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Thursday, 27 May 2004
Page: 29344


Dr EMERSON (11:28 AM) —An appropriate starting point for the debate on Appropriation Bill (No. 1) 2004-2005 and the cognate bills is the identification of the challenge facing Australia in the coming years. That challenge is well articulated in paragraphs written by Treasury in Budget Paper No. 1. The challenge is of an ageing population and faltering productivity growth. This challenge has been recognised by Treasury since 2002, when it produced the Intergenerational Report. But Budget Paper No. 1, at page 1-6, says that over the next 40 years it is:

... projected that growth in the proportion of the population of workforce age will slow to almost zero ...

This is a very chilling forecast. It is one clear indication of the ageing of the population. The other contributor to the challenge facing Australia is faltering productivity growth, as confirmed again in Budget Paper No. 1, at page 1-7, which says:

... it is likely that real GDP per person will slow to around 1½ per cent per annum over the next 40 years, relative to around 2 per cent per year over the past 40 years. This is due largely to the negative contribution to growth of the projected decline in labour force participation—a direct result of the ageing of the population—and a return to the long term growth rate of productivity of 1 per cent a year.

This forecast decline in per capita GDP growth from the year 2010 onwards would constitute the slowest rate of growth in measured living standards since the decade of the Great Depression. Through the Intergenerational Report and the official budget papers, Treasury is forecasting our worst performance in per capita GDP growth from the year 2010 onwards since the decade of the Great Depression. You would think that, having been confronted with this challenge, the government would respond adequately to it in the budget, but it does not. The budget paper also says, at page 1-8:

... in the Discussion Paper Australia's Demographic Challenges released by the Treasurer in February 2004. That paper highlights the need to take early action to increase productivity and labour force participation.

What action is provided in this budget to increase labour productivity and work force participation, and combat the ageing of the population? This budget is a grave disappointment, in that the challenge has been identified and well articulated by Treasury but the response is sadly lacking.

In terms of the ageing of the population, the government has introduced some measures relating to superannuation, which, in effect, ensure that superannuation tax concessions flow to high-income earners—in particular, to the spouses of high-income earners, through the co-contribution and the changed eligibility that is enunciated in the budget. That changed eligibility is such that only 10 per cent of a spouse's income needs to be earned—meaning that up to 90 per cent can be unearned income. That is a clear indicator of a preference to support superannuation for the spouses of well-off Australians. The other measure associated with superannuation is a reduction in the superannuation tax surcharge, which would go to something like one in 20 Australians, leaving 19 out of 20 Australians to get no benefit from that particular measure.

Why is the Howard government so intent on ensuring that superannuation again becomes the preserve of the relatively well off? The answer is: it is being consistent. It is being perfectly consistent, because when Labor understood the challenge of the ageing of the population way back in the 1980s, Labor successfully sought to spread superannuation to the working men and women of Australia; the then opposition, the coalition of the Liberal and National parties, hated it. They hated it and opposed it at every opportunity. Have a look at the Hansard. Have a look at the public statements. They hated the idea of working people getting access to superannuation. Yet, before the 1996 election, for purely expedient reasons, the Howard government made a promise in its official election documents to retain Labor's co-contribution scheme. In 1997, the Howard government broke the promise and scrapped Labor's co-contribution scheme that would have ensured a reasonable, decent retirement income for the working people of Australia. It broke a promise and scrapped the scheme, consistent with its long-held philosophical view that working people should not have superannuation. That philosophical view has been reinforced in this budget. There is this challenge of the ageing of the population—and, therefore, an increased burden of providing adequate retirement incomes—and the government, through its ideological obsessions, has squibbed the challenge, restricting benefits overwhelmingly to the highest income earners in this country.

When the government scrapped Labor's co-contribution, it stole out of the pockets of working Australians the money that was to be directed into superannuation funds. It kept that money. Then, in the year 2000, it used some of that money for what the Treasurer described as a `streamlined new tax system for a new century' and `the biggest income tax cuts in Australia's history', but it did not even give back all the bracket creep that it had accumulated. It stole the money, gave these tax cuts and described them as the biggest tax cuts in Australia's history, but they were just GST compensation—compensation for a GST that the government created and has been disowning ever since. It says the GST has nothing to do with it; it is not a Commonwealth tax—you will find in the budget papers that the government denies that the GST is a Commonwealth tax, even though it was put through this parliament, even though the Auditor-General has indicated and ruled that it is a Commonwealth tax.

The only people in Australia who believe that the GST is not a Commonwealth tax are the members opposite—the members of the Howard government. You ask any one of them and they will look you in the face and say: `Oh, no, the GST is not a Commonwealth tax. We don't remember going into parliament and passing that legislation.' I think the Australian people are a bit smarter than that—in fact, a lot smarter than that. In the year 2000, in the form of GST compensation, the government gave back some of the money that it stole from the Australian people in 1997. Then, in the year 2003, last year, it gave one further tax cut—a tax cut worth $4 a week. It was a $4-a-week tax cut that Senator Amanda Vanstone described as a sandwich and milkshake tax cut. She was right. It was barely enough to buy a sandwich and a milkshake.

This budget provides, for four out of five Australians, no reduction—not one cent—in income tax. These are the forgotten people. Four out of five Australian families and single people get not one cent of reduction in income tax in this budget—and right through the forward estimates period to mid-2008. The Treasurer was asked about this. He was asked on the 7.30 Report: `What about the forgotten people?' He said: `You asked me about low-income earners. Last year we did it across the board. Low-income earners pay less tax.' He just dismissed the question about why four in five Australians get not one cent of income tax cut in the budget. He completely dismissed it. It means that these forgotten people, if the Australian people were ever to have the misfortune of the Howard government being re-elected, would get only one income tax cut in the entire period from 2001 to 2008—that income tax cut being a $4 sandwich and milkshake income tax cut.

The government has forgotten most Australians in its tax policy. But who are the forgotten people? I have done some analysis of this. The forgotten people are hairdressers, farmhands, cleaners, shop assistants, receptionists, hospitality workers. I might just point out, using the government's own projections of inflation and earnings growth, how much extra the forgotten people will be paying in income tax by the middle of 2008 as a result of the fact that the government has given them no income tax relief in this budget or for any year up to the middle of 2008. A hairdresser will be paying almost $29 a week extra in income tax by the middle of 2008. A farmhand will be paying $31; a cleaner, $33; a shop assistant, $34; a receptionist, $34; a hospitality worker, $36; an office clerk, $36; a labourer, $36; a factory worker, $39; a motor mechanic, $39; an enrolled nurse, almost $41; a machine operator, more than $41; a social worker, more than $42; and an accounts clerk, almost $43 a week extra in tax. These are the forgotten people.

Back in 1942 the Prime Minister's hero, Bob Menzies, described the forgotten people in a radio interview. He said that they were the backbone of the country. These are the people who form the backbone of Australia, but this government has said that they deserve only, in a seven-year period, a sandwich and milkshake $4-a-week tax cut. I have also calculated that 62 per cent of those sums is bracket creep. So when the government says it is giving back bracket creep, it is completely untrue. These forgotten people will be subject to bracket creep as a result of their omission from the income tax cuts. It is also the case that three in five Australians will get not only no income tax cut but also no increase in family payments—three in five families and single income earners.

The government would be doing very well in terms of income tax receipts over the next few years if it were to be re-elected. If it were to be re-elected, there would be an increase in income tax receipts, as projected in this budget, from $97 billion in 2003-04 to—wait for it—$121.9 billion. That is an increase, in just a short period, of 25 per cent, or $24 billion. So the government is raking in income tax because it is too mean to give the forgotten people a tax cut. The government also neglects the GST, which is also growing.

It is worse in my state of Queensland. NATSEM has calculated that in Queensland—and this is because incomes are, on average, lower—63 per cent of families and single income earners get nothing out of tax cuts or increased family payments. The day after the budget I did a calculation, and it came out at 67 per cent of families and single income earners who get nothing. This is now confirmed at 63 per cent, which is pretty close to the estimate that I provided to the parliament at that time.

If the Howard government were re-elected, it would have delivered just three tax cuts in 11 years. Labor delivered seven tax cuts in 13 years and returned to the Australian people every cent—and even more—of bracket creep. Is it any wonder that this government shows up as the highest-taxing, highest-spending government in Australia's history? Of course it is. The government has failed to respond to the challenges of the ageing of the population and faltering productivity growth. I will refer now to a paper by Saul Eslake, which says:

The consensus emerging from numerous studies of the improvement in Australia's productivity performance attributes it largely to economic reforms.

The footnote refers to a Productivity Commission report of 1999. The economic reforms to which the report refers are reforms introduced overwhelmingly by Labor. So Labor ensured that there was a big kick-up in productivity growth, which has created prosperity. But this government is so complacent and so tricky that, when it had an opportunity in this budget to do something to make that productivity growth continue and to ensure that the government's own forecasts do not become a reality, it squibbed the task. Instead of developing a plan for Australia, it developed a plan for an election.

The shadow minister for finance referred in his previous speech to reductions in spending—savings—that will be implemented by Labor, including in my own portfolio of workplace relations. We are committed to abolishing the Office of the Employment Advocate, because we believe that that is simply an ideological extension of the government's agenda. In respect of industrial relations matters, there have been so many claims—most particularly by the Minister for Small Business and Tourism, including one to the Australian newspaper last night—that are out and out lies. I will start with the press release of 5 February where the minister for small business said of Labor's plans in relation to casual employment:

Firstly, the Labor Party intends to force employers to provide additional benefits to casual employees, such as holiday and sick leave. This ignores the fact that many casual employees already receive loading to compensate for these benefits.

The ALP intends forcing its solution on the workplace, where many employees have chosen casual employment for the flexibility it offers.

Time does not permit be to go through each of those points, other than to indicate that they are completely untrue. On 6 May this year the same minister said:

The fact is that Labor's proposal would be compulsory.

That is also untrue. He went on to talk about portable long service leave, saying that Labor will introduce a national portable long service leave scheme. He got that out of a private members' bill being considered for the ACT Legislative Assembly that did not even have the support of the ACT government. When told that by the ACT Treasurer at a breakfast, the minister came in and gave a press conference as if he had been told nothing, and so perpetrated a completely false statement—a lie. And so it goes on. The Minister for Small Business and Tourism obviously has within his office or his department a `Ministry of Truth' where George Orwell's memory lingers on very strongly.

A letter has been prepared by the member for Dobell, Mr Ken Ticehurst, dated April 2004 and addressed to local businesses, which makes such statements as Labor will: `force employers to pay long service leave to employees who have accrued that entitlement in previous jobs under different employers', a lie; `coerce small businesses to convert their casual employees to part-time permanents with all the extra costs involved', a lie; `extend the power of union officials to enter businesses, including home based businesses'—there is no proposal to allow union officials to enter home based businesses—another lie; `allow unlimited strikes without secret ballots', another lie. A further lie was told by the minister for small business last night to the Australian newspaper. The journalist, Dennis Shanahan, said to me—


Mr Hardgrave —Mr Deputy Speaker, I rise on a point of order. I accept that a bit of licence is being taken by the member for Rankin, but the continual use of the word `lie' is unparliamentary. I invite the member to withdraw the comments he is making continually about the member for North Sydney, the Minister for Small Business and Tourism, and to refrain from using that word in the future. You cannot say it.


The DEPUTY SPEAKER (Mr Wilkie)—I think the member for Rankin could rephrase the term.


Dr EMERSON —I am happy to do that.


Mr Hardgrave —Mr Deputy Speaker, I rise on the point of order. I would ask the member for Rankin to also withdraw the comments suggesting that the minister has lied. It is unparliamentary to say so. I let a couple of them go through, but his continual use of this terminology is not parliamentary. He should do better than that.


The DEPUTY SPEAKER —The member for Rankin should withdraw the word `lie'.


Dr EMERSON —I am happy to do so, as I just indicated. In any event, this little bird, who was described to me by Dennis Shanahan as a big bird—so that is `Big Bird' Hockey—had said to him that at a closed meeting I had made certain statements. There was a Liberal Party staffer at that meeting and, yet again, the statements attributed to me are completely false. (Time expired)