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Monday, 24 May 1993
Page: 1078


Senator KEMP (3.14 p.m.) —Since the Labor Government came to office in 1983 we have witnessed a massive devaluation of the Australian dollar. Only one thing has been devalued more in this country than the value of our currency and that is the word of our Prime Minister (Mr Keating). As my colleague Senator Tierney said in his notice of motion, it is very clear that the Prime Minister went to an election making promises that he and his Ministers knew simply could not be kept. That is why we have raised this matter of public importance, which states:

  The Government's obvious intention to abandon its election promises in order to reduce the massive Budget deficit.

In just over two months Australian voters have seen the Government back away from, modify or substantially delay promises in a whole range of areas including the funding of its dental health program, providing a home child-care allowance, purchasing private hospital beds for public patients on hospital waiting lists, and funding a survey of the Darwin to Alice Springs railway—an issue of particular importance to my colleagues from South Australia, to which Senator Ferguson recently referred.

  During the last election I debated retirement policy in the Ivanhoe Town Hall with the ALP member for Burke, Mr Neil O'Keefe, before some 500 pensioners and self-funded retirees. During this debate—I think this is important because it was witnessed by more than 500 people in the audience—Mr O'Keefe was asked whether the Keating Labor Government intended to keep its promise to exempt all age pensioners from tax by 1995. It was a very clear question and I was asked the same thing.


Senator Patterson —What did he say?


Senator KEMP —Senator Patterson will be appalled to learn that in answer to this question and in front of all these pensioners Mr O'Keefe promised that by 1995 all pensioners and part-pensioners, whether in receipt of some age pension or service pension, would be exempt from tax. That promise to pensioners was repeated all over the country. I believe Senator Patterson can quote a similar case in the electorate of Holt where the Minister for Primary Industries and Energy, Mr Crean, made precisely the same promise, and all of my colleagues can refer to similar examples. This promise was made deliberately to fool pensioners and part-pensioners—and it is just one of many. This was a major promise with significant implications for many older Australians which, along with the other promises I have listed, has been dumped by the Government.

  Madam Acting Deputy President, you may recall the fanfare when the Prime Minister, Mr Keating, announced at the start of the election campaign on 19 February the basis of his new accord with the ACTU—accord mark 7. You may recall that the headlines on that day were all about a new pay deal with the union movement. A central part of the agreement was that after 1 July—in just over a month's time—there would be a $8 a week pay rise for all workers to provide a safety net for those who did not achieve pay rises through workplace bargaining. This was a clear election promise; it was made in the context of an election campaign. It was intended to show that this Government believed, through its economic policy, it could make this kind of guarantee to all workers.

  But what happened? Just a few weeks ago—some two months after the election campaign—this commitment to all Australian workers was scrapped and its scrapping was announced by none other than Mr Martin Ferguson of the ACTU. So those lower paid workers, that core constituency of the Labor Party, have lost their pay rise. It is interesting to note that on 1 July, the date on which lower paid workers were to be entitled to their $8 a week pay rise, members of the Senior Executive Service, the highest paid members of the Public Service, including those on $100,000 plus per year—the Mr Costello's of Senator Evans's department—will become entitled to performance based pay rises.

  On 1 July, ordinary workers will have to forgo their $8 per week pay rise. On 1 July, the Senior Executive Service will be entitled to performance based cash bonuses, ranging from $8,000 to $15,000, which will be payable after 1 July. I suggest to the Senate that Mr Keating made an interesting comment about the Government's priorities. Mr Keating had no problem in keeping his promises to higher paid workers—a promise which was endorsed by Mr Kelty and Mr Ferguson of the ACTU—but his commitment to lower paid workers was not kept. In fact, it was scrapped.

  This is only the start. What we are seeing is a Budget deficit out of control; a Budget deficit of Whitlamesque proportions. Those of us who lived through the appalling mismanagement of the Whitlam period from 1972-75, and Senator Sherry will recall this period, are now seeing the same thing emerging with Mr Keating. This is a result of the irresponsible nature of the commitments he has made and because he will do and say anything in an attempt to win an election.

  This year's Budget was originally forecast to have a deficit of $13 billion—this is a figure that Senator Sherry will certainly confirm. This Budget has already blown out by some $3 billion and will probably show a deficit in the order of $16 billion.

  When we examine next year's Budget we find that the deficit will continue to spiral. The so-called starting point for next year's Budget—I think as Senator Evans or certainly his colleagues have confirmed—will be in the order of $18 billion. Mr Keating is the highest taxing, highest spending Prime Minister in Australian history. He is far worse than the notorious Mr Gough Whitlam.

  As a result of the spiralling Budget deficit, a Budget out of control, it is clear that Mr Keating will have to dump another series of promises, including the major election promise not to raise taxes. We can recall, and I am sure Labor senators will recall, that this Government has a magnificent record of breaking its central election promises.

  What was the central election promise of this Government in 1987? I am sure honourable senators will remember. It was that by 1990 no child would live in poverty. That was a promise made by Mr Hawke and endorsed by Mr Keating, even though he knew it could not be kept and even though the finance Ministers and senior Ministers of this Government knew it could not be kept. That promise was of course broken.

  What was the central promise of the 1990 election? I remind Senator Sherry that the central promise was that there would be no recession. Day after day during the election campaign, Mr Keating went around informing the electorate that there would be no recession. What happened? We had the worst recession in 60 years and a million people unemployed.

  What was the central promise made by Mr Keating during the 1993 election? I suggest to the Senate that the central election promise was that there would be significant income tax cuts and no consumption taxes of any sort. Those were the promises that Mr Keating made when he went into the last election. It has become clear from the figures that I have quoted that taxes are going to have to rise, and will probably have to rise very substantially indeed. Mr Keating made these promises knowing full well that if he was elected the day of reckoning would come, but that when he was safely ensconced in the Lodge, with perhaps two to three years to govern the country, all the commitments that he made to Australian voters could be dropped. In my view, those promises will be dropped.

  In just two months the Government has moved from its position of promising `no new taxes' and substantial income tax cuts to the position of floating a whole series of new ideas on future tax increases. One example has been the foreshadowing of a rise in the excise on fuel taxes. Perhaps Senator Sherry could confirm whether the Government will proceed with its proposal for an excise tax on energy—presumably on coal and natural gas. Ideas have been floated—


Senator Sherry —I can't answer questions.


Senator KEMP —When Senator Sherry gets up to speak in this debate he will have the opportunity to tell us the answer to that question and to make an ironclad commitment that the Prime Minister's promises will be kept. I remind Senator Sherry that we will want to hear from him that the income tax cuts that were promised will remain in place and that there will be no new consumption taxes. Every word that he says will be listened to by honourable senators in this chamber and by people listening to the radio to hear whether he is prepared to make that commitment. I suggest that if he makes that commitment then his life as a Parliamentary Secretary might be somewhat attenuated.

  The Labor Left has floated the idea of a new wealth tax. Even the inimitable President of the ACTU, Mr Martin Ferguson, who wiped out wage increases for ordinary workers, has urged the raising of income taxes on the higher income-earning groups. Of course, it did not worry Mr Ferguson that the higher paid levels of the Public Service were provided with cash bonuses. Articles in today's edition of the Sydney Morning Herald and other newspapers announce that a range of new taxes and charges to be imposed on government services has been floated.

  Almost every day the Leader of the Australian Democrats (Senator Kernot) stands up in this Parliament and, through her questioning, urges the Government to break its promise to cut the level of income tax. Honourable senators will recall that the Democrats used to be the party whose role, as it was often expressed in this chamber, was to `keep the bastards honest'. Surely one aspect of keeping them honest would be to ensure that they kept their promises. I would have thought that was one element of keeping people honest. If a party goes into an election campaign promising to significantly cut the level of income tax, surely the Australian Democrats would see their role as ensuring that such a promise was kept. We have seen nothing of the sort. In fact, Senator Kernot has marked her accession to the leadership of the Australian Democrats by demanding that the Government break its central election promise to cut income taxes—a funny start for the leader of any political party, particularly one that markets itself as the party that will keep the major political parties honest.

  Make no mistake about it, the Government will renege on its tax promises. Of course, the Government has a way out of its dilemma: to start pruning government spending. Honourable senators will recall that in Fightback the coalition identified areas where significant reductions in spending could be achieved. The Commonwealth Budget now totals almost $110 billion and is growing at a very rapid rate. Since 1989-90 Commonwealth Government spending has increased in the order of 16 per cent in real terms—a very substantial increase—while Public Service employment has increased by almost eight per cent, which is also a very sharp rise. Those two areas must be financed by either taxation or borrowings, and in most cases both.

  As I said before, we have found out that not all people will suffer from broken promises; the higher paid public servants will get their promise of substantial cash bonuses. I suggest that all those who are in the welfare area—on a number of occasions Senator Patterson has referred to the problems that voluntary groups in the welfare area have in providing emergency relief—might recall that the cash bonuses that the Government has promised to those senior public servants who receive an income which sometimes stretches over $100,000 will cost the Budget at least $40 million. Those welfare agencies may well reflect on the priorities of Mr Keating.

  As I have said, Mr Keating has promised new benefits for pensioners, substantial income tax cuts for all but the very lowest income earners, wage increases for all workers, new child-care provisions for young parents and further help for welfare agencies. All these promises are now in the process of being thrown out the window.

  One area of particular interest to me is the Government's promise that corporate taxes would be cut to 33 per cent. It has to be admitted that this is a significant cut. This cut is to be funded by bringing forward tax payments from companies. In 1996-97 the cost to revenue of the company tax cuts equals about $1.7 billion. Senator Sherry will confirm that the additions to revenue from bringing forward corporate tax payments will also be about $1.7 billion. The problem is that after 1996-97, the bringing forward of the corporate tax payments washes out of the system and the Government will be left, in a comparatively short period, with yet another black hole in the Budget stretching towards $2 billion. This is why I say that the irresponsibility of this Government in the last election campaign will be demonstrated in the coming months.

  I say to people who are listening that, if they received a promise from any Labor government member or Minister, now is the time for them to write to the Prime Minister and remind him of that promise. Now is the time for them to write to all Labor senators and members and remind them of the promises that they made, not only the specific promises they made to their group but also that they promised major income tax cuts and no new consumption taxes. I suggest to those who are listening that time is running short and now is the time to tell their Labor members of parliament what they think about governments that lie to the Australian people.

  The rules of this Parliament prevent me from calling Mr Keating a liar and a cheat, yet outside this Parliament these are the very words that the Australian electors are using when they refer to the man who would say anything in order to cheat his way into high office.