Jim Chalmers (Rankin, Australian Labor Party, Shadow Special Minister of State (House)) Share this | Link to this | Hansard source

The member for Moreton knows it well; we share a boundary in Queensland.

Thank you to members of the government and the assistant minister for the opportunity to speak a little bit this afternoon about the 2018 budget, handed down about a month ago in this building. I think one of the defining features of the budget was that, for the first time in four prime ministers and four treasurers, we had the global economy making a big positive contribution to the budget, rather than a big negative contribution to the budget—something that we had, unfortunately, become accustomed to for much of the last decade or so. It really was welcome news that, with the global economy in such good condition, the best condition for a decade, we are seeing some of the revenue return to the budget. Obviously, it's a good thing that we have those conditions improving around the world, and that is helping the Australian economy and the Australian budget as well.

In the economic sense, we're seeing those global conditions feeding some good national accounts outcomes when it comes to investment and exports, in particular, which made a big positive contribution to the most national accounts. You can see the transmission from a stronger global economy, where we've got something like 120 different countries growing simultaneously for the first time in a long time, making a contribution to our export numbers and some of our other, broader numbers and measures of GDP as well.

But, despite those relatively welcome headline figures—in particular the GDP in that last quarter—there are some troubling undercurrents. Here, we're thinking about wages at historic lows; we're thinking about living standards being quite weak in historical terms; and we're thinking, of course, about low household consumption—soft household consumption—in those most recent numbers, as well as a lack of saving, and high household debt. So at the household level, below that headline rate of GDP, we've really got some quite soft conditions. We've got a lot of families experiencing a triple whammy of spending less, saving less, but still racking up more debt, and that's obviously a very troubling situation.

In the budget we also had something like $40 billion of additional revenue—taxes and charges—show up at the front door of the Treasury. There's $40 billion in this budget, yet we still have record net debt in this budget, twice what this government inherited. It went from $175 billion in September 2013 to $350 billion now. We've got record gross debt. Gross debt has only been over half a trillion dollars under one government in the history of the country—under this government. In these budget papers it's expected to be over half a trillion dollars every year for the next 10 years, and higher at the end of that decade than it is today. So despite the global economy helping the budget, $40 billion in extra revenue showing up at the door, we still have a budget in substantially worse condition than it was in September 2013. Probably most remarkably, despite this substantial new revenue showing up at the door, we've got a 2019-20 surplus which relies exclusively, entirely, more than entirely, on the bring-forward of a tobacco tax. We have a skinny surplus which relies on a timing change in tobacco tax, without which there would be no surplus in 2019-20.

Those are just the facts of the matter. No doubt we'll get into a bit of back-and-forth here, but I'm just establishing that the facts of the budget are good global conditions, soft conditions at the household level in the economy. We still have record net and gross debt. Debt is being accumulated per month at a faster clip now, on average, under this government than under the previous government. So despite having everything that you would ask from the global economy helping the economy, helping the budget, we still have very poor fiscal outcomes in the budget. With net debt doubled, with gross debt more than half a trillion dollars and with debt accumulating faster now than it did under the previous Labor government, what we really need to hear from the government representatives here today is, why we don't hear anything anymore about a budget emergency?

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

I have several questions for the minister today regarding our investment in defence infrastructure and capability and what this means for jobs in my home state of South Australia and the nation more broadly. I'm keen to ask questions of the minister because investing in defence infrastructure and capability is one of the many ways the Turnbull government is creating a strong economy and supporting jobs in my home state of South Australia and in my electorate of Boothby. Our investments are also creating education and training opportunities which our university sector in SA, for example, is very excited about. Just last Thursday I heard direct from Professor Colin Stirling, the Vice-Chancellor of Flinders University, which is in the heart of my electorate of Boothby, of the range of benefits the naval shipbuilding program will deliver to my local area. These exciting opportunities are a direct result of the Turnbull government's investment in defence infrastructure and capability. The Turnbull government's shipbuilding plan will give Australian businesses opportunities to take part in delivering defence contracts and transfer the knowledge, technology and skills they develop into other areas of the economy. This will assist in the expansion of businesses into new markets, allowing them to competitively pursue lucrative export opportunities. Through our initial investment we will be enabling local businesses to build their capabilities and practices so they can compete globally and build our defence export capability. With nine future frigates, 12 submarines and also offshore patrol vessels, the defence industry will soon be booming.

This $90 billion investment in our nation's defence and defence industry will benefit all Australians. It will create a total of 2,800 jobs in my home state of South Australia alone and opportunities for local businesses in my electorate of Boothby—businesses like Cornell Design and Plasteel in Melrose Park and SAGE Automation at Tonsley have previously worked on major defence contracts. They know the value of defence projects to local businesses and manufacturers and the jobs they support. It's not just the direct defence work that supports jobs; it is also the technology, learning and innovation these companies can then apply to other problems or issues in the private sector and the civilian world that deliver additional value to our economy and additional jobs as well. This is to my mind the true value of defence work. It is not just the actual defence capability, which is absolutely necessary for the nation, but the skills and the technology that companies can then apply to non-defence projects.

Our investment in defence could not be more different to that of the Labor Party. The former Labor government failed to commission a single vessel from an Australian shipyard during their time in office. This impacted the stability of shipbuilding jobs, particularly in my home state of South Australia, as well as the capability of our Navy and Defence Force personnel. In stark contrast, the Turnbull government has committed to building 54 new naval vessels in total. We've taken action to ensure workers at the Australian Submarine Corporation remain employed and have opportunities to upskill, with scholarships available to support roles in operations, management, computer aided design, engineering and supply chain fields. We've launched the Naval Shipbuilding College, the Centre for Defence Industry Capability and the Defence Innovation Hub—based in Adelaide—so that South Australia has the workforce and capabilities it needs to support the thousands of direct and indirect jobs that will be created by the naval shipbuilding program.

In March 2017, the Turnbull government established Australian Naval Infrastructure Pty Ltd to facilitate the development and construction of new infrastructure at the Osborne shipbuilding facility, as outlined in the naval shipbuilding plan. In August we saw the first sod turned for the new surface shipbuilding yard, which is arguably the most significant infrastructure supporting the delivery of a continuous naval shipbuilding program in Australia. When completed, thanks to the Turnbull government, we will have one of the most modern and busiest platform shipbuilding businesses in the world at Osborne south. At Osborne north we will have one of the most modern and busiest submarine businesses in the world.

The work at the Osborne shipyard commissioned by our government with the current infrastructure build, and later with the construction, sustainment and maintenance of naval vessels, is a game changer for South Australia. So I ask, will the minister update the chamber as to how the works are progressing at Australian Naval Infrastructure's new naval shipyard development at Osborne? Minister, how many jobs do you expect to be created as a result of the shipyard construction through the managing contractor? And, Minister, how has the coalition government's investment in Osborne and elsewhere helped to ensure the ongoing stability of Australia's domestic shipbuilding industry?

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I want to raise an issue and pose a few questions to the minister, which I think warrant serious consideration and response, regarding the government's so-called innovative financing—I think they call it 'innovative financing' themselves—colloquially known as off-budget investments, which in the worst case scenario is becoming an $80 billion ticking fiscal time bomb for the nation. I say at the outset I do understand there's no formal accounting definition of 'off budget', but entities or investments outside the general government sector as presented in the budget papers are commonly referred to as being off budget because they get excluded from the calculation of the government's budget deficit or surplus. The kinds of things this covers, Minister, are by way of equity investments, concessional loans, contingent liabilities, guarantees and so on. Of course, assets acquired or funded through equity investments must generate a commercial rate of return, cover their cost of borrowing and a bit more and repay their capital investment in a reasonable time frame. There are of course legitimate ways to use this kind of financing. For example, the Moorebank Intermodal Terminal under the previous Labor government or the government's decision around the Western Sydney Airport strike me as quite legitimate uses of off-budget funding.

But there are serious risks. If things do go wrong they pose a fiscal time bomb in that if the equity investment doesn't get the commercial return which is projected or if something happens to impair the valuation—or indeed if the government of the day is cooking the books—then at some point that loss comes straight back to the budget, blows out the deficit and, if sizable, can impact our AAA credit rating and blow out net debt. There is a worrying temptation for any government to overstate the benefits or inflate asset values, and the problem then becomes one for future governments and taxpayers.

So it's critical that taxpayers, through the parliament, are absolutely confident that the government isn't cheating or fiddling the books at any point in time. I believe, having looked at the budget papers, there are worrying signs. The growth has been remarkable. Over the last five budgets, there is now a total of $84 billion of easily identifiable off-budget investments. There is about $55 billion worth of equity investments and about $29 billion of concessional loans. It's a little unclear how you count WestConnex—the government still can't tell us where that tunnel is actually going in Sydney, but that's a minor detail: just keep digging and it will pop up somewhere; give it a few billion. I do acknowledge you can identify most of the investments sitting underneath that total, but the budget documents don't provide sufficient detail for anyone to assess how much of the commitments have been drawn down across the portfolio of investments. The government has flagged in the budget papers explicitly and in all the pre-budget waffle—we hear in question time from the Prime Minister in question about this mythical $75 billion pipeline of infrastructure and the rail lines he can build with no money that he keeps announcing—that it's preparing to use these methods more extensively. So I would ask you, Minister, can you outline precisely for the $84 billion: which projects, what are the risks, where can we find this information and how much of these commitments for each instrument are drawn down and will be drawn down? And where is this information publicly available? The reason I'd also say alarm bells are ringing is—I will give a couple of examples. With the Inland Rail project, the government's now put in nearly $9 billion of funny money. You can only describe it as that because former Deputy Prime Minister Anderson's review found that it would not repay its capital, even in 50 years. This is a serious issue.

Let's be clear what you're doing, Minister, with this set of budget documents and this investment. You're borrowing $9 billion for an Inland Rail project. You're pretending that it's going to make a commercial return above the cost of borrowing and repay its capital in a reasonable time frame. That's what is required. And yet your own independent review by the former Deputy Prime Minister, National Party doyen, John Anderson, said, 'That's not going to happen. That won't be repay it, even in 50 years.'

The former CEO of the Australian Rail Track Corporation told the Joint Committee of Public Accounts and Audit—I was stunned that he actually admitted it; it was an outbreak of honesty. I noticed he's not there anymore. I don't know what went on there—he probably just retired. But the revenues that flow to ARTC won't cover the full capital cost and provide a return. So that's the CEO of the ARTC saying, 'This $9 billion we've just hidden over there isn't actually going to be repaid. It doesn't provide a commercial cost of return.' On the face of it, if that was true, you'd say, 'You're fiddling the books.' So can you explain to the parliament, then, how this is classified as an equity investment—you can build infrastructure with grants, give somebody some money and build it; that's the traditional way—and what the consequences are if some is written off, and what impact that will have on the deficit?

David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Link to this | Hansard source

I thank the members for Rankin and Boothby and the other member for their comments and questions. In relation to the member for Boothby's question, she raised a very important issue. What she did highlight, with great specificity, was the sad failure of the previous government to support the building of even one naval vessel during six years in office. So after six years—it's a long time—there's not one ship. Those opposite stand condemned for their failure to invest in the Australian shipbuilding industry.

The member for Rankin held a very important and prestigious role as chief of staff to the then Treasurer. He did not use that lofty perch from where he sat to argue for the commissioning of a single naval vessel, and that's a failure. But, in contrast, I can explain to the member for Boothby that this government is very committed to the future of the naval shipbuilding industry in Australia. We have avoided the valley of death that those opposite so cruelly would have imposed on the naval shipbuilding industry, and we are investing very significantly in the shipbuilding industry in Australia.

So, in this budget, we provided an additional equity injection to Australian naval infrastructure to enable the development of the required infrastructure at the Osborne precinct in Adelaide—$535 million, a substantial sum towards the surface shipbuilding yard in Osborne. It will support the purchase of additional land at Osborne, and I'm sure that all members would support this very important investment. It's required for the Future Submarine construction yard, of course, and, thanks to this investment, the redevelopment of the Osborne yard is in full swing.

Only eight months after Australian Naval Infrastructure engaged Lendlease as the managing contractor for the redevelopment project, the development is progressing well. That's good news for the industry, and that's good news for South Australia. Let me go into that in a little bit more detail. It's estimated that this Osborne South redevelopment will create up to 600 jobs. Currently, there are about 100 construction staff working onsite—good news for Adelaide—and ANI advise that this will peak at up to 400 employees in 2019. That doesn't include all of the knock-on benefits to all of the related industries adjacent to the Osborne shipyard. The earthworks subcontractor, McMahon Services Australia, completed the site preparation works in April this year. The majority Indigenous-owned subcontractor Intract Australia formed a joint venture with McMahon to construct these early earthworks. We are seeing 100 per cent of the square-section structural steel for this project ordered from Australian steelmakers BlueScope, in Port Kembla, and Liberty OneSteel, in Whyalla. Again, it is all about supporting Australian industry and supporting Australian jobs and it is another reason why 2017 was the greatest year of job creation in Australian history, with some 415,000 jobs created in that year, a very strong record. This important naval shipbuilding program is a key part of that. In contrast, those opposite failed to build a single ship or, indeed, to even commission or contemplate the building of a single ship in that time.

I want to address the member's question in relation to equity financing. As he's pointed out, those opposite made use of these funding mechanisms for programs like the Moorebank intermodal, a very important project in Western Sydney, and the NBN. Each of these projects, in addition to all the projects that are accounted for in this way, is subject to a rigorous process through the Department of Finance. The principles in relation to equity accounting have been consistent over the years. That process hasn't changed. This process enables investment in important job-creating projects.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I quite like the member for Banks. We did a bit of work together before he got elevated to deputy chief Treasury Muppet or whatever. But that's not an answer. I actually used my serious voice. I used numbers. I pointed to real facts and figures that are in the budget papers. And you completely didn't address the question. You responded to the member for Boothby's government waffle, when she wasn't even interested enough to stay around and hear your response. I feel slighted. I feel a little upset by this. So let me continue.

On the Inland Rail—and I would welcome your answer to a pretty specific and clear question, Minister—what is the basis on which you can classify this $9 billion of 'funny money' as an off-budget investment? What is the basis? Tell us how that accords with your accounting rules, which require you to make a commercial return and repay the cost of capital in a reasonable time frame. That would be a good question to answer. If you could answer that, that would actually be helpful and make this part of the legislative process perhaps just a little bit meaningful for all of us.

But I draw your attention to another and very significant off-budget investment, if you like—the National Broadband Network. That was started by Labor—and I thank you for your acknowledgement of that, Minister—as a good nation-building project. Of course, it was based on a set of assumptions—it was based on a business case at the time—that have now changed. The Prime Minister, when he was communications minister, bastardised, as we know, Labor's visionary NBN. I challenge him to come to Glen Waverley in my electorate and have a chat to anyone there who keeps getting stupid letters from the NBN saying, 'The rollout's off,' 'The rollout's on,' 'The rollout's off,' 'The rollout's on.' The only thing worse than not getting the NBN is getting the NBN, as it turns out for people who do.

The NBN is currently valued at replacement value on the books, but industry experts are saying louder and louder that the NBN is not worth what the government claims, with the changing business model. If that's true, then the loss in value at some point will come back to budget and blow out the deficit. We're not talking about small numbers here. We're talking about $29.5 billion now of equity that the government has tipped in and another $19.5 billion of loans. Minister, can you explain the basis of the valuation and can you state unequivocally to the parliament, hand on heart—pinkie promise, invisible ink, swear in blood, whatever you like, whatever's your thing—that the NBN is worth what you claim it is, that the cost of capital will be repaid and that this is not a fiscal time bomb for future governments or taxpayers to bear? It would be very good if we could hear that unequivocal assurance that the NBN is worth what you say it is and that your reputation will hang on that.

The other point I would make is about the $75 billion sham package for infrastructure. I said to the Parliamentary Library: 'We hear about this $75 billion. What's the list of projects?' The Parliamentary Library said they couldn't find the full list of projects—and they're pretty good at finding stuff; they're much cleverer than me. I don't have a PhD, of course, unlike my learned friend, here—he's pretty good at finding stuff. But the Parliamentary Library can find no full list of the projects. In fact, when you look at the budget papers, Minister, there's only $24.3 billion of this mythical $75 billion in the forward estimates—real money. The rest is not budgeted. It appears it will be a mysterious, opaque mix of things, including contingent liabilities, like the East West Link in Melbourne—a joke—so we think you're counting that in the $75 billion. There would also be concessional loans, such as for the WestConnex tunnel in Sydney, the road to nowhere; the Auditor-General has identified a lot of problems with how that's gone. It would also include indemnities, guarantees, equity investments. There is the Melbourne rail link—the rail line the Prime Minister thinks you can build with no actual money, because apparently it's going to make a profit. I think it would be the only rail line in the world, outside Hong Kong or Singapore, that you could make a profit on building. There's a form of magic going on. As the chief executive of Infrastructure Partnerships Australia said, you can't finance your way out of a funding problem. It doesn't matter how much you cook the books or spin it, you can't. On the airport rail scam, the Grattan Institute said:

So there’s a real risk that these equity investments will end up not even making a positive rate of return, never mind a commercial rate.

So can the minister please tell me where I can get a full list of exactly what is in this $75 billion package. I want a full list—I think the Australian people deserve a list—project by project, outlining how they're funded, what the mix of innovative financing mechanisms is, and what the finance department's advice and scrutiny has been, project by project, of the fiscal risks posed by these mythical investments.

Trent Zimmerman (North Sydney, Liberal Party) Share this | Link to this | Hansard source

I wanted to start by welcoming the members of the Inter-Parliamentary Study Program who have joined us for this riveting session this afternoon. I have to say it's that time of the day when the circadian cycle means that you may be feeling a bit drowsy and wanting a nap, but nothing in the Federation Chamber will ever disrupt that natural course of events, I'm afraid to tell you.

I wanted to ask the assistant minister about payment growths in the federal budget, but I want to put a bit of context around the question I pose to him. Like many members of this House, in the lead-up to the budget, we get a number of competing demands from our communities about what their expectations of the budget are, and I have to say that my electorate is no different to what the common trend is in that regard. Over the last six months, during the course of my work in the electorate, I have met many people who have spoken to me about their concerns for essential services and those important items of infrastructure which they expect government to deliver, and I know that those concerns have included funding for education and health care and what we're going to do to support the transport needs of a growing city like Sydney. Therefore, I think this budget has met a lot of the expectations that those residents have posed to me.

I particularly highlight the incredible commitment that we're giving to school education, with an extra $23½ billion over the next decade; the commitment to health which is reflected in the $30 billion extra that will flow to our public hospital system; all that we're doing to support drugs becoming cheaply available to those who need them through the PBS and the like; and of course what we're doing in the area of infrastructure. Unlike the member for Bruce, I'm delighted that we actually have a 10-year plan for infrastructure, which was reflected in the pipeline that was released in the lead-up to the budget by the Minister for Infrastructure and Transport, the Deputy Prime Minister. Having that type of 10-year funding pipeline is just so important for projects which obviously run over multiple years. It allows those developing the projects to plan properly and accordingly.

The commitment to that type of infrastructure is reflected in my own electorate, where I'm really pleased that this government has been able to deliver funds for important infrastructure projects like creating a major new public foreshore park on the former submarine base Platypus, in Neutral Bay, which opened a couple of weeks ago for the first time. We provided $20 million to the Sydney Harbour Federation Trust for that, and it followed the $50 million that Defence spent on remediating the site. Similarly, we're investing almost $10 million in new sporting facilities at Gore Hill, which is a commitment to the sport and recreation needs of my community. I also know that, in relation to transport, through the Asset Recycling Initiative, we're continuing to provide something like $1.6 billion to help the New South Wales government build the Sydney Metro project, which is really great news.

The other area that my constituents raised with me is the need for tax relief. That's why I think this budget is so important, because not only are we delivering the company tax reductions that small and medium-size businesses so desperately need, company tax reductions which will maintain our international competitiveness, but also that personal income tax package which offers relief in the short term to low- and middle-income earners and in the long term will guarantee that 94 per cent of Australian taxpayers aren't paying any more than 32.5 per cent.

Another area that people do raise with me is obviously the issue of government debt and how the government is going in relation to coming back into surplus. What is pleasing about the budget, of course, is the commitment to bring the budget back into surplus a year earlier, to reduce debt by $30 billion over the current four years and to constrain the debt blowout that was created by the last Labor government when it went on its reckless spending program. That's a great achievement of this government. In part we've been able to do that because revenues are increasing, but I'm conscious of the fact that the success of the government's fiscal strategy has not just been about relying on revenue; it's also been about relying on spending restraint. Therefore I wanted to ask the assistant minister whether he might be able to provide the House with an update on how we're going in our efforts to balance the budget by reining in spending and making sure it's sustainable, and particularly how that compares with the efforts of previous governments.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Special Minister of State (House)) Share this | Link to this | Hansard source

It's getting harder and harder not to laugh when you hear those opposite talk about debt under Labor, when in fact the government's own budget papers, these budget papers which were released by the government in May this year, show there in black and white that net debt has doubled during the five years of those opposite. It has actually doubled. Gross debt is also at record levels and debt is accumulating at a faster rate now under this mob than it did under its Labor predecessors.

Leaving that aside, I want to pick up on something else that the member for North Sydney said in his contribution, if you could call it that. He talked about what the people in his community wanted to see in the budget. He talked about education spending. I think he should write to the members of his electorate and say that in this budget this government pulled another $270 million out of TAFE. I think that says it all about their approach to education. If we genuinely care about teaching and training our people for the next generation, for the jobs of the future, we can't continue to hollow out TAFE as this government has been doing. It is a new $270 million cut to TAFE in this budget.

That's one thing that shows how spectacularly out of touch they are when it comes to communities around Australia. Another one is when it comes to wages. One of the defining features of the economy in the last few years has been that we have had wages growth which is at historic lows. They are really quite poor wage outcomes, despite the fact that the economy has started growing and global conditions are terrific. We have all these sorts of things going for us. There's been a decoupling between the prospects of the national economy and the prospects of ordinary workers like those that the member for Moreton and I represent in the best part of Australia to the south of Brisbane.

We've got a story there from the Governor of the Reserve Bank, Philip Lowe, in a quite remarkable contribution, which I congratulate him on. In the last week or two he gave a speech about wages. What he said about wages was that unfortunately in this country we've come to expect that what used to be normal wages growth of maybe three or four per cent has become more like two per cent. The new normal for wages growth, for a whole range of reasons relating to technology, bargaining power in the workforce and all of those sorts of things—what we're seeing is wages growth stuck at two per cent, which is a really poor outcome. That's why we're seeing less consumption, less saving and more debt, because people aren't getting the wages outcome they need and deserve to look after their families in suburbs of this country.

So when you examine the budget in any detail, something that really jumps out at you, a big red flashing light in the forecast that the government is relying on, is that it has got remarkably optimistic—many of the independent commentators have said overly optimistic—expectations for wages growth. Remember, as I said before, and as the Governor of the Reserve Bank and others have said, we've had wages growth of around two per cent. It's been under two per cent, which is shocking. It's now around two per cent, or just over. Remember that the Reserve Bank governor said that that might be the new normal. Yet when you look at the budget—even at the summary table in statement 1—and if you look at their forecast for wages, the wage price index forecast is at two per cent now. By the end of the coming financial year they're expecting it to be 2¾ per cent—a pretty big jump. Then, in 2019-20, they expect it to jump to 3¼ per cent. The projections after that are 3½ per cent for 2020-21 and 2021-22. What that really tells us is that with wages growth at two per cent, all of a sudden, the government is expecting that, miraculously, we're going to get to 3½ per cent wages growth in just a few years time.

As the assistant minister would know, and as anyone who follows budgets would know, budgets are very sensitive to little tweaks in the forecasts, and what we've got here is really quite a substantial forecast change in wages. I've done my best not to make this a partisan question, because I think it's an important thing for us to understand when we look at the budget, even in an objective way. What I'd like to know from the assistant minister is: what would be the impact on the underlying balance if the government included in its budget wage forecasts which were more realistic, more in line with what the RBA governor is describing as the new normal of two per cent?

David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Link to this | Hansard source

It's good to be able to respond to the questions from the member for North Sydney. I also want to pick up on some of the comments from the member for Rankin. The member for North Sydney rightly points to the importance of fiscal constraint. He asks about that because he knows that the Australian people want their government to live within its means and he knows that the Australian people expect their governments to take a prudent and cautious approach to spending the money of the people. And there is a tremendous contrast between the prudent observations of the member for North Sydney and those opposite, because, when the member for Rankin was the chief of staff to the Treasurer of Australia, the real growth in spending under the previous government was some four per cent on average per year. It was very, very high—four per cent every year. Under this government—and this really goes to the heart of the query from the member for North Sydney—the average growth in real spending has been just 1.9 per cent per year, and, when you're talking about a budget of literally hundreds of billions of dollars, that difference between four per cent on average and 1.9 per cent is immense. And the good news is that, in this budget, the forecast rate of growth of spending declines even further to 1.6 per cent, and that comes through the hard work of going through each program carefully and of thinking, when one is going to spend the people's money, that it is just that—the people's money. It's not the government's money. It is money that has been generated by the hard work and enterprise of the Australian people, and we need to be very judicious and careful in how we spend it.

We also know that government net debt is expected to peak in this financial year—the financial year that ends in less than two weeks. And we expect that net debt will be reduced by some $30 billion over the next four years. So it is very important: we are turning the corner from that appalling legacy of debt and deficit that those opposite left us. We know they haven't passed a surplus budget since 1989, and the member knows that 1989 was a very long time ago. There have been no surpluses under those opposite since that period, some 29 years ago. And so, Member for North Sydney, it is pleasing that we are in a position of turning the corner on net debt and of paying an estimated $30 billion over the forward estimates, and it is an extraordinary contrast with those opposite, because what we saw under those opposite was the requirement for more and more spending to be addressed to interest payments. Of course, when they came into office there was no net debt. There was some $16 billion of cash in the bank, and they turned that around to a net debt of close to $200 billion—a very, very poor result indeed.

I want to also address a number of the comments of the member for Bruce and the member for Rankin. The member for Bruce should be assured that the process in relation to equity accounting is as it has always been—the Auditor-General is required to sign off on the government's financial statements, including the treatment of any equity-accounted investments. That's as it should be. That's a very sensible and prudent approach. There are specific rules in relation to the classification of an investment as equity: it must be outside the government sector, there must be an expectation that the investment will be recovered in real terms and the government must exercise reasonable control over its investment. These are all the sorts of questions to which the Auditor-General turns their mind.

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

Twenty seconds to talk about wages.

David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Link to this | Hansard source

In relation to jobs and wages, it is also important to note the record jobs growth in 2017—the greatest in history. One in eight manufacturing jobs were lost under those opposite.

Mr Perrett interjecting—

So we certainly will not be taking lectures from those opposite in relation to the jobs market.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Special Minister of State (House)) Share this | Link to this | Hansard source

Wages policy is such a huge priority on that side of the parliament that in a five-minute answer, the Assistant Minister for Finance said 'wages' with 17 seconds to go but then didn't say anything actually about wages. He just said 'wages', because the member for Moreton was within his rights to say, 'Don't you care at all about how people are being paid in this country?' It says it all about how out of touch those opposite are, that we can't even hear a peep about wages. In a serious non-political question about the sensitivity of the budget forecast to a more realistic forecast on wages in line with what the Governor of the RBA said, those opposite can't even bring themselves to utter a full sentence about wages in this country. I think that does say it all.

If the member for North Sydney and the member for Banks were out listening to their community or indeed any community, they would know one of the main reasons people aren't in a big rush to give the Treasurer a big pat on the back for the economy is that the economy that people feel—the economy that people experience—is dictated largely by whether or not they're able to work hard and provide for their families. Wages are a big part of that. It's disappointing but not especially surprising that those opposite don't realise that. It's disappointing but not especially surprising that we don't get any concession or recognition when those opposite talk about debt. They always say that debt was disastrous under the Labor Party. Net debt is literally twice as big now after five years of those opposite in government.

The member for Banks bangs on and on about how Labor didn't deliver a surplus during the global financial crisis. That's a matter of historical record. But what is also a matter of historical record is this mob under rosy global conditions—quite good global conditions—is yet to deliver a surplus. Spare us the dusted-off Tony Abbott talking points of 2013; they really should be beneath someone who walks around this place and pretends to be a serious contributor to the economic debate.

The reality is that this budget is built on three dodgy elements. The forecast surplus in 2019-20, and the forecasts generally, are based on three dodgy sets of assumptions. The first one is wages, as I mentioned. The second one I dealt with very briefly in the beginning. It is that the entire 2019-20 surplus is based on assuming that we can pull forward $3.3 billion in tobacco tax revenue. I hope we can; we do want to crack down on illegal tobacco, but the people of Australia need to know there's $3.3 billion claimed there and it's only a $2.2 billion surplus. You don't need to be a genius to work out—even the member for Banks can probably work it out—that the surplus in 2019-20 is entirely reliant on that tobacco tax bring forward. The third set of dodgy assumptions—the cooking of the books in its most partisan and political form—is that the budget continues to claim billions of dollars in savings which have no chance of passing the Senate. In this place, the political commentators call them the zombie savings because they just won't die. The parliament keeps voting against them, and those opposite, just because they want to deliver a rosier set of numbers than they are entitled to do, continue to claim a whole bunch of zombie measures.

The worst one is the pensioner energy supplement, which has been defeated in the parliament. It takes money off seniors who need it, particularly in the winter but also in the hot summers, to pay their electricity bill. Those opposite want to take it away from them. The parliament, to its eternal credit, crossbenchers included, has continued to knock that back. Yet, in the budget, there it was again. The budget is claiming a billion dollars in savings from the energy supplement which won't pass this place, so there's a billion dollar black hole right there. Those opposite like to talk about budget black holes—there's a billion dollar hole right there.

The same is true of the family tax benefits, the maximum liquid assets waiting period, the pension supplement for people overseas, the pension residency requirement and the pensioner education supplement. There's a theme emerging. These are all attacks on pensioners. They say to the pensioners of Australia, 'We can't find $14 a fortnight for your energy supplement, but we can find almost $5 billion for the Commonwealth Bank,' the biggest single beneficiary of the company tax cuts that those opposite pretend to be so proud of, which give $17 billion to the big four banks and $80 billion to big business, which will largely spray around overseas for multinationals.

So my question to the assistant minister—I'm not expecting an answer given he hasn't even engaged on a simple nonpartisan thing like wages policy—is: when will the government be pulling the zombie measures out of the budget so the people of Australia can get a serious fair dinkum sense of the budget position without the government cooking the books with savings that won't pass this parliament?

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

I want to thank the Assistant Minister for Finance for the fantastic job that he and the finance minister are continuing to do in working to reverse the damage done to Australia's financial situation by six years of Labor. It has been a long process and a difficult balancing act. While we have a responsibility to the Australian people to support necessary services, we also have a responsibility to appropriately manage what is really the Australian people's money. It is disappointing that not all in this place have the same respect for taxpayers' money, including funds that come from my own electorate of Dunkley. We have introduced a number of budget repair measures totalling over $41 billion. So my first question to the minister is: can the minister advise the chamber on the progress of the government's budget repair measures through the parliament? How much progress has the government made in passing unlegislated budget repair measures since the 2016 PFO?

Australians expect us to live within our means, and we have not done this in a long time. The past few years have been spent working towards getting the budget and the underlying cash deficit back on track. We're approaching the end of the financial year, and it is widely expected that the underlying cash deficit will have been lowered to $18.2 billion. This is a huge figure; however, this is expected to be the best budget outcome since the Howard government's last budget a decade ago. The size of government debt is not to be underestimated or dismissed; however, my constituents and I are delighted that progress is being made. My second question to the minister is: what is the estimated impact of measures that the government has implemented since the 2013 election, and can the minister please speak to some of the key measures that have contributed to this figure?

We cannot continue to borrow money to fund services that should be funded by the government as a matter of routine. That is why we are delivering a surplus in 2019-20, the first since we came to government in 2013—over a six-year period we have worked to undo six years of Labor—and the first since the last year of the Howard government in 2007, just before Labor came into government and brought the difficult financial circumstances they left for us in 2013. Compare our results to those opposite. I was five years old when Labor last delivered a surplus in government. The Berlin Wall was still standing. It was a difficult situation at the time around the world, but it was even more difficult being led by Labor, who have not delivered a surplus since that time.

It is our job to ensure that essential services like health and education can be funded through strong economic management and not by using borrowed money, so we can reduce our deficit to bring us back into a surplus and, therefore, reduce our debt. That means we're reducing our interest payments, and we will have more to spend on health and education. We cannot continue to borrow money forever. This is why it is crucial that we make sure that our spending is sustainable. This is exactly what the government's approach towards funding services has been. We have now reached the point where we no longer have to borrow to pay for routine government expenses, which was a situation Labor brought us to after the 2007 election, when you continued to put us into deficit, therefore increasing debt and therefore increasing the interest on our credit card payments.

In contrast, we have responsible economic management. That, unfortunately, is not something that could be guaranteed if those opposite were again in government. The strong economic management of the Howard era was torn to shreds by the Rudd-Gillard-Rudd government. Had their spending not been reined in, Australia would have been at risk of losing its AAA credit rating from the major ratings agencies. The Treasurer, the assistant minister, the Minister for Finance and our government, led by the Prime Minister, have been responsible in managing the economy to ensure that we continue to retain that AAA credit rating. Even now, those opposite will try to write off the coalition government's successes since 2013, promising bigger, better tax cuts while pledging funding increases for every potential recipient that they can think of.

Minister, I am concerned that the only foreseeable way that Labor could do so would be to plunge us back into further debt, undoing all the hard work of the coalition and recklessly putting us back into a vulnerable position should we find ourselves facing the global difficulties of just over a decade ago. Considering what I have said, could the minister please also tell us more about the budget repair measures presented by the coalition and how these will get Australia back on track? Finally, can the minister outline the government's fiscal strategy and how the government is planning to achieve a sustainable budget position over the medium term?

Jim Chalmers (Rankin, Australian Labor Party, Shadow Special Minister of State (House)) Share this | Link to this | Hansard source

It's hard to imagine a less intelligent, less informed contribution to this otherwise important conversation about the budget. You can come in here with your opinions. You can't just make it up as you go along. The only reason we have a AAA credit rating from all three agencies is that it was won, for the first time, under the same government that the previous speaker was criticising. Can someone please, before he speaks, check his notes for him or write some notes for him? That was embarrassing. We have three AAAs because they were won under the government that he was criticising. Surely you can at least check a fact as basic as that. Or maybe, before you talk about interest repayments, check the fact that they are higher now than under any other government. If you want to talk about debt, maybe at least be a little bit ashamed of the fact that net debt has doubled and that gross debt is over half a trillion dollars, and both measures have accumulated faster under this government than under the Labor predecessor. It is so tempting to go through all of the ways that that was really just an appalling, fact-free contribution to what should be a conversation based on facts—really quite disappointing, unbelievable.

I will move on to other matters, given the lateness of the hour. One of the noticeable features of changes in government spending in the last little while has been the quite extraordinary increase in spending on contractors. If you go to the government's AusTender website, you can run a whole bunch of searches to show that, since the government changed hands in 2013, a lot of the categories have just exploded in terms of spending—billions and billions of dollars in extra spending on a lot of things that used to be done by the Public Service. The reason that we have that is that an arbitrary cap has been placed on public servants, in this town and right around Australia. Federal public servants have had an arbitrary cap imposed. That says to agencies: 'If you want to get this work done, you need to get it done externally.' There will always be a role for external expert advice, but we shouldn't be wasting billions of dollars in marked-up work—labour hire, contractors, consultants—when that work could and should be done by the Public Service. I think one of the things that sticks in the public's craw is that they get lectured all the time—'We couldn't possibly find that money for the pensioner energy supplement; we couldn't find that $270 million for TAFE'—but we can spend billions and billions more every year on contractors and consultants in the Public Service because there is an ideological commitment to a Public Service cap.

So what's happening in Australia on the government's side is that we're paying more and more for poorer outcomes. We're paying more than we were before, and we're getting inferior outcomes. That's because those opposite cling to this ideological Public Service cap, which is not actually delivering the policy outcome that they want. The purpose of the Public Service cap was to keep down costs in the Public Service. Instead we have costs blowing out madly. Anyone who spends even 10 minutes on the AusTender site can see the quite remarkable multiples of growth in certain categories, particularly of management services in the Public Service. Agencies need to get the work done but they've got the cap, so they have to go outside. So we're seeing all of this public money wasted on what is an IPA ideological frolic, which is the cap on the APS headcount.

This was put to the finance minister, Senator Cormann. Over the summer there were a number of well-informed stories in our broadsheet press, which had done what the public expects it to do, which is to examine the spending by the government on contractors and consultants, and uncover this extraordinary blowout that the government would rather Australians didn't know about. The government's response, quite remarkably, was to say you can't rely on those figures. They're the government's figures on the AusTender site. What we need, very clearly, is more transparency and more accuracy. If those numbers are wrong then other numbers need to be provided, because this scandalous waste of billions, if not tens of billions, of dollars to satisfy this ideological obsession is a matter of public interest. My question to the minister is: why have you made it not transparent enough for the Australian people to understand just how much money you're wasting on consultants and contractors?

David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Link to this | Hansard source

I thank the member for Dunkley, in particular, for his very strong contribution to this debate. He again hits on the important point about restraining government spending. It's a very important contrast with those opposite. I will talk to the member's question about some specific savings measures that have been passed through the parliament in recent times, but we also need to understand the alternative.

One way of improving the budget position is to make savings. That is the better way. That is the preferable way. Those opposite are all about tax increases. They propose more than $200 billion of tax increases. The member for Rankin wanted to talk about older Australians in his contribution. He and his colleagues are proposing to smash older Australians with a massive retiree tax that will devastate hundreds of thousands of older Australians. Those opposite also want to smash the housing market by abolishing negative gearing for all except new homes. In an environment where the housing markets around Australia are already under pressure, that is going to lead to tremendous problems, and it's going to hit the most important asset of the vast majority of Australian households, their home. It is an appalling policy. They also want to put up capital gains tax by 50 per cent on everything, not just on housing and not just on investment property. They voted against tax relief for any business that has a turnover of just $2 million, which is a very, very small business. Those opposite said, 'No, this is some sort of big business, and it is not entitled to any form of relief.'

Those are bad policies. They are in contrast to the priorities of this government and of the member for Dunkley. He knows that getting the budget back on track is about sensible budget repair. He knows that since MYEFO we've implemented and delivered savings worth some $4.6 billion. We are doing the hard work of actually passing budget repair measures. Since the 2017-18 budget there has been some $16 billion worth of budget repair measures. Since the 2016 Pre-election Economic and Fiscal Outlook, the value of budget repair measures implemented by this government has been some $41 billion. That is a massive improvement in the fiscal position of this nation, and that is why in this financial year we turn the corner on net debt and begin paying down that legacy of debt, with some $30 billion of net debt reduction expected over the forward estimates. That is being driven by the strong results of this government.

I note that the member for Rankin has left us, but I do want to address a number of his comments. In relation to the forecast on wages and other matters, here are some comments. Saul Eslake says that the economic growth forecasts in the budget are reasonable and the commodity price assumptions are conservative. Stephen Koukoulas, not known as a raving fan of the government, says:

It is important to note, in this context, that the budget is framed on a series of realistic and reasonably conservative economic forecasts for economic growth, wages and company profits …

That is a very sensible contribution by Mr Koukoulas. This sort of assertion from those opposite is just wrong. We note that in an environment where we are constraining government spending growth to just 1.9 per cent in real terms, that means that public-sector spending is under control. That is the right thing for this nation.

Proposed expenditure agreed to.

Ms Julie Bishop (Curtin, Liberal Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

The 2018-19 budget is designed to ensure Australia is well positioned to achieve the objectives set out in the 2017 Foreign Policy white paper. This is the first comprehensive review of Australia's international engagement in 14 years. It sets out our priorities and interests, underpinned by values, and reaffirms the government's commitment to delivering more global opportunities for Australian businesses. As my friend and colleague the Minister for Trade, Tourism and Investment knows, Australian business has to be internationally competitive. The budget includes a $15 million business engagement package to continue tackling non-tariff barriers faced by Australian exporters and to increase the competitiveness of our service exports in particular.

The Turnbull government is pursuing the most ambitious trade agenda in Australia's history, having concluded or upgraded seven trade agreements since we were elected in 2013, including the historic Trans-Pacific Partnership 11. This morning Minister Ciobo launched formal free trade agreement negotiations with the European Union. We are pursuing these job-creating deals because we know they drive economic growth, they open doors for Australian businesses in growing markets around the world and they create jobs. Our thriving tourism industry is supporting 600,000 jobs. In fact, under the Turnbull government 16 times as many tourism jobs have been created as under the previous Labor government. The Turnbull government is continuing to provide record funding for Tourism Australia, and is supporting $45 million in grants through the Building Better Regions Fund to help move even more tourists into our regional areas. The budget will also fund work to identify solutions to grow our cruise sector, which contributes $2.7 billion to the economy each year, and to create many jobs through our creative industries through the $140 million Location Incentive Funding Program. We're very excited about this because it's going to encourage more international productions to film in Australia, underpinning our creative sector.

The budget also further delivers on the government's largest diplomatic expansion in over 40 years and the white paper's commitment to open more overseas missions over the next 10 years. We are providing $10.8 million for a new consulate-general in Kolkata, India—that brings to four the number of diplomatic missions in India—and $8.4 million to open a high commission in Tuvalu. The new consulate-general in India will help Australian businesses access opportunities in India's growing mining sector. We're also protecting our interests in the ever-changing Indo-Pacific region. Tuvalu is a key member of the Pacific Islands Forum and an important partner in the Pacific, and this will bring to 14 the number of missions that we have in the Pacific.

We're stepping up our efforts to create a more resilient and prosperous region, and the Pacific will benefit from over $1.3 billion in aid in 2018-19. This is Australia's largest-ever contribution to the Pacific, and it represents over a quarter of Australia's total aid program. It includes funding for undersea telecommunications cables for Papua New Guinea and Solomon Islands, and this is all about delivering more reliable communications infrastructure and providing economic development benefits for our partners in the Pacific.

We'll also invest an estimated $4.2 billion in total eligible official development assistance in 2018-19, including $410 million for humanitarian funding and, in this increasingly dynamic and volatile world, we need to have funding to help those in need after a crisis. The aid budget is responsible, it's affordable, it's targeted and it's delivering sustainable outcomes in health, education and gender equality.

We're also providing $10 million over three years for the new Australian Aid: Friendship Grants scheme—I think this will be welcomed by all sides of the parliament—which will enable Australian community groups like service clubs, diaspora groups and civil society entities that are not currently registered with DFAT to deliver aid in conjunction with funding from the Australian government.

Finally, the white paper also seeks to promote and protect the international rules based order, and I'll just mention one area where this is of concern: the Turnbull government continues to seek justice for the victims of the downing of Malaysia Airlines MH17. We're providing $50.3 million over four years to support the Dutch prosecution of those responsible and assist the next of kin to participate in court proceedings. The coalition government will continue to advance Australia's security and prosperity in a highly competitive world.

Anthony Albanese (Grayndler, Australian Labor Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise to contribute to the consideration in detail debate for the budget, particularly with regard to tourism, because there is no doubt that this budget is a missed opportunity when it comes to tourism with the coalition failing to restore the $35 million funding cut from Tourism Australia last year.

Investing in Tourism Australia is a no-brainer. The fact is that every dollar spent on tourism advertising and marketing generates a return on investment of some $16. What's more, we know that tourism has been identified as one of five supergrowth sectors by Deloitte. It employs more than one million Australians and, given where we're located—in the fastest growing region of the world—there is enormous opportunity for us to grow the economy and grow jobs, particularly in our regions, if the government provides appropriate support.

Upon coming to office, the coalition cut two of federal Labor's successful programs: the T-QUAL Grants Program and the Tourism Industry Regional Development Fund. Both of those programs supported industry development by providing grants for projects that would not only attract both interstate and international visitors but also encourage them to lengthen their stays. Communities across the nation benefited immensely from these programs. While the tourism sector is performing well in Australia, the fact is a number of challenges remain around regional dispersal and extending the average stay.

The continued success of tourism relies on a government that supports it, and the coalition should prove it does by restoring funding to Tourism Australia. It's not just Labor saying this; the TTF, the peak organisation, said, 'It's dismissed as a joke by Minister Ciobo'—and I note that his attitude towards the sector is now on the record. They describe the 2018 budget as bittersweet saying:

… the Government has missed a golden opportunity to reap the benefits from substantially increasing its funding for Tourism Australia.

This follows the disastrous 2017 budget, which saw not just the cuts to Tourism Australia but the increase in visa application charges. Of course who can forget the minister's performance in question time speaking about any increase in the Passenger Movement Charge as 'killing the goose that lays the golden egg'?

He made a goose of himself, because immediately after that the government introduced a budget that in fact increased the passenger movement charge, in spite of the fact that there was very clearly an election commitment from both sides of politics that that would not happen.

Of course, we know that tourism does matter. When the government were elected in 2013, they forgot to appoint a tourism minister; so they have improved somewhat—they at least have someone as tourism minister now. We know that tourism generates more than $97 billion in economic activity. It's got to be regarded that investment in tourism is just that—it's an investment that produces a return; it's not simply a cost. We know that there are enormous opportunities. At the last election, we were the only political party that produced a tourism policy. When we're in government, we certainly won't forget to appoint a tourism minister; indeed, we will make sure that tourism is very much linked in with infrastructure and transport. We know that all the great cities of the world that rely on tourism—New York, Paris, London—have very effective public transport networks, and we know that that linkage with provision of infrastructure is so important. We know also that tourism infrastructure matters in our regions. There is incredible opportunity for us to grow tourism in the regions around Australia, not just at the Reef and the Rock. More importantly, there is an opportunity to grow jobs in regional centres. So we regard tourism as a priority and we regard this budget as a lost opportunity. Indeed, the feedback from the sector is that it is a lost opportunity. Tourism is critical to Australia's future, and it's about time the government gave it due support. (Time expired)

Steven Ciobo (Moncrieff, Liberal Party, Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Well, there you go—that's the full commitment of the shadow tourism minister. He comes in, rambles for five minutes, making all sorts of false allegations, and walks back out. That is the summation of Labor's approach to tourism. When it comes to the Australian tourism industry, the Australian Labor Party is nothing other than a complete and utter fraud. This guy opposite, the shadow tourism minister, gets up, rattles off a few platitudes and then not only walks out he has next to nil investment in Australia's tourism industry. This is from the Australian Labor Party, who just took five minutes lecturing the coalition about tourism funding, yet when they were in government they actually cut funding to Tourism Australia.

When the shadow minister makes the false allegation that there's been a $35 million cut to Tourism Australia's funding, he fails to mention two things. The first is that that reduction in TA funding was a consequence of the operation of the Department of Finance's foreign exchange financing of the tourism agency. That's what that was: Department of Finance foreign exchange fluctuations. That's what drove that reduction. But what we know now and what the actual facts are now is that Tourism Australia is receiving record funding under the coalition. When Labor was elected, the federal coalition had left Tourism Australia with a substantial amount of funding. In the 2007-08 budget, there was $136.3 million. What did Labor do in 2013-14? Funding was down to $130.4 million. So, when the shadow tourism minister walks into this chamber and starts rattling on about reductions in Tourism Australia funding, well, Labor would know, because Labor delivered reductions in funding for Tourism Australia. That is in complete and total contrast to the coalition, which has increased funding for Tourism Australia to record amounts. When there was a change in the forward estimates, it was as a consequence of the Department of Finance's foreign exchange dealings.

The second thing to note about Australia's tourism industry is we have a record number of tourists staying for a record length of time and spending a record amount of money. Lo and behold, there has been record funding from the coalition. So there are four records for Australia's tourism industry: record numbers, record spend, record length of stay and record funding from the coalition. So I frankly reject entirely this fraud of a shadow tourism minister when he comes in here and starts telling the coalition how we're getting tourism policy wrong, because the fact is that the results tell a very different story to what we're hearing from the shadow tourism minister.

The other example that we saw was when he tried to verbal me in relation to TTF. What I did was question the authenticity of the shadow tourism minister, which he tried to manipulate and twist into somehow being a criticism of the industry. Do you know what? I have been proud to stand shoulder to shoulder with Australia's tourism industry for decades with operators on the Gold Coast, operators in regional markets like Cairns and operators in our major cities, all of them driving this magnificent industry from strength to strength, notwithstanding that, for the two terms that they were in, the Australian Labor Party slashed Tourism Australia's funding, massively increased the passenger movement charge and levied a host of new taxes on Australia's tourism industry. It was the men and women of Australia's tourism industry—including my very own family—that continued to make sure that Australia went from strength to strength.

I'm so pleased that the foreign minister and I work hand in glove in promoting Australia globally. Take, for example, the bold new campaign in the North American market. It's a terrific campaign, which is, in fact, up for a number of awards at the forthcoming global television advertising industry awards in Cannes—a testament to the bold vision of the MD of Tourism Australia, John O'Sullivan, and of the board of Tourism Australia and to the fact that the foreign minister and I can work together as a team to maximise the opportunity for Tourism Australia to continue to put its best foot forward. We will remain invested in giving the tools that Australia's tourism industry needs to make sure they go from strength to strength, to continue to provide record exports, to continue to see record numbers of tourists, to continue to see record spending in the tourism industry, and to continue to drive investment in the tourism industry so that we can, most fundamentally, continue to create so many jobs for those hardworking men and women and the next generation of young Aussies coming through.

Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I want to ask the trade minister about non-tariff barriers. The foreign minister mentioned in her introductory remarks the allocation in this budget to tackle non-tariff barriers, and the Foreign policy white paper released in November last year made the point that the government will implement new non-tariff measures to respond to business concerns. As the minister knows, this is a big problem and a serious problem. It's arguably the biggest problem confronting a lot of Australian exporters and potential exporters. As tariffs have gone down around the world over the last few decades, a lot of non-tariff barriers have gone up, and I think the minister made the point in his remarks at the Press Club two weeks ago that G20 countries have implemented more than 7,400 non-tariff measures in the last 10 years. In the budget, as I mentioned, there's funding allocated in the DFAT portfolio. There's also funding allocated in the department of agriculture's portfolio. That's for ag councillors, I understand, to be posted to the UK, Mexico, Japan, India, Chile and Russia, but not China, which I thought was interesting. But I didn't want to press that point.

I was interested in learning more today, if we can, about the DFAT allocation of $15 million over four years for a package of initiatives to support the Australian business community. In estimates, a couple of weeks ago, we were advised that $6.6 million of that $15 million would be allocated towards tackling these non-tariff barriers. Can the minister provide us with some more details on what that funding will be allocated to do and, specifically, whether this is the funding allocated to tackle that issue identified in the white paper or whether there are other things that the minister is intending to do here? And, while the minister's on his feet and thinking about this, I'm interested in the minister's views on a proposal by the former National government in New Zealand to establish a cross-agency team of their equivalent of DFAT and agriculture to coordinate the work that government does on non-tariff barriers in key export markets. It's something that I understand the new Labour government in New Zealand has continued with, so that, now, there's a single point of information and contact for exporters when dealing with government, whether they're dealing with an ag issue or some other issue, that can address their concerns and help to make sure there's better coordination when industry needs the support of government. So my first question is: what does the minister think of this as potentially a way to tackle this big and important problem?

While I've got the chance, I might ask also the minister for his thoughts on the value of internship programs for young Australian professionals and how they might be inserted into trade agreements. The minister would be aware that the French government recently negotiated an agreement with the Chinese government—a reciprocal program that allows young professionals to gain commercial experience in China, undertaking an internship for I think up to six months. In their submission to the foreign policy white paper, the Australian Chamber of Commerce Shanghai, who met with both the minister and me today, recommended that such a program should be replicated for young Australian professionals.

It is an idea that wasn't picked up in the white paper, but it's an idea that I think is a good one. Not enough Australians have experience working in Asia. I'm conscious—and I'm sure the foreign minister will make this point—that the New Colombo Plan facilitates that. This is something that could operate over and above that. Knowing as we do, from work that Asialink and PwC have done over the last 12 months, that we have a serious deficit in terms of the number of Australian professionals with experience working in Asia, I wonder whether there's some thought being given to trying to implement a similar program to this to make sure that the next generation of Australian businesspeople have these sorts of skills.

I've said that, if my party wins the next election, we'd seek to establish a similar program to the one that the French have recently negotiated with the Chinese. If it works, it's the sort of thing that I think we could do with other countries in Asia. So my question to the minister is: does he support this approach of increasing the amount of Asian business skills that young Australian professionals have by setting up internship programs with our Asian neighbours?

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

While I'm glad to hear the member for Blaxland ask some questions quite rationally, as opposed to the member for Grayndler, I've spoken previously in this chamber about the New Colombo Plan, and, as somebody who was a student in Asia learning a language and as somebody whose background as a practitioner was predominantly doing trade deals, living and working in Asia, with the foreign minister's focus on economic diplomacy before taking on this role that she now fills, the delivery of the New Colombo Plan is being received so well, not just here in Australia but indeed particularly across the Asia-Pacific.

I was disappointed in the member for Grayndler's very emotional beat-up against the government, again unnecessarily. If I go back to the Rudd-Gillard-Rudd era, I was then based in Asia and I was doing deals, and I had my head in spreadsheets. When you're doing very large deals, often there is a cell on a spreadsheet for sovereign risk, and that usually impacts a discounted cash flow, in one way or another. At that time, Australia's sovereign risk was far higher than it was previously and certainly far higher than it is now, and that is because the Australian economy was being managed so poorly by the previous Labor administrations, which had a detrimental impact on investment coming into Australia but also on Australia's reputation internationally. If there has been something in particular that this Minister for Trade, Tourism and Investment and his predecessor has done so well, it is executing those free trade agreements. Indeed, the Korea, Japan and China agreements all stalled under the previous Labor government. We saw the impact ultimately residing in the state of the national economy.

Look at our national economy now. Our national accounts came out only a couple of weeks ago. What we see is unemployment at 5.4 per cent. What we see in the first quarter of 2018 is a growth rate of one per cent, making annual growth 3.1 per cent. Business confidence is up and investment is up. This is an extraordinary set of figures for Australia's national economy. When you break down that last quarter of growth, the No. 1 one thing that drove Australia's growth for the first quarter, the biggest contribution to our GDP growth, was exports. We saw even in the last financial year $374 billion in exports. Now that is a record for our country. In Queensland alone: Queensland's total exports of goods were valued at $70 billion in 2017—that's an increase of 25 per cent. Of course, the biggest export good for us in Queensland is coal, followed by beef. There are nearly 25,000 people employed in the coal industry in Queensland and nearly 20,000 in beef—both enormous producers of jobs and growth to our economy.

Looking at the track record of this government, as somebody who has worked in trade most of his life, I cannot tell you how proud I am to be part of a government that has concluded seven FTAs, and to think of the FTAs that have impacted us, particularly in Queensland, such as the Japan, Korea and China FTAs and, more recently, Peru and the TPP-11—a negotiation, by the way, that the Leader of the Opposition thought we should fold on—all being delivered by this coalition government. That is what, ultimately, is opening up opportunities for us.

Negotiations are now to start with the European Union. This is a marketplace of half a billion consumers. This is a marketplace with a US$17.3 trillion GDP economy. Again we see opportunities opening up, because we have the single most comprehensive, ambitious trade agenda that this country has ever seen—which leads me, of course, to ask a question of our Minister for Trade, Tourism and Investment. Could the minister expand on how the Turnbull government is delivering on our ambitious trade agenda? And how will that agenda continue to drive opportunities here in Australia, particularly opportunities that will drive growth?

Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I would like to ask the foreign minister about foreign aid and the cuts to overseas development assistance in the budget, particularly given the comments that she made in Sydney last week, when she made the point that she thinks that overseas development assistance should absolutely be increased in the budget—she said that, I think, at the British Chamber of Commerce event in Q&A with Ticky Fullerton. Is that right, Minister?

Ms Julie Bishop (Curtin, Liberal Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I'll put it in context.

Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

Let me put it in context as well, by saying that it seems that this budget is yet another cut to Australia's overseas development assistance, having already cut this budget by $11 billion under this foreign minister's watch over the last four or five years with cuts to outlays in the next four years of $140 million. This year's budget delivers the weakest levels of Australian development assistance in history, now spending just 22c in every $100 of our national income on foreign aid in 2018-19. On the current trajectory, by the end of the forward estimates this will be just 19c in every $100. The aid budget has now been cut in every single budget since this government came to power.

Australia has a deep interest in contributing to global poverty alleviation, and our international development program supports security and stability in our region. The minister's own DFAT white paper that was released late last year said that Australia's overseas aid program aims to:

… assist developing countries reduce poverty and achieve sustainable development in line with Australia's national interest.

However, in London a few months ago, the Minister for International Development, Senator Fierravanti-Wells, cited opinion polls to justify Australia's poor aid budget. She said:

In Australia we had some research done where it showed that about 80 per cent of Australians believe that we should not be spending more on foreign aid or that what we spend is about right.

So it seems that the government thinks an opinion poll is the best way to determine how much we should spend on overseas development assistance.

Unlike the Turnbull government, the New Zealand government gets it. They've described their decision to boost aid funding in this year's budget as a clear demonstration to the international community that New Zealand is serious about addressing global and regional challenges, and their decision to lift overseas development assistance to 0.28 per cent of gross national income over the next four years is a demonstration of that.

A Shorten Labor government will contribute more to international development assistance than this current government. We've repeatedly urged the Turnbull government to return to a proper bipartisan approach to international development assistance, so I was heartened to hear the foreign minister last week say that she believes that foreign development assistance should absolutely be increased. My question to the minister is: at a time when Australia's influence in the region is under stress and you yourself believe that we should be spending more, why haven't you been able to prevent $11 billion worth of aid cuts in the Australian budget?

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

My question is to the Minister for Foreign Affairs. The unprecedented growth in the Indo-Pacific region will provide job-creating opportunities for my electorate of Forrest, particularly while Australia's economy, one managed by the Turnbull government, remains resilient, competitive and agile. I am a member of the Joint Standing Committee on Treaties, which is planning a delegation to India and Indonesia to meet Australian businesspeople in both countries to discuss the challenges they face in day-to-day operations, the scale of opportunities both markets provide, and the obstacles to expanded trade such as language, cultural traditions and infrastructure. The delegation will also meet with committee counterparts in the respective parliaments. Can the foreign minister outline how a new consulate-general in Kolkata, India, will further help businesses in Forrest access opportunities in India's growing economy and advance our interests in a changing Indo-Pacific?

In addition to supporting small to medium businesses in Forrest, the coalition government is creating a new generation of outward-looking young Australians with an abiding interest in our region through its flagship foreign policy initiative, the New Colombo Plan. I'm delighted that former Busselton Senior High School student and 2018 New Colombo Plan scholarship recipient, Ms Hayley Winchcombe, was earlier this year named the inaugural New Colombo Plan ASEAN Fellow at a special reception with the leaders of the 10 ASEAN countries, co-hosted by the foreign minister and the Prime Minister. How does this type of educational exchange help guide Australia through a period of profound change in our region, boost employability and drive economic growth?

Since February, I've been supporting another form of educational exchange. As part of the Australia Awards Women's Leadership Initiative I've been mentoring Nirose Silas from Vanuatu. Nirose recently completed a Master of Business (Management) at Queensland University of Technology. An auditor by profession, she is returning to her native Vanuatu, where she hopes to continue to work with the Public Accounts Committee supporting the Vanuatu parliament. Nirose's future goal is to become the Auditor-General of Vanuatu. I wish her the best in this. She's absolutely committed to improving the leadership skills of women in Vanuatu and supporting them to take on senior government and public sector roles. How is the coalition government's aid and humanitarian budget supporting girls and women like Nirose in our region to reach their full economic, social and political potential? And how will this budget allow generous community organisations in Forrest to tackle poverty and inequality in our region through the government's new Australian Aid: Friendship Grants?

Finally, in order for us to benefit from the immense opportunities in our region, Australia must be well placed to meet a diverse range of security threats—from Islamic terrorism to threats to open sea lanes which enable trade in goods and energy that fuel the region's growth. Countries continue to disrespect, challenge and undermine international law. North Korea's long-range missile and nuclear programs are one such example. We, and I in particular, remain deeply concerned by the downing of Malaysian Airlines flight MH17. No members of my electorate were lost on that fateful day, but the grandparents of the three young Maslin children live in Dunsborough, in my electorate. This was beyond a dreadful day, and it was a tragic day in the life of that family, and every day since, for them and their whole family. Minister, how does this budget seek justice for the victims of the downing of MH17?

Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I have another question, this time to the Minister for Trade, Tourism and Investment. He might—

Mr Ciobo interjecting—

Well, it's back and forth. If you want to, you can jump in at the next opportunity and answer the question.

Mr Ciobo interjecting—

I tell you what; I'm a good guy—I'll be brief. And I hope in return you'll answer the questions that I've asked.

Steven Ciobo (Moncrieff, Liberal Party, Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Comprehensively.

Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

Okay. This question is about beef exports to China. In March last year, the Prime Minister signed an agreement with the Chinese Premier, here in Canberra, that will increase the number of meat processors in Australia that can export chilled beef to China. It's an important agreement. The minister issued a statement at the time—I think with the former Deputy Prime Minister, Barnaby Joyce—saying it was worth, potentially, about $400 million to Australian industry. Unfortunately, now, 15 months later, no additional Australian meat processors have been able to export chilled beef to China. When asked about this at estimates a couple of weeks ago, it was made clear that the agreement that was reached last year in March to expand access is still being worked on by the department.

I understand that representatives from the Australian beef industry have been in China in the last few weeks, that China has accepted the relevant protocols necessary to import Australian chilled beef and that the agreement could be implemented in a staged and graduated way, but there are political issues between the countries that the Australian government has to resolve. Minister, I know that the beef companies have written to you about this, and they've told you this, and they've also written to the Prime Minister, so my question is: what action is the minister taking to resolve this issue?

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

The question is that the proposed expenditure be agreed to.

Ms Julie Bishop (Curtin, Liberal Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I'll answer the questions from the member for Forrest and also address the questions from the member for Blaxland in reverse order.

Thank you, Member for Forrest, for raising the issue of MH17. I know the grandparents of the Maslin children are in your electorate. I have met with them and I remain in contact with the Maslin family and the other families throughout Australia of the 38 people who were aboard flight MH17 from Amsterdam. The Australian government's commitment of $50 million is to assist the families of the victims to take part in the Dutch proceedings. There will be a state prosecution led by the Netherlands, and we want to ensure that the families can take part. The funding will also go to support those proceedings. The Ukraine government has entered into the necessary treaty arrangements and extradition arrangements with the Netherlands, so we believe a very full prosecution will be able to take place. But the member for Forrest would also be aware that, on 25 May, after receiving further details from the joint investigation team, Australia and the Netherlands called upon Russia to accept state responsibility for its role in the downing of MH17. We share the grief of the families around the world of the 298 people who were killed, and we'll continue to do what we can to get justice for the families here in Australia.

Your point, Member for Forrest, about the work in the Pacific is very positive because I know that you have joined this mentoring scheme and you have been connected to a bright, young woman from Vanuatu, who was a recipient of an Australia Award. Under this women's leadership initiative, the female recipients of Australia Awards who have studied in Australia will be mentored by an Australian businesswoman or parliamentarian, or a woman from civil society, so that they can maintain that connection through the Australia Awards alumni, but it is also about supporting women in the Pacific, who do face many challenges.

The Australian aid budget is very heavily focused on three elements of support and empowerment for women and girls. First, we're providing women with the skills, the capabilities and the capacity to take leadership roles in their families; in governments, both provincial and national; in business; in communities; and in civil society. Second, we're supporting the financial empowerment, the economic empowerment, of women by giving them the necessary skills and access to microfinance, and ensuring they can join the formal labour market. Third, we're dealing with the scourge of domestic or gender based violence in the Pacific. No country is immune, but it is particularly prevalent in the Pacific. This alumni program is part of our efforts to support women in the Pacific.

You also raised the New Colombo Plan. I'm particularly proud of that, because from a standing start in 2014 to the end of this year over 30,000 young Australian undergraduates will have been overseas, pursuant to funding under the New Colombo Plan. The member for Blaxland says, 'Why don't we have an intern program?' That's precisely what the New Colombo Plan is. Australian undergraduates have the opportunity not only to live and study in one of 40 locations in the Indo-Pacific but to undertake practicums and work experience. We have had some amazing levels of cooperation from businesses and governments and civil society, who are supporting young Australians undertake these practical experiences, working experiences, as part of the New Colombo Plan.

In relation to Kolkata, I point out that it is the centre of India's mining and resources sector. I'm pleased that the member for Forrest asked a question about her constituents. The new consulate general will enhance two-way cultural, education, research and tourism connections and provide consular opportunities, but for the member for Forrest's electorate I think the tourism and the mining opportunities will be enormous.

On the question of aid, the member for Blaxland asks why there isn't a bipartisan approach to increasing the aid budget. I say: why isn't there a bipartisan approach to maintaining a budget surplus and maintaining an affordable aid program? He talks about $11 million in cuts. The trajectory that Labor had embraced was utterly unaffordable and was never going to happen. The aid budget has increased—2.1 per cent per year. (Time expired)

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

The question is that the proposed expenditure be agreed to. Before I give the call to the minister, I would remind him that by resolution of the House debate will conclude at 5.45.

Steven Ciobo (Moncrieff, Liberal Party, Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Before I get to the questions from the member for Blaxland I will speak to the questions asked by the member for Fairfax and the member for Forrest. Both of them are outstanding local members, outstanding for their consistent advocacy on behalf of their constituents—in particular their small to medium sized enterprises. I had the privilege of being with the member for Fairfax and going to Yandina, where I had the chance to meet with a macadamia nut processor and farmer. I note that one of Australia's premier macadamia nut processing plants, Nutworks, is in the electorate of the member for Fairfax. It employs more than 60 people and is now exporting its products worldwide. In fact, Kylie Watson, the CEO of Nutworks, at an FTA seminar recently explained how an increase in inquiries from China, spurred as a consequence of the introduction of the FTA, prompted Nutworks to start exporting its macadamias. She said:

It was the timing of the reduction in tariffs. We really started to see an increase in enquiries, particularly coming out of China.

That's a consequence of the member for Fairfax's strong work and understanding of his local community and his being a strong advocate for them in the government's party room.

Likewise, I've had the privilege of being with the member for Forrest and speaking to not only local tourism exports but small and medium sized exporters. They are the people who are creating employment in Australia and giving opportunities for new young Aussies to be able to participate in the labour force by getting jobs in the small to medium sized enterprises that are now exporting their products and services to the world. That's a direct consequence of this, the most ambitious trade agenda that Australia ever had and—as we have seen in relation to the China-Australia Free Trade Agreement—their advocacy and their level headedness with the Australian public about the opportunities.

I know there is good spirit shown by the shadow minister opposite, but we should never forget it was the Australian Labor Party who described the China-Australia Free Trade Agreement—they came in here asking in an anguished tone what was happening bilaterally and why wasn't the Australian government doing more—as a dud deal. This deal, which has underwritten a third of Australia's economic growth, was described by Labor as a dud deal. In fact, they turned the other way when the Australian trade union movement ran the most disgraceful, dishonest, multimillion-dollar campaign against China and Chinese workers and said the China-Australia Free Trade Agreement was going to wreak devastation across the Australian economy. So you can understand why I might take a minute to reflect on Labor's track record. Again, you don't look at what Labor say; you have to look at what Labor do. And their track record on the bilateral relationship with China on trade and on investment is absolutely disgraceful!

In the short time that I have remaining, I'll speak more directly on non-tariff measures; the government have put money on the table. We've put money on the table to deal with non-tariff measures in a comprehensive way, because when I talk to industry I hear concerns about non-tariff measures, in the same way as I get strong advocacy from the member for Forrest and the member for Fairfax as well as so many coalition members, who raise with me the concerns of their constituents on NTMs, or non-tariff measures. We're working to break down those barriers. Under the coalition, we've seen some of the most expeditious outcomes around protocols to get Australian goods into markets like China than by any government in Australia's history. We're also putting more money down. I'm sure the shadow minister would like to know that I'm looking very closely at what New Zealand has done in relation to opportunities for an interdepartmental committee. I don't want to use IDC loosely, but I'm looking for opportunities for coordination between the Department of Agriculture and Water Resources and the Department of Trade and Investment, and I'm happy to speak to him directly about other concerns that he has.

Proposed expenditure agreed to.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

In accordance with the resolution agreed to in the House previously, the debate is interrupted. The debate is adjourned and resumption of the debate will be made an order of the day for the next sitting.