Tony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Housing, Community Services and Indigenous Affairs) Share this | Link to this | Hansard source

This is very important legislation and it is quite appropriate that it be given plenty of scrutiny by this House. I know that it is very important to the government. The government would not have brought this forward without very strong reasons which seem good to the government, but the opposition has a wide range of questions and issues which it thinks need to be taken into account before this Federal Financial Relations Bill 2009 and cognate bill are finally dealt with. Australia is obviously in difficult financial circumstances right now, and these bills are part of a range of legislation which the government has put before the House to try to deal with those circumstances. The government is to be commended for the seriousness with which it has taken the current financial circumstances, but it is to be condemned for the fact that so much of the response is about spending money rather than undertaking continued long-term reform that will strengthen the economic base of the country.

It was the British Labour Prime Minister James Callaghan who said, back in the late seventies, that you cannot spend your way out of a recession. What you can do, though—possibly, not certainly—is reform your way out of a recession. That is the problem that this government has. It has turned out to be much better at spending money—money which has been accumulated by the careful husbandry of former Prime Minister John Howard and the member for Higgins, Peter Costello. It has turned out to be much, much better at spending that money than actually doing the hard yards of reform—reform which the former government never shirked. So far, I regret to say, this is a government which has not taken any hard decisions. It is not a tough decision to spend money that someone else has accumulated. That is, in fact, a very easy decision because there is absolutely no-one who will ever object to government money being spent on them or their particular cause. So that, in a nutshell, is why this legislation deserves the important scrutiny of this chamber. That is why a significant number of frontbenchers from the opposition will be forensically analysing the legislation in the course of this debate. I have had great pleasure in trying to at least contextualise the position of the opposition in the debate that we now intend to proceed with.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

It is a little bit of a shame—despite the valiant attempts of the contribution we have just seen—that the shadow minister could not make it down here to actually outline what the opposition’s position is in relation to this legislation. But it is not surprising, really, that the opposition is not quite sure where they are in relation to responding to this legislation, because they are in a mess. They are not quite sure where they are in responding to the economic crisis that is engulfing Australia and the rest of the world. They are not quite sure where they should be in relation to the issue of Work Choices, and they are even all over the place on the question of who should actually be their leader. So it is not surprising that we have had the kind of contribution that we have just seen there, one that has had to be done on the run and one where the shadow minister himself could not make it down to talk to this particular legislation.

The Federal Financial Relations Bill 2009 and cognate bill are important pieces of legislation, and they mark a stark contrast between the approach to government adopted by the Rudd government and that of the previous government. This approach is about working and cooperating with the states to get better outcomes for all Australians. It is not about trying to stand over the states. It is not about trying to have money conditional on them adopting a particular philosophical approach—which we saw all too often under the previous government. This is about sitting down, cooperating and coming up with clear objectives and clear ideas that are going to help all Australians in a wide range of areas. It is about delivering on the important promise that we made, going into the last election, that we would look to end the blame game with the states. This legislation is a terrific example of the concrete steps that this government has taken to do that by sitting down and cooperating, by clearly defining roles and responsibilities, and by making sure that there are fair and sustainable financial arrangements between the states and the Commonwealth.

With this bill there is a focus by all the parties in these financial relations—the federal government and the state and territory governments—on long-term development and enhancement of government service delivery. We will see enhanced public accountability through simpler, standardised and more transparent performance reporting by all jurisdictions. There will be a stronger effort towards the achievement of outcomes, efficient service delivery and timely public reporting. These bills will bring other positive aspects as well: reduced administrative and compliance overheads; stronger incentives to implement economic and social reforms; ongoing provisions of the GST payments to the states and territories, equivalent to revenue received from the GST; and the equalisation of the fiscal capacities between states and territories. The national specific purpose payments will be spent in the key service delivery sectors. Of course, when we are doing this, we are talking about schools, early childhood, health and disabilities, vocational education and housing.

In my electorate of Dobell on the Central Coast, we enjoy a great lifestyle. It is probably one of the country’s best, with some beautiful beaches and coastline. We have large areas of natural and pristine national parks, and we are very close to Australia’s biggest city. But like many growing areas, we are still in need of better services; we still have some way to go to achieving those. This bill is about trying to coordinate and provide better services in those key areas of schools, early childhood, health, disabilities, vocational education and housing. In Dobell our schools need upgrading. Early childhood facilities need to be expanded. Health services are in higher demand. In fact, Wyong Hospital has the fifth busiest emergency department in New South Wales, and Gosford Hospital has the seventh busiest. So we have very busy health facilities and a growing population. At the last election the Rudd government committed to establishing a super GP clinic in my electorate. I know, from talking to constituents, that they are all eagerly awaiting the announcement of the successful tenderer for that, and we are expecting that to happen any day now. Such a facility has been earmarked for the area where the demand for health services is highest. In this case it is in the fast-growing suburbs of the Wyong shire in the northern part of the Central Coast. Hospitals and their busy emergency departments are getting busier and, with an ageing population, these health facilities are coming under increasing pressure because of what is still a low per capita number of doctors compared to many areas of New South Wales.

We have important issues relating to water infrastructure that need to be addressed. In the last election the Rudd government promised to construct a pipeline between the Mardi Dam on the coast and the largest storage dam, the Mangrove Creek Dam, in the mountains behind the Central Coast. This sort of infrastructure is vital for the Central Coast. We have experienced the full effects of the drought. In fact, we were down to less than 13 per cent of our water supply. Even with a heavier than usual period of rain in the last 12 months, our dam capacities are still at only 31 per cent. The Rudd government is working with the local council on this issue to make sure that solutions are worked out cooperatively, that they provide outcomes that benefit everyone on the Central Coast and that they help to secure the water supply for all the citizens there.

The Council of Australian Governments has developed a new integrated approach to improving health outcomes for all Australians and improving the sustainability of the Australian health system. The agreement identifies the long-term objectives of the Commonwealth, state and territory governments. Those objectives are: prevention so that Australians are born and remain healthy; primary and community health so that Australians receive appropriate high-quality and affordable primary and community health services; hospital and related care so that Australians receive appropriate high-quality and affordable hospital and hospital related care; aged care so that older Australians receive appropriate high-quality and affordable health and aged care services; patient experience so that Australians have a positive health and aged care experience which takes account of individual circumstances and care needs; social inclusion and Indigenous health so that Australia’s health system promotes social inclusion and reduces social disadvantage, especially for Indigenous Australians; and sustainability so that Australians have a sustainable health system. These are important and very worthy objectives that, by sitting down and working together, the federal and state governments have been able to reach agreement on. Part of this bill is about making sure that these sorts of important long-term goals, which are so vital to ensuring that our health system functions properly, are enacted and put into place and that we have both those levels of government working together for a common outcome rather than working in silos, with the public losing as a result.

In the area of disabilities, we have made many improvements but there is still a long way to go. Recently in this place I spoke about our local disability groups and how they regularly give accounts of the struggles faced by many people with disabilities and their carers in my community. Transport is a major problem for people with disabilities. Finding a job is still a major challenge in many ways for people with disabilities. The Parliamentary Secretary for Disabilities and Children’s Services spoke to a number of groups on the Central Coast recently and told them how important it is to fight for fairness and equity for people with disabilities, at both a local and neighbourhood level. This fight is ongoing, and we intend to persevere. But the smooth delivery of funding to the states and territories in this area on an ongoing basis will help make that fight easier. That is partly what these bills will do.

These bills help provide the appropriation for the Commonwealth to make an ongoing financial contribution in the following vital areas—that is, health care, schools, skills and workforce development, disability services and affordable housing. In my electorate on the Central Coast, we have 46 schools in total, 38 of them government schools. Can I say there has been an overwhelming positive response from the school community about the Rudd government’s stimulus package, which will go a long way to improving much-needed educational infrastructure on the Central Coast. All of these schools will be able to upgrade their facilities and in doing so will create local economic stimulus, giving tradespeople much-needed work, not to mention improving the school facilities for teachers, students, P&C groups and other organisations that use them.

I have said before in this place that, if you were designing a stimulus package for my electorate, it would be exactly the stimulus package that the government announced earlier this year. In my electorate of Dobell, one of the key areas that the stimulus package has a major effect on is retail, and employment in the retail sector is larger than in any other sector. We have a disproportionately high number of people employed in retail, so clearly that is something that is directly affected by the stimulus package. But the other interesting thing about my electorate is that we also have a disproportionately high number of tradesmen and tradeswomen, who both work in the electorate and commute to Sydney. Providing this kind of stimulus package, which addresses the infrastructure requirements of schools and makes sure that the local tradespeople have the opportunity to work on the 46 schools in my electorate, is absolutely vital for the seat of Dobell. The seat of Dobell has traditionally been affected by unemployment disproportionately, by more than the national average. In fact, youth unemployment has gone close to 20 per cent in my electorate, and the unemployment rate is already in the area of seven per cent, which is much higher than the national average. It is vital that areas like this, which are more susceptible to economic downturns, are addressed properly and squarely by the stimulus package, and that is exactly what the stimulus package does for my electorate. I have had nothing but people saying to me, ‘Thank God the federal government has done something.’

What we have done in terms of the stimulus package in this particular bill and the way in which we are cooperating with the states stands in such stark contrast to those sitting opposite. Those sitting opposite find it very hard to come up with a coherent position because they are so wracked with division. At the moment so much of their energy is being occupied by negotiating who is going to be leader and who will be on the rival frontbenches that they have completely forgotten their obligation to the Australian public in looking at and addressing the financial crisis that we find ourselves embroiled in because of what is happening overseas. So it does not come as any surprise that there is such a stark difference between the government benches and the opposition benches in this particular issue.

And what do we get from the opposition in relation to any of the positive steps that this government puts up to stimulate jobs, to make sure the economy is cushioned as best we possibly can from the global financial crisis? At the moment, what we get is the Turnbull threestep. We have all heard it. It starts off with: ‘We support the government’s position.’ They then raise some doubts about the government’s position as the backroom dealing on who is going to be leader hots up in the Liberal Party room, and then they get to the final position of objecting to or opposing the government’s legislation. This opposition has not supported substantially, for any length of time, for anytime more than a few days, any of the positive initiatives that have been put up by this government, and in my electorate people are saying, ‘Which of our schools is the Leader of the Opposition saying won’t be upgraded? Which of our people who need the economic stimulus are going to miss out? Is it going to be pensioners who will miss out? Who is going to be missing out if the opposition have their way?’ They are very disturbed at the approach that is being taken by the opposition, who are spending too much time navel gazing and worrying about who sits where on their front bench rather than dealing with the issues that confront the economy and the world generally.

This government, though, in stark contrast, is about providing solutions by both short-term stimulus and long-term structural changes. This particular bill goes to both of those issues. Most particularly, though, this bill is important because it provides a dramatic change in approach from the previous government. Previously, the former Howard government’s engagement with the states was minimal. They took a position of dealing with the state and territory governments which said: ‘We have a proposition. Take it or leave it. There is no room for discussion. There is no room for compromise. If you have different objectives, that is just tough. This is the way that we are going to operate.’ How can we get the best outcomes for all Australians if we have two levels of government that do not share a common view as to the outcomes that they want to seek in service delivery? It has been absolutely vital for us to sit down and reach agreement with the states and territories on a whole series of issues of service delivery. It was vital because not only does it put resources into the areas where they are required but it makes sure that both levels of government are working to a common purpose. If that is not to be the case, then clearly resources are going to be wasted. Outcomes that may be sought by the Commonwealth may well not be able to be achieved if different outcomes are sought by the state and territory governments. This cooperative approach with the state and territory governments is so important to making sure that we get better delivery of those vital services.

The National Affordable Housing Agreement provides the framework for the parties to work together to improve housing affordability and homelessness outcomes for Australians. Parties to this agreement are committed to: providing direction on a range of measures including social housing assistance to people in the private rental market, support and accommodation for people who are homeless or at risk of homelessness, and home purchase advice; working towards improving coordination across housing related programs to make better use of existing stock and underutilised government assets, and achieve better integration between housing and human services, including health and disability services; and, of course, the very important goal of reducing the rate of homelessness. This agreement is ongoing and may be amended as necessary by the agreement of the Council of Australian Governments.

This is a very worthy goal to have. It is one that is backed up in this bill by financial commitment. It is one that has been backed up by the government’s stimulus package in providing public housing and it is one that I would think all members of this place would want to support—making sure that people who are sleeping rough have some chance of having a roof over their head is absolutely vital. In any society that describes itself as a civilised society these kinds of initiatives need to be at the top of our agenda. But this is more important than that, because not only does it help achieve these morally important issues for our culture and our country but it also provides that stimulus in terms of providing work in the building sector that is so vital to making sure that we are cushioned from the worst effects of the global financial crisis.

Again, to further emphasise the difference in approach, this is something that is agreed between the states and the Commonwealth. This is not something that is imposed without discussion; this is something that has been negotiated so that we have a common set of values, a common set of aims and a common set of goals. That is the only way that we are going to be able to achieve change in relation to these important issues: by making sure that in terms of service delivery across these vital areas we sit down and cooperate with the states and territories and we reach agreement. By reaching agreement we have common goals and outcomes and we can then make sure that they are adequately financed. I commend the bills to the House.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

The Federal Financial Relations Bill 2009 and the Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009 provide a set of new arrangements for organising Commonwealth payments to the states and territories. They do that in principally three areas: general revenue assistance, which includes most importantly the GST payments; the national specific purpose payments, which replace the Commonwealth-state agreements on programs such as housing; and national partnership payments, which I interpret as being a scaled-down version of the former national competition payments. Like many government bills which come before the House, they pretend to great reform and revolution, but on closer inspection they amount to little more than bureaucracy creep. But this is typical of this government because their popularity stems from never having to make a hard decision since they have occupied the treasury benches for just over a year now. They have never had to make a hard decision because all of the decisions that have been taken have largely been about doing popular things such as throwing money around. The hard decisions come when you have to make tough decisions on these issues and do unpopular things, but we are yet to see this government do one unpopular thing.

In our last budget in government, in 2007-08, the coalition allocated almost $42 billion for the states in the form of the GST. More significantly, this involved a windfall of $3.2 billion that would never have been received without that tax reform. I make mention of that because it was a hard decision, when it comes to federal-state financial relations, to introduce a GST—to introduce a major and radical overhaul of our tax system that previous governments had failed to do and did not have the stomach to do. That being in place enabled money to flow to the states and territories with a growth tax, something they had been after for many years, like never before. The fact that these revenues have been, frankly, squandered by the states since the GST was introduced is another story. The good voters of Queensland will have the opportunity to cast their opinion on that in a very short period of time.

If you believe the Treasurer when he introduced these bills, you would think that the reason for the manifest failure of the states in their financial management had nothing to do with their incompetence but rather had to do with the way the payments were being made—there was some administrative problem that needed to be overcome to ensure that states actually exercised some sort of financial responsibility. The Labor Party will blame anyone, and anything and everything, to avoid taking any accountability for their own financial recklessness; they will even blame blame itself. When you cannot blame anything else, why not blame blame. Hence we had the ‘blame game’. This became the great rhetoric of the government as to the reason why hospitals were falling over and schools could not be funded. It was not the fault of the state governments; it was the fact that people used to blame one another. Of course, without blame there is no accountability; and that is why the government fears blame so much.

The GST shows that you can lead Labor to the waters of economic responsibility but you cannot ever make them drink. Labor may be changing the colour of the envelopes in which the cheques are going to be sent to the states under these changes, which is fine, but they can hardly claim this as any great reform. Perhaps when coming to these measures they should have taken up one reform from their Labor colleagues in New South Wales and Victoria. I used to hear them constantly talking about removing the sunshine subsidy of GST payments to Queensland and other states. Strangely enough, when Labor came to power—after hearing them all talk about it; it did not matter which premier it was in New South Wales or Victoria, they would all make the same criticism and call on the coalition in state parliaments and in federal parliament to overcome this terrible injustice—at a federal level they fell silent. This bill does not address the sunshine subsidy problem that was highlighted by previous Labor premiers. In paragraph 1.10 of the explanatory memorandum it says quite clearly:

The Commonwealth will distribute GST payments among the States in accordance with the principle of horizontal fiscal equalisation as expressed in GST revenue sharing relativities.

So there has been no change. Perhaps this is because in Labor’s new system of collusive federalism, as I like to call it, the Prime Minister is happy to simply wave away the obligations of states to cut taxes, in particular, and renege on their GST undertakings—which were made some years ago in the introduction of the GST. We saw that recently when the Prime Minister sat down with the state treasurers and said, ‘You know all of those business taxes that you said you were going to cut as a result of getting this GST money, well, you just don’t have to do it now.’ We are in an economic downturn. Of course, it would be better for business to be paying less tax rather than more tax. But instead of taking the hard decision of making Labor mates in the states cough up on their commitment of cutting taxes, they simply waved it away. One Friday afternoon they just waved it away and said ‘not a problem’. It is not a very hard decision to let your Labor mates in the states off the hook of having to reform taxes.

The second area of this bill relates to specific purpose payments. I mentioned before the former Commonwealth-state-territory funding agreements, which covered a range of areas including health, schools, disability services and, in my area of shadow portfolio responsibility, housing. This bill provides for $1.2 billion to be spent in 2009-10 under the National Affordable Housing Agreement recently completed by the Commonwealth, states and territories, succeeding the previous agreement for Commonwealth-state housing between 2003 and 2008. The annual funding provided in this bill for the new Commonwealth-state agreement is in effect an additional $50 million in real terms compared to the last year of the previous agreement. So it is not a very significant change. The new agreement incorporates the Supported Accommodation Assistance Program, which was previously subject to a separate agreement with the states and which focused on providing crisis accommodation and support to people who were homeless or at risk of homelessness through 1,300 provider organisations, largely not-for-profit and charitable organisations, which I am sure we in this place would all agree do a tremendous and very worthy job.

The new agreement must address some serious issues in the management of the public housing stock by its state and territory agencies. During the period of the previous agreement around $4 billion over five years was spent in real terms on the construction of new public housing dwellings. Despite that $4 billion investment, the total number of dwellings actually declined by over 10,000. In fact, there were 10,146 fewer dwellings as a result of an investment of over $4 billion in expenditure of new money on new construction. It is therefore of concern that in this agreement—the NAHA, as it has colloquially been known—the states have still been left to run their own show in terms of how the moneys under this agreement are to be deployed.

I think it is a legitimate criticism that the coalition’s previous agreement failed to spoonfeed the states and territories on how they should manage their budgets. In hindsight, billions of dollars were provided to states and territories for these initiatives and the dwelling stock was allowed to deplete. That is because there were no specific requirements in the agreement to allocate funds between capital costs and maintenance and operating costs. The social housing sector made the point to the government that this sort of discipline should have been included in the new agreement—and, frankly, I think it should have, but it has not been. So as a consequence we are going to continue to write cheques to the states, providing them with no real guidelines on how they have to manage their stock. As a result, I think we can expect the states to continue their form.

Of particular concern is that under the former Supported Accommodation Assistance Program there was a requirement for matched payments from the states. Under the new National Affordable Housing Agreement there is no such requirement for matched payments from the states. So again we are writing cheques to the states and territories in this new era of collusive federalism and, frankly, not asking them to stump up in return in the same way, particularly in the area of homelessness, as we did previously for the Supported Accommodation Assistance Program.

Public housing accounts for around five per cent of households in Australia, which is less than three per cent of the residential construction industry. I make that point because I think it is important that we understand what is emerging as a key difference between the Labor government and those on this side of the House in terms of public housing and our housing policies more generally. The coalition is committed to providing people and families with a pathway to become self-supporting in private accommodation. That is our goal. Our goal is to see people be able to take responsibility for their own housing needs in the private sector market, which, frankly, 95 per cent of the population currently does. We need housing policies that address the housing needs of all Australians, not just those who unfortunately and for a whole range of reasons have to rely on the state system for their housing needs. We need housing policies that address everyone’s needs and put a roof over everyone’s heads. In the majority of cases this means ensuring that people are simply able to hold their own in the private housing market. It is of significant interest that, despite the fact that the number of dwellings declined by more than 20,000 during the period 2003-08, the number of people on public housing waiting lists across Australia in that period, most of which was under the coalition government, declined by more than 30,000. So we had a contraction of stock yet we also had a contraction in the number of people who were waiting for public housing.

The lesson in these figures is this: the best way to put Australians in homes, especially in their own homes, is to give them a job. Over two million jobs were created under the coalition government. The best way to keep them in their homes is to give them sustainable increases in their wages. Over the term of the coalition government we had a more than 20 per cent increase in real wages compared to a fall in real wages under the former Labor government. So you give them jobs; you give them wages that grow in real terms; you increase their wealth, which rose to the highest level on record under the former government; and you enable them to step up and take responsibility for their own housing needs wherever possible.

Our objective should be to have fewer clients in public housing, not more. Our objective should be to ensure that people can escape the clutches of social and public housing and be self-sustaining in the private market. We want to see fewer clients not more, just like we want to see Australians have jobs not redundancy payments, which is the focus of another debate in this place here at the present time. There will be those for whom social housing will be a permanent requirement, and no-one in this place doubts that. We owe it to those Australians to ensure they are not competing for services with those who can take control of their own housing future. Our objective must be to ensure that the experience of social housing is a temporary one, an opportunity to regain some stability in their lives, rebuild their confidence and move on.

The final area that this bill covers is the area of partnership payments, and there are quite a few that address the housing sector. There are four such agreements. They deal with social housing, homelessness, Indigenous housing and the government’s $6.4 billion public housing cash splash. Social housing and homeless agreements were both supported by the coalition when they were introduced—there were no questions, they were absolutely supported—along with the $150 million Place to Call Home initiative. They were all worthy initiatives. The social housing program provides capital funding of up to $400 million over two years to build new, affordable housing. The partnership on homelessness provides $318 million over four years from the Commonwealth. Again, this was welcomed by the coalition when it was announced in November and then curiously reannounced just before Christmas.

The third partnership agreement is for remote Indigenous housing, providing almost $2 billion over 10 years or $835 million over five years. Again, this agreement was supported by the coalition. The proposal was first announced in November 2008 and in this place just a few weeks ago when the Prime Minister addressed the House on the status of the Closing the Gap initiative. It involves building 4,200 new houses and upgrading a further 4,800 other houses to tackle overcrowding in remote Indigenous communities. This is a very worthwhile initiative.

However, according to COAG, the agreement provided for under this bill was to have been completed by 1 January this year. So it was disappointing that eight weeks after that time that agreement still had not been signed. When you look at the agreement you will see that all of the states and territories signed up in December. The only one not to have signed up for that agreement was the Prime Minister, whose signature was dated February—and I understand it was towards the end of February. So for around eight weeks this agreement sat on his desk. This agreement has now been completed; however, it highlights again why Australians are increasingly sceptical of the torrent of announcements and sentiment from the Rudd government. It is because time after time they fail to meet their own benchmarks and timetables for delivery.

This comes on top of the fact that a few weeks ago the Northern Territory government claimed they had barely broken ground on the 750 houses they were responsible for delivering with the federal government as part of the Northern Territory intervention. While the Rudd government now claims to have built 80 of these houses—we are not quite sure where they are, for what purpose they were built or if they were even for Indigenous people at all—that is pretty poor progress, even if you accept it at face value. Of 750 houses promised in September 2007, at their best guess 80 have been built. If the government could only build, on their own figures, 80 houses in remote areas in the 16 months since the election, I do not know how we can believe they will now build 20,000 public housing dwellings across Australia in the less than two years they have allocated to spend the $6 billion on new public housing. Too often the Rudd rhetoric is not matching the Rudd reality. Whether it is jobs, funding or houses, once Labor—or local government, for that matter—have made the big announcement, they seem to think the job is done. What the Australian people want of this government is not to make hairy-chested announcements and big populist gestures but to actually get on and do the things they claim to be doing.

In total the coalition has now supported almost $3.5 billion in social housing initiatives announced by the government since they were elected in November 2007. That is a lot of money. It is a serious amount of money and it is going to address a very serious problem which the coalition shares the government’s concern regarding. That does not include the $1.2 billion also annually provided under the affordable housing agreement. Labor then tried to accuse the opposition of not having any interest in addressing social housing needs in this country because we chose to draw the line at spending a further $6.4 billion on public housing which will not be delivered in that time frame and which will not provide an economic stimulus. We draw the line and we say no. This package fails to stimulate additional investment, it fails to address the very real needs in the private housing market and it is incapable of delivery by the states. I would not trust the Premier of New South Wales to take out the bins, let alone build 9,000 new houses in about 18 months. He is simply not capable of it and neither is his government. I think gambling billions of dollars of taxpayer debt on the ability of states to deliver this program is reckless and irresponsible.

The package focuses only on public housing and ignores private housing needs. In doing this, the government have overcapitalised their stimulus by failing to leverage additional investment in residential construction, beyond direct public expenditure, and thereby maximise the potential boost expected from a proper stimulus measure. $6 billion would pay for more than 280,000 new home construction grants. That is twice the number of annual housing starts each year. Today’s housing finance figures released just a few hours ago show that loans for new housing construction increased again by 2½ per cent in January, following a much larger 9.9 per cent increase in December. However, the number of commitments in January are still fewer than a year ago. In addition, the proportion of first home buyers taking on housing finance commitments rose again to 26.5 per cent in the latest figures in January, the highest on record, eclipsing even July 2001 after the initial grants were introduced by the coalition government.

Today’s figures highlight the need for the federal government to increase their focus on stimulating construction in the private housing market, where more than 95 per cent of Australians live and more than 95 per cent of housing construction workers have a job and are at risk of losing them. On 30 June, the government’s first home owners grant will expire. The program has so far produced some good results. I am happy to concede and applaud that. It has the potential to do even better if the scheme is modified to provide a greater emphasis on building new homes rather than buying just existing dwellings, which accounts for around 90-plus per cent of the funds that are being spent on that initiative. Under Labor’s plan, this can only be achieved by driving Australia even further into deficit and debt. Their failure to set aside funds as part of the $6 billion cash splash on the public housing program was reckless and irresponsible because it failed to provide for the extension of these grants which actually can make a difference to private housing. Australia cannot afford for Labor to allow their social agenda on public housing to override their economic responsibility to do what is right for the Australian economy. It is time to get some balance back into their housing program policies and acknowledge the urgent needs in our private housing sector.

Finally, I would say this: when this package was put together and we went through Senate estimates, the government had no idea how much it would cost or how long it would take; they simply rang the state governments and said, ‘Do you think you can deliver this?’ and the response was Obamaesque with a ‘Yes, we can’. They cannot deliver in less than two years what they could not deliver in eight years of spending on these programs. So we rightly highlight that the stimulus package for public sector housing will be unable to be delivered by the states and as a result should be directed towards private housing. (Time expired)

Mark Butler (Port Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

I guess that, given the previous government’s record on federal financial relations, it is no wonder that contributions would seek to focus on justifying why the opposition voted against the biggest stimulus to social housing since the Second World War rather than dealing with the details of the Federal Financial Relations Bill 2009 and the Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009, which involve the most significant overhaul of federal financial relations—the financial architecture of our Federation—since the Whitlam government.

This government is utterly committed to ending the blame game in the federal system and stopping the buck passing that has dogged our state and federal government relations for far too long. This government—and also while in opposition before the election—is very clear in its view that the federal financial architecture is fundamentally broken. These bills seek to take the first steps in fixing that architecture.

Exhibit A in that breaking down of the federal financial architecture is the constant accretion of section 96 payments, or specific purpose payments, that have become so numerous, so varied in their forms and so detailed as to be completely incomprehensible to most commentators and observers. There was, it is to be noted, some reform to our federal financial architecture with the ANTS—A New Tax System—that surrounded the GST, but there was no serious attempt at all during that process to grapple with the broken specific purpose payment system. These bills implement an agreement by COAG in March 2008 and subsequently in November 2008 to undertake that very important reform.

The Rudd Labor government came to government having talked about these issues for a considerable period of time before the November 2007 election and with very clear expectations from the public that reform would be undertaken. We have delivered that quickly—in March 2008, within only weeks of being elected, the Prime Minister delivered an agreement at COAG that fundamentally overhauled federal financial relations in this country. These bills implement that agreement in very large part. The first element of that March 2008 agreement was to rationalise—long overdue—the specific purpose payment system, firstly with the objective of combining agreements to a smaller, more comprehensible range of agreements; secondly, to institute much clearer demarcations of responsibilities between the different tiers of government; and, thirdly—and perhaps most importantly—to focus on performance and outputs from those agreements, rather than the tendency within SPP agreements to focus on inputs, particularly from state governments, and with those performance benchmarks to be assessed by the independent COAG Reform Council.

The second element of the landmark March 2008 agreement was to introduce national partnership payments—payments intended to reward incentive and reform undertaken by state governments. It is very important to note, particularly given the contribution about these issues of the previous speaker, the shadow minister for housing, that this type of payment is not subject to the principle of horizontal fiscal equalisation or, as the shadow minister—notably from New South Wales—described it, the ‘sunshine subsidy’. Horizontal fiscal equalisation is a principle to which the Labor Party unashamedly adheres. It is a principle that redistributes money among parts of the Federation according to the capacity to raise revenue and the need to spend money. Under horizontal fiscal equalisation, the Commonwealth Grants Commission takes account of differences between states in revenue raising capacity and their different spending needs and readjusts grants accordingly.

It is beyond comprehension, other than for base political purposes, to understand why a member of this federal House would have a problem with that principle as a general proposition, with only this exception: that COAG agrees, and the Prime Minister and the government very much agree, that reform-based incentive payments such as are included within the national partnership payments should reward states that are first movers in reform. In the area of national partnership payments, states are treated on the merit of their contribution to reform or to a particular program. This is an important exception to the principle of horizontal fiscal equalisation which, given the previous speaker’s contribution, I want to reiterate as a fundamental platform of Labor government.

The third element to the COAG agreement in March 2008 was that COAG retain the general revenue sharing framework adopted in 2001 after the introduction of the GST. Firstly, there would be no conditions placed by the federal government on states about how they spent that money and secondly—again—the principle of horizontal fiscal equalisation would apply to the distribution of those funds. Essentially, the Rudd Labor government adopted the system in relation to the distribution of GST money introduced by the former Treasurer, the member for Higgins.

Since that landmark agreement in March last year, very significant work has been undertaken at the COAG level between the Prime Minister and premiers, between other ministers and between officials of the different tiers of government, particularly on the reform of the specific purpose payment system. These bills implement that framework adopted at the March 2008 meeting, adding detail which has been worked on over the subsequent months and agreed at the COAG meeting on 29 November last year. This is the most significant overhaul of specific purpose payments since the provision in the Constitution section 96 began to be used broadly in the early 1970s under the Whitlam government.

Under the November 2008 agreement and these bills there will now only be five specific purpose payments: firstly, for health care; secondly, for schools; thirdly, for skills and workforce development; fourthly, for disabilities; and, fifthly, for affordable housing. Each of those five specific purpose payments will be subject to a separate national agreement between the federal agreement and each of the state and territory governments. Each agreement, for the first time, clarifies very specifically the roles and responsibilities of each tier of government.

In my previous life I dealt on a number of occasions with the specific purpose payment systems governing home and community care, or HACC, and other areas of disabilities. Frankly, it was a minefield, not only in working out quite what the moneys were intended to do but in working out what the responsibility was, in my case, of the South Australian government and what the responsibility was of the Commonwealth government. Commentators, stakeholders and governments have for years complained about the indecipherability of specific purposes payments as they have existed until now. This legislation and the agreements made at COAG in November 2008 make a fundamental reform to that system. Each of the five SPP agreements importantly include performance benchmarks and outcomes. Those, as I said earlier, will be assessed by the COAG Reform Council and, for the first time, will be published annually in a very significant advance in the transparency of government in this country.

The fourth significant reform to the system of specific purpose payments is the removal of very detailed conditions previously imposed by the Commonwealth governments on states. These were more usually related to state inputs rather than to more meaningful outcomes or performance benchmarks that might actually impact on Australians. Now the states will choose how to spend the money, provided that the money is spent in their particular areas, such as health care or disabilities as the case may be. But they need to spend that money bearing in mind the benchmarks that will be assessed on an annual basis—and the assessment will be published—by the COAG Reform Council.

The other significant reform contained in this legislation is the introduction of national partnership payments. The November 2008 COAG meeting agreed on a number of payment systems, and, importantly, given the debate in this place this week, at the COAG of 5 February 2009 the Nation Building and Jobs Plan was also the subject of a separate national partnership payment agreement. As I indicated earlier in my contribution, these payments are not subject to the redistributive principles of horizontal fiscal equalisation. These payments reward states who work hard. The claim has been made by a number of states—particularly the bigger states, such as Victoria—for many years that reform based payments should not be subject to horizontal fiscal equalisation. Our government has heeded those calls in this part of the legislation.

These payments will be the centrepiece of a new wave of microeconomic reform in areas which for too long have been neglected by the federal government. Earlier this week I was very pleased to see the announcement by the Parliamentary Secretary for Early Childhood Education and Child Care, Maxine McKew, of the national partnership payments for early childhood education. Under that agreement $955 million will go to states between now and 2013 to implement one of the centrepiece promises that the Labor Party made before the last election—namely, that the Commonwealth had a place in ensuring that all four-year-olds in Australia had 15 hours a week of preschool education in the year leading up to school, wherever they lived.

I come from South Australia, a state that has taken preschool education very seriously in any event, but I know that there are many states in the Federation that have underfunded particularly four-year-old education but also perhaps the area of nought- to five-year-olds in their state generally. For too long the Commonwealth has sat on its hands and done nothing while there has been such a variable contribution to the education of our four-year-olds. We know from recent research that those five years are the most important years in the development of a human being’s brain. This is just one example of many national partnership payment agreements that have been the subject of debate and ultimately agreement at the COAG level which will deliver very significant reform to our country.

Finally, the Federal Financial Relations Bill 2009deals with appropriations. It is an appropriation bill, and it appropriates an extra $6 billion or so over the next five years for the national specific purpose payment agreements that I referred to for things like fixing up our hospitals and delivering extra services to those Australians with disability. How those opposite, after the Howard government stripped money year after year from our national health system, can complain about our attempts, transparently put before the people before the November 2007 election, beggars belief. This is the government’s implementation of a very clear commitment to the people before November 2007—that we would fix the hospital system, that we would make life better for those with disability in Australia and that we would deliver a proper system of child care and preschool education to Australian children.

In conclusion, this is a very significant reform of our federal financial architecture. It significantly improves the transparency of payments between the Commonwealth and the states and territories. This will be a very good thing for where people complain—and, in many cases, rightly complain—about the service delivery undertaken by state governments. For the first time, those state governments will be accountable against performance assessments by the COAG Reform Council that will be published and available to all Australians. These payments, particularly the national partnership payments, set the foundation for a new wave of microeconomic reform and a new wave of quality service delivery for Australians. I commend COAG for the work that they did between March 2008 and November 2008 in putting together a very significant overhaul of their financial relations, and I commend the legislation to the House.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I am very pleased as a Western Australian to have the opportunity to speak on the Federal Financial Relations Bill 2009 and the Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009. I want to make it very clear that I am committed to a federal system. I recognise that all is not perfect in this system of government and that it is a bit of a movable feast because we are changing as a nation. Like democracy, our system of government is not perfect, but it is probably the best that we can offer in terms of robust debate and robust competition in delivering the very best services to people throughout this vast continent. That is one of the great benefits of a federal system. We live in a very vast continent. Each of our states has its own geography, and life for citizens in the states varies quite markedly. That is why I believe that the state governments are the best people to determine the priorities that will govern their states.

We have in the public gallery people from probably all over Australia. I do not think that they would be well served by having government administered centrally. Indeed, that is not what this legislation seeks to do. It seeks to have a new cooperation in terms of how we manage this great country of ours. The problem is: many Australians see any reform process with a degree of cynicism because we have heard it all before—that is, the federal government announcing that they are going to manage something because it is not working as well as it should be. While this legislation does seek to have new cooperation between the state and federal governments, I think it is still highly prescriptive. It is the federal government calling the shots and saying to the states: we will hand over buckets of money to you but you will do certain things.

I hope that we will continue to robustly debate these matters in this place, because it is through the fires of robust debate that we come to good policy positions. We should never be afraid of that process, no matter how difficult it may get sometimes. I know sometimes the public see this as a very combative exercise, but it is from the fires of robust debate that we come forward with the very best options for governing Australia in the 21st century.

The government have described this legislation as a new direction with modern federalism. The reform manifesto is filled with the discourse of a new era of cooperation. Indeed, it would seem that our Prime Minister has been extolling the virtues of such collaboration between federal and state governments for many years. Behind the rhetoric of cooperation, the reality is clear: state and federal governments are no longer peers. When the drafters of our Constitution began to imagine the shape of Australia’s Federation, they pictured something vastly different from what we are operating under today. They pictured strong states that could hold their own against the federal government. They created distinct areas of responsibility. If they ever imagined that there would be a vertical fiscal imbalance, I am quite sure they never would have imagined it would be as pronounced as it is today.

When we talk about modern federalism, we are essentially discussing the funding arrangements between the levels of government. Since the federal monopolisation of income tax, state governments have been reliant on federal grants to fulfil their constitutional responsibilities. The resulting vertical fiscal imbalance has gradually given the federal government increased power in areas that once were the exclusive domain of the states and territories. I sometimes think that we in this place set the states up to fail in that duty. We sometimes forget that the states have a vested interest in delivering best practice to their constituency because their ultimate report card is when they go to the electorate and seek re-election.

The essence of this legislation is that it will reform the system of funding to the states and territories. There will be three tiers of funding. Firstly, the federal government will distribute collected GST revenues to the states by general revenue assistance in accordance with the principles of horizontal fiscal equalisation. Secondly, all existing tied grants or specific purpose payments will be summarised as payments for key human sector services such as health care and schools. Thirdly, new national partnership payments will be made to those states that reach the incentive targets of service delivery and adopt social and economic reform as laid out by the federal government. So what we have is a bit of a pea and thimble trick: nothing is changing in essence.

It is encouraging to see the government continuing the work of those who went before them and engaging in constant renewal of our federal system. The introduction, indeed, of the GST under the Howard government provided funding for the states, which has been a very significant move forward. It has gone some way to restoring some balance in terms of fiscal relations between the levels of government in Australia in recent times. Any attempts that are made to make the system more efficient will be welcomed. There is no doubt about that. I think everyone will welcome that. But, by setting goals that virtually say one size fits all, we are removing from the states the capacity to be innovative and creative about how they solve the many service delivery challenges that they are confronted with today—and probably more so at the moment, with the global financial troubles that beset us.

Again, it is a welcome move to see the existing system of tied grants which had been implemented gradually over time in accordance with various developments now being modernised. It is also pleasing to see that the state and territory governments who received this money will have some flexibility in how they spend the money. As I said, it is flexibility that will enable innovation to flourish and provide an opportunity for governments to learn from the successes and failures of others as they try to find the best way forward to deliver to their constituencies. However, it would seem that while this bill gives budget flexibility with one hand it is also taking it away with the other. As I said, it is the old pea and thimble trick; it does not really fool anyone. The sometimes coercive nature of specific purpose payments will potentially be replaced by the national partnership payment, and you have to look at that and say, ‘Is it really that much different to what we’ve been doing?’

The key aspects of the bill that I have concerns about relate to the requirement that specific purpose payments are subject to reporting requirements and the national partnership payments require that the state adopt ‘new projects of national importance’ and meet national benchmarks. So I suppose it depends on how these new projects of national importance are determined. Are they determined by the federal government, the state government or in partnership? If it is a true partnership, that has to be a positive move, but I have a great concern about policies that are developed in this place, on a one-size-fits-all basis, for a continent that is so vast and whose peoples are so diverse. I think it does remove that capacity to be innovative.

These measures do demonstrate a number of disturbing trends in the view of the government toward federalism. Firstly, it makes evident the federal Labor government’s new-found understanding of the depth of incompetence of their state Labor counterparts. Secondly, it reveals the desire of the federal government to assume a custodial power over the states. By making the states accountable to big brother federal government, it will no longer be the role of the state voters to hold their elected state representatives to account.

But dictating how the states spend is not what cooperative federalism should be about. Perhaps, as the government tend to do, they have forgotten where the money comes from. It is the taxpayers’ money, and they are distributing money that is not their own but the money of all Australian taxpayers. It is therefore only proper that the taxpayers are the monitors of how that money is spent, and that means giving the states maximum capacity to determine their own policy direction and for the voters to monitor that to see whether the states are delivering what the citizens want. At the end of the generally four-year terms for the states the ultimate sanction is that a party loses government if they have not done the right thing.

The old argument of duplication of services is not necessarily one that cannot be better managed. If there is duplication of services, I think we will find it is because the federal government have taken over or encroached more and more on the areas of the state governments. There is one way to fix that, and that is to go back to the drawing board and to more clearly delineate the responsibilities of state and federal governments. I do not think that it would be too difficult to come to an agreement about just where the demarcation lines are, but it does need to be addressed because things have moved on since the Federation was first established.

Back in 2005 the current Prime Minister gave a speech entitled ‘The case for cooperative federalism’. I have to say that, apart from some of the laughable ideological diatribe that was expressed in that speech, a few important things were said. Some of the more credible things that came from the then shadow minister for foreign affairs, trade and international security were when he said:

The challenge for a future Labor government will be to rebuild the Federation. And it is my argument that the Federation can be rebuilt based on the principles of co-operative (rather than coercive) Federalism.

He went on to say that there needed to be a ‘culture of political cooperation and collaboration as opposed to confrontation and coercion’.

What is important about these statements is that they again truly highlight the level of inconsistency between what the government says it will do and what it actually does. One needs only to look at health care or education to see that this government is much more comfortable with coercion than with cooperation. While the Prime Minister came into office promising to end the blame game, he threatened the states that if they could not agree on a national reform plan for public hospitals the federal government would seize control. This does not sound like mutual collaboration to me.

This government also came to power promising an education revolution. What they did not mention was that, whilst the Bastille they will be storming is that of state control, the federal government’s stimulus package will further demote the responsibility of states. Money will be dished out to schools, with the Deputy Prime Minister having the exclusive rights to any credit for work done. This is despite the important role that states and territories have in administering education and despite the fact that the money used to fund this does not yet exist and, if it did, it would not belong to the federal government anyway. As I said, this is money contributed by all Australian taxpayers. Just last week we heard that the federal government would expand their control over vocational studies. What will the next coercive tactic be to bring the states on board with federal policy? For many people the precise problem with federalism is that there is no clear demarcation as to responsibility.

During the aforementioned speech from 2005, the Prime Minister quoted former Queensland Premier Wayne Goss saying:

It is unacceptable from the point of view of the consumers of government services that we should let confusion reign as to which level of government is responsible for particular government programs.

The design of the national partnership payments is likely to further complicate this issue. How can a member of the public hold government accountable when it is not even clear who a policy belongs to?

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

Order! It being 2 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member for Pearce will have leave to continue speaking when the debate is resumed.