Julian McGauran (Victoria, National Party) Share this | Hansard source

This evening we are discussing Appropriation Bill (No. 5) 2007-2008 and Appropriation Bill (No. 6) 2007-2008. I heard previously my good colleague from Victoria Senator Ronaldson speak, and I would like to follow up and add to many of the comments he made in regard to the broader question of the Rudd government’s first budget. What Senator Ronaldson was saying, and what I am saying this evening, is that the first budget of a government really defines that government. As it defines the Rudd government, it defined us when we first entered government in 1996. It tells you what the government is all about. It tells you what the leadership is all about. It tells the Australian people where this new government is heading, where it is taking the economy, what its mettle is and what its competence is. So much is encapsulated in a new government’s first budget.

Heaven knows the Rudd government has had an extended honeymoon from the media in the gallery which is unprecedented, certainly in my time. Even with the Hawke, Keating and Howard governments, the press gallery never indulged a new government as much as they have the Rudd government. Even with that extended honeymoon, the handing down of the first budget requires scrutiny from the press gallery. You can run, but you cannot hide. The first budget is where the scrutiny really starts. That was the case with the coalition when we came into government in 1996. The budget set down by the Howard-Costello leadership was the template that served us so well for our 11½ years in government and for our 11 budgets. It defined the coalition in 1996; we were defined there and then. It was a tough budget that required a great deal of discipline not just from the Treasurer and the cabinet but from all the new members of that government. As exciting as it was, I do recall in the early times that the call upon our discipline and the acceptance of the need for some of the tough decisions made in 1996 certainly took the honeymoon out of our entry into government. But we knew then that we were laying down the foundation stone of a decade of economic growth. We knew that if we did not act there and then in our first budget we would lose an opportunity. So that budget was the foundation stone of record employment rates, record low unemployment rates, low taxes and an economic and social dividend for families. Of course, it laid the foundation stone for reforms in different portfolios and departments, none more so than in communications, education and health.

To put it in perspective, as every new government comes in, they have to look at the legacy the previous government has left. I suppose Malcolm Fraser had the worst legacy coming in following the Whitlam government, but when we came into government in 1996 we had the legacy of a $10 billion deficit that was covered up by the previous government. They told us they had a surplus. We were left the legacy of a $96 billion debt. We were left the legacy of an unacceptable unemployment rate, an unacceptable inflation rate and an interest rate which may have averaged around five per cent, as it did in the decade of the previous coalition government, but which peaked at phenomenal levels that, a generation on, we cannot even contemplate—that is, 17 per cent for home loans and over 20 per cent for business loans. These were the challenges we had to face when we first came into government and had to lay down our first budget. If we had not taken the hard decisions by making the budget cuts, setting down the plan to bring the budget into surplus in the first cycle, setting down a regime of debt reduction generated by privatisation and getting all the finances in order, then we could never have taken on the reforms and strengthened the economy for the future and for the future shocks that inevitably come to any government, such as the one we received in our first term with the Asian economic meltdown.

I think the first budget is any government’s toughest budget, but I can say this about our first budget: we did not shirk it. We were not weak. We were not muddled. We knew exactly what we were putting into place. I give that background to highlight, as I mentioned, how crucial the first budget is. I will just quote some very proud figures at a point 11½ years on from laying down that first budget of the previous government. They are figures that cannot be disputed. They can be left out of the new government’s rhetoric, and the new government may want to fraudulently represent them, but the truth of the matter is that they are down after 11½ years for those who want to know the truth. As this government should and will find out, all policy making and decisions funnel down to the simple question of jobs; that is the most important thing a government can deliver. When you look at health, education, industrial relations and the sheer management of the economy—both macro and micro—it is all about getting jobs for the Australian people so they can live decent lives, achieve their ambitions and achieve a lifestyle for their children. That is what it is all about. I am happy and proud to say that the previous government achieved record low unemployment rates and record low long-term unemployment rates, and created, on top of that, over two million jobs.

If I just left the figures there, that would be enough, because, as I said, all decisions are woven into this one end result. But, of course, that was all achieved because of the economic discipline of the previous government, with low interest rates and low inflation rates over the cycle, and tax cuts for Australian families and individuals. Eighty per cent of Australians were paying 30c or less in the dollar. These are some of the proud figures that I am able to quote from the previous government’s record because of the first budget and the consequent budgets. But if you do not get the first one right it is playing catch-up football. That is what we are playing here today. It will not surprise you that this is exactly what I am leading up to in regard to the Rudd government’s first budget. They were left with the legacy of a strong economy where all the structures of reform were in place. It was a pretty lucky inheritance—luckier than we had.

Moreover, coming into government, Mr Rudd set his own benchmarks for the first budget and for his first term in government. Mr Rudd told the Australian people that he was going to bring down grocery prices, bring down petrol prices, make housing more affordable, help working families, fight inflation and keep the economy strong. These were his own benchmarks. Yet, on budget night—the defining moment of this new government—he let the Australian people down. First of all, he appointed Mr Swan, the nervous man, as Treasurer. That was the first point at which he let the Australian people down. But the substance—what was written into the budget—let the Australian people down too. All the spin and hyperbole pre election—post election, even—led up to a budget that amounted to naught. The budget failed every single test: the test against the legacy that the previous government left them and the test and benchmarks that Mr Rudd set for his own government. It was a muddled, rudderless budget, and it reflected just the type of government that we are going to get over the three years of their first term. This is what we can now expect. If they fail the test here, do not think that they are going to make a second budget any better or with any more integrity than their first.

They are what we know now as old Labor—big spending, high taxing and not meeting their commitments. I know they go around making a song and dance in regard to meeting their election commitments. The truth is, they are not meeting their election commitments and the real promises that they made the Australian people. They have not cut government spending. In fact, it has increased by over $14 billion. They made some cuts all right—they cut $15 billion of coalition programs so that they could replace them with over $30 billion of their own programs. They seek to introduce a policy in regard to fuel prices—Fuelwatch. We are all well aware of the controversy over the last few weeks surrounding that. On the advice of four departments, including no less than that of Treasury itself, this price-fixing scheme—and that is what it is: old-fashioned price fixing—will put prices up, not put them down. That is on the advice of four departments.

The government set up a grocery inquiry. That was their idea of tackling the grocery price problem. Yet, by sleight of hand or slap of hand, at the same time, they sought to introduce into this chamber—and no doubt they will do it again after June 30, when we lose the majority—a road user transport charge on trucks. That is, in plain language, a 1.5 per cent increase in the diesel tax on trucks, which is indexed—the return of the old indexing of fuel! The obvious cascading effect of this—let alone the effect on the small businesses and the truck drivers that drive around this country delivering the groceries—is an increase in prices on supermarket shelves, and an indexed increase in prices at that.

The Labor government introduced an array of taxes in this budget. We never saw that coming. We saw the tax cuts coming because we were the ones who set it up for you. We knew the ‘Costello tax cuts’ were coming—the biggest income tax cuts in the history of Federation. We were probably not too sure if you would actually commit yourself to that, but you did. But no-one saw the tax increases coming. You did not say anything about it before the election. Of all aspects of the budget, this part reveals what we can expect in the future from this government. It is the part that really took my breath away. You actually increased an array of half a dozen or so taxes!

The most significant was of course the $3.1 billion on mixed drinks—the so-called alcopops tax. This was dressed up falsely as a health measure designed to tackle binge drinking. That is how you sold it. But why then would the budget papers show an increase in that tax over the next four years if you thought it would actually reduce alcohol use? It was a tax grab.

Another hidden item buried very deep in the budget papers is the $2.5 billion tax grab on condensate, which is a light crude oil from the North West Shelf. And it is the Western Australian consumers who will feel the cascading effect of this $2.5 billion tax grab. They never saw that coming. We have a Western Australian here with us in the chamber: Senator Judith Adams, who I know only too well. Perhaps Western Australia knows the legacy of Labor governments because at the last election it was a state that just simply would not swing to the Rudd phenomenon. They were too smart for that. And what reward did they get? New taxes on their fuel.

Labor abolished over $1 billion worth of small business programs. Those programs were designed to create investment and employment. You do not get near-full employment without supporting small business and their ability to employ people. Small business is where the growth in employment is—it is not at the big end of town—and you have now slashed $1 billion off the small business programs of the former government.

But, without doubt, the most callous item buried in the budget papers is the utter abandonment of the goal of full employment, which the previous government had. In fact, the budget papers talk of unemployment increasing by over 100,000 people. In such strong economic times and with such a great legacy left to them, Labor, in their first budget, is actually conceding an end to the goal of full employment and conceding that unemployment will increase.

Every commentator has concluded that this budget is a wasted opportunity but, most of all, the Australian people have. The Australian people have without doubt judged this budget to be a lost opportunity. Business and investment confidence has slumped and consumer confidence is at a 15-year low. There is very little confidence that you can tackle the domestic concerns and, of course, the international concerns, which are still rolling in. As the previous Treasurer said, ‘They will roll in like a tsunami.’ And there are more to come; we are all quite aware of that. There will be more international unrest that will affect this economy. Australian consumers, whose confidence is at its worst for 15 years, have now passed judgement on this government’s first budget.

It is not that they do not have a plan. They do have a plan for the future in two particular areas. The first one is to return the unions, front and centre, to power in the workplace. Secondly, they want, of course, to get themselves re-elected, and to this end they have established a $40 billion slush fund.