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Thursday, 13 May 2004
Page: 23326


Senator BARTLETT (Leader of the Australian Democrats) (8:01 PM) —On behalf of the Australian Democrats, I present the party's formal response to the government's budget for 2004-05. I remind the Senate that every budget is just a range of proposals presented for consideration by the Senate and the parliament. The Senate has the right and indeed the responsibility to do all it can to ensure that the budget is economically responsible, socially fair and environmentally sustainable.

The Senate has the right and the responsibility to attempt to improve the various budget proposals wherever it can. The history of the Senate, and certainly the history of the Democrats, is full of examples of where significant improvements to original budget proposals have been made and dangerous measures have been prevented. We will be looking at the tax cuts, at the family payments and at the health, education, defence and environment budgets—indeed, every portfolio—and judging each measure on its merits.

Unfortunately, it appears that many in the Senate will be using the excuse of an imminent election to avoid the responsibilities that they were elected to this chamber to perform. We have already seen one major budget measure—the spending of an enormous $19 billion of public money—pushed through both houses of parliament in the space of 24 hours, without any genuine scrutiny. This is the Senate acting irresponsibly and unacceptably. The Democrats do not believe that is what we were elected here to do.

The Democrats call on the Labor Party not to fall into the small-target trap they made for themselves prior to the last election. It was not just they who were the victims of that; the biggest victims were the Australian people, who have had to live with so many of the bad pieces of legislation that were passed as a consequence of that approach. The Labor Party should at least stand up to the most offensive part of this budget, which is the income tax cut measures, by supporting the Democrats' proposed tax cut amendments. The Australian people are the biggest losers, as is democracy itself, when the Senate dodges its responsibility.

As our name suggests, the Democrats take democracy very seriously. We will exercise our vote on each budget proposal measure with care, regardless of the Prime Minister's election timetable. We will not be making judgments that will affect 20 million Australians for many years to come or that will have global consequences, just on the basis of whether or not the Prime Minister might call an election in a couple of months. The Democrats will work hard to ensure that government and opposition parties are held accountable for the budget and the decisions they make. We will seek to use the Senate and public processes to expose the truth. The role that the Senate plays is more important than ever, given that we have one of the most dishonest governments in our nation's history. As the Democrats' history and record show, we put in the hard work on a wide range of issues, not just on the one or two that get the headlines.

I will summarise a few key points from this budget, before I expand on some of its detail. Its central proposal of huge tax cuts only going to those on high incomes is fundamentally unjust and economically irresponsible. The tax cuts must be shared equally, and the Democrats will vote against the tax cuts in the Senate unless they are. Whilst there are many measures in the budget that will provide welcome funds to various areas of need, the tactic of saving up money until just before an election to address these areas rather than at the start of the government's term or when those needs are identified is not only cynical but also irresponsible. It is bad management, it is bad economics and it means that many areas of need are left unaddressed much longer than they should or need be. A key area in which the budget fails massively is that of the environment. The opposition is running the risk of failing massively in doing its job in the Senate. The budget makes it clear that the government has walked away from the major challenge, the important challenge, of welfare reform once and for all. It has once again failed the honesty test.

Before addressing some specific budget proposals, I want to briefly address the economic foundations which underpin this budget as a whole. The Democrats have shown since the last election that we always constructively exercise our balance of power responsibilities while sticking to our principles, and we will continue to do so in responding to this budget. The Democrats unashamedly take some of the credit for the strong economic situation which Australia finds itself in. The Democrats hold the balance of power in the Senate, and we have not succumbed to the temptation of insisting on getting 100 per cent of what we want before we pass measures. We have acted responsibly and effectively, recognising the policies must be paid for and that economic stability, fair and comprehensive revenue flows and effective expenditure on public needs are all essential. The solid financial position of Australia is not simply a result of the handiwork of the Treasurer, Mr Costello; it is also due to the sound and responsible actions and decisions of the Senate.

The Democrats have played an effective, responsible and constructive role in reforms in a range of areas, including industrial relations, tax, the welfare system, the environment and a range of other areas. We have made things fairer by preventing some of the worst initiatives of this conservative government from hurting Australians. We have stopped previous budget proposals that aimed to attack the sick and the disabled, and we have significantly improved other measures. I call on the Senate as a whole to not remove our own power to improve measures in this budget. Treasurer Costello complains about the so-called obstructionism of the Senate damaging the economy yet, whenever he gets good economic results, he claims that it is all his own work. The Senate legitimately claims a share of that credit, as do the Democrats as the balance of power party in the Senate.

The area of tax cuts is a fundamental component of this budget. I repeat the Democrats' position that we will not support or vote for the budget's income tax cuts as they stand. The Democrats' approach to tax cuts varies significantly from that of all the other parties in this chamber. The Liberals obviously want big tax cuts but only for people earning over $52,000 a year. The Labor Party have quite correctly identified that the tax cuts are unfair and need to be changed, but they will not back up their words with action and they will not, on their statements to date, make any attempt in the Senate to make this happen. The Greens say no-one should get any income tax cuts at all, including low-income earners. Only the Democrats say that all Australians should benefit from income tax relief. We say that tax cuts, if we are going to have them, must be fairly shared amongst all Australians, and we will take action in the Senate to back up our words.

Our tax position is based on a simple question: are the tax cuts in the budget fair? Quite clearly they are not. Not only are they unfair; they are offensive, they are unjust and they will significantly widen inequality in Australia. To give $42 a week to higher income earners but no tax relief at all to the average earner—to those who are genuinely on a middle income—is contemptuous and unacceptable. The egalitarian principle that is at the heart of Australia's essence, and which so many people hold so dear, will be heavily damaged by these tax cuts, which is why the Democrats call so strongly for the Senate to exercise its responsibility and seek to improve them. The Democrats will certainly do that. We will seek to amend the tax cuts so that all taxpayers get the opportunity to share in some of the money being returned to income earners.

The Democrats' proposal, which we flagged before the budget was announced, is to raise the bottom income tax threshold, not the top one. Our proposal would give each taxpayer a $5 a week tax cut in the next financial year, increasing to $10 a week the following year—that is, the same amount for everybody. Tax cuts for lower income earners—tax cuts that I emphasise the Greens do not believe should be supported—are needed to prevent poverty traps and to encourage people off welfare and into work. The Senate's recent inquiry into poverty clearly demonstrated that providing extra money in the pockets of those on the lowest income is an effective way of addressing poverty. To deny those people income tax cuts is irresponsible. Our amendments would cost about the same as the government's proposal, but they are much fairer.

I must also defend the Democrats' position against some of the false claims that the government has already made. In stating the position that I have just outlined, we are not saying that people who earn $50,000 or $60,000 a year are rich. We are not saying that individuals and families who earn this money do not deserve tax cuts; we are simply saying that people who earn less than this also deserve tax cuts and would also benefit from them. The funds should be fairly shared. Let us also not forget that higher income earners also have the benefit of a range of existing measures that have already delivered to many high-income earners significant extra income. Mechanisms such as negative gearing, capital gains tax cuts, salary packaging of company cars, personal trusts not being taxed as companies and the private health insurance rebate, just to name a few, all overwhelmingly benefit higher income earners. These areas should all be addressed, but we should make our revenue base broader and fairer, with additional revenue being used to provide services or to alleviate poverty.

I remind the Senate that last year the Democrats forced the government to change the superannuation priorities that they announced in last year's budget. We negotiated an additional $455 million, nearly half a billion dollars, for lower and middle-income Australians to encourage them to boost their superannuation savings, while reducing the proposed tax cuts for higher income earners. This doubled the number of working Australians who could access the superannuation co-contribution and laid the foundation for further assistance to those people.

About the only sweetener in the budget for many low- and moderate-income earners with no dependent children is possible access to the superannuation co-contribution scheme. This budget attempts to build on that foundation of superannuation co-contributions for middle- and lower income earners, which the Democrats established, trebling the cost of it by pushing the benefit to a higher level of income and by changing the dollar-for-dollar benefit to a $1.50 for $1 benefit. The Democrats have some sympathy with the view that the superannuation co-contribution should be extended—indeed, we did foreshadow that we wanted to explore this area—however, whether or not the model proposed by the government is the best way to achieve that needs to be tested and examined. We need to look at the likely impact on national savings and whether we are getting the best value for the money. Part of the proposal includes a reduction in the superannuation surcharge. This is another tax cut that will apply only to those earning over $100,000 a year. We will once again seek to use our balance of power in the Senate to ensure that these measures are made more equitable, more responsible and more effective.

The work and family area is one that the Democrats have spent a lot of time on, working on policy proposals and raising it in the community. This government's work and family package is, I am sure, a welcome relief for many families who have been struggling to balance work and family responsibilities, but it still falls short. The measures announced in the budget should have been implemented in the early part of this government's third term. Very early in his third term, the Prime Minister told us that the work and family issue was a barbecue stopper and promised it would be a priority. He has left this priority until possibly the very last days of his term—and, even now, it really looks like those barbecues are going to be stopped for a while yet because there is still much that needs to be done.

The maternity payment to all Australian women is much better than the regressive and ill-targeted baby bonus, but the $3,000 is still selling three-quarters of Australian women short. The government's payment does not replace the lost earnings that occur because of the physical need to take a break from the work force. It is less than half the amount of the Democrats' proposal of 14 weeks paid maternity leave at the minimum wage, which is currently $6,543 before tax.

Some of the changes to family tax benefits A and B will assist families with incentives to enter the work force and go some way to reducing the effective marginal tax rate, but they do not do enough to eliminate poverty traps. There is no doubt in my mind that a longer term, more sustainable solution can be found, and the Democrats' policies are a good place to start. The work and family package is short term and ignores the mid- and long-term pressures on family. Cash in your pocket now does not compensate for a lack of child-care places, an underfunded Medicare system or increased higher education costs.

The Treasurer has asked families to go and get procreating and will reward them for doing that but failed to adequately fund child care. Without access to affordable, flexible, quality child care, we will see pressure on parents—in particular mothers—to withdraw from the work force. The government has ignored some of the recommendations of its own child-care experts to increase the child-care benefit to pay for a wage increase to child-care workers and to counteract the 30 per cent increase in child-care fees over the past two years.

One of the forgotten groups of this budget is sole parents, but there is a measure there for them—unfortunately, it is a negative one. At the same time as the government gives tax cuts to high-income couples, it is to spend an extra $1 million unfairly chasing sole parent `relationship status' reviews. Every time a sole parent changes their address, Centrelink has the power to haul them in for an interview to discuss their circumstances. This is particularly unfair given the difficulty of finding safe, secure low-cost housing—low-cost housing being particularly necessary for many sole parents.

The area of carers is an important one. As Australia ages, a growing number of Australians provide care for family members. Let me say that I believe that, if there is one group in the community that really deserves all it can get in extra assistance, it is carers. However, whilst the $1,000 payment for carers will be welcome, and it might buy the government a vote or two, it will not ease the long-term burden of caring. Many carers will miss out on this payment because only those who are receiving the actual carer payment on 11 May will receive the one-off payment of $1,000. Many age pensioners, disability support pensioners and sole parents provide the same full-time care for elderly partners, elderly parents or children with a disability. They are part of the `silent army' of carers, and they will miss out on any assistance. The Democrats attempted to fix this problem by amending the legislation earlier today. Disgracefully, both the major parties were so desperate to rush through the legislation and ignore any flaws that they did not support our amendment. As a result, this silent army of carers will miss out.

Again, in the area of disability, there is plenty of assistance for other people—people already in the work force and earning high incomes—but nothing to assist disadvantaged Australians in the transition from welfare to work. People with a disability missed out on the $300 lump sum payment in the last pre-election budget, and again they miss out this time around. The government is offering lump sum one-off payments to families, carers and aged care facilities but nothing to the person with a disability.

There are many other sections of the community that were virtually ignored. The Indigenous budget is one key example. The Indigenous budget is the budget of the smiling assassin. It shows the government is just marking time in this absolutely crucial area. It has thrown money around in generous tax cuts and other budget bribes in other areas, but there is no real increase in Indigenous funding. Prior to the budget, the Democrats called for an extra $300 million annual investment in the key area of Indigenous primary health care and preventative programs as a top priority, just to try to bring the health of Indigenous Australians up to par with—or at least closer to—the rest of the population. This, of course, was a costed measure. Instead, we see that the Indigenous health budget has barely increased by $40 million over four years—far short of what is needed. The government could have used a small amount of the surplus to dramatically improve the life chances of Indigenous Australians instead of providing so much assistance to higher income earners. Further funding to address family violence and assistance with Aboriginal home ownership are welcome, but they should have been funded anyway, not at the expense of ATSIC.

Health and health care costs more broadly remain significant areas of concern for all Australians. This budget does little extra to alleviate those concerns. It does little more than fund existing programs, with the odd handful of responses to pandemics and terrorism. The ongoing $2.5 billion a year drain on the public purse of the grossly inefficient and inequitable private health insurance rebate continues untouched—money which could be far better spent on addressing some of the glaring needs in the community. The government has failed to deliver in a number of key critical areas such as mental health, dental health or long-range health work force planning. There is nothing in this budget to contain the spiralling costs of specialists that have so undermined the fundamentals of Medicare.

The government's aged care package only goes part of the way to addressing the needs of the aged care sector. It does not underpin the long-term structural needs of the sector. The underlying failure of the indexation system for operational grants in aged care has not been addressed. It will not provide sustainability, and so the problems will emerge again, probably around the time of the next electoral cycle.

The one-off payment to aged care residents enables them to meet accreditation. This is welcome but it should and could have been provided earlier. The 1.75 per cent annual increase to providers in line with the review of pricing arrangements is a good response but it is still less than the government's own inflation figures. The conditional adjustment payment will assist with attracting staff but is only one-tenth of what is required. The one-off payments for capital works will help providers in the immediate term but, again, do not provide any long-term sustainable solutions.

In the area of education, the budget has failed to ensure a fair school funding system. It leaves funding for public school students well below the OECD average. It is ironic that a government that has consistently undermined teachers and public education can now find $34.6 million over four years to spend on so-called values and citizenship education in Australian schools. The budget projections of declining public school enrolments over the next four years clearly expose the policy objectives and funding priorities of this government.

In the area of higher education, our universities and students continue to have their needs ignored. There is no relief for students in relation to income support despite them being slugged with HECS increases of up to 25 per cent in many universities, adding even further pressure and disincentive. In addition, we have the abolition of the Educational Textbook Subsidy Scheme that will result in textbook costs increasing by up to 10 per cent from 1 July. The meagre improvement to scholarships announced in the budget does little to ease students' financial burden nor improve income support for the 70 per cent of students who have to work at least two days a week during the semester to survive while they try to fit in studies as well.

This budget does not deliver the increases that are needed to significantly improve our national research and development investment and is likely to see Australia fall even further behind the OECD average. According to the Australian Vice-Chancellors Committee, the sector requires an additional $405 million a year to adequately support universities' research infrastructure. The Democrats support their calls—and those of others—for increased research infrastructure funding and a proper target of R&D spending of two per cent of GDP by 2010.

In the areas of defence and security, the Democrats welcome the extra $26 million to extend our presence in East Timor, but it is a pity that our current intransigence in grabbing more than our fair share of the oil and gas in the Timor Sea is costing that impoverished country far more in lost revenue. The Democrats have already expressed our support for extra money for intelligence, although it highlights again the need for a proper investigation into our intelligence services to make sure they are functioning properly so the extra money can be properly spent. Extra money continues—$16 million this time around—to be wasted by misusing our defence forces to try to keep out refugees and asylum seekers. We remain concerned that extra money is going to Defence purchases despite little being done to address the scandalous record of money being wasted in that area. The fact is that Defence are simply very bad shoppers. They put items on lay-by and come back later to find they do not fit. If you sent them to the shop to buy the classic $5 sandwich and milkshake, they would either spend $50 or come back with half a packet of chewing gum—used chewing gum.

In the area of communications the Democrats believe that our democracy depends on the diversity of opinion and questioning of the government and all political parties that public and community broadcasters provide. We were pleased to see there was some additional funding to the ABC to continue their regional and local programming initiative and for program acquisition, but it does not come close to making up for the 30 per cent cut in real terms over the last 15 years. We are also very disappointed that SBS and community broadcasters missed out.

In the budget figures for trade, it was interesting to see confirmation that the much promoted Australia-US free trade agreement will cost Australia at least $1.5 billion in the first few years after the agreement comes into effect. The budget papers clearly spell out that allowing US goods to be imported into Australia duty-free under this agreement will reduce tariff revenue by around $1.5 billion over the next four years. This is part of the high price of a substandard trade deal that compromises critical aspects of Australia's social, cultural and environmental policy and locks us into commitments that will severely limit the sovereignty of future Australian governments. It is worth noting that in all the rush by this government to clear the decks for an election, there is still no sign of legislation that would be needed to implement key parts of the deal. This suggests to me that the government knows that the community is cottoning on to the fact that the benefits the government claims come from the free trade agreement are grossly overstated and often dishonest.

In the agricultural area the Democrats welcome the continued commitment to the Agriculture Advancing Australia suite of programs, which has delivered benefits to farmers. The commitment of $1 billion of drought assistance funding is positive. The commitment of $11 million to implement the recommendations of the Keniry inquiry into the live export trade will make only minor improvements to an industry that continues to be unjustifiable in its enormous cruelty. When our frozen carcass trade is worth about $5 billion more per year than the live export trade, we should not persist in making our animals suffer and continue to waste public money to prop up an unjustifiable trade.

The environmental area, as I have mentioned, is an absolute con in this budget. The government must address the declining environmental conditions and the important rivers and aquifers that ensure the sustainability of this country. This budget fails the sustainability test and, more importantly, the honesty test. The budget papers fudge the figures, and we have already identified and detailed more than $1 billion of broken promises. It has slashed funding from several highly effective programs at important research centres and failed to keep numerous promises on salinity and water quality.

Undoubtedly, the government's greatest failure is in relation to climate change. It made the grossly dishonest promise to spend almost $1 billion on climate change over the last four years, yet this budget shows that the spend has been less than a third of that amount. It has now scrapped the Greenhouse Gas Abatement Program, which was negotiated with the Democrats and has been the government's most successful greenhouse measure. It has replaced that with a collection of voluntary programs that have little chance of achieving significant cuts in emissions.

In summary, there is unfairness and a blinkered focus on the short term in this budget. It is full of misconceptions and deceptions. It is economically irresponsible. This government has lost once and for all any credibility in its claims to be effective economic managers or strong and effective in the areas of defence and security. That is in no small part due to its ongoing dishonesty towards the Australian people and the Senate. I have pointed out just some of the dishonesty and irresponsibility in this budget tonight. The Senate must examine it for more.

There is a bigger question and it should be asked—were there other choices available to the government? Was there a fairer approach or another way? Of course, there was. There was, and is, considerable public support for more spending on services. Many Australians were prepared to put their hands up for better services instead of tax cuts. We believe that any government's first priority should be to ensure affordable quality standards of health, education and housing for all Australians, as well as an adequate standard of living and a protected and clean environment. Many Australians agreed with us, but instead the government gave priority to tax cuts for higher income earners. I guarantee that the Democrats will scrutinise carefully all budget legislation that comes before the Senate. We will seek to responsibly amend bills to achieve fairness and sustainability. We will do the job that we were elected to do. (Time expired)