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Federation Chamber: Appropriation Bill (No. 1) 2015-2016
It is an absolute honour to be able to speak in relation to the Appropriation Bill (No. 1) 2015-2016 and the related bills. I think that, while she is a friend of mine, the member for Bendigo indicated very clearly in her contribution why the Labor Party will never be able to deliver a surplus and will never be able to show the kind of fiscal responsibility that Australians expect of their mature federal governments.
In essence, the Labor Party are now going around the country as a complaint box for every group who would like more money. They are promising lower taxes, higher spending and a better bottom line outcome for the budget. So that is higher spending, lower taxes and bigger surpluses. Now, if the Labor Party think that Australians are so silly as to buy that then I think they are going to be very sadly mistaken.
One thing that this budget does is that it meets three very important objectives. Firstly, it gives us a believable, achievable and fair path to surplus. Then, it does so whilst also restraining spending. As an earlier speaker made clear, over the forward estimates spending restraint is capped at about one per cent growth a year, compared to somewhere near three per cent when we inherited government. And the third objective that I think this year’s budget does quite successfully is to improve confidence in the economy.
In a sense, it is actually quite difficult to traverse those three competing objectives, because they do compete in certain areas. But improving confidence without hitting the bottom line has been one of the great outcomes of this budget. The first area that I would highlight there is, clearly, our small business package. It has been very popular, with accelerated depreciation of up to $20,000 for a piece of capital equipment that you may have had to depreciate over a number of years which can now be depreciated in the year in which you buy it. That means that from budget night until 30 June if a business purchases a piece of capital equipment up to the value of $20,000 they can depreciate it this financial year. That has absolutely reverberated through the small business community and it is delivering confidence in spades.
The beauty of the policy, though, is that whilst it does that there is not a huge budget impact. In a sense we are freeing up small businesses to take the chance, to take that next step and to expand their business. The economic benefits that will flow from that, in my view, will be increased tax receipts that outweigh the costs of the accelerated depreciation. So it is quite an extraordinary outcome and I think it is quite instructive for both sides of politics that we can make sensible budgetary changes—changes that improve confidence in the economy—that do not have a huge bottom line impact on the budget.
I know that goes against the Labor Party’s philosophy, which is that government is just one big spending competition—that we run around the country and have a competition as to who can spend more money. As Liberals, we accept that we can never win that competition. If government in this country becomes a competition as to who can spend more money then, guess what? Labor, you will win every time! In fact, we do not want to win that competition. We want to deliver the kind of responsible economic management of this country that frees up individuals and small businesses to do the things that they do best, and that is to create wealth for themselves. A benefit of that is that they create wealth for the rest of the country that we as a government take from them and redistribute to other people.
Let us never forget that. Every dollar that we spend is taken from somebody else. So I think that this budget, in quite an efficient way, manages those three priorities: it has a path to surplus and spending restraint but improves economic confidence.
I have spoken about the small business package in very broad strokes. I want to speak about it in a little more detail for the next couple of minutes. Obviously, the 1½ per cent tax cut for incorporated small businesses is good news for those small businesses that are incorporated. But, given the deep small-business background of many of us in this House, the Minister for Small Business, and, indeed, the Prime Minister and the cabinet, have done an extraordinary job in recognising that lots of small businesses are not incorporated. So there is a tax cut also for unincorporated small businesses of five per cent, up to $1,000. That means that every small business, or a very huge proportion—92 per cent—of small businesses will be receiving a tax cut through those mechanisms.
Of course, accelerated depreciation has been exceptionally popular. I have seen examples of it in my own electorate. Last week I visited a number of small businesses. I visited Cafe Emjay in Ringwood East; Bill and Mary do a wonderful job there and they are potentially looking to expand their business. I visited Daisy’s Garden Supplies; they have significant investments in plant and equipment. Anything we can do to help them make those investments—to help them to actually pull the trigger on making those investments—will reverberate throughout the Australian economy.
I also visited Dewar Electronics, a business that is 45 years old; they were very pleased to say that I was the first member of parliament that had ever visited them in 45 years. What an outstanding success story this business is. They are competing on the world stage now—competing against really big global competitors, from China in particular—but they are holding their own. And they are holding their own because they are a small family business where, when times get tough, the wagons circle and they make it work. They get their costs under control. And they have got an exceptionally loyal workforce which provides them with benefits that I think all small businesses need.
Let us remember why we want to help small businesses. Often, small businesses treat their employees more like family than employees. Having grown up in a small business family, I can tell you right now: the rent gets paid first, the utilities get paid second, the employees get paid third, and if there is any money left over at the end it goes to the small business operators. And, for many small businesses, there are months and sometimes years when a payment to the small business owner never happens, because they are reinvesting into the business or times are tough and they are trying to build up the business. They pay themselves last. So anything that we can do as a government to assist small businesses to flourish helps not only them but also their employees because it creates opportunities.
One of the lamentable aspects of our current economy is that we cannot rely on the top 50 or top 100 ASX-listed companies to provide us with the jobs growth that they have in the last 40 years. Many of them are sitting on very healthy balance sheets. They have been able to repair their balance sheets since the global financial crisis. But those investments, certainly in our human capital—in growing our workforce—are not happening at the rate we would like. So this package recognises that the jobs of the future will be coming more and more from young entrepreneurs and small businesses, and that anything we can do to kick-start their growth is going to be good not only for them but also for the broader economy.
In my state of Victoria, we also, in the budget, had a couple of very good infrastructure announcements. I was very pleased to see that $3 billion has been set aside in the budget for the East West Link. This is obviously a very lamentable policy area in my state of Victoria, where we have a state government that has spent up to $1 billion not to build a road. Nonetheless, we think, and certainly my electorate believes, that this piece of infrastructure is absolutely crucial—not only for the liveability of the eastern suburbs of Melbourne, and not only so that parents do not spend all their time in their cars on their way home from work but actually get to spend some time with their children, but also for the productivity benefits and the 7,000 jobs that will flow. So $3 billion has been set aside by this federal government for any future state government that is willing to build the East West Link.
I think slowly but surely Dan Andrews and the state Labor Party, and hopefully Bill Shorten, will recognise this. The pressure will become too strong and too great for them and they will capitulate and recognise that spending up to $1 billion not to build a road in a city that is growing by hundreds of thousands of people was just the most outrageous decision ever and they will take us up on our offer. They will accept the $3 billion that we are generously putting on the table and they will get the East West Link built.
I do not want to get into the politics of this anymore. I just want to improve the lives of my citizens. I want to improve the lives of people living in the eastern suburbs of Melbourne, and how can you live in a big city if you cannot get around? How can you actively participate in an economy if it takes you hours and hours to get from one meeting to another? So we have big challenges in dealing with transport infrastructure in Victoria, and I think the $3 billion that has been set aside by this federal government in the 2015 budget will be something that Victorians thank us for in the future, because the East West Link will be built. It will be built, and when it is built I think our residents will be very pleased and will hopefully by then be very grateful for the bipartisanship on the issue which we had for many, many years. The support for the East West Link was bipartisan for nearly a decade.
In my electorate of Deakin, we also had an outstanding announcement with respect to $3 million from the National Stronger Regions Fund for the Realm project, which is an initiative involving the federal government, the Queensland Investment Corporation and Maroondah City Council. It will build an innovation hub in Ringwood, a hub that dovetails very nicely into our small business package. It will offer support for small businesses. As the Minister for Small Business often says, and to borrow a phrase from him, it will help our ‘mumpreneurs’—people like my sister who have set up very successful small businesses from home, people who are looking to innovate, people who are looking to invest in R&D, people who are looking to take advantage of the free trade agreements that this government has successfully negotiated with Japan, Korea and China.
It will be an innovation centre that helps them unlock these opportunities, because one thing we know is that 20 years ago a small business had a small catchment in its own area, but nowadays, like my sister’s business, a small business has a catchment of customers around the world. So how can we help people like her access those opportunities? The Realm project in Ringwood and the $3 million commitment from this federal government under the National Stronger Regions Fund is going to help them unlock those possibilities. By unlocking those possibilities, we will improve the job prospects for our young people because we will have vibrant small businesses and, hopefully, small businesses growing into medium and large businesses into the future.
Other speakers in the debate on this bill have spoken about our support for families package. Obviously I think every member of this parliament, when travelling around their electorates, would hear the lamentable stories from various constituents about how difficult it is, often but not always, for mothers to juggle work and commitments to children—not only the funding of child care but the logistics of getting them to and from child care. So anything we can do to assist with those challenges I think is important, and this is one thing that the package does.
There is $3½ billion of additional funding to support families, which will hopefully have a couple of dividends for our society. The first dividend will be increased participation. I know this statistic is reeled off a lot by government members, but I think it is very important. If we had a female participation rate akin to the rate in Canada, an economy comparable in many ways, the dividend for our economy would be in the tens of billions of dollars. So we are hopeful and indeed the research indicates that our jobs and support for families package will have that dividend.
Finally, one thing that has not been spoken about a great deal is some of the great work that Sussan Ley, the Minister for Health, has done in this budget, firstly in confirming our support for the Medical Research Future Fund. One of the more depressing aspects of last year’s discussion and debate was the negative carping about the Medical Research Future Fund.
Why have Australians enjoyed better health outcomes and higher average life expectancy over the past 20 or 30 years? It is due primarily to medical research. And anything we can do to turbocharge medical research, which is an area of absolute competitive advantage for us, is I think important. So, the $400 million for the Medical Research Future Fund, and indeed an ongoing commitment from this government that we will ensure that the Medical Research Future Fund ultimately reaches its capital amount of $20 billion, will then enable it to fund ongoing medical research, particularly in my home state of Victoria. We are the medical research powerhouse of this country. Sure, I have a parochial interest in medical research as well, but I think that was an outstanding and not-so-spoken-about aspect of this budget.
I congratulate the Treasurer. I think that here we get to meeting the three competing objectives of returning to surplus, restoring economic confidence and exercising spending restraint. I commend the bill to the House.
Click here for the Hansard transcript.
For more information on the 2015-16 Budget, please visit budget.liberal.org.au
Click here to view a video of this speech on YouTube.