Don Farrell (SA, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

Yes, it is a shame, Acting Whip. Gross debt is currently above $518 billion with no signs of slowing down, and doesn't peak in the government's own budget papers. Net debt has doubled under this government and will hit record highs for the next three years. That is not to mention that the deficit for this year is $23.6 billion, eight times higher than the $2.8 billion the Liberals first predicted in their 2014 horror budget. I know you are interested in that, Madam Acting Deputy President, so I'll repeat those figures. The deficit for this year is eight times higher than the Liberals had predicted in their first horror budget of 2014.

I note that the Prime Minister is more reluctant to speak about debt and deficit blowouts on his watch than he was back in 2009. But his Assistant Treasurer, the member for Deakin, was happy to help out, saying it was 'a truckload of debt, an absolutely extraordinary amount of debt'—I don't think the opposition could have said it better! But what is more extraordinary is how quickly the coalition have racked up this truckload of debt. The coalition, under Mr Turnbull and Mr Abbott, have racked up debt much faster than during the Rudd-Gillard years. Gross debt has increased by $39 million a day quicker. Net debt has increased by $21 million a day quicker. And the government can't blame this on the global economy as global conditions are the best we've seen in a decade. The International Monetary Fund's most recent World Economic Outlook Update—this is for January 2018—says:

Global economic activity continues to firm up. Global output is estimated to have grown by 3.7 percent in 2017, which is 0.1 percentage point faster than projected in the fall and ½ percentage point higher than in 2016.

Yet the government is still racking up debt quicker, in good economic conditions, than occurred under Labor, when we had the global financial crisis to contend with.

The state of the budget under the Liberals comes down to one key point: the Liberals are obsessed with pandering to the top end of town. This attitude hurts the budget, hurts the economy and comes at the expense of people who work and struggle to make ends meet. The latest Mid-Year Economic and Fiscal Outlook is a perfect example of the Liberals' elitist and out-of-touch approach, with higher taxes for workers, lower taxes for multinationals and millionaires, and record and growing debt. Whenever the Liberals do attempt fiscal repair, it is always at the expense of vulnerable people. They are ripping away funding and support for students and universities. There is a $34 billion hike on the seven million low- and middle-income earners in Australia. They want to ditch the energy supplement, which would leave pensioners up to $366 a year worse off, and increase the pension age to 70, which will mean Australia will have an older pension age than the US, the UK, Canada and New Zealand. It will also mean that 375,000 Australians will have to wait longer to access a pension in the first four years alone.

But for the clearest example of the Liberals pandering to the top end of town we need look no further than the $65 billion tax cut for big multinationals and the big banks. This is a $65 billion ram raid on the budget. It is $65 billion taken out of funding for education, health and the pockets of middle Australia—and $10 billion of that is going to the big banks. The economics of this don't stack up. Treasury modelling shows a one per cent boost to GDP in 20 years time—an average of 0.05 per cent a year. A report by the Australia Institute highlighted the lack of evidence between the tax cut and increased jobs or growth. The Grattan Institute has warned that national income would be reduced for years and that, by committing to the handout before fixing the budget, the government risks reducing future living standards. To quote that think tank:

An unfunded company tax cut would add to already-large budget deficits … any cut to the company tax rate should only be implemented as part of a wider tax (and spending) reform package that does not increase budget deficits.

The tax cut is a kick in the face for people struggling to make ends meet. Ordinary Australians don't want to see the biggest companies get tax concessions they don't need at the expense of their own living standards. Polling from The Australia Institute also shows that the majority of people—that is, 58 per cent—don't support the $65 billion big business tax cut. And, more significantly, I guess, a recent Guardian Essential poll showed that 42 per cent versus 30 per cent rejected the claim that a corporate tax cut would lead to higher wages. It also showed that more people—38 per cent to 32 per cent—thought that cutting the company tax rate would simply deliver more profits to the business bottom line, rather than attract investment and create more jobs and higher wages.

The coalition's pandering to the top end of town is not just exclusive to the big business tax giveaway, it applies to other areas as well. The government has given tax cuts to those who need them the least: a $16,400 tax cut to millionaires. It's also not willing to reform other areas, like trusts, negative gearing, capital gains tax and superannuation, that advantage the top end of town.

For example, under the Liberals, more than half of the superannuation concessions go to the top 20 per cent of income earners. Peter Martin from Fairfax summarised it well recently, when he said in an article:

The biggest superannuation and capital gains tax concessions are directed towards the highest earners, something we wouldn't tolerate if they were delivered as cheques, paid into accounts.

This government's elitist and out-of-touch approach is as concerning for the economy as it is for the budget. As I said, the global economy is going strong, and our domestic headline rate would suggest that things are good here too. The national accounts show that Australia's GDP growth for the year to the December quarter was 2.4 per cent. However, the headline figure doesn't give a sense of how we're slipping in a global context. Australia has gone from leader to laggard.

Our response to the global financial crisis meant that we overperformed in what was an horrific global context, and we were only one of two advanced economies to do so. Between 2008 and 2010, Australia had the fourth-highest GDP growth among all OECD countries, with the US, the UK, Japan, and Germany all contracting over that period of time. The latest comparative data shows that Australia has now slumped to 20th among the OECD, behind likes of Mexico, Estonia, Finland and Latvia. I can see that you are shocked, there, Madam Acting Deputy President Reynolds, and I am too! I'll repeat those countries: we've now slumped to 20th among the OECD, behind likes of Mexico, Estonia, Finland and Latvia.

The headline figure also masks some enduring, and indeed concerning, underlying trends in our economy which are disproportionately hurting some more than others. A lot of people feel, with some justification, that the rules of the economy are written to benefit others at their expense. That makes sense when you consider that inequality is at a 75-year high and that the gender pay gap is widening, with a recent World Economic Forum report ranking Australia 42 out of 144 countries, falling from 12th position a decade earlier.

This economic disconnect is most prevalent in the world of work and wages. The link between hard work and reward has been severed. Wages grew by two per cent, consistently hovering around record lows. The unemployment rate is at 5.5 per cent, a level comparable to the peak of the global financial crisis. With near-record underemployment, Australians want more work, but they cannot get it. On top of these economic pressures, the Liberals are worsening the situation by supporting penalty rate cuts. These cuts hurt our lowest-paid workers—with some 700,000 impacted—with workers losing up to $77 a week, and have a disproportionate effect on female workers.

The Commonwealth Bank of Australia's chief economist, Michael Blythe, wrote about the wages recession in his economic issues note. He spoke about the weakness in wages growth as a significant economic risk, with impacts on households and businesses. Mr Blythe notes that weakness in household incomes remains a major threat to consumer activities.

The Liberals are simply pandering to the top end of town, and it's best displayed with their $65 billion big business tax cuts. This policy sharpens the difference between the Labor Party on this side and those opposite. We know you can't grow the economy by favouring the top end of town at the expense of middle Australia. This is a government that thinks big multinational corporations pay too much tax, seven million working Australians pay too little tax and people get paid too much to work on weekends. These are all absurd propositions, and they are the reasons why ordinary Australians reject the Turnbull government's trickle-down economic agenda.

We in the Labor Party know that growth has to be inclusive. If you're serious about growing the economy, you have to invest in people and their productivity, you have to make sure people are rewarded for effort and you have to ensure that people have money to spend in the economy and can provide for their families. That attitude to growth also underpins our fiscal approach: we believe in budget repair, but it has to be fair. Unlike those opposite, we don't ask the most vulnerable to carry the can when it comes to getting the budget back to balance. That's why we've announced a raft of responsible savings that significantly improve the budget over the medium term. No opposition in recent memory has been as committed to leading the policy agenda as the Labor Party. Our determination to repair the budget in a fair way is the driving force behind that.

Labor has already committed to changes in taxations of trusts; reforms to negative gearing and capital gains; reforms to dividend imputation; changes to superannuation concessions for the top end; crackdowns on multinational tax avoidance; and other measures, including a cap on deductions for managing tax affairs. All up, we have put forward tens of billions of dollars in fair budget repair measures that don't ask the most vulnerable in our community to carry the can through higher taxes or stripping away funding they rely on.

We are pleased that our determined approach to setting the policy agenda, particularly when it comes to the economy and fiscal repair, hasn't gone unnoticed. To again quote Peter Martin from an article late last year:

… this time next year we will be faced with a choice between a government that makes things up as it goes along and a government in waiting that knows what it wants to do.

Laura Tingle, soon to be 7.30's new political correspondent, wrote last year in an article titled 'A useless bunch of indulgent politicians who deserve to be turfed':

… Labor frontbenchers have been going back and having a think about what it is they and their party should actually be trying to achieve in government: what values they are trying to promote.

In conclusion, we support these bills and won't stand in the way of supply.