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Thursday, 27 November 2014
Page: 9570


Senator LEYONHJELM (New South Wales) (15:40): I, and also on behalf of Senator Day, move:

That the Senate acknowledges that it has a responsibility to propose and discuss options to cut government spending.

My hope for this general business debate is for senators from across the chamber to outline spending cuts they would support. My hope is that we uncover some spending cuts where a good number of senators agree with each other. And my hope is that the government has the gumption to adopt any such spending cuts. But my wishful thinking does not stop there.

I hope that we do not get diverted into discussions on revenue-raising. Proponents of revenue-raising are free to devote a general business debate to that issue. But this is a debate on options to cut government spending. I will resist the urge to discuss whether revenue should go up or down, and I ask others to do the same. I also hope that each senator proposes more spending cuts than they oppose. It is inevitable that senators will speak against various spending cuts. But surely this should be balanced by alternative suggestions.

To kick off this debate, I want to indicate my support for spending cuts mooted by others in this place. My co-sponsor in this motion, Senator Day, will outline his spending cuts shortly, and I anticipate that I would support each of them. I have avoided stealing his thunder by not mentioning them now, but he is not the only crossbencher willing to propose spending cuts.

Senator Madigan has called for MPs to travel in economy class by default, to abandon junkets overseas and to leave their spouses behind when they travel. I agree and consider that the same approach should apply across the public service.

Senator Lambie has made comments about cutting foreign aid. I also think it should be cut. In fact, I believe that we should abolish government provided foreign aid other than short-term humanitarian responses to natural disasters, including the Ebola outbreak.

Government provided foreign aid does not show how generous Australians are; it shows how generous some people are with other people's money. A true indication of the generosity of Australians would be to leave decisions on foreign aid to individuals. I cannot say what this would do to the level of foreign aid leaving our shores but I am confident that the money would be directed to organisations and causes that Australians have faith in. And, on a value-for-money basis, it would absolutely leave government foreign aid for dead. If we really want to help people in other countries, promoting free trade across the board would have much greater benefit.

In amongst their calls to increase revenue, the Australian Greens have proposed some cuts to spending, such as spending on industry assistance. I agree with these spending cuts. Our industries would be better off if they could focus on satisfying customers rather than bureaucrats who hand out grants.

I support ending what people normally think of as industry assistance, like spending on agriculture, tourism, mining, manufacturing, and construction industries. But industry assistance goes beyond that: it includes funding for the arts industry, the sports industry and the communications industry, including the ABC and SBS. Corporate welfare does not stop being corporate welfare when the corporation is government owned or when the corporation is one you like, such as a renewable energy business.

The Australian Greens have also mooted cuts to defence. I agree that responsible spending cuts are possible in defence. Our permanent military should be limited, but should be able to quickly expand if required. Our permanent military should be focussed on long-distance force projection, requiring a strategic strike capability, an effective submarine fleet and a rapid reaction, air mobile expeditionary force including special forces. This implies less of a need for other aspects of our current military, like most of the Navy's surface fleet. Achieving our military goals in a cost-effective way also requires procuring the most suitable items from the best suppliers around the world. On that can I also say that I think the Australian Submarine Corporation could build a canoe, but only one and it would be very late and horribly expensive.

I also acknowledge that Labor has supported spending cuts in recent times. For instance, just prior to the last election Labor cut spending on the Public Service, foreign aid, subsidies to landowners to support biodiversity, subsidies to employers for taking on apprentices and subsidies for clean technology and carbon capture and storage. I support spending cuts in each of these areas. Since the election the coalition has proposed a range of spending cuts, including cuts to higher education and the Australian Research Council, cuts to Medicare rebates for GPs and the private health insurance rebate, cuts to welfare payments for individuals and corporate welfare and cuts to the ABC and SBS. I support all of these cuts. In fact, I think the only coalition proposal for spending cuts that troubles me is the periodic removal of Newstart for young unemployed people. This strikes me as an odd thing to do given that we actively stop employers from taking on young people because of our insistence on a prohibitively high minimum wage.

This brief scan of the Senate gives me hope that there is a will in this Senate to cut government spending. We just need to open our eyes and look for the common ground. I would like to add a couple of spending cut suggestions to the mix from the party platform of the Liberal Democrats. Let me start with a spend that represents a quarter of the Commonwealth government's spending—that is Commonwealth payments to the states, territories and local governments. These payments should be abolished. Abolition would prompt the states to means test access to public hospitals and schools and to put tolls on arterial roads and highways. Even if they reacted by increasing taxes, which I would not encourage, we should remember that the states have access to substantial tax bases, many of them more efficient than the Commonwealth's income tax. The abolition of Commonwealth payments to states would increase the autonomy and accountability of the states and allow greater competition and experimentation between the states. The abolition would also serve to end horizontal fiscal equalisation—a welfare system whereby funds are effectively taken from rich state governments and given to poor state governments. This system discourages state governments from removing impediments to economic growth and from reducing dependency on government services. It also targets assistance more poorly than welfare to individuals.

Billions of dollars are taken from Australian workers every year and then given back to the same families in the form of government handouts or subsidies. This is wasteful, inefficient and unnecessary. We need to bring back a central support role for family and community, we need to focus tax paid support on the least well off and we need to get rid of middle-class welfare and indeed upper-class welfare. While we hear complaints about dole bludgers, the truth is that spending on family payments is more than three times larger than spending on unemployment payments and spending on aged pensions is six times larger.

We need to dust off the Commission of Audit report, which suggested the removal of the schoolkids bonus and family tax benefit part B. We need to target family tax benefit part A to families with the least income. Today I have introduced a bill that would do just that. We need to include the family home in the assets test for the aged pension. So long as only the home's value above a high threshold is taken into account and so long as there is always access to a pension equivalent payment through a reverse mortgage or something similar, there is no reason for the family home to be excluded.

Finally, we can appreciate public servants while at the same time believe they are overpaid. The typical wage across the entire Australian workforce is around $62,000, but that is roughly what a Public Service graduate gets at the start of their career. By the time they have worked for a few years many are on around $100,000 per year. The various layers of management regularly get between $150,000 and $300,000, while top bureaucrats get up to $700,000 per year. A cut to Public Service budgets totalling $2 billion could prompt salary cuts of around 10 per cent. This would reset public sector wages, which have grown faster than private sector wages over the last decade, and it would still leave public sector wages at a very healthy level.

After accounting for inflation, Commonwealth government spending per person has increased by more than a third since the introduction of the GST. Commonwealth government spending is more than a quarter of GDP, which is well above the post GST average. It is time for the denial to end. Our government has a spending problem and it is time for an intervention. I look forward to the contributions to this debate from my fellow senators.