SPEECHES

Appropriation Bills

22 Mar 2017


Dr CHALMERS (Rankin) (16:15): I thank the House for the opportunity to rise today to speak on the appropriation bills and to support, as these bills do, the ordinary functioning of government. But these bills, as always, are about more than just the ordinary functions of government; they go much broader and much deeper, to the fiscal and economic conditions and the fiscal and economic policies of this government and to the alternatives on this side of the House.

We have less than two months to go until the government hands down its budget—the Treasurer's second and likely final budget, to be handed down in May from the dispatch box over there—and the sad reality for Australia is that this is a government which is too divided, too dysfunctional and too out of touch to put together a budget which legitimately deals with and which is in the interests of Middle Australia and people who work for a living. Theirs is a nasty, right-wing, extreme trickle-down agenda, and we saw it again today with the resurrection of some of the very worst cuts from the 2014 budget, arguably the nastiest budget in the history of the Commonwealth. Now we have seen this Prime Minister and this Treasurer reach up on the shelf, dust off the Abbott-Hockey budget of 2014 and resurrect some of the meanest cuts from that budget.

There are many reasons why those opposite have made such a mess of the budget, but key among those reasons is not just their willingness but their intent, their desperation, to shower largesse on the top end of town at the expense of the most vulnerable Australians and the hardworking people of Middle Australia. Anyone who thinks that this country's biggest challenges are that low-income people get paid too much, that big multinational corporations pay too much tax or that it is too difficult to sledge and slander someone on the basis of their race— anyone who thinks that the highest policy priorities of this parliament should be supporting cuts to penalty rates, giving big business tax cuts that the country cannot afford or watering down important protections against race hate speech is not just out of touch; they are from another planet.

The budget situation is dire. In between the government's first budget in 2014 and their most recent update at the end of last year, we have seen the budget deficit more than triple, from about $11 billion to about $37 billion, and, from the day the government came to office until the last update, we have seen debt in this country blow out by much, much more than $100 billion. As a consequence of all of those failures, we now have that hard-won AAA credit rating seriously jeopardised by the mess that those opposite have made of the budget. We on this side of the House are taking our typically and characteristically constructive approach to budget repair. Because we see a need after the deficit has tripled, debt has blown out so substantially and the AAA credit rating is at risk, we are taking a constructive approach.

Where we differ is not on the need for budget repair but on the way to go about it. We do not think that the best way to repair the budget in this country is to go after the weakest in our community while showering largesse on big business—and that is before we even get to the $17,000 personal income tax cut that a millionaire will receive from 1 July this year. We are providing leadership on this side of the House. We are demonstrating with our policies and with our actions that budget repair can be fair and that we can satisfy three key objectives of economic policy: to ensure that growth is inclusive, that hard work is rewarded and that there is a decent safety net for those who are left behind. In that context, with those three objectives in mind, we will always be about budget repair, but budget repair which is fair.

Our constructive approach begins but of course does not end—it goes well beyond—with supporting these appropriation bills. We, of course, will not be blocking the supply bills that are before the House today; they are required to ensure the ordinary function of government and to ensure that that continues for the remainder of this financial year. The bills appropriate something like $2.2 billion, which is already incorporated in the budget bottom line, as presented in the mid-year update late last year, and this is in addition to the amounts which were already appropriated by the supply acts and the appropriation acts last year. But, as I said, it is important to put these bills in the broader economic and fiscal context. If we begin with the economy, we note that, yes, there was a rebound in growth in the last quarter. That was thoroughly expected, after the disaster of the quarter before—the economy actually shrank in the quarter before last. We did get a decent headline figure in the most recent national accounts, but I think it is fair to say that that does really mask some troubling and some concerning trends that we have been witnessing in the macro economy.

One of those, of course, is that we have inequality at a 75-year high in this country. What troubles me about that is that it has flow-on consequences for social and economic mobility in our suburbs that I represent, in the suburbs the member for Barton represents and right around the country. When you have inequality at 75-year highs, that does have the capacity to feed into intergenerational immobility, which is something we care very deeply about on this side of the House, as I know my colleague the member for Barton—who is here at the table—does. I think where people are particularly hurting, when we think about the broader economy and the issues behind the headline growth rate, is really in the world of work and wages. That is where we see, unfortunately, low-income earners in this country under such substantial attack.

You have to scratch your head sometimes when you hear the Treasurer. Unfortunately, I am unable to make the choice that most Australians have made, which is to ignore the Treasurer, so I listen to what he says. In the last couple of weeks he must have got some sort of focus group report back that said that people actually care about their wages, so from time to time now we get the sense from the Treasurer that the government are all about wages, that they want wages to go up. There are so many ways in which that is an absurd statement, given the policy agenda of those opposite. He says, 'We want wages to be higher, and that that is one of our key objectives.' One of the many key reasons that the Treasurer has become such a laughing stock in this country is that he insists that he is all about higher wages at the same time as we have yearly wage growth at just 1.9 per cent—another record low under this government. It is worth noting that, if wages had grown over the past 12 months at the same rate as they did under the Labor government, the average worker in Australia would be over $1,000 better off than they are today. Probably most tellingly, most absurdly given the Treasurer's comments, penalty rates are being slashed, not just with the support of those opposite but really cheered on and campaigned for by those opposite. They are desperate to see low-income people in this country get paid less and they are desperate to see multinational corporations keep more. It really is an absurdity.

There are so many reasons why the Treasurer has become a laughing stock. Another is that he says he is all about growth, when, as I said before, the economy went backwards in the September quarter, the quarter before last. The economy actually shrank. It is only the fourth negative quarter in the last hundred, but it is the first one that cannot be explained by anything other than the Treasurer's incompetence. The first negative quarter was when the GST was introduced in 2000, the second was when the GFC was at its peak in 2008 and the third one was when the Queensland floods decimated a big chunk of the Australian economy in 2011. This Treasurer has nothing like that to point to for his negative quarter of growth.

The Treasurer is a laughing stock because he claims he is all about jobs, when 23,000 full-time jobs disappeared in the past year alone, and unemployment has jumped to 5.9 per cent, which is the highest in over a year and back to GFC levels. Given what is going on around the world right now, it is pretty remarkable to think that unemployment in this country is the same as it was during the sharpest synchronised downturn in the global economy since the Great Depression. The government has overseen record underemployment—something like 1.1 million people want more work but cannot find it. When you combine the unemployed with the underemployed, something like 1.8 million Australians are underutilised in the labour force. The total number of hours worked has decreased. We have seen youth unemployment hike a full percentage point to 13.3 per cent in the latest figures. The list goes on and on. This is a Treasurer who says he is all about jobs, and that is his record.

After all the bluff and bluster about budget emergencies and moral imperatives, we have a situation under those opposite where the deficit for this year, as I said, has more than tripled, from $11 billion in the first budget to $37 billion now, and debt is $133 billion bigger now than the day on which they came to office. The government says they have no money for child care or no money for the NDIS unless they smash the most vulnerable communities and the most vulnerable people in this country. If you ask them to find $50 billion to give to the big banks and the big multinational corporations, they can find that no dramas—that is easy enough. But, if you ask them to properly invest in the social safety net in this country, they are nowhere to be found. So the Treasurer is a genius, really. He has gone on and on about higher wages, more jobs, more growth, improving the budget, and instead he has delivered lower wages, patchy growth, GFC-level unemployment, record underemployment, more debt and more deficits. That is the record of those opposite.

One of the main arguments for the tax cut—I will get to the tax cut in a bit more detail in a moment—is that if companies earn more then they will pay their workers more. It beggars belief that the Treasurer has not noticed that, at the same time as we have had record low wages growth, we have also had soaring company profits. The link between the two has been severed. But the poor old Treasurer over there still thinks there is some link there. He has not been able to grasp the problem that we have right now, where companies are reporting something like a 20.1 per cent surge in profits in the December quarter during the same period in which wages grew by only 0.5 per cent. This is what is happening in this country. It is not something which is just cheered on by this government; it is an outcome which is actively sought. It is something that those opposite drool over. They love the idea that, in their time in government, they can increase the profit share for companies and decrease the wages share for ordinary Australian working people. It is disgraceful.

Those opposite are so out of touch that they want to give a pay cut to up to 700,000 workers, who stand to lose up to $77 a week from their pay packets, and they want to do that when they know that it particularly hurts low-income workers. My electorate is one of the top 10 most impacted electorates by this decision because it has such a high number of retail and accommodation and food service employees. They want to do it when they surely must know the impact on demand that taking all of these wages out of the economy will have. They must understand that, when low-income people are paid less, there is less money to go around and less demand in the economy, and that has broader consequences for the economic conditions in this country. That is some of the economic and policy context for these bills. That is the real story of jobs and growth in wages in this country. Now let me turn to the budget more specifically.

This is not an opinion; it is a fact. It is in the government's own budget papers. However you look at it, the budget today is in much worse shape than when Labor left office. So, when those opposite come to the dispatch box and get into us about our fiscal record during the global financial crisis, any time they criticise the levels that they inherited, they fail to recognise, they fail to confess and they fail to take responsibility for the fact that on each of the key indicators the situation has become much, much worse. Since their first budget, the deficit has tripled from about $11 billion to about $37 billion this year. Net debt has blown out by well over $100 billion since the 2013 election. This is the fiscal record of those opposite. With a debacle like this, it is no wonder that the ratings agencies are circling. They have been warning for some time of a downgrade of Australia's prized AAA credit rating, which Labor worked so hard to ensure. Under Labor, for the first time in Australia's history we got a AAA rating from the three big ratings agencies. We did that during the global financial crisis: we became part of a very exclusive club who had that AAA from the three agencies, and now that is at risk.

And why we care about this is because a downgrade in our credit rating means higher mortgage repayments for Australians. One reputable outfit estimated something like $720 a year in extra mortgage repayments, so we care about the AAA, because it flows through to mortgage repayments. We also care about the AAA because, if we lose it, it has the capacity to smash confidence in our economy, and that is a very damaging thing for the government to be responsible for. They would love to pretend, after almost four years, that somebody else is in charge of the budget. But, if we lose the AAA credit rating, they will have nobody else to blame apart from this Prime Minister and this Treasurer, having been in government for nearly four years and, over each of those four years, the budget is getting progressively worse.

One of the galling things of course is, as I said before, a government that says it cares about jobs and growth and wages and all of those sorts of things is actually exacerbating and accelerating the economic and fiscal problems that we are facing. It is true of the wage cuts. It is true of the attacks on vulnerable people—and we saw more of that today in the omnibus bill—and it is true of the big business tax cut. We call on the government, as we have been for some time, to finally bury the 2014 budget; instead, they pick it up and run with it again. We call on them to ditch the $50 billion in tax cuts for the big banks and the big multinational corporations in this country.

We tried to do the Treasurer a favour today: we gave him multiple opportunities to stand at the dispatch box and say that he would abandon that ram raid on the budget—the $50 billion for big business—which the country cannot afford. But, he could not back them in, because he is getting all this pressure about these deeply unpopular tax cuts. He could not back the tax cuts in but nor could he ditch them. The reason he could not ditch them is that he knows that, if he ditches those tax cuts, that will be the final humiliation. He knows that all of those behind him sit in judgement of his poor performance, not just in question time but in the budget and in the economy. He knows that he probably cannot survive one more humiliation like having to drop the absolute centrepiece of his so-called plans for jobs and growth.

He knows that the cheering that was once there when he was the immigration minister—all the adulation and all the 'Hear, hears!' that he used to get; I have not heard any of that for months. He has not been backed in for months. He is out on his own and he knows that, if he ditches that tax cut, it will be the final humiliation in a whole pile of humiliations. Because most of the bright ideas on that side of the government—things like linking the NDIS to a tax on vulnerable people, things like linking the childcare package to a tax on vulnerable people— generally emanate from the Treasurer's office with the full support of the Prime Minister.

Now the Prime Minister lectures about budget repair being a moral imperative but, until the Treasurer goes through that final humiliation, the government still has on the books a big business tax cut that Australians do not support and which the country cannot afford. The core of their agenda is: to take money from ordinary people and their hospitals and schools, and shovel it in the direction of the big banks—the worst kind of redistribution of wealth in this country in the wrong direction. It is the centrepiece of their economic plan. It is the only piece of their economic plan and it is such a farce that, even if they implemented it, it will see a 1.1 per cent increase in wages growth in 20 years’ time. That is $2 a day in 20 years’ time. This company tax cut that they have attached all of their hopes to is such a laughable prospect. The Grattan Institute has warned that the handout would reduce national income for years and that committing to the handout before budget repair risks reducing future living standards. There are all kinds of quotes that I would read out, if I had more time.

We know that even some in corporate Australia—including David Gonski, including the Australian Institute of Company Directors, who are in the building today—have said that the company tax cut is not the be-all and end-all for growth in this country. They understand, as we do on this side of the House, that if you want to grow the economy, you need to make sure you get the infrastructure right; you need to make sure you get the human capital right; and you need to make sure that growth is inclusive, because social inclusion and economic growth are complementary, not at odds. We understand these things on this side of the House.

On that side of the House, they think that, if you take money out of hospitals and schools and give it to the big banks, somehow that will miraculously flow through to growth in the economy. They think that somehow a $7 billion tax cut for the big banks will improve the life of a hospitality worker. It is just laughable and no wonder, even corporate Australia is saying—trying to tell them and send them smoke signals through the pages of the Fin Review—that this is not the be-all and end-all of growth in this country.

Another reason why the company tax cut is such a big problem for the budget is that, if you apply even a very conservative calculation to the $50 million that the government would need to borrow to fund this tax cut and if you apply a conservative assumption about interest rates not only would it cost the budget $50 billion; it would cost the Australian people $4 billion in interest. Think about that for a moment. They are saying to the Australian people, 'Hey, we've got a great idea. We're going to smash Medicare a bit. We're going to support lower wages for you. We're going to take money out of your hospitals and schools. We're going to give it to the big four banks and, by the way, we're going to send you a $4 billion interest bill for the privilege of us smashing your living standards while we boost the bottom line of the banks and big multinational corporations.' That is the sum total of the government's approach, and Australians will not just pay the price with the cuts, they will not just pay the price with the extra debt; they will pay the interest bill as well and that is an absurd situation.

So we are less than two months from the budget and what we see on that side of the House is the budget is supposed to be being put together at this point in time. It is something that resembles a three-ring circus, and we have got all these clowns riding around on unicycles, trying not to bump into each other. We have got all of these messages sent through the pages of the paper—courageously and on background, of course. We have got the Prime Minister saying that the Treasurer is not up to selling the budget and that he might have to do it himself. We have got the Treasurer and the finance minister at odds over key policies. We have got the far right calling the shots. When the Prime Minister was up at the dispatch box in question time today, he could see his leash was showing, the leash that the far right uses to yank on, whether it is about race rate speech, economic policy or whatever else—as a wry smile breaks over the member opposite, who is one of the people pulling the leash. We have got this debacle, which the member opposite is involved in, over housing affordability and particularly whether or not they are for or against negative gearing changes, for or against capital gains changes. We have got the assistant minister here who would not rule out changing capital gains. We have got a finance minister who categorically ruled it out. We have got a Prime Minister who eventually ruled it out and we have got a Treasurer who has no position on the matter. That capital gains tax debacle really is a pretty stunning illustration that, with less than two months to go until the budget is due—until the homework has to be handed in—they are so focused on brawling with each other over key policies that the chances of us getting a coherent budget that actually deals with the real concerns that people have in our neighbourhoods, in our suburbs and in our towns—

Ms Burney: Zilch.

Dr CHALMERS: is absolutely, as the member for Barton says, zilch. There is no prospect of that happening, given the condition that those opposite are in. As I said, budget repair is necessary, but there is a much better way to go about it. We do not need a nasty, trickle-down agenda; we need decisions geared towards the three main economic objectives I mentioned before: growth that is inclusive, hard work that is rewarded and a decent social safety net for those at risk of being left behind.

Beyond the economy and the budget, the government's agenda has important consequences for our society and for our politics as well. We have a Prime Minister who likes to stand up at lecterns and talk about how worried he is about the outbreak of populism and the outbreak of protectionism. We are all worried about that. But the real issue is when you say to the Australian people: we are going to attack your schools and hospitals; we are going to attack your wages; we are going to cut your family payments; we are going to go missing on tax avoidance, because we always go soft on the big end of town—and by the way we are going to give away $50 billion that we took from your hospitals and schools and give it to big business. The only possible consequence of a policy agenda like that is to say to so many people in the broader Australian community that they are not being listened to by their government in this place.

No wonder, then, that people are looking for populist alternatives, when they have a Prime Minster with an agenda that is so at odds with the hopes, aspirations and ambitions of ordinary working people from Middle Australia and of vulnerable people as well, who just want a fair go from this government. They want a government that will listen to them. Instead they get this mob. Is it any wonder that the people have turned so starkly on the government and that some people are looking for alternatives? That is a very damaging thing for the Prime Minister and the government to have done. We will, as I said, continue to play a constructive role when it comes to budget repair. Our responsibility is not just to improve the bottom line but to improve lives. We have led the conversation. We have already demonstrated our bona fides when it comes to budget repair. Straight after last year's election, we put forward a budget repair package worth more than $8 billion over the forward estimates and $80 billion over the medium term. We are pleased to see that the government picked some of our policies, including an increase to the tobacco excise, changes to VET FEE-HELP and opposing the return of the baby bonus.

We also put forward reforms to negative gearing and capital gains, which we encourage the government to support for the sake of the budget but also for the sake of first-home owners. Like many of the proposals that we have made, we have found a way to have a win-win—something that can improve the budget but also improve the lives of people trying to get a toehold in a very difficult housing market, particularly in Sydney and Melbourne.

We negotiated with the government to secure $6.3 billion in budget savings in the first omnibus bill. This was more than what the government originally proposed. But what our negotiations did was civilise the original omnibus bill and help protect vulnerable people targeted by cuts. They saved the Australian Renewable Energy Agency as well. We are also being proactive in opposition when it comes to ways to improve budget transparency and how Australia's fiscal blueprint is presented to Australians.

I released our better budgeting discussion paper last month, and I am very pleased with the reaction, with different sections of the community making submissions. We sent it to leading academics, accountants, economists and stakeholder groups, and I am very pleased to see people engaging in that process in a constructive and very helpful way. That will open up a public conversation about the best ways to budget for capital and recurrent spending, how to more accurately paint the longer-term picture, how to increase the transparency of key issues and assumptions, and more of those sorts of things.

Instead of focusing on inclusive growth or budget repair that is fair, the Prime Minister's priorities, as I said before, are hopelessly twisted. We have a situation where this Prime Minister thinks that the three biggest problems in the economy—the three biggest challenges that we need to overcome together—are that low income people are paid too much, that multinational corporations pay too much tax and that it is too difficult to make somebody feel horrible because of their race. When you think about it that way you can see why the Australian people have turned, and are turning, on those opposite.

You can judge a government by what they do in the budget, the priorities that they demonstrate in the decisions that they make. We saw today in the omnibus bill more attacks on vulnerable people from the 2014 budget, where the Prime Minister just rubbed out Tony Abbott's name and wrote 'Malcolm Turnbull' on there instead, in cuts to family payments—we have seen it in all kinds of ways today.

My Labor colleagues and I will continue to lead the way when it comes to setting the policy agenda and fixing the budget. We will continue to play that constructive role. We will agree with budget repair measures where we can, and we will disagree where we must. We will not support measures that unfairly target the most vulnerable people in our community nor ask them to carry the heaviest burden for the government's budget failures. We will keep offering alternative, responsible policies and savings measures, as is our role in opposition, and we will always prioritise budget repair that is fair.



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