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

I move the following second reading amendment:

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

"the House declines to give the bill a second reading as this bill is a stunt and a broken promise that will increase taxes on low and middle income Australians."

Deputy Speaker, the Prime Minister while he was in opposition repeatedly said, 'what you will get under us are tax cuts without new taxes'. But in this budget we have seen 17 new or increased taxes levied on the Australian people. The Prime Minister said from opposition that this would be a 'no surprises, no excuses' government but we have seen more surprises and more excuses than from a bunch of toddlers at nap time. From this government we have seen a tax-to-GDP ratio that is higher under the coalition than at any point during Labor's term in government. This is despite the Prime Minister saying in August 2013:

Taxes will always be lower under a coalition government.

In August 2013, then Leader of the Opposition Mr Abbott said:

There will be no overall increase in the tax burden whatsoever.

But his own budget papers put the lie to that. When Labor was in government, tax receipts averaged 20.8 per cent of GDP. Under the coalition today tax receipts average 22.6 per cent of GDP over the budget forward estimates.

This is a government which has failed its own tests on economic management. Few economists would say that the hallmark of great economic management is your management of debt and deficit. But that was the test Mr Abbott set himself from opposition. How well has he managed to meet that test? Upon coming to office, this government doubled the deficit through decisions such as giving $1.1 billion back to multinationals and scrapping a range of sensible savings proposals, as well as giving $9 billion to the Reserve Bank of Australia which they had not asked for. In this latest budget, the deficit has been doubled again, doubled for the forthcoming fiscal year from $17 billion to $35 billion.

The government claimed, when in opposition, that it was necessary to drive debt trucks around the country to illustrate the sheer scale of the debt and deficit disaster in Australia. But since coming to office they have done a deal with the Greens for unlimited debt and now, if they were being honest with themselves, they would buy a debt ocean liner and put it out to sea. The decisions made by this government have not only failed their own economic test but they have failed the economic tests that most economists would set—that is, equity and efficiency.

On the equity point, NATSEM modelling shows that nine out of 10 of the wealthiest families are a smidgen better off, while nine out of 10 of the poorest families are substantially worse off. A low-income family with a couple of school-aged kids can lose $6,000 a year under this budget and it increases taxes by $228 for Australians with an income of between $22,000 and $37,000.

On the issue of confidence, the Westpac consumer confidence number is still seven per cent lower than when the coalition won office. Unemployment is forecast to be over six per cent right out to the end of the forward estimates. The Reserve Bank has lowered rates to a level well below what Joe Hockey called 'emergency levels' back in 2013. So much for the statement made by—

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker: I request the honourable member refer to the Treasurer by his title, not by his name.

Don Randall (Canning, Liberal Party) Share this | Link to this | Hansard source

We refer to members by their title, member for Fraser.

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

I thank the honourable member for his intervention. As the former shadow Treasurer said in 2013, Reserve Bank rates were at emergency levels. I do not know what he would make now of the fact that, now that he has moved from being shadow Treasurer to Treasurer, the Reserve Bank cash rate is lower than it then was. And in February 2013 the Prime Minister, then Leader of the Opposition, said:

I am confident that should there be a change of government later in the year, there will be an instantaneous adrenaline charge in our economy. There will be an instantaneous surge of confidence because of an incoming government.

So much for a surge of confidence. Westpac's consumer confidence figure is seven per cent lower than it was under Labor. What this government fails to accept is that under it confidence has gone down, unemployment has gone up and we have seen debt and deficits going up. The economic numbers that should be going down are going up; the economic numbers that should be going up are going down. Perhaps it is no great surprise that the government has attempted to spin its way out of trouble. We have already heard from respected scientist Dr Karl Kruszelnicki about the fact that he feels abused by the way this government used him to promote the Intergenerational report. He said:

I deeply regret that I didn't get to see the full and final version—

and particularly noted its woefully inadequate treatment of the intergenerational challenge of climate change. But we have learnt recently that the problem is worse still. It is not the $11 million spend on ads that we thought it was; it is $36 million being allocated by Treasury to spend on budget and Intergenerational report promotion. At the very time when the government is complaining about a debt and deficit disaster, they are trying to spin their way out of trouble. We have a Treasurer who is at the whim of television shows, who is so fragile that it reminds his colleagues of the time just before the 2009 leadership spill where he said, 'Hey gang, I want to get your thoughts on the ETS,' when he turned to Twitter for advice on the ETS. I suspect now we have the Treasurer saying, 'Hi gang, I want to know what the deficit should be. Tweet me and let me know your views.' That is the standard of economic management we have from this Treasurer who wants to divide us into leaners and lifters, just as his Conservative counterparts in Britain are doing between strivers and skivers. For the coalition, it is all about us and them. It is about trying to divide Australians from one another, rather than trying to build a common wealth. This is a deeply dispiriting budget, a budget which fails the government's own tests, Labor's tests and the community tests of equity and efficiency.

Don Randall (Canning, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Fraser. Is the amendment seconded?

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

I second the amendment.

Don Randall (Canning, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill now be read a second time. To this the honourable member for Fraser has moved as an amendment that words after 'That' be omitted with a view to substituting other words. The question now is that the amendment be agreed to.

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

I welcome the opportunity to address the House on the Labor 2013-14 Budget Savings (Measures No.1) Bill 2014, the clear purpose of which is to support the all-important issues of debt control and fiscal responsibility. As our political history records, national debt in Australia exploded exponentially during the Labor-Green years from 2007 to 2013. Labor spent, and promised to spend, recklessly and seemingly without regard for the long term consequences. In the end, as we know, Australians grew weary of the spendathon and threw them out—in the case of my seat of Bass, with a swing that was the second biggest in Australia at almost 11 per cent. The term 'spend like a drunken sailor' has often been used to describe periods of Labor government. The Howard government toiled for years to clean up after one such period of economic vandalism, and the current effort by the Abbott government is history repeating itself. But the term 'spend like a drunken sailor' does our navy a great disservice; Labor's approach to public money was far less respectful than what might have been expected from modestly-remunerated sailors—drunk or otherwise!

I mentioned the Howard government's years of toil to pay down Labor's debt, and it is worth recalling former Prime Minister Howard's words as he framed the job ahead just prior to becoming Prime Minister in 1996:

When Labor came to power Australia owed the rest of the world about $23,000 million. We now owe the rest of the world $180,000 million. Nothing, my friends, symbolises absolutely completely and comprehensively more than that disgraceful figure the total failure of Labor's economic management over the last 13 years.

The reasons for this bill resonate with the sentiments expressed by former Prime Minister Howard. They resonate with the public's insistence that this parliament continues to redress the current and future debt burden on all Australians.

This bill repeals the second round of carbon tax related personal income tax cuts, which are due to start on 1 July this year. This measure has been introduced to the parliament twice under the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 as part of the package of carbon tax repeal bills. Yet the Senate has now twice voted down this budget repair measure, which was actually put forward by the former Labor government—that is right, this bill seeks to implement a measure first announced by the Labor Party and now they are blocking it. In Wayne Swan's final budget, handed down on 14 May 2013, the former government deferred a second round of personal income tax cuts, resulting in a $1.5 billion saving over the then forward estimates. Due to the addition of two further years to the forward estimates since then, the measure is now worth $2.8 billion to the budget over the next four years. The problem is, the former Labor-Green government never followed through. This was one of nearly 100 'announced but unimplemented' taxation measures. Since becoming the Opposition, they have now twice voted against legislation that implements their own budget repair measure—and they double the damage to the economy by providing no alternative plan to pay for their 180 degree U-turn on this measure. This is not the first time that the Labor Party have done this. They are not only standing in the way of this $2.8 billion savings measure but are also blocking a total of $6.5 billion in other measures that they themselves announced:

You can also add the change of Labor's Student Start-Up Scholarship, provided as a grant, to a loan repayable through HECS—a $2.1 billion measure. You can also add the change to apply an efficiency dividend to university funding—a $1.2 billion measure. You can add the abolition of the discount for paying HECS fees up front—a $336 million measure. When questioned by Chris Uhlmann on ABC AM why the Labor Party is now opposing their own savings, Bill Shorten's only response was, 'Chris, we're the Labor Party.' It is a bit like the fable of the frog and scorpion, where the frog is asked by the scorpion to ferry it across the river. The frog is scared of being stung until the scorpion explains, logically, that if he was to sting the frog they would both drown. Reluctantly the frog agrees and, sure enough, halfway across the river, the scorpion stings the frog, dooming them both to drowning and death. As they are about to sink into the river, the frog says to the scorpion, 'But why?' The scorpion say, 'It's in my nature.'

As we have seen, Australians remember being economically stung by Labor and Labor-Green governments from 2007 to 2013. They understand it is deep in Labor's nature, in their DNA, to spend and borrow unsustainably, and they will not be stung twice. They rejected the Rudd-Gillard-Milne model of economic vandalism in 2013 and they continue to reject Labor's tax, spend, borrow approach to economic management. The sad thing is that the Leader of the Opposition is the IED of scorpion bites—indiscriminately stinging even his own people. There will be some interesting commentary on that from two former Labor prime ministers on the ABC on Tuesday night.

Labor's cynical opposition to their own savings measures is laid bare through a $58.6 billion black hole that continues to grow with every blocked saving—with every new unfunded promise. The Australian people can see Labor has learned nothing from their repudiation at the 2013 election. They understand that we have to act to repair the budget. The Intergenerational report clearly explains why and the Labor-Green politicians in this parliament will continue to be rejected by the Australian people while they maintain a tin ear to the need to restore our economic freedom of action.

Consider the economic inheritance of the Labor-Green years from 2007 to 2013. The cumulative deficits inherited from the former government, as outlined in the 2013-14 MYEFO, total $123 billion for the four years to 30 June 2017. We have now brought that down to $82 billion over the next 4 years. Government debt, if we did nothing to change Labor's borrow and spend trajectory, would have been $667 billion over the next decade. Under the budget settings Labor left us, we would never have got to surplus and we would never have started to repay the debt.

There is both economic and moral virtue to changing course and putting the budget back onto a more secure and sustainable footing. But do not just accept the word of this government that it is important to repair the budget and to get to a point where the government is living within its means. The former Treasurer and Deputy Prime Minister, the member for Lilley, in his budget speech in 2011 said that:

… meandering back to surplus—would compound the pressures in our economy and push up the cost of living for pensioners and working people.

In a doorstop interview on 8 May 2012, the member for Lilley also said that:

… coming back to surplus is about making sure we help those people sitting around the kitchen table when they're figuring out how they will make ends meet.

Again, those were wise words indeed from the member for Lilley. How in all conscience can the Labor Party express those sorts of sentiments about Australian families and then act totally contrary to the interests of those Australian families?

By way of contrast, the coalition's budget is about building a stronger economy. The measures we announced in the budget are responsible, measured, fair and entirely focused on building a strong and prosperous economy. Since the last election, our economy has created a quarter of a million new jobs, and the centrepiece of this budget is a plan to create even more local jobs. Jobs are now growing at about three times the pace they were under Labor. The coalition's 2015 budget reduces the small business company tax rate to its lowest in almost 50 years and, for two years, we are giving all small businesses an immediate tax deduction on any asset they buy costing up to $20,000. This will benefit more than 95 per cent of all Australian businesses.

The budget also delivers for families. Our Jobs for Families reform will deliver a simpler, more affordable and more accessible childcare system, giving parents more choice when it comes to balancing work and family. Low- and middle-income families will be $1,500 a year better off if they are using the childcare system. Families using child care in 2017 on family incomes of between $65,000 and $170,000 will be around $30 a week better off. The Abbott government's 2105 budget delivers for families, for small business and for our economy. It is responsible, measured and fair. It cuts taxes, creates local jobs and delivers a responsible path back to surplus.

This bill is actually a rare conjunction of usually dissenting parliamentary viewpoints. The coalition are wholeheartedly supporting Labor's former intentions. Yet, if I understand the position of those opposite, they are indignant that we are supporting their own budget measure. If Niccolo Machiavelli were alive today he could write a whole new chapter on that sort of Labor logic. Why wouldn't Labor members consider this bill as an olive branch of sorts? Disagreeing in politics is fine when we both have legitimate and different positions, but to do so when both sides strongly agree is internecine politics at its very worst.

Labor should not think we're trying to embarrass them with this bill. They need little, if any, help from us on that front! Rather, we are seeking, in a constructive spirit of bipartisanship, to help them help us help our fellow Australians. The passage of this bill would reflect well on the government and the opposition whilst also advantaging the taxpayer. If there is such a thing as a triple win in politics, this is it. I trust that this approach will not fall on deaf ears or that Labor, out of sheer pique, will not seek stubbornly to cut off their nose to spite their face. Either would be a great shame because, in the end, this bill offers great potential to benefit all Australians.

In conclusion, through its action on this bill the coalition are continuing our efforts to repair and sustain Australia's financial future. It is not an easy task; it is a mammoth task. I said before that we inherited $123 billion in cumulative deficit and debt on an extraordinary trajectory to $667 billion. It is a mammoth task which naturally calls upon the collective efforts of all of us in this House, as well as all Australians beyond it.

Equally, this process is a test of character for those opposite, who pledged to the Australian people to make this saving. I say to the opposition: 'If you do not like our savings, what are yours? What is your plan to restore the economic freedom of action of this country? What is your plan, and how are you going to pay for it?' The wider community rightfully expects the opposition to do what they said they would—nothing more and nothing less than what they promised.

The Labor Party, the Greens and Independent senators might not agree with everything in our budget or every policy announcement—I get that—but they must surely have heard, loud and clear, the message from Australia that our nation must live within its means. How do we live within our means when as a consequence of that concurrent spending, that spending across political cycles that was entrenched the during the Labor-Green years, we now borrow $100 million every day more than this country earns in revenue? To get the budget back under control and regain our economic freedom of action requires an effort on all sides of this parliament. If Labor disagree with this—their own budget savings measure, in the case of this bill—then what is their alternative? What is their alternative plan, and how will they pay for it? I commend this bill to the House.

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

I rise to speak on this curiously named bill, the Labor 2013-14 Budget Savings (Measures No.1) Bill 2014. The bill seeks to amend the Clean Energy (Income Tax Rates Amendments) Act 2011, to amend the Clean Energy (Tax Laws Amendments) Act 2011 and to repeal Labor's planned personal income tax cuts for low- and middle-income earners. Those tax cuts would have been as follows. They would have seen: the tax-free threshold rise from $18,200 to $19,400; the second personal marginal tax rate rise from 32.5 per cent to 33 per cent; the maximum value of the low-income tax offset fall from $445 to $300; the low-income tax offset withdrawal rate fall from 1.5 per cent to one per cent; and the taxable income threshold below which a person may receive a low-income tax offset rise from $66,667 to $67,000. These tax cuts would have provided real help to low- and middle-income earners across my electorate of Blair and south-east Queensland.

These are the families that have borne the brunt of the Abbott government's cruel and unfair cuts and increased taxes. These are families that in significant numbers believed the promise of the then opposition leader prior to the 2013 election. On 6 September 2013—these are his words, not mine—he said there would be 'no cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS'. On 6 August 2013 he said, 'Taxes will always be lower under a coalition government.' One of my personal favourites is what he said on 22 August 2011: 'There should be no new tax collection without an election.' He seems to have forgotten that one whilst occupying the Treasury benches. The low- and middle-income families in my electorate could be forgiven for taking him at his word. Fortunately, they did not take his candidate at his word too much, and I was re-elected.

After all these years, we have seen across two budgets the coalition parties and the Abbott government break the sanctity of those promises. Do not forget he told the Australian public on 22 August 2011, 'It is an absolute principle of democracy that governments should not and must not say one thing before an election and do the opposite afterwards.' That did not survive MYEFO in 2013 and it certainly did not survive the May 2014 budget. It was a principle that was broken pretty quickly by this government, who said one thing before an election and did precisely the opposite thereafter.

Families in my electorate watched in horror as we saw the Abbott government increase taxes and cut services, just as the Campbell Newman LNP government did in Queensland, and look what happened to them—turfed out after one term, despite their record majority of 79 seats out of 89. The Abbott government ripped away funds from the states for local schools and hospitals—$30 billion on one count for schools and $50 billion for the public hospital and health system. This budget continues that. Those opposite want to make families pay more for their kids' medicine and when they take kids to the GP. That is their policy; that is their commitment. One of their proposals was to freeze the family tax benefit payments, eroding help provided for the family budget, or cut family tax benefit part B entirely when youngsters turn six years of age. This bill abolishes tax cuts for those same families whilst blaming us for it, as I have heard speakers from the Treasury benches say. It is a real trick to be able to get a broken promise together with a cunning stunt in the one speech and in one piece of legislation. At the start of the Treasurer's second reading speech, I notice that he was blaming us for this legislation. It is not true. I do not think too many people in my electorate believe much of what the Abbott government has to say, because their attitude towards the Prime Minister is akin to the attitude they took to former Queensland Premier Campbell Newman.

I think the government have a truth deficit, not a budget deficit, in many ways. They have lost the capacity to understand what fairness is. Broken promises have been a real problem for the government, and they have hurt people. People know it, the government know it and their backbenchers in marginal seats know it. Since the 2014 budget, when they have done what they call their listening posts—what we call our mobile offices—they would have heard that message loud and clear. No doubt the endless focus groups at Liberal and National Party headquarters would have told them the same. Certainly the Prime Minister knows it and the Treasurer knows it. Just prior to the 2015-16 budget being handed down, the Prime Minister told radio 3AW in Melbourne:

My determination is to ensure that this Budget is fair. That is my determination …. I don't want anyone to say that this is an unfair Budget.

Simply, they knew very much that the 2014 budget was unfair. This unfairness continues, because the cuts continue. In my portfolio areas, the cuts have continued in aged care and in Indigenous affairs. Over $40 million has been cut from the Workforce Development Fund, over $20 million has been cut from dementia assistance and $145.6 million has been cut from Indigenous affairs. The unfairness continues.

It is interesting, because again and again we hear the Abbott government refusing to accept this unfairness and excoriating the National Centre for Social and Economic Modelling, NATSEM, at the University of Canberra. Who can forget the Prime Minister previously praising that centre as the most reputable modelling organisation in Australia? The coalition proudly boasts that some of its pre-2013 election commitments were 'modelled independently by NATSEM, Australia's foremost social policy modelling consultant'. NATSEM's credentials are accepted across the political spectrum by us and by those opposite. Following the 2014-15 budget, NATSEM analysed its financial impact on a range of families and reported as follows:

The burden on families for 2014-15 falls most heavily on low and middle income families with children. The impact on high income families with children is smaller in dollar terms and percent change terms.

It is quite clear that NATSEM's modelling and its conclusion destroyed any claim about fairness in the first budget. NATSEM went on to say:

The results clearly demonstrate that low income families with children are the main family group to be impacted by this budget. The budget impact is relatively moderate in 2014-15 but becomes more significant by 2017-18.

NATSEM modelling also showed:

Low income couples with children (bottom 20 per cent) are worse off by around 6.6 per cent while single parents are worse off by around 10.8 per cent on average.

NATSEM found that 15 of the 16 electorates hit hardest by the first Abbott budget were held by Labor, with low- and middle-income families in Western Sydney and the outer suburbs of Melbourne overwhelmingly worse off. My electorate of Blair did not escape. NATSEM found that the first Abbott budget would leave families in my electorate worse off by about $406 a year. The impact was more severe in neighbouring electorates, even in the electorate of Wright, which wraps around the bottom part of Ipswich, where families would be worse off to the tune of $439 a year.

The government must have held its breath waiting for NATSEM's modelling and its verdict on their second budget. They were pretty disappointed, and you could see the way in which they attacked NATSEM, which torpedoed the budget with respect to fairness. On the 2015 budget, NATSEM found:

The burden on families for 2014-15 falls most heavily on low and middle income families with children. The impact on high income families with children is smaller in dollar terms and percent change terms … In percentage terms, the impact is clearly felt by the low income families more than high income families.

The modelling across electorates was very similar. In their modelling, Family 1, for example, is a sole parent family with an income of $55,000 and two kids, one at primary school and one at high school. Across the forward estimates in the 2015-16 budget to 2018-19, the Abbott government's cuts and taxes will see Family 1 lose $20,647. By 2018-19, the weekly impact of the Abbott government's 2015-16 budget on Family 1, based on decisions they made previously as well, will be a loss of $117.46. Family 2 is a couple with a single income of $75,000 and two kids, again, one in primary school and the other in high school. Across the forward estimates the Abbott government's cuts and taxes will see Family 2 lose $6,049. By 2018-19, the weekly impact of the Abbott government on Family 2 will be a loss of $38.75. Family 3 is a couple with a dual income of $120,000 and two kids, both in high school. Across the forward estimates, the cuts and taxes will see Family 3 lose $11,575. By 2018-19, the loss will be $62.92 a week. This is the impact of these two budgets on families, and it worsens across the forward estimates. There is no peak and respite: just pain. NATSEM stated:

… low income families with children are the main family group to be adversely impacted by policy changes since the last election. The budget impact is relatively moderate in 2015‐16 but becomes more significant in the outyears.

So the Abbott government's claims to fairness lie utterly in tatters—or dead, buried and cremated, to use of the Prime Minister's favourite phrases.

For most of the last two years, and while in opposition, the coalition gave pushed a hysterical bombast of a budget emergency and a debt and deficit disaster, at every opportunity comparing our economy to that of Greece. That ridiculous rhetoric has vanished in the 2015-16 budget. It is instructive to note that the 2015-16 budget has more debt and deficit. Taxes go up. There is more spending. There is higher unemployment. And it is all there in the budget papers. They reveal at least $3.9 billion of new taxes and increased taxes and charges. Tax receipts will rise each and every year across the forward estimates of the 2015-16 budget. The Abbott government now taxes the Australian public at a higher rate than at any time since the Howard government.

Let us compare tax to GDP. Over Labor's last period in government, tax receipts averaged 20.8 per cent of GDP. Under the Abbott government, tax receipts average 22.6 per cent of GDP, across the forward estimates. Alan Kohler, writing in Business Spectator on 20 May 2015, put the lie to the fiction of the coalition being a low-taxing, small government administration. He dismissed this as:

Spin. The 2015-16 deficit will be $6 billion less than this year because taxes increase by $20 billion because of bracket creep, and spending by $14 billion, making this the biggest taxing and biggest spending government since the GFC. Before that you have to go back to the previous coalition government.

That previous coalition government was the big-taxing, big-spending Howard government. Page 317 of budget paper No. 2 reveals that the Abbott government has doubled the deficit, from $17.1 billion to $35.1 billion, in the last 12 months. They doubled the deficit. Of the government's claims to have inherited $48 billion deficit, Mr Kohler, again writing in the Business Spectator, said:

Spin. At least $10 billion of the 2013-14 deficit came from decisions of the Abbott government, including the $8.8 billion capital injection to the Reserve Bank.

In terms of debt, budget paper No. 1 estimates the net debt at $285.8 billion in 2015-16, which is 17.3 per cent of GDP, the highest in Australia's history. The budget papers estimate net debt to peak at $313.4 billion in 2016-17, which is 18 per cent of GDP—incidentally, some $9 billion more than estimated in last year's MYEFO.

Put simply, net debt under the coalition government continues to grow in nominal terms each and every year across the forward estimates. The spending increases in this budget are another coalition myth buster. The former Labor government keep spending growth at an average of 1.3 per cent in the four years following the global financial crisis. Under the coalition government, spending growth averages 1.8 per cent across the forward estimates. The government has broken its promise to save as much as it spends. Coalition members should have a look at the budget papers because they do not understand what they are talking about. The budget papers reveal a very different story to the spin that this government is presenting about its own last two budgets.

Eric Hutchinson (Lyons, Liberal Party) Share this | Link to this | Hansard source

I actually think the member for Blair believes that. But the Australian people do not. They do not believe it. This bill that I speak on today, the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, really goes to the heart that is the hypocrisy of the Labor Party since the election. This government was elected, absolutely, on a platform of national security. I think that every Australian believes that the federal government should take a very strong line to protect our citizens, and that is exactly what we are doing. There is also an absolute expectation for economic security, and that is what we are determined to provide for the Australian people, because, whether it is a family, a small business, a big business, a council, or a state or federal government, they all know that we must live within our means.

What we inherited was debt and deficit as far as the eye could see. Do nothing. And we had $123 billion of deficits in front of us, over the four years of the forward estimates, peaking in 10 years at a debt of $667 billion. With the Labor spending we inherited we had no way of returning in any way, shape or form to surplus, no way of starting to repay the debt and deficit we had inherited from just six years of Labor government. It is quite extraordinary. They were the single biggest-spending government, in the speed at which spending increased over the six years they were in government.

The hypocrisy of what we see before us today is that in the 2013 budget Labor booked the revenue from the deferral of these tax cuts—but they did not legislate this. This was one of almost 100 taxation measures that were highlighted and booked within the spending, within the revenue—and savings, in some cases—by the previous government and never legislated. This is what we inherited. We inherited, beyond the forward estimates, the skeletons in the cupboard, the kickers. Beyond the forward estimates, we know there was $123 billion. What most Australians do not know is that beyond the forward estimates revenue was projected to increase at around three or 3½ per cent but the spending kicked to nearly double that. This is what Labor left us. The task we have is a real task.

We hear so much from those opposite about unfairness. We often hear the word 'unfair'. This was unfair; that was unfair. What is unfair is stealing from the next generation, stealing from my children and their children, with an inability of this generation to be in charge of its own finances. That is the fundamental unfairness of what Labor left this country between 2007 and when they were booted from government in 2013. Look at what they delivered. I have mentioned the debt and deficit, and we are working on that; we have not finished the job. But what we have done—and it is truly a budget measure as well—is stop the 50,000 illegal arrivals that came in the six years under Labor. We have done that job, and the Australian people know that. We have completed that task. And we have removed the carbon tax. That was a dividend, on average, to every household around the country of $550 per year. That was the dividend of removing bad public policy.

What I hear at the listening posts I hold regularly around my large electorate of Lyons is: 'How are you going to do it? How on earth are you going to get on with the task that we elected you to do? How on earth are you going to do it when you are getting absolutely no help from those opposite, no help at all from the Labor Party?' All complaint; no solution. The bad tenant that trashed the house—and then locked the door and will not let us in to clean up. This is the Labor Party of today.

These are not the only measures opposed by the Labor Party that were nominated as their own savings. In addition to standing in the way of this particular measure, which is a $2.8 billion budget-repair measure, Labor is standing in the way of other measures they announced but are now refusing to vote for. I do not understand—and I think most Australians do not understand—how this could be. There are a number of measures for start-up scholarships that were a $2.1 billion saving. There was an efficiency dividend to university, saving $1.2 billion. These are savings Labor had highlighted and now refuses to support. There is an abolition of the discount fees for paying HECS up-front, a $336 million saving.

An interview conducted with the Leader of the Opposition on ABC Radio said it all. Chris Uhlmann asked Bill Shorten why the Labor Party was now opposing its own savings. His only response was: 'We are the Labor Party.' Chris said, 'We'll get to that, but why won't you even back your own cuts?' Bill Shorten said, 'Chris, we're the Labor Party.' I think that says it all, and the Australian public understand it.

The Budget reply was on Thursday a fortnight or so ago. It will need to be a pretty good money tree—because the Labor Party black hole now totals $58.6 billion—if they are re-elected to government, for the promises they have made. But the Australian people understand it simply does not grow on trees. We thought it was the magic pudding but it is now the money tree, and Australians will not buy it.

We must continue the work of budget repair. The deficit we inherited, outlined in the 2014 MYEFO, totalled $123 billion over the forward estimates. And we are doing the job. With no help from those opposite, we have been able to reduce that to $82 billion. It is nothing to be proud of, but we are making steady headway over the next four years

As I mentioned before, government debt was on a trajectory where, if we were to do nothing and if it were left unchecked and allowed to continue, within 10 years, it would have been at $667 billion.

Under the budget settings that Labor left, the budget would never have got to surplus and repayment of the debt would never have started. That is simply unacceptable. It is simply inacceptable in the context of the family budget, it is simply unacceptable in the context of a small business and it is simply unacceptable in the context of the federal government budget. There is a strong economic imperative—indeed, a moral imperative—to change the course and put the budget back onto a secure and stable footing. This is what I hear when I am talking and listening to people in my electorate. They are very concerned about the direction that our nation is heading.

We have seen what has happened in Europe. We have seen the concern there when governments lose control and it all becomes too hard. I have no doubt that there was a time in Greece, Spain, Italy and places like that when there were people who identified that there was a credible way back to surplus. But they did not take those difficult decisions at the time. They left it and it got to a point where it was simply impossible to see a pathway back. Then you start to have the very difficult conversations that are going on in parts of southern Europe at the moment about the right way to deal with these issues and the conflict that that will bring.

It really is a challenge for all of us. In Australia, we are truly the lucky country in every respect. But we must heed the warnings. I believe that Australians understand that we cannot afford to go down that path ever in this country, and that is what they elected this government to do. They elected us to make those difficult decisions. This has been confirmed by Labor's inaction, inability and unwillingness to support their own budget savings measures in the Senate. We are quite clear that the Labor Party will never do this job. The Australian people know that it is up to the coalition to reset the course of the federal budget to head back towards something that is sustainable into the future and not to leave that challenge to the next generation.

In respect of the bill, this was a legacy of, as I say, the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013. It was the final package of bills to repeal the carbon tax. It was introduced into the House of Representatives on 14 July 2014 and it was agreed by the Senate on 17 July 2014. However, a bill to repeal the legislation in the 2015-16 tax changes was no longer part of this carbon tax repeal package. This was the history, if you read through the plan that the previous government had to go to an emissions trading scheme. I think there was maybe even a realisation by those opposite that the policy that had been forced upon them by, effectively, the Greens was failing and that this was a desperate attempt, at that time, to convince the Australian public that they had a credible plan. It was not a credible plan, and the Australian people understood that.

What we see here before us is a measure that was reasonable at the time, that was proposed by the Labor Party when in government but that was not legislated, and I call on those opposite to examine the morality of this. It is not about us, it is about the Australian people, because, at the end of the day, it is we who need to take responsibility as a government. We know we want to see lower taxes, and in the recent budget we have taken a step in that direction with the engine room of the economy—small businesses in this country—being given an opportunity to be their best selves through a reinvigoration: a tax cut for incorporated entities, a discount of five per cent for those entities that are not incorporated and the opportunity for those small businesses, through the $20,000 instant asset write-off, to reinvigorate their businesses, to employ more Australians and to grow the economy.

We want to see lower taxes in this country. But, in this instance, this goes to the very heart of the hypocrisy that was the Labor Party. In government they saw fit to introduce these measures, and now in opposition they are unwilling to support them. Quite frankly, the Australian people understand. The people and families in my electorate know that that is unacceptable. The small businesses know that that is unacceptable. Governments, as well as small business and families, must live within their means. I encourage those on the other side to examine their consciences and support this measure.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I rise not to oppose the Labor 2013-14 Budget Savings (Measures No.1) Bill 2014 before the House tonight but to point out the rank hypocrisy of the government. Australian people do recognise one thing, and that is that you cannot trust the Abbott government. They say one thing before the election and another thing after the election. They constantly change their policies, they are a high-taxing government and they are a government that has not delivered what they promised to the Australian people.

When the Abbott government came to power, it was with one of the best performing economies in the developed world. We had a triple-A rating by all credit agencies. Since they have been in power they have done nothing but trash the economy. Every time we hear the Treasurer open his mouth he is trashing our economy. Business confidence is at an all-time low. People could be forgiven for thinking that this country was in a very sorry state. But even with the Abbott government in control and even with the current Treasurer we have, we are still performing quite well.

The mantra when the government was elected was, 'The adults are back in control.' One thing that adults do is take responsibility for their actions. If I could say, this government has at no time taken any responsibility for its ineptitude and for its failure in the area of economic management. I think that they stand condemned. The one thing Australian people are looking from their government is honesty. They want a government that is actually truthful, they want a government that does not govern with three word slogans, they want a government that has got a plan and they want a government that is actually really looking at strong economic management.

If I could just refer to the member for Lyne's contribution to the debate, he talked about debt and deficit. He was saying that the government has not finished yet. I think the Australian people need something a little bit more honest than that. What really has happened is that the government has not started yet. It is not finished; it has not even started! What it has done is lead to a massive increase in our debt and a doubling of our deficit. If that was what the government was elected to do, then it has succeeded. Unfortunately, the Australian people put faith in the Abbott government. The Australian people thought they could actually deliver on their promise to get rid of the deficit and to lower debt. But the government has done anything but that.

Along with that, the government have cut funding to education, they have cut funding to health and they have broken every promise they made to the Australian people before the election. I do not think that is good enough. I really do not think that is good enough. It is a high taxing, big spending government. That is what Australia has got: a high taxing, big spending government, where debt has blown out and the deficit has doubled. I think it is high time that they really looked at themselves, looked at their policy and decided to inject some fairness into it and deliver to the Australian people.

This year's budget and budget changes built on the unfairness of last year's budget. Last year's budget was inherently unfair. It targeted those people who could least afford to be targeted. It targeted people who look to government for support. Instead of getting that support, what this government delivered was GP taxes and freezing the rebate paid to doctors for a four-year period, which I might add is still in place. That in effect will lead to GPs being tax collectors. Eventually, doctors are going to need to charge a fee so that they can survive. The best information that I have been able to receive is from the AMA president, who indicated that that increase will be in the vicinity of around $8 a visit.

I implore the government to actually act as adults, take responsibility for their poor economic management, take responsibility for the skyrocketing debt in this country and sit down with the opposition. We are happy to help them out and we are happy to work with them to address some of the economic problems that seem to be just a little bit above them. We understand that, as I was saying, fairness is not one of the strong points of the Abbott government. We understand that putting tax on petrol at the bowser is something that the Abbott government does not understand. It does not understand the impact that it has on people, like on families and on low- and middle-income earners. I think it was the Treasurer that said that if you are on a low income, it will not affect you.

You may ask why that is. The Treasurer believes that lower income families do not drive cars. In Shortland electorate, it is a relatively elderly electorate. We have got a lot of pensioners. I think in New South Wales, where Shortland electorate is, it is the electorate that has the most pensioners of any Labor electorate. It has the fifth most pensioners of any electorate in NSW and about the seventh most pensioners of any electorate in Australia. I might say that the median income is fairly low. Those pensioners struggle. But the way the area that I represent is set out, you cannot rely on public transport. That is because it is a very spread out electorate. It is a series of little villages that have come together to grow into suburbs and grow into regions, like Lake Macquarie and the Central Coast. For people in those areas, no matter what their income, if they do not have a car, they are unable to get to the shops, to the doctors, to travel and visit their friends and families, and to survive.

The statement by the Treasurer shows just how out of touch the Abbott government is with the Australian people. It shows how they do not understand that the changes and cuts that are going to cost Australian families $6,000 a year will really hurt. They do not understand the impact on charities like the Salvation Army, which had their Red Shield Appeal last Saturday. I was very happy to go out and assist with that. I knocked on one person's door, and this guy was a cement renderer. He said:

I don't have much money. I lost my job last week, but I have some change in the middle of my car.

He came out with a handful of coins and threw them in. He said:

I know that it is hard times. I know that jobs are hard to get, and I know that the Salvation Army is being called upon to provide a lot these days.

So I say to those members on the other side of this House—the government members of a high-taxing, big-spending government who cannot bring the deficit under control, who have seen debts skyrocketing out of control, and who took over at a time when we had an AAA rating from all rating agencies—to be honest with the Australian people. I ask them to deliver real economic reform, and deliver it to all Australians, not just a few selected Australians. Tell the Australian people that you are not up for the job, that you are unable to manage the economy, and that you are unable to deal with the debt.

We hear in this House every day how the government is delivering increased spending in every area, yet on the other hand we hear how they are cutting and making savings. Please! That is conflicting. Surely, they are either spending more, or saving more. Or maybe it is the extra taxes that they are putting on the Australian people?

I am not rising to oppose this legislation. I am rising to point out to the Australian people just how inept the Abbott government is—how unable and incapable they are of handling the economy; how they have let the Australian people down; and how they have promised one thing before an election, and delivered something else after the election. Time and time again, they have told this House that the 'adults are in control', but, as adults, they have been unable to accept responsibility for their poor management of the economy. They have been unable to accept responsibility and show real leadership to prepare Australia for the future with jobs for the future.

They have been unable to accept responsibility for cutting from health—they are saying that they are spending more. They have been unable to accept responsibility for making sure that every Australian will have access to quality health. They have introduced legislation that is only going to deliver hardship to all Australian families.

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

I rise to speak on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, on taxation policy, and on the 2015 budget. Let me start by relating a relatively bizarre incident that occurred last month. On 24 April this year I received an email from the ALP National Secretary, George Wright. He wrote that I was randomly selected to help the ALP in its year of ideas. In fact it is worth quoting the email verbatim. I says:

Friend

2015 is the year Labor puts forward our ideas to the Australian community.

We want to hear from as many people as possible to get views from as broad a section of the community as possible.

That's why you've been randomly selected to participate in this survey about your values and priorities. Could you please take this survey and let us know what's important to you?

I hope you take this chance to let us know what you think our policies and priorities should be.

Thanks for taking the time to make sure we do a better job of developing the policies that will make Australia a fairer, better country.

George Wright

Labor National Secretary

I am much obliged to Mr Wright for asking me for my views. I am surprised that Labor admits that I have a legitimate contribution to make, given the slanderous things their candidate, the former member for Eden-Monaro, has had to say about me while hypocritically claiming he will not indulge in personal attacks. He might ludicrously label me an 'ideological extremist'—me of all people. Obviously, the national secretary of his party thinks differently, treats me as a friend and values my ideas! Indeed, what an embarrassment for Labor. They have to turn to Liberal party members of parliament to get some ideas.

I am happy to help them. They should sign on to the government's agenda, and help pass the budget in full. They should vote for this bill that seeks to repair the budget problems they imposed on the Australian people. As the Treasurer said in his second reading speech, this bill repeals the second round of carbon tax related personal income tax cuts that are due to start on 1 July 2015, because that is what the Labor party promised prior to the last election as a budget savings measure to help repair the budget. However, since the election they have failed to keep their promise to the Australian people. We are now introducing legislation to allow the Labor Party to keep its promise to Australian people to fix the budget. The cost to the budget for the second round of personal income tax cuts has increased from $1.5 billion to $2.2 billion over the current forward estimates period to 30 June 2018.

The government's 2015 budget has been a well-received budget across the Australian community and in my electorate of Eden-Monaro. Since the budget, I have been crisscrossing the 29,000 square kilometres of my electorate—that is an area equivalent to a European country like Belgium—to find out what my constituents think. In the week or so since budget day, I have had listening posts or other engagements in Queanbeyan, Bredbo, Bega, Moruya, Bingie, Merimbula, Jerangle, Tathra, Narooma, Dalmeny and Frogs Hollow. That is a good cross-section of the electorate and I have met hundreds of people. What I have found is a good reaction to the soundness of the budget. There is a recognition that it is a pragmatic way to proceed given the enormous constraints and roadblocks caused by an unthinking Senate, led by the ALP and the Greens. There is a general recognition that, while last year's budget might have tried to bite off more than we could chew, it is understood that this budget is taking the path to fiscal improvement, admittedly more slowly, in a constructive way that gets us measured progress.

In a macroeconomic sense, what I can note is this: we inherited a deficit of $48 billion. The deficit for the budget year is now estimated to be $35 billion and it is forecast to reduce each and every year to below $7 billion over the next four years. Over four years, this means that we will have reduced the $123 billion of deficits inherited from Labor by over $40 billion to $82 billion. Because of our efforts, the deficit reduces each and every year on average by around half a percentage point of GDP. For those of my constituents who are concerned that we may be dropping the ball on fixing the budget, can I say: you should not believe everything you read in the newspapers and hear on the radio or TV. In fact, the budget explicitly contains a credible path back to surplus.

I understand that the Prime Minister and Treasurer are reluctant to give the firm commitment of getting back to surplus in five years time, in 2019-20, with surpluses projected over the remainder of the medium term, as it says on page 1-8 of Budget Paper No. 1. The debacle of Gillard, Rudd and the member for Lilley, former Treasurer Swan claiming on hundreds of occasions that they were getting back to surplus or had in fact actually delivered a surplus, when in fact they were just blowing out the deficit by ever more billions of dollars, is not something we want to repeat. They are concerned about the 'curse of Lilley'. However, as a mere backbencher I feel I can point to the budget papers and say that, on the basis of all that is known now, the Treasury experts are predicting a surplus in 2019-20, five years from now. With such a surplus, we can start paying down Labor's debt.

Let me tell you about Labor's budget black hole. Labor has a budget black hole of more than $58 billion. Before the Leader of the Opposition's budget-in-reply speech, Labor faced a $52 billion budget black hole, but, by 8 pm that Thursday night, that hole had grown to $58.6 billion. Labor is blocking $17.2 billion worth of government savings and revenue measures, including more than $5 billion of their own savings. Labor is also calling on the government to restore $31 billion in savings that have already been banked, including spending an additional $18 billion in foreign aid. Labor would deliver higher debt and higher deficits.

As former New South Wales Labor Treasurer Michael Costa wrote in The Daily Telegraph a few days ago, on 26 May, the Leader of the Opposition's:

… refusal to acknowledge let alone deal with the budget deficit and emerging debt burden, which the Rudd government was largely responsible for, is a clear example of the consequence of union and special-interest politics.

It's tragic that the party of Hawke and Keating which did so much to liberalise and economically reform the Australian economy has now embraced kindergarten Keynesianism and the infantile ideology of anti-neoliberalism.

Mr Costa could not have been more accurate. Labor are indulging in 'kindergarten Keynesianism'. In my view, kindergarten Keynesianism is when the left takes the most simplistic interpretation of what the great economist John Maynard Keynes said about economic policy and turns the solution to every social, cultural and economic issue facing the nation into a simple recipe of spending more and more taxpayers' money. It is nonsensical and a complete travesty of what the great man actually proposed. They have no constructive plan for Australia and, if they are ever elected to government again, there will be a very high price for Australian families.

For example, Labor has returned to its failed carbon tax policy. Labor says it will bring back its failed carbon tax, a tax which belted up household costs by some $600 a year without cleaning up the environment. Labor wants its tax on electricity and will not give up on the past. So you have a very clear contrast between the coalition government, which wants to help business and jobs, and Labor, which wants to hurt business and jobs by increasing taxes like the carbon tax. The coalition government got rid of the failed carbon tax and, in its place, our Direct Action Plan is set to achieve and exceed the bipartisan cuts to emissions on targets. Labor will bring back the carbon tax and reopen the people smugglers' opportunities, threatening lives and billions of dollars in uncontrolled expenditure on detention centres. At the first sign of rising mineral commodity prices, you can bet that Labor will return to the mining tax as well, despite its denials.

One of the other things you can count on with Labor by their own admission is that they will raid your super if you give them half a chance. Their latest thought bubble is a big new tax on superannuation and retirees. Retirees are threatened by a multi-pronged attack to their retirement savings by the Australian Labor Party. As of the latest census, there are some 43,984 people over the age of 55 in my electorate. That is 32.5 per cent of the population of Eden-Monaro, and compares to only 25.6 per cent for the nation as a whole. So Labor's attack on retirees is a dagger at the heart of the incomes of a sizeable proportion of the people I represent in this parliament. What is the threat? Two weeks ago, Labor's shadow Treasurer confirmed that Labor will 'fix' the superannuation system with a big new tax. But first a little history lesson. I remind the House that Kevin Rudd, before the 2007 election, said that there would be no change to super—'not one jot, not one tittle'—and they broke their word. In fact, they increased taxation on super by just short of $9 billion. In particular, Labor sought to add a new tax on earnings on super above $100,000. After all that, in 2013 they promised that for five years they would not make any changes to super. In fact, that was a promise by the then Labor Treasurer, who is now the Labor shadow Treasurer, the member for McMahon. And now they are at it again. In 2015, amongst other proposals, Labor has announced that they would reduce their previous policy of a $100,000 income threshold to a new tax on super above just $75,000. This will affect, by some estimates, more than 300,000 retirees. They have also said that they would not index those thresholds, affecting thousands more Australians as the years pass by and inflation brings the effective threshold down every year in real dollar terms.

So much for the 2013 promise of a five-year moratorium on changes! However, that promise of no new changes did not end in 2013. The Leader of the Opposition, as recently as 22 April this year, said:

… these are the final and the only changes Labor will make to the tax treatment of superannuation.

Sounds like a strong assurance, doesn't it? But, less than one month later, in May this year, the shadow Treasurer at the Press Club said:

… what we have flagged is that we are still doing work on other aspects of superannuation policy.

So there is obviously more to come. Indeed, they are also explicitly flagging attacking the negative gearing that thousands of retirees rely on. On 22 April this year it was reported in The Sydney Morning Herald that, in a speech the previous day at the National Press Club, the Labor shadow Treasurer stated that it would be 'irresponsible to rule out going to the next election with changes to, for example, negative gearing'.

What might Labor be planning? We do not have to go far, as they have been doing media interviews to float their impending policy. Journalist Troy Bramston of The Australian newspaper reported on 22 May this year, only a couple of weeks ago, that the New South Wales branch of the Labor Party—indeed, the shadow Treasurer's own branch of the Labor Party—was having internal discussions about an $8 billion hit to the negative gearing of investors in Australia. That $8 billion hit would be in the realm of the $9 billion they hit superannuation for in their last term of government. Labor have made a calculated gamble based on an appeal to the politics of envy to target these retirees to fund the vote-buying spree that the Leader of the Opposition announced in his budget-in-reply speech. It is cynical and disreputable. It is not about good policy. The government recognises that superannuation is the hard-earned saving of Australians, and not a piggy bank to raid as a desperate measure to fix Labor's budget black hole. That is why we on this side of the House have committed to no adverse or unexpected changes to superannuation this term. I say to the retirees in Eden-Monaro: you cannot trust your savings with Labor.

May I say in conclusion that the coalition government's 2015 budget is a 'have-a-go' budget. It delivers for families, for small business and for our economy. The budget is the next step in our economic plan for jobs, for growth and for opportunity. It is a responsible budget. It is measured and fair. It cuts taxes and will create jobs, and it delivers a responsible path back to surplus. The Labor Party should abandon its negative campaign and support our policies, including this bill. That is the one big idea they should adopt for their so-called year of ideas.

Wyatt Roy (Longman, Liberal Party) Share this | Link to this | Hansard source

Today I feel like we are entering a new era of very low-grade politics. The Labor Party came into this place today and tried to distract as much as they could from the budget and used something that is a very important political issue as a political football. As part of this pretty shameless act they said, 'Isn't it terrible that half the House was empty when we just had a routine tabling of a private member's bill?' It is pretty interesting that we are here in the chamber tonight debating a very serious bill and I see one Labor member here—one Labor member on a bill that really will define what the modern Labor Party stands for.

Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

How many are there on your side? Two, three—four.

Wyatt Roy (Longman, Liberal Party) Share this | Link to this | Hansard source

Which is a few hundred per cent more than what is on your side. But it is a really interesting thing, because this bill is a serious question about what the modern Labor party stands for. We have a situation—and let's remove the partisan politics from this discussion—that we have to face as a country, not as political parties, not as politicians, but as a country. We have inherited from the former government hundreds of billions of dollars worth of debt. We have an economy that is reliant very much on the mining boom, and inevitably that will come off. And we have an enormous demographic challenge facing our nation. We can stick our heads in the sand and pretend that that does not exist or we can prepare for the future. The reality is this: today there are 7½ people working for every person who is not working. By 2050, when my generation is heading towards retirement, it will be 2½. We have these really pathetic political discussions in this chamber where we go across from one side to the other about how we can score these cheap political points, but the reality facing our country at the moment is this: if we cannot manage our finances as a nation, if we cannot set up our country so that, one, our government lives within its means and, two, the private sector is as productive as possible, as innovative as possible and as outward-looking as possible so that we have as many Australians in the best possible jobs and earning the highest real wages and ultimately paying more tax, we are going to say to the next generation of Australians, 'We're sorry. We weren't up to the task. We weren't up to the challenge and, collectively, we'll hand over to the next generation of Australians a country with less opportunity than we have here today.'

I think it is up to us as political parties, as politicians and as a parliament to rise to that challenge and say that it is not good enough to hand over to the next generation of Australians a country with less opportunity. The Productivity Commission says that if we do nothing, which is essentially what the modern Labor Party stands for, then just to meet the demographic challenge—and it is not a political party saying this; it is the Productivity Commission—we would have to raise taxes by 21 per cent. That is before we add funding to schools or roads or hospitals or important schemes like the National Disability Insurance Scheme.

If we cannot act and have a government that lives within its means, a government that can provide for the future of everyday Australians, then we are going to say that this is all too hard, that we are going to have a cheap political win today and our kids and grandkids—my generation—are going to pay 21 per cent more tax than we currently do. I do not think there is anything fair or equitable in that. We are going to say to them that because we could not manage our own finances, because we could not live within our means, the next generation of Australians are not going to have as much money to spend on roads, on schools, on hospitals and we are not going to have the ability to provide the opportunity to them that is provided to our current generation.

This is a reality that we all know in this place. The Labor Party might sometimes like to pretend that these challenges are not there, or make cheap political arguments wherein they say: 'Look, it's all okay; it's fine. Nothing to see here. We'll just keep handing out other people's money for as long as we can.' But this reality exists for us as a country, and if the Labor Party and the Liberal Party cannot come to terms with that, if we cannot live within our means, and if the people in the other place, in the Senate, cannot come to terms with that, then that is what we are going to do. We have to be prepared enough to say that we are just going to hand over a country where you pay more tax and have less opportunity than we do. I do not think that is a fair or equitable thing for us to do as a nation.

This bill shows the remarkable turnaround of the modern Labor Party, from the Labor Party of Bob Hawke and Paul Keating, who did amazing things for our country—opened up our economy, increased the prosperity of our nation. What does the modern Labor Party stand for? I cannot understand what Bob Hawke and Paul Keating would see, looking at the modern Labor Party. The bill we have before us contains saving measures that the Labor Party in government proposed—saving measures not from this side of the chamber but from the Labor Party when they were in government and that now, under new leadership, they are trying to deliver as a new direction. It is simply the most populist political party our country has seen in decades. This is no longer the Labor Party of Bob Hawke and Paul Keating. This is just a populist movement seeking power for power's sake. And now, in opposition, they are opposing these saving measures.

We all know in this place that we have to have a government that lives within its means. The Labor Party was prepared in government to put some savings—not enough savings, but some savings—on the table so that the next generation did not inherit an enormous amount of debt, so that the next generation did not pay much higher taxes, and they proposed some savings. And of course now in opposition they have this crazy political ideology that will just keep rattling the money tree, and money will just keep falling out and they will promise absolutely everything to everybody. Surely that is the easiest political thing for somebody to do if all they want to do is seek power for power's sake. If all we wanted to do in this place was to be politicians who came here and sat on this green leather and never actually had to do anything good for the country, we would just promise more money for everybody for everything. But the reality is that the next generation of Australians will pay for it. The reality of us seeking our own political survival today is that the next generation of Australians will have less opportunity. Seeing the Labor Party opposing their own savings in this bill, I think the next generation of Australians should be very disappointed in the level of political discussion we have as a nation. They should be disappointed in the lack of credibility of the modern Labor Party, and they should be disappointed by a political class that thinks it is okay to just hand the problem over to the next generation.

While we are frustrated, while we are disappointed, I am eternally optimistic that we can rise to the challenge in this place and we can hand over to the next generation of Australians a country that has more opportunity, not less; a country where we pay lower taxes than we pay today, not higher taxes; and a country that reaches its potential, that takes hold of the opportunities of this century. But if the modern Labor Party cannot even bring itself to support a bill like this—their own savings—there is very little hope. So, my plea to the members of the Labor Party, those members opposite, is: support this bill, support your own savings and show the next generation of Australians that you are not just going to kick the can down the road and make them pick up the bill. For that reason, I commend these bills to the House.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

This bill is very well named. Indeed, it is quite deliberately named the Labor 2013-14 Budget Savings (Measures No. 1) Bill, because, despite being introduced by a coalition Treasurer, it is very much a Labor bill. It is a Labor bill because it gives effect to a commitment made on 14 May 2013 by the then Treasurer, the member for Lilley. In his final budget as Treasurer, the member for Lilley committed the then Labor government to the deferral of a second round of personal income tax cuts, a measure that was estimated at the time to save $1.5 billion over the forward estimates. The tax cuts were to be unwound because their original purpose—to compensate taxpayers for the movement of a carbon price from a fixed to a floating price—was no longer necessary. This was because the floating carbon price forward estimate from 1 July 2015 was revised significantly downwards, from $29 to $12 a tonne, a figure below even the fixed price that taxpayers were already paying.

However, Labor happily banked the $1.5 billion saving to prop up their flagging budget bottom line. But the people of Australia well remember the chaos and dysfunction of the dying days of the Labor government in 2013. It will therefore not be a surprise that Labor did not follow through with what it said it would do at the time. The legislation was not unwound. The weakened, disorganised, chaotic government of the day could not sufficiently get its act together to introduce legislation giving effect to savings in its own budget. So, this bill is as welcomed as it is late. We should have been debating this bill in this House, in this session, two years ago. However, whether by incompetence or by design, Labor failed to deliver. So, yet again, it is left to the coalition to repair Labor's budget mess. Members opposite should be lining up to support this bill. After all, it fulfils the intention of the 2013 Labor budget.

The member for Lilley should certainly be supporting it, and so should all those opposite who supported him to be Treasurer for all those years. The member for Lilley will, I am sure, also be enthusiastic in his support for this bill because it charts a sustainable path back to surplus. We all know that the member for Lilley liked to talk about budget surpluses—so much so, he had a persistent habit of announcing budget surpluses that failed to materialise. But, surplus or not, printing and distribution companies were kept in business producing glossy brochures proclaiming his budget-conjuring genius. But perhaps I am too harsh on the member for Lilley. He did make a very good point during his budget speech back in 2011 when he remarked:

... meandering back to surplus would compound the pressures in our economy and push up the cost of living for pensioners and working people.

Fine words from the then Treasurer. Unfortunately we know that, in six budgets, he never quite led Australia back to surplus—meandering or otherwise.

And we must also not forget that not only did Labor promise this measure in their final budget; they also took it to the last election as an election promise. In the time that has elapsed since 2013, the cost to the budget of not passing this measure has increased over the forward estimates. The explanatory notes to this bill, prepared following the 2014-15 budget, identify that the cost has now risen from $1.5 billion to $2.2 billion in the period to 30 June 2018. It will now have risen further.

So here is an opportunity for Labor to finally make good on their commitment to budget responsibility and to make good on their own election commitment. They could not do it in government but now, finally, they have an opportunity to make good on their rhetoric and support a government that it is serious about getting our country back to surplus. Sadly, I have my doubts about the opposition's commitment to budget repair. After all, this is an opposition which has combined with their old friends the Greens in the Senate to block so many of the government's savings measures necessary to get Australia's finances back on track.

Mr Danby interjecting—

There is an interjection about the opposition's friends the Greens. Sorry, they were not only their friends; they formed a coalition government with them in the last parliament. They are now an opposition who have favoured politics and partisanship over responsible economic management. So much so, we have seen the ludicrous scenario of a Labor opposition voting against $5 billion worth of budget savings measures proposed by Labor themselves when they were in government. They are voting against their own budget savings measures! Such obstructionism may be in Labor's short-term political interests but it is not in the interests of Australia's long-term financial sustainability. It is time for Labor to be responsible—hard as that may be. It is time for them to put their own interests aside and to join with the government to back a bill that enacts savings measures supported in principle by both sides of the House.

I commend the bill to the House.

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

It is no wonder that Labor members took themselves off the speakers list. They are embarrassed about the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 and they are embarrassed about the fact that, through their obstructionist behaviour in the Senate, they are holding up their own bills to help repair the budget situation. The member for Melbourne Ports made a comment during the member for Ryan's excellent contribution to this debate. I do not think it would have been recorded in the Hansard but I will record it. He voiced his objections about the Greens. The member for Melbourne Ports does not like the Greens. He is probably a little more in favour of them than I, as a Nationals member, am. He knows full well just how obstructionist the Greens can be and the agenda that they are running. I will give the member for Melbourne Ports his due. He has scant regard for the Greens and their social agenda which is damaging to this nation.

The bill that we are debating tonight talks about Labor's 2013 budget policy of repealing the second round of carbon tax related personal income tax cuts which are due to start on 1 July. In opposition, we committed to keeping the first round of personal income tax cuts and all the associated pension and benefit increases—and they have been retained. We said prior to the September 2013 election that they would be retained and, indeed, they have been retained. We have also delivered further savings to Australian households by removing the carbon tax itself.

The carbon tax was that wonderful piece of public policy that the then Prime Minister Julia Gillard announced within months of being elected. I remember it well. We had the smiling, bearded member for Lyne standing behind her. He had grown a beard to hide his appearance in public because he was so embarrassed about the fact that Labor also had to get the Greens vote—and we also had the Independent member for New England. Julia Gillard realised that she needed the support of the crossbenchers, she needed the support of the Greens, to hold the numbers in the parliament. I suppose you can say fair enough, numbers is what politics is all about; you cannot govern if you do not have the necessary numbers. But you should not govern if you have to almost sell your soul to achieve the treasury bench. You should not govern if, to have the numbers, it means you have to give the independent crossbenchers or the Greens everything they want. And that is what we saw after the 2010 election. That is what we saw in early 2011, when Julia Gillard stood there at that infamous press conference and announced that there would be a carbon tax—after she had so famously said: 'There will be no carbon tax under the government I lead.'

But the removal of the carbon tax is saving the typical Australian family $550 a year. That is a significant saving. We all know that the typical Australian family—indeed, any Australian family—is under cost-of-living pressures with maintaining family budgets, and it is not easy. Five hundred and fifty dollars is a big saving. But we know what Labor is going to do if Labor does get re-elected next year: they will reintroduce the clean energy or carbon tax—call it what you will. They will reintroduce that legislation. Goodness knows, we do not need that!

This bill implements a measure first announced by the Labor Party. In the member for Lilley's final budget—thank goodness it was his final budget!—when he handed it down on 14 May 2013, the former government deferred a second round of personal income tax, and that resulted in $1½ billion worth of savings over the then forward estimates. Due to the addition of two further years to the forward estimates since then, the measure is now worth $2.8 billion—I will repeat that: $2.8 billion—to the budget over the next four years.

The former government, the Labor government, never bothered to legislate this May 2013 budget measure. This was just one of 100 announced but unimplemented taxation measures left to us by Labor. It was like, as the Treasurer announced today, time bombs left in the cupboard for us. When we opened it, there they were.

Upon coming to government, we attempted to legislate this Labor measure as a matter of urgency. We had to do it, because we did have a crisis. We had a crisis of confidence in business. We had a budget emergency. There was so much despair and gloom about the situation that we were left. We all know there were accumulated deficits as far as the eye could see, with projected debt of $667 billion if we did not act. As such, this measure was introduced to the parliament twice, under the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 as part of the package of carbon tax repeal bills. However, Labor have now voted twice against this legislation—twice—which implements this budget repair measure, without outlining an alternative plan for it. That is the trouble we find with Labor. Even in the budget reply speech delivered by the member for Maribyrnong, the would be if he could be Prime Minister—

Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Will be.

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

Not 'will be', member for Melbourne Ports. God forbid! He would be if he could be, but hopefully never will be. Surely the Australian public are smarter than that! But, in his budget in-reply speech this year, the debt just blew out and out and out. We heard the Treasurer, in question time today, mention the fact that, for every minute that the opposition leader stood and delivered that budget in-reply speech, it would cost this nation, if it were to be implemented, another $200 million. Thank goodness no-one from Labor's side called for an extension of time! It was $200 million a minute—that is just extraordinary—but without any possible way of saying, 'This is how we will pay for it; this is what we will do if we are elected to govern this great nation, and these are the savings that we will implement to actually pay for it.'

This is not the first time that Labor has opposed its own budget repair measures. In addition to standing in the way of this $2.8 billion budget repair measure, Labor is also standing in the way of other policies that it itself announced but is now refusing to vote for. Labor measures that Labor now opposes now total—they have now racked up—$6.5 billion. You can look through the list. There is this particular $2.8 billion budget repair measure; the change of Labor's student start-up scholarships, provided as a grant, to a loan repayable through HECS, which was a $2.1 billion savings measure. The abolition of the discount for paying HECS fees up-front was a $336 million savings measure. The change to apply an efficiency dividend to university funding was another $1.2 billion savings measure. And they all add up.

The trouble is: Labor could not manage the country properly in the six years from 2007 to 2013 when in government. They could not manage government. They certainly could not manage money. And we all know of Labor's absolute fiscal ineptitude when it came to making sure that the economy was ticking along nicely and debts were being repaid. And what did Labor leave us? They left us with $133 million a day over and above what we could afford to pay. So, every day, when Australians go out to work, and every day, when we are trying to run the economy, we are trying to pay our debts and we have got balance of payments figures, but, under Labor, we are $133 million a day over and above what we should be. And we have got that down to $96 million a day. That is way, way too high. But we are getting it under control because of sensible, measured, responsible Treasury management by Joe Hockey, the member for North Sydney.

When questioned on why the Labor Party is now opposing its own savings, the member for Maribyrnong's only response was: 'We're the Labor Party.' What sort of response is that? Chris Uhlmann, on ABC AM on 17 July 2014, asked: 'And we'll get to that, but why won't you even back your own cuts?' And Bill Shorten, the member for Maribyrnong, says: 'Chris, we're the Labor Party'! What sort of response is that to a question? 'How are you going to pay for it?' 'We're the Labor Party.' I mean, seriously! These savings now form part of the $58.6 billion black hole of the Labor Party—$58.6 billion; it is just extraordinary!

We have to get on with the job of repairing the budget. That is what good Liberal-National governments do. We come in and do that. We did it in 1996. Kay Hull, my predecessor, was elected in 1998, and she often talked to me about the hardship and heartache that, even two years in to government, the Howard government, in its early years, suffered as a result of trying to fix up the mess that Labor left it. And it did, with prudent fiscal management by John Howard; by Peter Costello; by the National Party leaders at the time, Tim Fischer and John Anderson, and, later, Mark Vaile. They fixed up the mess that Labor left and restored confidence to regional Australia and did all the sorts of things that people expect Liberal-National governments to do. And, once again, in September 2013, the Australian public tasked us with that very important job of fixing up the mess left by the Rudd-Gillard-Rudd years. But what do we get? We just get baseless accusations in this place, we get measures of mass distraction in this place from those opposite and then, when it goes to the Senate, we, again, get obstructionism; again, we get held up; again, Labor will not even pass their own budget savings measure. I say: shame on them.

Our budget is about building a stronger economy, and that is what we saw when the Treasurer, Mr Hockey, announced his 2015-16 budget. While Labor is distracted about all things which are not getting on with the job of creating prosperity, are not about generating new jobs, are not about fixing our balance of payments and are not about increasing hope, reward, opportunity and investment, we are getting on with the task of building a strong and prosperous nation. The focus of the Abbott-Truss coalition government is on a credible path back to surplus. It is not going to happen next year. It is not going to happen the year after. We are not going to stand here—and Joe Hockey is certainly more sensible than to stand here and promise, 'The four years of surpluses which I announce tonight', as the member for Lilley so mischievously did. He is not about to mislead people to say, 'The surpluses I announce', because he knows that it is going to be a tough job; he knows it is going to be a tough task. But jobs are now growing at well over three times the pace under Labor.

The coalition government's budget cuts the small business company tax rate to the lowest in almost 50 years—since 1967—bringing it down from 30 per cent by one and a half per cent. All around the Riverina region that I represent, that has really been welcomed. On the way home last Friday, I pulled up along the Sturt Highway and Roger Morton, a mate of mine, was fixing a fence. I pulled up, walked across and chatted to him while he was repairing his fence. I said, 'You know that—

Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Did you hold the post for him?

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

Yes, I did actually. I held the barb wire whilst he was straining it. He was grateful for that, but he was even more grateful, member for Melbourne Ports, for the fact that, under the budget announced by Joe Hockey, he would be able to replace that full fence for his cattle farm with a new fence and there would be an instant asset write-off for that. That is great. Of course, companies are going to be able to do it for $20,000 worth of equipment. That has really gone down well.

I have to say that after the 2014 budget it was tough work going out into the supermarkets and going out to sporting events and community events which I attend all the time because people said, 'Gee, the budget's tough.' It was necessarily tough, but this year's budget does provide hope for business. We know that small business is the engine room of the economy. We know that we are going to get a jobs boost and an economic boost from those small businesses which are the lifeblood of particularly regional Australia but, indeed, the whole nation. We know that Labor failed. We know that because we see it on so many fronts. We are getting on with the job of fixing up the mess that we inherited. The member for Melbourne Ports knows that there was a problem when we took over government. We will get on with the job of fixing it because that is what good, responsible, measured and fair Liberal-National governments always do.

Rick Wilson (O'Connor, Liberal Party) Share this | Link to this | Hansard source

I would certainly like to invite the member for Riverina when he is in Western Australia to come and help with some fencing at my place. It sounds like he is a bit of a dab hand. It is a pleasure to follow the member for Riverina. He is a great advocate for rural Australia. I will be followed tonight by the member for Grey, who is also a great advocate for rural Australia.

Today I rise to commend the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. The bill is the second carbon tax related repeal bill legislation, legislating the removal of a proposed personal income tax from 1 July 2015. There are three points I would like to make in supporting this bill. Firstly, this legislation implements a Labor Party election promise, and this is an opportunity for them to keep that promise. Secondly, there is a lot of commentary, especially in the media and by the opposition, that there is not a budget emergency. But there is. I will talk about why our current structural deficit is a serious problem for our country to find itself in. Just in recent days it has been revealed in media reports that the opposition is holding up up to $100 billion of saving measures in the Senate. Thirdly, the first part of the carbon tax repeal bill, the actual removal of the carbon tax, has been greatly welcomed a my electorate of O'Connor, with many businesses publicly coming out in its support.

When the carbon tax was introduced by the former government, they included two rounds of personal tax cuts to compensate for the carbon price. The first round of tax cuts to compensate for the introduction of the carbon tax took effect in July 2012. This increased the first personal tax threshold to $18,200. Increasing it again to $19,400 was to take effect from July 2015. This is because, in the Labor Party's final budget, revealed in May 2013, the increase in the carbon price was not expected to occur until 2018-19 due to a revision in their carbon tax price forecast. So they deferred the tax cut until 1 July 2015.

At the time, Labor booked $1.5 billion in savings to the budget bottom line over the then forward estimates period but did not seek to introduce the legislation to reverse the personal income tax changes which it had legislated. Then, leading into the last election, the Labor Party continued to campaign on this budget saving strategy. So here we have a situation where the Labor Party lost the election but the coalition was prepared to honour their promises and remove the second round of personal tax income changes due to commence on 1 July 2015. Currently, the cost to the budget, if this bill does not pass, is $2.2 billion over the forward estimates to 2017-18. Since the election, this measure has been introduced to the parliament twice under the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 as part of the package of carbon tax repeal bills. At both those times, the Labor Party voted against this legislation. That means the Labor Party has voted against its own election commitments and has not provided any ideas for alternatives.

The government inherited an unsustainable budget position from the previous Labor government, with the deficit inherited totalling $123 billion. Without action, the budget outlook is deficits and rising debt for at least another decade. The budget would never get into surplus and the debt would never start to be repaid. The interest bill on that debt would rise to $3 billion a month. That is the equivalent of the construction of three brand-new teaching hospitals in Australia every month, and we are just spending on interest unless we address this issue.

We have already reduced the projected debt in 2023-24 to $389 billion—that is, $300 billion less than the projections that we inherited. There are many nations that have much greater government debt, but they fund it from within their own economy because they have a huge pool of domestic savings. But, in Australia, 70 per cent of the interest we pay goes overseas because Australia fails to fund itself.

Japan is a classic example where the government has an enormous debt, as a percentage of GDP, but it is the Japanese families, the 'Japanese housewives' as they were previously called years ago, who save the money and can fund the government debt. They can fund it within their own economy. Even Italy has the capacity to fund its own needs. It is a net exporter of capital. But Australia is not an exporter of capital; Australia is an importer of capital. Each year we import from the rest of the world to fund ourselves and this year we will import about $40 billion. During the global financial crisis it was a rude shock because our banks could not get offshore funding, so they relied on government credit rating. The government had a strong credit rating; therefore, we were able to fund ourselves in the international markets.

Therefore, it is so important that we have a government that lives within its means so that money becomes more accessible and more affordable for the private sector, which then uses that capital to develop the big projects in the big land that help drive our economy.

There is always a lot of talk that there is no budget emergency, but my question to the opposition is: does that mean you are happy to stay in deficit? Because, on 8 May 2012, former Treasurer and Deputy Prime Minister, the member for Lilley, said:

… importantly by coming back to surplus we give the Reserve Bank maximum flexibility to cut interest rates, should they decide to do so independently of the Government.

… coming back to surplus is about making sure we help those people sitting around the kitchen table when they're figuring out how they will make ends meet.

Here we have a clear statement that the opposition knows that being in surplus is better than being in deficit. Acknowledging the fact that there is a budget emergency, Governor Stevens, Head of the Reserve Bank of Australia, said:

… the fact that the real issues with public finances are medium-term ones is not a reason to put off taking decisions to address them. On the contrary, as experience in so many other countries demonstrates, by the time these sorts of problems have gone from being out on the horizon to on our doorstep, they have usually become a lot more difficult to tackle. Early, measured actions that have effects that build up over time are a much better approach than the much tougher response that might be required if decisions were delayed.

Phil Bowen, the Parliamentary Budget Officer, echoed this statement, saying:

It is time to start coming out [of debt and deficit], otherwise the longer you leave it the more exposed you become and the harder it is to wind it back …

He continued:

Sure we're currently at a very low level relative to the rest of the developed world, but frankly we don't want to find ourselves where the rest of the world is …

You've got to have a buffer. One of the reasons we came through the global financial crisis so well was because we started with assets.

Mr Bowen continued:

If the rate of the increase [in debt], if allowed to go unchecked, would mean that net debt would increase quite rapidly to the point where that fiscal buffer . . . would not be available …

To understand budget situations and choose appropriate solutions, it is important to distinguish between cyclical and structural components of the deficit. The cyclical component can be attributed to a weak economy. A recession drives down government revenue because many workers and businesses are no longer earning as much taxable income. At the same time, government spending rises because more people need assistance through programs such as unemployment benefits. In budget phrasing these are known as 'automatic stabilizers' because they help to maintain demand in an economy that is not producing enough for it to keep growing. The result is a temporary or a cyclical increase in the deficit. Once the economy recovers, tax revenue and government spending on assistance programs should return to normal.

If government spending exceeds tax revenue, even when the economy is strong, then the deficit is deemed to be structural. Unlike cyclical deficits, structural deficits reflect a chronic problem that must be addressed through changes in tax and spending policies.

The most effective policy changes are those affecting permanent law, such as entitlement programs and tax provisions that run on autopilot. With structural deficits, one-time spending cuts or temporary tax increases may help to relieve the pressure but cannot solve the problem.

So why should we be concerned about a structural deficit? The most basic reason to be concerned about a structural deficit is that it is generally projected to grow faster than the economy. Even assuming a strong economy, with no cyclical deficit, the current structural deficit will produce a steadily rising debt-to-GDP ratio for as far as the eye can see. Eventually, the debt burden will become too great to bear.

Although it is impossible to say exactly when it will happen, don't you think it would be foolish to risk finding out? While cyclical deficits can assist the economy to get back on track or at least smooth out the bumps, large chronic deficits pose significant risks in many ways. For one thing, deficits tend to divert savings away from more productive investments in the growth capacity of the economy. The strength of the future economy depends on an educated workforce, productive capacity, sources of energy and solid infrastructure.

If there is no financial slack in public budgets because a rising share of available resources is already committed to programs for older people and to paying interest on the national debt, it will be harder to invest in children, research and development, transportation and communication, and other factors that will promote future growth.

Phil Lewis, Professor of Economics at the University of Canberra, said in his article 'How the budget is faring':

… it can be demonstrated that Australia's economy is strong. However, there is concern that Australia, on its current trajectory, is heading for (or well on the way) to an unsustainable structural deficit. This is where the budget may most influence economic growth, as it impedes the ability of a government to plan future spending.

It is generally accepted that the actual government budget will (and should) fluctuate between deficit and surplus during, respectively, downswings and upswings in the economy. While there is a lot of public attention on whether the year-on-year budget balance is in deficit or surplus, and by how much, the structural balance is the more important concept.

Professor Lewis went on:

As I have pointed out previously … this structural imbalance is a result of irresponsible spending policies of successive governments … but particularly by the Rudd/Gillard governments. New spending initiatives, such as the Gonsky funding changes and the NDIS, have been brought in without plans to raise the revenue to pay for them, and often, without due analysis.

And bad luck for Tony Abbott—

the Prime Minister—

that he is left with unfunded big budget items in the future to deal with, as a legacy of the former government.

Professor Lewis says the answer is:

The only way to reduce the deficit is through reduced expenditure and/or increased revenue. As each idea of how this can be done is shot down on a daily basis, the Coalition government is realising what a difficult thing this is to sell. The hostile reaction to the Commission of Audit report at least might mean some of the unpopular decisions in the May budget are, by comparison, greeted with relief.

Peter Fray, on The Australianwebsite, echoed this sentiment, saying:

But we do have a structural budget problem. If the budget remains in deficit indefinitely, creditors will eventually lose confidence. Australia is unique in having run a current account deficit throughout the past 150 years and is much more dependent on the goodwill of the international capital markets than any other advanced country.

Economist Leith van Onselen said the following:

… the above headwinds mean that the budget will remain permanently in structural deficit unless action is taken on both the revenue and the expenditure sides. The debate, therefore, should not be about whether to have budgetary reform, but rather about ensuring that reform is undertaken in an efficient and equitable manner …

I have a few comments about the carbon tax repeal bill, which has been widely welcomed in my electorate of O'Connor, not just by small and medium businesses, but by local government. The City of Kalgoorlie-Boulder CEO Don Burnett said:

In the city's 2014-15 draft budget we allocated $92,000 for our 2013-14 carbon tax liability. It is estimated that future carbon tax costs for the city would be a minimum of $100,000 per annum. That impost, across all local governments in O'Connor, represents a significant saving that councils can now spend on services for ratepayers.

Businesses also were quick to welcome the repeal, with Plant Manager Tony Bessell of Western Australian Meat Marketing Co-operative at Katanning saying:

Last financial year, our energy provider's carbon charge was $20.56 per megawatt-hour and we used 8,192 megawatts, that's a carbon charge bill of $168,427, solely for our electricity usage. And that is not even taking into account the large number of suppliers we use that pass on their carbon tax component to us.

Fletcher International WA, based at Narrikup, is one of Australia's largest export abattoirs and their general manager, Greg Cross, said:

The carbon tax was a weight in our saddlebags we certainly didn't need and repealing it is a step in the right direction. The meat industry are one of the last manufacturers in Australia, with other manufacturers closing or moving off-shore. We don't want to do that but the extra cost from the carbon tax was a serious impost on us.

In a follow-up story that the Countryman and Albany Advertiser newspapers did on both these companies, the two businesses claimed the carbon tax repeal could save each business $400,000 a year on packaging and electricity alone.

If we do not fix the budget now, the pain and impact on the Australian people in the days, months and years ahead will be far greater. To quote John F Kennedy, 'It is always best to repair the roof whilst the sun is shining,' than to be in a situation where, in the middle of a cyclone, everything starts to come apart. I commend this bill to the House. I should not have to urge the Labor Party to keep its election commitments, but that is what I am here to do. Honour your promises. Keep your word to the Australian people. Help us get on with the job of fixing the economy.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

I would like to say to the member for O'Connor that if we can get the member for Riverina over there to do the fencing I will welcome him at Buckleboo.

I do not support the amendment. Bill Clinton famously had a sign displayed in his electoral office before his election to the presidency of the US in 1993: 'It's the Economy Stupid.' And so it was, and so it remains. It is the economy. Because very little can be fixed without money. The less anyone has, the less they care about everything else. Take the environment for instance. If you cannot feed your family, the environment comes last. The industrialised nations of the world, those that have money in their pocket, are the greatest friends of the environment. Those that have nothing can care little for the environment, because the pressing issues of today take precedence

Making sure Australia has a viable and wealthy future is in so many way determined by what we do today. If we leave a legacy to our children and their children that promotes the best of what this country can afford to its residents, we will have done well. But I underline: 'the best of what this country can afford'.

If, by comparison, we live beyond our means like the prodigal son or, even worse, like the grasshopper in the ancient Greek story from Aesop that delivers the parable of the Ant and the Grasshopper: the grasshopper played away all summer and the ant stored for the winter. If we are like the grasshopper our future may be fine, but our children and our grandchildren may face an increasingly bleak and difficult future. No lesser an authority than the Bible tells us that 'the sins of the fathers will be revisited upon the children,' and nowhere can this be more apparent than this generation leaving mountains of debt for the next. Because not only does high debt inevitably lead to higher taxes, with the same certainty it will deliver lower services. So our inability to pay our way at the moment is impacting on our descendants in a very real way. I suspect that while some deny it, in their heart of hearts every member of this chamber and this parliament knows that.

For all their terrible faults as a government, the previous Labor government knew it too, or at least they said they did. Kevin Rudd, after all, promised the nation that the Labor Party believed in surpluses and would operate in surplus on average, through the economic cycle. One would wonder how long that cycle might be, with current performance. And it was the former Treasurer, the member for Lilley, Wayne Swan, who repeatedly told the nation that returning to surplus was imperative. In fact, in his budget speech in 2011 he said:

Meandering back to surplus would compound the pressure in our economy and push up the cost of living for pensioners and working people.

He was right, and he kept telling us how important it was and how he had made it happen. With the emphasis, once again, on 'had'. In fact, in the 2010-11 budget he told us that:

The strategy will see the budget return to surplus three years ahead of schedule and ahead of every other major advanced economy.

In 2011, he told us:

We are on track from surplus on 2012-13, on time, as promised.

In 2012, he told us:

The four years of surpluses I announce tonight are a powerful endorsement of the strength of our economy, resilience of our people and success of our policies.

In his last budget, the member for Lilley said:

Speaker, tonight, we put in place the savings to fully fund these priority investments—

Gonski and NDIS—

for 10 years and beyond, an achievement unprecedented in our nation's history.

That is the best bit: 'Tonight we put in place savings to fully fund these priority investments,' and 'an achievement unprecedented in our nation's history'. The words 'put in place' would indicate to me that this was a past event, that these savings had been put in place, that they had been legislated. Of course, they had not.

What would have broken historical trends is if the Treasurer of that time, the member for Lilley now, had delivered on what he had promised. That government was either too weak or too incompetent to do so. He and the Labor government did not legislate their own savings. Not to be denied, they sought a mandate at the election. They took the policy to the election and, as part of that existing bottom line, as incoming governments do, so did we. We picked up their budget, and that is our starting base. The Labor Party lost the election and with that they lost the zeal for any move that might lose them one vote. They lost their way and their appetite to deliver on savings that they had championed. They lost their solemn commitment to the Australian public to return the budget to surplus, not that the $6.5 billion in question would do that but it would most certainly help.

What a pathetic mob. Never has there been a mob so desperately lacking in intestinal fortitude. When asked on the ABC's AM program, by Chris Uhlmann—and this has been quoted extensively by my colleagues—why the Labor Party had backed away from its own savings, the opposition leader Bill Shorten said: 'Well, Chris, we're the Labor Party.' That sums it up. What Labor Party is that? It is certainly not the old Labor Party of Hawke, Keating and Walsh. It is the new Labor Party of Rudd, Gillard and Shorten. It is that Labor Party: all for themselves and stuff Australia.

They opposed the $2.8 billion saving delivered by not pressing ahead with the increase in the tax-free threshold, by layering the marginal tax rate, with direct implications on low-income tax offsets—which the Labor Party championed when they spoke of achieving surpluses and their importance. Now they are abandoned. They opposed the modest changes to the HECS. They now want the coalition government to borrow even more money to mortgage Australia's future for short-term political popularity with their support base. Shame on them for walking away from their own proposal, for taking their bat and ball and going home. It would be funny if it were not so tragic or adding to the intractable issues facing this country.

The coalition has been working hard to try to bring the budget back into balance since it was elected. It is not easy. They are hard decisions. Almost no-one in the whole of the parliament is willing to accept there is a problem, apart from the coalition. From the Labor Party, what do we get? Straight obstructionism. I cannot understand why opposition leader Bill Shorten will not let us get on with the job. It is beyond me. Surely, he hopes to win the next election and, surely, he wants the books to be in the best possible position when they come to that election and, surely, the savings that he puts forward before the election—let us take the political heat but surely he wants those in place, so those books are in better shape if and when he is to lead this country.

While the Treasurer and the government have signed three new FTAs to enable our service providers, agriculture and manufacturing sectors to get to the markets they need to grow, while the coalition has removed $2 billion worth of red tape and 57,000 pages of legislation that were choking productivity, while the coalition makes tough decisions to sell Medibank, while it wears the political pain of freezing indexation on a range of services and lifting the freeze on fuel excise, the Labor Party cannot even support its own savings. To the Labor Party, I say: thanks for nothing.

The government has signed off on $1 trillion worth of environmental approvals, abolished 76 wasteful authorities and boards and reinstated employee share schemes. We are doing our utmost to fix the budget and stop mortgaging our kids' futures. For the record, Labor opposes savings which will climb to $110 billion over the next decade.

The new head of Treasury, Mr John Fraser, said in February that Australia did not yet have a budget crisis but it faced economic problems that would become harder to fix the longer they were left unresolved. He said:

Our net commonwealth government debt is rising to high levels when the average cost of servicing that debt is less than 3 per cent per annum … If we don't start trying to turn around the rise in the quantum of debt, we leave ourselves very vulnerable to what will be the inevitable increase in interest rates somewhere down the track.

He went on to say:

More and more of our outlays will be going on government debt interest, paying the holders of government bonds, rather than being directed to more noble objectives.

So there we have it—from the head of Treasury—but the Labor Party denies there is even a problem. More importantly, on a moral basis, they deny their central part in creating that problem in the first place.

Once they had their hands on the levers of the economy, once they had an excuse to spend money because of the GFC, they just could not pull back on the hand break. They were able to give money to every group that had ever tapped them on the shoulder and said, 'You can help us when you're in government,' and they just kept helping. Except they were not helping. All they have done is create a huge problem for future generations to deal with. This government knows the problem and, I suspect, some—not many—in the Labor Party do too, but it seems there are not enough of them.

It is worth reflecting on what Joe Hockey and the Abbott government have been able to do to address the problems. I have detailed some of the tough decisions but there has been so much that is positive as well. The abolition of the ineffective and incredibly expensive carbon tax has been a windfall not just for household consumers but also for our businesses, the employers in our economy. The compliance cost accompanying the tax that raised no money—the mining tax; an interesting tax, that one—is gone. The budget delivers huge incentives for small businesses. These decisions have been met with great enthusiasm by the business community. We cannot fix the budget by just cutting outlays or by just curtailing expenditure growth alone. We also need to grow the economy and to facilitate the creation of new jobs. The budget delivers extra incentives for our very efficient and world-class agricultural industries, one of the very bright spots in our economic future.

The government has embarked on the biggest infrastructure spend ever, not because we have money to throw around but because we know that if it is well spent—as opposed to things like the home insulation scheme or the school halls scheme—then it will pump up the economy. I opened with a little bit about Bill Clinton and the notice in his office. In closing, I quote a song title to the Labor Party from that masterful musician of the twentieth century, John Lennon. He said: 'How do you sleep?'

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

This bill, the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, implements Labor's 2012-13 budget policy. It gives effect to just one of the almost 100 announced but not implemented taxation measures left to us by Labor. We really need to understand what has brought us to this point: firstly, why we need to pass budget savings measures and, secondly, why we need to expose the hypocrisy of Labor in opposing what were actually their own budget savings measures.

We have seen evidence today in question time of Labor's absolute rank hypocrisy, raising questions about spending levels but, here tonight, blocking these budget savings and this legislation. It is a very clear demonstration of why the Australian people simply cannot trust anything Labor says. They were saying one thing at question time; they are doing another thing now. They says one thing and do the complete opposite. Why are Labor opposing their own budget savings measure? Labor have opposed and are opposing these budget savings measures for a very special reason, the incredibly profound reason that the Leader of the Opposition gave to Chris Uhlman when he was asked why they would not back their own budget cuts. It is because, simply:

… we're the Labor Party.

That is the reason why you do not back these budget savings measures. This exposes not only the hypocrisy of Labor but also their almost pathological denial of responsibility for the financial mess they created.

I remember it well. When I was first elected in 2007, Labor was the incoming government at that time. At the time, I looked at the smugness on their faces. Clearly they believed not only that they would be there in government forever but also that being in government was easy. Maybe it looked that way to start with. They had inherited a very sound balance sheet, one that any business would have been proud of as a starting point. There was $20 billion in surpluses and at least $40 billion in savings.

To Labor, obviously, at that time, they thought that government was simply about deciding which of their pet projects would they splash taxpayers money on. It looked easy. And didn't they just love that wasteful spending! Labor was addicted to spending. No matter what the problem or issue that arose, as a government, they had only one response. Kevin Rudd or Julia Gillard would stride into this parliament—I can remember it well—and simply throw some more taxpayers dollars at the problem, clearly of the belief that, by throwing money at a problem, the problem itself would disappear or simply that the Labor government could pretend that somehow they had fixed the problem because they had thrown money at it. That was the solution. It was government by the thought bubble of the day. It was that period in Australian politics. Every day I thought, 'What is Kevin Rudd's and Labor's latest spend-up or next you-beaut idea going to be today? What did those overnight focus groups tell them to do this time?' I remember thinking very clearly—it was really dreadful—that it was like they were kids in a candy shop with taxpayers' money. It was appalling.

As time went on in those first and second terms, I sat here in this place and I watched with absolute horror as Labor's spending spiralled completely out of control. It was just appalling. In my opinion, it was the time in Australian politics when there were so many billions being thrown around so easily that the actual quantum of how much a billion is—that thousand million—was actually lost. A billion became a Labor throwaway line. That is all it was. Perhaps, in some people's minds, it was more around a million in perceived cost, it was done so simply and easily.

Given the GFC, the coalition supported the first Australian stimulus package, that $10.4 billion announced in October 2008. But Labor did not stop there. That was not enough. The second stimulus package came in February 2009. It was $42 billion, and they sent $900 cheques to people—16,000 to deceased persons, and 27,000 went overseas. There was a wasteful $42 billion stimulus. What really appalled me was that they created the debt limit in 2008 and then treated it as a target—'We've gotta get there'—setting the cap first at $75 billion, then in 2009 increasing it to $200 billion and then $250 billion in May 2011, and in May 2012 they went to $300 billion. It was just constant waste and reckless spending.

We saw things such as the failed border protection policies, which included not just tragedy at sea but also $11.6 billion in blow-outs. We saw a similar thing with blow-outs in the Building the Education Revolution and up to $8 billion in waste. The pink batts program included well over $2.4 billion wasted, precious young lives lost, house fire after house fire and small business after small business on a rollercoaster boom and bust cycle caused by the pink batts debacle. This is, yet again, another Labor mess we are now having to clean up, as the Minister for Industry and Science said in question time today. The findings of the royal commission into the home insulation program was damning. Our government is providing the home insulation program industry payment scheme to help offset the very significant adverse financial impacts of what was a dreadful scheme. It was a mess. No wonder employment in small business fell from 52 per cent of the private sector workforce to 43 per cent. 519,000 jobs were lost in small business under Labor and there were fewer small businesses than during those Howard years.

We saw Labor throw away taxpayers' dollars repeatedly. They threw it around like confetti: the $900 cheques, as I said; the panicked cancellation of the solar homes program, which blew out by $850 million; $1,500 for a set-top box program, providing equipment to people when retailers said they could install them for $170; academic grants wasted, such as $145,000 to study sleeping snails and $578,000 to research a credit instrument in Florentine economic, social and religious life in the 1500s; and $300 million wasted in green loans. That is all before the National Broadband Network plan, which could have been done far more cost effectively and efficiently.

I have frequently referred to our experience of coming into government as kicking over each portfolio rock and finding another nest of poisonous snakes and spiders. That is exactly what it was for each one—one after the other. It was just like kicking over another nest of poisonous snakes and snipers; there was more to find every time. There is no doubt and no question that we inherited an unsustainable budget position from Labor. That is why this legislation is required.    Labor cannot deny that deficits alone inherited from the former government, outlined in the 2013-14 MYEFO, totalled $123 billion. It cannot be denied and swept under the carpet.

In spite of Labor's opposition to budget savings, we have now brought that down to $82 billion over the next four years. We know that government debit would have been $667 billion within a decade, with interest rates of $3 billion a month—70 per cent of which goes overseas. At that time, we were paying $l billion a month in interest under Labor. Under Labor's budget settings, the budget would never have gotten back to surplus and the debt would never even start to be repaid.

It does concern me that many people are of the belief that when the budget actually does get back to surplus then somehow automatically the debt has gone as well. You hear that out in the community. Somehow, there will be a clean slate, just because we get back to surplus for the first time. As we all know, nothing could be further from the truth. It will need and require year upon year of surpluses to even begin to pay back Labor's disastrous debt and deficit legacy.

I spend a lot of time in schools in my electorate, more often than not to deliver cyber safety presentations to students. I look at each one of these great young Australians and I think of the debt burden that they now bear. I am appalled by this. This is as a result of Labor's profligate spending; these young people will be forced to pay in one form or another. They actually have no choice. Even if we are making the tough decisions and doing our best in spite of Labor to make the tough decisions, Labor's debt stretches well into these young people's futures. It is something we cannot escape. It is that legacy that Labor has left.

It is time for Labor to take at least some responsibility for the debt and deficit by supporting this bill and other measures. We also really need to expose their further spending. Even in opposition, we see further Labor spending. They have already committed to $58.6 billion of additional spending. As we heard the Treasurer say in question time today, the Leader of the Opposition spent $220 million a minute in his budget in reply speech. Thank goodness, he actually only spoke for 29 minutes and not the full 30 minutes, otherwise he would have spent another $220 million! It really must concern young people that Labor is also announcing more taxes, such as the reintroduction of the carbon tax and a superannuation tax policy that could affect 125,000 Australians within the next decade. Unfortunately, we know that Labor sees superannuation as their own personal ATM. It cost superannuants $9 billion in the six years of Labor, including a $3.3 billion hit on low-income earners.

We also know our kids bank accounts are actually not safe either. In 2012, when Bill Shorten was Minister for Financial Services and Superannuation, Labor cut the time that inactive bank accounts were declared unclaimed from seven years to three. This saw millions of dollars held in thousands of active Australian savings accounts transferred to the Labor government. This caused real financial distress for many Australians. I heard it in my office and I know most members on our side heard that repeatedly. That included older Australians and community groups, who were not able to access their own funds when they needed them most. In 2011-12, around $70 million was transferred to ASIC as unclaimed money. In 2012-13, after the former government's changes, 156,000 accounts—worth around $550 million—were transferred to ASIC. Labor imposed large costs and inconvenience on people who were then forced—you had no choice—to go through a time consuming process to try to reclaim your money. That took at least six months in some instances.

I am a small business person and I am from a community and volunteer background. One thing that I have learned in my years in business and in the community is this: whenever there is a problem, the first step in dealing with that problem is to admit that there is a problem; and the second step is deciding what you are going to do to fix the problem and how you will go about it. Not only does Labor refuse to admit that they created a massive intergenerational problem for our young people but they are absolutely, wilfully determined not to be part of a solution for the Australian people. We have no choice but to live within our means. I support the bill before the House.

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

It is a pleasure to speak tonight on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. I want to start by referring to an interview. Other members have referred to this interview during the day in debating this bill. I think it is important to start with it because it really sets the tone and the mood for the debate we are having here tonight. It was an interview that the Leader of the Opposition had with Chris Uhlmann on the ABC AM program on 17 July 2014. During the interview, they were discussing why Labor was opposing its own savings measures. I think that Chris Uhlmann was trying to get the Leader of the Opposition to explain how he had ended up in such a contradictory position. How could it be that when he was in government he put forward certain savings measures but, then, when he was in opposition, he decided to do a complete 360 turn around and oppose the very savings measures that he was putting in place. One would have thought that the Leader of the Opposition might have taken some time to consider his response to such a predicament, because on face value it seems that this was incredibly contradictory. As a matter of fact, you would be saying to yourself, 'I might look like I can't lie straight in bed if I haven't got the right response to this.' You would think he would consider this, think about it and give an answer. Yet, it is very enlightening as to how the interview went. It went along these lines. Chris Uhlmann, when talking about what the government was doing asked, 'We will get to that, but why won't you even back your own cuts?' Bill Shorten replied, 'Chris, we are the Labor Party.'

It says a lot that the savings measures that Labor is now opposing are part of a $58.6 billion black hole that the Labor Party has left for the government to try and fix—a $58.6 billion black hole that the ALP has bequeathed to the government and to the nation to try to fix. I would like to remind people about Labor's economic mismanagement and how we got to where we are. I know it is extraordinary that we could get to a situation where they are opposing the very savings measures they had tried to implement in government. It is worth remembering why we got into this predicament in the first place. The waste and mismanagement included the $29 billion blow-out of the NBN. Once again, it is hard to fathom. This is a project that was drawn up on the back of a beer coaster.

Kevin Hogan (Page, National Party) Share this | Link to this | Hansard source

You would think it was a joke.

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

You would think that you were joking. You would assume that you were joking, but this was the one that was drawn up on the back of a beer coaster. We would laugh about and it would be amusing, but here is a $29 billion blow-out, and, sadly, we have to repair the damage this has done to our economy. You would think that when something like that has happened—the beer coaster and the $29 billion blow-out—that when it came to the savings they had put forward, they would say in opposition, 'We do have some moral responsibility to try to fix this.' But all we have seen from those opposite is that they are happy to completely run away from the moral responsibility that they have to help us try to fix the nation's finances.

There was the $11 billion blow-out on border protection. It is going to be very interesting to see where the ALP end up on border protection at their national conference. I am going to be looking forward to hearing the debate that takes place to see whether we are likely to see Labor adopt the policies that have worked and been implemented by the coalition government—and that have seen us save money when it comes to border protection—or whether they will want to, once again, put in place those policies that will lead to a further $11 billion blow-out on border protection, the like of which we saw during the six years they were in government.

There was the $7 billion spent on school halls. We all saw that program writ large and the very public failures of rolling out that program. I will never forget, in my home town of Hamilton, visiting a school where $80,000, approximately, had been spent on portaloos because the first part of the building knocked down was the toilets. So they had to bring portaloos in for 12 months at a cost of $80,000. Once again, when you hear of these things you would think that they have a moral responsibility to try to address these issues and say 'We erred here. We got it wrong.' But there does not seem to be any sense of that from the other side. They seem to be all care and no responsibility. They ran up this enormous tab, and it is someone else's problem now.

There was the $2.8 billion on pink batts. I will not go into the very sad circumstances around that. Once again, you would think that, given what we saw with the pink batts, and the very tragic outcomes from that, there would be a moral responsibility from those on the other side to say, 'Yes, once again, we did err. We rushed the implementation of this program. We didn't take due care in how we should've rolled it out and there were sad consequences.' But we have heard nothing.

Then, of course, there was the other tragic waste of money, which was the $900 cheques. Forty eight thousand $900 cheques were sent to Australians who were either dead or overseas. This was Labor's stimulus program—48,000 $900 cheques to either dead people or those living overseas. I suppose that some of those oversees who got the $900 cheques might have decided, 'I'll send it back so that it will stimulate the Australian economy,' but I think they would be pretty few and far between.

Kevin Hogan (Page, National Party) Share this | Link to this | Hansard source

Stimulate the global economy.

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

Yes, and maybe there was the hope to stimulate the global economy because, at that stage, there was one particular Prime Minister who I think did believe that, ultimately, he was going to rule the planet. So maybe he was trying to stimulate the global economy. It is not a bad observation, because the grandiose plans could potentially have led to us ruling the world in a rather perverse and deluded sort of way. But they are just some of the examples of what we are trying to fix.

What was the result of this? When we came into government, we were looking at deficits over the forward estimates of MYEFO that totalled $123 billion. Government debt, if left unchecked and allowed to continue on the inherited trajectories, would have been $667 billion within a decade. Those numbers are quite staggering. That is what we are trying to fix, and I am confident that we can fix it. We did so when we were last in government. When we came to government as a coalition in 1996, we faced $96 billion worth of debt and we were able to fix that. But the parliament was prepared to assist; the parliament was prepared to help. In this sad instance, unfortunately, the Labor Party does not want to carry any moral responsibility for what it did when in government for those two disastrous terms. Yet, previously, there was a willingness to play a part. The sad thing about the state of the nation that we face now is that the Labor Party is not willing to roll up its sleeves and assist in fixing the job that it messed up so badly. When we came to power in 1996, we were able to fix the problem, and when we left office in 2007 there was no net debt and the budget was in surplus.

We will fix it again—we are determined to fix it again. We are determined to get the budget back into surplus and determined to start paying down the debt. The Treasurer, in his excellent budget of a couple of weeks ago, clearly outlined how we are going to do that. I once again appeal to the Labor Party: please, just lend us a hand with the measures which you supported in government as savings measures and will not now support. Just change your mind on that; it will give you some credibility as an opposition. If you cannot find a way to do that, sadly, you are going to be seen as still the problem and not in any way part of the solution. The Treasurer in his budget speech took a two-pronged approach. He wants to continue down the savings path. He wants to make sure that spending is kept in check, but he also wants to make sure that we grow the economy at the same time. That, at its heart, is what the small business package was all about, and it was very, very well received across the Australian community. It was heartily received in my electorate of Wannon, where both small business and farmers will be beneficiaries. I have already spoken to small businesses and farmers, and they are very keen to utilise the measures in the small business package. So I am looking forward to seeing a stimulus from this. It is not a stimulus of the type you would get from sending cheques to dead people or those oversees; this is a real stimulus that will see small business confidence grow. They will then look to invest and employ, and we will see sustainable economic growth into the future. That is what the budget was all about, as well as making sure that we continue to keep spending in check. Part of the issue is to, hopefully, get the Labor Party to change their mind on the budget measures that the Labor Party supported when they were in government, which they are now opposing. They are an important part of it—they are an important part of us starting to address those $123 billion of accumulated deficits over the forward estimates, so that the $667 billion worth of debt which would have accumulated over the next decade can be addressed also.

I say this to the Leader of the Opposition, returning to where I started regarding what he said in that now infamous interview with Chris Uhlmann: we know you are the Labor Party. What we would like to see from you, though, is a bit of a change of direction to take some moral responsibility for the damage you wrought on the nation's finances and for you to say, 'Yes, we do take some responsibility, and we're going to change our mind and support the government on these savings measures.'

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

The Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 is a particularly important piece of legislation, so I am very pleased to have the opportunity to speak in support of it. I wanted to speak firstly about something which is so important to our economy; indeed, all of these economic debates really occur within the context of this issue. That issue is productivity, because, at the end of the day, the way that living standards rise in nations over time is through productivity increases. Of course, productivity is one of those words that we hear thrown around—it appears in textbooks and so on—but at its heart it is a very simple concept. It simply means that, over time, for living standards to grow, nations need to produce more goods and services effectively in the same amount of time. So for a unit of time we need to get more done, because, if we just keep doing the same thing that we did 20 or 30 or 40 years ago, then living standards will not rise. It is absolutely incumbent upon government to always have productivity growth very firmly in its sights when it frames policy.

Government can help productivity growth in a number of ways. One is by minimising tax, because obviously if you have a whole lot of tax it does not encourage investors and small-business people to go out and do new and productive things, many of which entail risk. So you have to minimise tax. You also, as a government, have to keep a strong balance sheet. By that I mean you have to not get into massive amounts of debt, and we will come to that in a moment. One of the many reasons why it is important not to go into huge amounts of debt is that governments that are servicing a large interest burden have much reduced firepower to respond to economic circumstances and potential crises as they arise. We see a very clear correlation around the world—Western and Southern Europe in particular—between high levels of debt and declining living standards, and that is something that governments must always stay away from. You want to encourage investment through sound regulatory policy—you want people out there doing things, not constrained by government regulation. This government is absolutely committed to productivity growth—ultimately driving, as productivity growth does, wealth in the long run. There is no more important thing than productivity.

We are doing it in a number of ways. In the budget there are initiatives around workforce participation, particularly for mothers who perhaps have been out of the workforce for a while. There is a huge asset base of skills in Australian families—mothers and fathers who have taken time off work to care for children—and it is incredibly important that those skills are not lost to the economy. Those people generally have some significant experience—they are often very accomplished and highly productive employees—and it is important for the economy that those employees keep going up that curve of skill, so to speak, and of productivity. That is why the measures that the social services minister announced were so important, to encourage people back into the workforce. We also want people to set up businesses because it is through the establishment of businesses and the investment in new frontiers that we also drive productivity. The small business minister has had a range of initiatives allowing small businesses to expense all of their start-up costs rather than depreciating them over four or five years, which basically means in a cash sense that it is cheaper to start a business today than it was a few weeks ago. That is really important because we need new businesses to drive productivity growth.

We also need big, high-value projects to happen. They tend to be highly productive projects; they tend to have high levels of output. That is why we have had a trillion dollars worth of environmental approvals since the start of this government, to really enable the private sector to get cracking on some of these massive projects around Australia and, indeed, in the Australian waters, because these really are important projects. We also need a huge growth in infrastructure. Why does infrastructure matter for productivity growth? It matters because infrastructure basically allows people to get from A to B more quickly, and if you can get from A to B more quickly you can get more done in the day. If you can get more done in the day you are more productive, and that is ultimately the source of wealth creation in the long run.

On the tax side we also have the $20,000 instant asset write-off for small businesses—again, encouraging them to go out and invest in productive equipment and other assets for their business, and we are cutting the tax rate for small businesses by 1.5 per cent for incorporated companies or putting a five per cent reduction on the tax bill for non-incorporated businesses. These are all incredibly important productivity measures. The other thing we have done is taken away bad taxes: the carbon tax, the mining tax. We have discussed them a lot in this place, and rightly so because the carbon tax basically brought investment in many sectors of the Australian economy to a halt. The mining tax basically raised no money but created an enormous amount of uncertainty and a sense of malaise in the Australian mining sector, which indeed is so important to your home state, Deputy Speaker Goodenough, and to the entire nation. So there is a whole range of very important initiatives to drive productivity, because ultimately it all does come back to productivity.

We do need to contrast that with what the Labor Party did when in power. There is a very simple request in today's legislation. All we are really saying to those opposite is: 'You, when in government, proposed but did not legislate for a range of savings.' We say today: 'Here they are. These are things that you, the opposition, actually proposed.' It is a feat of great intellectual dexterity to be able to propose a set of savings measures, advocate them publicly, have your opponents effectively say, 'Do you know what? We'll support that idea. We think that's actually sensible,' and then turn around and say, 'Actually, we're not going to do it.' That is the absurdity of the situation that we face today. Of course, the problem with the previous government, amongst many, was a complete failure to understand the driver that is productivity and the counterproductive activities that they pursued. And $50 billion in cash in the bank when they came in and net debt of $200 billion when they came out means a large debt servicing burden. A debt servicing burden means that governments have less to invest in the important affairs of the nation. That cannot be a good thing for the economy, and of course it is not. It is a very consistent theme for Labor governments from the 1970s onwards. The Whitlam government ran up a huge debt, which was cleaned up by the incoming Fraser government. Labor in the 1990s left a very large debt, which Prime Minister Howard and Treasurer Costello cleaned up. And now, after this short but brutal six years, we have a very substantial debt that needs to be addressed, and address it we will.

So, how did it get so bad under Labor? There were so many different examples. I have said this before, but the NBN will go down in the annals of Australian government as an extraordinary example of how not to run public administration in this country. This is actually frightening, when you look at what happened. On a whim—or, as my friend the member for Wannon said, on the back of a beer coaster, and I think that is doing a disservice to beer coasters, because they are often very well constructed—the previous government, flying around the country, in a few snatched conversations here and there, committed to something that they first said was going to cost $4.7 billion. Then they said it was going to cost $43 billion. And it turns out it was going to cost $73 billion. So, effectively, from the initial grandiose statement of the National Broadband Network by then Prime Minister Rudd to the actual reality of the rollout that the previous government was proposing, there was a gap of about $68 billion. It is just extraordinary. As I said, this is something that will always be remembered in our history as an appalling example of how not to manage things.

On border security, we saw some very poor administration. Two consequences were an appalling humanitarian consequence and an appalling financial consequence, with a huge blow-out of $11 billion. So we got to this position where the incoming government faces this terrible trajectory when coming into office: debts of $123 billion over the forward estimates. If that was left unchecked, if they were left to their own devices, if it was left to the Rudd-Swan-Gillard business plan, the country was heading for a total debt of $667 billion—that is two-thirds of $1 trillion; that is 'trillion', with a T, just completely unsustainable and completely unacceptable.

So we have had to do a range of things to get spending back under control so that government debt does not become this millstone around the neck of the nation, dragging down productivity growth. As part of a wide range of reforms under which we see real government spending growth go from about 3.6 per cent under Labor to about 1.5 per cent under us, we say, 'Here are a number of initiatives that Labor proposed when in government'—an admittedly modest list of savings measures—'We'll support the previous government's plans on those things and we'll put those to the parliament.' One of those was some income tax cuts associated with the carbon tax, which Labor effectively put off towards the end of its term in government. There is a saving of about $2.8 billion there, and that is what we seek to pass through the parliament. There was obviously a change in the Start-up scholarships and the HECS from a grant to a loan. That initiative is about $2.1 billion—again, a Labor initiative. We say, 'That is a sensible initiative, given the financial circumstances we face, so here is that savings measure.' And obviously we would hope that the Labor Party would support those sensible measures. There was a $1.2 billion efficiency dividend from universities, which, again, Labor had announced but not legislated. We say we should legislate that, and Labor, despite actually proposing that, say they do not want to support it, which is quite extraordinary.

So, there is a track record of activities that have hurt the budget, that have been negative for productivity in the economy. We have a current debate where we are saying, 'Here are some ways to sensibly address this massive debt burden', which Labor rejects. And then if you look out to the future, at what Labor advocates for the future, there are more problems on the horizon. And then there is the superannuation tax—Labor's year of ideas, with a capital I. The big idea from Labor is to tax superannuation. Basically they are saying that if you save, if you do that hard work over decades, often in highly productive industries, contributing to the economy—precisely, in fact what we want, precisely what we need—then they are going to hit you with a very significant tax. That is going to hurt literally hundreds of thousands of people, and these are not people who should be punitively taxed; these are people who should be lauded, because people who have done that hard work and saved for superannuation not only are helping to boost productivity in their work years but also are reducing the cost to the budget through their lack of reliance on the age pension.

Labor has a notion of a multinationals tax based on so-called thin-capitalisation rules, which is basically about the level of debt you can expense in a business. This one is very flimsy. The government has consistently sought detailed analysis of how these figures came about, which has not been forthcoming. This is a really complex area. It is not about putting out a press release, because multinationals are by definition multinational; they are mobile, and it is easy for them to change their activities. You have to be sensible, as we have been, in how you approach this issue.

Back in that famous editorial in January the shadow Assistant Treasurer wept at the grave of the carbon tax and the mining tax and very clearly flagged that they would be coming back. That is the agenda of those opposite. It is an agenda that is bad for productivity. It was in the past, is today, and will be in the future. We reject that agenda and we encourage those opposite to support these sensible savings measures.

Louise Markus (Macquarie, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. I rise to speak on this important bill because, as this government forges forward to alter the trajectory of the financial situation left by those opposite, there would be an expectation that those who helped create this problem would assist and contribute to solving it. This, as we know, has not been the case. As we saw last year, with so many of the cost-saving measures that this government attempted to introduce being negated by those opposite in an attempt to block legislation, they would rather risk a downward trajectory of this country's financial situation than see the changes required for our nation to remain strong and prosperous, grow small business, create jobs and maintain a safety net for the future for those who need it.

This is what we are seeing yet again with the personal income tax cuts linked to the Clean Energy Future package. The former Labor government introduced two rounds of personal income tax cuts, which were included in the 2011-2012 Mid-Year Economic and Fiscal Outlook. These two rounds were introduced through the Clean Energy (Income Tax Rates Amendments) Act 2011 and the Clean Energy (Tax Laws Amendments) Act 2011. Whilst the first round of personal income tax cuts commenced on 1 July 2012, the second round of personal income tax cuts, which was legislated to commence on 1 July 2015, never eventuated. In fact, they were deferred by the previous government.

How can a government that said in its 2013 Budget speech, as Labor did, 'We have always put the interests of working Australians first,' defer a personal tax cut? In fact, Labor have now voted twice against this legislation which implements this budget repair measure and helps Australian workers, the very people Labor claim to represent. By passing on the savings from the removal of the carbon tax, this government delivered to Australian households a saving of $550 per year for the average home. In opposition, we committed to keep the first round of personal income tax cuts and associated pensions and benefit increases—and they have been retained.

If Labor returns to government, their intention is to bring back the carbon tax. The Labor Party have forgotten what they have left us by way of debt and deficit and they are not helping to contribute to a remedy. This is mind-boggling. The former Treasurer's second round of personal income tax cuts could have resulted in $1.5 billion worth of savings over the forward estimates at that time—not being implemented, and with two additional years since, that equates to a saving to the budget of $2.8 billion over the next four years.

This bill will give Labor the opportunity to keep their promise. This government wants to get on with the job that we said we would do. We want to give Australians the opportunities they deserve. Labor have demonstrated their view on taxes with the carbon and mining taxes and now they have announced a superannuation tax policy. The repeal measures in this bill will mean that the tax free threshold will remain at $18,200 rather than increasing to $19,400. The second personal marginal tax rate will remain at 32.5 per cent rather than increasing to 33 per cent. The maximum value of the low-income-tax offset will remain at $445 rather than falling to $300. The withdrawal rate for the low-income tax offset will remain at 1.5 per cent rather than falling to one per cent. This means the threshold below which a person may receive the low-income tax offset will remain at a taxable income of $66,667 rather than increasing to a taxable income of $67,000. This represents real measures to assist individuals, families and households.

These real measures have not been supported by Labor. And whilst Labor is delaying beneficial measures, this government will continue building a strong and prosperous economy. We are strengthening small business, the backbone of our economy, and, in doing so, giving small business the certainty to grow and produce jobs. Small businesses provide 4.5 million Australians with jobs and an income that enables them to spend and develop their own lifestyles in a real, credible way.

Since the last election, this government has created a quarter of a million new jobs and, with this budget, we plan to create more. This budget will ensure small business see the lowest company tax rate since 1967. We will give an immediate tax deduction for any individual asset valued at up to $20,000 that a small business buys. This measure will assist some 11,000 small businesses in the electorate of Macquarie who choose to take advantage of it. This budget will help, not stifle, small businesses.

This budget also delivers for families. Additionally, we are reducing the cost for small businesses to employ job seekers through initiatives such as wage subsidies and assisting job seekers to gain valuable work experience by providing $18 million over four years. This government wants to see jobs. We know how difficult it can be, particularly for the young, and that is why the government will support wage subsidies which will also be available for mature-age workers through the Restart initiative. This government's wants to help families. The $4.4 billion Jobs for Families package will give parents more choice and opportunity to work, making childcare simpler, more affordable, more flexible and, most importantly, more accessible.

Ours is a budget for a stronger economy and jobs. Only this coalition government has a responsible, long-term economic plan that will grow the economy and fix Labor's debt and deficit disaster. Those opposite spend their time simply criticising the budget and criticising this government without presenting any credible alternative. They reject assistance measures which they themselves proposed. These measures will put money back into the hands of those who earned it so that they can choose how to spend it and invest in their own lives and futures. But this appears to be the central theme of Labor, with their superannuation tax policy again denying choice to those that earned the income, and, instead, designing to tax it. In contrast, the coalition, as the Treasurer has said, is introducing this bill that will facilitate the Labor Party keeping their promise. That is what we are doing: we are giving those opposite the opportunity to keep a promise.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The question now is that the amendment be agreed to.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to speak on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, in the resumed debate on the second reading. Never have I seen such hypocrisy as that displayed by those opposite. Despite the fact that they have no policy ideas—in their 'year of big ideas'—of their own, they stand in this place and vote against the government's policy measures that are based on a sound economic framework. And, worse yet, they vote against their own policies, as we have seen with the current bill before the House.

The Australian people would be confused by this, and may even take the next step of asking those opposite, 'Why?' Of course, the only answer that a person would get is a fumbling response by the opposition leader, such as maybe asking for a hot pie, when the reality is that, like the opposition leader, the entire Labor caucus has no sound policy reasons for opposing this bill. They are simply opposing it because it is the coalition government that has now introduced it. Like the average person, I would therefore say to those opposite: 'What are your policies? What do you stand for? And where is your leadership?' I am sure the people of Australia would not be surprised to hear that they have no answer.

Not only did those opposite fail to implement economically sound policies but they created a massive budget deficit that every single Australian taxpayer is now being forced to pay back. Now, instead of helping the government to implement our budget savings agenda—which, I should also remind those opposite, we actually have a mandate for—they have attempted to block us at every turn. Again, people may ask, 'Why?' And the answer is that apparently those opposite like debt, they like economic mismanagement, and they like to see every Australian suffer because they refuse to get their own act together.

Like any person, I would say, 'It's time those opposite started to act like adults, stopped their mindless negativity and looked at the legislation for what it is.' It is a sound policy to remove a tax concession that no longer applies, and a policy that will save this government, and, therefore, all taxpayers, about $2.8 billion over the current forward estimates period.

The Labor 2013-14 Budget Savings (Measures No.1) Bill 2014—which I must say the Treasurer very aptly named—seeks to give those opposite yet another chance to support every Australian, and perhaps to also support themselves, by passing a piece of legislation that they actually initially introduced into this place. It will also provide them with the opportunity to do something that they have never managed to achieve themselves in government, but could at least assist with while they are in opposition: balancing the books and putting the nation's economy back into surplus. Balancing the books—I know it is a concept that many people do struggle with, and I fully accept that. But neither I nor taxpayers accept a government's inability to balance the whole country's books, considering the number of people they pay with their hard-earned money to do just that, and that they are being blocked by the opposition—money that I must say was clearly wasted by those opposite.

I can, however, assure those same taxpayers that the coalition recognises and understands that this is not government money being used to fund initiatives and policies; it is the taxpayers' money. We also understand that, when money is wasted—as seen under those opposite—it is taxpayers' hard-earned money that is going down the drain. And that, I say to all members in this place, is something that should not be condoned; it should be condemned.

The government is proposing with this bill to amend the Clean Energy (Income Tax Rates Amendments) Act 2011 and the Clean Energy (Tax Laws Amendments) Act 2011 so that both acts have their future operative provisions repealed. This repeal will ensure that the former government's planned increase to the nominal tax-free threshold from $18,200, as applied in the 2014-15 budget, to $19,400 in the 2015-16 budget, and an associated increase to the second personal marginal tax rate from 32½ per cent to 33 per cent, will no longer take place. Consequently, the bill will also implement provisions to maintain the existing income threshold and withdrawal rate for the low-income tax offset or LITO. I do, however, highlight that the first income tax cut, which was introduced to compensate households for the increased burden on households and businesses that the carbon tax created, has now been delivered, as per the coalition's election commitment.

We are, however, repealing the second round of tax cuts because its original intent no longer applies. It does not apply because the former government made an assumption about the carbon tax which, as usual, did not work out too well. This assumption was that, as part of the carbon tax, the carbon price would continue to increase over future years, including a higher one-off predicted increase to $29 when the carbon price transitioned to an emissions trading scheme.

To compensate households for this predicted transition increase, a second round of personal income tax cuts and associated pension benefits were legislated, but, instead of the price increasing as those opposite predicted; the price fell significantly. This forced the Labor Party while in government to defer the tax changes indefinitely, and they then in fact stated that they would axe them completely, but the legislation was never implemented. Of course, even though they could not manage to introduce the appropriate legislation for their policy, they did manage to jump the gun and include the deferral of this increase in their budget estimates—which was about $1.5 billion at that time.

So let us take a step back and map this out so that those opposite are no longer confused. Firstly, we now have a situation where the legislation's policy intent stopped being valid under the former government because the carbon price did not increase to predicted levels. Those opposite recognised this and planned to axe the planned income tax cut. Now they have twice voted against their own policy, which, if it was not valid before, is certainly not valid now, considering that the policy in question does not even exist anymore, thanks to this government's repeal of the carbon tax.

Despite this being crystal clear in my eyes and those of my colleagues, those opposite still do not seem to understand it, so I will explain it again. By the coalition government's repealing of the carbon tax's burden on industry and households, the intent of the former government's proposed changes is no longer valid because there will not be an increase to their costs because of their carbon tax. Rather than being faced with additional costs, Australian households are instead being delivered additional savings of $550, thanks to this government's repeal, and will have an additional $2.2 billion in savings to put back into the economy if this bill is passed in this place.

The actions of those opposite never cease to amaze me, because they are opposing just for opposing sake. That is what they have to be doing as it was their bill initially that we are introducing into this place. This government is implementing those opposite's proposal, and they even disagree with that. So I ask those opposite: if you cannot agree with your own policies, what can you agree with? Do you all agree that, if you do not know where you are going, any road will get you there? The coalition government is one that believes in living within its means while those opposite believe in cash splashing with no regard for the consequences. Again, to simplify things, I will remind those opposite of the consequences: $123 billion in deficits over the next four years to 2016-17. That is the legacy that the coalition is now, once again, left to clean up. But, as I have said, instead of helping us to do that and righting their wrongs, as adults would do, those opposite just want to keep dragging this country down into a black hole of debt.

I have previously highlighted Australia's debt issues, but what I think many members in this place and the general public do not realise is that, where countries such as Japan have debt, that debt is funded within their own economy. Australia's debt, however, is funded from overseas. So not only do we have a situation where we are faced with $123 billion in debt, which would have increased to $667 billion in the medium term if this government had allowed Labor's level of spending to continue, but we have to borrow money from overseas to fund our economy and then we have to pay back the massive interest bill on that debt.

Those opposite may like to sprout little phrases about giving things for free, such as seen during the GFC, but they seem to forget that the money has to come from the taxpayers. For those members who still have not caught onto what this projected deficit would have meant in the terms of interest, let me clarify: it would have meant $3 billion in interest per month. Again, that is the Labor legacy if they had stayed in government. The Australian government may not be able to prevent the United States or China, for example, from having an economic downturn, but if the GFC taught us anything it is that we need to do everything we can as a government to ensure we are best placed to ride out that storm in the event it reoccurs. Australia and, therefore, the former government were lucky in 2007-2008 when they were elected to government. The reason they were lucky was because of the financial position they came into government with. They were still benefiting from consecutive surpluses which were delivered by taxpayers and managed by the Howard government. Right now, however, thanks to those opposite, Australia is faced with a situation where, if this same economic downturn were to take place, we would not be able to withstand it in the same manner because we are already in significant debt.

The answer to put our economy back on track is, however, quite simple: for members in this place to pass the government's budget measures so that we can stop the sinking ship we are all on and repair our economy—a ship that without change is only leading towards more debt and deficit and a ship that has no protection against a downturn in our own economy, which, I also remind members, is largely based on exports to these nations. The Australian people know that a coalition government can get our economy back on track, and that is why they elected us.

In 1996 the Howard government was faced with the same need for remedial action after inheriting a debt of $96 billion from the Labor government of the day. I am sure members in this place have caught onto the ongoing cycle of Labor creating debt and the coalition fixing it. Of course, like in 1996 when the Howard government began its process of fixing the budget deficit it had been handed, the Abbott government will do everything we can to now fix the budget deficit of those opposite. The only thing that is stopping us, however, is the mindless negativity of those opposite. They are opposing because they think that means they stand for something. The opposition want to talk about anything but the economy and the budget. Let me remind those opposite: standing for something means standing for your own commitments. So, again, I will remind those same members: the bill before the House was initially your commitment. It is now time to stand up and implement those budget savings which you earmarked and no longer have any support towards. Why any responsible political party would vote against removing invalid legislation is beyond belief, and I am sure it is beyond belief for all Australians.

What all members should know is that a big part of any government's ability to survive the political rollercoaster is to maintain their integrity. Integrity—it is a big word. I encourage those opposite to look it up and then apply it. It could also earn you some respect. Having integrity would mean passing a bill that you previously committed to. Having integrity would mean assisting to put this country's economy back on track to surpluses that those opposite have repeatedly claimed they want. They gave us four surpluses in a row but they never delivered them. What those opposite again do not seem to understand is that all the words in the world will not make a surplus appear. Action actually has to be taken.

This government has taken the necessary action to repair the repeated budget failures of those opposite and to once again create sustainability for our economy. We will achieve this by implementing our strategic policies that ensure our nation is once again living within its means. To do that, we have to rein in the unsustainable spending measures of those opposite. That is why the Abbott government has looked at all departments across all portfolios to find those areas where money is being wasted on unnecessary and often duplicative legislation. The government made a commitment to the Australian people to cut $1 billion in red tape and green tape each year as part of the coalition's overall deregulation agenda. This was a commitment and I am pleased to inform the House that we have now more than doubled it, to $2.4 billion, following the government's introduction of the Omnibus Repeal Day (Autumn 2015) Bill in March. So that is $2.4 billion in savings that this government has already found, which includes more than 21,000 pieces of additional regulation which was introduced by those opposite. Of those 21,000 pieces of additional regulation, the carbon tax alone had 1,100 pages of additional regulation and legislation, which have now thankfully been repealed.

The coalition is a government which believes in supporting industry and business, unlike those opposite who seek to burden it with more bureaucracy and regulation at every turn. Now we have this bill before the House which seeks to save the Australian taxpayers $2.8 billion. But what do those opposite do? They stand in this place and hypocritically vote against it, not once but twice. When questioned why the Labor Party are now opposing their own saving, Bill Shorten's only response was, 'We are the Labor Party.' I would laugh if it were not the Australian taxpayers who were copping the brunt of the opposition leader's ridiculous attitude. So to those opposite: do tell us what you stand for and how you will fix the mess you made. I am sure every Australian taxpayer wants to know. From where I am standing, the only answer you have is more taxes—reintroducing the carbon tax, reintroducing the mining tax and now slugging taxpayers with a superannuation tax that could affect 125,000 Australians within the next decade.

Now is the time for those opposite to regain their integrity, even if it is just on this bill, and to vote for their own policy commitments. It is time they put aside their mindless negativity and voted for the budget savings, which are based on sound policies that will put our great nation's economy back on a sustainable path and will repair the damage that was caused by six long Labor years. I commend this bill to the House with the hope that those opposite finally see the light and do the same.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

I obviously rise in support of the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. It is quite an extraordinary set of circumstances for leaders here today, to put this bill in front of the House to remind the Labor Party that they are now blocking savings, worth $2.8 billion over the forward estimates, that they took to the last election. Speakers on this side of the House have gone through ad nauseam the irony of that approach and how irresponsibly reckless and, quite frankly, embarrassing it is for the Labor Party.

For a Labor Party person to walk into this House and say, 'I campaigned with this legislation as part of our policy manifesto before the last election and now we're voting against it, even though we left the budget in a parlous condition,' I find extraordinary. I think they should really hang their heads in shame. It is absolutely unbelievable that they would block these savings measures.

The coalition have repealed the carbon tax, we have delivered household savings of $550 per year for the average household, so we no longer have to continue with the second round of compensation in tax cuts that was associated with the original carbon tax proposal from the Labor Party. So on what basis could you argue that that $2.8 billion that Labor itself took to the last election, which we agreed to before the last election, should not pass this House? It is quite extraordinary.

The Labor Party, unfortunately, view government in a very unusual way. In my view, the problem with the Labor government—and, quite frankly, they are unreconstructed over there in opposition—is that they view government as a big spending competition. They think that you go to an election and if you promise to spend more than the other mob then you will get elected. They run around the country and treat it like a spending competition. Let me say to the Labor Party: if that is what government in this country is, we will not participate. We can never win that fight, because we know Labor will always spend more. If it is a pure spending competition, Labor will govern forever. But the problem is: if Labor governs forever, we will end up with budgets like the worst European budgets, in the most parlous fiscal circumstances. I must say to the opposition: the Australian people know that. For somebody to walk out into the street and tell their constituency that they are voting against saving measures in the fiscal environment that we now face, that the Labor Party took to the last election, I think is absolutely embarrassing.

No-one should forget that, when we came to government, debt was projected to rise to $667 billion. We had $123 billion of cumulative deficits over the forward estimates. When debt peaked, as it was projected to at $667 billion, it was going to cost $3 billion a month in interest payments, that is, $133 million a day in borrowings that the government would have to enter into, just to keep the lights on—not to actually do anything, not to build infrastructure, not to build the productive capacity of our nation but just to keep the lights on. Thankfully, with the election of the Abbott coalition government, we understand that that is not sustainable. The Australian people understand that is not sustainable. The only way that I can explain why Labor would continue down this reckless path of blocking savings such as these is that the opposition are in so much denial over the debt and deficit disaster that they left this country. These measures should be a no-brainer. This should be $2.8 billion that we can bank to the bottom line. Given that we are still looking at debt and deficits for a number of years, the Labor Party need to assist, need to repent for their sins in government and need to go a small way in helping us get to that point.

But the Labor Party have got form here. This $2.8 billion of their own savings, which they are now forgetting about, is in addition to other savings of their own that they are blocking, including the change to Labor's Student Start-up Scholarship, which was a $2.1 billion savings measure; a change whereby an efficiency dividend would be applied to university funding; and the abolition of a discount for paying HECS fees up-front—a $336 million saving. The Labor Party believe that all of these savings measures that they took to the last election no longer need to be made.

We on this side of the House are absolutely determined to fix the budget. We do not believe that engaging in intergenerational theft should be on the conscience of any government. So I appeal to the Labor Party: if you are not too ashamed, if you are not too embarrassed to be blocking these savings measures, look into your own conscience and look at the fact that the next generation of Australian taxpayers will ultimately be the people who pay the price for Labor's profligacy.

As I said at the beginning, the fact that we are even having this debate and that we have got to this point is the culmination of a fairly extraordinary set of circumstances. We have the opposition leader and the shadow Treasurer in absolute denial about the former Rudd-Gillard-Rudd governments' fiscal inheritance by this country. But I would appeal to the backbenchers in the opposition. These are the kinds of measures that we should be able to get together on in this House and make happen, because future governments on both sides of the House in this country, one way or another, are going to have to tackle these issues. If the Labor Party are going to take measures to an election that they then repudiate afterwards, presumably just to make life a bit more difficult, I find it quite extraordinary. As a relatively new member to this House, I never, ever thought it would be an argument or discussion that we would have to have.

Obviously, these budget saving measures are being discussed in the context of a very well-received budget. Particularly in my electorate of Deakin, I can say that the small-business tax measures have gone down very well. The Jobs for Families package has been absolutely welcomed by my electorate. But I want to highlight the juxtaposition of those measures and the measure that the Labor Party is blocking today. There are ways that governments can improve confidence and the productive output of our economy with quite modest expenditure. In my view, the small-business tax cuts, and most particularly the accelerated depreciation—being able to write-off capital equipment up to the value of $20,000 in the year in which you purchased—is going to have such an impact on confidence that ultimately, I think, the tax receipts that that confidence will engender will outweigh any cost to the budget of the accelerated depreciation. That is where governments need to be now. That is the space we need to be in. How can tax measures and tax policy encourage economic growth and activity and encourage the entrepreneurial spirit of this country, because that is going to be one of the important ways that we ultimately get out of the debt mess that Labor left us. Sure, we need expenditure restraint—we inherited expenditure running away at over 3.5 per cent growth per year. Sure, we need to ensure that our tax system is more efficient, as well. But ultimately, if we are going to get Labor's debt under control, there will also need to be an element of increased confidence and increased economic activity to grow the pie and grow tax receipts. That is where we need to be making those investments when we are tweaking tax policy. So accelerated depreciation, in my view, is going to have a negligible impact on the bottom line because, I think, the economic activity that flows from it is going to ultimately outweigh any short-term cost to the budget.

Here you have Labor blocking $2.8 billion of savings that they took to an election that are just going to be a drag on the bottom line. They are not going to increase participation, increase the productive capacity of this country or increase confidence. They are just going to be a hit on the bottom line.

The other example I would use is our Jobs for Families package. Sure, we are making a huge additional investment, particularly in child care. But again, I think that investment will ultimately be outweighed by the increased productivity that will flow from parents either re-entering the workforce sooner than they otherwise would, or being employed for longer every week than they otherwise would—working that extra half a day, doing that extra couple of hours each day, or going back to work a bit earlier because it makes sense because the costs of child care are no longer a disincentive to going back to work. So again, that $3.5 billion additional investment in child care, which already has many billions of dollars in the budget, in my view, will unlock economic potential, economic activity and, most importantly, the participation of parents in the workforce. Again, in the long term this will have a positive impact on the bottom line.

So I say to Labor, this is the space that governments have to be in. How do we tweak tax policy, how do we reform tax policy, to grow the pie? That will have spin-off benefits for the government, hopefully, in increased tax receipts, not because we are increasing each dollar more, but because the pie is bigger. That is ultimately how we are going to get to where we need to be, which is running budget surpluses.

Unfortunately, a big misconception in the community is that once you run a budget surplus you can celebrate. Unfortunately, with the debt that we have inherited from Labor, we are going to have to run surpluses for many years to pay the annual interest bill and to pay the capital amount of the debt. I was a relatively young kid when the Howard government was first elected, but it took them 10 years to pay off $96 billion of debt. We have gone a long way in reducing the $667 billion debt trajectory that we inherited, but there is well over $300 billion that we will have to repay, and it will take a lot longer than 10 years to repay that debt. So, even though I am very confident that we will get to a believable, credible, fair surplus under Treasurer Hockey, the job will then have only begun.

And we will never get the job done as a country if this absolutely mindless opposition continues to savings measures you took to an election. I say to the Labor Party: if you think Australians are that silly I think you are going to be sorely mistaken. In this country, if you vacate the space on fiscal reform and improving the budget bottom line then you are so out of touch with where the Australian public is that you are in real trouble. So I say to the Labor Party: you should be reflecting on this and I would encourage you to support this bill, because these are sensible budget savings. They are savings to remove compensation and tax cuts associated with a carbon tax that no longer exists, so it makes absolute sense for this House to pass them. Let us do it quickly, and let us deliver these benefits for the budget and, most importantly, for the Australian people. (Time expired

John Alexander (Bennelong, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. This bill repeals the second round of carbon tax related personal income-tax cuts that are due to start on 1 July this year. Prior to forming government, the coalition made a commitment to the people to keep the first round of personal income-tax cuts and associated pension and benefit increases, and we have kept that promise. We have also delivered major savings to every Australian household by removing the carbon tax, which will save the typical Australian family $550 this year.

The second-round cuts were first announced by the member for Lilley, in his previous capacity as Treasurer, when handing down the 2013-14 federal budget. The former government never bothered to legislate this budget measure, which has added to nearly 100 announced but unimplemented taxation measures left to us by Labor. On coming to government we attempted to legislate this Labor measure as a matter of urgency. You would think that implementing Labor's own policy would be one of the easier things to get through parliament, yet despite twice being introduced to parliament—as part of the package of carbon tax repeal bills—Labor, each time, voted against its own measure. It would be too much to ask those opposite to outline an alternative plan to pay this, despite the measures now being worth $2.8 billion over the next four years.

Unfortunately, this is not the first time Labor has stood in the way of budget measures that they themselves announced. In fact, Labor measures that Labor now oppose total $6.5 billion. These include the change of Labor's student start-up scholarships to a loan repayable through HECS, a $2.1 billion savings measure; the change to apply an efficiency dividend to university funding, a $1.2 billion savings measure; the abolition of the discount for paying HECS fees up-front, a $336 million savings measure; and this $2.8 billion budget repair measure. These savings now form part of the $58.6 billion black hole for the Labor Party.

Last week the Parliamentary Budget Office announced that the previous government left $101 billion in measures yet to be legislated. This would have to be extended even further if the myriad announcements made by the opposition leader, during his budget-in-reply speech, were implemented, despite no mention of where the money is coming from. The Treasurer has calculated that the opposition leader spent $220 million a minute in his budget-in-reply speech. I cannot remember $220 million in savings in the entire speech, yet he had expenditure of $220 million per minute. It is good he did not speak any slower.

It is simply beyond any reasonable person's comprehension that Labor can announce savings measures and then block them. They can complain about government expenditure programs and then block measures that would reduce government expenditure. I know that very few on the opposite benches have any practical experience in business, but I can assure them that behaviour like this would simply not be tolerated in the business world. Their shareholders would have them sacked and on the street in no time—much as our wise voters did 18 months ago.

Earlier today, in question time, the Treasurer spoke of how he wishes he had inherited a budgetary position as strong as that left to Labor by the Howard government in 2007. With a healthy surplus of $40 billion in the bank, the previous Rudd-Gillard-Rudd Labor governments were the worst economic vandals this nation has ever seen. After six years of Labor mess, the coalition was elected to fix the problem and, through a range of legislative measures—like this bill—we are doing exactly that.

The $123 billion in deficits we inherited has now been brought down to $82 billion over the next four years. Government debt, if left unchecked and allowed to continue on the inherited trajectories, would have grown to $667 billion within a decade. The $133 million in interest repayments we needed to make every day of the year, just to maintain that debt, has now been reduced to $96 million. That number is still way too high but we can already see that the budget is being repaired, that we are on a credible path to surplus—something a Labor government has not achieved during the entire lifetime of the member for Longman.

It is clear that under the budget settings left by Labor the budget would never have reached a surplus and the debt would never have been paid off. These achievements by this government are despite the iron-ore price falling from $120 to around $54 a tonne and the headwinds out of the global economy, and both the Treasurer and Minister for Finance deserve our compliments for steering the ship back in the right direction, tacking magnificently.

At the last election the Australian voters gave the coalition a strong mandate to change course and put the budget back onto a secure and sustainable footing. The repair of the budget, as achieved, in part, through bills like this one, must happen responsibly and at pace. Do not just take my word for that—indeed, you can go back to the former Treasurer and Deputy Prime Minister the Member for Lilley, in his budget speech, in 2011. He said:

… meandering back to surplus—would compound the pressures in our economy and push up the cost of living for pensioners and working people.

So the coalition government is getting on with the job of building a strong and prosperous economy.

We have designed a raft of responsible and fair budget measures for this parliament to enact. Since the last election our economy has created a quarter of a million new jobs and the centrepiece of this budget is a plan to create even more

Jobs are now growing at well over three times the pace under Labor. We are cutting the small business company tax rate to the lowest in almost 50 years, and for two years we will be giving all small businesses an immediate tax deduction on any asset they buy costing up to $20,000. This will benefit more than 95 per cent of all Australian businesses.

The budget also delivers for families. Our Jobs for Families reform will deliver a simpler, more affordable and more accessible childcare system, giving parents more choice when it comes to balancing work and family. Low- and middle-income families will be $1,500 a year better off if they are using the childcare system. Families using the childcare system in 2017 on family incomes of between $65,000 and $170,000 will be around $30 a week better off.

The Abbott coalition government budget in 2015 delivers for families, for small business and for our economy. It is responsible, measured and fair. It cuts taxes, it will create jobs and it delivers a responsible path back to surplus. This pathway to prosperity all starts with bills like this. I urge those opposite to stop obstructing, go back to their own measures and support this bill in order to help us get our nation back on track and renew the meaning in our name of 'Commonwealth of Australia' so it is not 'Australia: a nation of common debt'.

Paul Fletcher (Bradfield, Liberal Party, Parliamentary Secretary to the Minister for Communications) Share this | Link to this | Hansard source

I am very pleased to speak on the Labor 2013-14 Budget Savings (Measures No.1) Bill 2014, which is an important bill that repeals the second round of the carbon tax related personal income tax cuts that, in the absence of this bill passing into law, would take effect from 1 July this year. In the time available to me, I would like to make three points. Firstly, I would like to highlight the hypocrisy and the irresponsibility that, sadly, we have seen from the opposition when it comes to the matter of the budget. Secondly, I would like to focus on the measures contained in this bill that are designed to hold the Labor Party to its promise, made before the last election, that it would repeal the second round of carbon tax related personal income tax cuts. Thirdly, I would like to highlight more broadly why it is vitally important that we have, from both major political parties, a responsible approach to budgetary management.

Therefore, firstly, let me turn to the proposition that what we have seen, sadly, from the opposition Labor Party is a staggering display of hypocrisy and irresponsibility when it comes to the matter of the management of the Commonwealth budget. It is very hard to take senior figures from the opposition seriously on the question of the management of the budget. Over eighteen months we have heard a range of airy generalities about fairness and the future. In the lead-up to the budget this year, the Shadow Treasurer gave the impression that he was concerned about the budget deficit. For example, he was quoted in the Australian Financial Review in April this year, saying:

… the deficit is blowing out again under Joe Hockey's watch in the upcoming budget …

In fact, despite what the Shadow Treasurer was warning in that article, in the budget delivered in May this year the Treasurer laid out a credible path back to surplus. In response to that, what we heard from the opposition Labor Party was a series of airy generalities about fairness and the future, such as claims that the budget:

… wasn't a plan for the future …

and that:

… it still retains some of the unfairness of last year.

I fear that we cannot treat seriously comments from any Labor figures on the question of budget repair, and for three reasons we ought to treat such comments with withering scepticism. The first is the record of inept budget mismanagement that we saw in the Rudd-Gillard-Rudd government. It is worth reminding ourselves that the present Leader of the Opposition and the present Shadow Treasurer were senior figures in the Rudd-Gillard-Rudd government. That government inherited a strong and healthy budget, with surpluses in 2006-07 and 2007-08 of $17 billion and $20 billion respectively. But once Wayne Swan and, subsequently, Chris Bowen got their hands on the policy levers, surpluses quickly disappeared. In the next six years we saw a grim and growing run of deficits, reaching almost a quarter of a trillion dollars in total. Under the previous Labor government, we saw a series of deficits of negative $27 billion, negative $54 billion, negative $48 billion, negative $43 billion, negative $18 billion and negative $50 billion.

The second reason that the Labor Party simply cannot be taken seriously on this issue is its grossly irresponsible behaviour concerning the measures that it had planned to implement when in government. These measures, delivering combined savings of $5 billion over the forward estimates, were included in the costings that Labor took to the 2013 election. For example, Labor included in its 2013-14 budget, delivered in May 2013, a series of savings measures for higher education delivering total savings exceeding $2 billion, such as converting the Student Start-up scholarships to income contingent loans. Naturally enough, therefore, the Treasurer, the member for North Sydney, included these measures in his budget brought down in May 2014. After all, if Labor had already promised to introduce these measures, surely it could naturally be relied upon to support them if the coalition legislated to implement them, could it not? Would that not be the most reasonable proposition in the world?

Sadly, it turned out that, no, Labor could not be relied upon to achieve even this minimal degree of consistency. It has reversed its position on these measures. Despite the fact that it announced them in 2013-14 and despite the fact that it included the savings from these measures in the 2013-14 budget, it has subsequently refused to support legislation to give effect to these measures, notwithstanding the fact that if Labor has continued in government after the 2013 election it would have needed to introduce legislation in exactly the same terms. If Labor cannot even bring itself to offer a minimal degree of assistance in the budget repair task by being prepared to support measures which, in government, it said it would introduce, then it simply has no credibility in even talking about the budget repair task. Perhaps the third and most fundamental reason why Labor has no credibility on budget repair is that, if the Labor Party seriously considers that budget repair were a worthwhile policy objective, it has the power in its hands to achieve that objective.

Let me remind the House of the basic arithmetic that operates in the other place. There are 76 senators. Of those, 25 of them are Labor senators. The coalition has 33 senators. Together, that makes a comfortable majority in the Senate. To achieve budget repair, all Labor needs to do is support the coalition's budget repair measures. If it does not want to do that, it could come forward with its own measures and there could be a serious dialogue—as befits serious national political parties—about how to achieve the budget repair task. Instead, we have Labor on the one hand claiming to be concerned about the budget deficit but on the other hand failing to engage on measures that would do something about it.

Let me turn now to what this bill before the House this evening does. The purpose of this bill is to hold Labor to its word. This bill is designed to facilitate the Labor Party keeping its election policies. The effect of this bill is to implement the policy committed to by Labor in the 2013-14 budget of repealing the second round of carbon tax related personal income tax cuts that are due to take effect—in the absence of this legislation—on 1 July this year. If that repeal were to proceed, then the tax-free threshold will remain at $18,200, rather than increasing to $19,400; the second personal marginal tax rate will remain at 32.5 per cent, rather than increasing to 33 per cent; the maximum value of the low-income tax offset will remain at $445, rather than falling to $300; and the withdrawal rate of the low-income tax offset will remain at 1.5 per cent, rather than falling to one per cent.

In opposition, the coalition committed to keeping the first round of personal income tax cuts and associated pension and benefit increases, and they have been retained. We went on to promise and give effect to our promise of removing the carbon tax, which is saving the typical Australian family $550 this year alone. What this bill before the House this evening does is implement a measure which was announced and committed to by the Labor Party when in government. In the final budget handed down by Wayne Swan on 14 May 2013, the former government deferred a second round of personal income tax cuts, resulting in a $1.5 billion saving over the then forward estimates. Due to the addition of two further years to the forward estimates since then, the measure is now worth $2.8 billion to the budget over the next four years.

The previous government never got around to legislating this measure, the financial benefits of which it included in its 2013-14 budget. This was one of nearly 100 announced but unimplemented taxation measures left to the Abbott government by the previous Labor government. This bill is intended to give effect to the measures that Labor announced but never implemented. I am sorry to have to inform the House that this is not the first time we have sought to legislate this measure, which Labor committed to when it was in government. On more than one occasion, Labor has voted against legislation containing this particular measure, notwithstanding the fact that it committed to this measure when it was in government. The hypocrisy and the irresponsibility of this is frankly staggering and remarkably disappointing.

There are a range of measures that Labor announced and committed to when in government that it now opposes. These total $6.5 billion, in addition to the $2.8 billion measure that is the subject of the bill before the House this evening. There is the change to the treatment of student start-up scholarships, where there was a $2.1 billion savings measure committed to by Labor when in government; a decision by Labor in government to apply an efficiency dividend to university funding, worth $1.2 billion in savings; and the abolition of the discount for paying HECS fees upfront, which was a $336 million savings measure. All of these measures, with a total value of $6.5 billion, were committed to by Labor in government. It now refuses to support legislation to give effect to these measures that it announced that it was committed to when in government.

Let me make the point in the brief time remaining to me that budget responsibility is a matter of the highest importance. This government has inherited an extraordinary budgetary mess thanks to the rank and serial incompetence of the Rudd-Gillard-Rudd governments. The consequence of the huge blow-out in debt and deficit under those governments is that this year we are paying around $14.2 billion in gross interest costs, which works out to be about $40 million every single day. There is a very important task ahead of this government and ahead of the nation, which is to restore the Commonwealth budget to a sustainable state. That is why it is so important that we have a credible path back to surplus. That is the credible path back to surplus that is committed to by the Treasurer in the recent budget.

For the sake of our nation and for the sake of our people, there is a serious job to do on budget repair. The Abbott government is methodically getting on with the task. It would be hoped that the other major political party in this place would demonstrate responsibility of a nature that goes with the stature that it holds of as a party and responsibility of the kind that significant and substantial Labor governments have demonstrated in the past. I am sorry to say this, but the current parliamentary Labor Party is simply not up to the standard of previous Labor parliamentary parties. It has refused to engage seriously on the budget repair task that faces this nation. It is about time the Labor Party addressed this matter with some seriousness. The bill before the House is designed to hold Labor to account to do what it promised it would do prior to the last election. I commend the bill to the House.