Mr COX (5:08 PM) —I want to draw the minister's attention to page 54 of his Treasurer's own budget paper, Budget Paper No. 2, Budget Measures 2003-04. If he cares to look at page 54 of that budget paper he will find, under the line item `Australian Health Care Agreements', a row of negative numbers: minus 108.9, minus 172.0, minus 264.6 and minus 372.9. With a little application of a calculator, the minister would find that they add up to $918.4 million, which is a $1 million cut more than the cost of the measures the government claims are designed to reinforce, but which will actually destroy, Medicare.

How grateful should Australian families be for their tax cuts? Not very grateful. There are tax cuts of $1.63 per week if you are on a very low income, tax cuts of $4 per week for most Australian taxpayers on ordinary incomes and tax cuts of $11 per week for taxpayers on higher incomes. They should not be very grateful, because the Treasurer has failed to hand back to families all of the bracket creep he has taken from them since his last tax cut. Those tax cuts were, in any event, substantially offset by the introduction of the GST. Now, after three years, Peter Costello is handing back only $2.4 billion of the $3.3 billion in bracket creep in 2003-04.

Why are Australian families not having returned to them the full value of bracket creep since the Treasurer's last tax cut? He could have handed back the full value of bracket creep this year and he would still, on current budget estimates, have had a surplus of $1.3 billion. If he had done that, the tax cuts would have been 37.5 per cent higher than the tax cuts he has offered. But the reason the Treasurer did not want to set the precedent of handing back the full value of bracket creep is that, if taxpayers had had the full value of bracket creep handed back to them, in the following two financial years the budget would be in deficit—a deficit of $550 million in 2004-05 and $1.55 billion in 2005-06. The Treasurer's financial administration of the Commonwealth is such that he cannot hand back to families the full value of bracket creep without putting the budget into deficit.

The Treasurer last night said that the Howard government had handed back the full value of bracket creep over the life of his government. I challenge him to publish the calculation that would justify that statement. I suspect that if he did we would find that the calculation was corrupted by the tax mix switch that occurred when the Howard government introduced the GST. A very large part of the income tax cuts that were given at the time the GST was introduced was given in compensation for additional indirect taxation in the form of the GST and the other taxes that accompanied it. The Treasurer now seems to want to claim that all of those tax cuts were given to cover bracket creep. As a barrister, Peter Costello is probably used to running mutually exclusive arguments.

Ms Gillard —I used to be a barrister.

Mr COX —I seem to have offended one of the former barristers on my own side. When you do it with the public account, you get a double count. The bracket creep estimates that I have used are Access Economics estimates of fiscal drag taken from the May 2003 Access Economics Budget Monitor. Those estimates are: for 2001-02, $1.2 billion of bracket creep; for 2002-03, $2.2 billion of bracket creep; for 2003-04, $3.3 billion of bracket creep; for 2004-05, $4.5 billion of bracket creep; for 2005-06, $5.5 billion of bracket creep; and for 2006-07, $6.6 billion of bracket creep. The Treasurer and his officers have been very reluctant to publish their own estimates of bracket creep. If you deduct the budget estimates for the tax cuts announced last night, the new calculation for bracket creep is: 2001-02, $1.2 billion; 2002-03, $2.2 billion; 2003-04, $900 million; 2004-05, $1.85 billion; 2005-06, $2.75 billion; and 2006-07, $3.7 billion. By the end of 2006-07, the Treasurer will have collected $11.9 billion in bracket creep since the GST tax cuts.

No wonder they call the Treasurer `bracket creep Pete'. Bracket creep is how the Treasurer keeps his budget in surplus—except, of course, when it is in deficit, as it was in 2001-02. Bracket creep is the trademark of our tax and spend Treasurer. It is his modus operandi. He is the classic tax and spend Treasurer. Under this Treasurer both taxes and spending are continually rising. There is always a bit of bracket creep to pay for the extra spending. But there is also a new tax or levy—the GST, the milk tax or the Ansett levy. Taxes are constantly rising.

Under Peter Costello, what Labor did in 1995-96 with 23.1 per cent of GDP—and that was pay for Commonwealth own purpose outlays and payments to the states—in 2002-03 now takes 25.3 per cent of GDP. That is down slightly on his 25.4 per cent record in 2000-01, but it is well ahead of any previous Australian government in the modern era. Australian families are entitled to ask: why is it that we pay historically high taxes but cannot get the things we used to get, like a doctor who bulk-bills?

The Howard government have two targets: retaining a surplus and reducing debt. Australian families have heard a lot about government surpluses and reductions in debt from this government. The Howard government—and particularly the Treasurer—are always boasting about their economic credentials. Why then, with record taxation levels and a surplus, is it that families in outer metropolitan areas like Morphett Vale and Hackham cannot find a doctor who bulk-bills?

First, let us look at debt reduction. This year's budget paper says that the government has cut net government debt by $63 billion. But, if you dig a little bit deeper, you find that $55 billion of that debt reduction has been achieved with asset sales. The government has been shuffling assets and liabilities around its balance sheet and not fundamentally strengthening its financial position. That means that only $8 billion of the reduction in debt is attributable to surpluses net of asset sales. On average, that is only $1 billion for each year the government has been in office.

Debt reduction is certainly not a result of savings. While the Howard government did cut $24 billion over the budget year and forward estimates period in 1996, in every year after that the net impact of policy decisions on the budget bottom line has been negative. It was $296 million in 1997 and $20.6 billion in 1998—but that, of course, was an election year; they had a bit of spending to do. It was $11.6 billion in 1999, $7.3 billion in 2000 and $25.6 billion in 2001—another election year. It was $5.3 billion last year and now, in this budget, it is $18.5 billion of fiscal loosening. Draw your own conclusions about whether this might be an election year. Over the life of this government the net impact of policy decisions on the budget bottom line has been negative—a big negative—by $65.4 billion. Australian families are entitled to ask how and why a government can take policy decisions with a net cost of $65.4 billion, and yet they cannot find a bulk-billing doctor. The answer is that the Howard government have different priorities from those of Australian families. (Time expired)