Dean Smith (WA, Liberal Party) Share this | Hansard source

I am speaking in continuation on this private senator's bill, the Productivity Commission Amendment (Addressing Inequality) Bill 2017, which I suspect we might even vote on this morning. It seeks to draw attention to the issue of inequality in our country. Before I get to the substantive matter of whether or not there are or are not rising levels of inequality in Australia, I think it's important to revisit the issue of whether the technical elements of this bill are, in fact, correct or flawed. In my earlier contribution some weeks ago, I drew the attention of the Senate to my observation that the technical elements of this bill were flawed, for two primary reasons.

First, I think it is important—and the bill does draw this out—to recognise the great work that the Productivity Commission does in our country quite generally. Later today, perhaps even this morning, the Senate will debate the government's legislation that seeks to reform the goods and services tax distribution arrangements in our country. That is a debate that I know you, Deputy President, are very familiar with, coming from Western Australia—and I see Senator Sterle in the chamber as well. When we think about the elements over the last few years that led to such a significant revision in our GST distribution arrangements, it was because of the very, very good work that the Productivity Commission had done, both in its interim report and in its final report, which provided a pathway to what was once regarded as an intransigent issue with regard to federal-state financial relations in our country. Where Senator McAllister's private senator's bill is correct is in recognising the important work that the Productivity Commission does—indeed, the transformational work that the Productivity Commission does. I, for one, along with many other senators, I am sure, am someone who does believe that the Productivity Commission can be trusted with significant jobs of inquiry using at its core the importance of an evidence based approach to coming up with alternative policy propositions that governments and, indeed, oppositions might like to take up.

The second element, of course, is that the bill also proposes that the Productivity Commission be charged with the task of doing the inquiry with regard to inequality and that it be given the responsibility to do that review over a significant period of time. But I do want to highlight one particular point in this debate: that the recent independent review of the Parliamentary Budget Office which was done as part of an inquiry that was established by the JCPAA made a very powerful recommendation—one that I think the government should embrace over the next six or seven months, and one that I hope future governments might give time to consider. That is whether or not the intergenerational report that is done by governments every five years should, in actual fact, be entrusted to the Parliamentary Budget Office and not to executive government or the government of the time.

The reason why I say that inquiry is one that is worthy of very, very detailed consideration is that, when we think about the importance of the intergenerational report for our country and shaping future policy decisions around population issues and future taxation issues, I think it's a fair observation to say that often the good work—the very important work—that the intergenerational report does and the evidence it paints for our country often gets lost because it is a document that is owned by government rather than being independently owned by an office like the Parliamentary Budget Office. If it were to be owned by the Parliamentary Budget Office, I think that the information that's contained in that intergenerational report would be more readily used by stakeholders across the Australian community and would be more readily used and endorsed by governments and opposition parties in framing a more comprehensive policy approach to a whole variety of issues that confront our country not over the immediate term but over the medium and longer term. That is something that, while not specifically addressed in this private senator's bill, is a matter that I think does deserve careful consideration, perhaps again by the JCPAA, which is the Joint Committee of Public Accounts and Audit, and most certainly by this government. I hope it's something the new Treasurer, Josh Frydenberg, will put his mind to over coming months. I think it's an important way to shift the focus from what parliaments, governments and politicians often get criticised for, which is having too short-term a focus on policy development and policy implementation, and shift it to a more medium- to longer-term policy approach.

But the substantive issue that we're discussing this morning is whether or not inequality in our country has been increasing or whether or not inequality in our country has actually remained stable. I will talk about the issue of inequality briefly in a moment, but, in discussing whether or not inequality has remained stable or perhaps even decreased in our country, that is not to excuse the very important work that does need to be done to make sure we are constantly addressing issues of workforce participation, making sure that young people get jobs in our country and making sure that women have an opportunity to participate in the country. So debating the point of inequality is not to excuse the very real issues and very real challenges that exist in our economy. We should make sure that Australians, irrespective of where they come from, irrespective of where they live, irrespective of their age and irrespective of their gender, have an opportunity to participate to the fullest extent in the Australian economy. We know that if people get to participate in the economy—that is, they have a job; they're able to save—then they're able to enjoy much of the prosperity, they're able to raise families and they're able to start businesses. And that, of course, is a critical element in what we're discussing.

If we turn to the substantive point—whether or not inequality in our country has been increasing or has remained stable, or whether or not it might just be part of the sloganeering that we hear from the Australian Labor Party as we move closer to a general election next year and whether or not the evidence actually supports the sloganeering—I will be arguing briefly, in the short time available to me, that the sloganeering is not substantiated and not supported by the evidence. I think the first evidence base, if you like, that I'd like to turn to is the Household, Income and Labour Dynamics in Australia survey, commonly known as the HILDA survey. The HILDA survey, released in July 2018, just this year, found that relative poverty is at the lowest point in the history of the survey, whilst absolute poverty remains close to record lows. That's the evidence. Whether or not inequality is on the rise in this country or has remained stable—the answer to that question is in the evidence. It's in the HILDA survey released in July 2018. It said that relative poverty in our country is at the lowest point in the history of the survey, whilst absolute poverty remains close to record lows. Again, that's not to say that we shouldn't be mindful of issues of inequality in our country, but, in terms of what the current position is, what the current challenge is, the HILDA survey has been quite conclusive.

The survey goes on to say that in the period from 2001 to 2016 the percentage of the population in absolute poverty decreased by approximately 70 per cent, from 12.6 per cent to 3.6 per cent, while the percentage in relative poverty—that is, with a poverty line set at 50 per cent of median income—fell from 12.6 per cent to 9.4 per cent. I'll be the first to recognise that it didn't say that poverty has gone, that poverty has been eradicated in our country, because, of course, we know that wouldn't be a true statement. But what it does say and what it makes very clear—the evidence makes it very, very clear—is that poverty has been on the decline in our country, and that's something that should be rewarded. It goes on to say that recent data supports the notion that some income inequality measures in Australia have stabilised since the global financial crisis. According to the Australian Bureau of Statistics, the Gini coefficient for income inequality fell from 0.33 in 2013-14 to 0.32 in 2015-16, after growing in the lead-up to the global financial crisis, peaking at 0.33 in 2007-08. So, the most important and reliable source of evidence, the HILDA survey, makes it very, very clear to us that poverty remains close to record levels in our country.

We can think about why that is. What are the structural features in the Australian economy that allow that to happen? I think it's fair to say that there are a number of elements that have given rise to that very, very stable outcome. The first and most obvious is the sustained growth that has been delivered significantly to Australians over the last 30 years. Sustained episodes of strong economic growth have allowed Australians across the community to enjoy high levels of prosperity. Importantly—and I think it's something that most people in this chamber would agree with—Australia's progressive tax and highly targeted transfer system have substantially reduced inequality, meaning that those who are asked to pay tax in our country are those who are most able to earn and accommodate that tax. But, also, our social security system arrangements are very well targeted, meaning taxpayers' money goes to support those who are most in need in our community. Another structural feature of the Australian economy that I think has helped to stabilise and even decrease those levels of inequality has been the fact that economic mobility in our country is very high, meaning that Australians, during the course of their lifetimes, during the course of their working lives, have been able to move across income distribution scales. That's an important structural feature of the Australian economy that allows issues of inequality to be constantly managed and constantly addressed.

As I said earlier, that doesn't mean we should be blind or ignorant to the fact some Australians might find themselves in periods of economic disadvantage or dislocation as the economy changes, but we can have a mature, sensible, evidence based conversation about inequality while, at the same time, recognising that for some Australians, at particular points in their working life, things might get a little bit difficult. And we have a transfer system or social security system that allows those people to be properly looked after and hopefully return to work.

Of course, there's been a significant development in the time that we've been debating this private senator's bill, which has been probably over the last few months. The Productivity Commission itself, in the last few months, released its own report to say that inequality in our country was not the problem that some people were trying to make it out to be. Indeed, the Productivity Commission report was conclusive. It received a tremendous amount of publicity through The Australian newspaper, The Australian Financial Review and other media sources. It was very, very clear about inequality in our country. The evidence of the HILDA survey was released in July 2018, but the survey was conducted in the period before that. But then, of course, added to that were the comments by the Productivity Commission chairman, Peter Harris, who has since retired, when he said that inequality in our country was not the issue that some Labor members of parliament had tried to make it out to be. What that means is that the parliament's attention is focused on issues where there is no evidence. It means the parliament's attention is not focused on the areas where there does deserve to be greater conversation, greater discussion and greater ideas with regard to possible policy improvements.

I want to quote briefly, if I may, from The Australian Financial Review. It was an opinion piece published on 4 September 2018 in The Australian Financial Review by Mr Brendan Rynne, who is the chief economist at the KPMG, a renowned consulting firm in Australia. I want to read into the Hansard not only what he had to say with regard to the issue of inequality in our country and what he had to say with regard to the Productivity Commission report but also what he had to say with regard to the KPMG's Economics and Tax Centre report that it released in April 2017, which specifically looked at the issue of income inequality in our country. Mr Rynne said in his opinion piece of September 2018 that, like the Productivity Commission report, KPMG's own report, the Economics and Tax Centre report of April 2017 titled Financial stress in Australian households: 'the haves', 'the have-nots', 'the taxed-nots' and 'the have-nothings', 'found that inequality in Australia has been relatively stable, and our tax and transfer system does a good job in equalising incomes between rich and the poor across the nation.' He went on to say:

Both of these studies have shown the proportion of Australian households living in poverty has not materially worsened over the past three decades; the economic prosperity we as a nation have enjoyed since then has been shared between everyone, and not just captured by the wealthiest.

Depending on how you measure it, growth in income inequality in Australia has, at worst, been equal to the OECD average, or at best, been virtually zero.

That's worth repeating: the chief economist at the KPMG—not a Labor senator, not a coalition senator but an independent—said:

Depending on how you measure it, growth in income inequality in Australia has, at worst, been equal to the OECD average, or at best, been virtually zero.

He went on to say:

This means income inequality has stayed constant in Australia while in the—

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