Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

It is a great honour to rise to speak on this proposed expenditure. May I say up-front in relation to this year's budget that this is a budget that is both honest and practical. It is obviously honest about the challenges and choices we face as a nation and practical in what we can deliver to the Australian people. While Australia has consistently outperformed some of the largest advanced economies in the world, we just cannot take this remarkable run of growth for granted. As the Treasurer pointed out on budget night, we have to fight for every inch of growth. We have to show determination and resolve, and furthermore, if we are to stay the course, we must have a decisive plan of action. I can assure all Australians that this government, the Turnbull government, does have a decisive plan for action in these key criteria.

The budget, the next phase in the Turnbull government's national economic plan, provides this in four areas, starting firstly with, and focusing on, more and better-paying jobs. In pursuing this objective, we know that Australians benefit when small businesses have the right settings and when we build the critical infrastructure that our country needs—road, rail and runway infrastructure, invested not only in our big cities but also in our regions. This of course builds on the government's recent success in cutting taxes and red tape for small and medium-sized businesses; in opening up new opportunities through our export trade deals, most notably with China, Japan and Korea; as well as in our investment in innovation and defence industries.

However, the reality is that not all Australians feel they have shared in our nation's hard-won growth story, a growth story that now exceeds a quarter of a century. With many Australians frustrated and not getting ahead, we have moved in this year's budget to guarantee the essential services that Australians rely on, including health care, disability support, education and employment. At the same time, we realise that many Australians have not had a decent pay rise for a while. This can make life more challenging for many households in dealing with what seem to be ever-increasing expenses. That is why we have chosen to place downward pressure on the cost of living, with a strong focus on energy, child care and housing, three areas that we know, particularly for families, have been a pressure point in recent years.

To make sure that the budget supports growth that secures more and better-paying jobs, the government is maintaining a credible path of diminishing deficits each year, leading to a projected return to balance in 2021 with a budget surplus of some $7.4 billion. This will place Australia in a better position to withstand any future economic downturns. It will also reduce the need to increase taxes or to cut back on essential services if there comes a time when government needs to take action to support economic activity. By living within our means, the government will not burden future generations with debt from today's everyday spending. From 2018-19, debt will not be required to fund recurrent spending, for the first time since the GFC, and this will ultimately lead to a stronger and more resilient Australia.

In setting up our fiscal future, well-selected infrastructure investment can also improve productivity and increase economic growth, which in turn leads to more secure and better-paid jobs. The government realises that the budget commitments that we have made to road, rail and runway infrastructure will provide the catalyst necessary to improve the productivity in the economy, which will, most importantly, achieve this objective of the budget. So a fair and responsible path to a balanced budget underpins the Turnbull government's approach to harnessing change and navigating the ever-complex and evermore competitive global economic environment that every single Australian business will increasingly face. Above all, the budget ensures fiscal sustainability and economic growth for the next generation, without mortgaging that generation's future.

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

When he rolled the then Prime Minister, the member for Warringah, the member for Wentworth said that his chief rationale was that Australia needed economic leadership. Since then, we have seen record government debt—shortly due to hit half a trillion dollars—profits surging, real wages falling, the slowest GDP growth on an annual basis since the global financial crisis, home ownership at a 60-year low and inequality at a 75-year high. It does not sound very much like economic leadership to me.

But today I want to focus on the issue of dodgy phoenix directors. We know, in many of our communities, that phoenixing activity is a scourge on honest businesses. When dodgy directors are able to tank a firm, take its assets and start a new one, they hurt their suppliers, their workers and the taxpayer. And yet the government has been unwilling to act on a string of important reports on this. I commend the team at Melbourne Law School and Monash Business School that has set up a phoenix research program and produced a set of important recommendations over the last few years. That builds on PricewaterhouseCoopers's analysis suggesting that phoenix activity five years ago cost the Australian economy up to $3 billion—a number that is surely higher today. We hear the stories through our community—the bricklayers, chippies and electricians who are ripped off by dodgy phoenix directors. We have more stories in the press today about phoenixing activity.

That is why Labor has announced a package of measures to tackle dodgy phoenix directors. We have said that we will require all company directors to get a director identification number with a 100-point ID check to deal with the problem that it is currently tougher to open a bank account than to become a director. Chris Jordan, the tax commissioner, told a senator in estimates recently that he could easily register that senator as a director and they would not even know about it. One expert says the laws currently are so lax that you could almost register your dog as a director. That is why Labor believes that we need a director identification number.

We also support increasing penalties associated with phoenix activity, introducing an objective test for transactions that deprive employees of their entitlements, clarifying the availability of compensation orders against accessories and consulting on the targeted integrity measures based on the recommendations of the Melbourne-Monash Phoenix Research Team. In this, we are backed by a string of entities. Who supports Labor's director identification plan? The answer is: really, who does not? Supporters include the Australian Institute of Company Directors; the Australian Small Business and Family Enterprise Ombudsman; the Productivity Commission; the Tax Justice Network; the Australian Chamber of Commerce and Industry; Master Builders Australia; the Australian Council of Trade Unions; the Australian Restructuring, Insolvency and Turnaround Association; and the phoenix project.

Indeed, the only body of any significance in Australia that does not support a director identification number is the Turnbull government. Perhaps the minister will tell us, at some stage later in this debate, why the Turnbull government are so slow to act on dodgy directors and why it is that they are not willing to crack down on this activity that is doing so much harm in the economy and why it is that they are more focused on giving a millionaires' tax cut and cutting penalty rates than they are on dealing with dodgy directors. The government say they care about debt yet they have delivered record debt to Australia, with debt per person increasing by around $4,000 just since the coalition came to office. They say they care about the cost of living, yet they have seen real wages growth at the worst that it has been since records began. They say they care about fairness, but their tax plan would raise taxes on minimum-wage workers yet cut taxes on millionaires. There is nothing fair about doing that when inequality is the highest it has been in 75 years. They are a government which are unwilling to get tough with the strong and are always going after the weak, leaking story after story about 'welfare cheats' to tabloid newspapers, but, when it comes to tackling the scourge of phoenix activity, the government are unwilling to act despite calls for action across the political spectrum.

Trevor Evans (Brisbane, Liberal Party) Share this | Link to this | Hansard source

I want to focus my questions today around the Turnbull government's support for small business, such as the extension of the instant asset write-off announced in the budget. Could the minister please outline to the chamber what economic impacts this extension will likely have on our local economy, including in Brisbane, considering the benefits that we have already witnessed from previous extensions and this policy? I understand that the measure was initiated in the 2015 budget, and it was otherwise scheduled to finish on 30 June this year. It has now been extended in the 2017-18 budget just announced last month.

Having spoken with many local small businesses, I must say that their feedback to me has been overwhelmingly positive. Local small-business owners have told me about their greater confidence and their greater willingness to invest in their businesses or to invest sooner. This is the type of positive and constructive economic activity that we should be trying to encourage, especially to the extent that it activates those economic multipliers, meaning that that cycle of greater investment, trade, consumption and therefore prosperity grows in our local economy.

As we know, Deputy Speaker, a strong small-business sector means more jobs for Australians. Small businesses are, after all, the backbone of our economy. They are the engine room for opportunities and the creation of prosperity. I have said before, maybe countless times in this place, that, if every shopfront in Australia would employ another two workers tomorrow, our unemployment rate around the nation would be zero. That would mean that the majority of young Australians, mature-aged Australians, Indigenous Australians and the disabled who are looking for work would find the dignity they want and deserve.

Of course, there is no silver bullet there. There is no single measure that is likely to cause that to happen in one fell swoop. We need to grab every opportunity that we can, whether it is opportunities like this to encourage investment, whether it is red tape reduction, whether it is tax cuts for our small-business sector, whether it is help to give jobseekers a chance and a foot in the door, whether it is the innovation agenda or it is focusing on those economic fundamentals around stability, consumer sentiment and business confidence. I consider that this measure, this proposal, is one more initiative, one more indication of this government's continued strong support for our small-business sector to grow and to deliver more and better-paying jobs—in this case, by helping them to upgrade their businesses by replacing or upgrading their machinery or their equipment. New capex means more efficiency and more productivity, and higher productivity is, after all, the only truly sustainable way to raise wages.

This could be for that new coffee machine or that new kitchen equipment or other new investments for, say, a local cafe in Paddington. I just visited the Naim cafe, in Paddington in my electorate, on Sunday. It used to be called Shouk, and it has recently been through a very successful reinvention, including its name and its menu and its facilities. Or this could be for, say, a new set of tools for a local carpenter in Albion. It could be for the great extension and expansion that is planned by the Green Beacon craft brewery in Newstead in my electorate or maybe for a hoist, say, for a local mechanic. This measure provides immediate benefits for those willing to invest in their business, and ultimately, therefore, it benefits our economy. When cash flow is king, and it really is for so many small businesses, this immediate write-off is exactly what so many small businesses need.

In my electorate of Brisbane, I understand there are approximately 28,000 small businesses that could qualify under this measure, and I would naturally encourage each and every single one of them to take advantage of this and to explore it as an investment option for them before the end of the financial year. The evidence of how this measure has been utilised in recent years is very clear to me and hopefully to everybody, and maybe the minister would like to expand on these numbers. I understand that, as of a few weeks ago, with about 60 per cent of 2015-16 returns counted, over 200,000 small businesses had taken advantage of this measure last financial year, and that is up on about 150,000 the year before that and on about 120,000 the year before that. So that is 200,000 claims, and I understand that they are about $8,500 on average. If I have done my sums right—and the minister may wish to correct me—that is $1.7 billion in total of investments under this scheme, and a significant proportion of those investments would have been made, or brought forward and made sooner, as a consequence of this government's initiatives.

A division having been called in the House of Representatives—

Sitting suspended from 16 : 15 to 16:31

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

I have a question about the small-business portfolio in particular. I used to run a small business. I have been a consultant for many. I managed a trade association for quite a few years. One thing I absolutely learnt in all of that time is that the single thing that is most likely to guarantee your success is that your customers are feeling confident and spending. If you do not have customers, nothing else matters. The customers need to feel that they are spending. For many years now I have been watching the growing inequality and wondering when it was going to snap, when the fact that we were sucking money away from the customer base and feeding it into profit would start to hurt because there just would not be as many people spending in order to make people wealthy. Spend money and it flows and eventually ends up in profit if we do things well. So I was wondering when it would break. I know that in the last couple of years or so there have been many economists around the world, including in bastions of radical thought like the World Bank, saying exactly that—that the inequality that we are now seeing across the world is becoming a problem.

I have watched this government through the last budgets, and there are a couple of things that concern me. I want to ask the Minister for Small Business how he responds to this. I have heard businesses from time to time—some businesses—arguing that they want to cut the wages of their staff. That is not uniform, by the way. I have heard many people say they do not want to do that. But I have never heard a business argue to cut the wages of its customers. And yet that is what we see happening in this budget.

We have seen the key measures of jobs and growth downgraded. We have seen the Turnbull government expecting 100,000 fewer jobs in our economy than they were expecting just a year ago. We have record underemployment. We have fewer hours worked per Australian than ever before. We have higher rates of casualisation and insecure work. We lost 35,000 full-time jobs last year. We have record low wages growth and inequality at an all-time high. That looks to me like we are seeing smaller numbers of workers and workers not getting the kinds of pay rises which particularly those at the lower end would spend.

We also see cuts to household income in this budget. We see cuts to family payments. One million families will be worse off. A typical family on $75,000 will be $1,000 worse off. About 70,000 new mums and their families will be worse off due to cuts to parental leave. Abolishing the energy supplement for millions of pensioners is about a billion dollars that is sucked out of the local community. Seven hundred thousand people will lose their penalty rates of up to $77 a week, and some much more. And of course we have a tax hike through the Medicare levy, which will particularly impact on the lower paid.

These people—the people who are affected by the penalty rates cuts, the families on $75,000, new mums—traditionally are on lower incomes and spend their money. They spend all of it. If they are confident, they will spend at the local hairdresser or supermarket et cetera. So, if you take the money out of that, you are actually ripping the money out of the community from the group of people that is most likely to spend it locally. Then the fruit shop does not get that money, it does not pay its staff who then go on and spend it again et cetera. The multiplier is affected as well. It is absolutely pulling money out of the pockets of customers that small business depend on.

I would like to ask the small business minister—with all the talk about jobs and growth and with all the talk about support for small business—how he responds to an economy which is seeing the money that people spend in local small businesses being reduced seemingly every month and every year. It is a very serious issue. When you go out—as I am sure you do—and talk to local businesses, the first thing they will tell you is that things are pretty tough out there at the moment because customers are not spending. If you rip this amount of money out of their customer base, what impact does that have on small business?

Michelle Landry (Capricornia, National Party) Share this | Link to this | Hansard source

I applaud the Minister for Small Business for making a real difference to the businesses of Capricornia. I thank him for personally visiting Capricornia last week as part of the small business roadshow. The Minister for Small Business has shown an unprecedented commitment to genuinely help small business in my electorate of Capricornia, personally attending the small business roadshow. What a turnout! The evening hosted by the T@ble Capricorn Coast Business Community is designed to offer a unique opportunity for small businesses to interact directly with the government and learn about the government's plan for small business. The audience was highly impressed even with the ATO representative. The session also allowed for the minister and agencies to hear direct from Yeppoon businesses the current issues affecting small businesses operation.

The coalition government is genuine about addressing the challenges facing small business, the backbone of our community. It is also a sector that feels the brunt of downturns in other sectors like mining and tourism. We heard from a very diverse group of 50 people that it is fixing the basics that matters most. Those in attendance could see that the minister is genuinely focused on resolving these challenges. Already, we have seen tax cuts and extension to the instant asset write-off for small businesses and incentives to work with state and territory governments to cut red tape. The government's support for small business is all about addressing the real issues facing small business, which include cutting red tape, reducing tax, simplifying the business activity statement and levelling the playing field for small business.

The lowest small business rates since the Second World War means local businesses can reinvest to grow and create more jobs. The ATO are developing a contemporary service-orientated organisation by transforming services and the way they deal with business. The office of the Australian Small Business and Family Enterprise Ombudsman—ASBFEO—was launched on 11 March 2016. The role of ASBFEO is to advocate for small businesses and family enterprises and ensure that the government policies take into account the needs of small businesses and family enterprises. These are all geared towards making life easier for working mums and dads, supporting the local business community and creating better opportunities. The immediate business tax deduction of $20,000 for purchasing assets makes a big difference. Extending the instant asset write-off program is a highlight of the budget for small business. The measure has proved to be one of the most popular government small business incentives and encourages Australia's 3.2 million small businesses to invest in their business.

During the minister's visit, we also stopped at Almost Anything Web and Graphic Design, a web and design business in north Rockhampton, who also happens to be one of two Google partners north of Brisbane. Almost Anything Web and Graphic Design have a high turnover but the profits are marginal. They can now benefit from the increase in turnover to $10 million. They have invested in branded vehicles that are used for deliveries, meetings and promotion. They are committed to growing their business and are now looking forward to doing so without punishing red tape and restrictions.

Minister, do you expect small-business confidence to increase following decisions in the budget to extend the instant asset write-off, an incentive for the states and territories to cut more red tape, lowering taxes and increasing the small-business threshold?

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

I always delight in these sessions of consideration in detail. It reminds me a bit of the parliamentary cricket match, where you get to come in off a bit of a run and send a few down to those on the other side.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

You haven't played yet!

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

The Minister, I note, has often thrown down the gauntlet and has indicated that I have not yet played, so we might use this as a bit of a warm-up. I might only come off 13 steps as opposed to my normal 24- or 25-step run-up, and I thank those opposite for their words of support.

My remarks are directed to the minister in his capacity as, perhaps, the poorer cousin of his portfolio, I have to say—that is, the consumers. We do not sit too far away from each other in question time, the minister and I, and I often hear him cry, perhaps somewhat rhetorically, 'Why do you hate small business?' He often says this. Not only am I proud to be a champion and great friend of small business, having grown up in a small business myself—my late father ran a real estate agency off the sweat of his own brow; Hammond & Co. it was called, in the South Shore Centre in Mend Street, South Perth, in Deputy Speaker Irons' electorate—but also I would like to think that those on this side are great friends of consumers.

How does that compare to the minister's track record, in relation to being an advocate for consumers? Perhaps the amount of productivity from the minister, in relation to attention focused on consumers as opposed to small business, tells the tale that we need to hear. In order to stay abreast of the portfolio not only do I constantly have my ears to the ground, in relation to stakeholders and what they require from advocates in this place, but also I regularly get the minister's email publications—press releases, speeches or transcripts of media interviews—and I go through them quite regularly. The statistics are telling.

Since his boilerplate press releases welcoming the publication of the Productivity Commission report into the ACL regulators on 12 April and the ACL review on 19 April, the minister has published on his ministerial website 37 media releases, 20 transcripts of media interviews or press conferences and five speeches. For those playing this at home, that is 62 in total. Yet a word search of all these publications reveals that only six of them include the word consumer. That is less than 10 per cent of the output of this minister being devoted to looking at any issues relevant to consumer affairs. Zero transcripts. Zero speeches.

I did raise this issue in the House a couple of weeks ago, in an MPI, and we ran a word count. The minister did go through his response by referring to the word consumer 13 times in his speech. That is 1.3 times per minute. In fairness, one of those times was when the minister was referring to himself as the minister for consumer affairs, so let us call it 12 mentions. Since that debate he has published another 10 media releases and four transcripts. Only one mentions consumers—in a joint media release with the member for Cowper about country-of-origin labelling for milk. Maybe the member for Cowper is looking to take on the member for Riverina's consumer affairs responsibilities, because it does not seem to me like the minister wants them. And this is not crying over spilt milk, I will have you know.

Having handed out a few brick bats to the minister, perhaps a bouquet—which relates to a bipartisan approach to one of Labor's long-held policies that we took to the election, that I am pleased to see the minister took up with gusto. That is in relation to Labor's policy of increasing maximum penalties for anti-consumer conduct under the Australian Consumer Law. And doesn't it all give us a warm glow when those reach across the aisle and accept our policies—it is a victory for commonsense.

The questions I have for the minister simply relate to those penalties. What is the time frame for implementing the increased penalties? Given the 2009 COAG agreement with state governments about the Australian Consumer Law, is the minister's budget announcement predicated on the hope that state consumer affairs ministers will agree? Has the minister sought any agreement from the ministers of the states? And has it been forthcoming? I have a final question for the minister, as I finish my long run, on the fifth ball of my six-ball over, and that is whether the increase in the maximum penalties for anticonsumer conduct will be accompanied by an increase in the ACCC's litigation budget? (Time expired)

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

I do thank the member for Perth for not talking about his tennis career as well! The question is that the proposed expenditure be agreed to.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I will go through in some detail each of the points that members have raised and endeavour, in the time allotted, to get through them. Phoenixing, as raised by the member for Fenner, is a scourge on the Australian economy, and the government is taking action—real action—to stamp it out. Too many times I have heard of cases where small businesses, particularly in the construction industry, are not paid by their employer and that employer then goes under, but then the same defaulting company, under a different name, springs up, either in the same state or elsewhere, to continue operating, minus their debts. It is not fair. It is not on. Phoenixing is un-Australian, and it is not fair to everyone who is working hard every day to get a job done—particularly in the construction sector: they get a job up to lock-up stage, sometimes, and then lose everything; they lose all that hard work and do not get paid.

In February 2017, the Phoenix Taskforce provided a submission to the Minister for Revenue and Financial Services on law reform to deter phoenixing activity, including the introduction of director identification numbers. Also in February, a joint paper from the University of Melbourne and Monash Business School on phoenixing was released. As you would expect, the government is carefully considering its options on both reports. It will respond in due course with a package of reforms.

To the member for Fenner: I note that he has finally caught up on reading this government's phoenixing agenda and has flagged the support of Labor for recommendations in these papers, and I look forward to working constructively with the opposition as these particular bills pass through, hopefully, the parliament. I note that the member for Fenner quoted Master Builders Australia's Denita Wawn. I would like to quote her now:

The Budget's small business measures will particularly benefit the building and construction industry which is 98% made up of small businesses. The building industry is a big winner from the extension of the accelerated depreciation measures by one year and to businesses turning over up to $10 million.

That is from her budget night media release, and I commend that to the member for Fenner.

To the member for Parramatta, who asked me about the budget, feeling confident and spending: yes, small businesses in her area are very genuinely excited about the instant asset write-off. In fact, Alana Laliotitis—whose Kouzina Greco restaurant I visited with the Minister for Defence, Senator Marise Payne—said that the new equipment that she purchased as a result of this program 'helped immensely'. She said: 'It was necessary for us to produce good food and for staff morale.' And it actually had a chain reaction, because she bought new kitchen equipment from a local supplier and she had it installed by a local tradie. So that created a chain reaction of positivity throughout the member for Parramatta's electorate. I would recommend that the member goes and visits that restaurant and talks to Alana about how positive it is, and, while the member is at it, she could talk to a number of other small business owners in the high street, in the CBD, to see how the small business instant asset write-off extension, the lowering of the company tax rates and all the other good measures in the budget—a budget of fairness, opportunity and security—have helped businesses in the member for Parramatta's electorate.

The member for Brisbane talked about the instant asset write-off. There are 31,775 small businesses in his electorate. I visited his electorate for a national business roadshow forum on 6 April, and there, too, I had that feeling of positivity. He talked about a carpenter in Albion and a brewery in Newstead. Yes, I can assure him that all those businesses and many more—indeed, the almost 32,000 small businesses in his electorate; what a great number!—are going to benefit from the measures announced recently in the budget. How good is that!

We also heard from the member for Capricornia. I had a great visit to her electorate just last week. There is so much positivity there. Jason and Yolanda from Almost Anything, a graphic design business that employs 13 people, have used the instant asset write-off to purchase two new vehicles.

Lastly, the member for Perth might have talked about cricket, but he is no Wally Hammond. Labor often criticised the government for not moving faster on consumer issues. That is all well and good, but it again shows that Labor does not know its own process. It is a process they created.

Opposition Member:

An opposition member interjecting—

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Any amendment to the Consumer Law is a direct result of Labor's intergovernmental agreement. They were in power when this process was put in place. I agree, we could do things faster, but we are restricted to Labor's processes, and so that is the restriction— (Time expired)

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

I call the member for Kingsford Smith and remind the member for Perth to let the member for Kingsford Smith be heard in silence.

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

The member for Perth might not be a Wally Hammond but he is certainly a Dennis Lillee, I think. So I will take that into consideration. He is one of Perth's and Western Australia's finest, I might add. But I digress.

Of course, budgets are about priorities and, when it comes to low- to middle-income Australians in particular, this budget is all about the wrong priorities for Australia. In terms of the tax arrangements that are outlined in this year's budget, we have seen that millionaires will get a tax cut of about $16,000. But an average family on about $60,000 a year will pay $325 more tax in two years time as a result of this budget. Cuts are being made in a number of areas, particularly to education programs, most notably to schools funding but also to the TAFE sector and to the early childhood development sector, that will make it tougher for families. Pensioners are going to lose the energy supplement. It will make life much more difficult for them, particularly in an environment of rising electricity prices.

The issue that I want to concentrate on today is something that is near and dear to the hearts of many in my electorate of Kingsford Smith and, indeed, to most families throughout Sydney, Melbourne and Brisbane these days. It is the issue of housing affordability. There is no more fundamental human right than the right to a roof over your head, particularly in those vulnerable years when you are raising a family. But, for many in Australia now, the cost of living is becoming so prohibitive that they are unable to afford to buy their own home. Indeed, many are unable to afford to rent a home. State Liberal governments are cutting back investment in new public housing, and public housing waiting lists are exploding. In the electorate that I represent, the public housing waiting list is eight to 10 years long, and it is getting worse because this government will not invest in public housing. In fact, we have actually seen this government cut funding for investment in public housing.

House price costs throughout the country are rising at an alarming rate every day. In the three years from 2014 to 2017, the cost of homes in Malabar in the electorate that I represent rose by a whopping 46.3 per cent, adding the $365,000 to their value. That equates to about $580 every single day.

Mr Leeser interjecting—

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

Order! The member for Berowra.

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

Up the road in Coogee, it is $592 every day. In Botany it increased by around 35 per cent over the last three years.

Unfortunately, when it comes to housing affordability, this Turnbull government sits on its hands. It is doing nothing. They talk about increasing supply. Liberal governments at the state and national level are talking about the importance of increasing supply, but they are not dealing with the crux of the issue, which is demand and, in particular, the massive tax concessions that exist in Australia at the moment for wealthy investors through negative gearing and the capital gains tax discount. That mob over there on the government benches are all about funding priorities. They are about making sure that you have measures in the budget to fund your priorities. Yet, when the capital gains tax discount was introduced by former Treasurer Peter Costello on behalf of the Howard government, it was unfunded in the budget. There was no measure it all to fund this commitment that reduced revenue by quite a large amount in the budget.

It is the view of the Labor Party that unless you reform negative gearing and capital gains tax discounts you are not fair dinkum about housing affordability in this country.

Government members interjecting—

I will take that interjection. They say that it is nurses and people that are negative gearing.

Mr Falinski interjecting—

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

Order! I remind the member for Mackellar that he was warned in the chamber.

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

It is well known that over 50 per cent of the negative gearing tax concessions go to the top 20 per cent of income earners, and we are talking about predominantly surgeons. The greatest number of negative gearers in this country are anaesthetists, and these are the people and the tax concession system that the mob over here want to defend. Unless you are tackling negative gearing and restricting it in the manner that the Labor Party proposes to to ensure that negative gearing is only available for new investment properties, and you reduce the capital gains tax discount by 50 per cent, the situation where first home buyers are priced out of the market will continue. So my question to those opposite is: why will you not adopt Labor's sensible approach to negative gearing and capital gains tax, restrict these outrageous tax concessions and make housing more affordable for more Australians? (Time expired)

Ted O'Brien (Fairfax, Liberal Party) Share this | Link to this | Hansard source

Can I just say how unfortunate it is that the previous speaker did not hang around to do another five minutes, because we are still waiting to hear what the Labor Party's plan is around housing affordability. In particular, I would love to see the modelling of housing affordability. At what price point do you want people's housing assets to be? The other side are silent, because they know the truth. They know that their only argument is that they want to reduce the asset value of people who own houses. What political party, in today's day and age, honestly goes to the people and says, 'We understand how important housing is to you, and our policy is that the value of your houses drops'? That is the Labor Party policy: drop the value of your assets. What we are yet to hear is exactly to what value they want those assets dropped. So they want to kill the housing industry. They want to penalise those mums and dads who have worked hard and bought a house. They are clearly saying they want the asset value of those properties to drop, but they have not come clean by saying how much they want it dropped.

As for the idea of even mentioning energy prices, I am a Queenslander, and we have about 4½ per cent renewables in our state, and the Labor Party's plan is to increase it to 50 per cent. We have the Queensland state government price-gouging, because we are talking about government owned enterprises in that marketplace. Every day, mums and dads are again being penalised with electricity prices because the Labor Party know they cannot run their finances, so they price-gouge so that they can feed their own coffers.

As for negative gearing, Labor's negative gearing plan only penalises those people who are prepared to take a risk and build their own enterprise. It is counterproductive to a free market economy, but it is absolutely consistent with big government—a big government Labor Party that wants to set not only high renewable energy prices but also the housing prices and that will penalise everyday Australians for wanting to invest and take a risk. That is what the Labor Party has to offer.

I want to say how honoured I feel as a member of the coalition—as a member of a party that understands that it is small business that keeps this economy running. On the Sunshine Coast alone, there are over 37,000 small businesses, and every single one of those businesses will enjoy a tax cut. Not one of them will lose out. And did you know that every single one of them will now, for another 12-month period, have access to the instant asset write-off? They were not going to have that. The Labor Party might oppose these measures for business, but of course the coalition deliver.

Of course, this is not the only thing we are doing for small business. This is the party—this is the government—that has reformed competition policy. This is the party that is extending the GST to low-value imported goods to ensure we have a level playing field. This is the party that is determined, and the government that is determined, to rip out red tape. There is only so much the federal government can do. Yet, what we have seen from this government, and what we have seen from this minister, is a package of $300 million to incentivise states and territories to rip out their red tape, which paves the way for small business to do what they do best and what they do best is create jobs. They create jobs in what is now, thanks to this government, a far more competitive, free market economy, where small businesses not only in metro areas but in the regions have a fair go. It is due to that philosophy of free enterprise and the policies embedded in this budget and thanks to this minister that they will have that benefit.

Proposed expenditure agreed to.

Employment Portfolio

Proposed expenditure, $2,182,014,000

Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Thank you for the opportunity to examine the budget that has been handed down by the government and the assumptions that are contained therein. In particular, I am interested in looking at some of the figures that go to forecasts for wage growth and the forecast for fewer jobs over the forward estimates compared with the budget of last year. Firstly, can I go to wage growth. What we do know is that we are seeing the lowest wage growth in this country for at least 20 years. A few weeks ago, the ABS came out and confirmed what I think most Australians already know—that is, wage growth is falling in real terms. People's wages are going backwards. Effectively, there is a wage recession in this country. As a result, people are struggling to make ends meet. They are struggling to pay for essentials. They are struggling to pay for the mortgage, the rent, to put petrol in the car and to provide for their families. They are feeling the stress that is clearly the result of falling wages in real terms in this country.

We are aware that the government, despite the fact that wages are falling, wants to continue to support a decision of the Fair Work Commission to cut penalty rates, and we see tax arrangements changing to the extent that people earning a million dollars will receive a tax cut on 1 July of $16,400. That contrasts quite starkly with what will happen for other workers. Indeed, workers earning under $87,000 will receive a tax increase. So at the end of this month, retail workers will see their taxes go up and their wages go down at a time when wage growth is the lowest in more than 20 years.

Off the back of that, the budget forecasts that wage growth will actually reach 3¾ per cent at the end of the forward estimates. I am somewhat sceptical about that assumption. Having seen wages flatline over the life of this government and to now see the forecast in wage growth at 3¾ per cent over the forward estimates, it is somewhat of a surprise. I think, therefore, it is incumbent on the government to explain how it is that wages will increase to such an extent, given the recent years of wage decline. This is a very important question. It goes not only to whether Australian workers should believe the government that their wages may start to improve in real terms but also to whether, in fact, the government can rely upon the revenue that they will receive based on the forecasts contained within the budget. If the budget forecasts are wrong—if they are inflated and optimistic, as many, many commentators suggest—then not only do we have a situation where workers are not going to see the improvements to wage growth but we are also going to see a problem with revenue for the government and therefore a real challenge for the government to balance the budget, as they say they will, in the future.

On that basis, I ask the minister who is acting on behalf of the employment minister: why is it that the government is so confident that the wage growth forecasts, as contained within the budget, are correct? What evidence does the government have, beyond what is contained within the budget, to suggest that these forecasts are not unrealistic, as many commentators have chosen to conclude?

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

I have been a builder in the construction industry for 30 years. I have worked as a carpenter, an adjudicator and a barrister. As a barrister, I produced three independent reports between 2013 and 2015 for the then Queensland government into the reforms of the Queensland Building Services Authority, security of payment and private certification in the Building Act.

One of the most important issues facing small businesses in the construction sector is that of security of payment for subcontractors. The 2015 Senate inquiry into insolvency in construction found:

In 2013-14 alone, ASIC figures indicate that insolvent businesses in the construction industry had, at the very least, a total shortfall of liabilities over assets accessible by their creditors of $1.625 billion. Others who have analysed the data place the amount at $2.7 billion.

It also found that the industry is burdened every year by nearly $3 billion in unpaid debts, including subcontractor payments. In my own state of Queensland, we have seen the terrible outcomes for subcontractors of failures in security of payment. Since 2013, construction company collapses may have seen as much as $200 million worth of debts left owed to as many as 3,500 subcontractors. In recent months, the collapses of Cullen Group Australia, Batir Construction and Bloomer Constructions have left many tradies struggling to keep afloat. We must do something about security of payment for subcontractors.

We have seen what the wrong approach looks like with the Queensland state government's proposed legislation to impose project bank accounts on all projects between $1 million and $10 million by 2019. Every project of this size will have to have its own project bank account, or PBA—a ring-fenced trust account established and managed by the head contractor. The principal will pay into the trust account, while the prime contractor and first-tier subcontractors will be paid simultaneously from that account. This may sound like a positive idea at first blush, but this move will result in no greater security of payment. Instead, it will form a statewide brake on growth and a catalyst for higher prices in what is already an over-regulated market.

Building projects of a value of over $1 million often involve multiple tiers of many subcontractors. It is those further down the chain—the self-employed tradies and family businesses—who lose out first when there are problems and are most vulnerable to such cashflow problems. The project bank account expressly excludes subcontractors beyond the first tier. Further, it is the head contractor that submits the payment claim to the principal, and the principal or superintendent that submits the progress payment instruction to the bank. The PBA will therefore do little to protect subcontractors down the contractual chain from unscrupulous practices. If the principal chooses not to pay enough money into the PBA because of perhaps a dispute between the principal and the head contractor, the funds will simply not be there to pay either the head contractor or their subcontractors. If a dispute arises—and that is how I used to make my money—between a subcontractor and the head contractor or principal about the payments due, as it often does, the PBA will be of no value. These disputes will continue to be resolved using the security-of-payment legislation, but in the meantime no payment will be made from the PBA to any other party down the contractual chain.

So the PBA will do little to assist. It is very likely that the scheme will actually increase costs for consumers, create significant risk and administrative complexity for head contractors and perhaps even lead to more insolvencies. Under PBAs, builders are going to face a greater need to source finance, overdrafts and industry creditors but will see some of the cash flow they could previously rely on to reassure their potential creditors reclassified as money held in trust. Further, the necessity of operating a PBA system on its own will increase head contractors' costs, literally thousands of complex new trust accounts will need to be created and administered to meet that new requirement, and most head contractors will need to bring in outside help from expensive professional service companies. So we know what the wrong answer is. The Turnbull government has consulted widely, listened to subcontractors and considered these issues carefully. So I ask the minister: what is the federal government doing to better ensure security of payment for subcontractors in the building industry?

Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Just so I can get this correct—the minister is going to answer questions at the end of this; is that right?

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I am. The call will go back and forth.

Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Okay. That is fine. The other point I touched on but would like to go to in more detail is the fall, as forecast in the budget, of jobs in this country. As I said, the budget forecasts 100,000 fewer jobs over the forward estimates when compared with last year's budget. We have already had a stubbornly high unemployment rate of 5.7 per cent, so there are some real issues that any government would confront in dealing with the unemployment statistics—the significantly high unemployment rate and the highest underemployment number in our history, with over 1.1 million Australians looking for more work but not being able to find it. You add those 1.1 million underemployed Australians to the 730,000 unemployed and you have got 1.8 million workers in this country either not being able to find any work or not being able to find sufficient work. I ask the minister to consider, in light of that, what it is that the government is doing to ensure there are more opportunities for prospective employees, jobseekers, or indeed part-time employees who are seeking more work so that they can find work? What is it that the government seeks to do?

As I said earlier, we have a situation where wages are falling and hours of work are declining. Aggregate hours of work over the last few months have fallen in net terms, and yet there seem to be, at the same time, improvements to profits. That is a good thing—it is good to see companies profiting, and indeed we applaud and welcome that—but we are concerned about the disconnect between profits of companies on the one hand and the fact that wages are falling and unemployment is not falling on the other hand. I refer to an article by the economics correspondent Adam Creighton that was published recently. He says:

Company profits rose more than 30 per cent in the year to March, the best result of 33 years, while wages rose only 1.5 per cent, leaving the share of wages in national income at 51.5 per cent — the equal lowest level since the early 1960s. A lower share doesn't mean most workers are worse off in absolute terms, but wage growth has been below consumer price inflation for six months, suggesting living standards are falling.

Mr Creighton and other commentators are pointing to this disconnect between, on one hand, good results for company profits and, on the other hand, wages falling in real terms. Given that the government now wants to consider things through the prism of fairness—or so it seems ostensibly—what is the government seeking to do to ensure that workers are beneficiaries of productivity improvements or increased profits? At the moment, it is apparent that wages have fallen since the life of this government and they continue to fall. They are going to fall again on 1 July as a result of the first stage of the cuts to penalty rates as a result of the decision of the Fair Work Commission. The government does not seem to be seeking to doing anything to arrest this decline in any way nor does the government seem to have any plan to provide opportunities for work, given that the budget's own figures forecast a 100,000 drop in employment figures over the course of the forward estimates.

If I can just remind the minister of my questions. Firstly, what has happened to wage growth? Why is it going backwards and what are you doing about it? Secondly, why is it that there are so few job opportunities? Thirdly, why is there such great growth in profits and such a fall in wages?

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

I welcome Minister Pyne to the Federation Chamber. It is great to have him here representing Minister Cash, another fantastic Western Australia. Actually, Minister Cash was in my electorate of Swan last week. It was an opportunity for her to tour the Belmont Business Park and to meet with some of the small and medium businesses in the area which employ many people in my electorate and more broadly across Perth. The member for Gorton will probably remember that the first time I met him was in Belmont many years ago. Minister, you might wonder what Minister Cash was doing in Belmont. It was to do with round 1 of the regional grants program. The coalition government is providing a $6 million grant to the city of Belmont for a business regeneration program, which is halfway through. We were fortunate enough to visit the company Paull & Warner, who have recently moved into the area. They are a smash repair business that has gone high-tech. We also visited KONE Elevators—their Western Australian office—and Alvin Brodie from Bondall, a concreting company in the construction industry.

Minister, today is a great opportunity for us in this consideration in detail to talk on another area of employment—that is, the ParentsNext program. The ParentsNext program helps parents with young children to plan and prepare for future employment. It provides personalised assistance which, first and foremost, recognises their role as a parent. As a custodial single parent to my son, I understand how important it is for parents to put their children first and how difficult it can be to juggle work and family commitments at the same time. ParentsNext has been operating since April 2016 in 10 of the most disadvantaged locations in Australia and has provided pre-employment assistance to almost 15,000 parents already. The current locations are Logan and Rockhampton in Queensland; Playford in South Australia; Bankstown, Wyong and Shellharbour in New South Wales; Greater Shepparton and Hume in Victoria; Burnie in Tasmania; and Kwinana in Western Australia. Parents in the program meet regularly with the ParentsNext provider to set employment or education goals and work towards these goals. The ParentsNext provider helps parents to access services in their local community, which will help them to achieve their goals. Some of the services that parents might access through the program include education, training, parenting courses, counselling, health services, child care, housing services, financial management and language, and literacy and numeracy classes.

We know that the program is having a deep and positive impact on the lives of many parents and young children. More than 1,000 parents in the program have commenced in employment and another 6,000 parents have commenced in education and training. That is why I am so pleased that the ParentsNext program, which has been expanded to 20 new regions, includes my electorate of Swan. We have heard stories about women in the program recovering confidence after emerging from violent relationships, a father who found an unexpected and unlikely role as a playgroup program leader and people who have started their own businesses or visibly gained confidence from this program.

One example of this is a lady who came to Australia on a humanitarian visa five years ago. I will not disclose her name, but she has two young children, aged three and six, and was eligible for the ParentsNext program. As you can imagine, in her first interview with the ParentsNext provider she was nervous. She told the provider that she really wanted to work and would be happy to do any kind of job; however, deep down, her dream was to become a nurse but she felt that her poor English would prevent her from realising this dream. The ParentsNext provider discussed some of the pathways to becoming a nurse that were available to her and provided her with a lot of confidence by reassuring her that her English was good. But she still lacked confidence about her English, so the provider researched courses with more flexible English requirements. They found a course for a certificate III in health service assistance that met this lady's needs. As you would expect, she was thrilled that this course provided the opportunity to progress to a diploma in nursing.

Finding the course was an important start but, as all of us do sometimes, she still needed support. ParentsNext provided her with assistance for the course enrolment, preparation, finding an appropriate local childcare service and applying for childcare assistance. I understand she also received help to locate her family's lost visa information, which was required for the course enrolment, through Visa Entitlement Verification Online. When asked about her ParentsNext experience, this lady said she was thrilled with it and would definitely recommend it to the other women who needed it.

Minister, how does the government propose to build on the successes of the ParentsNext initiative and, particularly, how can those successes be applied to Western Australia and my electorate of Swan?

Emma McBride (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

The former speaker mentioned Wyong. Wyong is my home town, where my family has lived for six generations, and it is really tough. At the moment, youth unemployment on the Central Coast and in my electorate sits at about 16.6 per cent—three points above the national average. If we then unpack that further, we see that there is significant underemployment. About 30 per cent of people aged 15 to 24 are also looking for more hours. This is coupled with drastic cuts in apprentices in training and also significant cuts to the local TAFE in Wyong on Porter Street. My brother Eddie was one of the young apprentices who was able to do his training through the TAFE there. In the past it was seen as a really good place for local people—young people, particularly—to be able to get a start and have a career and a good job.

In my community, one in four workers commute outside of the Central Coast each day for work. They spend a minimum of four hours commuting each day. I am also concerned that, in pockets of my community, families are living below the poverty line. In some pockets of my community, families are living on $600 per week. Recently we supported Maybe Baby, an initiative to help those families in need, particularly coming into winter. But I am really concerned that youth unemployment is stubbornly high, sitting at the moment at 16.6 per cent—three percentage points about the national average—and that one in four workers in my community are being forced to work outside of the community each day, commuting a minimum of four hours each day just to get to and from their job. Also, regarding wage parity on the Central Coast, a lot of people are forced to commute because the wages are not the same on the coast as they are in Sydney or Newcastle. This is coupled with so many families living in desperate need.

My background is in health and health care. As soon as someone's job is insecure, it has an effect on their health and wellbeing. So many people have spoken to me about the impact of job insecurity on their wellbeing and that of their families. As someone who has spent 20 years working in mental health, I have seen what job insecurity means to people. A lot of people in my community are less than three pays away from defaulting on their mortgage, losing their accommodation and living in desperate need.

My question to the minister is: what is your jobs plan for the Central Coast, what do you have to say to the young people in my community who cannot get a start, who cannot get a local job and who cannot get the training they need to get a start, and to those people who have commuted for 10, 20 and 30 years to Sydney in order to support their families?

Chris Crewther (Dunkley, Liberal Party) Share this | Link to this | Hansard source

Firstly, I would like to welcome and thank the minister for joining us in the Federation Chamber today. I acknowledge that this is not, technically, your own portfolio but we appreciate you representing it here today to answer questions and to enable us to speak directly about the aspects of the employment portfolio that affect the constituents of Dunkley.

As the youngest member of the House of Representatives I hear from many constituents about their concerns related to youth unemployment. Dunkley is an incredibly diverse electorate and statistics there reflect trends observed right across Australia. Young people everywhere struggle to combat unemployment and, increasingly, underemployment. Fifteen- to 24-year-olds, in particular, experience unemployment at a rate approximately double that of the rest of the working-age population.

Often, people remark on the fact that apart from the retail and hospitality industries, which have more of a focus on the youngest of the youth cohort, employers regularly demand experience in an industry before employing an individual. Yet people are often unable to obtain this experience, because of the lack of avenues to do so. I am frequently, therefore, asked how someone starting out in the workforce is able to get experience in an industry for the first time.

It is for this reason that, when I heard of the Youth Jobs PaTH: Prepare, Trial, Hire legislation, I was very enthusiastic about it. This program will provide young people with the experience and avenues needed to obtain meaningful employment and avoid welfare dependency. Currently, unemployment and underemployment are concerningly high. My concern for Dunkley residents is that this can affect self-confidence, particularly, among young people who are unemployed or underemployed. The parallel phenomenon of welfare dependency is crippling for self-esteem and takes away the independence that people work so hard for these days.

If we can help people out of the debilitating cycle of applying for jobs, being rejected due to a lack of experience and, then, needing to claim welfare payments, which require them to apply for more jobs, we should embrace the opportunity without hesitation. Despite the phrase first rising to fame 52 years ago—18 years before I was born—'We are talking about my generation,' this is part of generation Y and most of generation Z, people who are unlike me, my wife, Grace, and many of our friends. People I have spoken to in my community about the Youth Jobs PaTH Program have all reacted positively to the increased access to employment, training and opportunities this would provide to young people.

As I mentioned in the House when I spoke on this bill, a constituent of mine in Langwarrin recently was in the news for having applied for over 200 jobs but had been rejected each time. Young people want to work. They want a job, but systemic barriers in many industries are preventing them from accessing work. There is plenty of evidence that lots of people are trying but are being knocked back because they have not had the chance to develop job skills or get experience in the industry, or have not been able to find someone willing to give them a go.

With these objectives in mind, Minister, could you please elaborate on the reception of the Youth Jobs PaTH Program but particularly from employers and industry leaders that the government has spoken to? Do they feel similarly about the program and do they believe that the additional support provided will help them access a previously inaccessible and willing sector of the workforce? What feedback have they provided regarding the projected outcomes and implementation?

Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Mr Deputy President, on a point of order: I was expecting the minister to rise. If he is not rising—

Mr Pyne interjecting—

Yes, we do go back and forth but at some point I want to hear the minister answer a question. There is no reason that we cannot interchange and we ask a question—you can, actually, answer some questions.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

We used to do it that way but Joel Fitzgibbon made such a fuss about it—

Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

I am just making the point. We will alternate and you will wait until the end. Is that right?

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

I am calling the member for Chifley.

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

The first question I wanted to ask in the Employment portfolio relates to the Employment Fund. A billion dollars is sitting there that is supposed to be used to aid jobseekers in improving their chances for employment. The Employment Fund—a billion dollars—is supposed to be there for jobactive providers to be able to draw down and invest in a jobseeker when they detect an area where they can either get their skills or training improved or deal with any other hurdle that may be inhibiting them from getting work. At the moment, we have unemployment that is tracking roughly the same as what it was when the global financial crisis was here nearly 10 years ago. The Turnbull government has a $1 billion fund, and so far, 30 per cent of the way in, only 15 per cent of that Employment Fund has actually been used to improve the ability of jobseekers to get work. That 15 per cent translates to just over $170 million. This fund is supposed to be used to improve those jobseekers' chance of getting a job. Instead of having the spectacle that we saw today, when the Minister for Human Services thought it was okay to slander an entire population within one of the biggest cities in Western Sydney and try to point fingers at people, why are they not looking at their own failures and making this Employment Fund, which is supposed to get people into work and remove any barrier that is stopping people from getting work, work better?

I have a series of questions that I wanted to put to the minister as to whether or not they will be able to answer them or whether they have identified anything that will be able to rectify the flaws at the heart of the way in which the Employment Fund has been structured and utilised. When we asked why the money was being left in government coffers instead of being used to help jobseekers, the deputy secretary of the Department of Employment on 29 May said, 'The jobactive providers expend the money, and they are asked to do that based on their assessment of the needs of the jobseekers,' yet the jobactive providers are saying that there have been so many hurdles and so many limits as to how they use it. But in actual fact the question comes back to: why isn't the government reviewing? Why isn't the fund being used? Why can't the jobactive providers access the funds in a way that will provide targeted assistance to get people jobs? Will the government commit to help jobseekers find work by spending the money set aside in the $1 billion Employment Fund for training, preparation and support? Secondly, why hasn't the government made changes to the Employment Fund requirements so jobactive providers can better support jobseekers with that resource?

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

It is always a pleasure to be able to stand in this place on behalf of the people of Goldstein, represent them and raise the questions that matter to them. One of the key issues that are raised with me regularly is from constituents, particularly those of mature age who are seeking employment opportunities because their previous employment may no longer be relevant or they may be seeking a different stage in their career, including a shift towards part-time work and making sure they are in the best position that they can be to secure employment to support their lives, to reduce their dependence on their superannuation and to be able to continue to enjoy the benefits and dignity that come with work. That is why, in the end, they are Liberals, and that is why I am so proud to represent them, because they understand those fundamental and important concepts of individual and personal responsibility.

These issues are particularly close to my heart because previously, in my former capacity as Australia's Human Rights Commissioner, I spent time working with the former Age Discrimination Commissioner, Susan Ryan, who was—shall we say—of a different political persuasion to mine but nonetheless a very good woman whom I have very high regard for. Former Commissioner Ryan ran an inquiry that produced a report called Willing to work: national inquiry into employment discrimination against older Australians and Australians with a disability, which was dealing specifically with the issues around age discrimination facing people who are older seeking work. I was very proud to support her with her important work in that space.

My concern, in that inquiry as it is now, is what the government is doing to support and assist those people of mature age to seek employment. What programs, Minister, are available to ensure that people of mature age are able to find a job and are then able to keep a job, because that is so important to their life to be able to support themselves and their sense of purpose of life? What support is the government providing in this budget to support mature-age workers so that they can continue to take responsibility for themselves, continue to contribute to our community and be part of the success story of this great nation?

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

Just over a year ago, a young bloke on a Work for the Dole site—

Government Members:

Government members interjecting—

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

If you want to make light of a young bloke dying on one of your worksites, by all means you can explain why you find that funny. Over a year ago, this young person died on a Work for the Dole site. There was an internal review done by the Department of Employment. It was finished in September and it went to the minister. Despite repeated requests that that report be made public so that people could be given an assurance that Work for the Dole sites are safer, at no time has that been done. At the same time, there was an internally conducted broader review about Work for the Dole safety by Ernst & Young, brought in by the Department of Employment. They checked out all the Work for the Dole sites. Over 200 sites were audited. And what did they find? Over 30 per cent of those sites were not meeting expectations on safety.

We had a young person die, and no report was provided as to what happened in Toowoomba—none. The reason offered is that the Queensland workplace authorities are conducting their own review and the Turnbull government want to wait for that review to be released before they respond. But why can't you give some sort of detail about the steps taken, not necessarily referring to the incident itself but giving an assurance that things are being done more safely? Then, when you get another consultant's report that comes out and says there are problems and safety expectations are not being met, you still do not provide a ministerial statement that says, 'This is where we're at right now in terms of making it safer, and when the Queensland state report comes out we will provide a more detailed report as to what is going on.' Nothing has been provided whatsoever.

Here is where the problem is: the government force people to go into a program knowing that there are safety issues. They force young people to go into that program. Here is the second problem: this program is tanking under this government. Between 80 and 90 per cent of people who go through that program do not end up with a full-time job three months after they have finished the Work for the Dole program. Why? No-one can explain why this incredibly low success rate is happening. A high failure rate is occurring under their watch, and no steps are taken to fix it. We get told in the budget, 'We're going to "refocus" it.' And what happens? What we find out through estimates is that there will be less money and fewer places. There are no answers as to what will be done to make Work for the Dole work.

Work for the Dole itself has operated under both political parties when they were in government, both Labor and Liberal. It is an important activation measure to ensure that people are going through and building up their work experience and job skills so that they can get work. But under this government it is failing. It is unsafe. There are serious concerns about whether or not safety expectations are being met. People are forced to go through it. They are not getting jobs at the end of it.

Frankly, a cynic would think that, in cutting the number of places, the government are more interested in a statistical ploy: if they have fewer places but they get similar outcomes, it will actually look like they are putting more people into work as a result of Work for the Dole. This is not a game. This should be about providing people with genuine skills that will ensure that they get a job at the end of it. If the government are saying that they want to see people get work instead of again pointing fingers at people that are not getting work, show us what you are doing to fix it up.

Our questions are: will the government actually be honest about why their jobs programs are failing and what steps they are taking to fix them up? When will they commit to fixing Work for the Dole and improving job outcomes for participants other than by engaging in cheap statistical games to make themselves look better with the outcome instead of fundamentally reforming the system?

Why commit to a Work for the Dole refocus that does not even help Australians actually find work? When can the family of the young bloke who died on a Work for the Dole worksite in Toowoomba in April 2016 get any kind of answer out of this government as to why they had systems that were not meeting expectations? Can the government give assurance to the other people going through the program that they are going through a safe program?

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I appreciate the opportunity to comment, in the time that is remaining, on the various questions that have been raised with me by participants on both sides of the House, including the shadow minister, the member for Gorton; members of my own party; and the member for Chifley.

I might deal with the member for Chifley's issue first, because it involves the tragic death of a young man, Mr Joshua Park-Fing, through no fault of his own, in April 2016 at the Toowoomba Showgrounds, as a member of the Work for the Dole program that was at that time in operation there. I am advised not to comment on the specific details of the accident while an investigation is still currently underway. The matter was reported immediately to the police and Workplace Health and Safety Queensland, being the relevant regulatory authority. Workplace Health and Safety Queensland is currently still conducting an investigation into the accident and of course has the support of Minister Cash's Department of Employment. Workplace Health and Safety Queensland has not yet provided a firm date for finalisation of its investigation.

The Department of Employment has investigated those matters that fall within its role as the program owner, including compliance with the deed requirements by the jobactive provider. It is apparent that the Workplace Health and Safety Queensland investigation may cover matters that are also subject to the department's report. At this stage, it would not be prudent to comment on the details of the incidents or to release that information about the incident before those investigations have been finalised. The Department of Employment has written to the provider, outlining a range of actions required to ensure jobseeker safety in Work for the Dole activities, and I am advised that the program that was being conducted at the Toowoomba Showgrounds was immediately suspended and has not been resumed.

In a wider sense, the member for Chifley asks about what the government is doing about making sure that work health and safety arrangements for Work for the Dole are in place. I can assure him and all members of the House that the government takes workplace safety as seriously as the Labor Party or any other political party in this place does. Obviously it is an area where sometimes terrible accidents do occur, as happened in Toowoomba, and all of us would be united in extending our sympathies to Joshua's family in what must have been a very traumatic experience that will live with them for the rest of their lives.

Work health and safety is a priority for the Work for the Dole program, and the work health and safety arrangements are carefully considered in the design and implementation of the program. There are clear expectations set out to ensure all the parties meet their work health and safety obligations. Providers have to ensure there is a safe system of work in place throughout the life of any Work for the Dole activity. A risk assessment must be conducted on the work health and safety of each Work for the Dole activity. That is done by the Work for the Dole coordinator or the jobactive provider that sources the activity. Risk assessments must be conducted by a competent person, defined by the Model Work Health and Safety Regulations as being 'a person who has acquired through training, qualification or experience the knowledge and skills to carry out the task'. In addition, providers must conduct an assessment for each jobseeker referred to a Work for the Dole place, and host organisations also have work health and safety obligations. Of course, that would be the case no matter who was in government, either the coalition or Labor. I know that the previous government did support the Work for the Dole program. While the numbers of people who took part in the Work for the Dole program did plummet during that time, it was one of the programs that survived from the Howard era.

In the last minute that I have remaining, unless I am given permission by the opposition to continue, I would like to deal with some of the other issues that have been raised with me. The member for Gorton asked questions about the slow wages growth, as he described it, and asked for information about the forecasts that Treasury has provided and whether we have confidence in those forecasts.

Of course the government has absolute confidence in the forecasts provided by Treasury in the budget. The wage rise that was recently announced by the Fair Work Commission, on 6 June 2017, to apply from 1 July 2017 is actually above the wages growth figure for the whole economy. The wage price index is 1.9 per cent over the year to the March quarter of 2017, and wages growth is forecast by the Treasury to be 2½ per cent in 2017. (Time expired)

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

The minister has asked for an extension of time. Is it the will of the chamber that the minister have an extension of time?

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I thank the chamber for allowing me to continue. The government does have confidence in its growth forecasts. Of course, we would all prefer wages growth to be higher than it has been. We are experiencing situations similar to those that have occurred in other Western democracies and economies around the world.

I would remind the member for Gorton, who has been here some time, that in fact wages growth was 19.8 per cent over the period of the Howard government. I picked that figure out from my memory, so it may be wrong, but I think that is pretty close to the mark. During the Keating-Hawke period, however, wages growth was less than two per cent—1.9 per cent over that period versus 19.8 per cent. In the boom years of the Howard government, apparently the Howard government—and Labor would paint us as not being the friends of the worker—were in fact the government that delivered exponential wages growth because of the combination of our policies. There were of course good policies in the Hawke and Keating period which the then opposition, both the Peacock-led opposition and the Howard-led opposition, supported. But I can say that, if you line up the two records of Labor and the coalition, our record during the Howard period far surpasses the record of the Labor Party.

The member for Gorton also talked about penalty rates. This is one of the most wonderful attempts at chutzpah from the Labor Party that even I have seen in my period in parliament, because it was the member for Gorton himself who very eloquently, in my view, on 15 February 2016—so not that long ago—said:

Labor believes that the FWC—

the Fair Work Commission—

is the appropriate body to consider these matters and it should be left alone by the Liberals to do just that, conduct its business as the independent umpire.

And of course, in the effluxion of time, the Fair Work Commission in its great wisdom has defused the issue of penalty rates for some awards on Sundays by introducing these changes over a three-year transition period. The air has well and truly gone out of the balloon of the Labor Party's campaign on penalty rates. I was surprised—

An opposition member interjecting—

Well, it is apposite that the member for Dawson is present today, because the member for Dawson has been a very strong advocate for two particular groups in his electorate over the time that he has been the member for Dawson: firstly, for small business and the chance to give them the opportunity to grow. That is why he strongly supports, as we all do on this side of the Chamber, the company tax cuts for small and medium enterprises, which have been opposed by the Labor Party—inconsistently, given the comments of the Leader of the Opposition when he was the minister in the Gillard government. Secondly, the member for Dawson supports the workers in his electorate. He wants to ensure, as I do, as we all do, that his workers are paid a fair wage for a fair day's work. So I commend the member for Dawson, as I commend all members of the House for their support for both the workers in their electorates and the small businesses in their electorates. On this side of the Chamber, we are reducing taxes as we did in the budget and last year's budget. We are reducing taxes on incomes. We are reducing taxes on companies. We are encouraging investment and growth in the economy, which all leads to jobs. It was not that long ago that the Labor Party used to support that.

Now, the member for Dobell asked me questions about young people and unemployment in her electorate. I come from South Australia, and there is no doubt that there are geographic parts of our society that are not doing as well as others. There is no doubt about that. With the passing of the mining boom from the construction phase into the extraction phase, that is particularly felt keenly in areas like the electorate of the member for Dawson and in Western Australia and other areas where mining has been a staple part of the economy.

That is why the government is trying to expand and diversify some of the key parts of our economy like my own portfolio of defence industry, with the biggest military build-up in our nation's history in peacetime driving jobs and growth. In the Central Coast, the member for Robertson has strongly supported the establishment of a medical school by the University of Newcastle at the Gosford.

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

The question is the proposed expenditure be agreed to. I call the minister.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I know that there are some competitive tensions between Wyong and Gosford—I have been to the Central Coast. What is good for the Central Coast is good for the entire part of that economy. The expansion of the University of Newcastle in to a medical school with disciplines like nursing and health sciences and so forth will be a tremendous boon for those young people in particular on the Central Coast who are looking to be trained in areas that will be growth areas for the Central Coast given the demographic breakdown of the population there and, of course, in attracting people to the Central Coast because of the good level of services that will be available with the young people and others who are trained or retrained in the medical school and in the health sciences there, because of the good work of the member for Robertson. I am sure the member for Dobell supports the member for Robertson in the work that she has done in ensuring that jobs and opportunities are available for young people in the Central Coast.

My own colleagues have asked me some questions about various matters to do with this portfolio, which I would remind the House is not my own portfolio but Minister Cash's portfolio. The member for Fisher asked me about security of payments in the building industry. I can tell him that independent contractors are an essential part of the workforce. The government is sympathetic to the concerns of small businesses involved in subcontracting, where insolvencies and late payment issues can make or break these operators. That is why the government has announced a national review of security of payments laws. The government has also established a security of payments working group. The working group is focused on monitoring and improving compliance with current legislative requirements through the work of the ABCC. Together, the review and the working group will help to improve the level of protection afforded to subcontractors in the building industry.

On 21 December 2016, the Australian government announced a review of security of payments laws in the building and construction industry. The review is focused on identifying legislative best practice with a view to improving consistency in security of payments legislation across jurisdictions and increasing the level of protection for subcontractors nationally. So you can see, Acting Deputy Speaker Hogan, that the government is responding to the member for Fisher's concerns about security of payments in the building industry. The review is being conducted by Mr John Murray AM, who is a specialist in building contract disputations and security of payments legislation—as is the member for Fisher, who was a noted barrister and himself a builder in the part of the world where he now lives and represents.

The member for Swan asked me questions about ParentsNext and its national expansion. I can tell the member for Swan that the government is investing $263 billion to expand the ParentsNext program nationally to give more parents of young children tailored support to improve their work readiness by the time their children start school. From 1 July 2018, more than 68,000 parents across Australia each year will benefit from that program. I know that the member for Swan is particularly interested in this subject of how to support families in this situation because he himself is a single custodial parent and has raised his child as a single parent and has done so very successfully. Since April 2016, ParentsNext has been operating in 10 locations across Australia. Almost 13,000 parents are currently participating in the program. More than 6,000 parents have commenced in education or training, almost 4,000 have commenced in other assistance such as counselling, health related assistance and parenting courses, and more than 1,000 have commenced in employment.

The national expansion will deliver two streams: $150.1 million over four years to expand ParentsNext nationally to the most disadvantaged parents in the 51 jobactive employment regions, and $113 million over four years to provide a more intensive ParentsNext service in the 10 existing locations and a further 20 locations where a high proportion of parenting payment recipients are Indigenous. So you can see, Mr Deputy Speaker, as can the member for Swan, that we are certainly putting our weight behind the ParentsNext program.

The member for Dunkley asked me about the Youth Jobs PaTH. As I have only 20 seconds left, I might see if the member for Chifley wants to ask me a further question, and then I will get the chance to sum up at the end.

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

I will not take up too much time. I do want to ask a question about Youth Jobs PaTH, and I also would like to remind the minister that I asked a question about the Employment Fund and I am very keen to get an answer on that. I am also keen to see if he will table the letter that was written by the Minister for Employment or the Department of Employment to NEATO, the Work for the Dole provider involved in the Toowoomba incident, outlining exactly what measures that provider was asked to take to improve workplace health and safety.

The next thing I would ask, in relation to PaTH, is this. The opposition has constantly outlined its concerns about the prospect of wage and job displacement triggered by PaTH. We have constantly had extended to us an assurance by the government that they would keep tabs and track the businesses that use these PaTH interns and would be able to tell us whether or not this is occurring. During estimates, we asked whether businesses enrolling in PaTH were large or small. The Secretary of the Department of Employment, on 29 May, had to take the questions on notice. It did not give us much confidence. The issue came up a second time when it was revealed that one business had already taken on seven interns. The department was asked again whether it was a large or a small business. The answer revealed inadequate tracking: 'We actually do not have that information on size.' What we want to know is: can the Turnbull government demonstrate that they have sufficient tracking and monitoring processes in place to make sure PaTH interns are not used to churn workers or exploit young people, and are the government actually going to hit their target of 30,000 interns a year and 18,000 to 20,000 businesses participating in the scheme?

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

In the time that I have remaining, I will deal with both of those issues: PaTH and the billion-dollar Employment Fund. I might deal with that one first.

The Employment Fund is a demand-driven and flexible pools of funds. Jobactive providers use these funds to help jobseekers get the experience and skills they need to find and keep a job. Over the life of the jobactive contract, the government is investing $1.1 billion into the Employment Fund. Between July 2015 and 31 March 2017, $518.1 million has been credited to the Employment Fund. Early Employment Fund expenditure was conservative, but provider utilisation of the Employment Fund has increased since the start of jobactive. A similar pattern was observed with the Employment Pathway Fund under Job Services Australia.

It is important to note that jobactive is performing better than its predecessor program, Job Services Australia, in 2014-15 and is helping more jobseekers to find work. In particular, the proportion of job placements converting to a 12-week outcome has increased to 53.7 per cent under jobactive compared to 49.1 per cent under the JSA for 13-week outcomes. The proportion of job placements converting to a 26-week outcome has increased to 36.2 per cent under jobactive compared to 31.1 per cent under JSA. Just under half—48.1 per cent—of all jobseekers were employed three months after participating in jobactive. This has increased compared to 42.8 per cent, which was achieved under the JSA.

I have about 1½ minutes to deal with the PaTH program. The member for Dunkley spoke much more positively about the PaTH program than the member for Chifley, but I have come to expect that from one of the government's chief critics. I can tell the member for Chifley that the PaTH program is working very well, and people are very pleased with the PaTH program, one of the Treasurer's particularly favourite programs. I can tell him that, as at 6 June 2017, nine hundred and—

Mr Husic interjecting—

Well, you will not be nearly as effective as the member for Corio, Member for Chifley. Do not try to elevate yourself to that level. Under the PaTH Employability Skills Training program, 921 courses have been approved in the department's systems; 196 courses have been completed; 186 are in progress; 539 are scheduled to commence on 7 June 2017—

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

It being 6 o'clock, the time for the debate has concluded. The question is that the proposed expenditure for the Employment Portfolio be agreed to.

Proposed expenditure agreed to.

Defence Portfolio

Proposed expenditure, $32,746,245,000

The Federation Chamber will first consider the Defence and Defence industry segments and then the Veterans' Affairs segment of the Defence Portfolio. The proposed expenditure now before the Federation Chamber is for the Defence Portfolio: $32,746,245,000. The question is that the proposed expenditure be agreed to.

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

So I start? Happy days! This is a great opportunity—to have the minister present to answer some searching questions about his portfolio. But, before we get to the questions that I want to put to the Minister for Defence Industry, it is worth appraising how this government has performed in the area of Defence industry since its election in 2013, because the truth of the matter is that, from that moment onwards, this has been a government which has had no commitment to Defence industry at all. Indeed, in its first term, the government's Defence industry policy was about everything other than Defence industry. What we found was that the supply ship contract was being bandied around to try and close the Korean free trade agreement. We had the submarines being put on the table to try and close a free trade agreement with the Japanese. Defence industry was being leveraged for every purpose other than actually building a Defence industry in this country. There was no better example of that than when we saw the appalling spectacle of the submarine build in South Australia being tossed around the government party room at the beginning of 2015 as a pawn in a play in respect of a challenge of the then Prime Minister Tony Abbott.

Of course the opposition welcomes the fact that there is a commitment from the government to build the submarines in Australia. That is an important commitment. But what we absolutely understand from the way in which the single biggest procurement in Australian history was being tossed around the government party room in this way is that this is not a government which has a commitment to Defence industry. This is a government which has a commitment to politics and playing politics, and Defence industry has found itself a part of that.

What also occurred in the first term of the Abbott government—and it has continued since the election in 2016 of the current Prime Minister—is that this country has experienced a real haemorrhaging of industry more generally. The car industry is the example which tells the story of what has happened to industry more generally across Australia. In my electorate, we have seen this firsthand with the car industry but also with the close of Alcoa's Point Henry smelter. That is just one example of what we have seen around the country, particularly in the states of Victoria and South Australia.

It seems to me that what we are witnessing now, as to Defence industry, from this government, is an attempt to make Defence industry the government's industry policy more generally. You get that from the fact that the industry minister became the Defence industry minister. It is, if you like, what the government seeks to do as to its industry policy more broadly.

Again, we welcome the fact that the government has found itself in a place, now, supporting Australian industry in the way in which it participates in the building and procurement of equipment for the Australian Defence Force. Sovereign capability matters. This is something Labor has always understood. The government is a late converter to this, but we will take it. It may be a shallow conversion, but that is fine as well. The concern now is that, given this, we have seen the Minister for Defence Industry, to his credit, active in various announcements in relation to a number of the projects. Right now the projects that are on the books of the government are the future frigate project, where there is an expectation or a commitment that steel will be cut in 2020; the OPVs, where steel will be cut in 2018; and the Future Submarines, in 2023.

I want to ask the Minister for Defence Industry: is he confident that those timetables are going to be met? Can he be confident that all the tenderers—the three tenderers for the future frigates—would be able to meet a date of cutting steel in 2020? Has the work been done to ensure that, on that time frame, Australian industry content is maximised in the supply chain of all of those projects and particularly the future frigates?

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

Do you want to keep going? I was going to respond to everything at the end, but I am happy to respond now. Are you finished?

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

I think we go back and forth.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

We do go back and forth. We are supposed to go back and forth. We will do that then. In the employment one we did that, so we will stick to that.

It cannot be easy—and I do not envy the member for Corio—having to come in here and pretend that defence industry is not one of the most sparkling aspects of the government's policies. Of course, he did preside, in the government that he was a member of, over the lowest ever spending on defence in Australia's peacetime history since 1938. They managed to get spending on defence down to 1.56 per cent of GDP—the lowest level since 1938, the last year of appeasement. By contrast, the government will hit two per cent, two years early, in 2020. It is a story of investing in capability as our No. 1 priority and investing in Australian native, sovereign, defence industry capability as our second priority. I admire the member for Corio's attempt to try and paint it as a shambles, but he knows as well as I do that if you speak to anybody in the defence industry they will tell you that they have never had a more exciting period of support for defence industry in living memory. Not only did we get the foundations right; we are now getting the implementation right.

The member for Corio asked me specifically: do I expect that the schedule—the very ambitious schedule, I might say—that we have set for ourselves for cutting steel on the offshore patrol vessels, the future frigates and, of course, the Pacific patrol vessels will be met? As he knows, I cut steel on the Pacific patrol vessels in Henderson about a month or two ago. We are very confident that the end-of-2018 deadline for cutting steel on the offshore patrol vessels will be met. The schedule for the release of the request for tender was met. The tenders are being assessed by the Department of Defence. We will make a decision in the third quarter of this year about the offshore patrol vessels in order to allow the time necessary to be able to bring that cutting-steel time line about. On the future frigates, the time that we want to cut steel is 2020. We believe—in fact, I am certain—that we will cut steel in 2020. On the future frigates, the request for tender has been released to the bidders. They are working on their bids. We should be able to make a decision on that on schedule in the early part of next year, as we had intended.

All of these particular projects work together in concert. Of course, the worst thing that could happen is for the Labor Party to win an election and completely undo what is a very complicated jigsaw puzzle that all works together. We all know that Labor left us with the valley of death at the Osborne shipyards and submarine yards by not making decisions over six years. So I am absolutely confident that, with a combination of the naval shipbuilding college, the retraining of workers, the construction that will begin at Osborne in July this year—I will turn a sod in July this year at Osborne, which will get the infrastructure underway at Osborne South for the shipyard—and the decisions around the offshore patrol vessels starting in Adelaide and then moving to Henderson, what we have done will mean that the workforce will be as intact as possible at Osborne South. The offshore patrol vessels will then come online, employing hundreds of people. The future frigates will begin in 2020, employing 2,200 people, and the submarine project, which is the piece de resistance, if you like, of the shipbuilding program, will begin in the early 2020s—in 2022 or 2023. It will be a $50 billion program of 12 submarines, employing 2,800 Australians. So by the mid-2020s we will have about 5,000 Australians in South Australia living in Adelaide and working at Osborne on a continuous naval shipbuilding program. It will be the first such program in our nation's history, and it will have been delivered by this government.

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

I have a question up front, which the minister can answer at his next go. For the sake of the Australian defence industry, can you personally commit to not cutting steel ever again?

Mr Pyne interjecting—

I see. But I do want to take issue with the defence industry minister's attempt to play politics in respect of the past and the way in which both parties approach defence industry now. The defence industry minister favours referring to spending during the Rudd-Gillard years. It is true that defence spending as a percentage of GDP was at 1.6 per cent. What the defence industry minister does not also say is that at one point during the Howard government years it was at 1.62 per cent—barely any more than was spent in the particular year he referred to. Indeed, I think there was a point during the Rudd-Gillard years where spending was taken to 1.93 per cent of GDP, which is higher than at any time during the Howard years. In the last budget of the Gillard government the amount committed to defence over the forward estimates was a record in absolute terms. So you can take statistics from certain periods and try to make an argument. But, if we are all honest and look at the stretch of time in respect of those statistics, the point that the defence industry minister makes simply does not stand up.

In terms of the valley of death, the reality is that it is something that is being experienced right now because of this government. This was a foreseeable event. Whilst the Rudd-Gillard government had built the skilled workforce in naval shipbuilding up to some 4,000, the end of construction of the LHDs and the air warfare destroyers was going to give rise to a gap before the building of the future frigates and the OPVs. Labor's intent was to fill that valley of death by making sure that the supply ships that the Navy was procuring were built in Australia and by bringing forward the timetable for the OPVs. What has actually occurred is that, thanks to this government, the supply ships are now being built in Spain and that, here in 2017, we still do not have a preferred tenderer to construct the OPVs. So the valley of death that we are experiencing now, which has given rise to 1,500 people losing their jobs and to Williamstown and Forgacs in Newcastle basically being at a standstill, is a product of the decisions that have been made by this government. The valley of death is being experienced right now because of this government and because the plans that had been put in place by the former Labor government were not, in fact, followed.

I do want to ask a question of the defence industry minister, though. The decision to pursue a defence industry is one that both parties obviously support, but it is a very significant and deep decision. In needs to be about jobs. It needs to be about more than jobs.

I want to draw your attention, Mr Deputy Speaker, to experiences I had last year when I visited Israel, where I visited companies such as IAI, Elbit and Rafael. It was an illuminating experience to see those defence industry companies operating in Israel. What was completely clear was the organic nature of their relationship with the IDF. It was also clear that the majority of the work that each of those companies did was export based, albeit their largest customer was the IDF, and the workforce profile of these companies was also extraordinary: they were mainly scientific and engineering houses. It was hard to come away from that experience without the question being in one's mind about whether it is possible to have a long-term defence industry which does not have an export basis as part of it.

I do know that the export potential of our own defence industry is a matter of some interest to the defence industry minister, and it leads me to this question: in respect of the future frigates—because I think they particularly offer the best opportunity to leverage a domestic, export based defence industry in the realm of shipbuilding and naval construction—is that a factor in the way in which the government will ultimately determine who ends up being the successful tenderer? Clearly, building the best frigate is the principal concern, but will the capacity to build an export based shipbuilding industry be a factor?

Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

I have the pleasure to ask a question of the Minister for Defence Industry, Mr Pyne. The Australian naval shipbuilding program is one of the most ambitious in the world, and the eyes of the world are watching Australia in this endeavour to see if it is indeed possible to modernise the Australian Navy's defence and border protection capability and to do it at home. Because we are bringing these vessels home by ensuring that they are built here, repaired here and designed here, we can ensure not only that the maximum amount of taxpayer money is spent here in Australia but also that we improve the operational capability of those vessels.

Because of the nature of Australia's position in the world geopolitically, if we really want to have a region-leading Navy, we need to have the capability to maintain and sustain those vessels here. If those vessels are required to be towed to the other side of the world—to a shipyard in France, Germany or indeed Spain—when they break down, those vessels' operational effectiveness is, of course, greatly reduced. To ensure that we are giving our servicemen and servicewomen the best chance to properly defend our shores, it is imperative that these vessels be built and maintained here at home.

But not only that; it is imperative that some of our naval shipbuilding be done in Western Australia, because Western Australia is hurting. We have suffered the slings and arrows of a boom and bust economy before, and my upbringing in the goldmining town of Kalgoorlie has prepared me well for life in the west and also life in politics. When the worm turns and the boom fades, there is a real human cost. We are left with mortgages worth far more than the worth of the property. We are left with closures of businesses and the loss of jobs, and the pain is real. The situation, of course, is not made any easier by the percentage of GST share that we receive, with most of it flowing to prop up other economies within our country.

That is why the naval shipbuilding program is so vitally important to people in Western Australia. We need to tell young Western Australians that this government has not forgotten them and has not sold them out and ruined their ability to go and get a decent job, have a career, earn a decent living and support themselves. The nature of the naval shipbuilding industry means that this is a sector that a young person can spend their entire career in. The lives of these contracts for the naval shipbuilding program are expected to be some 40-odd years, meaning the work will be there when it is needed. It will encourage those young people to go out and get the training that they need to be able to take advantage of a proper career in the naval shipbuilding of our country.

The skills required in this industry are very adaptable to the skills that many young people in Western Australia have acquired through the mining industry, so there is the potential for some retraining and some retooling for those hit by the mining downturn to turn their hand to naval shipbuilding. That is something that I think is very exciting and something that we should be talking more about in this place. If we can retool and retrain that considerable workforce in Western Australia, we have a real shot at establishing a robust sector that is not beholden to the boom and bust of the mining industry. We know that we can take those skills offshore as well. My question to the minister is: what is the government doing to support naval shipbuilding in Western Australia and what benefits will this bring to the economy of Western Australia?

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

I want to put on the list of the questions that we now have for the

We are aware, through the media, of at least some of the issues in respect of both the HMAS Canberra and the HMAS Adelaide. From 7 March this year, an issue was identified with the HMAS Canberra. It was returned to Sydney on 17 March, and the HMAS Adelaide was returned shortly after that. As I understand it, the HMAS Adelaide went into dry-dock on 17 May. The Canberra has been beside the Adelaide since around that time as well. Exactly what the issue is, though, with both these ships is a matter which, in our view, needs greater elucidation by the government, and that is in essence the question that I ask of the defence industry minister now: what are the concerns in relation to the Canberra class vessels and what is their immediate prognosis? We know, from the most recent round of Senate estimates, from the evidence provided by the Chief of Navy, that the exact nature of the issue in respect of the propulsion pods is still being determined. There seemed to be a suggestion that this may have something to do with a design flaw, but I put that in terms of the question. What we really need to understand is: what is the concern in respect of the Canberra class vessels?

I ask this also in the context of the upcoming Exercise Talisman Sabre. Talisman Sabre this year was intended to be the showcase for the Canberra class vessels. This was going to be the moment at which both vessels would be able to put through the full range of operational paces that they have, with a view to them being finally certified for service at the end of this year. As I understand it—but I pose these as questions for confirmation by the defence industry minister—the Canberra may participate in Talisman Sabre, although I am not sure that has been confirmed. It appears—but again I put this as a question—that the Adelaide will not be participating in Talisman Sabre and will not be active until later in the year. If that is right—that one of the two vessels will actually not participate in Exercise Talisman Sabre—that is obviously a considerable concern. This was a critical milestone in the development not only of the ships but, as I said earlier, the amphibious capability that the ADF has been seeking to develop, with the support of both the major parties. It is a critical element because this was a moment at which those soldiers and sailors who work with the platform would have an opportunity to do so in the context of Exercise Talisman Sabre, which is a unique moment to test these capabilities. That one of these vessels appears not to be participating, and potentially both, is obviously a concern. The questions I ask the minister in respect of the Canberra class vessels are: what is the issue; what is their immediate prognosis; can the minister confirm that the Adelaide will not be participating in Talisman Sabre; and can the minister confirm that the Canberra will be participating in Talisman Sabre? What light can the minister shed?

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

As the minister knows, the government is spending an unprecedented $200 billion in the coming 10 years on our defence capability. This spend will transform our Defence Force's capabilities and make an enormous difference to our security in the coming years. The government is committed to ensuring that as much of this spending as possible flows into Australian businesses, so this procurement will also prove to be a massive boost to local industry.

I want to see some of that $200 billion spent on the Sunshine Coast. We do not have the facilities to lay down the keel of a frigate or to build an entire fighter jet; however, we do have an underutilised aerodrome in Caloundra, vacant industrial property, a great many retired Defence personnel and more and more technological innovators in our community. Our small to medium enterprises are perfectly poised to deliver important parts of the defence capability that our country needs.

There are already companies in my electorate of Fisher that are exploiting these opportunities. HeliMods in Caloundra have recently won a contract for $154,000 to deliver wet decks for 14 MH-60R 'Romeo' Navy helicopters. HeliMods already employ 25 skilled workers on the Sunshine Coast. If they are able to build on this contract and win more Defence work, they intend to employ many more. The minister will remember that I visited Will Shrapnel and the team with him just last month to see their manufacturing facilities. Another company in the same part of my electorate, Praesidium Global, have recently won a larger contract, for $1.3 million. Praesidium are designing and manufacturing an entirely new type of unmanned ground vehicle, which will help to keep our service men and women safe and out of harm's way. This kind of innovation is exactly why the coast is the perfect location for more Defence contracts in the future. A third business in my electorate who are also working with the ADF are Eniquest. Based in Warana near my own electorate office, Eniquest build military-grade DC and AC power generators and auxiliary power units which are used in our Bushmaster vehicles. Eniquest have not only been supplying these power units to the ADF, but they have also been able to enjoy a new contract with the Singapore military, announced only a couple of weeks ago. The University of the Sunshine Coast has also been successful in winning a multimillion-dollar contract, to research new pavements for runways for the ADF. This is a great sign of engagement between universities, higher education, and the Defence Force.

Helicopter parts, remote vehicles, power generators and research—these are the kinds of projects that small Sunshine Coast businesses and the University of the Sunshine Coast are perfect for. I want to see a Sunshine Coast that is no longer dependent on tourism, building and construction. I want to see our small businesses given the opportunity to make a contribution to the nation's defence capabilities. That is why I organised the inaugural Sunshine Coast Defence Industry Forum in May. I am very grateful to the Minister for Defence Industry for joining me for this event. One hundred and seventy local businesses registered for the forum to hear the minister speak and to learn more about what they could do to win a Defence contract. The interest among small businesses in Fisher was very clear. The Innovation Centre at the University of the Sunshine Coast was full, and a great many had questions for the minister and for representatives of the Centre for Defence Industry Capability, Defence Science and Technology Group.

Small businesses see the opportunities here and they want to be involved. Small businesses face challenges, of course, that are different from their larger counterparts. Their lower cash flows and smaller cash reserves are one example. The Turnbull government already helps with this challenge with its Supplier Pay On-Time or Pay Interest Policy. The government pays all businesses within 30 days on contracts valued up to $1 million. If it fails, it pays interest on the balance. In 97 per cent of these contracts the government now pays on time. We are acting as an example in our payment terms for all businesses and I encourage all companies to follow suit. It will never be easy for a small business to get their first Defence contract. It is right that it takes flexibility, perseverance and vision. But government should do everything it can to make the process as easy as it possibly can not only in the Defence portfolio but across government procurement. I hope that the minister agrees. I would like to ask the minister what the government is doing to make it easier for small business to engage and to contract not just with the Defence department and the ADF but with government across all portfolios.

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

The Future Submarine project is, by some measurements, the single biggest procurement in Australian government history. It is an incredibly important project in terms of the strategic capability of the Royal Australian Navy, of our Defence Force and, as a result, of our country. It is a huge project in terms of the construction that it entails and the development of a sovereign capability in Australia in terms of being able to sustain and maintain submarines in the future based on the experience that will be gained from building the submarine in the first place is enormously strategically important for our sovereign capability.

Labor have always been a supporter of the Future Submarines. Indeed, in large measure it was initiated under the former Labor government. Again, we welcome the government's, albeit late, conversion to now supporting the purchase of 12 submarines and, ultimately, having those submarines constructed in Australia; indeed in the minister's home state of South Australia. It was not always thus. For quite a while there seemed to be an attempt to make the submarine project something which was subservient to other government interests—namely, a free trade agreement with Japan. And of course we had the very unfortunate and famous remarks of former defence minister Johnston, who characterised ASC's ability in this regard as being unable to build a canoe. I accept that they are the comments of one individual and they are probably comments which, at the end of the day, cost him his job. But it does leave one a little uneasy about the exact commitment in the hearts of those on the government side about the need for the construction of this to occur in Australia and for the genuine sovereign capability to be acquired by Australia in respect of the Future Submarines so that we can have this capacity and maintain and sustain these boats into the future.

As the timetable is currently set out for the Future Submarines, we will not see the first submarine in the water until the early 2030s. I think it is estimated that the last submarine will not enter the water until 2050. That, in turn, has implications for maintenance of the Collins class submarines, so that a capability can be maintained between now and when the Future Submarines takeover the role. Because we are talking about maintaining the Collins class submarines through until the middle of this century, there is obviously a significant cost associated with that. The cost of the project is therefore significant and the actual capability we get from the project will not come to pass until the 2030s. On top of that, and this is simply making the observation, this is a unique capability which is being purchased; it is not an off-the-shelf product. With any unique build there is an element of risk associated with it. There is nothing that can be done about that, but it is part of the landscape that we now find ourselves in. It is a capability that will not come on board until the 2030s; a solution which is ultimately expensive by virtue of the fact that the Collins need to be maintained through until the middle of the century; and a new capability which has in it an inherent amount of risk.

The question then for the Minister for Defence Industry is: has the government given any consideration to the pace at which this project can be sped up? Is there any consideration or plan in respect of that? Obviously, if the project could be sped up then the maintenance of Collins would be reduced and ultimately there would be a cost benefit there. Can the minister assure us that we will not experience any capability gap associated with the transition from the Collins to the new Future Submarine? That is obviously critical in terms of how important the strategic capability is that we are acquiring with this submarine. Can the minister assure us that all 12 submarines will be built in South Australia?

Ted O'Brien (Fairfax, Liberal Party) Share this | Link to this | Hansard source

Three weeks ago, we were in this very chamber making speeches about a terror attack in Manchester. Two weeks ago, it was London. Last week, if parliament sat, we would have been talking about Melbourne. Indeed, we are living in a global political environment which is amidst heightened volatility. Major conflicts are causing upheaval the world over. As I speak today, there are approximately 28 wars raging across the world—and if you include smaller conflicts in African nations, that number jumps to 58. In 2017 thus far, these wars have recorded 47,000 deaths.

As we have seen in the last three weeks, whether it is Manchester, London or Melbourne, there is another war going on, waged by Islamist terrorists, often targeting the most innocent of lives. It is a war waged against a way of life—our way of life. It is a war waged against a set of values, the very values that define who we are as a country and as a people.

Here in Australia, despite our rich diversity, we are united because we are bound by a common set of values. We have no more important value than that of freedom: freedom realised through independence, self-reliance and dignity of the individual—the individual who is equal, no better, no worse than other individuals. They are ideals that, in turn, promote the protection of free speech and property rights and encourage human endeavour and free enterprise. These are the very things that have created the Australia of today: an open, liberal, free-market economy. We are the envy of much of the world and yet the target of those who are repulsed by these ideals, who believe that freedom and our way of life should be detested and ruined.

All of this is a sombre reminder that, as we debate many a worthy cause in this chamber, there is no greater cause and there is no higher duty than protecting our nation and keeping our fellow Australians safe. Indeed, the Prime Minister addressed the House today, saying:

My No. 1 priority, my government's No. 1 priority, is to keep Australians safe.

The Australian government cannot discharge its duty in this regard on a wish and a prayer. We must ensure that our defence forces and our law enforcement, security and border protection agencies have the resources and capabilities needed to protect Australia and the values for which we stand.

We need to be on the front foot in this regard. Again, let me quote from the Prime Minister's speech today where he said:

Our national attributes, our pride in our security, our diversity, our freedom and the prosperity which they enable, mean that we are well-placed to confront these challenges.

But we can never be complacent or avoid hard truths.

The PM is right, and that is why I am here in the chamber today in support of that sentiment for the consideration in detail with the Minister for Defence Industry. If we are to build and sustain our nation's defence capabilities to meet the challenges of today and tomorrow, major investments are needed, and, under the leadership of this minister, those investments are indeed being made.

The Defence Integrated Investment Program allocates capital investment of more than $50 billion over the forward estimates and $200 billion up to 2027-28. And it is my understanding that about 10 per cent of that $200 billion budget has been earmarked for the Land 400 program, which is the Army's largest program ever, valued up to $20 billion in acquisition costs alone. It includes 225 combat renaissance, I mean reconnaissance, vehicles—it is almost renaissance in our spend, can I say—in phase 2, and 450 infantry fighting vehicles along with 17 manoeuvre support vehicles in phase 3.

As a proud member of the LNP's team Queensland my colleagues and I are convinced that the Land 400 project could be delivered almost anywhere in Australia but nowhere better than in Queensland. Therefore, my question to the minister is: why is the Land 400 project so important and what is the current status of its tender?

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

I know that there will be many of my constituents who will be very eager to hear the minister's answer to the member's question, in respect of where Land 400 will be constructed.

A few weeks ago I visited the Middle East area of operations and I would like to place on record my thanks to the government, to Minister Payne and to the Defence Industry minister for their support. I have written to the Chief of the Defence Force, Air Chief Marshal Binskin, Vice Admiral David Johnston, commander of the Joint Operations Command, as well as Major General John Frewen who is our commander in the Middle East Area of Operations.

It was a fantastic experience, and I note your service, Mr Acting Deputy Speaker Hogan, as well so this will ring true to you, I am sure, in terms of what I witnessed—Australian Defence personnel of all three services operating in difficult circumstances but in a completely professional way and acting as our country's best ambassadors, acting in a way that made it clear to troubled countries—in Iraq and Afghanistan—that we are there to help and lend a hand to them in a difficult hour of their history.

The focus of our efforts in Iraq is combating the forces of Daesh, and it would appear that this fight is proceeding in a satisfactory way. The expectation is that, ultimately, Daesh will be defeated. I note the statement made by the Prime Minister this morning and my question, in respect of this, to the Defence Industry minister is to ask for a report of progress on the fight with Daesh and the work that has been undertaken in Afghanistan. In Afghanistan the situation is more complex. There is an insurgency underway. But in both countries what Australian personnel are doing is providing training to the forces of Afghanistan and Iraq so that those countries have an increased capacity and ability to deal with the very difficult circumstances they face.

What became very clear from all that I observed and all the meetings that I had was that the advice, assistance and training being provided by Australian personnel is being received in a very favourable way by those countries. It is being seen as the provision of support which is, to be frank, invaluable, from their perspective, and which is really making a difference, in terms of the sustainability of those countries in dealing with a set of circumstances which for us, here, is unimaginable.

The professionalism of those involved was deeply impressive, the thoroughness with which people undertake their task, making decisions that go to questions of life and death—for example, whether or not a strike is made or not made from one of the FA18 Super Hornets, which are now over the skies of Iraq. Those decisions are matters of life and death, but I watched Australian personnel going through the process of making those decisions in a deep, thoughtful and thorough way, understanding the enormity of what they were doing and, as I said, in the process absolutely representing our country in a way which could only lead one to have an enormous sense of pride.

The point I want to make is that the mission that we are engaged in in the Middle East is one which has total bipartisan support of the major parties in this parliament. The work that those people are doing is making the world a safer and a better place. In doing so, the honour and the prestige of Australia is being promoted and built. I think I said earlier that the serving personnel in the Middle East are our greatest ambassadors and really do a marvellous job in the way in which they carry out their task in a very difficult way. I know that they are comments which will be received in a bipartisan way by the government, and they are given in that spirit. I guess the question that goes with it is that I am just seeking an update on how things are proceeding. (Time expired)

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I do thank my colleagues for their contributions to this consideration in detail about defence, and I thank the shadow minister, the member for Corio, for the spirit in which he has engaged in the questioning of the government in a serious way about things that are very important and, it is fair to say, by and large, attract bipartisan support. I might answer the shadow minister's questions first in order to pay him the respect that he is due as the shadow minister and then deal with my colleagues' questions.

The shadow minister asked about the Collins class submarines. He asked about a number of specific issues to do with the Collins class and its replacement. I can tell him that the timetable that he has broadly outlined for the replacement submarines based on the Barracuda class from DCNS is broadly right, and contingencies are being put in place by Defence, as he would expect, to ensure that there is no capability gap in the 2030s as we transition from the six Collins class submarines to the 12 DCNS submarines that will come into operation. I can tell him that that schedule cannot be hurried up. He asked if it could be done faster. The reality is that building submarines is an enormous task—it is a huge project. I give due credit to the Hawke government that initially decided that we would build Collins class submarines. Sure, that was a very fraught program, but let's not forget we had never built a submarine in this country before.

I, and I am sure the member for Corio does too, want to ensure not only that we have the sovereign strategic capability to sustain and maintain submarines, which we now have thanks to the work of particularly this government, but also that we can have the capability to build submarines into the future. We never want to be in a position again where we have to rely on another country for spare parts or for the availability of our submarines, as happened in previous periods, particularly during the Falklands War. I am sure that the opposition agrees with us about that. I can tell him with absolute clarity that every one of the submarines will be built in Adelaide at Osborne, from submarine 1 to submarine 12. Some of his colleagues have been trying to create dust storms around this issue. There is absolutely no question that the 12 submarines will be built in Adelaide, there is no plan at this stage to change the sustainment and maintenance arrangements that already exist between Henderson and Osborne for the sustainment and maintenance of the Collins class submarines, and the submarine project is very much on track.

As I said before, I will turn a sod at Osborne south in July, which is the shipyard. DCNS are organising their plans for Osborne north, which is the submarine yard, and I look forward to turning a sod there as well. I can inform the chamber that, in fact—as has been publicly stated—the Commonwealth government has secured, for $230 million, the Common User Facility at Techport, as it is known, which was previously in the ownership of the South Australian government. It has also secured all the land around the Osborne shipyard and submarine yard, effectively more than doubling it in size, in order to ensure that we have the space that is necessary for a successful ship- and submarine-building capability. In fact, the member for Kingston will be pleased to know that the shed that DCNS will build at Osborne north for the submarines is actually bigger than the Adelaide Oval stadium. So it is dramatically large. The member for Kingston does not seem as excited about that as I had expected she would be, but it certainly excites me. You will not quite see it from space but you will certainly see it every time you fly into Adelaide and be reminded that it was this government that secured the submarines for South Australia, not the Labor Party.

The shadow minister asked about exports. Coming from a government that never did anything about exports in six years, that was audacious, but, nevertheless, I take it in the spirit in which it was intended. I can tell him that there will be a defence export strategy released in the third quarter of this year, but, as he knows, I, as the Minister for Defence Industry, am not waiting for the defence export strategy; I have already written, in January this year, to all of the defence attaches— (Time expired)

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

I can assure the minister: I am very, very excited. I just hope that he actually delivers on his commitments to his Naval Shipbuilding Plan. I do want to reference the Naval Shipbuilding Plan. One of the priorities of the government, they have said, is that they plan to transition automotive workers from Holden. Unfortunately, Holden is leaving South Australia, affecting many of the workers who were in that industry—not just those in the Holden plant itself, but many people from my electorate. There was reference in the Naval Shipbuilding Plan to ensuring that those individuals are transitioned into shipbuilding as a priority.

My question is: there seems to be no evidence of that, so I would be pleased if the minister would highlight what evidence there is of steps the government has actually taken to work with Holden and automotive manufacturers—those who will no longer continue—to ensure that these individuals are skilled up and able to seamlessly, without large periods of unemployment, transition to shipbuilding. Could he outline what work is currently being undertaken with individual companies, with the state government and also with the individuals involved. What programs are in place? As to employment outcomes, has he set targets for automotive manufacturers moving into these industries? And has there been a full identification of what skills these individuals require to actually make a seamless transition into working in the shipbuilding industry? So that is my first set of questions for the minister.

I also have some other questions for the minister, more broadly on the Defence portfolio. Five years ago, there was a Pathway to Change program announced by the then Defence department, after a number of inquiries initiated by the Labor government into the culture within Defence, and there was a commitment from Defence for a strategic plan that has lasted five years. Those five years have now come to an end. My question is: will the government be providing any reflection, report or public statement on the end of this strategic plan? What will be put in its place in terms of processes going forward? Would the minister like to comment? One of the key recommendations or key findings was to ensure that more women were involved in Defence decision-making bodies. As of 30 June, I have identified that, within the ADF in particular, out of 62 positions, seven are held by women. So is the minister able to outline: what is the strategic plan going forward? What is the commitment? Why is it that we have not had a statement or an announcement? This has been something that the government regularly referenced when it came to issues around gender in Defence. I wonder why there has not been a statement at the end of that five-year strategic plan and what will be put in its place.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

In the short time I have left to me, I will try and answer the various points that were raised by my colleagues. I will deal briefly with the landing helicopter docks that the member for Corio asked about, in order to be able to answer his question. I can tell him that the HMAS Canberra completed initial propulsion sea trials in May, which, together with advice from industry partners, indicate Canberra is able to return to service before full pod repairs take place during scheduled maintenance docking later this year. Following analysis and advice from industry partners, Navy is continuing planning for Canberra to participate in Exercise Talisman Sabre 2017. The final decision on Canberra's participation in Exercise Talisman Sabre will be made in the coming weeks.

HMAS Adelaide moved to the dry-dock at Navy's Fleet Base East on 17 May 2017, and Defence is undertaking a range of activities, including access to and a detailed inspection of the propulsion pods, defect rectification and maintenance. The docking and inspection of HMAS Adelaide has identified damage to the port pod bearing system, which is the likely cause of the oil contamination, and reaffirmed the measured approach taken by Defence in managing the propulsion pod issue. Once more information is available, Defence will provide further updates. HMAS Canberra and Adelaide are still in their operational test and evaluation period. It is in this period that issues such as the ones currently being identified and addressed are resolved.

My colleagues from the coalition side of the House asked questions which I think deserve responses, starting with the member for Fairfax, who is one of the most significant advocates for team Queensland in this building and is putting in a laudable effort in order to try and win more work for Queensland in defence industry. The state government has really dropped the ball in recent years in promoting defence industry, unlike other states, but is now trying to come to the party—albeit late. But Queensland is well represented here by LNP members—in fact, by all three LNP members in the Chamber as we speak. The process for the Land 400 contract, which is the 225 combat reconnaissance vehicles, is that the two vehicles—the Rheinmetall vehicle and the BAE vehicle—are currently being tested in their risk mitigation activities to assess which one Army would prefer for us to purchase and of course to build, as much as possible, here in Australia.

I took part last week in the live firing exercise at Puckapunyal—I see the member for Kingston is now particularly interested in the idea of me being in a uniform—and firing—

Mr Perrett interjecting—

I did. I have never fired a rifle, Member for Moreton, but I fired a cannon and I hit the target six times out of eight in the Rheinmetall and BAE vehicles. That was part of the risk mitigation phase for the two vehicles. It is, as you said, a $4 billion project. It is very significant. Both the bidders have indicated that they have down-selected Queensland and Victoria as the two sites where they will base their operations and their work. That is good news for both of those states. The contracts are so large, the scale of these projects is so huge, that the whole country will benefit from wherever the combat reconnaissance vehicles are being built, whether it is in Queensland or Victoria. I can assure the member for Fairfax that he and his Queensland colleagues are leaving no stone unturned in ensuring that Queensland gets a fair hearing as part of that process.

The member for Fisher raised with me issues about Australian involvement in defence industry. I visited HeliMods with him on the Sunshine Coast, who have won the contract to provide wet decks for the Navy's helicopters. I must say that was one of the best front pages that I have seen in a newspaper. The Sunshine Coast Daily's headline was '$200 billion bonanza for the Sunshine Coast'. It was not that the Sunshine Coast want a share of the $200 billion military capability build-up; they want all of the $200 billion! They obviously have great faith in their member, the member for Fisher—which they should.

The member for Leichhardt has gone, but he has been a great advocate too, for Cairns, as the sustainment and maintenance centre. I am sorry that we are running out of time. If the member for Kingston had covered that earlier—

Ms Rishworth interjecting—

rather than allowing the member for Corio to have four or five goes, she might have actually got an answer to her question. But there are other members in the Chamber who want to have an answer to their question—

Ms Rishworth interjecting—

and you have waited a bit long to saunter in, Member for Kingston. You should have been more on the job.

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

Order! The question is that the proposed expenditure be agreed to. I call the member for Corio.

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

In the—sorry?

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

Do you want me to answer the questions—

Richard Marles (Corio, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

Indeed. In the minute left, you can answer those questions.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

One of the main purposes of the Naval Shipbuilding College is to help retrain Holden workers from Elizabeth into naval shipbuilding. The Naval Shipbuilding College request for tender has been released. It is gaining a lot of interest from consortia around Australia, and I think it will play a very important part in training and retraining people for the naval shipbuilding industry. We expect to turn out 1,600 graduates a year. None of these things would have happened if the Labor Party had been in office—none of them. But all of them are happening because we are in office. I think I am now pressing on a friendship; is that right, Mr Deputy Speaker?

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

No, 10 seconds—you are fine.

Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

We have 10 seconds left. How exciting! So I can tell the member for Fisher that everybody around Australia will benefit—including, Member for Durack, the Western Australian industry, which will also benefit around Henderson and around—

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

Order! The time for this session has concluded. The Federation Chamber will now consider the Veterans' Affairs segment of the Defence portfolio in accordance with the agreed order of consideration. The question is that the proposed expenditure for the Defence portfolio be agreed to.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

My first question is to the minister, and he has just walked in, so I am not sure if the member for Sturt wants to answer these questions. He might have a better go this time. My questions are for the Minister for Veterans' Affairs about the wider government freeze on allied health providers as part of the Medicare freeze. There has been some concerning evidence that the Medicare freeze has flowed on to the Repatriation Medical Fee Schedule and that this is increasing the gap between what is paid by DVA and what a private or a public patient that is willing to pay the gap has to pay.

There has been evidence tabled by the Australian Medical Association, which has released findings of a survey which has highlighted that the indexation freeze is affecting not only psychological services but also specialist services including surgery, medicine, psychiatry and ophthalmology, to name a few. What is happening is that some specialists are refusing service to veterans and other specialists are treating them not under their DVA status but as public and private patients.

This has also been indicated to the Senate inquiry into suicide research and prevention. Evidence tendered by both the Australian Psychological Society and the Royal Australian and New Zealand College of Psychiatrists is that the freeze, which has left the DVA rebate effectively the same for many years now, since 2014, is acting now as a disincentive for experienced, skilled clinicians to see veterans.

Considering that there is now evidence to show that this issue is affecting access for veterans to health care, my questions to the minister are: is he collecting any evidence? Is his department recording any complaints that are made around not getting service? Is there any empirical work being done about the refusal of service? Is anyone recording whether specialists or other healthcare professionals are not accepting DVA clients, preferring to treat them as public or private patients? Has he written or communicated with the Minister for Health about the impact of the freeze? Has he advocated for this freeze to be lifted earlier than in three years time? Has he spoken with the AMA or any of the other peak bodies about what this freeze means for veterans?

Is there any plan for any adjustments and to decouple the DVA repatriation medical fee schedule from the Medicare rebate? And will there be any automatic payments to cover what is becoming an increasing gap that is not able to be charged to veterans? Is this going to be followed into the future? And what will the minister be doing to ensure that veterans actually get what they are entitled to?

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

The federal seat of Fisher is home to many ex-service men and women. Our relaxed lifestyle and healthy environment, our strong community and our vibrant RSL subbranches make the coast a perfect place to enjoy civilian life. But life after service for those who have risked all in the defence of their country can sometimes be difficult. A return to civilian life, in and of itself, after the rigours and structures of a military life would be a challenging transition for anyone. Like any major life transition, such a change leads to an increased risk of poor mental health. For many service men and women, however, this transition is made more difficult by the experiences they carry with them. For those who have volunteered to put their lives at risk, have been away from families, have seen friends and colleagues in danger or worse, or have seen some of the terrible impacts that conflict has on innocent people, the effects can be severe and lasting.

That clock has not stopped after the last speaker, Mr Deputy Speaker.

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

Just keep going, and I will make a judgement call when your time is up.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

Thank you. I am happy to take up the time! In 2013, of the 148,000 veterans with service-related disabilities being supported by the Department of Veterans' Affairs, 46,400—almost a third—were living with an accepted mental-health disorder. These included post-traumatic stress disorder, anxiety disorder, depression and substance dependency.

In too many cases, these conditions can have tragic consequences. Towards the end of last year, the government released the most statistically robust data on the prevalence of suicide among current and former members of the ADF ever compiled. The figures, in themselves, make for devastating reading. In the 13 years to 2014, there were 292 deaths by suicide among people who had served in the ADF for at least one day since 2001—292 men and women who had done our nation proud and put their lives on the line to keep us all safe. Even one such death is too many, and, no doubt, these figures are an underestimation, as no data is available for those whose service occurred before 2001.

When examined in more detail, however, the statistics reveal an even more alarming fact which needs to be urgently addressed. Among serving male members of the ADF, after adjusting for age, the suicide rate was 53 per cent lower than the general male population. I can only speak about men, as the sample of women in the report was too small to create statistically valid results. Among men in the Reserve, the rate was 46 per cent lower. These figures are good news, and are testament to the ADF's work to support their soldiers through the most challenging and stressful environments. However, among veterans—ex-servicemen—the suicide rate was 13 per cent higher than for the equivalent general population. The day that a man leaves the armed force, his likelihood of death by suicide rises from 53 per cent lower than others his age to 13 per cent higher. Worse still, if he is a young man aged 18 to 24 who has served in and left the ADF, he becomes twice as likely as his peers in civilian life to die by his own hand. There have been 23 deaths since 2001 among this statistically small group alone.

I know that the minister has as keen an interest as I have in seeing a solution to these problems. In my own electorate of Fisher, the government has recently committed $5 million to the Sunshine Coast Mind & Neuroscience Thompson Institute for research and treatment programs for youth mental health, suicide prevention and dementia. I am proud of what we are delivering and grateful to the government. As I have mentioned to the minister before though, my next goal in this field is to secure further funding to support a PTSD program at the Thompson Institute. I look forward to working with him in the future to explore this possibility. If anyone watching or reading this speech is worried about how they or someone they know from the veteran community is coping, I urge them, on behalf of all members, to seek help early. The Veterans and Veterans Families Counselling Service is the perfect place to start to find support. They can be reached 24 hours a day on 1800 011 046.

Minister, what is the government doing to support the mental health of veterans of the ADF, and what action is the government taking in the area of suicide prevention for these men and women who have done their country proud?

Cathy O'Toole (Herbert, Australian Labor Party) Share this | Link to this | Hansard source

I have worked extensively in the mental health community sector for more than 15 years. As the former CEO of one of the largest mental health community organisations in North Queensland, I am very well aware of the issues faced by veterans, ex-service personnel and their families. As the newly elected member for Herbert—which contains the largest garrison city in Australia, Townsville, which is home to veterans, ex-service personnel and their families—I am passionate about standing up for veterans, ex-service personnel and their families on this very important issue of suicide prevention. They deserve no less than the strongest advocacy in this place.

Minister, I would like to draw your attention to the fact that on 11 August 2016 the Prime Minister announced a veterans' suicide prevention trial for Townsville. As the Department of Veterans' Affairs does not keep the official numbers or names of all the veterans, there are many veterans and ex-service personnel who are falling through the cracks. It is essential that these men and women have access to the suicide prevention trial in Townsville. But we need to have accurate data and modelling occur to ensure that all veterans are included. Minister, are there any plans to identify those veterans who are not registered with the DVA to address this huge gap?

In December 2016 the minister, along with the previous minister for health, the Honourable Sussan Ley, held a suicide prevention round table in Townsville. The feedback from veterans is that it was very much a tick and flick exercise. The minister's media statement released on 30 November 2016 stated: 'Minister Ley and I will be holding a round table with local stakeholders in Townsville to discuss this issue and hear ideas that will help shape the new landmark suicide prevention trial in the region.' Minister, what has been done with the information gathered from the Townsville round table? Will a report be released and, if so, will it be made public? How has the information received from that round table being shared and used to shape the trial? Has anything been done with that information?

Minister, I want to take you through everything that has occurred on the ground since the government announcement on 11 August 2016, which was more than 10 months ago. All of these steps have occurred without any assistance, direction or funding from the Turnbull government. In August 2016, I formed the Townsville Community Defence Reference Group, which includes local veterans, ex-service personnel, family representatives, health professionals and the PHM. The group was formed to ensure that local veterans had a strong voice in a program which directly affects them, and we meet on a regular basis. After several months of waiting for terms of reference, or any direction from the government, the reference group took the following action. It formed a steering committee, voted for the chair of the steering committee, drafted the terms of reference for the steering committee, drafted the job description for the project officer, formed an interview panel for the project officer interview process—and the PHM was directly involved in all of this process. The PHN advertised the project officer position, and the project officer has been employed by the PHN and has been working for over a month—and all of this activity has been paid for by the PHM. To reiterate the last point and make it very clear: not one cent of the $3 million that was allocated by the Turnbull government has been given to the PHN in Townsville. The PHN are clearly committed to this trial and as such have made funds available to get the trial underway.

My question to the minister is: why hasn't the funding been immediately released and will the minister be reimbursing the PHN for the costs they have accrued so far? No funding has been given to the PHN in what will soon be the first year of a three-year trial. Does that mean that the Townsville veterans will have a three-year trial that will actually be funded for only two years? The PHN is able to write business cases to roll over unspent funds for all portfolios except for the mental health portfolio. Why can't the mental health portfolio do this, especially given that this includes the veteran suicide prevention trial funding? Given that the first year of the suicide prevention trial received no funding, will the minister extend the trial to ensure that it runs for the full three years as promised? How will you do this, Minister, given the fact that mental health cannot apply to rollover funds? Has the schedule for the suicide prevention trial been done? Have targets been determined and agreed? Have the parameters of the work to be carried out been determined? Have the terms of reference from the project been done?

Dan Tehan (Wannon, Liberal Party, Minister Assisting the Prime Minister for Cyber Security) Share this | Link to this | Hansard source

I will enable others to speak, but given that previous statement I just want to place a few facts on the record. The member for Herbert was up there when we launched the trial site and she was included in it. Rather than trying to play politics on this issue, could the member work with the government on an initiative which was this government's then we will work cooperatively with her and do so. The PHN has been involved in this process from the word go. So the fact that the PHN has been involved in your process shows that your process is part of what we are trying to achieve. The health department have made it very clear to the PHN, and it has been publicly stated, that they have the funds available for the suicide prevention trial site. I will leave it there so others can have their questions. I will sum up at the end, but I just wanted to get that clearly on the record, so we can end the politics around what is very, very important to the veterans community.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

I hope the minister will come back to the repatriation medical fee freeze. I have some further questions on the budget for the Veteran Centric Reform. I note that in the 2017-18 budget there is $160 million appropriated for only one year of the Veteran Centric Reform. As a result of his own discussions at public forums, it has been regularly cited that a significant amount of work needs to be done. Different figures have gone around but in excess of $500 million over a period of time, I think a six-year period, has been discussed. We understand and have been in mutual agreement that having a system that is at risk of catastrophic failure is not good. My concern is that the budget has only an amount for years '17 and '18. Minister, what will that money be spent on? What particular parts of the program will be fixed as a result? What further money will be necessary to deliver the full Veteran Centric Reform, to fix the full IT system as well as deliver what PwC and the department have been working on? In the last budget they had been allocated money to put a program together. How much will be required to actually deliver the full scale reform in the Department of Veterans' Affairs? What is the process? What has been the commitment from the whole of government to properly fund this over the forward estimates?

Is the minister concerned that money has not been secured in the forward estimates? What other commitments have been made by the Prime Minister and the Treasurer to properly fund the department to undertake this reform?

In the time I have left I am going to move onto another budget measure. The minister is waiting for me to finish. I would like to now draw the minister's attention to the $7 million that was allocated in the budget, although it is unclear in the budget papers, to recognise 100 years of armistice in 2018. Further investigation has identified that, while not described in the budget papers, this will be allocated as $50,000 per electorate. How was this program determined? Will it be the same as the Centenary of Anzac? Will it rely on local members putting together projects? Considering the length of time that Centenary of Anzac process took to ensure that the proponents had all their paperwork, can the minister see this process being actually rolled out so that projects are delivered by November 2018? What sort of support will be given to electorate offices to go through this process? If one electorate does not spend its full amount, will the money then be re-allocated to other worthy projects or will that be returned as a saving to consolidated revenue? Has there already being consultation with the veteran communities at the grassroots level about this program?

I ask these questions with hindsight, knowing my own experience with the Centenary of Anzac grants. While a very, very excellent Labor program, it did take significant time to ensure that proponents could get their applications in and that committees were in a position to be able to look through those. It took a very, very long time at the department end to process those. If we are wanting a program that properly recognises November 2018, the 100-year centenary of armistice, what assurances can the minister give that there will be adequate support for electorate offices as well as adequate processing time at the department's end?

Chris Crewther (Dunkley, Liberal Party) Share this | Link to this | Hansard source

Minister, thank you for joining us for this consideration in detail of the veterans' affairs portfolio. There have been a number of measures for veterans included in the budget this year, and I commend you and the government for your work in this area. Veterans' mental health is a worthy focus of affairs and I am proud to be a member of this government that is investing a record amount into veterans' mental health support and veterans' services. I thank you, Minister, for recently coming to Dunkley to speak at Seaford RSL with veterans about some of these initiatives.

Minister, we also recently met to discuss the personal difficulties that one of my constituents in particular is experiencing in relation to his Defence Abuse Response Taskforce, DART, claim, including the delays in reaching an outcome and the support that he requires. I really appreciated the time and concern you brought to that discussion and the assistance that you are providing to my constituent.

An area that has been brought to my attention, however, both locally in Dunkley and in the media are veterans' experiences in transitioning to post-military routine and often their struggle to cope, especially with employment and what many of us would consider aspects of ordinary, everyday life. We have heard about the shocking suicide rate among young veterans. I acknowledge my colleague the member for Fisher, who spoke before, and his concern in this area.

I would also like to bring focus to the welfare and support of veterans when it comes to re-integrating into the workforce. It is sadly all too common to hear that employers frequently do not recognise the training, accreditation and experiences of trades within the armed forces, as the skills required tend to vary in context and how they are applied. People who have served our country so selflessly do not deserve to be left at a loss when they leave the Defence Force. However, often their experience and skills are seen as nontransferable to civilian work.

Employment is an aspect of life that is so critical to routine and structure, something which goes hand in hand with learning to cope in a new environment and system. It is for this reason that I am incredibly supportive of the Prime Minister's Veterans' Employment Program, which aims to support veterans in finding meaningful postservice employment and to assist businesses to recognise and value the unique talents of former ADF personnel—some of the talents, for example, that I saw when I recently visited the Middle East region and Afghanistan, joined by the shadow minister in this Chamber. Amongst the community, there could be a lot more support for those veterans than there appears to be currently, so I encourage ex-service organisations to get involved with the program and to register their interest in partnering with industry on projects to promote the employment of veterans.

I support the initiatives of the department to improve the transition process by ensuring that all individuals leave the Defence Force with the appropriate documentation detailing their training and abilities and individual transition programs. It is encouraging that many of the initiatives included in the Prime Minister's Veterans' Employment Program will aid veterans in transition to postmilitary life, especially by working with civilian authorities to align military qualifications with civilian qualifications and to fill the effective gap in former members' working history.

Minister, on these points, with the aims of the Veterans' Employment Program in mind, how can we as a government work to ensure that our veterans do not fall through the gaps in the system and that they continue to be supported once they leave the Defence Force? Could you please elaborate on other aspects of the Veterans' Employment Program?

Dan Tehan (Wannon, Liberal Party, Minister Assisting the Prime Minister for Cyber Security) Share this | Link to this | Hansard source

I thank all members for their contribution to this very important area of public policy that we as a government are given responsibility for. Can I just go firstly to the questions asked by the shadow minister in her first statements regarding the Medicare freeze, which the Labor Party introduced. As the shadow minister would be aware, we are in the process of now dismantling that freeze, which the Labor Party introduced. All the available evidence that I have been given is that veterans are still getting the services that they require. We will continue to monitor this, but all the available evidence to me and everything that I am hearing is that veterans are getting the care that they need, and there is not an impact on the services available to them.

With regard to mental health issues and the work taking place at the Thompson institute and whether we might be able to look to do more in the area of PTSD: research into PTSD has been something that we have prioritised and will continue to prioritise. It is something that we will look to do on an ongoing basis on the back of our world-leading changes in the mental health area for veterans. Now, if you have served one day, you can get free treatment and free access to treatment for all mental health conditions.

Identifying veterans is obviously an area which has not been a priority but now is. What we want is a very seamless process whereby, when you start in Defence, we will be able to follow you right through your Defence career into the veterans community. As of 1 July last year, that process has started. Obviously, it will take time, but at least, from now on, we are going to be able to monitor someone's career through Defence into the veterans community so that we will not get people falling through the cracks.

With regard to the $160 million investment in Veteran Centric Reform, I thank the Treasurer and the Minister for Finance for being the first Treasurer and finance minister, I think, in over a decade to properly invest in the Department of Veterans' Affairs to make sure that it will continue to be able to operate as a proper, standalone department. The onus now is on the department and me as minister to make sure that that money is well spent so that we can then go back and ensure that we continue this process. With the initial $20 million last year, we were able to demonstrate what that could do to claims times in certain areas we put that money to. My view is that with this $160 million we will once again be able to show the transformational impact that this investment can have, and we will be able to continue the process to ensure that we have a 21st century Department of Veterans' Affairs.

When it comes to the Centenary of Anzac grants, can I say that we learnt a lot. Obviously the previous Labor government introduced the grants that were implemented by our government. We have learnt from that, and we will make sure that they are rolled out extremely well in the coming months.

Expenditure agreed to.

Debate adjourned.

Federation Chamber adjourned 19:31