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Wednesday, 23 February 2011
Page: 1344


Ms O’DWYER (7:14 PM) —I rise to speak on Appropriation Bill (No. 3) 2010-2011 and Appropriation Bill (No. 4) 2010-2011. I do it on the basis that the government have made some quite preposterous claims. The government said before they were elected that they were going to be economic conservatives, that they were going to be great economic reformers and that they were going to be good, strong economic managers. Very sadly for the Australian people, not one of these claims is true. One only has to look at these appropriation bills to find evidence of that. We need only look at the border protection policy of the government to see that they have had huge blow-outs in the border protection budget.

The government claimed, when it changed the policy in August 2008, that it would have different policies from the previous coalition government. It claimed it would be more compassionate but that it would be equally successful at deterring people smugglers and deterring people from getting on leaky boats to come to this country in dangerous circumstances. There could be nothing further from the truth. Since the change in the government’s policy in August 2008 the number of boats that have arrived in Australia is 208, and counting, and the number of people who have arrived is upwards of 10,250. Very tragically, lives have been lost and families have been torn apart. But rather than look to the failures of its policy, rather than change its policy, this government ploughs on. It ignores the human tragedy, and we see in this appropriations bill some of the serious economic impacts.

In Appropriation Bill (No. 3) there is an extra $290 million for running costs in the blow-out this year of offshore asylum seeker management. In Appropriation Bill (No. 4) there is $152.8 million in additional capital expenditure for the establishment of the Northam detention centre and the Inverbrackie detention centre, which has previously announced by the government. This is very interesting. The government has made much of the fact that it cannot pick up the telephone, speak to the President of Nauru and again begin offshore processing directly in Nauru. One of the great claims why this cannot occur and why, instead, it must pursue the East Timor solution—which we know will never happen—is the terrible cost of the program. Senator Evans said in February 2008 that the Pacific solution was very costly, ultimately unsuccessful and that part of the reason for its lack of success was this extraordinary cost. We have done our homework and looked at the figures. The cost of running this program is $289 million. That is less than what the government is asking for this year with its budget blow-out. And it would cost much less to run the Pacific solution for almost six years, based on the government’s own statements, than what the government is asking for to cover the cost of its policy failures for less than a six-month period.

So this is not part of the solution, but this is not the only area that the government has claimed to want to reform. It has also claimed that it wants to have great new tax reform. The government spent just over $10 million asking the Secretary of the Department of Treasury to conduct a tax review. It said that this was the most comprehensive tax review that had ever been conducted and that this review would form the basis of its great tax reform. There were 138 recommendations that came out of the Henry tax review. One of these recommendations was to introduce a new mining tax. Well, surprise, surprise—this was the only recommendation that the government liked. In fact, it liked it so much that it took it to the election and, despite the fact that the mining tax will have a significant impact on Australian businesses and jobs, it will proceed with its flawed mining tax, having stitched up a deal with a number of mining companies before the last election.

We should look back on the Henry tax review. It said that we had just on 125 existing taxes. This government has added an extra tax, the mining tax. It said before the last election that it would not be looking to deliver a carbon tax but already this promise has been broken. The government is now looking to when it can actually introduce this carbon tax. The latest example of the government’s supposed tax reform is the new disaster tax, the flood tax, that we are now debating in the other chamber. It is probably useful to refer to the American humorist Art Buchwald, who said:

Tax reform is taking the taxes off things that have been taxed in the past and putting taxes on things that have not been taxed before.

This is certainly a mantra that the government knows well and it is certainly the mantra that they live by.

We should compare the government’s tax record to that of the previous coalition government, which is a much better record. It is a record that the present government could learn from. When we were in government we lowered the tax rates—at the top level, from 47 per cent to 45 per cent and, at the lowest level, from 20 per cent to 15 per cent. This of course had a very direct impact on Australian families. It made it much easier for Australian families to save their money, because they did not have to contribute so much in tax. We increased the income tax thresholds across the board, again, making it easier for Australian families to save and to then choose how to spend their money, whether it be on educating their children through the independent school sector, on new business initiatives or on a whole variety of things. The choice was absolutely with them. We cut the company tax rate from 36 per cent to 30 per cent, again, making it easier for companies to do business and to employ Australians. We also introduced the concessional 50 per cent tax rate on capital gains.

But probably the most extensive reform that the coalition government brought into effect was the GST reform, aimed at bringing about a fairer tax system for Australians whereby we were then able to provide further tax relief through tax cuts in 2000, 2003, 2004, 2005, 2006 and 2007. The GST reform replaced the wholesale sales tax and nine different state taxes and provided a source of funding for the states.

Today in the other chamber we are also dealing with the introduction by this government of a new flood tax. The government claims that it requires this $1.8 billion flood tax in order to preserve its current fiscal management. It claims that, in addition to imposing this tax, it will make cuts to expenditure and that this balance is the right balance. Of course, nothing could be further from the truth. The supposed expenditure cuts that the government says it will bring into effect have already disappeared before our very eyes. They have disappeared because, in order to secure the support of the Australian Greens, just over $340 million which was going to be cut from various government programs that the government said were superfluous to the needs of the Australian people has in fact gone back onto the books. They have cut a deal with the Greens.

But they have not just cut a deal with the Greens; they have also cut a deal with the member for Denison. He has his own claims. He wants $50 million that was to be cut from the teaching program to go back onto that program, which means that almost 25 per cent of the expenditure cuts that the government claimed they would bring into effect do not now exist. Despite the fact that we have asked the government repeatedly whether they are going to make further expenditure cuts, they have been silent on this matter and they have told the opposition that we must wait and see what cuts they are going to bring forward in the budget.

The government claim that they are going to put on the Australian people a $1.8 billion flood tax because it is the right thing to do. It is the first time in history that a disaster tax has been imposed on the Australian people. Normally, when unforeseen events occur, those unforeseen events and disasters are dealt with out of consolidated revenue. This creates a very new precedent—dare I say a dangerous precedent—and in fact the recent inquiry that the House of Representatives Standing Committee on Economics held into the flood tax supports the view that this is a very bad precedent. Economists appeared before the committee and Professor McKibbin, who is a very senior economist and a member of the Reserve Bank board, presented strong evidence that to bring in a disaster tax, to respond by taxing, would create a very bad precedent in terms of the broader economic framework. This was supported by another very senior economist, Mr Saul Eslake, who also said that this was a very bad precedent.

Not only is it a bad precedent; both economists also spoke of the churn factor involved in actually collecting a tax such as the $1.8 billion flood tax. The fact is that, because some exemptions apply because of the way this tax will operate, a substantial amount of the tax will be going into paying for the administration costs of the tax. We simply ask the government to be serious when they talk about reform and make the expenditure cuts that we know they can make. We have made the offer to the government that we would be prepared to sit down with them, to actually go through things line by line to find those expenditure cuts so that the government can live within their means. They have rejected that offer. Despite the fact that we have been rejected, we have put in place our own expenditure cuts that we would bring forward in order to ensure that the government live within their means, just like they ask all Australians to live within their means.

There is another element that the government needs to address, and that is further tax reform. As I said before, it made very great fanfare of the fact that it would be implementing serious tax reform. We saw nothing come from the Henry tax reform except for a new mining tax, and the government promised the Independents on receiving their support to form government after the last federal election that it would put in place a tax summit. The Independents are probably scratching their heads because they have heard nothing further about this great tax summit. Questions directed to the Treasurer, Wayne Swan, about when this will be, what date will be set and who will be invited are all met with stony silence. This goes to demonstrate that this government is not serious about tax reform; the only reform it believes in is implementing new taxes—a carbon tax, a mining tax and a flood tax. We do not believe that this is good reform. We believe that this will bring new costs for Australian families. It will hurt them further because it will put upward pressure on interest rates and it will increase the cost of living for Australian families. It is the wrong thing to do, and we do not support the government’s new taxes.

Debate (on motion by Mrs Griggs) adjourned.