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Wednesday, 9 May 2007
Page: 77

Senator CHAPMAN (3:16 PM) —What a pathetic effort from Senator Conroy in his response to the budget and the issues raised in question time today! Contrary to what Senator Conroy claims, this budget exhibits a strong long-term vision on the part of the government. Perhaps more than any other, this budget demonstrates that the government does have a long-term vision. It is looking to the next decade rather than just the next year. It is possible to do that because of the strong economic management on the part of the Howard government in the years we have been in government, since 1996. This has made Australia a very different and much better place than it was in 1996.

It is worth reminding the Senate what has been achieved over the decade or so that the Howard government has been in office which now provides the springboard for the next decade of economic achievement. Over that period inflation has been halved. Ninety-six billion dollars of government debt was built up year after year by the previous Labor government because they could not manage the government’s finances and they had year after year of deficits. That $96 billion of government debt has been eliminated. We have had 10 budget surpluses replacing those continual Labor deficits. We have got an extra two million Australians employed and real wages have increased by 20 per cent in a non-inflationary way. That gives the lie to what Senator Conroy claims about productivity growth. You cannot have real wage increases of 20 per cent and halve inflation unless you have substantial growth in productivity. That is exactly what has been achieved under the policies of the Howard government. That provides the basis now for the government to springboard policies into the next decade.

These achievements are not merely serendipitous. They have happened as a result of the hard work of the Howard government and the tough decisions that it took in its early years in government, and that has been built on with continuing prudential management of our finances over the years since those hard decisions were made. Again, they are characteristics that were never exhibited by previous Labor governments and would not be exhibited by a Labor government if we had the misfortune to have a Labor government elected later this year.

We can now secure those achievements to face the challenges of the next decade by building Australia’s economic capacity. That is what this budget does. It focuses on skills development, on infrastructure, on the environment and on the health and welfare of ageing Australians. One of signal initiatives of this government, which points to the fact that it is taking a long-term view rather than a short-term opportunistic view, is the establishment of the Higher Education Endowment Fund with an initial government investment of some $5 billion. That is a perpetual capital fund that will generate earnings year after year to provide money for capital works and research facilities in our universities. It mirrors the Future Fund that we established two years ago. Two years ago we were looking to the long term. At that time we were looking to the unfunded liability which the government had for the future payment of Public Service superannuation and we established the Future Fund to ensure that those unfunded liabilities could be met in the future. We have now established the Higher Education Endowment Fund to ensure that the education which is so important to our productivity growth is achieved and that the money is there, set aside as a capital sum, to earn income which can be applied for that purpose.

That is not the only long-term initiative we have taken in this budget. There are initiatives with regard to land transport, ensuring our water security, renewable energy and further encouragement for retirement savings. And of course, importantly, yet again the government has reduced taxation quite significantly, to the extent that now the top marginal rate, which we reduced in the last budget to 45c in the dollar, will not cut in until an annual income is reached of $180,000. That is three times the level of income at which the top marginal rate —which was substantially high than 45c in the dollar—was reached when the government came to office. Then it was an amount of $60,000. In this budget not only have we increased that threshold but, importantly, we have also increased the threshold applying to lower income earners. The rate at which the 30c in the dollar tax rate cuts in will not be achieved until an income of $30,000 per annum is reached, compared with the previous level of $25,000. So there are enormous incentives provided there in terms of returning to workers the surplus that this government’s sound financial management has generated. (Time expired)