Nick Xenophon (SA, Independent) Share this | Hansard source

There are many elements in these social services and other legislation budget measures bills that I simply cannot support. In my view, many of these measures are punitive and cruel, and they will further disadvantage the people in our community who most deserve our support. The Treasurer does have some structural issues to deal with in the budget. I agree with the cool heads, such as Jennifer Westacott from the Business Council of Australia, who say that we are going to have proportionally many fewer people in the workforce and many more people who will be ageing and demanding benefits, as they should, in the sense that we will have fewer people paying taxes and more people drawing on government revenue. So there are some structural issues that we need to deal with in the coming years. My concern is that this budget, and these budget measures, are retrograde and will not fix the problem.

It is also important to put into context a key element of the Treasurer's budget speech when he said that we need to be lifters, not leaners. Setting aside the fact that we do not need to be encouraging the idea of dividing our society into haves and have-nots any more than we already do, I say this is a simplistic approach to a very complex problem. When it comes to lifters and leaners, let us put this in a bit of perspective. I note that The Sydney Morning Herald, on its front page just two days ago, made mention of the fact that the rate paid by one in three of Australia's top companies is less than 10c in the dollar.

One company that I have a particular interest in is James Hardie. It effectively pays a tax rate of zero per cent because of the way it has restructured overseas and in the Netherlands. I should indicate that, as a long-time patron of the Asbestos Victims Association of South Australia, I know a little about what James Hardie's products have done to people. James Hardie knew, or ought to have known for many years, that it was peddling a very dangerous and indeed deadly product. James Hardie seems to be going down a path where it is having very healthy profits, and that is a good thing—I want James Hardie to do well so that it can keep up its compensation fund. But there appear to be shortfalls in that fund, which was established by a former senator in this place, who at the time was Premier of New South Wales, Bob Carr. I congratulate Bob Carr for the work he did in holding James Hardie to account, but it seems that there may be shortfalls in that fund.

The Sydney Morning Herald report indicates that nearly one-third of companies have an effective tax rate of 10 per cent or less. Mr Acting Deputy President Back, I am sure that, in transiting to and from Perth, you would have been to Sydney Airport on many occasions, and I presume you would be as outraged as I am about some of the fees that we pay at Sydney Airport. They do very well out of the hapless members of the travelling public and out of airlines, yet they are paying a tax rate of two per cent. Echo Entertainment, owner of Star Sydney Casino, pays a rate of five per cent. Leaving aside the issue of the enormous damage that the gambling industry causes, given the fact that a gambling establishment, Star Sydney Casino, is paying a five per cent effective rate of tax, then I reckon they are leaners, not lifters, when it comes to our nation.

The measures in these bills demonstrate that the government expects the most disadvantaged amongst us to do the heavy lifting for everyone else. Not only is that not okay; those on top of the heap are encouraged to lean on those below—that is what it looks like to me. This is not something I can or will support. I do believe we need to take action to repair the budget, but I think it is bad policy and bad economics to look at a graph and conclude that, since social services is the biggest area of expenditure, that should be the area to cut. What about areas of revenue? My concern is that, when it comes to revenue, we have not done enough. I do not agree with all that the Australia Institute says. Just so that I can put this in perspective, I think our think tanks in this country play a valuable role, and I am also grateful for the work that the Institute of Public Affairs does. It actually contributes to the public debate in a meaningful way, although I may disagree with many of the conclusions it reaches. But I think you need to have organisations such as the Institute of Public Affairs at one end of the spectrum and the Australia Institute, from the left-of-centre point of the spectrum, to trigger good public policy debate.

Dr Richard Denniss from the Australia Institute has done a lot of good work in relation to superannuation tax breaks, which have been described by the Australia Institute as 'the Hindenburg of the federal budget'. Back in April, before the budget, Dr Denniss said: 'It's the big elephant in the room. If we talk about the pension ballooning, well, this is the Hindenburg.' These tax breaks are not sustainable in the longer term. I believe we should encourage private superannuation. In fact, I have a private super fund. I do not mind people paying more tax on private super once they get to a certain sum. I think a benchmark or threshold of, say, $2 million for a private superannuation fund before an additional rate of tax were imposed would not be unreasonable, and that would be a significant source of revenue for the Commonwealth. We need to look at that in a way that is fair and equitable, because it is not sustainable given that we are looking at tens of billions of dollars for the cost of private superannuation tax concessions in the years to come.

I think the cuts imposed through this legislation are bad policy and bad economics, because they fail to take into account both the social and financial impacts. The measures in these bills will entrench the vicious cycle of disadvantage that exists in too many areas of our society. For many of us here it is difficult to understand or appreciate what it is like to live and grow up in these circumstances. I do not want to presume to speak for the people who will be affected by the measures in these bills—they have the right to speak for themselves. But what we do know is that punitive measures do not work. Instead, they lead to increases in crime, in substance abuse and in further disadvantage. In particular, the proposed Centrelink allowance waiting period could have a huge impact on people's ability to feed themselves or their family and could mean the difference between having accommodation and being made homeless.

The other issue is that jobs are just not out there. You could almost see a rationale for this in a period of full employment, but things are getting grim in terms of employment. In my home state of South Australia we are looking at many thousands of jobs being lost in the coming two to three years unless we can do our best to manage the transition from General Motors Holden leaving manufacturing in the state, along with all the component suppliers that they are involved with. And, of course, if we get the shipbuilding and submarine-building programs wrong, many thousands of jobs will be lost in my home state and across the country. Why would you want to punish a young job seeker when the jobs are simply not out there? We have failed our young job seekers, and our unemployment rate—with a headline rate of between six and seven per cent, depending on which state and which month—is inherently misleading. This is because a number of years ago the rules were changed, albeit internationally, so that if you are working one hour a week or more you are no longer deemed to be unemployed. The level of underemployment in our community is massive, particularly among young job seekers. You cannot afford to pay off a mortgage, get a loan for a car or plan your life if you are working only eight or 10 hours a week. So let us put that in perspective. I know my friends in the ALP and the Greens oppose me on this, but I think we need to have some flexibility on penalty rates for small businesses with 20 employees or fewer in the retail and hospitality industries. If there is some flexibility there, not on paying the award rate—I do not support reducing the award—or paying a casual loading, which are important, but on getting rid of some of the more punitive aspects of those rates we will see more people being employed.

Only a few weeks ago we debated the government's proposed changes to the penalties for serious failures relating to Newstart allowance. That bill, which was thankfully voted down, would essentially have made the penalty of an eight-week non-payment period the default for any serious failure. It removed the secretary's discretion not only to waive the penalty but also to end the penalty early where there was serious financial hardship. During the debate on that bill I quoted 2008 data from the Department of Education, Employment and Workplace Relations which showed that approximately 15 per cent of people subject to a non-payment period lost their accommodation and a further 50 per cent experienced difficulty in paying their rent and were put at risk of homelessness. It is not difficult to extrapolate that the proposed six-month exclusion period will have an even greater impact.

It is important to remember that these measures will affect more than those who are suffering serious disadvantage. The changes to the indexation of pensions and the family tax benefits may not have the same severity of impact, but the impact could still be significant. In relation to the family tax changes, these proposed amendments will likely affect the ability of families to access childcare and similar services. In turn, this may mean it is no longer financially viable for the lower earning parent to remain in paid work. Statistics tell us that this is most likely to be the mother. As such, the proposed changes will have a further impact on the ability of women to remain in the workforce. I have quoted the following statistic before, but in my view it is an incredibly important one. In 2012 the Grattan Institute released its paper Game-changers: economic reform priorities for Australia. The report stated:

Removing disincentives for women to enter the paid workforce would increase the size of the Australian economy by about $25 billion per year. The most important policy change is to alter access to Family Tax Benefit and Childcare Benefit and Rebate so that the second income earner in a family — usually, but not always, a mother — takes home more income after tax, welfare and childcare costs.

It is important to note that the paper estimates we could achieve that $25 billion by increasing the participation of women in the workforce by just six per cent. The amendments in this bill will do the opposite. Not only is that bad for the economy and a lost opportunity to add $25 billion to our GDP but they will also have a significant impact on the individuals and their families. Being out of the workforce does not just mean you are not taking home money right now, it means you are disadvantaged in terms of superannuation in the future. There is also the social context to consider. Participating in the workforce has benefits that go beyond just the financial.

On similar lines, I want to make a particular point regarding the proposed changes to the indexation of the single-parent payment. I acknowledge the government's view that this is the only payment that is indexed to the CPI and benchmarked to 25 per cent of male total average weekly earnings, as opposed to being indexed according to the higher of the CPI and the Pensioner and Beneficiary Living Cost Index and benchmarked to 27.7 per cent of male total average weekly earnings. However, it is important to note that recipients of the other allowance received a one-off weekly increase to compensate for the change in indexation when that occurred in 2009. PPS recipients never received that one-off increase, and indeed the eligibility requirements for the allowance were tightened even further in 2013. Under the proposed changes PPS recipients will be worse off in the future because their allowance will increase more slowly than it would under the current arrangements. This measure is a slap in the face.

I started by talking about what some companies are paying in tax. The effective tax rate for about one-third of companies is 10 per cent. I think most workers who are on a reasonable income would love to be paying a tax rate of 10 per cent. I agree with Senator Bill Heffernan—

Senator O'Sullivan interjecting—

I am not sure why Senator O'Sullivan is smiling. I agree with Sen Heffernan on many issues; some others we will agree to disagree on. He is right. He has warned that if you turn a blind eye to the billions of dollars going out of the door and offshore you are doomed to being unable to provide what people expect from government—roads, schools and hospitals. In Senate estimates not so long ago I asked about the approximately $130 billion that is being transferred offshore from Australian companies. If transfer payments are taking place that is costing the Commonwealth a lot of money in revenue. I acknowledge that the Treasurer, Mr Hockey, has been very vocal about this at the G20 and has actually done some good work about this. I think the Prime Minister recently made mention of this as well. If a tax transfer is occurring with, for instance, Apple then we need to be aware of that so that they pay a fair share in tax. If there are price differentials and the like then we need to know about that and we need to act on it. We need to have a budget that is much more equitable. I see that the government has put so much emphasis—too much emphasis—on these changes that I think are cruel and counterproductive.

Finally, on behalf of those self-funded retirees who are very concerned about getting rid of the Seniors Supplement of about $800 a year—I send a cheerio to my Aunt Effie, who has been in this country for over 50 years. She has worked her guts out and is a self-funded retiree with my uncle. It takes a lot to get my Aunt Effie upset—in fact, I have never seen her upset in all years that I have known her. She was upset about getting rid of the Seniors Supplement. Her words to me were that she has paid her taxes, she has worked hard all her life and she is self-sufficient. The Seniors Supplement was very important for her and her family for getting by, for helping out her grandchildren. That was just snatched away from her. I think the government could find that Aunt Effie and many others in a similar position who may have been supporters of the coalition may be swinging in another direction on their lower house vote. I assume she votes for me in the upper house.