David Hawker (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honorable member for Lilley proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The inadequacy of the 2007 Budget to secure future economic prosperity by addressing the nation’s long term challenges of flagging productivity growth and dangerous climate change.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

It is my privilege to support this matter of public importance on the failure of the 2007 budget to secure future economic prosperity by addressing the nation’s long-term challenges of flagging productivity growth and climate change. I want to start by thanking the Treasurer for doing something that Labor has been doing for a very long period. For a long time, Labor has been talking about education and climate change, two issues which go to the very heart of our economic prosperity and our survival as a nation, two issues which are absolutely central to the future of the nation.

Education is central to boosting productivity in Australia, and lifting productivity is the way we can guarantee rising living standards beyond the mining boom. The recent Intergenerational report delivered that message as well—that lifting productivity is the key to future wealth creation beyond the mining boom. We all know that two key elements of lifting productivity are education and modern infrastructure. They are absolutely central. They are just as central as climate change, which has to be addressed in an absolutely comprehensive way. If we do not address climate change, future prosperity will be threatened. So thank you, Treasurer, for inserting two words which were not in last year’s budget speech—productivity and climate change. Those two words were missing completely—

Alexander Downer (Mayo, Liberal Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

Three words: productive, climate, change. You are supposed to be the shadow Treasurer!

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

Two concepts, three words, both concepts missing from last year’s budget speech. In fact, climate change has never appeared in any of the Treasurer’s 11 budget speeches. We know this government has disinvested in education over 11 years, and that proves that productivity has not been central to the government’s agenda during those 11 long years. Labor says it is time our nation started using the budget to invest in the future of the nation, rather than simply using it to buy the government’s way back into power. So why are education and climate change now the centrepiece of this year’s budget? It is pretty clear: it is politics, clear and simple. We have a stale, reactive, slow-on-the-uptake government which has decided to give itself an extreme makeover. Watching the Treasurer trying to give himself an extreme makeover is extremely humorous. It is not very comfortable. The Treasurer is not comfortable talking about climate change and he most certainly is not comfortable talking about education. He is trying to camouflage the government’s complacency on these key issues, which is driving a strong mood for change in the community. The community sees this government as being stuck in the past, complacently relying on the commodity boom rather than putting in place a reform program to lift productivity and to create wealth beyond the mining boom. That is why we say this budget is a re-election budget.

Most certainly it is not a reform budget. It does not take a rocket scientist to see what has been happening here. Kevin Rudd has offered a vision for the future, a package of reforms that will prepare our economy for the future challenges we will face. This vision is striking a chord with the Australian community after 11 years of a government that is simply stuck in the past.

Mr Costello thinks he is a very clever boy. He knows that Labor’s vision for the future is striking a chord so he is scrambling to re-invent himself before this year’s election. All of a sudden, the language Labor have been using constantly appears in the Treasurer’s words. His budget is about securing the future. Who has been talking about that? His budget contains huge reforms. Who has been talking about this? When Labor announced our education revolution, it struck a chord, and next thing we have the Prime Minister calling for an education revolution. Why? Because this government has been threatened electorally. It has not moved because there is a fundamental problem in our economy; it has moved because the election is around the corner and there is a very strong mood for change in the Australian community.

We need reform. Despite rivers of gold flowing from the mining boom in recent years, this government has not been investing in the nation’s capacity. Economic reform and productivity growth have faltered on this Treasurer’s watch. Productivity growth has fallen from 3.2 per cent to 2.2 per cent in the latest productivity cycle. It has fallen even lower since then.

This slowdown has seen us slip further behind the productivity leaders in an increasingly competitive global environment. In comparative terms, we have now almost completely lost the productivity gains associated with the economic reforms implemented over the 1980s and 1990s. Of course, as we demonstrated in question time, the budget papers reveal that our flagging productivity growth is not expected to improve anytime soon. In fact, the forecasts on page 1-5 of Budget Paper No. 1 reveal zero productivity growth in 2006-07 and declining productivity growth at the end of the next financial year.

If this is a budget that is about the future, that is designed to lift the productive capacity of the economy, why does the budget forecast declining productivity growth? Why does it forecast that? In fact, in the Intergenerational report released last month, the government revised down its projection of productivity growth over this decade from 1.7 per cent to just 1.5 per cent. This is less than half the rate of productivity growth achieved over the 1990s. So this government has a poor record.

We as a nation need to urgently turn around our flagging productivity growth if we are to build prosperity for the future and to build it beyond the mining boom, which is why this country urgently needs an education revolution. We welcome the education initiatives in this budget; they are a useful contribution after 11 years of disinvestment. But with the best global conditions in over 30 years, and the windfall from the mining boom, the government should have already built a world-class education system. However, they have not been doing that.

These budget papers show that expenditure as a percentage of GDP has fallen. Treasurer, no matter how much you try to drag a dead cat across the figures you presented in question time, it has fallen. It has fallen over 11 years. Even with the new spending in this budget, education spending will fall as a proportion of the total budget over the forward estimates. That was demonstrated comprehensively during question time in the questioning of the Prime Minister by the Leader of the Opposition. We are slipping behind our competitors. Overall, Australia’s investment in education as a proportion of GDP ranks behind 17 other OECD economies, including Poland, Hungary and New Zealand.

So whilst these budget measures are welcome, while they are useful, they are a long way from the education revolution needed to secure our future. Just consider this comparison: this budget commits $3.5 billion to its education and skills package over four years. That is roughly the same amount committed in one-off pre-election payments to go out in the next eight weeks.

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

Are you against them?

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

We are absolutely for them, Treasurer. Most notably, the budget fails to invest in high-quality universal preschool education for all four-year-olds, to give them the best start possible. As we know, Labor is committed to a $450 million package to provide play based learning for all four-year-olds. Labor has also committed up to $200 million for 260 new childcare centres on school sites.

We welcome the measures on apprentices, but there is nothing in this package which shows that the government comprehends the magnitude of the challenge before us and the nature of the education revolution we require if we are to deal with declining productivity.

The government has established its Higher Education Endowment Fund. That is a welcome initiative because the government has neglected this area for too long, but its way of paying for it is interesting. Its way of paying for it undermines the government’s case against Labor’s national plan for high-speed broadband. The government is proposing to pay for this measure by taking part of the surplus that would otherwise have gone to the Future Fund. And, just as the education endowment is an investment, so is Labor’s high-speed broadband initiative. The Treasurer simply can’t have it both ways.

That brings us to broadband. We saw in the parliament during question time that the Prime Minister simply does not get broadband. He does not comprehend how important broadband is for lifting productivity in this economy and that this country urgently needs a solution so that we can get high-speed broadband to all Australians. Its importance to business and to families is simply not comprehended by this Prime Minister.

That brings us to tax cuts, because the tax cuts in this budget are welcome. They do start to tackle some of the worst disincentives to workforce participation. As the Treasurer will well recall, it has been Labor in this House that has been making the case constantly for taxation reform to ease the high effective marginal tax rates which have been hitting second-income earners, who are predominantly women. All of a sudden, there is another conversion from the Treasurer. He has discovered part-time workers, he has finally discovered they are women and he has finally discovered that they, too, deserve an incentive, like everybody else in the tax system. Of course, that has taken 11 years. But we certainly welcome these tax cuts, and we also welcome the fact that they are staged, because to stage them will minimise the risk of inflationary pressures. But these tax cuts do not even hand back all the additional tax that the government is collecting as a consequence of the mining boom. Despite the tax cuts, the government will still collect more than $10 billion more in income taxes, excluding company taxes, from 2007-08 to 2009-10 than originally anticipated before the budget.

This is a high-taxing, high-spending government. What is important here is a stable macroeconomic environment. Labor is committed to disciplined fiscal policy. We are committed to running budget surpluses over the medium term, to not increasing tax as a proportion of GDP and to meeting our commitments by reprioritising spending in the budget and cutting out waste.

That brings us to climate change, because there is not a comprehensive program that this country needs being put in place to combat climate change. We know that the Treasurer is a well-known climate change sceptic. We know the record of the Prime Minister; we know the record of the industry minister. We know the view of the Treasury—that the government does not get it when it comes to combating climate change and dealing with problems in water. The government simply does not get this, and we know that from the speech given by Treasury Secretary Ken Henry over a month ago. He blew the whistle on the Treasurer, he blew the whistle on the Prime Minister and he blew the whistle on the cabinet about their inattention to climate change and water problems and their central importance to wealth creation in this community. That whistle was well and truly blown by the government’s chief economic adviser, who pinged them for what they are—completely irresponsible when it comes to dealing with one of the most serious issues which goes to the heart of future economic prosperity, job creation and environmental sustainability.

That is why we do not have an emissions trading scheme. That is why we do not have a serious response to renewable energy. That is why we do not have a serious response to demand management. All of these things are missing, but no doubt they will come—and why? Because Labor under Kevin Rudd and Peter Garrett, and also the member for Grayndler, have been putting out comprehensive plans to combat dangerous climate change. We have left the government for dead and they are so embarrassed that they are going to be forced to follow in the months ahead. It will be really exciting to watch the backflips and the U-turns and so on.

That brings us finally to where this economy should be going. The Treasurer would have us all believe that the economic reform process starts and ends with him. The reality is that much of our current wealth owes a lot to the reforms implemented by the Hawke and Keating governments. I would like to quote an eminent authority on this: the Secretary of the Treasury—the government’s pre-eminent economic adviser. This is what he had to say:

That macro performance owes much to decades of reform that have improved monetary, fiscal and structural policy frameworks.…            …            …Much of our recent macroeconomic and fiscal success is based on past reforms, assisted by the terms of trade.  A significant proportion of the latter may be transitory.

The Secretary of the Treasury is warning all Australians that the government is not prepared for the future beyond the mining boom and has not put in place the essential reforms required to lift productivity and create wealth beyond the mining boom. That is the warning from the Secretary of the Treasury; it is a damning indictment of the performance of this Treasurer and the performance of the Howard government. During this time, a time of plenty, it has been raining gold bars. There have been substantial increases in national income. Why haven’t we taken the opportunity to create a First-World, first-class education and training system so we can compete in our region and become even more prosperous and wealthy? Why has the government not done that? Because it has been complacent, tired and stuck in the past. (Time expired)

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

Members will recall a former National Secretary of the ALP, Gary Gray, complaining that Labor was increasingly relying on what he called ‘white-bread politicians’ who were coming into parliament—people who had no real experience outside of politics and were bland and insubstantial. That criticism that Gary Gray made, without naming whom he had in mind, was made in relation to Mr Swan, the member for Lilley, and Mr Smith, the member for Perth—two people who came into this parliament out of the ALP machine and had experience in focus groups and polling but never really had any great interest in policy or, indeed, what makes economic policy work.

If you wanted a demonstration of that criticism that Gary Gray made of the member for Lilley, you would have seen it in the speech that he just made—completely insubstantial, offering nothing except rhetorical lines, the kind of rhetorical lines that he would have got a focus group to put together and then retailed around to the Labor Party as lines to use in relation to the budget. The focus group that he obviously got together was the source of this media release, which just about says it all in terms of the depth of thinking of the member for Lilley. I guess just about every word that he used in that speech came from this press release in one form or another. The press release itself came from the focus group, and it illustrates really how insubstantial Labor has now become in relation to economic policy.

Normally in a budget reply a shadow Treasurer would stand up and say: ‘These will be the macro effects of what you did and this is why they are wrong. Maybe the budget surplus, instead of being one per cent of GDP, should have been 0.1 per cent of GDP or maybe it should have been two per cent. This is what we think about the economic forecast. Your economic forecast for growth of 3¾ per cent is wrong because we think household consumption will not be as strong as you are saying, or we think that net exports will detract from growth to a larger degree. Here’s what we think about your inflation forecast. We think that, given pressure arising out of the drought or given pressure arising from international oil prices—because we do not agree with those assumptions—your inflation target will be wrong. Here’s what we would have done on tax cuts. We believe that you have cut tax too far down the scale or too far up the scale or you haven’t cut it enough. You should have changed the mix to move tax cuts off income tax and maybe put them on business tax. Here’s what we think you should have had your investment in. We don’t think an endowment fund is the right way to go because it is a capital fund. We would have gone with recurrent funding; we would have gone for the current amount. Mr Speaker, here’s what an alternative government would do.’

But you will never hear that from the member for Lilley. You will never hear it because I do not think he has ever really understood the nature of economic policy in Australia and he certainly has not done the work. To him it is a question of getting a focus group, running a line and moving on before anybody actually scratches for things that are substantive underneath. He is somebody who is quite voluble, but there is never any substance behind it. There was never actually any substance in his reply. In all of the budget replies I have heard from five shadow treasurers now, that would be the weakest without question. We had Gareth Evans, Simon Crean, Bob McMullan and Mark Latham, but I do not think I have heard a weaker budget reply than the one we have just heard. I think we can deal with it pretty quickly.

He welcomed the Higher Education Endowment Fund, he welcomed the tax cuts and the fact that they were staged and he welcomed the apprenticeships. He welcomed those measures that are going to be done before 30 June, so everything that was done was right. I do not think there was anything that the government did that he said was wrong, but I think the essence of it was that we should have spent more in every area of the budget and ended up with a bigger surplus. I think that was the outcome: ‘You should have cut tax, spent more in every area of the budget and ended up with a bigger surplus.’ Why didn’t I think of that for a proposal? We should have spent more on education, we should have spent more on skills, we should have spent more on climate change, we should have spent more on the environment, we should have cut tax and we should have had more left over.

That is the kind of thing that you would try and get away with at an ALP branch meeting as a machine man, but every now and then you are confronted with facts. The fact of the matter is that, when you are managing a $240 billion budget, there are more demands than can possibly be funded. Sometimes you have to be able to say no. Managing a federal budget requires a bit of strength; you have to be able to say no and sometimes you have to be able to say no to a minister. Sometimes you have to be able to say no to a whole government. Sometimes you have to make very hard choices if you want to get a particular outcome, and when you want to get that particular outcome it is not enough to convene a focus group and ask for a slick line or an insubstantial criticism. It actually takes hard assessment and hard work.

The place where Australia is now did not just drop out of the sky. It was not as if a cloud was suddenly unleashed on Australia or, as he said, ‘Oh, gold bars just started raining on Australia.’ If the member for Lilley thinks that about economic management, it illustrates how ill equipped he is for the great role of being in government. If he believes—and I do not think he believes it for a moment—that you balance a budget, reform a tax system, improve industrial relations, pay off $96 billion worth of debt or set up a Future Fund and it is all just some kind of fluke then he is less prepared for government than I suspect many of us, even in our worst nightmares, thought would have been the case.

One of the things that the member for Lilley said in his speech is that of course Labor is committed to budget surpluses. Why would he say that? The focus groups would have said, ‘You’ve got to show that you’re committed to balanced budgets.’ It is easily said. Anybody can say that, but I would ask him this question: as an adviser to the Labor Party and a Labor Party staffer in all those years when Labor were in government between 1990 and 1996 when they ran consecutive budget deficits, if he was so committed to surpluses why weren’t there any? I think it is a fair question: why weren’t there any?

For the sake of the record I think we ought not to actually listen to the words, we ought to listen to the deeds, because in 1990-91 the federal government deficit was 2.8 per cent of GDP. In 1991-92, it was 3.9 per cent; in 1992-93, 3.7 per cent; in 1993-94, 2.7 per cent; in 1994-95, 1.9 per cent; and in 1995-96, one per cent. So that is six straight deficits, the highest of which was four per cent of GDP. If we had had a deficit of four per cent of GDP in the budget I brought down last night it would have been $40 billion. We had a budget surplus of $10 billion. If we had had a budget deficit of four per cent of GDP, it would have been a $50 billion turnaround, a $40 billion deficit.

But, in the mind of the member for Lilley, what you actually do in government is not the important thing; what is important is what the focus groups demand that you do, and you reassure them without actually getting into the substantive policy debate. I guess the illustration that brought this home to me more than any other was when this government increased family benefits with an annual $600 payment and announced that we would pay a $600 lump sum in respect of each child where the family was entitled to family tax benefit. The member for Lilley decided that that payment should be abolished. His leader, Mark Latham, said to him, ‘How do we explain that we’re taking $600 a year away from families?’ The member for Lilley said: ‘Tell them it’s not real. Tell them they never had a $600 payment, so when you take it away they won’t notice it.’ This is of course what you would learn as a machine politician. When you are on weak ground, claim that black is white, repeat it often enough and you will get people to believe it. You could not fool the Australian public; they knew they were getting $600 as I said—it went into their bank accounts. It could be spent, it could be drawn out, it could be exchanged for milk and bread, and the line that it was not real did not gel with reality. Of course it turned into a disaster during the 2004 election.

I want to say something briefly about productivity because I was saying this in the course of question time today. What would you be doing if you wanted to boost productivity in Australia? I think investing in schools will boost productivity in the longer term because, if you invest in skills and you train more apprentices, you get more people into the labour force with higher skills. Over the course of time, you would expect that to lift capacity. Of course, you have to bear in mind that an apprentice will take four years to train and the apprentice then has to go into the workforce. I think we have something like 160,000 apprenticeships at the moment, which is some kind of record in Australia, and that will give you benefits in the long term; there is no doubt about that.

But, if you really want to unlock key productivity benefits, you should do it in relation to the existing workforce—not just the future workforce, not just in five or 10 years time, but the existing workforce. I have no doubt that if you improve industrial relations, if you allow employers and employees to directly agree on AWAs, that will be a much more productive industrial relations system in each and every factory, shop, business and company in Australia. But, of course, the Labor Party are against that. If you do not want to take my word for it, you could take the word of the former Governor of the Reserve Bank, Ian Macfarlane. In his testimony before the House of Representatives shortly before he ceased being governor, he said:

The biggest thing in this area—

productivity—

is industrial relations reform. There must be a lot of things that still can be done.

What did the Reserve Bank Governor say? The biggest area is industrial relations reform. What is the major plank of Labor’s industrial relations policy? To get rid of AWAs. So the Labor Party would have you believe, on one hand, that they are critical of the government about productivity and, on the other hand, that they want to abolish the key thing that can drive it. So how would you reconcile those two positions—that you allegedly want to increase productivity and, at the same time, abolish the key thing that would drive it? You do precisely what you did in relation to the $600 payment. You deny the obvious and you repeat over and over again that it is not real, that it does not occur, that it does not happen. Australia needs more than focus-group-driven glib cliches. What we need is real policy. What the government delivered last night was real policy. It is the biggest investment that Australia has ever had. We are going to lock in the gains. We are going to invest for the future. This is the economic path forward and the coalition will lead it. (Time expired)

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

Seven weeks ago the Treasurer stood up at the dispatch box and suddenly became hysterical. He screamed, he shouted, he went red in the face, he frothed at the mouth, he cursed, he ranted like an old preacher at an AA meeting. We were almost expecting a round of ‘Away, away with rum by gum.’ You could say that he does this often, but this was a particularly spectacular performance—and, by the sound of his rather ponderous and soporific contribution today, he is probably still recovering. Why was it that he became so hysterical? What was the cause of this outburst of red-facedness, hysteria and ranting? The answer is: Labor’s broadband proposal.

This proposal includes drawing on $2.7 billion of Telstra shares, one telecommunications asset held by the government in escrow in the Future Fund, in order to invest in creating the national broadband network that this nation desperately needs and the Howard government has totally failed to deliver. The Treasurer described this as shameful economic vandalism, robbery and burglary. He said it was the most economically irresponsible thing that Labor has said in 11 years. Fortunately the commentators dismissed this hysteria as total rubbish and last night, in effect, the Treasurer and the government completely surrendered. They vacated the field on this assertion that Labor’s broadband proposal is economically irresponsible. Why? Because they have effectively done the same thing that Labor was proposing to do with respect to prospective future investments. But they have doubled it. They have taken what would otherwise have been Future Fund assets of $5 billion plus the earnings that would accrue from that between now and the end of next year, which effectively adds up to double what Labor’s commitment involved. But in true hypocritical preacher style the Treasurer is still trying to pretend he is pure. So in the budget speech, the same speech where he announced this $5 billion drawdown on the Future Fund, he also said, ‘But we won’t be like those irresponsible Labor people who propose to draw down $2.7 billion.’ Let us run through the quote to make it clear exactly what we are dealing with. He said:

If you rob capital or earnings from the Future Fund, taxpayers will have to make up the difference. You are passing our bills, our obligations, from our generation to the next. This will limit their future. We will strongly oppose any irresponsible attempt to raid this national investment for cheap political advantage.

Six weeks ago, in the Australian Financial Review, the Minister for Finance and Administration said:

Certainly this year’s surplus and next year’s surplus will be going into the Future Fund.

So where did this $5 billion for the Higher Education Endowment Fund come from? It came from this year’s surplus—the same surplus that, according to Senator Minchin, was destined for the Future Fund. Whichever way you look at it, however you play with words—as he sought to do in his press release defending himself this afternoon—that $5 billion was halfway out the door, heading towards the Future Fund. He grabbed it and said: ‘We’re going to have a Higher Education Endowment Fund. This isn’t going into the Future Fund.’ So the preacher has gone out and got legless. He is wandering around looking for some alcoholics to convert and lecture about the virtues of abstinence. Labor supports the Higher Education Endowment Fund. It is a reasonable idea. But we should not get carried away with it, as the Prime Minister and Treasurer have done, because it is only going to deliver approximately $300 million of, one would hope, new money to the higher education sector each year. A lot more needs to be done, but that is not a bad start.

But the one thing we can take out of this is that the debate about Labor’s broadband proposal is over. Not only is the proposal good in the national interest from the point of view of getting that broadband network built; it is entirely responsible financially. But yet again there is virtually nothing in this budget to tackle that chronic productivity problem of our falling behind the rest of the developed world in access to high-speed broadband. The government have now conceded not only that Labor’s proposition is good and sound from a communications point of view and a productivity point of view but also that the financing proposal is entirely reasonable—because they are doing exactly the same thing with respect to the headline announcement in this year’s budget.

In a sense that encapsulates the entire budget, a budget built on preaching abstinence and practising incontinence; that is the entire budget of 2007. Yes, there are many initiatives that we support, such as the Higher Education Endowment Fund. Some of them we designed, so why wouldn’t we support them? But the wider picture is different. The wider picture is of a government that is complacently cruising on the minerals boom, handing out money every way it can to try to ensure its re-election while not investing for the future of Australia and for the future living standards of our kids and not investing for increasing productivity to ensure that we stay at the forefront of the world’s nations. When the sun is shining you make hay. That is not what this government is doing and that is not what the budget is doing; it fails the future test.

We welcome the education initiatives that are in the budget, but they are, in overall terms, relatively modest—a good first step. They are good snapshots but they are a long way from being the whole picture. And the government could not help themselves: they had to whack in a little sting in the tail on HECS; they had to slug students on the way through. They had to revert to type and hit accounting, business and commerce students with a big HECS slug, because they could not help themselves. Even though they are trying desperately to look like they care about education—they want to improve investment in education because Kevin Rudd has put the issue squarely at the forefront of the national agenda—on the way through they could not help themselves: they had to slug students.

We need to examine what has not been tackled in this budget. We need to look at what has not actually occurred. There is very little on vocational education in the middle of a skills crisis. There are a few modest initiatives with respect to climate change, the most striking of which is about adapting to climate change, getting used to it—not doing something about it, not acting, not leading the world as Australia should be doing, not contributing to a global solution. Early childhood education is critical to the future opportunities of all children but there is effectively nothing. And, as I said, there is nothing on broadband.

Then, if you look at the wider estimates, the wider projections as to where the nation’s economy is heading, you see productivity effectively at zero and very ordinary productivity figures projected for the future. As to export growth, they have finally given up on all of the outrageous, exaggerated export projections that they have put over the past few years when they have kept saying we are going to get eight per cent or nine per cent growth but it turns out to be two per cent. They are backing that down to five. That makes you really worry about what the outcome and the reality will ultimately be in the next few years if they are pulling their projections down like that, particularly when the projections indicate that the current account deficit is expected to blow out to six per cent again.

Unemployment is expected to rise; job creation is expected to fall. It is also important to look at the wider macrofiscal position to lay to rest once and for all the suggestion that this is a fiscally conservative, ‘small government’ focused, economic-managing government. Fifty-three billion dollars in additional money has rained down on the government since December. The estimates for the four years have $53 billion more than what was available in the equivalent estimates in December. They have spent the lot. They have used the lot, some on tax cuts and an awful lot on spending, and they have managed to throw in an additional $4-odd billion of spending at the end of this financial year, the one that is about to close, not to mention the $5 billion that has been put in there for the Higher Education Endowment Fund. We are getting to the point where we are going to see more new spending initiatives at the end of a budget than we see at the start. In the financial year that is about to end, the new spending initiatives that were announced in the 2006 budget for the 2006-07 year were worth about $4 billion. The new spending initiatives for the 2006-07 financial year announced in the 2007 budget are also about $4 billion, even if you exclude the one-off capital investment in the higher education fund. This is a very peculiar approach to accounting.

There has been virtually no serious effort to gain savings, to cut expenditure and to ensure that we have rigorous controls on government spending. A lot more money has been handed out to departments such as Treasury and Finance without even any process attached to them as to what they are supposed to be for. The Melbourne Cricket Club has got another $10 million to add to the $15 million it got last year for its museum, and so the list goes on.

The drunken preacher is having a wild time. He is handing out free advice on abstinence in between swigs of his flagon. He is passing the flagon around and he is having a great time because he has a lot to drink. The worry is, though, that it will be our kids who get the hangover, because when this nation was in a position of enormous good fortune—of great fortune with huge revenues coming in to the government from the mining boom—what did the government do? They squandered it and they are continuing to squander it. Don’t be fooled by the fact that they are trying to look as if they are doing something, because this budget fails the future test. (Time expired)

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise on this matter of public importance—

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

Member for Moncrieff, is your microphone on?

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

We’re not missing anything!

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

Order! The member for Lowe is not helping. The Deputy Clerk will start the clock again. I will call the member for Moncrieff now that we have sorted that out.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, we have worked out what the problem is: the member for Melbourne actually put the microphone operator to sleep. That is a new record. In the six years that I have been in the parliament I have never actually seen a member of the opposition put a console operator to sleep. Congratulations to the member for Melbourne! It is a new record to the member for Melbourne: not only was he so boring and his speech so devoid of any fact but he actually managed to give it in such a monotonous way that he sent one of the console operators to sleep. My heart is with the console operator. But for the fact that I am paid to sit in this chamber and have to pay attention, I would have liked to have fallen asleep as well, although I would have had some sort of recurring nightmare as I heard the member for Melbourne drone on and on and on.

Notwithstanding that, I am very pleased to stand up to speak on the MPI that is before the chamber today. I was fascinated by one small part of what the member for Melbourne had to say in the topsy-turvy Tanner approach to economics. We have got the member for Melbourne coming to the dispatch box saying, ‘You know what: Labor and the coalition are as one when it comes to the Future Fund and investment in broadband.’ What we know from topsy-turvy Tanner economics is that they say it is okay to have money in the Future Fund and to take that money from the Future Fund and go off and spend it, because that is the same thing as having money in the Future Fund and then establishing an additional endowment fund. In other words, what are we actually talking about?

The member for Melbourne is saying that, if you have $100 in a savings account and you take out $50 and go and spend it, it is the same principle that members of the coalition have put forward. What are the coalition doing? They have put $100 in a savings account and are now opening a second savings account and putting in an additional $50. According to the Australian Labor Party, to have $100 in one savings account and $50 in a second savings account is apparently the same as having $100 in an account, withdrawing $50 and spending it. That is what the member for Melbourne said to the chamber this afternoon, and it is for that very reason that the Australian Labor Party is absolutely laughable when it comes to having the discipline or economic sense to manage the Australian economy.

The Treasurer said today that you cannot trust Labor when it comes to managing Australia’s trillion dollar economy because it is just too important. We know that the members for Lilley and Melbourne have both clearly demonstrated that, when it comes to having discipline, to rolling up the sleeves, to getting up early and doing the work required to manage Australia’s trillion dollar economy, the Labor Party just do not have it. If you want proof positive, the Labor Party would ruin the Australian economy with not only their talk of $600 ‘not being real money’ but also their comment that having one savings account and starting a second savings account is the same as taking money out of a savings account. It beggars belief. We hear from the Australian Labor Party that it is the same thing; it is not even remotely similar!

The Australian Labor Party’s proposition on broadband—and we heard much talk about broadband from both the member for Lilley and the member for Melbourne—is very clear, and it is nothing like what this government is doing with the endowment fund. The Australian Labor Party’s approach to the Future Fund is to say, ‘We will extract money from the Future Fund and spend it.’ Their initial approach was that $2.7 billion was going to be used on broadband rollout—which, incidentally, the Australian Labor Party were going to steal from the Future Fund. That $2.7 billion smash and grab was going to be used to invest in a network that two private operators in Australia are looking at rolling out themselves. Not only have we got the Australian Labor Party smashing and grabbing from the future savings of Australian generations; we have them investing that money in a broadband network that two private operators are lining up to roll out today. That is the Australian Labor Party’s approach.

This government has turned around and said, ‘We quarantined the money in the Future Fund.’ We do not want the burden of retirees in the future—service men and women from Australia’s defence forces, and public servants. We are building up retirement savings for them in the Future Fund. We do not want future generations of Australians to have to shoulder that burden, so we will start making provision today. The Future Fund is a savings account that we have opened today to provide for all of our tomorrows, and we have done it again with the endowment fund.

The $5 billion visionary endowment fund that the Treasurer announced last night will ensure that, in perpetuity, Australian universities have access to capital to ensure that Australia can have world-class and first-class research institutions and teaching facilities and a whole spate of new initiatives available to our tertiary education sector. We can have world-class facilities that will ensure that Australian kids in the future can be not only among the best in our region but among the best in the world, with access to the very best technology and the very best teaching facilities at our universities. That is what this government has set up under the $5 billion endowment fund.

What is the Labor Party’s response to that? They say that they support it, but in fact they would approach it by stealing more money out of the Future Fund. The Labor Party’s approach is not to create additional savings but to spend even more money. We know that the Australian Labor Party’s approach to the budget is really distilled down to a couple of basic elements. Their criticism has been that we have not spent enough as a government, so they say, ‘Spend more money.’ The other criticisms that have come from the Australian Labor Party are that the surplus was not big enough and that we should have saved more money. Spend more money; save more money—that is all we hear from the Australian Labor Party.

When we get to the issue of our environment, it is important to recognise that this coalition government is proposing to spend $19 billion on Australia’s environment over the next four years—$19 billion of investment in Australia’s environment and those of our surrounding neighbours. A key plank of this government’s approach to combating the effect of climate change is to look at some of the source problems affecting climate change. We know that one of the key issues is deforestation that is taking place around the world. I am proud to be a part of a government that is working with poorer nations around the world and with some of our near neighbours to put in place incentives to try to stop them from cutting down trees—a very good initiative. It is the kind of initiative that will have a long-term benefit for our nation. It is a world-leading initiative that the member for Melbourne was talking about earlier. This country is leading and setting an example for the world. We are doing it by focusing not only within Australia but also on our near neighbours, and saying to them, ‘We will work with you. We will create an incentive so that we do not end up with vast hectares of deforested land because you have people in your countries who are chopping down trees faster than we can plant them here.’ That is the kind of world leadership that I am pleased to be part of.

One of the single biggest, most glaring errors that we have seen from the Australian Labor Party is their standing up and saying it has been raining gold bullion for this Howard government. We hear the Australian Labor Party say, ‘It’s all just a coincidence; it’s all just a fluke.’ The reality is that the Australian Labor Party have stood opposed to every major reform measure that this government has tried to introduce since 1996. The Australian Labor Party stood opposed to tax reform. The Australian Labor Party stood opposed to waterfront reform. The Australian Labor Party stood opposed to the tax reform that took place under the GST. The Australian Labor Party even opposed tax cuts for Australians in the previous budget. That is the Australian Labor Party’s record. When it came to industrial relations reform—for example, unfair dismissal laws—the Australian Labor Party opposed that as well, and they are opposing Work Choices now. On every single front, the Australian Labor Party have stood opposed to the initiatives this government has undertaken, the kinds of initiatives that have delivered in spades to the Australian people—that have kept our budget in the black, got unemployment down to a 30-year record low and delivered the dividend that the Australian people enjoyed last night in the Treasurer’s speech.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Last week Australia had a very eminent visitor, a respected commentator on globalisation, the author of one of the world’s best-selling books in recent times—Thomas Friedman, the author of the book The World is Flat. He met with the Prime Minister, he met with the Leader of the Opposition and he addressed a big dinner in Sydney—

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Hockey interjecting

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The minister was at the dinner and they may have met individually.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Hockey interjecting

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

They met individually; I am glad to hear it. The minister and several other ministers were at the dinner, as were shadow ministers, and we heard about Mr Friedman’s views on what makes a successful nation in this difficult time around the world. An interesting quote has been brought to my attention. Thomas Friedman says this:

Money, jobs, and opportunity in the flat world will go to the countries with the best infrastructure, the best education system that produces the most educated work force, the most investor-friendly laws, and the best environment.

Last night’s budget fails the Thomas Friedman test because it fails the future test—

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Hockey interjecting

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

and the minister knows it. The minister knows that last night was another squandered opportunity from a government which is riding the mining boom, taking the Chinese dividend, and refusing to invest and prepare Australia for the downturn which will inevitably come in this nation. It is a government which is ignoring the productivity gap which has not only existed but has been rising under this government for several years; a government which ignores—and has ignored for 11 years—the need for a massive reinvestment in Australia’s education system. At five minutes to midnight, five months before an election, they suddenly rediscover the need to invest in education. Well, it is not enough.

It is not enough to catch up. Australia has to do better than that. A catch-up is welcome—we welcome some of the funds going to education in last night’s budget—but a catch-up is not enough. And the Australian people will not be fooled by a cynical and cunning budget at five minutes to midnight which finally recognises the need to invest in education. It does not go far enough—on any measure.

I was in the budget lockup yesterday and I thought, ‘I’ll look up the early childhood measures; I’ll find out how much new money is going into early childhood.’ And I looked and I looked and I looked through the budget papers, locked away in the room—not one. Every respected economic commentator in the world says that one of the best ways to invest in a nation’s future is to invest early—to invest in early childhood education; to take people in their first two or three years and give them the best possible start in life. That is why Labor has committed to a multimillion-dollar early childhood investment plan. Yet there was not one word on that in the budget. I thought, ‘Maybe the government will try to catch up; maybe they will respond,’ but there was not one word on that.

Australia’s overall investment in education is 5.8 per cent of GDP—behind 17 other OECD nations. That is not changed by this budget. We are behind Hungary—still behind them. We are behind Poland. We are still behind New Zealand. We are still behind 17 other OECD nations when it comes to investment in education. As the honourable member for Perth pointed out in question time, we welcome the $5 billion Higher Education Endowment Fund. That means an average allocation between Australia’s 38 higher education institutions of about $8 million. Now, that is welcome. But let us not kid ourselves that that is enough. Let us not kid ourselves that that is going to make up for the backlog of investment in capital infrastructure in universities in this nation. The government are kidding themselves that it is enough, but it simply is not.

I looked through the budget papers for higher investment in broadband funding. I looked and I looked and I looked—not one word; not one cent. And then, in question time, I realised why: it is because the government just does not get it. We got up here and we pointed out the connection between education and broadband. We pointed out that children in regional areas need access to high-speed broadband to help them with their education—and there was laughter from the other side; guffaws of laughter at the connection being made by this side of the House between education and broadband. They just do not get it.

The honourable member for Moncrieff called Labor’s plan to invest in a broadband network for this nation ‘theft’. He used all sorts of other pejoratives to describe Labor’s plans. He does not get it. And nobody on the other side of the House seems to get the connection between the need to connect 98 per cent of the Australian people to broadband, the need to increase broadband speeds by 40 times, and the impact that will have on Australia’s education outcomes. But we get it. (Time expired)

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

I certainly disagree most strongly with the proposition put by the member for Prospect that the budget fails what he calls ‘the Friedman test’ in preparing this country for the future, because nothing could be further from the truth. We have heard nothing from the opposition—up until recently—other than hot air and rhetoric.

An unusual thing happened at the ALP conference. We saw a couple of things starting to occur. We saw the Leader of the Opposition make it pretty clear that he takes the vote of the Australian people for granted. We also saw the Leader of the Opposition cast doubt on the ability of someone of a particular chronological age to function at a high level in this community. If you went to a focus group and asked them the question: ‘If someone is a certain age, does that mean they cannot run a country or they cannot run a major corporation?’ they would tell you very strongly that they certainly can. And there is very strong objection to that notion put by the Leader of the Opposition that if you grew up in the era of black-and-white television you are somehow less worthy to hold high office than if you were a child of the era of colour television.

We also saw at the ALP conference a shift from hot air and rhetoric to their first piece of black-letter policy. We saw them move away from the rivers of milk and honey and the endless discussion of warmth and light to put out a policy. What was it? An industrial relations policy. Was it going to build productivity? I think not. Was it going to take this country forward? I think not. The first piece of black-letter policy that they brought out did not take this country forward but, in fact, took it back some 20 years. We got to the point where Labor were going to produce this piece of policy that would bring us back to the great old days of centralised wage fixing. They were going to make reforms they were going to turn back AWAs. We know—and I see the Minister for Employment and Workplace Relations at the table, and he certainly knows—that AWAs provide more flexibility for employers to come up with arrangements with their employees to maximise the production and productivity of this country. And to take away a major element of the growth of this nation, through taking away AWAs, can hardly be setting up this country for growth and taking this country forward.

We saw the folly in Labor’s first venture into policy when they had to review their own policy some five times within 10 days. The Deputy Leader of the Opposition must be embarrassed by what is considered by most commentators as an absolutely woeful foray into detailed policy. The government believes that greater flexibility is greater productivity, but Labor want to introduce union rule by good old team ACTU, that great bastion of flexibility. If you want to look at productivity you have to look no further than the commercial building industry, where we hear of reductions in cost in commercial building of some 20 to 30 per cent through fewer industrial disputes, through less intimidation and thuggery on work sites and through improved work practices.

What is Labor’s response to this improved flexibility, improved productivity and reduced cost on commercial building sites? They want to abolish the Australian Building and Construction Commission. They want to go back to good old team ACTU. Bring back union thuggery, revitalise union power: ‘We want to have the crane drivers running the construction sites again, deciding what goes up the building and what comes down. We want to have the crane drivers holding up the job, costing tens of thousands of dollars in prolongation costs.’ That is the response of the Labor Party to improved productivity that has been brought about by these sorts of changes. It is the peak of hypocrisy for Labor to talk of productivity growth, when the first policy that they bring out takes this country back 20 years.

This budget has introduced a range of measures that will drive this country forward. This government is very much on the leading edge of improved productivity. You are a very backward-looking opposition. You have no real solutions, apart from hot air and rhetoric. We have seen you on climate change. It is all warm and fuzzy, but there is nothing beneath that never-ending rhetoric that you put out. This government is taking this country forward in an economically responsible way and the people of Australia see through your—

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

Order! The time allotted for this discussion has concluded.