Dave Sharma (NSW, Liberal Party) Share this | Hansard source

I've had the unique honour of representing Australia in a number of capacities: as a diplomat and ambassador, as a former member of the House of Representatives and now as a senator in the Senate, representing the people of New South Wales, the oldest state in our federation, and the place I've always been proud to call home. My political journey has involved a lot more twists and turns than I ever anticipated when embarking on this career. As a form of employment, it's proven somewhat less secure than the diplomatic service! But what drew me back—why I am back—is because I care deeply for, and believe strongly in, our nation of Australia. Patriotism has become an unfashionable concept of late, but I am happy to describe myself as a patriot, because we should all be proud of Australia's audacious success. We have forged a nation out of the most diverse group of people imaginable into one that is prosperous, secure, united and harmonious. The opportunities we provide our citizens are without parallel. Our freedoms are robust. Our institutions are strong. Our quality of life is the envy of the world.

We should never, however, make the mistake of assuming that Australia's success is preordained—a birthright of our nation. Representing Australia as a diplomat overseas, I've seen how quickly countries can run aground by neglecting their fundamentals, by magnifying small differences, by indulging special interests, by allowing hubris to take hold. The biggest challenge we face in Australia is that born out of complacency. It's complacent to assume we can focus on the small issues because the big issues will look after themselves. It's complacent to assume that future prosperity is assured because the past has been kind to us. It's complacent to assume that our security is safeguarded by powerful allies and remoteness. The truth is Australia faces significant tests, the likes of which we have not encountered for several decades.

When I delivered my first speech in the other chamber, almost five years ago, I warned that Australia's strategic holiday was over, that the features of the international system and our own neighbourhood, which had largely underwritten peace and prosperity in the post-war era, were coming under strain and that we would need to rely more on ourselves and less on others in safeguarding our freedoms and independence as a nation. Since that time, the world has become only a less certain and more dangerous place.

Australia has enjoyed three great assets, and for most of our history these assets have kept the forces of chaos and danger safely at bay. The first is our geography. Being an island continent and relatively remote has insulated us from much turmoil and hostility. The second has been our partnerships: our alliances with the major naval power of the day, initially Great Britain and later the United States, have safeguarded the seas and our major trading routes, allowing us to trade freely and underwriting much of our prosperity. The third has been an international order that is rules based rather than power based. Australia has been an outsized beneficiary of this order where states are considered sovereign equals, where they enjoy the same rights regardless of size or strength and operate under the same agreed framework of international law.

These three assets, however, are now under threat. Longer-range weapon systems plus the ability to interfere from afar through digital and cyber tools means our geographic isolation no longer provides the measure of protection it once did. The US Navy no longer enjoys uncontested predominance on the high seas. The PLA Navy now has more battle force ships than the US Navy and is building new ships and combatant vessels at a higher rate. The liberal international order is under strain, with a distinct shift towards a power based rather than rules based order. If Australia is to remain a sovereign and independent nation enjoying freedom of action and making decisions in our own national interest, we must confront each of these challenges.

The erosion of our geographic advantage means we need to be better equipped to deter and defend against potential attacks on our sovereignty. This means greater surveillance and force projection capabilities in our defence forces and an ability to operate further from Australia's shores. We also need to strengthen our defences against espionage, foreign influence operations and digital and cyber attacks.

The Royal Australian Navy is now operating the oldest surface fleet in our nation's history, and the time line for an upgrade in our capabilities is too slow. Australia must embrace new technologies and doctrines, from longer-range missiles to armed drones and uncrewed platforms that can quickly boost our power projection capabilities.

Lastly, the challenge to the liberal international order means Australia must do more to defend the principles that underpin that order rather than rely on the efforts of others. In today's world there are currently two significant conflicts underway involving major powers. They are testing two important, foundational principles that have underpinned the post-World War II settlement and are articulated in the UN charter. Russia's invasion of Ukraine is testing the principle that one sovereign state cannot use force against another or acquire territory by force, and Hamas's terrorist attack of 7 October against Israel and Israel's legitimate military response are testing the principle of the right to self-defence. Both conflicts have the potential to spill beyond their current theatres and escalate into larger wars with global implications for peace and security. Both wars are exacting a heavy human toll. In both wars there are loud voices growing louder, insisting that the costs have grown too high and demanding that a settlement be found on any terms.

The test we face today with these two conflicts is whether we are prepared to uphold the important principles at stake. It was Henry Kissinger, reflecting on the breakdown in peace in the interwar period, who counselled that peace was the by-product of an international system that was willing to use force if necessary to maintain its underlying principles. But he warned that, if these underlying principles were not enforced, the system would quickly fall victim to the most cynical and ruthless states and would lead to a greater breakdown in peace.

If we truly want an enduring peace then we need to defend the principles that deter aggressors, and Australia has to play a part in this defence. If Russia succeeds in extinguishing Ukrainian sovereignty or Hamas is able to claim a meaningful victory, then we will have failed this test. Ruthless actors the world over will be emboldened, and the conflicts we so desperately sought to avoid will be brought, instead, closer to our own shores. Australia must do more to help Ukraine resist Russia's aggression, and Australia must insist that a durable peace in the Middle East is only possible with the removal of Hamas.

Domestically, our nation is struggling. The national accounts show that the Australian economy is anaemic. Without migration, our economy would not be growing at all. Real living standards are going backwards. Productivity growth is low, inflation is high, our population is ageing and the demands on government spending are growing massively. This is not just a post COVID blip but, as last year's Intergenerational report makes clear, a taste of what our economic future may look like.

Left unchecked, Australia is headed for a high-tax future, national decline and stark choices about where to direct our shrinking national resources. We risk becoming this century's Argentina, a promising nation that lost its way. And we are already seeing signs of Argentina syndrome here in Australia, where much of the national debate is focused on how to divide the spoils, how to reallocate the burdens, and how to insulate key industries and sectors from competition rather than how to grow the economy so that we are all better off.

The heart of our national economic challenge is threefold: to improve our demography, to boost our productivity and to rein in government spending. To support a larger elderly population in a sustainable way, we need a larger working-age population. Reversing the steady decline in our birthrate would lower Australia's median age, help ensure we have a larger working-age population and deliver a more sustainable balance between immigration and Australian-born citizens. We need policies that increase support for families, including those having children later in life, that make our care and schooling systems more accommodating; that treat the household, rather than the individual, as the entity for tax purposes; and that make housing more affordable.

Our woeful productivity performance must also be addressed. In Australia, this challenge is exacerbated by two factors: an industrial relations system that is increasingly decoupled from productivity gains and a lack of competition.

Competitive pressures drive innovation, investment and productivity, but the Australian economy in key sectors—from banks to utilities, supermarkets to telecommunications, aviation to insurance—has too little competition. In addition to the drag on productivity this situation creates, this lack of competition has allowed aggressive pricing practices, especially in the wake of the pandemic, and has been a major contributor to recent inflation. Corporate gross operating profits have surged over the past three years, whilst the share of national income going to labour has shrunk, despite low unemployment, to its lowest level ever. What we have witnessed is a rapid redistribution of national income. Big businesses have gained; workers and small businesses have lost.

Australia now has one of the most concentrated economies in the developed world. We have two major supermarkets, three dominant energy retailers, three dominant telcos, four major banks, two major airlines, four major insurers. And the profit margins of all of these companies are generally higher than those of benchmarks overseas. Concentrated domestic industries with only a few dominant players have, as their main objective, the preservation of their cosy market structure with reduced incentive to improve productivity or compete on price. This is highly profitable for shareholders, but it comes at the expense of consumers and, ultimately, Australia's economic performance. The way to solve this problem is not through more regulation. What we need is a renewed emphasis on competition policy and reform in Australia to lower the barriers to entry to reduce regulations that entrench the privileged positions of existing market players.

Lastly, as the blowing-out costs of the NDIS and the pressures on our aged-care sector illustrate, demand-driven social services without strict eligibility criteria, caps on payments and a scaled user contribution can quickly balloon out of control. Such an approach to welfare is simply not sustainable.

One of our most pressing national challenges is that of housing affordability. Australia is a nation built on home ownership. Home ownership provides stability for families, creates stronger communities and provides security in retirement. Housing is not just an asset class; it is a social good. But today we are failing a whole generation of younger Australians by denying them the ability to buy their own homes. Forty years ago in my hometown of Sydney, the median house price was five times the average annual salary. Today the ratio is closer to 12 and it is a picture replicated to varying degrees across Australia.

Today's younger Australians have done all that we have asked of them. They finished school, got a qualification, found a job, are paying taxes yet they find no matter how much they earn or how hard they save, home ownership is beyond their grasp. This is a breach of our social compact, and if it is left unaddressed we are storing up massive problems for the future. We will undermine social mobility in Australia and entrench inequality. The failure here is overwhelmingly one of supply. Consistently, over two decades, we have simply failed to build enough new homes to meet the demands of Australia's population, and this problem is especially acute in my home state of New South Wales. There are myriad reasons: slow and cumbersome approval and land release processes; too much bureaucracy and regulation, which add to cost and time for projects; workforce and skills shortages in the construction industry; and, sometimes, outright nimbyism, which privileges the rights of existing property owners over those who do not yet own property.

New South Wales managed to build 40,000 homes per year at the end of World War II. Last year we managed just 32,000 new dwellings. We must do better. We must enable the building of more homes, more quickly, and more cheaply or we will fail Australia. The shortage of housing is being exacerbated by high immigration, which is fuelling demand for already limited supply. Until we are able to accelerate the pace of our homebuilding, we need to reduce our immigration intake or else we will simply place further pressure on our housing market.

The challenge of housing affordability is not the only one being faced by the current working generation. They are also expected to pay for their own retirement through compulsory superannuation. Many of them carry sizeable debt from the studies they undertook to get a job, and increasingly they are being forced to pay through higher income taxes the lion's share of our generous social services. This is not an equitable or a sustainable social compact.

Australia collects a greater share of tax revenue from personal income tax than almost any other advanced economy. Almost 50c in every tax dollar collected comes from personal income tax, roughly double the OECD average. This unhealthy dependence on income tax receipts is growing worse, spurred on by high inflation and bracket creep. Income tax collection has gone up 23 per cent in a little under two years, as inflation pushes people into higher tax brackets. The number of Australians in the top tax bracket has doubled in the past decade and this shift has been mirrored right down the tax scale. People might be earning a higher nominal income, but high inflation means their purchasing power is actually reduced, and now their taxes have increased.

The changes to the stage 3 tax cuts made by the Labor government have only further entrenched bracket creep as a feature of our tax system. Australia's unhealthy dependence on income tax places an unfair burden on many younger Australians. Most do not own any assets but they are seeing an increasing share of their income being transferred to people who do. Little wonder they are frustrated. While I appreciate the challenges of wholesale tax reform, at the very least we should put in some guardrails to stop this problem from getting worse. We must put an end to the government's lazy reliance on bracket creep to magically fill revenue holes, put some discipline into government spending and force a conversation that we must have about a better tax mix.

Finally, let me address one of the most important responsibilities we all share: keeping our nation united. If you conducted a thought experiment and declared that you were going to people a new nation with individuals from all around the world with different ethnicities, languages, cultures, religions and value systems, put them all together, and overlay them on an existing civilisation and culture, most people would think you were creating a sure-fire path to civil strife, but that nation is Australia and the fact that we have been able to make such an experiment succeed and create a peaceful, prosperous and harmonious whole from many different parts is nothing short of astonishing.

We have achieved this through a shared sense of civic values, a respect for our institutions and, most fundamentally, a respect for each other as fellow Australians first and foremost. This is what has allowed us to escape the sorts of communal violence and sectarian tensions that often bedevil countries abroad. But, too frequently of late, our leaders have muted their voices and our institutions have neglected their duties in maintaining this compact. Discrimination, vilification, harassment and intimidation against the Jewish community in Australia have reached unprecedented levels. I understand that people in Australia feel strongly and differ widely in their views about the rights and wrongs of the current conflict in the Middle East and the terrible suffering and human tragedy that has accompanied it. But differing views is one thing. What we have seen in recent months has clearly crossed the Rubicon and resulted in one community and one community alone—the Australian Jewish community—being made to feel unwelcome in their own country, fearful in their own neighbourhoods and anxious about the future they face here. This is utterly unacceptable. It is also incredibly dangerous.

Jewish Australians are no more responsible for Israel's conduct of this war than Palestinian Australians are responsible for Hamas's terrorist attack that prompted it. Like all other Australians, they are entitled to their political freedoms and to voice their political opinions. We simply must not tolerate the mix of mob rule, lawlessness, anarchy and intimidation that has been allowed to flourish in Australia in these past several months. It is doing irreparable harm to a community, but it is also doing irreparable harm to the social fabric of Australia. Today it might be Jewish Australians, but tomorrow it will be another group or another minority against which the forces of the populist mob are unleashed. Down that road lies civil turmoil and national disunity. Staying quiet, sitting on the sidelines and hoping it will all go away is a complete failure of leadership.

I have a large number of people to thank tonight, many of whom are sitting in the gallery—more than I can possibly do justice to! It's an honour to be filling the casual vacancy created by the retirement of Marise Payne, who devoted her professional career to public service and served with distinction in senior roles in government. It's a source of pride to be here as a member of the Liberal Party, the political movement whose values are most relevant to modern Australia: a belief in the moral agency and freedom of the individual, a commitment to social mobility and a recognition that a thriving private sector is the best provider of opportunity. It's a pleasure to serve under today's leadership of Peter Dutton, Sussan Ley and Simon Birmingham in the Senate—all people whom I admire and respect.

I've been incredibly fortunate in the opportunities Australia has given me, from a quality public school education to the honour of representing our country overseas and now the people of New South Wales here in this chamber. But I would not have been able to grasp these opportunities without the support I've had from so many people: my close mates from school, who always keep me grounded and who threatened the disclosure of various youthful indiscretions if they did not get a special mention this evening; my two elder sisters and my mum's family members, who have always looked out for me; and, most importantly, my own family members: my wife, Rachel, and our three daughters, Estella, Daphne, and Diana, who have always been a steadfast source of support, encouragement, humour and love.