Appropriation Bill (No 1) 2011-2012

Ms BIRD (Cunningham) (18 : 43): It is a pleasure to follow the member for Kooyong. Perhaps he would like to take his philosophy of the market being the best option, apply it to consideration of the carbon debates in this place and reconsider the direct action policy of his leader as the most appropriate way to address the climate change challenge. I look forward to the reassessment, as I understand some of his colleagues would probably be keen to get in behind him on that.

So I anticipate that with great pleasure.

 want to take the opportunity to speak today in the debate on the Appropriation Bill (No. 1) 2011-2012 and cognate bills, as most of us do in this place, and to pull together a view of where we have gone since the last budget and, indeed, where our budget sits within the context of a series of budgets in our economic progress. In my first term in this place, in discussing the budget of the then government, obviously there were various points that I took issue with that government on. That is not surprising; that is why we sit on opposite sides of the House. But I well remember—it never leaves me—the intense debate we were having about how this nation managed the mining boom. We had seen across the nation the great advantages that came from the mining boom creating significant problems for other parts of the economy.In particular, as a member of the House Standing Committee on Economics, I was a member of two important inquiries initiated at that time by Peter Costello as the Treasurer to look at the effects of the mining boom on two important sectors of the economy: the manufacturing sector and the services sector. Certainly, there was clear evidence that the great growth and the black hole effect of the mining boom was sucking resources, investment and skills out of the broader economy. While that was great for that sector, and we all benefited from the wellbeing of that sector—and we would wish it to continue its wellbeing —we also have to acknowledge the effects that it had across the broader economy.

The result of that was that we saw significant messages coming from places like the Reserve Bank about the inflationary pressures that were being put into the economy from both skill shortages and infrastructure bottlenecks. It has been on the agenda of the Rudd and then Gillard governments to address seriously those major breaks in our economy, and in particular with this budget to look at significant ways in which we can facilitate a broader range of people—that is, individuals and regions—to participate in the future economy.

I think this budget stands the test of this place within that process. It is, indeed, about addressing the patchwork national economy, and despite the natural disasters which we saw, very sadly, on our screens and in reality for too many of our members in this place and the people they represent in Queensland, northern New South Wales and regional Victoria, our economic prospects are strong. The economy is expected to grow over the next two years, we are enjoying the highest terms of trade in 140 years and we are in the midst of an unprecedented mining boom.

Given its nature, the mining boom will generate significant strong employment growth, including in my own area and that of my colleague sitting here with me, the member for Throsby. We see that. I well remember uncles in the mining industry saying to me in the 80s that the biggest most recent skill they had developed was rewriting their CV to add another closure on it and to look for work elsewhere. We had several members of our family have to move out of the area. That is not the case now; there is good strong employment in that sector.

But this does place pressure on the capacity of the economy more broadly, and that daunting challenge remains where we have to manage to add to supply and demand in the economy at about the same time. It is for this reason that the government is determined to return the budget to surplus in 2012-13. The government will turn around a deficit into a surplus of $3.5 billion in 2012-13, increasing to $3.7 billion in the 2013-14 year, and consolidating the surplus at $5.8 billion in the 2014-15 year.

This fiscal consolidation—an unprecedented achievement, completely ignored by those opposite —will keep pressure off interest rates, which will help families with mortgages and businesses. I would remind people more broadly of the 10 back-to-back interest-rate increases that occurred at the end of the Howard government era as a result of their failure to address the warnings that were coming about inflationary pressures.

Mr Stephen Jones: They were blind!

Ms BIRD: Exactly right—the member indicates that they were blind to those, and they were indeed. And they were not spread over time; they were not a response to gradual changes and a tapping on the brakes. They were back to back, and they were devastating for people.

In describing the budget, the economics editor of the Sydney Morning Herald, Ross Gittins, said in his column on 14 May 2011: Sound like a weak effort to you? It's a turnaround equivalent to 3.8 percentage points of gross domestic product - 2.1 points in the coming year and 1.7 points in 2012-13.

This means that, in the simple way most economists (including those at the Reserve Bank) measure it these days, the "stance of policy" is highly contractionary.

He goes on to say: The budget's net contribution to demand is negative - contracting rather than expanding - thus leaving more room for private sector demand to expand without generating as much inflation pressure.

It should be indicated that what has been missing from many of the contributions of those opposite is the fact that we have been through a cycle of a global financial downturn of great significance. We in this place all listen with great interest to those opposite. The whole global financial crisis, which is critical in most discussions that occur about the international economy, has been completely missing from their conversations about the economy over recent years. We have come through that much stronger than most other advanced economies and we are recovering much more strongly as well. The opposition cannot seem to agree with itself, indeed, on whether the 2011-12 budget was too tough or too soft. On the one hand, we had the spectacle of the Leader of the Opposition and the shadow Treasurer claiming that the budget was too tough on families. On the other hand, they were trying to play to the economic and political commentators by saying that the budget was far too weak.

The Leader of the Opposition in his effect non budget reply simply ran to half an hour with a negative message and a reheat of the coalition's 2010 election policy platform. That does not particularly help us in assessing his economic view for the future of the nation. The shadow Treasurer fronted the National Press Club to give a rather dismal performance of last year's comedy. At least we did not have 'pass the baton' this time round. But there was not much of any great substance to assist us, either.

I will leave the best independent observation to Mr Gittins. He said this on 11 May, the morning after the budget was handed down: It could have been more excruciating—economists are hard to please when it comes to inflicting pain—but it's tougher and more courageous than all but the first of the 12 budgets the now-sainted Peter Costello delivered.

The facts are that the 2011-12 budget will keep tax revenue as a proportion of GDP lower than the Howard government managed—21.8 per cent compared to 24.1 per cent in 2005-06. Real government spending is one per cent over the next five years, while the Howard government spent nearly four per cent in its last five years. The government has cut personal income tax, as the member for Throsby reminded us previously, leaving an income earner on $50,000 a year better off by $1,750 annually and an income earner on $100,000 nearly $2,000 better off. We will cut corporate tax to 29 per cent for small business in the year that we bring the budget back to surplus and for all other businesses from 2013-14 as part of the government's reforms in taxing superprofits from resources.

Small businesses, including those in the Illawarra, will benefit from a $5,000 upfront tax break, as well as the instant tax write off for the first $5,000 of any car purchase from next year. The coalition, by contrast, maintained a 30 per cent corporate tax rate.

The government will increase the retirement incomes of workers from nine per cent to 12 per cent, sustaining not only the retirement of workers but importantly— and this is one of the great strengths over the long term of our economy—adding to national savings through the superannuation pool.

The budget delivers a further downpayment to all Australians. The government recognises that the patchwork economy is placing pressure on the cost of living of Australians. From 1 July 2011—only about 13 weeks away—the government will increase the proportion of the low-income tax offset delivered to 6.5 million Australians. This provides an income earner on an annual income of $30,000 an extra $300 during the year in their regular pay, rather than making them wait until the end of the financial year.

The government will expand the work bonus from 1 July, enabling an age pensioner to earn up to $250 per fortnight extra without it being assessed under the income tax laws. So on top of the permanent built-in increase that we have provided to age pensioners so that they do not have to wait each year in expectant hope as they did during the Howard-Costello period that some largesse would fall out of the budget we have provided them with the capacity to earn an extra $250 per fortnight before it is assessed. Age pensioners are continuing to benefit from the inbuilt increases that are worth $128 per fortnight for single pensioners and $116 per fortnight for pensioner couples combined.

Self-funded retirees remain eligible for the seniors supplement, providing $806 for single self-funded retirees and $1,216.80 for couples combined. The government will also deliver a 50 per cent discount on the up to $1,000 of interest earned as income on savings products, including bank accounts, benefitting both self-funded retirees and age pensioners.

We will expand the education tax rebate—and this is very welcomed by families, and particularly by those in our area in the Illawarra—to include the cost of school uniforms. The payment of the childcare rebate will be made fortnightly to either the childcare provider or families to assist in reducing the upfront costs. I well remember under the old Howard scheme families coming to me because they were having to wait two years in reality before they got the refund because of the way that the tax claim system worked.

We will also, importantly, increase family tax benefit A for 16-to-19-year-old teenagers who are in school or an equivalent vocational qualification by about $160 per fortnight. For families who are trying to keep their kids in school and on to year 12, when we know how significant that is to their long-term wellbeing, then this particular payment continuing after the age of 16 is significantly important. In my role heading the education committee, when we looked at young people combining work and school—not work and post-school study—the capacity to earn an income in many of those families was critical to support the family income. Those kids were trying to study for their senior years at the same time.

The budget goes further. It touches on an area that is of great significance for our long-term future, and it is of great importance to me, and that is the skills agenda. There are several very significant initiatives with $3 billion in skills by placing industry at the heart of Australia's training effort and, in particular, another round of great investment in our Australian apprenticeship scheme. I think all of those will be very, very welcome. Certainly in my area of the Illawarra the importance of youth employment and apprenticeship opportunities will be very, very welcome.

More broadly, I should indicate that the member for Throsby and I sit on an apprenticeship committee in the Illawarra, and I want to take this opportunity to commend the work of that committee in targeting the most at-risk young people in our region and getting them into apprenticeship opportunities. It is work that we will continue to undertake.

In the short time that I have left, I want to do a little bit of parochial messaging. There is a view, I believe, that is very wrongly expressed on occasions in the Illawarra, that we get ignored by various governments.

I would remind local people that in fact over time we have delivered from the Commonwealth government over $498 million into the federal electorates of Cunningham, Throsby and Gilmore in the process of fighting off the global financial crisis. It is worth recapping that there were jobs fund programs for 14 projects of over $7 million, and this supported nearly 300 jobs, 58 traineeships and 107 work experience places. We invested nearly $6 million in the Regional and Local Community Infrastructure Program in my electorate, including the magnificent Blue Mile project, which will support local tourism for a long time into the future. We put $83 million into social housing in my electorate, not only creating job opportunities for tradespeople but also providing housing for the most at-risk. It should be acknowledged that we put significant money into the Illawarra Care Centre at Wollongong Hospital with its outreach in the Shoalhaven of over $12 million in the hospital.

These are all serious and significant investments in my electorate. I am sure they will continue, and I will continue to lobby for them with my colleague the member for Throsby. We will never, ever allow our area to be taken for granted. We have the greatest confidence that this government, unlike the Howard government, will take those calls seriously. I commend the appropriations bills to the House.