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Wednesday, 4 June 1997
Page: 4979

Mr HAWKER(12.30 p.m.) —Mr Deputy Speaker, after listening to the honourable member for Grayndler (Mr Albanese), I must admit that I was rather disappointed to hear the way he seems to have fallen back into the bad old habit of taking a patronising view towards some sectors of the community and the way he seems to be trying to reinvent the class war—something that I thought Australia was rather pleased to have got rid of. It really is most unfortunate to listen to someone having to resort to going back to things like the politics of envy.

One of the things that all honourable members particularly on this side would say—and all the thinking ones from the other side—is that they really could not accept anyone from the Labor Party lecturing us on unemployment. After going out of office after 13 years with 8½ per cent unemployed, I would have thought that all members of the Labor Party would be rather inclined to stay right off that subject with a track record like that. I do not think they would want to be talking about unemployment for a long time.

At the same time he made some comments about the Treasurer revising down the growth figures to 3¾ per cent. Some of us have a reasonable memory you know and it was not that long ago when Labor was in power that the growth figures were actually negative. It was not that long ago and you have been around long enough to know that you only have to go back to the recession we had to have and the growth figures were negative. It is very disappointing to hear someone saying that.

Getting on to the budget, the member for Grayndler seems to have completely missed the point about savings. He talked about the savings initiatives of the government which I happen to think are an excellent development, but he missed the whole point. It is all about encouraging people to increase their savings. He was trying to look backwards all the time instead of looking forwards. What he ought to realise is that the reason why the government has brought in this incentive for savings is to actually encourage people to increase their savings. It is not about trying to benefit people who may have savings now. It is all about encouraging those who want to get into savings to start to do so. As has been pointed out many times, it is capped, so in fact it will be of limited benefit to those on very high incomes.

Of course when he raised the question about national savings, he seems to have completely overlooked one of the fundamental changes that have occurred with this government and that is the moving of the budget into surplus. Now what better way is there to improve savings than to move the budget into surplus? Likewise, as a contrast, what worse way is there to destroy national savings than to continue to run budget deficits? This is exactly what this government inherited from the previous government—a $10 billion black hole; a $10 billion budget deficit. Ten billion dollars was eating into national savings as a result of an irresponsible government that was of course rightly thrown out at the last election. It was thrown out by the people of Australia because clearly it no longer deserved the right to govern this country.

Not only is this budget all about building on the work that the Treasurer and the government already started in the last budget to bring this whole budget back into surplus in one parliamentary term, but it also in fact reduces as a percentage of gross domestic product the level of Commonwealth outlays. It reduces them from 27 to 23 per cent over the term of this parliament and it brings the level of Commonwealth outlays to the lowest level since the pre-Whitlam era. In other words, it is the lowest level as a percentage of GDP in over 20 years. Indeed, that is a tremendous achievement and is something about which all members of the government and all members of the Australian public should be very proud. But in fact the story about the budget gets better.

It is the first time in over a decade that the Commonwealth will not have to borrow a single dollar. That is indeed a great achievement. By the year 2000, the Commonwealth debt as a ratio to GDP will have literally halved from the time that this government came into power. In other words, we are moving away from Labor's approach of deficit funding—of spending today, not worrying about it, just racking it up on the Bankcard and leaving it to the next generation; a `send the bill to the kids' type of approach—to a responsible approach to budgeting. This is something that all Australians should recognise as a very significant achievement.

Of course, this budget also builds on many of the achievements of last year. We saw the family tax cuts that came in on 1 January of up to $500 per family, specifically targeted at the very people that the member for Grayndler said he was so concerned about. I did not hear him talking about the benefits of these tax cuts. These are significant achievements and something that this government is very proud of.

Mr Albanese —Was there anything in this year's budget?

Mr DEPUTY SPEAKER —Order! I ask honourable members on my left to refrain.

Mr HAWKER —I also want to talk about some of the other achievements that this government has already put in place through last year's budget and which this year's budget builds on. If we look at what has been done for self-funded retirees, as of next month we will see a rebate coming in over two years for self-funded retirees so that they get the same tax treatment as pensioners.

One of the real achievements of this budget—building again on last year's budget—are the major incentives for small business. Also we have the changes to Austudy for families with two children studying away from home—something that will be of particular benefit to those in regional Australia and something that recognises that people in the country have significantly increased costs in sending their sons and daughters away to study, in most cases because they have no choice but to send them away.

There is more. We can talk about the new savings initiative or we can talk about the Natural Heritage Trust—$1¼ billion going to the environment—which brings environment into the mainstream, something that Labor, after 13 years, could not do; something that we have achieved that will have lasting effect not only for this generation of Australians but for successive generations of Australians.

We also have, in this budget, the Federation Fund—$1 billion dollars to build infrastructure projects of national significance—which is something that again recognises that this government knows how to run a decent budget. This is probably why I can feel very enthusiastic about this budget. It gives, as I was saying, great opportunities for small business. It gives business a chance to get going and that will lead to jobs, which we all recognise is such an important issue in Australia today. In fact, the paramount need is to get unemployment down.

In getting small business going, we have to look at the right ingredients that this government has brought to the task. Firstly, we have got the responsible economic management that I have already spoken about that is getting the budget back into surplus. Secondly, we have got the low inflation rate that we are now working to lock in, and from that we get lower interest rates. We have seen four cuts to official interest rates since this government came in—four cuts that will give the sort of encouragement and build the confidence that is so important in getting business to start to invest and expand—leading to greater opportunities and greater job growth.

When some people ask, `What's this budget all about?' I would sum it up by saying it is all about building confidence: confidence that people will have to start to build their own futures rather than having to forever worry about what the government is going to do next and what the government is next going to get wrong.

When we talk about employment, it is important to note that last year, in the first year of the Howard government, we saw 130,000 new jobs created. When we look at what is expected in the coming year, this will increase to a further 200,000 jobs. So we are in fact tackling this whole issue head on. Unlike the Labor Party, who just threw buckets of money at the unemployed, never knowing how they were actually going to solve the long-term problem, we have got in place lasting programs that are all about building sustained jobs.

But I will get back to the question of small business. There is a number of important issues that are all about getting small business going. We have already reduced the provisional tax uplift factor. While that may not sound a major change, it does in fact improve cash flow in small business by some $180 million—quite significant, I would have thought. We have also extended the incentives for employee share ownership and will be introducing quarterly group tax remittances for small employers—again, all part of reducing paperwork. That, in itself, is going to be worth $500 million in cash flows to those small businesses that have a group tax collection of less than $25,000 per year.

We have seen fringe benefits tax changes that should allow the paperwork to be completely removed for about half of small businesses. We have seen changes to the industrial relations law, changes which are partly already through and partly still to come, and which will mean massive changes to the way in which small business approaches employment. I believe this will give tremendous encouragement to small businesses to increase their employment.

But the real sleeper in changes has been the capital gains tax rollover provisions. These are something that the editor of Business Review Weekly spoke of in very glowing terms a few months ago when he described it as `probably the most significant change in decades to tax laws affecting small business'. What he was so enthusiastically talking about was that allowing the opportunity for people to roll over their capital gains when they sell one business and buy another was a real incentive for small business to really build up a capital base. If you like, when we talk about national savings, this is just another aspect of improving national savings.

What Robert Gottliebsen was saying, of course, was not just that the provisions are going to change the way small businesses approach their whole operations, because they will be looking now on how to accumulate a capital base; he was also talking about the changes that it will mean to the career paths taken by many of the best and brightest in this country. A lot of people will look at this opportunity and realise that with the change to the capital gains tax—rather than go into a major corporation where, as soon as they get up the management ladder, they very quickly find themselves with a marginal tax rate of 50c in the dollar—they may well be able to accumulate some capital in a much quicker and more effective way.

He also went on to point out that, in the current climate—as we have seen with the changes to many corporations, particularly in middle management, and the takeovers that have been occurring—there are many managers who reach the age of 45, say, and suddenly find themselves out of a job. Once you get past that age, it is not easy to find another job. So, in terms of career paths, Gottliebsen was really saying that the change to the capital gains tax law is going to lead to many of our brightest young people changing their whole career path and going into small business. That is a very exciting development, because we all know that small business is where the new jobs are going to be. When you look at the changes that have occurred already in assisting small business to grow and prosper under this government, you will see a pretty exciting and pretty impressive line-up.

Of course, we could talk further about the savings initiative. It is a very important element of this budget: not only does it provide incentives for people to save but it also encourages those who choose to increase their personal superannuation contributions by up to $3,000 per year, in that they will also be able to get the 15 per cent tax rebate. But, of course, it also applies to everyone, including self-funded retirees.

The impact of the initiative will, over time, be enormous. Not only that, but it will help to change the culture in Australia; it will help to rebuild the independence of individual families; it will provide the incentive to save for all the things that families probably want to do but have not been able to in the past, so that they can in fact save for their own futures, their own housing, better health care and better education. In short, not only will it be better for individuals but it will be better for the nation; and, with savings, it will help to attack one of the other major legacies that Labor handed on: the level of national debt.

In the time that I have left, I want to go to another issue that I think is quite fascinating to see unfold: that is, the unravelling of the leadership of the Labor party. It all started just over a week ago with an article in the Australian by Glenn Milne headed `Alternative ALP thinking on tax offers some hope'. The article showed that there are some in the Labor party who are becoming increasingly disgruntled with the direction that has been taken by the old guard leadership. The article mentioned some very interesting comments made by the member for Melbourne (Mr Tanner). It says:

In a veiled warning to those in the ALP hoping to capitalise on societal unease and insecurity by offering a simplistic return to industry protection, tariff wars and tax subsidies disguised as industry policy, Tanner bluntly warns against a "a trip down memory lane arm in arm with Pauline Hanson".

The article went on to talk about Tanner's paper entitled `Populism and Rationalism' in which Tanner talks about how Labor has to `avoid becoming economically irrational, lapsing into mindless populism, recycling the policies of the 1950s and defining ourselves by what we do not like.' He went on to say, `We cannot afford to return to the 1970s.' Again, it has a very familiar ring with the way some of the old guard are operating in the Labor party these days. Mr Tanner rejects two specific ideas put up by fellow front benchers: Martin Ferguson's proposal for job sharing, and Simon Crean's call for the reintroduction of tax breaks for research and development. I thought that was a fascinating start to what is now seen as an unravelling of the leadership of the Labor Party.

Last Monday we got another article by Glenn Milne headed `Labor's young braves are starting to get restless'. So it is widening. In this article Glenn Milne talks about those who are attacking the leadership. He says:

In doing so they also risk fracturing the dominant forces standing behind Beazley, represented collectively by former Keating ministers and most prominently by Gareth Evans and Simon Crean.

The reason that this article has come on top of the previous one is that the problem is growing. This article talks about the challenge to Labor's leadership group being implicit in Tanner's paper about populism and rationalism, which was talked about in the previous article. It says:

Within the caucus Tanner's views are associated by backbenchers with a number of younger Labor MPs, including future leadership prospect Mark Latham, from the Right, and key Victorian factional figure Kim Carr, from the Left.

The member for Bruce (Mr Griffin) is one of the young future leaders of Labor. I am sure he is interested in all of this and I am sure he has read the article. The article goes on to talk about some of the difficulties that are starting to emerge and says:

While Carr has internal party debts to settle with Crean in his home State, he, along with Tanner and Latham, also sees a new divide in Labor's approach to regaining office.

Note those words, `a new divide.' Clearly the leadership is unravelling. The article talks about Evans and that some are saying that he is doing a wonderful job overseeing this policy development. But the article also says that this is being dismissed in some sections of the caucus as `mere puffery.' And so the article goes on saying that `reversion by the Old Guard to the mantras of industry policy is driven by the union movements' continued preoccupation with a shrinking manufacturing sector.'

What capped it all off was the front page of the Australian today where it says:

Beazley threatens MPs over `treachery'—

It is all coming out—

Kim Beazley has warned his frontbench colleagues that he will sack anyone responsible for "treachery"

It goes on to say:

Beazley gave a far more guarded version of the warning to Caucus yesterday

Obviously, he cannot trust the caucus. He says one thing to the frontbench—yet that still gets into the paper—and when he goes to the caucus he is very careful. Clearly, we are seeing something fascinating. It is a changing of the guard and we will all watch for the next instalment. (Time expired)