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Monday, 26 May 2003
Page: 14937


Mr McMULLAN (7:08 PM) —I rise to speak on Appropriation Bill (No. 1) 2003-2004. The budget we are about to begin debating here in the parliament, the public has, in an economic sense, stopped debating. The budget was an economic non-event but it may well mark something of a watershed in Australian politics. The government would have you believe this was a steady as she goes budget, the big features being the tax cut and a few other measures to do with security, health and education. However, this budget is about much more than that. Both the government and the opposition have had much to say, in the budget speech and in the reply delivered by the Leader of the Opposition, about Medicare and about tertiary education. While the subject matter was the same—Medicare and tertiary education—the approaches were significantly different. That is why this budget has the potential to be a watershed: it demonstrates more starkly than any other budget for many years the political choices facing Australia.

The government's budget and the opposition's reply demonstrated that there are clear and important differences between the parties—differences both in our immediate policy prescriptions and in our underlying values. This budget demonstrates clearly the choices and priorities of each side of politics. It presents clear choices and priorities for Australian voters, and for that reason it has sharpened the edge of political debate between the parties and in the community in Australia. In some ways that is a very healthy development, although the manner in which it was brought about by the government has been a cause of some concern.

One particular aspect of this budget that I want to focus on today is that this is a budget that betrays the battlers. The Prime Minister's most famous boast used to be that he would look after the Aussie battlers. It was a mantra that he thought showed his common touch and his concern for ordinary Australians. He does not make this boast anymore; we have not heard it for a long time. There is no wonder about that. The Prime Minister's betrayal of the battlers in this budget reflects his core beliefs about the role of government. The budget brings into the open an ideological agenda that has always been a core political belief of the Prime Minister but which, until recently, he has kept in the shadows.

This budget reveals that this government is pursuing an ideological agenda of shifting costs and responsibilities from government to individuals. One of the lessons that I think needs to be learnt from the assessment of and commentary on this budget is that people use the word `reform' very loosely these days. It is as if it is a synonym for change. Not all change equals reform. The changes to Medicare and to higher education—and they are significant changes—are not reform. Reform carries with it the implication of improvement and progress. These are definitely changes, but they are a long way from being reforms.

The consequence of the agenda that the government has outlined is deeply disturbing. It undermines a crucial value that has traditionally been very strong in Australian society: the value of fairness. This budget confirms that under this Prime Minister most Australian families are getting less and less help from the government for services once considered an essential part of the government's role. The biggest losers, across the broad range of policy issues, are working families earning more than $30,000 a year. These Australians are the backbone of the economy—the nation is built on the backbone of their hard work. They aspire to a better life for themselves and particularly for their children. It is a cruel hoax for the government to pretend to be interested in them when it betrays their interest at every turn. Their losses are driven by an insidious pattern to the Howard government's policy changes. In many key areas of this budget, most importantly in health and education, the government is withdrawing support and transferring the burden to families.

The bills we are dealing with tonight translate the main spending decisions announced in the budget into law. They do this by appropriating money from the consolidated revenue fund for the business of government. The opposition, of course, will not oppose the bill—we have never opposed appropriation bills. It is strangely ironic to hear the Prime Minister talking about Senate obstructionism. He is the one person in this parliament who was associated with and supported the proposition, while a member of parliament, that the then opposition should use its numbers in the Senate to block supply. That in the same career he could say with equanimity, `I support the right of the Senate to block supply but I am opposed to it defeating any of the legislation I put forward,' is the high point of something for which there is a well-known Australian phrase—which is unparliamentary—that means you say one thing but you do another. Mr Deputy Speaker, there is a well-known word for it but I do not think you would allow me to use it—but every Australian knows what it is. We will not be exercising that double standard. We will not be opposing the bill. However, in the light of the criticisms I have mentioned, we will be moving a second reading amendment. I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House condemns the government for:

(1) Its obsession with shifting the cost of health and education from the budget to Australian families;

(2) Imposing higher costs of doctors visits on families without concession cards and a 30 per cent hike in essential medicine prices;

(3) Allowing HECS fees to rise by 30%, introducing a loan scheme with a 6% interest rate and doubling the number of places reserved for full fee paying students;

(4) Its cynical attempt to distract the public from these higher costs by offering miserly tax cuts of $4 a week for the average family;

(5) Its failure to address the complexity of superannuation and its determination to offer super cuts only to the wealthiest families;

(6) Its willingness to deliver tax cuts to corporate Australia while imposing a record tax burden on Australian families;

(7) Its failure to protect the superannuation savings of Australian families by protecting them from corporate greed;

(8) Its decision to hire yet more tax officials rather than take steps to ease the BAS compliance burden on small business; and

(9) Its failure to provide leadership on environmental issues and in particular its failure to address water reform”.

In moving that second reading amendment on behalf of the opposition, I want to focus for a while on this issue of the budget betraying the battlers. In speaking to the National Press Club on this matter last week, I outlined several important ways in which the budget betrayed the battlers. I will refer to them briefly on this occasion. Most damaging of all are the changes to Medicare. The budget demonstrates that the government's goal is not reform of Medicare but Medicare's destruction. The government's Medicare changes will make most Australians pay three times for their health care: by paying a Medicare levy, by purchasing private health insurance and then by paying every time they see a doctor. By contrast, the measures announced by the Leader of the Opposition in his budget reply speech aim to staunch the wound created by the government's changes. More importantly, they are the first step towards Labor's long-term objective of saving Medicare—starting with the goal of lifting the average national rate of bulk-billing back to 80 per cent, the level at which it stood when the Howard government came to office.

The changes to higher education in the budget will further shift the burden of paying for education from the government to Australian families. As a result of the massive increase in HECS fees already made prior to this budget under the Howard government, Australian families are paying $900 million more this year towards higher education than they were in 1996. Yet the government's main idea for increasing funding to Australian universities is to make students and their families pay even more.

The tax cuts offered in this budget will disappear in the blink of an eye. The significance of the tax cuts is only that they provide clear evidence that John Howard and Peter Costello felt the need to respond to the widely accepted fact that they run the highest-taxing government in history.

The budget papers also reveal that the Prime Minister's much-touted baby bonus is a flop. The baby bonus was the centrepiece of the government's family policy in the 2001 election. When it was introduced last year, the baby bonus was expected to provide $335 million in assistance to families in its first two years, but the budget papers show the estimated benefit from the baby bonus in its first two years has slumped to $230 million—that is, 31 per cent less than expected and $105 million less in support for families than was promised. It appears the fall has occurred because substantially fewer women than the government originally estimated have taken up the baby bonus. This is not surprising. The baby bonus, after all, provides the biggest benefit to those who need it least and fails to provide financial support when it is most needed, and the average baby bonus payment is only $680 per year—or less than $2 per day—which is less than one-third of the amount paid to the most well-off. The poor take-up of the baby bonus is yet another sign of the government's mistaken priorities. The so-called Howard battlers on low to middle incomes have been hit from all directions by the budget, and they certainly will get very little benefit from the baby bonus.

All those reasons are reasons we put on the public record on budget night and last week. Today I want to outline a couple more areas where the budget betrays the battlers. Firstly, I will go to the issue of golden handshakes. The revelations last week about the payout to former BHP Billiton chief executive Brian Gilberston, which could total as much as $50 million, highlight the government's failure to take steps to impose constraints on excessive executive payouts. The opposition leader in his budget reply speech outlined our proposal to end tax deductibility for businesses for the portion of a redundancy payment that exceeds $1 million. The government has been performing the most amazing contortions in seeking to justify its inaction on this issue. We had, for example, the Minister for Revenue and Assistant Treasurer, Senator Coonan, at the weekend in a television interview saying that it was moving into `dangerous territory' to use the tax system to dissuade companies from making excessive payments to executives.

Unfortunately, apparently nobody has told the Minister for Revenue and Assistant Treasurer that her government, the government of which she is a member—and the tax system for which she has responsibility to this parliament—has for seven years retained a law introduced by the previous Labor government which denies tax deductions to companies making excessive contributions to superannuation. That is good policy and it is appropriate that the government should continue it, but how can the Minister for Revenue and Assistant Treasurer say that denying tax deductibility to excessive golden handshakes is a dangerous precedent which should not be pursued but continue to deny it for excessive superannuation payments? If it is all right to limit tax deductions for excessive contributions to superannuation, what is wrong with limiting tax deductions for other golden handshake retirement payments?

Bizarrely, in that same interview, Senator Coonan applauded the action of shareholders in British company GlaxoSmithKline, who voted to reject an executive pay deal. I agree with her that that was a good decision. But she seems to be unaware that her government, through the portfolio of which she is an office holder, has rejected amendments moved by the Labor Party here in Australia that would have allowed Australian shareholders the same opportunity as the shareholders of GlaxoSmithKline. She thought it was a terrific idea for shareholders in the UK, but she voted against it in Australia. There is only one conclusion to be drawn: the budget betrays the battlers on golden handshakes too.

Let me turn to the very important issue of jobs, because another way the budget betrays the battlers is, when properly analysed, through its gloomy prognosis of the outlook for employment. There is a disturbing warning within the budget figures of the risk that unemployment will rise above current levels of around six per cent. The level of jobs growth usually follows changes in the growth of the economy, which is what you would expect. But statistics indicate that it usually occurs with a lag of around a year—about 12 months after growth slows, you see the consequential slowing in employment. The budget forecasts that non-farm GDP will grow 2.75 per cent in 2003-04, with no fall in unemployment. The budget unemployment forecasts do not go out beyond 2003-04. However, an analysis of the statistics suggests that there is a serious risk that the economy will follow the usual pattern of employment slowing in the year after a slowdown in economic growth. If this occurs, unemployment is likely to rise above six per cent in financial year 2004-05.

There are warnings not in the budget but in commentaries about and subsequent to the budget that the outlook could be worse still than the budget predicts. The budget forecasts are based on the assumption that the Australian dollar will remain at a value of US60c on average over the year. But a Macquarie Bank research report last week argued that the recent rise in the Australian dollar is becoming an increasingly important risk to growth. Macquarie Bank warns that a sustained 10 per cent rise in the dollar could directly cut economic growth by around half a percentage point. This is because the stronger dollar lowers the return received by exporters and increases prices of imports. If that happens, employment growth is likely to be weaker still than that already implied in the budget forecasts.

Yet the government seems to have no appreciation of this serious risk. If non-farm GDP were to fall by half a per cent to 2.25 per cent, that would not be sufficient growth to sustain unemployment at its current level; 2.25 per cent non-farm GDP would not be sufficient to prevent unemployment from going up. Yet the government seems to have no appreciation of this serious risk. The Treasurer recently on a TV interview dismissed the prospects of employment falling below about six per cent. He seems to have given up on that goal. He seems equally unconcerned about the prospects of it rising higher. That is why on jobs, as in so many other areas, this is a budget that betrays the battler.

Let me speak briefly about Labor's approach to budget policy. Of course we recognise the crucial importance of sound macroeconomic policy—this is the first of what I call the four foundations of sound economic management. Achieving low inflation and low interest rates will be a critical goal for a Labor government. As part of this, we will maintain our commitment to the golden rule of balancing the budget over the economic cycle. As an opposition we have been rigorous in demonstrating, in the lead-up to every election, that we will meet that golden rule. We have done this by providing full costings for all our promises. I have challenged the Treasurer from time to time to come up with any of the savings which we outlined in the Leader of the Opposition's speech on the last sitting Thursday that he believes will not be able to be delivered in full and on time. He has not responded because he knows that all the numbers are the government's numbers, straight out of the budget papers.

Over the four years to 2006-07—that is, the forward estimates period—through redirecting specified parts of the government's Medicare package, opposing the reduction in the superannuation surcharge, not proceeding with the government's changes to public sector superannuation and not proceeding at this stage with the proposed changes to business tax, the opposition have identified $2,884 million of savings—almost $3 billion of savings. And we will achieve further savings by reallocating the unfair and failed baby bonus, which the government has said will ultimately cost more than $500 million a year. This money will go to families, but in a fairer and more efficient way. I have already challenged the Treasurer to find in these figures any saving that is not achievable in full on the timetables we have specified. But of course there has been no reply because, as I said, he well knows that all the figures come from his own budget papers.

That list of savings is not only important in itself; it also demonstrates the opposition's preparedness to make tough savings decisions. More than $3 billion of savings is only the beginning of our effort in identifying our better priorities; there is a lot more to come. Let no-one be in any doubt about our determination to run a sound and sensible budgetary policy and our willingness to make the tough decisions—sometimes the unpopular decisions—to achieve those outcomes. Let no-one be in any doubt either of our determination to do so in a way that redirects the budget priorities to those abandoned in this budget: working families—the battlers that John Howard has abandoned, the battlers that this budget has betrayed.


The DEPUTY SPEAKER (Hon. L.R.S. Price)—Is the amendment seconded?


Ms Livermore —I second the amendment.


The DEPUTY SPEAKER —The original question was that this bill be now read a second time. To this the honourable member for Fraser has moved as an amendment that all words after `That' be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.