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Wednesday, 9 May 2012
Page: 4368


Dr LEIGH (Fraser) (18:16): It is my pleasure tonight to rise on the Tax Laws Amendment (2012 Measures No. 1) Bill 2012. This bill is an important part of the government's economic reforms—a set of economic reforms that are laying the foundation for Australia's prosperity. It is a set of reforms that recognise we are here not just to help in solving immediate problems but also to put in place long-term solutions. I see the Assistant Treasurer in the chair here, and I would note in particular the aged care reforms, a set of reforms that are long overdue and that recognise that for too long the Howard government put bandaids on an aged care system that really needed root and branch reform. I commend him for his work on aged care reform.

In the area of tax laws, this Labor government is committed to improving the tax schedule. We put in place the Henry review—a comprehensive review in the spirit of the 1975 Asprey review—which really looked right across the tax code at reforms that were needed. One of those reforms was the abolition of the dependent spouse tax offset, and this bill continues that. In an earlier bill, this parliament chose to abolish the dependent spouse tax offset, except for taxpayers with a spouse born on or before 1972. Now that date is taken back to 1952. That is an appropriate change, recognising the change in our society since the dependent spouse tax offset was put in place. It recognises that a dependent spouse tax offset was a measure that might have been appropriate in a day when most men worked and most women were homemakers, but is not appropriate in modern Australia.

In the same spirit, we are continuing to modernise a range of different tax measures. Today this House has been debating the abolition of the education tax refund and its replacement with the schoolkids bonus. That again was an updating of the tax and benefit system, and it was an updating that recognised that the education tax refund was not being claimed by one million of the 1.3 million Australians who were eligible for it. Those opposite in the debate today were arguing that the one million out of 1.3 million Australians who were not claiming the tax refund in full somehow did not want the money. Well, they would have been the first to have met an Australian who did not want $410 for a primary school child and $820 for a secondary school child. What is more likely, and the reason that we reformed that particular provision, was that Australians were simply too time poor and busy to be able to keep the receipts necessary to make those claims. One of my staff related to me a conversation she had had with friends of hers who had three young children and who were simply unaware of the education tax refund. They were on family tax benefit part A: they were doing it tough and they needed the money, but they did not know about the provision and they were not getting those benefits.

As John Maynard Keynes once said: 'When the facts change, I change my mind. What do you do, Sir?' We on this side of the House looked at the facts and they were incontrovertible. One million out of 1.3 million Australians were not claiming the education tax refund. It just was not good enough, and we replaced it with the schoolkids bonus—a measure which goes to all Australians. Those opposite are concerned that the schoolkids bonus will not be spent on education expenses, but it is very clear when you look at Australian families that they are spending substantial amounts of money on their children's education.

It is unusual to see those opposite arguing that money going to families should be tied. If you like, it is a conservative notion, not a liberal notion. If you are a small 'l' liberal, then you believe in putting money in the hands of families. You trust them to do with that money what is best. If you are a conservative you do not trust families. It is the spirit of conservatism that gave rise in the United States to the food stamp system, a notion that you cannot just give poor people money, you have to give them tied money—money that is tied to spending on food. We in Australia have not had things like food stamps because we have trusted low-income Australians to do the right thing with money that is given to them by the government. That is the same spirit that embodies the schoolkids bonus. It is a spirit that says if you put money in the hands of parents of school-aged children they will do the right thing with that money, but it is not necessary to tie that money to educational expenditure to get a better outcome. Those opposite, taking the conservative path, distrust low- and middle-income Australians to do the right thing by their kids. We on this side of the House are taking the small 'l' liberal approach, the market-based approach—as on so many issues—by taking the view that Australians will do the right thing with money that is placed in their hands. We have seen the clear contrasts in this budget process. We have seen the strong recognition from the IMF of Australia's fiscal position and a broad recognition across economic commentators that Labor has a lower tax-to-GDP ratio than the Howard government did—that it is Labor that delivered real spending cuts. It is a real contrast, in that sense, with what happened in the Howard government under mining boom mark 1. The Howard government never had to face the tough decisions. It saw the money roll in and it just rolled it out the door.

It is Labor which has made tough decisions about what we are not going to continue funding. The government is about values, priorities and making choices for things you are not going to do. That is a great Labor tradition, with finance ministers Peter Walsh, Lindsay Tanner and now Penny Wong. What it chooses not to do marks out a party as much as what it chooses to do. But in this budget we are choosing to invest in critical areas of the economy—in skills and training, in a national broadband network, in spreading the benefits of the mining boom, in putting a price on carbon and in returning the budget to surplus in 2012-13.

Those opposite are like deer in the headlights. That is probably a little unfair to deer. Let us think about fish out of water. They are flip-flopping like fish out of water. We saw this in the famous budget reply of 2010. The Leader of the Opposition said that he would identify savings, and then the member for North Sydney said that he would identify savings and then the member for Goldstein was going to do it. Finally, the fish flopped here and there and was just left with an adviser at the back of the room shaking his head.

We saw it with the $70 billion black hole. The member for Goldstein and the member for North Sydney went to-and-fro on talk show after talk show on whether or not the $70 billion black hole was a real figure. Sometimes they said: 'Yes, it's our figure. It's a big target to meet.' Sometimes they said, 'That's a Labor hoax.' They were flip-flopping like a fish out of water. We have seen it in the question of entitlements. When we look to means-test benefits, such as family tax benefit part B, the baby bonus and the private health insurance rebate, those opposite say we are playing the politics of envy. They say that we are engaging in class warfare when we put in place means tests at $150,000. The shadow Treasurer went overseas and said, 'We'd like to have a Hong Kong style welfare state.' That is a pretty substantial cut to benefits, one would think. Then the Leader of the Opposition came out immediately and said: 'Oh, no. The coalition won't be cutting benefits.' They are flip-flopping like fish out of water.

When it comes to economic policy there is really only one member of their frontbench who does not look like a fish out of water and that is the member for Wentworth. He delivered a very thoughtful speech at a Melbourne institute event I attended here in Canberra. He spoke about his views on a sovereign wealth fund. I disagree with his conclusion that Australia needs a sovereign wealth fund but he put, quite provocatively, the argument that under the Howard government spending had sometimes got out of control, and argued that this could be the case for other governments. I can imagine his colleagues afterwards, saying: 'What were you doing up there on the surface? Surely you should be down here with us, down here swimming in the warm waters of populism.'

We know what their view is on costings. We have had very clear statements that the coalition are now going to eschew the parliamentary budget office—the same parliamentary budget office that Senator Joyce and the member for Higgins said they would back. They backed off that because they realised how deep their budget crater is. They realised the problem they got themselves into last time, when they went to the election and were later found to have an $11 billion black hole in their costings.

In response to Treasury finding the $11 billion black hole we saw the member for Mackellar and the member for Goldstein traducing the reputation of Ken Henry, a great Australian who was appointed Secretary of the Treasury by Peter Costello. Their response to Ken Henry finding that the coalition costings did not add up was a bit like the rich kid whose maths teacher finds a mistake in his homework—he immediately goes to the principal and asks for the maths teacher to be fired. They were in here attacking Ken Henry and attacking the Department of the Treasury for what they said was politicised work. It was nothing of the sort. The Department of the Treasury engaged in the same costings process for the coalition that it has engaged in for other political parties.

The coalition have now moved to an audit commission. That audit commission is simply a phrase to disguise the fact that their costings will not be audited this time. Why will they not be audited? It is because when they went to the last election they discovered that audit has a legal meaning. If you want an accounting firm to audit your costings, it must afterwards say that they have been audited. I spoke yesterday in this place about the shadow Treasurer's attempts to suggest that there was such a thing as a small 'a' audit and that somehow the coalition could engage in a small 'a' audit rather than a large 'A' audit. Unfortunately, there is no such thing.

That is where we find ourselves, with the coalition, at the moment: all promises to special interests but an inability to make the hard decisions that government requires. Government does require often unpopular decisions to be made. Certainly we would not be claiming that every decision made by this government has been greeted with universal acclaim by the Australian people. But that is true of all the major economic reforms in Australian history. Great reform is not invariably greeted with cheering in the streets. It requires steady argumentation. It requires engaging the Australian people in a long conversation about why reforms are necessary.

You can imagine the Leader of the Opposition had he been leader when Australia was to float the dollar. He would have immediately engaged in fearmongering about foreign speculators. We know those opposite have engaged in fearmongering on foreigners. We see that with foreign ownership debates. 'What are foreign currency speculators doing determining the level of our dollar?' the Leader of the Opposition might have then said. In fact, we know he opposed the floating of the dollar as late as a decade after the dollar had been floated. But we now know that that was an enormously important economic reform. It acted like a shock absorber for the Australian economy. When international shocks come along, a floating exchange rate is enormously important to the prosperity of Australians.

Can you imagine if the Leader of the Opposition had been leader when Australia put in place substantial tariff cuts—tariff cuts that halved the price of a pair of kids' school shoes, tariff cuts that puts thousands of dollars in the pockets of Australian households? They were tariff cuts which could, all too easily, have been demonised by a populist looking for short-term gain. You can imagine what the Leader of the Opposition would have done— (Time expired)