Lyn Allison (Victoria, Australian Democrats) Share this | Hansard source

There was much fanfare and self-congratulation in this place on Tuesday night when the Treasurer handed down his 12th budget. We waited in anticipation: would this be a budget that would deliver on the big challenges of our time—climate change and water—a budget that would help struggling families, lock in access to health and education or make the tax system fairer? With more than $16 billion extra a year to spend, anything was possible. But what we got was a grab bag of cheques in the mail: $700 vouchers to parents to spend on tuition for their children; a $500 one-off cash bonus for most of the over-65s; $1,000 and $600 for carers; a childcare rebate of up to $8,000 cash—two years worth all at once; apprentices to get $1,000 to top up wages; $5,000 to move to where the jobs are; an $8,000 rebate for buying a solar photovoltaic unit; and a top-up of up to $3,000 for superannuation contributions. In fact, if you have a pulse, you will be likely to qualify for a windfall of some description. There were also minimal tax cuts for the lowest income earners and bigger cuts for those on middle to high incomes; very modest sums for Indigenous health and housing; a partial answer to poor dental services; tiny increases in childcare support, mental health and obesity; some handouts for farmers; $5 billion parked in a future fund for universities; and big spending on defence.

This budget has one purpose: to buy the Howard government’s way back into office and to kill off what must be for the Prime Minister an unsettling rise in the polls for the Labor opposition. What an extraordinary place to be in Australian political history, and what an extraordinary opportunity it presented—an economy at full strength, low inflation, coffers overflowing! We probably have to go back to the gold rush to find a time when governments were rolling in so much money from mining and taxes. In the boom more than a century ago, the money was spent on major infrastructure—on rail and road networks, sewerage and water systems, town halls, universities, parliaments and ports—but not so in this budget. Even as the Treasurer beamed with self-satisfaction at his own largesse, there were plenty outside thinking: ‘Shouldn’t some of that serious money be spent on tackling the really serious challenges we face?’

Federal government revenue next year is set to reach a massive $245 billion, excluding GST. However, the rain over the last week or so does not necessarily signal an end to the crippling drought, personal debt has grown alarmingly, housing is less affordable and rates of obesity and alcohol use loom as huge costs to health. And, despite coal exports worth $26 billion a year, Australia’s foreign debt keeps growing. The budget papers predict that export volumes will be up by five per cent next year but—here is the rub—imports will rise by 6.5 per cent. Our current account deficit will reach $66 billion—a staggering six per cent of gross domestic product. If the country settles back into a pattern of extremely low rainfall, if another big storm wipes out a whole sector in agriculture, as it did bananas last year, and if oil prices keep going up—and they have almost returned to the highs of late last year—then the Reserve Bank would have to act. This budget assumes a growth rate of 3.75 per cent, consumer prices to rise by 2.75 per cent and wages to go up 4.25 per cent—all of which nudges us closer to an interest rate rise and disaster for those families who are up to their eyeballs in mortgage repayments.

In its indecent haste to bribe its way into office, the Howard government again failed to tackle Australia’s most urgent threat—climate change. The United Nations Security Council, the UK and Pentagon defence experts now say that climate change is a bigger security threat than terrorism and is more complex than the Cold War. So what did we get on Tuesday night? Defence got an extra $2 billion and land transport $22 billion, but climate change did not even rate $1 billion. It is in fact wagging a finger at the most menacing threat of our time. For all the fanfare, the solar rebates will put barely 15,000 PV systems on rooftops, and these will be completely swamped by new housing—housing that for the most part will have pathetically poor energy efficiency. Add to this Australia’s record for having the world’s worst energy standards for appliances and equipment and it becomes clear that the grants were headline catching but totally ineffective in dealing with the enormity of this problem.

Where were the triggers for big investment in markets for energy savings and renewable energy? Where were the policies that industry and business were pleading for? The World Bank estimates that $55 billion was invested directly in renewable energy in just three years. Renewable energy investment is growing globally by 50 per cent a year, but not in Australia. From a purely business perspective, this is a global market that Australia should not be missing out on. As one of the most wasteful countries in the world, we need to ramp up energy efficiency initiatives. It is shocking that Australians who want to do the right thing are being betrayed by cynicism and deceit: being told that cuts would ruin the economy and that only coal and nuclear can provide baseload power. It is wrong and the government knows it. Yes, solar panel rebates are welcome, but this limited number will not solve the enormous problem we face. Fifty-three million dollars for stickers telling households how to save energy will not cut it either. The $170 million for adapting to climate change is in fact the white flag in this budget. It is easier to surrender than to act, particularly if your horizon is the next election.

Of course, the Howard government sceptics remain firmly in denial that catastrophic changes to our lives and our environment are upon us and will worsen unless we act now. One hundred and seventy million dollars will not be enough to adapt to the impact of climate change. In fact, the cost of adapting will be 20 times greater than the cost of taking action now to avoid the worst of it. But I am guessing the Howard government will have a road to Damascus moment as polling day draws closer. Its emissions task force will conclude that policies to lock in emissions cuts are required after all. The government will suddenly and resoundingly accept what the international scientific community has been telling it for years. It will swoop in just before the election with a multibillion-dollar handout for more so-called clean coal and nuclear reactors—perhaps even dam the few remaining wild rivers for hydro.

The reality is that this government believes that climate change is just another political problem like child care and dental health—problems that can be solved by funding just enough money to deliver a political advantage. But this is not every other problem; this is about the spectre of catastrophic climate change which may threaten our very civilisation. The Democrats, again, call on the Howard government to abandon political manoeuvring and to act now on climate change.

In every budget there is something that makes me really angry. This time it is a broken promise—a longstanding one to the Democrats and a recent one to Warren Entsch, other Liberals and to millions of Australians. Mr Howard has reneged on the undertaking he gave that this budget would recognise interdependent relationships for Public Service death benefits. Cabinet apparently knocked it back, saying it would increase unfunded superannuation liabilities by $2 billion. This is absurd. Superannuation liabilities increase all the time. In any case, what is the purpose of the Future Fund? The fact is that miserable and mean conservatives also opposed equality for women, the end of slavery and every other cause of the dispossessed and the disadvantaged. Mr Howard, if $2 billion is the price of equity, pay it. You have got the money—we all know it.

For years—decades even—Democrats have argued for long-term, sustained and sustainable commitments by successive governments to the nation state’s basic underpinning—its people and its land. From preschool to workforce entry takes nearly two decades. It is a very long time before you get a social and an economic dividend. Australia is paying for the coalition’s underinvestment in the last decade in the land—infrastructure, water, energy—and in our people: skills and making work worth while. There is supposed to be a labour shortage in this country. The crazy thing is that we have plenty of people available—combining the unemployed and the underemployed, over 1.5 million—but too many of these people do not have the skills or the incentives for the jobs that are available. To maximise productivity and skill creation you need a high level of sustained investment, and it has to be by governments. Productive investment needs long-term thinkers, not user-pays obsessives and hands-off economic rationalists. I think the coalition only woke up in the last year to the need to invest in the supply side—in education and in skills and training of all types. How is it that a budget to answer Labor’s education revolution could exclude the TAFE sector? Mr Howard, we do need plumbers and electricians and it is good to give young people help to enter these worthy careers, but that is not all there is to fixing the skills shortages. What is left of manufacturing in this country needs brains, not brawn.

The other aspect of the skills supply side is making work worth while. That means tax reform. It is true that participation has lifted as effective marginal tax rates have lowered, but not nearly enough. Real wages have lifted, but again not nearly enough and at nowhere near the rate of increases in profits. It is true that there have been tax cuts for the last five budgets. It is true that the low-income tax offset lifts the effective tax-free threshold substantially, but what a complex system we have. It is no wonder that it is not a good motivator to get people into work. ‘You will pay X dollars of tax, but, wait, we will give you Y dollars back.’ For goodness sake, we say: do not tax these people in the first place.

We have always agreed that top thresholds and rates had to be cut, but not without first helping the lowest-income Australians to shift from welfare to work. But always, for the coalition, the wealthiest got theirs first. We understand the rationale. Tax cuts to richer people are often saved. Tax cuts to the poor are spent and can endanger the economy, overstimulating it when it is near full capacity, as it is now. That is why the Democrats argue for phasing in structural tax reform over the medium term. Raising the tax-free threshold to the poverty line of $12,500 would apparently cost over $35 billion over four years. But can someone please explain why we income-tax people who are below the poverty line? Tax reform needs a plan but Mr Costello has no income tax plan; he just has an annual show bag at budget time.

Thank goodness for elections. At least vote buying means that lower-income Australians get a slice of the $31 billion in tax cuts over four years, even if it is only $2.88 a week, which is $50 less than someone earning a quarter of a million dollars. Nonetheless we applaud the return of funds to taxpayers whose tax bills are increased each year by stealth through bracket creep, and whose pay packets have recently been cut by Work Choices. This is money owed to them, taken without notice and without permission by a system which forces working men and women into a higher tax rate even as their real wage remains the same or goes backwards.

We acknowledge the Howard government’s stewardship over a buoyant economy and the many positive things they have done, but they are unable to grasp the idea of eliminating bracket creep by indexing the tax thresholds, a position that is widely supported, not least by the Australian Chamber of Commerce and Industry. The Treasurer, it seems, does not get this essential equity principle. He expects praise for giving back tax revenue that he should not have in the first place. That is not good economic management. That is the Treasurer slipping his hand into pay packets and helping himself to more, while the government rolls in money, and the wages of many remain stagnant or go backwards. Had the 1980 lowest threshold of $4,041 kept pace with earnings it would now be about $15,000.

Any advocacy for struggling workers is incomplete without reference to those predatory IR policies which involve taking from the poor and giving to the rich. Work Choices is the poster boy of exploitative workplace legislators. The reality is that any money now being given back to low-income earners as tax cuts is limited compensation for wages driven down by the poisonous Work Choices, a law which punishes those without power, influence or wealth. At a time of healthy surpluses and soaring revenues, this was the opportunity to make the tax system simpler, fairer and more transparent.

The Democrats say it is not good policy to maintain a system of tax churning by taxing lower-income Australians and then instigating a complex system of returning bits of what was taken at various later dates in the form of benefits. We call on the government again to lift the tax free threshold over time, so that low-income earners do not pay income tax until they get to $20,000 in earnings. This will take at least two million people out of the income tax system, the vast majority of them women and part-timers. So you want greater participation in the workforce? Try this one, and let us pay for reform by getting rid of welfare for the wealthy and rationalising inequitable, inefficient and outdated tax concessions. It is called base broadening.

The budget earmarked $5 billion for the Higher Education Endowment Fund from which it is intended will flow perpetual funding to universities for capital works and research facilities. The Democrats welcome extra funding for universities. They are simultaneously starved of funds by government and lauded as the places where Australia’s future lies. We welcome the boost for capital works and research facilities, but those buildings and facilities must be filled with students. Bricks and mortar and a lick of paint do not help students struggling to pay their fees and rent, or for their books.

We acknowledge the Howard government’s decision at last to extend rent assistance to Austudy recipients, a measure the Democrats have campaigned on for years. We acknowledge there are other student income support initiatives but they fall well short of what is needed. And equality of access to university education has been ignored. In fact this budget actively paves the way for more rich students by removing the cap on full fee paying places. We oppose this regressive policy absolutely. Why would we want to lock in a system of inherited privilege rather than merit and intellect as a pathway to university education? Poorer, brighter students will be crowded out in favour of those clutching a fistful of dollars or those prepared to burden themselves to a life of crippling debt. It is obvious that cash-starved universities will err towards full fee paying students. Already universities are flagging another rise in HECS fees for those business courses which copped financial cuts in this budget. The Howard government’s higher education policies are designed by zealots who do not care that some are already paying more than $200,000 for their degrees. It is policymaking which is elitist and divisive.

In this budget the government has tried to placate those families struggling with child care, but what is on offer will do little to solve the real problems. We are pleased to see the government is finally moving to fix the absurdity of the 30 per cent childcare tax rebate so that families will receive the money more quickly. This was criticised by us and many others at the time; waiting 18 months was not helping the families who needed it most. And we are pleased to see that low-income families are now eligible. But the childcare tax rebate is still inflationary and a poor response to the sector’s many problems. The Treasurer is talking up the ‘up to $8,000’ that families could now receive but of course that is for two years; at most it could be up to $4,200 a year but almost nobody gets that. In fact the average payment will $813 per child.

The 10 per cent increase in the childcare benefit on top of indexation will help low- and middle-income families but it is a once-off. Childcare costs went up 12 per cent in each of the last two years.  If this pattern continues—and we have no reason to think it will not—people will be in the same boat they are in now in 12 months time. It would have been good to see the level of childcare benefit linked to the real costs of child care on an ongoing basis. Nor did we see any acknowledgement of the difficulties in finding places for the under twos. More affordable care does not help if you cannot find a place for your child.

There is not much vision for early childhood care and education here despite our poor position internationally on funding for this area. There is no sign either of removing FBT for employer provided child care and nannies are still not brought into the system. We need to see a national long-term plan for reform of child care and of the way that we provide early childhood services. We need better staff-child ratios; we need improved training and qualifications for all childcare staff; we need mandated age-appropriate learning and development program and national planning controls to make sure centres and services are equitably distributed, including operational subsidies for some areas And of course what is most missing is a national paid maternity scheme.

Australia’s 2.6 million carers will welcome the one-off bonus of $1,000 and the increases in respite funding. Nonetheless, this $341 million in handouts is peanuts compared to the $30 billion that family carers save the economy every year. The work that is done by carers often comes at great personal cost to their own physical and mental health, not to mention the pressure on their other relationships and the impact on their employment and financial situation. And what about the government’s commitment to people with disabilities? The response to the Senate’s unanimous report of a couple of months ago recommending substantial additional funding was obviously missing.

People may wonder who got the seriously big money in this budget. Well, let me now turn to defence. Defence gets another surge—this time to $2 billion, bringing the budget to $22 billion in 2007-08, with major new spending on mostly high-tech assault equipment like the $6 billion worth of Super Hornet fighter-bombers. Another $228 million is to be spent marketing the services as employers of choice. It is little wonder that this is needed when the treatment of returning men and women has been so shabby. All of this, and the money wasted on Iraq, may ingratiate us with President George Bush, but it is money that would have been better spent on climate change or on health and education or even on peacekeeping and good relations with our neighbours in this region.

Or let us for a moment imagine what a fraction of that money could have done for Indigenous Australians. The Democrats are extremely disappointed that, in a budget brimming with pre-election bribes and one-off handouts, so little for Indigenous people has been provided—even though this government has acknowledged time and again that they are the most disadvantaged and disenfranchised group in Australia. The failure to act on one of our most pressing national problems at a time when we can easily afford it is immoral. The most generous reading of the budget figures provides $135 million over four years, or less than $35 million extra a year, for Aboriginal and Torres Strait Islander people. These are the ones with a life expectancy of 20 years less than the rest of us.

The $300 million for Indigenous housing, while welcome, is likely to be wasted by the irksome conditions attached, like funding only houses that can be transferred to state housing authorities or made available for purchase by individuals. Nobody is against providing more opportunities for Indigenous people to own their own home, but that should not be to the exclusion of other effective options. This appears to mean that Indigenous community housing organisations will only receive funding if they relinquish control of their housing stock. Despite the highly distorted picture the government has been presenting about the state of Indigenous housing, even the minister acknowledges that some Indigenous community housing organisations have been very well managed. A one-size-fits-all solution makes no sense in locations where the private home ownership market is unlikely to work. We can look forward to Indigenous people again being blamed for government failures. The statistics for health and housing for Indigenous communities show a sorry neglect. We challenge the Rudd opposition to bridge the gap in Indigenous health, employment and housing, and to do so without a paternalistic agenda.

To conclude: we looked for inspirational leadership to deal with the menace of climate change; we got dust thrown into a powerful and growing storm. We looked for tax reform; we got money returned to low-income earners from whom it should never have been taken in the first place and nothing to protect them from it being nicked again. We looked for childcare and school funding that would cut to the heart of the problems in those sectors; we got a spray of surgically enhanced early payments and subsidies. We looked for funding that would ensure all of our best and brightest would have access to university, regardless of their income; we got a fund that will improve the look of facilities but little to finance the students who populate them. And Indigenous Australians continue to be treated in the same shameful way they have always been treated.

This is a budget which cements old prejudices and bribes voters. Its centrepiece? Truckloads of money. It could have done so much, but actually did so little. Sure, the Treasurer threw back to us some of it and, like kids in a lolly shop, we are expected to scramble for our share. But you can bet your bottom dollar that we will all end up paying for it in a multitude of ways and in the not-too-distant future. If you missed Tuesday night’s budget, do not worry: there will be another: ‘2007 Budget: the Sequel’. Just before election day, another large stash of money will be found and another round of  promises and spending will commence. And I am tipping that the sequel will be just as show-stopping as the first: a daring taxation robbery; a dramatic fight scene in which the key players alternatively fall away and then claw their way back; lots of special effects; and a winner-take-all scene at the end. But whether you will see reparations made in Indigenous communities, a lid on interest rates, a commitment to tax reform, access to higher education or a real response to climate change when you finally get out of the theatre remains to be seen.