Speech on Appropriations Bill (No. 3) and related bills

27 February 2014

Dr CHALMERS (Rankin) (11:39): I rise today to speak on the appropriation bills. The bills, as the House is aware, are required to pay for the spending announced by the government since the election in September last year, as well as the cuts outlined in the Mid-Year Economic and Fiscal Outlook. In summing up the midyear update, I find it very difficult to improve on one commentator's view of the document, which is that it was a 'crass political confection'. MYEFO was really just a big, excuse-making exercise. It was a politically motivated document. It was not particularly subtle, which is a pretty common experience from this government. And I must say, just in passing, that I find it hard to hear a speech from the member opposite, the member for Canning, about fiscal responsibility when he is someone who uses the taxpayers' dime to look at rental properties.

The MYEFO document was just a warm-up act for what is to come in the budget in May this year. That budget is going to be a betrayal budget: it will be a budget full of broken promises and it will be a budget based on a big con. We know that because those opposite talked before the election about a budget emergency, and then, last year, after they were elected, they added something like $12 billion to the bottom line in the space of just a few weeks. If they were serious about this budget emergency, the Treasurer would not have spent that $12 billion, which included an almost $9 billion gift, which was not asked for, to the Reserve Bank. We also know that they went to the election promising to pay back the debt, and then when they got elected they sided with the Greens, with the member for Melbourne, and others in the parliament, to give themselves an unlimited credit card for debt.

All the talk before the election of a budget emergency was a pretty obvious political strategy to construct an excuse to rip and tear at the social safety net and to hurt middle Australia. The PM, when he was the opposition leader, spoke endlessly during the election campaign of Australia's skyrocketing debt. He either failed to understand or refused to understand that the international credit agencies rated Australia's economy and its fiscal position as AAA, with one of the lowest debt levels in the OECD. The first time that the big three ratings agencies gave Australia the AAA rating with a stable outlook was under the former Labor government. It is something that did not occur when Peter Costello was Treasurer and John Howard was Prime Minister.

In confecting his budget emergency, the current Prime Minister was trying to manipulate the community, to con the community, in order to justify harsh cuts fuelled by a cruel and uncaring ideology. As part of this strategy, the MYEFO that came out in December was nothing more than 81,000 words of excuses, or 276 pages of the longest and most obvious exercise in finger-pointing in memory. The then opposition leader promised in his campaign launch speech a 'no surprises, no excuses' government. He promised before the election to restore accountability to government, to take responsibility, but now we see him refuse to accept responsibility for the budget blow-out that was revealed in the Mid-Year Economic and Fiscal Outlook. The Prime Minister even went so far as to describe that document as Labor's last budget statement—an extraordinary failure to understand that he is now the Prime Minister. It has not yet dawned on those opposite that they are now the government and that they must take responsibility for their own budget decisions.

By far the biggest spending in that midyear update was the $8.8 billion grant to the Reserve Bank fund. We were fortunate to be able to speak to the Governor of the Reserve Bank at a recent public committee hearing. It was very clear from that committee hearing that the one-off nature of the grant was due to the Treasurer's request, and anybody who knows anything about the sort of manipulation of the budget that those opposite seem to be pursuing right now knows that the objective of that one-off grant was to take a hit to the budget in the near term, blame Labor, and then get dividends in the ensuing years. In that committee hearing it was very clear that it was the Treasurer's idea that it be a one-off payment. The Reserve Bank was not particularly troubled by whether it was to be a one-off payment or not, but the Treasurer insisted. I think that is a fairly unfortunate relationship to have with the independent Reserve Bank.

The other key component of the MYEFO blow-out was a change in methodology used to forecast revenue and transfer payments. I know when people talk about revenue forecasts a lot of people's eyes glaze over, but in this context it is important because it goes to the political strategy being put by those opposite, which can be seen in the methodology that was used for forecasting unemployment, for example, prior to the MYEFO. The Labor government used the same methodology that was used by Howard and Costello; the incoming government, the Abbott government, changed that methodology. They also changed a lot of the forecasts from the independent pre-election forecasts that were provided a couple of months before.

Unsurprisingly, the Treasurer came up with a way to be more pessimistic about estimates of revenue and transfer payments so that he could exaggerate the deficit that Australia will face this year and in the forward estimates. It is just part of that political strategy. We know this because, of the almost $70 billion in additional accumulated deficits over the next four years, $54 billion comes from that forecasting fiddle that I just referred to and almost all of the rest comes from spending decisions he has taken since the coalition was elected nearly six months ago. So again it is very clear that the Treasurer has manipulated the numbers in the MYEFO to create a case for savage cuts now.

When the Australian people voted for those opposite to form a government, they did not vote to line the pockets of the most wealthy in our community with money snatched from the most vulnerable, but that is what they got—this reverse Robin Hood that the government seem keen to pursue. The government scrapped the low-income superannuation contribution, a yearly tax refund of $500 for the 3.6 million low-paid workers in Australia, with the retail and hospitality sectors being hit the hardest by this cut. On the same day as its formal announcement, the government gave the 16,000 wealthiest people in the country a tax break on super earnings above $100,000 a year. The people benefiting from that tax break typically have more than $2 million in their superannuation accounts.

These cuts for low-paid workers and tax breaks for the wealthy are indicative of this government's regressive approach to fiscal policy. Unfortunately, this is just a sign of things to come. There have been plenty of half-announcements, plenty of whispered leaks to newspapers, plenty of plans floated by ministers, plenty of 'wait and see', but the ones that stand out are the health minister's refusal to rule out the $6 GP tax and the social service minister's secret plans for the disability support pension—and, of course, on top of that, the PM's refusal to rule out changes to the age pension.

All of these changes, all of these thought bubbles and all of the cuts that were announced in MYEFO are a warm-up act for those to come in the Commission of Audit. We had a very interesting story today in the Financial Review which referred to the Prime Minister's Paid Parental Leave scheme, which of course gives up to $75,000 to some of the wealthiest mums in our community. That was really quite an embarrassing leak for the Prime Minister, because he should not need a leak like that or a Commission of Audit to tell him that it is wrong to take money off the most vulnerable and give it to the most wealthy mums in our community.

I am from Queensland and we have seen the Commission of Audit strategy play out before. We have seen this approach taken by Campbell Newman as well. He had a Commission of Audit, again headed up by an LNP mate—this time Peter Costello—and he used that Commission of Audit to justify brutal cuts to health, education and services. I think the recent results in the state by-election in the seat of Redcliffe, where our friend the former member for Petrie won so resoundingly, show that the community rejects this sort of Commission of Audit process.

Treasurer Hockey's Commission of Audit will be in the same mould as the Queensland one. We know this because of the way they hand-picked the Commission of Audit panel. He picked it from a very narrow part of society. We welcome business involvement, obviously, in the development of policy, but our point is that, if you do not want a predetermined outcome, you need to have the broadest possible representation on a panel as important as the Commission of Audit panel. If you were fair dinkum about getting a fair result, you would put representatives on there of the charities sector, the welfare sector and the labour movement and from right across the community. So I think that shows that the Commission of Audit outcomes are largely predetermined.

They know what they are getting. It will be a re-run of the big business playbook that we have seen before. We also know that the Treasurer got this Commission of Audit report 13 days ago. It is apparently something like 900 pages. I think it is time for the interim report to be released so that Middle Australia knows what this government has in store for it.

Labor of course supports responsible budget repair, but not on the backs of Australia's most vulnerable low-income earners. Budgets are ultimately about priorities, and to sum up this government's approach it is a war on the weak. They are the type of government who will cut more than $11 million from a multicultural communities program but can find room to pay for a tax break for the wealthiest in the superannuation system. They are the type of government, as I said, who will give $75,000 to millionaire mums who take leave to have a child but will deny a pay rise to low-paid child care workers. They will look for ways to justify cuts to our most disadvantaged on the DSP but are happy to blow $20 million on marriage counselling vouchers and as much as $100 million on a politically motivated royal commission. They are happy to take assistance from hardworking families in the form of the schoolkids bonus but will return $700 million worth of tax avoidance and profit-shifting measures to multinational corporations operating in Australia. Their approach to the budget is motivated by a blind and cruel and harsh and extreme ideology.

Labor has a strong record of fiscal consolidation but fairly shared in the community. We have a history of finding savings in budgets which are carefully targeted and appropriate for economic conditions. At the same time, we have found a way to invest in important reforms for the future—in disability care, the NBN and Better Schools.

Despite what the coalition and their cheerleaders in some sections of the media will have you believe, the Labor Party left the budget in good nick before the last election. Australia's debt as a percentage of GDP at the end of the last government was the third lowest of all countries in the OECD—a podium finish. In April 2013 the IMF director for Asia said that Australia's fiscal position was of 'no concern because of the country's low level of debt'. I would prefer to take their word for it rather than believe in this confected budget emergency claimed by those opposite. The independent IMF praised the Labor government for its 'adept handling of the fallout from the GFC, prudent management and strong supervision of the financial sector'. This is entirely different to their criticism of the big spending during the Howard years.

When considering this appropriation bill and the budget more broadly, we also need to be conscious of the state of the labour market and how it will be affected by harsh austerity. We do know that austerity will affect some parts of this country more than others, and there has been some recent academic work done—some good stuff done by people at Griffith University, Charles Darwin and Newcastle—about employment vulnerability. Unfortunately for my community, some of the red alert suburbs that they identify are in Rankin, my own electorate. They issue a warning that radical austerity will make the situation for employment in my area much worse. So communities like mine have a lot of skin in the game when it comes to the likely recommendations of the government's audit commission.

We also saw the Brotherhood of St Laurence—and I commend them for their work on youth unemployment—come out this week and speak to some of the dangers, including the planned cut to Youth Connections, which is a key project. It certainly does a good job in my electorate of trying to hook young people up to the employment market so that we do not lose them forever. We need to be careful not to cut programs like that one that are doing good.

In summing up, this MYEFO is a big con. It is setting us up for some really bad decisions. It is setting us up for decisions that will hurt vulnerable people, that will hurt Middle Australia and that will do no good in a softening labour market. Unfortunately, I think the MYEFO was just the first salvo in a long war on the weak. The Labor Party will be up for any conversation about budget repair, but we will not be engaged in what is just a thinly veiled ideological exercise and political con on the part of the coalition.