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Thursday, 12 May 1994
Page: 809

Senator MARGETTS (8.41 p.m.) —The bookkeeping in this year's budget is definitely an improvement on last year's, although there is an element of creative accounting with respect to supposed spending in some programs, which is of concern. The budget is, however, based on certain key assumptions in relation to business investment and employment creation, which I find very questionable. It is interesting that the Treasurer (Mr Willis) appears to be having similar doubts about these assumptions. The assumption that there will be a reduction of those on unemployment benefits to about half their current level, that is, to 500,000 people, should be reviewed in the context of the lack of real commitment in this budget to the creation of long-term job opportunities for the hundreds of thousands of long-term unemployed when they have completed their training or work experience.

  With the recognition of spouses as unemployed, about 200,000 more people will be classed as unemployed. Even assuming that half of those will not entail any additional expenditure, since they were covered at the same rate under unemployment at family rates, that still leaves 100,000 additional people who will now receive unemployment payments. These are mainly women who are spouses of those who are working at poorly paid jobs—part of the new working poor. We congratulate the government for recognising these people as real, but we remind government that they would swell the number of benefits paid by 10 per cent as a starting point.

  Add to this those women over 60 who will no longer qualify for the pension. Whilst we understand that there will be other benefits available to these women, there is the hope within the budget figures that we can see that some of these women will be pushed back into the work force because of their lack of desire to be classified as unemployed. Honourable senators will also understand that many young people now officially stop being unemployed, not that anything will really have changed; it is just that they will not be called unemployed anymore, so some of these figures will be balanced out. We have mentioned many of these criticisms already in relation to the white paper.

  In order to eliminate unemployment payments to these officially 500,000 people on an ongoing basis, well over 600,000 jobs will need to be created, and not just short-term jobs that lead to a continuing cycle of employment and unemployment. The budget is predicated on job increases twice: in reduction of payments for unemployed and in increases in income tax revenue.

  The other major assumptions are on business investment and growth. These may or may not come good, and the Treasurer is now hedging his predictions on his own very optimistic investment growth forecasts. Unfortunately, the government is overreliant on investment from transnational export industries, over whom the government has no real control. The idea of telling these corporations what to do is nearly as ridiculous as the spectacle of the Prime Minister (Mr Keating) standing up in the House and criticising the money markets for having no faith in his government's economic policy direction.    The money markets he criticised recently are currency speculators, trading about $900 billion a day. They are mainly institutional speculators in the United States and Europe and, in the opinion of the Greens, have too much influence on the direction of economic policy in this country. Despite the Prime Minister's criticism, this government determines much of its economic policy according to the dictates of these gamblers and speculators. As I mentioned, the budget may please the money markets, but is it socially responsible, is it ecologically responsible and is it even economically responsible outside of a narrow bookkeeper's framework?

  Few measures in this budget move us more than incrementally towards more social justice. There are also few positive measures for the environment, with the rare exception of the Daintree rescue package.

  A basic problem is the underlying assumptions in current economic orthodoxy. The government approach assumes that we cannot survive without substantial foreign investment and that value-added goods in Australia which substitute for imports can be sacrificed to allow for increased markets for primary goods. The perceived need to attract foreign companies to make or mine or cut down or kill for the export market—in short, to asset-strip this nation—has resulted in a reduction in control over our national economy.

  Since regulation frustrates transnational corporations and investors, regulation has been reduced; they can avoid proper scrutiny and they continue to call for the removal of many of the existing investment controls and guidelines. We cannot control what they do, how they invest or whether they invest.

  The only option is to please them and promise them that the government will help them make more money here than they can in Vietnam, in South Africa, or in China. So we grovel and lower our taxes in competition with Asia, in competition with nations that have virtually no social support programs or proper environmental standards. We promise them cheap power, cheap roads and cheap diesel. We make clear that they really do not have any obligations to give anything back, and that we will help them with trade promotion and other programs. We will help cut their expenses. This is on top of a 160 per cent tax break on research and development, which may not result in product development in Australia. We will get CSIRO to do their research. We will make researchers in universities more accountable to the needs of corporations.

  We will take away any obligation for training, while increasing industry-tailored training programs funded by the public. We will subsidise workers at the low-paid end of the jobs market. We will use the accord and the famous cooperation between the government and the ACTU to hold wages down. We will help push for erosion of union power through enterprise bargaining and individual contracts.

  The Treasurer, Mr Willis, on page three of his budget speech, said, `Real unit labour costs are declining'—that means wages—`and profit share is near an all time high.' We know that. On page five, the Treasurer said, `In addition, this government has created a very favourable tax regime for businesses over recent years.' We know that, too. So how do we pay for all these things, and who pays? Effectively, the wage earners of this nation and the small businesses pay for these subsidies through taxes. Company taxes decline, and transnational corporations may pay effective rates of tax of under five per cent. Last year the government gave personal tax cuts to those making over $20,000 per year, about half of all taxpayers. But the biggest cuts went to those at the top, who got a cumulative increase which amounted to a tax cut of $1,224 to everyone making over $50,000 a year, the top 10 per cent. So the ordinary person pays.

  But there is a limit to how much more the government can get the poorer people to pay, especially when it is holding down wages. So, the solution has been to cut public sector services and privatise some government enterprises. In this budget we have got the Federal Airports Corporation, the AIDC and Qantas all on the auction block. While we allow media ownership to concentrate in fewer hands, often overseas hands, we sell off telephone services in the name of competition.

  In COAG and the white paper the government has paved the way for wholesale sell-offs of state infrastructure. It talks about private provision of employment services while cutting CES budgets at a time when employment and case management approaches are being touted. Budget efficiency is being put in everywhere on social programs, and cuts to state funding, coupled with benchmarking programs designed to push the erosion of services, guarantee that cuts to services will occur at all levels.

  One way the government could have addressed the issue of regaining some meaningful improvements in the economy was through economic restructuring in regional development to create more self-sufficient regionally based economies. Regional development was supposed to be a special area of government action in this budget, but let us look at what has been done. Assistance to states has been underspent by a minimum of $88 million on the surface—but other programs, of course, have been cut as well—and urban and regional development was underspent by $19 million or 17 per cent.

  The rural adjustment scheme was underspent by $20 million, or 44 per cent. Natural resources and management were underspent by $5.2 million, or six per cent. These were programs from last year. Basically the government is hiding the fact that it has underspent on these programs, and that has been mentioned by previous speakers. We mentioned this on budget night and nobody else caught on. In some areas this underspending carries through. Estimates for assistance to states are revised downwards by $144.7 million next year and by $243 million in 1995-96. In other areas, such as the rural adjustment scheme, the estimates are increased by $10 million. This is supposed to be an area of new funding, to pay for projects such as the Sunraysia development. In fact, the increase over last year's forward estimate is only half of the underspending on this year's budget, and there is no promise that underspending will not continue.

  Over the four year planning period, rural adjustment funding declines from a high of $83.9 million in 1994-95 to $65.1 million the next year, to $39.3 million and $41.7 million in the next two years. Urban and regional development continues its decline from $95 million in 1993-94, to $71 million, to $68 million, to $62 million, to $48 million by 1997-98.

  Natural resources development and management funding for landcare and other land management areas goes down from $87.4 million in 1994-95 to $86.7 million, to $71 million, to $65 million by 1997-98. It becomes more clear why the government emphasises regional self-funding.

  Funding for the environment also continues its decline. As noted, the natural resources and development area declines steadily. It has become a victim of underspending in spite of heavy lobbying by farmers and environmentalists. The decline is 25 per cent over four years. Does this mean that the government now believes land and water management problems have been solved or are under control?

  National estates and parks gets a `boost' this year, with the Daintree rescue. What was not said was that the estimate in the 1993-94 program budget went from $144.4 million to $115.5 million in this one. An amount of $29 million was underspent on what was appropriated, a reduction of 20 per cent. This more than pays for the `increases'. The increases are also dependent on Queensland putting in a share of the Daintree package and so is not under the control of the federal government.

  In any case, the budget for this area supposedly goes up next year to $125 million, thanks to the downward adjustment of this year from $144 million. It then declines to $116 million, to $88 million, to $84 million by 1997-98; that is a drop of 42 per cent by 1997-98. Basically, it seems that the government is increasing its expenditure; in fact, it has decreased expenditure considerably from last year's estimates.

  Environmental protection was another area of underspending. This year's funding estimates dropped by $7.7 million, or 11 per cent of the program budget. There is a boost in 1994-95 to $113 million, mainly for spending on rehabilitation of Maralinga. From that point funding declines to $89 million, to $55 million, to $56 million in 1997-98—a fall of 50 per cent over the four years.

  Clearly, the government believes it does not need to do anything much for the environment. Clearly, its increases are rearrangements rather than real increased commitment. And this is just in the obvious areas of environment. We know about the lack of commitment to doing anything about the greenhouse problem, about building in energy efficiency anywhere. The Auditor-General's report has noted the poor performance in even implementing its own programs on greenhouse gas reductions. We have heard suggestions that the government's answer to the problem of the need to maintain a differential between recycled and non-recycled paper products through a concessional tax will be answered by eliminating all exemptions on recycled goods.

  In terms of social justice, the two big areas where the government is supposed to be moving ahead in this budget are employment and Aboriginal issues. In the area of employment the government has done very little to create real jobs, in spite of many suggestions. It has not even considered issues like the structure of work, the issue of overwork and underwork, the length of the normal week, the issue of secure part-time work, and the process of casualisation of labour, especially in the public sector. It is continuing to put pressure on spending in departments that can only lead to further public sector job cuts.

  It has put up a program to statistically reduce the number of long-term unemployed by creating a rotating pool of subsidised, low-paid labour. Does the government really think that such a system will not see people now working put off and a downwards pressure on wages generally?

  On Aboriginal issues, again the outcomes do not match the rhetoric. When we compare the budget from last year with that from this year we see again the `downward adjustment' of budgets. In the Abstudy budget there is a decline from $238.3 million to $150.5 million for the 1993-94 year between budgets. This is underspending by 37 per cent, or $88 million. This carries over to subsequent estimates, and all forward estimates for Abstudy are down about $87 million in each year. This is about one-third of the budget. It is easier to find $160 per year for Aboriginal issues if we have just `saved' it from Abstudy and other existing programs. Migrant education is another area that has suffered `underspending'.

  `Underspending' is rife. It is easy to make something look like an increase if we revise the previous year's spending downwards. It is easier to find `new' money if we have not spent it in the first place. Of course, there are exceptions. The Defence department overspent by $14 million—not much compared to the Defence budget but surprising given the reported scramble to spend as much as possible over the last few weeks. For this reason we continue to call for accountability in the Defence budget.

  Government is hardly a capital intensive business. Such underspending is associated with massive job losses, and even Defence has shed its personnel enormously in order to increase its spending on war toys.

  We are very disappointed that the government backed out on its commitment to increase foreign aid to 0.4 per cent of GDP by 1995. While it could be argued that their are increases in some areas of foreign aid, maintaining the aid budget static in GDP terms is not an increase in any sense, and aid is always considered as a percentage of GDP. We also note that forward estimates signal that aid will actually decline. Much of the aid budget is still related more to Australia's trade requirements rather than to the very real need for genuine humanitarian aid and the need to assist communities to sustain themselves.

  This budget gives little chance for the parliament to address the real problems facing Australia. It gives little hope for those in the community who have contributed their ideas to solve these problems. It does not address any of the underlying social, ecological or economic problems facing us. It does nothing for regional Australia, and signals another round of sell-offs of infrastructure.

  Those parties such as the Greens and the Democrats who have been consulting widely with community groups on the issues associated with this budget have been deliberately left little leverage in this budget. The policies of the government and the opposition are now so similar that it hardly matters. The community will suffer. We know where this government's priorities lie. This is a budget designed to restrain wage inflation by a government that is so blind as to think that this is the noblest of aims.

  Finally, I would like to respond to the comments of Senator Hill who claimed that the minor parties had stitched up a deal in advance via the consultative budget approach. Let me tell him that the government sent more information to the media than it shared with the Greens (WA). We agreed to be part of the consultative process so that we could pass on he real concerns of a wide range of community groups. If there is evidence that the government understands those needs it will have our support. If it brings forward legislation which clearly works against those needs, we will not support it.

  Debate (on motion by Senator Watson) adjourned.