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Tuesday, 10 February 2009
Page: 656


Senator PAYNE (5:39 PM) —In rising to participate on the debate on the bills which make up the government’s spending package, I want to acknowledge that I do so at a time of extraordinary sadness for Australia. So many people, so many families and so many communities are devastated by recent events in Victoria this last weekend. I want to acknowledge in the chamber that my thoughts and our profound sympathies are with them at this time as we endeavour to comprehend the tragedy that has befallen them in Victoria. It is indeed almost impossible to comprehend.

In this chamber, however, today we continue to discuss this package of bills before us in relation to the government’s spending package. There is no doubt that Australia, with the world and with the financial crisis which besets the international community, is facing difficult economic times and that action must be taken to protect Australia’s long-term economic security. But it is my view and the view of the coalition that this spending package will not achieve that result. In our view, it is ill considered, imprudent and poorly targeted and will unnecessarily put Australia into massive debt for many years to come.

We are not opposed to a responsible stimulus package, nor do we countenance a belief that a deficit budget should be avoided at any cost, as long as any deficit is kept as low as possible. But we do oppose this latest spending spree precisely because we believe it is not a responsible or sustainable way to run this national economy. The objective of any spending package at this time must be to protect and create jobs, to support small business and to strengthen the economy. This package cannot achieve those outcomes. In fact, it contains no real measures to secure jobs and increase productivity, efficiency, competitiveness or employment across the economy. So far, in fact, there is no evidence that the government’s $10.4 billion package implemented before Christmas created the much vaunted 75,000 jobs that the Prime Minister promised. In fact, in this chamber, the second reading speech by the parliamentary secretary, Senator Stephens, said:

When combined with other measures, this investment means that the Economic Security Strategy is expected to create about 75,000 additional jobs for Australians.

And in a speech on 11 December 2008 the Prime Minister said this was:

... a $10.4 billion package to stimulate the economy, to support jobs, and create through it 75,000 additional jobs.

Where are they? What does this week’s ANZ job survey say? It certainly does not indicate to us that there has been job creation going on as a result of the first stimulus package. In fact, what it says is that its latest figures show an almost 52 per cent decrease on the figure for the 12 months before. So, if we are looking for evidence, it is certainly not there for us at the moment.

Now we have the Prime Minister and his cabinet wanting to try even more potentially reckless cash handouts and massive spending, claiming that this package will support—an interesting change in terminology, I note, as other speakers have—up to 90,000 jobs. And in committee hearings this week, from my perusal of the Hansard and from my reading of reports of those committee hearings, Treasury officials have in fact said that 90,000 is really quite an imprecise figure which is based on what is essentially hypothetical economic modelling and, even worse, that you would probably never be able to say whether the stimulus package actually works. Where does that leave a parliament? Where does that leave this coalition? Where does it leave responsible members of this chamber who want to know how best to address the proposition the government puts before us?

We have a government plan which is also asking the parliament for permission to take the nation $200 billion into deficit, a $9,500 debt for every single Australian. What that does is put the budget on course for four serious consecutive budget deficits, totalling almost $120 billion. Even with all that spending, the Prime Minister’s package also predicts that unemployment will top seven per cent in just over a year, a figure which Treasury officials again acknowledge means another 300,000 Australians out of work.

In 1996 when the coalition government was elected we found that the previous Labor government had left us a legacy of $96 billion in government debt and that the budget had been in deficit for six successive years. That debt was an extraordinary drain on the budget. It took almost $9 billion in interest payments each year. It took 10 solid years of hard work and strong economic management by the coalition to pay off that debt. Australians do not deserve that sort of sentence ever again. We cannot allow this nation to be run needlessly into debt by another Labor government.

The preceding speaker, Senator Colbeck, made some reference in his remarks to the housing component of this particular spending package. I want to pursue some of those remarks. We have a commitment in this package to build 20,000 new ‘social houses’—a term that evidently combines public housing and community housing—by the end of next year and to upgrade 2,500 more. We are told by the government that this will be a great boon for the construction industry and that it will stimulate and secure this sector. But in the context of this particular spending package I am concerned that this initiative—and I choose my words carefully—is destined for, shall we say, limited success.

With other colleagues in this chamber, I spent some time last year on the Senate Select Committee on Housing Affordability in Australia. You, Acting Deputy President Barnett, joined us in Tasmania for hearings. Public housing accounts for just three per cent of the housing market in this country. If you wanted to actually stimulate an economy, wouldn’t you think about supporting the much larger and economically self-sustaining private housing market, which represents overwhelmingly more, obviously, than three per cent? What about the potential for damage that this proposition has to the private housing market?

And if you cannot get the houses built in time—and in all practicality, given all of the evidence that we took in 2008 in the Senate inquiry into housing affordability, that looks challenging—the Prime Minister says that he will buy up house and land packages in private housing developments. Where does that leave the federal government? Bidding against every prospective homebuyer looking to buy their own house and land package in order to reach this target of 20,000 new public housing dwellings? The housing market is actually complex enough right now. Any claim that this target can be achieved and construction begin immediately—and they are the Prime Minister’s words—in the context of the approvals that need to be achieved, in the context of land that needs to be released, in the context of the whole process one goes through in terms of home construction, is stretching credulity.

I would like to say that I think it is possible. I would like to say that I think it can happen—like that—but it is, in my view, stretching credulity. Let me tell you why. Because in large part, apparently, it is the state governments that will be implementing the program and building the houses. Let us think realistically about the capacity they have to deliver across Australia. Let us just start with New South Wales. The capacity of my state government to deliver a loaf of bread let alone thousands and thousands of components of social housing beggars the imagination, quite frankly.

Over the last 10 years in this country there were only slightly more than 40,000 new house approvals for public housing, according to the Australian Bureau of Statistics. That almost certainly means that even fewer than that were built. And now the government wants to build half that number of houses in a fifth of the time and effectively have state governments do all the work! Call me cynical, but I am from New South Wales. You would not want to be holding your breath.

State government public housing agencies in every state and territory—notwithstanding the best of intentions from the officials who have over the years tried to run them—are not, it is fair to say, characterised by huge success. So the federal government proposes gambling $6 billion of taxpayer funded debt that those state government agencies can deliver the construction of 20,000 new homes. That $6 billion—again from the hearing process that has been committed to that initiative—is a figure that was apparently decided on without any independent verification of the capacity of these governments to actually deliver. In the face of all of the evidence that these authorities across the country are really not coping now we are simply supposed to believe that this time it will all work out?

So we have a stimulus package with a housing component which pits the government directly against first home buyers—driving up prices, as Senator Colbeck referred to—as the government becomes increasingly desperate to deliver those new homes. I really think this is ill thought out. I think it is ill-considered. I think it presents a proposition that in the reality of policy delivery and substantive delivery of results is just stretching credibility too far.

What impact is this going to have, for example, on the effectiveness of the First Home Buyers Grant for new projects—which of course was supported by the coalition—as first home buyers potentially get crowded out of the market? Just as disturbingly, as I understand it, states and territories are not about to waive their fees, taxes and charges like DA costs and transaction fees. Once you start churning that $6 billion around the state and territory economies—to stimulate housing construction, supposedly—doesn’t it simply end up propping up stamp duty and other tax revenues? Where does it actually go constructively, for want of a better phrase—no pun intended.

The government has also said that the new houses that are built or otherwise acquired under the program are going to be allocated to homeless Australians and in some cases to people struggling in the private rental market. Of course, the opposition has, through the shadow minister, Mr Morrison, both acknowledged and recognised the extraordinary challenge that homelessness provides in Australia in policy terms and in support terms. It is a very serious one. But I do not actually think it is as a simple as saying, ‘Here are some new houses that we are going to build and now we are going to move significant numbers of homeless Australians into them.’ I do not think it is that simple. People who are long-term homeless need support and access to social services. They may need rehabilitation; they may need mental health care. But I do not see any provision in this package for those extra services, which are potentially in fact quite extensive.

I asked the Minister representing the Minister for Health and Ageing in this chamber last week whether there was any support in this package for health and the answer was effectively no. So what does that mean? Does it mean that we take a range of homeless people from the streets or from shelters where they are currently trying to exist and potentially move them somewhere they have not been before, away from their friends, away from whatever support networks they may have and leave them to fend for themselves? It is not that simple and that is the most important thing to note in this aspect of the package.

For those who are currently struggling in the private rental market, who will supposedly also benefit from this program, I think the government seems a little confused. We have a very much-publicised National Rental Affordability Scheme, known as the NRAS, which is designed to move people out of public housing and into private rental accommodation. And now we have this particular proposition which aims to move people struggling in private rental accommodation out of the private market and into public housing. It would not be unreasonable if one were confused.

In contrast, the coalition’s proposal is a small, better targeted stimulus package that would include broad based tax cuts for Australian families and tax relief for small business—the employers of this nation. It is a plan much more directly targeted at protecting and creating jobs, supporting small business and strengthening our economy. That perhaps identifies the largest gap in the government’s package—the lack of measures that directly and broadly support employment, particularly in the small business sector. We have raised publicly a number of propositions with the government and have advanced them through the parliamentary process, which we seek to pursue.

Overall, we propose a more modest investment of $15 billion to $20 billion at this time—a strong, but financially responsible package that will not see Australia consigned to a debt ridden future and which also leaves open the possibility of further packages in the future. That is, we think, a very important component of our approach.

There is no doubt that our economy is facing very difficult times, but our reaction, our response, needs to be considered, measured, targeted, well thought out, modelled where appropriate and responsibly addressed. A spend of $42 billion, without criticism, without public scrutiny and without proper examination is simply irresponsible. The Senate and the coalition have taken this opportunity to more seriously consider this proposition. The new spending package—‘spending spree’ it is being called—is too big in our view at this stage and not properly thought through.

As I said at the beginning, the objective must be to protect and create jobs, to support small business and to strengthen our economy. This package will not achieve that. Instead, it will leave a legacy of debt for the nation’s children and grandchildren to pay off.