Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

The President has received a letter from Senator Sherry proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:

(a)

the fact that the 2007 Federal Budget contains welcome tax cuts and one-off payments for the many Australian families and carers who are under financial pressure, yet little is included to lift Australia’s future productivity which is low; and

(b)

the fact is that long term challenges for Australia’s future such as: reviving Australia’s productivity, investment in an education revolution, delivering a national high speed broadband; and decisive action to deal with the economic cost of climate change and the national water issues, require more attention and greater leadership.

I call upon those senators who approve of the proposed discussion to rise in their places.

More than the number of senators required by the standing orders having risen in their places—

The Acting Deputy President:

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

The matter of public importance that I have moved today deals with aspects of last night’s budget. Naturally, the day after the budget there would be a focus on some aspects of it. I intend to touch on these in my contribution.

First and foremost, as the Labor Party have indicated, we welcome the tax cuts and one-off payments that were announced in last night’s budget. The tax cuts will apply from 1 July, generally to low- and middle-income earners. Those earning between approximately $10,000 to $26,000 receive a tax cut ranging between $3 and $6 per week and those earning between $27,000 and $70,000 receive a tax cut of between $10 and $14, but the tax cut peaks at about $21 per week for those earning between $30,000 and $40,000. There are further tax cuts for middle- and higher income earners from 1 July next year. Labor broadly welcome those tax cuts.

Frankly, it is about time that low- and middle-income earners did receive a tax cut, because what has been a contrast in previous budgets is that group of low- and middle-income Australians—the battlers—who have been doing it tough in many respects. They have had increases in petrol prices, food prices, rent and mortgages. There have been four interest rate increases since the last election. I would remind the chamber and those listening of the promise of the Prime Minister and the Treasurer that interest rates would remain low under a re-elected Liberal government—a promise made and broken. So low- and middle-income earners do deserve some tax relief, and that is delivered from 1 July. Unfortunately it is a bit late and was not given great consideration in previous budgets.

However, looking at the value of those tax cuts, many of the taxpayers in the low- and middle-income bracket who receive a tax cut from 1 July are receiving back little more than bracket creep. Bracket creep occurs when the increase in wages takes you into a higher tax bracket. It varies from income tax payer to income tax payer, but a large proportion of that tax cut effectively represents the increase in bracket creep that has occurred over the previous few years.

Looking at the budget papers from last night, one of the interesting aspects of the tax cuts is that after those tax cuts are delivered to that group of battling Australians the individual taxation from income tax still increases. Income tax collection still increases even after those budget tax cuts: in 2006-07, it is $107,000 million; in 2007-08, $110,700 million. This is an outcome of two things. It is an outcome of bracket creep, which I referred to earlier, and also of economic growth.

Turning to the issue of economic growth, one of the fundamental drivers of a strong economy for the long term—sustaining economic growth, sustaining growth in the economic cake, in wealth creation, so that we can either have tax cuts or important expenditures to support health, dental care and like matters—is productivity growth. That is a key fundamental to the economic equation and to the long-term strength of the Australian economy.

I want to refer to a couple of aspects of productivity growth that I think should be of concern to the Australian people. If you look at last night’s budget papers, in table 2 on page 1-5 of Budget Paper No. 1, you can work out productivity growth for the 2006-07 year. You may recall that I asked Senator Minchin a question about this in question time. With not much of the year left to run, the calculation for productivity growth is zero for the current financial year. If you look at last year’s Budget Paper No. 1, the forecast for this current financial year for productivity growth was 2 1/4 per cent. So the forecast for productivity growth, which is important for underpinning long-term economic growth, was forecast 2.25 per cent but is going to come in at zero.

If you look at the forecast for productivity growth in 2007-08 on page 1-5, it is approximately 2.25 per cent. It is then projected, over the following three financial years, to drop away to 1.75 per cent. That highlights one of the lies around the so-called Work Choices legislation. That legislation is not going to be a major feature of my contribution today. But if the argument from the government is—and it has been their mantra—that Work Choices is about contributing to productivity growth, why is it that, for the three years from 2008-09 through to 2010-11, productivity growth is projected to fall if Work Choices continues in operation in the event that a Labor government is not elected at the end of this year?

Even more disturbingly, the long-term average productivity growth over the last three years has been below that which Australia enjoyed in the early and mid 1990s. This is a worrying sign for sustainable economic growth in the long term, because we are heavily dependent at the moment on a mining boom. I think I saw a figure from the ANZ Bank showing that the mining boom had delivered approximately $300 billion, although that may have been updated today. Indeed, while I am on the ANZ Bank and their well-respected economic commentator, Mr Eslake, the bank notes its disappointment at the low productivity growth that is implicit in the budget productivity forecasts; however, I am not sure if that should be attributed to Mr Eslake. Frankly, the government has run up the white flag on productivity growth, which is so necessary to ensuring our long-term economic future.

The best way of summarising the budget is that it is a clever political document designed to assist the government in securing re-election. It is a clever political document. We have seen it from Mr Howard and Mr Costello—but particularly from the Prime Minister, Mr Howard—time after time: clever political calls which are exemplified in a number of ways in the budget. I refer to one: the income tax cuts for low and middle-income earners who have largely been ignored in budgets in recent times. The government knows that it needs to lift its support amongst this group of battlers, so it delivers a tax cut for them on 1 July. The government is finally giving them some attention.

There are a couple of other interesting measures that are one-off payments. There are two in particular I want to refer to. One is the $500 that is to be paid to senior concession card holders—pensioners and seniors who are eligible for that card. They are to receive a $500 one-off payment. They are receiving some attention—rightly, I think. If you look at the battlers in our community, full age pensioners are really doing it tough. In Braddon on the north-west coast of Tasmania, where there is a high proportion of full age pensioners, I receive regular reports about food prices and petrol price increases in recent times. I even receive reports about things as basic as paying the rates on their homes. Where I live, the majority own their own homes and it has become a real battle for them. But I would pose a basic question about this one-off $500. You cannot help but think that this is yet another clever short-term payment, to a group in the community who deserve a payment, to help secure re-election of the government. What happens next year?

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Shouldn’t they get it?

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

No, they should get it. That is exactly my point, Senator Ronaldson. They have largely been ignored and they should get it. But what happens next year to the battlers—the basic age pensioner receiving about $13,700 a year? A pensioner came into my office a few weeks ago with a rate bill for $1,200. She owned her own home but was sadly widowed. She was really battling to pay the rate bill. It is $500 one-off, but what happens next year and the year after? If there is a logic to paying the battlers like the full age pensioner $500 because they are doing it tough—and I think they are doing it tough—what happens next year when there is no one-off payment?

Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Industry) Share this | Link to this | Hansard source

It’s not an election year.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Of course, as Senator Carr reminds me, there is no election next year; it is this year. Maybe that is why a bit more attention is being paid in this budget to the basic, battling age pensioner.

The other one-off payment that I want to touch on is the one-off superannuation co-contribution payment of $1,000. Labor supports the co-contribution scheme. If Labor is elected to government, it will continue. It is a watered-down version of Labor’s original co-contribution scheme, which the government signed up to and then dropped. It made a promise it would implement it but dropped it in 1997. Nevertheless, the co-contribution scheme will continue under Labor. Labor welcomes the additional $1,000 going into the individual superannuation accounts of slightly more than one million people. Labor welcomes that extra up to $1,500—the payment varies depending on your income and your level of contribution—but it is going into the superannuation accounts of people who made a contribution in the 2005-06 financial year. It is rewarding past saving. It does not deal with some critical threshold issues that need attention in the co-contribution scheme to encourage future saving.

I note that a number of commentators from the financial services sector have mentioned this. It is not just commentators from the financial services sector; according to an inaccurate budget leak some weeks ago, the Assistant Treasurer, Mr Dutton—to his credit—was purportedly arguing that the parameters of the co-contribution scheme should be changed going forward, particularly to assist under-45s, the younger group in our community. But he obviously got done over by Mr Costello and probably the finance minister, Senator Minchin. What have they come up with? Rather than redesigning the scheme to lift superannuation savings going forward into the future, there is up to $1,500 placed in the superannuation accounts of people who have already saved. Whilst there is an extra $1 billion going into super—that is fine; that is extra moneys—the fundamental design issues of the voluntary co-contribution scheme to give encouragement and incentive going forward were not dealt with, and that is unfortunate.

My colleague Senator Carr is going to comment expansively, I am sure, on some issues relating to the new part of the Future Fund that is being created for higher education. Five billion dollars is being placed in that section of the Future Fund, and the revenue is to be used for various capital purposes at universities. We have seen this before—smoke and mirrors, I call it. We saw it with the first sale of Telstra, where there was an environment fund set up with the proceeds from the first tranche of the Telstra sale. This was to support extra environment expenditure. But what happened on the expenditure side? In following budgets, the Commonwealth government cut expenditure on the environment in other areas. They gave a boost on one side of the ledger and cut environment spending on the other side of the ledger—smoke and mirrors. That occurred after the election, and I suspect we will see something similar if this government is re-elected at the next election. (Time expired)

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

If that had been the focus group testing of the budget reply, it would have to be viewed as a remarkable failure. The focus group has viewed that as a remarkable failure. In 15 minutes we did not hear one policy from the Australian Labor Party. It is the day after the budget, and we did not hear one policy from the Australian Labor Party or Senator Sherry. Mr Acting Deputy President Lightfoot, while you were reading out the letter from Senator Sherry proposing a matter of public importance, I thought it probably should have read: ‘The utter incompetence and all too obvious inexperience of the ALP’s economic spokesmen and spokeswomen and the danger to Australia’s future were the ALP to be elected to government.’

Today we have heard probably the most enthusiastic endorsement of the budget we have heard from anyone. The Australian Labor Party thinks this is a good budget. But, prior to that, Senator Sherry—so that his master in the other place did not get too antsy with him about the whole thing—had the gall to talk about the potential threat to tax cuts. This is coming from the Australian Labor Party, and Senator Carr may well hang his head in shame because he remembers it. What happened to the Keating government’s l-a-w law tax cuts? They just disappeared. It was the Labor Party blatantly misleading the Australian public in relation to a tax cut. In the last five budgets, we have delivered tens of billions of dollars in tax cuts to Australian families.

The Australian Labor Party has the gall to talk about battlers. When did you suddenly reinvent concern for battlers? Where was your concern for battlers when interest rates were at 18 per cent? Where was your concern for battlers when unemployment was at 11 per cent? Where was your concern for battlers when you saddled every Australian family in this country with $96 billion—$96,000 million—worth of debt?

Senator Carr, you are virtually the only one left in the chamber, and that reminds me: this is so important that how many ALP senators were here to support Senator Sherry? Twelve. The day after the budget, 12 ALP senators came to support their colleague on a matter of public importance relating to the budget—

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

It wasn’t very important.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I think they voted with their feet, and they thought this budget was so good they stayed in their rooms and dreamed about next time. Senator Carr, $96,000 million is $160 million per week that the Australian people are not having ripped out of their pockets. The government has paid off $96 billion. As Senator Scullion said during question time today, that is $160 million per week, $23 million per day, that the Australian Labor Party would have ripped out of their pockets if it had not been for us repaying $96 billion.

It is extraordinary that the only response you can give to the budget is to talk about productivity. Are we talking about productivity in 2004-05? No. But yes we are, indeed: it grew 2.4 per cent. Senator Sherry has come into the chamber today and alleged that there has been no productivity growth in 2006-07 and that is the result of Work Choices. I looked at my calendar this morning, Senator Sherry, and guess what, my friend? The year 2006-07 is not finished. ABS will not release their data until the end of the financial year. What an incredibly ignorant line to run about the budget. How utterly desperate are they?

If you want to talk about productivity, I will revisit a couple of things that Senator Minchin talked about today. He quoted some comments from Heather Ridout of the Australian Industry Group, who said:

Kevin Rudd talks a lot about productivity, but this reregulation will lower productivity.

This reregulation, of course, is the Labor Party’s new IR laws. What about Michael Chaney of the Business Council of Australia? He said:

Despite claiming to support policies that will lead to continued productivity, the ALP has clearly ignored consistent and strong business representations about how productivity and jobs growth is achieved in the economy.

The editorial in the Australian said that Mr Rudd’s reregulation of industrial relations will increase business operation and compliance costs and reduce productivity. It is very interesting if you listen closely enough in this place. When Senator Sherry asked Senator Minchin a question about productivity today, he quoted Heather Ridout’s comments and Senator Evans leaned across the table and interjected, ‘Oh, was that before last week’s changes?’ In other words, by their own admission, the Australian Labor Party have said that regulation of IR will dramatically impact on productivity—out of the mouths of babes.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Senator Joyce interjecting—

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

That is right! What the Australian people are going to have to make a decision about in five or six months time is whether they are going to allow the Australian Labor Party to dramatically reregulate the IR that has put up this very productivity that they are crying crocodile tears over today. Senator Carr, you are no friend of business but I invite you to listen to the comments of those in the business community. You might even want to ring the fellow that you have suddenly apparently dropped, Sir Rod Eddington—your conduit to the business community. How many phone calls did Sir Rod get in relation to industrial relations policy? None. Your conduit into the business community, so proudly trumpeted by the Leader of the Opposition, did not get one phone call from anyone in the Australian Labor Party in relation to IR. Not one phone call! This engagement with the business community—well, I think I have a rough idea of what Sir Rod Eddington thinks about you people and quite frankly I share his views: you are not worthy of his time.

There is only one group of people who dictate ALP IR policy and that is the ACTU and the union bosses, who are single-handedly responsible for the destruction of the small business sector in this country under the last Labor government and who have clearly dictated to the Australian Labor Party that they must return to their traditional roots. There is this line that has been run by some in the union movement that they have had to make concessions: well, there have been no concessions and they are charging you the full fare, my friend, for their $30 million in advertising. There are no concessions; this is a full fare and you are paying 100 per cent of the debt that you owe the ACTU.

You are only there for the protection of sectional interests. You have no interest in the wider Australian community. Your past indicates that you have no interest; your new IR laws indicate that you are hell bent on ripping apart the engine room of the Australian economy, which is the small business sector. Your IR policy, Senator Carr, is designed to allow your union mates to once again go into every small business in this country and enforce and impose on them your philosophical views on life. You have always hated the small business sector; you have bowed to the ACTU, which is determined to make sure that you make the lives of small business absolute hell. I think you get some perverse enjoyment out of it. And you get enjoyment out of it because you simply cannot control it. (Time expired)

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

That was another fire and brimstone performance from Senator Ronaldson, although there were some valid points in amongst the finger-pointing. I think that it is important to bring some balance back to the debate before the Senate today. Productivity is an important issue and for that reason it is understandable that the productivity implications of workplace relations have found their way into the debate, and I would like to follow on from Senator Ronaldson’s remarks in that area.

He has pointed to the criticism that any form of shift from the coalition’s extremist Work Choices legislation would somehow harm productivity. Yet last week we saw Mr Howard make some of those changes. I recall the last federal election and the workplace relations legislation that was in place up to 2005. At no stage did Mr Howard go around in the election campaign saying: ‘Our industrial relations legislation is far too constrained. It is harming our productivity. Business is not able to operate effectively under our workplace laws.’ Indeed, if I recall correctly, the government used to talk quite proudly about the positive impact of its workplace laws. These workplace laws, I remind the Senate and the community, were shaped and maintained in a balanced form by the Democrats. It was only because the coalition obtained control of the Senate that they were able to wipe out the Democrats’ workplace relations regime and put in place their own extreme measures.

Suddenly, when the ALP put forward a policy—one that does not even go back to 2004—there is an outcry. Labor’s policies only go part of the way. They have accepted part of Mr Howard’s unfair dismissal changes. They have accepted the secret ballot. If the Democrats had allowed the secret ballot through this place at any time in the previous 10 years we would have been ripped limb from limb by various senators here and people in the union movement for daring to support such a travesty. Yet Labor have adopted that. Now it appears that there are 11 allowable matters—down from the previous number. So Labor’s policy is actually far closer now to Mr Howard’s, in many respects, than Mr Howard’s own laws were in 2004. Yet we are expected to believe that any change back is going to destroy productivity and lead to union hordes marching in and chaining up the whole Australian economy.

Minister, it is a ludicrous debate. It is about time we pulled it back to the facts before us. It is important to have more productivity, and adequately flexible workplace laws are an important part of that. But they must be tempered and flexible with adequate protections against exploitation. I believe that the Democrats did very well in shaping the workplace relations laws over the previous periods the Howard government has been in office. Since the loss of the Senate and the Democrats’ ability to put in place a balanced approach, we have seen great change. There was a balance between the undoubted pull of the union movement on the Labor Party and the extremist ideology that we are now seeing governing those that count in the coalition. But now the ability to find a middle path to deliver that balance has been lost. That is why this issue has caused such damage to the government that they have started to put in place the Democrats’ safety net that they so gleefully shredded at the first available opportunity. This was despite giving no warning of it during the 2004 election.

It is important in taking a balanced view to note that there are positive measures in this budget. I think that it is churlish and unreasonable and inaccurate to simply nitpick the bits that are bad and ignore some of the positives. For the first time in a few years the income tax cuts are directed at areas where they are most needed—at lower income earners—and they are directed and operated in a way that should enable and encourage lower income earners to engage in more work, including part-time work. That will assist productivity and the real capacity constraints that currently exist in the Australian economy. So it is a good measure.

But the trouble with budgets is that they are always one-offs. There is always a mad frenzy about one budget and then we all forget it and look at the next one—and of course we will have another mini-budget pre-election ‘bribefest’ later on this year and we will focus on that and forget what has happened now. We have not made the structural changes needed. A long-term policy of the Democrats, and one that we will continue to push for, is not to continually battle budget after budget to get tax cuts delivered back in a fair way to assist lower and middle income earners but to index the tax thresholds so that people continually maintain the real value of tax cuts. Whilst these income tax cuts for lower income earners and the hike in the low-income earner offset are welcome, in many respects this is just returning bracket creep. If we could do just one thing it would be to index or even partially index the tax threshold. Then we would not have the government raking in large amounts of extra revenue largely because of bracket creep and CPI impacts and then expecting a huge round of applause when they are just belatedly handing money back a few years later. We need to be putting in place some of those structural reforms that will have a lasting impact rather than just these temporary one-off bursts of largesse. That is a failing in this budget; the positives have not been locked in.

Another failure indicating lack of vision in this budget—and it also goes to issues of productivity—is the total failure to address housing affordability. As National Shelter have indicated today, even with the $15 a week tax cut for lower income earners—which is very much welcome—that is about how much rents have gone up in the last year in many parts of the country, and in some cases they have gone up more. People have already had to cover that just for the rent hikes without anything else regarding their cost of living. The whole issue of housing affordability has been left in the too-hard basket. It does not even need money spent on it to fix it. I acknowledge the government’s adoption finally of the Democrats’ longstanding calls for rent assistance to apply to people over 25 receiving Austudy. This was a ludicrous anomaly that has finally been fixed. It is not even going to cost significant amounts of money to address housing affordability, but it needs vision and structural reform. That has been left in the too-hard basket and that, frankly, does impact on other measures like productivity.

Another measure that should have been in the budget is addressing Indigenous disadvantage, and Indigenous health in particular. It was not, which goes to a lack of vision in core issues of productivity and key areas where capacity could be injected into the Australian economy. I simply cannot believe the total paucity of extra measures that have been put in place to deal with Indigenous health. At best count, about $35 million a year of extra measures for Indigenous health has been allowed, when we all know how much extra funding is needed for that. That is not only a matter of justice; it is a matter of delivering better results for productivity and capacity in the Australian economy. Those are just a few key areas. (Time expired)

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

The hallmark of this government’s performance in the last 11 years has been unswerving attention to the state of the Australian economy and the capacity to manage the basic economic conditions facing Australians in a way that builds up the resilience of the Australian community through having a strong and secure fiscal outlook. What we have done with that has also been a very important part of our economic management. It is important to state that we have never seen the maintenance of good budget circumstances, the reducing of debt, the elimination of deficits or other good hallmarks of economic management as ends in themselves. We have seen these things as ways of delivering opportunities in two senses: firstly, opportunities for individuals, families and businesses in the Australian community to pursue ways of creating wealth, making those organisations and individuals self-sufficient and self-reliant; secondly, opportunities on the part of government to generate stronger safety nets for those people who are unable to take advantage of those marketplace opportunities of which I have just spoken. That is what this budget, I believe, demonstrates very clearly.

The matter of public importance before us today makes reference to tax cuts and payments to strengthen or support Australian families and carers. We look at this document, this budget, and see very clearly that we have pursued that philosophy. We have strengthened the economic conditions to continue to create opportunities out there but we have also strengthened the Australian safety net. As far as tax is concerned, this budget continues the trend of the last five Australian budgets, which have delivered tax cuts to the Australian community. That is on top, of course, of the very important tax cuts delivered in the 2000 budget, which was part of the new tax system around the GST.

The aggregate impact of personal income tax since 2004-05 is that a taxpayer on $30,000 has had their tax liability cut by 45 per cent since that time, and a taxpayer on $40,000 has had their tax liability cut by 23 per cent. That does not just compensate for bracket creep; that goes beyond bracket creep and delivers real buying power into the hands of Australians. It has done so as a pattern over the last six or so budgets. Since 2000, every tax rate has been cut and every threshold has been increased. It used to be the case that once their income exceeded $50,000 a taxpayer faced the top tax rate, but from 1 July next year that top tax rate will be incurred at $180,000.

This budget has been described as a budget that delivers a number of benefits to the Australian community, but they have been described in the matter of public importance debate as one-off. I want to run through some of the things the budget delivers to strengthen the support available to Australian families, to carers and to those people who are unable to take advantage of the good economic conditions. Let me run through them. There is $2.1 billion for childcare incentives, an increase in the rate of childcare benefit of over 13 per cent. That is not a one-off benefit. Payment of the childcare tax rebate has been brought forward. Necessarily, that is one-off, but there is also an additional $71.3 million for the inclusion support subsidy program for children with high needs. That is not a one-off initiative. There is $43.8 million to provide further financial support to kids in rural and remote communities. That is not a one-off initiative. There is $1.4 billion for seniors. There is $406.8 million for carers, which includes a one-off bonus of nearly $400 million, but an extra $6 million is in there for people needing immediate and short-term respite. That is also not one-off. There is $81.1 million to support volunteers, with an extension of the volunteer small equipment grant program. There is $128 million for disability services. There is $12.2 million over four years to increase the level of services delivered through the National Disability Advocacy Program. That is also not one-off. There is $116 million to ensure that up to 18,000 people with disabilities will be able to access employment services. That is also not one-off. The list goes on.

I think we make the point that these provisions are sustainable, are continuing and are about strengthening the support that Australian families and carers receive. That is all important. It is very important to have an effective safety net but, as I said before, it is also important to make sure that the general economic conditions sustain a sense of people being self-reliant and able to fend for themselves in an active and vital Australian economy. In a sense it is like the drought. What would you rather have to fix the drought—good measures to provide for emergency assistance to those who need it or rain? The Australian government has, in a sense, provided that rain through strong economic management over the last 11 years, but we also have an effective emergency net.

Our record has been outstanding, and I think it is fair in those circumstances to again contrast what we have done with what the Labor Party in office did in the same circumstances. Their record was falling real wages, high interest rates and high unemployment. How did any of that help families under financial pressure—the ones referred to in this matter of public importance debate? How did it help them? Of course, it did not. It created more families under financial pressure. There is nothing more important in our environment today than relieving financial pressure on families by creating opportunities for jobs, and that is what we have obviously done in spades.

A strong economy and fiscal discipline provide jobs, provide the capacity to increase services and family payments, and provide the ability to make sure that there is a real dividend to communities. Unlike what the Left of the Labor Party would have us believe, a strong economy is not only compatible with social justice but also essential for it. Productivity is important as part of that debate, but again I ask: where is the Labor Party on that issue? Where has the Labor Party been on all the big productivity issues and debates in the last decade? Where was the Labor Party, for example, on the critical question of water? (Time expired)

Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Industry) Share this | Link to this | Hansard source

At least Senator Humphries made an attempt to defend this government. He made an attempt to argue the government’s case, unlike Senator Ronaldson, who thought that he could bluff and bluster his way through his presentation and talk about his own arrogant contempt for working people, in a manner which highlights just how out of touch he has become, why he was driven out of the seat of Ballarat and why it is he finds the red seats in this chamber so comfortable.

The budget that the government brought down last night and presented to the Australian people is essentially a poll driven exercise—a big-spending budget, an election year budget. Unfortunately, it is also a budget of missed opportunities. Labor takes the view that what we require at this time is a comprehensive plan to build Australia’s future capacity for productivity. We need to tackle the challenges of climate change and our crumbling infrastructure and we need to address the bottlenecks within our economy, which are putting such pressure on our productivity and on inflation and may well lead within the next 12 months to further interest rate rises. Unfortunately, the government failed to deal with those matters.

It failed to deal with the huge problem of what we do in this country once the mining boom is over. The Labor Party argues that there needs to be a determined effort by government to build our capacity for innovation through education and building our national innovation system. But we need to start from the very early times, from early childhood, and go right through to schools, vocational education, universities and university research. We need to be able to ensure that prosperity is sustained at the same time as social justice is maintained. We need to be able to build a fair and just society. What we saw with last night’s budget was the government’s neglect of those fundamental concerns. It failed to deal with those issues. And it cannot be argued that there is a shortage of money. After all, $71 billion was thrown around last night. Senator Humphries talked about rain. Well, it rained money last night! But this government failed to deal with those basic challenges facing the country and failed to develop a long-term vision for where this country is going.

I am particularly concerned about the failure to take up the opportunity that so much money provided to deal with the whole question of social exclusion in this country, which has now become a dominant feature of this government’s term in office. We have seen it through 11 years. This government has essentially sought to divide Australians. It has not sought to deal with the question of social inclusion but has sought to exclude people from the benefits of prosperity—for instance, with respect to housing. In last night’s budget there was no real effort to deal with the fundamental concerns that relate to the capacity of Australians to be able to join in this society and to share productively in the benefits of an advanced country such as ours. If we look at some basic propositions regarding our capacity, we see that our national investment in education in literacy and numeracy for four-year-olds leaves us at the bottom by international standards—at the very bottom of the international table. You would expect that Australia would seize the opportunity to provide real and meaningful access for four-year-olds right across the country. Labor has a proposal to do that. This government did not pick up that opportunity.

I have already spoken on the housing crisis and the failure of this government in relation to access to and equity in our education system. There could be nothing that is more damaging to the capacity of Australians to do well at school than homelessness. Every night in this country there are 100,000 who are homeless, and a majority of those people are under the age of 12. But what did this government do about that last night? There was not a word about it—not one word. The government said nothing about the need to allow people to have the equality of opportunity that you would think would be fundamental in a society such as ours. If we look at the broader approach this government takes to equity, we again see this government’s fundamental failure. The higher education statistics show that there is a decline in the number of Indigenous students, a decline in the number of students from low socioeconomic groups and a decline in the number of students from rural and isolated areas. What a fine achievement! We have more money than this country has ever had, but the government has failed to deal with these basic questions about the capacity of this country to come together and enjoy the benefits of that prosperity.

We have seen a failure to seize opportunity. We have seen the government’s failure to face up to the challenges of the future. As a result, what we saw last night was a piecemeal, erratic budget, with no coherent plan to deal with the big questions facing the country. What we saw from the government was a response to a whole lot of focus groups. The government sought to plug political gaps in its campaign to catch up with the policy initiatives that have been announced by Kevin Rudd. We had basic facts being neglected by this government in its quest to seek short-term political advantage.

Let us take another fundamental issue with regard to productivity—that is, the contribution this country makes to innovation, particularly research and development. This is an area where the government should hang its head in shame. Australia’s gross expenditure on research and development sits at less than 1.8 per cent of GDP—well under the OECD average of 2.3 per cent. But what did this government do about that? Nothing. After 11 years of this government, business spending on R&D has grown as a percentage of GDP—true enough—but it remains at a very low base by international standards. It is well below our international competitors. What did the government seek to do last night about expenditure on research and development? We did not see any movement from this government. If you look at government expenditure on research and development, you see that, in terms of our OECD position, we slipped from about third to about ninth in the period from 1996 to 2004. As a share of our national economy, expenditure on research and development as a percentage of GDP has declined by about a third under this government.

We have a government that has failed to deal with these fundamental questions. We are seeing a disinvestment in the future needs of this country and in facing the challenges of the future. We have a government that has failed to appreciate the significance of these issues when it comes to productivity. It has failed to appreciate the importance of research in ensuring that prosperity and the diversification of the Australian economy are maintained. What we have got is a cynical, cunning, clever budget which is aimed at the survival not of Australian industry, not of Australian economic security but of the political future of a particular government. The government seeks to beguile the Australian people, to buy their support and to present a position that it is concerned about these issues—but it has failed to deal with them for 11 years.

If you think about what is happening in terms of our international position, one simple measurement is the number of PhD students. We talk a lot about a skills shortage in this country but we hardly ever talk about the problems at the skilled research end of the labour market. Taking OECD figures produced in the 2007 fact book as an example, Australia produces 7.8 PhDs per 1,000 members of the workforce. Canada produces 8.2, the United States produces 10.7, Germany produces 21.1 and Switzerland produces 27.7. If you look at the number of PhD students per 100 graduates, in Australia it is 2.3; in Canada, 3.9; in Germany, 11.2; and in Switzerland, 10.1. By international standards, we are actually slipping behind. We are failing to measure up to our international competitors. This is in a context where we have an ageing academic workforce within our universities. With respect to the next generation of researchers, we have a serious long-term problem with replacing those people. This is at a time when we have also got limited opportunities for young people to join our universities because of a failure to develop the necessary research infrastructure. We have a problem with mid-career researchers and, at various levels throughout the university system, we have got major challenges before us. But what did we hear from the government about this last night? Stony silence. Nothing. We heard not a word about research training. We heard not a word about grant funding for the Australian Research Council.

We hear of additional money being spent for a new centre to be established in Queensland, around the research of Professor Ian Fraser—which in itself highlights the great benefits of Professor Fraser’s 20-year career and public support for his research. His vaccine for cervical cancer will probably earn him a Nobel prize. This underscores the importance of public investment in long-term basic research. But do we see that in this budget? No. We see a proposition for a special fund to be established: some $300 million per year—the equivalent of less than $10 million per university. In the case of a number of universities, this will not even begin to scratch the surface of the backlog of requirements for replacement of capital and research infrastructure in this country. We have a situation where the government is now suggesting that this money will be available only to some universities and only to universities that sign up to its industrial relations agenda.

What we have is an agenda where the government is seeking to present a clever and cynical political exercise. It is more sophisticated than Malcolm Fraser’s old ‘fistful of dollars’ approach; nonetheless it is essentially the type of approach that assumes that people will be able to be beguiled. I have a lot more confidence in the Australian people than this government perhaps does. We will wait to see whether or not the Australian people buy these arrangements.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

After that extremely high-flown rhetoric by Senator Carr, I would like to concentrate particularly on the education segment of this matter of public importance. The actual terms of the MPI before us today talk about investment in an education revolution. I would like to suggest to the Senate that that is exactly what the Howard coalition government have been doing since our accession to government in 1996. When you think back to Labor’s New Schools policy, which put a cap on the number of schools that could be established under the Australian education framework, when you think about the way in which Working Nation was managed—which offered a dead-end road to people who were not fortunate enough to have a job but were enrolled and were recycled around and around in meaningless training programs—I think everyone would agree that, in the 11 years of the coalition government, we have done a great deal more than that.

It is no accident that cumulative budgets have put us on a much stronger economic path. If you take, for example, the population’s investment in superannuation and the government’s investment in education, it is no accident that higher employment has led to higher wages. With the addition of tax cuts, it means that people are now able to put more money into super, which in turn will benefit them in their old age and will mean that the government bears less of a burden. If that is not investment in a good economic framework, I would like to know what is.

I probably do not have time to encompass the three areas of education that I would like to talk about this afternoon, but I want to refute a couple of the myths that were posited by Senator Carr. In almost every education inquiry in which I have been involved in my 14 years in the Senate, two measures that were dealt with in last night’s budget have come up time and time again. The first is eligibility for rent assistance to Austudy recipients. As we know, many university students, particularly if they come to capital cities, have to find rental accommodation a long way from their homes, which imposes extra costs. We are providing $87 million over four years to give rent assistance to Austudy recipients, and that benefits around 11,000 students aged 25 years and over. In addition, another criticism of our education policy has been that those students undertaking master’s degrees by coursework have not been eligible for the youth allowance and Austudy in their turn. We are now spending $43 million over four years to extend eligibility for youth allowance and Austudy to those students studying for qualifications that are a minimum entry requirement to a profession or part of a restructure of existing course requirements. That money in turn will help those students maintain their studying regime so that they are able to finish their course.

As well, our package A Better Future For Indigenous Australians means that in last night’s budget there is additional support and improved access to school and tertiary education for Indigenous students. The number of Indigenous students in tertiary education is very low for a variety of reasons. We are going to provide financial assistance, scholarships, training and employment opportunities for Indigenous young people from rural and remote areas, as well as education and job placements in urban and regional areas. When you think about the fact that we are also providing increased Commonwealth learning scholarships at a cost of $91 million to assist talented students from low-income backgrounds to attend university, this is not the social exclusion that Senator Carr talked about; it is social inclusion. We would like to help every student who wishes to go to university to do so. Some may think that that is an unattainable ideal, but we have certainly moved a long way along that road in 10 years of trying to help them to do that.

I will now quickly move to apprentices and technical colleges. We have made enormous strides in the number of apprentices we see in Australia. That number has increased three or four times since we came to office. It is important to recognise that only 30 per cent of school leavers go on to university. The rest find a trade, get a job or do other study. We want to support them, because the shortage of skilled workers which exists in most Western countries at the moment means that tradespeople are very strongly required. We need to encourage students to take up apprenticeships in the first place and employers to keep them on. Eligible Australian apprentices under the age of 30 will get an additional tax exempt payment of $1,000 per year as a wage top-up. That is again something that has been raised with me time and again around the countryside. They will also receive a voucher to reimburse the course fees payable to their registered training organisation by up to $500 per year. This is something that was mentioned to us in the transport inquiry being undertaken by the Senate Standing Committee on Employment, Workplace Relations and Education at the moment.

I wish I had more time to talk about the Investing in Our Schools Program, which has been such a success for primary and secondary schools that we are extending it to the end of the year 2008. I wish that I could talk about the literacy and numeracy initiatives that we have undertaken, the encouragement of teachers to gain better qualifications—particularly in literacy and numeracy—and the way in which our capital grants will continue for schools. As well, at least we have managed to persuade state governments to bring together core curricula for basic subjects such as English, maths, history and science. But never forget that that is the responsibility of state government.

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time for the debate has expired.