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Monday, 2 March 2015
Page: 1703


Mr ZAPPIA (Makin) (19:27): These bills, the Appropriation Bill (No. 3) 2014-2015 and related bills, expose the Abbott government's mismanagement of the Australian economy, its poor financial management, and the disastrous effects that its misguided policies are having on the budget's bottom line. The Abbott government's financial strategy is indeed in tatters, its budget is a mess, and its attempts to blame Labor for that mess are wearing thin. The Abbott government has now been in office for nearly 18 months It is halfway through its first term, and it is ready to bring down its second budget—it still has not got its last budget through the parliament, and it still does not wish to claim any responsibility whatsoever for the nation's deteriorating financial position. How long can a government continue to remain in office and claim no responsibility for the state of its budget? Can I suggest to members opposite that, whilst they are continuing with that spin, it is not being accepted by people out there in the community who, after this government handed down its budget nearly a year ago, said: 'It is now up to the government of the day to take responsibility for the nation' economy.' And yet the government will not do that. It is clear that this government has lost control of its budget.

According to a media report released in the last couple of hours by Peter Martin and Gareth Hutchens, the government has spent $380,000 on focus groups to test reactions to this week's Intergenerational Report. The government has money to spend on focus groups but then cuts every last penny from community groups around this country and justifies that by saying that we have budget crisis, a budget disaster, intergenerational theft and other constant spin lines that I hear each and every day in this chamber from the Treasurer and members of the government.

When the Abbott government was elected the independent, Pre-election Economic and Fiscal Outlook projected a $24 billion deficit in 2014-15. I understand that deficit has now blown out by $16.4 billion, again according to the Abbott government's Mid-year Economic and Fiscal Outlook—that is after taking into account all the cuts this government has implemented in the meantime. I further understand that, according to the government's own forward estimates, the deficit will blow out by $44 billion. It is the government's own policies that have brought the budget to this very position—policies that have caused a loss of confidence throughout the country and in turn a fall in government tax revenue and an increase in government expenditure. Tax revenue falls when businesses do not invest, when businesses close, when more people are unemployed or working fewer hours or are only working part-time. Conversely, welfare costs increase when more people are unemployed. Business confidence also falls when businesses see savage cuts to government departments and a government in disarray, as we see each and every day.

This is a government that simply denies the obvious and continues to perpetuate the spin that it was elected with—that is, the scare campaign that it ran about debt and deficit at the last election. That scare campaign has now caused the government to box itself into a corner through its own dishonesty. It is a government that thinks that every difficult situation can be fixed by cutting government funding or washing its hands of government responsibility. This is the flawed ideology of the extreme right-wing ideologues who have taken control of the Abbott government. This is a government that foolishly believes that austerity measures work, and it is too blind to see the damage already being done by the Abbott government's cuts after 18 months in office.

The bills appropriate an additional $1.7 billion to pay for the policies, election promises and blunders of the Abbott government. It is $1.7 billion of additional debt that arises solely from Abbott government decisions and expenditure incurred on the Abbott government's watch. It is $1.7 billion of expenditure after taking into account savage cuts to the ABC, to family payments, $11.3 billion of cuts to foreign aid—to mention just a few areas. Whilst the Abbott government adds $1.7 billion to government expenditure, it simultaneously squeezes more money out of the most vulnerable and disadvantaged in our society under the guise that it has inherited a budget crisis. I spoke only today of $270 million that has been cut from some of the most valuable community organisations that provide essential front line services across this country.

Whilst the government tells one story to voters—painting a picture of a country burdened with debt and need for austerity measures—it tells a different story to the rest of the world in its Australian Trade Commission report, where the real state of the Australian economy is revealed. Amongst the findings, the Trade Commission report states that over the past 23 years, Australia's economy has achieved real GDP average growth of 3.3 per cent per annum and Australia is the only developed country to have recorded no annual recession over this 23-year period. Australia's forecast economic growth rate between 2015 and 2019 is the highest amongst the major advanced economies. At $1.5 trillion Australia's economy is forecast to be the 13th largest in the world in 2015. Even during the global financial crisis years, the Australian economy continued to grow at a rate of 2.7 per cent—higher than many other developed countries—though members opposite continually forget that the last Labor government presided over the global financial crisis and managed it well. That is exactly why it grew by 2.7 per cent throughout those years. Were it not for the policies of the previous Labor government we would not have the statistics that I have just mentioned—statistics which the government likes to use when they are talking to people in other countries about the strength of the Australian economy.

When we look at key economic indices, notably productivity levels of 16 out of 20 Australian industries rated above the average productivity of global competitors in the same sector. In particular, there was strong productivity growth of 1.9 per cent in 2012-13 and 2.6 per cent in 2013-14. Over the last 23 years of consecutive growth, labour productivity has recorded a compound growth rate of 1.8 per cent, while real unit labour costs have fallen by 0.5 per cent each year. In other words, in all of those years, productivity in this country continued to grow. Those statistics completely contradict the Abbott government's spin about the need to improve productivity by cutting back on workers' wages, conditions and entitlements. We see that time and time again in this chamber: members opposite come in and talk about the need for industrial reform. What they are really saying is that there is a need to cut the wages, conditions and entitlements of our workers in order to boost productivity. The truth of the matter is that Australia rates very highly in comparisons of productivity with the rest of the world. I am pleased to see that, at least in their published documents that they give to other countries, the Abbott government acknowledge the true state of affairs with respect to that.

The most notable statistic in the report is that in 2015 Australian government debt is forecast to be 16.6 per cent of GDP. That figure compares with 74 per cent for the Euro area advanced economies, 80.9 per cent for the USA, 39.1 per cent for Canada and 27.2 per cent for New Zealand. Even New Zealand, which has the closest rate, is at almost twice the rate of Australia in terms of its debt ratio.

The coalition government's dishonest spin about government debt, blown out by its own inflated figures, simply does not stand up to scrutiny. We hear the Treasurer every day come into this chamber and talk about the huge debt that this country has—I have no idea nor have I been able to ascertain where these figures have come from.

The debt crisis is being used to mask the coalition government's own incompetence and to justify its savage cuts on Australia's lowest income earners; to cut higher education funding; to dismantle Medicare; to cut $878 million of funding to research and science; to cut $80 billion to schools and hospitals; to change the indexation of pensions; and to cut Newstart payments to 26 weeks for under-30-year-olds. I could go on and on about the cuts made by this government since coming to office.

In its spin on debt and deficit, the coalition government constantly refers to intergenerational theft and the debt that is being left to future generations. I suggest that it will be a much greater debt left to those generations if you cut funding to our health and education systems and if you cut funding to those areas which create jobs and employment for the people of this country, which is exactly what this government is doing. This is a budget driven by the same misguided right-wing ideology that you will find in other capitalist countries around the world, and which is proven to have failed—an ideology of cutting taxes of higher income earners, cutting essential government expenditure, cutting wages and labour costs and cutting social payments. This results in your own citizens having less money to spend and being less able to maintain a stable economy. Then the government desperately attempts to find new markets by entering into poorly negotiated free trade agreements in order to boost income in the country.

Driving down wages through so-called deregulation and cutting government expenditure does not work, as several countries have already found out from experience. Nor can policies of one country be simply applied in another, as each country has distinctive characteristics and distinctive strengths and weaknesses which dictate how particular policy settings will play out. The effects of these policies are already becoming clear, despite the spin and fudging of the figures by Treasurer Hockey.

Unemployment is the highest it has been since mid-2002—that is, for over a decade. Even worse, the underutilisation rate is now nearly 15 per cent and, as Tim Colebatch points out in an excellent analysis of unemployment trends in 2014, for every new 100 adults added to the Australian population workforce, only 46 new jobs were created and, of those, only 28 were full time. Underemployment and unemployment reduce people's spending ability and, not surprisingly, retailers are experiencing some of their worst results, with retail sales growing by a weak 0.2 per cent in the month of December.

Reducing Newstart payments when there simply are no jobs is the heartless policy of highly paid ministers and multimillion dollar earning private sector executives who would have no idea what it is like to try and live on $38 a day. Just as foolishly, it causes the economy and government finances to go in the wrong direction, to which the government's response is then more austerity. For example, under this government unemployment has risen by over 75,000 people across the country. If all of those people were on Newstart, the cost to taxpayers would be about a billion dollars a year. That is without factoring into account the lost tax revenue and other social costs that they might otherwise be entitled to. It would have cost the government far less to have supported the car makers of this country than to chase them out of Australia and now pay the unemployment benefits that arise and the other ongoing social costs.

This is a budget that, as I said from the outset, is in tatters. The government has indeed lost control of its budget, and its spin is also wearing thin for the Australian people. This legislation is testimony to the fact that the Treasurer has lost control of his budget. It ought to be condemned for what it is. I support the amendment moved by the shadow minister on our side, and say to members opposite, 'Stop trying to spin lines to the Australian people—they are simply not accepting it.'