Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

What a topic to debate today, Mr Acting Deputy President Leyonhjelm! I want to touch on a few key economic issues before diving into the politics of this matter. Firstly, let's get some facts on the table. Most noticeably, we're seeing that wages growth is stagnant under this government; we haven't seen a rise in wages for some time. Let's just set the context for this debate. We know that the Treasurer has indicated that low wage growth is probably the economy's greatest threat. Today we see the national June accounts showing annual growth of 1.8 per cent, which is a long way short of our nation's potential, notwithstanding the fact that we've experienced a record period of economic growth in this country—but I'll come back to that point. We've got economic growth below two per cent, and it's been below two per cent for the last three or four quarters. This is now the worst run of economic growth performance since the GFC. There is no question that we are lagging behind. These accounts put Australia's annual growth performance below that of Canada, the US and New Zealand in the OECD.

It's ironic that we have the Turnbull government trying to whip up fear of socialism whilst it relies on public spending to prop up the June quarter wage figures. Yes, that's right: it wasn't actually the private sector which generated the growth in the economy. It was, in fact, total government investment in that period—driven largely by the new Royal Adelaide Hospital and the Weatherill government in South Australia, and government consumption—that is the explanation for the fact that we had any growth at all in the economy. So it is somewhat ironic that it is public sector growth that this government is holding up as part of its economic performance.

Average wages fell by 0.1 per cent in the June quarter, which is another reminder of the squeeze being felt by low- and middle-income earners, and living standards have slipped significantly. Despite these concerns, the Turnbull government, with its policy to cut penalty rates, presides over a scenario where the wages of low-income employees are being cut without any compensation and continues to fail to deal adequately with the surge in power prices. The ABS notes that, for the last five quarters, households have been spending more than their incomes, and this is in line with the RBA governor's concerns around household debt and the risks that this poses to future economic growth. We have the extraordinary situation where household debt is around 180 per cent, I think—it was when I last looked at it—of GDP. That is an extraordinary position.

So, I would go so far as to say that it's the Turnbull government that is posing the biggest risk to future economic growth. Indeed, in March of this year an analysis from the Australia Institute showed that 46.2 per cent of the share in the GDP in the March quarter was the lowest recorded since the ABS started collecting data in 1959. So we're talking about the share of the economy there. It's even lower than when economic policies of Eastern Europe were at their most popular.

When it comes to company tax, one of the classic arguments put forward in 1980s economic thinking was that tax cuts were self-fulfilling, that if the government got out of the road of corporations and lowered the tax rate we'd have higher growth and wage rises and these benefits would pay for themselves. Last year we had a Prime Minister and a government clutching at straws to have a credible jobs and growth campaign. We all remember how many times that slogan was repeated, but—unusually—we don't hear much of it these days. And what did we see as the centrepiece of that economic policy? A company tax cut, straight out of 1980s economic thinking. It was put forward as a solution to all our economic woes. I think this goes to the heart of the issue: we have a government that is looking at the problems that beset the Australian economy in 2017 and beyond through the lens of what happened in the 1980s and before that.

Now, let's be clear about company tax cuts. They are not always a bad thing. We remember the good work of former Prime Minister Paul Keating in reforming our economy and lowering the company tax rate. But there is a difference. Former Prime Minister Paul Keating paid for all of his tax cuts; the Turnbull government didn't, blowing a $65 billion hole in the budget—so much for responsible budget management from the other side of the chamber. As I repeatedly mentioned—Stephen Koukoulas makes this point—when you're looking at which side of the chamber actually has the record of being the low-taxing government, it's actually Labor governments that quite empirically can be shown to be in that category.

Budgets are about priorities. There might be times when a company tax cut is the best use of taxpayer money, but we also hear from the RBA and the IMF that infrastructure spending is likely to be much more productive. Education is also a worthwhile investment. On this side of the chamber we take a modern, progressive approach to economic thinking. We see on the other side a government that is stuck in the 1980s, trying to re-prosecute old battles.

I just want to talk about the presence in Australia recently of former shadow chancellor in the UK, Ed Balls. I thank my colleague and former Treasurer Wayne Swan, the Chifley Research Centre and the Australia Institute for arranging his tour of Australia. Ed spoke about how current economic challenges have shown that policy thinking needs to move on from the 1980s. He made a couple of points in his Press Club speech that are worth thinking about:

Assumption one was that the main source of instability in our economies came from governments making mistakes – too much inflation, too much deficit spending – and that if you had a sound approach to monetary policy and got your fiscal policy right that was the best way to ensure stability in the economy.

When we look back to the GFC we see that the lack of strong regulation and oversight of the financial system was a crucial oversight. And when we look to this government we see a government stuck in the past, refusing a royal commission into the banks, refusing to take a strong interest in macro-prudential regulations to manage runaway housing prices. The second issue Ed Balls mentioned was:

… we didn’t see … that inequality wasn’t going to be, as we thought, simply about the bottom falling behind. In Britain from the early 2000s, from America from before that and maybe Australia more recently, the issue has been that people on the highest incomes have seen their incomes shoot ahead while medium earners, people in the middle, have seen their wages stagnate as well as people on the bottom. And in terms of jobs and technology we’ve seen an absolute increase in unskilled jobs, an absolute increase in high skilled jobs and an absolute fall in middle skill, middle wage employment.

There are challenges in the modern economy to protect the middle class, and Labor has clear policies addressing housing affordability, education, protecting Medicare and protecting penalty rates to ensure that people have a decent shot at life. But we see from the government's approach that their thinking is stuck in the past. They are looking to undermine the social safety net, undermine the union movement on a daily basis, lower penalty rates and engage in rampant deregulation and widespread privatisation. The government needs to get out of the 1980s time warp and come into the 21st century. If the Liberal-aligned commentators and ministers stopped ragging on Labor and addressed their own party's policy shortfalls, perhaps Australia's economy wouldn't be so stagnant.

I am proud to be part of a movement that has stood up for ordinary working people for more than 125 years. As the working environment continues to change, our policies will continue to change to suit the needs of working people and the needs of our families. The only people in danger of adopting 1980s policies are this failing government. They want to fight the same battles that were drawn up years ago. They are refusing to change and, in doing so, they are failing to change Australia for the better.