Conservative Club Brisbane - Budget Breakfast
11th May, 2012
Thank you very much Scott for that welcome. Isn't it wonderful to have a Minister at one of these functions again. Even if he is one who is always asking for money.Stan Collard, Kerry Herron and all associated with this event, the new state members of parliament and new councillors who are here, those re-elected, ladies and gentlemen.
Thank you for being here this morning for this regular date on the Friday after the federal budget to talk discuss what has been happening in Canberra over the week.
Unfortunately, the news that has been coming out of Canberra has been more about people like Craig Thomson and Peter Slipper than it has been about the welfare and progress of our nation.
These scandalous stories are capturing the imagination of the newspapers and, sadly, reflecting very poorly on the Parliament and the processes of our democracy.
This is sleaze at its worst and it's certainly not only damaging the government, who deserve it, but it also damages the Parliament and our sense of our democracy.
There has to be honour and integrity in government for people to respect the decision making process.
I'm sorry to say we've got years of this ahead of us as the Thomson affair plays out. And there is a deep suspicion that what has been happening in the Health Services Union over the last year or two or more, may well be endemic in the trade union movement. It's part of a culture where union leaders think that the union's money, the workers' money, is theirs and they have a right to spend it as they see fit.
While that attitude prevails there will be endless scandals like this. We've reached a stage where it's important to clean this stuff up so that we have confidence, and workers can have confidence, that the money paid to unions is being used properly.
And when the government of the day seems to be going out of its way to protect Thomson and delay the process, the public will be increasingly concerned.
Imagine four years for Fair Work Australia to prepare a report on these complaints but when it arrived at the public prosecutor's office he took 24 hours to throw it in the bin because it was useless and he had to start again.
This issue has taken a lot of the focus away from the budget and its implication for Australians and the future of our country.
On budget night the Treasurer got one thing right - this is a true-to-form Labor budget. It's hollow, shifty, vindictive and not to be believed.
We have a fudged surplus, more broken promises and there is nothing in it to drive productivity growth, repay debt or secure jobs.
Some commentators dubbed it the 'fudge it budget'.
In essence the centrepiece of the budget, even though it was barely mentioned in Wayne Swan's speech, is the carbon tax, which will hit every business and every family in Australia in just 50 days.
It's now only 50 days away.
The budget has been constructed to provide additional compensation for lower income people for the impact of the carbon tax to deal with the fallout from its implementation.
It is a tax full of flaws and unfairness. Frankly, nothing can be done to fix that. They are setting for Australia a penalty on everything we do in this country that is way out of kilter with anything else happening in the world.
If you believe you need to address climate change as a global problem, even if you believe that Australia can or should take the lead, you wouldn't set a price five-times higher than that being paid anywhere else in the world. Or a tax that is so comprehensive across the economy that no other country will collect even a fraction of what Australia's carbon tax will raise.
In fact, it will only take four months for the Australian carbon tax to collect more money than the Europeans have raised since their tax started. There are 400 million Europeans and only 22 million of us. So the impact on our economy will be significant.
When I look at the budget, there's an element of class warfare to it. It seems Labor has learned nothing from what was dealt out to them in the NSW election and the magnificent result in Queensland.
They haven't learned that people don't want governments who waste their money and spend what they haven't earned. And they certainly don't want governments that fail to tell the truth.
The feeble $1.5 billion surplus that is the triumph of this budget fails to inspire or encourage struggling communities and families right across Australia.
When you bring spending forward and push expenditure back into out years you don't make any more money, you just shuffle it around. Any business that tries to balance the books or any family budgeting their household expenses is painfully aware of that.
This slippery surplus is simply not worth the budget paper it's written on.
If the government had not brought forward $1.1 billion of the money to be paid to local governments in 2012-13 into this financial year, the budget surplus would virtually evaporate.
If the government had not brought forward a $1.4 billion payment to Queensland for disaster relief the budget surplus would be gone.
If the government had not brought forward $1.8 billion in infrastructure payments to the states, just depositing the money in the states' bank accounts rather than their own and builds no new roads any sooner, that's more than the entire budget surplus.
If the government had not brought forward $1.5 billion in household compensation payments to pensioners and welfare beneficiaries for the carbon tax into this financial year, that measure alone would have wiped out the surplus.
The carbon tax starts in 2012-13 but the government is paying the compensation in 2011-12.
It's just fiddling the figures.
It doesn't alter outcomes or the nation's net worth, it just moves the expenditure out of the next financial year.
But wait there's more.
Labor's energy security scheme to compensate for the carbon tax will spend $1 billion this financial year, another $1 billion in 2013-14 and more again in 2014-15... but in 2012-13, the magic surplus year, they are only going to spend $1 million.
So it's a billion-dollar a year program... except for next financial year when it gets $800,000.
Labor's 'coal sector jobs package' will spend $222 million in 2011-12, $247 million in 2013-14 and $257 million in 2014-15... but will only spend $10 million in 2012-13.
The 'schoolkid bonus' replaces the education tax refund. But the bonus is not tied to the education needs of children... it's a carbon tax sweetener.
Moreover they are going to pay it in June. That transfers $1.3 billion from next financial year into this financial year.
The effect of these measures is just moving money around - many times the size of the total surplus.
This isn't the first time Labor has promised a budget surplus.
The very first Rudd budget in 2008-09 promised a $22 billion surplus. We all know what happened to that, it ended up as a $27 billion deficit. He was only out by $49 billion.
We've had deficits ever since. In fact, $174 billion in deficits over four years. The so-called World's Greatest Treasurer is yet to deliver a surplus. Frankly, no one believes that this $1.5 billion surplus will ever be delivered either.
It only requires a change in government revenue of 0.4% and this surplus disappears. I've never seen a Labor government yet that can go a month without spending more money.
The other curious thing about this surplus is, even though the government says we will run at a profit for the year, our net debt is forecast to rise by $40 billion.
It's going to go up to $145 billion of net debt.
The government has also heralded legislation in the budget increasing Australia's credit card limit from $250 billion to $300 billion.
They say they only need the increase for temporary purposes but you don't need legislation to temporarily increase the limit.
This, like all their other increases in our national borrowing limit, will unquestionably end up being permanent. So our debt will grow.
We will be paying $12 billion this year just in interest.
It's interesting to note federal government expenditure has gone up by $100 billion in the four years of this Labor government.
Who believes for a second they are going to turn it around in the financial year ahead of us?
Can I turn briefing to some of the parameters of the budget. You will recall that the Treasurer announced that the 2011-12 deficit has blown out yet again.
This time last year the deficit was forecast to be $12 billion. Within a few months it had reached $22.5 billion, and late last year it grew to $37 billion. Today, for the current 2011-12 financial year, it's tracking at $44 billion and we still have a full quarter of the year to go.
This government simply cannot be trusted to balance the budget.
Yet, on top of the $1.5 billion surplus this year, we are being asked to believe they will achieve a $2 billion surplus in 2013-14, $5.3 billion the year after that and $7.5 billion in 2015-16.
Threadbare, wafer-thin surpluses that beggar belief.
Growth is predicted to be 3.25% this year, that's up on last year, and 3% over subsequent years.
Unemployment is predicted to be 5.5% for the year ahead, that's up on the current 4.9%, 5.5% again in 2013-14 and 5% in 2014-15.
CPI is expected to rise 3.25% - above the Reserve Bank's target range and above their projections for future years.
The government promised in the 2011-12 budget that it would create 500,000 new jobs. The actual figure is now put at 200,000 new jobs, and that follows on last year when there was zero growth in jobs in Australia.
How has the government achieve this magic surplus? Well there were the usual leaks in the newspapers, so there were not many surprises on budget night.
There had been a bit of speculation about whether the government was going to axe the company tax reduction that it had promised as part of introducing the mining tax.
There was the debate about axing the tax for big business or axing it for small business. In the end they did both. They have axed all of the company tax cuts that they'd promised as part of the compensation for the mining tax.
That will save the government $4.7 billion.
They have also taken off their books their proposal for a standard $500 tax deduction, ramping up to $1,000. It's gone, saving $2 billion.
The tax concession they promised on 50% of people's interest earnings has also been axed.
The $500 mature aged worker tax offset has also been axed. That saves another $250 million.
The super tax has been doubled to 30% for those people with incomes above $300,000. That earns the government $1 billion.
They have deferred the higher contributions cap on superannuation yet again. That saves another $1.5 billion. The cap is now locked in at just $25,000.
So there are numerous significant measures in this budget that make superannuation less attractive for people, particularly those on higher incomes.
One industry facing the most difficult circumstances in Australia at the present time is the tourism industry.
Under the budget, the passenger movement charge (or departure tax) goes up 17% to $55 per ticket as of 1 July this year.
It will net the government an extra $610 million over the next four years. Given the departure tax is designed as a cost recovery charge for border services, this is an unjustifiable cash grab.
The costs associated with border services are already fully recovered by the existing charge. Topping up the tax is a revenue gouge our tourism sector can ill-afford.
In addition, the government has decided that they will charge airports for the presence of Australian Federal Police on their property.
I don't know what's next, will police send you a bill when they come to investigate a robbery at your home? The concept that people should pay extra for policing services - over and above their taxes - is a concern.
Airports will pay for having the AFP on-site and, naturally, they are going to pass that on to people who go through their airports.
So these things will burden our tourism industry.
In addition, the road user charge for heavy vehicles has been significantly increased - raising an extra $166 million next year and over $700 million over the forward estimates.
The government has also called forward $750 million in special dividends from government business organisations, like EPIC and the Australian Reinsurance Pool Corporation... again to concoct an artificial budget surplus.
APRA and ASIC levies and court fees are up and you will only be able to buy two packets of cigarettes duty-free.
The government has announced some business tax measures that many people might think are superficially attractive. Business will be able to carry back losses up to $1 million. Unfortunately, only 110,000 of Australia's 2.4 million business are expected to be eligible, and the total benefit over four years is only $714 million. So this, in no way, compensates for the tax cuts that have been taken away.
One interesting observation on the carry back loss initiative is that we committed to do it in the 2007 election, but we expected it to cost twice as much.
That's because there were many more businesses around making profits.
Employment termination payments will be taxed more harshly at a benefit to the government of $200 million.
The tax cuts for the green building program have been axed, saving $405 million. Buildings are responsible for 10% of Australian greenhouse gas emissions and the idea of making our buildings greener can achieve far more for reducing CO2 emission than most of the artificial measures the government is putting place.
But the incentive for this program is now gone.
$941 million for infrastructure works to improve water efficiency in the Murray-Darling Basin has been deferred to 2015-16. That's the very last year of the forward estimates and a sign the whole program is heading for the axe altogether.
This is a critical factor in delivering a balanced MDB. Instead of fixing the system the government continues to resort to buying water and impacting on local economies that will undoubtedly be felt for a long time.
Another major headline out of the budget was $1 billion to help start the National Disability Insurance Scheme.
But, again, that's pretty much a disappointment to the disability sector because the Productivity Commission had recommended a $3.9 billion outlay over the next four years.
It will cost $7 billion a year to run.
If we, as a nation, weren't scheduled to pay $8 billion a year for interest on Labor's debt, we could afford the NDIS now.
There are increases in Family Tax Benefit A to compensate for the carbon tax. But children over 18 will no longer quality for FTB A.
There is a new Supplementary Allowance being paid to Newstart and Parenting Allowances, as well as the Schoolkids Allowance to be paid in June this year and again in March next year, which some newspapers have already labelled the plasma allowance.
Parenting Allowance will no longer be available once the youngest child reaches 8 years old, but for a couple once the child reaches 6.
Another triumph from this budget was the government announcement that its school computer scheme for Year 9 students will be completely this year. You may recall when Kevin Rudd promised it in the 2007 election it was going to cost $900 million and would be completed by 2009.
Well, the actual cost is now $2.4 billion and it is to be completed in 2012.
The government has also announced $350 million to reduce the dental waiting list, so long as the states cooperate. Very little of the money is in this financial year and to fund it they are seeking to abolish the Medicare Dental Program and the Teen Dental Program.
$68 million has been cut from the rural health workforce program and $75 million from Indigenous health infrastructure programs.
The Gonski Review of Education will require billions of dollars if it is to be implemented. There is only $5.8 million over four years in the budget.
The budget also heralded a new aged care package and I am disappointed welfare groups have not had come to say on this.
The package shifts the burden of meeting people's aged care needs from the government to individuals. It's a $3.7 billion package, but only $1.6 billion is government money - and only $500 million of that is new money.
The rest of it comes from shifting programs around.
In the future, only full aged pensioners will be able to receive their aged care in home, hostel or nursing home free of charge. A part pensioner will have to pay contributions toward their aged care.
These contributions won't be small. They are predicting amounts up to $20,000 a year.
This will create serious issues for families.
Let me say, I think all Australians should be taking more responsibility for their own aged care and retirement needs, so I'm not against it in principle, however, most Australians reaching retirement aged have been budgeting on the fact that they will get government assistance.
Well, this aged care package changes that dramatically. People will now need to expect to pay much, if not all, of their aged care costs.
The government has decided to slow down the increase in foreign aid (to 0.5% of GDP), saving $2.9 billion, but they could find money to almost double administrative grants to Australian aid organisations.
Australia is also planning to join the African Development Bank. And then there is$7 million for the Whitlam Institute.
There is one other area of the budget I'd like to touch on - defence spending. It has been slashed by $5 billion in this budget, which is very significant.
In the government's defence white paper, released shortly after its election, then-Prime Minister Rudd promised a 3% increase in defence expenditure - a real increase every year.
Since that promise was made, $17 billion has been cut from the defence budget. So there will be a lot of deferral of programs and some contracts simply cancelled altogether.
In 2012-13 the defence budget will make up only 1.6% of GDP and we understand that is the lowest ratio of spending since 1938. I guess we all know what happened in 1939.
The asylum seeker impact is also reflected in the budget. Since the government changed the rules on asylum seeker entry into Australia it has cost taxpayers $4.5 billion in extra costs.
Scott mentioned the road budget. The roads budget this year is smaller than in the last year of the Howard government. The roads budget projected for 2015-16 is also lower than the last year of the Howard government.
So all the rhetoric you hear from Anthony Albanese about big projects and national building is pretty empty.
Last year's road budget was $6.2 billion. This year it's $2.6 billion. Some amounts have been transferred out of next financial year but even taking that into account there is a massive cutback in highway funding.
There are no new road or rail projects announced under the four years of this budget. As a Queenslander, that's especially disappointing for the Bruce Highway.
$380 million was announced for the Cooroy to Curra section of the highway, but it has been announced several times already. In fact, the work is almost finished... it will be open in a few months time.
There is no commitment for stage A... they build B before A... and now it is clear that the commitment we made to complete the four-laning of Cooroy to Curra by 2020 is simply unachievable.
There is not going to be enough money and, now, no time to get it done.
There has been a lot about the Pacific Highway and the government's pledge to pay $3.5 billion so it can be completed by the government's own 2016 deadline.
There is actually only $2.6 billion in the budget out to 2015-16.
But the $3.5 billion is conditional on NSW matching it. When there was a Labor state government in NSW the Commonwealth was paying 86% of the cost of Pacific Highway projects.
When the O'Farrell government came to office they pitched in an extra $400 million, making the ratio 80:20.
But now the federal government is changing the rules, insisting on a 50:50 split on the Pacific Highway.
This is a $3.5 billion offer the federal government knows cannot be accepted by NSW.
The roads and infrastructure budget is a massive disappointment.
Ladies and gentlemen, when we come to budgets it's always important that they have a vision, that they provide hope and confidence. And that the government will back Australians who put their own investments on the line.
It gives people confidence to buy a house, that their jobs are secure for them to pay it off. Our country has been built on the willingness of people to back themselves.
And they need an economic environment that rewards that investment and innovation.
At the last election the Coalition promised fiscal responsibility. We found $50 billion in savings - a lot of which were criticised by the government at the time but have now been adopted.
But lower taxes, less spending and lower interest rates are in the Coalition's DNA.
People struggling with mounting cost of living pressures and the loss of consumer confidence need encouragement and the peace of mind that their government is competent and intent on delivering for them.
We won't be spending $16 billion on over-priced school halls - calling it an education revolution - while academic standards plummet.
The same goes for $2 billion to buy brown coal power stations only to close them down.
Or $11 billion buying Telstra's copper wires only to let them corrode in the ground.
And we won't be spending $50 billion plus on a National Broadband Network that people don't need and, ultimately, won't pay for.
We will kill the carbon tax and that will deliver $31 billion in savings over the forward estimates, with a net improvement of $4 billion in the budget bottom line.
We won't be proceeding with the mining tax, and that will also help deliver a stronger country.
We deserve a budget that doesn't just keep on increasing debt and unemployment and, in the process, deliver the world's biggest carbon tax.
This budget confirms that this government has no plan for a stronger economy, there's nothing there to give people confidence that debt will be repaid and that their jobs will be secure.
We can't keep borrowing, raising taxes and debt and expect to be a prosperous nation.
I hope that by this time next year there might be better news.
Thank you for your time this morning. I hope you've learned a few things about the budget that you may not have seen in the news and I wish you well for the year ahead.
[ENDS]
