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Thursday, 22 October 2020
Page: 87

Mr STEVENS (Sturt) (11:17): I rise to strongly support Appropriation Bill (No. 1) 2020-2021, and cognate bills, as delivered by the Treasurer in the last sitting week. I start my contribution by firstly noting what occurred before the budget was handed down a few weeks ago, because this budget has to be remembered in the context of the significant economic challenges and the significant economic response that was announced by the government, going way back to March this year. Of course, we all know we were meant to have the budget handed down in May. No-one could have predicted at the start of the year that, far from handing down a budget in May, it would occur in October and it would be in the circumstances where, effectively, the entirety of the budget is about responding to the greatest health challenge and economic challenge that we have faced as a nation since the Second World War. It was back in March that the government recognised the need to put a floor under the uncertainty in the economy because of the health decisions that needed to be made to respond to the coronavirus pandemic and the risk of losing control of it in our community, which would not only put our health system under enormous pressure and potentially take it to breaking point but, obviously, as we've seen in other parts of the world, there are other terrible consequences to, that. So the economy was, in many ways, shut down. We had to say to businesses, 'We, as your government, are telling you that you can't trade for the foreseeable future. We, as your government, are saying, in the interests of protecting us all, you can't go about earning your livelihood as you would ordinarily expect to.' That required an enormous government response to ensure that the uncertainty and risk didn't manifest itself in a complete collapse of consumption in our economy and a whole range of other decisions by people in that environment of uncertainty, which would have sucked us into a deep and depressive vortex. It would certainly have taken this country's economy into a deeper recession and probably a depression.

So, of course, we had significant announcements in March. In particular, there was the JobKeeper program, the wage subsidy program, which said to businesses: 'Look, don't lay off your employees. Don't disconnect yourself from your staff because you, quite reasonably, don't know how you'll be able to pay them going forward. The easiest thing for you to do, if we don't help you, is to say to your staff, "I have to lay you off" and then put them onto the unemployment queue.' So the JobKeeper Payment was central to keeping a connection between employers and employees. It said to businesses: 'We will pick up the salaries and wages of your staff for the next six months. Keep them engaged with your business. Where they can still come and work, they can and should. If they can't, so be it, but keep them on the payroll and keep that connection in place.' I think that will go down as one of the most prescient policy decisions that could have been made in the face of the challenges that we had thrust upon us.

There were many other important decisions made back in March, particularly the coronavirus supplement payment on the JobSeeker side of things. Despite the JobKeeper program, there was inevitably going to be an increase in unemployment. There was inevitably going to be an increase of people needing government assistance. But, much more importantly than that, people coming from a position of economic security into a position of economic insecurity make decisions that not only affect themselves and their families but potentially have a much wider impact on the economy. If you own a home and you've got a mortgage and you lose your job, you get very nervous about that. You think: 'I don't know what my future is. I don't know what my future income earning capability might be. I don't know when I will get a job again and what my salary might be.' And you start to make decisions that contribute to contracting the economy. Whether it be JobKeeper or JobSeeker or the other payments that were put in place—the $750 payments to people on other government support packages—this was a way of putting support under consumption in the economy, ensuring that people didn't make drastic contractual decisions in their own personal family budgets that would have had a flow-on negative multiplier effect more broadly on the Australian economy.

That's not to say that we didn't still have contraction. We did, of course. Unfortunately, this year we've had the first recession in my adult lifetime. No-one enjoys seeing people lose their jobs, seeing people under financial pressure and all the other associated impacts of that. But I speak with a great deal of confidence that, were it not for the measures and the policies that we pursued leading up to this budget, we would have been approaching this budget from a significantly deteriorated position not just as a nation but as individuals, families, businesses and communities. So I commend the government, which I'm proud to be a member of, for what we did in the lead-up to the budget.

This budget builds on those measures and the policies. More importantly, this budget is about rebuilding on them. They were the foundation that limited the economic impact, the potential economic carnage, and now this budget is about rebuilding—regrowing our economy, rebuilding jobs, creating hope for the future again for so many people. Despite the fact that it is a significant amount of expenditure and it's not the natural inclination of Liberal governments to deliver deficit budgets, this one was absolutely necessary, and I'm very strongly supportive of the decisions that the Prime Minister, the Treasurer and the cabinet have made, which, yes, do include an enormous deficit this year. It's a necessary deficit, and I see this as an investment: an investment in rebuilding our economy and an investment in creating jobs—getting jobs back for the people who have lost them and creating new jobs into the future for not only our existing workforce but those that will be coming into the workforce in the years to come.

I also see this budget as one that is really about empowering the private sector to create jobs and saying to the business community, saying to those sitting in the boardrooms, saying to those making decisions about the future of their business: 'We want to incentivise you. We want to back you to be positive, to have confidence to make decisions.' And some of the key measures in this budget are all about that. The instant asset write-off is a great example. It says, 'You can invest in eligible assets, in plant and equipment, in things that can expand and grow your business and write that off immediately, write that right down from whatever its value is to zero in this tax year if you want to.' This is something that isn't ordinarily available to businesses. We've had, with a much lower threshold of course, the instant asset write-off in previous years. This one is completely uncapped for eligible assets as long as your turnover is under $5 billion a year, which is, I can tell you, the vast majority of businesses in this country and the sort of businesses we want to be focusing on and helping. That opportunity means that when managers and executives in the decision-making processes of their business are thinking about whether or not they should make an investment in plant and equipment, that's a massive incentive towards saying: 'Yes, let's do it. Let's invest in expanding or modernising the capability of our business. We get an enormous benefit if we do it under this current policy setting.' In doing so, that's not only going to provide the tax benefit to the business, it's clearly going to grow business, and when you grow businesses you create jobs.

The tax clawback measure equally is a fantastic cash flow injection to businesses. Of course, until this budget, if a business made a tax loss in the current year, if in the future they proceed to be profitable they can offset that loss against future tax liabilities they might have in the future when they're profitable. This effectively reverses that principle and says, 'If you made a profit last year but you've made a loss this year, we will let you offset this year's loss on the tax you paid on last year's profit.' Given that that tax would have already been paid in many circumstances, that's going to see major refunds coming into businesses, money they didn't think they were going to have until this measure was announced. That of course means, when a business has got cash, a business hopefully will spend it. It's an excellent initiative that gives people confidence in the here and now to make decisions rather than think, 'I'll just wait and see and possibly make new investment decisions in my business when I've got more confidence from a cash point of view into the future.'

The wage subsidy for young people—this has been debated quite a bit, and there are some with different views on the efficacy of it. I really see this as something that is critical to ensuring that we don't get engendered long-term unemployment for young people in this country who might have lost their jobs because of the COVID pandemic. Certainly the lessons of previous recessions have always been that young people in particular probably lose their job very quickly when there's a recession, when times are tough, and they take an extremely long period of time, generally speaking, to re-enter the workforce. We don't want to have a generation of young people that are effectively entrenched in unemployment. The wage subsidy in many ways, in my view, is not providing an incentive to employ young people; it's probably just levelling the playing field for young people where the deck is stacked against them. There can be stigma from some employers about young people who are unemployed, they're on the JobSeeker unemployment benefit, they probably don't have a very comprehensive CV and a lot of work experience. They are probably seen in some cases by employers, generally speaking, as a risk to the business, as a risk potentially not worth taking. This is a policy initiative that gives incentive to offset that risk, and I think that is something that should be celebrated and promoted and seen for what it is, which is a way of us targeting the very real potential problem of long-term youth unemployment in this country.

In my home state of South Australia, one of the most exciting things in the budget has been the confirmation of defence expenditure well into the future. We've already had very important decisions around defence industry naval shipbuilding in South Australia, the Attack class submarine program and the Hunter class frigate program. Both of those are enormous projects—two of the biggest defence acquisitions in the history of this country. I believe the submarine project will be the largest-ever expenditure in not just the defence budget's history but, in fact, the Australian budget's history to acquire the 12 new Attack class submarines for the Royal Australian Navy. That wasn't in doubt, and obviously it's not a surprise that that was reconfirmed in the budget. A lot of other significant defence expenditure announcements are, at their core, not only about providing capability to the Australian defence forces—which has always got to be the first priority in these things—but also about building sovereign capability and creating an industry here in Australia. For a long time governments of both persuasions found defence industry not to be as high a priority as it should be. Frankly, when they were acquiring capabilities it was probably only about the capability and the dollars and cents.

For a long time we have been an importer of defence capability into this country. We're turning that on its head and we're now not only building defence industry in this country that will provide for our Australian defence forces the highest capability that they must always be given by us but also creating sovereign capability. Sovereign capability is fundamental. It has never been more important as we live in more and more uncertain times not only in our region but across the planet. Having the ability within this country to develop and create capability for our defence forces is vital. To think that we can afford to rely on other countries into the future—no disrespect to the fact that they have been excellent allies for a long time, and I have high confidence that they will be into the future, but we need to be self-sufficient in this country. If there's one thing that the challenges of this global pandemic have shown us, it's that we must be self-sufficient. The Manufacturing Modernisation Fund we have announced in the budget is a very good example of this government investing in the need for sovereign capability and secure supply chains—particularly in areas that are of vital importance when global supply chains are disrupted, as we saw occur because of the coronavirus pandemic. I congratulate the government on the decisions and investments around defence industry.

I had the pleasure of having the Treasurer in my electorate last week. We visited a number of businesses during his visit. People have had a tough time, but they're very grateful and appreciative that their government has been there with them and supported them through these difficult times. I genuinely hope the worst of it is over. But, with that hope fulfilled, the new challenge for us is to make sure that we rebuild this country, better than it was before. I'm very confident that this budget has the policy measures in place to ensure we do just that.