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Second Reading: Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014
I obviously rise in support of the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. It is quite an extraordinary set of circumstances for leaders here today, to put this bill in front of the House to remind the Labor Party that they are now blocking savings, worth $2.8 billion over the forward estimates, that they took to the last election. Speakers on this side of the House have gone through ad nauseam the irony of that approach and how irresponsibly reckless and, quite frankly, embarrassing it is for the Labor Party.
For a Labor Party person to walk into this House and say, ‘I campaigned with this legislation as part of our policy manifesto before the last election and now we’re voting against it, even though we left the budget in a parlous condition,’ I find extraordinary. I think they should really hang their heads in shame. It is absolutely unbelievable that they would block these savings measures.
The coalition have repealed the carbon tax, we have delivered household savings of $550 per year for the average household, so we no longer have to continue with the second round of compensation in tax cuts that was associated with the original carbon tax proposal from the Labor Party. So on what basis could you argue that that $2.8 billion that Labor itself took to the last election, which we agreed to before the last election, should not pass this House? It is quite extraordinary.
The Labor Party, unfortunately, view government in a very unusual way. In my view, the problem with the Labor government—and, quite frankly, they are unreconstructed over there in opposition—is that they view government as a big spending competition. They think that you go to an election and if you promise to spend more than the other mob then you will get elected. They run around the country and treat it like a spending competition. Let me say to the Labor Party: if that is what government in this country is, we will not participate. We can never win that fight, because we know Labor will always spend more. If it is a pure spending competition, Labor will govern forever. But the problem is: if Labor governs forever, we will end up with budgets like the worst European budgets, in the most parlous fiscal circumstances. I must say to the opposition: the Australian people know that. For somebody to walk out into the street and tell their constituency that they are voting against saving measures in the fiscal environment that we now face, that the Labor Party took to the last election, I think is absolutely embarrassing.
No-one should forget that, when we came to government, debt was projected to rise to $667 billion. We had $123 billion of cumulative deficits over the forward estimates. When debt peaked, as it was projected to at $667 billion, it was going to cost $3 billion a month in interest payments, that is, $133 million a day in borrowings that the government would have to enter into, just to keep the lights on—not to actually do anything, not to build infrastructure, not to build the productive capacity of our nation but just to keep the lights on. Thankfully, with the election of the Abbott coalition government, we understand that that is not sustainable. The Australian people understand that is not sustainable. The only way that I can explain why Labor would continue down this reckless path of blocking savings such as these is that the opposition are in so much denial over the debt and deficit disaster that they left this country. These measures should be a no-brainer. This should be $2.8 billion that we can bank to the bottom line. Given that we are still looking at debt and deficits for a number of years, the Labor Party need to assist, need to repent for their sins in government and need to go a small way in helping us get to that point.
But the Labor Party have got form here. This $2.8 billion of their own savings, which they are now forgetting about, is in addition to other savings of their own that they are blocking, including the change to Labor’s Student Start-up Scholarship, which was a $2.1 billion savings measure; a change whereby an efficiency dividend would be applied to university funding; and the abolition of a discount for paying HECS fees up-front—a $336 million saving. The Labor Party believe that all of these savings measures that they took to the last election no longer need to be made.
We on this side of the House are absolutely determined to fix the budget. We do not believe that engaging in intergenerational theft should be on the conscience of any government. So I appeal to the Labor Party: if you are not too ashamed, if you are not too embarrassed to be blocking these savings measures, look into your own conscience and look at the fact that the next generation of Australian taxpayers will ultimately be the people who pay the price for Labor’s profligacy.
As I said at the beginning, the fact that we are even having this debate and that we have got to this point is the culmination of a fairly extraordinary set of circumstances. We have the opposition leader and the shadow Treasurer in absolute denial about the former Rudd-Gillard-Rudd governments’ fiscal inheritance by this country. But I would appeal to the backbenchers in the opposition. These are the kinds of measures that we should be able to get together on in this House and make happen, because future governments on both sides of the House in this country, one way or another, are going to have to tackle these issues. If the Labor Party are going to take measures to an election that they then repudiate afterwards, presumably just to make life a bit more difficult, I find it quite extraordinary. As a relatively new member to this House, I never, ever thought it would be an argument or discussion that we would have to have.
Obviously, these budget saving measures are being discussed in the context of a very well-received budget. Particularly in my electorate of Deakin, I can say that the small-business tax measures have gone down very well. The Jobs for Families package has been absolutely welcomed by my electorate. But I want to highlight the juxtaposition of those measures and the measure that the Labor Party is blocking today. There are ways that governments can improve confidence and the productive output of our economy with quite modest expenditure. In my view, the small-business tax cuts, and most particularly the accelerated depreciation—being able to write-off capital equipment up to the value of $20,000 in the year in which you purchased—is going to have such an impact on confidence that ultimately, I think, the tax receipts that that confidence will engender will outweigh any cost to the budget of the accelerated depreciation. That is where governments need to be now. That is the space we need to be in. How can tax measures and tax policy encourage economic growth and activity and encourage the entrepreneurial spirit of this country, because that is going to be one of the important ways that we ultimately get out of the debt mess that Labor left us. Sure, we need expenditure restraint—we inherited expenditure running away at over 3.5 per cent growth per year. Sure, we need to ensure that our tax system is more efficient, as well. But ultimately, if we are going to get Labor’s debt under control, there will also need to be an element of increased confidence and increased economic activity to grow the pie and grow tax receipts. That is where we need to be making those investments when we are tweaking tax policy. So accelerated depreciation, in my view, is going to have a negligible impact on the bottom line because, I think, the economic activity that flows from it is going to ultimately outweigh any short-term cost to the budget.
Here you have Labor blocking $2.8 billion of savings that they took to an election that are just going to be a drag on the bottom line. They are not going to increase participation, increase the productive capacity of this country or increase confidence. They are just going to be a hit on the bottom line.
The other example I would use is our Jobs for Families package. Sure, we are making a huge additional investment, particularly in child care. But again, I think that investment will ultimately be outweighed by the increased productivity that will flow from parents either re-entering the workforce sooner than they otherwise would, or being employed for longer every week than they otherwise would—working that extra half a day, doing that extra couple of hours each day, or going back to work a bit earlier because it makes sense because the costs of child care are no longer a disincentive to going back to work. So again, that $3.5 billion additional investment in child care, which already has many billions of dollars in the budget, in my view, will unlock economic potential, economic activity and, most importantly, the participation of parents in the workforce. Again, in the long term this will have a positive impact on the bottom line.
So I say to Labor, this is the space that governments have to be in. How do we tweak tax policy, how do we reform tax policy, to grow the pie? That will have spin-off benefits for the government, hopefully, in increased tax receipts, not because we are increasing each dollar more, but because the pie is bigger. That is ultimately how we are going to get to where we need to be, which is running budget surpluses.
Unfortunately, a big misconception in the community is that once you run a budget surplus you can celebrate. Unfortunately, with the debt that we have inherited from Labor, we are going to have to run surpluses for many years to pay the annual interest bill and to pay the capital amount of the debt. I was a relatively young kid when the Howard government was first elected, but it took them 10 years to pay off $96 billion of debt. We have gone a long way in reducing the $667 billion debt trajectory that we inherited, but there is well over $300 billion that we will have to repay, and it will take a lot longer than 10 years to repay that debt. So, even though I am very confident that we will get to a believable, credible, fair surplus under Treasurer Hockey, the job will then have only begun.
And we will never get the job done as a country if this absolutely mindless opposition continues to savings measures you took to an election. I say to the Labor Party: if you think Australians are that silly I think you are going to be sorely mistaken. In this country, if you vacate the space on fiscal reform and improving the budget bottom line then you are so out of touch with where the Australian public is that you are in real trouble. So I say to the Labor Party: you should be reflecting on this and I would encourage you to support this bill, because these are sensible budget savings. They are savings to remove compensation and tax cuts associated with a carbon tax that no longer exists, so it makes absolute sense for this House to pass them. Let us do it quickly, and let us deliver these benefits for the budget and, most importantly, for the Australian people. (Time expired)
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