31.5.11 Appropriation Bill (No. 1) 2011-2012

Mr HAWKE (Mitchell) (19:55): I rise tonight to speak on yet another Labor budget, which is of course leaving Australia with a legacy of debt and deficit. It is impossible to examine a budget and think about what is going on in Australia today without considering what the bottom line is. Numbers do not lie. The ruthless efficiencies of figures and numbers are things that should be at the forefront of any responsible government that seeks to deliver improvements in the quality of life of its citizens.

When I ask Australians, as I do in my electorate regularly, 'What is the biggest single item of expenditure within the federal budget?', most say health; or 'Defence' is another popular answer; or education. Lots of different answers are given. But it always dismays me to note and I always like to note in this place that the single biggest item of expenditure within the federal budget, what we spend money on here in Canberra, is of course welfare, the Human Services budget, at $121 billion this year. The largest item of federal expenditure is welfare. It is double the health budget. It is four times the defence budget. It is two and a half times the education budget.

That is always an important starting point for this discussion, because we have to find ways to reduce the welfare budget in Australia, to ensure that we are not a nation of rent seekers. I do not believe we are. I do not believe that is worthy of a country like Australia. Almost every single dollar of individual income taxation that is taken in by the federal government is sent back out in the form of welfare, and that is something I do not agree with. I think it is something future governments will have to change. There is no doubt that is not going to change under the current government. There is now a deficit of $49.4 billion this financial year—$50 billion. Today we refer to a billion like it is going out of fashion. Net debt will peak at $107 billion. That is the single largest amount of net debt accumulated by any Australian government. We pause often in the chamber for all kinds of solemn occasions and events, but I reckon it is worth a minute's silence to note that we have the highest level of net debt in Australian history, racked up in just four short years by this government. That is a legacy for all Australians.

When you think about debt and deficit, you have to think about the approach to take into government. And too often we see from a Labor government that is spiralling out of control in its spending habits not a carrot and stick approach—the carrot is all gone—we have a just a stick approach. And that is something I want to speak about further.

This government seems to think that taxation or penalties, the punitive powers of government, is the answer to every single problem that the government faces, every single challenge. That is why, since 2007, Labor has announced 14 new and increased taxes. There was most famously the alcopops tax, which was supposed to provide for an education campaign to reduce drinking rates. That was the justification for that increase in taxation, which of course has not happened. There was an increase in the luxury car tax; the mining tax; the flood levy; LPG excise increase; a new tax on Australians working overseas, making it more difficult for people coming from Australia to go and earn money and bring it back to Australia; cutting the amount Australians can put into superannuation tax-free; new restrictions on business losses claimable for tax purposes; changes to the employee share scheme. Even these ones which were abandoned—all of these were announced by Labor. There were taxes on cigarettes of up to 25 per cent; ethanol tax increases; tighter restrictions on tax claims for medical expenses; fringe benefits tax in the 2011-12 budget; and, of course, the biggest tax of all, a big new carbon tax. That is why I say that this government is addicted to punitive measures. But there are other things in this budget which I think are very relevant for this House to consider. My approach, and the Liberal Party's approach, to government is built on incentives, not on saying that people are doing the wrong thing out there in the economy and that we need to create all these disincentives for them to earn, create, innovate, employ and do the things that we ask them to do. Our approach says that there should be incentives built into government. That is a better way of doing government and that is why I think that, hidden within this budget, there are many measures which go to the heart of what is wrong with the federal Labor government's budgetary settings today—things like lowering the drawdown rate for self-funded retirees, making it more difficult for a person to retire under their own steam, to fund their own retirement without government assistance after they decide to stop working, and measures like halving the rate for upfront fees. When you go to university in Australia today you can pay your HECS fees upfront and get a 20 per cent discount. That is called an incentive. That is a decent incentive that will drive, and has driven, people to pay their education upfront. Why would we want them to do that, Madam Acting Deputy Speaker? People paying their education expenses upfront save the government money not just now but in the long run. It gets capital into the education system. So halving the rate from 20 per cent to 10 per cent is a removal of an incentive that works, a removal of something that actually saves the government money in the long run, which is what incentives do. But all we see from a Labor government addicted to spending is taxation, punishment and settings that say, 'You are doing the wrong thing.' There is no ode to genuine incentives, which would of course make a big difference in the long run.

That is why I am so opposed to this government's approach to fiscal matters, not only because they cut $2 billion from the Defence budget. When you go to the Australian Labor Party's website it says the No. 1 priority of a national government should be the nation's defence. It acknowledges that its own government's first priority ought to be the defence of the nation. Yet in this budget we see a $2 billion reduction for expenses in defence without serious attention given to defence expenditure and the capital acquisition outlined in its own defence white paper, which calls for a rapid expansion of Australia's defence forces, including serious long-term capital acquisition of key items. None of that is funded. In fact we see a reduction in overall defence spending, without any consideration of how we will meet the challenges outlined in that white paper, how Australia will be able to defend itself in the long term and, more importantly, how we can fund it. That is yet another consequence of a Labor government addicted to debt and deficit.

Of course this government has omitted serious and substantial items from its budget. The carbon tax is one, notably—and they use the excuse that the GST was not in the budget. Fair enough! What would you say then, Madam Acting Deputy Speaker, about the biggest single item of Commonwealth expenditure in this country's history, the National Broadband Network? Why would we not include that in the budget bottom line, considering that this will be the single most expensive item of government expenditure ever? I think there is an answer to that as well, and it does not bode well for this country's future that the government is taking such a reckless and casual approach to the nation's finances. The member for Bradfield made an eloquent appropriation speech about the NBN, and I think he made some very valid points. He is a serious man from the industry. What we have is the NBN Co., which started from the ground with no experience of construction, no record of achievement in a particular industry, now moving into a niche of the market and attempting to dominate it, funded by the taxpayer and other investors, allegedly—although that will remain to be seen. As the member for Bradfield eloquently outlined, the recipe there, when all of the industry is saying, 'Don't do it this way. Don't do the things you are doing the way you are doing them, because you will not make it work', is one that will be a serious challenge for this country's future, especially with the current government running it.

The NBN is not in the budget. The difficult thing about the budget today is that, if you try to get a figure of how many billions the government is spending on the NBN, it is a moving feast. Is it $20 billion? Is it $26 billion? Is it $30 billion? Is the total cost of the NBN going to be $40 billion or $50 billion? It keeps going up. And, if you are trying to put a cable to 93 per cent of households in a country like Australia, I would suggest to you that your costs cannot be overestimated. They cannot be overestimated enough because the cost and expense of doing that when the industry is saying, 'Don't do that; you don't need to do that,' is obviously quite severe.

The carbon tax is also a very serious issue for this country's future. There are polls that suggest that many Australians support action on climate change: improving our environmental practices, dealing with badly polluting industries and indeed transitioning our economy into a cleaner and greener future. Those are instincts that I think are not incompatible with the advancement of human beings. In fact, the only answer to those questions is for us to advance—to use technology to our best ability to ensure our impact upon the planet is minimised.

However, for the government to suggest that the tax system will provide the answer to our environmental challenges is one dimensional. It is wrong and it is demonstrably not going to achieve the aims of the government to reduce the emission of carbon by individual households, by industry or by anybody else. Simply examining the government's proposed carbon tax system reveals that if you are creating a tax—and the concept of a tax, once again, is very clear—it is a disincentive to do something. In this case, you are putting a tax into the economy to create a disincentive to emit carbon, to create carbon or to use carbon-intensive products and services.

But then the government suggests to this place and to every member here—and it is really an insult to the intelligence of every member and the Australian people—that somehow the government will compensate individual households. We do not know how many, but of course the government suggests most of them and that everybody will be better off. Industry will be compensated and exempted, and indeed there are now whole states and territories seeking complete exemptions. If there is no disincentive to use carbon, which would be created by a carbon tax, for all of those households and all of those industries, how will our emissions reduce? The answer is always unclear; it is always vague. It is always, 'Oh, don't you know? Haven't you worked it out? We've got a snide sort of view of these things.'

Recently it was revealed that New South Wales and Queensland are today paying double the price for electricity that Victoria is—double. We have been paying double for some time now because of billions of dollars of underinvestment in the power grid and in the power network. So effectively what you have had in New South Wales and in Queensland is a price on carbon. Electricity generation is the number one reason why Australians do emit high amounts of carbon. Everybody knows the challenge; governments know the challenge. But effectively in New South Wales and Queensland you have had in operation a carbon price—double the rate of electricity in Victoria.

Have we seen any alteration in behaviour or any reduction in emissions in those states where the electricity price is already double what it is in another state? It is fascinating. But, of course, it is not fascinating to some, who have obviously pointed out from the beginning that electricity generation is vital to every sector and every household in this economy. It will continue to be necessary, it will continue to be used and it will continue to be in demand. There has been, with a doubling of the price in two states, no difference in the rate of increase of carbon emissions in either of those states. So you already have an effective working model in this country today of how a carbon price might work, and it has already been revealed that it will not work on the principle that the government suggests.

In a state where electricity is half the price you would expect a doubling the rate of increase, more people, more activity or more generation, and in a state where the price is doubled you would expect a reduction. Neither has occurred, showing that the demand for electricity is very stable across the nation and will remain stable—and no tax on electricity, electricity generators or those essential items of everyday living will produce a reduction in carbon emissions. That, of course, is the big furphy behind the government's carbon tax proposal. That, of course, goes to the heart of this matter.

At a time when we have power bills double the rate of other states and increases in New South Wales that are hurting families across Western Sydney and in my electorate of Mitchell—and I have the highest rate of families with dependent children in the entire country—it is a great concern that this government does not consider cost of living increases as a serious political issue in Australia today. We are told that households will pay and they will just absorb cost increases. Households are already absorbing cost increases in Australia today. They have absorbed substantial cost increases. In New South Wales you can go into any part of Sydney and speak about electricity prices and every household will tell you, every small business reliant on energy will tell you, that the cost of electricity is squeezing them in a way that is unsustainable. So for this government to suggest that somehow we will increase the cost of living through a carbon tax and that will just be borne and not have an environmental benefit is something that I regard as irresponsible.

In summary, Labor being addicted to debt and deficit has seen the highest level of net debt in our country's history. That will all have to be paid back. So will the NBN. So will the carbon tax and its consequences when Labor is finished in office. I think we need the restoration of a government that has the ability to read numbers, understand the bottom line and not take a punitive approach to government. (Time expired)

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