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Thursday, 27 November 2014
Page: 9591


Senator DI NATALE (Victoria) (17:08): I do not disagree with the proposition that the Senate has a responsibility to propose and discuss options to cut government spending—and I will get onto that in a moment. I think it is the wrong question. There is a question that come before that, and it is: what is the purpose of government spending; what is it that we expect from our governments; what is it that the community expects from governments; and how best do we as a community fund those services that people expect?

When we look at how we collect and distribute revenue for services like health and education, law enforcements, and ensuring that we have got roads and public transport, there is an understanding—and we can talk about this in more detail—that those services are best funded collectively. The question presupposes that we should be implementing cuts to government spending simply for the sake of it. It does not help us tease out: what is the purpose of government spending? What is it that we should be doing with that revenue?

The notion that we should be simply cutting government spending for the sake of cutting it is an ideological belief. It is no different from any religious, faith-based assertion. The idea that we should be aspiring to small government, low taxes and low government spending is no different to any other religious or fundamentalist belief. It is not based on evidence; it is an aspiration based on an ideological world view. I am quite happy to talk about the proposition around cuts to government spending but I think we need to tease out why we are having this debate right now.

I understand that on some issues I will, for example, agree with my colleague Senator Leyonhjelm. But this proposition that the aspiration of any government should simply be to reduce government spending for the sake of it is not based on science. For somebody who is trained in a scientific discipline, I like looking at the evidence for some of these assertions.

I am not for increased government spending or reduced government spending; I am for government spending that achieves the aims we want to achieve. I am not for big government or small government; I just want good government. I am not for high or low taxes; we need to recognise that taxation is part of the price we pay for civilised society. We need to collect it fairly, and distribute it fairly and efficiently.

Europe is a good example—and I heard Senator Sinodinos talk about Europe—because in some countries there is wasteful government spending; he is absolutely right about his country of origin, no question about it, and it needs to be reduced. Some European countries have large public sector spending where rates of economic growth have been over and above many other European countries with much lower public sector spending.

The size of government, the size of taxation and the size of government spending has got no correlation to economic growth or how prosperous and wealthy a society is. What is much more likely to correlate with economic growth and achieving quality of life as a consequence of that is whether there is good government spending.

The idea that Australia sits somewhere near the top when it comes to government debt and expenditure is a fabrication. I was fortunate enough to chair the inquiry into the Commission of Audit where we heard from a range of academics, businesspeople and union representatives. We heard time and time again that we are relatively efficient by world standards in terms of taxation. We have lower than average taxation by OECD standards. Government spending is again lower than average by OECD standards, and the debt crisis is a fabrication.

The evidence does not back up the idea that we should be cutting government spending simply for the sake of it. What does the community want? What is it that the community seeks from government? This government is in so much trouble, because it is completely out of sync with where the community sits on this issue. The community wants the government to spend, but it wants it in the areas that they think are important. Medicare is a good example of that. We had a debate about the way health care should be funded through the 1970s and 1980s and the consensus emerged that we believed that collectively pooling our individual revenue to fund universal health care was a fair way of ensuring that everybody got access to good medical care.

What is interesting about that is it is actually a very efficient way of funding health care as well. It marries those two sometimes competing objectives of equity and fairness and economic efficiency. You only need to look at comparable health systems to see that having universal coverage funded through progressive taxation is a very efficient mechanism for funding the delivery of health care. The government is in trouble with its proposed co-payment proposal because the community recognise that what we have got is precious, works well and should not be tampered with.

Let us look at the National Disability Insurance Scheme. What was most interesting about that for me was that that was funded through a proposal to increase the Medicare levy. There was no debate about it, there was no controversy about it, there was bipartisanship and the community were pleased that we had a government and an opposition who recognised that it was important that those people with disabilities got access to the appropriate supports and they were prepared to increase the level of taxation that they pay to fund it. Similarly, when you ask people about the Greens' proposal for universal dental coverage so dental care is funded through Medicare in the same way as health care is funded, the community say they would be prepared to pay an increased Medicare levy to fund it.

So this ideological view that we have to cut government spending simply for the sake of it is out of step with where mainstream public opinion is, and the government are paying for it at the moment. The government are suffering so badly in terms of their perception within the Australian community because the Australian community do not buy that argument. It is not backed up by the evidence and it is certainly not backed up by mainstream public opinion. That is part of the reason we are having this manufactured debate around an artificial debt crisis. If you do not create fear and panic around the state of the nation's finances then the community just simply will not come at the idea that we have to attack health, education, public broadcasters, income support and so on. They just will not come at that. That is not to say that I do not believe that some people on the other side have convinced themselves that we in fact do have a debt crisis. That is just natural human psychology—you found an opinion based on nothing other than a belief rather than based on evidence and you look for a way to rationalise that, and the rationalisation that they have given themselves is this idea that Australia is facing some sort of debt crisis.

We do have some challenges. I do not deny that for a moment. We have some long-term challenges we need to meet. We have some challenges around productivity. Senator Sinodinos again articulated the productivity challenge that confronts us. Of course we have to deal with that, but the way to deal with that is not by slashing investment in education, not by slashing investment in research and development and not by slashing investment in science. If we do think that we do indeed have a productivity challenge to deal with, rather than look for again an ideological view that it is all about labour market flexibility let us look at it investing in those things—in our human capital—to ensure we are placed through this century to be able to meet that productivity challenge.

Of course we have an ageing population and a number of other things that we have to deal with. When you look at it in that context of course part of the equation is to look at government spending and look at where we are wasting some of the revenue we collect from the Australian community and see if there are savings that can be made there. It is for that reason that the Greens do have a range of proposals to reduce government spending.

When you look at the tax expenditures that Australia gives to a range of industries, we in fact have one of the highest rates anywhere in the world. With those tax expenditures—or tax concessions, as they are sometimes referred to—we rank right up near the top of the list when it comes to the money we give to a range of industries and sectors, so why don't we start there. We provide concessions in the order of $10 billion over the forward estimates to the fossil fuel industries. We have this ridiculous handout that goes to mining industries in the form of the diesel fuel rebate—cheap petrol. When the price of petrol goes up we all pay for it—but not those in the mining industry; they get a whopping big tax concession that allows them to pay less for their diesel.

There are other areas we could be looking at as well. Superannuation is one. We provide enormous superannuation tax concessions that disproportionately favour the wealthiest people in our community. Superannuation was designed to try to relieve the pressure on our welfare system, on effectively the government's ability to be able to pay a pension for people once they hit a certain age. The tax concessions we currently provide, particularly to high-income earners, do not serve that purpose. They effectively serve as an investment vehicle for people on higher incomes, and that is not what they were designed to do. So there is an area where there are rich pickings. Let us have a look at superannuation tax concessions and whether there are some opportunities to reduce government spending in that area.

There are other areas in the property market. Negative gearing may be another thing the government chooses to look at. Negative gearing basically allows property to become an investment vehicle, again largely for people on higher incomes. What is the purpose of that tax concession? Some people argue it is necessary in order to drive investment in the housing market

If we were serious about that we would be restricting negative gearing to new properties in order to drive housing construction, but that is not how the current system works. So we have one area of government spending—perhaps an area of government spending that Senator Day is not inclined to support—that is a form of tax expenditure and it should be looked at alongside many of the other areas of government spending that have been discussed.

It is not just government spending that we should be looking at. Why not look at the issue of revenue as well? We have some enormous opportunities. If we are to meet some of those challenges in terms of providing the services the people want we could be looking at areas of revenue—for example, a decent mining tax. Why on earth would we have this debate about cutting government spending and have a government prepared to look at introducing so-called price signals in health, when at the same time the government has effectively cut a source of revenue that most of the Australian community thought was fair and would have worked? It would have brought in income, over time, to a hugely profitable industry.

There are other opportunities as well, such as a levy on the big four banks. We guarantee—we effectively underwrite—our banks so that, should they face a challenge through something like another financial crisis, it is the taxpayer that underwrites their security. The banks are not responsible for paying, in any way, for that guarantee that we as taxpayers provide them. Why not have a very modest levy, in effect in return for the government underwriting the security of our big four banks?

I do not shy away at all from a debate on government spending. I think it is imperative that each of us here in this place takes a responsible look at areas of waste and mismanagement and ensures that collected hard-earned taxpayer revenue is used wisely. Of course we should be doing that, but let's not talk about cutting government spending for the sake of cutting government spending, because if we are going to do that we might as well have a debate about fairies in the sky or about any other area that is not based on reason or evidence.

The evidence is very clear. Government spending, in and of itself, can be a good thing or a bad thing. The aim of this place is to ensure that we maximise the public good and we minimise those harms associated with the collection of revenue when it is unnecessary and wasteful. For those reasons the Greens have put forward some sensible proposals to cut government spending alongside some revenue measures that will allow us to pay for the sort of society that each of us wants—one where health care is delivered in a fair and equitable way, where you can access a doctor regardless of whether you are unlucky enough to have been born in the wrong postcode, whether you can get a decent education and whether you live in a regional community or in the middle of a city, whether you are down on your luck and are unable to find a job, and knowing that you will be supported by other members of the Australian community. That is the sort of society that most us want to live in.