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Thursday, 27 November 2014
Page: 9579


Senator DAY (South Australia) (16:21): Every teenager, every family, every business and every government in the world that gets into financial difficulties says the same thing: 'If I could just get a little bit more income, I'd be fine.' Well, I am sorry to break the news but it never works. When you are in financial difficulty and your spending exceeds your income, the only solution is to shrink to viability and then regrow from there.

First, let me say from the outset that I understand the government's predicament. I have been in the government's position. I have experienced industry slumps where the market drops by something like 40 per cent, leading to a 40 per cent drop in revenue. It is painful; it is disruptive. The structures, the systems, the staffing and the resources that have been put in place to handle X level of activity are suddenly confronted with the chill winds of economic reality. The government is experiencing what thousands of business owners experience. Welcome to their world.

Employment levels are falling, our terms of trade are falling, home ownership levels are falling. At the same time, our national debt is rising, interest payments on our debt are rising, government spending on a whole range of areas is also rising. Something has to give. Not only that, pretty soon a person on average ordinary full-time earnings will move into the country's second highest tax bracket. With five levels in our tax system, the idea that someone on average weekly earnings would be on the second highest tax bracket should give serious pause for thought. High tax rates undermine enterprise and destroy the will to work. The prospect of giving up nearly half your earnings leads people to decide that it is simply not worth it. Taxation at these levels starts to produce gross inefficiencies as people stop working as much or as hard as they have been and governments find that taxes are not producing the revenue they expected.

Similarly, many on welfare benefits decline opportunities to work because of the punitive effect small earnings and high tax rates have on the security of their welfare benefits and the value of extra work. People on very low incomes fare worst of all for, as they increase their earnings, higher rates of income tax combined with the loss of means-tested benefits deprive them of up to 80c of every extra dollar they earn. If we are to extricate ourselves from this dysfunctional system, the goodwill of the public needs to be restored by getting tax levels back to something that most people would see as reasonable.

Australia will get nowhere with tax rates like these. Bosses are not ripping off workers, it is the government that is ripping off workers. Senator Leyonhjelm and I have moved this motion today out of concern that when it comes to getting the budget in order, when it comes to relieving the tax burden on Australian families, the government seems to adopt the teenager's plea for more money rather than reducing its spending. The Australian government is simply too big, and has for too long been captive of the discredited Keynesian theory of economics, where governments are looked to for so-called economic leadership to stimulate the economy by injecting money into it. Far from solving the nation's economic problems, they just make them worse. This is because, simply put, governments—that is, politicians and government bureaucrats who make the decisions on these things—do not know enough to make the right decisions. If they did, like Bert Kelly once said, 'They would not be here in Canberra; they would be sitting in the south of France with their feet in a bucket of champagne'. This applies to everything, from trying to solve an alleged global problem with carbon dioxide emissions to the most miniscule local issues that neighbours or communities could very easily sort out themselves.

My home state of South Australia is a classic example of failed Keynesian thinking. The state government there thinks it can spend its way out of an economic slump. It has gambled South Australian taxpayers' money and lost it, and all South Australia has to show for it is record debt and record deficit. But, as always, Keynesians never, ever admit they are wrong. They are like the gambler who goes to the racetrack or the casino, thinking that if he keeps doubling his bet each time, then eventually he will back a winner and get all his money back. And all that happens is he runs out of money. And there is nothing more certain than the South Australian state government will run out of money.

I co-sponsored this motion today because I started to think very carefully about this topic when the Prime Minister urged the crossbench to think of savings measures if we were inclined to oppose other government measures. At the time the Prime Minister first made that request, I pointed out three easy savings areas. The first is a measure that you heard me outline in my first speech in this place, and I will keep saying it until I am blue in the face and perhaps even after that—that is, allow people to escape from the industrial regulation prison. It gets them off the dole and will improve the budget position by billions of dollars. For every one per cent of people who get off the dole, the government saves $100 million. We spend $145 billion—more than one-third of the budget—on social security and welfare, and that will grow over the next three years to $169 billion or 33 per cent of the budget, subject to what has passed or might pass the Senate since July. We pay these benefits to a cohort of people who could otherwise be working and be financially independent.

The second saving area that I explained to the government is to end the duplication of health and education bureaucracies. Together they comprised $94 billion last year, and are on track to cost $106 billion by 2017-18. These bureaucracies cost and spend billions, yet they do not run a single hospital or a single school. The health and education budget lines in the budget papers are the second and third individual portfolio areas with the largest cost to Commonwealth taxpayers. Yet section 51 of the Constitution makes it clear what federal responsibilities are: foreign affairs, trade, commerce, tax, communications, the military, quarantine, currency, copyright, marriage and family law, pensions and, of course, corporations. There is no mention of hospitals, schools, disability services, pink batts, carbon dioxide emissions or many of the other things that the federal government decides from time to time that it wants to spend our money on. Or, more to the point, borrow money against the common wealth to use taxpayers' money to pay interest on that debt.

Family First strongly believes in federalism and, as such, in having a Commonwealth government that sticks to its own constitutional responsibilities and leaves the rest to the states and territories. If it is not about trade, tax, troops or the family then do not ask us to raise taxes for it and do not ask us to spend on it. Health and education are state responsibilities, so the states should fund them. Those who spend the money should raise the money. At present, the Commonwealth raises the money and the states spend it, and we all know what happens when people spend money raised by someone else.

To go further on this duplication argument, I agree with my colleague Senator Leyonhjelm: there is no need for any government to run a single school. There is sufficient know-how and capacity in our community for schools to be run by non-government bodies. Fund students directly and let their families decide where the student funding is spent. Get out of the business of running schools.

The third saving suggestion I gave in July is a simple question of running things more efficiently by eliminating some of the ridiculous costs of office fit outs and other wastes of money that we see and hear about all the time in this place. It is $10,000 here and $50,000 there; it all adds up. Not only that, it develops a culture of disregard for the person who worked in a factory, or on a hospital ward, or in a classroom or on the land and their hard earned taxes that pay for it all.

I was elected on a platform of 'every family: a job and a house'. On housing, I have told the government they can save at least $600 million a year by reducing grants to those states which engage in price-gouging of residential land holdings through their land management corporations. The Commonwealth government could also immediately sell off its own surplus land to address housing affordability. The benefits from the sale of this land would create a multiplier effect: more housing activity, more employment, more income tax raised, more building materials made and sold, more whitegoods and appliances, more soft furnishings and, of course, more GST. I estimate the states are missing out on $2 billion of GST a year due to their own land restriction policies.

On this point of housing, I note the Commonwealth is planning to lift spending on housing from $4.8 billion this year to $5.1 billion in 2017-18. If state governments woke up to the fact that their urban planning policies were based on myth and misinformation, the Commonwealth could save all that money. I defy any state government to substantiate its urban densification and urban consolidation claims. They are wrong; they are misguided. Claims that urban densification is good for the environment, that it stems the loss of agricultural land, that it encourages people onto public transport, that it saves water, that it leads to a reduction in motor vehicle use and that it saves on infrastructure costs for government are false. Urban consolidation and densification is an idea that has failed all over the world, whether it be traffic congestion, air pollution, the destruction of biodiversity or the unsustainable pressure on electricity, water, sewerage or stormwater infrastructure, urban densification has been a disaster.

Urban consolidation is not good for the environment. It does not save water, it does not lead to a reduction in motor vehicle use, it does not result in nicer neighbourhoods, it does not stem the loss of agricultural land and it does not save on infrastructure costs for government and, worst of all, it puts home ownership out of the reach of those on low and middle incomes.

On the jobs front: quite aside from the savings from letting people escape the industrial regulation prison, there are substantial savings to be made in what is called 'labour market assistance to job seekers and industry'. As we know, some people have become very wealthy in the job seeker assistance market which, in the current budget papers, grows from $1.46 billion to $1.5 billion per annum. Job seekers know where to find jobs on terms and conditions which suit them. But the government will not let them take them. There are massive savings to be made there.

I have also made the point during the recent carbon-farming debate that the $2.5 billion allocated to so-called Direct Action is totally unnecessary. I see no need to repeat my arguments here, but the saving opportunity there is massive and clear. I hasten to add that I agree with Senator Lambie from Tasmania in including hydroelectricity in the renewable energy target. A review of the RET would see a further saving to government to make it reflect far better Australia's actual renewable energy achievements.

Then there is the ABC. There is definitely a case to be made now for reviewing the scope of public broadcasting. These services were set up in a different era, before private sector—that is non-taxpayer funded—media organisations were developed. It is a very different world now. There are numerous areas where the private sector is ready, willing and able to provide media services but cannot compete with the deep pockets of the public broadcaster. As James Paterson in the Australian Financial Review on Wednesday rightly points out:

… the ABC's charter also requires that it "take account of ... the broadcasting services provided by the commercial and community sectors of the Australian broadcasting system", and it's this part of the charter the management has most openly flouted.

Instead, Mr Paterson points out correctly that the ABC has established competitors to a pre-existing 24-hour news service in Sky News and:

… private fact-checking initiatives, such as PolitiFact, …

and, as Mr Paterson calls it:

… the cornucopia of free online opinion when it launched The Drum opinion website in 2009.

The ABC is investing more in these areas where it competes against its charter with commercial enterprises. Conversely, their rural and regional services, including those in my home state of South Australia, exist in an under-serviced market. These services are the true identity of the ABC—covering droughts, floods, bushfires and iconic stories that have defined the Australian national identity. The government should perhaps create a country broadcasting corporation, which only has a charter to cover country areas, and then sell off the ABC.

We also need a national debate on families—family lifestyle choice and caring responsibilities in this nation. We fund childcare—$5.6 billion last financial year, rising to a whopping $8 billion in 2017-18. Yet if you asked most families, one of the parents—mum or dad—would rather stay home and care for their own children or, failing that, one of the grandparents would be very happy to look after those children for nothing, or at a fraction of what childcare costs the taxpayer. Industry assistance—there is no place for industry assistance. If an industry itself wants to create a spending program from its own members it can do that, but there is no role for government in giving taxpayers' money to industries or to certain companies. We South Australians know all too well from experience where all the money went to keep Mitsubishi in our home state—the money went back to Japan, never to be seen again. We have to stop governments from pretending that they know anything about business or which industries might be successful. It fails wherever it is tried—nowhere more obviously than in my home state. Meanwhile, families and communities suffer greatly.

I welcome the government's announcements that it will review the tax system and our Federation. These two items, in tandem, will help us address the problems we have with social needs and the ability of states and territories to raise the revenue needed for their constitutional responsibilities. We debated aged care recently in this place. It is a classic example of where the Commonwealth has stepped in to fund a rapidly growing sector. We need to clarify who is responsible for what and ensure that whoever bears the responsibility has the revenue to do so—not blank cheques in the form of new or higher taxes that can be raised at whim, but revenue to meet the responsible spending needs of government. Not the myriad of wasteful and excessive spending that we see across all levels today. The savings measures I have proposed have merit in their own right, but have further merit as well. Massive spending reductions will help address the Commonwealth public debt interest which grows and grows from $13.4 billion last year to $17.9 billion in 2017—a $4.5 billion increase in interest payments. Imagine the benefit if we paid no interest on our public debt. Every family—a job and a house. It is what Family First is about. We are a conservative party and we understand the fundamental importance to taxpayers' families and to the national interest of reducing Commonwealth spending.