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Tuesday, 14 June 2011
Page: 5896


Dr LEIGH (Fraser) (18:35): There are two kinds of people in the Liberal and National parties. There are conservatives, who oppose everything, say no and want to keep the world as it is, and there are liberals, who stand for values, who believe in markets, who believe in competition. We are here today to mourn the demise of the small 'l' liberal in Australian politics. With this oppositionist stance, the coalition have shown their true colours. They have shown that they are not only willing to say no to Labor reforms; they are willing to say no to coalition reforms, because that is all this is today. The legislation that is before the House today is enacting a transition path first announced by Treasurer Peter Costello. That is right: this is a Peter Costello reform, enacted by the Labor government and opposed by Tony Abbott's opposition.

In 2003, announcing the May budget, Peter Costello said as follows:

… today I am announcing important long term reforms to the excise treatment of fuels. The reforms establish a broad sustainable taxation framework for fuels, by addressing a number of anomalies in the current fuel tax system and providing increased long term certainty for investors, while meeting Government commitments and providing time for industry to adjust.

Time we have had. Indeed, during the House Standing Committee on Economics inquiry, I asked Treasury officials if they could give me a single example in which a transition path had been longer than eight years, in which an industry had more than eight years to adjust. They could think of no such example. But this eight-year reform, supported by the Howard government, supported by the Liberal and National parties as recently as the last election, has now been abandoned in favour of the quick vote grab, the quick headline. As the regulatory impact statement says:

The announcement of the measure in the 2004-05 Budget means that industry is aware of and has been expecting the proposed changes …

It goes on to say:

Significant deviations from the announced policy that impact on the tax liability of the affected industries may unsettle investment decision making.

Those of us on this side of the chamber believe in providing certainty. We believe in long-run reform, and this legislation is doing exactly that. I hate to say this, but Peter Costello was right in 2003 and continued to be right through the period of the Howard government.

This reform recognises, as the LPG industry say, that they generate 87 per cent of the emissions of regular petrol, and under this policy they will still only pay tax at half the rate of the energy equivalent fossil fuel. Australia ought to tax fuels more consistently. LPG users should contribute to maintaining the roads that are used by all vehicles. Even following the enactment of this legislation, if it passes the parliament, as the member for Dobell has pointed out, Australia will still be well down the list in our taxation of LPG. As a price comparison prepared by Treasury for the House Standing Committee on Economics sets out, LPG in Australia will still be taxed at a lower rate than in the United Kingdom and the United States.

So this is not radical reform. This is reform that recognises that what we need to do is follow through. The government announced in 2003 that fossil fuels would be taxed in a fairer and more equitable way, and we should not suddenly step away from that at the very last minute, making a momentary grab for the headlines. But, sadly, that is exactly what the opposition has done here. If this legislation is not passed, it will drive a $500 million plus hole in the budget. Those opposite did not oppose the fuel tax changes in the election campaign, but now they are opposing the measure. Are they putting up alternative savings to fill that $500 million black hole? Of course not. This is the opposition that went to the election with costings $11 billion short, and, when you are $11 billion short in an election campaign, what is another $500 million between friends?

Sadly, the opposition here are playing exactly the same sorts of simplistic games that the US Republicans are playing. But that puts them apart from their right-wing colleagues around the world. With your indulgence, Mr Deputy Speaker, let me run through what some right-wing governments are doing in different parts of the world. In Germany the Merkel government are putting in place a high-tech strategy. They are aiming to network the research and business communities more closely. They have a pact for research and innovation. The right-wing parties in Germany actually believe in ideas. They are, if you like, small 'l' liberals. If you look at the UK Conservatives, they are putting in place a 'Big Society'. To me, I have to say, it sounds a little bit like Tony Blair's Third Way but there are certainly ideas. They are part of an emissions trading scheme and they are committed to reform within the NHS. The right-wingers in the UK are committed to ideas. They are not a party of 'no'; they are a party of generating ideas. The right-wingers in Canada are investing in a clean energy economy. They have a digital economy strategy. They are looking at new resources to support leading-edge research and they have a new phase of Canada's economic action plan. In New Zealand the right-wingers have in place an emissions trading scheme, a policy that we may hear a little more of next week when Prime Minister Key addresses this parliament.

In all of these countries we see right-wing parties putting in place ideas. But what do we see in Australia? We see the politics of negativity, the politics of no. The Liberal and National parties have truly become the parties of no. They are not only opposing policies being put forward by the Labor government; they are opposing their own policies. They are turning their back on economic reform when it comes from this side of the House, such as carbon pricing and minerals resource rent taxation, and they are opposing good economics even when it comes from Peter Costello.

We now see the Leader of the Opposition in the frankly bizarre position of being the only living Liberal Party leader who does not support putting a price on carbon, the only one who does not support using market mechanisms to tackle dangerous climate change. The Leader of the Opposition's unwillingness to use markets when it comes to climate change is symptomatic of a rejection of any politics of ideas in favour of the politics of negativity and the politics of simplistic bumper stickers and getting his face on the evening news. While we in government are working on long-term reforms, driven by a principled approach that now sees us looking to put in place the LPG reforms announced in 2003, those in the Liberal and National parties are preparing to vote these measures down. They are willing to put a hole in the budget, willing to vote down policies first proposed by a Liberal Party Treasurer.

It is frightening to think what would have happened to Australian economic reform were Mr Abbott to have been the Leader of the Opposition during the Hawke and Keating governments. Would we have had changes to superannuation? Would the superannuation guarantee have come into place? Probably not. Mr Abbott would have run a 'no new tax' campaign against compulsory superannuation. He would have said Australian households could not afford it. And what would the result have been? In recent weeks, we have seen headlines in the UK saying things like 'Millions must work after 70' or 'Now no pension until the age of 72: only way to save the economy, say experts'. Why is that? It is because, unlike us, the British do not have compulsory superannuation. They do not have that bucket of money that provides dignity in retirement. They do not have the benefits of the long-lasting economic reform put in place by the Keating government in the early 1990s. If Mr Abbott had been Leader of the Opposition at that time, I suspect he would have voted down compulsory superannuation. He would have run the mother of all scare campaigns against compulsory superannuation and Australians would, as a result, be impoverished in their retirement. Mr Abbott probably would have opposed the tariff cuts. He would have run a simplistic made-in-Australia campaign, insisting that it was not possible to take down the tariff walls when it came to cars and that it was not possible to take down the tariff walls that were sheltering our textiles, clothing and footwear industries. No, he would have gone to those factories and said: 'The Labor government may be proposing to put in place a long-term plan to sustain jobs and reform, but that's not good enough. It's better for me to just stand against change.' If Mr Abbott had been the opposition leader in that period, we would not have seen the tariff cuts we saw in 1988 and 1991—tariff cuts that put $1,500 back into the pockets of the typical Australian family, tariff cuts that put Australian business on a more competitive footing, tariff cuts that recognised that the Australian economy needs to compete with and engage with the world and that that is the best way to prosperity.

Mr Abbott, I suspect, would have rejected all of that in favour of a spot on the evening news. He probably would have rejected enterprise bargaining as well, one of the great productivity-enhancing reforms of the era. I suspect, in his constant, carping negativity, he would have stood against that as well—rejected the notion that pay deals can be struck at the enterprise level in return for higher productivity.

And of course he would have stood up against capital gains taxation. I suspect that if Mr Abbott had been opposition leader in the mid 1980s he would have said: 'Capital gains taxation? That's a big new tax on every form of capital gain. I'll oppose that.' That, again, would have meant that we had a big hole in the budget. It would have again meant that a source of taxation that, as we know, is an efficient and equitable way of raising revenue would not have come into place. Australia would have been a country that then had to turn to less efficient sources of taxation.

Mr Abbott's constant, carping negativity, applied to many reforms of the past, would have left Australia in a scary position: an Australia with no compulsory superannuation, still sitting behind high tariff walls with no enterprise bargaining and no capital gains tax.

Frankly, we know that people do not like taxes, but we need them. With taxes we build society, and we need to raise tax revenues from the most efficient bases. We need to achieve consistency across different taxes, and that is what we are doing in focusing on the emissions resulting from LPG. We raise tax revenues in the most efficient way in order to fund social services, and we impose taxes on things that have negative externalities that harm others. That is why we impose things like fuel taxes, alcohol taxes and cigarette taxes. We impose these taxes because we recognise that they are an important part of building a civilised society. If we are to constantly oppose every measure, then we end up in the perverse situation of having inconsistencies. We end up in the odd situation of inequitable tax treatment of fuels, whereby fuel users look at the systems and say, 'That doesn't strike me as fair.' If a tax system is not regarded as fair by taxpayers it loses its legitimacy.

With this bill, we are putting in place reforms to LPG, the impact of which will be small. The reforms will be introduced slowly. They will allow families, taxis and other users time to adjust, and, of course, taxi drivers will be able to claim fuel costs as a tax deduction. The modelling we have suggests that the average metro taxi trip from 1 December 2011 will cost an additional 3½c—and that is if the LPG increase is passed on in full. That is a very, very small impact, and it is being put in place to achieve consistency across fuel—a philosophy supported by those opposite for eight years minus the last month, when the Liberal and National parties turned their back on economic reform.