Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by ministers to questions without notice asked by opposition Sernators today relating to the 2007-08 Budget.

Today’s debate reflects the very low opinion that the government have of the intelligence of the Australian electorate. The government seek to convince the Australian electorate that, after 11 years of neglect of some of the major challenges facing this country, there is some sort of short-term political fix to be found in throwing money at some of those problems. They think that those people who have suffered under the childcare crisis for the last 11 years, that those who have struggled to meet the cost of living as they try and balance work and family and that pensioners who have done it very tough as the GST and high food prices have affected their standard of living for a long period of time will somehow forget. They think that by sending them a cheque somehow those issues have goes away—that those people will not remember the serious neglect and the arrogance that the government have shown to their condition over a long period of time.

Senator Minchin is right: we endorse many of the payments that are contained in the budget, because at long last they provide some recognition and some compensation for some of those people who have been doing it tough. But, as I have said, there is a whole range of issues. The government go nowhere near compensating people for the pain and suffering they have had as a result of the neglect of the government in tackling the issues of Middle Australia.

The tax cuts are a classic example. For years the government has failed to deliver proper tax cuts to low- and middle-income earners but suddenly, six months out from the election, these are the people the government cares about. I think the reaction will be people saying: ‘Thanks very much for the money; we need it. It will be a help, but it is nowhere near enough. Quite frankly, it is far too little far too late. And we are not fooled. We can see the cynicism. The budget reeks of cynicism. It reeks of a short-term fix to a political problem.’ What the government fails to do—

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

Which is exactly why you are supporting it.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Because it addresses a lot of the problems that the Labor Party has been highlighting in recent years. It throws money at problems that have been identified and that the electorate is concerned about, but it does not seek to fix any of those problems. It does not resolve those problems; it throws money at them as a short-term fix because there is a large surplus. It throws money at those problems without really dealing with them.

You have to ask yourself: what has this done for climate change? What has this done for productivity? What has it done for the great need for new broadband infrastructure in this country? What has it done seriously for education, apart from the Higher Education Endowment Fund? What has it done to tackle the huge skill shortages and the huge need for further investment in education at all levels? Nothing. There is no strategy here.

The minister quoted Mr Chaney from the Business Council, but he did not quote what he said about the budget. People know there is no strategy here. They know there is no long-term approach to the major problems that confront Australian society. They know the government is tired; they know it is out of touch; they know it has run out of ideas. And the government’s response is to spend big and throw money, because that is its only way of hoping to convince the Australian electorate that it is worth being re-elected. The Australian electorate are very cynical about the government. They know that these are short-term fixes aimed to make them forget the failure to tackle the real issues.

In my portfolio, I am amazed. As shadow minister for resources and energy, I noted that the Treasurer never mentioned the resources boom, resources or mining in the whole budget speech. It is a sector that is contributing $55 billion this year to the growth of the economy and has added $300 billion to the economy over the last five years—and he did not mention it. Talk about a Melbourne-centric view of the world! He is in denial about it. The words ‘mining and resources sector’ will not pass his lips. The opposition know that a lot of that activity is driving our economy, but he is in denial about it and will not face up to the fact that he has failed to meet the challenges and use the mining boom resources and royalties to drive a long-term, strategic direction for our economy. He has failed to invest in climate change and failed to drive a more productive economy. This is a short-term fix. (Time expired)

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

I thought the performance of the member for Lilley last night on the 7.30 Report was dismal. But I have seen a performance which even outdoes the member for Lilley. The Leader of the Opposition in the Senate said that this budget does not fix the problems but he is going to support it; this budget does nothing for education other than higher education but he is going to support it; and the tax cuts do not go far enough but he is going to support them. This is extraordinary.

If you listened to the Australian Labor Party you would think that the government had a very easy time preparing the budget over the last 11 years. I suppose the government did have a very easy time if you ignore the fact that it inherited a $10 billion budget deficit. I suppose this government did have an easy time if you ignore the fact that it inherited a $96 billion debt. I suppose this government did have an easy time if you ignore the Asian financial crisis. I suppose this government did have an easy time if you ignore the one-in-100-year drought. I suppose this government did have an easy time if you ignore the dotcom bust. I suppose this government did have an easy time if you ignore the fact that Labor opposed every single measure designed to bring the budget into balance and that this government did not have a majority for the bulk of its time in government.

Unlike the opposition, we had a set of clear and simple goals. We wanted to see a broadly based economy, we wanted to lower unemployment, we wanted to lower inflation, we wanted to lower interest rates, we wanted to balance the budget and we wanted to repay debt.

The Australian Labor Party would have you think that fiscal policy, budget policy, is too complex, too hard, for the average member of the public to understand. Fiscal policy is actually pretty straightforward. Yes, there are complex assumptions behind budget forecasts and budget modelling but it is actually a fairly straightforward thing. As a government you should live within your means. As a government you should provide for health, education, defence and welfare. Once you have done that, if you have money left over you retire debt. Once you have done that, if you have money left over you give it back in the form of tax cuts. As a result of this approach we have seen the government deliver the longest period of economic expansion since Federation. We have seen this government deliver 10 budget surpluses compared with nine budget deficits under Labor. We have eliminated government debt and we have secured Australia’s economic fundamentals and social services. We have delivered five rounds of tax cuts and a sixth round of tax cuts has been announced, and we are saving $8 billion a year in interest payments, which can go to hospitals, schools and defence.

It was extraordinary last night watching the member for Lilley. He said:

Well, I think we ought to be running surpluses like this, given how good world economic conditions are. We have to be running surpluses like this.

This struck me as extraordinary. Mr Swan is saying that running the economy is easy, having a growing economy is easy and running budget surpluses is easy when the world economy is growing. It is clearly not that easy because under Prime Minister Keating we had a budget in deficit and an economy in recession at a time when the OECD countries were booming and the tigers of Asia were roaring. Clearly, it does not follow automatically that a booming world economy leads to a booming Australian economy and a budget which is in surplus. During the Asian financial crisis the regional economy was in recession but in Australia we were still growing. We still managed to have surplus budgets. Running the economy does not take care of itself. We do not just run off the back of the international economy. Good policy settings in Australia do make a difference.

What I particularly like about this budget is that we have Labor proofed future surpluses with the Future Fund and the Higher Education Endowment Fund so that Labor cannot waste that money as they have previously. What I also like about this budget is that we have now created the expectation that, when a government has the means, when it has the surplus, when it has paid the debt and when it has paid for essential services, it will cut tax. That is an expectation that if Labor were ever to win office they would be bound by. (Time expired)

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I used to defend Senator Fifield in the past. In his previous life he worked for the Treasurer and I knew that he would have been in there trying to convince the Treasurer to take the smirk off his face. But after that display of smugness and arrogance I am drawn to an article today in the Australian Financial Review. Senator Fifield, you should stay in the chamber for a moment because it talks about the ceremonial ironing that has evolved over the Costello era. It is the duty of one senior adviser to press the Treasurer’s shirt just before he steps into the House of Representatives. I am not surprised that Senator Fifield has run from the chamber in embarrassment because I understand it was his job to iron the shirt of the Treasurer just before he gave the budget speech.

The smug and arrogant government, as you have seen from last night’s budget, is alive and well because this is—do not misunderstand this—a very clever election budget but it is a budget that fails the future test. This is a budget that does little to build Australia’s productivity. We asked the government in question time: where is productivity growth? The government even managed to leave out of the budget papers the actual outcome of this year’s productivity growth because it is zero. It is a big fat zero. We listened to all the claims about the government’s IR reforms and how they are going to fuel the economy into the future. What do we find in the government budget papers? The long-term forecast for productivity growth is the long-term average. There is no increase in productivity growth forecast from the government’s IR reforms.

This is a government that has failed to address the future. It has failed when it has the most improved terms of trade in 30 to 40 years. We have had a long-term decline in our terms of trade and our economy has had to really pull its weight. But because we have had the biggest increase in the terms of trade in 30 to 40 years we have a complacent government that is coasting along. Fifty-five billion dollars was injected into the economy by this government last night for the next forward estimates period. That comes off $300 billion of growth in the economy from the mining boom. This is a massive injection of cash, and what it is masking is a low productivity growth. The government has failed to address our flagging productivity. It has failed to invest in a genuine education revolution. Today we had Senator Minchin and the Prime Minister and the Treasurer, Mr Costello, talking about the use of the $5 billion taken from the Future Fund.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

It’s not taken from the Future Fund. You haven’t got a clue.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

This government promised that all future surpluses—and there was your own promise—would go into the Future Fund. You have taken that money from the Future Fund. You have said that you are going to use the interest earned to spend on productive investment. We say that is a good thing; we believe in that principle.

Six or eight weeks ago when Labor proposed a national fibre-to-the-node network to build our productivity base—which according to the government’s own figures last night is impoverished—we were accused of economic vandalism. We had big stories about it. Now we have the Treasurer with his paws in the honeypot. Senator Minchin has spent the day wiping the honey off the Treasurer’s paws and the Treasurer has spent the day wiping the honey away from his mouth. Eight weeks ago this government said that it was economic vandalism to do exactly what it did last night. This government has not delivered a national high-speed broadband network. If you go through those budget papers you will find that again it has not faced up to that great challenge of climate change. It is smug and arrogant and it has not addressed the issues. There is nothing on clean coal innovation. There is nothing on an emissions trading scheme. There is nothing on renewable energy to encourage Australian made greenhouse technology. (Time expired)

Grant Chapman (SA, Liberal Party) Share this | Link to this | Hansard source

What a pathetic effort from Senator Conroy in his response to the budget and the issues raised in question time today! Contrary to what Senator Conroy claims, this budget exhibits a strong long-term vision on the part of the government. Perhaps more than any other, this budget demonstrates that the government does have a long-term vision. It is looking to the next decade rather than just the next year. It is possible to do that because of the strong economic management on the part of the Howard government in the years we have been in government, since 1996. This has made Australia a very different and much better place than it was in 1996.

It is worth reminding the Senate what has been achieved over the decade or so that the Howard government has been in office which now provides the springboard for the next decade of economic achievement. Over that period inflation has been halved. Ninety-six billion dollars of government debt was built up year after year by the previous Labor government because they could not manage the government’s finances and they had year after year of deficits. That $96 billion of government debt has been eliminated. We have had 10 budget surpluses replacing those continual Labor deficits. We have got an extra two million Australians employed and real wages have increased by 20 per cent in a non-inflationary way. That gives the lie to what Senator Conroy claims about productivity growth. You cannot have real wage increases of 20 per cent and halve inflation unless you have substantial growth in productivity. That is exactly what has been achieved under the policies of the Howard government. That provides the basis now for the government to springboard policies into the next decade.

These achievements are not merely serendipitous. They have happened as a result of the hard work of the Howard government and the tough decisions that it took in its early years in government, and that has been built on with continuing prudential management of our finances over the years since those hard decisions were made. Again, they are characteristics that were never exhibited by previous Labor governments and would not be exhibited by a Labor government if we had the misfortune to have a Labor government elected later this year.

We can now secure those achievements to face the challenges of the next decade by building Australia’s economic capacity. That is what this budget does. It focuses on skills development, on infrastructure, on the environment and on the health and welfare of ageing Australians. One of signal initiatives of this government, which points to the fact that it is taking a long-term view rather than a short-term opportunistic view, is the establishment of the Higher Education Endowment Fund with an initial government investment of some $5 billion. That is a perpetual capital fund that will generate earnings year after year to provide money for capital works and research facilities in our universities. It mirrors the Future Fund that we established two years ago. Two years ago we were looking to the long term. At that time we were looking to the unfunded liability which the government had for the future payment of Public Service superannuation and we established the Future Fund to ensure that those unfunded liabilities could be met in the future. We have now established the Higher Education Endowment Fund to ensure that the education which is so important to our productivity growth is achieved and that the money is there, set aside as a capital sum, to earn income which can be applied for that purpose.

That is not the only long-term initiative we have taken in this budget. There are initiatives with regard to land transport, ensuring our water security, renewable energy and further encouragement for retirement savings. And of course, importantly, yet again the government has reduced taxation quite significantly, to the extent that now the top marginal rate, which we reduced in the last budget to 45c in the dollar, will not cut in until an annual income is reached of $180,000. That is three times the level of income at which the top marginal rate —which was substantially high than 45c in the dollar—was reached when the government came to office. Then it was an amount of $60,000. In this budget not only have we increased that threshold but, importantly, we have also increased the threshold applying to lower income earners. The rate at which the 30c in the dollar tax rate cuts in will not be achieved until an income of $30,000 per annum is reached, compared with the previous level of $25,000. So there are enormous incentives provided there in terms of returning to workers the surplus that this government’s sound financial management has generated. (Time expired)

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

I rise to speak on the motion of Senator Evans to take note of answers provided by the government in question time in relation to budget matters. I want to start with what the budget papers, the government’s own figures, tell us about the government’s performance to date. This issue was raised with Senator Minchin during question time and also with Senator Abetz. Senator Abetz, as per usual, did not really answer the question. Senator Minchin said, ‘Damned statistics and lies’, in effect, suggesting that the budget parameters, which are set by the government and which indicate that productivity growth is forecast to be zero for 2006-07, were somehow irrelevant.

What the budget papers tell us is that the government’s own figures confirm their failure to engage in long-term investment in the productivity of the Australian economy over their 11 years in office. That is what the budget forecasts confirm. To have productivity forecasts at zero per cent growth for 2006-07 simply confirms that the government have not been doing what they ought to have been doing in terms of investing in human capital and infrastructure to increase the productivity of the nation.

And why is it that we talk about productivity? Is it just some statistic that people throw around for political purposes? It is not. It is a measure of the future prosperity of the nation. Today’s productivity is tomorrow’s prosperity. It is a maxim that economists and politicians for many decades have been talking about. You look to the future prosperity of the nation by looking to today’s productivity. That is why one of the important functions, tasks and priorities of a government must be to keep an eye on where Australia’s productivity is. We know from the government’s own figures that, at this stage, their forecast for the 2006-07 year is zero per cent.

It is an interesting proposition because when the government talk about productivity they like to talk about labour market deregulation and their Work Choices legislation. Of course, it is not quite clear whether they are talking about the new Work Choices regime, their current backflip, or the one before when they say Work Choices is the great saviour of the Australian economy. At this stage, the government’s forecasts confirm no productivity growth as a result of the introduction of Work Choices.

Rod Kemp (Victoria, Liberal Party) Share this | Link to this | Hansard source

Senator Kemp interjecting—

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

They are your figures, so you deal with your Treasury and Finance statisticians and you tell them why they are wrong, because their statistics clearly do not measure up with the story you want to tell the Australian people about what is happening to Work Choices.

But let us talk about what the government have failed to do. They have failed to wisely invest the proceeds of the resources boom. They try to dismiss it. As Senator Evans said, there was no mention of the mining and resources boom in the Treasurer’s speech. Let us look at the facts, though. Saul Eslake of the ANZ has stated that the resources boom is responsible for an estimated $283 billion increase to federal government tax revenues above its original estimates over the 2002-03 to 2009-10 period. That is $283 billion more flowing into federal government coffers than previously and over the forward estimates period, and yet we have a situation where their own forecasts are zero per cent productivity growth for the 2006-07 year. That is the reality.

Since MYEFO alone, an additional $53 billion has flowed into government coffers above what the original estimates were. That is the reality of the impact of the resources boom on government revenue. That is a good thing. But what is not a good thing is your failure in previous years, in particular, to invest in the Australian economy in terms of long-term productivity. Where has your investment in education been until the electorate and the opposition started talking up this education revolution? That is what this budget is about. It is responding to political pressure. All of a sudden in an election year, after having cut investment in universities and in R&D, in 1996 and onwards, as a proportion of GDP, magically you wake up to the fact that education investment is important to Australia’s economic future. And do you know what? Australians are alive to this. (Time expired)

Question agreed to.