Appropriation Bill

Wednesday, 2 June 2010

APPROPRIATION BILL (NO. 1) 2010-2011 

APPROPRIATION BILL (NO. 2) 2010-2011 

APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 1) 2010-2011 

Second Reading 

 Mr HAWKE (Mitchell) (10:01 AM) —I rise this morning to speak about a budget that is threatening the wellbeing of all Australians. The longer the Rudd government are in existence, the more it is apparent that the underpinning of their fiscal and economic strategy is that they are seeking to exploit a myth in Australian culture. This myth in Australian culture is built on the very popular myth of Robin Hood. At every budget opportunity since 2007 Mr Rudd and Mr Swan have cast themselves in the role of Robin Hood. I went and saw the movie the other week, and I want to speak about this myth and how it strongly affects ordinary Australians. That movie does a very good job of showing what is really going on with Robin Hood.

In 2007 we saw that it would be the big Robin Hood budget, that somehow we would take from the rich and give to the poor. This was the myth that was cast in modern day Australia. But what is really going on in the current budget is not that the Rudd government are seeking to take from the rich and give to the poor but that they are seeking to take from people who have earned their wealth in Australian society and to use what they take to pay off a mountain of debt, a debt that will peak at $90 billion, with reckless cash splashes, sometimes handed out on completely illogical bases. The Rudd government tell us that now we need to tax the most productive sector of our economy 40 per cent more than we currently do because they are not paying their fair share, that somehow the mining sector has gotten away with a massive rip-off of the Australian people over a long time.

In using this popular myth, Mr Rudd and Mr Swan are trying to cast themselves as heroes against the injustice of mining companies escaping fair rates of taxation. In Australia today, the mining sector is the most productive sector of our economy. It already pays substantial rates of taxation, as it should. It already pays good money for the right to prospect and mine minerals and to turn them into commodities. This is not a simple process. The process of production is always a difficult process. The process of successfully investing your capital and making a return on it—and, in the process, producing wealth, employment and growth in our society—is a difficult process, fraught with many dangers. So for the government to say that somehow the mining companies are simply pulling rocks out of the ground on our behalf is a complete and utter furphy. They are indeed producing wealth and it is a difficult process that we ought not to confuse with the days of Robin Hood.

Wealth in almost all cases in Australia today is earned. It is earned through hard work. The days of inherited wealth are largely long gone. In modern Australia individuals pay taxation and companies pay taxation. There are myriad laws, taxes, charges, red tape and bureaucracy throughout our state and federal governments that ensure that all the fair and just amounts of taxation are claimed from our corporations and from our individuals.

Indeed, many would argue that we have too-high rates of taxation, and it is something that I would endorse—that individual taxation is too high, that other levels of taxation on our corporations and other businesses are still too high today and we need to do more to rein in the level of taxation in Australia. One way that you do not do that is to continue to increase your spending as a government, especially on the basis that we have seen from this government.

The government promised a great deal before it came to office in 2007, and now we understand that there are at least 47 identifiable broken promises, including things like takeovers of public hospitals, GroceryWatch, Fuelwatch, the ETS, delivering no budget deficits, delivering GP superclinics—and the list goes on and on. The government is backflipping on the basis that, as it says, ‘The global financial crisis came along, therefore we had to change our entire outlook and of course the budget changed substantially.’ There was a global financial crisis, but as a defence of the government it is very odd. I listened to the appropriations debate yesterday, to Labor member after Labor member, and the member for Solomon said, ‘We are a lucky country; this is how we got through the global financial crisis.’ The member for Solomon says it is pure luck that we got through the global financial crisis. The reality is that we got through the global financial crisis in better shape than many others because of the hard work and preparation by the previous government in setting the fundamentals of the Australian economy in such a way that it prevented us from being sucked down. If members opposite are being honest, they will acknowledge that that was absolutely the case.

What is happening around the world right now? What is going on in all the major countries, including Greece and other troubled states of Europe, is that governments are desperately trying to cut spending and reduce deficits in a desperate attempt to claw back their positions. Yet what is the Australian government doing in this budget? They are trying to scramble back from the $315 billion debt they were going to send us into in the last budget; they are trying to desperately claw it back in. The answer that they perpetually get up in here to rant about is that debt and deficit are somehow our salvation, saying that, ‘If we did not spend, spend, spend as a government in the last year, we would be in a worse position.’

I saw a great graph from Treasury about the projected impact of the global financial crisis and the actual impact of the global financial crisis, and the impact of the stimulus spending in averting the global financial crisis. For the amount of money that we as a country and as a government spent on these handouts, it was not worth it for that small change that happened. Why was it not worth it? Because you do not govern from year to year. You do not govern for a political cycle. You govern for the long term; you govern for the future of Australia.

When this government came to office it inherited future funds, zero net debt and finances that were stable and secure and would allow for long-term planning and investment, including things like the funding of all Commonwealth superannuants. One of the great difficulties that the Howard government inherited when it came to office in 1996 was not just $96 billion of debt. It was not just a deficit budget; it was the fact that the unfunded liabilities of the Commonwealth were enormous, including Commonwealth superannuants. One of the little-understood achievements of the Howard and Costello years was the funding of the Commonwealth’s ongoing liabilities, and that is something that is now under threat from this government. Indeed, for the Prime Minister and the Treasurer, it is as if profit, success and self-reliance have become part of the problem and not part of the solution to our economic woes. There is this hideous attack on profit.

Now, what is profit, Madam Deputy Speaker? I stand here in this House today and say that profit is a good thing for Australian businesses. Profit is a good and necessary function of our economy; it is something that allows for ongoing growth and investment. Would I rather that the mining companies made a substantial profit so that they can reinvest in their business and grow their enterprise, invest in new infrastructure, new mines and do the things they need to do, or would I rather that the government had the money? I am here today to say that a dollar in the hands of the private sector is a dollar that will be spent on growing the economy, on creating and building jobs, on establishing a livelihood for so many Australians. Taking a dollar from a company and giving it to the government is not a way of producing prosperity.

Governments often say that they are responsible for jobs growth in society. This is a complete and utter furphy. It is the corporations, it is the businesses—the small businesses, the medium enterprises and the large enterprises—that create jobs and wealth in our country, and they ought to be free to do so. If people do well, we ought not put a super tax on it.

Why do we have taxes in a society? One reason is to create a disincentive to do things. We quite often tax things to reduce that activity in our economy or society. We tax cigarettes on the false premise that that will reduce smoking—but, over time, rates of smoking have declined, because taxes continue to rise. Whenever you put a tax on something you create a disincentive to do things. One of the arguments from the last government about putting a tax on spending was to reduce spending and increase levels of income. One of the ongoing arguments about high rates of income tax is that it is a disincentive for people to earn money. In taxing profits over six per cent—and this is the government’s whole ethos and rationale for doing this—you create a disincentive to earn profits.

I want to quote the Premier of Western Australia on the super mining tax, because I think this is very important. In a speech that he gave on 21 May, he spoke about visiting New York with a whole bunch of mining and petroleum industry executives put together from some of the world’s leading companies. They passed around a list of about $170 billion of projects that were expected to proceed in Western Australia—$170 billion. The Premier of Western Australia made an excellent point, saying: ‘My guess is that we’ll probably lose 25 per cent of those $170 billion of projects. I’m not suggesting the mining or petroleum industry is going to collapse or even decline. It will continue to grow but it won’t grow at the pace it could have.’

Why is this important? It is important because the government is saying—even the member for Blaxland today was saying loudly on television—that we are running around saying the mining industry will collapse. We are not saying that at all. But, when you put a massive, major new tax on an industry, you will reduce its growth, you will stunt future opportunities and you will slow down wealth creation. This constant and ongoing process of the government to put higher taxes in place and slow down wealth creation will create a poorer society. It will create higher costs for goods and services, it will create fewer opportunities for investment, and 25 per cent of $170 billion in terms of new investment projects in Australia is a lot of money to be threatening.

I think this idea of taking from the rich and giving to the poor is really kind of a furphy as well in modern-day Australia. It is the case in Australia today that the government collects in this budget $137 billion in individual income taxation. That is the biggest slice of incoming revenue for this year’s budget—$137 billion. I always ask members and people I meet in the street: what is the biggest item of expenditure in the federal budget? Most people do not know. Some people guess defence, some people guess health. Actually, the single biggest item in the federal budget is the $115 billion for welfare and social security. That is the biggest item. It is double the health budget. It is five times the defence budget. To put it another way, we collect $137 billion in individual income taxation and we have already spent $115 billion of that redistributing wealth—paying the pensions and other social security, sending it back to people who we think need a hand up. But that means almost every single dollar collected from individuals is returned to other individuals in the form of income redistribution.

But this government says that is not enough. This government says we have to redistribute wealth because people are unfairly being taxed or unfairly being charged or ripped off by companies who are earning and producing the wealth. It is true to say, as the Leader of the Opposition has said, that the tax represents a dagger at the heart of the Australian economy. You do not put such a yoke on your most productive sector and you certainly do not perpetuate this myth that, in modern-day Australia, people who are wealthy, people who have produced, people who earn, and people who have grown a small business into a big business are somehow outside of legitimate and lawful processes.

It is the right of every citizen to work hard. It is the right of every citizen to earn money. It is the right for them to accumulate wealth and to improve the lot for themselves and for their families. We ought to congratulate those people who have done well, not perpetuate this envious approach to politics and government that says that if you do well you ought to be taxed more, and if you produce more wealth and more jobs you ought to be yoked and burdened and harnessed until you are unable to compete properly.

The reality is that the ministers of this Labor government, and the Prime Minister and the Treasurer in particular, have tried to cast themselves as Robin Hood as a desperate smokescreen for their inability to manage the nation’s finances. They are exploiting the natural egalitarian instinct of Australians. That egalitarian instinct is a good thing, but it is not an instinct that we should promote in order to hold people back from succeeding. We ought to reject the premise that governments unjustly redistributing wealth will produce a better society. It will not. It will make all of us poorer.

I also want to speak today on some of the realities of infrastructure funding as well in Sydney and in my electorate in particular. The reason I want to raise this is because in successive budgets now we have seen the government laud its infrastructure credentials. In fact one of the reasons for this mining super tax is of course that it is going to build infrastructure. The entire budget for national infrastructure building this year is only $12 billion, which is very much down the order of priorities for the federal government’s expenditure this year.

In particular in Sydney, the biggest city in Australia, once again we have seen a complete lack of funding for key infrastructure projects. In last year’s budget there was a mere $40 million for a study for a western metro line, which was to go through the minister for infrastructure’s electorate, funnily enough. But with the worst New South Wales government in the history of our state—and I know the member for Werriwa will agree with me on that—we were unable to complete the western metro line and of course the money has to be returned to the Commonwealth. The $40 million for a study now has to be returned to the Commonwealth government. So Sydney ends up with not a single dollar of infrastructure spending—the biggest city in Australia.

Every resident of Sydney—and I know the constituents of Werriwa, Blaxland and Lindsay in particular—will know that when the minister for infrastructure speaks of the great infrastructure spending of our time and the improvements in infrastructure that this government is making, there is not a dollar for Sydney infrastructure, even though we have the worst New South Wales government in history and even though they are cancelling key rail and other key infrastructure projects almost on a weekly basis in Sydney.

Today I also want to speak on some factors that affect young people in Australia. One of the promises that the Rudd government has broken in relation to young people is that of a mandatory internet filter. Prior to coming to office the government announced its intention to filter the internet on a mandatory basis at the ISP level. I think this is very important, because a very revealing story came to light about the federal government’s budget just in May this year. On 15 May this year Rick Feneley from the Sydney Morning Herald revealed in an article that buried in the budget papers—not this week’s bundle of course; he is not referring to this year’s but to the 2008-09 budget papers—is a ‘small set of ugly numbers’. In his article he said:

and succeed. I want to record, as a member of the Cyber-Safety Committee and deputy chair of that committee, that this is exactly what is wrong with the Rudd government’s approach to government. The government thinks that somehow, by moving a law or imposing a mandatory filter on everybody, it can protect us from all the bad things and the risks of life that are out there. I want to reject that notion. The way to protect our children and the way to protect people online is to enforce the law—to have laws that are there to protect people.

That article is very revealing: at the same time that they are proposing a filter that will allegedly protect everybody—which we of course know it will not do—they are cutting the budget for the Federal Police to target online predators. It is an absolute outrage. I know that young people around this country feel betrayed by this government. We knew that Kevin07 was something new. He was trendy. He was going to relate to young people. He used to go on Rove and make very bad jokes—I never thought they were very funny but obviously other people disagreed with me—but he was going to relate to our young people. I speak to a lot of young people aged 18 to 25 and they know that a mandatory internet filter is not a solution to the problems of the internet. They know it will slow it down. They know it will allow the government to monitor and filter views that they disagree with—something which in a free society we should absolutely reject. That is another example of what is wrong with this government.

By stealing the image of Robin Hood in a modern-day society, this government is trying to claim the role of hero. But I want to record very strongly here today in this House that they are taking money unjustly from the most productive sector of our economy because they have recklessly spent the budget surpluses they inherited. They were looking for any industry they could find, and they went for the most productive sector because they thought they could get away with it. But even the very simplest person in this country, ordinary Australians, people on very low incomes, can understand that a 40 per cent tax hike is a tax grab to cover up reckless mismanagement of our nation’s finances.