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Thursday, 16 March 2000
Page: 14957


Mr ALBANESE (10:59 AM) —I am pleased to have the opportunity to speak to this report on the review of the Reserve Bank of Australia annual report 1998-99. The House of Representatives Standing Committee on Economics, Finance and Public Administration is a committee which I have the privilege to have served on in this parliament and also in the previous parliament. I would like to begin by expressing my gratitude particularly to the staff of the committee, in particular the secretary, Bev Forbes, and Tas Luttrell, who made a major contribution to putting the report together.

The report highlights the fact that, whilst our differences within this place are often stressed in the media, some of the best work in the parliament is done through its committees. The deliberations of committees such as the one chaired so well by the member for Wannon and the outcomes we have from reports such as this make a valuable contribution to the parliament's analysis of directions for the Australian economy.

Discussion of this report gives an opportunity to put a viewpoint as to the current economic direction in Australia. I want to make a contribution on one particular aspect of economic policy and, indeed, economic development that is occurring: globalisation. The House of Representatives Standing Committee on Economics, Finance and Public Administration is currently undertaking an inquiry into international financial markets and the impact that globalisation is having, particularly on the ability of domestic governments to make policy decisions which will impact on the people in nation states.

One of the concerns that I have about globalisation is the growing evidence of an expansion of income inequality occurring in advanced countries such as Australia and the United States—and, indeed, on a global scale, if you compare rich countries and poorer countries. To discuss wealth distribution in Australia in 2000 is perhaps to risk being branded old-fashioned. Paddy McGuinness has asked, `Why are the chattering classes so obsessed with the inequality of incomes?' The answer to that is that it matters to many more than the chattering classes. It is not just a case of growth and economic expansion; it is a matter of what happens to that growth in terms of whether the benefits of economic growth are shared fairly.

Certainly, disparities in wealth distribution matter to workers such as those at National Textiles and Braybrook, who have struggled for their meagre entitlements at the same time as the failed chief executive of AMP can get a $13 million payout as reward for failing in his job. Income disparity certainly matters to rural and regional workers who are dismayed by the Treasurer's call for them to be paid even lower wages. It certainly matters also to those lower and middle income Australians who will pay a GST on the essentials of life while tax avoidance by the wealthy remains a growth industry.

According to the last Business Review Weekly Rich 200 survey, in three years the total wealth of the rich 200 has jumped $21 billion, or nearly 60 per cent. The share of wealth for the top 10 per cent of people has risen from 43.5 per cent in 1983 to 48.6 per cent at the end of 1998. The 10 richest Australians were 15 times better off than they were in 1983. At the other end of the scale, a significant portion of Australians are wondering where the economic growth is. The Bureau of Statistics has estimated that the bottom half of Australians own just five per cent of the national wealth. One example is the alleged revolution in share ownership. Largely, that is a result of the privatisation—by governments of both persuasions, it must be said—of publicly owned assets.

Privatisation of national institutions such as the Commonwealth Bank is something that I opposed and continue to oppose. Privatisation of Telstra, just up to 49 per cent of it, we have seen—as the member for Bendigo eloquently pointed out in this speech earlier today—has resulted and is continuing to result in a loss of services. But, as a result of that and as a result also of superannuation investment in shares, we have seen a growth in share ownership. But when you actually compare the reality with the rhetoric of the government, you get a very different picture. When the 1985 decision to introduce imputation credits for fully franked dividends occurred, Treasury estimated a cost of $250 million in the first year and $500 million thereafter. Those figures have proven to be absurdly low. In 1997-98, the figure was $3.8 billion for individuals, with an additional $1.77 billion for the trusts, such as those which most of the frontbench members of the government have.

The regional dimension of inequality is evidenced by comparing suburbs in Sydney. Bellevue Hill's 5,625 residents shared more than $28 million in imputation credits, representing shares worth $1.43 billion, an average of $713,433. Compare that with Mount Druitt in Sydney's western suburbs: in Mount Druitt there were 24,577 taxpayers of whom only 831 owned shares. The total amount of shares owned was $26,640 and they received an average imputation credit of just $666. Class is alive and well in Australia in the year 2000.

The tax office has estimated that 100 wealthy individuals continue to avoid about $800 million in tax. In recent years, one of Australia's five billionaires claimed a taxable income of $12,524—a weekly income of $241, this gentleman would have us believe, at a time when ordinary Australians are doing the right thing and paying their tax through the PAYE system. You have this sort of obscenity continuing to occur. And it might not be fashionable in this place to raise Kerry Packer and his case, but it is an outrage that Australia's richest individual is not prepared to make the appropriate financial contribution to society.

The passive resentment I feel turns to anger when battlers struggling to pay their mortgage view traders cheering as interest rate increases are announced. The paper profit for these traders, like the growth in speculative derivatives, has an almost surreal element to it from the perspective of so many Australians, for whom an interest rate increase dramatically impacts on their supermarket purchases. Concentration of the benefits of growth is not just confined to income. At a time when there is growing generational unemployment in some suburbs and regions of about 25 per cent, the average working week has grown to more than 43 hours. While weekend papers highlight the happy sellers of inner Sydney properties achieving six figures above reserve prices, homelessness is growing rapidly. More than 100,000 Australians have a very different perspective of the trickle-down effect when they are sleeping in parks and struggling to gain shelter each night.

It is not just groups or individuals traditionally associated with the left of politics who are concerned about this. In his The Crisis of Global Capitalism, billionaire international speculator George Soros criticised the system he has profited on by saying:

Lasting relationships have been replaced by individual transactions. A transactional society undermines social values and loosens moral constraints. Social values express a concern for others. But a transactional economy is anything but a community.

Globalisation does offer enormous potential opportunities, but the challenge for governments is to ensure that the benefits are not concentrated with the few. In my view, there is nothing inherently wrong with the growth in the number of millionaires, but it is very hard to be proud of this when, at the same time, there are increasing numbers of Australians living in poverty.