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Thursday, 4 February 2010
Page: 538

Senator HURLEY (4:46 PM) —This government has made significant headway in helping Australians manage cost of living pressures. I am pleased to speak on both the broad and specific measures we have undertaken to support Australian families, particularly the most vulnerable, to keep their heads above water. I think it is extremely important to recognise that these achievements have been made in the face of the greatest challenges a federal government has had to tackle in many decades: firstly, the most significant global financial crisis since the Great Depression and, secondly, 11 long years of neglect and inaction by the previous government, which withdrew millions of dollars from our hospitals and schools, refused to tackle the need for investment in infrastructure and skills, and refused to embark on the reforms desperately needed in our taxation and welfare systems.

The global financial crisis was averted by the swift and decisive actions of the government. There is nothing like unemployment or underemployment to really reduce the standard of living and to increase the net cost of living for Australian families. It was action by the Rudd government—in the teeth of opposition by the coalition parties—that averted the very imminent threat that has had a great impact on countries in Europe and on the United States. The reality is that this government has not only faced these things but overcome them since being elected to government. I proudly stand here and defend this government’s actions to support Australians and their families in these difficult times. This government has been willing to make difficult decisions, as opposed to the ‘do nothing’ response in the face of the global recession and the ‘climate change is crap’ mantra of the opposition.

Senator Kroger mentioned there are high inflation and high interest rates under this government. That is extremely rich coming from the Liberal opposition—the Liberal Party that left Australia with the highest inflation in 16 years. In the last quarter of the Liberal government, underlying inflation had risen to its highest level in 16 years. The average increase in the Reserve Bank of Australia’s measure of underlying inflation reached 3.7 per cent in the year to the December quarter 2007. There were 10 straight interest rate rises. Under the Liberal government, standard mortgage interest rates rose from 6.05 per cent in April 2002 to 8.55 per cent in November 2007. This rise cost families $484 more a month, or $5,805 a year, on a standard $300,000 mortgage. That cost of living increase really affects your standard of living. Even after recent increases, a family with a $300,000 mortgage is still paying around $600 a month less than they were 18 months ago under the Howard Liberal government. That is the kind of thing that the Rudd Labor government has done about inflation rates, whereas the Liberal government ignored 20 warnings from the Reserve Bank of Australia about inflation.

The Howard government left us with twin deficits—a skills deficit and an infrastructure deficit—and declining productivity growth. When we are talking about standards of living we need to acknowledge that productivity, innovation and infrastructure are intertwined as a means of improving the future for Australians. The coalition parties have always been poor at looking at the future, at looking ahead, and considering how macroeconomic policies will impact on ordinary working families.

Currently inflation is subdued. The CPI figures from last week show that inflationary pressures in our economy remain subdued. They reflect an economy that is, unfortunately, still operating below its capacity. CPI inflation was 2.1 per cent through the year to the December quarter and at the lower end of the RBA’s two to three per cent target band.

So there is that macroeconomic setting, but the government has also helped working families directly. There are of course two parts to cost of living pressures. One is the income side and one is the expenditure side. On the income side, the government has recognised that working families face rising prices. It has also taken steps to help on the income side. The government has delivered not only at an interest rate level but on its promise of tax cuts for Australians. This means that a person earning $50,000 a year pays 14 per cent less tax in 2009-10 than they did in 2007-08. Further tax cuts in 2010-11 mean that they will be paying 18 per cent less than in 2007-08. That is a tax cut of $1,750. Other measures include increasing the childcare rebate from 30 per cent to 50 per cent, improving affordability for parents. So, recognising that there are price increases, the government has taken action to improve income and benefits.

We have introduced paid parental leave, which will provide up to $9,788 for around 48,000 mothers and primary carers each year. We have also introduced the 50 per cent education tax refund, which provides up to $750 per primary school child and $1,500 per high school child to help with the costs of education. Again, recognising that there will be, in the nature of things, cost increases, the government have taken steps to offset those increases. Very importantly, we have also delivered a historic pension increase of $32.50 a week for single pensioners, costing $14 billion over four years. Cost of living pressures were increasing under the Howard Liberal government, but did the coalition take any measures to improve the lot of ordinary people? Not many, and not at all for pensioners. They took no steps to help those on low fixed incomes to cope with cost of living increases. And the Liberal opposition have the temerity to come in here and move a motion like this! They did nothing for people on low fixed incomes. Also on the pension side, we have increased the utilities allowance from $170.20 to $500 a year.

Senator Williams —Who introduced it?

Senator HURLEY —The Liberal coalition might have introduced the utilities allowance, but they left it at a level that meant that increased costs—which is what we are talking about now—left pensioners way behind. We have increased it from $170 to $500 a year. Did the Howard government increase that utilities allowance? No. We have increased the telephone allowance from $88 to $132 a year. We have indexed the pension to the pensioners’ cost of living, so pensioners are now much better off. An important cohort of our population is much better off. You ask them about the cost of living and see what the response is.

On the income side, Senator Kroger mentioned housing. This government has taken action on housing affordability. The National Rental Affordability Scheme offers $6,500 per dwelling, plus at least $2,168 from the states, to build affordable housing and rent it out at 20 per cent below market rate. The Housing Affordability Fund is a five-year, $512 million investment to help address barriers to new housing development by streamlining planning and approval processes and reducing infrastructure costs. Also, the First Home Saver Accounts have proved very popular and very useful for new homeowners.

The government has delivered on its election promises and has provided for both aspects of the cost of living. It has increased income and benefits and it has taken steps to reduce the other side of it, which is expenditure. On expenditure, I want to talk a little about what the government has done on competition to help drive down grocery prices across the sector. The government is committed to promoting competition in the grocery and retailing industry, which I think everyone recognises is the most effective means of exerting downward pressure on grocery prices. In the past, both state and federal barriers have impeded the entry of competitors into local and national grocery markets. The government is currently working on policy measures to introduce more competition by lowering the barriers to entry and expansion in both retailing and wholesaling for independent supermarkets and potential new entrants.

The ACCC has reached an agreement with Coles and Woolworths to end restrictive provisions in leases. I welcome the agreement between the ACCC and Coles and Woolworths to bring in such measures. Active restrictive leases will cease immediately in 602 out of 750 cases. The remaining 20 per cent will be phased out within five years. Both companies have also agreed that they will not include restrictive provisions in any new supermarket leases. This has been a long-running issue. It is not one that is out there on the front page of the paper, but it has been a key reason for reduced competition. We have finally reached agreement with the two major retailers to ensure that it is phased out. What is the opposition policy on that? I have not heard one at all.

Senator Williams —We’re not in government, you know.

Senator HURLEY —No, you are not in government, and for good reason. It is because these kinds of key steps were not taken by the Howard government. The Rudd government has had to take these steps to ensure that there is additional competitive pressure on prices.

Before my time concludes, I would like to address at least one more area that is important on the income side of things in terms of cost of living pressures. Let us talk a bit about how the coalition addressed the income side of things. Given that Senator Kroger is a senator from Victoria, I would like to talk about the VCOSS state budget submission for this year. It talks about the disparity between wages and the growing cost of living, certainly, but VCOSS does not seem to put the focus on the last two years, on the time of the Rudd government being in power. It talks about 2001 to 2006, which of course was when the Howard government was in office. A lot of these pressures take some time to come through the economy. The VCOSS report says that, while gross average Australian household income grew by 31 per cent between 2001 and 2006, incomes in the wealthiest areas grew by 36.5 per cent and incomes in the poorer suburbs grew by only 29 per cent. While the average income of Sydney households increased by 22 per cent after housing costs, after factoring in the cost of food, petrol, education and child care the annual increase was only around 1.5 per cent. The situation in Melbourne was found to be similar.

So we had the pattern from 2001 to 2006 of, yes, increasing wages, but, at the same time, greatly increasing cost pressures. What was the Howard government’s response to that? The Howard government’s response was to introduce Work Choices, which seemed almost specifically designed to drive down people’s wages even more. It removed penalty rates, annual leave loadings, the right to collectively bargain and the right to unfair dismissal provisions for small business employees, casual employees and seasonal employees. That was the Howard government’s response: ‘Okay, the well-off people are doing reasonably well. The middle classes and lower income groups are really struggling. Let’s squash them even more. Let’s squash their income even more. Let’s leave them even more exposed to increases in the cost of living.’

It amazes me, when we have seen decreased taxes and increased wages under this Rudd government, that a Liberal opposition member can come in here and talk about cost of living pressures. If we are talking about cost of living pressures, we cannot ignore Work Choices and what that would have meant for the cost of living for ordinary families struggling along under the burden of Work Choices and trying to meet those increased costs. It was not only the pensioners that were struggling under the Howard government; it was also working families. That is why people turned against the Howard government in a big way—because they could see the future; they knew where it was heading.

So I welcome this motion from the opposition, because it gives us a chance to talk about the significant improvements brought about by the Rudd government. Hopefully there will be even more in the future, because, as I said before, that is the difference between a Labor government and a coalition government: the Labor government looks to the future. We are looking to the future in terms of productivity, skills improvement and how we enable families not only to cope with the cost of living but to look forward to a higher standard of living in the future.

That higher standard of living will be brought about by productivity, which the former, Howard government neglected shockingly, despite calls from the business community, from economists, from academics, to pay attention to that area. The Howard government let the productivity agenda just drop off. It was all too hard. The decisions that had to be made were hard, so they were not made at all, and we saw productivity drop off shockingly. Also, we saw an appalling problem with skills development in the time of the former government, which meant that a lot of projects in that boom time that the Howard government enjoyed did not proceed as well as they might have, because of dramatic skills shortages.

Although we have had the global financial crisis, although we have seen recession around the world so that there has been a drop-off in new projects and start-up activities, that does not mean that the Rudd government has dropped the ball on issues like productivity and skills development. The Rudd government was pushing ahead in the last budget, despite the crisis which impacted on the budget, to make sure that, as we come out of this recession, we will be well placed and not have those blocks in our path to improving productivity in the future—hopefully in the next few years. It really stuns me that the coalition members raise this issue, because it just gives a chance for members on this side to once again highlight the appalling record—with high inflation and low productivity—of the former government and to point out the positive steps that this government has taken.