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Wednesday, 1 June 2011
Page: 5526


Mr SHORTEN (MaribyrnongAssistant Treasurer and Minister for Financial Services and Superannuation) (13:06): I am pleased to bring the second reading debate on Appropriation Bill (No. 1) 2011-2012 to a close and I thank those members who have made a contribution. Despite the devastating impacts of the natural disasters at home and abroad, Australia’s economic prospects remain strong and the budget remains on track to return to surplus in 2012-13. The need to return the budget to surplus has not been diminished by the impacts of natural disasters nor a weaker near-term outlook for tax receipts.

Constructing this budget meant taking some tough decisions on government expenditure in the long-term national interest. Led by the Treasurer, and of course the Prime Minister, we have done that. While the terms of trade have been good for both this government and our coalition predecessors, Labor in office remain determined to be fiscally prudent. Because of our fiscal prudence, spending growth is increasing under this government by just one per cent. By comparison it is now a matter of public record that under the coalition’s last seven budgets it was 3.3 per cent. In the coalition's final term of office it was actually 3.6 per cent.

I believe it is also very important to note in this place that, under this government, the tax-to-GDP ratio has dropped from 23.5 per cent in 2007-08, when we came to office, to 21.8 per cent in 2011-12. We are determined to keep Australia’s tax-to-GDP ratio at or below the level we inherited, on average, as part of an economy where taxes are fair, simple, sustainable and pro-growth.

While the natural disasters have dampened growth in 2010-11, the strong economic outlook highlights the importance of returning to surplus to avoid compounding capacity pressures that are expected to re-emerge. That is why we have made $22 billion in difficult savings, around two-thirds of which are from reductions in spending, to keep the budget on track to return to surplus. These savings have also provided scope for the government to invest in Australia’s workforce and to deliver reforms in a number of key areas.

This budget has focused on measures aimed at expanding the productive capacity of the economy and ensuring that all Australians have access to the opportunities and prosperity of mining boom mark 2. The core of this budget is jobs. We do not just believe, we understand fundamentally, that the best way to ease the cost-of-living pressures for Australian families and households is to make sure they have jobs with decent pay and fair conditions.

This budget also contains a blueprint to build Australia’s strengths—a plan to build a more productive workforce for our economy; a plan for better schools, hospitals and health care; investments in a sustainable and internationally engaged Australia; and new assistance for small businesses, manufacturers and of course families themselves. This budget includes funding to build Australia’s future workforce. This funding will help get skilled workers into industries, modernise apprenticeships and ensure more Australians are employed. Under our conservative predecessors, Australian apprenticeships were largely forgotten about—ironic, given the Leader of the Opposition’s rhetoric of late about forgotten Australians. Under the Gillard government and this budget, apprenticeships are shown to be what they really are—an engine room of our productivity and skills base.

The government will implement a new approach to training, including the $558 million National Workforce Development Fund, which will deliver 130,000 new training places over four years; supporting apprentices by providing $101 million for a national mentoring program and $100 million for more flexible training models; providing funding for 30,000 additional places in the Language, Literacy and Numeracy Program, which provides job seekers with basic skills essential for employment, and allocating 16,000 skilled migration places to the regions. The government will also invest $233 million in new support programs and targeted wage subsidies to get the very long-term unemployed into work.

In addition to building productive capacity through the investments in training and participation, the government is also investing in infrastructure. We are providing $36 billion for vital roads, railways and ports, including the Moreton Bay Rail Link in Queensland, the Gateway WA Project, the Western Ring Road upgrade in Victoria and additional funds to duplicate the Pacific Highway. Infrastructure Australia will also receive extra funding and greater independence to produce the national construction schedule which will give superannuation funds and other investors the certainty they need to invest with confidence. I note that the new governance arrangements for Infrastructure Australia have been warmly welcomed by the private sector, including with some strong words of endorsement from the Australian Industry Group. So, again, where for over a decade under the conservatives infrastructure investment in our country was neglected and undermined by political interference, under this government we are prioritising the productivity agenda and administering infrastructure investment as it should be.

The Gillard government is committed to investing in better health care and education for all Australians wherever they live. The government will provide $1.5 billion for new initiatives to address mental illness as part of a $2.2 billion package which will deliver better care. The package will focus on support for the severely ill and includes funding for organisations coordinating clinical and social support for the severely ill and their families. A further $419 million is being provided to headspace and to early psychosis prevention and intervention centres to assist with the prevention and early detection of mental illness in young people. In addition to the funding being provided to address mental illness, a total of $1.8 billion will be invested from the latest round of the Health and Hospitals Fund for regional hospitals and health care, an investment of $717 million over five years will expand access to diagnostic imaging services and make new medicines and immunisations more affordable and access to public dental services will improve as a result of the $53 million provided by the government.

This budget also includes over $800 million of new investment in schools, including $425 million to reward top-performing teachers, $18 million for the Teach Next Initiative, which provides new pathways into a teaching career, and $200 million to support school students with a disability. On this side of the House we are pleased and proud to be providing some $200 million to students with disabilities to improve their educational chances in life. The new funding in this budget is about giving children with a disability the best possible education outcomes.

This budget also helps families under financial pressure, regions under pressure and businesses under pressure to modernise, to grow and to prosper. It also helps industries under pressure from the rising dollar. The government is helping families through a range of tax relief initiatives, including increasing family tax benefit part A for older teenagers. The government’s commitment to developing regional Australia will be met with a $4.3 billion dollar investment in essential services and infrastructure. This will include initiatives to improve hospitals, health care, universities and roads. The government will also provide $232 million dollars to partner with state governments in projects that address the particular needs of individual regions. The government will provide small business and manufacturing with support through improved taxation arrangements. We will replace the narrow entrepreneurs tax offset with wider reforms for small business. These reforms include an immediate deduction after $5,000 for small businesses to purchase vehicles. We will also help business to free up cash flow by reducing tax instalment payments by $700 million in the 2011-12 financial year. The government will provide further tax relief to small businesses by implementing the cut to the company tax rate early for small businesses, funded by the minerals resource rent tax.

This budget also recognises prisoners of war from World War II and the Korean War with an additional fortnightly payment of $500 from 20 September 2011.

While the amendments to the Commonwealth Inscribed Stock Act 1911 are part of Appropriation Bill (No.2) 2011-2012, given the number of comments on this which members made as part of the debate I will spend a little bit of time explaining, particularly to those opposite, the rationale behind this sensible move. The need to increase the government's borrowing limit at this time is an inevitable consequence of the impacts of recent natural disasters and weaker-than-expected revenues. It has always been the case that the government's borrowing limit would need to be increased. This has been clear from previous budgets. In the 2009-10 budget, the impacts of the global financial crisis on the budget position meant that gross debt was expected to reach at least $300 billion by 2012-13. Our sustained fiscal discipline has meant that gross debt will now peak significantly below this level. The increase in the legislative limit on debt from a total of $200 billion to $250 billion is a modest increase that will provide for the government's financing requirement over the forward estimates. It will also provide the flexibility to maintain a liquid and efficient government bond market in the years to come, a policy that has bipartisan support.

Historically, the bills to borrow funds in deficit years were typically introduced as part of the budget on budget night. The new borrowing arrangements introduced in 2008 mean the actual loan acts are no longer required. It is therefore appropriate that the CIS Act amendments are included in the appropriation bills as they relate directly to the government's financing requirements over the forward estimates. The amendments to the CIS Act will also repeal the special circumstances provision and establish two special appropriations for the expenses associated with borrowing and debt management activities.

The appropriation bills have been prepared to accord with the government's existing interpretation of the Senate executive compact. In response to concerns raised by the Australian Greens and several Independents in the Senate more generally, the government is considering a number of alternative arrangements and in this regard has commenced discussions with relevant parties. At this stage it is too early to assess the timing for implementation of changes.

This is a budget that gets the balance right. It maintains our drive to surplus, it carefully addresses the circumstances of an economy in transition and it looks after all parts and people in our community—all at the same time. If you have children in child care, we are giving you the choice of claiming childcare payments more regularly, getting the money in their pocket or off their bills. If you have children in school, you can now use the education tax refund to claim for school uniforms. If you have teenagers between 16 and 19, we are increasing the family tax benefit payment by up to $160 a fortnight. If you want some training to earn a higher wage, we are creating 130,000 training spots. If you want to be an apprentice, or have a teenage son or daughter who does, we will provide more support for them to complete—through mentoring, guidance and allowing good apprentices to get their qualifications faster.

If you are a tradesperson or a small business and are buying a new ute or vehicle, you can claim $5,000 back in tax. If you are a low-income earner, you will get more in your pay packet each week through the low income tax offset, which will mean another $300 in your pocket during the year rather than at the end of it. If you are finding it tough to get a job, there will be 35,000 wage subsidies for very-long-term unemployed job seekers to help them get a job and 30,000 training places for single and teenage parents to get the skills they need to be in the workforce. If you are worried about your local hospital, there will be $3.4 billion for emergency departments and elective surgery, and there is $613 million to make new medicines and immunisations more affordable. If there is a teacher in your family or you are a family that places a high value on the quality of your child's teacher, there is $425 million to reward our top-performing teachers across the nation.

This is a government building on its record of successfully steering Australia through the global financial crisis, of managing the evident forces of an economy in transition and of setting our sights on securing the next wave of national prosperity. This budget is a bridge to that future. I commend Appropriation Bill (No.1) 2011-2012 to the House.

Question agreed to.

Original question agreed to.

Bill read a second time.