Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

In the short time allotted to me I would like to make a contribution on the budget. On 6 September 2013 Tony Abbott said, 'no cuts to education, no cuts to health, no changes to pensions, no changes to the GST, no cuts to the ABC or the SBS'. That is on the public record. Whenever that has been raised in this chamber or anywhere else, there has not been an answer saying, 'We changed our mind.' The answer is always, 'But there is a budget emergency.'

Let us follow that through. If there were a budget emergency, what action would you take? At Senate estimates it became very clear that the first action the Treasurer and others would take would be to reduce the Australian Taxation Office staff numbers from 21,390 to 19,068 in the next 12 months. 'We have a revenue problem,' in the words of the Treasurer and those opposite, so the first thing they do is take 1,000 or thereabouts tax collectors out of the system. The Second Commissioner of the Australian Taxation Office, Mr Geoff Leeper, said during a committee hearing that 96 per cent of tax comes to the agency voluntarily and that it is the compliance team that spends its time chasing the other four per cent. Here is the rub: Mr Leeper states, 'that is largely where our new policy effort is focused, on high-risk areas', and that is where you are going to get a $6 return for every dollar invested. The rate of return is one to six.

If I were to accept that there is a budget emergency, why would the Treasurer be cutting 1,000 tax collectors? Why would he make it more difficult to collect in the high-risk area where people are not doing the right thing, where people are not declaring and paying? According to Mr Leeper, 96 per cent of Australians pay their tax voluntarily. There is an area where you need to chase the dollars. If there is a budget emergency, why on earth would you cut 1,000 people who have the potential, for every dollar invested in them, to raise $6? Andrew Leigh, the shadow Assistant Treasurer, said in a media release on 15 July 2014:

The Abbott Government’s deep staff cuts at the Australian Tax Office (ATO) will result in a hit to the federal budget, with new evidence revealing every dollar cut from spending on staff will sacrifice up to $6 in unpaid tax.

My office has had considerable interaction with people—probably up to 15,000 phone calls made proactively and reactively—about the budget. So we do have an understanding of the depth of feeling out there in a lot of regional and metropolitan areas about these unfair and unpromised attacks on ordinary Australians. The government say we are sacrificing our children's and grandchildren's future. If that were even remotely the case, why would you would cut tax collectors? Why would you sacrifice the ability to get $6 for every dollar invested? That is not new tax; that is the existing tax regime, which is not being complied with by about four per cent of the population.

Contrast that with the GP tax, a $7 co-payment that would cost Australians $3.5 billion. The most vulnerable Australians would be the ones who would suffer. My office has had countless conversations with ordinary working class Australians who simply see this as a kick in the guts. They know the Hon. Tony Abbott, the Prime Minister of this country, lied when he said 'no new taxes'. At the same time, Tony Abbott is not even collecting the taxes that are out there to collect, because he is cutting 1,000 tax collectors.

If that was not bad enough, he is putting his Paid Parental Leave scheme in place. Do not take my criticism of the Paid Parental Leave scheme; do not rely on this side of the chamber's criticism. You do not have to go far to find the other side of the chamber criticising the Paid Parental Leave scheme. They have put their name to their criticism. Among the names bandied around of those who are not only critical of the scheme but feel so strongly about it that they are willing to cross the floor are Senator Bernardi, Senator Williams, Senator Smith and Senator Ian Macdonald. They join Alex Hawke and others in the lower house who are in open revolt about a $5 billion spend on a PPL scheme in this area of alleged budget emergency. Hang on though, Joe said, 'We'll do that. That's our signature policy. We're going to do that over the top of our own side's opposition. We're going to cut 1,000 tax collectors, forgo the chance of getting $6 in for every $1 spent, and we are going to whack a co-payment on the most vulnerable Australians.' That is fair? Goodness gracious!

We do not have to go too far to find some interesting media commentary. I was intrigued by the contribution from Niki Savva on Insiders on 24 August 2014. I do not know the journalist. I have no doubt that she does a startlingly good job in her field. She has certainly been around a fair while. She said in reference to Senator Cormann:

Mathias I think is doing a very good job, but he's doing 2 and a half jobs at the moment … He's doing as you say Arthur Sinodinos' job, doing his own job as finance minister and half of Joe Hockey's job as treasurer.

She went on to say:

But it's not a very tenable situation, either Joe has to come good and everyone is keeping their fingers crossed on that hoping because if Hockey doesn't come good then they are in all sorts of trouble again and plus they need an assistant treasurer before too long.

We all know that Senator Sinodinos has parked himself on the bench. That has left a bit of a hole, no two ways about that. Here is a commentator that says that Mathias is doing a good job, he's doing 2½ jobs, keep your fingers crossed for the Hon. Joe Hockey to come good. If he can get his gaffe-prone performance back on line, they might be able to prosecute their budget. Someone in this place who has been here a very long time once said to me, 'I can't remember a budget that people were still talking about three weeks after it happened'. This is different. This is 100 days after it has happened and it is red-hot out there in the electorates. People are not going to stop talking about this budget. This is red-hot. It has managed to touch everybody.

Arthur Sinodinos is on the sideline; he has parked himself on the bench. The Hon. Joe Hockey, the Treasurer, has put his foot in his mouth a couple of times and had to withdraw from the front line—he cannot sell his budget and he complains that no-one wants to talk to him and no-one likes him. Senator Cormann has had to step to the front and take up the running. And what do we get from the Prime Minister of this country? The Prime Minister, a man who ceaselessly criticised former Prime Minister Kevin Rudd for travelling, in this time of budget emergency has managed to make as many international trips as were undertaken by the person he decried in the first place. So you have a budget emergency and a leadership emergency on the other side. They have one person paddling, one person dragging the boat back and another person flying around in circles. The reality is that you cannot cut tax collectors and punish pensioners and then expect the Australian electorate to say, 'Yep, that sounds fair.'

Amongst all of this debacle there is an issue we have discussed in a number of Senate committees—transfer pricing. This is about the fact that Apple, Google and other global corporations work the world system to their advantage—quite properly and legally at the moment—and avoid paying taxes in countries where they make lots of sales. What have the Taxation Office done in respect of that? I presume we will have to wait till the next round of Senate estimates to confirm this, but my information is that they have made redundant the people they charged with investigating that issue. These are the people that they were asking to give them a policy about getting some tax off these global corporations. Because there is no research and development tax in California in the United States, Apple do their design, research and development there—fair enough; that is legal. There is a 15 per cent company tax rate in Ireland, so Apple have a company over there. They sell their stuff in Australia but whack the proceeds off through the Cayman Islands, so we pay full tote odds and more for our Apple products and they make no tax contribution to Australia. The people at the ATO who were charged with investigating that issue have been made redundant. That is what I have been told by someone close to the issue. So in a budget emergency, the response of those opposite is to get rid of some tax collectors. What on earth is going on?

To go a little bit further into the things that are really driving the electorate, in education the Hon. Tony Abbott is cutting $30 billion out of schools, scrapping the Gonski reforms and abandoning needs-based funding. This is after he said before the election that there would be no cuts to health and no cuts to education. That is not what teachers and educators are saying these changes will mean. What they are saying is that these changes are going to mean that disadvantaged kids in school classrooms will not get the appropriate amount of attention to enable them to have a fulfilling education and contribute properly in their lives. They are saying that these changes that are being brought in are not conducive to good educational outcomes.

As to the co-payment, I spoke to a doctor last Saturday night who runs a very successful GP clinic. He said that the most common question he gets asked is: 'Do I have to pay the seven dollars?' He is reassuring people, as are all of his doctors in that clinic: 'No, you don't have to pay that.' But people are very concerned about it. Senator Macdonald, on the other side, has made it very clear, in print and publicly, that coalition voters are concerned about it.

Let us take this for a comment: Mr Abbott was told yesterday that the budget changes were 'unreasonable, unfair and unacceptable'. Now guess who that came from? The Premier of Victoria, Denis Napthine. That is not from our side; that is from their side. The New South Wales Liberal Premier described the federal budget as 'a kick in the guts'. There is no ambiguity in that comment. The Queensland LNP Premier, Campbell Newman, said: 'We're all in agreement that what the government is up to in relation to health and education is not acceptable.' At least he was polite!

So this goes on and on and on, and when we raise simple issues, like, 'Why are you putting off tax collectors if we are to accept that we need to have some more revenue?' there is no answer. It is, 'It's your fault; you left us a great big pile of debt; you've mortgaged our grandchildren's future'—which we do not accept. We accept that you have to run the country in a proper, prudent fiscal manner. But you do not have to do that by whacking the pensioners, or by hitting the unemployed. Six months with no dole? What are they going to do—starve? (Time expired)

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Today I would like to address an area of public policy that has a far-reaching and pernicious effect on the cost of living for many Australians—a policy that is making households poorer and industries less competitive, is stifling jobs and is imposing a $29 billion burden on the Australian economy. The policy to which I refer is the renewable energy target, or RET.

The RET is a generous industry-assistance policy that rivals the largesse of the motor-industry gravy-train, and has the inevitable consequence of driving up power prices through government-mandated customer subsidies. The policy and its continuation are, unsurprisingly, promoted vigorously in the renewable sector, at the expense of ordinary Australians.

In June 2009, then Minister Assisting the Minister for Climate Change, Greg Combet, in his speech introducing the Renewable Energy (Electricity) Amendment Bill 2009 said:

The Renewable Energy Target Scheme is part of the government’s economically responsible approach to tackling climate change.

Surely using the words 'economically responsible' and 'Renewable Energy Target' in the same sentence must be an oxymoron! A report from the accounting firm Deloitte issued in July, entitled Assessing the impact of the renewable energy target, is unequivocal in its conclusions. It notes that completely abolishing the RET is projected to increase real GDP by $29 billion in net present terms relative to the RET continuation. It also said:

Households are projected to gain the most given the two-fold impact of higher real wages and the relatively larger reduction in residential retail electricity prices …

Over the last decade, since the introduction of the RET, Australia has gone from being historically one of the cheapest energy nations to now having four of our states in the top six internationally for expensive household electricity. Only Denmark and Germany, both heavily reliant on wind energy, are more expensive.

Australia's residential electricity prices in 2007 were much the same as in the US, but now are more than 120 per cent higher than those of many Americans. No green energy is free, or even the same price as electricity generated by coal or gas. It is beyond doubt that electricity produced by wind turbines is more than twice as expensive to produce. The more wind energy we encourage, the more we will pay for power.

Under the RET, electricity retailers are forced by the government to spend millions of dollars buying Renewable Energy Certificates from wind energy companies. The electricity retailers, of course, do not wear this cost; it is passed straight on to consumers, via their bills.

It is this last point that highlights a fundamental misunderstanding as to who pays the cost of renewable energy. It is clear from the public commentary on this issue that many believe the government is paying the subsidies to energy companies, and they are happy for the government to support renewable energy as long as they themselves do not have to pay for it. Apart from the fact that, on any issue, government money is taxpayer money, the costs of renewable energy subsidies are passed directly to customers but are not shown separately on their bills, so the subsidies are hidden from scrutiny.

Household energy poverty—defined as when 10 per cent or more of disposable household income is used for energy needs—has become entrenched in Australia, creating a new underclass whose daily choices are now dominated by electricity price signals from a government-manipulated energy market. Politicians are quick to claim the moral high ground in defending the position of working families, battlers and the disadvantaged, and these are certainly the groups most affected by high electricity prices. The hypocrisy of Labor, the Greens and Clive Palmer is exposed when they each claim that these groups are their core constituency while vigorously opposing any suggestion of changes to the RET.

Clive Palmer claims to be a friend of the battlers but at the same time he insists that they continue to be compelled to subsidise the wind industry—by far the largest and noisiest beneficiary of the RET subsidies that line their pockets while emptying the pockets of the battlers. We cannot produce ever-increasing amounts of expensive wind power and not expect electricity bills to keep increasing. It is as simple as that. To pretend otherwise is duplicitous. Our nation was built on the gold boom, agricultural exports and cheap energy. Sure the world has changed, but the fundamentals have not and energy use drives the economy even more so in this modern age.

The Liberal Democrats are opposed to industry assistance that favours one type of generation over another, and we are opposed to the perverse outcome that sees the least well off in society subsidising the solar panels of the affluent. And we are opposed to the massive transfer of wealth—$17 billion over 15 years—from Australian electricity consumers to multinational energy companies via subsidies. Those who support the idea of expensive electricity for minuscule environmental benefit need to face the reality that the RET is very inefficient. According to the Productivity Commission, the scheme abates greenhouse gas emissions at four times the cost of the now defunct carbon tax. There is no doubt that abolition or very serious reform of the RET is required.

Energy market demand is falling, according to the latest report of the Australian Energy Market Operator, and new generation will not be required to be built for over 10 years, but the RET requires at least $10 billion of investment in renewables in the next six years to meet the mandated target. Either the renewables industry invests $10 billion into a declining market to produce a greater quantity of expensive electricity to meet the government decreed target or penalties in excess of 50 per cent greater than the current renewable energy certificates will be applied, which inevitably will flow through to electricity bills. In either case, further substantial increases in retail electricity prices will result from additional subsidies for new wind energy or consumer funding of penalties imposed on electricity retailers because the target was not met. This is self-imposed madness. Like the carbon tax, the RET is a tax on jobs. Analysis by Deloitte shows that continuation of the RET reduces full time employment by over 5,000 jobs compared to abolition. This is self-evident given the costs imposed on industry from higher electricity bills.

Some people suggest that present renewables subsidy arrangements should be grandfathered, with no new agreements entered into, as a means of quarantining the escalating costs of energy. While this would draw a line under the cost of the RET, it would still see a $7 billion cost to consumers for years to come. The unchallengeable economic reality is that to restore a key advantage to the Australian economy the RET should be abolished. The only other course of action to extricate ourselves from the policy black hole that is the RET is to make it a scheme that truly recognises all renewables in the energy market and cap the scheme at a true 20 per cent of generation.

Currently around 12,000 gigawatt hours of existing hydrogeneration that pre-dated the RET scheme is excluded from receiving renewable energy certificates, with a large portion of this hydrogeneration capacity located in Tasmania. Recognising the obvious, this hydro capacity is the bulk of renewable energy currently generated and including it in the scheme with the ability to generate Renewable Energy Certificates would give a badly needed economic fillip to Tasmania to the tune of around $120 million per year.

It is beyond dispute that retaining a RET scheme in whatever form will be a continuing serious economic drain on the country and the wealth of households and therefore should be abolished; however, if a revised scheme is to be retained it should be more equitable. It is not in the best interests of households and business to continue propping up an inefficient and expensive Renewable Energy Target via our electricity bills.