Andrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

It is always a pleasure to have your work quoted in the great Houses of Parliament and it was a real pleasure for me today to have my work quoted more than once by members of the government! I had a brief moment of thinking, during question time, that the government had done some original research. But, of course, that was a little dashed when I turned to the 'Cut and Paste' column of The Australian, which is clearly providing the government's talking points now. It is government by Cut and Paste. It is a column which, I understand from friends at The Australian has really gone downhill a little since Nick Cater stopped editing it.

The question of consistency in one's public utterances is naturally a question that voters turn their minds to. The question that voters naturally have in their minds, when asked why a parliamentarian has changed their view on an issue is: have they done so for good policy reasons or merely for political reasons? In this place on 18 November 2013 I spoke about this issue in the context of emissions trading. I listed, then, the raft of comments by members, from the weathervane Prime Minister down, who had changed their views on emissions trading schemes to match the one-vote margin in the Liberal Party room.

Today I draw the House's attention to comments made during the last parliamentary term. These are not comments made by someone writing in a newspaper while they were back at university; no, these are comments made by members of the coalition when they were seeking high office. On 16 May 2013, the then Leader of the Opposition—now the Prime Minister—said:

A coalition government will keep the current income tax thresholds … The carbon tax will go but no one's personal tax will go up …

On 14 March 2012, Mr Abbott said:

What you will get under us are tax cuts without new taxes.

On 20 November 2012, the Prime Minister said:

We are about reducing taxes, not increasing taxes. We are about getting rid of taxes, not imposing new taxes.

On 16 August 2011, Mr Abbott said:

… there can be no tax collection without an election.

On 4 August 2013, Mr Abbott was asked by Mark Riley:

But aren’t you going to have to increase taxes yourself?

Mr Abbott replied:

No. We are going to get government spending under control.

On 25 August 2013, the Prime Minister said:

… no country has ever taxed its way to prosperity.

And on the Today show on 3 February 2013, Mr Abbott said:

Personal income tax will be lower under a coalition government in its first term than it is now …

In a doorstop interview on 20 November 2012, Mr Abbott said:

We are about reducing taxes, not increasing taxes. We are about getting rid of taxes, not imposing new taxes.

Asked by a reporter, 'Is that a promise?' Mr Abbott replied:

This is my whole reason for being in politics in the parliament.

The coalition's Real Solutions policy document said, on page 18:

We pledge to the families of Australia that we will never make your lives harder by imposing needless new taxes.

And at a doorstop interview on 14 February 2013, Mr Abbott said:

I absolutely guarantee to the Australian people—absolutely guarantee to the Australian people—that the tax burden will be less under a coalition government.

Those are just some of the many comments that Mr Abbott has made on taxation going right back to 2009, when he said:

… there will not be any new taxes as part of the coalition's policies.

These statements that I have read to the House are statements that were made by Mr Abbott when campaigning to lead this nation. They have now been cast aside like a child snapping up kindling for a fire. Mr Abbott was prepared to say one thing in order to win office but now he has entirely changed his view on taxation. And he is not even taking his own advice on being trustworthy. On 13 June 2013, Mr Abbott told Newcastle radio:

Well, I can understand why just at the moment politicians aren’t much trusted because we’ve had too many politicians who say one thing before an election to win votes and then do the opposite after the election…

But that is precisely what this government has done. If this government had gone to the last election saying that they were going to impose the measures contained in the bills under consideration in the House then the Australian people could have considered that. We could have had leaders' debates in which the topic of increased income taxation was discussed between the Prime Minister and the then Leader of the Opposition Mr Abbott or between Chris Bowen and Joe Hockey. But we did not have that because the coalition was not up front with the Australian people about what they were intending.

And now we hear the weasel words as to what this tax increase is. As Sarah Ferguson said on 7.30:

If it looks like a tax and sounds like a tax, it probably is a tax; unless you're the government, and then it might be a temporary deficit levy to help tackle the country's budget deficit.

On the Q&A program, the Treasurer introduced a new note of the ridiculous into the debate, saying:

It's a payment. You can call it a tax. It comes out of a pocket. It comes out of someone's pocket—a taxpayer's pocket. You want to call it a tax; you can call it anything you want. You can call it a rabbit.

The rabbit that is being debated before this House today is a rabbit which has been hopping around in front of the Australian people—and they are hopping mad about this particular rabbit. Of course, it is one of the rabbits that the coalition pulled out of the hat after the last election, after promising that the hat was empty. They promised there would be no surprises, no excuses, adults are in charge, it would not matter what the state of the books was, they would not break their pledges. But now they have broken their pledges to Australians. They have broken a pledge not to increase taxation; they have broken a pledge not to cut spending on education. They have broken a solemn promise not to cut spending on health and they have broken a solemn promise to Australia's pensioners. They have broken a promise not to get rid of more than 12,000 public servants and they have broken a promise to increase aid in nominal terms in every year under a coalition government. These broken promises are the reason why this budget is perhaps the worst received of any budget in recent history. It is the reason, as I noted in the Federation Chamber last night, that consumer confidence is in free-fall and retail sales have slumped. This is a budget that breaks promises, that does not reduce the deficit but in fact increases the deficit relative to what it was in the Pre-Election Economic and Fiscal Outlook, and unfairly targets low- and middle-income families.

As Peter Martin noted in The Age, 'I'd feel better about the budget if the people who designed it acted as if they understood it.' Over recent days we have had both the Prime Minister and the Treasurer show that they do not understand how the GP tax will affect people with chronic diseases. The Prime Minister, with the now infamous winkgate interview with Jon Faine, shows that he misunderstands when the HECS-HELP increases will kick in, and that has followed a range of episodes which have shown the government's lack of comprehension of its own policies, such as the government's inability to explain whether or not their proposed changes to section 18C of the Racial Discrimination Act would have caught someone like holocaust denier Gerald Fredrick Tobin.

Labor has serious concerns with the shabby and rushed way that this tax measure has been put together. It is not clear why it is shabby and why it has been rushed. It could be that that the measure was changed as a result of media leaks before the budget. This measure was originally proposed to kick in from $80,000 but, following public pressure, that threshold was raised to $180,000. Perhaps, too, the lack of a dedicated Assistant Treasurer working through the details has caused problems for the government. The finance minister has now been acting for some months as the Assistant Treasurer. As the shadow Assistant Treasurer, I am acutely aware of the lack of a government counterpart, particularly in this critical lead-up to a government's first budget.

One of the chief loopholes that is generated by this bill is the way in which it treats fringe benefits tax. That is a loophole that will allow wealthier taxpayers to avoid the tax increase while surreptitiously catching taxpayers who earn less than $180,000 a year. Because the FBT year and the tax year do not line up, the increase in income tax runs for three years while the increase in fringe benefits tax applies for only two years. So there is a nine-month period from July 2014 through to March 2015 and then again a three-month period from April to June 2017, at the end of the three-year period, in which the increase in the FBT does not apply. What is the practical effect of that? It is that there is a full 12 months in which people earning over $180,000 can shift their income into fringe benefits in order to avoid the increase in tax. The government was not wrong when it said that this was a temporary levy. In fact, for taxpayers who re-arrange their tax affairs it will last for two years, not three. That raises serious questions about the accuracy of the government's revenue forecasts. It is not at all clear that the government has taken into account this loophole in forecasting the revenue that this tax change will cause.

In addition to making it easy for high-income people to avoid the tax, the government appears to have designed the tax so that less well-off Australians may end up paying it too. The problem with the increase in the fringe benefits tax is that it will affect everyone, whether they earn more or less than $180,000 a year. The government sensibly increased concessions for those industries that currently enjoy them but there are plenty of Australians who receive fringe benefits who are not in those industries. So we end up in the curious position of having a tax that is supposedly designed to share the burden of the government's misguided budget but may in fact do the opposite. This may end up being less of a tax on those Australians who drive a Bentley or, dare I say, a Rolls-Royce, and more a tax on Australians driving a salary-packaged Commodore into their work car park. The opposition will use all the avenues available to us to investigate those implementation issues and we hope the government will be adult enough to take those concerns on board.

I want to conclude on the issue of equity, because the government has made much of the claim that, because of this increase in income tax, the burden of the budget is being shared equally across the community. I seek leave to have incorporated in Hansard modelling produced by NATSEM on the distributional effects of the budget in 2017-18.

Leave granted.

The document read as follows—

The table was prepared by Ben Phillips from NATSEM and sets out the distributional impact of the 2014 budget on the final year of the forward estimates in 2017-18. It shows, disturbingly, that the burden of the budget is far from fairly shared. It shows, for example, that couples with children who are in the lowest income quintile will see a 6.6 per cent fall in their disposable income, while couples with children in the highest income quintile will see a 0.3 per cent increase in their disposable income. It shows, particularly worryingly, that a single parent in the bottom income quintile will see a 10.8 per cent decrease in his or her disposable income, and it shows that, right across the distribution, those in the bottom quintile are seeing a 2.2 per cent fall in their disposable income while those in the top income quintile are seeing a 0.2 per cent increase in their disposable income.

This is despite the fact that inequality has been rising for a generation—a generation in which billionaires have made out better than battlers; a generation in which earnings have risen three times as fast for those in the top 10 per cent of the earnings distribution than for those in the bottom 10 per cent; a generation in which the top one per cent income share has doubled, the top 0.1 per cent income share has tripled and the richest three Australians now have more wealth than the poorest one million Australians.

This is a measure which is atypical for this budget, because this is a budget whose burden falls upon the poorest Australians. Those Australians, of course, are disproportionately located in certain parts of the nation. I was in Devonport recently with Senator Anne Urquhart speaking with some of the communities there who will be especially hard hit. I am surprised that members of the National Party are not raising a greater outcry given that, for many people in National Party electorates, the incomes are lower than average and this is a budget that says that they should not be driving. In many of these National Party electorates, they do not have access to public transport, so they will be hit by the fuel excise change, they will be hit by the GP tax, and they will be hit by the withdrawal of benefits that will occur through this budget.

The distributional impacts of this budget are of deep concern to those of us on this side of the House. We shall continue to prosecute an evidence based argument against this budget, based on the fact that it breaks promises, that it increases the deficit and that it fails the fair-go test.

Peter Hendy (Eden-Monaro, Liberal Party) Share this | Link to this | Hansard source

I rise to support the Taxation Laws Amendment (Temporary Budget Repair Levy) Bill and related bills and to condemn the Labor Party for forcing this type of necessary budget repair on the Australian people. This is a package of fifteen bills that will introduce a temporary budget repair levy from 1 July 2014 until 30 June 2017. The temporary budget repair levy will apply at a marginal rate of two per cent on individuals' annual taxable income in excess of $180,000. In addition to the levy itself, the package of supporting bills contains important consequential amendments that will maintain the integrity and fairness of the tax system.

The government has an economic action strategy that will fix Labor's debt and deficit disaster. We cannot keep on borrowing $1 billion a month to pay the interest on debt. This is a budget of both saving and building. That is why we are moving spending from short-term consumption to long-term investment, including by building the infrastructure of the 21st century.

In 2017-18 there would have been a deficit of at least $30 billion under Labor, but we are drawing that back to less than $3 billion by winding back unsustainable spending. But we are doing it in ways that are responsible. Everyone is making a contribution so that we can build for the future. These tax bills are a vital part of the repair job. The underlying cash deficit is projected to be $60 billion over the four years to 2018—a vast improvement compared to the $123 billion over the four years that Labor left us. Instead of the $667 billion of debt by 2024 that Labor put into the pipeline, we will now have debt of $389 billion. This substantial improvement is built off a significant reduction in payments growth. At the time of the 2013 Mid-Year Economic and Fiscal Outlook, average real growth in payments over the four years to 2017 was to be 2.6 per cent. The average over the four years to 2018 is now 0.8 per cent.

The recent budget has stimulated a lively debate on taxation reform. These bills on taxation give me an opportunity of speaking more widely on the issue of income and corporate taxes. The tax measures in the budget have many opponents on one side and on the other side a distinctly smaller number of supporters. It was 'ever thus' with taxation. Part of the problem has been the dearth of any meaningful and substantial reform for over a decade—indeed, since 2000. And, clearly, while many of the recent tax measures can be argued for in the case of repairing the budget's bottom line or fulfilling promises like abolishing the carbon tax, I will not insult the listener by claiming that they are the be-all and end-all of tax reform. Some will argue that certain measures are actually anti-reform.

There was not any sustained attempt at tax reform in the latter half of the Howard government—not surprisingly due to the near political death experience of that government when it courageously took massive tax reform, including the introduction of a GST, to the electorate in 1998. Since then, the former Treasurer and continuing member for Lilley was one of the most quixotic treasurers in Australia's history when it came to taxation. His claim that the carbon tax was 'economic reform' defied logic and the treatment of the review chaired by then Treasury Secretary Ken Henry in 2009 was flaky to say the least. I actually did not agree with quite a few of that review's recommendations, so I am not unhappy it was largely ditched. And, while the member for Lilley would argue that one of the three recommendations that was attempted, the mining super profits tax, was a 'reform', my view is that it was both bad in theory and in practice. It obviously also precipitated the demise of Kevin Rudd in his first incarnation as Prime Minister. Clearly, whatever the merits of any particular proposal, significant tax change is fraught.

One area of the economy that is crying out for taxation reform is small business. The Australian Chamber of Commerce and Industry pre-election survey for 2013 found that more than three-quarters of businesses expressed major and moderate concerns with company tax, the compulsory superannuation levy and personal income tax. Further, small- and medium-sized firms rated the superannuation levy as one of their top five concerns, while large firms placed it well down in their list of concerns. As the ACCI commented, 'The concern of SMEs is understandable as the superannuation levy is one of the major on-costs for hiring workers, and this on-cost will increase further following the increase of the levy from the current nine per cent to 12 per cent over the corning years.'

ACCI asked businesses which taxation areas needed further reform. It found that while small business ranked company tax reductions and personal income tax reductions as their first and second tax reform priorities respectively, medium and large businesses rated payroll tax reductions and company tax reductions as their first and second reform priorities.

The recent budget delivered on two key coalition election promises: to delay the increase in the super levy and to cut company tax by 1.5 per cent to 28.5 percent. They are very welcome. In my view we should be looking to go further. Firstly, on super I think there is a strong case for an even longer suspension in any increase. I also think we should be reviewing international experience and looking at having a differential and lower company tax rate for small business. Over the years this has been implemented in a number of countries including the UK, the USA, France, Japan and South Korea.

I also think that the Rudd-Gillard-Rudd government's abolition of the small business entrepreneurs' tax offset should be reversed. Small business taxpayers with a turnover of $50,000 or less were allowed a tax offset of 25 percent on their taxable income. That benefit was introduced in the 2005 Costello budget and had little time to be tested. For those who do not like the tax measures in the recent budget, can I urge them to take part in the community consultation on taxation reform. At the election the coalition promised that we would review the taxation system within two years of coming to government and prepare a comprehensive white paper. My view is that the review should start immediately, maximising the opportunity for selling any tax reform proposals. And small business should be a key focus of the review.

However, with respect to tax reform I have more to say. I have a warning for my Liberal and National Party colleagues: speculating on increasing the revenue take from the GST is playing with fire. They are in serious danger of being dragged into a debate that does not stand up to economic justification despite all the so-called expert commentary on why it would be such a marvellous idea to increase the GST rate or alternatively expand the tax base by removing exemptions for fresh food, education or health services. I am here talking about the economic case. The political case is even potentially more horrendous. First to the economic case.

When you boil it down, most of the commentators arguing for changes to the GST are focused on increasing the tax take so that they can spend more money on their pet projects. They are not really talking about tax 'reform' at all. It is simply about extracting more money from the taxpayer. The premiers are calling for more tax revenue to fund massive increases in education and health expenditure that were promised by prime ministers Gillard and Rudd. They were always undeliverable promises, and many people said so at the time of their announcements. The premiers are being completely disingenuous on this issue. They want the Commonwealth government to wear the opprobrium of raising higher taxes so that they get the applause for spending more money. It is one of the great dysfunctional aspects of Australia's federal system.

There were two principal economic reasons for introducing the GST. First was the fact that the pre-existing indirect taxes like the wholesale sales tax were very inefficient because they taxed business inputs such that there was a cumulative cascading of taxes that added massively to business costs. This was particularly damaging to exporters and import-competing industries that were battling with businesses from overseas that were not suffering from the same handicap.

The GST or value added tax, which is its more economically accurate name, removed that double taxation burden. This was the principal economic reform and it meant billions of dollars to Australian businesses. However, it is a reform that is completed. It was long overdue but it is now done. The efficiencies and productivity benefits have already been booked many years ago—no thanks to the Labor Party, which cravenly opposed its introduction although they knew it was a necessary economic reform.

The second big economic reason for introducing the GST was that it allowed for what became known as a 'tax mix switch'. That principally meant a reduction of the revenue burden on direct, income taxes to be replaced by indirect taxes. It is argued that this is important as high marginal tax rates on personal income have a largely negative impact on economic activity, discouraging work and productivity improvements. This is well known to be the case from decades of research, like that of the OECD. The Treasury Secretary, Martin Parkinson, was making similar observations in a speech last week.

A tax mix switch was attempted in the 2000 Howard-Costello tax changes. It was also the centrepiece of the Option C proposal of Paul Keating in 1985 when he was Labor Treasurer and of the Fightback package of Iohn Hewson and Peter Reith. However, the bottom line is that it did not really work for the Howard government. At the time there were some substantial income tax cuts, but we seem to still have a heavy reliance on direct rather than indirect taxes in Australia. The reason for that is bracket creep on the income tax schedules and a heavy call on corporate income tax. Also, there was to be significant replacement of inefficient state taxes. However, a large segment of that was reneged on by state premiers. Ask Peter Costello about broken promises by state premiers—he has a fine old story to tell. That is why I would be highly reluctant about doing any future deals with state premiers on GST, given that their predecessors displayed high levels of bad faith on delivering on tax reform over the last 14 years.

The other point to make is that many of the same people who are arguing for increases in the GST to fund increased government services would immediately become the noisiest advocates for compensation through tax and welfare cuts, which would soak up most of the new GST revenues, thus defeating much of the stated purpose for a change, namely to pay for other things. I say again that most of the advocates are simply arguing for bigger government, not a more efficient tax system. I think that business organisations like the Business Council of Australia and the Australian Industry Group should shake off their naivety and be very careful about supporting such calls.

Another issue is the simplistic call for the removal of the GST exemptions for fresh food, education, health, sewerage and water, and financial supplies. Some people are claiming that these were all politically expedient decisions. Admittedly, the fresh food exemption was the price of getting the support of the Australian Democrats in the Senate to pass the GST legislation. However, it would be entertaining to see someone try and sustain an argument for taxing fresh food more heavily when one of Australia's current problems is an obesity epidemic. As for the other exemptions, they were not so much political decisions as tax administration decisions based on the difficulties of taxing these areas, especially given the heavy involvement of government in many of these sectors and the cross-jurisdictional issues in our Federation which could cause significant tax churning. They were not design flaws of the system but in fact design features deliberately taken for good, on-balance reasons. I say again: considering changes to the GST is playing with fire without significant economic benefits.

In conclusion, I support these bills, not because they are taxation reforms but because they are economically responsible and show the resolve of the government in meeting its fundamental election promise of getting the budget under control.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014, also known as a tax hike or a tax increase, or in fact a broken promise. We heard that a fortnight ago when the Australian people were hit with a budget that was made up primarily of broken promises, cruel cuts and unfair cost-of-living increases—hypocrisy writ large for all Australia to see. Budgets are about choices and they display a government's values. This budget shows the Abbott-Hockey government cares more about big business and the wealthy than about the young, the sick, the elderly, the unemployed, the poor overseas or even middle-income families. This is not the sort of Australia that I want to be associated with.

Prime Minister Abbott misled Australia when he promised before the last election that there would be no new taxes. This piece of legislation is a clear breach of that promise. He said there would be no tax increases; we have seen a fuel tax proposed. He said there would be no cuts to health, no cuts to education, no cuts to the ABC budget or the SBS budget, and no changes to pensions. All of those promises have ended up being broken and, sadly, most Australians will now pay the price for that.

Let us look at a few incontrovertible facts contained in the Abbott-Hockey budget. It is important that listeners understand how these decisions will affect them and their families. For a start, almost immediately—from 1 July—we will see an impact on hospitals, such as the hospitals in my electorate, the QEII and the PA, which is right on the border. The government's broken promises mean beds will go, wards may close and patients will obviously be worse off. Waiting lists will become worse. Queensland has already been under the knife from Campbell Newman's devastating attacks on health, which resulted in reduced services and thousands of job losses. Now we are told there will be a $7 fee increase for GP visits, combined with cuts to public hospital funding.

Labor will not stand by and let Australia become a country where the elderly are at risk and have to choose between eating or going to see a doctor, or where poorer families have to choose between food and vaccinations for their children. I am proud to be a member of the party that will fight the Abbott-Hockey attack on Medicare, this GP tax. We are the party that introduced Medibank, repulsed the conservatives' attacks on it and brought back Medicare. Labor will not let this government destroy universal health care in Australia. I remind those opposite, who talk about the need to put a price on things, that it is not a free healthcare system: we pay for it in our taxes when we pay the Medicare levy. So we will vote against Prime Minister Abbott's doctor tax.

I note the Minister for Health has not repeated his line that all doctors received a $10,000 pay rise in the budget. That certainly went down like a bucket of cold sick with my doctor when I went for a check-up last week and spoke to him about it. He explained that the costs associated with recouping the $2 that goes to the doctor's pocket would be wasted. It is like a red-tape tax on top of the cut to what they receive if they are bulk-billing.

All Australian schools will hurt as a result of the Abbott-Hockey $30 billion cut to education. Education is the policy area that I am most positive about. Sadly, we saw it savaged a fortnight ago. Before the election, the Liberal-National party told Australians that they would not cut education. We were told that they supported the Gonski reforms—it was a unity ticket. Many of those opposite had their photographs taken in front of the Gonski reform banners. Instead, the teachers, parents and students of Australia found out they had been betrayed, with the budget announcing the biggest cut to school funding that this country has ever seen. Before the election, the government said, 'No cuts to health, no cuts to education.' After the election, it was a different story.

The education cuts will mean a reduction in the number of teachers and aides, and literacy and numeracy programs and may eventually see schools close. One school in my electorate, Nyanda State High School, has already closed, and other schools may become more marginal as the states try to plug the great, gaping hole created by the Abbott-Hockey budget. As a former teacher I understand the importance of upholding quality education and resources for all Australians.

Labor will continue to do what we have always done. We believe in a fair education system for all Australians and we want the Gonski reforms. Remember, they were economic suggestions. They were not from some bleeding-heart leftie; they were from a banker looking at education from an economic perspective and saying, 'We must invest in education based on need, because of the gaps that are opening up.'

The budget also contained the Prime Minister's plan to cut families off from family tax benefit B when their youngest child turns six. Under Labor, these families received family tax benefit B until their children turned 16. This cut will be especially felt by single-income families. They are the group that have been asked by the Liberal-National coalition to do the heaviest lifting, the group that cannot just cut back on cigars, the ones that struggle to make ends meet.

In addition to having their family payments cut, families will lose the schoolkids bonus at the same time as they are slugged with these new taxes when they visit the GP, when they fill up the car and when they pay the Coles and Woolies tax at the checkout to, basically, fund the Prime Minister's crazy, gold-plated PPL scheme. This budget is a major hit to family budgets. It sparked a discussion between states and territories about increasing the scope of the GST and, as we heard from earlier speakers, it will hit people making decisions about focusing on fresh fruit and vegetables if the GST is spread to fresh fruit and vegetables. The people that are actually investing in fruit and vegetables will now drift away from that. Hopefully, that is not an argument that those opposite will advance.

As Labor has indicated, we will oppose the attacks on our pension system and the millions of Australian pensioners who rely on it. We did increase the pension age to 67 by 2023. That flowed after a comprehensive review into Australia's pension system and a significant improvement to the base rate for the pension and improvements to indexation. I remember the member for Port Adelaide, as the responsible minister, travelling the land and talking to seniors groups about that process.

However those opposite have provided no evidence to support an increase in the age pension to 70. We in Australia would have the oldest working people in the world. This budget of broken promises will mean concessions that flow to almost 600,000 Queensland pensioners and almost 50,000 Queensland Commonwealth seniors health card holders will dry up because of the cuts to states, and maybe from as soon as 1 July. On top of this, around 650,000 Queenslanders will have concessions cut for vital services such as public transport, electricity and water bills. That is in addition to them trying to meet the costs of that 23 per cent electricity spike from last year delivered by Premier Newman. The people in my community deserve better than these savage attacks on their wallets. When you are struggling to get by week to week, a discount on your power bill or your bus ticket if you are going to see your doctor, goes a long way. All those discounts will go due to the Abbott-Hockey budget.

One of the cruellest betrayals, I think, is that of those young people under 30 who are looking for a job. Horribly, we hear that they will have to wait up to six months before receiving any income support. Bad luck if you are one of those people estranged from your family and who cannot go home to find a bed with your family, or if you do not have generous friends. Often they are the people that have struggled in education and struggled to find work. We will be stepping over them in the street; they will be the beggars of tomorrow. After six months on work for the dole, if young people still cannot find work, they face another six months without Newstart. This means that those without parental support will have to beg, basically.

So we oppose this. The government has planned to push young people under 25 from Newstart onto this lower youth allowance, a cut of at least $48 a week or almost $2,500 a year. So much for all Australians doing the heavy lifting. It seems that the poorest and most disadvantaged are the ones asked to do the most. These changes will confine young people to a life of poverty and tear away the vital services that they rely on.

This budget of broken promises has ensured that Australians that want to attend university in the future will face higher debts. It will see students paying thousands of dollars extra in the interest on their loans after 2016. I heard on the ABC this morning that it is estimated that there could be an increase of the third, or 33 per cent, and that is before the university bean counters hike up their fees depending on what they feel they can retail their degrees for especially in some of the sandstone universities.

The future of our nation is built on quality education and meeting the growing demands for skills and innovation. This means that universities should cater to our smartest not just the richest. This 'dumb but rich' cohort strategy should be avoided by those opposite. This is definitely a budget built on the wrong choices and the wrong priorities and it has not recognised where we should be investing if we are going to have any chance of providing jobs for the children of the next 50 or 60 years.

This is seen in the context of a government that made a promise to the Australian people that there would be no changes to higher education. In fact it would 'ensure the continuation of the current arrangements for university funding'. However the budget is basically the end of affordable higher education and Labor will oppose this inequitable change to higher education and fight to maintain the current HECS/HELP system widely acknowledged as affordable because it asks people to contribute to a reasonable amount to their education.

This budget is an unprecedented attack on the standard of living Queenslanders and people in my electorate. It is a complete betrayal. Before the election the coalition promised:

No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or the SBS.

There were even cards distributed so that people would be able to hold the future coalition government to account.

There is a strong odour of mendacity around those opposite. They have broken their promises and betrayed Queenslanders, and I am sure that Queenslanders will remember them when it comes to voting at the next election. I am sure that they will also see the ploy being set up when Campbell Newman says, 'I object to everything that the Prime Minister is doing.' The reality is that he has an election coming quick and fast—maybe in March. We have a by-election in Stafford in a few weeks and that will also be an opportunity for Queenslanders to let the Liberal-National Party coalition know that they do not agree with people saying one thing before an election and doing something else afterwards.

This legislation before the chamber, the Tax Laws Amendment (Temporary Budget Repair Levy) Bill, is another broken promise, as I said at the start. We have seen quote after quote to this effect. I think that the Monthly has kindly put all these quotes together so that people can compare what was said before the election with what has occurred after the election especially a fortnight ago on budget night. So I am looking forward to people holding this government to account when it comes to what they said before the election and what they have said afterwards. This legislation before the chamber now is another broken promise and should be seen in that light.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

I note with interest the member for Moreton's comments about education, and being a former teacher he will know that we have a massive challenge on our hands to restore Australia's education system to a better level. Whether it is the World Economic Forum's Global Competitiveness Report, that says we are going backwards in the quality of primary education from the 12th to the 22nd for the years of 2007-08 to 2013-14, or the quality of the system, or the quality of maths and science or the availability of research and training services. The member for Moreton, as all members in this chamber do, realises that there are challenges to be faced with the education system.

But what the member for Moreton failed to acknowledge was the increase in education spending by this government over the next four years. As we know, for the next four years it will increase by 34 per cent—around $4.6 billion. These are year-on-year increases—more money to the states. This is something that is factual and cannot be denied by those perpetrating the myths on the other side of this House.

But let me go back a few steps to why we are in this situation that we are today. This is because Labor has left a mess; a mess of deficit and debt. The five largest deficits in Australian history—$123 billion of deficits—and a debt reaching out to $6 or $7 billion. Importantly, this equates to a billion dollars in interest repayments a year. If you think about what these interest repayments could do: they could purchase or build a new small hospital, build around six new schools, more social infrastructure and they could help community services to go out to the grassroots and communities making their lives better.

Why are we in this mess? Let us just have a look at our spending. A number of years ago we had $272 billion worth of spending. Last year it was $409 billion, and it is only increasing. The Commission of Audit made some very valid points about the increase in expenditure for major programs, and I just want to run through a few: Medicare benefits are currently $19 billion and going up by 7.1 per cent; hospitals are going from $14 billion to $38 billion over the next 10 years; pharmaceutical benefits are growing by 5.4 per cent; the age pension is going from $40 billion, rising by 6.2 per cent; aged care, again a similar increase, doubling over the next 10 years; schools funding is growing; and higher education is growing.

We are funding some of these commitments over the four years, as we all know. So this is the challenge we have—this is the challenge we all face—whether it be on our side or the other side, whether it be in the state, federal or local government: we have spending commitments that we must fulfil going forward.

I will just go back to our government spending increases and compare them to other countries. The IMF Country Report of February 2014 had Australia increasing in real terms between 2012 and 2018 by 16 per cent. That is equivalent to Korea and higher than the US. It is higher than Canada, Sweden and New Zealand. Germany was at five per cent and one of our neighbours and great trading partners, Japan, is at three per cent, and the Netherlands is at one per cent. This is significant: we have a real structural challenge at hand and we need a solution. We need to have a mature debate about this.

So let's have this debate. Let's have a sophisticated approach to this. Let's have a look at solutions to these problems that we face. The member for Moreton, in his maiden speech, referred to Paul Keating. Paul Keating and the former Labor governments took some of the structural challenges in our economy head-on. He made some bold reforms and made some courageous decisions. We long for when Labor will come to the party again on that front. We know we have an ageing population and demographic challenges. This is what we face ahead of us.

Let me now turn to the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and the debt repair levy. We all know that there has to be a contribution from everyone in our society to help manage the finances going forward so we have sustainable finances and sustainable health care, education, social services and pensions—the list goes on. We are asking for a contribution from higher income earners, and I note with interest an article in today's Australian about a family in Sydney. They made some valid points. They realise that sacrifices need to be made. They understand that some tough decisions have to be made so that this country is better for the next generation.

This is where we are coming from: making our country and our budget sustainable for future generations so we do not leave the debt to our children, and that we do not have to make the cuts that the South Australian Labor government are having to make on services. As people say in South Australia, 'The government is broke.' They do not have any money to spend and so everything is cutting back. Everyone is facing the cuts.

We just heard from the high commissioner in Britain about the measures in the UK and how that nation is getting back on track after some tough measures were taken. There is more private investment and the economy is growing again because of the tough decisions the Conservatives had to make in the UK. They have private sector investment, they have job creation and an economy growing at around three per cent.

I will just return to this family, 'It is okay to contribute more,' and they are in favour of the government making tough calls. Out there, the people are saying, 'We realise that Labor left a mess. We realise they left the budget in a poor state. They were an incompetent government, fighting amongst themselves for six years: changing leaders and not managing the execution of policy properly and the mistakes that came with that.' And now they are paying, and the Australian public is paying. We are all paying for Labor's poor government. The Australian public made that decision at the ballot box with overwhelming support for a change.

Let me return to the debt repair levy. It is on high-income earners, which makes Australia's marginal personal tax rate one of the highest in the world. And let's have a look at our welfare payments that provide a good safety net across the board—whether it is the child care rebate or other money for child care. The top 10 per cent of taxpayers contribute around 50 per cent of the tax to government revenues. We can all see that Australia is a generous society in the way we have our tax system set up. Everyone is making a contribution equivalent to their income capacity.

Without these measures in the budget we would not be able to do what we are doing to get the finances back on track. We would have debts spiralling out to around $3 billion a month, and that means further cuts and further harsh measures going forward. We would not be able to build the roads for the 21st century—and it is great to have the Minister for Infrastructure and Regional Development here tonight, because he has been a key member of our government in producing some great initiatives to build the roads that we need.

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

WestConnex.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

Whether it is WestConnex, as my good colleague the member for Banks says, or the Torrens to Torrens project in South Australia, the Prime Minister, Minister Briggs and others have decided that Australia needs greater productivity and greater infrastructure, and we are going to deliver. I have been lobbying hard, since I was elected, to get that result for the Torrens to Torrens project in South Australia. Minister Briggs knows that I have been speaking to him on a regular basis. I have also been speaking to the Prime Minister and other senior ministers. They have come through with $1 billion for the South Road upgrade, which will deliver better travelling times so people have more time to spend with their families rather than on the roads.

The budget will also deliver a groundbreaking medical health research institute. As Australians, we look to where we can be competitive in a new economy. Given that our manufacturing sector is declining, we need some new industries, some new areas of competitive advantage. We have excelled in medical research over the years, with companies like CSL and Cochlear, and the list goes on. We have had great researchers like Howard Florey, who helped develop penicillin and saved millions of lives in the process. We have been very good at this, and we need to do more. The billions of dollars going into that will inspire more scientists and more great outcomes to help fight the diseases of an ageing population.

It was good to note the comments of Peter Beattie, the former Labor Premier of Queensland, in The Australian a week and a half ago. He described the medical research fund as nation building. It is truly nation building. We need to focus on these areas that we can excel in and inspire a future generation of Australian researchers and medical scientists. Hopefully we can commercialise some of that research as well, so we have spin-off companies, just as, in my city of Adelaide, we have had GroPep and BresaGen in the past and we have Bionomics, which is doing some great things in the world of medicine.

In higher education, we are offering 80,000 more places in TAFE courses, VET courses. We will help students with their loans going forward and we will provide scholarships for the disadvantaged, people from poorer backgrounds. There are some great measures in this budget. I am very proud of what we are doing to get our finances back on track so that we can live within our means, so that we can fund crucial social services, physical services and the physical infrastructure of the future and so that we can say to our children, 'We have given you a better life and helped Australia be a better country.'

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

This is a budget based on wrong choices, wrong priorities. There are nine million families in this country, and they make choices every day, in their budgets, on how to spend money on what they need and want—on school fees and school expenses for their kids, on whether to send their kids to soccer or basketball, on what shoes they need, on the cost of IT, on how to feed their families and whether to shop at IGA or Woolworths or Coles, on what car to purchase, on where to live, on how to pay the rant, on mortgages, on holidays, with those precious few dollars that they have left over. They know that those decisions are based on their values, their morals and their ethics. They make choices every day. This government has made choices in this budget. This government demonstrates its character by the priorities it has taken in this budget and the decisions it has made.

We will see, and we are seeing, the destruction of universal health care in this country. We see a massive amount of cuts in education and health—$80 billion, according to the budget papers. They said there would be no new taxes, and there are new taxes. They said there would be no cuts to the ABC and SBS, and there are. They said there would be no changes to pensions, and, of course, there are—the freezing of indexation, the savage cuts in the future. They claim in here during question time that pensions will go up on the basis of CPI—and yet they had the temerity to run arguments, all over the country, that the indexation based on CPI for DFRDB and DFRB recipients was not fair. They had the temerity to run that campaign, and yet they are saying to pensioners and veterans that, in the future, they will see the true value of their pension—and their capacity to make those choices I referred to—diminished. If that is not the case, why in the budget are they talking about these decisions they have made actually being savings? So, in terms of decisions that they have made, they have demonstrated their character and their choices.

Every time a person gets into their car and goes to the service station, they will pay an increased tax. When they take their sick child to the doctor, they will pay a GP tax payment. That is what they will do. And the debt levy the government are talking about here, in the legislation before this chamber, the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014, is yet another broken promise. All across Australia, the candidates for the opposition, successful or otherwise, took around their Real Solutions booklet, their blue book. They carried it round like a bible, a badge of honour—the charter to put Australia back on track. And guess what: on no page will you find an indication at all that they would increase taxes or put in a deficit levy for people earning over $180,000 a year. There were going to put it, of course, on people earning $80,000 a year or more, until the public hue and cry was so great that they had to back down on that.

I would have more respect for those opposite, in relation to the choices they made, if the money from the GP tax, the co-payment, were to go back into health directly, to pay for Medicare. But it will not. By sleight of hand, it is going into a medical research fund. Medical research is a great idea, but you should not do it this way because you are making people who are sick and vulnerable now make choices in relation to their priorities, in relation to their children. If those opposite do not believe that that is price sensitive, they do not believe in a market. Of course there is a market. Of course it is price sensitive. People will make choices as to whether they can afford to take their sick child or themselves to the doctor. The government cannot get their story straight across this area, whether it be the Prime Minister, the Parliamentary Secretary to the Treasurer or indeed the Treasurer himself. They cannot get it right whenever they do interviews. These are choices they have made. We understand these are challenging times but there is no budget crisis or budget emergency. That is simply fiction.

I had a look at the budget papers and at the Pre-election Economic and Fiscal Outlook. Neither the Treasury nor any other body looking at this is affiliated with the Labor Party. I had a look at the state of the books before the election. One of the best things we have done in this country is the Pre-election Economic and Fiscal Outlook. PEFO outlines the state of the budget before the election. So no-one can come in here and say, 'We didn't know the books. We now have come in and seen them. They're terrible. We have to junk all our policies. We have to junk all our policies. We have to junk all our promises and do something very different.' In this country, those days should be gone.

The Pre-election Economic and Fiscal Outlook indicated one thing—that the deficit for 2013-14 under the Labor government was $30.1 billion. I had a look at the budget papers for this year to see what it is like under the coalition, having won the election in September last year. It is $49.9 billion, nearly $20 billion more under the coalition than it was under Labor just before the election. I had a look also at PEFO in relation to 2016-17. Those opposite say they have made decisions to pay down debt and to reduce deficit. They say they have done that, but according to PEFO, in 2016-17 there will be a budget surplus under Labor of $4.2 billion; under the coalition, according to the budget papers—I am not making it up—it will be $10.6 billion in the red. So do not come into this place and tell us what you are doing is bringing down debt and deficit when the Treasury figures do not say that at all. They do not reveal the narrative those opposite, one after another, have been saying in this place. I do not think they have seen the budget papers. I certainly do not think they have seen PEFO, which does not show that what they are saying is true.

Those opposite have made choices to increase the debt and deficit in this country with the decisions they have made. They have also made choices of how the money will be spent this year and across the forward estimates. We would not spend $2.6 billion on a direct action policy. We also brought in a paid parental leave scheme in this country to cover 95 per cent of working women. Hundreds of thousands of them have accessed that scheme already, paid for by taxes and consolidated revenue. We would not bring in a paid parental leave scheme which gives millionaires up to $50,000 to have babies at a cost to the taxpayers, according to the budget, of $5.3 billion. They claim there is a budget crisis, yet they splurge money on these things.

We also would not have given superannuation concessions to millionaires of $360 million, but those opposite did in one of the first acts when they came to government. We also would not have forgone $7.4 billion in relation to revenue that comes in, according to the budget papers, from the MMRT and the carbon pricing mechanism. They asked us, 'What would you have done about it?' We would not have spent the money; we would have kept the revenue. We did not also give $9 billion, unwarranted and not asked for, to the Reserve Bank. We would not have changed the assumptions to dodgy-up the figures in MYEFO and we would not have cut funding commitments across the length and breadth of the electorates of those opposite—Regional Development Australia, building multicultural communities and a host of areas which they cut in MYEFO.

When it comes to decisions, do not come into this place and give us lectures. Those opposite know that the budget crisis did not occur. This week, I had the benefit of Senator Barry O'Farrell come to debate me at the Ipswich Chamber of Commerce and Industry.

Jamie Briggs (Mayo, Liberal Party, Assistant Minister for Infrastructure and Regional Development) Share this | Link to this | Hansard source

Senator Barry O'Farrell?

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

Not Barry O'Farrell; Barry Sullivan, the same sort of bloke. So quickly we forget, do we not? Senator Sullivan admitted in front of 100 business leaders that in fact there is no budget crisis. An hour later he went to the Ipswich Trade Training Centre, opened it and said how wonderful it is, where $5 million of federal money will allow up to 5,000 young people access to skills and training, partnering with industry—HIA, Apprenticeships Queensland, skilled tech, the railways et cetera. He said, 'Isn't this great, fantastic! We should do more of this.' But they canned it in the budget—$950 million gone.

They will say one thing in their electorates and across the states and territories and they will do another thing in this place. The hypocrisy in relation to this from the coalition is rank. They know that the debt and deficit in this country was about one-seventh of the debt and deficit in advanced economies throughout the world. They know we had a AAA credit rating. They also know we had low tax to GDP. In fact, look at the budget papers. You will see across the forward estimates the footprint of a bigger government under the coalition than it would have been under Labor.

Like households, they have made choices in relation to this. We made choices on the NDIS, on Gonski, on Building an Education Revolution and on education funding. They said opposite that there was a unity ticket in education, but across the forward estimates they have cut $80 billion out of health and education. If you do not believe me, look at what the premiers have said in relation to this issue. Campbell Newman, the Premier of Queensland, has made it crystal clear that he does not like it. Denis Napthine, the Victorian Liberal Premier, has made it clear that he does not like it. And Mike Baird, the New South Wales Premier, has made it very clear that he does not like it either. So it is a unity ticket for those opposite and a unity ticket for the state premiers who represent the parties that they represent saying something very different.

On this side of the chamber, we believe that we should support households. That is why we have taken attitudes in relation to excise, pensions and a whole range of things that we are opposed to. But we say to those opposite, go back to your electorates and do your mobile offices, your street stalls and your listening posts et cetera and speak to your people, and remind them about what you said and what you campaigned on before the election. Remember the crystal clear statements of the then Leader of the Opposition. In August 2011, the then Leader of the Opposition and now Prime Minister outlined the exact requirement before a government raised a tax. He said:

A very clear message is going out from the Australian people to this government: there can be no tax collection without an election.

He was so convinced he repeated his rhyming rally cry a few weeks later in September:

I say to this Prime Minister: there should be no new tax collection without an election.

If Australians were not convinced by this promise of no new taxes under a coalition government, he offered this sweetener in March 2012:

What you'll get under us are tax cuts without new taxes.

It does not get much plainer than that. The then Leader of the Opposition kicked off his campaign on 6 August 2013 and said:

Taxes will always be lower under a Coalition government.

And on 9 August 2013, he said:

The only party which is going to increase taxes after the election is the Labor Party.

That has not been proven to be true, has it? It is the case that households make decisions. Mums and dads, pensioners and self-funded retirees make decisions. They make choices about what they spend money on. They make those decisions every day.

One thing that I find really galling about this is that those coalition members opposite who are going to affect these 400,000 taxpayers with a $3.1 billion tax to their back pockets are the same people who opposed the flood levy that helped reconstruct my community and helped reconstruct Queensland. They came into this place and voted against it time and time again. They have the temerity to bring this legislation before the chamber and force people to pay increased taxes but do not have the integrity to actually vote for a flood levy to reconstruct Queensland.

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to speak in support of the Tax Laws Amendment (Temporary Budget Levy Repair) Bill 2014, arising as it does in the context of economic management where there is really no greater contrast than between the government and those opposite. One side of the House take a measured, mature and responsible approach to economic management and the sorry history of those opposite is well known, and I will come to that in some more detail in a moment. The budget repair levy is a temporary levy, which will be in place for three years from 1 July 2014. The levy applies to high-income earners of over $180,000—less than four per cent of taxpayers. It is a measure that needs to be taken because of the very serious economic situation which the government faces. As all Australians are required to contribute to that very difficult budget task, it is entirely appropriate that high-income earners do so as well.

The tragedy is that we are in this situation in the first place. This would not be necessary and in fact many of the measures in the budget would not be necessary but for the extraordinary financial mismanagement by those opposite. When Labor came to government after a long era of sensible, mature economic management, there was about $50 billion in the bank. You would think that the first instinct of an incoming government would be to protect that asset. Obviously that is what you would do in real-life, that is what you would do in business and that is what you would do in a household. And the last thing you would want to do is inherit a tremendous financial situation and blow-up the joint in a few short years. That is what occurred and it occurred because of a very loose approach in relation to spending.

Spending went up 50 per cent over six budgets. That is not a very long time—six years. Inflation was dramatically lower than 50 per cent in that period. So in real terms, it was a huge increase. As well, Labor left us with the horrendous debt situation of $200 billion and they also left us with a very bad trajectory. You might argue that if there had been a temporary move into debt and then a hurried and successful move to get that under control then perhaps one might have more respect for it. But in fact the exact opposite of that occurred. So having hurried into debt, Labor continued to put the foot down on the accelerator. We saw more and more spending and a complete lack of regard for taxpayers' money. So much so that, based on the trajectory provided by the previous government, OECD's forecast for Australia was for the fastest growth in the OECD between 2012 and 2018. The notion in the previous government that somehow everything was related to the financial crisis of six or seven years ago really does not hold up, for a number of reasons. One reason which demonstrates that very clearly is the fact that the trajectory of government spending is the fastest in the OECD at present. It is very difficult to hold responsible for a period from 2012 to 2018 some events that happened on Wall Street in 2008.

One asks the question: how can this occur? I think there is a simple reason for this: those opposite do not fundamentally understand the basics of economic management. I think they see some charts and numbers on a page, and they look up at the PowerPoint presentation and see lines and things like that, but they do not understand that this is real money and that the government does not generate money. The government takes money. People generate money. Companies generate money. Government takes some of that money. Given that government takes some money, it is incumbent upon it to exercise discretion and care in the way it spends that money. Of course that is not what happened.

We can think back to the days of the NBN announcement and that famous plane trip that Senator Conroy and former Prime Minister the former member for Griffith took. There it all was: a couple of pamphlets, a few envelopes, maybe a couple of HB pencils. And a massive project was born. We had the grave announcements with the faux FDR significance of the private sector being in retreat and the government stepping forward. But of course we had one of the worst, if not the worst, example of public sector management in our nation's history—a project that was costed in our most recent independent assessment as having a peak funding requirement of $73 billion. There are about nine million households in Australia, so $73 billion is about $8,000 per household in Australia to build the NBN under Labor. Remarkably, once each household effectively contributed that $8,000, they still had to pay for it. They still had to pay $70 or $80 a month—whatever the cost was. So it was $8,000 to build it and then a requirement to pay for it on an ongoing basis. There was a lack of operational management and a lack of hand on the steering wheel which was really quite frightening to behold.

We saw the same thing in border protection. The arguments put to that matter were not good for humanitarian purposes at all, as we know, and were certainly not good for economic outcomes for the nation, with a massive budget blow-out of $11 billion. We are now in this position where we have to fix up the mess. That is what we are saying and that is exactly right. It is $1 billion of interest every month. Another way of thinking about that is $30 million or $35 million every day. It is a sobering thought. And what do you get for your $30 million? What you get from your $30 million is to keep your outstanding principal of $190 billion at the same amount. That is what you get. You basically get to pay off your interest and keep your outstanding principal at about $190 billion. In order just do that you have to borrow $30 million every day. This is extraordinary.

Then again, these are the people that have not produced a surplus budget since 1989. You do not need me to tell you that 1989 was a very long time ago. It was 25 years ago. It was a different nation then. Labor in 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 had deficits as far as the eye could see. If it just happened once or twice you might understand it, but over such a long period of time—way back to 1989—that is just a way of life. Cast your mind back to 1989. It was a very long time ago. Kylie and Jason were still doing duets in 1989. There were some fantastic movies in that year: Bill and Ted's Excellent Adventure, Weekend at Bernie's. Ivan Lendl won the Australian Open. As you know, he is much more of a coach these days than an active participant. Cher released If I Could Turn Back Time, which no doubt is something that Labor thinks of when it considers its legacy of economic management in recent decades. So the notion that Labor could provide any sort of guidance—perhaps an academic thesis from the member for Fraser or a pocketbook guide from the member for McMahon—and have its arguments treated with any respect at all is quite laughable given the extraordinarily poor result we have seen since the late eighties.

We are taking a very responsible approach in this budget. We are reining in spending where it is appropriate to do so. We are doing it in a responsible way so we can fund investment for the future and so we can get our debt burden under control. But we do need to bust some myths perpetrated by those on the other side about the measures in the budget. Over the next four years, within that envelope of responsible economic management, we are able to increase hospital spending by 40 per cent. You hear from those opposite about billions of dollars of cuts. But we are actually increasing hospital spending by 40 per cent in four years. Mr Deputy Speaker, you know the small business community better than anyone. If you were in small business—or in big business, indeed—and you were told that your revenue was going to increase in the next four years by 40 per cent, you would think that was a very substantial increase, which of course it is. Schools spending is up 34 per cent in the next four years, at $1.2 billion more than Labor was going to put in. Pensions are going up every single year, despite this scaremongering. I was very pleased to be able to ask the Minister for Social Services about that important topic this afternoon.

With respect to universities, there are important deregulation measures, which will allow universities to be their best. Importantly, though, we are actually expanding the number of students who can get access to the HELP debt system by about 80,000. Nobody is required to pay up-front now and will not be required to pay up-front in the future. Nobody has to pay back any of their HELP debt until they are earning at least $50,000 and, even then, they only have to pay back about two per cent of it in that year. So this sort of screaming and so on that we have seen about university costs is particularly inappropriate. It is entirely right that students contribute to the cost of their education and the cost of around 50 per cent is entirely reasonable.

Of course, it is great to have the assistant minister for infrastructure in the chamber with us as we talk about the importance of infrastructure. Of course, infrastructure is the economic gift that keeps on giving. Once you put that road into place, once you put that infrastructure in place, it is there for years and years, decades and decades. Those productivity savings accumulate and they are there on day 1 and they are also there 30 years down the track.

In my electorate and indeed in yours, Mr Deputy Speaker Kelly, the development of WestConnex, championed of course by the Minister for Infrastructure and Regional Development, is a great initiative. We are expecting savings in travel time to the city of about 25 minutes through the duplication of M5 East, which is a terrific result.

Another thing on economic management is the carbon tax. We have talked about this topic before. We know that the abolition of the carbon tax will mean a $550-a-year saving for the average family. Yet those opposite, who purport to be the champion of Australian families, are cruelly standing in the way of that $550 relief per year. It is a very significant saving. Those opposite persist with their environmentally ineffective and economically irresponsible carbon tax.

What does all this mean? It means that we get the budget back on track. It means that we go from $50 billion of debt in FY 2014 to about $3 billion in FY 2018. We will save $300 billion in debt and all of the interest that would have otherwise been paid on that amount. We will get the nation back on a sensible and economic foundation.

We are at our best as a nation when we confront difficult issues. We cannot just sleepwalk into the future and pretend that difficult issues do not exist. They do exist. Those opposite have created an economic crisis and the budget crisis needs to be addressed. We are addressing it. It is absolutely in the interests of the Australian people.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I am pleased to make a contribution to this debate on the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and supporting bills. This, again, is a broken promise, a broken commitment by the Abbott government to the people of Australia. 'We will be a no surprises, no excuses government,' Mr Abbott said. 'We're about reducing taxes, not increasing taxes,' Mr Abbott said. 'No cuts to health, no cuts to education, no changes to pensions and the GST,' Mr Abbott promised prior to the election. These were definitive election pledges. The Australian people took the Prime Minister and the then opposition members on trust in that election. The Australian people believed that such definitive pre-election pledges could not be broken by an Abbott government. Well, fast forward a few months and look at what we have seen from the new government. As the opposition leader has said, 'The Prime Minister promised time and time again not to introduce this tax increase.' The Prime Minister said, and I quote:

The Coalition will keep the current income tax thresholds …

He said:

What you'll get under us are tax cuts without new taxes.

He also said:

… there should be no new tax collection without an election.

Those were the commitments made by the Prime Minister prior to the election. What we got was the complete opposite—broken commitments to the Australian people in the form of the very increases in taxes that were ruled out prior to the election. Not only tax increases but changes to Medicare, pensions and family tax benefits that will hurt communities across Australia. These income tax increases represent a clear broken promise by the Prime Minister. Before the election Tony Abbott repeatedly promised that he would not raise taxes, but he has. That is a breach of trust and faith of the Australian public. This government has fundamentally breached the trust of the Australian people and not just once but on a range of issues: health, education, pensions and taxes.

They can say whatever they want to try to dodge this responsibility, to try and excuse themselves, to justify the change in policy and to justify some of the measures that have been introduced in this budget. But, at the end of the day, the Prime Minister made a commitment to the Australian people to trust him and his government not to increase taxes, not to touch Medicare, to change pensions or family tax benefits.

Quite simply, that commitment was hollow. This bill proves that. This is an income tax increase and is more damning evidence of the deceit that was perpetrated upon the Australian people at the election. This is the first of many new taxes that this government will be seeking to pass, following its cruel and deceptive budget. The result of these broken promises has been outrage across the community, including from conservative premiers, in particular in my state of New South Wales where Premier Mike Baird has described this budget as 'a kick in the guts for the people of New South Wales'.

Women's groups, multicultural communities, veterans' groups and community organisations have all condemned this budget. There is even evidence beginning to appear already in the Australian economy that this budget will have a damaging effect on our economy in terms of aggregate demand. The Australian economy is in a precarious position at the moment. The economy is volatile, particularly to changes in consumer demand, and consumer confidence has taken a considerable hit in the wake of this government's budget announcements. That has been confirmed in a number of consumer confidence surveys. Quite clearly this is a budget that not only hurts families, pensioners, low-income earners and students but it is also hurting businesses.

Labor has serious concerns about the way many of the provisions in the budget have been put together. They appear to have been rushed, they appear to have been put together in haste and many of them appear to have problems. One particular element of the budget where there is a discrepancy is with fringe benefits tax loopholes and income tax increases. The treatment of fringe benefits tax appears to create a loophole that will allow wealthier taxpayers to avoid this tax increase while surreptitiously including taxpayers who earn less than $180,000 a year. This measure should not fool Australians into thinking that the burden is being shared equally across the community. Quite clearly, those on lower to middle incomes will bear a greater burden.

Last week I received a phone call from a very distressed pensioner in my community, someone who suffers from a chronic form of leukaemia and requires two trips to her GP per month, one consultation with a haematologist, one regular blood test per month and a couple of scripts for medication and one dose of chemotherapy. That pensioner is going to be worse off under this government's budget. She is going to have to worry about getting proper treatment for her illness but is now also going to have to worry about how she is going to fund that treatment. Pensioners, families, students and ordinary Australian people in general do not deserve to be treated in that manner, particularly given the commitments that the Prime Minister made to such people prior to the election. They are the people who bear a greater load when it comes to the heavy lifting of this budget. NATSEM modelling shows that among families with children those in the most affluent fifth will see a 0.3 per cent reduction in disposable incomes while those in the poorest fifth see a five per cent reduction in disposable incomes. Those NATSEM figures quite clearly highlight the discrepancy that is evident in this budget about where the burden of the budget will lie. That will have an overall effect on consumer confidence and aggregate demand, because there is a much greater proportion of the population within those lower quintiles, or fifths, when it comes to income and disposable income in this country.

Despite the fact that inequality has been rising for a generation, this budget redistributes that income from poor to rich. That is why this budget is a breach of trust with the Australian public. Before the election Tony Abbott told the Australian people that he would lead a government that was not about surprises, that had no excuses in government, that would reduce taxes, not increase taxes, that would spare health, education and pensions from the Abbott government axe. Here we have a clear breach of that commitment: a broken promise from the Abbott government that will hurt individuals in our community and will make the most vulnerable in our society pay more. That in my view is unconscionable.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

Years ago one of my previous occupations was as a debt collector on credit cards. One of my roles was to track down people that had gone well and truly over their limit on credit cards. To go back to the 1980s, what people used to do was ring up and get authorisation, but if your transaction was below the floor limit you would not get authorisation. So we had a guy that I was chasing suddenly appear on the reports having spent an awful lot of money. That was a $1,000 limit on his credit card or his bank card and he is up to $3,500. I looked his account up and everything like that and he had had it for ages, he had ever paid any interest, and I could not understand what was going wrong. So I brought up the transaction list and I found that the last transaction he had was a motel in Emerald. His address was in Charters Towers. I rang the motel in Emerald and said, 'Do you know of this fellow that might have gone through and had recently stayed?' They said, 'Yes, I remember him. He is from up north.' I said, 'Do you know what he was doing?' 'Yes, he was buying fodder for his farm outside Charters Towers near Richmond.' I thought to myself, there is not a farm outside Charters Towers, they are stations, they are big properties.

I am the son of a stock and station agent and I thought to myself, that is a very big ask. So I rang my dad, who was then working at the art gallery in Brisbane. He used to call himself an education officer and used to educate the people to keep their fingers off the paintings. I rang him and said, 'Listen, we've got a bloke going through and it looks like he is buying feed for a cattle station up at Richmond. Would you do that?' He said, 'You could, but it is a little bit like using drugs. At the start it is okay but the real damage comes at the end when you try and control it.'

That is very much what is happening with this budget. What we have seen is that in 2007-08 we had the GFC hit and Labor started spending. What happened was that they could not stop, but sooner or later you have to stop. When it comes to drugs, you either end up dying or you stop. When it comes to budget repair, you lose office. You walk across the room, sit over the other side and you point the finger of blame at people. The problem with blame is that it does not fix anything. Blame is easy—we can all stand around and look at the mess but it is only the people on this side who seem capable of picking it up.

This bill we are talking about, the temporary budget levy bill, is part of our way of saying that we have all got to participate in cleaning up the mess, that we have all got to do our bit. I have had a lot of interaction with people in my electorate. Lots of people have come to me and said, 'I know they had to go, I know we are in trouble, I know we have got debt issues, I know we had to start making payments and I know you had to make changes—but why am I affected?' And lots of people have come to me and make comments about us parliamentarians. As an aside, Deputy Speaker, I wish we still had the defined benefit scheme because you and I both know we do not get the pension but you and I also know that every day someone comes and tells us, 'It's all right for you blokes, you're getting the pension.' I do not whinge about the pay or about our superannuation or benefits—it is what it is. When I was a candidate in 2007 I never made a point of finding out what a parliamentarian would get paid. I figured if I won I would find out sooner or later; if I didn't it was none of my damn business.

It seems everyone considers that the whole thing could be fixed if parliamentarians could be made to work for nothing. I had a bloke come up to me and say, 'It's all right for you blokes, you don't pay any tax.' I said, 'Well, you know, we actually do.' He said he is on $40,000. I said a person on $180,000 earns 4½ times what a person on $40,000 earns—that is obvious. But a person on $180,000 pays nine times the tax of a person on $40,000. The top 10 per cent of wage earners in this country pay over 45 per cent of the nation's income tax. Fifty per cent of families in Australia pay no net tax. There are reasons for that and I would like to develop that argument as I go through because in 1996 we were faced with the same issue.

In 1996 we were faced with the issue of a $10 billion black hole and $96 billion worth of debt. But we had a Treasurer who was prepared to stand up and have a go and we had a Prime Minister who was standing right beside him saying, 'We're going to make tough decisions'—and they did, and we reaped the benefits. The budget was pretty much under control—we had not paid off all the debt—when the Asian financial crisis hit. The Asian financial crisis was very, very local. Working in the finance industry at that time I was very aware of what was going on, and it was very tight out there. What the then Howard government did was that they supported, they spent the money, but then they corrected, and so this nation went into deficit for one year only.

Fast forward to the GFC. We went into deficit, into deficit, into deficit, into deficit, into deficit, into deficit—six in a row—and were unable to stop spending, to the point where, if left undetected, we are looking at gross debt of $667 billion. We are borrowing a billion dollars a month now just to service the debt. To bring this home to everyone in Australia—the member for Longman talked about this earlier in the matter of public interest debate—$667 billion spread across this country is $24,000 per man, woman and child. I have a 12-year-old son at home. When he leaves school I want him to owe a damn sight less than $24,000. I want him to have as good chance as he possibly can. I do not want him to be paying for our mistakes. Again, this gets back to blame: you can blame anyone you want, but what we have got to do here is fix it.

I refer often to the speech made by the then brand-new Treasurer, Joe Hockey, in September last year. He said we had to do three things when we were facing the debt and deficit of the previous government. We had to tell the people what the problem was—and I think we did, although we do have lots of people coming to us saying they never expected there was a debt and deficit problem. So we explained to people what the problem was. Then we had to tell people what we were going to do about, and I think this budget goes a long way to saying that we are going to do something about it because there are significant issues here. The third and most important thing, the Treasurer Joe Hockey said, was that we had to take the people with us when we go. Unlike the Labor Party, where a budget lasted only 48 hours before they made changes, we have a plan and we will take the people of Australia with us because we are worried.

I want to address the issue Labor trot out that our debt to GDP is not great, that it is 11 per cent and one of the lowest in the world. They started with zero and in six years they went from zero to 11 or 12 per cent—from zero net debt to over $500 billion. At the moment, of the OECD countries we have the fastest-growing government spending, from 2012 to 2018, at 16 per cent in real terms. Denmark has minus one. France, that great socialist republic, has only three per cent. Germany has five per cent. Iceland, which was basically bankrupt during the GFC, has only six per cent. Everyone is doing better than us at 16 per cent.

Another issue I want to address is the budget deficits. We have lots of stuff that we could throw around here. We went into budget deficit in 2000-01 or 2001-02. We followed that with surpluses of $7 billion, $8 billion, $14 billion, $16 billion, $17 billion and $20 billion. Following that we have had deficits of $27 billion, $54 billion, $47 billion, $43 billion, $19 billion and $47 billion. That is $191.5 billion worth of deficits. Whether people agree with our summation on the projections is completely up to them. What no-one can deny is that when the Labor government came to power they had zero net debt and money in the bank. What no-one can deny is that they then went on to rack up $191.5 billion worth of budget deficits. And what no-one can deny is that the major spending on education, health, all the stuff that went out there into the never-never, way past anything, where the government was just going to take out a system 30 each week and get the money back. There was going to Lotto-winning inspired recovery.

I do not want to go on all night about this, but everyone has to put in and everyone has to try their best to be part of this. We are going to cop a two per cent tax levy when this goes through. I have not had too many people complain about that, actually. What I have had people say to me is that we said 'no new taxes', and I will address that. We went to the last election promising a levy for our paid parental leave scheme which will address the superannuation needs of women in the workforce, who retire on 35 per cent less superannuation on average than their male counterparts. We went to the election saying that we would support the raised Medicare levy for the NDIS. Tony Abbott stood right there at that dispatch box, where the member for Isaacs is sitting now, and stared down the barrel and said we will not be going ahead with any of the things from the mining tax because we are scrapping the mining tax. We said we would scrap the carbon tax but pensioners would keep the compensation from the carbon tax. We would do that. He stared down the barrel and said that things like the schoolkids bonus and foreign aid are borrowed money—we are borrowing money from overseas to give to overseas people—we cannot progress. He said we would make the hard decisions. We said we would do this hard stuff. So all this stuff about no new taxes just does not hold water.

What I want to say is that this temporary deficit levy is two things. A: it is temporary. B: What it does is show that we are all in this. This is not just one person. We are not just poking the finger at anybody and saying whose fault it is. We are saying that we have to fix it.

I will close with the words of the Prime Minister after the budget had been handed down. He said:

The sustained savings achieved mean that our budget position should strengthen over time to surpluses of well over one per cent of GDP by 2024-25 …

Importantly this path takes into account future tax relief, so we are talking about it being part-time. He goes on to say that 'this improvement in the budget position would see debt decline to $389 billion by 2023-24' compared to the $667 billion which was projected under the status quo left by Labor. As I said before, if we get to $667 billion, that is 24,000 per man, woman and child. If we get it down to that in 2024-25, that means $10,000 for every man, woman and child in Australia. We have a big job in front of us. It is going to take some pretty good people to do it. I believe in our economic team—and I see the birthday boy is sitting at the dispatch box there; I wish the member for Moncrieff a happy birthday. He is a very good man; more than that, he is part of a very solid economic team that is committed to bringing this country back to what it is. We are a great country and we need to get in and we need to fix it up.

The Treasurer said in his speech, 'We are lifters not leaners.' That is a very real statement. We are lifters not leaners. We are workers not passengers. We are asking everyone to make sure that we are coming out of this okay. I thank the House.

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

This evening I rise to speak about three things in relation to the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and related bills. To begin with, I will outline the budget impact tour I am undertaking across my electorate of Indi to ensure that I understand and represent my constituents in this budget process. I will talk about what I have heard from my constituents in regards to the temporary budget repair levy and other budget initiatives. Secondly, I will point out the inequity in the fact that high-income earners stop contributing to the budget deficit in 2017 just as average Australians begin to experience the hardest cuts. Finally, I offer an amendment to this bill to ensure that the debt and deficit burden is shared more equally across all Australians. I would also like to acknowledge my pecuniary interest in this legislation.

Since the budget was delivered on 13 May, I, my staff and a large team of volunteers have been travelling the length and breadth of Indi, undertaking the Indi budget impact tour. At several listening posts across the electorate, we have been talking to hundreds of constituents in order to understand their opinions, concerns and ideas surrounding the 2014-15 budget. Hundreds more constituents have contacted the office via the website, phone or social media. All this information is currently being distilled into a report which I will soon present in this place and use in representing Indi.

I must say the opinions have been broad-ranging. One aspect of the budget that has drawn support is the temporary budget repair levy. This levy will increase taxes by two per cent for those earning over $180,000—including me. Only 2.3 per cent of Australians earn over $180,000. The government's debt levy will raise $3.1 billion over the forward estimates. This levy will apply for three years, starting on 1 July this year and finishing on 30 June 2017.

However, many of my constituents are concerned other aspects of the budget. I draw the attention of the House to the following points. The significant cost-cutting policies in this budget begin in 2017, such as: reducing the income threshold for the repayment of HELP loans, the reduction in the indexing of pensions to CPI rather than wages, and the reduction in funding to hospitals and schools. These policies primarily rely on average Australians contributing to reducing the budget deficit by paying more and receiving less from government.

Most importantly, from 2017, the most significant impact of the budget will be experienced by average Australians whilst those earning over $180,000—which includes me—will no longer be contributing to reducing the budget deficit. Many people in my electorate point out to me that most people do not earn that amount of money; $180,000 a year is a lot of money. To put it into the Australian context, the Bureau of Statistics does not record income brackets higher than $104,000 per year. Only five per cent of Australians earn over $104,000 per year, and in Indi it is only two per cent of people. Therefore, it is safe to say that less people in Indi earn $180,000 than the national average. My constituents will be doing more to repair the budget deficit from 2017 onwards than high-income earners, including me, across Australia.

Independent research supports my view that the debt and deficit levy is not being fairly spread across income brackets. Someone earning $190,000 per year will pay an extra $200 per year, or a total of $600 for the deficit levy over the next three years. Research from the National Centre for Social and Economic Modelling demonstrates that low-income families with children are the main group to be impacted by this budget. High-income families and singles and couples without children are shown to be largely unaffected by this budget in either the short or the long term. The report goes on to say that couples with children will be worse off by around 6.6 per cent while single parents will be worse off by around 10.8 per cent on average. The report also says that high-income families are marginally better off thanks to the planned removal of the carbon price.

The government believe that there is a serious debt and deficit problem and they believe that this debt burden must be shared. Extending the temporary deficit levy for a further four years will raise at least another $3.1 billion to go towards tackling the debt and deficit challenges faced by the government and this country. To ensure that the debt and deficit burden is spread more fairly amongst all Australians, I move to the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House calls on the Government to extend the period of the budget repair levy until 2020-21 to ensure the debt and deficit burden is spread more fairly amongst all Australians.”

In closing, I address my colleagues on the other side of the House. If the government truly believe, as many of my constituents do, that government debt and deficit in Australia is so serious, I request they support this amendment to spread the debt and deficit burden more fairly amongst all Australians.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Andrew Wilkie (Denison, Independent) Share this | Link to this | Hansard source

I second the amendment. I applaud my colleague the member for Indi and reserve my right to speak.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

I would like to make a little announcement to the House. My good friend the member for Herbert in his excellent speech tonight mentioned that it was the member for Moncrieff's birthday. I would like to correct the record and say that it is the member for Moncrieff's birthday on Thursday. I know all of us here tonight in the chamber wish the member for Moncrieff a very happy birthday for Thursday.

Honourable members: Happy birthday to you, happy birthday to you—

We have even got a bit of singing going on. This might be the first time we have had Happy Birthday sung in the House. I am sure there will be many more happy returns for the member for Moncrieff as well.

The temporary budget repair levy bills are before us. This is a very important matter. It goes to our children and our grandchildren. It goes to whether our generation should burden future generations with the bill for propping up our own current standard of living. There are reasonable debt levels, serviceable debt levels, which means that a government can borrow but can also plan for the future. There comes a time when the government has to look the Australian people in the eye and say: 'The situation has got out of control. The opportunity cost of that debt is starting to hurt future generations and we must act.' That is the situation that confronts us as a government at the moment. When the interest bill on your debt reaches $1 billion a month and is going to continue to grow unless something is done then it is time for a government to act.

The one thing this government said more than anything else during the last three years it is that we would act to stop the reckless spending and to get the budget back under control. That is the task we set upon doing when the Treasurer gave his excellent, considered and honest budget speech on Tuesday before last. It was honest. We could have taken the easy option and tried to skim over the problems facing this nation, but we decided to open the books transparently and show the Australian people the current state of affairs. It did mean being honest about what had been promised in the future years beyond the forward estimates by the previous government completely unfunded. It did require us to say that we are going to have to make some tough decisions, that we are going to have to introduce some important reforms that will enable the taxpayer to get value for money in various sectors and that we are going to put in place some important price signals to ensure that the growth in expenditure will be sensible, contained and in a way that we know our revenue base can support. And that is what the budget set about doing.

I take a moment to commend the leadership that we saw from the Treasurer and from the Prime Minister, for their courage to say to the Australian people that the time has come. We have said this before on this side: none of us here wants to stand up and say that we have had to put in place tough measures. We would much prefer to have continued on from 2007 where we had a budget in surplus, where we had the Future Fund set up, where we had a higher ed fund set up and where we had a telecommunications fund set up. We would have loved to continue down that path of responsibly managing the economy, building funds up and ensuring that surpluses continued. But that is not what we faced when we won the last election; we faced something completely different. The member for Herbert demonstrated this when he referred to the charts that we faced. One of those was the government debt, gross debt, that we were facing: with no policy change by 2023-24, we were looking at $667 billion. That is not a monopoly money; that is money that is a debt, that has to be repaid and that has to be serviced. And it has to be repaid by the taxpayer. That is what we faced.

If you look at the rest of the major economies that we are normally compared with, you see our spending had got out of control and the situation with regard to the changing net debt between 2012 and 2018 as a percentage of GDP had also got out of control. We were going to hit eight per cent. I do not know, but I think you would have to go back to just after the Second World War to find a government facing a similar situation. We had to act. In terms of the government spending increase between 2012 and 2018, we were looking at 16 per cent, and that is in real terms. The comparisons are: Denmark, minus one per cent; Netherlands, one per cent; Belgium, two per cent; Japan, three per cent; France, three per cent; Czech Republic, four per cent; Germany, five per cent; Austria, five per cent; Iceland, six per cent; New Zealand, seven per cent; Finland, eight per cent. I just repeat the figure for Australia: 16 per cent.

And once again, as the member for Herbert outlined, you also have to look at our record. The proud record of what coalition governments do when they get into government—that is, they sort the nation's finances out. As the previous Howard-Costello government demonstrated, year upon year upon year, you get the nation's finances sorted out and you slowly build towards surplus after surplus, growing, and then you get funds in reserve for the rainy day. That is what we have set out to do in this current budget: making sure we can get the budget back into surplus. Then we can put the funds aside for the rainy day.

Now, how have we done it? We have done it maturely, we have done it sensibly and we have done it with an eye to producing very good policy for the nation's future. Let us have a look at some of the welfare reforms. What we are talking about with the 'earn and learn' philosophy when it comes to welfare reform is that we are now saying to people that you have a responsibility to contribute. And it might only be that you have to contribute in a small way, but contribute you will if you can. This is an underlying philosophy of this budget, and it is a good philosophy, because as a nation we all have to lift. We all have to lift to repair the budget; we all have to lift to repair the nation's finances. Through our welfare reforms, that is the message that we have said. But we have sent that message with a responsible safety net to ensure that those who need looking after, those who need the protection, will get it. But for everyone else, what we are saying is this: it is your time to help as well. I am sure that will be a message that resonates within the community and that people will embrace, especially our young. My view is they do want to be part of the solution, they want to part of the nation's future, they want to be contributors, and we have given them the mechanisms to ensure that they do that through either earning or learning.

When it comes to the higher education reforms, these are the most significant reforms that we have seen in the higher education space since the Whitlam government—without question. What we have said to universities is that once again it is up to them to decide how they are going to run their universities. We said, 'You can put a price mechanism in your degrees, you can put a price mechanism in what you are offering to students and you can compete with each other and you can compete in a way which is free and open for you to make the decisions that you require'. I think that is incredibly important, especially with what it potentially holds out for regional and rural universities, those campuses based in regional and rural areas. They can say to students, 'We can offer you a competitive price on a world-class course and also, when it comes to the cost of living, we can offer you a advantages there as well'. We can start attracting students into our rural and regional areas. These are substantial reforms.

And it is the same with what we have done in the health space. It is worth reminding people that the reforms we have undertaken in the health space are also important. There are also safety nets, but the reforms are also done in the context that the health budget continues to grow for the next four years. We have put a small but important price signal in there for the health consumer. This is, once again, important reform. It is not the first time that it has been tried when it comes to Medicare. Obviously, the Hawke government did the same thing. But it is also not the first time that it has been tried within the health system, because it has been tried when it comes to our pharmaceuticals. This is very important reform. By putting that price signal into Medicare we are saying to people. 'There is a tiny cost to providing Medicare and if we are to make sure that Medicare is sustainable you need to understand that it does come at a cost to the taxpayer.'

So these are important reforms which have driven what we have done in this budget. Overall the focus has been on ensuring that we get the budget back to surplus, and back to surplus we will get it. It will then be within our ability to start repaying Labor's debt. We have already reduced the forecast debt—we have almost halved it—but then we will actually be able to get on to the job of starting to repay it. But, importantly, we have also introduced significant reforms which will stand the country in excellent stead in the future. It will mean that we will have a world-class education system. It will mean that we will have an affordable and sustainable health system. It means that we will have a welfare system which looks after those most in need but encourages those who can to use welfare as a temporary thing and make sure that they get on with their lives and contribute. That is extremely important, because it is saying to people, 'You have the ability to be as much a part of our society as everyone else.' That philosophy that underpinned the budget will ensure that we can grow the economic pie of this nation and by growing the economic pie we will grow jobs, we will grow communities, and we will grow this country into being the world leader that it should be.

The amendments to what we are trying to do here are nothing but a distraction. What this government is intent on doing is fixing the nation's finances—starting the budget repair job. Start it we have and finish it we will, because this is too important for us not to do so. Our children depend on the decisions we are taking currently; our grandchildren depend on the decisions that we are taking currently. We must do this for future generations. Otherwise, we are leaving them with the tab for our standard of living today, and that is not fair.

Mark Dreyfus (Isaacs, Australian Labor Party, Shadow Attorney General) Share this | Link to this | Hansard source

On 13 May this Liberal-National Party government delivered a deeply unpopular budget. Pensioners, young people, students, parents across my electorate have made this very, very clear to me since 13 May—in fact, people across Australia, because I have been to some other places other than my electorate in the couple of weeks since the budget. People in Bendigo, people in Castlemaine, people in Mornington in Victoria, people in Sydney and people here in Canberra have all made it very clear to me just how deeply unpopular this budget is. It is probably for that reason that an unnamed Liberal was quoted in the media today as describing this budget as 'a stinking carcass around the neck of this government'. And well might that description have been given to this budget, because for a whole range of reasons this budget has deeply disappointed Australians. It has deeply disappointed Australians because of the number of broken promises that we find in this budget. It has deeply disappointed Australians because of the unfair and uneven pain that this budget inflicts on so many Australians. And it is deeply unpopular and bitterly disappointing to Australians because of the wrong choices that this budget is full of.

One could start with, for a broken promise, the new income tax that is imposed by this bill. Leave entirely to one side the Orwellian title, like so many of the pieces of legislation that come before this House, where this bill, which imposes a new income tax and some other taxes as well, is, according to this government, the 'Tax Laws Amendment (Temporary Budget Repair Levy) Bill'. This government wants to say—and I will come back to this later—that the budget is in dire need of repair. But before I get to that, and before I get to the falsity of the government's claim about there being a so-called debt and deficit disaster, and, to state it clearly, there is not, I just want to deal with the multiple—not one promise, not two promises—but multiple promises made by the Prime Minister from opposition as part of the multiple promises he made, many, many of which have now been broken, in order to win government. This was the Prime Minister before the election:

A coalition government will keep the current income tax thresholds.

Or this one:

What you will get under us are tax cuts without new taxes.

Or this one:

There should be no new tax collection without an election.

It is not as if these were not recent statements by the Prime Minister. This is the Prime Minister in February 2013, a little over a year ago:

Personal income tax will be lower under a coalition government in its first term than it is now…

He said, in that repetitive way the Prime Minister is fond of:

We're about reducing taxes, not increasing taxes. We're about getting rid of taxes, not imposing new taxes.

When asked by a reporter, 'Is that a promise?' Mr Abbott replied:

This is my whole reason for being in politics—in the parliament.

How have the Australian people been repaid for accepting those and so many other promises from the Prime Minister? That was his set of promises about not increasing taxes or saying that he is about reducing taxes. The Australian people have been repaid with an increase in the income tax rate, which is what this bill would impose.

It adds to so many broken promises from this Prime Minister. There were to be no cuts to health. There were to be no cuts to education. So much for that promise! As the Premier of New South Wales has described it, this budget is a 'kick in the guts' because there is an $80 billion reduction. What is set out in the budget papers—although the Prime Minister, ridiculously, has been trying to deny it in this place—is an $80 billion reduction to health and education payments by the Commonwealth to the states. That is why the Premier of New South Wales thinks it is right to describe this budget as a kick in the guts.

No cuts to the ABC. That was another promise we had from the Prime Minister of Australia. That promise was made on the eve of the election. And what have we seen in the budget delivered on 13 May? We have seen cuts to the ABC—a so-called efficiency dividend cut and a much larger cut, which is the complete scrapping of the Australia Network. The scrapping of the Australia Network is a cut that does not appear in the communications portfolio budget; it is a cut which appears in the foreign affairs portfolio budget. But, make no mistake, it is a cut to the ABC, because the Australia Network—Australia's international television broadcasting arm that has been doing so much for us in terms of self diplomacy—has been fully integrated in the ABC's operations for some time. And the cutting of the $200 million over the next eight years is a cut to the ABC.

This is the government that, from opposition, liked to say it was on a unity ticket on Gonski. This is the government that promised, from opposition, that there would be no change to pensions and benefits. We have seen what that has meant in this budget. We have seen changes to the indexation of pensions and changes to a host of benefits. It is not a little change to pensions. We have had more nonsense from the Prime Minister about that over the last few days. He wants to be able to point to some projected rises in pension levels but entirely ignore the real change that is being brought in in this budget, which is a change to the indexation method to pensions, which would mean, in the most direct terms, that pensioners will receive less over time.

Just to demonstrate it, if you apply the different indexation method that this government wishes to bring in to the age pension, over the last four years it would mean that a pensioner now—had that new indexation method been in place for four years—would be receiving some $1,500 less each year. But there were to be no tax increases, no new taxes. That was what was promised by the Prime Minister in seeking to gain the trust of the Australian people and convince them that he ought to be elected at the last election. We have seen the way in which this Prime Minister, who pretended so much that he was someone to be trust and who talked so often of the need for trust in politics, has repaid the Australian people for accepting his promises. He has repaid them with broken promises as far as the eye can see.

The whole of this government's budget is based on untrue slogans. The whole of this government's budget is based on false claims. We have not heard anything from the train of Liberal backbenchers who have spoken on these bills about the host of broken promises that this budget contains. We have heard nothing from them about the unfair cuts and the uneven burden that is being placed on the Australian people by this budget. Far from it; what we have heard from them is simply a repetition of some of the untrue slogans that the opposition, now the government, went to the election with—a repetition of the false claims of a debt and deficit disaster; a repetition of the false claim that the Liberal Party is the lower taxing party.

There has been barely a mention of the global financial crisis that our Labor government steered this country through with sound financial management. In fact, there was no mention at all by the train of Liberal backbenchers who have spoken before me in this debate about the low debt of our nation—I will repeat that; the low debt—when you compare Australia's debt levels to almost every other OECD country. There has been no mention, of course, of the AAA credit rating that has been given to Australia by all three of the world's major credit agencies. There has been no mention at all of the sound financial state of the Australian economy right now.

Of course there are issues going forward in the budget. There is the issue of declining revenues, which is something that Australian governments have now been facing for some time. There has been no mention of that by speakers on the other side of the chamber . There has been no mention from the Treasurer or the Prime Minister that this budget does not actually do the great task that they have claimed for it. It does not reduce the deficit. A proper comparison would be of the pre-election financial outlook with this budget—not the false comparison that the Treasurer was trying to set up by offering a comparison between his mid-year economic and fiscal outlook and this budget. The charter of budget honesty makes it possible for Australians to have a true comparison. The charter of budget honesty was introduced so that we would not have the kind of game-playing we have seen from this government, where you invent a false picture of the budget

On the true comparison we are not even going to see from this budget a faster return to surplus than what is set out in the pre-election financial outlook. The pre-election financial outlook had us returning to surplus in 2016-17; this budget has us returning to surplus in 2017-18. The reason that the Treasurer and the Prime Minister have been able to bring about this sleight of hand is, of course, because they doubled the deficit. In the Mid-Year Economic and Fiscal Outlook they doubled the deficit by giving to the Reserve Bank of Australia $8.8 billion which the Reserve Bank did not ask for, and they doubled the deficit by changing all of the assumptions in the budget about costs by removing any cap on spending, and that enabled them to invent this supposed debt figure that we were going to reach on their false assumptions by 2023. It enabled them to say that, because of the changes that they made in the Mid-Year Economic and Fiscal Outlook, the deficit was much higher than it is and much higher, of course—something like double—than what the Pre-Election Economic and Fiscal Outlook produced by the Secretary of the Treasury and the Secretary to the Department of Finance said very clearly to the Australian people.

The budget that has been presented is full of wrong choices. It makes wrong choices on the cuts. It makes wrong choices by imposing a cut on family tax benefit B. It makes wrong choices by imposing cuts to the way in which the unemployment benefit is to be administered. What an appalling thing for a government of Australia to be saying to the young people of Australia: 'If you are under 30 you will not receive unemployment benefit for six months when you become unemployed.' What an appalling decision to make in a budget to say, 'If you are under 25 you will not even receive the Centrelink benefit; you will be receiving the youth allowance.' What does this government think it is doing? Does it want to create an entire outcast generation in our country? What does this government think that people under 30 are meant to do? Are they meant to go out and steal? That is what is left to some people. Not everybody has a family to fall back on. Not everybody in Australia is able to obtain work when they want it. Some people, in some parts of Australia, are living in places where there is 20 or 25 per cent youth unemployment. We want a government that understands that. We want a government that understands that it is the role of government to provide for and look after the young people of our country, to provide for and look after the old people in our country, and to provide for and look after families. I can say to this parliament that Labor understands those priorities. This government clearly and absolutely does not. With its budget full of wrong choices and unfair burdens everywhere you look—wrong choices on revenue measures and wrong choices on cuts. (Time expired)

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to speak on the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and related bills. Whenever we introduce legislation into this House we need to set out the clear and unambiguous reasons why that legislation is needed. I would like to start by talking about why we actually need a temporary budget repair levy. Over the past six years we have had the sixth largest budget deficits in our nation's history. This debate is not arguing about how those deficits occurred. I know there are two arguments. There is the argument that it was wasteful, reckless and politically motivated spending that ran up all these deficits. Then there is the other argument—that it was actually the economic genius of Kevin Rudd and Julia Gillard, our former prime ministers, and their brilliant plan of sending out $900 cheques and things like GroceryWatch. I could go on and on, but that is not the purpose of this debate. We have that debt as a nation. Irrespective of how we got there, we have had those six largest budget deficits in our nation's history, and we now have a debt of over $300 billion.

One day, sometime in the future, we will have to repay that debt. Taxpayers some way down the track will have to repay that debt. But, until we do, we have to pay the ongoing interest commitments on that debt—exactly the same way as someone who goes out and racks up money on a credit card. They then have the obligation to pay the interest on the debt that they have run up. How much is that today? Remember that we had no interest bill until six years ago. Today that interest bill that we must pay as a nation is $12 billion a year. That is $1 billion a month or $33 million in one single 24-hour period. Every hour, this nation has got to take $1.4 million that we collect from the taxpayer and use that money not to pay for all the things that we need in society but to pay the interest on the debt that has been racked up over the last six years. In fact, the allotted speaking time that we have in this debate is 15 minutes. During a 15-minute speech in this parliament, we have run up an interest bill of $350,000. And that goes on, day after day after day. That is the interest liability that we have as a nation. What is even more scary is that two-thirds of that money goes out of the country, overseas. When the previous government borrowed these record amounts, most of that borrowing was done overseas from foreigners.

That is where we are today—and opposition members get up and say, 'There's no problem; don't worry. There's no crisis'—but that is only half the problem. We need to look at the trajectory of where this debt is going. The previous Labor government made all these politically inspired promises to everyone. It is wonderful to go out and toast everyone champagne and lavish money upon everyone. But the trajectory that they have us on is one of the fastest rates of government spending anywhere in the world—a 16 per cent increase in real terms between 2012 and 2018. So, if nothing is done and we just keep chugging down the road that we are going and we do not make hard decisions, the debt that is now over $300 billion will blow out to $667 billion.

What does that mean? What would that do to those interest repayments that we have to make? It will not be a billion dollars a month; it will be $3 billion a month. So $3 billion every single month will have to be taken from the taxpayer to pay two-thirds of it, at least, to foreigners overseas just to fund the interest payments on the debt—without paying one cent. What would this mean for the average citizen? We have to remember that this debt is all in the names of the average Australian.

We saw students marching in the streets last week concerned about the HECS debts. Fair enough, students have the right to protest and they have the right to complain about an increase in their HECS debt. They are talking about a HECS debt of, on average, around $20,000—but it might go out to $24,000—but, for that investment, the average university student has the capacity to earn a million dollars more in salary over their lifetime. It is about 75 per cent more than the average year 12 leaver. So people are marching in the street because they have a $20,000 HECS debt, but they have the capacity for greater earnings to pay that off.

What the opposition want to do is run up debts of $25,000 for every person or $100,000 for the average family of four. Remember that that $25,000 debt per person—which is where we are heading—is not just to people who have a greater capacity to actually go on to earn a higher income; that $25,000 debt is for every man, every woman, every child and every pensioner in the country. Then of course there are those interest payments of $36 billion a year. That is where we are heading. We are heading towards a cliff. This is why changes must be made.

I think everyone who comes into this parliament would agree that we have obligations to future generations. I had a look at my maiden speech. I said in my maiden speech:

I also understand that I have an obligation—in fact, we all have an obligation—to pass this great nation onto our children and grandchildren in better shape and with greater freedoms and opportunities than we inherited.

But the direction that we are heading is to burden our future generations with $667 billion worth of debt—$25,000 for every man, woman and child in the country. If we go down that track, we are risking impoverishing our children and our grandchildren.

There is a simple question I would put to members of the opposition, who stand up and complain about a cut here and cut there and find something to whinge about, and that is: How much debt do you want to pass on to future generations of Australians and what interest repayments would you like them to have to pay in the future? That is the question. And that is why we have such a challenge here in front of us with the budget crisis that we have.

The other issue that we should be concerned about regarding that debt, that interest repayment, of $3 billion every single month is that we are putting future generations of Australians at the mercy of foreigners, because at least two-thirds of that debt will have to be financed from overseas. We have no guarantee going forward of what the interest rates will be in a decade's time. Small movements in global interest rates could cost the budget $5 billion, $10 billion, $20 billion or $30 billion. This is the reason that we cannot continue down the track that we are going to impoverish future generations of Australians.

In this debate we have heard some absolute, all mighty, hypocrisy from opposition members. They stand here and they complain about this cut and that cut, but they are blocking the repeal of the carbon tax over there in the Senate. If we could get that carbon tax repealed, Madam Speaker, that is $550 for every household in the country. Don't stand there and complain about $7 increases and increases of a few dollars when you are blocking a $550 cut for every household by refusing to repeal the carbon tax.

There is also the issue of what the carbon tax actually does. We know that it forces up electricity prices. Many people in our society today who, when they get that huge hit on their electricity prices, simply cannot afford to heat their home using electricity, so they go looking for an alternative. Some people will either heat their home or eat. But there is another option for people that live in the western and south-west parts of Sydney—they can go to nearby bushland, gather wood, take it home and burn it in a log fireplace to warm their homes. That is what has been happening.

Debate interrupted.