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

Some things in politics are all too predictable. The government says last night's 2016 budget was a budget for jobs and growth. They blamed the former Labor government for the successive budget deficits that are now forecast to stretch out into the next decade. The Labor opposition says it is a budget for millionaires. They contend that most Australian families will miss out on any benefit and that that simply is not fair. These scripts could have been and probably were written well in advance, and the same lines are going to be repeated ad nauseam over the next eight weeks.

If you step back from the highly partisan debate, the majority of commentators—and there are commentators aplenty these days—have found the budget distinctly underwhelming. Indeed, the best that some could say last night was that Treasurer Morrison had to some extend followed the philosophy of the ancient Greek physician Hippocrates insofar as the budget appears to have been designed to do the least harm. All too often these days politics seems to involve the triumph of low expectations.

Regrettably, however, I do not think is a Hippocratic budget. Regrettably, it will do harm; it will do harm by omission. It is not what it is in the budget—a tax cut that maybe could buy a meat pie and some very modest tax breaks for business. It is the things that are not in the budget that are the bigger issue. For a budget that is supposed to be all about jobs and growth, it is inexcusable that it fails to acknowledge the crisis in manufacturing in this country not just in the auto-making sector but also in our steel industry, with manufacturing in this nation as a percentage of GDP now well under double digits, unlike comparable developed nations. Australia's manufacturing as a share of GDP has slipped from 12 per cent in 2004 to well under seven per cent now and is expected to slide even further to below that of nations that never had a significant manufacturing base—for instance, Botswana at six per cent and Rwanda at five per cent. Contrast that with Germany, the jobs and economic powerhouse of Europe, where 22 per cent of their GDP is derived from manufacturing, including smart, advanced manufacturing.

The budget papers refer to the massive decline of some 60,000 jobs in the manufacturing sector in the past year. However, they conspicuously fail to acknowledge the 200,000 jobs at risk, especially in South Australia and Victoria, and flow-on effects throughout the rest of the nation when the auto-making sector shuts down at the end of 2017. A strong, viable steel industry is essential for our nation's manufacturing sector. Arrium, the producer of structural steel in this country—the steel that is used in concrete pours for new buildings and so much more—is a critical part of our manufacturing sector. Indeed, it is an essential part of its foundation.

Arrium, which is currently in administration, is doing it tough, and an entire city, Whyalla, relies on steelmaking to survive—although I am confident that the administrator, Mark Mentha, can revive its fortunes if we have the right policies in place. If we keep going as we have been, we will soon no longer be a manufacturing nation of significance. Unless we change Commonwealth procurement laws to ensure that the social and economic benefits of local procurement are given priority not just with the $59 billion of Commonwealth funds that are used to procure goods and services each year but with the tens of billions of dollars more that go to state and local governments for infrastructure, Arrium and so many other companies will not have a fair chance to prosper and, indeed, could fail.

Our antidumping regime and non-conforming building products from overseas are two other important areas that need urgent reform to give Australian manufacturing and jobs a fair go. Of course, members of the government, especially those from my home state of South Australia, can rightly trumpet the government's recent announcement in respect of naval shipbuilding and say that all will be well. Of course, I wholeheartedly welcome the much-delayed commitment concerning construction of the next generation of 12 submarines and praise my colleagues for being part of that success. But there is still a long way to go before the contracts are signed. There is an even longer way to go before steel is cut—up to seven years before we see most of these jobs materialise. There will certainly need to be continuing pressure on whoever forms the next government to see that the commitments that have been made in regard to naval construction and submarine building are fulfilled in full. In any case, it will certainly be some time before the benefits of new naval construction re-energise South Australia's shipbuilding and defence industry sectors.

In the meantime, the Navy's new supply ships, worth some $2 billion, seem destined to be built in Spain, but I note the contracts have not yet been signed. But a contract has been signed for Australia's next Antarctic research icebreaker, a $500 million build that will be constructed in Romania. South Australia's shipbuilders are still going to face some very serious challenges before the new naval construction projects come online, with at least 700 direct jobs due to go in South Australia by the end of 2018—the so-called valley of jobs death—with several thousand more jobs affected through the supply chain and multiplier effects.

The budget does very little for the South Australian workers, contractors and small to medium businesses in manufacturing supply chains that face immediate and grave challenges. As is so often the case, the government's ideological—I say blinkered—commitment to free trade agreements also fails to consider the extent of impacts on local manufacturing opportunities. I have already referred to the importance of local procurement. However, the budget references to the TPP procurement agreement are certainly light on detail and could compromise Australian jobs by restricting the ability of local procurement agreements that would take into account the great benefits of buying local. But it could get worse—much worse—if Australia signs on to 'the greatest procurement treaty you've never heard of', to quote Graeme Philipson of Government News. If Australia goes on to sign the WTO Agreement on Government Procurement, that could well make it illegal for state governments such as those of South Australia and Victoria to attempt to ensure that the local benefits of procurement are considered. It could also mean that any attempts by this parliament to strengthen our procurement laws could be challenged in the WTO.

South Australia's manufacturing crisis, and indeed the crisis around the country, is real and immediate and will only intensify in coming months. If the government were a physician, it would be standing by the bedside, passive and ineffective, wringing its hands and telling everyone that it hoped for the best while the patient struggles for life. This indifference extends to the struggles of Australia's iconic wine industry. While the government has made some unambiguously welcome steps towards promoting Australian wine to the world and dealing with aspects of the wine equalisation tax, it has failed to acknowledge the Winemakers' Federation's urgent plea to phase out, now, the much rorted wine equalisation tax rebate on bulk and unbranded wine. That tax has distorted and damaged the sector, pushing many hundreds of wine grape growers and winemakers to the economic brink. The government's failure to listen to the industry and to do the right thing by beginning the phase-out now, rather than in 2019, will cost Australian winemakers dearly.

The budget could also have provided the government with the opportunity to reconsider other measures that can only exacerbate economic challenges for regional Australia. The government's failure to scrap the much-feared backpacker tax, due to commence on 1 July, is certainly another body blow for farmers wanting to get the job done in regional Australia, where there are periodic labour shortages. This silly, counterproductive tax needs to go now.

There are also some very serious questions in regard to the health, education and aged-care aspects of the budget. The government certainly has not restored the health and education funding that was cut away in 2014. The budget papers also blandly refer to 'efficiencies' of $1.2 billion over four years through changes in the scoring matrix in the Aged Care Funding Instrument. This could prove deeply damaging to a significant number of our senior citizens. The government certainly needs to spell out its plans in detail to show exactly what is proposed in this very sensitive area, and they need to give an absolute guarantee that none of Australia's elderly will be disadvantaged.

It would be remiss of me today not to also point out the government's failure once again to come to grips with the enormous social and economic impacts of problem gambling. Despite the government announcing—a welcome announcement—last week that it would clamp down on online gambling, including illegal offshore online gambling sites, there does not appear to be any money set aside for the enforcement and implementation of these policies.

I fear that this is very much a 'treading water' budget from a government desperately anxious not to sink at the 2 July poll, and I understand that. Time will tell whether the government's gamble will pay off. No doubt there will be a strident partisan debate between the coalition and Labor in coming weeks, but it remains to be seen whether either side will really address some of the really important challenges that our nation faces, especially the jobs crisis in our manufacturing industries.