current baby boom, [but] it is not providing any infrastructure to support young families.

The Herring family was in absolute distress. But, after several phone calls by my office to dozens of child-care centres, we finally were able to cobble together a temporary solution: two days at one centre and three at another. It was not ideal, but it was the best we could do.

Recently I conducted a survey of local child-care centres in Chisholm. Of the 24 child-care centres surveyed, 15 had absolutely no vacancies. This is long day care and, for those who do not understand, generally this is the preferred option of most people; generally it is what they are after—not always. Some people prefer family day care, but we are talking about long day care. Of the nine remaining centres, several had only a few places available, many of which were part time on specific days. The Howard government seriously needs to put more funding into child care. This budget, as I said, has done nothing to assist that. This government also needs to stop shirking its responsibility for child-care planning. At present, new centres are being built in areas where there is an oversupply, while areas with great need go without. This needs to be addressed—and the government cannot keep passing the buck and saying that it is a state issue; it is not. It is an issue that needs to be addressed across the board.

To make matters worse, child-care costs have risen by 62 per cent since 2000. This is hitting families really hard. Child-care fees are currently rising at a higher rate than everything, except petrol. That is a crying shame for our families, who are doing it tough already. It is not just Labor who has criticised the Howard government for its neglect of child care. Even the member for Lindsay, one of its own, has joined in attacks on the coalition’s record on child care, saying that the budget was not an adequate response to the crisis. She said that Labor is much more in tune with the issue and she has commended Labor’s policy of establishing 260 new child-care centres on primary school grounds.

The government needs to make sweeping reforms to child care as a matter of urgency. Australian families do not want imaginary places; they want real ones. If families cannot access child care, they cannot work. Extreme new industrial relations laws coming into place and the changes from Welfare to Work will force even more families to work for longer hours at shorter notice, which will place even greater pressure on the system.

Unlike the coalition, Labor has a plan to fix Australia’s child-care system to give families affordable child care that is easy to access. The Howard government should adopt Labor’s policy, which would provide new capital funding to establish new child-care centres on primary school grounds, solve the workforce issues that are crippling the system and establish a single waiting list in local areas. This budget has failed child care and it has failed families.

The other issue I want to look at is illegal fishing. This is something that you would not think of as a big issue in downtown Chisholm, I admit; but, as chair of Labor’s task force on transport and maritime security, it is something I have become quite interested in and quite passionate about. I would say again that the Howard government’s measures to fight illegal fishing are woeful also. While it is encouraging that the government has finally acknowledged that illegal fishing is a problem—for many years now, it has put its head in the sand and said that it was not actually an issue—it seems it has no idea about just how out of control illegal fishing is in our northern waters.

Peter Costello boasted in his budget speech that this new measure will double the number of apprehensions of foreign vessels each year. Again, whoopdedo!—because last year alone there were only 204 apprehensions. Considering that there were 13,018 sightings of illegal fishing vessels in our waters by coastguards, doubling the current rate will only bring apprehensions to 408 next year, which is around three per cent of all illegal fishing vessels which enter our waters. What a joke! Labor believes Peter Costello should aim to catch 100 per cent of illegal fishing vessels coming into our waters and, indeed, he should be deterring these fishing vessels from even starting the treacherous journey from Indonesia, not settling for just a lousy three per cent.

While I welcome the fact that the government has finally recognised that Indigenous sea rangers have a role to play in combating illegal fishing, I concur with the Northern Territory fishing minister, Kon Vatskalis, that $6.9 million for the program is not adequate. Indigenous sea rangers should have a big role to play in this issue. They are already doing a fantastic job on a shoestring budget—most of them are paid for out of the communities’ own money and most are also paid under CDEP, not for the proper job they are doing. We should recognise the value of the work these people provide and pay them a proper wage as proper rangers, as we do for any other person who performs this great role for our nation. We should be doing more because they are doing more to protect their waters, their culture, their heritage and their communities. As numerous as the people are who I have seen on my various trips around the country recently, as part of our custom and our tradition we need to do this anyway. As we are the only ones who actually live up in these very remote communities, why are we not being adequately utilised to protect our borders?

After years of Howard government neglect, an illegal fishing crisis has emerged in northern Australia. The Labor transport and maritime security task force has travelled the country. I have been to some great places—sadly generally for only a day so I have not really got to enjoy them—Perth, Broome, One Arm Point, Maningrida, Brisbane, Cairns and Launceston. We have heard first hand from the industry and community groups about this issue. Mostly they tell us that they are sick and tired of being ignored and overlooked. They believe that this government has failed them miserably. As we heard time and time again, ‘It is because we are in the Kimberley; it is because we are up here out of sight, out of mind. If one of these boats arrived in Sydney Harbour, someone would do something about it.’ That is tragic.

The evidence gathered by the task force is alarming. The Howard government has neglected our national border security to the point where foreign criminal syndicates now view Australia as a playground for illegal fishing. If 13,000 boats are getting onto our shores, what else is coming? They are not just coming into our waters; there was multiple evidence of landing. It is not just commercial fishers who are suffering. The illegal fishing crisis threatens the very existence of a number of our Indigenous communities. The fantastic people at One Arm Point, the Bardi community, need to be commended. They are producing the trochus shell in hatcheries on shore, a beautiful shell that is sold on and made into pearl buttons. In the hatchery, they get them to a point where they can go and reseed them on the reefs. Later they harvest them. It is very hard work because you have to get down on the reef and pluck these sea snails off. Last year they sent off a container to Italy and made $85,000. That might not sound a lot to some people in this place but to a very remote Indigenous community, off their own bat, $85,000 was a lot of money. This year they are not going to make anything because Indonesians have stolen the majority of the trochus. For anybody else that would probably be theft but, again, it is a remote Indigenous community and it seems nobody cares. Our ecosystem is also under threat, with Indonesian fishers killing our sharks in huge numbers. They take dolphins and turtles as bait. By leaving ghost nets throughout our waters, a lot of turtles, dugongs, sharks and other species are being caught in these nets and killed.

Biosecurity is another great risk, and there is a very real concern that our import markets could be compromised by the introduction of animal diseases such as rabies, foot and mouth disease and swine fever, to name a few. I could go on forever on this topic but I want to get to my last point which is telemarketing. Whilst I welcome the money in this budget for telemarketing I reckon somebody could have at least had the decency to recognise me because it has been my campaign and nobody else’s that has finally got the government to introduce a do not call list. We get the blame for being oppositionist for opposition’s sake.

Helen Coonan was great. She heard that Labor was going to announce its policy. I had Kim Beazley lined up in my electorate one morning—thank you to Erin, a lovely constituent of mine, who was going to have us in her house—and at 8.20 that morning Senator Helen Coonan put out a press release saying, ‘Here’s a do not call register.’ Twelve months before that she told me that it was a waste of time, it was a joke and it could not be done. So at least in this budget line she could have said, ‘Thanks Anna.’ Previously the Howard government said it would not work and this is despite the fact that similar registers currently operate in the UK, the US and Canada. When I introduced a private member’s bill in this place last October, the government would not allow a vote. Instead, Minister Coonan announced a discussion paper on the issue. I could have told the minister that the overwhelming number of submissions would be in support of the proposal.

Australians receive over one billion calls from telemarketers each year. They are simply driving our constituents nuts and we should be doing something about it. I have received over 1,000 phone calls, emails and letters from the community in support of my campaign for a do not call list. Here is just a sample of what some of my constituents have had to say on this issue. In September last year, Kathie of Mount Waverley emailed me saying:

I have lost track of how many times I have had difficulty feeding and putting my baby and toddler to bed because of these annoying calls. I get at least five each week—and they are never convenient for me. Thanks for taking up the issue.

And in October, Heather, also of Mount Waverley, emailed me the following:

Thank you for your newsletter that I received through the mailbox. I would very much like to have information on how to stop telemarketers targeting our home. We receive so many calls that I’m beginning to think there is a large notice next to our name in the phone book saying ‘ring these people frequently’.

And Robert of Surrey Hills wrote:

I fully support your efforts to stop the scourge of telemarketing phone calls. I work from home and the calls are an endless nuisance.

It is now six months later and people are still getting in touch with me to express their frustration and dismay at the government’s inaction. It is unbelievable to think that many Australians are now reluctant to answer their phones. Just last month I received an email from a constituent called Allison, who said:

I was very interested in your telemarketing campaign. We received three overseas calls in one week ... I would dearly love to have our phone number off these telemarketing lists ... We have caller ID so now every time I see that it’s from overseas I hesitate to answer it. The only reason I do answer it is because we have relatives over in New Zealand ... thank you for listening.

And it is not just constituents. People from all over Australia have contacted me in support of this issue. I put on the record that I do not want people to abuse the individuals who are working for these telemarketing call companies. I do not want you to be picking up a whistle and blowing it in their ears. I had a very nice email from a woman the other day who said her daughter worked in one of these centres. She said that while she supported the do not call register, she did not want us to take it out on the people making the calls. I wholeheartedly endorse that. These are people making a hard buck—it is a tough gig—and I do not want people to be taking their frustrations out on the people making the calls. That is why I think people should have the option to say, ‘No, I don’t want to be on this list.’

Time and time again people ask me, ‘Why isn’t the government doing anything about this? We’re being driven nuts in our own homes.’ There was very much a sense of disbelief that they had no rights to protect their privacy and their family time in their own homes. Finally, the government has acted, but it was forced to act in such a hurry that we are still not sure what this all means. Only today, an article by Neil Shoebridge in today’s Australian Financial Review says:

The Howard Government is silent about several key details of its do-not-call register for consumers and small businesses:

The definition of a small business

How often the register will be updated

How much it will cost telemarketers to access the register

How the set-up cost of $33 million was determined

How industry’s contribution of $15.8 million was determined

How industry’s contribution will be enforced

Which organisations will be exempt

How calls from overseas companies will be stopped

The days and times telemarketers will be allowed to call people and businesses that are not on the register

If the Australian Communications and Media Authority, which will manage the register, will outsource the running of it

All these questions were asked in the Financial Review today. The minister has to have the answers. She has told the industry that she will not speak to them until the bill is out there. I say that it is easier than that. You have only to look at what is currently happening in the US, Canada and the UK to see how these can operate.

For a do not call list to be successful it has to target calls made from overseas. There is nothing to stop the government from penalising Australian companies using overseas call centres to sell their wares. The do not call list must also be administrated by a government agency. If the industry is in charge, I fear it will be a second-rate registry which simply will not work. If this is going to work, it has to be complaints driven. It has to put the best interests of the consumer first, not the best interest of the industry.

The government must also close off any loopholes which will allow telemarketers to continue bugging people who sign up with the register. For instance, it should consider making caller ID mandatory for direct marketers. At present Telstra refuses to divulge the identity of incoming telephone calls made from a private number, so if a direct marketer’s number is not listed, it will be impossible to register a complaint. As I say, I welcome this move, but this budget is appalling by its omissions. (Time expired)

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

I can concur with what the former speaker, the member for Chisholm, has had to say. It is very important that people do have some privacy in their own home when it comes to phone calls. Her exposition today has been worth listening to, though she claims all the credit—and rightly so, if she has put that work in. It was probably before my time. I congratulate her and all those who have been concerned about the issue of pesky phone calls that we all get in our homes at the most inappropriate times.

I rise this evening to speak in the debate on Appropriation Bill (No. 1) 2006-2007 and cognate bills. Firstly, I congratulate the government, and particularly the Treasurer, on its economic performance which has led to a great and historic opportunity to deliver a budget and has, as the member for Cook said, delivered nine surpluses in a row. He gave a very good speech. I was impressed with the fact that not only have we had nine surpluses in a row but we were able to reduce the debt that Labor left us as we came into government.

In 1997 the Treasurer allowed me to have a meeting with him at which I told him that we had a real problem with the Pakenham bypass. I told him that the community of both South and East Gippsland could not access the city and the city could not access the country. I said that we had a bottleneck in Pakenham and that we needed to do something about it. He said, ‘What do you want to do?’ I said, ‘I’d like some planning money to put in place the groundwork to be done for a complete bypass of Pakenham—a 30 kilometre bypass—planned in the future by VicRoads.’ The Treasurer acquiesced and in 1998 we announced $30 million for the initial planning stages for the Pakenham bypass. I think it went unheralded. I do not think it was noticed—there was an election campaign on and a lot of other issues were being addressed at the time. I accepted that, but the $30 million was on the table for the state government of the day to address the issue of the Pakenham bypass.

Here we are now in 2006 and finally the sods have been turned and three contracts have been let. There has been argy-bargy over who is going to pay for what. The federal government spent $121 to coerce the Bracks government in Victoria to pay for their share of the Pakenham bypass. The Pakenham bypass will go from Beaconsfield to Nar Nar Goon. It will make a huge difference to what is happening not only in Gippsland but also in South Gippsland, because we need to do a link road that goes from Pakenham right across to Koo Wee Rup, where the South Gippsland Highway will join with the Pakenham bypass. So we are going to end up with a situation where the whole of the economy of Gippsland and South Gippsland will benefit from what the Treasurer did when he put the first $30 million into the planning of the Pakenham bypass. It will provide great opportunities for business in Gippsland and South Gippsland. More importantly, we want to commit further moneys to connect the whole of Gippsland to the city of Melbourne. Even the member for Corangamite praises the government for the Geelong bypass. However, whilst that may be important to his electorate, can I say that bridging the gap—

Debate interrupted.