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

Thank you very much, Deputy Speaker, for this opportunity to speak on the Appropriation Bill (No. 1) 2017-18 and other appropriations bills for the budget that was recently handed down. There is a large and, unfortunately, growing group of Australians for whom the economy is a very different place to that which has been described by the Treasurer and the Prime Minister from that dispatch box. For this group of Australians, life is precarious, particularly at work. They face record low wages growth. They face record high underemployment. They cannot find the hours that they need to work to provide for their loved ones, because hours worked per person are also at record lows. Unfortunately for them and for the country, amidst all of the spin and rhetoric of this budget—all of the things that the government would like us to believe this budget is about—the economy today and the budget that the government has handed down make life for that group of precariously placed Australians much, much harder. That is the real story of the people facing part of the economy today, not the one told by the Treasurer.

Again unfortunately for this country, this is a budget which sides with the millionaires and the multinationals over middle Australia, and that is because we have a government that still clings to an idea which has been long discredited, this Thatcherite fantasy that says that if you shower largesse on the top end of town then somehow, miraculously, people on low and middle incomes in this country will benefit from that effort. That has been the approach of those opposite for as long as I have been around. It was certainly the approach that defined the first three budgets of the Abbott-Turnbull governments, the Abbott-Turnbull period. The only thing that is really different about this fourth budget is that they want Australians to believe that they have changed—that they have somehow had some big conversion and all of a sudden they believe something else. They are so ashamed that they want to continue with that $65 billion income tax cut for the top of town that they want Australians to believe that the budget is about something different. But Australians are smarter than that. They know that the leopard cannot change its spots. They know that this government will always favour the top end of town over those who work and those who struggle.

What makes this budget particularly peculiar is the gap between the rhetoric that we hear from those opposite and the reality of the budget itself. They want Australians to believe that somehow it is a budget that Labor could have handed down. That is a very flattering reflection in lots of ways. Labor has led the debate on this side of the House on important policy considerations, but no Labor budget would have $22 billion of cuts to schools, dramatic increases to university fees or $600 million cut from TAFE and apprenticeships. No Labor government would fail to take action on negative gearing and capital gains—those tax breaks for wealthy investors that put first home buyers at such a disadvantage.

Those opposite want us to believe that this is a fair budget. But no fair budget would have those cuts to family payments, to veterans health or to pensions—something like $366 a year in terms of the energy supplement, which is still in the budget as a cut for pensioners. The government took out what has become known in the insider talk of this place as the so-called 'zombie measures'. They took out some of those zombie measures from the budget, but we know from the finance minister and others that they were taken out not because the government stopped believing in harsh cuts to the most vulnerable, but because they could not get them through the Senate. The finance minister even said it was regrettable that that they could not pursue those harsh cuts to benefits for the most vulnerable people in our community.

No fair budget would hike taxes for those earning less than $87,000 at the same time as they give a tax cut for everyone earning more than $180,000. That means a millionaire gets a $16,400 a year tax cut on the same day that up to 700,000 Australians lose their penalty rates, on the same day that somebody earning $65,000 a year gets a $325 a year tax increase. No fair budget would give multinationals and banks a $65 billion tax cut at the expense of middle Australia.

The government also wants us to believe that it is an infrastructure budget, but no infrastructure budget would have this smoke and mirrors and old announcements and potential projects and the same old excuses not to get cracking on important projects such as Cross River Rail and projects right around the country. It was this approach by the government, this smoke and mirrors approach to infrastructure funding, that led Infrastructure Partnerships Australia to point to the lowest investment in infrastructure in 10 years.

More fundamentally, those opposite want us to believe that this budget is somehow about budget repair. Some of the numbers that I am about to tell the House—you do not hear a lot about these numbers, but they are there, buried in the budget papers. These are not opinions from the Labor side of the parliament; these are the facts which are in the government's own budget papers. The first one is that the deficit for the year that we are in right now, 2016-17, has tripled from the government's first budget under Joe Hockey, from $10.6 billion to $37.6 billion. The deficit for the year we are in right now has more than tripled. It is worse for the coming year. The deficit for the coming year, 2017-18, has increased more than 10-fold from Joe Hockey's first budget to the budget that the Treasurer handed down very recently. It has increased from $2.8 billion deficit in their first budget to a $29.4 billion deficit in the most recent budget—a 10-fold blowout.

Net debt has blown out by over $100 billion since they those opposite came to government. Net debt will be at record highs for another three years. Gross debt will pass half a trillion dollars for the first time in Australia's history next month. That is roughly $25,000 for each Australian man, woman and child. That is why the Treasurer snuck out the announcement that he would have to increase the gross debt cap, because it will hit $600 billion and will keep rising to well over half a trillion dollars in gross debt. Gross debt will hit $725 billion in 10 years, and it will keep on growing. It does not actually peak in the 10-year budget period. Gross debt continues to rise.

Remember, it was Malcolm Turnbull, when gross debt was expected to hit about $300 billion, who in 2009 described that as an almost inconceivable level of debt. He called it a gigantic mountain of debt. He said it was a frightening amount of debt when it was approaching $300 billion. Now we know that under this government gross debt will hit $725 billion and keep rising after that. No wonder that, when the ratings agencies reaffirmed the AAA credit rating, they kept us on negative watch. They kept Australia on negative watch because they were not convinced that the government had the capacity to arrest these blowouts in debt and deficit.

All of this is in spite of $21 billion of new taxes. They do not like to talk about that on that side of the House. $21 billion of new taxes—the price that Australians will pay for four years of chaos, division, dysfunction and debt and deficit blowouts. Those opposite also want us to believe that, in the words of the Treasurer, it is a budget for 'better days ahead'. I think the Prime Minister described it as a budget to 'make people's dreams come true'. In the short time since the budget was handed down, we have already had two measures of consumer confidence and both have plummeted. The Treasurer stands up and says that this is a budget for better days ahead. But the Australian people have examined it, held it up to the light and said, 'No, we don't think so.' Consumer confidence has plummeted on both of the key measures that were released last week.

But I think perhaps the biggest failure, the biggest gap between the rhetoric of this budget and the reality of this budget, relates to the government's performance on jobs. One of the main reasons they have changed that old slogan 'jobs and growth' to 'fairness', which Crosby Textor has told them to do, is that the record on growth and, especially, jobs, is really poor. Even in this budget—again, it is something the government does not like to talk about—the key measures of jobs and growth have been downgraded. So when they want Australians to believe they are doing an amazing job on jobs and growth, they put downgrades into the budget for all the key measures.

I think the starkest failure in this budget, compared to the budget before it, is that the Turnbull government is now expecting 100,000 fewer jobs in our economy than they were expecting just a year ago. The nerve of them to say this is a government about jobs, while they quietly downgrade their expectations for jobs in this country! Almost 100,000 fewer jobs are expected than just a year ago—no wonder we do not hear so much of that slogan anymore.

The budget is a subset of a broader problem that the government has. It is a subset of a broader reason why the government is not just failing on the politics of this budget but on economic policy more broadly; it is a policy failure as much as it is a political failure. And the policy failure stems from a misguided belief—as I mentioned before, this Thatcherite fantasy—where they think growth comes from a $65 billion tax cut for the biggest companies in this country and an income tax cut for those who need it least, those who earn more than $180,000 in the personal income taxes them. What they fail to understand—and this is the really damaging problem; it is a really unfortunate, disappointing failure on that side of the House—is that we will not get economic growth in this country while people are not earning. We will not get the demand we need in the economy—the household spending, the investment—unless we have economic growth which is inclusive, which gives people a stake in our economic success. We will not get that growth unless people are properly rewarded for the work they put in.

I was greatly heartened by the contribution by the member for Wakefield and the member for Lalor a moment ago. They talked about penalty rates and the 700,000 Australians who stand to lose up to $77 a week because the government will not protect their penalty rates. We need to make sure that work is rewarded in this country if we want to have economic growth. We will not have proper, inclusive economic growth unless we have a decent social safety net. On all three of those fronts—inclusive growth, work that is rewarded, and a decent safety net—this government is taking us in the wrong direction.

I am proud of Labor's response to the budget. I am proud that we will not ask low- and middle-income earners to pay more so that the top end of the town can pay less tax. In the finance portfolio I am pleased that, in the Leader of the Opposition's budget reply, we identified more than $1 billion in spending in this budget that we will not proceed with—including advertising campaigns and other measures in the budget—and we announced new important savings such as capping the deductions that people can claim when they manage their tax affairs. We are making sure that the one per cent of Australians who spend more than $3,000 a year on lawyers and accountants to minimise their tax cannot claim that back on their tax themselves. It is a policy that we are very proud of, which improves the budget. We are proud of our steps on tax haven transparency and further steps towards ensuring multinationals pay their fair share of tax.

We are proud to have announced over $120 billion in savings over the medium term, which demonstrate that we can have budget repair in this country, we can improve and we can address the mess that those opposite made of the budget, but we can do so in a fair way. We can do it in a way that does not ask the most vulnerable Australians to carry the can for the debt and deficit blowouts under those opposite. I am also proud that in the Leader of the Opposition's budget reply two Thursdays ago we prioritised what I think is probably the most important thing we can do if you want growth in this country, and that is to invest in the human capital of our people to make sure that we have investment in apprenticeships—that we put TAFE back at the centre of our vocational training and educational system. These are the things we should be doing if we genuinely care about growth and jobs in this country.

People would be aware, because of the history of the appropriation bills, that there has been a convention for some time that the opposition do not oppose the appropriations bills. We will be supporting the bills in the usual way—the way that people have been accustomed to since the mid-1970s. In that light—the fact that we are voting for these bills—let me finish with something else that we agree on. Those opposite have said in the last couple of weeks that budgets are about choices, and they are. Unfortunately, this budget chooses the millionaires and the multinationals over middle Australia. Only this side of the House believes in the people powered growth that we need in this country, and that begins—but does not end—with budgets that are genuinely fair not just in spin but in substance.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

It is a privilege to be able to stand up and address Appropriation Bill (No. 1) 2017-2018 and, particularly, the case for it—for the substance of it, rather than, as we have unfortunately just heard, a critique indulged with spin that might make people feel good about themselves but does not address the substance. There are a number of measures within this budget that I strongly support. For instance, one of the things that perhaps slipped the headlines but is an extremely important part of the budget is that there is, essentially, a tax cut for Australia's future workforce. In the budget, the government announced that it would not be drawing down from the Future Fund. When it was announced in 2005 by then Treasurer Peter Costello, he said that the Future Fund was established to:

Fund the liabilities—

meaning public sector pensions

we have already incurred but not yet made provision to pay for—

with the intention—

no Government will be able to draw the money out of it until it is sufficient to meet all the unfunded liabilities …

The intention was that the contributions would be made from surpluses from the 2007 budget onwards. What we know, in practice, is that, apart from additional contributions from the sale of Telstra shares, that never occurred. Costello said in his 2007 budget speech:

If you rob capital or earnings from the Future Fund, taxpayers will have to make up the difference. You are passing our bills, our obligations, from our generation to the next. This will limit their future.

He was as right then as that principle and statement are now. In this budget, the coalition has deferred drawing down from the Future Fund from 2020 until 2026. If drawn down earlier, the Future Fund would only be able to cover liabilities for the next 20-odd years. A six-year delay ensures it will mature in fund liabilities for the next century, and amounts to an effective tax cut for over a century, with the primary beneficiaries being those aged less than 20 years old today. So when I hear the pointless and needless rhetoric from the opposition leader about a war against young people, what I am not hearing is his commitment to support the measure by the government to delay drawing down from the Future Fund and that, should he be elected into government at some point in the future, they would not seek to raid the Future Fund. Because we know they have form in the past where they have sought ways to do that—whether through the principle of developing the National Broadband Network as a justification to extract money, or finding measures that may give justification to raid the Future Fund for their political benefit.

There is of course also another important measure within the budget around the instant asset write-off for small businesses. Coming from an electorate with thousands of small businesses, entrepreneurs coming together to create small businesses and invest in the future so that they cannot just take care of themselves and provide goods and services to the market place but also employ people, to create an economy built off the ingenuity and energy of people and to employ others so that they may stand on their own two feet. The continuation of the instant asset write-off is enormously beneficial for the people of Goldstein—and not just the people of Goldstein but for the people they seek to employ from within our community and from without.

Another contentious measure that has raised its head throughout the debate on the budget has been the introduction of a bank levy. I will concede that introducing a bank levy has never been my first preference, but when it comes down to the reality of how banks operate and the capacity for a levy to be introduced to reflect some of the aspects of their enjoyment of guarantees in the past which have lowered the rate at which they are able to borrow capital, particularly in comparison to smaller banks, I do not think it is an outrageous proposition. The banking levy does do something to create a level playing field between larger and smaller banks, though I think there is a case from time to time to look at how the operation of this levy operates. My personal preference is that it would not exist for a long time into the future, particularly because of its contribution towards dealing with issues around deficit and debt reduction.

There have been a lot of arguments on the political left about this budget, and of course they have been using all sorts of perpetual arguments about fairness as a justification for supporting one measure or another, often with heated rhetoric and little substance. As I said, we just heard a large chunk of that in the speech by the member for Rankin. This budget seeks to redress and rebalance some of the issues that face our country, making sure that there is proper investment in things like education and protecting those people who are most vulnerable and can do little to improve their circumstances, particularly by fully funding the National Disability Insurance Scheme and the consummate measures in the Medicare levy.

But this budget is only the beginning, in my opinion. It must be seen as an opportunity to refocus and refresh the discussion around the future of our country, because if you want to protect young people and their interests into the future we do need to have an honest discussion about the budget and an honest discussion about the growth of expenditure and where it is coming from. In the past, governments that have been elected have been able to focus on welfare reform to get people back to work, to privatise assets and introduce revenue into the government to pay down debt. That is not the challenge that we face today, and until we as a country take that issue seriously and understand what is driving our expenditure, not just the nature of debt and how it is created, we will not be able to hand on to future generations the type of country we have inherited. There is a lot of discussion about curbing middle-class welfare and the like, particularly from the opposition. What they invariably mean is reducing assistance to income earning families, which assists them in staying in employment and creating and building their own lives and their own Australian dream of being able to stand as much as possible on their own two feet.

At some point this country needs to have not only a very serious discussion about real growth and where it is coming from and what is driving it and how we as a country are going to deal with the challenges that come both with expenditure by the government of taxpayers' dollars but also a discussion around how we raise revenue. Discussions around revenue are not just about increasing taxes, as some of our opponents would like—it is a discussion about how we rebase the tax system that properly reflects that. What we know is that the real growth in welfare spending since the turn of the 20th century has been in assistance mostly to an ageing population. Since 1999, welfare support for an ageing population has grown from $31.9 billion to about $61.7 billion in 2016 dollars. Similarly, total health expenditure has grown from $28.7 billion to around $71.2 billion—not that all of that cost, I might add, is driven by Australia's ageing population. But, a Productivity Commission report has found that 20 per cent of a person's lifetime health expense is intensely focused at the end of a person's life.

As a society we of course need to assist those people who cannot assist themselves, but it has long been understood that supporting an ageing population will increasingly put more pressure on taxpayers and particularly a diminishing taxpayer base. The trajectory is set because the share of Australians over the age of 65 will increase from around 15 per cent of the population today to nearly 22 per cent by 2054-55. People retiring now around the age of 65 can have up to 30 or 40 years of life ahead of them. Unsurprisingly, they want security, and they should have it, particularly around government policy and programs to make sure that they can retire with both dignity and confidence in their future.

Yet, at the same time, they will receive pensions, aged care, health care and medicines during the most dependent period of their lives, through taxpayer funded support. Concurrently, the private wealth of many retirees is held in superannuation and rarely attracts income tax unless you are over the new refined thresholds that were introduced by this government—that is, unless you are extremely well off. Similarly, many pensioners pay little income tax, as their income barely exceeds the current tax-free thresholds. The 2015 Intergenerational report identifies the challenge that presents, as we have a diminishing number of people who pay tax. It identifies the increasing pressure this will put on presently younger Australians. Currently there are 4½ people of working age for every person over the age of 65. By 2054-55, it will drop to 2.7, and there will be a significant narrowing in the number of taxpayers.

That is why one of this year's most important budget measures is that everyday expenses such as health, education and welfare will be taken from revenue and not debt from 2018-19, and that the government should finally be back in surplus by 2021. The current budget will only stabilise debt. The challenge for all future governments will be to start paying back that debt and ensuring the next generations are incentivised to work.

But, at the heart of it, we have to deal with the problems around the tax system and where revenue is coming from. I spoke of this in my first speech to this parliament: we need a substantial rebasing of the tax system to recognise, firstly, that we operate in an internationally competitive environment. This is the fallacy and the absurdity of our political opponents, who cry foul at the idea that you would reduce tax for companies. We live in a world where capital and labour are mobile. Get real. Recognise that we are going to have an increasing challenge and a diminishing amount of income that can come from company tax, particularly if other countries decide to go down the path of reducing their company tax to attract investment, and with that will go jobs.

Similarly, we need a reduction in personal income tax rates, because in the end, firstly, labour, particularly skilled labour, is now mobile, and people will choose to work partly in the environments where they can seek to enjoy the most return from their effort. But, in addition to that, we know what is actually happening out there in the economy. People, particularly those people who are not on salaries working for other people, face choices. They often will go out of their way to set up company structures and trusts to minimise their tax liabilities. Of course, the response from our political opponents will be simply to dismiss this issue and say, 'Let's get rid of any structure that allows them to do it,' but all they are doing is responding to incentives.

If we want to see a situation where the government raises the revenue it needs, you need a rebasing of the tax system and a consistency across tax rates, whether it is consumption, company or personal taxes, to make sure that everybody is carrying their obligations and that all of the people who are employed out there—and there are thousands of them—as accountants and lawyers to minimise people's tax liabilities go off and find some productive purpose to grow the economy and help businesses to grow their profits and their economic opportunity, not simply to minimise their tax.

There is a very good book that I would recommend to anybody who has not had a chance to read it. I know it probably sounds a bit dull, but it is titled For Good and Evil: The Impact of Taxes on the Course of Civilization. It is by a fellow by the name of Charles Adams, and in it he goes through the history of taxation and how it can lead to the rise and fall of societies, drive incentives within communities and economies, and deliver substantial differences in the trajectory of a nation. That is the challenge that we as a country must face: whether we are going to tax appropriately and focus on the trajectory that we want for our country, which is one that grows and builds opportunity for the future for younger Australians. I particularly note the epilogue of Adams's book, where he talks specifically about the broad themes that can be taken from the role of tax throughout history:

First is the glaring fact that all good tax systems tend to go bad. Unless restrained by the people in some effective way, governments are unable to live with a good working, moderate tax system …

Second, the most challenging problem of our age is whether or not civilization can extricate itself from its own tax self-destructiveness. If we don't address that problem, I believe our children in the next century will …

The destructiveness is not just economic, it endangers more important matters of the human spirit—

which goes to the heart of whether people can stand on their own two feet and enjoy the rewards of their efforts, but also the calling to others to be able to contribute to our society and stand on their own two feet and celebrate their efforts and endeavours. He continues:

Third, the one common denominator of all good tax systems (before they went bad) has been moderation. This principle was riven to us by the ancients as the ideal of the good life and of good government … Aristotle arranged a long list of moral qualities in triads. Virtue was a middle ground between extremes, called vices.

The essential character of what Adams analyses by looking at the whole history of taxation is that it should be simple, it should be consistent and it should be low, because that is the basis on which people will pay it. If people do pay their taxes because they see them as fair and just, as a respectful recognition of their reward and their effort, you will get people doing what they appropriately need to do. Also, they will not be distracted by creating artifices and structures that otherwise seek to advance minimising their tax obligations. But that requires reform and the sort of conversation that unfortunately we cannot have right now, because anything that involves a serious discussion around rebasing the tax system leads to the inevitable cries and shrill responses from those opposite; they cannot and do not understand how you can have a proper discussion around tax and what is in the best interests of this country.

Finally, just to summarise, a number of people have commented on this budget, particularly in relation to what they describe as self-identified conservatives and the problems they have with this budget for one reason or another. I am a liberal, and I am proud to be a liberal and always will be. One of the great follies of why I never describe myself as a conservative, though I do have conservative dimensions, is that when you describe yourself as a conservative you define yourself by what you are against, and that allows others to define the agenda and to simply temper the speed at which they get there. That is why we must always be liberal. (Time expired)

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

On 9 May the Treasurer strutted out to deliver a budget that in a mere two weeks has already slumped into a slouch. A budget that was supposed to stand tall and lift the government's standing is doing nothing of the sort. And the reason it is a slouch of a budget is that, frankly, it lacks a policy backbone and is weighed down by contradictions and a heavy load of hypocrisy.

The coalition government, who shrieked about the disaster of debt and deficit, will preside over gross debt rising to $725 billion and, in this budget, snuck in as a footnote that they would lift the debt cap to $600 billion. Things are not much better when you focus on net debt, which is set to rise to a staggering 20 per cent of GDP. It has not been that high since World War II. And it has never been that high under a Labor government. This is a budget that is jam-packed with heroic claims of future performance, such as reaching surplus in a few years off the back of a leap to three per cent wages growth, when just last week we saw official figures detailing that wages growth had reached historic lows of just 1.865 per cent. How is that leap supposed to occur? What about the observation of Fairfax's Peter Martin, who says this about government spending:

… in 2019-20, for one year only, the budget tells us that number will drop to 0.9 per cent, before bouncing back to 2.1 per cent.

That curious dip, for one year only, is enough to push down the projected 2019-20 deficit from $10.5 billion to $2.5 billion and to turn what would have been a deficit in 2020-21 into a surplus.

Amazing!

The budget is one of the principal financial documents of the Commonwealth and it is, frankly, underpinned by dodgy, politically pliable numbers. When you push through this and focus on the real numbers, you appreciate the reality of the debt and deficit disaster presided over by the coalition. There will be new record net debt for the next three years, and we will experience a deficit for the 2017-18 year which is 10 times bigger than was predicted in the coalition's first budget. As this reality is dawning on people, you can appreciate why the proud claims of the coalition simply do not stack up and why this budget reflects either laziness or an incapability to get any budget management right.

While the deficit has soared, so too has the weight of the Turnbull government's cuts, and the impact of its bad decisions have ballooned, affecting the people I represent in the electorate of Chifley. From Mount Druitt to Blacktown, families will find themselves worse off because of Malcolm Turnbull's budget. While they will pay more tax and bear a heavier burden, the nation's wealthiest two per cent are actually aided by the Turnbull government in this budget. Millionaires will get a tax cut of $16,400, while families in our area feel the pinch of this budget.

It was staggering to listen to the fake, opinion-poll-driven concern of the Treasurer on budget night, when he said:

We must choose to tackle cost of living pressures for Australians and their families.

He did not say that because he genuinely believed it. He said it because, no doubt, the $200,000 he spent on opinion polling told him to say it. It is offensive when you compare his words to the realities of his decisions. Anytime this government has a chance to make a decision to help average Australians, the Turnbull government makes decisions that actively hurt them.

Look at what this budget does. A family on $65,000 will pay $325 more in tax in two years time. Changes to family tax benefit A supplement will mean that a family with an income of $80,000 will lose nearly $730 per child. Axing the energy supplement to new pensioners, people with disability, carers and Newstart recipients will mean a cut of $14 a fortnight to single pensioners or $365 a year; couple pensioners will lose just over $21 fortnight or roughly $550 a year. Beyond this budget, the Turnbull government hardly lifts a finger to lift the wages of low-income earners—or it champions cuts to take-home pay, by supporting penalty rate cuts which mean 10,000 workers, from Mount Druitt through to Blacktown, could lose $77 a week from their pay on 1 July, the very same day that millionaires get a $16,400 tax cut.

As to schools, the Turnbull government budget has slapped schools across Australia with a $22 billion cut. Parents across the Chifley electorate should burn with rage when they realise that $22 billion of funds that should be invested in their children's education is being shovelled into a $65 billion cut in big business's taxes. The original Gonski report—the fair dinkum Gonski report—identified how education investment could bust clusters of disadvantage. Yet when I look at the very neighbourhoods where I know these clusters exist, the harsh reality is this: millions of dollars are being denied to those young Australians and their opportunities in life crippled and hampered by a government that could not care less.

Of the roughly $900 million cut from New South Wales schools, public schools in Chifley will suffer cuts of $31 million over the next two years. Over two years, Chifley College Mount Druitt Campus gets $5.9 million less; Plumpton High School, $1.38 million less; Doonside Technology High School, $1.36 million less; Hebersham Public School, $1.35 million less; Bidwill Public School, $1.14 million less; Lethbridge Park Public School, where the member for Barton once taught, will get $1.13 million less because of this funding deal. Rooty Hill High School will get $1.2 million less. All of those areas will suffer cuts to education funding. We hear often from those on the other side the claim of intergenerational theft. This is intergenerational theft—ripping away money that would have helped so many young people in our area get a better education and, hence, a better start to life.

As to TAFE, there were budget cuts of $600 million more from TAFE and vocational education and training over four years. Locals trying to pick up valuable skills at Mount Druitt TAFE will inevitably feel the cuts.

For universities, up jumped the student costs by thousands of dollars. University funding was cut by $4 billion. At a time when we are supposed to be lifting the skills of future generations, we are underinvesting in the development of those skills.

On Medicare: the Turnbull government's delay in reversing their freeze on Medicare by three years puts bulk-billing in our area at risk. In Western Sydney, bulk-billing is relied upon by the vast majority of doctors and patients. Nearly 99 per cent of doctors in the Mount Druitt area bulk-bill. If they have to start passing on these costs, charging more for visits, families will bear the brunt of this freeze every time they visit a doctor.

As to hospitals, the current low levels of hospital funding were not boosted in this budget. State governments have closed down wards—for example, the cardiac ward in Mt Druitt. In an area where heart disease is a massive concern, the state government shut down the cardiac ward. No wonder when you see the cuts to hospital funding that you see hospitals in our area doing that—denying a vital service to people. This budget enables more of the same—residents having to sit through long waits in emergency rooms and long wait times for elective surgery in both Mt Druitt and Blacktown.

As I said earlier, this budget lacks a policy backbone, and the failure of the Turnbull government to deal seriously with housing affordability is a classic example. I would be stunned if there was an ability of the general public to point to just one thing ushered in by this budget that will make it easier for first home buyers to get their first home—just one thing. A budget that said that housing affordability would be a central part of it is suddenly unable to deliver and refusing to tackle the hard task of pulling apart the distortion created by taxation concessions like negative gearing and capital gains tax discounts—again, no backbone in this budget.

On jobs, vital not only to Western Sydney but obviously to communities across the country, the Turnbull government's own budget papers show their inability to grow the economy and help create jobs. Nearly 100,000 fewer jobs are forecast for this year compared to the last budget. Their own numbers show up their claims of economic growth. This year's budget forecasts higher unemployment, lower wages and lower GDP. Just last week we saw the new labour stats announced. While more people are getting into work right now, there is a very slippery undercurrent. There are fewer and fewer full-time jobs available and fewer work hours to go around. People are feeling the pinch, but nothing in this budget reveals anything—not even a hint—of a jobs plan.

The government does a poor job of creating jobs and then those who cannot find jobs are placed into failing jobs programs. The Turnbull government said, for instance, in this budget that they had refocused Work for the Dole, but there is no detail around how they will improve that failing program. Remember: almost 90 per cent of Work for the Dole participants are not in full-time work three months after finishing the program—appalling!

The government announced the expansion of the National Work Experience Program but they have not even finished or published a review into the program, explaining why it is meeting expectations or not meeting expectations. There is little detail about how much this expansion would cost and no justification for its expansion or an expectation of what success would be triggered by. Some new incentives will be provided to jobactive and transitional work providers as well as the National Work Experience Program post providers, but, again, there is very little detail around cost.

The government's approach to jobs is all talk. They care more about tabloid headlines than actually helping find Australians work. The latest thought bubble was the one that was ushered in by last year's budget, the Youth Jobs PaTH intern program. Last week, the employment minister admitted that just over 100 interns have signed on to this program since it started in April. The harsh reality is that the government have to get 2,500 interns a month to meet their 30,000 annual target. Australia's labour market is in a weakened state, with wages growth at record lows and underemployment at record highs. But the Turnbull government have still not been able to explain how putting 120,000 interns into a shaky jobs market will not displace jobs that already go to paid employees.

I heard firsthand the impact of a weak labour market when I visited Western Australia, where the unemployment rate remains above the national average. There, the Turnbull government have watched the state's employment services perform poorly compared to the rest of the country, but what have they done about it? They have not lifted a finger. In six Western Australian employment regions, the majority of jobactive provider sites scored only one or two stars out of five in the Department of Employment's own evaluation system. Despite this poor performance, they have not made any changes. Jobseekers are still being left out to dry. They need to get serious about helping people find work.

On the digital economy—another portfolio area that I focus on—the Turnbull government have made cuts to education, skills and universities and are continuing to ignore the investment required to grow our digital economy. Start-ups feel like they have been abandoned by a Prime Minister who told us last year that it was an exciting time to be alive and agile. As the CEO of StartupAUS, Alex McCauley, summed up this budget:

Startups and entrepreneurs, once seen as the heart of the `Ideas Boom' and the government's economic agenda, were not mentioned in the Treasurer's speech at all.

We need a focus on their work. We need a stronger, more inclusive approach to advancing the innovation agenda in Australia to plan ahead for those who will be affected by technological change and automation. In some cases, for example, manufacturing might see automation affect 50 per cent of the jobs that are performed there. Fast food, the generator of entry-level jobs for young and mature workers alike, could see 60 per cent automation. We need to be doing the work now to build the skills of future generations of people, to ensure that there is an effective transition through that period and that people are looked after. We cannot afford to drop the case for innovation as has been seen by this government. And we certainly cannot afford to drop this in regional areas.

I noticed last week that the Turnbull government had sneakily pulled the handbrake on a $23 million program to help fund the set-up of regional incubators to start new businesses in our regions. During this program pause, which is simply Canberraspeak for a future cut to this program, it will be interesting to see what gets announced. Great things are happening—for example, Runway Geelong and Silicon Paddock, initiatives that are occurring outside the cities to generate new enterprises and new jobs. And the support, right at the time it is needed, is being pulled by this government. It is unacceptable, particularly for regional Australia, to have that impact on them.

In the meantime we see stuff-up after stuff-up in digital transformation by this government, which has announced that it is spending not $5 billion that it inherited when it came into office but $10 billion right now—$10 billion on ICT, with no explanation about how the government is spending the money wisely, while at the same time cutting funds to education, cutting funds to innovation. Again, it is simply unacceptable to see that ushered in by this budget. As I said, it is a budget that started to walk tall but is now in a slouch. It lacks backbone, it lacks discipline, it lacks focus and, importantly, the people of Australia are paying for that.

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

I am very pleased to see that there is a very large cohort of opposition members here in the chamber who came especially to listen to my speech on these appropriation bills. I thank you. Tonight is the 75th anniversary of the famous speech by Sir Robert Menzies known as The Forgotten People. I would like to quote a few words directly from it. Menzies talked about the people he represented in parliament: the salary earners, the shopkeepers, the skilled artisans, professional men and women, farmers and so on. He said:

These are, in the political and economic sense, the middle class. They are for the most part unorganised and unself-conscious. They are envied by those whose benefits are largely obtained by taxing them.

I would advise every Australian to take the opportunity to read in full that speech of Sir Robert Menzies. He concludes with the words:

Individual enterprise must drive us forward. …

But what really happens to us will depend on how many people we have who are of the great and sober and dynamic middle-class - the strivers, the planners, the ambitious ones. We shall destroy them at our peril.

Sir Robert Menzies gave a warning in that speech. He warned about those who sought to divide the Australian people into classes. He talked about:

our greatest political disease - the disease of thinking that the community is divided into the relatively rich and the relatively idle, and the laborious poor, and that every social and political controversy can be resolved into the question: What side are you on?

The other warning he gave was that 'to discourage ambition, to envy success' are things that we must avoid. He also said:

Now, the last thing that I would want to do is to commence or take part in a false war of this kind. In a country like Australia the class war must always be a false war.

Sadly, that brings me to the speech on the appropriation bill by the opposition leader. It was nothing other than class warfare rhetoric. Half a dozen times, he made derogatory referral to so-called millionaires. But it seems that he defines anyone who earns over $87,000 as a millionaire. What is really concerning, when you look at the details of his speech, is how he is actually encouraging class warfare with false statements.

I will quote the opposition leader's speech:

A Labor budget would stand up for middle-class and working-class families, instead of taking their money in raised taxes and giving it to millionaires …

He went on in another part of his speech to say that the coalition's budget 'goes out of its way to give taxpayer money to millionaires'. In another part he talks about taking money from the middle-class and spending it on millionaires. I am at a complete loss about how and where the government is taking money from one sector of the community and giving it to millionaires. This is just completely and utterly false!

What the opposition leader was referring to was the two per cent temporary tax increase in the marginal tax rate for those above $180,000. Employing that tax on them is simply confiscating money earned and created by those people. That money does not belong to the government. This is what we see from the Labor Party, time after time. They seem to think that the wealth of the people, created in this country by hardworking Australians, belongs to the government. It belongs to the people who earned that wealth. And if they want to take that wealth from them they have to admit that they are confiscating their money. They are taking money from them to be redistributed. They are not taking money from others and giving it to so-called millionaires.

That is why the speech by the opposition leader was so recklessly dangerous, with its false class warfare rhetoric. It gives us a window into what a future Labor government would be like. They would give us uncompetitive rates of company tax. They would give us an uncompetitive personal marginal rate of tax and they would give us uncompetitive energy prices that would deter economic growth in this nation. We know that class warfare has always been the mortal enemy of economic growth and jobs. Let's just have a look at a few of these things.

Firstly, the opposition leader's speech also referred to Paul Keating—in praise. He said:

Bob Hawke and Paul Keating changed Australia from industrial museum to a modern, outward looking, competitive economy.

What has Paul Keating had to say about Labor's plans? It is interesting: he actually slammed a 49½ per cent highest marginal tax rate as a tax gouge. He said—and I am happy to quote Paul Keating:

I believe the top rate of tax in Australia should be no higher than 39 per cent at the most.

He talked about what Labor's plans were for 49½ per cent and he described them as too punitive. He said that it is at a level where the state is confiscating almost half of people's income. And, although I hate to say it, I must admit that on this subject Paul Keating is exactly right. If we have a top marginal tax rate in this country set at 49½ per cent for those above $180,000, it means that once you get to that level of income then 50 per cent of every single extra dollar that you earn goes to the government. And with what you have left, what you spend, you must also then account for a 10 per cent GST, so that more than half of the extra money that you earn goes to the government in higher rates of tax. This is a disincentive on the job creators and wealth creators of this nation.

We only have to look at how this rate compares internationally. We know the global average of the top rate of marginal tax around the world is 33 per cent. That is exactly what it is in New Zealand. In the US it is 39.6, in India it is 35, in Hong Kong it is 15 and in Singapore it is 22. Where those marginal tax rates are slightly higher, they are set at greater multiple levels of average income. We set our highest rate of marginal tax at 2.2 times the level of average income. In comparison, in Switzerland it is 3.5 and in the United Kingdom it is 4.1—4.1 times average income until you reach the highest level of marginal tax. In Canada it is 4.3 and in the US it is eight times the average income. Yet ours is 2.2. In an economy where Australian citizens have a greater opportunity to travel and to work around the world, Australia cannot simply have the prosperity we need and the wealth creation we need if we are to have a 49½ per cent highest rate of marginal tax cutting in at 2.2 times the average income.

We have not only an uncompetitive rate of marginal tax but an uncompetitive rate of company tax. Capital has never been more mobile. If those on the opposition side think we can maintain the standard of living and investments we need when the US cuts their corporate tax rate to 15 and when the UK's rate is 20 they are fooling themselves, but it does not fit their class warfare rhetoric to say so. At the very minimum, we need to reduce the company rate of tax in this nation to 25 per cent for all companies. If we think we can get away with that rate of 30 per cent when all other nations are lowering it, we are fooling ourselves.

Then it comes to how we would see under a Labor government uncompetitive energy prices. There was a white paper in 2004 which I came across. It talked about Australia's competitive advantage in energy. It said:

Access to low-cost reliable energy is a source of competitive advantage for Australia. This low cost is driven by ready access to relatively inexpensive sources of energy, especially coal.

It goes on:

Australia enjoys some of the lowest stationary energy prices in the developed world. These prices have been an important factor in Australia’s national prosperity, underpinning energy-intensive industry and providing cheap reliable energy to businesses and households.

That is what has underwritten the wealth of our nation, but the policies of the Labor party have sacrificed Australia's competitive advantage in industry. To think that we can have a modern industrial base and high paying jobs and that we can create wealth and attract investment around the world if we generate 50 per cent of our electricity from wind turbines is one of the most dangerous fallacies out there in our country today.

Dr Leigh interjecting—

It is a dangerous fallacy, and the member sitting at the desk knows that. Perhaps amongst all the members of the Labor Party, he most understands the importance of having industry that is internationally competitive. We have taken energy prices in this country from the lowest in the OECD to one of the highest. Only the renewable energy king, Germany, has higher electricity prices than this nation.

That also brings me to the comments made by the member for Port Adelaide, who, in an interview on ABC—where else?—recently said:

The demand for thermal coal exports around the world is in rapid decline … Indeed, the demand for thermal coal exports from Australia is actually in decline …

I thought that was a bit strange. I thought, 'Maybe the member for Port Adelaide knows more about thermal coal exports than everyone else does.' So I went and just had a look at a few things to see how accurate he was. Firstly, a report published by no less than the Sierra Club and Greenpeace, hardly friends of the coal industry, says that currently around the world there are 842,000 megawatts of coal-fired capacity under construction. I will say that again: 842,000. Take into account that Hazelwood was a 1,600-megawatt power station. Around the world now, under active development, there are the equivalent of not 10, 50 or 100 but 542 power stations equivalent to Hazelwood. They are under active development today. Yet we have the member for Melbourne saying that thermal coal exports are in decline, so I thought I would go and have a look at the exact figures. The best place to have a look at those figures is some commentary by the coal industry themselves. They said:

The value of Australia's thermal coal exports is expected to grow by 28 per cent in 2016-17 and total $19 billion.

That is according to official statistics. Hang on. There is expected to be a 28 per cent increase, to $19 billion, and we have the member for Port Adelaide saying it is in rapid decline. Something here does not add up.

So I went further to see what information I could find. There is the Department of Industry, Innovation and Science—trust the science. What do they say about Australia's thermal coal exports? Their latest report, the Resources and energy quarterly from March 2017, says:

The outlook for growth in Australia's thermal coal exports is positive over the medium term. Significant gains in export values are expected in the short term … Moderate increases in thermal coal export volumes are expected to offset … resulting in strong export earnings. Australia's thermal coal export volumes are forecast to increase …

Where does the member for Port Adelaide get this? I think that the Australian public deserve to have the member for Port Adelaide come into this chamber and admit that he misled them and was completely wrong on thermal coal exports around the world. If we are to have debates on these issues, we have to be debating on facts, not falsehoods propagated by the member for Port Adelaide. (Time expired)

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

In considering any budget that comes down, it is worth saying a few words about the economic circumstances in which it is received. Today in Australia we have record underemployment, fewer hours worked per Australian than ever before, higher rates of casualisation and insecure work and record slow wages growth. We have inequality at a 75-year high, homeownership at a 60-year low and incarceration at a 100-year high. And we have a government which came to office driving debt trucks around the country and now having increased the deficit tenfold and increased debt by $4,000 for every man, woman and child in Australia. Interest on government debt costs every Australian nearly $500 a year. That is the debt blowout we have seen since the government came to office.

I am indebted to the member for Rankin, who notes in an opinion piece in the Huffington Post today that, despite spruiking $75 billion in infrastructure investment over the next decade, the government's budget papers actually show that funding for infrastructure has been slashed, leaving Infrastructure Partnerships Australia, an independent expert body, slamming the budget and saying it 'sees infrastructure funding at its lowest level in more than 10 years'. So, while the government is talking about better days ahead and claiming to do something on housing affordability, in fact this is a budget that fails the job test, fails the Medicare test and fails the fairness test. The zombies are still alive. Medicare is still in the freezer for years.

We have heard from the previous speaker a suggestion that taxation is theft, but apparently that only applies when you are taxing millionaires. If you are proposing to put up taxes on the local plumber, cashier or cleaner, that is not theft at all! No, that is the government's money to take away from them! So, when the government raises the Medicare levy by 0.5 per cent on workers on average wages, a measure opposed by those of us on this side of the House, I am not going to hear anyone on the other side of the House claiming that tax is theft. It is only theft if you are taking it from millionaires!

We have heard also this guff from those on the other side that the personal income tax scales are now egregiously unfair if we leave them where they are on 1 July compared to where they are on 30 June, that if we leave the top marginal tax rate where it has been for two years then apparently Australia will fall into a terrible time of ruin. The member opposite repeated the comment of the Treasurer, saying that Labor will have you working one day for yourself and one day for the government. I have a couple of concerns about that. First of all, the Treasurer of Australia seems not to understand the difference between marginal and average tax rates. Also, the Treasurer of Australia seems to be eliding a little between his proposal and ours. Let's be clear. Labor's proposal, at the top marginal rate, would have a day's work for the taxpayer and 23 hours 46 minutes work for the government. The Liberal Party proposal has a day's work for the taxpayer and 22 hours 48 minutes work with the government. It does not sound like such a big difference when you put it that way, and that of course is because 49.5 per cent and 47.5 per cent are only two percentage points apart.

From this government, we have a proposal that someone on $1 million should have a tax cut of $16,400, while someone earning $65,000 will pay $325 more tax in two year's time. Meanwhile, someone working on Sunday, 2 July—as so many Australians around the country will do—will be earning weekend penalty rates. According to the analysis, they could lose up to $77 a week—the day after a millionaire has begun enjoying the fruits of their $16,400 tax cut, the day after a bank CEO has begun enjoying the fruits of their $170,000 tax cut coming to them under this government.

Members opposite have also spoken about company tax. One statistic you will never hear from them is where Australia compares to the G20, the world's 20 largest economies. If you listen to their rhetoric, you might imagine that Australia's company tax rate puts us near the top of that pack. In fact, according to the United States Congressional Budget Office's report conducted in March this year, Australia is in the middle of the G20 pack for our company tax rate. On top of that, we have dividend invitation, which gives back about one-third of the revenue. That means a company tax rate of 30 per cent, with imputation, raises about as much for the government as a company tax rate of 20 per cent without imputation—another fact you will not hear from those opposite.

And then we have the bank levy. When Labor proposed a bank levy one-tenth of the size of the one that is proposed by the government, the then Treasurer Hockey said, 'If they do this just before an election, imagine what they will do if they win.' Well, Australians do not have to imagine that because, as history records, the Liberals won the 2013 election. They do not have to imagine what a Liberal bank levy would look like, because they have one in front of them now—well, they will have if it ever comes out of secrecy. We know that a Liberal Party bank levy does not involve any consultation with anyone. In contrast to the proposal put forward by Labor in 2013, which followed a letter written by Reserve Bank Governor Glenn Stevens as head of the Council of Financial Regulators, this bank levy has no relationship to a financial stability fund. Labor acted on the advice of the head of the Council of Financial Regulators, a group including the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and the Treasury. We acted on their proposal to put in place a bank levy much more modest than the current one and to allow the Australian Prudential Regulation Authority to collect the money and put it into a financial stability fund.

By contrast, we have seen from the government no prior debate of this measure and we have seen no prior calling for it by expert bodies. It stands in contrast, too, with the British bank levy where there was around seven months of consultation allowed between the release of the consultation paper and the legislation passing the parliament, and in which long-term debt was explicitly exempted in an attempt to change the behaviour of the banks. This Treasurer is incapable of making a clear economic argument, which is why he has merely made political arguments for his bank levy and it is why he is now incapable of answering simple questions, such as why the levy does not apply to foreign banks.

We on this side of the House have a very different set of proposals. We have put forward a very clear set of packages aimed at closing debt deduction loopholes, which adds more than $5 billion to the budget bottom line over the medium term. It continues Labor's activism on multinational tax avoidance, including legislation passed during the last Labor government, the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, which was integral to the recent Australian Taxation Office victory over Chevron. I mention that bill because the Liberals voted against it. Had the Liberals had their way in this parliament, the Chevron decision would not have been possible in the way in which it took place. So Labor continues to lead on debt deduction loopholes while those opposite continue to attend industry conferences and happily tell the big end of town that their loopholes are safe while there is a coalition government in charge, because they will not close the debt deduction loopholes like those that have been used by big firms around the world in order to avoid paying their fair share.

In his budget reply, Bill Shorten announced a package of measures designed to tackle tax havens. Tax havens hold trillions of dollars of the world's financial wealth. On one estimate, one-tenth of all of the world's financial wealth is held in tax havens such as the Cayman Islands, Panama and the British Virgin Islands. These islands, these 'treasure islands', as they have been referred to by Nicholas Shaxson, account for billions of dollars of lost taxes every year. As ATO Commissioner Chris Jordan recently noted:

Many of these matters involve deliberate tax evasion, often using overseas tax havens or complex corporate structures to avoid detection and recovery.

Yet the Turnbull government has shirked every opportunity to clamp down on tax havens. Labor will take a very different approach. We have announced the public reporting of country-by-country reports. This is high-level tax information about where and how much tax was paid by companies whose turnover exceeds a billion dollars globally. The reporting of this information is vital to ensure that we have transparency to see where firms pay their tax. The Senate Economics References Committee's report entitled Corporate tax avoidance part 1: you cannot tax what you cannot see made this a clear recommendation. I commend in particular senators Dastyari and Ketter for their hard work on that committee. Public disclosure allows other businesses, shareholders, civil society, academics and journalists to ensure that the big companies are paying their fair share.

Labor has announced a package of reforms on whistleblower protection and incentives. In our last term of government, we extended whistleblower protections in the public sector, and this now does so in the private sector, where it leads to an increase in the tax paid. It allows whistleblowers to collect a share of the penalty collected, capped at $250,000 or one per cent of the penalty figure, whichever is higher, and goes well beyond the government's proposals announced in last year's budget. Measures of this kind—these reward and incentive measures—exist already in Britain and in the United States in the form of the False Claims Act, and they sit alongside appropriate protection for whistleblowers.

Labor will put in place mandatory reporting of material tax risk if companies have tax haven exposure. The tax office would issue guidance on the types of activity and the detail that businesses are required to disclose. A list of tax haven jurisdictions would be of a similar design to the European Union's 'black list' and might well include jurisdictions such as Guernsey, Monaco, Mauritius, Liberia, the Maldives, the Marshall Islands, the Bahamas, Bermuda, the British Virgin Islands and the Cayman Islands.

Labor have announced that we would provide public reporting of AUSTRAC data—that is the international funds transfer instructions for every calendar-year.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate maybe resumed at a later hour and the member for Fenner will be able to continue his contribution at that time.