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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

He went on to say:

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

(Time expired)

James McGrath (Queensland, Liberal National Party) Share this | Link to this | Hansard source

I rise to speak on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. Inequality has become the new rallying cry of the Left as they continue to peddle the politics of greed, envy and division. We've got a Labor Party here in Australia who have looked across to what Jeremy Corbyn is up to in the United Kingdom, with his politics of envy, with his views on British society and the British state, and they've gone, 'Yes, we'll have some of that; we'll bring that here to Australia.'

It's ironic that the Labor Party preach to us about inequality while they oppose government measures that give Australians the hand up they require. With Bill Shorten's Labor Party it's always about the handout, not the hand up. It's always about having another review, another study. It's not about what we can do to grow the economy. This modern Labor Party, under Bill Shorten, the Leader of the Opposition, is not like the Labor Party of Bob Hawke or Paul Keating. It is a different beast. I may not have liked Paul Keating as Prime Minister when I had reached the dizzying heights of president of the Griffith University Liberal Club—our rallying cry back in 1993 and 1996 was about kicking out Paul Keating, and we finally did that in 1996—but under Prime Minister Hawke and Prime Minister Keating Labor did focus on market based reforms to improve the Australian economy. It is sad that we will not be able to say the same about Bill Shorten, the Leader of the Opposition, and the current Labor Party.

With Labor it's always about taxing the rich, but now it's also about taxing the elderly. We've got a Labor Party who want to tax those who want an investment property. We've got a Labor Party who don't want to give out tax cuts. They want to make the poor poorer. They want to make sure the poor take a handout from government. They don't want the poor to get on that aspirational ladder, to start and grow a business, to start and grow a family, to help grow Australia. What they want to do is protect the trade unions in Australia. This is a segment of the community whose membership rate, increasingly, is going down. In the private sector, just over one in 10 workers are members of a trade union. Why is that? It is because workers recognise that the way to get ahead is not by having this third-party industrial organisation, these dinosaur-era trade unions, trying to negotiate on their behalf. They recognise that unions have forgotten what they're there for. Unions have become just a campaign arm of the Labor Party. They are not standing up for the workers. They use money from the workers to try and get Labor elected and try and keep Labor in power. That is very sad.

The Productivity Commission, funnily enough, has just done a stocktake of the latest and most complete evidence on inequality. They have found that inequality has decreased since the global financial crisis. One of the main reasons for this is that this country has had 27 years of consecutive economic growth. That is a world record for a developed economy. For 27 years since 1991, since the recession we had to have—when Paul Keating drove the economy into the ground—we've had an economy that has been growing. It has largely been thanks to the economic stewardship of Mr Howard and Mr Costello, in terms of the work they did building on many of the reforms of Mr Hawke and Mr Keating. But the work of the John Howard-Peter Costello government between 1996 and 2007, for 11 years, is something that all Australians, regardless of their political allegiance—whether they're a member of the Greens, Pauline Hanson's One Nation, the Labor Party or a troglodyte party that I don't know the name of—should be proud, in terms of growing the Australian economy.

We were able to have that economic growth notwithstanding the best efforts of those economic troglodytes in Labor. It was when we had Wayne Swan, that noted economist/thespian/union official, who was Treasurer of this country for a long period—notwithstanding his best efforts to ruin the economy. We should not forget that, when Mr Howard was asked by the Australian people in 2007 to update his CV, Australia had no debt whatsoever. In fact, we had money in the bank. It took Labor just under six years to spend all the money in the bank and also rack up over $500 billion of debt. Notwithstanding those efforts, because of the work of Mr Howard and Mr Costello we still had economic growth.

Since the 2013 election, which Mr Abbott and the coalition won, we have been able to continue that economic growth. We've done that through making sure we try to live within our means and making sure that government, where there is a need for government, is small but good; it shouldn't be large and wasteful. We also need to make sure that taxes are as low as possible. We on this side of the chamber believe that the individuals, families and business owners know best how to spend their money, and they will act in the interests of themselves, their families, their business and their communities in terms of how they spend that money. We think that they know best in terms of spending the money rather than allowing government to spend money and continually increase taxes.

The Productivity Commission found that there is a high degree of economic mobility in Australia, including a high degree of economic opportunity. This economic growth has delivered significantly improved living standards for the average Australian in every income segment of the economy. We've all been growing; as the Australian economy has grown, we've all grown. In fact, economic mobility in Australia is higher than in most other OECD countries, including the United States and the United Kingdom. This is because our progressive tax system and our broad social safety net, our welfare system, are working together to drive inequality down.

The government's plan for a stronger economy is working, and it is helping to deliver a stronger economy for all Australians. How is it doing this? It is doing it through tax relief or, as I prefer to say, tax cuts—tax cuts to encourage and reward working Australians, tax cuts that keep backing businesses to invest in and create more jobs. We should not forget that, since 2013, a million jobs have been created in the Australian economy. We all want to decrease inequality and we all want to get rid of poverty, and the best way to do that is not by having the Productivity Commission do another study, which is effectively what this bill would propose, but by creating jobs. It is about people working for money. It is about people actually paying taxes that then go back into helping that social safety net. By doing that, it guarantees the essential services Australians rely on.

We're also growing this economy by keeping Australians safe. We are making sure that our borders are secure. We are making sure that we have an immigration system in which we decide who comes into this country and the circumstances in which they come. We decide who comes to this country, what skills they have and how they can help grow Australia.

We've also got to make sure that the government lives within its means. The government is delivering on its plan to get the budget back into the black sooner, with the reforms we've made, and also to start paying back debt. One of the biggest roadblocks to inequality in Australia will be government debt. Money we're spending on interest repayments is money that is not going into essential social services. Money that is going into paying interest on government debt is money that is not cutting taxes. We should never forget what Labor did to this economy in the period they were in power between 2007 and 2013. We went from zero debt in 2007 to almost half a trillion dollars of debt in 2013.

The core function of the Productivity Commission is to conduct public inquiries at the request of the Australian government on key policy or regulatory issues bearing on Australia's economic performance and community wellbeing. There is nothing preventing the commission from research and investigation into inequality or its impacts upon community, wellbeing or economic performance. In fact, that's what it's just done. Australia has a progressive tax system. It has a broad social safety net, and our welfare system is one of the most targeted in the world. There's also been wide reform of our age pension system to give more to those on the lowest incomes. We know that the best way to help Australians get ahead is to ensure that every Australian who can work is able to get a decent job. That is why our entire plan is targeted at growing the economy, getting more Australians into work and seeing incomes increase right across Australia.

In contrast, the Leader of the Opposition, Mr Shorten, and Labor believe that for some to do better others must do worse. We do not believe that. We think we can all do better. We think that by growing the economy all Australians can rise. Bill Shorten and Labor want to increase taxes and punish the job-creating parts of our economy, and that is a tragedy. The main thing we're doing to improve income inequality is jobs generation, because nothing helps people more than getting a job. The Household, Income and Labour Dynamics in Australia survey, called 'HILDA' for short, released in July this year found that relative poverty is at its lowest point in the history of the survey, while absolute poverty remains close to record lows. From 2001 to 2016 the percentage of the population living in absolute poverty decreased by approximately 70 per cent, from 12.6 per cent to 3.6 per cent. Meanwhile, the percentage living in relative poverty—and that's with the poverty line set at 50 per cent of the median income—fell from 12.6 per cent to 9.4 per cent.

Recent data supported the notion that some income inequality measures in Australia have stabilised since the global financial crisis. According to the Australian Bureau of Statistics, the Gini coefficient, which is used to gauge economic inequality, fell from 0.33 in 2013-14 to 0.323 in 2015-16, after growing in the lead-up to the global financial crisis and peaking at 0.336 in 2007-08. In case Labor has forgotten, in that instance lower is better. The HILDA survey estimated that there has been little change in income inequality between 2001 and 2016, with the Gini coefficient remaining at approximately 0.3 over the 15-year period. In 2016 the Gini coefficient was at its lowest level since 2005. In 2015-16 a total of 3.6 million Australian households received more in government payments than they paid in income taxes. Therefore, around 40 per cent of households do not pay any net tax after benefits. By contrast, in 2015-16 the top 10 per cent of taxpayers paid 45 per cent of total personal income tax.

It's disappointing coming to this debate, because Labor lack credibility on this topic. They have abandoned any pretence of fairness and of taking real action to reduce poverty in Australia. They want to play politics with it. They fail to understand that the best way to address inequality in our society is by economic means. It's not by doing another study, it's not by raising taxes, it's not by taxing one element of the population to subsidise another element of the population and it's not by adopting the Venezuela model of just taxing and taxing and taxing. The best way to decrease inequality is to make sure Australians have an economy that is growing, an economy where businesses will put on new workers, an economy where workers can decide that they want to start their own business.

In Australia we sometimes forget that every large business in Australia started off somewhere small. We forget that businesses like Qantas, in my home state of Queensland, started off in a shed in Longreach when it was the Queensland and Northern Territory Air Service. We forget that that is how that massive business started off. We forget that Coles started off with a single corner store and is now one of the giants of the Australian retail sector. We forget the same with Myer, which started off with a single store. So many Australian business names started off with someone who had been a worker deciding they wanted to start their own business, and they wanted to start their own business because they wanted to a get ahead. They wanted to get ahead for themselves, for their families and for the community. By doing that, they employed more people. By employing more people, we get them out of the poverty trap. We get them out of being reliant on welfare from the government. Even though we do need welfare, we do need to have that safety net for people, we want to make sure they can get ahead and have a job.

Labor's alternative plan for growing the economy is to put $70 billion of extra income tax on Australians. They don't want to have tax cuts for businesses. They will come to the table when they get shamed into it before the election. But let's see, if they ever win an election again in this country, what they will do. We got a pre-taste with what they did between 2007 and 2013. And, heavens forbid, if we fail to win the next election, and Bill Shorten becomes Prime Minister, we will have all these economic giants who sit on the opposition frontbench, all these people with their extensive business experience! This might be a fun fact for people to know who might be listening at home: the number of people in the Labor frontbench—there might be an exception here—or indeed on the backbench with business experience is very limited. And that is sad because small businesses and those who work for big, small or medium-sized businesses—but particularly small businesses—do so much for Australia. My fear is that Labor do not understand that small business is the best way for people to get ahead, for that person who has that dream, who sees that empty shop in the main street. My office is in Nambour in Queensland. There are people always wanting to see an empty shop and start a small business and grow it, to make sure they can get their family ahead. And it is tough. But doing another study, doing another report, raising taxes or getting Canberra to tell people what is best for them are not the ways to do it. The best way to do it is to empower people to get ahead.

It was Labor who opposed our tough measures to crack down on multinational tax avoiders when they opposed the 2015 multinational anti-avoidance legislation. One of their many great shames—they have a lot of great shames—was to have voted for leaving $2 billion in the pockets of multinationals instead of supporting our efforts to deliver it to the budget bottom line, funding essential services for Australians. It is Labor who, by voting against the enterprise tax plan, is opposing the Liberal-National government's efforts to boost investment, increase earnings and grow the economy. It is a Labor who have a plan for higher taxes and higher deficits. At the 2016 election, the Parliamentary Budget Office confirmed that Labor's election commitments would have resulted in higher deficits to the tune of $16.5 billion. Higher taxes, higher debt and higher deficits are the worst prescription you can write for the Australian economy. Labor are a AAA threat to our AAA credit rating:

Labor do not have one policy that would help one business invest one dollar or create one job. On housing, Labor's only plan is for higher taxes. We all know that higher taxes don't build houses. Labor's plan is to tax more so they can dole more out for their welfare spending increases, and that is wrong. The best form of welfare, the best way to fight income inequality, is actually a job.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to make a contribution to the debate on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. I sat here and listened to senators, most recently Senator Smith, talking about inequality and poverty in this country, quoting figures, for example, from the Productivity Commission report on income inequality. While there was some very useful data in that report, what I'm deeply concerned about is quoting the Productivity Commission and the misinterpretation of some of the issues that came up in the Productivity Commission report on inequality, and also quoting the HILDA data and the Gini coefficient. When you actually look into the issues around inequality, you can mask the impact on particular cohorts of Australians who certainly are not doing better. If you look at the figures in terms of the concentration of wealth in this country, you see that in fact the situation isn't as rosy as the government likes to paint it. If you look at the fact that Australia is considered by many now to be the second wealthiest country in the world, poverty rates in this country remain very high. We've just gone through Anti-Poverty Week in October, the week before estimates. When we were looking at Anti-Poverty Week we heard how poverty is affecting so many Australians. Yet you get up here and listen to the government senators and you would think everything was sweet.

They're ignoring the fact that poverty rates are remaining stubbornly high, with around three million Australians who are suffering deprivation and do not have a good quality of life. There are three million people in Australia living below the poverty line, of whom 739,000 are children. Inequality is baked into our system. When you look at the income share of the top one per cent in Australia, it has doubled. The top 20 per cent now own half of Australia's total wealth. That concentration is growing at a rate that is one of the highest in the world.

If you look at the recent Productivity Commission report, the way some people are interpreting it suggests that inequality hasn't got any worse in recent years, based on analysis that basically compares the incomes of the highest decile and the lowest decile—in other words, the bottom 10 per cent versus the middle versus the top 10 per cent. The problem with this particular methodology is that it masks what's going on in the analysis for specific vulnerable groups—those vulnerable groups that I was talking about. It is also completely at odds with the reports that you get from the front-line services—Foodbank, for example. I'm going to come back to Foodbank, because we've just heard that it has had its funding cut again.

If you look at some of the figures from that report and some of the other figures that are quoted, particularly when the Gini coefficient is quoted—it is often misquoted, and it is quite a difficult coefficient to understand—you look at what happened when the age pension increased. I am not for one minute saying that that was not a good outcome. It was a good outcome when the Rudd government increased the age pension. It was something that the Greens had been campaigning for; Senator Bob Brown in particular had been campaigning for it for a long time. Because there were so many age pensions that got that very needed boost, it masked some of the impacts on some of those other vulnerable groups moving more and more into poverty. That increase made the figures look a lot better for that particular group of people that had been living in poverty. Given that we also have a much better indexation rate for the age pension, that has helped that group of people deal with poverty better. That's not to say there are not aged pensioners living in poverty, because there are, particularly if you are a single woman. A lot of them are really struggling as they move into older age, particularly those who are unemployed and have used up their savings. They are moving onto the age pension in poverty.

Basically, it's masking those who are unemployed, single parents and those with a disability who should be on the disability support pension but are in fact on Newstart because of the change in the eligibility tables. Age pensioners have been better off over the term that we've been talking about—from the early noughties through to now—because of that increase, but the government is trying to wipe the slate and say, 'People aren't living in poverty anymore.' It's just not true. That is skewing the figures and masking the fact that, if you are living on Newstart, you are living in poverty. We have to raise the rate of Newstart by $75 a week.

There have been a number of very learned articles about the fact that it is easy to misquote the figures to make them look better without looking at those vulnerable cohorts who are really struggling, such as those on Newstart and single parents. We know from analysis that the poverty rate of children of single parents—and we know that the bulk of those are single mothers—has significantly increased since single mothers were dropped off parenting payment single onto Newstart.

I promised I would make this contribution short, but let's quickly look at, for example, the stats coming through from Foodbank. Their hunger report was released just a couple of weeks ago. The number of people that they are servicing went up five per cent in the 12 months from 2017 to 2018. There has been an increased call for their services. They are providing a valuable service to feed those people who aren't able to put food on the table, because they are living in poverty. And what has this government done? It has cut their funding again. It is outrageous. You only have to visit their services, which I did recently, to see what an excellent job they do and see how they are supporting vulnerable families who are trying to get by on particularly Newstart, the disability support pension and the age pension. Families are struggling on casual part-time work. They are not earning enough to be able to put food on the table. Foodbank are providing that service. They are supporting people who are living in poverty.

To imply that this country does not have an issue with inequality is simply ignoring or juggling the facts to make them fit their story. This country needs to wake up to the fact that we have an increasing problem with poverty and we have an increasing problem with inequality. Those who are trying to survive on extremely low incomes and on Newstart in particular are doing it very tough. If you just look at the proper figures and at those vulnerable groups, you will see that this country has a very significant issue with inequality.

Jenny McAllister (NSW, Australian Labor Party, Shadow Assistant Minister for Families and Communities) Share this | Link to this | Hansard source

I want to thank all my colleagues for their useful contributions to this debate on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. This is a debate we should have more often. It's a shame that, at a time of income stagnation and rising inequality, globally and here, this is one of the few real opportunities that the Senate has been given to debate these issues, and it's only doing so because there is a private senator's bill before us, not because of a government bill to address these issues. Where is the government's legislation addressing income stagnation? What is their plan to address living conditions for Australians? What is their plan to tackle the cost of living? I'm not sure and I don't actually think they know either.

Over the course of this debate, colleagues opposite have spent some time explaining why they don't think it is necessary to have the Productivity Commission regularly and routinely examine inequality as part of its work. I want to review some of these comments because this debate has been on foot for some time and a lot has changed in the intervening period. One senator said:

I am thankful for the opportunity this private senator's bill provides me to speak a little about the Turnbull coalition government's program to reduce income inequality in this country. One of the coalition's flagship policies is of course the enterprise tax plan.

That was in February this year. There are three things clearly wrong with this statement: it's no longer the Turnbull government, they don't have a program to reduce income inequality, and the enterprise tax plan is no longer one of the coalition's flagship policies.

A number of those opposite, during the course of the debate, spoke about their preference for reducing the cost of living for average Australians rather than addressing questions of distribution. One senator opposite said:

First and foremost, this government is tackling the cost-of-living pressures on Australian households. … On the energy front, the National Energy Guarantee, unveiled by the Minister for the Environment and Energy in October last year, will further ease cost-of-living pressures on Australian households, with expected savings of up to $400 per year on their energy bills.

There is another problem with that statement, because, of course, there is now no National Energy Guarantee. The government's figures of $400-a-year savings were always a bit rubbery. Now, however, they're entirely hypothetical. It appears the only climate or energy policy this government has is Direct Action, and that is a policy that should have expired along with the Abbott government. The only policy they have to reduce electricity prices was to have Minister Angus Taylor ask power retailers to do it—to ask nicely. As he found out last week, that is a strategy that doesn't work. Power retailers have refused to provide the lower rates by 1 January as demanded by the minister.

Despite the absence of any program to address inequality or the cost of living pressures or wage stagnation, a number of those opposite opposed the bill on the basis that it was better to take action rather than commission another report. One senator said:

Directing the Productivity Commission to undertake this analysis and provide a report to government is going to do nothing, other than allow us to line the shelves in our offices with yet another report that may well never see the light of day, that will just gather dust and that will not make a jot of difference to the lives of those people we're talking about now.

That sentiment fundamentally misunderstands the nature of policy development. Reports shouldn't line shelves and gather dust. That's not why we commission reports. They should be read. They should be understood. They should be used to inform decision-making. Yes, action is important, but so is understanding the problem. Perhaps this explains some of the struggles that the Abbott-Turnbull-Morrison government have had in developing coherent policies: they don't value or understand evidence, and, as a consequence, they are unable to move in an organised way through cogent decision-making.

It is encouraging to see that the Productivity Commission has in fact already undertaken some of the work outlined in this bill. In August this year, the PC released a research paper on rising inequality. It's a useful first look at inequality that I don't think has been properly digested by Canberra. What does the report tell us about the state of inequality in Australia? It tells us that inequality has been rising over the last 30 years. It tells us that our progressive tax and transfer system has been a substantial factor in reducing inequality, typically lowering income inequality by around 30 per cent, and that government-funded services like health, education and public housing have an additional equalising effect. This is a positive story about how the role of government can deliver for Australians. Sound monetary, economic and social policies can and do reduce inequality. We know we have the levers we need to make change.

However, the PC report also tells us a story of persistent and entrenched inequality and disadvantage. Shockingly, despite 27 years of uninterrupted economic growth, the poverty rate hasn't decreased. That's nothing to pat ourselves on the back about. We've had 27 years of economic growth as a country, and what have we done for the poorest Australians? Not a great deal. According to the report, around three per cent of Australians are living in continuous poverty. Some Australians move in and out, but there is a core group of around 700,000 people that are in continuous poverty. I invite those opposite to consider what that might actually be like. The commission has, in fact, reported that poverty in Australia is increasing. This is essential information that governments need for assessing the state of inequality in Australia, and that is the point of this bill—to require the PC to regularly produce this information and to ensure that when they are doing their other work they have regard to the impact of other decisions on inequality in our society.

What is it that the PC recommends we do about inequality? During his address to the National Press Club about the report, the commissioner didn't talk about corporate tax reform as a solution to inequality and entrenched disadvantage; instead, he noted the very low rates of income growth. He talked about productivity growth and pointed to three key areas from the Productivity Commission's Shifting the dial report last year. These areas were higher workforce participation and personal wellbeing, through preventing chronic disease; more adaptable workforce skills, through practical improvements to secondary and tertiary teaching; and reducing the number and complexity of overly restrictive planning and zoning restrictions, to make it cheaper and easier to live and work in our congested cities. Those are ideas for economic reform that we don't hear spoken about here.

Despite the fact that our premier economic institution raises these, advances them, it is of no interest, apparently, to those opposite, who continue to hang onto the outdated policy prescriptions they worked up in the mid-1980s and are unable to let go of. None of those opposite mentioned any of these issues in their contributions. Senator McGrath suggested that we need to open up property investment for those in poverty and that tax concessions for property investment were really critical in addressing disadvantage. What nonsense. You'd be laughing if it weren't so offensive to the 700,000 people living in continuous poverty.

There's not just a moral imperative to take serious action in addressing poverty and inequality. It is also likely to have an impact on our economic performance. That is something the Productivity Commission would be asked to consider through its work as a result of the passage of this bill. There is no fixed divide between social and economic policy. It is a porous relationship. When we all do well together our economy does well also. Back in 2012, the BCA, the ACTU and ACOSS released a joint statement and they committed to work collaboratively to support Australians disadvantaged in the labour market. This statement made the argument that there was a level of income support required for jobseekers to allow them to live decently and respond to job opportunities, and below a certain level of income it impedes jobseekers' ability to get into work. It didn't just make the social argument; it made the economic argument too. It said that in doing so we would provide employers with access to workers who had the skills they needed in the workforce.

More recently, that's been built upon by a Deloitte and ACOSS report. It looked at the economic impact of raising the Newstart rate by about $75 a week. They estimate that the immediate stimulus provided by a decision of that kind would produce an additional 12,000 jobs in the first year. Reforms in social policy can have a direct impact on the economic outcomes of a community. Equally, economic reforms can affect social outcomes—for example, people's health and wellbeing and their ability to participate meaningfully in their community.

What would a comprehensive response to poverty from a federal government look like? You'd start with action to address income. It's not reasonable that so many people who are working still don't have enough money to feed their families. I went out to Foodbank's warehouse recently in Glendenning. They make the point that of the people they help each month they're not just helping the unemployed and the homeless; their large-scale survey suggests that 20 per cent of people who are in part-time or casual work experienced issues accessing food in the last year. This is not because people are failing to manage their budgets or just need a little bit more advice about income management. There is a working poor, people going to work who cannot feed their families.

And the payment system needs to be examined. In the case of Newstart, we will conduct a root-and-branch review of the payment system, should we form government, because we know that the rate is too low. We also need to undertake action to improve services. The Productivity Commission has made it very clear that services like health and education—those universal services—make a great deal of difference in ameliorating inequality in this country. That's why Labor, should we form government, are planning a very significant investment in public education, putting back all the money recommended by Mr Gonski and ripped out by the government over the past five years from our schools. That's why we're committing to make preschool available to all three-year-olds and four-year-olds. And it's why we continue to believe that Medicare needs to be funded properly and that the attacks on Medicare need to stop.

These universal services may not be enough for families who are in deep structural poverty. The literature suggests that exposure to poverty in childhood damages a child's development, their future productive capacity and their life prospects more generally. It has economic costs for our society, but surely the moral cost is much greater. Government already run a range of early-intervention programs delivered in the home to support those families. The question is: are we doing enough? As the Productivity Commission has made clear, there is a group of people for whom poverty is an unending reality, and we need to come to grips with it as a society. Unfortunately this is not a challenge that seems to be of interest to the government. The coalition came to power with a very limited set of fixations. They're fixated on unions and on working people's organisations, they're fixated on delivering tax cuts to very big businesses and they're fixated on stopping action on climate change. They struggle to find enthusiasm for any issue that doesn't involve their ideological obsessions, and unfortunately that is most issues. That's why this government find themselves without any plan whatsoever to address income stagnation. That's why they find themselves without any plan to attack poverty.

Having the Productivity Commission report regularly on inequality, as proposed in this bill, will drag these issues back onto the table, because that is where they belong. Australians are facing the very real consequences of policy inaction. Income inequality—sustained poverty—creates a multitude of barriers that affect people's living standards, affect their social participation and extract an enormous human cost. It's clear that the government have no real interest in addressing those concerns. When they do talk about welfare, their focus is on punitive measures. They are focused on monitoring payments and overpayments, chasing up debts from extremely financially disadvantaged groups, and income management. There's no thoughtful discussion about tackling disadvantage. There's no thoughtful discussion about the social and economic benefits that come from investing in our poorest people. This is a missed opportunity—a missed opportunity in social policy as well as a missed economic opportunity. It should be a priority of the government to address this issue. Instead, they choose to simply engage in a war of words.

There's no more hiding behind rhetoric about what past Labor governments may or may not have done. The government have been in power for five years, and their inaction is having serious consequences. Poverty isn't a force of nature; it's not something that exists in isolation. It is forced on people by social and economic structures that inflict harm, and it affects our most vulnerable. Overwhelmingly, it is children and the elderly who bear the brunt of food insecurity and income inequality. Just today we've had reports that the government is nearly halving the funding for Foodbank, our largest food organisation, which nationally provides emergency relief to on-the-ground charities, reaching thousands and thousands of vulnerable Australian families. We should be doing more, not less, to support these people. Addressing poverty in Australia should be core business—a key priority for this parliament and a key priority for the government. But that's not the case. We need to change our institutional arrangements so that now and forever these issues cannot be ignored. I commend this bill to the Senate.

Scott Ryan (President) Share this | Link to this | Hansard source

The question is that the bill be read a second time.