Mr DANBY (8:45 PM) —There are three things that distinguish this budget. The first is that it rewards government supporters; the second is that it punishes social groups which the government sees as expendable; and the third is that it neglects Australia’s future economic and social needs. In other words, it is a self-indulgent, vindictive and complacent budget.

Let me look first at the government’s tax changes. Many speakers in this debate have drawn attention to the fundamental unfairness of a budget which gives the biggest cuts in taxation to those on six- or seven-figure incomes while tossing $6 a week to those on lower and middle incomes—to the seven million Australians who do most of the work in this country. This is a prize example of the government using a post-election budget to hand out rewards to its own supporters and friends in the hope that, by 2007, the majority of taxpayers who have been shafted by this budget will have forgotten about it.

I represent a relatively wealthy electorate by per capita income, and many of the people in my electorate will get the full tax cut from this budget. I know a lot of them. They are successful people in business and the professions. I have no problem with wealth or success. Many of them are my supporters. I know that most of them—even the wealthiest of them—recognise that a country’s taxation system ought to be based on fairness and that, at a time when profits are high, dividends are high and businesses are doing well, the government ought to be ensuring that the benefits of all this prosperity flow through to all Australians and are not reserved for those at the top of the tax table. Those who have done well out of our economic system are smart enough to know that capitalism works best when everyone shares in the growth and prosperity that it generates.

If I might digress into theory for a minute, this is the difference between laissez-faire conservatism, doctrinaire socialism and social democracy. The conservative says, ‘Let’s rig the system so that we and our friends get richer, and everyone else can go hang.’ The doctrinaire socialist says, ‘Let’s punish the successful through a confiscatory taxation scheme so that everyone is equally poor.’ The social democrat rejects both of these approaches. The social democrat recognises that only the free market system can generate wealth, but argues that it does so most effectively when wealth is equitably distributed—not equally distributed but equitable distributed, fairly distributed, so that everyone has a stake in the success of the free market.

The principal instrument for achieving equity is the tax system. This government has consistently used the tax system to build more and more inequity into Australian society. This is a dangerous game because it jeopardises the social consensus in favour of the free market system, something the Hawke and Keating governments in their pro-market reforms of the 1980s were careful to maintain. That is why I support the alternative tax proposals of my friend the honourable member for Lilley which provide genuine tax reform within a framework of overall equity.

Whilst some people in my electorate will benefit from this budget’s tax changes, there are also a lot of people in Melbourne Ports who will miss out on its benefits. I am not at the moment talking about the poor, the disabled, the single parents or the unemployed. I am talking about the mass of employees—those on incomes in the order of $50,000 a year—who are paying the great bulk of tax revenue flowing into the government’s coffers and funding government largesse for its friends and supporters. In my electorate, as in most urban electorates, these are the great majority—the responsible, hardworking families who expect a reasonable share of the prosperity which their labour has created. These families have now learned that their share is to be $6 a week. They are not impressed. Even the Daily Telegraph, in an article today, revealed that a lot of people who had been told that this was a workers budget were not impressed. And who can blame them? At the same time as it rewards those who are already doing well, this government—this budget—has continued its usual practice of penalising those who are not doing well and adding to their burdens. This year it is single parents and the disabled who will be required to meet a tougher work test in order to qualify for their benefits.

I am all in favour of encouraging people to work when they are able to, but this budget does not address the real challenges that these people face getting back into the work force, as many of them would like to do if they were able to. Instead, the government intends shifting a large number of people from the parenting payment or the disability pension onto Newstart. As the member for Sydney has pointed out, people on Newstart lose 60c in the dollar for every dollar they earn instead of the 40c they lose on the parenting payment and the disability support pension. This budget thus actually discourages people from moving from welfare to work. In its nine years in office this government has done almost nothing to address this welfare to work interface.

Even more astonishing is the budget’s attempt to force single mothers into the work force by imposing a tougher work test on them while doing almost nothing to tackle the single greatest disincentive for women with children who want to re-enter the work force—the lack of appropriate and affordable child care. One of the reasons women leave the work force is because it is almost impossible to find child care for children under the age of five. There is an acute child-care shortage in many areas of Australia, particularly in inner city areas such as my electorate, where all the child-care facilities traditionally run by the churches are being closed as the churches choose to reallocate their resources to outer suburban areas and where the very high cost of real estate is a serious disincentive to anyone wanting to build a new child-care centre. At present in my electorate, which runs from Melbourne to St Kilda, approximately 1,300 child-care places are required in the City of Port Phillip alone. The area has a waiting list with approximately 1,600 children on it, a figure which has increased by 41 per cent since May 2004.

A few months ago I spoke to a rally of angry Port Melbourne parents protesting the lack of affordable child care. Their anger had been brought to a head by the imminent closure of the Scott Street Presbyterian kindergarten in Elwood, where I went as a child many years ago, and St Bede’s Anglican Early Learning Centre. I have worked very hard to see that there are alternatives to those two child-care centres, but even if we are successful they simply replace the number of places; they do not expand them. I do not blame the churches for rationalising their resources in this way. I do blame the federal government, which until now has persistently denied there is a child-care crisis.

Now they are proposing to make the situation worse by pushing more women with young children off parenting benefit and into the work force. The government’s solution is to announce funding for 84,300 new out of school hours child-care places in this budget. As the relevant shadow minister, the honourable member for Sydney, has said: ‘We will believe this when we see it. We were promised 40,000 new child-care places in the 2004 budget. We now learn that those places have not even been allocated yet, let alone actually provided to parents.’ The majority of places created this year will not come online until 2008. Half of the funding for these places is not available until 2008-09, but the proposed changes to the parenting benefit come into effect in 2006. So there is a gap of at least two years and probably longer between the extra demand created by the government’s welfare changes and the supposedly new supply to meet that demand. Furthermore, because of this government’s aversion to anything which looks like planning, there is no guarantee that these new child-care places will go to the parents who need them most—those who are being pushed off the parenting benefit by this budget. In fact many of them will go to the more than 30,000 children already on waiting lists, and others will go to affluent parents rather than to those low-income parents who need them the most.

In any case, the real crisis is in the provision of long day care, and this budget does nothing about that at all. There are 174,500 children missing out on the child care which would allow their parents to re-enter the work force. It is a real scandal that not a dollar has been allocated in this budget to long day care. As a result, many parents with young children will be unable to return to work, no matter how much they want to, because of the critical shortages in long day care. We have asked for assurances that single parents will not be kicked off the parenting benefit if they are unable to accept a job offer because of the unavailability of child care or because they cannot afford private child-care services. We have received no such assurances, Mr Deputy Speaker, as you know. If I were a suspicious person, I might conclude that this was all designed to force more people into the arms of the private child-care sector. The biggest operator, Mr Eddie Groves, is now a well-known friend of the former president of the Liberal Party in Victoria, who in fact sold him ABC Childcare, and he is a generous donor to the Liberal Party. I am sure that these kinds of considerations never entered into anything, with ABC Childcare owning 23 per cent of all private child care in Australia now!

What do we find when we read the small print of the budget? We find that the government are reducing access to the Jobs, Education and Training program, an excellent program established by the Labor government, which provides child care for people who are undertaking training—the very people the government say they want to encourage. The budget excludes from the JET child-care scheme people whose courses take longer than a year—and many courses do take longer. This is typical of this government’s slapdash, laissez faire attitude to skills and training.

There are currently 1.3 million people on either disability benefit or parenting payment. They are the people the government say they want to move from welfare to work, yet this budget creates only 7,600 new vocational training places for disability support pension recipients. At the same time, the government are proposing to abolish the Australian National Training Authority, one of the most successful programs of the Keating government, apparently purely for reasons of ideology. ANTA is a cooperative venture between the Commonwealth government and the states, and it gets in the way of the desire of the Minister for Education, Science and Training to run everything himself. So it has to go, despite the excellent work it has done in the very area the government claim is a high priority.

Overall, the training measures in this budget are manifestly inadequate. Moving people from welfare to work is a desirable objective but this budget makes no more than a token contribution to that objective. This budget leaves it open to suspicion that the government’s real objective is cutting costs and benefits so that more money is available to hand out to their supporters.

I also want to say something about schools funding. During last year’s election campaign, the minister for education came to the electorate of Melbourne Ports and tried to scare parents, particularly in one section of non-government schools in my electorate—the poorer parochial Jewish schools—by telling them that a Labor government would cut funding to their schools. That was untrue. Under the funding formula announced by Labor none of the schools in Melbourne Ports would have lost its funding. Their funding was guaranteed.

But the minister’s claim was mainly designed to divert attention from the real scandal in school funding in my electorate. During the 2001 election campaign, the then minister, Dr Kemp, came to East St Kilda and promised to review the SES funding formula which grades schools according to the socioeconomic status of the postcode areas in which the parents live. This formula was designed to channel more money to schools like Geelong Grammar, which has many wealthy parents living in non-wealthy rural areas. It has the consequence—if I were charitable I would assume it was an unintended consequence—of disadvantaging poorer parochial Jewish schools, particularly orthodox schools in my electorate, which have mostly non-wealthy parents, many with large families, living in relatively wealthy postcodes such as Caulfield.

Dr Kemp came and saw for himself the disadvantaged circumstances under which some of these schools operate, even though they are classed as wealthy schools because of the postcode area in which the students live. The parents of the children who attend these schools live in those areas for religious reasons: they have to live in close proximity to synagogues, to which they walk on the weekend, and it is impractical to live further afield. Dr Kemp did nothing. Nothing has been done by his successor, the current minister. For all their promises just before election time, and for all their rhetoric, nothing has been done about this situation in the budget. The parents in Melbourne Ports are still waiting for this government to keep a promise which they made four years ago. How much longer do they have to wait?

I said at the start of my remarks that this is a complacent, self-indulgent, vindictive budget. This budget rewards the government’s friends while punishing those the government do not care about, such as mothers waiting for child care in Elwood and St Kilda. It is a complacent budget because it ignores the looming skills crisis and the looming infrastructure crisis, both of which the government have been warned about many times and which have the potential to derail our strong economy and the sustained growth, which were created by the reforms of the Hawke and Keating governments and on which the government have coasted along, benefiting from them, for nine years.

Australia’s future prosperity depends on developing a world-class infrastructure and a highly trained and educated work force as well as a tax system which gives people incentives to improve their skills and get into the work force. This budget ignores the priorities, concentrating on short-term gratification. It is the budget of a government which has grown complacent, arrogant and lazy—a government which has been in power too long.

I endorse the concerns of the member for Chifley. Given that, as the Leader of the Opposition has said, Australia’s credit card is nearly ‘maxed out’, with over $400 billion in foreign debt, or seven per cent of GDP, it particularly concerns me that, some time soon, when American interest rates increase, foreign investors will see Australia’s very large foreign debt overhang and will demand big increases in Australian interest rates. They could start to pull out of the Australian economy. As the member for Chifley said, one of the most frightening things about the current economic situation is that, even though interest rates are at 5.5 per cent, more than 30 per cent of the average person’s disposable income is spent on mortgage and credit card debt, the same level as when interest rates were at their highest during the recession of the early nineties. Imagine the effect on ordinary people if there were just a small increase in interest rates. With that $400 million foreign debt overhang, we have to maintain a positive differential between our interest rates and American interest rates. Mr Greenspan, in some senses, holds Australia’s future in the palm of his hand, with the unintended consequences of future increases in American interest rates. This country will pay a high price in the long term for this government’s neglect, arrogance and self-satisfaction, which are reflected in this budget.