Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. Why has the Prime Minister failed to take decisive action and lay out a plan to deal with grocery, petrol and mortgage stress on all Australian families in last night’s high-taxing budget? Prime Minister, how will $19 billion of extra taxes, including taxes on family cars, oil, alcohol and computer software, ease the inflationary pressure on Australian families?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for his question. This budget begins an era of responsible economic management in Australia. The reason is that we have generated in this budget a surplus which is the second highest in a decade. It is also a significant budget in Australia’s recent economic history in terms of the surplus rendered. The reason that we delivered this sort of economic outcome was that we needed to take on the fight against inflation. That meant ensuring that when it came to our handling of government outlays we did not perpetuate the spendathon of those opposite. As we have seen in recent years, government expenditure has mounted and mounted. Instead, we had to send that back in reverse direction. Now we have landed at a point where government expenditure as a proportion of gross domestic product is lower than anything delivered by those opposite in their entire period in government.

Turning to the tax side, tax as a proportion of GDP has gone down as a consequence of this budget. That comes on the heels of our predecessors having run a series of tax outcomes for the Commonwealth which imposed larger and larger taxation burdens not just on families but also on businesses. All these measures were necessary to place downward pressure on inflation. When it comes to the alternative put by those opposite, their alternative as articulated by the shadow Treasurer is this: there is no economic case to cut government spending. That is the core characteristic of the economic strategy offered by those opposite. It is a recipe for economic disaster, because those who bear the inflationary burden are working families. We have acted responsibly for them in the fight against inflation and we have delivered at the same time a package of measures to support those working families under financial pressures, a package of which the government is proud.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline for the House the steps taken in the budget to fight inflation and invest in the future?

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

I thank the member for Flynn for his question. Last night, this budget began a new era of investment in the future, something that every member on this side of the House can be proud of. It is a budget that delivers for working families and invests in the future. It is a budget in which there is some real spending restraint for the first time in a very long time. Every single dollar of new spending was more than matched by savings elsewhere in last night’s budget. We have begun a new era of responsible spending after 11 years of recklessness from those opposite, and particularly from the former Treasurer, who went on a spending spree in the run-up to previous elections, which put upward pressure on inflation and upward pressure on interest rates. That is why this government has tackled the inflationary challenge.

It is also why we have decided to make the investments in the future that we announced. We have announced three multibillion-dollar funds to invest in the future. The first one is the $20 billion Building Australia Fund. It has the strong support of everybody from this side of the House—after decades of neglect from those opposite. We have announced the $11 billion Education Investment Fund, which will pay for ongoing improvements in our TAFEs and universities as part of the education revolution. That is what we support. Thirdly, the $10 billion Health and Hospitals Fund will pay for better hospitals, better health care generally and important medical research. That is what this side of the House supports.

What does the other side of the House stand for in the middle of all of this? The Liberal Party has lost its way on the economy. What they are is the party of welfare for millionaires. They are the high-inflation party. They are the same old Liberals who neglect hospitals and neglect the education system. We on this side of the House are the only ones who are fair dinkum about fighting inflation and investing in the future. That is what last night’s budget proves.

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. Prime Minister, how does increasing taxes on Australian families by $19 billion help the additional 134,000 Australians the government predicts will be out of work over the next year? Doesn’t rising unemployment across Australia illustrate that the Prime Minister has failed to take decisive action in his high-taxing budget to help people keep their jobs?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for his question. As we have seen the unfolding of the global financial crisis and its impact across North America, across Eastern Europe and across the East-Asian hemisphere, the impact on growth across the world has been drawn down. As a consequence, that has impacted also on Australia. Secondly, if we are looking at impact on growth, one of the things which does have an impact on economic growth is 12 successive interest rate rises. What we have had as a consequence of economic mismanagement on the part of those opposite and their failure to address the supply side challenges in the Australian economy is the Reserve Bank acting time and time again. Ultimately, that has an impact on domestic activity; hence the projections for growth and employment that you see in the budget papers. On the question of tax, we have delivered an outcome which represents a decrease in tax as a proportion of gross domestic product, in contrast to what we inherited from those opposite. It is a record of which we are proud. Those opposite should hang their heads in shame.

Jodie Campbell (Bass, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister inform the House of the benefits of last night’s budget to Australia’s future?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Australia has begun, through this budget, a new era of responsible economic management, because we have delivered a big surplus of $21 billion plus. It is a budget surplus which is the second highest in 35 years. It is a budget surplus of which this government is proud. Furthermore, we have done so by bringing down government outlays. We have generated one per cent growth in government outlays in contrast to the 4.5 per cent real increase in outlays inherited from our predecessors. And, before they talk about what they were planning to do in the future, look at what they projected for the year ahead, 2008-09, in terms of their own outlays when they were last in government—an increase in outlays of nearly three per cent. Even against that measure we represent one-third of what those opposite were proposing to spend. This is not just a comparison in reflection; it is a comparison in anticipation of the clear plans outlined by those opposite.

So in terms of delivering a responsible outcome on outlays we have delivered an outcome with expenditure as a proportion of GDP being the lowest since 1989-90—lower than any of the budget outcomes delivered by those opposite. On top of that we are reducing the overall taxation burden as a proportion of gross domestic product, which is consistent with our pre-election promises, and we do so having inherited economic circumstances whereby those opposite delivered to this nation the highest inflation rate in 16 years.

Therefore, within that framework, the government has brought forward an economic strategy which does three things. Firstly, it fights against inflation by delivering a responsible economic outcome with a significant budget surplus. Secondly, it does not accept the proposition advanced by those opposite that working families have never been better off—that was their boast and they never contested it. We believe that working families are under pressure. That is why the centrepiece of our budget strategy is a $55 billion support package for working families, of which we are proud.

On top of that, as the Treasurer has just outlined, we have brought down a nation-building budget for the 21st century. We have brought down three investment funds for the future totalling $40 billion. We have brought forward the $20 billion Building Australia Fund, the $10 billion Health and Hospitals Fund and the $11 billion Education Investment Fund. We have done this because these have been areas of systematic neglect on the part of those opposite who year after year have taken budget surpluses and squandered them through unprofitable consumption.

We in contrast have a different economic strategy, which is to invest in the future. If you take infrastructure alone, CEDA reports that, as a result of underinvestment, the backlog in infrastructure investment for water, energy and land transport is alone around $25 billion. That is costing around 0.8 per cent of GDP a year in lost production—that is $8 billion a year. That is a stunning statistic given that those opposite had 12 long years to act on that underinvestment.

Well, we have decided to act. We have established the Building Australia Fund and we therefore will be acting on these key areas of challenge—challenges that the Reserve Bank of Australia presented those opposite with multiple warnings on during their period in government: skills constraints and infrastructure bottlenecks.

Look at the specific projects that we will investigate, with the states, in the 12 months from here, before the funds flow from the Building Australia Fund, from 1 July 2009: the western metro rail link and the eastern section of the M5 in New South Wales; components of the east-west transport corridor and the Western Ring Road in Victoria; key sections of the Bruce Highway and the Gateway Motorway in Queensland; a transport master plan for Perth airport; a transport sustainability study for Adelaide; and other projects as well.

Opposition Members:

Opposition members interjecting—

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I hear interjections from opposite about these being state responsibilities. If you look at the cost of any one of those major projects for metro Australia, whether we are talking about Sydney or Melbourne or other transport projects for elsewhere across Australia’s capital cities, these are megaprojects. The response of those opposite is to say: ‘Not our problem. Buck pass to the states—blame the states. Not our job.’ Our response is: let’s be part of the national solution, not just be part of a carping national problem, which those opposite seem to specialise in.

We are proud of our investment plans for the nation’s future. The money invested in these funds for the future—$40 billion—is not our money; it is not the Liberal Party’s money; it is taxpayers’ money. What we have decided to do through this budget is invest their money back into the priorities which they themselves identified: transport infrastructure, ports, roads, broadband, as well as the needs in our TAFE system, our university system and our health and hospital system.

We believe this is the right way forward. It will take time to do, but we are determined to embark upon this course of nation building for Australia’s future and we are proud of this plan; it is core to the government’s budget strategy.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Treasurer. I refer to the Treasurer’s promises to make big cuts in net expenditure in his budget and to put downward pressure on inflation—promises so convincing that we were concerned that the Treasurer’s cuts might be too savage. Why is it then that the Treasurer’s own budget papers show that $15 billion of Howard government expenditure was cut, yet it was replaced with more than $30 billion of his own expenditure? Will the Treasurer now concede that there will be a net increase in expenditure in this high-taxing budget over the next four years and that all of his prebudget rhetoric was a complete con?

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

I will be pleased to answer that question because I think the member for Wentworth is playing with the figures as usual.

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Dr Nelson interjecting

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

And the numbers of course—he knows the numbers. The ones in the party room, they are the ones he knows.

Spending in this budget as a share of GDP is the lowest for any budget since 1989-90—lower than any year of the Howard government. And so is the tax to GDP ratio. I do not expect those opposite to take my word for it but I tell you what I think they should take the word of. They should take the word of Goldman Sachs and their budget review today. This is what they had to say:

After 2 years of notable conflict, finally we have fiscal policy that is pushing in the same direction as monetary policy.

That is what Goldman Sachs had to say today in their economic monitor. This is what they also had to say:

A clear picture of the restrictive nature of the budget emerges from the expenditure estimates which suggests that the reduction in new policy decisions is equal to the coalition’s first and only attempt at fiscal restraint.

End of story.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer explain to the House the need to provide transfer payments in the most responsible way?

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

I thank the member for Petrie for that question. This side of the House does not believe that the wealthiest Australians need welfare from the government. Paying transfer payments to millionaires is simply impossible to defend. We believe we need to put transfer payments onto a more sustainable footing to help us with the fight against inflation. That is why we took the tough decisions in last night’s budget to means test family tax benefit part B and the baby bonus. That is a decision we made; it is a decision we stand by. Unfortunately, those on the other side of the House do not appear to have any idea about where they stand on this issue.

The Leader of the Opposition was interviewed this morning. He was asked on ABC TV, ‘Is that reasonable—$150,000?’ Dr Nelson said, ‘Of course we, well—just have a look at this.’ Chris Uhlmann asked Dr Nelson, ‘You have not got an opinion on that?’ Dr Nelson said, ‘Well, let’s just have a look at the fine print.’ That is really decisive, isn’t it? Of course, we have the shadow Treasurer. Last week, he said there was no case for spending cuts; this week, there is a real case for spending cuts and he wants more. They do not know whether they are Arthur or Martha. The Liberal Party have lost their way.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Treasurer. I ask the Treasurer to confirm that his high-taxing budget will directly increase the price of alcohol, cars and, as the Prime Minister confirmed today, health insurance premiums. I ask the Treasurer: how can he reduce inflation by increasing prices? What kind of voodoo economics is he peddling? Doesn’t this show, yet again, the government has no decisive strategy to meet Australia’s economic challenges?

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

It is a bit rich getting that question from the Liberal Party. They are the best friend inflation ever had. A 16-year high—that was the legacy to this country. It has fallen to the Labor Party in government, the Rudd government, to take the decisive action that is needed in cutting spending: $7 billion worth of spending cuts, $7 billion worth of savings in the 2008-09 year and $34 billion over the forward estimates. That is our contribution to the fight against inflation. Those opposite do not have a policy to tackle inflation at all. Before this week and before the budget, the Treasury spokesman said there was no need for spending cuts. Today he is out there saying there is a need for substantial cuts. He does not know what he is doing.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order of relevance. I have asked the Treasurer whether he would confirm that the budget will increase the price of alcohol, cars and health insurance premiums and how that can reduce inflation. He has not chosen to answer either question.

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

The whole budget is tackling inflation. The forecasts are there.

Sharryn Jackson (Hasluck, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Education, the Minister for Employment and Workplace Relations and the Minister for Social Inclusion. Will the Deputy Prime Minister update the House on how the 2008-09 budget will boost productivity?

Julia Gillard (Lalor, Australian Labor Party, Deputy Prime Minister) Share this | Link to this | Hansard source

I thank the member for Hasluck for her question. Of course, I do wait every day to be asked a question by the shadow minister for education, but it never happens. The Marcel Marceau of Australian politics, he still cannot quite work his way out of that imaginary glass box. But one of these days we might see him actually spring out to the dispatch box and ask a question.

The member for Hasluck has asked an important question about the future of this nation and what was delivered for productivity in last night’s budget delivered by the Treasurer. Productivity is a concept that the Liberal Party has never understood. It never understood that you needed a fair and balanced workplace relations system to deliver productivity and it never understood that you need a world-class education system now so that we can have productivity, participation and prosperity in the future. Our government, the Rudd Labor government, is committed to delivering a new era for our education system: the education revolution that we promised the Australian people. An important thing to recognise in this budget is this is a government that delivered what it promised at the last election. Across the suite of education—from the education of our smallest children in preschool through to our university system, through schools, through vocational education and training—this is a government that is delivering on its commitments. That was a foreign concept to the former government, which, of course, invented the terminology ‘non-core promise’.

This is a government that takes its promises seriously and is delivering them through this budget. I do not have the time to take you through every education measure in this budget but it is important to recognise that the earliest education of our youngest children—where the world research undoubtedly says that if you can invest in the education of children between the ages of zero and five it is the most prudent sort of investment—is an area where Australia, courtesy of the Howard government, radically underperforms by world standards. In this area, in this budget, the government has committed $2.4 billion to early childhood education and care initiatives, including our commitment to universal preschool for all children in the year before schooling.

And, of course, this budget delivers on the substantial investments we want to make in schools: on our digital education revolution, our trades training package, national curriculum, Asian languages—and the list goes on. This is a budget that invests in the future of Australian schooling. It is a budget that assists families, through the education tax rebate, to enable families to have some assistance to afford that expenditure that they want to make to facilitate their child’s education. So whether it is with broadband at home or a textbook at home, there is relief for working families with the education tax rebate. Then, in vocational education and training, this is a budget that delivers on the government’s promise to address the skills crisis left to it by the inaction and neglect of the former government. It is a skills crisis entirely of its making, on the watch of the Leader of the Opposition and the Deputy Leader of the Opposition, because they did not invest in skills.

This budget delivers on the government’s promises to bring on 450,000 new training places within the next four years to enable that investment in skills and to make sure that people have the skills they need to be in work and be able to progress in work. We are investing in the skills and future of the Australian community. And, in universities, we have not only delivered on our promises; we have delivered more. We have delivered on our promises to phase out full-fee-paying places. We have delivered on our promises about scholarships and the like. I understand the opposition think education is boring. They manifested that in government through their neglect and lack of investment. I know they think it is boring. They do not care about education, and that is why their shadow minister never speaks.

Apart from that, we are a government that has not only delivered our promises to universities but delivered more—including a $500 million investment this year in our universities. I am sure the member for Hasluck would be interested to know about the $50 million which will be delivered to Western Australian universities before 30 June this year. I am sure the member for Rockhampton will be interested to know about the $5.5 million to be delivered to Central Queensland University. I am sure that the member for Kingston will be interested to know about the $8.9 million being delivered to Flinders University. I am sure the Tasmanian members of this parliament will be interested to know about the $11.5 million being delivered to the University of Tasmania. And I have no doubt that the member for Lindsay will be interested in the $15.9 million being delivered to the University of Western Sydney—a down payment on making up for the decade of neglect of our university system by the Howard government.

We have also made special provision for educational investments in the future—an $11 billion fund to bring renewal to our higher education institutions and vocational education and training institutions. For the first time ever, this money will be delivered in accordance with a strategic plan. This is a government that believes in the future of universities and charting their course for the next decade, and in the future of our vocational education and training system, and charting its course for the next decade. This stands as a stark contrast to the former government, which used to abuse university academics, micromanage their affairs and impose extreme industrial relations on them. It is a stark contrast to their failure to invest in vocational education and training, which has created today’s skills crisis, putting upwards pressure on inflation and interest rates. This is a budget that lays the foundation stones for the government’s education revolution. It is part of ensuring we have a world-class education system—something valued by every member on this side of the House, and something dismissed as irrelevant by every member on that side of the House.

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. I remind the Prime Minister of his commitment to Australian seniors and carers to lock in the annual lump sum payment. Why has the Prime Minister failed to honour his promise to seniors and carers in last night’s high-taxing budget? Doesn’t this illustrate that the government has failed to take decisive action in helping seniors and carers facing higher fuel, grocery and housing prices?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Seniors and carers are doing it tough in Australia, and that is why the government has sought to provide some assistance through this budget package. We are committing $5.2 billion in additional funding for seniors in this budget. That is 3½ times the amount pledged by the previous government in the 2007-08 budget. The implementation of Labor’s election commitments in this budget will provide age pensioners and seniors with an additional $900. To put this in perspective, the average gains of age pensioners over the last six coalition budgets was around $327 and, for seniors, $400. Today we introduced into the parliament a bill to pay age pensioners and seniors a $500 bonus; 2.7 million Australians will benefit from this measure. This bonus will be paid from the end of the current financial year, 30 June 2008.

These bonuses come on top of an increase in the utility allowance from $107.20 per year to $500 per year, and this is locked in. We have already paid out the first quarterly instalment to age pensioners and seniors in March, and we are working to deliver our commitment to index pensions by the highest of the living cost index for age pensioner households, consumer price index or male total average weekly earnings. These important financial measures come on top of an extension to the telephone allowance, new dental funding for concession card holders and petrol vouchers for volunteers who use their own transport.

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. The question is, ‘Why has the Prime Minister broken his promise to carers and seniors to lock in the lump sum payment?’

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

If points of order are going to be used to repeat parts of the question, they need to recognise that there were other parts to the question which the Prime Minister is addressing.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I also note that these measures that are contained in the budget for seniors and other related measures for carers, from our point of view, represent barely a start. Seniors and carers have real challenges in terms of cost of living pressures. We recognise that. That is one reason why the question of future financial support by the Commonwealth for seniors and carers will form part of the overall commission of inquiry conducted by the Secretary of the Treasury which looks at the totality of tax, welfare and retirement incomes policy. On top of that, could I just remind those opposite that in every budget where the previous government indicated that it would make a one-off payment at the conclusion of that financial year it made no forward provision for that bonus in the out years, and they know it.