Dr LAWRENCE(1.27 p.m.) —Despite its seeming innocuousness, the second Howard-Costello budget actually compounds the assault on decent social standards that they began in the first. It is another step toward producing a society characterised by private opulence for the few and public squalor for the many. It is built on the same dubious assumptions and mindless ideology and accelerates the destruction of consensus and generosity as the basis of public policy.

This budget demonstrates yet again—if we needed convincing—that the Howard government has uncritically embraced the ideology which insists on the necessity and rectitude of reducing government expenditure and of removing government from key areas of policy. This at a time, interestingly, when there are clear signs that the orthodoxies of economic rationalism and market based resource allocation are being challenged, often by those who were their most enthusiastic proponents to begin with.

We are led to believe that the reduction in the government deficit is to be the sole criterion for assessing this government's performance. Solving the problem of unemployment and providing for decent standards in health, education and social services is apparently relatively unimportant. This posi tion is not dissimilar to views espoused by sections of the business community and the financial press, and reflects an economic orthodoxy which, in my view, has not been sufficiently challenged, particularly given its obviously destructive effects on those who are less well off. I think it is time that more of us shouted, `The emperor's got no clothes.'

Familiar too in the assumptions shaping this budget is the pressure to reduce government involvement in policies affecting the quality of people's lives and to replace joint government action with individual decisions made in the marketplace, allegedly allowing the market to better allocate resources throughout the community. Accompanying these cuts here, as elsewhere where it has occurred around the world, is the crude rhetoric of `getting government off the people's backs'.

This rhetoric is predictably associated with mantras extolling the virtues of private sector efficiency and greater competition as the justification for cutting government expenditure, for selling public assets and for contracting out services, with the resulting loss of control over both the quality and the cost of those services apparently to be ignored. However, a recent analysis by Hodge of 245 studies of the effects of contracting out amongst some 20,000 enterprises found that, in reality, in areas such as policing, health and environmental management, changes in performance `were not significantly different to zero'.

One of the results of this government's obsession with smaller government is a substantial reduction in the size of the Public Service and, of course, a corresponding reduction in the expertise that is available for public policy and for service delivery. Recent insulting observations about the level of expertise in the service by Max Moore-Wilton highlight the inevitable consequences of his and the government's favoured strategies of `contracting out, downsizing, outplacement and right sizing'. All of these insidious concepts, many now repudiated by their originators, are basically code for removing people from jobs that they previously held and either replacing them with contract workers or requiring fewer people to do the same job—with greater stress, I might say. The expertise in public policy that we have had is apparently not valued by this government since it is being so easily discarded and then, I might say, illogically complained about.

A common associate of many of these free-market nostrums that we are hearing from the government is that labour markets should be made more flexible—where have we heard that before?—for which read: it should be easier to sack people and pay them lower wages. Indeed, the Treasurer (Mr Costello) recently indicated that greater flexibility could mean lower wages for some—it has taken a long time to get that concession from him. The new Reserve Bank Governor was apparently unashamed, however, to recommend greater labour market flexibility while recognising very clearly that this contributed to greater inequality in Australian society.

This same outcome was also recognised by the Confederation of Industry which suggested the effect could be ameliorated by further taxpayer funded payments to the working poor—this while simultaneously recommending huge cuts in public service expenditure, except apparently when it benefits business. If the government's savings initiative introduced in this budget and the private health insurance and family tax rebates introduced in the last are indicative of their approach to assisting those on low wages, then it is clear that the real battlers—as opposed to the ones the Prime Minister (Mr Howard) likes to refer to—are unlikely to get much at all. Most are ineligible for the private health insurance rebate since they do not have private health insurance; many would not obtain part B of the family tax rebate since both are likely to be working, at least part time; and the savings benefit is insultingly small to non-existent for those with little saved.

Underpinning these budget and policy prescriptions is the proposition—and this is very clear—that individual gain and not the collective good should determine which services are paid for from taxes and which from individual incomes. For example, it has been argued that those on high incomes should insure privately, use private health services and send their children to private schools rather than paying higher taxes and, with other citizens, creating a universal, quality service which is then available to everybody regardless of means. I much prefer what John Kenneth Galbraith calls simply the `good society': a society where we work together for the greater good and share in the wealth of our community.

Much of the government promotion of smaller government and private provision uses, misleadingly, the rhetoric of choice to disguise that shift away from collective provision. Funds are being removed from government hospitals and schools ostensibly to give people greater choice to purchase these services with their own resources in the private sector. While the notion of greater choice is superficially appealing to a great many people, the possibility of choice, however, rests heavily on the individual's income.

The inevitable result is a two-tiered system of service provision: one for those who can exercise `choice' because of their wealth—with private health insurance, private education or private aged care—and a second tier which is clearly residual or marginalised, the charity system for the indigent. For working families, this choice is hardly a free one. The massive cuts to child care over two budgets—we have some $820 million removed—and the flow-on increases in the costs of care have swamped any financial benefits that may temporarily result from the much vaunted reduction in home mortgage rates for those buying their own homes. In some child-care centres right now weekly fees have risen more than $50 per child, and some parents are either having to abandon work or study altogether or having to `choose' inferior, informal care. This, of course, is no choice at all, but a government enforced reduction in their self-determination and in their standard of living.

The cumulative impact of cuts to hospital funding over the two budgets—cuts to pharmaceuticals, to aged care and to child care—is already creating further inequalities of access to critical services and products. These are not discretionary. For example, the recently announced payment to nursing homes of $5 per day for each subsidised resident has rightly been attacked as derisory, particularly by the charitable sector. Alongside last year's decision to allow up-front charges of an unlimited amount from those who do have some assets, this decision will inevitably lead to a rich man's and a beggarman's service.

Similarly, the budget decision to cut a further $700 million from expenditure on pharmaceuticals hits the poor hardest. They will be expected to be satisfied with drugs of reduced efficacy or increased side effects or they will have to sacrifice other much needed expenditures to purchase these more expensive drugs. Many simply will not be able to afford to do that.

I have already been contacted, for example, by a number of women about the removal of vaginal anti-fungal creams and ointments from the PBS schedule. Since candida albicans—which usually causes this condition—is a persistent condition which often recurs and needs careful diagnosis and care, this decision will selectively threaten the health of those on low and fixed incomes. It will not affect the wealthy.

Reductions in university funding have already damaged the quality of Australian universities, according to the head of the government's own review of higher education, Roderick West. Mr West has found, from going around those universities, that many universities have cut tutorials, reduced staff numbers and axed many good courses on an ad hoc basis in an attempt to cope with the cuts—which are not yet finished. These effects, of course, are not being felt uniformly with older established universities, which are typically better endowed, likely to manage the cuts and attract more full fee-paying students. This will inevitably be at the expense of the newer and less prestigious establishments, which usually operate in outer metropolitan and rural areas and cater for the less well off.

The view that is already held by some of the so-called brownstone universities that they are superior institutions will become a reality under this government. Two classes of university will emerge again, this time based on ability to pay.

In addition to attempting to persuade the community that cutting government funded programs means greater individual choice, this government has cynically and spitefully offered citizens an invitation to constantly measure their entitlements and benefits against those of others who seem to be getting `more than they deserve'.

There is currently a very divisive and calculated exploitation of what is called, quite reasonably I think, the politics of envy and resentment. We are being encouraged to define certain groups as `outsiders'—as objects for our resentment—because they get `special treatment'. The irony is that these people who are described as getting `special treatment' are often those who are already marginalised in our society: for example, recent migrants from Asia and our indigenous people. They are being scapegoated. I do not think there is any other way to put it. The cuts to ATSIC last year and to Abstudy this year are clear examples of this policy. It is exploitative.

These attitudes underlined in this budget and the previous one are part of a constellation of what I believe are deliberately cultivated values which are eroding the social contract between the government and the Australian people.

A very ugly side of this value set is the tendency to blame the victim. Those in society who have fewer resources are to be blamed for any disadvantages they suffer. For example, if you look at the official statements surrounding unemployment, which is one of the most involuntary statuses that we as a society can confer on anyone, it encourages us to think that the unemployed are `ripping off' or `bludging on' the system, to use two much used phrases. The last time the word `dole' was used as an official government description of unemployment benefits—at least until its recent disinterment—was in the early 1980s, when we were encouraged to think that the 10 or 11 per cent who were unemployed were taking the rest of us for a ride. The reality is that they were not and they are not now.

The great majority of people now unemployed would prefer to be in work. And many of those who are employed now would prefer to have more employment than they do. It is the governments which have failed them, not vice versa. The idea that those out of work should be compelled to work for the dole to repay society for giving them something to which they are really not entitled—that is the thinking behind it—is insulting and destructive. This budget compounds this insult by reaffirming the massive cuts to labour market programs and ignoring employment growth almost altogether as a major objective of its policy.

I must say I was flabbergasted last evening to hear the member for Warringah (Mr Abbott) talking about the difference between the government's newly introduced Green Corps, which is a much smaller program than the former LEAP, which also covered conservation and environmental management. He told a rather small but startled audience that the virtue of Green Corps in his eyes is that it is made up of volunteers. The difference between Green Corps and LEAP is that LEAP participants were conscripts while Green Corps participants are volunteers. He goes on to say in the same speech:

There is an enormous difference between Green Corps and work for the dole. Green Corps is an environmental program for young people. Green Corps is a job; it is a job lasting for six months at the national training wage. It is a real job.

Presumably, we are invited to conclude that work for the dole is not. He goes on further and says:

. . . Green Corps is very much a quantum leap ahead of the LEAP program because of the fact that these people are volunteers. These are not conscripts. They are not slave labourers. They are not there because they have been threatened with the loss of any benefit. They are there because they want to be there. They are there because they are people genuinely committed . . .

In other words, these characteristics seem a virtue in the Green Corps. Yet this is the same government that has just introduced an insultingly small program called `work for the dole' which has all of those characteristics that the member was deriding.

I must say that I was amazed to hear the Prime Minister recently, when asked to defend cuts to higher education funds, express the opinion that many people who did not have a degree actually resented paying taxes so that others could pursue higher education. Whether that is true or not, the Prime Minister was inviting the listeners to feel resentful and refusing to recognise that there is a substantial collective benefit in having a well-educated and highly skilled population. His statement also ignored the fact that a fair and universal system is also likely to benefit most families directly at some time.

It is true that higher education confers an increased earning capacity on some—it depends on what sort of work you do; and they do make a contribution—but if we have a well-educated, well-informed, highly trained population, we all benefit enormously as a community.

This government's budget, and its previous budget, and associated policies, do not contain any recognition that there are very compelling grounds for caution in embracing prescriptions which recommend free market solutions to our social and economic problems—any or all of them. These reservations arise both from the shortcomings in the economic theories that drive them and from a growing body of evidence, which I think we ignore at our peril, that they actually fail to achieve not only their stated economic goals but their unstated social goals as well. Furthermore, I think it is clear to say that such policies have been instrumental already in producing social, environmental and political consequences which will prove inimical to civilised standards.

I think we need to be reminded that at the core of the free market program embraced by this government and this budget is the extension of the market principle into almost every part of community life with targets as diverse as health services and university places, with contracting out and market testing being applied to everything from labour market programs to information technology.

It is important to recognise too that the emphasis in a lot of this change program—it is not reform—is largely or solely on efficiency, not on effectiveness or improving outcomes for society, or improving the status of the disadvantaged in our community. I have to say I agree with John Ralston Saul that efficiency is a low-level technical objective, one we expect of everybody. Efficiency is a criterion of dubious benefit when assessing public goods or natural monopolies. For instance, a school may have fewer teachers per student and lower operating costs than another, but a very poor educational outcome.

Many have observed that the unrestricted operation of the market can produce perverse, not to mention socially damaging results. For instance, when contracting out occurs, the costs of contract development and the monitoring of performance of contractors is often not acknowledged. The result is the development of another tier of government which is not delivering a service or developing a policy, but monitoring those who have been contracted to do the work. What emerges is a very extensive bureaucracy devoted to auditing, managing and evaluating contracts over which effective control has been relinquished. Just ask Jeff Kennett about the ambulance services in Victoria.

I am already receiving complaints about the operation of the private sector in providing case management for the long-term unemployed, including concerns about serious privacy breaches which, I am pleased to say, are now being investigated. These relate to highly sensitive questions about mental illness. I have here a copy of one of the questionnaires that is used by one of these private providers. It asks the potential user of this service, `Tick any of the following mental health problems you have had: diagnosed depressive illness, diagnosed schizophrenic illness, mood swings, suicide attempts, anxiety attacks, panic attacks, phobias, hospitalisation.' The person concerned rejected that and resented it and, I am pleased to say, with my assistance, has made that known to the department. But, at the time, no-one from the department was apparently aware of these possible breaches. That was a contracted out service.

There is no doubt too that we are seeing increasing dislocation and disaffection as a result of many of these so-called `globalising economic pressures'. Furthermore, as Walter has argued, `It has been resort to a single principle in public life which we've been persuaded to call economic rationalism,' which has been so damaging.

The fact is that it is not particularly rational as a framework for deciding how we run our lives. We are told that there are no options. Those who voice objections to this view of the world are derided as economic pygmies or ignoramuses who are out of touch with right thinking. We are told this in the context of outcomes for the wider community which are clearly far from perfect.

It is fair to say that, wherever these experiments have occurred—for instance, in the UK, New Zealand and the US—growing inequality has been their hallmark. Governments should intervene to reduce and remove inequality. Where governments do not intervene, or where they intervene less effectively than in the past, the result is, and will be, growing inequality. Cuts to government programs and benefits will further widen these gaps.

As Kapstein said plaintively in a recent edition of Foreign Affairs `this is not how things were supposed to work'. Kapstein, along with others, had advocated expanding the role of the marketplace, increasing privatisation and having smaller government. He now decries the fact that today's advanced global capitalism has failed to keep spreading the wealth and that inequality has worsened. George Soros—also a recent convert—said:

Too much competition and too little cooperation can cause intolerable inequities and instability.

The more governments withdraw public funding from education, health and housing and insist that the individual pay his or her way, the more we will see Galbraith's private opulence and public squalor—walled cities within cities; and it is already happening.