Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Citizenship) Share this | Hansard source

I saw the light, Senator Cameron. Maybe you will one day as well if you have a hard enough look at the evidence. The fact is that grocery costs have been soaring. Labor promised to keep a lid on the cost of living, to do something about the rising cost of living, and they have utterly failed. Mr Rudd went on TV yesterday—on the Today program, which Senator Kroger has already referred to—and tried to justify what he thought were modest increases in the cost of living that would be caused by his emissions trading scheme. He postulated that the cost of living would only increase, according to Treasury calculations, by 1.1 per cent. He then failed to distinguish himself by being able to indicate in any way what the actual increases would be on things like milk, bread and petrol, when asked by the presenter of that program but continued to assert that that was the case.

I do not think the Prime Minister was well briefed when he made those comments. In fact the Prime Minister has already, in the course of this week, had to adjust his statements to the community about what exactly the higher costs would be as a consequence of his ETS. For example, he told the community a few days ago that there would only be a seven per cent increase in the cost of electricity prices attributable to his ETS. That sounds fairly modest—a bit more than 1.1 per cent, yes, but only seven per cent. Perhaps we could deal with that for the sake of the planet. But in fact, no, that was not the case. He had to come back and correct the record on that statement. In fact he admitted that electricity prices would rise by 19 per cent in the first two years alone of the operation of the emissions trading scheme. There will be a 19 per cent increase. That is in line with what the New South Wales independent regulator said when he reported that there would be, over the next three years, an increase of 62 present in electricity prices, of which more than one third would be attributable to the emissions trading scheme. There will be something like a 25 per cent increase in electricity prices. Electricity makes up a large proportion of household costs, both directly in the costs that consumers pay and indirectly in the input it has into all the other things that consumers use such as food and groceries. To see there will be a 25 per cent increase in electricity costs—in New South Wales at least—does not make one confident that the government will be able to contain increases under the ETS to just 1.1 per cent.

Another important point I think is worth adding to the mix is this: the government have calculated what they see as the increase in food and grocery prices as a result of the ETS. I understand that one of the factors that they have used to calculate that increase is that over a period of time people will begin to purchase more and more of their groceries in the form of imported goods. You might ask, ‘Why would people be purchasing more imported goods in the mix of their household basket of weekly purchases?’ The answer is this: imported goods are not subject to the ETS tax. Goods produced overseas and sold to Australia are not subject, at least at this point in time, to the inflationary effects of an ETS. The government’s own calculations are predicated on an increase in the cost of Australian made foodstuffs and a smaller increase in the cost of goods produced overseas. The government’s own calculation is dependent on more Australians buying imported foodstuffs and goods in their supermarket basket. That is one way of controlling the increase in costs, yes, but it is hardly a very encouraging way from the point of view of Australian primary producers. There is very disturbing logic at work there.

I mainly want to draw attention to the Rudd government’s failures with respect to the cost of housing. That is a very significant part of any household budget in Australia today. Perhaps we can look to that to see whether the Rudd government has been able to contain the cost of housing. Mr Rudd said, in the lead-up to the 2007 election, that the issue of housing affordability was a barbecue stopper affecting all Australians. He said he wanted to open a dialogue and find real solutions in holding the states to account for their contribution towards the cost of land and housing and wanted to make sure that this was an issue kept under control by his government. Again, let us look at the evidence. Senator Hurley spoke about the significant improvements by the Rudd Labor government. What have they been and how have they affected the price of housing? According to the survey of median house prices in eight capital cities around the country of the Real Estate Institute of Australia, in the first 18 months of the Rudd government the price of housing increased by 9.9 per cent. A rise of 9.9 per cent in 18 months is a much higher increase than the rate of inflation. House prices have risen faster than incomes. House prices have meant a lower level of affordability for Australians seeking to buy a home.

In rental housing, the situation is not much better. Again, the REIA calculates that over eight capital cities the prices of rents have increased by 8.9 per cent since the Rudd government was elected. So if you cannot afford that house you want to buy—because your first home is less affordable as a result of the policies of the Rudd Labor government—you are not going to get much relief by moving into rental accommodation, because the price of rental housing is increasing at a faster rate than it was supposed to.

The Rudd government promised that it would do something about bringing down the cost of family homes by introducing the National Rental Affordability Scheme to ensure that households paid less—20 per cent less—on rent than they had done previously. That scheme is still in the process of being rolled out, so at this point in time we cannot form any definitive judgement about how effective it will be, but it is worth remembering that at this stage very few of the supposed 50,000 Australian families meant to benefit from the scheme have actually obtained any benefit whatsoever. Even if they do enter into rental arrangements under that scheme with, supposedly, a 20 per cent reduction on the market rate in the rent that they pay, they are of course already half of that 20 per cent behind because rents have increased by 8.9 per cent in the course of the last 18 months. There is not much point in decreasing rents by 20 per cent if every 18 months or so there is an overall increase in rents in the order of eight or nine per cent.

The evidence of increasing housing ‘unaffordability’ in this country mounts day by day. Only this week, Fujitsu Australia, which provides business and information services, issued its monthly survey of 2,000 households and focus groups which looked at the evidence of household stress caused by the cost of housing. It found that high interest rates and rising costs of living were pushing up household stress in Australian families. For example, it found in respect of Canberra that 23 per cent of young, growing families will experience mortgage stress by the end of this year. It said that severely stressed households—those facing a potential sale or foreclosure as a result of factors such as rising costs and rising interest rates—were affected such that short-term relief through the government’s cash stimulus had dwindled and that net hours worked and falling household incomes were actually contributing to the extent of household stress.

The executive director of Fujitsu, Martin North, said most people in severe mortgage stress escape their predicament by selling their home, masking the full extent of the problem. The ratio of average incomes to average house prices was more extreme in Australia than in comparable Western countries. He said it would take 7.15 average annual incomes to pay for the cost of an average house, compared with 6.2 times that amount in Britain and 3.5 times that amount in the United States. Disturbingly, Fujitsu estimated that 747,000 Australian households would be in some discomfort by December of this year and 307,000 households would be under severe mortgage stress.

How does that justify the claims of the Rudd government that it is doing something about the cost of living if that very important component of almost every household income, the cost of housing, is rising at such a rate that it puts 700,000 Australian households under some form of housing stress? In what way is the Rudd government effecting significant improvements, to quote Senator Hurley, in dealing with that particular pressure point for Australian families? It clearly does not stack up. For the 8.8 million Australian families who are experiencing pressure as a result of this government’s policies, whether it be from rising grocery prices, rising rental prices or rising house purchase prices, nothing that the Rudd government is doing is having any particular positive effect.

The fact is, the ETS will make the situation much worse and it is very clear that the government just does not have any clear picture of what is going on in that area or how it is going to affect Australians. There was evident confusion in question time today from the government about exactly what the effect of the ETS would be on household incomes. Senator Evans claimed just yesterday that 92 per cent of families would receive full compensation and that working families would have those costs met. Today he had to admit that he was wrong and retract that claim. The fact is that the government’s position is anything but clear. The Prime Minister’s own confusion on the Today program this week illustrates that.

I think it is fair to estimate, as Senator Birmingham did in question time today, that something like half of Australian households will in fact be worse off after the compensation mechanisms are put in place. Something like 4.2 million of the estimated 8.5 million households in Australia by 2011 will receive less than full compensation or no compensation whatsoever. That is based on the calculation made by Senator Birmingham. You might ask on what basis Senator Birmingham has made that calculation. Senator Birmingham is entitled to ask: on what basis does the government calculate that 92 per cent of families will receive some measure of compensation or that the burden of the ETS will not be significant on Australian households? In question time in the last week, Senator Birmingham and others have asked the government to indicate what the extent of cost increases on those vital purchases by Australians will be, but they have not received an answer. We do not know what those cost pressures will be because the government cannot tell us. We have asked that question in question time—and the question has been asked in the other place—but no answers are forthcoming. In those circumstances, I think the government is open to the criticism that it just does not know to what extent Australians’ standard of living is going to be adversely affected by the decisions that the government is making with this ETS and other things that are impacting adversely on Australians.

I will conclude by taking up another point that Senator Hurley made, about rising prices under the coalition—how these made Australians go backwards and indicated our failure in the task of sustaining the standard of living of Australians when we were in office. The statistics are very clear. If members want an illustration of how governments—coalition governments versus Labor governments—have performed in this country, then they need look only at the last 25 years to see their records on the question of the cost of living. In the 11 or 12 years of the Howard government, real wages in Australia—that is, the amount that Australians receive in wages over the costs that they have to meet—improved by 20 per cent. That is our record in government. That is what we were able to achieve—a 20 per cent increase in real terms.