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

Australians expected a lot with the election of a new government. Last year they listened to what the now Prime Minister and Treasurer had to say. They heard them say that they were going to be good economic managers. They heard them say that they would do something about grocery prices. They heard them say that they would do something about the price of petrol. They heard them say that they would do something about home interest rates. They heard a lot. Every Australian should now ask themselves this question: will this budget make it easier for me to keep my home, to fill my trolley with groceries, to put petrol in my car and to keep my job?

The Prime Minister and Treasurer have styled themselves as new Labor leaders, yet this is old Labor returning to haunt the Australian economic landscape again. This is an old-fashioned, high-taxing, high-spending Labor budget that seeks to punish those it does not like and discourage aspiration. The government promised to ease the pressure on working families but failed the very people they promised to help. How can any government boast of a budget that proposes to put 134,000 Australians into unemployment? Under the coalition it was ‘welfare to work’; under Labor, we are headed again on the road from work to welfare.

How can they boast of a budget that largely ignores the men and women whose sacrifices built this nation—seniors and retirees? How can they boast of a budget that not only leaves carers in the lurch but sells them down the river? Where were the incentives for small family business? Where was the emphasis on water, farmers and rural and regional Australians? This budget, like this government, puts media spin ahead of substance, bureaucratic doublespeak ahead of people and more than 100 reviews, inquiries and committees ahead of decisions. There is no substitute for a sound economic strategy—and Australians know it.

For months, the nervous man that is now Treasurer talked up an inflation genie as being out of the bottle. He spoke of an inflationary crisis. He darkly warned that deep funding cuts were needed. Yet he has delivered a budget that actually increases spending and increases taxes. Far from slaying inflation, this budgetary approach risks breathing new life into it. This budget will do little to reassure Australians nervous about whether this Treasurer and this government really understand what they are doing. In contrast, the Liberal and National parties have enormous demonstrated experience in keeping the Australian economy strong and competitive and in making sound judgements according to economic circumstances.

Since last November’s election, the Prime Minister and the Treasurer have been more concerned with undermining and misrepresenting the Howard-Costello legacy than they have been focused on the economic challenges facing Australia. We should never forget that the leadership of the coalition of John Howard and Peter Costello enabled Australia to become a stronger, more prosperous country, more confident in itself and its place in the world.

Australia was a dramatically different place when the coalition came to office in 1996. Under Labor, Australia had emerged from oppressively high interest rates, the collapse of businesses and a recession that deeply scarred the nation. It was an Australia in which every parent feared for the future of their children. There was no talk of a skills crisis.

In its very first budget the coalition faced a deficit of $10 billion and $96 billion in accumulated Labor debt. Last November, by contrast, we handed to the new Prime Minister and the new Treasurer an economy the envy of the world. There was no Commonwealth debt, surplus budgeting is now accepted as the norm and more than $60 billion was then invested in Australia’s future. During the 12 years the coalition was in government, everything that should be up—wages, economic growth and business and consumer confidence—was up while everything that should be down—inflation, interest rates and unemployment—was down. Under the coalition government Australians were able to get ahead.

This sound management and economic prosperity took place in the face of the Asian financial crisis of the late 1990s, the US recession of 2001, the tech wreck, the SARS epidemic, the terrorist attacks of September 11 and in Bali and amidst the worst drought in 100 years. We took these challenges in our stride because we know that managing a trillion dollar economy is never easy.

The Labor Party steadfastly opposed every single coalition measure that was essential to getting Australia into the position that it found itself in in November last year. Before the election, the Prime Minister repeatedly styled himself as an economic conservative. Expensive advertisements, slick management, cardboard cut-outs and expensive suits do not make economic conservatives. It is deeply rooted in philosophical conviction and character.

Today Australians are not confident about our economy. Business and consumer confidence has plunged to record-breaking lows, despite the fundamentals still being strong. Retail sales have fallen, building approvals have fallen flat, house values have fallen in many suburbs and Australians are less confident both in the economy and in their government—all this before the global liquidity crisis is yet to fully wash through the Australian economy and Labor’s inflationary, job-destroying roll-back on workplace relations. Union bosses are back in town, and we have no confidence that this Prime Minister will be able to stand up to union intimidation. Why would he? After all, they invested so much money in getting him into government.

Under Labor there is little opportunity for Australians to get ahead. This underwhelming budget is one of lost opportunity. The Prime Minister and Treasurer have presented their high-taxing budget as one that fights inflation. While no-one should deny that there is an inflationary challenge to be managed, there is no crisis. The last Labor government ran inflation in excess of six per cent a year for six years and it peaked at 8.3 per cent. Inflation is currently running at 4.25 per cent and is forecast to fall.

We have never subscribed to the Treasurer’s assertion that an inflation ‘crisis’ justifies savage budget cuts at a time of significant domestic and global economic uncertainty. We do not support higher taxes and higher spending. For all his talk of slaying some dragon, the Treasurer has breathed new life into inflation with a budget that delivers something Australians have not known in Commonwealth budgets in recent years: tax increases. The government has perpetrated a fraud on the Australian people.

Preliminary calculations indicate that the budget will increase the CPI by up to 0.4 per cent. The price of alcohol is up. The price of cars is up. The price of groceries will be pressured in part from higher taxes on trucks. The passenger movement charge is up. Taxes on software are up. And workers are about to have the Treasurer bite into their hard-earned money with a tax on canteen meal cards.

And health insurance premiums will increase with measures that will see a so-far confirmed figure of half a million Australians—mainly young people—drop private health insurance, leaving families, retirees and pensioners to pay even higher premiums to keep their private health insurance. We will stand up for private health insurance. We have always stood up for people with private health insurance and we will continue to do so. We will oppose this measure.

These are real price increases and they will cut into household budgets of real Australians, many of whom can least afford to pay them. These price increases could also mean higher interest rates. Far from reducing spending and putting downward pressure on inflation, this budget increases spending. The Treasurer has not, as he says, ‘taken the axe to irresponsible spending’. He has merely taken a sledgehammer to people the Labor Party does not like and ignored others—seniors, carers, small business, and rural and regional communities.

The government has cut $15.2 billion from programs, but then it has added $30 billion in new Labor spending programs, so net spending will increase by almost $15 billion over the forward estimates. The government has not paid for this new spending with cuts. The government has instead chosen to impose taxes and increase revenues that will raise $19.7 billion over the next five years. Far from reducing taxes to encourage incentive and workforce participation, this budget increases taxes. The total tax take will increase over this year alone by $15.7 billion. That is a 5.2 per cent increase in taxation in one single year. This is a high-taxing, high-spending Labor government.

As for the income tax cuts announced by the Treasurer on Tuesday night, bear in mind that these are the coalition tax cuts copied by the new Treasurer. He no longer, however, has a straight A student in the form of Peter Costello to copy. As such, Australians have seen the last tax cut that they will see for some time. This budget confirms that Labor stands for higher taxes, whereas the coalition stands for lower taxes. Even after the income tax cuts, the total income tax take from Australians will increase by $42.8 billion, or 21 per cent, over the next four years.

Tax relief not only provides practical help for families; it also rewards hard work and self-sacrifice. It can also help tackle inflation by removing pressure for wage claims while encouraging people into work. The Treasurer demonstrated his lack of commitment to tax relief in January, when he called for an end to the Howard government policy of returning excess budget surpluses as tax cuts. The Reserve Bank, he warned, had been allowed to shoulder too much responsibility for controlling inflation with interest rate rises. If the coalition tax relief delivered in this budget reduces inflation by promoting participation, encourages skill development and keeps wage pressures under control, as Labor accepts, doesn’t that argument also apply to future tax relief? Clearly the Treasurer does not believe his own argument.

Labor is giving us something with one hand and taking it back with the other—and not just through knee-jerk measures, such as the new Tarago tax on cars or the $1 slug on responsible Australians who happen to enjoy a pre-mixed Bundy and coke or a scotch and dry. We know that, as incomes rise over time and workers move into higher tax brackets, the value of today’s tax cuts will be eroded in the future. Economists call it ‘bracket creep’. We call it tax increases on the sly. There must be a commitment to future tax relief. Alcohol abuse is a problem—it is a real problem—not only confined to some young people but spread right across society. I spent much of my medical life seeing its human consequences. I am also a parent.

According to the government, the principal cause and the source of binge drinking is the so-called ‘alcopops’ or ‘ready to drinks’. A whopping 70 per cent excise increase, we have been told, would make significant inroads into binge drinking. The evidence does not support the government’s assertion—in fact, quite the contrary. The National Drug Strategy household survey confirms binge drinking by young women since 2001 has actually declined and alcohol abstinence in this group has increased. So the Prime Minister has told Australians that they have got to pay $3.1 billion more in tax on one alcohol product to deal with binge drinking. Any parent, let alone a health economist, will confirm that, if you jack up the price of alcohol in isolation from other measures, kids will simply move to another form of alcohol or a drug.

The budget confirms that after its tax increase the government expects consumption of these products to grow at a rate of some 10 per cent per year compounding. This is nothing more than a tax binge falsely presented to Australians as something that it is not, and that is why we are angry about it. We will oppose it. A real strategy to deal with alcohol abuse and antisocial behaviour demands an integration of education, prevention, policing, media, appropriate pricing measures and parenting where it involves young people. I will convene a national forum of alcohol specialists, educators, police, parents where expertise in their field is involved, and those who have expertise in related fields to develop a truly integrated approach to what is an undeniable problem. This will involve more substance than style.

Before the election, the Prime Minister led the Australian public to believe that he would do something about the price of petrol. He has done nothing of substance. Watching petrol prices does not bring them down. Australians may not have expected a silver bullet in the case of petrol, but they sure as hell deserve a government that does more than fire blanks. In 2001, when the price of petrol spiked sharply, we took the view that a strong budget allowed for some tangible relief. Petrol indexation was abolished. Petrol is now 17.7c per litre less than it would otherwise have been. The coalition did that.

Petrol is now hurting Australians in every walk of life and in every part of the nation. There is only one way that an Australian government can actually do anything decisive about the price of petrol and that is to cut taxes. So tonight I propose a cut in fuel excise of 5c a litre. This is a modest but meaningful way of helping all Australians—families, small businesses, pensioners and working people—so dependent on their cars. Ninety per cent of Australian households have a car. Right now, they all need help—real help. The coalition believes it responsible and fair to return a further $1.8 billion to hardworking everyday Australians in the form of a 5c a litre reduction in the fuel excise.

By lowering the price of petrol and the cost of transporting goods, this 13 per cent reduction in petrol excise will also have a modest, but measurable downward impact on inflation. This is in stark contrast to the tax increases under Labor which, as I have outlined, will have an impact on the CPI upwards of 0.4 per cent. The coalition is serious about reducing price and inflation pressures. Labor talks; the coalition acts. This is a real tax cut in the best traditions of the Liberal and National parties.

It was the Keating Labor government that put 5c onto the excise in 1993. We opposed it. I challenge the Rudd Labor government to help us take it out in 2008. This is not a review, it is not a committee, it is not a summit, it is not an idea to have a meeting—it is a decision. It is decisive action.

Small family businesses are the backbone of the nation. Indeed, it is one of the pillars of Liberal belief—men and women taking a risk, borrowing money to create or buy a small business and employing other Australians. Few things are more important to our way of life and our future prosperity. Get the conditions right for small business and employment will flourish and businesses will grow. We believe in encouraging and rewarding hard work. The tax system should not stifle innovation and Australians who are prepared to have a go.

Therefore, we are announcing tonight a major reduction in capital gains tax for small business. The current 15-year rule with respect to waiving capital gains tax on the sale of a small business entity on retirement from age 55 was an incentive to small business introduced by the coalition in government. To further encourage small business men and women to invest in establishing or taking over a small business, the coalition will introduce a five-year rule for capital gains tax on sale of the business for retirement. After owning and operating a small business for five years, we believe you should be entitled to capital gains tax relief should you sell your business for retirement. You will be rewarded, as you should, for your hard work, determination and sacrifice.

Education is our future. The centralised fund proposed by Labor for school infrastructure cannot replace ‘parent power’. Parent groups and school principals will always know what their school needs much better than a clipboard-carrying bureaucrat who turns up from a centralised education department. The government has scrapped our Investing in Our Schools Program. These direct grants to schools made a big difference to improved buildings, classrooms, playgrounds and upgraded technology. The coalition will reinstate it. We will get them moving again. The government speaks of a so-called ‘education revolution’ in delivering more computers to schools, while ignoring the added costs to parents and schools of connection, of maintenance and of training.

The single most important influence in the life of a child, apart from a parent, is their teacher. But no teacher can teach what they do not know. The standard of teacher training in Australia must be improved. It is unacceptably low. Higher standards in universities mean higher standards in classrooms. In this, we are failing. The coalition commits to education reform, so essential to our economic and social development. The coalition will require a number of conditions on Australian universities before they receive a dollar in public funding if they are training teachers. Entry scores to undergraduate teaching degrees at Australian universities are embarrassingly and pathetically low. The minimum university entrance score must be higher for entry to an education degree and will be formally set as a condition of funding.

Science, humanities and social science departments will be required to set and/or accredit relevant course content and assessment in education faculties. All trainee teachers will be taught how to teach children to read using proven techniques, including phonics based instruction. They must also be taught and assessed in basic sciences, mathematics, English and history. University education faculties will be required to appoint high-quality classroom teachers to their academic staff as tutors and lecturers. We need more classroom teachers teaching in our universities and fewer social engineers. This will assist in lifting the status of teaching as a profession and it will bring a greater practical focus to the training of teachers. To attract our best graduates into teaching, we must provide quality teachers with access to increased pay. Like any other profession, teachers should be rewarded and recognised on merit, as assessed by their peers. Better teachers deserve better pay. There can be no place for mediocrity when it comes to the future of the nation’s teachers, yet that is tolerated in too many of our teacher training institutions. This is an education revolution.

The Prime Minister has repeatedly told the House that he would reduce the financial stress of carers by providing them with ongoing secure support. The budget has failed carers. The carers bonus, introduced by the Howard government, is only being paid this year because the Labor government was shamed into action. Devastatingly for carers, however, there is no commitment in the budget papers to pay it in future years. These men and women, these carers, are the window into our humanity. Their work is done on behalf of all Australians. What modest support they receive from government should be recognised as a wage that saves Australian taxpayers in the order of $30 billion a year. Tonight I give all Australian carers my commitment that we will use the government’s inquiry to ensure equitable funding to carers in reflection of the work that they do on our behalf.

Australian seniors feel let down that the federal budget does very little to ease their cost-of-living pressures when they have done so much to build this country. That is why we will not support Labor’s changes to the income test for the Commonwealth seniors health card, which will leave thousands of seniors without a health card when they need it most.

In addressing the future and the course of our nation, we need to identify and respond effectively to five key challenges. The first is the prosperity of our nation. How can we hand to the next generation a level of prosperity of which we can be proud and in which they can have confidence? This will mean taxation reform—not just simplification but lower taxes overall—and we have already begun that process. Further, how can we prosper when this budget cuts investment in research and development and swings cuts through the CSIRO?

The second challenge that we face is that of the Federation. It is very important for every one of us to ask ourselves in this the 21st century: how can we make the Federation work more effectively for our country in the interest of Australians? It will require all of us, in a mature and sober way, to examine the constitutional arrangements and responsibilities of the three tiers of government—who is responsible for what, how the money is raised and then how it is distributed.

The third challenge is that of the environment. We, as Australians and as global citizens, need to begin to live on environmental interest instead of environmental capital. It is time that we focused on water and food security as much as on anything else. Further, Australia alone cannot solve climate change, but we can do enormous environmental and economic damage to our future if we get this wrong.

The fourth challenge for us in our future is that of the security of our nation—the defence and protection not only of our country but of, increasingly, our people, our interests and the values for which we stand throughout the world.

The fifth challenge is to ensure that we are a cohesive society—to make sure that we see drug use, alcohol abuse and illiteracy not only as a human but as an economic issue. We must see the existential despair and state of 90,000 Aboriginal people living in remote parts of this country and many other things such as gambling addiction as being no less important to us in our future than getting our economic fundamentals absolutely right, upon which, ultimately, success will depend. Before the next election we will announce policy to shape the future that we want as Australians. We are an opposition, but we are also an alternative government.

Our beliefs are in the individual, in the encouragement of, and rewards for, hard work and self-sacrifice in everyday life. We believe very strongly in the family as the bedrock of Australian society, while respecting and reaching out to every other Australian, whatever their economic or personal circumstances.

We believe in choice. We believe Australians should be encouraged and supported in choice in health and education. Equally, they should be free to join a union or not to join a union.

We believe strongly in defence and security and investment in it for the protection of our nation. We believe very strongly that small family businesses are the lifeblood of our nation and its economic prosperity. We believe always in lower taxes, once our obligations to society in health, education, road infrastructure, defence and other requirements have been met.

We believe ultimately in the individual. We believe that the inherent worth of every single Australian is paramount and that our task as Liberals and as Nationals is to stand against oppressive bureaucracy and governments that too often—and under this new government—appear to think that they know what is best for Australians, instead of leaving choices and freedoms in the hands of individuals who actually make this country work.

We believe we will be at our best as a nation if we see ourselves as and strive to be an outward-looking, highly competitive and compassionate people, reconciled with our Indigenous history and imbued with fundamental values of hard work, self-sacrifice, courage, tolerance and a determination to see that we support one another, that we respect our freedoms and stand up for the rights, values and freedoms of not only all Australians but all people throughout the world.

Debate adjourned.