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

I move:

That this House:

(1) recognises that:

(a) since 1975, earnings at the 90th percentile have risen three times faster than earnings at the 10th percentile; and

(b) since 1980, the top 1 per cent income share has doubled, and the top 0.1 per cent income share has tripled; and

(c) overall, inequality in Australia is now higher than it has been in three-quarters of a century;

(2) notes that:

(a) analysis by NATSEM (which the Prime Minister once described as 'the most reputable and authoritative modelling organisation in Australia') shows that the 2014-15 budget will redistribute income from lower-income households to higher-income households;

(b) by 2017-18, NATSEM analysis suggests that the budget will cause:

  (i) across all households, a 2.2 per cent drop in disposable incomes in the bottom quintile, and an 0.2 per cent rise in disposable incomes in the top quintile;

  (ii) among couples with children, a 6.6 per cent drop in disposable incomes of households in the poorest quintile; and

  (iii) among single parents, a 10.8 per cent drop in disposable incomes of households in the poorest quintile; and

(3) calls upon the Government to rethink a budget that not only breaks promises and produces higher deficit figures than in the Pre-election Economic and Fiscal Outlook 2014, but also fails the 'fair go test' by hurting low and middle income families.

One of the great challenges of politics is to put yourself in the shoes of others. In the framing of this budget I really question whether the government has been able to do that. If the Prime Minister and the Treasurer had placed themselves in the shoes of the poorest sole parents in Australia, it is doubtful they would be taking away one-tenth of the income of those families.

If they had placed themselves in the shoes of people like the vulnerable young Australians I met recently in Devonport, a part of Australia where unemployment is nearly twice the national average, I doubt they would be thinking it was reasonable that young, jobless people in high unemployment areas should sleep in their cars or on the streets for six months before they get unemployment benefits.

It appears to me that the Treasurer, with his strong understanding of how to invest his own money, is unable to put himself in the shoes of a pensioner who is ignorant of financial matters and who would therefore be hurt when the government strips away financial advice protections. I do not see any evidence that the government has been able to put itself in the shoes of people living on a low-lying Pacific atoll, who will be hurt by climate change as sea levels rise. I also worry that so many members of the government have not been able to think about how a same-sex attracted young person might feel as they attend weddings, knowing that they themselves are not able to enjoy the same ceremonies. While this budget has received criticism for breaking promises and for increasing the deficit, the real reason that I think Australians are condemning this budget is that it fails the 'fair go' test.

Over the last generation, Australian inequality has risen markedly. We have seen earnings of the top 10th go up three times faster than earnings for the bottom 10th. The Prime Minister's No. 1 business adviser and climate change sceptic, Maurice Newman, thinks that there is a wages problem in Australia. But his concern is not about CEO pay, which has gone up twice as fast as the pay of average workers; it is about the minimum wage, which is rising slower than average wages. Then there is the claim about a wages break-out that was given a lie last year, when wages for the first time in many years grew more slowly than inflation.

A recent report, put together by Australia 21, The Australia Institute and the ANU, Advance Australia fair, was sparked off by work that I had done in Battlers and Billionaires, in telling a story of inequality in Australia. The report brought together a range of people to discuss the problem of inequality and what to do about it. To me, it was particularly striking to hear John Hewson, former leader of the Liberal Party, at the launch talking about the great inequity that was at the heart of this budget.

When Australians see a government which is willing to give $50,000 to millionaire families to have a child, which is going to raise the non-concessional superannuation cap from $150,000 to $180,000, a measure that will surely benefit, almost entirely, millionaires, and which sees its priority the repeal of the minerals resource rent tax, as beneficiaries will be mostly mining billionaires, they wonder why the government is giving so much to those at the top after a generation of rising inequality. They worry deeply about the impact on those at the bottom. Vulnerable Australians are being hit by the withdrawal of legal aid. They are suffering from the government's attempts to strip financial protections away from pensioners—a measure that will surely be good for bankers, but will almost certainly be bad for battlers.

Through this budget, we have seen the analysis carried out by NATSEM, which Prime Minister Tony Abbott once described as:

… the most reputable and authoritative modelling organisation in Australia.

The Prime Minister's No. 1 modeller says that the budget is redistributing income. It is not redistributing, as the Australian social safety net has traditionally done, and as has been supported by both sides of the House, from those who have the most and who have benefited the most over the past generation to the most vulnerable. No. It is redistributing from the bottom to the top. This budget is Robin Hood in reverse. It is a 'sheriff of Nottingham' budget, which takes away from those in the bottom quintile and which, by 2017-18, will see a 0.2 per cent rise for the top but a 2.2 per cent rise for the bottom. It is an unfair budget, the most unfair in many a generation. (Time expired)

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

Is there a seconder for the motion?

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Mr Deputy Speaker, I second it.

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

It is most interesting to follow the member for Fraser on his contribution to his private member's motion, which seemed more like plugging his book, rather than any advancing of alternative economic strategies of the opposition. We hear these great concerns from the opposition about the less well off in our society. I say to the members of the opposition: if you are so concerned about the less well off, why are you not repealing the carbon tax? The Parliamentary Library has been kind enough to get us some information about the spending on electricity prices. It follows that the lowest quintile of our population spent 5.2 per cent of their income on electricity. As we get to the lower end of that lowest quintile, it would be much higher. An average household spends only 1.5 per cent of their income on electricity. So the lowest income household spends 3½ times more of their income on electricity than does the average household. If we compare it to the highest quintile of incomes, the lowest quintile spends five times more of their income on electricity.

So one would think that if members from the opposition here were concerned about the inequality in our nation, they would be very keen to do everything they possibly could to get those prices of electricity down. They have another chance. Today the Prime Minister reintroduced the repeal of the carbon tax bill in the House. The opposition now have a chance. If they are really concerned about inequality, the steps are simple. Repeal the carbon tax because that lowers electricity prices. When you have high electricity prices, the people that you hurt the most are the poorest and most vulnerable in our society. But it appears to me from the contribution by the member for Fraser, he is prepared to have the lowest quintile of our population pay five times higher electricity prices as their share of income, because he believes—and I think he writes—that this will stop the sea level from rising, otherwise we will inundate Pacific atolls. That is the message from the opposition: 'We do not care about you; you will pay higher prices for electricity because we believe we can control the sea levels.'

It also shows the complete fundamental misunderstanding of our economy that those on the other side have. Our economic pie, our wealth, is not a fixed, static unit. It rises and falls with the struggles and achievements of our entrepreneurs and that is what we should be encouraging. We should be making sure that we do everything to encourage small businesses—the entrepreneurial class of our society—to get out there, to have a go, to create, innovate and take risks, because that is what increases national income and that is what enables us to provide more money to those lowest quintile earners.

In fact, that is what we have done in this society over the last several decades. For example, in 1983-84, per capita, welfare spending in this country was $1,500 in today's prices. Today, because we have grown the economy, it is actually $6,000. We have been able to increase it four times. This is the spin-off when we get on with creating economic growth and growing the economy. What did we see under the six years of Labor?

What happened to that small business community, the entrepreneurs of our society? We saw job losses in the small business sector of over 500,000 people. You could fill the MCG five times with the number of people in small business that lost their jobs under this group. Yes, there was a transfer of small business—

Dr Leigh interjecting—

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

Order! Member for Fraser, the member for Hughes listened to you intently.

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

It is disappointing that the member for Fraser simply does not understand the importance of encouraging small business.

If our concern is inequality, what we need to tackle is equality of opportunity. We are one of the few countries in the world without price discrimination laws, to tackle anticompetitive price discrimination.

Very soon, we are going to have a competition report handed down. I hope that members of the opposition will get on board with the coalition, and get on board with that competition inquiry, and come forward and support fixing our anticompetitive price discrimination laws. That is the thing that deters equality of opportunity— (Time expired)

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I rise today to speak in favour of the private member's motion moved by the member for Fraser, regarding the impact of this budget on inequality in Australia. He has done excellent work to advance our understanding of inequality in this country. I am pleased to support him on this motion. I also want to acknowledge the work of the member for Lilley on these issues. And what better time to debate them? As the rhetoric in the member for North Sydney's recent speech to the Sydney Institute shows, the political architects of this budget see rising inequality not as a challenge to overcome but as an objective to be met. We know that they cling to this idea—long disproven—of trickle-down economics. We know that they are seeking to construct in this society and this country a two-tier society of haves and have nots.

The scale and breadth of this budget's attack on low-, fixed- and middle-income earners are neither unavoidable nor inconsequential. They will increase inequality; not by accident, but by design. Theirs is a deliberate strategy and one that is particularly out of place given an international policy environment increasingly interested in reducing inequality and promoting social mobility. This new and welcome focus is founded on what has become mainstream economic opinion. Even the notoriously dry magazine TheEconomist has recognised growing inequality as 'one of the biggest social, economic and political challenges of our time'. This government ignores this challenge and instead focusses on making Australia less fair, by asking the poorest and weakest to shoulder the heaviest burden.

The NATSEM analysis of the budget's full impact on families really speaks to this. The member for Fraser mentioned it a moment ago. The data reveals that the poorest 20 per cent of households will see their disposable incomes fall almost 2.2 per cent, while the richest quintile will see a rise of 0.2 per cent. A budget like that can only lead to a wider gap between the wealthy and the low paid in our economy. That is why the Australian Council of Social Services described it—accurately, I think—as a budget that divides the nation. Not only does it magnify inequality today; it will ingrain inequality for many years to come. The cuts to health, schools and higher education make it harder for our nation to develop the deep pools of human capital needed to feed productivity and social mobility in the decades to come.

It is worth reminding ourselves why inequality matters. There is a wealth of literature on this topic but let me boil it down to three key things. Firstly, it destroys human happiness. Secondly, it weakens our society. Thirdly, it weakens our economy. Inequality destroys human happiness because people cannot help but judge their own personal worth by comparing the resources they have with those of others. In a society like ours, the poor are surrounded, even bombarded, every day with images and living examples of people with advantages of money, status and possessions that they can only dream of. When these inequalities persist—and, worse, if they are handed down from generation to generation—it cannot help but breed a sense of hopelessness that no amount of effort will improve their situation and that social mobility is a relic of the past in an Australia we no longer recognise.

The second point is that large and enduring disparities make people feel that their society and their democracy are loaded against them, that somehow the game is rigged and they can never win. This breeds mistrust and weakens social institutions and democracy, with terrible consequences if left unaddressed.

The third point is that inequality is bad for economic growth. In a series of landmark studies, the IMF has clearly demonstrated the damage that inequality does to growth in the developing and the developed world. Jason Furman, President Obama's economic adviser, added to that literature over the weekend. Not only is this point striking for reaffirming what many of us feel instinctively but it also argues for different models of economic decision making, like inclusive capitalism, a concept fleshed out by Mark Carney, the Governor of the Bank of England. These models reflect the economic reality that equity and growth are not in conflict but can be mutually reinforcing.

We are here in politics—at least I and my colleagues like the member for Fraser, the member for Moreton and others are—to help people lead fulfilling lives and to build genuine social mobility that strengthens and grows our economy. That is the key reason why we are lining up with millions of Australians who reject the unfairness of this budget. It is why we are making the case for a country where fairness is part of the future and not just part of the past.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It has been interesting listening to the contributions of both the member for Fraser and the member for Rankin. It is instructive to note that, back in January this year, the respected former Labor senator John Black produced a report. This was quoted by Matthew Denholm in The Australian in an article titled 'Labor's policies hurt "working families"'. It opens with the comment:

THE big winners from six years of Labor government were white-collar, inner-city Greens, while the big losers were blue-collar traditional ALP voters and young mums in the outer suburbs, an analysis of job trends shows.

We have spent the last 15 minutes listening to two contributions from those Labor members opposite, who were both key members of the previous government. Yet it was their very policies over the last six years—I would respectfully suggest—that were, in part, a contributing factor to the outcomes that were quoted from that NATSEM report.

It is sad to reflect that, whenever Labor are in government, they always purport to seek to help the poorest and most needy in our society yet appear to do almost exactly the opposite. In particular, they stand there still as an obstacle to the repeal of the carbon tax, yet they fail to want to have an honest discussion about the welfare of low- and middle-income families. But we need to recognise that it is their past decisions that have gone a long way to contributing to the cost-of-living pressures felt by those people, as was well outlined in Mr Black's report. These are decisions such as an economy-wide carbon tax driving up the cost of living for families, community organisations, service groups, small business and those supporting our families; changes to private health insurance placing more pressure on public hospitals; abolition of the Chronic Disease Dental Scheme; and, for those organisations involved in helping the most needy in our community, the introduction of the Australian Charities and Not-for-profits Commission.

To give you on a local example, Debbie Hill from Lighthouse Care—who provide low-cost groceries for our community—was recently at a forum with the Minister for Social Services. She advised the minister that the cost of additional compliance and red tape as result of the introduction of the ACNC was some $10,000 per annum. Considering that they sell groceries to those needy families in our community for $25 a trolley, that is some 400 trolleys of groceries they can no longer provide. But this government stands here today seeking to repeal things like the ACNC, which will take that burden away and allow community organisations to help those who are in need.

As I touched on earlier, we have the absurdity of the carbon tax. Imagine the savings to our community organisations, charities and small businesses that will accrue through the removal of the carbon tax, the funds they will be able to put back into our local communities, funds and resources that will assist low- to middle-income families, the very families you are talking about in this motion, member for Fraser. They will continue to be disadvantaged by the stubbornness and intransigence of Labor and the Greens.

The coalition government's priority is to provide more opportunities and security for Australian families. As the member for Hughes rightly touched on in his contribution and to quote the member for North Sydney, the focus should be on equality of opportunities. That is exactly what we are seeking to do for all in our community through the introduction of the trade support loans for apprentices, through providing additional concessional loans for diploma and associate degree students for the first time and through working with the university sector to provide scholarships to those from low- and middle-income families who otherwise could not afford university education.

Debate adjourned.