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Monday, 27 February 2012
Page: 1919

Mr TUDGE (Aston) (17:13): I also rise to speak on Appropriation Bill (No. 3) 2011-2012 and Appropriation Bill (No. 4) 2011-2012, which are in front of us. I would like to use the opportunity, if I may, to discuss three important national issues which are confronting my electorate. My electorate is in suburban Melbourne. It is very much a middle-income electorate, 15 or so kilometres out from the centre of Melbourne. It is made up of middleclass families, hard-working people and small business people—aspirational people. So the issues which confront them, I believe, also are very likely to be issues that confront the broader Australian community. There are three issues particularly which they have been raising with me which I would like to touch on today: cost-of-living pressures, job security and manufacturing. The first, cost-of-living pressures, would be one of the issues which gets constantly raised with me when I am out in the community, and I am sure other members equally would have this issue raised with them. It gets raised in the churches, it gets raised at school fetes, it gets raised when you are at the footy or cricket clubs on the weekends. The reason is that people know that the cost-of-living pressures on basic household goods are rising more rapidly than their wages or pensions. These are not discretionary items; these are the necessary items which you and I and every family has to rely upon: petrol, food and groceries, electricity, water, medical expenses and the like. These are the things that are going up well in excess of wages or the official CPI indexation rate.

The difficulties which constituents of mine articulate to me are backed up by the official statistics. When you look at the official statistics of some of these basic household necessities you see that they have gone up already by an extraordinary amount. For example, people's water bills have gone up by 46 per cent since 2008. Their electricity bills have gone up by 50 per cent since 2008—an enormous increase in electricity bills, which, of course, directly impacts on your household budget. It is something that you cannot not use, particularly in winter and particularly in a cooler climate like Melbourne, where you do need to have your heater on. If you are a pensioner, you are often in your house all day and you need to have your heater on. Gas prices have gone up 30 per cent since 2008; medical expenses have gone up 20 per cent since 2008. I think you are starting to get the picture, Deputy Speaker Oakeshott: the official statistics directly back up what constituents and local residents on the ground are telling me and telling other members in this chamber.

There are many reasons why prices go up in excess of the CPI or of our wages. Of course, there are supply and demand issues which impact prices. But a government can also have a significant impact on prices through its policy settings. My critique is that this government's policy settings have been set in the wrong direction and so they are deliberately putting prices up unnecessarily. That is unforgivable. Yes, of course, prices will increase over time because of supply and demand pressures, but, when the government itself is causing prices to go up, that is what is unforgivable.

I want to talk about a few areas where this government has done that. Let me start with the macro level, because at the macro level if you run large budget deficits, which this government has now for four years in a row—$37 billion this year, $50-odd billion, a further $50 billion the year before; the three biggest budget deficits in Australian history—that puts upward pressure on inflation and upward pressure on interest rates. That is the first criticism that I have of the government. Its fiscal policy puts upward pressure on all prices and upward pressure on interest rates.

My second criticism is at the individual level. When you look at individual items, again the government is having an impact on prices going up. Let me start again with electricity. High electricity prices is something that is hurting everybody, and it is particularly hurting pensioners and other people on low incomes or low fixed incomes. What is the government doing? To start with, some of its renewable energy policies, which have been poorly designed, are putting up electricity prices. On top of that is what is coming on 1 July, as all of us in this chamber know. From the government's own figures, the carbon tax will add an additional 10 per cent to the price of electricity. If you ask the electricity sector, they will tell you it is a 20 per cent increase. There will be a 10 per cent increase in the first year alone, let alone in subsequent years when the carbon tax is legislated to increase. So electricity prices will continue to go up through a measure of the government. That is my critique. Let me look at gas prices. Again, with the carbon tax, gas prices are forecast to increase by nine per cent in the first year alone and will continue to go up.

Let us look at child care, another item that is not a discretionary expenditure. If there are two parents at work or if you are a single parent who works, you need to put your child into child care. What has the government done in relation to child care? The first thing they did was cap the rebate so that many families are hitting that cap. But that is not the worst thing. In my view, the worst thing they have done is change the childcare staff-to-child ratios. Whereas it was one staff member to five children, they changed it and mandated that, from 1 January this year, it must be one staff member to four children.

As you can appreciate, in a childcare centre your staffing is your major operational cost so, if you force a childcare centre to go from five to one to four to one, you are in essence increasing your operational costs by about 20 per cent. That flows directly through to childcare prices. You could say that that is improving the quality of the childcare centre. But I ask what the government has to do with this when: (a) there is no categorical research that says four to one is better than five to one; and (b) why can't parents themselves decide in their own right whether they want four to one or five to one? If they are happy with five to one, they can go along to that and it will be a cheaper childcare centre. If they want four to one, I am sure there would be a childcare centre where there is a four to one ratio.

I mention one childcare centre in my community. A woman I have mentioned before in this chamber, Mrs Kulkarni, has written to me saying that there has been a 21 per cent increase in the fees for her this year. She asked:

Why are we being penalised for working hard and paying our taxes? The changes in staff-to-children ratios will not make a life-changing impact on my two-year-old now or over the next three years until he starts school. All of us were very happy with the care being provided before.

But, no, the government here in Canberra knows what is best for my constituents in outer eastern Melbourne! That is what I find egregious. We have residents who are happy with the service and we have childcare centres happy with the service they are providing. But what does the government do? It has to get its fingers in there and say, 'Oh, no, it's not good enough for the childcare centre and not good enough for the parents; it's got to be four to one,' and as a result the prices will go up by 21 per cent. Thanks very much! What will happen then? Parents will pull their kids out and parents will not be able to work. We have a participation problem that is contributing to a lack of productivity, which is a problem. It is poor policy design like this from an overbearing government which is also contributing to price increases.

Health care is the next item on my list. We debated this last week. Changes to the health insurance rebate will cause an increase in all health insurance premiums, which will go up by an estimated 10 per cent across the board, according to Deloitte. That will mean that some people will pull out and go to the already overburdened public hospital system, and for the taxpayer overall it will be more expensive. I fail to see how that is good public policy. It just adds to the cost-of-living pressures of everyday families in my electorate and, indeed, across Australia.

It is not just the policy designs that have led to price increases; there have also been a number of targeted tax increases which have put up prices for everybody on things like cigarettes, motor cars and alcohol. Prices have been forced up for residents.

The carbon tax will add an additional $400 to the cost of an Australian made motor car. It will not be added to the cost of a Hyundai, coming in from South Korea, but it will be added to the cost of a Holden, a Toyota or a Ford, which are built right here in Melbourne and South Australia. It is unbelievable. Do you think that will make a difference to the climate? Will the weather be different because we are adding $400 to the cost of an Australia made motor car? No, it will not. All it will do is make those motor cars more expensive for Australians and lose jobs in the Australian motor car industry.

Not only have we had taxes increased but we have had benefits reduced. In the last budget many people had their family tax benefits A and B frozen. Over 10,000 people in my electorate alone were impacted by that. Even microbusinesses at the micro level—the low-income, independent business owners—have now lost the entrepreneurs tax offset, which provided a little bit of tax relief for those microbusinesses earning less than $75,000 a year.

At the macro level we have a poor policy setting. We have taxes up across the board, we have poor policy design in a number of areas—which puts up prices—and in many cases we have had benefits removed. All of those things contribute to cost-of-living pressures for everyday Australians both in my electorate and across Australia. Thatis my criticism of the government. Sure, there are supply and demand issues, but my key criticism is that they have put in place poor policies, increased taxes or removed benefits because they are trying to get control of their budget, which is presently completely out of control.

In the last couple of minutes I have available to me, let me touch on job security and manufacturing. We know that job security is an emerging issue in this nation. The unemployment figure is at 5.2 per cent, but I believe that that significantly underestimates the real figure. Roy Morgan estimates that it is more like 10.3 per cent and, if you also include the underemployed, it is 17.8 per cent. Those are extraordinary figures. I am not suggesting that governments can just create all of these jobs. The government cannot create jobs; businesses create jobs. We as a nation need to make the business environment attractive for businesses to thrive. That means lowering taxes, getting the budget under control so that interest rates can be lower. It means a more flexible industrial relations system where individuals and bosses can come to some sort of agreement which is mutually beneficial for them both. It means incentives for R&D so that innovation can be the real driver for productivity. It means generally creating a sense of hope for our business community that there will not be another hit around the corner, which is presently what many businesses currently think. If you put those sorts of things in place, that is how you get productivity, job creation and businesses to thrive. Indeed, that is how we will best support our manufacturing industry. It cannot be sustained by having the government throwing money at it. It will only be sustainable in the longer term if those businesses are profitable in their own right. We can help achieve that by creating a strong business environment.