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Monday, 2 June 2003
Page: 15679

Mr KING (8:28 PM) —I rise to speak on Appropriation Bill (No. 1) 2003-2004. I suggest to the House tonight that this is the most significant budget for the Howard government and the Treasurer since the 1996-97 budget. In world terms it compares most favourably with any other budget delivered in this fiscal year. This budget not only achieves the trifecta that has been so eloquently spoken about by the Treasurer—namely, a balanced budget, tax cuts and meeting expenditures of an unusual kind—but also addresses major structural issues, particularly in the areas of health and education.

In my address I want to deal, firstly, with some general aspects of the budget, which I wish to draw to the attention of those who have elected me and others and, secondly, with three special issues: firstly, the SARS debate and certain opportunities that it opens up economically for Australia; secondly, securing Australia both domestically and overseas in the current international terrorism context; and thirdly, and importantly, heritage conservation in which, in this budget, an important vision has become a reality. If time permits, I then want to briefly address some aspects of the Labor alternatives and draw my remarks to a close in that context.

It is worth while going back to the remarks of the Treasurer in 1996—by the very same Treasurer, I am pleased to say, who delivered this budget. He noted that the program anticipated at that time was one for families, small businesses, older Australians and to improve health care and plan and repair the nation's finances. Of the inherited deficit, he said:

We could not stand back and ignore the problem. Although we did not create it, we will take the responsibility to fix it.

He was referring there to the extraordinary series of deficits which had been handed down by Labor administrations and which were the core challenge then facing the financial and economic regimes in the country.

In this year's budget the Treasurer spoke somewhat differently. He spoke about the challenges for security and prosperity and about the need to address structural change in education and health. Those challenges were addressed in the context of a series of budgets that have delivered a million jobs since March 1996 and a level of growth and prosperity that has not been seen before in this country over a sustained period.

How does the budget continue those outcomes? Perhaps the first and most important way is to propose a series of tax cuts. These have been scorned by our opponents, but they do add up to significant tax cuts for various groups of our people. For example, the threshold increases in relation to income tax cuts for persons whose annual taxable income is between $21,600 and $30,000 are up to 10 per cent. The annual reduction in tax liability for someone on a taxable income of $21,600 is $329, which is an estimated percentage reduction of 10.7 per cent. In addition to those tax cuts, there is an increase in the low-income tax offset to $235 per year—an increase of $85 per year.

It is unnecessary to go through the detail of these measures, which are set out in the budget papers, but it is important to note that it is not only income tax cuts but also benefits through tax cuts for senior Australians through the senior Australians tax offset that have been proposed in this budget. This allows many senior Australians to earn up to an additional $500 annual income before they have a tax liability. The same proposals provide that Medicare levy thresholds for senior Australians will be increased to ensure that they do not pay Medicare levies until they begin to incur an income tax liability.

There are also tax cuts involved in the international taxation arena. These are designed in a comprehensive way to ensure that Australia is encouraged as a regional headquarters for foreign groups and to improve our country's attractiveness as a continuing base for multinational companies. It is important that we address those structural problems; otherwise countries that envy our record and have highly competitive regimes at the moment will, for their own reasons, attract Australian companies and potential companies overseas, which will impact negatively upon our employment and growth. It is therefore important that the Senate approach these reforms very seriously and constructively, as advised by the board of review.

I want to mention a couple of measures that, in my assessment, are significant in the overall context of this budget. The Australian Reinsurance Pool Corporation, which was recently established under the terrorism insurance legislation and about which I spoke in the House not so long ago, will be established with a $5 million equity injection, leading through collections to a $100 million equity base per annum which will be built up over time to ensure that there is a proper backdrop for terrorism insurance in this country.

Another important reform is the support given to the CLERP 9 reforms in relation to improving disclosure by Australian corporations. This issue has been aired through a number of inquiries and royal commissions. It is significant that the budget is addressing the concerns of commissioners and others who have commented upon these problems relating to corporate collapses in the last couple of years and is responding positively to the proposed reforms. Apart from that, the Financial Reporting Council will achieve an expanded role. APRA, the important regulatory body for prudential regulation, will receive a significant injection of funds, and its structure will be reformed and financed adequately to ensure that it continues to play a significant and enhanced role in prudential regulation so that the business community, ordinary customers and consumers will have greater confidence in the operation of our free enterprise economy.

It is against that background that it is worth while remembering that, apart from the significant achievements that this budget achieves nationally, it is also applauded internationally. The OECD Economic Survey of Australia in its March 2003 review states:

Australia's current and recent economic outcomes place it among the top performers in the OECD.

A little further down it states:

The Government's commitment to reform, its willingness to commission expert advice and to heed it, to try new solutions, and to patiently build constituencies that support further reforms, is also something that other countries could learn from.

Another comment worthy of note, which relates to the importance of achieving economic policy objectives, states:

Dogged pursuit of structural reforms across a very broad front, and prudent macroeconomic policies firmly set in a medium-term framework, have combined to make the Australian economy one of the best performers in the OECD ...

Immediately following the budget, the respected commentator William Pesek Jr on Bloomberg News commented:

Unusual, indeed. While most major economies are struggling, Australia's is thriving. In the U.S., Japan and Germany, it's stagnation and rising unemployment that folks worry about. Here, it's how to keep the good times going.

He continues:

But domestically, it's hard to see Australia as anything but a role model for the world's biggest economies.

He also states:

Australia isn't getting much credit domestically or internationally, and that's a shame.

... ... ...

Yet if you're looking for an example of an economy that's forging its own path, independent of the weakness slamming most, Australia is it.

By way of budget comparison, these points are worth making. This budget is expected to record a budget surplus of $2.2 billion—or 0.3 per cent of GDP. According to data from the OECD's Economic Outlook April 2003 edition, in the 2004 fiscal year the UK is expected to record a deficit of 2.2 per cent of GDP. In Australia, this would be a deficit of around $16.2 billion. In 2004, the US is expected to record a deficit of 4.2 per cent of GDP. In Australia, this would be a deficit of around $30.8 billion. When one compares the record internationally of the government, one sees that this is not just a very significant budget but perhaps the most significant budget in fiscal terms in the contemporary world—certainly amongst the OECD countries with whom Australia is traditionally compared. It is on that basis that all Australians can be proud to have a government that has put in place a budget which has brought such strong results for continued prosperity and also for continued change and reform.

Let me comment on a couple of issues that I have mentioned earlier which, it seems to me, are worthy of note in the current context. The first is SARS. It must be said that one of the issues that faced the framers of this year's budget was the unusual and unexpected expenditures required. The first, of course, was the war in Iraq. There were very significant expenditures which were not expected and had to be provided for in the budget context. That has been achieved. Another was SARS and the epidemic which has now, on one estimate, affected by death or illness some 8,000 persons around the world. It still does not appear as if the epidemic has been brought under control. Most adversely affected, especially in our part of the world, are Hong Kong and China, although Singapore and Taiwan have also been seriously affected. Professor Warwick McKibbin of the Centre for International Economics and a member of the Reserve Bank board has estimated that SARS would cost Hong Kong some 5.5 per cent of GDP in this fiscal year and China some 2.4 per cent of GDP.

I have had an opportunity to discuss these matters with some leaders in the tourist industry, including the Australian Tourism Export Council, who have indicated that, far from seeing this as a challenge for Australia, it ought to be seen as an opportunity. While the epidemic is progressing and is to be brought under control there are opportunities for Australian businesses, especially in the area of tourism. For example, it has been estimated that some two million Japanese visitors have elected not to proceed to China in the first six months of this year. Australian tourist authorities and businesses could do well to look in that direction and encourage them to come to Australia. We could do well to promote our country as the clean, green nation that it really is. Our stability and security, which have been obvious in the last eight years or so, ought to be used not just as a basis for securing our future but also as an attraction for others such as those tourists who might otherwise go to China—or, indeed, in their case, in the first six months of this year stay at home.

Likewise in relation to investors, it has been suggested that banking industry investors have withdrawn from the growing markets of China and possibly Taiwan and Korea. Australia should do what it can in the current climate, at least until the current epidemic is over, to seek to attract those investors to this country. In this context, I have recently written to Mr Draffin, the Chief Executive Officer of Invest Australia, suggesting to him that the policy division of Invest Australia examine and investigate the potential investment opportunities for international businesses in tourism, in banking and in other areas so as to continue to establish Australia as a strong, clean and green economic zone for the purposes of investment, tourism and other services.

There are other possibilities open to us in this regard. The Rugby World Cup later this year itself opens up opportunities for us to encourage tourism to this country and to spread this country's name around the globe to a number of areas and a number of businesses and people who would otherwise not be considering travelling and promote this country as a clean, green destination. In that regard, I would urge the Tourism Export Council of Australia, with Mr Peter Shelly as its able managing director, Invest Australia and other authorities to give very careful consideration to these opportunities. It does not mean that we should try to do down our neighbours—of course it doesn't; we should do our best to try and help them. But, on the other hand, if opportunities are going begging and Australia is in a position to exploit them, we should do what we can to continue to establish this country as a place of initiative and to maintain and improve the levels of prosperity that we currently enjoy.

The second issue that I wanted to mention concerned the interests of securing this country. This budget spends an additional $2.1 billion on defence in addition to the $645 million spent on the war in Iraq, the $100 million for humanitarian relief for reconstruction in that country and the $411 million for domestic security, especially in the area of intelligence gathering. Mr Rohan Gunaratna, the security expert, has eloquently explained that countries like Australia cannot hide from the terrorism scourge. We cannot roll ourselves up into a little ball and hope not to be noticed. We have to address the challenges of international terrorism—and that is what we are doing. The best way that we can do that, as he and others have said, is by ensuring that we have the best intelligence sources and that we are continuing, as we have done in recent times, to punch above our weight.

Let me speak of a third issue of importance. One of the major achievements of this budget for me and for my constituents has been the government's funding commitment to the protection of our heritage. I know that residents in my electorate will particularly welcome the decision to commit $115.5 million over eight years to the Sydney Harbour Federation Trust, which has responsibility for managing two sites within Wentworth. The trust is the institutional face of the Howard government's visionary commitment to Sydney Harbour and its foreshores, and it has been doing a magnificent job in restoring and preparing management plans for the sites within its charge. Public interest in trust land is understandably high, and it is of great credit to the leaders of the trust, Kevin McCann and Geoff Bailey, that they have brought those community interests together in such a way.

In my electorate, the former marine biological research station at Watsons Bay and the Macquarie light station—an icon of the eastern suburbs—will both benefit as a result of this budgetary decision. I know that they will continue to be heritage places of great significance to the local community, and I am delighted that the trust can proceed with its planning functions confident of a long-term and secure funding base.

The budget also included the exciting announcement that over $52 million has been allocated to fund a new heritage program, Distinctively Australian. This program provides a financial base for the reforms the government has proposed to the way in which the Commonwealth manages places of national heritage significance. It provides a considerable financial backbone to the proposed new heritage regime, and I hope that the Appropriation Bill (No. 1) 2003-2004 will be quickly passed in the Senate so that Distinctively Australian can become operational.

The proposed regime involves the establishment of a list of heritage places—those sites, be they Indigenous, built or natural, that are truly of national significance. For the first time, these sites will enjoy the protection of the Commonwealth to the extent of our constitutional power in this area. Distinctively Australian will also ensure that the Commonwealth is able to assist property owners in protecting, managing and promoting places on the national list. I mention promote because the national list offers a wonderful opportunity for local communities to maximise the tourist potential of these sites. Just as tourists are often attracted to World Heritage sites because of their international recognition and importance, I believe that visitors will be drawn to places that have the status of being on Australia's National Heritage List. I am enthusiastic about these reforms because they come at the end of a long process of community consultation and input, including that undertaken by the Australian Heritage Commission while I had the honour of being its chair. That community involvement included Australia's first ever National Heritage Convention in 1998, which made a valuable contribution to the government's deliberations on these issues and was one of the highlights of my time as the chair. I congratulate the minister and the chair of the Australian Heritage Commission, Tom Harley, for their drive and initiative. Once again we see demonstrated the government's commitment to an area virtually ignored by the previous Labor government. I commend the budget to the House. (Time expired)