I have received a message from the Senate informing the House of a resolution of the Senate referring the following additional matter to the Parliamentary Joint Committee on Corporations and Financial Services.
The message read as follows—
The committee will investigate the involvement of the banking and finance industry in providing finance for investors in and through Storm Financial, Opes Prime and other similar businesses, and the practices of banks and other financial institutions in relation to margin lending associated with those businesses.
I have received messages from the Senate informing the House that Senator Farrell has been has been appointed a member of the Parliamentary Joint Committee on Corporations and Financial Services and that Senator Furner has been appointed a member of the Joint Standing Committee on Foreign Affairs, Defence and Trade.
Debate resumed from 16 March, on motion by Mr Shorten:
That this bill be now read a second time.
It is great to have the opportunity to follow on from where I left off yesterday on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. Back in 2007, prior to the last election, the Prime Minister promised to ease the pressures felt by older Australians to keep up with the rising cost of living. This was a promise, just like many others, that has since been broken. Rather than taking affirmative action to ease the financial pressure felt by so many, particularly self-funded retirees and pensioners, true to style, those opposite have just commissioned a report and indeed now are making life much harder for people who are retired.
We saw the failed Fuelwatch. We saw the failed GroceryWatch, which was designed to bring down the cost of groceries. Certainly the price of fuel has come down a little, but that is fluctuating constantly. Nothing has been done regarding the promise to bring the price of groceries down, so it just adds layer after layer of additional impost on people who are retired—on top of the global recession, which, as I said yesterday, has caused a lot of difficulties.
While the Labor government is now restricting people’s access to the Commonwealth seniors health card, the coalition government expanded eligibility. Eighty-five per cent of people who had reached the age requirement for an age pension had access under the coalition government to the Commonwealth seniors health card, the healthcare card or the pensioner concession card. The coalition sought to ensure that 85 per cent of older Australians could at least get a bit of assistance after a lifetime of contributing to and building this nation.
The Commonwealth seniors health card includes access to the seniors concession allowance, a non-taxable payment of $128.50 made every three months to help with regular bills such as energy, rates and motor vehicle registration fees that are not available at a concessional rate otherwise. It also includes the telephone allowance, a non-taxable payment of $23 made every three months if the cardholder has a telephone connected in Australia. A higher rate of $34.60 is paid every three months where the person has an internet connection. We know now that many older Australians rely on the internet to allow them to be connected to what is going on in the community.
In the heart of a global financial crisis, older Australians will depend on these services more than ever, so one must seriously question the government’s timing of this bill. Unfortunately for seniors who lose their card, the effects are dire. Under the PBS, cardholders pay $5.30 per script. After losing it they will pay $32.90 per script. That is a huge jump in costs. And what of the PBS safety net? With a card, a senior reaches the safety net threshold when he has paid a total of $318 for scripts. Prescriptions after that are free. Without a card, the safety net threshold rises to $1,264.90—yes, you heard right, Mr Speaker: it rises from $318 to $1,264.90—after which a fee of $5.30 per script still applies. Most working families would struggle to pay this, let alone a senior relying on the pension, who cannot go back and start a career again to restore their savings and investments.
The Commonwealth seniors health card allows holders to benefit from a range of concessions granted at the discretion of providers. These include medical bulk-billing and household, transport, education, recreation and entertainment facilities. They will be greatly missed by people who become ineligible for the card. Older Australians have a right to feel cheated by this government—the same government that voted against increasing pensions by $30 when the coalition supported that measure.
I have noticed a disturbing trend in the media of late where older Australians are being negatively targeted. One such article published in the Daily Telegraph under the headline ‘Counting the cost of filthy rich pensioners’ suggested that taxpayers’ money was being handed out to undeserving millionaire pensioners on a regular basis. This is indicative of a host of articles suggesting that thousands of retirees spend their days trying to work out the best way to beat the system.
Nothing could be further from the truth. It has certainly not been my experience in the electorate of Pearce, and I do not believe this is a true picture of what is going on. A number of elderly constituents have contacted me recently to comment on the negative social attitudes that are being put about by some elements within the community. They are attitudes that my constituents feel result from stereotypes that were created recently in the media.
My constituents further tell me that they are proud to be self-funded retirees and that they will do all that they can to ensure that they remain as independent of government assistance as possible. These are people who are proud of what they have achieved. They are proud of having raised families and of having contributed to the nation. They do not wish to have any more reliance on government than is absolutely essential. For a section of the population who cannot readily re-enter the workforce and improve their budget situation, alterations to their budget will have a significant impact on their quality of life.
The government have a duty to all Australians to uphold their promises, but they have not done so. They have breached their duty to older Australians. They have a duty to ensure that the effects of the current financial conditions do not cause even greater uncertainty and, importantly, greater financial stress for older Australians. They have breached this duty. I do not know how any person in this place who votes for this bill will be able to walk among their community and look older Australians in the eye and tell them that they are representing their interests.
I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. The title of the bill in no way indicates that it takes entitlements away from senior Australians and veterans. If I can wear my previous hat for a moment—I was shadow minister for veterans’ affairs—this government came in saying that it would always protect the rights of veterans and look after them. In my previous capacity I pointed out the way in which entitlements were being taken away from veterans without any indication in the build-up to the election that they would be targeted. Here, again, some veterans will be among those who will lose their entitlement to the Commonwealth seniors health card.
This government has tried to say that it is concerned about the plight of people who are suffering in this financial crisis. It has thrown $42 billion away and plunged us into debt. It is going to try to claw back some of that money by punishing some of the most vulnerable people in our society. These are people who have worked hard and they have done so with the ethic that they do not want to be dependent upon government, that they want to provide for themselves and that they want to be proudly called self-funded retirees. For those purposes they have sacrificed the spending of money—on holidays and all sorts of things that folk do—in order to save and provide for the time when they would no longer be in the paid workforce.
As part of recognising that these people had indeed worked so hard to not be a burden on the remaining taxpayers, they were given access to the seniors health card. The card is means tested. The test is $50,000 for an individual and $80,000 for a couple. The test was never indexed; it remained at that figure. Many people will ask why it was not indexed. The answer is that it was felt that that was a reasonable limit at which people would become eligible for the card. As my colleague the member for Pearce pointed out in her speech a little earlier, with this card people have access to discounted pharmaceuticals. This is of enormous value to older Australians because they are such great users of the Pharmaceutical Benefits Scheme. They need access to the drugs that are available for keeping them in good health. The card gives them discounted access to these drugs, which is very important for maintaining their health and their lifestyles.
The member for Pearce pointed out the difference that that will make in terms of being eligible for the safety net. If you are indeed entitled to the health card, the safety net clicks in at $318 a year, but if you are not eligible for the card it clicks in at $1,264. The difference of close to $1,000 is an enormous amount if you are on a fixed income. The term ‘fixed income’ has taken on a new meaning that no-one thought it would. A so-called fixed income is becoming less and less, and more and more people who considered that they had provided adequately for themselves—self-funded retirees—are going to have to become part pensioners or become more dependent on the part pension than they were before.
This is an initiative that the government announced at the time of the budget in May last year, before we saw what was happening to the economy and to people’s incomes, and they are still pressing ahead with it. They will spend nearly $20 million over four years to gather in $84 million. Look at that in the context of the $42 billion that is being pitched out, or splashed out. Look at the $75 million that was paid to pensioners living overseas who are entitled to the $900 that went out as part of the $42 billion. That did not need to be paid out. It was supposed to be a stimulus package for the Australia economy, not for overseas economies. That $75 million could have been kept here in Australia and then this mean initiative, which saves $84 million over four years, would not be necessary.
How do the government justify not being able to go over this part of their budget, when they can plunge the country into debt of up to $200 billion? That is what the bill that they brought in has authorised them to go out and borrow. And look at the impact of that. On the one hand they are saying, ‘We’ll guarantee deposits in banks so there will be money that small businesses can borrow against and use to stay in business and keep employing people,’ and on the other hand they are saying, ‘We’re going to plunge the entire community into enormous debt’—and it looks like they are going to borrow the money domestically. So the government will now be in competition with the private sector for the money that is guaranteed in the banks so that they can finance their debt. I understand they will be paying a bond rate of about 6.25 per cent. So guess who will be buying up those bonds? The banks. So the government will be in direct competition with the private sector—the businesses that are providing jobs—for the very money that would enable them to stay in business, by plunging us into debt with a $42 billion package that in no way benefits the people of Australia in a long-term sense.
What is the cry? ‘Here, have $900 each and go out and spend it, and we hope that will keep people in jobs,’ they say. The reality is that businesses that can survive this financial crisis are not being allowed to have access to finance because the government are in competition for that same dollar. Part of that splash of money was $75 million paid instantly to overseas people who need not have been in receipt of that money at all. It could have offset the $84 million that is going to be the net saving over four years as a result of taking away the entitlement of a health card which enables people to stay healthy. What meanness and trickiness is that! Where is the morality in a decision like that? The government seem able to reconsider all sorts of things, but not when it comes to older Australians and what this will mean to them.
As the member for Pearce clearly said, the Commonwealth seniors health card provides access to discounted pharmaceuticals through the Pharmaceutical Benefits Scheme and the threshold for the safety net cuts in at $318 instead of $1,264. The Commonwealth seniors health card currently provides older Australians with access to the seniors concession allowance—that is the one that we established as a one-off payment every now and again; the telephone allowance, which is meaningful, particularly for the internet; and the seniors’ $500 bonus. And there are other things that they are eligible for. At the discretion of providers, they may benefit from concessions, such as medical bulk-billing, household, transport, education and entertainment facilities. By taking away their eligibility for the card, the government are reducing the standard of living of older Australians, who are not in a position to go back into the paid workforce.
If you look at the way in which the government are going to do it—the way in which these people are no longer going to be eligible—it is important to see how tricky and mean the redefinition of taxable income is for the purpose of having access to the seniors health card. To get access to the Commonwealth seniors health card, income which is presently excluded from the definition will be added back in. It will include income from a superannuation stream with a tax source, which means that the fund from which the superannuation payments are made has already paid tax—and which under the reforms of the last government became tax free—and it will also add back into the income test for the card income that is sacrificed for superannuation payments. In other words, while legislation previously passed by this House exempted certain superannuation benefits which are being paid now but have already been subject to a tax regime, these benefits are going to be added back into the definition of income received for the purpose of being eligible for the Commonwealth seniors health card. Double taxation perhaps? A neat way of going around and repealing benefits that were given by a previous government? All of those questions should be asked of this government.
At the end of the day, this is a moral question. The government will strip $84 million from these people over four years—$21 million a year—to lower their standard of living while, at the same time, splashing around $42 billion of taxpayers’ money and plunging us into debt. And the government are sending $75 million of that $42 billion overseas, where it will not benefit the Australian economy at all. So, at the end of the day, it is older Australians—who have saved so that they could proudly call themselves self-funded retirees and proudly say, ‘We have provided for ourselves and we will not be a burden on the taxpayer’—who are being forced to fund the $75 million worth of $900 bonuses paid to people who no longer live in Australia, which will benefit another economy, not ours. It is an immoral decision to force older Australians to be responsible for providing that money to pay people who no longer live here. I might add that the $75 million that was paid to the overseas people did not need to be paid under the agreements that have been struck between governments as to pension reciprocity payments. These are payments that are made above and beyond that. Indeed, it is my understanding that, when we as a government made one-off payments to people who met the criteria to receive that one-off payment—that is, pensioners, part-pensioners or self-funded retirees—we did not send that money overseas.
The mechanism was already there to ensure that the payments were made to stimulate the Australian economy, not to be sloppy in the administration—or perhaps it was intentional, to say: ‘We are going to grab this money away from these older Australians in order to pay it to some others.’ So in speaking to this bill and saying that we are going to oppose this provision, I personally find the decision to attack those people who are most vulnerable—that is, older Australians, including veterans, who have worked hard to provide for themselves—one of the most immoral decisions that this government has made.
Every promise that was made before the election not to reverse the benefits given by the previous government to older Australians is being reversed in this sneaky piece of legislation. The more people who know about it the more people whose voices can be heard. Perhaps their voices can be added to the voices here to implore this government to change its mind about penalising older Australians who have saved for their retirement and lowering their standard of living when they are already seeing their standard of living reduced because of the economic crisis. To do so when there is so much money being washed around the economy like a man with no hands and to benefit people who no longer live here at the expense of those who do is an immoral stance by this government. Please listen to the words of those who are going to suffer, and reconsider the decision that you have made.
I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. At a time when Australians are facing an economic crisis, the Rudd government is planning to cut senior concessions. I am certainly against this bill. Unfortunately, this bill sends yet another message to our seniors, our older Australians and our veterans, that the Labor government does not value the contribution they have made to Australia over their working lives. This measure totally disregards the fact that these same seniors have worked for most, if not all, of their lives. They have taken personal responsibility for themselves. They have saved. They have rarely, if ever, sought financial assistance from the government. They have raised their families and have made sacrifices during their lives not only for their families but often also in preparation for their older years. It appears that the Labor government is determined to discourage savings, to discourage hard work and sacrifice, to discourage taking personal responsibility and, clearly, to discourage reward for hard work. This bill effectively rips 22,000 concession cards from our senior Australians, including self-funded retirees and Veterans’ Affairs pensioners. How does this ease the cost-of-living pressures for senior Australians?
In 2007, during the election campaign, the Prime Minister said he would ease the cost-of-living pressures for senior Australians. Well, this does not do that. It clearly now appears that the Rudd government wants to roll back the support provided for seniors and veterans by the previous coalition government, and this comes at a time when senior citizens are feeling particularly vulnerable. They are finding it increasingly difficult to maintain a reasonable standard of living, many having no capacity or capability to find employment to supplement their fixed incomes. On 15 May 2008, the government announced a review—yes, another review—of measures to strengthen the financial security of seniors, carers and people with disability. This was known as the Harmer review. The government was provided with the final report at the end of February but has not released it publicly nor outlined its response. We can only believe that cuts in this bill may well be the first of many. Many seniors in my electorate of Forrest have read about the proposed changes in the local Western Australian seniors’ newspaper and have been in touch with me. Not only those receiving a pension but also those suffering a declining rate of return from their hard earned savings and investment funds as interest rates continue to fall have expressed their very genuine concerns that they are already facing tight financial pressures.
What has to be respected, remembered and understood is that, as we are an ageing population, many of us will require increased access to medical treatment and prescriptions to assist our wellbeing in later life. Many senior Australians struggle with the cost of prescription medicines. Even though medications under the Pharmaceutical Benefits Scheme are government subsidised, the seniors health card provides a further subsidy of $5.30. To many senior Australians that is a very important amount because so many of them need more than one script per month and would struggle to pay the higher costs for their medications at the full rate. This would simply put even more financial pressure on our senior Australians.
The Rudd government has spent the budget surplus and plunged Australia deep into debt and it is now penalising the people who have worked and saved for retirement. The coalition supports an increase in the base rate of the age pension and in September we introduced the bill that would have increased this rate. During the last 12 months I have regularly talked with many senior citizens who are finding it increasingly difficult to maintain a reasonable standard of living because the rate of the pension they receive has not kept pace with increased costs. We know that the base rate for the single pension is $562.10 per fortnight. Many of our senior Australians cannot live on this amount with the recent cost-of-living increases for basic items such as food, housing and health costs. I believe it is now time to address this very important issue by ensuring there is an increase in the base rate of the age pension in the May budget.
Also, the burden of paying rent is one of the biggest issues for retirees and pensioners. I have over 12,760 age pension recipients and over 4,400 disability support pensioners in my electorate. I ask the government: how many in my electorate will lose their Commonwealth seniors health card and therefore suffer even further financial pressure than they are currently facing? As I said earlier, I am very concerned that the changes outlined in this legislation may be the beginning of more cuts that will adversely affect vulnerable people in our communities—and we have seen so many of the benefits that have come for our seniors.
After 1 July, threshold limits will remain the same. Superannuation drawings from a taxed fund will remain untaxed, but those drawings will simply be added to a person’s adjusted taxable income for the purpose of assessing eligibility within the threshold limits. The effect will be that many self-funded retirees will lose their Commonwealth seniors health card on 1 July 2009. We need to know exactly who these self-funded retirees are and where they are currently living. Many of those same self-funded retirees altered their investment arrangements towards superannuation, to take advantage of the 2007 reforms, and they will now be negatively impacted by the eligibility changes.
There is no doubt that there is now a significant difference in the economy and in the performance of private and taxed superannuation funds and various savings vehicles. An increasing number of previously self-funded retirees have suffered a severe fall in income and, as a result, are now entitled to the age pension. A proportion of those on higher levels of income who have also had a fall in income may now be below the health card income-test limit and may qualify.
But for seniors who lose the card the effects are substantial. They will lose benefits such as prescribed pharmaceuticals under the PBS safety net, the seniors concession allowance, the telephone allowance and a range of other benefits granted at the discretion of providers. These include medical bulk-billing and household, transport, educational, recreational and entertainment facilities. These benefits will be a major loss to those who lose access to the card, and this will no doubt have a very negative impact on the quality of life of those affected. That is very important in the senior years of each individual’s life.
The first tranche of cutbacks will be enacted if this bill passes. I reiterate that approximately 22,000 self-funded retirees may lose their Commonwealth seniors health cards from 1 July 2009. The Prime Minister did not disclose this to voters before the election. The former coalition government improved eligibility for Australian government concession cards so that over 85 per cent of people above age pension age actually qualified for the healthcare card, the Commonwealth seniors health card or the pensioner concession card. The coalition significantly increased the income limits so that more self-funded retirees became eligible. Due to these measures, around 300,000 people held the card, compared to just 35,000 when Labor left office in 1996.
The Labor government proposes to allow for superannuation income streams from a taxed source and income that is salary sacrificed to superannuation to be included in the income assessment for the purpose of eligibility. These changes will hit self-funded retirees the hardest. Keep in mind that these are the same seniors who have also been penalised by the Rudd government’s bungled bank deposit guarantee and had their savings frozen and locked up by this decision.
Let us not forget that the original purpose of the Commonwealth seniors health card was to provide assistance to retired persons on low incomes. When introduced in 1994, the income-test limits for the card were the same as the income-test limits that applied to the age pension, so the vast majority of retired persons issued with the card were asset rich but income poor, and often farmers.
Mr Rudd and his government will effectively force many seniors over the income-test limit and strip them of their card. The former coalition government worked very hard to pay off the previous Labor government’s $96 billion debt so that assistance could be offered to self-funded retirees who were not claiming income support. Now, 15 months after coming to office, the Labor government is rolling back this initiative. These proposed changes, as I said, were not mentioned prior to the last election, and recently we have learnt that the Prime Minister is looking at options to roll back other measures that the coalition government provided to senior Australians.
During these difficult economic times, the Rudd Labor government should not be punishing self-funded retirees. Those people have worked hard, saved and planned prudently for their retirement with very little dependence on government support. I strongly support the seniors and veterans in my electorate. I am opposed to Labor’s proposed changes and do not support this bill.
I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. The government is continually reminding us that people are being stripped of their entitlements, that they are unable to claim their redundancy entitlements and that they are suffering because of the global financial down-turn, so it is extraordinary that we have before us today a piece of legislation which will effectively cut the entitlement of 22,000 people to a concession card that provides them with significant benefits which allow them to continue to fund their own retirements.
It is important for us to note that this group of people is not fabulously wealthy. These people do not have more money than they know what to do with. These people are on the very edge of being able to fund their own retirement and thereby remove a burden from all other taxpayers and the government. This is something we need to encourage for the future of Australia. We need to ensure it is a viable proposition for future generations to take up.
I find it especially hard to understand this measure when retirement incomes have been so badly affected by the global financial crisis. I believe that the government will again have to reconsider and address the whole question of retirement incomes in the near future. Interest rates are low and they are set to fall further. This will badly affect many retirees. While it may conversely provide a benefit for people with mortgages, it punishes people at the other end of the equation, who rely on income streams that have interest rates attached to them. When cost-of-living pressures are maintained and when people have already been affected by the bungled bank deposit guarantee, it is hard to understand this as being anything but an ideological measure. It is typical of a Labor government, which says, ‘We don’t want you to do anything for yourself; we will take care of things for you.’ It is a typical Labor approach: ‘Don’t ever dare to do anything such as fund your own retirement. We’d prefer to have governments fund everything for you at every moment of your existence.’ It is stunning to think that this includes veterans and will affect veterans’ entitlements.
I think that when these measures are viewed in the light of what they mean for many of those people on the edge of returning to full government assistance, it will be seen that these perhaps should be scrapped. We know that the Commonwealth seniors health card is provided to non-wealthy self-funded retirees primarily to allow them concessions on health care and pharmaceuticals. Because we have allowable income thresholds which are applied, the card is widely recognised as a means-tested provision. I think this is an important point. This is one of the benchmarks that is used for those people who are barely funding their own retirements for a wide range of other benefits by other governments and other services and other facilities and other entitlements. So by taking away the Commonwealth seniors health card we are actually removing access to a wide-ranging series of things. Indeed, the flaw in the legislation before us is that the threshold limits, which are at the moment $50,000 for singles and $80,000 for couples living together, will not change. The threshold limits will remain the same. Superannuation drawings from a taxed fund will remain untaxed but the drawings will be added to a person’s adjusted taxable income for the purposes of assessing eligibility. Of course, herein lies the rub. Those people who have structured their arrangements around superannuation changes of the previous government, people who have put in place what they consider to be a modest retirement, will then be caught up and have this card removed.
What does this mean for those people who will have their Commonwealth seniors health card removed? It is quite dire when you consider what it does mean. Under the Pharmaceutical Benefits Scheme, Commonwealth seniors health card holders will pay $5 per script. When they lose it they will pay $31.30 a script. There is the PBS safety net. With the card, a senior will reach the safety net threshold when he has paid a total of $290 for scripts. Prescriptions after $290 are free. Without the card, the safety net threshold rises to $1,141.80, after which a fee of $5 per script will still apply. People who lose their eligibility for the card will lose many other benefits, including the seniors concession allowance, the seniors bonus payments and the telephone allowance.
Why is this important? It is important because we know that retirement incomes are one of the major challenges that we face as a nation, not just during the present financial crisis but well into the future. We know that people are living longer. We know this presents us with many new and emerging challenges. Experts say that one in three female children born today will live to the age of 100. One of the biggest challenges that we face in terms of growth in government expenditure is the one surrounding pensions, superannuation and retirement incomes and it is something that we have to take very seriously. So any measure that we face in this place, like this legislation before us today, which attempts to alter the arrangements ought to be considered very carefully. We ought to ask what is the benefit of this measure as opposed to its cost. I want to argue today that, regardless of the financial crisis and the problems that we currently face, any measure that we take in this place which reduces the incentives for people to fund their own retirement is going to lead to a bigger problem for future federal governments. We need to make it attractive for people to fund their retirement. We need to make it easier and make it a viable option, especially when you consider all of the other alternatives which mean that the Commonwealth government will have to find extraordinary amounts of revenue with a declining revenue base, with the demographic challenges that we will face. I think we need to design policy settings to encourage people to fund as much of their own retirement as possible.
I was pleased to meet recently with representatives of the Association of Independent Retirees and members from my own Hills Seniors Association to discuss Labor’s proposed changes to the seniors health card. As we know, the Rudd Labor government is planning to take away this card from many Australians. Indeed, hearing their stories about how this will directly affect those seniors brought home to me exactly what this will mean for people at a very vulnerable stage of life, people who have worked hard, people who have sacrificed to put away money for their retirement, people who have given up a different lifestyle at different stages of their lives to ensure that they had a measure of their own security later in life. I want to note that they are particularly upset that these changes were never mentioned prior to the last election. There was no mandate to make these changes to the Commonwealth seniors health card. The government has no mandate for these measures. Much has been made in recent times of having a mandate, of outlining your policy prior to an election. Indeed, that has not been sought nor has it been achieved in relation to the legislation before the House.
They raised with me that the thresholds were last adjusted in 2001, and I have some sympathy with that. If this measure today was viewed in the light of an amendment or there was a proposal to see those thresholds raised, I believe many of these self-funded retirees could live with that. What we are concerned about is that $50,000 for singles and $80,000 for people living together are not realistic amounts taking into account that CPI figures indicate a rise of 20 per cent in the cost of living since the thresholds were last adjusted in 2001. In other words, retirement incomes have crept past those thresholds, just to fund the day-to-day cost of living. Again, I would stress to members here that these are not wealthy people. We are going to be affecting thousands of people who are not well off. They have worked hard to fund their own retirement and achieve a measure of security and we are threatening that security. I want to note that we have already seen thousands of people returning to the pension over the December-January period. We do not want to create a system which encourages that trend or indeed adds an extra burden on the government at a time when we will face significant challenges.
I want to reiterate that one of the things that most concerned the members of the Hills Seniors Association Australia and the Association of Independent Retirees who met with me was that they had structured their superannuation arrangements to take advantage of reforms and are now caught in the unenviable position of having to restructure their arrangements, with no guarantee that they will be able to fall under the thresholds that are set in this legislation.
I believe that self-funded retirees are playing a significant role in ensuring that our retirement system is viable. They are people who have worked hard and sacrificed much so that they can fund their own retirement and thereby lift a burden off other taxpayers. When you consider the question of what will happen in future with declining revenue bases and increasing costs and liabilities to fund many more older citizens and their retirements, this legislation attacks the very heart of a system that would encourage people to fund their own retirements.
I find the proposal to index eligibility threshold limits for Commonwealth seniors health cards a good one. If this legislation were to be improved to receive my support and the support of the coalition then indexing those threshold limits would be one way to do that. But there is no proposal to reset these limits. There is no proposal to reindex them annually. Fifty thousand dollars and $80,000 are not reasonable levels in the current circumstances, with declining incomes for many people funding their own retirements.
Without any changes to this bill, I will be standing up for the self-funded retirees in Mitchell, for the 10 per cent of people in my electorate who are over the age of 65, many of whom have sought to fund their own retirements, who have done the right thing by the government, done the right thing by society and done the right thing by themselves. We need to ensure that in the future we see legislation that encourages and rewards people and strives to get as many of them as possible to fund their own retirements, for the future of all of us in our nation. But, unless there are changes, I will be opposing this bill and will work to see it defeated in both places.
I rise today to speak against the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 because I believe it is not in the best interests of our senior Australians. This legislation effectively cuts 22,000 self-funded retirees off from their concession cards. The Commonwealth seniors health card is provided to non-wealthy self-funded retirees, mainly to allow them concessions on health care and pharmaceuticals. Because allowable income thresholds are applied, this card is widely recognised as a means-test provision to identify those self-funded retirees needing some assistance.
Currently the threshold limits are $50,000 for singles and $80,000 for couples living together. This dollar amount refers to adjusted taxable income and does not include non-taxable drawings from a taxed superannuation fund. If this legislation is passed, the threshold limits will remain the same and superannuation drawings from a taxed fund will remain untaxed, but those drawings will be added to a person’s adjusted taxable income for the purposes of assessing eligibility within the threshold limits. This will mean that many self-funded retirees will lose their health cards from 1 July this year.
For seniors who lose the Commonwealth seniors health card, the effects are dire. One effect will be the increased cost of prescribed pharmaceuticals. Under the Pharmaceutical Benefits Scheme, cardholders pay $5.30 per script. After losing the card, they will pay $32.90. Another effect relates to the PBS safety net. With the seniors health card, a senior reaches the safety net threshold when he or she has paid a total of $318 for scripts. Prescriptions after that are free. Without the Commonwealth seniors health card, the safety net threshold rises to $1,264.90, after which a fee of $5.30 per script still applies. This will mean that many of these self-funded retirees will go without. They will choose not to purchase medicine when they reach the threshold limit and will put their health at risk. These people have grown up in a time when it was the done thing to put yourself last, but unfortunately, in their senior years, when it comes to medication this will have dire effects.
Another effect relates to the seniors concession allowance. With the Commonwealth seniors health card, a senior is eligible to receive an annual allowance of $500 to assist with the payment for essential services for which pensioners are granted concessions. At 1 July 2009, many seniors will lose their entitlement. The telephone allowance will also be affected. Cardholders currently qualify for a telephone allowance of $34.60 paid every three months for a residential service. If they lose their card, they lose this allowance. The Commonwealth seniors health card also allows holders to benefit from a range of concessions granted at the discretion of providers. These include medical bulk-billing and concessions for household, transport, education, recreation and entertainment costs. These concessions will be greatly missed by persons who become ineligible for the card under this system.
The simple fact is that non-wealthy self-funded retirees who have planned prudently for their retirement with little dependence on government support will be hard-hit by the proposed changes to their eligibility for the Commonwealth seniors health card. Self-funded retirees have done a great job in looking after their own interests and have worked hard to ensure they can provide for themselves during their senior years. A seniors health card is something that provides these hardworking Australians with a small amount of comfort and gives them the opportunity to receive discounts that can make a big difference to their daily costs.
Self-funded retirees have perhaps been the group hardest hit by the current economic downturn, and they are really hurting. Many of them have lost large amounts of their superannuation and are having to watch their dollars closely. Many of them have lost close to 50 per cent of their retirement nest eggs. They have been largely ignored in the Rudd government’s stimulus packages, and there has also been no real investment in aged-care infrastructure in the packages, which means this sector of our society will be fighting a losing battle in the years ahead. On top of this they are now faced with the possibility of losing their health cards. This legislation is a slap in the face for self-funded retirees.
The coalition are strongly opposed to Labor’s proposed changes and we are not supporting this bill. The coalition are not the only group opposed to these changes. I have had many groups and individuals in my electorate of Parkes contact me in relation to this issue, and they are all strongly against this legislation. One particular person who has contacted me about this—and I spoke to him last Friday—is Brian Semmler, who is the vice president of the New South Wales division of the Association of Independent Retirees, commonly known as the AIR. Earlier in the week, Brian had emailed me and said:
In my view this is a pathetic measure, as many of the present holders of the card are elderly, not in good health, and will have enormous outlays for pharmaceuticals and lose other benefits which will impact on their financial survival. Clearly the best solution to this problem is to throw out the proposed Legislation.
On Friday afternoon, I spoke to the Dubbo branch of the Association of Independent Retirees, and what is normally a modest gathering was a large crowd. In excess of 100 self-funded retirees turned up to this meeting in Dubbo. It made me feel very angry to see how frightened and confused they felt. Their feeling was that they had been abandoned, with no recognition of their hard work and the savings and sacrifices that they had made through their entire working lives, just to get to this particularly vulnerable stage in their lives and then be treated with such callousness. Self-funded retirees deserve the government’s respect and consideration, and this legislation is not in their best interests.
The coalition paid off Labor’s $96 billion in debt and extended support to our seniors, including self-funded retirees. Now, some of the first casualties of Labor’s debt train wreck are our senior Australians, many of whom can least afford it. The Rudd government is penalising the people who have done the right thing and saved for their retirement.
I, too, speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 in absolute disgust. Australia is being shaken by the greatest global economic crisis in years, and the vulnerable in our society are suffering. Many older Australians have seen the devastation of the value of the investments intended to see them through retirement. Some have been refused access to money which had supposedly been safely deposited with financial institutions but was then subject to the government’s muddled bank guarantee scheme. Living costs remain high. These people are hurting. And what does the government do? Does it express sympathy or extend a helping hand? No. Does it implement measures to ease the pain felt by this deserving section of the community? No. Does it even try to maintain the services which were already in place when it took office? No. It just kicks the elderly in the teeth.
The government is telling retired Australians, who planned ahead on the basis of promises made to them while they were building the country that we all enjoy today, that they do not deserve the benefits of our society. The members opposite are telling 22,000 Australians, whose hard work has placed them just above the breadline, that they should be punished—punished for being naive enough to trust that promises would be kept under a Labor government.
These are not wealthy people by any measure. They just set aside enough so they would not have to rely on the pension alone. They are people who struggle in the current environment and get by with the aid of the Commonwealth seniors health card. Until now, superannuation payments have been excluded when assessing eligibility for the card, which carries a wide range of benefits. But this bill will take that income into account as well, and any single retiree getting more than $50,000 per annum or couples receiving more than $80,000 per annum will be denied the card. How many members of this House could get by on those income levels or less, even without the added cost burdens which come with age, particularly the expense of medication?
We all recall the Prime Minister’s admission last year that he could not survive on the aged pension—an embarrassing admission which was parroted by several of his offsiders on the benches opposite. But, of course, the Prime Minister speaks from a position of comfort, safe in the knowledge that his retirement will be easily covered by the tens of millions of dollars his family has accrued as a direct result of Howard government policies. The Prime Minister said that the pension—which is around $560 per fortnight for a single person—was ‘almost impossible’ to live on. And his Treasurer, foreshadowing an increase in the pension in the next federal budget, said, ‘The single rate pension is totally inadequate.’ The question, of course, is how they expect pensioners to survive when they themselves admit they could not get by on such a pittance.
Many of those who would be affected by this bill made their retirement plans on the basis of Howard government policy—like the Prime Minister, albeit without his vast wealth. The previous government showed them respect and care. The Prime Minister shows them only contempt. In the 2007 election campaign he promised to take care of the elderly. And this is how he is taking care of them! The plan to snatch seniors’ health cards from 22,000 retirees would save, perhaps, $40 million in the first year of its implementation. That is about 0.1 per cent of the Prime Minister’s latest spending spree in which he has emptied Australia’s coffers—and gone beyond that, to plunge the nation into grave debt—to buy some fleeting affection from the public. The members opposite took government with an impressive surplus, the legacy of the Howard government, but now the cupboard is bare. And it seems the elderly have been targeted to pay the price for this government’s bungling. Forty million dollars—that is what will be gained by causing misery and distress to thousands of older Australians who did nothing more than work hard and plan for their future. The government obviously thinks this is a price worth paying; I do not.
More than 3,000 retirees in my electorate of Tangney alone signed letters last year registering their disgust at the government’s treatment of them, particularly in the bill we are debating today. More than 200 retirees crammed into a local hall to express their rage at what they see as abuse by a government which does not care, a government which is intent on punishing seniors for reasons known only to itself. The plan to cut back on entitlements for the health care card was hatched long ago. It was buried in the last federal budget and, not surprisingly, it did not appear in any of the ‘highlights’ circulated by the government. It was brought to my attention by two elderly constituents—a couple who had worked hard and scrimped and saved throughout their lives so that they could be secure in their retirement. They are among those whose future will be determined by the outcome of this debate. The plan had been pointed out to them by a sharp-eyed accountant. This couple found that the inclusion of their superannuation income would push them over the threshold and mean the withdrawal of their health care cards. The lost pharmaceutical benefits alone would cost this couple some $300 per week—a heavy burden for anyone and a back-breaking burden for those already struggling to get by.
Most of those older constituents who signed letters and rallied in my electorate against their treatment by the government are self-funded retirees, who are the prime target of the bill before us today. Many of them have since seen access to their funds blocked by the government’s bungled bank guarantee. They are already facing dire straits, and the withdrawal of their health cards would be a massive blow. This move would see the cost of their prescribed medications soar from $5 per script to $31.30. Remember that many of these people require multiple scripts every week to deal with the health problems that beset some older citizens.
The card also includes a safety net, which cuts in when $290 has been spent on prescriptions in one year, with any further medicines being provided free for that period. This bill would see that cut-off rise to $1,141.80 in one year, after which a fee of $5 per script would still apply. The card provides other benefits not necessarily related to health but on which many older Australians are dependent. These include the seniors concession allowance, which provides cardholders with $500 per annum to help pay for basic services for which retirees are not given concessional rates, including energy, rates and motor vehicle registration fees. Then there is the seniors bonus payment, under which cardholders are due to get a $500 lump sum payment in 2008-09. If they lose their card there will be no more bonus payments. They also get a telephone allowance of $88 per annum and a wide range of other concessions—on services such as transport, recreation and entertainment—extended by state, territory and local governments as well as private providers.
Demand for these benefits is set to dramatically increase, with the number of Australians aged 85 and over to increase from 400,000 today to 1.6 million by 2047. In 2055, forecasts say, there will be 78,000 Australians aged over 100, compared to 2,860 today. Clearly the demand for medication by the aged will rapidly expand. But what will they do if they cannot afford to pay because of this government’s policies? This is a very real scenario faced by 22,000 people who would be affected by this bill right now. There is no other safety net. This is the safety net, and members opposite would like to take it away. The choice for some could come down to whether to take medication or to eat, because this government is not going to allow them do both. Obviously the Commonwealth seniors health card is of tremendous benefit to those who hold it, with some reports suggesting it saves some cardholders about $10,000 per annum. If, like the Prime Minister, you have millions of dollars it is obviously no big deal, but for those struggling to get by, and whose income makes them targets of this bill, $10,000 could be the difference between surviving and falling by the wayside. This is especially true when you consider that many self-funded retirees—assuming that they are able to access the funds they set aside for their older years—are particularly exposed to diminishing values on the stock market. In short, the withdrawal of the card would be devastating to many.
Some say this bill is the thin end of the wedge and that it is the first step in hitting the elderly to make up for the disastrous losses incurred by the government in recent months. But I do not say that, because the writing has been on the wall for some time. This is just another example, and we should not be surprised. This bill is in keeping with the contempt the government have shown for older Australian since they took office—and it appears that they are set to stay on this track, with news reports suggesting there are plans to tighten the income requirements for receiving the age pension. The reports say the effect of these measures in slashing the number of people entitled to a pension will allow payments for the few remaining pensioners to be significantly increased. Presumably the Prime Minister’s objective is to then be able to boast that the pension has reached a reasonable level, regardless of the fact that it is available to a relative few because others have been excluded from receiving the benefit. Other reports have suggested that the government may change the rates at which asset tests are tapered, which would have the effect of reducing the incentive to save for retirement. They say there may be an increase in income test taper rates, which would be a disincentive for people to earn additional money.
Many of today’s older Australian pensioners planned their retirement in the days before universal compulsory superannuation, when they were assured that a lifetime of paying tax would be rewarded with state benefits in their later years. If the government has its way, we as a nation will be defaulting on this promise. These reported planned changes are in keeping with government tactics of giving with one hand and taking away with the other—and taking far more than was given at that. The coalition supports an increase in the age pension and last year tried to raise it by $30 a week, but the government voted against it. That, you will remember, Madam Deputy Speaker, was at the time when the Prime Minister cried crocodile tears of sympathy for pensioners and said he knew they were doing it hard, while his family were sitting on piles of cash they had built up because of Howard government policies.
The members opposite should be hanging their heads in shame over their treatment of seniors. After their disgusting refusal to increase the age pension, embarrassed by their own insensitivity and squirming for a response to the emerging financial crisis, they finally caved in to our urging and made some payments available to the elderly late last year, and that was it. The government have done nothing more to help seniors, whose standard of living has steadily declined throughout their term in office. Those one-off payments were the giving part of the equation. The bill before us today is the element of taking.
With the healthy surplus which the government inherited on taking office now obliterated, we can expect more of the same. How will older Australians cope with a government which is spiteful enough to take away the very concessions which allow them to survive? How will we all cope in our old age? A raft of reports late last year painted a grim picture of life for the elderly under the current government. The OECD said that Australia had the fourth highest poverty rate for over-65s among the world’s developed economies, adding that for singles aged over 65—get this—Australia had the highest relative income poverty rate in the grouping. If there was any doubt about the likely impact of withdrawing these health cards from so many, we can look to a very disturbing report which said some older Australians were not taking potentially life-saving drugs because of financial concerns. How much worse will things get if this government has its way with this bill?
The aged-care system is another shambles under this government—and, if the system cannot meet demand for aged care today, how will it cope with the rapid ageing of Australia’s population? Many baby boomers have not yet even retired. Aged-care providers are turning down offers of federal government subsidies and refusing to build new places because it is simply not viable to do so. Continuing the government record of neglect of older Australians is the recent move to strip away pensions from the former wives of veterans. Under this despicable cash grab, women who have separated from their veteran husbands will lose their pensions. This is after spending their lives in support of men who risked everything for their country in combat zones around the world. Rather than receiving an entitlement in recognition of service to this nation, they will be forced to seek payments from Centrelink, receiving either unemployment benefits or the age pension.
In his 2007 election campaign, the Prime Minister pledged to ease life for senior citizens, but after taking office, instead of taking real steps to improve the lot of older Australians, he ordered a review into measures to ‘strengthen the financial security of seniors, carers and people with disability’. This has become typical behaviour for the government: ordering reviews and inquiries rather than effecting real change. It is a strategy of giving the appearance of motion while standing still. It is all about style and not about substance. The review to improve conditions for the elderly, carers and the disabled—the Harmer review—made its final report to the government last month, but it has not been released and no key findings have been announced. So, while promising to improve things for the elderly, the government’s only changes have been to the detriment of older Australians.
I challenge the members opposite to guarantee that no older Australians will suffer disadvantage as a result of changes implemented by their government—if, that is, they can bring themselves to make changes without ordering yet another review. Why won’t the Prime Minister give such a guarantee if his professed sympathy for the aged is genuine? Why won’t any of the relevant ministers give such a guarantee? I think we all know the answer.
As we are approaching Anzac Day, I would like to urge the members opposite to take a close look at those marching in this year’s parades. What will they see? They will see mostly older men and women who, regardless of damage suffered by their bodies caused by lives of hard graft and sacrifice and ultimately the ravages of age, carry themselves with humility, dignity and pride—and so they should. Is it too much to ask that they also be treated with dignity and pride? It is hard to find the words to convey the disgust many of us feel at the government’s treatment of older Australians. I trust the members opposite sleep well at night knowing they are sticking the knife into these people to cover their own ineptitude. I do not, because I feel real shame that this House is even debating measures which are intended to harm the welfare of these people who are held in such high regard by well-minded Australians. The members opposite would do well to pay attention to those marching on Anzac Day. Perhaps they too could learn a little about humility and honour. They certainly need to.
I rise to oppose the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. It is indeed a mean-spirited measure. It is a measure that penalises prudence. It is a measure that again emphasises the gulf between the government’s rhetoric and its actions. The coalition has proposed immediate help for pensioners in a way that offered them security and confidence about their income. But, while pensioners struggle to make ends meet and seek long-term security, the government has fobbed them off with its review of tax and pensions and a one-off, headline-grabbing bonus. Meanwhile it is whittling away the benefits this deserving sector should rightly receive. It was interesting that the member for Warringah made the observation that this government hit the ground reviewing. That is exactly what it has been doing since it came to office—review after review after review. When you finally get action it is very confused action indeed.
Let us look at who is affected by this mean-spirited measure to restrict access to the Commonwealth seniors health card. There are currently just over 270,000 holders of this card, people who are over the age pension age and do not receive any income support payments. They are self-funded retirees and some are service veterans. In the first year of this measure, some 22,000 will lose their eligibility for this card as a result of the government including superannuation income and income salary sacrificed to superannuation in its eligibility assessment.
We hear a lot in this House about the current financial crisis, but if there is one sector of the community that is suffering a financial crisis at present it is our senior Australians, particularly self-funded retirees. I represent an electorate with a high proportion of pensioners and self-funded retirees, including around 2,000 senior health care card holders, and they have left me in no doubt that they are doing it tough. Those relying on benefits are seeing the value of their benefits eroded while they wait for their income to be reindexed. When it is reindexed they face the reality that the cost of essential items—and many of them buy only essential items—such as groceries and transport is rising faster than the indexation they receive.
I remind members that at the last election the coalition proposed changing the method of indexation to better reflect pensioners’ true cost of living. This practical and effective measure, along with a basic increase, is one the government should implement. Self-funded retirees are subject to exactly the same pressures as far as their costs are concerned but with no prospect of any increase in their income. In fact, many have seen a reduction in income as the stock market crash has reduced the value of their investments and the value of their superannuation.
The government may say that as their level of income drops they become eligible for benefits. But that only puts self-funded retirees in the same position as existing age pensioners, and, as I have said, those very pensioners are doing it tough indeed. No-one welcomes the prospect of going backwards, and this poorly thought-through measure proposed by the government will cause many self-funded retirees and some veterans to do precisely that. To live on the age pension is not at all easy.
Many of my constituents were clients of locally based company LKM Capital Ltd, which went into receivership as a result of the financial crisis. Investors lost a valuable source of income when the fund went bust. But, instead of being able to access Centrelink benefits straight away, investors were forced to wait for many months until the receivers could estimate the outcome of the fund’s liquidation. While these investors were waiting, Centrelink was still deeming them to be receiving interest from the fund. Through a very difficult situation and through no fault of their own, a range of self-funded retirees were substantially disadvantaged.
Self-funded retirees have done what governments of all persuasions have encouraged responsible citizens to do—they have made provision for their retirement by saving and investing when they had the opportunity to do so. When times were good, they prudently set aside some of their income for retirement, rather than spend it, so that they would not be a burden on future generations and on the government. Now they are being penalised for their prudence. Many will feel that they are being treated like mugs, that they should have enjoyed their money while they could have, that they should have spent it rather than saved it and relied on the government to look after them. Rather than making the government pick up the tab, they saved so that they would not be a burden on the public purse. They prepared for their own retirement, and what are they getting for their efforts? They are getting ignored by this government. When the government is prepared to run up billions of dollars of debt for headline-grabbing handouts more aimed at winning votes than at economic security, we have a valuable benefit being withdrawn from a very deserving sector of our community.
We see the stimulus package being paid to overseas pensioners and to the deceased. One could quite rightly argue that self-funded retirees are more deserving of support than pensioners overseas and that we should be spending that money in Australia rather than overseas. It could quite rightly be argued that the deceased no longer have a need for such funds and that the funds should be directed to self-funded retirees.
In the face of mounting job losses, the government has failed with its various vote-grabbing packages. It has failed with its cash splashes. We see unemployment continuing to rise. We see an accelerating in-crease in the unemployment rate. The workers at Pa-cific Brands have hardly benefited from the various packages! The Treasurer said that the funds from the stimulus package of December last year were going to be spent on socks and jocks—precisely what Pacific Brands produce. Did that manage to stop the 1,850 redundancies at Pacific Brands? No, it did not. There are further job losses: 150 at Robert Bosch in Mel-bourne, 650 at Anglo Coal in Queensland and New South Wales, 100 at Ernst and Young across Australia, 95 at Carl Zeiss, 150 at the Bank of Queensland in Brisbane, 85 at BHP in South Australia, 41 at Jetstar in Hobart, 150 at Harvey Beef in Western Australia and, recently, 500 at ANZ. That is almost 2,000 job losses and we have not even reached the end of the month.
It is an absolute outrage that this government’s mismanagement is failing to address the increase in unemployment and that this government’s mean-spiritedness is taking away benefits from self-funded retirees. The government calls on Australians to save, save, save for their retirement but they also call on Australians to spend, spend, spend to stimulate the economy. It is quite an interesting dichotomy.
Of course, for many self-funded retirees these days saving is not an option. Nor is it an option for another group affected by this measure—the veterans community. Once again, we see the difference between Rudd’s rhetoric and Rudd’s reality. We all know of his eagerness to wrap himself in the flag and a service uniform, pretending to be one of the lads, on a five-minute visit to Afghanistan, but when it comes to the crunch he is quite happy to see benefits removed from some service pensions. It is absolutely outrageous. Taking a seniors health card away from some of our veterans and stopping the pay of those who risk their lives on the front line is Rudd’s reality rather than Rudd’s rhetoric.
The member will refer to the Prime Minister by his appropriate title.
That is, the Prime Minister’s reality rather than the Prime Minister’s rhetoric. I know other members have mentioned the concessions that will be lost when self-funded retirees and veterans have their cards withdrawn, but they bear repeating. Under the Pharmaceutical Benefits Scheme, holders of a seniors health card pay $5 for a script. When the card is withdrawn, they will pay $31.30—an extra $26.30 per script. For someone who presents only one script a fortnight, that is an extra $681 a year. May I remind the government that many elderly people rely on several medications, not just one, so the extra cost may be multiplied by two, three or four items. Of course, there is the PBS safety net. A cardholder who pays more than $290 for scripts will get them free thereafter. But without a card the safety net threshold is $1,141, a potential loss of $851. And thereafter they still have to pay $5 a script when the safety net applies.
Cardholders are entitled to $500 a year to help pay for essential services. Without a card, they are not. Cardholders are currently entitled to the seniors bonus payment of $500 in this financial year. Without a card, they will not be entitled to any future bonuses. Cardholders qualify for a telephone allowance of $88 a year. Without a card, they do not. There are other possible concessions covering medical bulk-billing, transport, education, recreation and entertainment that will be lost if the person does not have a card.
All these cuts are mean and, I would say, unnecessary. They are hitting particularly hard those who are most vulnerable, those who have provided for their own retirement and some veterans. For most elderly people, the prospect of falling ill and the difficulty of finding the money to pay for medicines is a constant worry. This measure will increase that concern for a wide cohort of Australians. There is no doubt that, in response to this change, some people will fail to take the medication that their doctor prescribes, purely because they will no longer be able to afford it. The effect of that on the community is increased long-term cost to our health system. It is quite clear that noncompliance with medical directions from a GP is a major source of poor health outcomes, and increasing the cost of medicines to a group who cannot afford to pay can only make that situation worse than it currently is.
We have a situation where the government is removing a vital benefit. Access to quality health services is something that we see as universal, and assisting our senior Australians to provide for their own health outcomes is something that we should be encouraging. Rather than this benefit being taken away, it must be retained. I would like to quote from a letter than I received from my local branch of self-funded retirees. It is from Mr Ross Gooley, the President of the Coffs Harbour branch of the Association of Independent Retirees. He said:
I ask you to consider very carefully the further damage that will be caused when inevitably the proposed measures result in the loss of valuable and much-needed benefits to non-wealthy self-funded retirees.
That is precisely the point. We are not stripping benefits away from this nebulous class of millionaire pensioners. We are stripping away benefits from non-wealthy self-funded retirees—retirees who saved for their retirement and who, by being prudent and frugal, are trying to look after themselves in their later years. Rather than rewarding that prudence, rather than rewarding that savings effort, we are basically kicking sand in their faces. This is a measure that should be condemned. It is a measure that I cannot support and I know that it is a measure that will be raising great outrage within my electorate.
I will keep my statement short and to the point. I am opposed to the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 on a number of grounds. Primarily, it will reduce accessibility for some senior Australians, reversing the generosity shown by the previous government. By changing the income test and counting in more income, you are going to disqualify people who had not previously been affected. In those terms, it is a retrograde piece of legislation; it is going backwards and it is not worthy of my support.
This bill represents a roll-back as far as entitlements go and it is yet another snub to self-funded retirees. To rub even more salt into the wound, this meanness is being introduced at a time when the government has written itself an open cheque for up to $200 billion in foreign borrowings, some of which will no doubt be spent on pet projects. What is this government going to say to those affected self-funded retirees in Gilmore if this bill is passed? ‘No, you’re not entitled because you’ve saved too much over the years and now we think you’re too rich’? Remember that the Commonwealth seniors health card was originally designed to meet the needs of people who may have been asset rich but income poor—people like farmers or pensioners whose blocks of land have been inflated by the Valuer General, like some of my elderly constituents who built their homes on a waterfront 40 or 50 years ago. Without their owners having doing anything, these blocks are now worth over a million dollars, and they are occupied by older residents on a pension or self-funded retirees living on the poverty line, many of whom have been forced out of their homes because they cannot afford to pay the astronomical rates and land taxes imposed by the state government. And yet one wonders if it is only a matter of time before these homes are also included in the asset test.
This legislation will definitely push some people into poverty because they will be compelled to pay for health and medical costs that were previously, under our government, subsidised. If this bill passes the House, this will no longer be the case for some of them. I am a tad confused at the apparent conflict in direction this government are taking. Here they are tightening up benefits to senior Australians—and they want to give them less—yet, at the same time, they are splashing around bucketloads of money for people to spend in the shops every quarter. They are spending $28 million to advertise the economic stimulus package, blowing $13 million on GroceryWatch—which achieved nothing—not to mention the petrol commission or Fuelwatch. And the list goes on.
This government is driving up national debt to unheard of levels, knowing that the current members of government will not be around to clean up the mess—but their children certainly will. This government is prepared to play around willy-nilly with taxpayers’ money yet can still talk about looking after an ageing Australia, uttering reassurances as to how valued our older people are. As I said, this is a retrograde step, yet, in the budget papers, how did the government describe it? Let me quote the words:
This measure will increase fairness …
That is a very subjective view. I wonder if the self-funded retirees in Gilmore who stand to lose out on this will share the sentiment.
Since July 2007, persons aged 60 or more with income from private taxed superannuation sources have had their superannuation income treated as being tax free. In so many ways, the advances made by the previous government are gradually being eroded, and this is yet another example—give with one hand and take with the other. Arguing as to what should constitute income misses the point. The real issue is that this government is actually taking something away that has been given or, in most cases, earned over many years to gain self-sufficiency in later life.
The disposable income of this category of affected person will be reduced significantly and dramatically for those individuals. More pressure will be placed on a health system that is already struggling as it is. And the quality of life for some will be lowered. It is also reasonable to assume that the life expectancy of some people will be compromised as they are forced to introduce lifestyle economies to cope with the change.
It was only a few short weeks ago that the government were critical of the coalition’s opposition to the promised spending splurge contained in the nation-building bill. We were lambasted for daring to question the motives of the government and why they needed to splash so much money around in the way they did, especially when it seems that the December splash did not produce the results prophesied. The December quarter actually went into negative growth, but maybe the government suspected much earlier that that might be the result and deliberately pumped half the surplus into a pre-Christmas splurge. Now, when we are saying, ‘Don’t cut benefits,’ the government are equally critical. That is two bob each way—and, as I said before, mixed messages.
The fact is that if you are not on an age pension you rely on an independent income as a retiree. If your adjusted taxable income is less than $50,000 for a single or $80,000 for partners, strap in! For seniors who lose the CSHC the effects are dire. Under the PBS, CSHC holders pay $5.30 per script. After losing it, they will pay $32.90. With the seniors health card, a senior reaches the safety net threshold when he or she has paid a total of $318 for scripts. Prescriptions after that are free. Without a Commonwealth health card, the safety net threshold rises to $1,264.90, after which a fee of $5.30 per script still applies. With the Commonwealth seniors health card, a senior is eligible to receive an annual allowance of $500 to assist with payment for essential services, for which pensioners are granted concessions. But, at July 2009, many seniors will lose their entitlement.
Commonwealth seniors health card holders will receive a lump sum payment of $500 in the 2008-09 year. If they lose their card because of eligibility changes, they will not participate in any further bonus payments. Commonwealth seniors health card holders qualify for a telephone allowance of $34.60 paid every three months to qualified income support recipients or Commonwealth seniors health card holders. The card allows holders to benefit from a range of concessions granted at the discretion of providers. These include medical bulk-billing and household, transport, education, recreation and entertainment facilities. They will be greatly missed by persons who will now become ineligible for the card.
I will certainly be telling the self-funded retirees in Gilmore how little this government thinks of them. Is this intended to be their reward for working hard all those years so they could be as independent as possible? It is not a good message. I am bound to remind my constituency that this intervention was not mentioned in Labor’s election campaign, so the government certainly cannot morally claim that it has been handed a mandate to reduce benefits to thousands of people.
These are tough times, and what this government is doing is making things even tougher for thousands of people who are not in any position to make a career change. This is just another nail in the coffin for self-funded retirees, who have been passed over time and time again by this government. Where will it stop? I am grateful for one thing, and that is that our veterans will be largely spared from this bill, at least for the time being—but who knows what tomorrow will bring with this government? It is a fact that, as our population ages, there will be more demands placed on health services, which are already stretched to the limit. Is it fair, therefore, to penalise the very people who tried so hard to look after themselves and may well now need the support of the government in their autumn years?
The savings from this intervention are projected to be in the order of just over $20 million a year, over four years. Twenty million dollars is all that will be saved, at the expense of some older Australians who should be rewarded for their efforts, not punished. Contrast that with the $200 billion blank cheque that Labor has written for itself, and tell the constituents of Gilmore how this bill is an act of compassion and understanding. How can you, Prime Minister, and your government now stand in the House and say we need to save $20 million a year and, in the same breath, blow a budget surplus of $20 billion plus and then even more again this month? What credit are we spending in March—$42 billion? So this government is going to take this money from a few thousand aged citizens and give it to someone who is employed, to help subsidise, perhaps, the purchase of new televisions, the money for which will most likely end up in a foreign country.
This intervention is virtually tax by stealth. It is the action of a mean-spirited, sneaky government. In these uncertain economic times, we need to be reassuring and motivating people—the Prime Minister has said as much on many occasions—certainly not frightening them and certainly not creating a precedent for another foray into more tax collections in the future, which this bill will do. Perhaps this government will now consider setting aside some of these savings to fund a happiness workshop for the likely victims of this bill, a workshop similar to that which the bureaucrats of the Department of Education, Employment and Workplace Relations attended at a cost of $642,000 to the taxpayer. What is the government’s response to all this for Gilmore’s self-funded retirees? The answer is: ‘Go visit Centrelink.’
I agree with the previous speaker, my colleague the member for Gilmore, that this legislation is mean spirited. It is sneaky, it is unfair and it is also un-Australian. According to the explanatory memorandum, the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 implements a 2008 budget measure relating to the adjusted taxable income test for the Commonwealth seniors health card. It states:
The measure will ensure that income received by seniors is treated in a similar way, will align with the age pension the treatment of income salary sacrificed to superannuation, and will ensure that the income test is applied to all cardholders consistently.
What nice bureaucratic language! When this measure was announced in the last budget I was wondering how this government was going to explain this bill to our self-funded retirees and to many of our veterans. So, for the benefit of my constituents, I would like to describe this bill in simple language. The Rudd Labor government is taking the Commonwealth seniors health card away from many senior Australians. This bill will push many seniors over the income thresholds by including income from superannuation and income that is salary sacrificed to superannuation. So while the threshold limits will remain the same and the superannuation drawings from a taxed fund will remain untaxed, these drawings will be added to a person’s adjusted taxable income for the purpose of assessing eligibility for the Commonwealth seniors health card.
The loss of the Commonwealth seniors health card will hurt many senior Australians as it provides access to discounted prescription medicines through the Pharmaceutical Benefits Scheme. Cardholders currently pay $5.30 per script, but after losing it they will pay $32.90 per script. Cardholders also benefit from the PBS safety net threshold because scripts are free once they have paid a total of $318 for pharmaceuticals. Currently cardholders also have access to the seniors concession allowance of $500 a year and a telephone allowance of $34.60 per quarter for help with essential services and expenses. Cardholders may also benefit from other services, such as bulk-billed GP appointments and a reduction in the cost of out-of-hospital medical expenses above a concessional threshold through the Medicare safety net.
In some instances, state and local governments and private providers offer additional health, household, transport, education and recreation concessions at their own discretion. These benefits are of great assistance to our self-funded retirees and to our veterans. Self-funded retirees have already been hit hard by the current global economic circumstances. Many have seen their savings decrease and their rates of return fall significantly. Indeed, one self-funded retiree I spoke to last weekend in my electorate said that since Christmas his income has reduced by over 50 per cent. But instead of providing extra assistance this heartless government is cutting assistance and forcing these retirees to dig deeper into their savings. This will ultimately lead to a decrease in their standard of living. I might point out that the recent $43 billion stimulus package had nothing in it for self-funded retirees. I have had a number of my constituents from Hughes contact me with concerns about this matter. I would like to read a letter from a Mr John S., a constituent from Engadine. He says:
I refer to the announcement in the 2008 Federal Budget regarding proposed changes to the income test for assessment of the Health Care Card. I specifically refer to the proposal to include superannuation and pension benefits paid for this test.
Access to the Health Care Card provides reduced health care costs for those retirees whom are ineligible for Government income payments, and in this regard greatly assists self funded retirees in funding medical expenses.
The proposed change to the Health Care Card income test greatly restricts access to this vital Government service for a large percentage of self funded retirees. The net result of this change will likely be that self funded retirees may have to access the Age Pension sooner than would otherwise be the case as savings will be depleted at a faster rate due to increased medical expenses.
Indeed, that is exactly the problem that these retirees will be facing: a decrease in their income. I am advised that the National Seniors Association and the Association of Independent Retirees are also opposed to this bill. The Association of Independent Retirees has brought it to my attention that a superannuant drawing down funds from their superannuation fund for a special need or emergency situation could be penalised because Centrelink would consider such a drawdown as income. The February newsletter from the Sydney St George branch of the Association of Independent Retirees clearly sets out the concerns of its members. It states that this legislation is:
… fraught with anxiety, and much uncertainty. There is the potential for significant financial loss, if pharmaceuticals and medical services must be purchased at the general price, and remembering elderly people usually are receiving treatment for chronic conditions and diseases. For example, 5 medicines per month the difference is $25 (5x$5 per script) to $150 (5x$30). Many retirees will not have that level of surplus income, or flexibility to seek an increase to the income stream.
The Government is neither recognising nor assisting retirees, in situations when a special or emergency need arises, in which case retirees must access their retirement capital. To create such uncertainty and doubt, when retirees need extra funds, but will be facing extra costs for medicines and medical services, simply because they have been denied the Commonwealth Seniors Health Card when their ‘gross income’ exceeded the income threshold.
This is the essence of what the Government has forecast when announcing that legislation will be introduced to change the eligibility criteria, when assessing gross income, for those retirees applying for and holding a CSHC.
If there are unrealistic opportunities, if there are abuses by workers applying for the CSHC, then those should be addressed. For retirees who need access to their funds for emergencies and living expenses, then the members of A.I.R. and the wider community of elderly retirees, seek your considered review of what is being proposed by the current government.
I am advised that, in opposing this bill, the National Seniors Association and the Association of Independent Retirees also point out that our senior Australians are anxious about this legislation because, should the drawdown be substantial and exceed the income threshold, the entitlement to the Commonwealth seniors health card and its related benefits, which are very important, would be lost to them and would cause significant uncertainty and hardship in their declining years.
The Association of Independent Retirees also makes this point:
In situations where the draw-down funds have been used to pay the accommodation bond to a hostel for low-care accommodation, or the money is used to replace motor car for transport, or the money is needed for home maintenance, it is difficult to understand the purpose of this ruling, and extremely distressing because the supposed ‘gross income’ would, quite possibly, disqualify the retiree from holding the Commonwealth Seniors Health Card for the remainder of the year.
This association asks:
How can the transfer of one’s own funds from one source to another and then spent on a necessity be regarded as income?
How indeed? The people in my constituency in Hughes ask this question in honesty.
The former coalition government worked hard to pay off the previous Labor government’s $96 billion debt so that we could extend some assistance to self-funded retirees and our senior Australians who were not claiming income support. Now, 15 months after getting into government, the Labor government is rolling back this support. These proposed changes were not mentioned prior to the last election.
Recently we have learnt through the media that the Rudd Labor government is looking at options to roll back other measures the coalition government provided to senior Australians. The media has reported that the Labor government could roll back the following measures: including the family home in the assets test, increasing the assets test taper rates and increasing the income test taper rates. These measures could force many of our senior Australians to sell their homes, they could reduce their incentive to save for retirement and they could provide a disincentive for them to earn additional money. During these difficult economic times Mr Rudd should not be punishing self-funded retirees who have planned prudently for their retirement with little dependence on government support. Senior Australians do not deserve to face the full brunt of this heartless Labor government’s razor gang. Mr Rudd needs to guarantee that no senior Australian will be worse off because of his pension review.
The coalition is strongly opposed to these proposed changes. As I said at the very beginning, they are unfair, they are mean spirited and, most particularly, they are an un-Australian way to treat our senior Australians, who have forged this country into one of the greatest democracies the world has ever seen. I cannot in good conscience support this bill and, on behalf of my constituents in the electorate of Hughes, I do not.
I rise to join with my coalition colleagues in speaking against the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. This bill seeks to toughen eligibility requirements for the Commonwealth seniors health card, or CSHC, from 1 July this year by including superannuation drawings from a tax fund as taxable income in the CSHC income test. This will affect many of Australia’s 278,000 CSHC holders, with approximately 22,000 people to lose their entitlement to the card.
The current approach is that the CSHC is available to seniors who, although they are of pension age, do not receive an income support payment from the government, provided that their adjusted taxable income falls below certain limits. Currently, the threshold limits are $50,000 for singles and $80,000 for couples living together. Significantly, the adjusted taxable income payment does not include non-taxable drawings from a tax fund on which a contribution tax was paid when the funds were being accumulated—in other words, a taxed fund.
The income thresholds for the CSHC are not indexed in any way and have not been altered since 2001. The Australian Association of Independent Retirees suggests that, since this time, there has been an increase of approximately 20 per cent in the cost of living, but there has been no associated increase in the income threshold for the CSHC. Effectively this legislation will strip benefits away from 22,000 non-wealthy, self-funded retirees, with estimates indicating that these seniors will be at least $2,000 a year worse off under this new scheme. This will affect access to many government benefits, including cheaper prescribed medications. CSHC holders currently pay $5.30 per script but would face charges of up to $32.90 per script. Under the PBS safety net the threshold for CSHC holders is $318, but some would face a threshold rise to $1,264.90, after which they would still have to pay $5.30 per script. This would also affect the seniors concession allowance, which helps pay for essential services; future seniors bonus payments—in 2008-09 there was a payment of $500; the telephone allowance, which is $34.60 every three months; and a whole range of other benefits such as bulk billing, transport and household facilities.
It is not surprising that the National Seniors Association and the Association of Independent Retirees, or AIR, are against these changes, as they would detrimentally affect many non-wealthy, self-funded retirees who have prudently planned for their retirement with little dependence upon the government of the day. The AIR has raised issues about the lack of clarity about withdrawals from superannuation funds being included as income. The AIR president, Theresa Kot, has raised concerns about the inclusion of lump sum withdrawals in the expanded income test, which would mean that if a senior makes a one-off withdrawal to buy a car or to pay a bond to enter an aged-care facility it would be treated as income, which would potentially disqualify them from the CSHC for that year. Centrelink has advised the AIR that they will reinstate the card if you can show proof that the one-off expense was necessary, but still the AIR is understandably uneasy about these proposals.
My electorate has one of the oldest demographics in Western Australia, with a large retiring population. There are approximately 5,500 CSHC holders who could potentially be affected by these changes and they are very nervous. I have been contacted by the Peel branch of the AIR, who are extremely active advocates for self-funded retirees in the electorate of Canning. They are strongly against this legislation, which may have a big impact on Canning’s CSHC holders. I will certainly be reminding them of what the government is doing to their future.
I am contacted by both pensioners and self-funded retirees on almost a daily basis. They raise concerns about the strain on their household budgets caused by increases in the cost of living over the last few years, coupled now with the decrease in the value of their investments. These changes will have a drastic effect on Australia’s non-wealthy self-funded retirees, who have already seen the value of their assets dramatically decline over the last year through no fault of their own.
Let us look at Labor’s approach to seniors. This is yet another in the long line of policy changes that the Rudd Labor government has introduced but did not mention at all prior to the last election. However, this measure is hardly surprising in light of the Labor government’s overall approach to seniors in general. The ongoing delay in respect of increasing the base rate of pensions is just one example of the indecision of the Rudd Labor government which is hurting elderly Australians. You will recall we endeavoured to bring a bill to this House to increase the rate of the age pension, and the Labor Party would not let us debate it.
On 22 September 2008, we did introduce into the Senate a bill designed to immediately increase the age pension by $30 per week. This proposal also applied to recipients of the widow B pension and recipients of the single service pension. Despite the Prime Minister and the Minister for Finance and Deregulation both admitting they, themselves, could not live on the current rate of the pension, the government would not support this bill. How mean!
The Harmer review has now responded to the government. However, not only has this report not been made public but still no action has been taken by the Labor government in relation to this matter other than a few words saying that they would look at in the budget. Media reports have also indicated that the Rudd Labor government may be considering other changes that will drastically affect senior Australians, including changes to the assets test to include the family home, as well as to the assets test taper rate. In comparison, the coalition introduced many proposals of direct benefit to senior Australians. Under the Howard government, we introduced amendments which saw 85 per cent of seniors of age pension age qualify for either CSHC or pensioner concession cards in recognition of the extreme importance of the benefits they provide. More broadly, in 1997, the coalition government linked the age pension to growing incomes—in other words, 25 per cent of the MTAWE, in addition to the CPI, whichever was higher—as well as introducing the utilities allowance currently available to CSHC holders and age pensioners to assist with the cost of bills such as gas and electricity. Additionally, in 2007 the coalition government passed legislation to change the assets test taper rate from $3 to $1.50 for every $1,000 of assets above the allowable assets limits. It also removed the tax on superannuation benefits paid from a tax fund for people aged 60 and over from 1 July 2007.
All of these measures, and many others introduced by the coalition, sought to improve the quality of life for Australia’s pensioners and self-funded retirees in recognition of the contribution that these people have made to Australia throughout their lives. And so we should.
Finally, I am pleased to speak against this bill, as it would have a detrimental effect on non-wealthy—I repeat: non-wealthy—self-funded retirees in my electorate and across Australia who are already doing it tough as a result of the global economic crisis, which is no fault of their own. We are the party for the battlers. The Labor Party only talk about it. It is about time the Rudd Labor government gave our seniors a fair go and came clean about their plans to change the government’s assistance for Australian seniors.
I rise to join my colleagues in speaking against the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. This bill, if passed, will have an extraordinarily detrimental impact on self-funded retirees, particularly those living in rural and regional Australia, including in my electorate in north-east Victoria. It will change the rules governing income assessments on self-funded retirees to determine their eligibility for the Commonwealth Seniors Health Card.
The Labor government is asking parliament to support them in introducing a new clause in the income test on seniors to allow for the inclusion of income from superannuation—an income that is salary-sacrificed to superannuation—to a retired person’s adjusted taxable income for the purpose of assessing their eligibility for the Commonwealth Seniors Health Card. This is a direct attack on self-funded retirees. You would think, at a time when many of them have suffered because their assets and their finances have been frozen, that this government would think about the hardship they are facing. But, no, these people are under attack. These are the people who have worked hard to build their savings, to build their superannuation and who have continued to manage their superannuation into retirement. They will definitely suffer if this bill is allowed to pass and changes are made to the income test to include superannuation.
There are more than 19,000 people aged over 65 in my electorate. This figure is predicted to grow to almost 29,000 people by 2020 and to over 41,000 people in 2035. A very significant proportion of the population in my electorate are retired, and many of them are self-funded retirees. Many of them, in their retirement, do come from other parts of Australia—for good reason—to retire in the north-east.
So, despite what the Labor government would have people think, the majority of self-funded retirees are not wealthy individuals squandering their super during retirement years. It is no wonder that those on the other side show no interest and total disregard for the plight that will face our seniors in retirement who have changed their arrangements after the previous government changed the income test to allow them to include superannuation income.
Many of the self-funded retirees in north-east Victoria do live on a restricted pension-style income, just as those who live on a government-funded age pension do. The difference is that self-funded retirees have earned and saved their retirement income during their working lives. This bill and this government directly want to punish them. I suppose it is part of the class war of envy that is becoming more and more apparent from the government during these difficult times—when they panic and have a knee-jerk reaction in responding to the economic situation confronting us. If this bill is passed and the government is allowed to include superannuation income in the income test for the Commonwealth Seniors Health Card, it will jeopardise the eligibility of many who have come to rely on it.
Order! It being 2 pm the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member for Indi will have leave to continue speaking when the debate is resumed.
Mr Speaker, on indulgence: I wish to make a statement to the House concerning the death of an Australian soldier. I was deeply saddened to learn that an Australian soldier was killed yesterday in Afghanistan. He was a fine and courageous soldier in the great Anzac tradition. He died while his patrol and their Afghan National Army colleagues came under attack 12 kilometres north of Tarin Kowt. I have been advised that no other Australians were wounded in the engagement.
On behalf of the Australian government I extend my condolences to the family of this soldier, his friends and his loved ones. This is a sad day, and the thoughts and prayers of the entire nation are with his family at this most difficult time. We are forever in the debt of this brave soldier who has given his life. The whole nation mourns his death. At the request of the soldier’s family, his name will not be released at this time but I can inform the House that he was serving as a member of the Mentoring and Reconstruction Task Force. I have said before that there is no higher calling than to wear the uniform of Australia. Those who choose to wear that uniform serve to protect and defend our nation. Some of them serve on foreign soil. They serve in some of the harshest environments on earth. They face daunting challenges every day. Today we are again reminded that some who wear the uniform of Australia make the ultimate sacrifice.
As a result of this incident, nine Australian soldiers have now tragically lost their lives in Afghanistan. Afghanistan remains a very dangerous place, but it is a central and continuing part of our ongoing fight against extremism and terrorism. We should always remember that, in the past, international terrorism found a safe haven in Afghanistan under the Taliban. We cannot allow this to happen again because the implications are felt all around the world, including in Australia. The government remains committed to confronting the ongoing threat from international terrorism and bringing greater stability to Afghanistan. Today our nation grieves with this man’s family and our thoughts and prayers go out to his fellow soldiers serving now in Afghanistan. His sacrifice will not be forgotten.
Mr Speaker, on indulgence: I join with the Prime Minister in offering the condolences of the opposition and the nation for the loss yesterday of an Australian soldier in Afghanistan. The thoughts and prayers of all Australians are with the loved ones of this brave man. As a nation we are reminded frequently of the dangers our forces face in Afghanistan every day. The loss of this soldier in an intense and prolonged exchange of gunfire just north of Tarin Kowt brings the total of Australian casualties in Afghanistan to nine since 2002. As a nation we are immensely proud of the men and women of the Australian Defence Force for their service and their sacrifice. In Afghanistan they are fighting in defence of our values of liberty and democracy, wearing our uniform and serving under our flag against the world’s most dangerous and treacherous enemy.
One of the critical long-term challenges we face is to help provide Afghanistan’s security forces with the training and support they need to be capable, ultimately, of securing and defending their society against the extremist threat. This is a key mission for our Mentoring and Reconstruction Task Force. It was to that end that our troops were on patrol with their Afghanistan colleagues near a village north of Tarin Kowt. They came under fire from a group of Taliban insurgents and the patrol returned that fire. One of our own was shot and fatally wounded during the battle. Earlier today the Chief of the Defence Force paid tribute to this brave man as a professional and courageous soldier. All Australians are indebted for this, the greatest of sacrifices in our name. Again, we extend our love, our gratitude and our most profound sympathy to his family, his friends and his comrades in arms.
My question is to the Prime Minister and is about his flawed emissions trading scheme, which threatens to destroy thousands of Australian jobs while doing little or nothing to protect the environment. Is the Prime Minister aware of warnings from the renewable generator Envirogen that design flaws in his scheme risk destroying 100 current and 300 new jobs in electorates including Flynn, Capricornia, Dobell and Macarthur?
I thank the honourable member for his question. It goes to the question of how we deal with the challenge of climate change and, most particularly, how we deal with the future of the emissions trading scheme and how we deal, in turn, with the impacts of the emissions trading scheme, assuming it passes the Senate, in the real economy.
On the question of the Carbon Pollution Reduction Scheme, the government’s plan is clear—that is, we believe in getting the balance right between serving the interests of our firms, our industries and our jobs, on the one hand, and doing the right thing by climate change on the other. This is a difficult task. We accept that fact, we accept that challenge and we are getting on with it. What the honourable Leader of the Opposition fails to appreciate is that failure to act on climate change actually destroys jobs in agriculture, tourism and elsewhere in the economy.
Mr Speaker, I rise on a point of order. What the honourable Prime Minister does not appreciate is that he has got to answer the question.
The Leader of the Opposition must come to his point of order. The Prime Minister has the call.
The honourable member refers to the impact of the Carbon Pollution Reduction Scheme on the future of renewable energies in Australia. The whole function of introducing a carbon price into the economy is to encourage the development of renewable energy industries and, in turn, to generate further employment from it.
Why are you putting the people out of work? Why are they losing their jobs?
As the honourable Leader of the Opposition interjects about a scheme on which he campaigned to unseat the member for Bradfield as Leader of the Opposition, again I suggest to him that he should actually use some consistency in his approach. What the country expects of a government is consistency of approach on climate change. What the country expects is an approach which says, ‘If you fail to act on climate change it destroys jobs in agriculture and tourism—
Mr Speaker, I rise on a point of order. We do not expect consistency; we expect relevance.
Order! There is no point of order. The Prime Minister is responding to the question.
I know why the Leader of the Opposition would not expect consistency, because reflecting on his own position there has not been one element of it. He used climate change and emissions trading politically to unseat the member for Bradfield as Leader of the Opposition when he said he was all for it and the member for Bradfield was all against it. Now that he is under threat by the member for Higgins he has changed his tune. Consistency is important.
Mr Speaker, I rise on a point of order: relevance. The question was about destroying renewable energy jobs now—today.
Order! The Prime Minister will respond to the question.
I am happy that the member for Flinders intervened, because I seem to recall last year when we introduced the government’s green paper, and then later our white paper, on emissions trading the honourable member for Flinders said something along the lines of: ‘They have just copied our policy.’ I appreciate the intervention from the honourable member for Flinders. He may be surprised to note that we actually pay some attention to what he says, because there has been a little more consistency—not a lot—in what he says compared with the Leader of the Opposition.
On the impact of the Carbon Pollution Reduction Scheme on employment, we are concerned to act because the job-destroying impact of climate change over time in agriculture in the Murray-Darling and in tourism across Australia will have a profound effect on the entire economy. Furthermore, by introducing a carbon price into the economy, we encourage the development of job-creating renewable industries across Australia. That is why we believe we have got the balance right in doing so. For example, on the employment impact of climate change, look at the number of people employed in agriculture in the Murray-Darling: 90,000 Australians. The Murray-Darling is a stressed river system because of overuse on the one hand and the impact of climate change on water going into the system on the other.
I draw the honourable Leader of the Opposition’s attention to what happens over time when you do not act appropriately on climate change. For example, modelling has been provided through the Garnaut review which indicates that, if nothing were done on climate change, the value of agricultural production in the Murray-Darling Basin would shrink by 12 per cent by 2030 and by 49 per cent by 2050. There are 90,000 Australians employed in the Murray-Darling. If you go to tourism, the same applies there. I draw the honourable member’s attention to this fact in the renewable energy sector as well: Treasury modelling suggests that, under global action on climate change, most sectors of the Australian economy will grow and, in fact, many emissions-intensive industries will maintain or improve their competitiveness. Furthermore, if you look at the impact on the renewable energy sector, Treasury modelling says that the renewable energy sector will grow by 30 times its current size, creating thousands of jobs—an uncomfortable fact for those opposite. Furthermore, the International Energy Agency estimates that the additional investment in renewable energy by 2050 will be US$45 trillion, creating tens, hundreds of thousands and millions of jobs around the world.
Therefore, the overall impact of introducing a carbon price is that over time we will see job generation coming out of the renewable energy sector. It is also necessary in order to underpin continued job generation in traditional sectors such as agriculture and tourism. This is the jobs dimension to what we do and I suggest that the honourable Leader of the Opposition show some consistency for the first time.
I inform the House that we have present in the gallery this afternoon members of a delegation from the Philippines who are visiting under the auspices of the Australian Political Exchange Council. On behalf of the House I extend a very warm welcome to the members of the exchange.
Hear, hear!
My question is to the Minister for Foreign Affairs. Will the minister update the House on developments in Pakistan? What are the implications for security in Afghanistan?
I thank the Chief Government Whip for his question. I start by associating myself with the remarks of the Prime Minister and the Leader of the Opposition on the tragic death of an Australian soldier overnight in Afghanistan. Afghanistan remains a difficult and dangerous place, but the Australian government very strongly believes that it is in Australia’s national interest and in the interests of the international community for Australia to continue both its military and its civil reconstruction commitment in Afghanistan. We have a direct stake in ensuring that Afghanistan does not again become a safe haven for international terrorists. Regrettably, in addition to the death of an Australian soldier overnight, we have in the past—indeed, in recent times—seen Australians at risk of international terrorism in Bali and more recently among members of the coaching staff and umpiring contingent for the Sri Lankan touring cricket team in Lahore in Pakistan.
The Chief Government Whip asked me about Pakistan and the implications it has for Afghanistan. Pakistan is one of the most strategically important countries in the world: it is in South Asia, close to the Middle East, close to Central Asia and a nation which has nuclear weapons. It is important that we recognise Pakistan in its own right and also the implications that the Afghanistan-Pakistan border has for terrorist and extremist activity in Afghanistan. Having had the opportunity of personally seeing the Afghanistan-Pakistan border area, one appreciates just how porous that border is and how there needs to be intense cooperation between the government of Pakistan, the government of Afghanistan and the international community through the United Nations and the International Security Assistance Force to address and counter terrorism in that area.
We have seen the terrible recent atrocity against the Sri Lankan cricket team in Lahore. But as late as yesterday we saw another terrorist attack where up to eight people were killed in a terrorist attack in Rawalpindi—and we condemn that absolutely. On the other hand, overnight we have seen—and I welcome very much—the news that the government of Pakistan has decided to reinstate former Chief Justice Chaudhry and other members of the judiciary and has decided to review the ban on former Prime Minister Nawaz Sharif and his brother so far as their political activity or engagement is concerned and has decided that those arrested in the course of the so-called Long March will be released. We have seen, as a consequence, that former Prime Minister Nawaz Sharif has called off the Long March protest against the government. This has very considerably defused a political crisis in Pakistan.
We welcome very much the defusing of that crisis and we urge the political parties in Pakistan to work together to move forward to jointly combat terrorism and extremism. It is quite clear that, whatever political differences the political parties may have in Pakistan, the common enemy is terrorism. As my colleague the Foreign Secretary of the United Kingdom, David Miliband, said recently:
Terrorism is a mortal threat to Pakistan—
or, as I have put it, a threat to Pakistan’s very existence, not just a matter for us to contemplate in terms of the Afghanistan-Pakistan border.
We do not underestimate the seriousness of the economic security and social challenges facing Pakistan at this time, which is why on my recent visit there I made it clear that Australia stands ready, willing and able to assist Pakistan in these difficult times while we are a founding ministerial member of the Friends of Democratic Pakistan which first met at the United Nations General Assembly in September last year.
In addition to the Minister for Defence meeting with his colleagues in Krakow recently and in addition to the Prime Minister’s forthcoming discussions with the President of the United States in The Hague on 31 March, I will be meeting with other foreign ministers to discuss the military and civil contribution that the international community can make to Afghanistan. This meeting of foreign ministers will be wider than NATO foreign ministers, wider than the International Security Assistance Force foreign ministers but will also include Afghanistan and Pakistan’s neighbours, including Iran, which is an important new development which I welcome. I look very much forward to discussing with my colleagues the important challenges that Afghanistan and Pakistan face.
Despite the risks, despite the difficulties and despite the tragic events that we have seen overnight it is absolutely in Australia’s national interest to continue to do our bit, to play our part with our international colleagues in seeking to stare down the terrorist threat that we currently find in the Afghanistan-Pakistan border area. There is no doubt that that border area is the current hotbed of international terrorism and all our resolve is required to stare that down in conjunction with our partners, our neighbours and our allies.
My question is again to the Prime Minister. I refer the Prime Minister to the economic modelling by Frontier Economics for the New South Wales Treasury on the impact of the emissions trading scheme on regional Australia and comments reported today by its author that the jobs cost will be ‘very high’ and ‘very severe’. Will the Prime Minister now release his own government’s modelling on the cost of the emissions trading scheme on jobs in regional Australia such as in Newcastle, Gladstone and Mount Isa?
On the question of the impact of the emissions trading scheme, the Carbon Pollution Reduction Scheme, as the government has proposed in regional Australia, the honourable member will be familiar with the structure of what the government has put forward—namely, a raft of assistance mechanisms for emissions-intensive trade-exposed sectors of the economy, a raft of assistance measures through the electricity supply industry in Australia, a raft of measures to assist other affected industries in the climate change adjustment fund, and a raft of measures to assist households in their adjustment. We believe that this set of measures provides an appropriate framework to assist economies in the transition to a lower carbon economy. It gets the balance right between acting for the environment and acting for jobs. We would ask those opposite to honour their previous commitments to get behind a positive piece of legislation for the economy, for the environment and for climate change for the future.
My question is to the Treasurer. What were the outcomes of the G20 finance ministers meeting held over the weekend in London and what do they mean for the upcoming leaders meeting?
I thank the member for Franklin for her question because we are in the middle of a global recession and that requires global solutions. The meeting at the weekend agreed to take whatever steps are necessary to restore growth. It is pretty fair to say that the meeting at the weekend was one of the most important G20 meetings that has ever been held. It made quite substantial progress in advance of the leaders’ meeting in a couple of weeks time. It is worth focusing on why the finance ministers were so galvanised, if you like, at this meeting over the weekend, because the latest figures that are coming out on global growth are sobering. Indeed, figures presented at the meeting at the weekend show that, on an annualised basis, growth in the developed world went back seven per cent in the December quarter. What this demonstrates is just how difficult the global environment is at the moment and why there is such an urgent need for there to be international action.
Four achievements stand out from the meeting over the weekend. The first one was that all of the 20 largest economies in the world are focused on dealing with the problem of toxic assets in the banking system. This is very important because it goes to the core of the ability of credit to flow globally and that then goes to the core issue of confidence in the international financial system. It is the case that the failure or inability of some governments to clean up these toxic assets, which we did not have in this country, but to clean them up elsewhere, is certainly restricting growth in domestic economies, slowing the world economy and then further eroding confidence in the international economy. It was good to see an agreement to a framework for international cooperation in this area which is based largely on proposals put forward by the Prime Minister. Our government put forward a set of proposals, as did the British government, and they were substantially adopted in the communique.
Secondly, all of the 20 largest economies in the world agreed on the importance of economic stimulus, on the importance of fiscal stimulus—
Not the Europeans.
Yes, they did. Finance ministers from across the political divide understand the importance of boosting demand to avoid a damaging loss of output, much higher unemployment, much higher budget deficits and, of course, what follows from that: much higher debt. The conservative governments in the room put forward economic stimulus packages. Conservative governments in the room on the weekend were very strong advocates of economic stimulus—namely, the Germans, but also the French and many others. That was because all of the leaders in the room last weekend, all of the finance ministers, understand, unlike the Liberal and National parties in this country, that action is required early to boost demand to avoid more damaging outcomes in the long run. So the communique did strongly support economic stimulus, and it was signed up to by governments of all political persuasions from around the world, most of whom are putting in place substantial economic stimulus packages.
Thirdly, the meeting agreed on the need for substantial reform of international financial institutions, most notably the IMF. Australia was the chair of that committee, along with South Africa, and those proposals are going forward to the leaders meeting. Fourthly, the meeting agreed to put forward a set of proposals to regulate and supervise international financial systems. These are very important. So there was a striking consensus across the developed and developing world and, as I said before, across governments of different stripes.
There are only one or two parties around the world who do not think that these initiatives are important and who do not support economic stimulus. Of course, one or two of those parties sit here in the Australian parliament. They are a pretty select band. They are joined by the radical right of the Republican Party in the United States, but there are not many others, because around the world, irrespective of the political divide, governments understand that economic stimulus is critical in an environment where there has been a sudden drop or contraction in demand and that failure to act simply pushes up unemployment and causes a greater drop in output and therefore greater damage to the economy in the long run. All of those leaders said that not to act—to sit and wait and see, as those opposite advocate—is the height of irresponsibility. Their approach was certainly not supported by anyone in that room in the G20 over the weekend.
It was an important meeting, and it sets the ground rules for the meeting in two weeks time. At that meeting, the Australian people can be assured that the Prime Minister and this government will be doing everything we possibly can to support an outcome that boosts global growth, that reforms our financial system and that supports employment. Internationally, the approach of those opposite—to ‘sit and wait and see’—is rejected by every other major political party in the Western world and the developing world.
I inform the House that we have present in the gallery this afternoon the New Zealand Minister for Economic Development and Energy and Resources, the Hon. Gerry Brownlee. On behalf of the House I extend to him a very warm welcome.
Hear, hear!
My question is to the Prime Minister. I refer to the facts that, firstly, the economy is now shrinking; secondly, the government is pushing ahead blindly with changes in industrial relations; and, thirdly, the government is pushing ahead with a flawed emissions trading system. I ask you, Prime Minister: how can you expect business to keep people in jobs when the risk of a Rudd recession is coming from three different directions?
I thank the honourable member for North Sydney, the minister for Work Choices, for his question. What I can say about the impact of a global recession is that the last thing Australian workers want now is the reintroduction of Work Choices. There the Liberal Party stand, led by the member for North Sydney, saying that what working families across Australia want now is Work Choices—Work Choices, which strips away redundancy payments; Work Choices, which strips away penalty rates; Work Choices, which strips away overtime; Work Choices, which strips away basic protections in the workplace. In a time of global recession, the free market fundamentalists opposite say that their solution for the future is to rip and tear away at the protections for Australians in the workplace.
The government’s strategy is clear. We will implement an economic stimulus strategy in order to reduce the impact of the global recession on Australian jobs. That is the government’s plan. That is the government’s strategy. That is what we are getting on with doing. I say this to the member for North Sydney: it is very easy to sit there and carp and be negative. It is very easy to tear down and not to build up—
Mr Speaker, I rise on a point of order. Now that the Prime Minister has finished carping, I say to the Prime Minister: there are three pressures on business which are causing people to sack—
Order! The member for North Sydney will resume his seat. There is no point of order.
The member for North Sydney, the minister for Work Choices—and I presume he is part of that group within the Liberal Party which still wants to visit Work Choices upon the Australian community—
Mr Speaker, I rise on a point of order. The Prime Minister well knows that this undergraduate humour of giving people the wrong name is quite unacceptable. He should refer to people by their seats or by their titles. He knows that. We know that his puerility knows no bounds—
Order! The member for Sturt will resume his seat. There will be no opportunity for him to continue on like that. The Prime Minister referred to the member by his title.
Opposition members—No he didn’t.
I am not going to repeat what he said, but he referred to the member by his title and then added something to it. It was title plus, all right? As I have indicated, I would hope that at some stage the House might address some of the matters to do with question time. What is happening here is permissible under the present standing orders, and the Prime Minister has the call.
I thank the member for North Sydney and the former minister for Work Choices for his contribution to the debate. What is a live concern for everyone in the nation is when they will seek to bring Work Choices back, because Work Choices is in the Liberal Party DNA.
Let us go to the three elements of the position put forward by the member for North Sydney in his question. The first is on economic stimulus. What they said when we introduced the economic stimulus plan was, ‘We, the Liberal Party, support it.’ Secondly, on the abolition of Work Choices what they have said is that Work Choices is dead. Thirdly, on the question of the emissions trading scheme, what did we have from the member for Flinders? When it came out in July last year, what did the member for Flinders say? He said:
Basically, what they’ve done—
that is, the government—
is they’ve dusted off the document that we had.
There you have those opposite saying that there is nothing different between them and us on emissions trading, saying that Work Choices is dead, supporting our economic strategy and trying to argue that somehow they have a credible basis on which to enter this debate today. Consistency, Joe, will help every day.
My question is to the Prime Minister. Will the Prime Minister update the House on developments in the global recession and Australia’s response?
I thank the honourable member for her question. Data from the United States overnight continues to confirm the impact of the global recession on its national economy. In the month of February, industrial production in the United States fell a further 1.4 per cent, taking production down to its lowest level in seven years. Capacity utilisation in the United States has now fallen to 70.9 per cent, down from 71.9 per cent in January. This is now equal to the lowest capacity utilisation level in the United States ever recorded.
Beyond the United States, we have received further confirmation of the way this global economic cyclone is hitting economies around the world. Canada has recorded a sharp jump in unemployment from 7.2 per cent to 7.7 per cent, and Italy has seen a fall in GDP of 1.9 per cent in the December quarter, its largest fall since contemporary records began in 1981. In Singapore, the largest fall in retail sales in a decade was recorded in January, with retail sales down by 12.2 per cent compared with last year. What these figures from the United States, from Canada, from Italy and from Singapore demonstrate is that this global recession is affecting every national economy. The key question within each national economy is, ‘What are you going to do about it?’ That is why the government has put forward its economic stimulus plan for the future, which is, firstly, based on us providing guarantees for bank deposits in order to underpin confidence in the Australia financial system; secondly, based on what we are also doing with support payments to pensioners, to carers, to veterans and to farmers in hardship, which will support the 1½ million Australians employed in the retail sector; and, thirdly, based on our investment in long-term infrastructure—our school modernisation plan as well as what we are doing in social housing and energy insulation.
On the impact of the stimulus package—and I noticed those opposite are no longer asking us about the effect of the economic stimulus package—I draw the attention of those opposite to the minutes of the 3 March RBA board meeting, which were released today.
What about jobs?
The chortling member for Aston might listen to this, as he was asking questions yesterday about the impact of the stimulus on activity in the economy. The RBA minutes say:
… retail spending had increased sharply in December, after a run of weak readings in previous months … the higher level of December sales was maintained in January, with sales rising by a further 0.2 per cent.
Further, the RBA attributed this rise to increases in household disposable income which were driven by ‘lower lending interest rates, lower petrol prices and government transfer payments’. Moreover, the RBA noted that the government’s second stimulus would provide further support for the economy. It went on to say:
Looking at government finances, the Australian Government’s fiscal package announced in February would provide significant stimulus to the economy over the next two years.
That is from the Reserve Bank Board’s meeting of 3 March. That goes to the heart of the relationship between the government’s economic stimulus strategy and its impact on economic activity in Australia across the period ahead.
The response to what the government has done is reflected by comments not just by a number of large retailers but also by small business operators in Australia. I note that support is coming in from Mildura, in the member for Mallee’s electorate. Rob McKinnon from Fantastic Furniture in Mildura said, ‘We have doubled our sales since Thursday and made $2,000 more than we did before Christmas.’ Then you have Office Works in Mildura saying, ‘March typically is a tough month in Mildura, but it is very encouraging and I think retail in general in Mildura is doing okay.’ There will be different reports from different parts of the country over time. What I find interesting in the baying and howling from those opposite, though, is that they do not like any good news. You know why? Because they celebrate bad news. That is because they seek to take political advantage out of bad news. We are getting on with the business of providing an economic response to the global economic crisis; they continue in their attempt to take political advantage from the economic crisis.
Mr Speaker, I rise on a point of order. Yesterday in a question that was asked by the member for Ryan you asked him to vouch for the statements that he was seeking to repeat in question time. I hope you will ask the Prime Minister to vouch for the efficacy of the ones that he has read out.
The member for Sturt will resume his seat. The Prime Minister has the call.
The member for Sturt should vouch for each of the P&C—
Mr Pyne interjecting
The Prime Minister will resume his seat. The Manager of Opposition Business has adopted a tactic of continuing debating with the Speaker as he sits down. If he wants to do that, he can do that at the dispatch box. I gave the Prime Minister the call; that dealt with the point of order.
The member for Sturt, in his electorate, should look at the impact of the Nation Building and Jobs Plan on each of the primary schools in his electorate. I say this to the member for Sturt, who is very quick to the dispatch box—why doesn’t he come back and answer this?—does he oppose the grants going to each of the primary schools in the electorate of Sturt?
Mr Pyne interjecting
The member for Sturt will resume his seat.
Opposition members interjecting—
No, settle down. The member for Sturt will resume his seat. The Prime Minister will resume his seat for a second. As the Manager of Opposition Bus-in-ess will understand, there is no provision under the standing orders for such a rhetorical question to be answered unless—
Tell the Prime Minister that.
I think that all members might, if they open their ears and do not chatter away, understand that I am talking to all of you, whilst my comments might be directed to the member for Sturt. But sometimes some people seem to be above all this. The member for Sturt probably only has very limited ways of being able to do this, but he might explore the standing orders to find out if there is a way that he can find a space within the pro-ceedings of the parliament to make a response.
Mr Speaker, I can think of a mech-anism if you granted me the indulgence, as you have on other occasions to mem-bers of the government, to respond to this kind of rhetoric. So I do seek indulgence.
No, the member for Sturt will resume his seat. I am not going to grant indulgence because—
Opposition members interjecting—
Order! I think that I would ignore—
Opposition members interjecting—
Unbelievable, you people! Many of you do not need indulgence to try to make a point. Luckily, they are ignored by the Hansard. I think that in indulgence I have actually been very fair in giving both sides the same amount of indulgence. That is not one of the mechanisms that I thought might be possible for the member for Sturt. The Prime Minister has the call.
Mr Speaker, I rise on a point of order. When the Prime Minister encourages an opposition member to stand up and answer a question and does so in the full light of the television, what he is seeking to do is create a situation—
Order!
Mr Speaker, hear me out—where the opposition appears to be unable or unwilling to respond. So this is a—
The Leader of the Opposition will resume his seat.
Mr Randall interjecting
Again, people like the member for Canning think that this is open slather to continue to make comments. I think he has granted himself indulgence by saying it is a very good point. Perhaps it is a very good point, and it has been used by governments of both persuasions. It has not changed. If the Leader of the Opposition were really very thoughtful about what happened before the last election, he would be able to think of examples where senior—
I don’t recall those.
I think that the member for North Sydney is feigning the type of forgetfulness that is advantageous to him at the moment. I just wish to illustrate so we can get back on with question time, because I am sure that the people of Australia would prefer to be having question time rather than this very intense discussion about practices in the standing orders of this place. The fact is that these types of rhetorical questions have been used. Rhetorical questions suggest debate. This is something that has been addressed by this House over many, many, many parliaments. If the opposition have some problem with it, they might take this up with the procedure committee.
I take it, at least from the member for Sturt’s vote in this House, that he does oppose every single grant to every primary school in his electorate of Sturt. In the absence of him saying no, I assume that is the case. I have referred to the impact in terms of retailers in Mildura, but also I would refer to what some major retailers have had to say most recently about the impact of the government’s economic stimu-lus strategy. For example, Big W has seen a very positive sales trend. Michael Luscombe of Woolworths said on 17 March in the Daily Telegraph that the government’s strategy:
… certainly resonated very strongly in Big W as families stocked up on everyday general merchandise such as kids clothing.
What you have, therefore, is a stimulus felt by smaller retailers, by larger retailers and also, of course, by the range of measures which have gone into the housing sector, as the Minister for Housing has referred to at the dispatch box before. These measures to provide for payments to families, to carers, to pensioners and to veterans are all designed to support stimulus for the 1½ million jobs in the Australian retail sector, which those opposite do not care about.
Beyond that, what are the government doing? We are investing in the largest school modernisation program in Australia’s history. We are also investing in order to make Australian homes energy efficient by installing ceiling insulation in 2.7 million Australian homes. The government are investing in building 20,000 new units of social housing. The government are investing $1.2 billion in the Australian Rail Track Corporation. The government are bringing forward $700 million in a roads program—a Black Spot Program. The government are investing $1.6 billion in critical upgrades to university and TAFE infrastructure. The government’s strategy is clear cut: an economic stimulus plan to support jobs now and to build the infrastructure Australia needs for the future. What we have instead from those opposite is a political strategy of ‘wait and see and do nothing; hope it gets better’ to take political advantage out of the global economic recession. We, the govern-ment, are getting on with the job.
My question is to the Prime Minister. What does the Prime Minister have to say to the people of Newcastle, Mount Isa, Gladstone and Latrobe, whose mayors have called on the federal government not to impose the Emissions Trad-ing Scheme on their com-munities in the inter-ests of protecting the economic and job futures of their citizens? When will jobs take priority over your unwil-lingness as Prime Minister to admit it when you get it wrong? What is more important—your ego or jobs?
Order! The last part of the question is out of order.
I thank the honourable member for Cook for his question given his spectacular contribution to the debate yester-day in the House of Representatives where he called for an extension of the government’s first home owners bonus—a little blip there in terms of opposition tactics, but never mind; let it be so recorded.
The honourable member asks a question about the impact of the Carbon Pollution Reduction Scheme in various regions in Australia. The government—firstly, in relation to the emissions-intensive trade-ex-posed sector; secondly, in assisting the electricity industry through the Electricity Sector Adjustment Scheme; thirdly, through the climate change adjustment fund; and, fourthly, through an assistance package for households—has put in place a set of mechanisms to ease the transition to a less carbon-intensive economy. That is the right and responsible course of action.
As the honourable member and any honest participant in this debate would know, those opposite had 12 years to get an emissions trading scheme right. Do I hear from those opposite a single word about why they waited 12 years to do nothing? It was because they did not believe in it, because they were simply climate change sceptics. That was until the member for Wentworth, the Leader of the Opposition, decided to make his run for the leadership—and then there was an attack on the member for Bradfield over his position on climate change—dressing himself in pale green colours in order to obtain the leadership. Then we got an attack on the brown side by the member for Higgins; namely, the Leader of the Opposition in waiting. And what do we do? We track to the right; we track to the brown side of the argument.
What people expect of governments or alternative governments in this country is consistency. We are getting on with the business of implementing an appropriate response to carbon pollution reduction. Those opposite are riddled with inconsistencies.
My question is to the Minister for the Environment, Heritage and the Arts. What progress has been made in implementing the government’s Energy Efficient Homes package?
I thank the member for Fowler for her question and report to the House that very good progress has been made in rolling out the Energy Efficient Homes package. This package will see the largest rollout of energy efficiency that we have ever had in Australia. It is a rollout of ceiling insulation and solar hot water, as the Prime Minister has just said, to up to 2.7 million Australian homes, slashing energy costs by up to 40 per cent. I am pleased to advise the House that we have received over 2,000 applications for insulation and solar hot water and that the call centre has already received over 33,000 calls. This shows that there is great and enthusiastic interest from Australians who want to take action on energy efficiency and householders who want to save money on energy bills and reduce their carbon footprint.
This is also good for supporting Australian jobs. I note that Bradford Insulation are looking to fill over 70 vacancies as a direct result of the stimulus package, ranging from national accounts managers through to plant operators. NSW Insulation estimate they will create an additional 100 job opportunities over three branches as a direct result of the stimulus package, and those positions are already being filled. This year the Insulation Council of Australia and New Zealand simply said:
The federal government’s stimulus package is very welcome and timely. The insulation initiative will help to save and grow local jobs during difficult economic times.
I note that, on 6 March in the Daily Telegraph, the General Manager of Dux Hot Water, Les Patterson, said—
Opposition members interjecting—
I appreciate that members opposite recognise the significance of Mr Patterson’s name, but the fact is that as the General Manager of Dux Hot Water, he said:
The enhanced solar hot water rebate will create countless new manufacturing and installation jobs … It will also support the jobs of tradespeople at a critical time—particularly those who have been recently displaced from mines and other employment.
This is a nation-building and jobs plan and this is the plan that the Liberal and National parties tried to block. They have been knocking it ever since and they are knocking it in the House this afternoon. But the fact is that this is a plan that delivers jobs. It delivers jobs through a package which not only enables local industry to get out there and put ceiling insulation in the roofs of Australian houses and solar hot water systems on the roofs of Australian homes but also produces low-pollution jobs and local jobs and delivers on our election promises in a way that the opposition can only dream about.
Mr Speaker, I would ask if the minister could table the notes from which he was speaking and also indicate how much of that plan is being spent on advertising.
The member for Flinders will resume his seat. The member for Flinders can ask for public documents that the minister might have been referring to but he cannot come in here and debate at the dispatch box. Was the minister quoting from a document?
Yes.
Was the document confidential?
Yes.
My question is to the Prime Minister. I refer the Prime Minister to his answer yesterday regarding Queensland Premier Anna Bligh’s guarantee on Sunday that if re-elected she will create 100,000 new jobs over the next three years, and I will quote her words: ‘I stake my own future on these 100,000 jobs.’ However, yesterday, only 24 hours later, Anna Bligh conceded that she could not guarantee those jobs. Isn’t Premier Bligh’s backdown identical to the Prime Minister’s own broken promise to create 330,000 new jobs?
The clear alternative in the Queensland election is that Labor stands for jobs and the Liberals and Nationals stand for job cuts. It is as simple as that. They do not like the fact that the Liberal National Party leader in Queensland, Mr Springborg, the job destroyer, has said that he will abolish a billion dollars from the budget and sack 12,000 public servants engaged in service delivery. That is the contrast between Labor, with an infrastructure plan to invest in the future in Queensland, and the Liberals and Nationals in Queensland, who are dedicated to sacking 12,000 workers. That is the clear contrast—jobs versus job cuts—and those sitting on the front bench of the Liberal Party should reflect long and hard on the impact of pulling a billion dollars out of a state budget and where that flows through in terms of job cuts. So I say to the honourable member for Fadden: when it comes to jobs and the alternative, it is absolutely clear-cut that, when you look at Mr Springborg’s policy, it is nothing short of job destruction 101—sacking 12,000 workers. If you have a problem with unemployment through the global recession, the Liberal National Party response is: add to that unemployment by making another 12,000 unemployed. That is simply wrong, wrong, wrong.
My question is to the Minister for Education, Minister for Employment and Workplace Relations and Minister for Social Inclusion. How has the government balanced the needs of flexibility for business and provided a safety net for employees through the unfair dismissal provision in the Fair Work Bill? Minister, are there any proposed policies that strip away the rights of Australian workers?
I thank the member for Braddon for his question and know that he is deeply concerned about ensuring fairness for Australian workers. As I have outlined to the House in the past, before the last election the Labor Party took a very clear policy on workplace relations to the Australian people. I know those opposite find that hard to understand—actually telling the Australian people the truth about what you are going to do on workplace relations—but we did. And very clearly in that policy were Labor’s plans for new unfair dismissal laws where we said, if elected, we would put in place unfair dismissal arrangements, with special arrangements for small businesses—businesses with fewer than 15 employees—and general arrangements for businesses with 15 and above. Those arrangements get the balance right.
For smaller businesses with fewer than 15 employees, counting full-time employees, part-time employees and regular and systematic casuals, small business owners will have a full 12 months to look at a new worker and to assess whether or not they fit into their business—a full 12 months. Then, of course, they will have procedural assistance if, at some time, they do need to deal with an underperformance issue with that worker or a dismissal issue in the form of our fair dismissal code. Bigger businesses—15 and above—will have a full six months to see whether or not an employee fits into their business. This gets the balance right.
On the question of the number, why was the number 15 selected and why was the system of counting full-time, part-time and regular and systemic casuals used? It was to equate the system with the longstanding feature of workplace relations that small businesses with fewer than 15 employees are not obligated by the award system to pay redundancy pay—to keep the definition standard across redundancies and across unfair dismissals.
I am asked about there being any alternative proposals that strip away the rights of working Australians, and an amendment being pursued by the Liberal Party does just that. First, it changes the benchmark for these unfair dismissal arrangements for small businesses from fewer than 15 employees to 25 employees on a full-time effective equivalent—something that is contrary to Labor’s election policy, contrary to our mandate and something we will not support. More amazingly still, it changes the definition of who gets redundancy pay from the standard current definition of fewer than 15 on a head count to fewer than 15 full-time effective equivalents. What does that mean? If you were an employee of nine years service and you worked in a business with 10 full-time employees and 10 part-time employees, and each of those part-time employees worked two days a week, today under the award system you would be entitled to redundancy pay if you were made redundant, and being a worker of nine years service you would be entitled to 16 weeks redundancy pay. If the opposition’s amendment were accepted then that business would not reach the threshold of 15 full-time equivalent employees and that worker would have no redundancy entitlement at all. Today: entitled to 16 weeks pay; under the Liberal amendment: entitled to nothing. The Liberal Party is the party in government that ripped off redundancy pay. Now it is seeking to do the same in opposition.
The Leader of the Opposition has tried in this debate to hunt with the hounds and run with the foxes. He has tried to be out there in the mainstream media saying to the Australian people, ‘Work Choices is dead; nothing to do with me; I’m a reasonable man,’ whilst at the same time in his party room going: ‘Bring Work Choices on. I support it because I am as strong on Work Choices as Peter Costello.’ Well, today is the day that opportunism ran out of rope. Let every Australian worker, particularly those who work for small businesses, understand that today the Leader of the Opposition and his Liberal Party have drafted an amendment and committed themselves to supporting an amendment that rips redundancy pay off hardworking employees. Mr Speaker, if you have made a fortune at Goldman Sachs then maybe 16 weeks pay is not very much, but for average hardworking Australians it is a fortune, and they are the people the Leader of the Opposition wants to rip off.
Opposition members interjecting—
Order!
Mr Speaker—
Order! The member for North Sydney does not have the call. Has the Deputy Prime Minister concluded?
Yes, Mr Speaker.
Coward! Engage in the debate!
Order! The member for North Sydney will return to the dispatch box and withdraw.
Why is ‘coward’ unparliamentary, Mr Speaker?
Order! In the context of you not having the call, I think that is the best way of dealing with the matter. The only other way would be to ask you to leave.
Why is ‘coward’ unparliamentary?
Will the member withdraw or not?
I withdraw to satisfy the chair, Mr Speaker.
There is no need to do so with qualification.
My question is to the Minister for Education. Will the minister inform the House why Eatons Hill State School in my electorate was advised by Education Queensland that the school would not be eligible for federal funding under Australian government guidelines, having already received a state government grant for over $150,000? Minister, why did the government reverse its decision and approve the funding four hours after the member for Petrie visited the school with the state Labor candidate for Everton?
Honourable members interjecting—
Order! The House will come to order. The question has been asked.
I do genuinely thank the member for his question. Can I explain to the member that there are schools in every electorate in this country. Some of them have good members of parliament, who came into this chamber and voted for the single biggest school modernisation project in Australian history. Some of them did what he did and voted against it.
Mr Speaker, I rise on a point of order going to relevance. There was political interference against the government guidelines.
The member for Dickson will resume his seat. There is no point of order. The Deputy Prime Minister is responding to the question.
On the question of good members of parliament, who support school modernisation and who supported the single biggest infrastructure investment in schools in this nation’s history: we are obviously rolling out that program and rolling it out quickly. Consequently, a lot of information is going to schools.
Mr Speaker, I rise on a point of order. The question could not have been more specific. It was about a specific school, a specific grant and a specific act of political interference—
The Manager of Opposition Business will resume his seat.
Obviously, this is a huge program, a $14 billion program, voted against by the opposition. It is being rolled out quickly across the country. When it is being rolled out quickly across the country, there are obviously times where there are information gaps and problems at local schools.
Opposition members interjecting—
What good members of parliament—as opposed to the incompetents yelling at me—do—
Mr Dutton interjecting
The member for Dickson will resume his seat.
is go and sort those problems out.
Mr Dutton interjecting
The member for Dickson will resume his seat. Has the Deputy Prime Minister concluded?
The member for Petrie is a good member of parliament.
Mr Pyne interjecting
Order! The member for Sturt!
Indeed, she is such a good member of parliament she not only sorts out problems with schools in her electorate but out of the goodness of her heart goes and sorts out problems with schools in the electorates of the incompetents opposite.
Mr Pyne interjecting
Order! The member for Sturt is warned!
I would have thought that the member for Dickson would have sent a thankyou note to the member for Petrie for getting this problem resolved for one of his local schools.
Mr Dutton interjecting
Order! The member for Dickson! The member for Dickson will leave the chamber for one hour.
The member for Dickson then left the chamber.
The Deputy Prime Minister will wrap up her answer.
The member for Petrie sorted out an issue. Obviously, people would not have turned to the member for Dickson to do it because he is opposed to the whole program. At this point we should have the Hansard record that the member for Dickson is probably the only member ever to come into this parliament, in all of its history, to try and stop one of his schools getting funding and to complain when a problem has been sorted out for his school. Can I say to every member of the parliament: this program is being rolled out for every school in this country. The guidelines are publicly available. Yes, there will be times when schools want advice, want assistance, want someone to come and give them a helping hand. Members on this side of the House are always prepared to do that. Those over there, if they were truthful, would walk into the school and say: ‘I am opposed to you getting this money. Goodbye.’
My question is to the Minister for Health and Ageing. Minister, what is the progress of the government’s alcopops measure and what will be the consequences if it is blocked?
I thank the member for Forde for his question. I know that many members on this side of the House are anxiously watching the proceedings in the other chamber. There have been developments today, with both the Greens senators and Senator Xenophon indicating that they will support this measure. But unfortunately we still have the Liberal Party, and particularly the Leader of the Opposition, opposing this bill. Very recently the Liberal Party in the Senate have indicated that they will oppose the alcopops measure. I have to say that this has now come to a point where the Leader of the Opposition has shown an absolute lack of any moral leadership on an issue that is a scourge across the country.
As a result of his failure and the Liberal Party’s failure to show any skerrick of moral leadership on this issue, if this matter is not passed then in just a few short weeks we will have teenage girls and teenage boys again able to buy alcopops for pocket-money prices—again drinking sweet and sugary drinks that are targeted at them. What is more, the Leader of the Opposition’s mates, the distillers, will get a tax break in the next four years of about $1.6 billion-plus. You have to ask yourself: what values does a leader have who opposes a measure like this? What kind of values compel the Leader of the Opposition to give a tax break to multinational alcohol companies that are selling sugary drinks to teenage girls? What sort of moral compass does the Leader of the Opposition have?
I want to read you some of the opinions of health experts who, unlike the Leader of the Opposition, are all too aware of the human cost of alcopops. Let me quote first of all the President of the AMA, Dr Rosanna Capolingua. She says:
We have to look at the alcohol industry and how it targets young people with alco-pops. It builds brand loyalty and the kids connect with a type of drink—they’re hooked in.
Then they go off and have an accident, or they’re king hit while waiting in a queue outside a tavern, or they’re raped or are having unprotected sex.
Those are the words of the President of the AMA. I can quote Geoff Munro, the Director of the Community Alcohol Action Network. Again, he is someone all too aware of the human cost of alcohol abuse—something that the Leader of the Opposition has refused to engage with, preferring instead to buddy up with his mates the distillers. Geoff Munro said:
… RTDs—
that is, alcopops—
are consumed by the riskiest drinkers and pose an immediate threat to the health and wellbeing of teenagers around Australia … Some single cans contain almost three standard drinks, which means young people get drunk quickly. Thousands of teenagers are admitted to hospital after overdosing on alcohol each year. Some suffer permanent brain damage, and some die, yet the industry is increasing the strength of drinks favoured by the youngest binge drinkers.
These people understand the human cost of alcohol abuse, but unfortunately the Leader of the Opposition is not prepared to take any sort of moral stand on this issue. I remind people that the Leader of the Opposition explicitly said that nothing could be done about binge drinking and it was pointless to even try. At the National Press Club last year he said, ‘One should never underestimate the enterprising ingenuity of the Australian drinker.’ Why not just give them a pat on the back and encourage them to drink even more, Leader of the Opposition! He has failed the test of moral leadership on this issue. He had a choice whether to lead public health experts, the police—
Mr Speaker, I rise on a point of order. Even by the standards of ministerial answers, this is grubby and offensive and it should be stopped. It is demeaning to the parliament to have this kind of imputation cast across the dispatch box.
It has often been said that this is a chamber of robust debate, and if in fact those who are being mentioned in the answer wish to have redress then there are avenues open for that at the end of question time.
Mr Speaker, I rise again on a point of order. The whole point is that there is no appropriate response to something which is as grubby and as low as this other than to move that the minister be no further heard—
The member for Warringah will resume his seat. The minister has the call.
I understand why the former health minister takes objection to this: he too has been in denial about whether binge drinking exists. He is on the record as saying that this is an overstated problem. The Leader of the Opposition had a choice to make. He had a choice to make about whether he would follow the lead of parents, whether he would follow the lead of the police and whether he would follow the lead of the AMA—
Mr Speaker, I rise on a point of order. In the interest of good taste, there are family members of people on this side of the House who have died as a consequence of binge drinking and it is deeply offensive for the Minister for Health and Ageing to accuse this side of the House of not being serious about binge drinking.
The member for Sturt will resume his seat.
Mr Pyne interjecting
Order! The member for Sturt has made his point. The minister has the call.
The Leader of the Opposition had a clear choice to make. He had a choice about whether he wanted to be on the side of the health experts, the AMA, the police and the parents and join with us in tackling this issue. Instead, who did he decide to join? The distillers. This man has no moral compass on this issue and stands for nothing.
My question is to the Minister for Education. Were the guidelines for Building the Education Revolution conveniently made more flexible, changed or ignored for Eatons Hill State School to suit Anna Bligh and the member for Petrie in the midst of the Queensland state election campaign?
It really does strike me as extraordinary that members opposite cannot understand the following basic things. Of course there are guidelines for all of the Building the Education Revolution program—for the programs for primary schools, for the programs for secondary schools and for the National School Pride program. Those guidelines are the same across the country. The member for Petrie mentioned yesterday to me how she had resolved a problem at a local school, covered by the member for Dickson. I think you will find, Member for Sturt, if you ask many members on this side of the parliament, that they are out there talking to their local schools, helping with getting information out there and helping with getting applications in. In my own electorate I have had a meeting of the principals of every local school to talk through—
Mr Pyne interjecting
Order! The member for Sturt has asked his question.
the program. I attended a principals forum, for example, in the member for Oxley’s electorate to talk through with principals the way the program works. Members on this side of the House: (1) believe in this program, the biggest school modernisation program in the nation’s history, (2) because we understand the economic stimulus effects, want this program to roll out quickly to support jobs across right across the country; and (3) understand that when you are engaged in the biggest school modernisation program this nation has ever seen and you want to roll it out quickly for the economic stimulus and job-supporting effects, people need the information and they need the assistance. Properly, the member for Petrie provided that in the electorate of the member for Dickson to assist a school with a local problem.
I understand that a desperate opposition want to make a cheap political point about this, led as they are by an opportunist. But before they go down this track too far, I will draw their attention to that great journal of record the North-West News. The front page from the most recent addition is headed up ‘Hill race for hall’. I will quote Mr Knox, whom I understand is the LNP candidate in the local area. Mr Knox said:
We are working hard to try and resolve it for them, they have been working on this project since 2004 and it is ready to go.
Mr Speaker, I rise on a point of order on relevance. The minister was asked a very specific question about whether the guidelines for the BER were ignored, whether they were changed or whether they were made more flexible. The member for Petrie, who is looking a bit wan today—
Order! The member for Sturt will resume his seat. The Deputy Prime Minister has the call.
Given the questions of so-called political interference that have been raised by the opposition, I think the words of the LNP candidate in the Queensland election are probably very relevant. Mr Knox goes on to say:
If I were Mr Rudd I would be keen to support a project that is ready to go.
Who is ready to support a project that is ready to go? Mr Knox is, the member for Petrie is and this side of the House is. The member for Dickson is not because he does not want this school to get assistance, and every member over there is opposed to investing in their schools in the biggest school modernisation program this country has ever seen. How amazing!
My question is to the Minister for Home Affairs. Will the minister advise the House about the impacts of alcohol abuse on policing?
I thank the honourable member for Makin for his question. The devastating effects of alcohol abuse are insidious and they are far-reaching. They contribute to family breakdown and family violence and financial, psychological and legal problems, with untold costs to the community. The link between alcohol, crime and social harm to the community is becoming much clearer. The facts are, in a word, sobering. A 2007 report from the New South Wales Bureau of Crime Statistics and Research estimated that New South Wales Police spend at least $50 million a year responding to alcohol related crime. According to the bureau, the money spent by New South Wales Police would pay the annual salaries of around 1,000 full-time constables in New South Wales.
Why is it that, in the face of all the evidence talked about today, the opposition still refuses to support the government in providing a disincentive for kids to get hooked on alcohol at an early age? The Minister for Health and Ageing has reminded us that these alcopops are deliberately targeted at teenage girls, who drink them like soft drinks because that is exactly what they taste like. Nearly a year ago, the New South Wales commissioner, Andrew Scipione, said this:
Drinking habits have changed. What many young Australians are doing now is going out determined to get drunk, whatever the consequences.
There’s been a normalisation of binge drinking rather than an encouragement of sensible drinking and sadly it involves both men and women … Enough is enough and it’s time to change the culture.
That is exactly what the government has been going—investing $872 million in prevention, including tackling alcohol abuse, and investing $53 million in our binge-drinking strategy announced last year, with more to come after the Preventative Health Taskforce reports next year.
The police know the reality. The government knows the reality. What will it take for the opposition to see the true scale of this problem and back the government’s measures instead of backing profits for the alcohol industry? The Leader of the Opposition has backed down to the big distillers and he has decided to let the police of Australia—
Mr Wood interjecting
Order! The member for La Trobe is warned!
pick up the pieces. It is not the Liberal Party on the front line on binge drinking; it is the police. The police want action on binge drinking.
Faced with a tough choice, Malcolm Turnbull has backed the peak distillers—
The minister will refer to members by their titles.
and left it to the police to clean up the mess. Police in Australia are already stretched, dealing with all of the problems of life as they are thrown out. The last thing we need is for Malcolm Turnbull to hospital pass police cheaper alcopops.
My question is to the Minister for Agriculture, Fisheries and Forestry. It relates to New South Wales Independent MP Richard Torbay’s truth in meat labelling bill, which would make it an offence to falsely describe meat—including beef, sheep meat, goat meat and pig meat—in advertising, packaging and labelling. Given that beef producers—for instance, in New South Wales—are currently being disadvantaged by voluntary labelling that is not enforceable and given that this issue is bigger than just New South Wales, what will the federal government be doing to address this issue at a national level? Will the minister bite the bullet on this issue, ignore some sectors of the meat industry which have railed against truth in labelling for their own purposes, and provide some leadership at a national level?
I thank the member for New England for his question. First of all can I say, ‘Happy St Patrick’s Day!’ No-one has mentioned it and it is important. The question that the member for New England raises is an important one. He is right that there is a need for national coordination. Some of the powers on this exist at a state level and some at a federal level. For that reason I have put it on the agenda for the next meeting of the ministerial council.
My question is to the Minister for Youth. Will the minister update the House on the role that alcohol plays in violence among young Australians and the need for decisive action to address binge drinking?
I thank the member for Chisholm for this question about an issue that is important not just in her electorate but in every community right around the nation. What we know is that Australia is facing a growing epidemic of alcohol fuelled violence, and it is having a devastating impact. If we have a look at the statistics we see that the number of assaults has jumped from around 9,000 per year in 1995 to almost 16,000 in 2006. We can also see that the methods of these assaults are apparently becoming increasingly gruesome, with reports of a 25 per cent increase in the number of glassings in New South Wales between 2003 and 2008. The simple truth is that whilst young people are often portrayed as the most common perpetrators of this violence they are also the most common victims. Statistics tell us that both males and females between the ages of 15 and 24 have the highest rate for being the victims of assault.
This government recently hosted the inaugural youTHINK event, where over 650 young Australians from right around the country came together at 10 locations, which were linked by satellite, to give us their views on violence within the community and what needs to be done to offer them greater protection. We heard from Australians firsthand that they want to feel safe and secure in their environments and in their local communities, but we also heard directly from them their concerns about the links between alcohol and violence.
This government echoes those concerns. We also want to break this nexus. That is why we have announced a comprehensive binge-drinking strategy, which of course includes the alcopop measure that is currently before the parliament. We know that the teenagers who drink alcohol at risky levels have a stronger preference for alcopops compared to low-risk drinkers. We also know that 75 per cent of females aged between 14 and 19 who consume alcohol at risky levels usually drink alcopops and that 64 per cent of males in the same category consume RTDs from a can. This means that alcopops are indeed central to the campaign to address binge drinking and violence. This is having a negative impact not just upon the health of young people but on their safety and security, which is why we on this side of the House have declared that we must act on these community concerns; we must stop the violence out there in the community. So we are showing leadership on this issue by putting in place the measures that are needed to protect young Australians and offer them a safe future. By comparison, the opposition are sitting back, carping, being negative and standing in the way instead of getting in line and helping pass this important legislation.
My question is to the Minister for Education. I refer her to the minutes of the Eatons Hill State School P&C Association of 27 February, which state: ‘Eatons Hill State School was ineligible to receive funds from the BER scheme for construction of a hall, as it had already started planning its multipurpose hall. The principal was advised that the multipurpose hall project was ineligible to receive BER funds because it had already received SSS scheme funding from DETA of $151,000.’ And I refer her to an email from the principal on 13 March to various people, including the member for Petrie, which says: ‘Our school would be eligible for up to $3 million in funding for the two major—’
Mr Speaker, I rise on a point of order. Standing order 91 says that a member’s conduct should be considered disorderly if the member persistently and wilfully refuses to conform to the standing orders. This is an extremely long question, and the member for Sturt is a serial offender.
The member for Werriwa will resume his seat. There is no point of order.
An email on 13 March this year from the principal to the member for Petrie and others says: ‘I wish to confirm the following outcomes of a meeting with me on Friday 13 March as arranged by Murray Watt, who was accompanied by Yvette D’Ath, that our school would be eligible for up to $3 million in funding for up to two major projects under the BER guidelines.’ I ask the Minister for Education: how were the guidelines altered, or ignored, between 27 February and 13 March, and is that alteration or ignoring the case for all schools or just the Eatons Hill State School during the Queensland state election?
I thank the member for Sturt, the shadow minister for education, who is opposed to expenditure on schools, for the question. I will answer his question very specifically, and he might learn something about a $14 billion school modernisation program he is opposed to. From the very outset, as soon as passage of the Nation Building and Jobs Plan was secured through the parliament against the trenchant opposition of the Liberal Party, which does not want expenditure on Australian schools—
Mr Speaker, I rise on a point of order on relevance. This is the Ros Kelly defence and, as such, is—
The member for Mackellar will resume her seat. Deputy Prime Minister.
As soon as passage of the bill was secured we issued guidelines and commenced consultative activities around the nation to answer questions about this program. In fact, the very first of those was a stakeholders forum in this Parliament House addressed by the Prime Minister and me. At that very first stakeholders forum a person asked: if you have already secured funds from another source, can you use those funds to work with a grant from the Building the Education Revolution program? The Prime Minister and I—at the very first stakeholders forum ever held on the Nation Building and Jobs Plan—said yes. What we also said was: ‘Of course, we would want to be satisfied that there was not a substitution effect, because the aim of this program is to get extra money to schools and to support jobs around the country. So we would want to be assured that there was no substitution effect, but that partnering, that top-up, can be done.’
Since that very first stakeholders forum in this Parliament House I personally would have been asked this question several dozen times by representatives of independent schools and Catholic schools that have engaged in some fundraising: can we put our money with your money and make a bigger project? The answer has always been yes, yes, yes. Obviously the same question was raised in relation to the Eatons Hill State School community hall, and the member for Petrie provided the answer that I would have provided if I were there, that the Prime Minister would have provided if he were there and that every member of the Labor Party would have provided if they were there, which was: yes, that can be done.
Is there some confusion about these things? Yes, when you are engaging in the biggest school modernisation program this nation has ever seen. Yes, some local schools get part of the information wrong or a bit of wrong information and they need someone to help them out with it. Do you know what that job of helping out is called? It is called being a member of parliament. There are two categories of members of parliament in this House. There is the Labor Party and the Independents doing their job competently and there are those fools opposite who are opposed to expenditure on their local schools. Remarkable!
My question is to the Minister for Small Business, Independent Contractors and the Service Economy. Minister, how is the government supporting small business through the global financial crisis?
I thank my friend the member for Lowe for his question and for his ongoing support for small businesses in the shopping centres of Five Dock, Drummoyne, Strathfield, Homebush, Rhodes and, indeed, Burwood. I point out that I got my first ever job in Flemings food market on Burwood Road, Burwood. That job was stacking shelves. It did not pay a lot in those days—$20 a week—but it was a good start.
The Rudd government’s responses to the global financial crisis have been designed to benefit small businesses all around Australia. The Economic Security Strategy included $8.7 billion of financial support for families, for pensioners, for carers, for seniors and for veterans, and these payments, which were made in December, flowed right through the economy. For example, the value of retail trade grew by 3.8 per cent in December, and that was the strongest monthly growth since August 2000. It was described by the Australian National Retail Association as a ‘massive leap’. In relation to those payments, Sara Hoenig, an economist with the Commonwealth Bank, said:
If there were any doubts about the efficacy of government fiscal stimulus packages … the December retail sales report is a clear rebuttal.
Michael Blythe, the Commonwealth Bank’s chief economist, said:
Policy is working in Australia. Lower interest reates and the first-home owners grant have lifted housing activity, and the pick-up in retail sales suggests the Government’s cash handouts have worked.
In December the government also announced a 20 per cent discount on the pay-as-you-go instalment which was due by the beginning of March, and that too received a lot of support from the small business community and continues to do so. Peter Anderson from the Australian Chamber of Commerce and Industry said:
… it will come at an important time in 2009 when cash flows are expected to be tight …
I turn now to the payments under the Nation Building and Jobs Plan, which have now begun to flow to households. Those payments will also support small businesses through the months ahead. On that, the Council of Small Business of Australia said that the plan will:
… provide benefit to many small businesses and to the communities in which they live and operate.
The Chamber of Commerce and Industry Western Australia described it as ‘a timely shot in the arm’ for small business.
Small businesses will also benefit from the government’s 30 per cent investment allowance, and I can point out that that has been welcomed too by the Chamber of Commerce and Industry Western Australia, the NSW Business Chamber, the Australian Industry Group, the Combined Small Business Alliance of Western Australia, Master Association Australia, the National Farmers’ Federation and the Pharmacy Guild. I can also report that Russell Garvey of the business advisory firm BDO Kendalls has said:
... this is a free kick from the Government. It is a genuine bonus from a tax perspective …
So there is another glowing endorsement.
I turn now to Bill Evans, Chief Economist at Westpac, commenting on the latest index of consumer sentiment. An article in the Australian reported:
The big surprise came with the outlook for the economy over the next five years which surged by 15.2%.
It went on to quote Mr Evans as saying:
This could only be interpreted as a strong vote of confidence that current policies are providing a strong foundation in the longer term.
That is just a few out of a much larger number of endorsements of what the government is doing by way of a fiscal stimulus package. That is a lot of support, but what did the Leader of the Opposition also say about the government’s fiscal stimulus package? Let’s look at the first stimulus package. He said on 14 October:
It will provide a stimulus to the economy, that’s for certain—
and he said:
… this is also a very significant economic stimulus …
Then, in this chamber, on 10 March just a few days ago he said:
… we voted for it. But we did not say it would be an effective economic stimulus.
So there he was back in October saying, ‘It will provide a stimulus to the economy; that’s for certain,’ and, ‘This is a significant stimulus.’ Then in this House on 10 March he denied that he ever said it, saying, ‘We did not say it would be an effective economic stimulus.’ The reason for that is the opposition leader is dancing to the tune that is being played by the member for Higgins. The opposition leader did originally support the fiscal stimulus package and he had to change his tune. The Leader of the Opposition is dancing to that tune. Opposition policy in this chamber and in the Senate is being determined not by the Leader of the Opposition but by the leader-in-waiting, the member for Higgins.
The stimulus package isn’t significant enough!
Let us have a look at the economic team that the Leader of the Opposition has assembled. He has the shadow finance minister, Senator Coonan. She was in a debate with me, ahead of the release of the most recent national accounts, on Sky Television.
Mr Speaker, I rise on a point of order on the issue of relevance. How is this possibly relevant to the portfolio of small business, where thousands of jobs are being axed as a result of this government’s laws?
There is no point of order. The member for Moncrieff knows this is not an opportunity to debate the question. The minister will respond to the question.
I am responding to the question, because I was asked about support for the package. We are not getting any support from the coalition. The Leader of the Opposition just interjected a moment ago, saying the stimulus package is not significant enough. There he was, back in December, saying, ‘It will provide a significant stimulus.’ Now he says we have got to go further. Then we have the Dusty Springfields on the opposition side, a-wishin’ and a-hopin’ and a-thinkin’ and a-prayin’ that maybe the global recession will go away.
Let us look at this powerful economic team assembled by the Leader of the Opposition. The shadow finance minister said this ahead of the national accounts that came out a little while ago on Sky TV:
We’ll know, we'll have a better indication on Wednesday when the national accounts come out as to just how the combination of the stimulus packages are working …
The national accounts referred to are those for the last three months of last year. The second stimulus package is flowing now, so the shadow finance minister was mystically thinking that the effect of a stimulus package that is flowing now will show up in the national accounts for the last three months of last year! Such is the stupidity, the low level of economic knowledge and the incompetence of the opposition. It is being dictated to by the member for Higgins. It is a hopeless team. You are absolute, total cheapjack opportunists and you should just give it away. That is all you are—cheapjack opportunists and a completely incompetent rabble.
My question is to the Minister for Education. I refer the minister to the Wahroonga Public School in my electorate, which is seeking funding under the National School Pride program for perimeter safety fencing for its school. The school has received two quotes for this project. The first is from the state government’s preferred contractor, which is Spotless, for $40,122, which it has been told it must accept. The second quote is from a local fencing company for $22,660. I ask the minister: why is it necessary to spend an additional $17,000 of taxpayers’ hard-earned money on this project when a local company, employing local businessmen and contractors, can do the job for almost half the price?
I thank the member for his question, which is a serious question. I can assure the member that we are working with state governments on the section of the biggest modernisation program schools have ever had in this country which involves state schools. We are working with state governments so that we can involve local providers throughout the states, throughout New South Wales and throughout the country. If there is a problem at his school in relation to that issue of engaging local people then I am more than happy to work with him to get that issue resolved.
The message we are consistently giving to state governments and block grant authorities in the independent and Catholic school sectors is that, because this is a school program that is part of an economic stimulus package, we want it supporting jobs around the country. We obviously want to maximise the engagement of local tradespeople. On that very specific school example I am more than happy to work with the member to resolve it. I remember when positions were reversed, and the member was Minister for Education, that we spent a very happy day at Werribee Secondary College in my electorate. I would only be too pleased to return the favour.
My question is to the Minister for Infrastructure, Transport, Regional Development and Local Government. How will local communities benefit from the Regional and Local Community Infrastructure Program and other parts of the Nation Building and Jobs Plan? Are there any obstacles to the implementation?
I thank the member for Petrie for her question and I congratulate her on looking after not just her electorate—as with the ‘Dorothy Dickson’ from the member for Dickson today—but other electorates as well. I was with the member for Petrie just on Friday. We were announcing the support that we are giving to rail crossings as part of the government’s Nation Building and Jobs Plan.
We are continuing to roll out the community infrastructure program. Today we have announced some 146 ready-to-go local infrastructure projects in regional South Australia, worth $5 million. We have announced some 164 ready-to-go infrastructure projects in regional Western Australia. And I am pleased that we have jointly announced with the member for Lyne some $1.1 million for community infrastructure on the mid-North Coast. These projects are being rolled out across the country. Every single local government area, every single one, regardless of which way they vote, is receiving support through the community infrastructure program.
Mr Speaker, I rise on a point of order on relevance. To be relevant the minister would have to say when they are going to get the money, because they have not received it.
There is no point of order. The member for Cook will resume his seat. The minister is responding to the question.
He has no idea. Money is already being rolled out for these programs. More than 300 council projects have already been approved. Over 129 contracts have already been signed with local government. But it is not inconsistent for this current opposition to have a local government spokesperson who opposes funding for local government, because we have local members who oppose funding for their local schools. Today we had an extraordinary spectacle. Can you imagine the tactics committee meeting this morning? There would have been about 20 of them sitting there, because everyone gets a guernsey. They are sitting there and the member for Dickson says: ‘I’ve got a good idea. I’ve got the government. They’re providing funds for Eatons Hill State School. It has 960 kids and they’re going to support them getting a hall. They’re going to support them getting upgrades. Let’s really get into them. Let’s have four questions on that.’
Mr Speaker, I rise on a point of order. We would ask that the Minister for Infrastructure, Transport, Regional Development and Local Government answer his own question, not questions on behalf of the Deputy Prime Minister.
The member for North Sydney will resume his seat. The minister was responding to the question. The minister has the call.
Any day soon they will have to move their tactics committee meeting to 1R1 because everybody is coming along; everyone gets a prize. That is why we see the questions from the backbenchers, because they are all focused on themselves. Today during question time—
Mr Speaker, I rise on a point of order. The minister is responsible for infrastructure. He is not responsible for the management of opposition business. We would rather he was. We would much rather he was on this side of the House and we were on that side of the House, but he is not.
The Manager of Opposition Business will resume his seat. The minister will respond to the question, including the addition to the question, which was about obstacles.
In this chamber there is an obstacle to the rollout of funding for primary schools; to the rollout of the community infrastructure program; to the rollout of support for railway crossings; to the rollout of support for road spending—to the rollout of these projects. There is an obstacle and those opposite indicate through their interjections who it is. Those opposite are obsessed with their own internal processes—that is why during question time today they conducted a number of ballots. Relax, Malcolm, I understand it was not about the leadership. They spent the whole of question time filling in ballots on the back bench and on the front bench. They were not concerned with issues of concern to Australians, because they are simply out of touch. They and their tactics committee are also out of their depth.
The minister has concluded.
Mr Speaker, I ask that further questions be placed on the Notice Paper.
Mr Speaker, I seek permission to make a personal explanation.
Does the honourable member claim to have been misrepresented?
Unfortunately, yes.
Please proceed.
In a media release from the Leader of the Nationals today, accompanying the identical words by some other members of the opposite side, there is a claim that I have plans to import live foot-and-mouth virus into Australia. The government has repeatedly stated, as have I, that the only circumstances where bringing a live virus into the country would be contemplated would be if an outbreak had already occurred, in which case the question would be asked of the veterinary authorities whether or not it was required to best conduct an eradication program—and they are the only circumstances. I will table the media releases.
I seek leave to make a personal explanation.
Does the honourable member claim to have been misrepresented?
I do.
Please proceed.
During question time today the Deputy Prime Minister alleged that I and other members of the opposition were seeking to change the definition of a small business for the purposes of paying redundancy. That is completely and utterly false, as is often the case with the allegations made by the Deputy—
Mr Speaker, the member must show where he personally has been misrepresented. He was not mentioned during question time. We ignored him—as you would.
The member, I am sure, understands the obligation he has to show where he has been misrepresented and not to debate the question.
I do, Mr Speaker, and, as I said in question time today, the Deputy Prime Minister alleged that I and others were seeking to change the definition of ‘small business’ for redundancy purposes. That is completely and utterly false.
Mr Speaker, I rise on a point of order. The member opposite is trying to debate a question. He has not shown that he was personally misrepresented and it is not a personal misrepresentation for a—
The Leader of the House will resume his seat. I will listen to the member for Stirling. The member for Stirling has the call. He will not debate, though, and I understand that he understands that.
As I said, the Deputy Prime Minister misrepresented the position of myself and other members of the opposition in relation to the definition of ‘small business’ for the purposes of redundancy. That is completely and utterly false, and I seek leave to table our amendments in which we explicitly say that for the purposes of redundancy the definition will remain at 15 employees.
Order! The member for Stirling will resume his seat.
Mr Speaker, I seek leave to make a short statement.
Leave not granted.
Mr Speaker, I wish to make a personal explanation.
Does the honourable member claim to have been misrepresented?
Yes, I do.
Please proceed.
Yesterday at a doorstop interview and then later in the House last night, the member for Paterson cast disparaging remarks on my attitude to a program of a potential light armoured mobility vehicle project at Thales in Australia. Let me assure the member that I have been very vocal, supported by the Minister for Defence and the member for Charlton. On 18 December I issued a media release on that very issue, which I am happy to table. It was published in the Bendigo Advertiser on 19 December. Again, I am happy to table that along with an editorial on the same matter. I also issued a media release on the 11th of this month about that particular issue, also published in the Bendigo Advertiser. It is the member for Paterson who is the Johnny-come-lately on this particular issue.
Is leave granted to table the documents?
Leave not granted.
Government members interjecting—
I suggest to the minister and to the parliamentary secretary that they have been here a while and they will understand that only one member needs to object and leave is not granted.
Mr Albanese interjecting
I did not say it to him, but I will be more particular, if the Leader of the House is worried. It was to the Minister for Defence Science and Personnel and now the parliamentary secretary for many things, including the Parliamentary Secretary to the Prime Minister.
Mr Speaker, in the last couple of sitting days it has become clear—and I ask you to consider this point—that when members on this side make personal explanations the Leader of the House seeks to interrupt and put the explanations into question. I ask you to consider whether this is a—
The member for Mayo will resume his seat.
Mr Albanese interjecting
Order! I have made it clear that I am not taking questions on the processes of the House. They can be dealt with as a point of order at the time. I have been consistent in that. People can shake their heads all they like. I will take questions about the administration of the department, but I am not re-entering debates about things that have transpired in the chamber.
Documents are presented as listed in the schedule circulated to honourable members. Details of the documents will be recorded in the
I have received a letter from the honourable Leader of the Opposition proposing that a definite matter of public importance be submitted to the House for discussion, namely:
The Government’s failure to manage the economy to prevent job losses.
I call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the standing orders having risen in their places—
For the past seven weeks the opposition has been trying to get a straight answer out of the Prime Minister on the subject of jobs. We have asked question after question on the effect of his policies on jobs, and all we get is blather, waffle and words, words, words—most of them referring to redundancy. That seems to be his fixation. I can give just one example. On Thursday, 12 March the shadow Treasurer, the member for North Sydney, asked the Prime Minister about the impact, the jobs consequences, of the so-called stimulus packages. The Prime Minister’s answer was:
One of the things that working families are interested in right now is the protection of their redundancy arrangements.
One of the things working families are interested in the most is remaining working families. The Prime Minister seems to be determined to make them redundancy families. He has so incompetently assembled his economic policies that he is deliberately putting Australians out of work at a time when we face real economic challenges. When we need a government that supports the economy, supporting employment, he is putting Australians out of work.
Yesterday we raised with him the very concrete example of Xstrata, one of Australia’s largest mining companies. It has said that, if the Rudd emissions trading scheme is enacted into law, it will close three or four mines, approximately 1,000 jobs will be lost right now, future investment of up to $7 billion will be cancelled and 4,000 future jobs will no longer be established. That is the evidence from Xstrata, one of the largest mining companies in the world, one of the largest employers in the mining industry in Australia. We put this to the Prime Minister and he waffled as usual. Words, words, words—endless words but no understanding of his own scheme. What he said was that Xstrata would be compensated as an emissions-intensive trade-exposed sector. But, in fact, the coal mining industry has been left out; instead, they have to scrabble for a bit of random compensation out of a fund. They are not going to be given free permits, as other elements in the emissions-intensive trade-exposed sector will be.
So we have the Prime Minister with an emissions trading scheme which is going to put Australians out of work—we have the word of this large employer saying the Prime Minister’s policy will put thousands of Australians out of work. We raise it with him in the parliament, and he does not even understand his own scheme. He cannot even explain the consequences of his own scheme. He does not know the damage he is doing, because he does not understand the scheme he is demanding that everybody sign up to. It is bad enough asking us to sign up to it sight unseen, but it is sight unseen by him too. Who has read it? Senator Wong, perhaps—nobody else, that is for sure.
Today, we raised another concrete example—a company called Envirogen, which is in the business of creating renewable energy from the burning of waste coalmine gas. At the moment, it gets compensation under the New South Wales Greenhouse Gas Abatement Scheme. Under that scheme, it gets financial incentives in the form of NGACs. That scheme will come to an end with the beginning of the Rudd emissions trading scheme, but, as Envirogen writes to us:
The CPRS, as proposed … does not reward generation initiatives for waste coal mine gas. Therefore, the coal mines will move to reduce their permit cost by flaring the waste gas—
in other words, by creating more emissions. They go on:
This is the least cost option from the coal mines perspective and consequently, the coal mines will not share the savings in permit costs beyond the value of flaring.
What is going to happen? More emissions, a current investment of $455 million and a hundred jobs at risk as well as new investment of $345 million and more than 300 new jobs at risk. There is a concrete case—a practical example—of the problems of a poorly designed emissions trading scheme.
I asked the Prime Minister about this in question time today, and all he could offer us was a meaningless, rambling lecture on consistency. Indeed, consistency is a major problem—he has as much difficulty with being consistent as he does with being relevant. Let us not forget that this is a man who said, when he was trying to get elected—and successfully getting elected in 2007—that he was an economic conservative. On the other hand, when he was trying to become leader of the Labor Party, he said he was an old-fashioned Christian socialist. And then, at the end of 2006, shortly after he had become leader of the Labor Party, he said to the Agewhich announced this almost in mourning and almost with a black border around the front page—‘I am not a socialist. I have never been a socialist and I never will be a socialist.’ The readers were obviously very upset to read that! Now, of course, he has got a new guise. The Christian socialist who then ceased to be a socialist and became an economic conservative to get elected has now become a social democrat, based on his latest essay in the Monthly magazine!
He is a chameleon on steroids!
One of my colleagues here describes him as a chameleon. That is very unfair, and I am disappointed. It is very unfair to chameleons—chameleons are only one colour at a time! The Prime Minister seems to adopt every political colour simultaneously. He is a highly evolved form of chameleon, if a chameleon he is at all! But he claims to be a social democrat, and, of course, the question is: ‘What is a social democrat?’ We all know that the difference between social democrats and other democrats is that social democrats are socialists. One of the Prime Minister’s fellow social democrats—one of his brethren in the international assault on neoliberalism—is, of course, Hugo Chavez. He is a very distinguished political leader, and the Prime Minister has obviously modelled himself on him. I just note that, not so long ago, Hugo Chavez was asked by journalists about the differences between him and Fidel Castro. Hugo Chavez said: ‘Fidel is a Communist. I am not. I am a social democrat.’ The time has come for the Prime Minister to rule out being a communist, but it was probably only a matter of time. He will have a go at that at some stage!
We have seen, over the last two months, labour force figures where the number of Australians without jobs has risen by 83,000. The unemployment rate has risen from 4½ per cent to 5.2 per cent—the highest in four years. And, I might say, youth unemployment is at its highest since 2001. We have seen a sharp contraction in GDP of one-half of one per cent during the December quarter. That has left Australia on the brink, at risk of a Rudd recession. We have seen evidence from one company after another, and I have cited just two today, that the Rudd government’s emissions trading scheme is going to cost them jobs. They are addicted to this emissions trading scheme as a matter of ideology. The reality is that there is no virtue in an emissions trading scheme per se—it has to be well designed. You can have a well-designed emissions trading scheme which does not cost jobs or you can have a badly designed one, such as the one the Prime Minister is proposing to foist on Australia.
The fact of the matter is that so many jobs in Australia depend on industries which are emissions intensive and whose competitors are in countries which are unlikely, for the foreseeable future, to put a carbon cost on their emissions-intensive industries. If you take the export of thermal coal, for example, the largest exporter of thermal coal nowadays—it was not always so—is Indonesia. If, as a result of the Prime Minister’s emissions trading scheme, we export 100 million tonnes less thermal coal, Indonesia will just export 100 million tonnes more. Thousands of jobs are lost in Australia, and there is absolutely no benefit to the environment. That is why we have always opposed the Rudd government emissions trading scheme. We have always opposed it because it is bad for jobs and bad for the environment, whereas the scheme we proposed several years ago was protective of emissions-intensive trade-exposed industries, recognising that economic reality.
Of course, this lack of competence in economic management is inherent in the Rudd government. We saw at the very outset of their government the way in which they talked up inflation for purely political purposes. They talked up inflation and talked up interest rates. That was the great challenge. We used to get lectures from the Assistant Treasurer all the time about the evils of inflation, and we were described as economic idiots because we dared to suggest that there was a global credit crisis and there might be more than enough tightening and contraction coming from the international credit squeeze. It turned out that we were right on that point—very right, as it turned out—and the Australian businesses that suffered from interest rates being too high for too long should blame the Rudd government for the way in which they talked up inflation.
Then, of course, we saw the extraordinary bungle of the unlimited bank deposit guarantee. How much damage has this done? This, of course, is part of the reason why the government are now rushing to establish Ruddbank. They have dislocated the financial markets without any precedent. There is no comparable country in the world with a strong, well-regulated financial sector—courtesy of the coalition in government, I might add—that has done so. There is no precedent of a country like Australia going for an unlimited bank deposit guarantee. Why would the country with the most secure banking system go for the most unlimited, extensive and comprehensive bank deposit guarantee? For a political headline. It is all politics and no economics. That was the Prime Minister’s objective. And what have we seen? The finance companies that underwrite the motor vehicle industry and equipment sales cannot raise money. Cash management trusts cannot raise money. Mortgage trusts cannot raise money. A quarter of a million Australians’ savings have been frozen. Now we see, as the government rush to try to patch up the damage they have done, that they have come up with this misconceived Ruddbank, probably the most misconceived exercise that the government have put forward to date. I will speak about that in speaking on the bill in a moment.
The government was left the strongest hand of economic cards it could possibly ask for. It was left with a national government with no debt, with cash in the bank and with a Future Fund that was established to take the burden of the previously unfunded liabilities to public sector pensioners off the shoulders of future generations. It was left with strong surpluses. It was literally the envy of the world, described by the Economist magazine as the ‘wonder down under’. That strong economic management had created jobs—2.2 million jobs—and, when we left office, the lowest unemployment rate for a generation. We pursued those policies that create jobs because we are passionate about employment. We recognise that the best form of social welfare is employment, to give everybody the chance of a job and to make it possible for Australians to live their lives as they wish, because we believe passionately that the job of government is to create and foster the economic environment where Australians can do their best. We now have a government led by a social democrat Christian socialist who, in his own words, wants to put the state at the centre of the economy. He wants to put an activist state at the centre of the economy. He really is a worthy companion of Mr Chavez.
Our opponents pretend to have compassion for the unemployed, but at the same time they are legislating for unemployment. They are, in fact, the party of unemployment. In 1996 the coalition inherited an unemployment rate of 8.4 per cent from the Keating Labor government. It took us a decade to lower it, just as it took us a decade to pay off their debt. Increasingly it looks, tragically, as though history will repeat itself under the Rudd Labor government. It is delivering us the classic old Labor trifecta, that terrible trifecta of more unemployment; more debt that will burden generations to come with higher taxes and higher interest rates; and, as we saw last week, more strikes. We cannot afford a government that is so careless about the economy and so ready, in pursuit of its own ideology, to send thousands and thousands of Australians onto the dole queues.
The Leader of the Opposition has a very interesting two-part approach to the pressures that the global financial crisis is placing on employment in Australia. Firstly, he never misses an opportunity to oppose a government measure to support jobs. The Leader of the Opposition has opposed every measure the government has taken to keep employment robust in Australia. The second part of his strategy is then to criticise the government for not doing enough. The opposition oppose every measure we take and then criticise us for not doing enough. Consistency and internal logic have not been very high on the Leader of the Opposition’s agenda of late—we know that—but this MPI is a bit rich, even coming from him. One commentator recently said that he was not particularly concerned if the Leader of the Opposition is not consistent all the time as long as he is right occasionally, but not even that was the case. I would like to see some consistency as well as the Leader of the Opposition being right, but we have not seen that either of late.
Let us have a look at the three major things that the government has done to support jobs and keep employment as robust as it can be in these very difficult times. First, there is the Economic Security Strategy, the first stimulus package, announced by the government last October. In the interests of fairness, the opposition did support that, even though they now oppose it. They voted for it at the time, even though they now take every opportunity to distance themselves from it. They call it a cash splash. They call it a sugar hit. That is not what they said to Australia’s pensioners and families at the time. That is not what they said when the Australian people were focused on those payments. I think the Leader of the Opposition and his colleagues are hoping that the Australian people do not realise that he has actually reneged on his support of that package. I think he is hoping that the recipients of the bonus payments and the payments to families do not know that he has walked away from supporting them in these difficult times. But the opposition’s original support was well placed. It has played a key role in supporting jobs. Retail trade in Australia in December increased by 3.8 per cent. In Canada it fell by 5.4 per cent. In the US it fell by three per cent, in Japan by 1.9 per cent, in Germany by 0.9 per cent and in New Zealand by one per cent.
The Leader of the Opposition has another very interesting little theory that retail trade has nothing to do with jobs and that increase in retail trade has no impact on employment. Usually in economic debates you can find some economist somewhere to support your theories. You can find some economist in the world to lean on for support for your theories. But the Leader of the Opposition will not find one to support his theory on this particular matter. I do not think he could find one economist who would support such an outlandish theory. On the contrary, economists have pointed out that the government’s stimulus package on retail trade has had a real impact on jobs. Tony Meer from Deutsche Bank said:
Retailers … bolstered by the cash-bonus-inspired strength in sales … have responded in January by retaining higher than usual post-Christmas staff levels.
The Age reported that ANZ senior economist Katie Dean believes that the government’s stimulus package has worked in retaining jobs in January, in tandem with aggressive rate cuts. Perhaps most importantly of all, Dr Gruen from the Australian Treasury said:
… we have evidence that the package stimulated consumption. We have … reason to believe that that would have led to more people being employed than would otherwise have been the case.
So the Leader of the Opposition now walks away from that package, which unquestionably, undoubtedly, has supported jobs in Australia.
The ESS was also about putting a floor under confidence in the housing construction sector, which is so important to the employment of so many thousands of Australians. What effect has it had? Almost 30,000 first home buyers had entered the property market by the end of January, using the first home owners grant. The number of first home owners taking out housing loans has increased by 21.3 per cent, pushing their share of new loans to a quarter, which is the highest level since December 2001. Considering the economic situation in Australia and around the world, I think these are pretty extraordinary figures, showing the impact of the government’s Economic Security Strategy.
Then we come to the Nation Building and Jobs Plan, the second government stimulus package. In this case at least the opposition have been more consistent. They opposed it all the way, to the death knell. They opposed it in early morning votes, in late night votes and, as I recall, even at the third reading stage, which is quite unusual. They opposed it in the other House. They opposed it right to the very end. They opposed our efforts to support Australian jobs. Now they criticise us for not doing enough. What did they say? What was their great strategy? Why didn’t they support it? Because they were going to wait and see. They were going to wait and see what the Australian economy did. The former shadow Treasurer, the Deputy Leader of the Opposition, said their strategy was to wait and see. The new shadow Treasurer has said as much in as many words. He said: ‘They have spent too much fuel. They should leave some in the tank. They are doing too much too soon. We have racked up too much debt.’ Bear in mind that, at the end of the forward estimates of this budget process, Australian government debt will be one-tenth of the OECD average. They do not care about jobs. Their debt argument is a straw man. They come in here and cry crocodile tears about the unemployed while opposing packages to support jobs in Australia. What a load of hypocrites! They oppose packages to support jobs then come in here and complain that we are not doing enough.
The impact of this package is only just starting to be felt. It will take some time to flow through to the Australian economy, as you would expect. Most of the payments have not yet even been made. But we have seen some early, encouraging indications of some impact, with retailers reporting increased sales last week as the first of the payments were made to families. The payments to families were just one part of the Nation Building and Jobs Plan. There was support for both big and, particularly, small business. There was $2.7 billion in enhanced depreciation for investment, with particular flexibility when it comes to small business. The Council of Small Business of Australia, COSBOA, said this: ‘The worst thing we can do is not do anything. I think half-hearted action is not required as well. We want somebody to get out there and do something big, and this is big.’
That is support from the small business sector for the Nation Building and Jobs Plan. They are saying, ‘Don’t wait and see, don’t have half measures and don’t sit and watch the world pass you by as unemployment washes through Australia—get out there and do something.’ That is what the government have done, because we do not think the opposition’s approach is sustainable or sensible.
We come to the third matter, which will be before the House in just a little while: the Australian Business Investment Partnership. I was interested to hear the Leader of the Opposition say that this is the most misconceived policy measure the Rudd government has embarked upon. That just shows how little he cares about Australian jobs. Anyone who had been in contact late last year and early this year with the business community, big or small, would know that one of the major concerns for business around the boardrooms of Sydney, Melbourne and elsewhere was the potential for foreign banks to withdraw from the Australian market in whole or in part. Anybody in contact with the Australian business community would know that. And it remains a very understandable concern. Several overseas banks have been nationalised, and their new owners are requiring them to focus on their home markets. We are already seeing evidence of foreign banks withdrawing to their home markets. I am aware of one nation in which the prudential regulation authority has changed the rules to favour domestic lending over foreign lending when it comes to capital adequacy requirements—really putting the pressure on foreign banks to stay in their home markets, something which will have a devastating impact on the Australian economy and Australian jobs.
The Leader of the Opposition again would have us think that this somehow is all about supporting the banks and not about supporting jobs. Perhaps in the forlorn hope of distancing himself from his former career, he tries to pour buckets over the banks and buckets over the government, when this is all about supporting Australian jobs. It is not just the government who says this. The Master Builders Association says: ‘The government has acted. It has acted in a timely way. We have to focus on what is the immediate problem, which is the lack of finance flows in this industry, and without that finance we will see job losses.’
This is the package that the opposition opposes. Aaron Gadiel from the Urban Taskforce said:
Without action we would lose valuable jobs, income and development that our community desperately needs. For every $1 million spent on construction, 27 jobs are created.
We have a scheme which is designed to support Australian jobs, to stop the impact of the global financial crisis, to stop the withdrawal of foreign funding impacting on Australian employment and to save Australians from being thrown on the dole queue, and the opposition says that it is the most misconceived policy that we have come up with. That is commitment to employment for you, that is commitment to Australian workers for you and that is commitment to Australian jobs for you from this Leader of the Opposition, who behaves inconsistently at every opportunity.
The Leader of the Opposition raises carbon trading and the Carbon Pollution Reduction Scheme, saying that he does not support the introduction of a Carbon Pollution Reduction Scheme even though, when in government, it was his policy to do so. Even though their shadow minister for the environment criticised our package as being too similar to theirs at the time, those opposite now say that they do not support emissions trading because it will affect jobs. They completely ignore the Treasury modelling which says that if you delay action you will cost jobs, that if you put action off on the never-never you will be throwing Australians onto the unemployment heap as we try to catch up and that, as the rest of the world moves—and we have seen President Obama moving in recent weeks towards carbon trading—if we leave it too late we will be throwing Australians on the unemployment heap. And the Leader of the Opposition is all for it. The Leader of the Opposition ignores the Treasury modelling.
The opposition would have us believe that there is a choice between the environment and jobs. We do not think there is a choice; we think that is a lazy approach. We think you can make a contribution to tackling climate change in the world and you can support Australian jobs at the same time. We think you can support alternative energy. We think you can embrace the methodology of the CSIRO, which says that up to 350,000 jobs in the alternative energy sector can be created as you embrace carbon trading. The opposition oppose it for cheap political purposes and the Leader of the Opposition opposes it to save his own job. That is the real agenda that he has. Every time the opposition have been tested, they have opposed jobs. Every time they have been tested, they have argued that we should wait and see. Every time they have been tested, they have said we should do less to support Australian workers. Every time they have been tested, they have failed when it comes to Australian jobs. Every time they have been tested, they have said that the Australian government is doing too much and we should do less. Is it any wonder that the Leader of the Opposition’s position is under such threat when he engages in these sorts of politics; when he engages in sophistry about employment, which is so important to so many millions of Australians; when he comes in here and opposes, to the death knell—through all-night sittings and early morning votes—measures which have at their very fibre, at their core, the protection and support of Australian employment. No wonder the Leader of the Liberal Party is under such pressure, because his hypocrisy has been exposed.
Australians have now for a decade felt secure in their jobs. They have been able to plan for the future with confidence. They have had the assurance of a strong economy to underpin their workplace. Yet, one year and a little more into Labor, all that has changed. The economy has moved quickly into retreat. Thousands of Australians have already lost their jobs and many look at the prospects for their career with nothing but doom and gloom. Yet Labor plan to introduce a range of new policy measures which they know will have a massive impact on jobs in this country. They plan to implement an emissions trading scheme—the harshest emissions trading scheme on jobs in the world; the harshest scheme that any government anywhere has attempted to impose upon its industrial sector, its productive sector. That is what Labor have in store for Australia, and on top of all that is industrial relations reform that they know will cost jobs across the nation.
Labor have never authorised any study into their new industrial relations scheme and the impact it will have on jobs. They have never authorised a study of the proposed emissions trading scheme and the effect it might have on jobs. The Australian Bureau of Agricultural and Resource Economics tried to have one, but the government stopped them from completing it. They do not want the public to know about the job impacts of the schemes that they are proposing because, whatever they may say in their relentless spin about jobs being the priority of the government, the people know that the government do not care about jobs; they do not care about the people whose jobs are being lost as a result of the government’s deliberate actions—their deliberate policy.
Yesterday in question time we asked the Prime Minister repeatedly what he had to say to the families who will be made redundant. All he could respond with was to say, ‘Well, we’ll make sure they get their redundancy payment.’ These people do not want a redundancy payment; they want their jobs. They do not want to trade in their jobs—their longstanding careers—for a redundancy payment. All the government can offer them is a redundancy payment. That is not a satisfactory answer to the people who are being thrown out of work as a result of the deliberate policies of this government. Today, when we again pressed the question, the answer had changed a bit. It was: ‘You need to have consistency.’ I do not think those people whose jobs are being sacrificed on the altar of consistency are going to feel very comfortable about the Prime Minister’s response that so long as you are consistent, and you keep consistently throwing people out of jobs, somehow or other you are absolved from responsibility. Under this government, 300,000 jobs are already on the way out. That is a scandal of monumental proportions.
The government has already proven that it cannot manage an economy and it is going to try to do even more. Its emissions trading scheme has as few friends as had Charles Manson. No-one is left there backing it because those who believed it was going to deliver green outcomes are disillusioned. They know it will fail. Those who have to bear the cost of this scheme—$13 billion in the first year and going up every year from then on—know that it is going to cost jobs. It is high time that the government stopped hid-ing the truth when people’s jobs are at risk.
When I was in Gippsland during the Gippsland by-election, I was impressed by the fact that the owners and operators of the power stations in that area had levelled with their workers about the impact of the ETS on their jobs. The unions had levelled with the workers. The unions were kept informed. I spent half a day with a union official on the polling booth, and he spent that time expressing his concerns to me about the emissions trading scheme and its impact on the Gippsland community. And, of course, the coal workers of Gippsland responded in the only way they could—they rejected Labor in droves in those coalmining towns because they understood what the emissions trading scheme was going to mean to their jobs.
It is high time that the unions and employers in other parts of Australia levelled with their workers about their prospects under the emissions trading scheme. What will be the impact on cities like Gladstone and Mount Isa in Queensland, La Trobe in Gippsland in Victoria and regions like the Hunter and the Illawarra in New South Wales as a result of the emissions trading scheme? The New South Wales government has done some modelling, although it has not been prepared to release it. The person who did that modelling, Mr Danny Price of Frontier Economics, said the impact would be ‘very high’ and ‘very severe’. He said:
In those regions, the effect on regional GDP would be many, many times more than the national effect forecast by the Treasury …
So somebody who has done some modelling says the impact is going to be very severe. I congratulate the mayors of Gladstone, Newcastle and Mount Isa, who today were prepared to go public on what they know will be the impact on their cities—the lost jobs, with the closures of coalmines and alumina refineries, and the new developments they had hoped for that will not happen. In a city like Gladstone, for every job lost because of the close-down of the coalmining industry or the alumina refinery, there will be eight or 10 lost in the city. The impact of this emissions trading scheme will be absolutely catastrophic for these people.
I think it is high time the member for Flynn levelled with the coal workers in his electorate about how many of them are going to lose their jobs. Their bosses already know that their mines cannot survive Labor’s emissions trading scheme. It is time that the member for Capricornia told the truth to the coalminers in her electorate about how many of them are going to lose their jobs. It is high time the member for Dawson told the people of Mackay how many jobs will be lost in the mine-servicing industry as a result of the emissions trading scheme. They cannot remain silent; they must tell the truth about the thousands of jobs that will be lost in that sector. The mining industry’s latest estimate is that at least 10,000 jobs in the front line of the coal industry alone will be lost as a result of Labor’s scheme. Members of parliament who represent those people must stand up and be counted.
But it is not just the coalminers. It is not just those people in heavy industry. If you have a food-processing industry in your electorate, you can also expect to see hundreds of jobs lost. Labor’s scheme is not going to exempt the food-processing sector from the ETS. New Zealand and most—I think all—of the other countries in the world with ETSs have exempted food processing. Australia is not going to do that. Why would anyone process dairy products in Australia when, if they did it in New Zealand, Europe or other places, they would not have to buy permits? The reality is that there will be jobs lost across the dairy sector in Australia in particular because of this ETS. Not only will farmers pay; their processors will also pay under Labor’s ETS. Has the Treasurer gone to the workers of Golden Circle in Brisbane—and there are 1,000 of them—and levelled with them about how many of their jobs will be lost as a result of his emissions trading scheme? They use energy, so permits will be required, which will make their jobs less viable.
It is not just in those sorts of manufacturing and industrial sectors that these issues arise. We learn today about Envirogen. That is a green company, a company that is actively involved in promoting green energy. They will lose 100 jobs as a result of Labor’s ETS, and 300 jobs that were on the drawing board will not eventuate. Labor talks about jobs but it does not deliver. When we were in government, between 1996 and 2007, 2.2 million Australians found jobs. Already, 300,000 of those have gone and Labor has plans to take many more of them away. All the hard work and all the progress is being eroded—and so quickly—by this Labor government.
The latest person to jump on Labor’s jobs bandwagon is Queensland Premier Anna Bligh. In a desperate bid to save her own job, she said Labor would create 100,000 new jobs hand in hand with Prime Minister Rudd. But the reality is that this is the woman who is leaving behind a $74 billion debt. She was warned last year, when the debt was $65 billion, that Queensland would lose its credit rating but she kept on spending like a spendaholic. The ALP’s stimulus package cost $10 billion and was supposed to create 75,000 jobs. It did not create any. It was not even claimed that the $42 billion package would create any new jobs; it was just going to save 90,000. How much is it going to cost Anna Bligh to create 100,000 new jobs, when Labor cannot create any with $52 billion? The reality is that Labor has lost its way on jobs, and there are going to be a lot more jobs lost in Queensland if the emissions trading scheme and the industrial relations policies of this government are put into place. Anna Bligh must level with the Queensland people about the jobs— (Time expired)
They are a curious coalition opposite. They are not the Liberal Party and the National Party; they are Friedmanite fundamentalists and climate change deniers. We had a rant from the member for Wide Bay. He spent the whole time talking about the ETS. He did not talk about the policy of his own leader and his own political party—whatever they call themselves in Queensland; I think it is the LNP these days. Guess what his policy is? His policy is to actually cut jobs, to cut 12,000 a year. His policy is to cut 12,000 jobs a year from the Queensland Public Service and to gut $1 billion from the state budget. Guess what will happen then? Services, health and education will be cut back. Guess what will happen then? There will be job losses in the Public Service. The coalition claim that their policy is to support jobs. It is not; it is actually to cut jobs. Labor’s policy in Queensland—and Anna Bligh has taken this to the people—is jobs, not cuts. That is what our policy is: to support jobs. Those opposite are supporting cuts. That is what their policy is. Labor’s policy in Queensland is 100,000 new jobs in three years. We have a target. Under Premier Beattie we achieved our target of reducing the unemployment rate to five per cent. I have every confidence that Premier Anna Bligh will achieve her target of 100,000 jobs over three years.
But guess what—I have every confidence that the LNP leader, Lawrence Springborg, will achieve his target as well: 36,000 jobs lost over three years. I have every confidence he will achieve his target because that is what he stands for: job cuts not the provision of jobs. That is their policy in Queensland and that is what they are saying. Guess what would have happened if by some miracle the coalition had squeaked home in their nightmare election on 24 November 2007—it would have been a world of Work Choices, the great policy of job insecurity. The coalition’s failure to deal with the issue of Work Choices is what this is about. It is all seen through the prism of their leadership tensions. They feign concern about job losses, and you can see the gleam on their faces when we talk about job losses. We are talking about the real face of job insecurity—the men, women and children in Australia who are actually facing job insecurity, job loss and financial insecurity.
So what are those people opposite pursuing? They are pursuing a policy of procrastination. They are pursuing a policy of not dealing with the leadership tensions opposite. They are pursuing a policy of trying to frustrate issues like alcopops reform and trying to stop our ETS getting through the Senate. They refuse to rid their body politic of Work Choices. That is what they are about. They are not just the architects and authors of Work Choices; they are the apostles of Work Choices. They are devoted to it. It is their alpha and their omega; their beginning and their end; their genesis and their revelation. That is what they are all about. This whole debate today is about stopping a concentration on getting rid of Work Choices. Those opposite are actually pursuing this myth that somehow they are the champions of jobs, that somehow they are the champions of economic reform and that somehow they are the champions of full employment.
In fact we on this side of the House are the ones who instituted economic reform in this country. We internationalised the economy. We got rid of the dead hand of McEwen-like protectionism. We brought in the Trade Practices Act. We developed a superannuation industry that ensured that the Australian public got support. That is what we did. Those opposite are wedded to their 19th-century ideological obsession with Work Choices. If they were on this side of the House, what would they have? They would have Work Choices—stripping away the terms and conditions, stripping away redundancy entitlements and making the public of Australia more insecure. Tell the truth. That is exactly what those opposite would be doing. They are the apostles of Work Choices—the devotees and the disciples of Work Choices. That is what they are about. They have drunk the Kool-Aid. They are the true believers—they just cannot get rid of it. That is what this is all about—it is about cuts, not jobs.
We on this side of the House are the people who are bringing forward economic security strategies and the Nation Building and Jobs Plan. We are the ones who the people are listening to. I would like to mention a couple of things. School buildings and other infrastructure does not build itself. Workers do it—tradesmen, plumbers, architects and carpenters. I have a few letters from some of the schools in my area. I am sure those opposite would have also received these sorts of responses. I have a letter from Principal Robert Mills of Raceview State School. That is the biggest primary school in my electorate. Some 935 children go to that school. It is a great primary school. My two daughters went there, so I was involved in the school life there. They are going to build a new multipurpose hall, extension resource centre and library with the money they are going to get. He is effusive about what it is going to do for the local economy.
Peter Doyle, the Principal of Brassall State School, the third-biggest primary school in my electorate, wrote to me. The coalition promised and promised to give him some money for a multipurpose hall. Guess what? We are delivering the multipurpose hall. We are doing it for the 731 students. That school is going to get millions of dollars. Peter Doyle is very happy. I have been to Peter Doyle’s school, Brassall State School. It is a great little primary school down the road from my office.
I have a letter from Bethany Lutheran School. Neil Schiller is the principal there. I visited him and had a look at their development and their redevelopment. Guess what Neil had to say? He said: ‘This funding could not come at a better time for us. The library that we can build with the money is far in excess of what we could have done under the grants under the BGA. There are no area guideline restrictions under BER, meaning that we can build a facility that will service a school of 400.’ They have a school of 200 currently, so it will not just cover the population of the school. ‘That is just awesome,’ he says, ‘and allows us to provide the sort of library that our school will need rather than having to add it in a few years time and end up with a facility not nearly as good.’
Leichhardt State School, a little primary school of 198 kids, is really struggling. I visited that school and met principal Lee Gerchow. That particular school really does need a massive injection of funds. They are going to build a new multipurpose hall, extension resource centre and science, innovation and technology centre. They are getting millions of dollars.
I think that those opposite should listen to this next point. I have received an email from Mr Phillip Manitta, who is the new principal at All Saints Primary School at Boonah. All Saints Primary School is a nice little school. There are 200 kids who go to that school. This is what he says: ‘Dear Shayne, just a quick email to pass on our sincere thanks to Kevin Rudd, to you and to your colleagues for the funding being made available to all primary schools. This is a once-in-a-lifetime opportunity to add infrastructure to many schools, which will go a long way in making the education revolution become a reality. As you know, All Saints Primary School Boonah has experienced phenomenal growth over the last five years. Your generosity in making this funding available has allowed us to bring forward by at least five years the infrastructure we need to ensure we can continue to deliver the best learning outcome for our students. In fact this funding has allowed us to make our dream for Frank Street become a reality. We are already an active organisation within the Boonah community. We would welcome further interaction with the wider community when they come and make use of our new community infrastructure. At All Saints we hope to use the funding to build a multipurpose building on Frank Street.’
I went and had a look at that school with the Labor candidate for Beaudesert, Brett McCreadie—and I hope he wins and beats Pauline Hanson and the LNP candidate in the Queensland election. The LNP candidate does not do anything down there. He runs around and breaks into all kinds of things, like Big Brother. He wants to promote his rock group. But in fact he does nothing for the area. Brett McCreadie, a former soldier and union official, will do a great job if the people of Beaudesert vote for him. This is what Phillip Manitta says at the end of his letter: ‘As an educator I praise you for your foresight and courage in delivering a package to primary schools that will not only benefit our current students but those of future generations.’
That is what we are doing. We are investing for future generations in employment, infrastructure and community life. All those people in regional and rural areas who fail to support this, thus failing to support infrastructure development, community infrastructure funding and roads funding in rural and regional areas in Queensland as well as other states, should hang their heads in shame, because the Rudd Labor government are investing for future generations, as Phillip Manitta said so wonderfully well and eloquently in his email to me. Those people who voted against the ESS and the Nation Building and Jobs Plan should really have a good look at themselves. (Time expired)
The member must have been asleep at the wheel somewhere if he did not notice the Howard government’s Investing in Our Schools Program or Roads to Recovery. They were similarly well received by the Australian community. When the Rudd Labor government came to office in 2007, it inherited a country in superb shape. There was a record low number of industrial disputes, two million new jobs were created and unemployment was at a 30-year low.
In 1997 the coalition government skilfully navigated around the Asian financial meltdown and Australia came through that crisis in very good shape. It should serve to remind us all that prudence in shaping policy should always prevail, because the alternative—reckless spending and reckless policy—has a devastating long-lasting impact on the lives of every citizen. I remind the House that it took 10 years to pay off the last federal Labor government’s spending spree.
Recklessness, though, has so far been the hallmark of the Rudd Labor government, with the decision to give an unlimited guarantee to the four major banks when the global financial crisis first emerged. This decision had an immediate and adverse impact, draining liquidity out of the investment banking sector, with dire consequences for business, the effects of which will be felt for a very long time to come. There will be an effect on jobs. Such reckless decision making is dampening business confidence, stopping business projects in their tracks and beginning the downward spiral of job losses.
Given the severity of the global financial crisis, the Leader of the Opposition offered to work with the government and made the suggestion of a modest guarantee that would have preserved savings without the savage impact of drawing capital away from business investment and development. That offer was rejected. So much for bipartisan work to try and look after the best interests of the Australian public!
Hot on the heels of that ill-informed policy, the government now proposes further measures that will cause businesses, at worst, to review their future prospects in Australia and whether there is a future for their companies in Australia or, at very best, certainly to review their position and possibly to cut jobs. We are already seeing evidence of that in abundance every day. The other two damaging measures are the industrial relations reform and the emissions trading scheme.
The industrial relations reform will inhibit employment, damage the economy and cause anxiety about future job prospects for those already employed and those about to seek employment. Like it or not, we live in a global context where it is easy for enterprise to move to the countries that offer the most advantageous conditions and, while I would not advocate always acceding to the demands of enterprise, it is foolish and naive to put unnecessary barriers in the way of enterprise, which will therefore jeopardise jobs in Australia.
The second policy based on a scheme designed by the international community over a decade ago is the dangerously flawed emissions trading legislation—another enterprise and job killer. By having such a narrowly cast policy, the government is missing an opportunity to build new industries and create new jobs while meeting Australia’s greenhouse targets. I am not a climate change sceptic. I support the need for measures to address climate change. But, sitting as it does in this great Asia-Pacific region, Australia has an incredible chance to develop a strong alternative energy industry and to export that know-how. We have some of the best scientific and technological brains in the world, and neighbouring nations want assistance in driving the great engines of their economies while at the same time reducing pollution. The recent Envirogen comments highlight the negative effects of Labor’s ill-conceived emissions trading scheme on the renewables sector and therefore on future job growth in that sector.
Australia has a real chance to maintain high employment by supporting existing industries and by creating new green jobs. The best Labor can come up with is the job-destroying policies of an outdated ETS and industrial relations legislation designed to drive down employment prospects. (Time expired)
I was very interested to hear the Leader of the Opposition speak on his MPI a little while ago. He got to talking about job losses and the emissions trading scheme. He then attacked the Prime Minister and said that the Prime Minister was changing colours a lot and whatever—it did not make a lot of sense. But then I realised that he was trying to defend himself because he is the one that has been changing colours daily. Sometimes a couple of times on the same day he has changed from one policy position to another. He got onto Castro and communism. He went through a whole range of things—neoliberal-ism and social democrats.
Of course he is getting confused. I think the public are getting a bit confused. I understand that 70 per cent or so of the banks in England are owned by government. I do not know if that is socialism or capitalism. I think the general public are getting a little confused as well as to the economic system that we are working under. But there are extraordinary times applying to our world and to our economic structures. The Leader of the Opposition went on to talk about jobs and how the opposition believe in jobs, jobs and jobs. But of course we know that they have opposed all the measures that this government has brought in which would help stimulate our economy and help save and keep jobs.
They—that side of the House—are the ones who supported Work Choices. They were the ones who brought that bill in. They are the ones that are continuing to support that concept. Of course we know that there was always Work Choices, which was to tear away conditions and tear down wages for ordinary working Australians. Neoliberals and conservatives have that whole ‘get paid less than a living wage but you can get a dip out of the church box to feed your family’ view. It does not seem to have changed much. They are still supporting that basic concept without really wanting to change. If they did want to change, they would not be opposing the Fair Work Bill that is in the Senate at this very moment.
So the inconsistency of the Liberal Party and the Leader of the Opposition comes through constantly to this side of the House and also, I think, to the general public. It is starting to jump out when I talk to my constituency that there is a very inconsistent position from the opposition. Whether that is stimulatory packages, emissions trading, climate change or whatever, there is a real inconsistency happening there.
The Leader of the National Party talked about the government ‘throwing out jobs’; he said jobs were being thrown out by government. I do not think the government has made a policy decision to dismiss anybody, so that was a bit hard to understand. In his whole delivery he did not mention that there is a world financial crisis going on which is making it difficult for all governments and all economic systems to be working well and that it is having an effect right across the world. But of course we know that our economy is coping to some degree with this and we are hopeful that, with the stimulation packages and our policy decisions, this government will help the economy from going into a very bad depression.
There have been a lot of positive things said in recent days about how long the world economies will continue to go down. So I would be hopeful that, with the way that we are operating and the way this government is dealing with these crises, we can look forward to the future—hopefully coming out of this within a year or two in a more positive way. I am sure that the pensioners that received their cash— (Time expired)
Order! This discussion has concluded.
Debate resumed from 12 March, on motion by Mr Tanner:
That this bill be now read a second time.
This Ruddbank, known as the Australian Business Investment Partnership Ltd, will be established with five shareholders: the Commonwealth of Australia and the four major banks—ANZ, Commonwealth, National and Westpac. The Commonwealth government will provide a contribution of $2 billion and provide a guarantee for an additional $26 billion of debt to be borrowed by Ruddbank, while the four commercial banks will provide $500 million each. The total capital therefore is potentially $30 billion, with the Commonwealth’s share up to $28 billion. So the Commonwealth has by far the lion’s share of the exposure. The equity is owned in the shares with the four banks having half of the equity and the Commonwealth having the other half.
The board of directors will comprise five persons—a nominee from the Commonwealth government as the chairman and a nominee from each of the four banks. Each director has a right of veto but, as with all directors under the Corporations Act, they are bound to act in the interest of the company—not to represent the institution or the entity that nominated them. The stated primary object of Ruddbank is:
… refinancing for loans relating to commercial property assets in Australia in situations where:
(a) finance relating to the assets is not available from commercial providers other than ABIP Limited; and
(b) the assets would otherwise be financially viable.
That is set out in the legislation.
This is consistent with the Prime Minister’s press release—it actually goes further than the Prime Minister’s press release—of 24 January 2009 where the Prime Minister talked about the concern that foreign banks would withdraw from lending syndicates to Australian property companies. So he said:
The Partnership will focus on completed commercial property investments and partly completed development projects with secured pre-commitments (for example, retail shopping centres, commercial office and industrial property). It will be structured to allow sufficient flexibility to provide financing in other areas of commercial lending, should the need arise and the Government and four major banks jointly agree.
This proposal had its origins in a paper developed by Mr Ahmed Fahour, who was then an executive of the National Australia Bank. Mr Fahour’s contention was that there were a large number of foreign banks lending to the Australian property industry who, because of the global financial crisis, were likely to withdraw their business from Australia and that this funding shortfall would not be able to be addressed by Australian banks. He said that, if that were to be the case, assets would be sold and prices would fall. He said that ‘market analysts are predicting property prices will fall 20 to 30 per cent in 2009’. So the object of the Ruddbank scheme is to stop commercial property prices falling. In other words, it is using taxpayers’ money—tens of billions of dollars of taxpayers’ money—to hold up commercial property prices.
Millions of Australians who have seen their investment in the stock market, in their superannuation funds, decline in value by half in many cases will be wondering why the government is so solicitous, so anxious to intervene, to hold up asset values for one particular asset class. Mr Rudd, characteristically, in January claimed that this was to do with jobs. He said:
Without action, a combination of weak demand … and tight credit conditions … could see up to 50,000 people in this sector lose their jobs, according to Treasury.
He has never provided any evidence of that. There has been no Treasury modelling produced, and it was no doubt a figure literally plucked out of the air.
The fact of the matter is that if a property—a shopping centre, an office building or a warehouse—is sold at a value lower than the value at which it was bought and the owner loses some money, or even if the lender loses some money on their loan, the workers still come to work and the tenant is there. The tenant might actually end up paying a lower rent because the new owner has less capital to service. So the fact of the matter is that, as asset prices go up and down for property, it does not affect employment at all. You could make an argument that it would impact on employment if the funding were designed to fund construction, but the Ruddbank is expressly designed not to take on construction risk. It is designed to refinance existing commercial property projects or projects that are already under construction with completion guarantees and with commitments of tenancies. So there is no construction risk and there are no construction jobs being protected by this exercise at all.
As we know, this venture was originally designed or stated to be for the purpose of stepping into the shoes of foreign banks if they pulled out of lending syndicates to commercial property companies and commercial property projects. The Australian Business Investment Partnership Bill 2009 and the draft shareholders agreement also give the parties to this venture, the shareholders, the four banks and the Commonwealth, the right—and I quote now from clause 7(2) of the bill—‘to provide financing in other areas of commercial lending through financing arrangements of a kind agreed to by the members of ABIP Ltd’.
This means that this Ruddbank can be used to provide commercial finance to any commercial project. Indeed, the government are asking the parliament not only to agree to put $28 billion of taxpayers’ money at risk here for the purpose of propping up commercial property prices—a poor enough objective in itself—but to give these four banks plus the Rudd government a blank cheque to enable Ruddbank to head off into any commercial lending venture that it sees fit. This is nothing short of a new government bank, which the parliament has no ability to supervise or to scrutinise. There is no accountability whatsoever. They have literally written themselves a blank cheque.
At the very core of this project is a fatal and fundamental flaw. It is flawed because it has been put together by people who have very little understanding and, in some cases, absolutely no experience of the way in which lending syndicates operate in difficult economic times. The reality is that when you get into a recession or into a bad or slow economic period, when property values decline or tenants go out of business and landlords are not getting their rent—when all of those bad things happen in the property sector—lending syndicates will come under pressure. Often you will find that covenants relating to interest cover or coverage of the loan itself or various other conditions in the loan will become breached, and the lenders will have an opportunity to declare it an event of default and ask for their money back. What often happens in syndicates—and I have seen this many times in my own business life—is that the smaller participants, particularly those that do not have a longstanding relationship with the borrower, will try to stand over the larger lenders and persuade them to take them out. They will say: ‘Just get us out of here. Give us our money back.’ They put pressure on the larger lenders, who have a greater commitment to the project or to the borrower, who might be a client of the bank and so forth, to take them out.
What stops them being taken out, of course, is the risk that, if they push too hard, there may be a sale and they may lose some money. That is the tension. It is the risk that if they force a sale, call the event of default, put pressure on the lender, they may end up losing quite a lot of money through a sale at a value that does not enable them to be repaid in full. That is the tension that keeps the lenders together. As long as the tenants are there, as long as rent is being paid, as long as the project is financially viable—and I might add that, in terms of the objects of this company, it is designed to be only advancing money to projects which are financially viable—then common sense dictates that the lenders will stay in.
However, if you have Ruddbank sitting over there on the side with a bag of taxpayers’ money—a very large bag, in this case—and the preparedness to take out any financial institution that wants to get out, there is going to be enormous incentive for those lenders to kick up a fuss, to put as much pressure on the situation as they can, in order that they will be paid out in full. In other words, this Ruddbank is calculated to encourage the very circumstance that its authors claim to be concerned about. It is the most counterproductive piece of legislation I have ever seen. It will literally exacerbate the alleged problem.
That brings me to the second big flaw in Ruddbank: the colossal conflict of interest. Under the Ruddbank scheme, the big four banks have to maintain their pro rata share in a syndicate which Ruddbank is stepping into. So if, for argument’s sake, Westpac and the National Australia Bank each had 25 per cent of a syndicate, and two other banks—say, Suncorp Metway and perhaps a foreign bank like HSBC—had 25 per cent each, and the two non-big-four banks, Suncorp and HSBC, wanted to bail out, Ruddbank would be able to replace them but it would not be able to replace either of the big four banks because they have got to keep their proportion.
The way the world works with ‘mark to market’—and, obviously, with the scrutiny of banks’ balance sheets, particularly in this environment—is as follows. If a lender in a property syndicate exits for a price that is less than face value, less than 100c in the dollar—if he sells his loan for, say, 80c in the dollar—the other lenders will be compelled to mark their loans down to that level. They will have to mark them to market. So, in the hypothetical example that I have given, the last thing that Westpac or NAB would want is for the two other banks, Suncorp and HSBC, to be taken out for less than 100c in the dollar, because that would have an impact on the big four Australian banks’ balance sheets. The big four banks will clearly have enormous influence in this arrangement because they will be the bulk of the board and they have the banking expertise; there is nobody working for the government or in the Treasury who has any experience in commercial lending. So they will have an absolutely vested interest in encouraging the government to agree to taking out the exiting banks at full value even though the real value of their loan may be, on an arms-length basis, less than 100c in the dollar. This motive is disclosed by Mr Fahour. On the second page of his paper, he said:
Eventually, what was a funding shortfall becomes a credit problem and then liquidation and forced closures occur. A number of vulture funds are being formed with significant capital to take advantage.
What Mr Fahour means by a ‘vulture fund’ is simply any entity that wants to buy bank loans for less than 100c in the dollar.
So you can see that the Commonwealth not only has got itself into the absurd situation of trying to hold up asset values in one asset class as opposed to any other but has done so in a way that will encourage non-big-four Australian lenders and foreign lenders to exit. It will give them a real incentive by taking away the tension that they might lose money, which exists at the moment. In addition to that, this is structured in such a way that there is a massive conflict of interest, because the big four banks will want Ruddbank to refinance any exiting lender at full face value. So, needless to say, we do not support this flawed legislation. It is fatally flawed. It is very poor public policy and it offends all of the principles of good public and corporate governance.
The Rudd government already has plans to borrow $200 billion. That legislation has gone through the parliament. We did not vote for it, I am pleased to say; in fact, we voted against it. It is a very bad move. In addition, another $26 billion is to be borrowed by Ruddbank and guaranteed by the Commonwealth. So the Commonwealth, with just one seat out of five on the board, has $28 billion of the $30 billion exposure to Ruddbank. This is indeed a government that is addicted to debt. Robert Palmer might have sung, ‘You might as well face it; you’re addicted to debt,’ as a tribute to the Prime Minister.
The government is not helping small business, which might benefit from lower rents. It is seeking to hold up commercial property prices, at the behest of one of the big four banks, in order to prop up their balance sheets. This is at a time when every balance sheet around the country is under pressure and when there is no support being given to self-funded retirees, who have seen their superannuation funds crash in value, and when no help is being given to mining companies, who have seen their commodity prices fall. This is a selective action to hold up prices in one sector. The history of governments trying to prop up prices in a falling market has always been self-defeating and catastrophic and has resulted in the governments concerned losing a huge amount of money.
The involvement of the four major banks is clearly nothing less than a cartel. These are the four biggest banks, who are meant to compete with each other ruthlessly and strenuously, working together in a cartel with the government. But that is addressed in the legislation: clause 16 of the bill explicitly and expressly exempts the Ruddbank from the operation of part IV of the Trade Practices Act 1974. Clearly this would otherwise be a collusion by the four major banks. It is ironic that there is currently legislation before the parliament that criminalises cartel conduct, allowing for penalties of up to 10 years jail. The government, at the same time as it is putting that legislation before the parliament, is actually establishing the largest cartel in our history and itself becoming a participant in that cartel.
The involvement therefore of the four major banks creates a cartel working against the interests of every other financial institution in the country. The four major banks will be partners with the government, with its unlimited resources, and will be collaborating together in a position to undermine the competitive position of every other lender in the country. There are inherent and dangerous conflicts of interest here, and the taxpayer is at risk. We are informed that the Commonwealth nominee—this one person out of five—will ensure that taxpayers are protected. That puts a lot of faith in one person who might be the only barrier to prevent the loss of $28 billion in government debt.
Our own history is replete with failures of this kind. We do not know who the Commonwealth nominee will be, but we can expect that the banks’ representatives will have an absolutely compelling incentive to transfer risk to the taxpayer. That is what this is all about. It is about shifting risk to the taxpayer, for the benefit of the big four banks, while disadvantaging Australians and their hard-earned taxes, which this government should be determined to protect.
We are told that initially the Ruddbank would only lend for commercial property purposes. Of course, lending is not restricted to that purpose, and it is in a position to lend for any other area that it may agree to. So we could see Ruddbank used to bail out failed state Labor governments. There is absolutely no barrier to it getting involved in other forms of lending. It could rescue state governments from failed projects. It literally has a blank cheque. All the government has to do to ensure that Ruddbank moves into a new field is to get the four Australian banks to agree. It only has $2 billion at risk and, in circumstances where the additional $26 billion affects the amount of regulatory capital that the big four banks have to carry in respect of their investment in Ruddbank, the additional capital borrowed by Ruddbank and guaranteed by the government will actually rank behind the contributions of the big four banks. This has not been widely reported at all but it is dealt with in clause 4.4C(iii) of the shareholders agreement. I will read a passage from it:
If the shareholders agree that an adverse capital consequence would result from the issue of further debt funding, the priority of a proportion of the relevant further debt funding will be subordinated so that it ranks in priority behind the initial debt funding.
In other words, there are circumstances where the money that Ruddbank borrows, guaranteed by the Commonwealth, will rank behind the money advanced to Ruddbank by the four big banks. So much for a government that is standing up for taxpayers!
The primary justification given for this legislation is that there is a pending withdrawal of foreign banks from the Australian market. In our briefing with the Treasury recently we were advised that no foreign bank has indicated that it will withdraw from Australia, except the Royal Bank of Scotland. That is consistent with feedback that we have received from the financial sector. The Reserve Bank’s February 2009 Statement on monetary policy states:
Over recent months there has been some speculation that many foreign-owned banks will withdraw from the Australian market and that this will create a significant funding shortfall for businesses. While there is a risk that some foreign lenders will scale back their Australian operations, particularly if offshore financial markets deteriorate further, at this stage there is little sign of this, with most of the large foreign-owned banks planning to maintain their lending activities in the Australian market.
Yet the parliament is being asked to agree to the establishment of an unprecedented organisation with wide powers to address a problem that according to the Reserve Bank and, indeed, the Treasury has not appeared on the horizon. The legislation will, as I said, encourage banks to leave Australia. It will encourage every bank which cannot exit from these syndicates—other than the big four, of course—to go. So it is counterproductive.
There has been no regulatory impact statement. Once again, the government has failed to provide any evidence to support its rash policy. This is what the highly respected economist Henry Ergas said in an article on 27 January:
In the short run, the scheme seems likely to induce developers to play off their existing foreign lenders against the safety net the scheme provides. This could accelerate the very withdrawal of foreign lenders the scheme is intended to guard against, while allowing developers to secure some free kicks on the basis of what amounts to taxpayer-funded insurance.
It does not matter how you rationalise or analyse it, this is bad policy.
If our concerns seem unreasonable to those on the government side, let us just remember the record of previous state Labor governments. The State Bank of Victoria, a great triumph of democratic socialist finance, lost around $3 billion, mainly through its subsidiary Tricontinental. The State Bank of South Australia, another democratic socialist experiment, had to be bailed out by the state government, with a final cost to taxpayers of around $2.2 billion. That does not even take into account the enormously expensive consequences of the government getting involved in money matters with the corporate sector and supporting corporate players and corporate participants in Western Australia. That, of course, ended up in a shocking collapse, the WA Inc. scandal and a consequent royal commission.
The reality is that Kevin Rudd, the Prime Minister, is the Rebecca Bloomwood of Australian politics. He is addicted to maxing out the nation’s credit card. He is a shopaholic. He happily goes around the world giving other nations financial and economic advice while handing out cash splashes in Australia and running up $200 billion in debt plus a $26 billion debt for Ruddbank. He is so addicted to spending that he has even started his own bank, Ruddbank, using other people’s money to fuel his addiction. This is bad policy. It is counterproductive, it is self-defeating, it will exacerbate the problem its authors claim to be seeking to address and it will put billions of dollars of Australian taxpayers’ money at risk for a misconceived venture. The government should abandon it, and we intend to oppose it both here and in the Senate.
We have just had an MPI where the opposition criticised the government for allegedly failing to manage the economy to prevent job losses, and here they are opposing legislation that will support jobs. The Treasury—and I believe the Treasury rather than the Leader of the Opposition—says that without action of this nature a combination of weak demand and tight credit conditions could see up to 50,000 people in the commercial property sector lose their jobs, with flow-on effects to other parts of the economy. This legislation, the Australian Business Investment Partnership Bill 2009 and cognate bill, is a necessary measure to support confidence in the commercial property sector. It is necessary in the circumstances where employment is threatened by the withdrawal of a foreign bank affected by the global financial crisis. It creates a special-purpose vehicle, just as we did with the car industry, to support jobs and investment. It is done with the support of private capital invested by banks who are participants. Overseas we have seen governments doing this sort of thing but without the support of private banks.
Does the Leader of the Opposition seriously think that the government is engaging in criminal cartel type behaviour? That is what he alluded to. I do not seriously believe he is making that allegation. Perhaps he had his tongue in his cheek. But we are doing this with the consent, approbation and approval of the Australian banking sector and with its cooperation. It is a temporary measure, as we have said, in specific circumstances to support the economy and to assist liquidity in the commercial property sector. Those people who work in the commercial property sector are electricians, carpenters, small business people and independent contractors, and they need this sort of support.
To support jobs we are establishing a $4 billion Australian Business Investment Partnership, ABIP. It is a temporary contingency measure to support commercial property assets, those projects such as shopping centres, office towers and factories under construction as well as existing properties of that nature. We know that the commercial property sector employs about 150,000 people in Australia. It is a big employer of people: tradesmen, carpenters, plumbers, those people managing property, electricians and other people who work in the industry. This is the real face of Australian humanity—small business operators, workers and their families in the sector. What we are doing is supporting that sector, and those opposite are saying: ‘We will wait and see. We will do nothing about this.’ They have opposed the stimulus package, and this is part of their opposition. We are supporting local jobs. We are not sitting back idly waiting for the world; we are doing things that will support the sector.
There are safeguards which will ensure that the banks will continue to finance projects. We have said that. We think that foreign banks play an important role in our economy and in the banking sector and we support that. We are the ones who internationalised the economy and brought foreign banks into this country. Those opposite in their stifled Hansonite delusions of the 1950s, 1960s and 1970s were the ones who opposed opening up the economy and internationalising the economy. We are supportive of the contribution that foreign banks make to ensure that constrained construction in the commercial sector remains viable in all the circumstances.
As I listened to the Leader of the Opposition go on about this legislation, I wondered whether he had actually looked at it. He talked about lack of oversight and lack of a regulatory framework. But, if you have a look at what ABIP’s operation is going to be like, it consists of a board with expertise and it has a requirement for all resolutions of the ABIP board to be unanimous, with the exception of enforcement resolutions. Even then it requires an 80 per cent majority of the board, provided that the government is a member of the majority. There is a requirement that any major bank continue its participation in terms of its loan facilities. There is a requirement that the Auditor-General audit the financial statements of the company and subsidiaries and the auditing must be done consistently with the Corporations Act 2001. Further, there is a requirement for the Treasurer to table the company’s financial report, directors’ reports and audit reports each financial year in each house of parliament as soon as practicable after receipt. According to the Leader of the Opposition, there is no oversight, no regulation. It is carte blanche, if you listen to what he says. But that is not true. In fact, what we are doing is creating an organisation, a bank in which all the participants have ‘skin in the game’, as the Treasurer eloquently said. It is true: all the major banking companies are in the game. They are participating in supporting the Australian economy. The only ones not supporting the Australian economy are those who sit opposite, who are opposing this particular reform.
We know that the commercial property sector supports what we are doing in this regard. We are initially financing ABIP to the tune of $4 billion, with the government’s contribution at $2 billion. We know it is being matched by a half-billion dollar contribution by each of the four major banks and extending also the capacity in terms of borrowing of up to $30 billion by a government guaranteed debt of $26 billion to create the $30 billion fund. We know that the global credit situation is going to be tight. We know that so many of our trading partners are in recession. We also know that China’s economy has contracted for the first time in about seven years. We know that the Japanese economy has gone back by 4.6 per cent in the last year. We have seen the dole queues in America; we have seen unemployment to the tune of about 651,000 a month rising in the United States of America. We know that the global financial crisis is going to wash across our shores.
We have seen in my electorate, which contains Ipswich, the Lockyer Valley and the old Boonah shire, a rise in unemployment. For example, we have seen in Ipswich about 3,000 people unemployed but we have seen an increase of 400 people, in terms of Centrelink entitlements, being unemployed in the last month. This is the real face of the global financial crisis affecting my electorate and, I am sure, the electorates of all members of this House. So it is very important that we ensure the continued finance which will enable shopping centres and property developments to continue, because this sort of thing is very important for our economy. It is also very important where I come from in South-East Queensland, where there are big property developments in places like Springfield and also proposed at Walloon and Ripley Valley. We have big shopping centres which have grown in the last 10 years at Riverlink and Brassel. We have seen big developments. Ipswich’s population is growing in such a way that we need a new classroom every week to educate the children in the Ipswich area, which is covered by the electorates of Blair and Oxley.
It is important that we get commercial property supported by a banking system that ensures that there is not weak demand and that there are not tight credit conditions which might impact upon the commercial property sector. I am really supportive of this reform. I think it is a reform. I think there is oversight in relation to the matter. The reform is supported by the Governor of the Reserve Bank of Australia, Glenn Stevens. Master Builders Australia support it. Ian Harper, of Access Economics—someone whom those opposite have used in the past for advice and for appointment—has also talked about how important this type of operation to support commercial property is in all the circumstances. The Property Council of Australia also support what we are doing here.
But once again the coalition opt out of the game, take off the boots, take off the uniform and say: ‘We’re not playing. We’re not going to participate in any bipartisan approach to address the global financial crisis. We’re not going to be part of the game.’ We have seen it on Work Choices, alcopops and the ETS; we are seeing it here on ABIP. The coalition are abdicating their responsibilities to the property sector. Once again, those people opposite, who champion business, are letting down business.
This legislation is important in all the circumstances. It is important for the commercial property sector. It is important for my electorate, in South-East Queensland. It is important for the people of Ipswich and the rural areas outside it. It will sustain economic development. It will sustain employment and jobs. Therefore it will help Australian families in this very difficult time. It is a shame that those opposite are coming up with silly arguments to oppose this, when all the stakeholders—those people who are interested, like the Reserve Bank of Australia, the Property Council of Australia and Master Builders Australia—support what we are doing in this regard. I think the coalition should listen to those sectors, to those people who really are in the game. I urge those opposite to put the boots back on, put the uniform back on and actually participate in the great debate in this regard.
I rise to oppose the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009. This legislation is flawed both in policy and in fact. As a coalition, we oppose this legislation because, in many ways, having come from the real world of commercial banking or the financial services sector, we understand what it means for the government to enter into a market. We understand what it means when the government enters into the financial services industry.
I reflect on my own experiences in this regard as, in part, a guiding light to the position that we are taking today. I began my legal career as a banking and finance lawyer in the late eighties and early nineties. At that time, the law firm that I was working with, a major Australian law firm, was charged with mopping up the failed State Bank of Victoria and in particular was responsible for unwinding numerous transactions involving the finance arm of the State Bank of Victoria, Tricontinental. Some of the deals were extraordinary—deals being run through jurisdictions around the world to minimise tax and, in the end, in many cases, to avoid tax. Significantly, in the case of Tricontinental, they used the state government balance sheet to extend credit to people who should not have been lent that money.
I reflect on the State Bank of South Australia, which, like the State Bank of Victoria, had a long history, extending back to the 1800s. The State Bank of South Australia had liabilities that officially were on the record at over $3 billion but in fact were closer to $10 billion. The State Bank of South Australia was in the business of lending money to people who should not have been lent money. In the cases of both the State Bank of Victoria and the State Bank of South Australia, many of the loans were secured against commercial property—commercial property where the borrowers themselves had little or no exposure to the risk associated with the venture.
The experience of the Labor Party in Western Australia, WA Inc., is also well documented—a detailed record yet again of the reasons why governments should not get into the business of direct lending to individual companies on the scale that is proposed in the legislation that is currently before the House.
The Prime Minister has given the bill the title of ‘Australian Business Investment Partnership Bill’. What codswallop! It is a banking bill. Even the previous speaker from the Labor Party just referred to it as a bank. It quacks like a duck, it waddles like a duck, it is in water—it is a bank. The only thing that separates this from being something with the title of ‘bank’ is that it is not supervised by the Australian Prudential Regulation Authority as an authorised deposit-taking institution. Not only is it not properly supervised by APRA, as a bank would be, but it is specifically excluded from the Trade Practices Act because it allows the shareholders and directors to collude, which would normally be in breach of the Trade Practices Act. It goes further—whilst I am on the issue of corporate governance. There are no independent directors. There is only one director, who is the chairman, who is guardian of the interests of the most exposed shareholder to this entity, the Commonwealth government.
My leader, the member for Wentworth, earlier in this debate laid down all the very good reasons why we are opposing this legislation, relating to the detail of the bill. But I do want to specifically refer to some of the particular items in the legislation. If we separate out a lot of the guff associated with the interpretation of the legislation before the House, clause 7 of the legislation, which I recollect, refers specifically to two items which will be the objects of the legislation. The first item deals with commercial property. The commercial property aspect specifically says that the commercial property should be ‘financially viable’. There is no defined term associated with ‘financially viable’. What ‘financially viable’ may be is open to the interpretation of the shareholders and the board. The second is clause 7(2), which says:
A further object … is to provide financing in other areas of commercial lending through financing arrangements of a kind agreed to by the members …
Carte blanche—whatever you want! Here is $30 billion, of which $28 billion comes from the Australian taxpayer or is guaranteed by the Australian taxpayer. This single clause here, clause 7(2) of this bill, is the most damning indictment of the Rudd government that we have seen in the last 18 months when it comes to seeking the opportunity of this parliament, and the will of this parliament, to give them carte blanche to spend as they choose.
Clause 7(2) basically says, ‘Well, we want a blank cheque from the Australian taxpayers to go into the business of lending.’ There are no restrictions. That effectively means that, with the agreement of the banks—and we will get to the balance of the relationship between the banks and the Commonwealth government in a moment—and with the agreement of the entire entity, Ruddbank can lend money to anyone for any purpose, under any circumstances. That very broad definition allows this entity to go to places where, in all truth, the banks themselves do not want to go.
We asked the government during the briefings, ‘Isn’t this simply going to be a case of the four major banks in Australia abrogating their responsibilities to an existing borrower and instead substituting, through Ruddbank, the Commonwealth taxpayer?’ The response was: ‘Well, in the shareholder agreement, there is an agreement between the four major banks and the Australian government that, if the banks have an exposure in an existing syndicate, they will maintain their existing ratios in relation to those exposures.’ Let us take, for example, the situation where one of the major banks has an exposure, as part of a syndicate, to a major property developer. Let us say that the total syndicate exposure is $1 billion, and that bank has a $200 million exposure. If the syndicate says they are going to drop, they are going to halve, the amount of the loan they are prepared to provide to that commercial property developer to $500 million, the bank’s proportional exposure is halved. With Ruddbank stepping in with the remaining $500 million, their exposure is not that great if it is out of a total pool of $30 billion. So, proportionally, they have maintained an exposure, but on the other hand their total exposure to that institution is much smaller.
Let us go to what was one of the main reasons for the establishment of Ruddbank. The Prime Minister said that they were concerned about foreign banks leaving Australia. There is no foreign bank restriction in this legislation. It does not say that Ruddbank will only step in where a foreign bank withdraws from a syndicate. It says ‘any bank’. In fact, it goes beyond ‘any bank’. The legislation actually states that the entity can step in, relating to commercial property assets in situations where finance relating to the assets is not available from commercial providers other than Ruddbank. So a ‘commercial provider’ could be any number of different entities. They go on to say the assets would be otherwise financially viable. But that is only in relation to property, mind you. There are no such restrictions in relation to what could be a pool of money for a whole range of different initiatives—initiatives similar to those that were undertaken by the State Bank of Victoria, the State Bank of South Australia and Western Australia Inc.
Mr Deputy Speaker Schultz, as you as the member for Hume will recall, I was involved in the privatisation of the State Bank of New South Wales. At that time, even though we had had the financial collapses in South Australia and in Victoria, when I was engaged as one of the project managers on the privatisation of the State Bank, we—the New South Wales Treasury—as a shareholder had to do a due diligence on the State Bank of New South Wales, even though as a shareholder we were meant to be fully informed of what they were up to. But, because we were not fully informed, we had to do our own due diligence before we let anyone else have a look. And what did we discover? Nick Whitlam, as the former Chief Executive of the State Bank of New South Wales, had taken them on balance sheet risk that never would be undertaken by a private sector bank. He was able to do that because it was a government guaranteed entity. It was a government funded, government guaranteed entity.
Let us be very clear about it because, again, I come back to my own personal experience with the privatisation of GIO. They had a minority interest in a state insurance office which was deemed to be a Crown entity because of that minority interest. Do not be under any illusion about this: this will be a Crown entity; it is a part of the Crown. It is borrowing money on the Crown against the Crown guarantee. It will be treated by the markets as a Crown entity in the very same way that Fannie Mae and Freddie Mac, even though ‘privately owned’, were treated by the markets as part of the US government, and that is where much of the subprime crisis actually started. Let us be very clear about that. This is a Crown entity without the normal corporate governance provisions and without the normal prudential supervision. It is a Crown entity that is venturing into an area where governments have feared to tread since the spectacular failure of Labor state government banks, and now Labor—true to their nature, true to their tune—are coming back to the pit, going to taxpayers and, on this occasion, raising up to $28 billion to go into the commercial property sector. Lord help us! As if one lesson was not learned, as if two lessons were not learned, as if three lessons were not learned—and now it is all happening again. It is like Groundhog Day. If you let Labor have a go at the Treasury, they have to be involved in banking and commercial property to boot.
The justification for the bill is foreign banks pulling out. Let us be fair dinkum about this: Treasury could not even state the name of the bank that had pulled out of Australia. That is very important. We asked them straight to their faces: which foreign bank has pulled out of Australia? They did not want to say, but in the Australian today there is a reference to RBS, the Royal Bank of Scotland, now owned by the British taxpayers, saying that they have reduced their exposure in Australia. Okay, that will happen from time to time—of course it will happen from time to time—but the latest lending figures clearly indicate that Australian banks are expanding their lending operations in Australia at this point in time.
The latest information clearly states that Australian financial institutions are financially viable. In fact, the four major banks who are tipping in $500 million each to this initiative are amongst the 12 best capitalised and largest banks in the world today. I would like to think that whilst that may have something to do with their good management over time—there has not always been good management in those banks—it also directly relates to the fact that Australian banks have the very best prudential supervision in the world and the very best regulation in the world. That came about, overwhelmingly, as a result of the reforms of the Wallis inquiry under the previous coalition government, initiated by the then Treasurer Peter Costello, the member for Higgins, and followed up with the Financial Services Reform Act, which significantly changed the way that financial products can be sold to the retail sector. That was a bill that I introduced as Minister for Financial Services and Regulation. They were hard bills. Labor were amending those bills extravagantly, one might say, in the Senate. They were simply moving ridiculous—even spurious—amendments, because they felt the need to be relevant at that time, rather than moving amendments that would improve the bills.
Let us be very clear: the government said that they would be entering into a so-called partnership—it seems like a very skewed partnership—so that they could fill the vacuum when foreign banks pulled out of Australia. Far from filling the vacuum when foreign banks pull out of Australia, this bill will encourage them to pull out of Australia. It will encourage them to pull out of syndicates at the first available opportunity, knowing that they can look for better assets than commercial property to invest in in Australia and that, at the same time, the government will stand behind them with Ruddbank ready, at taxpayers’ expense, to fill the vacuum.
This is bad legislation. It backs bad policy—because this is what the Labor Party does. The Labor Party goes into a deep, dark abyss of debt and deficit in a search to be all things to all people. Sometimes you have to take a stand against people who want free money and against people who seek to gain commercial advantage from taxpayers. But, most significantly, you have to take a stand for the taxpayers who are going to be burdened by this very significant exposure to the Australian commercial property market at a time when there are a large range of areas of the Australian economy that could do with liquidity. This is not the answer; this is a bad answer and it is bad policy. I am very pleased that we are opposing it.
I rise to speak in support of the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009. I do so with pride, as I stand on the side of this parliament which is acting swiftly and decisively to bolster the Australian economy against the biggest economic shock that the globe has seen since the Second World War. This measure is one of a suite of measures which have been taken by this government to bolster this economy. We have acted swiftly and decisively, and the actions that we have undertaken have been watched with commendation around the world. They stand in such stark contrast to what we see on the other side of the House and to what we have just heard from the shadow Treasurer. At a time of national crisis, when we might have expected some bipartisanship in policy across both sides of politics to deal with it, instead we see rank politicking and scaremongering from the opposition. That was in evidence in the speech that we just heard from the shadow Treasurer, as he seeks to characterise what we are doing now as the establishment of a bank. What we are actually doing is putting in place a short-term temporary measure to get this country through what is the worst global economic crisis that we have seen since the Second World War.
This bill does three things: it establishes the Australian Business Investment Partnership Ltd, it provides for an appropriation by government to the Australian Business Investment Partnership and it also provides for the ability to establish a guarantee on extra debt issued by ABIP in the future. There is a consequential amendment to the Corporations Act so that ABIP, the Australian Business Investment Partnership, is exempt from holding an Australian financial services licence. The aim of this bill is to restore confidence in Australia’s commercial property sector by providing a vehicle where finance can be made available in circumstances where there are viable commercial property projects which have had their finance withdrawn or risk their finance being withdrawn. The commercial property sector employs 150,000 Australians, and Treasury predicts that if nothing is done then the global credit crunch and the reduction in demand will put 50,000 of those jobs at risk—nearly one-third of the sector. So this is a $4 billion plan to build Australia’s future and to support Australian jobs through the creation of the Australian Business Investment Partnership.
It is a temporary measure. It is not the establishment of a bank but a temporary measure to support viable commercial projects. Foreign banks and, indeed, second tier banks in this country have played—and we hope will continue to play—a very important role in financing commercial property projects. But the sad fact is that the global economic crisis has impacted upon our economy such that foreign banks may find themselves withdrawing money from viable commercial property projects because they are seeking to repatriate that money to their home countries. This creates a tightening in conditions which will last through the rest of 2009. It is a tightening of conditions that persists for the entire economy but is particularly felt within the commercial property sector because of the highly leveraged nature of that sector. The sudden withdrawal of finance from a commercial property project risks the possibility of an investor in such a project being required to sell that property in a depressed market.
The market stability of the commercial property sector is at stake in what we are discussing here this evening and, indeed, that flows on to the stability of the property market more generally. Therefore, the value of superannuation funds is also at stake—the value of the life savings of superannuants. Making sure that we have a robust commercial property market is, in one aspect, essential to ensuring that those superannuation funds continue to maintain their value as best they possibly can in this difficult economic time. The commercial property market is fundamental to our nation’s economy, and the government, through this measure, is providing certainty and stability to a very important sector of our economy. We cannot afford to sit still and do nothing, which is what is being advocated by those on the other side of this House. We need to take extraordinary measures which befit the extraordinary time that we find ourselves in. Ian Harper, of Access Economics, said as much:
In normal times, the Government ought have no business lending to property or to anything else, but these are extraordinary times.
Aaron Gadiel, from the Urban Taskforce, said:
Without action we would lose valuable jobs, income and development that our community desperately needs. For every $1 million spent in construction, 27 jobs are created.
So the government needs to protect the interests of good Australian businesses, we need to protect the interests of this very important sector in the Australian economy and we need to ensure that investor confidence is not eroded by the uncertainty which characterises global capital markets at the moment.
Just last week, I had the privilege of opening a commercial residential building on Geelong’s waterfront. This is a building which has a significant commercial aspect. It is these kinds of buildings which may be the beneficiaries of finance from these funds going into the future. I want to tell the story of Edgewater because it gives us a snapshot of the significance of this industry to the economy of Geelong and a snapshot of the significance of this industry to our nation’s economy.
The Edgewater development was a $66 million investment that provided work for a hundred construction workers for two years as they built this property. But what is really significant is that it will also provide ongoing employment for 50 workers on a permanent basis—people employed in the retail outlets on the ground floor of this property. It is a property which has retail outlets on the ground floor and apartments on five floors above that. The Edgewater building is a very significant step forward in property development in Geelong. It brings a range of retail outlets, principally eateries and cafes, to Eastern Beach Road, which is the main thoroughfare along the Geelong waterfront. It will turn this thoroughfare into one of the great boulevards in our country and will provide life, a sense of energy and a buzz to that area which will greatly enhance the city of Geelong. With that buzz and that vibrancy come jobs, and it is a really important development which not only adds to the quality of life in Geelong but also provides employment to so many people who live in Geelong.
It is an example of the fact that, prior to the global economic recession coming into being, Geelong was experiencing something of a construction boom. Hundreds of millions of dollars of investment on an unprecedented scale was reshaping Geelong’s waterfront and central business district. Several major jobs—including, for example, the $100 million TAC headquarters—have been completed. So, too, has the Westfield shopping centre, which has been a revelation in revitalising the CBD in the Geelong area. These construction projects have been significant drivers of construction jobs and have also provided long-term jobs in Geelong beyond the construction of those buildings. The building of these buildings is, in a sense, the most obvious manifestation of vibrant economic growth within a city—certainly within Geelong.
But those involved in the construction and commercial property sector within Geelong now tell me that the sector is starting to slow dramatically. At least half-a-dozen major commercial projects that were about to get underway have been put on the backburner because of the current economic climate, and that will inevitably have an impact upon jobs—both short-term jobs in construction and ongoing jobs in running whatever is the outcome of that construction work. And what is happening in Geelong is being repeated in many regional centres and major cities across Australia.
This bill brings certainty in a sector and in a year when many things are so uncertain, when people are so nervous about what the future holds and when we are already starting to see the effects of the credit crunch not only in this sector but also in many other industries. The Australian Business Investment Partnership will work as follows. There will be an initial financing of $4 billion to ABIP, which includes a $2 billion appropriation as a result of this bill from the Commonwealth along with half a billion dollars from the four major banks. There will also then be the ability to provide a guarantee of loans of up to $26 billion in the future, creating a financing vehicle of up to $30 billion. ABIP will lend for two years—two years only—and this is to deal with the immediate issue of the global economic crisis which we are confronted with.
In financing commercial property ventures it will be limited to the refinancing of Australian commercial property assets on commercial terms when withdrawal of funding by a lender threatens the refinancing of the loan. It will focus on completed commercial property investments and partly completed projects with secured precommitments such as retail shopping centres, commercial office blocks or industrial property. It will not be able to be used to provide for the refinancing of loans from the four major banks.
ABIP will be established as a company. It will have a board of five members consisting of one from each of the four major banks and one from the government, with the government member as the chair of ABIP. It will be subject to a number of stringent requirements, such as providing for the composition of an expert board and governance requirements of the board which require that all resolutions are made unanimously with the exception of enforcement resolutions. Even enforcement resolutions can only be made with an 80 per cent majority vote which must include the government member as part of that majority. Any major bank in the loan facility must continue its participation in the loan facility, and there are other parameters which will exist around ABIP’s operations. All of this will be put in place to ensure that there is minimal risk of exposure to Australian taxpayers in the establishment of ABIP.
This is an important intervention at this time. It is important government support for a vital sector of our economy which drives employment. We cannot stand idly by as the global economic recession continues to operate upon our economy. We cannot walk down the path which is being offered by those on the other side of the House, which is essentially a path that leads nowhere, a path that is about doing nothing. Confidence in our action—confidence in government action—will breed confidence in this sector. That is what this bill is all about, and in breeding confidence in this sector we will ensure the jobs of tens of thousands of Australian workers, which is so important during this global economic crisis.
Debate (on motion by Mrs Mirabella) adjourned.
Bill returned from the Senate with requested amendments.
Ordered that the requested amendments be considered immediately.
Senate’s requested amendments—
2A. Schedule 1A | The later of: (a) the day after this Act receives the Royal Assent; and (b) the day after the Excise Tariff Amendment (2009 Measures No. 1) Act 2009 receives the Royal Assent. However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur. |
Schedule 1A—Ready-to-drink beverages
Customs Tariff Act 1995
1 Schedule 3 (subheading 2203.00.31, the rates of duty in column 3)
Repeal the rates of duty, substitute:
$40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
2 Schedule 3 (subheading 2204.10.23, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol DCS:4%, and $40.82/L of alcohol DCT:5%, and $40.82/L of alcohol |
3 Schedule 3 (subheading 2204.10.83, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
4 Schedule 3 (subheading 2204.21.30, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
5 Schedule 3 (subheading 2204.29.30, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
6 Schedule 3 (subheading 2205.10.30, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
7 Schedule 3 (subheading 2205.90.30, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
8 Schedule 3 (subheading 2206.00.52, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol DCS:4%, and $40.82/L of alcohol DCT:5%, and $40.82/L of alcohol |
9 Schedule 3 (subheading 2206.00.62, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol DCS:3%, and $40.82/L of alcohol |
10 Schedule 3 (subheading 2206.00.92, the rates of duty in column 3)
Repeal the rates of duty, substitute:
$40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol |
11 Schedule 3 (subheading 2208.90.20, the rates of duty in column 3)
Repeal the rates of duty, substitute:
5%, and $40.82/L of alcohol NZ/PG/FI/DC/LDC/SG: $40.82/L of alcohol DCS:3%, and $40.82/L of alcohol |
12 Schedule 5 (cell at table item 1, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
13 Schedule 5 (cell at table item 9, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
14 Schedule 5 (cell at table item 11, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
15 Schedule 5 (cell at table item 13, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
16 Schedule 5 (cell at table item 15, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
17 Schedule 5 (cell at table item 17, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
18 Schedule 5 (cell at table item 19, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
19 Schedule 5 (cell at table item 21, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
20 Schedule 5 (cell at table item 23, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
21 Schedule 5 (cell at table item 31, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
22 Schedule 5 (cell at table item 42, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
23 Schedule 6 (cell at table item 4, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
24 Schedule 6 (cell at table item 12, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
25 Schedule 6 (cell at table item 14, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
26 Schedule 6 (cell at table item 16, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
27 Schedule 6 (cell at table item 18, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
28 Schedule 6 (cell at table item 20, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
29 Schedule 6 (cell at table item 22, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
30 Schedule 6 (cell at table item 24, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
31 Schedule 6 (cell at table item 26, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
32 Schedule 6 (cell at table item 34, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
33 Schedule 6 (cell at table item 45, column 3)
Repeal the cell, substitute:
$40.82/L of alcohol |
34 Application
The amendments made by this Schedule apply in relation to:
(a) goods imported into Australia on or after the commencement of this Schedule; or
(b) goods imported into Australia before the commencement of this Schedule, where the time for working out the rate of import duty on the goods had not occurred before that commencement.
I move:
That the requested amendments be not made.
The government rejects the amendments proposed by the opposition in the Senate and intends to proceed with its original legislation. I might add for the benefit of the House that I will speak on this first message. Of course, there is a second message. Our arguments for rejecting the Senate’s requested amendments are the same for both, and I intend only to speak to this first one.
I am pleased to say that, after intensive but constructive negotiations, the government has reached agreement with the Greens and Senator Xenophon such that the government is prepared, if this bill is passed, to invest an additional $50 million in a range of measures designed to tackle binge drinking, including a fund to provide sponsorship to local community organisations who provide sporting and cultural activities as an alternative to other forms of sponsorship, an additional investment in community level initiatives designed to tackle binge drinking to enhance those already announced earlier this year, enhancing telephone counselling services and alcohol referrals, and a possible expansion of existing social marketing campaigns. These measures will only proceed if the legislation passes both this House and the Senate unamended.
The fact is that there is no silver bullet on binge drinking. The government does not have a silver bullet, the opposition does not, Senator Fielding does not, the Greens do not—nobody does. That is why we need to take a range of comprehensive steps in this area, and that is what the government have been doing since we were elected—through COAG, through our binge drinking initiatives, through the Preventative Health Taskforce and through the extra initiatives that we have put on the table today, including some changes to advertising regulations. Public health experts from around the country support the government’s actions, but this is going to fall at the last hurdle because the Liberal leadership do not care about binge drinking and because Senator Fielding is prepared to walk away from a range of these significant enhancements.
I have to put on record that I have a great deal of respect for Senator Fielding. He has been a longstanding opponent of binge drinking. He has done much to bring this to national attention, including having a private senator’s bill in the Senate. So I would urge him to support this bill, which is part of a comprehensive government approach to alcohol. It picks up on—and the offers that have been made to Senator Fielding pick up on—two if not 2½ out of three of the proposals he has been arguing for for a long time, and we urge him to think closely about whether he wants to give up the opportunity to have those measures introduced by the government. We have done more to tackle binge drinking than any previous government, so I am disappointed that, despite the major initiatives that have been put on the table, Senator Fielding has indicated he may be prepared to walk away from these major reforms.
The Liberal Party say that the measures should be terminated so that in future alcopops would be sold more cheaply. Supporting changes that, going forward, would mean selling cheaper drinks specifically designed to disguise the taste of alcohol with sweet or coloured water and marketing them to teenagers is not consistent with our values and we cannot support it. Neutering this proposal is not consistent with our values. As a result of the opposition’s failure to show moral leadership on the issue, in just a few short weeks teenage girls will be back paying pocket money prices for these alcohol laced drinks. What is more, the distillers will get a windfall over the next few years of $1.6 billion. That is certainly what I call a decent shout.
The Rudd government is taking a stand, showing leadership and standing up to the alcopops industry. Who is against this measure and who is for it are instructive. Over the past year my colleagues and I on this side of the House and in another place have cited statistics, expert researchers, police commissioners and media reports on alcohol abuse and misery, and against this measure are only two groups: the distillers, who profit from selling these alcopops to young people, and the Liberal Party. The truth is, however, that there is no evidence which will be strong enough to break the connection between the Liberal Party and these alcopop profiteers. Any evidence which is presented—whether it is consumption data from the ATO, data from Nielsen or other statistical data from the National Household Survey—will never be enough for the Liberal Party. Expert evidence from public health researchers across the country to the Senate Standing Committee on Community Affairs inquiry into the bill last week counts for nothing when it gets between the partners in that close relationship.
No-one can seriously dispute that the best evidence is that pricing works to discourage demand. As alcopops are targeted at young people, we are trying to close a tax concession which affects their price. As I have said, public health experts from around the country have given evidence to the Senate committee inquiry and, given the time, I am not going to quote all of those. But let me just use one example—that is, the President of the AMA, Rosanna Capolingua, saying it would be a retrograde step not to pass this measure. We are determined to curb the excesses of binge drinking. We want to do what we can to protect the community. There is no one single answer, but we think this measure can be part of the answer. We are supporting it in its original form, and I urge the opposition and minor parties in another place to help us protect the health of the next generation and their wellbeing into the future.
What we have heard tonight from the Minister for Health and Ageing is a demonstration that this whole proposal by the government has been a sham. It was always about a tax grab. It was never about a health measure. It was never about a government that was genuinely concerned about helping young people to manage drinking alcohol responsibly. It was never about trying to curb binge drinking. In effect, what the government has done has resulted in people—in particular, young people—being driven from one alcoholic product to another alcoholic product. There is no case that has been made by the government, no evidence that has been provided to the Senate Standing Committee on Community Affairs inquiry into the bill—no evidence whatsoever provided by the government—that would indicate that this is a measure which has successfully curbed binge drinking. On the government’s own advice, there has been a reduction in consumption for one category of product but an increase in the consumption of other products.
I say to Australian families, to the mums and dads of Australia whose teenaged children will be going to drink this Friday night: are they drinking less alcohol as a result of this measure, or have they taken up something else to drink? Are they drinking less at pubs or parties because the price of alcopops has gone up? Or is it the case now that they are mixing their own alcohol? In some cases, that means—particularly for young girls and young women—having their drinks mixed at parties by people not known to them, whereas before they were able, at least in their own mind, to provide some level of satisfaction that there was no potential for their drinks to be spiked because they had a premixed drink.
This government has been on a tax binge. It has not been on a binge of addressing the very real problem of alcohol abuse as it exists in some segments in this country. We have, from day one, said that we are serious about the issue of binge drinking. Regardless of all of the hype and rhetoric that the minister carried on with again in question time today, obviously frustrated by the fact that no deal has been negotiated with the Independent senators, and despite the complete overreaction by this minister and her fabrication of some of the positions that she claims have been taken by the Liberal Party, by me or by the Leader of the Opposition, the government’s position is completely hollow. In fact, this is a humiliating day for the health minister. This is a real problem for the health minister, because in 12 months she has not been able to negotiate a position. We are at the eleventh hour. This government has had 12 months to resolve this particular situation, and if it does not pass it by this Thursday then it suffers a great humiliation. That is a shame for the government and a shame, of course, for the minister personally, but that does not negate the fact that they have not been able to provide the evidence to the Independent senators that this would be a health measure and not a tax binge.
It is, in particular, relevant to note as part of this debate that of the projected $1.6 billion of revenue to be gained out of this measure, the government propose to spend $50 million—$50 million of $1.6 billion—on addressing issues that have been negotiated with the Greens and with Senator Xenophon. It is $50 million of $1.6 billion, and yet they still argue with a straight face that this is not about a tax grab. If they were serious about addressing the issue of binge drinking in this country, they would support the very responsible position taken by the coalition, and that is the position which was supported by the Senate last night. The Senate decided that they would support the coalition’s move to have all of the money that has been collected over the last 12 months—$290 million—allocated to proper education and to proper alcohol programs that will have a real impact on binge drinking. Do not put forward a proposal which says, ‘We will jack up the price of one product,’ and then not expect substitution of another. That shows how hollow the argument has been from the government, and this is why the coalition remain resolute in our opposition to what is a tax grab and not a health measure. That is why we have taken this very responsible stance, why we were supported in the Senate last night and why, while we remain in this parliament, we will be opposed to this tax grab measure in its current form.
Question put:
That the motion (Ms Roxon’s) be agreed to.
Bill returned from the Senate with requested amendments.
Ordered that the requested amendments be considered immediately.
Senate’s requested amendments—
2A. Schedule 1A | At the same time as Schedule 1A to the Customs Tariff Amendment (2009 Measures No. 1) Act 2009 commences. |
Schedule 1A—Ready-to-drink beverages
Excise Tariff Act 1921
1 Schedule (cell at table item 2, column headed “Rate of Duty”)
Repeal the cell, substitute:
$40.82 per litre of alcohol |
I move:
That the requested amendments be not made.
The shadow minister and I have agreed that neither of us will speak to this measure; we simply refer to our speeches from the previous bill.
Question put.
Debate resumed.
The Australian Business Investment Partnership Bill 2009 and related bill deal with the establishment of Ruddbank. The Ruddbank is to be established under the Corporations Act. It is going to have shareholders in the form of the four major banks and the Commonwealth. The government will provide $2 billion and the major banks will provide $500 million each. Ruddbank will only be able to enter into new refinancing arrangements for commercial property assets for two years—a two-year prospect. The Ruddbank will be able to issue up to $26 billion of government guaranteed debt to create up to $30 billion of loanable capital. The Ruddbank will provide financing, it says, on fully commercial terms for commercial property that meets the Ruddbank’s lending criteria, determined by its shareholders, and where the underlying assets and the income streams from those assets are financially viable. Ruddbank will focus on completed commercial property investments and completed development projects with secured precommitments, but it is not confined to that. It says its focus will be that, but there is an open-ended blank cheque for it to extend to have sufficient flexibility to provide financing in other areas of commercial lending, which is incredibly vague and opens up the prospects for what this new Ruddbank might be involved in to literally anything.
It is the classic example of this government: it will go to any policy port during this economic storm, as the Prime Minister likes to describe it. It is prepared to do anything on these matters rather than focus on doing the right thing, on doing what needs to be done during the course of this economic crisis. The government’s philosophy is: ‘We need to kick up the dust. People need to see that we are doing something. We need to do something, anything. Any idea that is thrown at us, we will do it.’ It will not take the time to properly consider whether it is the right thing to do and whether it is going to have consequences that will cause all sorts of havoc within our economy, as we have seen with many of this government’s decisions. It will do anything rather than the right thing.
The common theme in all of the various ‘anything will do’ proposals from the government is at the core of every single prospect: they all involve transferring risk to the taxpayer and increasing our debt. They are going to put the government credit card out there and put on that credit card risk that would normally be looked after in other places. We saw that with the unlimited bank guarantee. We saw that in their rush to do anything—not the right thing but anything—when they came up with the unlimited bank guarantee, as it was first known. We saw the havoc that that caused in financial markets, the government not having thought it through and not having even bothered to get the Reserve Bank governor on the phone. There was far too much time to be spent rolling up sleeves for photo opportunities in the cabinet room on that Saturday or Sunday, whenever it was, back in October. As a result of that, we saw the funds of 270,000 investors frozen in their investment trusts and we saw all sorts of other consequences of money moving all over the place until eventually the government had to listen to what the opposition said. Sadly, they did not listen enough, because they did not take the cap on the guarantee down far enough. Nevertheless, with the unlimited bank guarantee we saw the government taking a rushed and bungled decision to put their credit card out there to be a receptacle for risk in the marketplace.
The other thing we have seen more recently is that they are not just prepared to take on these assets and debts from the com-mer-cial property sector as part of their own book in government; they are also doing it for the states. They have put the credit card out there on the table. Through this and other measures, the government have shown a preparedness to say to the New South Wales, Western Australian, Victorian or South Australian state governments—all of which had gov-ernment owned banks that got into a bit of difficulty, to put it mildly—that there is nothing to stop them using federal taxpayer credit guarantees to underwrite their performance. We are really on a very slippery slope now when it comes to the current government and debt. Their appetite for debt knows no limit and they are just getting started. We have a budget coming in a few weeks time and I am sure we will see more debt. We will see more debt and more of a defi-cit in that budget because they are a govern-ment addicted to debt, and debt will continue to grow as long as they remain in office.
Prior to coming to this place, many years ago I spent almost six years working for what is now known as the Property Council. From my time there I have a good knowledge of the policy areas affecting the commercial property sector and I have a great deal of sympathy for the sector. But my sympathies must first go to the taxpayers of Australia when I consider these measures. I am not surprised that the property sector, in particular, or the banking sector would be supportive of this proposal. If you were the beneficiary of this proposal, wouldn’t you be supportive of it, in terms of the sectional interest that is being looked after in this bill?
In Ruddbank we have a number of key themes, which the Leader of the Opposition and the shadow Treasurer have touched on. The one that concerns me most is that this is a vehicle to transfer property losses, lending losses, of foreign banks to Australian taxpayers at the face value of what those loans are in those syndicates. We are going to say to a foreign bank: ‘We will buy you out. If you are thinking of going, now is a good time to go because we will buy you out at face value. The other shareholders in Ruddbank will not be interested in a price any less than that because they will have to write down their own positions in each of those syndicates. So we will take you out, taxpayer funded. We will say to you and to banks all over the globe: we will buy you out at face value, and the people who are going to do it are mums and dads, self-funded retirees and pensioners and others right across this country. We are going to bail you out of the Australian market so you can go back home and, just to add insult to injury, we will pay for that privilege through this proposal.’ From that simple measure we are going to see losses, effectively—potential losses—for these foreign banks transferred onto the government’s taxpayer funded credit card and borne by Australians. I do not know who thought that up but I think that proposition would be offensive to most, if not all, Australians around the country.
The second theme is about collusion amongst the banks, which has been given the green light under these bills in terms of the Trade Practices Act. This means that a proposal from the four big banks will only get to Ruddbank if they are unable to source finance elsewhere. And who are the major sources of finance in this country? The four big banks. So the commercial property owner or lender, or whoever is involved in the matter, will go to those banks and say, ‘Can you extend your facility on these?’ And they will say, ‘Oh no, we cannot do that.’ Where are the projects that the banks reject—in true John West style—going to end up? They are going to end up at Ruddbank. Ruddbank is going to have the opportunity to invest in all of those projects which could not leap the hurdles of the private banking market. Yet the government say they are going to do it for projects that are apparently ‘financially viable and on commercial terms’. So the projects that cannot clear their own hurdles will actually be referred to a board, which the government will be a member of, that basically will take up the hospital passes from other lenders and other banks. Again: who is paying for it? Who is going to underwrite these debts if and when they go bad? Who will be the ones to suffer? It will be the mums and dads, our children, self-funded retirees and all the people forgotten by the government, who have been left to their own devices. It will be small businesses. It will be all those who have been denied while these sorts of systems have been set up to enable the government to once again do what they have always wanted to do as good socialists—that is, to set up a national bank owned by the government.
The third theme of it, which totally offends me, is that the government wants to add another $26 billion to the taxpayer funded Rudd credit card—as if $200 billion worth of debt was not enough. Frankly, the Australian people are already going to suffer an enormous burden of debt as a result of the actions of this government, and now it wants to add more and more. And, as I said, the budget is still to come.
In making their rationale for this bill, the government and those others who have supported this bill have said this. I read in today’s—or yesterday’s—Financial Review that the Minister for Finance and Deregulation said that 150,000 jobs would be at stake if this measure did not proceed. When the Prime Minister first talked about this, he talked about 50,000 jobs being at stake. It is not uncommon for this government to talk up the book when it comes to impacts on employment. Usually it talks up how many jobs it is going to create, like the 75,000 that were supposed to be created by the cash splash back in December. Now it is saying, ‘It’s not 50,000; it’s 150,000.’ That is the total number of people employed in the commercial property industry. Is the government seriously suggesting, through the Minister for Finance and Deregulation, that every single job—that is, the job of every single person who works in the commercial property industry—is at risk if this proposal does not go forward? That is a nonsense proposition. As usual, the government is overclaiming and overdramatising the circumstances to suit its political arguments and its own political ends.
Secondly, the government maintain that this is going to keep a whole raft of construction projects going. The truth that they refuse to utter in this place or anywhere else is that a minuscule proportion—that is, minuscule if any, but I grant it may be minuscule—of the projects and assets that will be subject to this proposal, those that are subject to syndicated loans which involve foreign banks, involve actual construction projects. These are existing assets that have a history and that have tenants. People come in and out of them every day. People do the cleaning, do the painting, do the maintenance and service the tenants. They do all of these things on a daily basis, and not one of those things is going to change as a result of this measure because they are existing assets. They are shopping centres that exist; they are office buildings that exist. In terms of construction projects it is fractional at best. The government’s claim that this is going to somehow support construction is hollow. They will know that supporters of this will also know it is a hollow claim. They know that this is about existing assets. I am quite sure they would like to see the argument on this proposal made on what they believe the merits of it are—that is, to keep property prices up. The government knew that this argument was not saleable to the Australian people, so they had to confect this argument about construction jobs—when virtually no construction jobs are involved or at risk regardless of whether this proposal goes one way or the other.
The third point I would make about that is this: the new projects that the government say are going to be abandoned because of a lack of availability of credit we know are being abandoned because of the economic circumstances that just plainly exist. The fundamentals for these projects to go ahead in the vast majority of cases are not currently in play. That is a sensible commercial judgment. The decisions to go and build these assets should be made on sound commercial bases. I remember my time in the tourism industry. They used to say that only the third owner of the asset ever made any money. The developer and others would go through the process. Fortunately in the tourism industry they have learnt many lessons over the last 20 years, and that prospect is no longer the case. But major investment decisions should be made on the basis of the investment horizon and the prospect that tenants or others are going to use the buildings, not on the basis of propped-up prices. That type of activity can distort markets and lead to very dangerous decisions. It can see developments proceed when they should possibly be left for another time, a time when economic circumstances will support them and the jobs they will create.
Also, we need to be mindful of the two other big things that are impacting on our economy and the investment horizon. The first of those is the emissions trading scheme of the Labor government. It is not just any emissions trading scheme but the Labor government’s emissions trading scheme. It will impact on the price of building materials and on all the other price inputs that go into building and maintaining these assets. The impact of that scheme will add costs that will make these projects less viable and even the existing assets, in terms of their returns, less viable. If the government want to talk about blockages to the performance of these investments and getting new projects going, they should scrap their current emissions trading scheme. They should scrap it because they know it is overworked, it is too complicated and it is going to add to costs while exporting emissions.
The second area is that of changes to the industrial relations laws. If anyone wanted to be serious about trying to create jobs in the construction industry, they would not go light on the Office of the Australian Building and Construction Commissioner, as the government are. They are going soft on that agency over time, as it gets whittled away under the current government. Secondly, they would not talk about doing things with unfair dismissal laws and confine them to businesses with just 15 employees by headcount. They would not do things about greenfields sites, which tie up these businesses in their new laws. They would not do things which provide unions with unfettered right of access to sites. They would not do all that if they were interested in these projects proceeding. They would be trying to take costs out of the system. They would not put costs into the system, as they are doing with the emissions trading scheme and the changes to industrial relations laws. They should be doing something about supporting construction in the commercial property industry or, for that matter, the housing industry. But, no, they have come up with the Ruddbank proposal to artificially prop up property prices.
There is a fundamental question here on the wisdom of governments becoming involved in manipulating the repricing of assets in the market. This is a very dangerous business. It is risky for governments generally to get involved directly in the banking business itself. The shadow Treasurer made many very good points about the risks of going down that path, making reference to Tricontinental under the State Bank of Victoria, the State Bank of South Australia and even the State Bank of New South Wales. They as a government had to do due diligence on it to find out what Nick Whitlam and the others had been up to while they were in charge of the taxpayer-backed bank.
I would argue that the government has already put in place a wholesale funding guarantee, which has been supported by the opposition. That wholesale funding guarantee was to enable our banks to actually step up should a foreign bank pull out of one of these syndicates. These banks, which account for one-third of the top 12 banks by capitalisation in the world, are apparently the ones that are not able to go out there and extend further credit and so on. Well, they are finding plenty of opportunities to extend credit—as they should, I would argue—particularly in the housing sector and particularly for first home buyers. They are out there aggressively in that market. These banks have been capitalised and they have been supported with things like the wholesale term funding guarantee to enable them to access credit. This should enable them to step up. But, no, they do not want to do that; they want to go back to the taxpayer and ask them to underwrite their proposal. On this the government has been the sucker who has been quite prepared to stump up again and say, ‘Yes, we’re happy to put the taxpayers’ credit card on the table for you once more.’
Finally, there are those who are left out by what I would say is the focus of the Ruddbank proposal. Most significantly, there is the small-business sector. I have no doubt that there are small businesses who are facing far bigger challenges than those of the big banks. I am sure there are small businesses, literally hundreds of thousands of them, who are going to face far more difficult circumstances in the times ahead and who are facing them now. This is where the jobs are. But are they supported by this proposal? Has the government gone and created a Ruddbank for small business in this country? No, it has not. Small business, like self-funded retirees, are the forgotten people of this government in this crisis. They have been completely dismissed through this process. The government is quite happy to turn up and put the taxpayer credit card down for the big banks and for the big property owners but it is not prepared to do that for small business.
The housing sector is also not covered by these syndicated loans. While there is much talk of 150,000 jobs in the commercial property industry, there are 700,000 jobs in the housing construction industry; and 95 per cent or more of those jobs are in the private housing industry, which is not touched by these measures. The last thing the government did for that sector of the industry was to bring in the first home owners grant. As we know, that runs out on 30 June this year, and there has been no indication from the government that they will be continuing it or whether they have any idea how they would pay for it. The government should be listening to the opposition’s view on how that can be done. In closing, the government should not be allowed to use the current economic circumstances to pursue their social agenda of nationalising banks and a whole range of social programs while dressing it up as an economic stimulus.
Never let it be said that the member for Cook ever goes over the top. The debate on the Australian Business Investment Partnership Bill 2009 and its cognate bill really encapsulates the way the Liberal Party think and really encapsulates Liberal Party philosophy. On 26 January every year most people wake up and think about what it means to be Australian, but for those of us with a political bent 26 January this year meant something different—we woke up, picked up our copy of the Australian and found on the front page the headline ‘Turnbull says let market decide’. It said, ‘Turnbull says let the market take its course.’ It is central to Liberal philosophy: let the market decide and let the market take its course. As the member for Cook just showed us, not just does it apply to the economy and not just does it apply to these bills; it applies to everything they say and do in this place—whether it is Work Choices, whether it is climate change or, for that matter, whether it is the collapse of ABC Learning. If the last few months have shown us anything, it is that this is the wrong approach.
Australia does not have the same problems with banking and with toxic assets that you will find elsewhere in the world, but that does not mean we are insulated from the problems that have beset the world. Some 40 banks around the world have already hit the wall and, as a consequence, some of those banks will stop lending here to focus necessarily on the home front. Australian businesses have exposure to these banks. Total bank debt in the commercial property sector is about $165 billion, and 18 per cent of this—or $30 billion—is financed by foreign banks. Some $70 billion worth of commercial loans have to be refinanced over the next two years and there is a real risk that some of these foreign banks could pull up stumps when commercial agreements are due for renegotiation.
An hour or so ago the Leader of the Opposition said that there was no evidence of foreign banks pulling out or reducing their exposure in Australia, but that is not what the Property Council of Australia says. Last week the Property Council said:
The Property Council has this week surveyed its members and they report that over 20 foreign banks from Europe (43%), USA (26%), and Asia (31%) have signalled plans to reduce their exposure to Australian commercial property funding, or have already withdrawn funding.
When you get information like that, you do not sit by and wait and see—you do not ‘let the market take its course’. I think it is important when you get information like that that you take action, because, as the Property Council said in the same statement, ‘Domestic banks in Australia can’t fill that void if it opens up.’
The Australian Business Investment Partnership Bill is designed to make sure that good commercial property projects do not fall over—and as a consequence people lose their jobs—for want of finance. Projects that are currently under construction fit within the scheme; so do projects that are already up and running. The bill establishes the Australian Business Investment Partnership—a partnership between the government and four banks that offers refinancing on commercial terms with a focus on commercial property investments like retail shopping centres, commercial offices and industrial property. Investment decisions are subject to strict criteria. Funding is only provided if there is the unanimous support of the board, comprised of all four banks plus the government. The banks also have skin in the game, which is different to the way schemes like this have been set up overseas, in Europe and elsewhere. They have to put in equity upfront and they have to continue their partnership in any loan facility that is extended as part of the scheme. Ian Harper from Access Economics, a noted leading conservative economist, had this to say about the scheme: it is an extraordinary bill for extraordinary times.
In normal times the government ought to have no business lending to property or anything else but these are extraordinary times. The great fear is that if owners cannot roll over existing borrowings they will be forced to start selling assets and that is the source of the conflagration that this initiative is designed to avoid. If there is a major collapse in asset prices in the commercial property market, that could feed through into domestic housing. Given the exposure of domestic banks to housing, that is what we are trying to avoid at all costs.
The important thing to stress is that this is a temporary contingency measure—it has a shelf life of two years—to avoid a fire sale of assets and a collapse in confidence. If you do not believe what I have to say, have a look at what the Master Builders Association said or, for that matter, what the Governor of the Reserve Bank had to say. They said the same thing: that this is designed to avoid a fire sale of commercial property and with it the potential cost of tens of thousands of jobs. This goes to the heart of the matter: should government be in the business of letting the market take its course or should it step in to protect jobs and protect confidence in the commercial property market?
My view is that, in these extreme times, the type of times that have been described so appropriately by Mr Harper, the government should act. The government should be involved. They should not wait and see. They should not let the market take its course. The opposition leader dismissed the need for the fund. He argued that others will swoop in and pick up property and everything will be business as usual. But, again, that is not what the Property Council had to say. In the same statement they said:
ABIP will safeguard:
… … …
and, quite importantly, because the member for Cook had something to say about this—
The same people that the opposition claim to be defending in the Senate in the debate about unfair dismissal laws, they do not seem to care about in this debate.
Small business people are the people that the member for Higgins, in the party room last week, said were the ‘arms and legs of the Liberal Party’. They seem to be quite willing to cut off the arms and the legs of small business here in this debate. It reminds me a little bit of that old Monty Python skit—‘nothing but a flesh wound’. But this is more than a flesh wound. It can seriously harm jobs, not just in the bigger end of the commercial property market. As the Property Council says so appropriately in its statement, there is a risk that it could hurt businesses, confidence and jobs all the way through the economy.
The truth is that there are a lot of companies, both big companies and small companies, that are very worried about commercial projects falling over at the moment. You are not going to hear them speak out in this debate. You are not going to read about them in the newspaper, because they are concerned about a run on their share price—and appropriately so. But anybody who has been close to this bill or close to this debate would know that that is the case. That is why industry has been busy in this building lobbying the opposition, urging them to back this legislation. Unfortunately, they are banging their heads against a brick wall, because this is inconsistent with Liberal ideology. It is inconsistent with the idea that the market should take its course. That idea underpins everything that the Liberal Party stands for, whether it is this bill, tackling the global economic recession, Work Choices, climate change or, as I said earlier, childcare policy.
We have seen a lot of pretending over the last 12 to 15 months. The opposition have been pretending they care about pensioners—remember the days when the cans of fruit were held up at the dispatch box?—pretending that Work Choices was dead and pretending that they care about climate change. But slowly the mask is coming off around here. Slowly the Liberal Party is reverting to form. You see that from comments by the member for Warringah, who now says that we cannot afford to pay pensioners an increase. You see it in the statement by Senator Fifield that Work Choices should not be killed off, that it is an article of faith that the Liberal Party should defend to the death. You see it in what the Leader of the Opposition said himself when he stood before the party faithful on the weekend and said, ‘Government is the problem, not the solution,’ and when he said that the most effective economic stimulus is more freedom. It sounds a little bit like Ronald Reagan. It sounds a lot more like George W Bush before and after Lehman Brothers collapsed. Slowly the mask is coming off. Slowly the real Liberal Party is being revealed in this place again—the same old conservative party with the same old conservative values. It does not matter whether it is the global recession, Work Choices, climate change or industrial relations, the approach is the same: do nothing, do not interfere, let the market rule and let the market take its course.
What you see in their statement of 26 January applies to everything that this opposition say and do in this place. It is the merchant banker approach to running the country: ‘Let the market take its course. Don’t regulate carbon pollution, don’t regulate for good wages and conditions and don’t intervene when the market fails. Government is the problem, not the solution.’ Unfortunately, everything that we have seen over the last six months tells us that this is the wrong approach. There is a role for government. There is a role for government in cutting pollution. There is a role for government in making sure that workers have rights and conditions that are complied with. There is a role for government in acting when the market fails—and that is exactly what this bill does—to protect jobs and to restore confidence to the market. I support this bill, because that is exactly what it does. I commend the bill to the House.
I rise to very strongly oppose the Australian Business Investment Partnership Bill 2009 and related bill, because this legislation is an economic disaster in waiting. The member for Blaxland—a member who we will see step through the ranks of the government in the next few years to the frontbench; he is clearly on that train and one of the select few on that side who seemingly have a big future ahead of them—talked about our approach versus that of the Labor Party, the current government. In some respects, I agree with what he has to say, because the Liberal Party would never ever be associated with setting up a bank. This obsession that the Labor Party has with setting up banks is quite worrying. We hear constant references from the Prime Minister, the Deputy Prime Minister and the parliamentary secretary at the table, Ms McKew—and from the member for Blaxland just then—to the fact that the Leader of the Opposition was a merchant banker. The fact is that the government side all seek to become merchant bankers through this bill. They are obsessed with being bankers.
The Labor Party’s history with banks is quite extraordinary. I come from South Australia, a state that the Labor Party in government sent broke through a bank. Guess what they were involved in that sent them broke? Commercial building. It is quite extraordinary what is occurring here. As friends of mine know, I am a big fan of the Finn brothers, particularly Crowded House but also Split Enz, although they were a little before my time. I have to disagree with them, unfortunately: history does repeat. History is repeating here in this bill. It is an extraordinary development in Australian public policy that a federal Labor government would repeat the mistakes of history and delve back into not only banks but the commercial property sector. Let me remind the House what sent the state government of South Australia broke in the early 1990s. The State Bank of South Australia went under because of two major decisions by its government instrumentalities: the stunning, palatial 333 Collins Street, which the South Australian government decided to get involved in, and the Myer building in Rundle Mall, which it dropped a mere billion dollars on.
There is a great quote, from the time, from a senior executive at the State Bank of South Australia who I am indebted to—a very dedicated and hardworking author who wrote a book on the state bank. He said, ‘Well, we’ve just bet the bank on this one.’ He was dead right, and the bank went under and so did the state of South Australia for many years. They talk about jobs on the other side. Let us remind those on the other side that that resulted in double-digit unemployment rates in South Australia for many, many years. But history repeats and they are back in the business again. This is quite extraordinary.
These decisions by a Labor Party in government, in relation to banks, cost the state of South Australia $2.2 billion, cost Victoria $3 billion through Tricontinental and cost Western Australia God knows how much through WA Inc—which still has cases before the courts, as we were reminded this morning by Western Australian members. Labor governments do not make good merchant bankers and they do not manage banks well.
This bill seeks to shift the risk from the big four banks to the taxpayer. It is bad policy and it is trying to prop up the prices of commercial enterprises, and that never ever works. The member for Blaxland—again, someone in this place whom I have some respect for—commented upon the Liberal Party’s position on these matters. Let me remind him of his own Prime Minister’s com-plete and utter hypocrisy when it comes to the matter of the economy. We were reminded recently of a great segment in The Latham Diarieswritten by that former leader who some on the other side, more than half at one point, supported, particularly the Deputy Prime Minister, who was Mr Latham’s numbers man there for a while. Mr Latham says that, after the 2004 election, the Prime Minister, the then shadow foreign affairs minister, begged Mr Latham to make him the shadow Treasurer on the basis that he was a full-on economic conservative.
We then saw the ads—no doubt recommended by the Parliamentary Secretary for Early Childhood Education and Childcare, who is at the table, and by Senator Arbib—where Mr Rudd had to say that he was an economic conservative and cuddle up to the record of John Howard and the member for Higgins as close as he could in order to be elected. But, now he is elected, he returns to his true colours of being a democratic socialist. So do not stand here and tell us that we are all over the shop on these policies. The Prime Minister is the greatest hypocrite this country has ever seen.
This bill is a disaster. It is a disaster for the future of our country because what we will see is our country go into more and more debt, just as we have before. We already have a credit card with $200 billion available to it. This bill will add another $28 billion to be put on that credit card.
The government claims that it will only spend $4 billion—$2 billion of government money. But, truth be told, if you look at the bill it actually says—and I am indebted yet again to the Parliamentary Library and their hard work—that, if additional financing is required beyond this initial $4 billion, ABIP, or the Ruddbank, will be able to issue up to $26 billion of government-guaranteed debt to create up to $30 billion of lendable capital. So that is $28 billion in additional government debt that we will see because we know that, when Labor have the ability to borrow, they will borrow.
The Minister for Finance and Deregulation yesterday, in attempting to justify the Ruddbank in this House, said:
It does involve some exposure to risk on the part of the taxpayer …
Too right it does! Again, I refer back to my home state’s experience. The Labor Party sent the state of South Australia to the edge of bankruptcy by getting themselves involved in commercial property decisions. And where are we back to again? We are back to the same group of people making the same ill-fated decisions yet again. I wonder how many Myer buildings in Rundle Mall we will see through this bill. One billion dollars was sunk on that one building alone in South Australia, yet they come back—history repeats—and they are doing it again. It is quite an extraordinary thing for us to see.
In addition, the government claims that this can only be used to prop up commercial property. There is no way that it can be used for other purposes. Yet we see that clause 7(2) says:
A further object of ABIP Limited is to provide financing in other areas of commercial lending through financing arrangements of a kind agreed to by the members of ABIP Limited …
Anything! They will fund any state project which is falling foul. There will be $28 billion in government funding again whacked up on the credit card, to take us over $200 billion in government debt which we have to pay back at some point. It is quite extraordinary.
This is a group of people, I remind you, who for 12 years in this place and in the public arena made the point that you cannot trust the banks—you cannot trust the big four banks. The minister for finance was regularly out there telling people to switch banks to avoid fees—to go to smaller banks. The member for Makin on 5AA, I seem to remember, would quite often suggest to constituents, or those he sought to represent, that they should look at other options.
Yet what we see here is the government agreeing to be part of a deal where they will have one representative on the board out of five. The other four will be from the big banks—the big bogeymen. The other four will only have the combined risk of $2 billion compared to $28 billion of risk on behalf of the Commonwealth. This is hardly something they have not taken on trust. It is quite extraordinary. They are now trusting these big banks, even though for 12 years we heard how bad the banks were and how they colluded. Guess what they are excluded from? The Trade Practices Act! This is quite extraordinary. It is the Labor loan sharks. The desire of the Labor Party to get involved and become merchant bankers knows no bounds.
This is disastrous legislation for our country, for it puts our economy at risk. We saw states like Victoria and South Australia go through dark years in the early nineties because of the financial mismanagement of state Labor governments. The same people on the other side now seek to implement the Ruddbank, which will make the same mistakes and do the same things that got South Australia, Victoria and Western Australia into such trouble in the late eighties and early nineties. I remind the House that the decisions that were made by state Labor governments through their banks and through their instrumentalities to lend to commercial properties were the reason those banks went broke and sent the states to the edge. They involved 333 Collins Street, Melbourne and the Myer building, in particular—$1 billion on one building alone. I would like to see how the member for Makin explains that to his constituents, who spent 15 years paying off the state Labor government debt that was accumulated because of decisions made by those on the other side with a great desire to be merchant bankers.
I will not take any more of the House’s time this evening, because I understand we want to keep moving on, but I very strongly oppose this legislation. This will be an economic disaster now, tomorrow and in the future. History repeats itself. The Labor government do not bank well, and I oppose the bills.
I rise to speak in support of the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009, and I have a great deal of pleasure in doing so because these bills are very important, very essential and very worthy to be brought into this place. This legislation establishes a partnership between the federal government and the four major Australian banks—that is, the ANZ, the NAB, the Commonwealth Bank of Australia and Westpac—for the purposes of creating a $4 billion Australian business loans facility. Under the partnership, the Australian government will commit $2 billion and each of the banks will commit half a billion dollars towards the $4 billion that is being raised. The intent is for the Australian Business Investment Partnership to be a temporary contingency measure to provide finance to viable commercial property assets and therefore support Australian jobs. This bill is about supporting Australian jobs, but it is more than that—and I will get to that in just a moment. The $4 billion raised by this partnership could be extended to up to $30 billion by the issuance of a government guarantee debt of up to $26 billion.
The commercial property sector in Australia employs around 150,000 people. The commercial property sector is heavily reliant on finance made available by both domestic and overseas financial institutions. Even finance made available by Australian financial institutions is dependent on local banks securing funds from overseas. It is my understanding that around 50 per cent of Australian bank loans originate from overseas funding sources. The global credit conditions have tightened and are likely to remain tight in 2009. Under a weakening global economic outlook, foreign based lenders are likely to withdraw funds presently available to viable Australian businesses, in turn placing creditworthy, viable Australian businesses at risk. If there is a withdrawal of finance presently available to the commercial property market, the Rudd government understands the consequences of that on the Australian economy and on Australian jobs. The Rudd government will not sit by, as the opposition would have us do, and watch the sector be wiped out by global credit markets that are beyond the sector’s control. Many of those employed in the commercial property sector are small- and medium-sized business operators—people who generate employment for others and who are, as some would refer to them, the backbone of the economies of so many local communities around Australia. They are decent, hardworking Australians who are not asking for a handout but simply some temporary assistance during tough times.
Commercial property finance is finance that is required for completed commercial constructions for which refinancing is required; for completion of partly constructed projects; and for approved projects where, in many cases, part—or, in some cases, all—of the occupancy has been presold but commencement of construction has not begun. If those projects that are partly constructed or partly presold are not completed, not only will small or medium-sized businesses lose work but they are unlikely to be paid for work that has already been carried out. These small and medium sized businesses simply cannot carry those kinds of losses, so what we are likely to see is a domino effect right through the business sector. But there is an additional risk in such projects not being completed or not being commenced. Private investors in those properties are at risk of losing the money they have already outlaid. These are generally small investors or young couples who have placed their life savings into a commercial property investment or into their future home or future apartment. The crash of Australia’s commercial property sector would hit very hard and cause severe hardship to many of Australia’s small businesses, to many mum and dad Australian investors and to many prospective homeowners.
In recent weeks in my home state of South Australia more than $1 billion of major city developments have been put on hold or have been indefinitely suspended as a direct result of the global credit squeeze. These developments include commercial properties, residential apartment blocks and a whole range of residential estates. We are not talking about one single house here; we are talking about areas where a property developer goes in and develops an entire estate. These are projects that, under normal circumstances, would most likely have been funded by the banks, but they are now simply unable to secure the funding that is required for them. The projects stack up in every other sense of the word. The collective work and jobs that would flow through the South Australian economy if these projects proceeded would be huge—and much needed right now in the middle of the hard times many people in the building industry are going through. What is equally significant about these projects is that they create long-lasting assets for the state. Therefore, the government’s involvement can be justified in terms of the minimal risks associated with them and the extensive benefit to the community that flows from the establishment of this fund.
I heard speakers from the opposition talk about the risks associated with these investments and I want to highlight three things. Firstly, this legislation has been framed to minimise any risks associated with funds put up by the Australian taxpayers, and that has been done quite deliberately. The risks are minimal. Of course, you can never absolutely guarantee that there are no risks with any financial outlay, but in this particular case the risks are being minimised through the structuring of the loan arrangements that have been put in place. Secondly, if the risks were huge, why would 50 per cent of this fund be funded by the commercial bankers? These are people who you would expect to understand financial risks as well as anybody, yet they are prepared to put money into this fund and be represented in the decision-making process—again, minimising the risk to Australian taxpayers’ dollars that are also in the fund.
Thirdly, these funds will be used to build infrastructure. Whether it is commercial buildings or houses, it is infrastructure—infrastructure that will be there for decades and that will serve generation after generation. There would be few people in this House who would disagree with the general statement that when you put money into houses it is as safe as houses. Essentially, this money is going into properties. Property is probably one of the most secure forms of investment that anyone could ever make. Yes, it might have ups and downs, but in the long term it would be very difficult to argue that by investing in property and real estate you are putting yourself at any real risk.
This proposal complements a previous decision of the government to secure financing arrangements of around $2 billion for the automotive retail sector. It is the same kind of proposal with the same purpose and the same objective. The arrangements for that have been in place for some time and have proven to be a godsend for that industry. Had we not made those arrangements, the retail automotive sector would be in absolute strife today. But, again, this government understood that. This government was not prepared to sit back and do nothing; it was prepared to take whatever action was necessary to ensure that sector remained viable and that the jobs that go with it were sustained.
Just as that proposal has stabilised and brought certainty to the automotive sector, so this proposal will bring certainty and stability to the construction industry in Australia. I understand the commercial property sector currently has bank debts totalling around $165 billion, of which $30 billion is provided by foreign banks, according to figures provided by the Australian Prudential Regulation Authority. It is obvious that, given the tight monetary conditions around the world, those foreign banks are not likely to refinance or to continue to provide the finance that is required to sustain those loans. Yet those developments are already in place or proposed to be put in place. If nothing is done, those developments will obviously have to be sold in a fire sale, which in turn means that the people who invested money in them will lose their money, bringing down property prices across the board. Consider the domino effect that that would have for the property market and industry right across Australia should it start to occur.
These are serious matters; the government understands that and this is a serious proposal. It is an essential proposal and a sensible proposal and, quite frankly, I am absolutely dumbfounded and cannot understand why coalition members would oppose it. I say that quite sincerely. I do not understand why coalition members would oppose this proposal, given the security arrangements that have been put in place to minimise the risk, the importance of what the money is going to be used for and the current state of the global financial markets. Industry leaders across Australia have supported this proposal. They are not fools—they understand the industry as well as anybody and they support and appreciate what the government is doing for that particular industry. They know that Australians across the nation will benefit from this investment.
I conclude that coalition members are opposed to this measure because, in reality—I can only assume this is the case, but I would like to think it is not—they want the Australian economy to fail, they want the people in that sector to lose their jobs, they want to see small investors lose their money and they want to see construction firms collapse. The reason they want to see all those things happen is because they believe, wrongly, that it will help them in the polls. They believe that, if the economy of this country collapses, at the next election the Rudd government will be blamed and it will be beneficial to them in the polls. That is the only logic I can put to why coalition members would be opposed to this measure. If that is the case then it is clear that they are not concerned with the wellbeing of the Australian people. They are only concerned with the wellbeing of their own jobs. I commend these bills to the House.
I rise to consign the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009 to the dustbin of history, to which they indeed belong. It would be nice to propose amendments, but these bills are so egregious in their thought, intent and principles that no amendment would suffice.
Let me tell the nation a quick story. I look at these bills and I see a bunch of banks with large exposure to commercial property—property that may well be losing its value. If they have exposure to unlisted property trusts or mezzanine finance firms, they know that syndicated loans form a large proportion of this property exposure. They know if one part of that syndicate pulls out at less than 100c in the dollar they are left wearing a range of exposure. I think they just went to Mr Dumb-Money Rudd himself and said: ‘How about a Ruddbank? How about a bank where the Commonwealth wears all the risk—where we are the beneficiaries and wear no risk and this bank helps us prop up commercial property prices on our balance sheets?’ A thinking government would simply laugh. Mr Dumb-Money has said yes; hence we have the spawning of this mongrel runt called the Ruddbank.
The Commonwealth will provide $2 billion and the four big banks will provide $500 million each. There is a contingency within this legislation for the Commonwealth to provide a further $26 billion, so the Commonwealth may provide $28 billion of funds for this, while the four big banks will provide only $500 million each. The Commonwealth money will all be borrowed from the international monetary markets through the raising of bonds and we will wear the liability for it—and this is supposedly a good idea.
When the Prime Minister issued his press release to explain his intent, it was about refinancing existing commercial property syndicated loans on commercial terms when the withdrawal of funding by a participant syndicate threatens a loan. The partnership will focus on completed commercial property investors. There are not a lot of jobs in completed commercial property investments and partially completed development projects. It will be structured to provide financing in other areas of commercial lending should the need arise and the government and the four big banks jointly agree. Yet the Reserve Bank’s February 2009 statement on monetary policy said:
Over recent months there has been some speculation that many foreign-owned banks will withdraw from the Australian market and that this will create a significant funding shortfall for businesses. While there is a risk that some foreign lenders will scale back their Australian operations, particularly if offshore financial markets deteriorate further, at this stage there is little sign of this, with most of the large foreign-owned banks planning to maintain their lending activities in the Australian market.
The Reserve Bank’s statement says there is no indication of foreign money pulling out, which is the basis of this foolish Ruddbank in the first place. So, if the foreign banks are not pulling out from their syndicated loans, what is the point of this ridiculous venture that will put $28 billion of taxpayers’ money at risk?
We know there is approximately $60 billion of foreign debt in commercial syndicated loans. So let us look at what will happen when the ‘Mr Dumb-Money’ Ruddbank is set up. The problems may actually be compounded. While the intent, albeit misguided, is to discourage foreign banks from exiting Australia, the proposal actually encourages any foreign bank that wishes to exit by allowing that bank to be paid out 100 per cent at face value. Right now, foreign banks can say: ‘This asset’s looking a little toxic. Its commercial value is going out. Mr Dumb-Money has stumped up a bank but we can get 100 per cent. We’re outta here.’ Rather than staying in there with the pressure the rest of the syndicate put on them to hold their money in, this will actually accentuate the flight of foreign currency from Australia. In an article in the Australian on 27 January, Henry Ergas stated:
In the short run, the scheme seems likely to induce developers to play off their existing foreign lenders against the safety net the scheme provides. This could accelerate the very withdrawal of foreign lenders the scheme is intended to guard against, while allowing developers to secure some free kicks on the basis of what amounts to taxpayer-funded insurance.
Ruddbank exposes the Australian people to a liability of up to $28 billion in what may well be toxic commercial assets, yet the Commonwealth only has a 50 per cent shareholding in the company. Does the Prime Minister really think it is a good bet to say to the four big banks: ‘You put in $500 million each. We’ll put in up to $28 billion. We’ll hold all the risk—so we’re holding 95 per cent of the funds and a hundred per cent of the risk—but we’ll only hold 50 per cent of the shares’?
There is a good reason. It is clear that no-one in the Labor Party has run a business. If this is the basis of their business acumen, may I suggest they get a big, fat, red ‘Fail’. It is no coincidence, with the Labor Party being the political arm of the union movement. They do not run businesses; as union thugs, they simply stomp all over them. This will add $28 billion in borrowed money to the $200 billion in borrowed money that the Rudd government is planning over the forward estimates.
Ruddbank is a response to a problem the government created. Large amounts of syndicated debt must be replaced in 2009 not just in commercial property but across corporations in general. One of the reasons for refinancing is that companies are being crowded out of debt markets by banks operating with a Rudd government unlimited guarantee, and one problem always accentuates and causes another. The major banks are already beneficiaries of the government’s bank guarantee. They run big, profitable companies, and with the benefit of the guarantee the balance sheets of four of the most secure banks in the world are well placed to handle any shortfall.
Mr Zappia interjecting
Ruddbank is not designed, I say in deference to the member for Makin, to make funds available to small businesses, as he tried to put it—small businesses in the community who are employing people. This is about the big end of town. This has nothing to do with small or medium sized business. Every dollar the government makes available to refinance large commercial projects is money not available to assist other areas of the economy.
The minister also states in the legislation that it specifically authorises the shareholders agreement and the activities undertaken by Ruddbank, its shareholders, directors, officers et cetera to be exempt from the competition provisions of the Trade Practices Act. This is being justified as necessary to remove any uncertainty. In fact, I suggest it creates an enormous amount of uncertainty as to how Ruddbank will operate. The exemption is somewhat extraordinary. It breaches any concept of good governance by having representatives from the four big banks and the Commonwealth, rather than an independent board, making decisions in the interests of the country. No matter how the government seeks to rationalise this, there will always be some suspicion that the bank nominees will represent their own interests rather than the interests of the organisation financing and wearing the risk—the taxpayers of Australia. Worse still, it will be hard to justify just whose interests are being served and, more importantly, who is ultimately accountable for decisions.
Whilst it may seem alarmist, the record of Labor governments in the 1990s when it came to major banking is not exactly the great resume that Labor would like to show. The State Bank of Victoria, under Labor’s watch, lost around $3 billion, mainly through its subsidiary Tricontinental. Other parts of the sorry tale are the Victorian Economic Development Corporation, where the final cost to taxpayers was counted at $4 billion; WA Inc., another great Labor brainchild; and the State Bank of South Australia, which had to be bailed out by the state government at a final cost to taxpayers of $2.2 billion. The Labor Party does not have a whole heap of form when it comes to banking. Then again, what would you expect from the union movement? Royal commissions were conducted into the debacles, and governments fell.
There is nothing positive about this legislation. The banks do not need it; they are just looking for an easy way out. It will cause a rush of foreign investment to leave—why would you hang onto a potentially toxic asset when Mr Dumb-Money himself will take it over for you? The legislation offends every principle of good governance. It is a significant and major retrograde step to put the taxpayers of Australia into a further $28 billion worth of debt just because Mr Dumb-Money was conned by big banking.
I rise to support these bills because we are facing rather extraordinary challenges in global credit markets, and these challenges require us to take action. It is not just business as usual. The challenges posed by the global financial crisis threaten Australian jobs, Australian businesses and Australian homes. The bills before us in the House today, the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009, are just one of the measures taken by this government to ensure that Australians are protected from the harsh effects of the global downturn.
The Australian Business Investment Partnership is a temporary measure aimed at stopping a potential fire sale of Australian assets triggered by the withdrawal of international finance, banks and corporations. This bill provides for a mechanism to ensure refinancing options are available where the abnormal conditions of the global credit market would otherwise prevent that finance from being available. It is vitally important to the commercial property sector, which is at the heart of a great deal of Australia’s economic activity across a range of industries such as retail, manufacturing, hospitality and others. That is why ABIP is such an important and responsible contingency measure.
ABIP is a partnership between the Commonwealth government and Australia’s four major banks to provide refinancing of loans related to commercial property assets in Australia where finance is just not going to be available. ABIP will be established under the Corporations Act and will be a public company. The shareholders will be the Commonwealth of Australia and Australia’s four major domestic banks. The Commonwealth will have a 50 per cent shareholding in the company and the four major banks will each take a share of 12½ per cent. The government will provide $2 billion and the major banks will provide $500 million each.
Accordingly, on its establishment ABIP will have access to around $4 billion of undrawn loan facilities, less a small amount for working capital. If it requires—and that is a big ‘if’—additional financing beyond the initial $4 billion contribution then $26 billion will be able to be reraised to provide extra funding to projects in the economy. The availability of financing for viable commercial property projects is essential to continued investment opportunities for Australian businesses and superannuation funds. Recently there was an announcement of 7,000 new jobs by Woolworths, and we know just how interconnected retail is with commercial property. It is impossible to have 7,000 new jobs in supermarkets if you cannot build the shopping centres in which these jobs would reside.
The danger is that many foreign banks are looking to reduce their lending commitments and exposure generally and are pulling back to their domestic markets. That may mean a withdrawal from Australia’s commercial property sector, and that might have pretty dire consequences for Australian industries, Australian businesses and Australian workers. The danger is not just to immediate projects. The withdrawal of finance may set off a spiral whereby those projects are forced to sell off assets, compounding the problem with a cascading deflation of assets. ABIP steps in to address this threat and is an important and sensible measure to facilitate the flow of credit to this important sector.
Earlier in the debate we heard the Leader of the Opposition advocating the merits of asset price deflation. He said, ‘Oh well, you will have cheap rents and people will pick up good deals.’ But the Great Depression, of course, showed the peril of asset price deflation, of credit contraction. It showed the peril of policymakers sitting on their hands and just expecting the market to act. We are clearly in a very different environment from the one that has existed in previous downturns. Niall Ferguson, who is a rather famous historian, discussed the Depression in his latest book The Ascent of Money. He talked about how the US Federal Reserve’s inability to avert a total of around 10,000 bank failures was crucial in the onset of the Great Depression. He said that that was:
… not just because of the shock to consumers whose deposits were lost or to shareholders whose equity was lost, but because of the broader effect on the money supply and the volume of credit. Between 1929 and 1933, the public succeeded in increasing its cash holdings by 31%; commercial bank reserves were scarcely altered (indeed, surviving banks built up excess reserves); but commercial bank deposits decreased by 37% and loans by 47%.
The absolute numbers reveal the lethal dynamic of the “great contraction”. An increase of cash in public hands of $1.2 billion was achieved at the cost of a decline in bank deposits of $15.6 billion and a decline in bank loans of $19.6-billion, equivalent to 19% of 1929 GDP.
And it is that lethal dynamic that governments around the world are seeking to avoid and so far have avoided. But the opposition leader’s policy—that is, just let assets deflate—courts disaster, particularly in this environment. It absolutely courts disasters. The Rudd government’s actions, both at national and international level, have been responsible and prudent. Without action a combination of weak demand and tight credit conditions, brought about by the global financial conditions, could see significant job losses. It could see up to 50,000 people at risk of losing their jobs—plumbers, electricians, carpenters and the like. The effect on jobs and businesses in other parts of the economy will be dire.
In my electorate there are many families where the main breadwinner is a tradesman, typically, and the other partner works in hospitality or retail. When you think of those families and the way they derive their income, you see how commercial property is an absolutely critical part of the economy. I guess that has been recognised by the Master Builders Association, the Property Council of Australia and the Urban Taskforce, and it is why the government providing viable finance for this sector is both responsible and prudent.
This legislation also has appropriate governance arrangements. They include a board composed of people with significant expertise: one representative from each of the partners and one from each bank, with the government being the chair. The board’s decisions must be unanimous in order to ensure that any issue is adequately dealt with and there is a consensus to act. In terms of financing decisions, there will be safeguards—including prudent lending criteria. ABIP will only provide funding to commercial property where there are underlying assets and income streams from those assets and they are financially viable. There is a requirement on the banks that they maintain their exposure to commercial property assets that ABIP lends to.
The purpose of ABIP is to address a potential liquidity problem and its effects on Australian business and jobs. That is why property outside of Australia—land banks, speculative development assets and rural property—will fall outside of the scope of ABIP’s lending. This partnership will provide financing to retail shopping centres, to commercial office buildings and to industrial property—all important drivers of Australian economic growth.
In conclusion, I guess I would say that in a normal set of circumstances we would not be doing this. If credit markets improve and ABIP is no longer required then it will be wound up. It is simply an important contingency measure that is put in place to meet a truly unique global challenge. I commend the legislation to the House.
I can see the ads for Ruddbank now: ‘Frontier financing—first in frontier lending, the Ruddbank will go where no-one else is prepared to go.’ That is what the ads will say: ‘Ruddbank—first in frontier financing, prepared to go where no-one else is prepared to go.’ That is really what we are talking about this evening—a proposition to create something that is designed to look like a bank but is not. You hear Labor members talk about all the safeguards, the governance arrangements and the prudential framework—all of which tries to make it sound like a bank, but it will not be regulated like a bank. It is a proposition where the Australian government and, through them, the Australian taxpayer will own 50 per cent, and the large banks will own 50 per cent. They will own 50 per cent for the princely contribution of 1⅔ per cent of the potential exposure and full value of the financing vehicle that is being discussed tonight.
This is a bad idea. It is a bad idea that has been badly designed. It is the heavy hand of government intervention actually looking for a problem to solve. It is a commercial risk hospital pass to the Australian taxpayer. The announcement was poor on 24 January 2008, because it sought to describe a crisis or a problem or an emerging threat that did not actually exist. There has been no evidence provided to substantiate the claim that there will be a mass exodus of foreign banks in the commercial property sector—none whatsoever. In fact, the Reserve Bank of Australia has said there has been little sign of foreign bank withdrawal. So the whole premise for the legislation we are discussing tonight, the Australian Business Investment Partnership Bill 2009 and cognate bill, is unproven. It is completely speculative in the worst possible character—one that may bring about a self-fulfilling prophecy. The premise itself is challenged by the Reserve Bank of Australia.
It was bad policy, poorly designed policy, seeking to try and provide an exit strategy for foreign banks in the commercial property sector, not in return for some better gain for the Australian public or some improved condition in the commercial property sector—no, just to let them get out, to let them go. This is Kevin Rudd being the foreign commercial bank concierge—he is carrying their bags to the airport while they take off with 100 per cent of their investment, regardless of what the asset was that they were investing in. Free of any obligation, free of any need to consider a market adjustment, they can take off with their cash and go home. What we are left with is then the Australian taxpayer, at the behest of the four big banks, who are so convinced that these investments are worthwhile that they will not lend to them. This is like, ‘Have we got a great proposition for you!’ This is such a viable commercially attractive proposition that the four big banks will not pick it up. There is no requirement on them to pick it up. But so attractive are these projects that they will be laid off to an Australian government guaranteed taxpayer backed funding vehicle—the Ruddbank.
What have we learnt from tonight’s contributions from the Labor members opposite? What we have learnt is that what is actually before us bears very little resemblance to what Labor members of parliament think we are discussing tonight. This is not about the original announcement that was made on 24 January 2009. The proposition has morphed into something much greater than that. It has morphed into things that we Victorians would more familiarly recognise as Tricontinental mark 2.
This law is drafted in such a way that it offers very little in terms of actual delivery of some of the comforting words that you hear from the Labor members opposite. In fact, it will turbocharge the very financial disease the Ruddbank is designed to inoculate against. It actually provides a financial supervirus that induces the departure of these foreign commercial banks investing in commercial property. It is creating a very speculative environment that will actually bring about the problem it is supposed to remedy, and this is what worries the opposition.
This is why we stand against this proposition. This is why—when it induces the departure of those foreign banks in the commercial property sector and then leaves the risk with the Australian taxpayer, and when it can now go beyond the original proposition, which was for the commercial property sector, into a whole range of nebulous and wildly described provisions in the legislation—we are here asking: why should the Australian public bail out banks? Why should the Australian public pay $75 a year in stealth bank fees for every man, woman and child in Australia? That is the cost of the interest bill alone for the debt that the Rudd government is putting us into in the name of this so-called Australian Business Investment Partnership. It is $28 billion of debt. There is a $2 billion contribution, of half a billion dollars each, from the four big banks—1⅔ per cent of the total lending vehicle for a 50 per cent say—and then there is a proposition that allows them to have not a golden share but a golden speck. For a 1⅔ per cent commitment to this project, those large Australian banks will get first cut at any resources that come out of this lending facility. So you can see how troubling this is.
But let us go further. Let us look at what the legislation will do. It is designed to deceive investors and to create the illusion that commercial property, and potentially other investments, are of a value that they are not actually able to bring about in the marketplace. The fear here is that, as the foreign commercial bank leaves a commercial property project or something similar, it will be paid out 100c in the dollar on its investment, regardless of whether the value of the investment has declined so that it, as other investors should, would take its share of the pain of that reduced value. It is masking that point. It is artificially propping up those values. It is designed to deceive—to make it seem as though there is 100c in the dollar of value still within those projects regardless of what the economic circumstances might mean for the actual value of that project.
It permits collusion between the major banks. It actually says that collusive behaviour is not something that this Ruddbank needs to be concerned with. It does not even do what that shambolic National Broadband Network tender does. That tender said to competitors in the telecommunications industry, ‘Provide your material about your broadband network and we will work out how to make a bid for further investment in that marketplace, but don’t use that commercial information for any other purpose; don’t gain a broader commercial advantage out of the disclosure of different competitors’ activities.’ There is not even that safeguard in here. There is not even a proposition that says that, once the Ruddbank board sits around and decides whether the taxpayer should stump up the money, they cannot go and use the material that was before them for some other purpose—maybe to offer to the person seeking the finance an attractive deal on what might be the most secure part of a portfolio of assets, while the part that is the dud is shunted off in a hospital pass to this Ruddbank and left as the exposure of the Australian taxpayer.
It tries to look like a bank, but it is not one. It does not have the safeguards, but it says it will lend to creditworthy, viable projects. If they are so creditworthy and viable, why are they going to the Ruddbank? Maybe they are going there because the banks might argue that they themselves do not have the funds to lend. That is interesting, because the banks have a government guarantee backing them. They should be able to attract money. We heard one of the earlier speakers talk about how it is hard to get finance for projects that are not backed by some assets. Then we were told by the member for Makin that these are as safe as houses—that these are assets that have some recoverable asset value to them and therefore are not a big risk. If they are so safe, why are they going to the Ruddbank? They talked about the property ups and downs. If there are ups and downs in asset values, isn’t it in our interest to see that adjustment take place sooner rather than later so that our economy can move onto a sustainable, productive footing and look forward to the future, rather than carrying these deceitful asset values into the future and wondering just what is going on in the marketplace?
This is a really disturbing proposition. It is designed to deceive. It induces the departure that it is supposed to be stopping, it creates a bank that is not actually a bank, it permits collusion and it has very little hurt money in it from the major banks, who will each put in $500 million—1⅔ per cent of the total value that this legislation seeks to provide in a finance facility. You can see why the banks would like it. You can see why those involved in commercial property would like it. It is very much in their interests. But the parliament is supposed to concern itself with what is in the national interest, and, if you look at that proposition, it fails that test comprehensively. It is not contained to refinancing viable existing commercial properties; it has moved on from that. It does not look anything like the 24 January 2009 announcement. It impedes the market adjusting to asset values. We have heard about the property price bubble and how unhelpful that has been in this global economic circumstance we find ourselves in, yet this is actually designed to perpetuate that bubble by maintaining a value base for assets that might not be justified if they were genuinely exposed to the marketplace.
If you are wondering why this is even more confusing, just read some of the explanatory memorandum material that the government has produced to support its proposition. It says that this intervention is crucially needed because:
The highly leveraged nature of the commercial property sector makes this sector particularly vulnerable to liquidity constraints.
I seem to recall that highly geared, highly leveraged activity is what brought us to where we are now. I thought that was the proposition. Isn’t that what the Rudd government has been telling us?
And then we look for guidance about how we might measure this proposition. I encourage people to look at Kevin’s plan to save the world. This is his seven-point plan to solve the global financial crisis. Not content with saving Australia, or trying to look like it, our own dear leader has come up with a seven-point plan to save the world. If you look through that seven-point plan, where he describes what everyone else should be doing, he talks about weak and systemically significant strains in the financial institutions and how they should be subject to a ‘stress test’—a reality check of the asset values. That is his proposition for the rest of the world, yet in this parliament tonight we are talking about a proposition that is designed to artificially inflate asset values, so it has failed the Rudd save-the-world plan.
He goes on to talk about ‘toxic assets’ on bank balances that ‘must be neutralised’. These are not toxic assets; this is real property that has a value. The issue is: what is that value, and should there be some adjustment? Again, he fails his own save-the-world test by foisting this proposition on the Australian people and the Australian parliament. The fourth prong of his seven-point plan is that ‘the prices of bad assets should be derived from a transparent and simple formula that is consistent across jurisdictions’. I do not think some dodgy Ruddbank to artificially prop up values meets that call that our Prime Minister, our dear leader, is making on the rest of the world. His own plan fails his own blueprint for saving the global economy.
Where does that leave us? It leaves us with a deeply troubling proposition. I heard the member for Corio talk about the Edgewater project in Geelong, saying that it is a very attractive project and that maintaining high values is in everyone’s interests. It will not be in the interests of the tenants occupying those retail spaces downstairs who are paying artificially high rents to prop up artificially high values.
I heard the member for Makin talk about how strong this is when there is a 50 per cent funding commitment from the commercial banks. No, there is a 50 per cent start-up commitment, but for the whole value of the $30 billion facility the banks have stumped up one and two-thirds of a per cent. He talked about the assets being safe as houses, but properties will have their ups and downs. They should be safe as houses in that these assets have a residual value, but this is designed not to allow property values to go up and down. Then he talked about infrastructure.
Isn’t it interesting: now we start to see what this is really on about. I imagine that after this debate Labor members of parliament will run around their electorates rekindling some nostalgic idea that we need a government backed development bank and this is it—that there is somehow discounted finance available to help build the country. I am sure that will be the spin they will put on it. We know that is not what this is about. The member for Wakefield and the member for Makin talked about developments of a residential kind that would not get going without this facility, yet I seem to recall one of them also saying that that is not what this is designed to do.
And then they called on the lessons of the global Depression. That is the first time I have heard a Labor member talk about some comparative analysis between where we are now and the global Depression. They had a very poor lesson out of history. They talked about a contraction and asset values being adjusted where the available funds went into savings and were not available for commercial finance. That is what this is designed to do. With government guaranteed deposits in banks, with the government itself out there crowding out the finance market on its debt binge, with $75 for every man, woman and child in bank fees by stealth to pay for the interest on this debt facility—and that is at the current bond rate for 269 tender—you wonder why people are wondering where the money is for commercial finance.
Where will the money come from for the small businesses that are being told that they are being re-rated for risk and now their cost of funds is going up, in some cases by 1.4 per cent and beyond? Where will the money come from for those businesses that had an overdraft facility to help buy supplies to help them continue with their work and that are now told by the banks, ‘You haven’t fully exercised that; let’s call it in and refinance it’? Where will the money come from for the farming community to rebuild, to plant in the fields, to restock? They will not have a commercial property to wave around to make them more attractive.
They’ll have the baby bonus!
They have to take their chances. And, as my colleague and friend says, they will have the baby bonus. I do not know how much that will go into the field, but it worries me greatly. The Rudd government is crowding out the finances. It is not learning the lessons of history, but it will have a slogan: ‘Ruddbank, first in frontier financing. We’ll go where no-one else is prepared to go.’ This is not only a shambolic proposition; this is a wretched remedy to a problem that has actually been created by the Rudd government, and it deserves to be thrown out. Whoever dreamed up this idea should go and find something else to do with their lives.
I rise to speak on the Australian Business Investment Partnership Bill 2009 and cognate bill. Whilst acknowledging the substantial problem that not only the national economy but the world faces, I express concerns that this response has enormous problems attached to it, so much so that, as much as I have looked for a reason to support this legislation, I cannot do so on behalf of the communities of the mid-North Coast or in what I consider to be the best interests of the country.
Without doubt Australia faces a significant problem when you look at the actual dollar figures. As a relatively new member of this chamber getting used to the ‘billion’ word, the collapse in the global investment market of $152 trillion is really confronting, as I think it is for all of us, as the size of the problem that confronts policymakers in response to the issues in play. However, I do not think this response satisfies some fundamental principles and some pillar principles that we would expect in a response that we want to be adequate. I think the concerns raised by previous speakers about the speculative nature and the unsustainable nature of the commercial property sector are real concerns. To put it in layman’s terms, I think it would be very hard for the man on the street to understand—as it is for me to understand—why we should be allowing the white shoe brigade, for want of a better term, the opportunity to buy more white shoes through basically a grant from government in an incursion into property lending and finance.
Commercial property development, particularly over the last decade, has been boosted by its speculative nature and by high gearing, which we have heard referred to by other speakers. It was a bubble that at some point was bound to burst. It is obviously disappointing that the timing is now. However, if it is unsustainable in its foundations—as we have seen in the recent high gearing in various structures and from companies trying to invest in this field and get money from various investors—people will get their fingers burnt. Many people in my area have. The speculative nature of high-risk investments—by the very logic of the words used—is high risk. What goes with that in investment is the principle of ‘buyer beware’. As hard as that is, it is a reality of high-risk investments that you roll the dice when you invest in areas such as speculative commercial property.
So it is of concern that this bank—for want of a better term—is being developed to bail out those who have been speculating for over a decade and those who have been living high on the hog over the good times. Now that we see the crunch come, they are going, cap in hand, to government. This Australian situation would be akin to US car company bosses flying in, cap in hand, to the President of the United States and asking for money. Here we have the commercial property sector, cap in hand, after some very good years, now asking for a bailout from government. I think the type of business we are being asked tonight to essentially bail out has reached levels of unsustainability. The gearings were getting stupid and getting to a point that was clearly unsustainable. Therefore, it is extremely uncomfortable for me to be put in a position to be trying for some reason to bail out these high-risk speculative investors.
And I do not buy the argument—which I think was put by the Prime Minister himself—about the flow-on impacts for the small-business community. I would just like to report from the mid-North Coast that, while certainly there are impacts on the ground in regard to what we are seeing with the global financial crisis, those impacts are nowhere near what is being reported in national media—the crisis of confidence that there might be in various other sectors or locations. The small-business community on the mid-North Coast is holding up pretty well. Yes, there are some issues. But, essentially, we are defending our territory pretty well, and the local economy is still kicking along. I do not, therefore, buy the argument, from my region’s perspective, that the commercial property sector is critical to the future of small business. In fact, I think what we have seen emerge on the mid-North Coast, as a high-growth community, is concern about speculative property development and concern that it was going over and above the expectations and wants for growth within our region.
So, on the question of small business and on the question of confidence, I think there will be more confidence if we see a re-aligning of the moons in regard to more highly geared speculative property development. I would have greater confidence in the small-business community, and in commercial property development generally, if the high-risk, highly geared speculative arm were brought into line—as it should have been, sometime long ago. Unfortunately, it has been allowed to run and it has got out of control. And we are now seeing a correction in the market—which I do not think needs government intervention to try to prop up an unsustainable model for the future of the commercial property sector and the various equities and debt options that are attached to it.
Specifically with regard to the response, the detail of the bill leaves a lot to be desired. We are yet to have clear detail about who exactly the directors are, their status as independent directors and the actual directorship model that would be in place with regard to ABIP. I think the objectives are too loose on the detail. The first objective is relatively clear, in that it is:
… to refinance loans for commercial property when finance is not available from other lenders and the assets would otherwise be financially viable.
Whilst that has a speculative element to it, which I have already referred to, at least as an objective it is relatively clear. The second objective, however, I think should spark the concern of this chamber. From a policy response point of view, we should be demanding more detailed work from government with regard to the development of a response to the problem. The second objective is:
… to provide finance in other areas of commercial lending through financing arrangements of a kind unanimously agreed by the shareholders.
I think, for us to make decisions we would want to see a little bit more detailed work with regard to that second objective. The flow-on from that is the question about the limits on lending. I do not think those limits are clearly defined in this legislation—and that has been picked up by others. There is a question left as to exactly what those limits on lending are and whether the statement of the shareholders agreement actually covers that or whether there are still questions left wanting.
The third reason for opposing this legislation is my concern about corporate governance. The government is taking an extraordinary step into the free market system that is the Australian welfare capitalist state. The Corporations Act in Australia is quite clear that, if you are a director of a company, you must act wholly and solely in the interests of the shareholders of that company. It is legally questionable as a response that this may not be able to achieve what government wants to achieve because the five directors who shall be appointed to this entity will have to operate wholly and solely in the interests of that entity. They cannot take into account global financial issues. They cannot take into account national economic issues. They cannot take into account particular issues for the commercial property sector. They as directors of the entity have to take decisions to operate purely in the best interests of this entity. It is no coincidence that four banks and the government are forming a partnership. Four plus one equals five. It is I think fair to assume that we will see five directors acting in the best interests of an entity that acts in the best interests of the four major banks and the government. Does that pass the test of the man or the woman on the street? I do not think it does. It will be an entity working in the best interests of the big banks and government.
As well, I am concerned about the consequential amendments bill. We have being formed a body that does not have to play by the rules that everyone else in Australian corporate law and financing law does. It is not required to get an Australian financial service licence under the Corporations Act. It is in breach of some standards that we as a parliament and as a nation have set for some time. The safe port in a storm rule would apply here. We have the Constitution of the nation and the rule of law, which we have developed over a long period of time. At times like this we should not go outside those foundation structures unless we have very clear and detailed rules and reasons why we would do that. This is loose on the detail. It is slipping outside the law and setting a standard for those who do have to follow the Corporations Law quite closely and clearly to operate in business in Australia. It is not the right message for this chamber to send—that is, that there is one rule for businesspeople outside of government and another rule for those inside government or inside the four major banks.
I also find the audit process unusual. Here we have government slipping into the territory of free market lending. I think it is an unusual merging and morphing of the government and non-government sectors for the entity to then come back and be audited by the Auditor-General. The exemptions to part IV of the Trade Practices Act and the issues of collusion and cartels, which have been raised by others, are very real issues of concern. Again, that is not the message to send from this chamber. I spoke a couple of weeks ago quite genuinely about how abhorrent cartel behaviour in Australia was and how happy I was that government legislation on upping the ante on cartel behaviour was being passed through this chamber. This is a disappointing message for this chamber to send. We have government on the one hand slapping business and coming down hard on the business community in creating a free market and in clamping down on cartel behaviour—which is good—but at the same time when this involves a government entity a different set of rules is applied. Again, that is a corporate governance concern.
The other corporate governance issue I would like to relate is this. I welcome the Prime Minister’s comments with regard to executive remuneration. A $2 billion injection into this public-private agreement between the government and non-government sectors begs the question: what skin in the game is coming on executive remuneration from the four bank entities? What sorts of commitments have government had with regard to those issues if there is going to be such a large commitment given to a bank bailout? How do we know that is not going to end up in the wrong pocket and slap everyone for the goodwill and good faith shown? I refer to the comments and frustrations of the US President on the US government’s bailout of AIG and the continuation of the payment of some high executive salaries paid. There is a lead example that should be of concern to us. I would be interested to know if some commitments have been achieved by the executive government with regard to executive remuneration and, if so, what those commitments have been. What skin is in the game with regard to the give from those four major banks?
Finally, I will go to some other issues of concern. I have raised several times in this House the lack of an accountability trail with regard to the public sector losses of the last 12 months on the back of the subprimes, the CDOs and the Lehman Brothers. That ball has continued to roll during the last 12 months and is predicted to roll for some time more.
I have yet to see one person shown to have been in breach of investment guidelines in regard to substantial amounts of taxpayers and ratepayers money in this country having been lost. Hundreds of millions of dollars of taxpayers and ratepayers money have been lost and still the public sector, at local, state and federal level, has not fingered one single person in regard to those losses. I continue to raise this question: either we have one person or many people in breach of public sector standards with regard to investment guidelines or, of more concern, we have some substantial problems with regard to investment guidelines we are setting in this country. It is one or the other. If no-one is going to be held to account for being in breach, I am left only to assume that this country has a structural issue and the investment standards for public sector dollars are incredibly weak.
I raise this issue again in this context because, once again, we are seeing bailouts happen. As a starting point we have some fundamental issues but I would hope that, in a parallel conversation to this, there is an accountability trail of the past 12 months—what on earth has gone wrong and why? I have yet to have that answer from government. I hope that if we are talking about national leadership then that answer comes soon.
I am opposed to this legislation. I certainly recognise the problem and the starting point for it. I think the response, however, is weak. I do not think it has worked through the conceptual details and the principles that are attached to such a substantial move into private sector financing. I think there are fundamental corporate governance issues. I think the commercial property sector has some issues of its own to address about the unsustainable nature of its core business over the last decade. I do not feel comfortable in fundamentally bailing out the white shoe brigade. I think this legislation specifically is too loose on the detail and, as I said, the accountability trail on public sector dollars still remains unanswered.
I rise to speak against the Australian Business Investment Partnership Bill 2009. Put simply, it is bad public policy. Corporate governance and accountability are certainly not part of this bill. The Australian Business Investment Partnership (Consequential Amendment) Bill 2009 will exempt Australian Business Investment Partnership Ltd from the requirement of holding an Australian financial services licence under the Corporations Act 2001. It is inconceivable that, under this legislation, the major banks will have the Labor government’s protection to collude and potentially engage in cartel behaviour because activities under this bill will exempt ABIP from any scrutiny under the Trade Practices Act. It will be exempt from ministerial and parliamentary oversight. The Trade Practices Act applies to Australian businesses and commercial entities except, in this instance, the major banks. The Labor government is placing the banks and the Ruddbank above Australian law, above ministerial oversight and above the parliament and scrutiny by the taxpayers who are funding and guaranteeing the $28 billion in funds.
Every taxpayer dollar allocated to funds for the Australian Business Investment Partnership, potentially $28 billion, removes initiatives and assistance that should be applied to the engine room of the Australian economy, the small businesses that employ nearly half the workers in the nation. It detracts from initiatives to assist exporters—keeping in mind that the only reason Australia has not been in technical recession is the strong performance of our exporting agricultural sector, made up primarily of small, family owned and run Australian businesses—initiatives for small business that will help them retain their highly valued and trained employees. Australian jobs should be the priority.
The Ruddbank reminds those of us from Western Australia of another Labor government initiative, WA Inc.—the infamous WA Inc. years of the WA state Labor government of the 1980s, when the state Labor government put big business interests above the accountability and scrutiny of the parliament and people of Western Australia. Between 1983 and 1991, in Western Australia, state Labor governments conducted quiet deals with private businessmen and their companies. The Bond Corporation, through the state government superannuation board, acquired major holdings in Bell Group. Rothwells was given a $150 million government guarantee by the then Labor Premier Brian Burke. The petrochemical plant joint venture, which was the cover for manipulating fundraising, collateral transactions, development proposals and of course the payment of management fees, turned a $100,000 outlay into a return of $400 million, $175 million of which was provided by a state Labor government agency, WA Government Holdings. Those are just some examples of Labor’s WA Inc. deals. These public scandals saw Perth entrepreneurial opportunists manipulate Labor ministers and commercial transactions, walking away with millions of dollars of taxpayers’ funds, provided with the full consent of the state Labor government.
But these funds were taxpayers’ funds and, in some instances, ultimately private investors’ funds. There is nothing in this bill to stop the Ruddbank funds from being used for other state government purposes, for other types of property investments or to prop up debt financing for large commercial projects—again without any scrutiny or accountability to the minister, the parliament or complying with the Trade Practices Act. It is bad public policy. Ruddbank will have access to $4 billion—$2 billion from the Labor government and $500 million each from the four major domestic banks.
When additional financing is required beyond the initial contribution of $4 billion, ABIP will be able to issue up to $26 billion in debt to raise the additional funding. Debt issued by ABIP will be government guaranteed, $28 billion of which is guaranteed by the Australian taxpayer—taxpayers who will be guaranteeing decisions, expenditure and debt decisions made by the four major banks. And this is of course on top of the $200 billion of taxpayer funded credit card borrowings of the Rudd government. How much more debt will this Rudd government leave for our children to pay off, and where are the checks and balances to prevent collusion by the big four banks in this process? There is a very clear conflict of interest. Jennifer Hewett reported in the Australian on 28 January:
Contrary to the impression deliberately created by Canberra, the new commercial property fund will do virtually nothing to directly protect jobs in the construction industry.
On the same day, in the Australian Financial Review, Stephen Kirchner reported that, once again, the Rudd government’s intervention puts the ‘needs of business and financial institutions ahead of consumers and taxpayers’. He wrote:
… the Rudd government is constructing a corporate welfare state that will ultimately hold back, rather than support, the economy.
Debate interrupted; adjournment proposed and negatived.
ABIP is counterproductive for Australia. There is no existing threat that foreign banks will withdraw, apart from the Royal Bank of Scotland, which is subject to a takeover. While supposedly designed to discourage foreign banks from exiting Australia, ABIP will actually encourage banks to exit and to demand their money back to the full value of their loan.
Anthony Klan, from the Australian, stated on 28 January that the Ruddbank was expected to ‘mask sloppy lending practices’ undertaken by the major banks during the property boom with their ‘reliance on overstated property valuations—or “friendly valuations”’. But taking over commercial property loans from foreign banking institutions must not be based on old valuations. The Financial Review agreed in an article on 3 February, which said:
Lending must be done on new, not old, valuations. Loans that were written on aggressive boom-time criteria should be allowed to fail.
Again—this is bad policy. Once again, the taxpayers will take all the risk. We certainly do not want a repeat of the WA Inc. scandal. This is bad policy, and it should not be passed through this parliament.
I rise tonight to discuss the initiatives that are being put forward by the government. Before voicing my opinion on the Australian Business Investment Partnership Bill 2009 and cognate bill, I would like to place on record that I have supported the government’s initiatives in relation to the various stimulus packages that are out there, mainly because I have some sympathy for the logic underlying why these packages have been produced. As I understand it—and I know the opposition has been opposed to these particular packages—the government are of the view that, due to global circumstances, there will be a period of time during which the economy will slow. Obviously, with a slowing economy there will be some employment impacts. To overcome those particular impacts, the government’s logic—which, as I said, I have voted for—is to stimulate the economy to such a degree that it can essentially fill that gap in terms of what would happen normally and what they perceive will happen due to the global slowdown. In recognition of that period of slowdown, they have injected fairly large amounts of money to try to plug that growth crisis, as they perceive it. As I said, I have supported those initiatives.
But I cannot support this current initiative before the House. I think the member for Lyne outlined a number of issues in relation to this legislation. I listened with some degree of interest to the contribution earlier of the member for North Sydney, who is in the chamber at the moment. I heard him talking about the role that he played in relation to the privatisation of the State Bank of New South Wales. I was in state parliament at that particular time and, it being a hung parliament, I had some knowledge of what went on. I probably have more now than I did then but I nonetheless had some knowledge. One of the things I was very interested to hear the member for North Sydney say was that, even though the state at that time was the major shareholder—
The only shareholder.
the only shareholder—there had to be an independent audit process of what was actually going on within the system. I was privy to some of that audit process. As tends to happen with hung parliaments, certain demands were made in relation to the probity issues and how all that was going to be worked through. So there is some history of government moving in and out of banking activities.
I will not be supporting this legislation. I think it is very dangerous and I think it is misplaced. I think the government is trying to trade on the other initiatives—the stimulus packages, which I have supported. I think they are trying to link the two together, in a sense: ‘Because we have done this, we need to do that.’ In fact, I do not believe we have to. I agree that we need to plug the gap that is there at the moment and try to stimulate the economy. But artificially inflating values, or maintaining values, of commercial property that, in a lot of cases, is very highly leveraged—very highly geared—for the sake of saving jobs is a very, very thin line that we are walking. In fact, I would argue that, if the stimulus packages that are in place at the moment do not deliver the appropriate outcome, this sort of package will not make any difference at all—because we will see the overseas economic meltdown far outweigh anything that we can possibly do here.
I think we have got to start sending some appropriate messages, particularly in relation to the commercial property market. We have seen, on the stock exchange, a commercial message go through to the investor that this was overheating and we were starting to overvalue assets. And we have seen trading activities and profits being made, by people who were really doing very little in terms of productive activity, out of some of those assets.
In fact, it would be very interesting, if this did get through the Senate, to watch who became the recipients of the money and which of those recipients had, in the past, made substantial donations to political parties—to see whether there is some payback being hidden behind this veneer of saving jobs in the commercial property market. In fact, if we are to learn anything out of what is happening around the globe at the moment, we have got to be able to transmit some of those messages back through to the community—that you cannot continually create productive effort out of a trading mechanism.
I also have some comments in relation to what we are attempting to do in terms of the emissions trading scheme. I am not opposed to doing something about climate change or to fairly stringent activity to try to cut emissions. But I think that this insinuation that if it does not fit within a market framework you discount it or rule it out is completely inappropriate in some of those areas.
Here, again, we are seeing what was essentially a market about to be funded by the four major banks and the government. Other members have made some very pertinent points in relation to this. There has been $2 billion from the government, and $500 million from the ANZ, Westpac, NAB and the Commonwealth. So that makes a $4 billion arrangement. But the legislation allows for a $26 billion debt capacity to be put in place. That means that the Commonwealth, as I understand it, has, or could have, a liability of up to $28 billion.
The legislation says that this is for two years. But a lot of things pass through parliament at the start as only interim measures. Look at the first home owners scheme—an interim measure. Look at the baby bonus. Look at what happened in the seventies and I think the early eighties in terms of the investment allowance. A lot of these things were put in place as temporary measures. It may be that governments believed that they were good ideas at the time. But I do not believe that the first home owners scheme is a good idea. I fought against one of the most ridiculous pieces of legislation in terms of monetary outlays that I have ever seen—the baby bonus. For Peter Costello—a man whom I admired in terms of his economic acumen—to defend that and try to put some logic to it in terms of population loss was, I thought, an appalling piece of social manipulation, and I think all members would be seeing some of the detrimental effects of the baby bonus and the impact that it is having. So these things that are put in place, often for the short term, can become part of the mechanisms of governments, and not all of them are positive. Occasionally, some of them are removed. But my message to the current government and to the Senate is that I believe there are some very substantial risks in this legislation. There are risks to the taxpayer and risks in terms of the commercial property market. And, as I said earlier, if the global economic crisis continues, the risks to those businesses anyway will be substantive and will possibly leave the nation and the taxpayer in a much worse situation, rather than accepting some of the messages that need to be sent.
So, as I said, I will not be supporting the Australian Business Investment Partnership. As the member for Lyne has said, and as I think the member for North Sydney and others have said, there are some governance issues here that really do need to be clarified. I do not believe that—just because we have an economic crisis, and just because there may be some liquidity problems with some very highly geared businesses, and just because some of those people may employ some people, and just because some of those people may be friends of the political process and have been quite substantial donors in the past—that is a good enough reason to create what really becomes a people’s bank for commercial activities. I think there are some very high risks.
I am pleased to see that the Treasurer is here in the chamber and, in conclusion, I will just reiterate my position. I supported the government on all the stimuli packages because I believed that there was some logic in terms of what they were attempting to do—to plug a pothole in terms of growth within the economy and to try and stimulate the growth that the normal economic activity, in their view, was going to be unable to achieve. I supported that. I supported the government in relation to the transfer of the $2 billion that was set up by the previous government as the Communications Fund, the interest of which would be spent over the next 20 years to achieve some pothole maintenance of our telecommunications system. I supported the concept of transferring that into a National Broadband Network. And I look forward to seeing those things come forward in the next few months. But I cannot support this structure. It is set up, essentially, to form a government bank. It is a government bank that rules out more people than it rules in, in terms of who can access the system. It leaves it slightly open-ended, so that others can be brought in at a future date. But it is essentially about propping up those—many of whom, as the member for Lyne said, have gone into these activities with their eyes open—who have made massive amounts of money, and who have become very highly geared with a view to making more and more money, when all of a sudden there are some storm clouds on the horizon. I do not believe that you remove those clouds for this particular sector within our economy. In fact, if we do remove those clouds, we do not really address the message that the globe is actually sending us—that you should be rewarded for a productive effort, not just for financial investment and margins at the end of that investment process. So I oppose the legislation.
I thank honourable members for their contributions to this debate. The Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009 are very much a necessary part of the government’s response to the current unprecedented global economic conditions. We have seen many banks in Europe and the US collapse or be bailed out by their governments. Australia does not face the same problem of toxic assets infecting the banking systems of the United States and Europe, but we have seen the impact on liquidity in our system and this will only be exacerbated if foreign lenders are forced to retreat to their home countries—a prospect that is all too real.
The global financial crisis raises the possibility that some financiers, particularly foreign banks, may reduce their level of financing of viable Australian businesses. Because many foreign lenders are facing difficult circumstances at home and may look to reduce their lending commitments and exposures generally, this could create a funding gap here in Australia. Commercial property assets are particularly vulnerable to liquidity shortage because of their generally highly leveraged nature. Foreign banks comprise around one-quarter of the commercial property exposures in Australia. The withdrawal of foreign banks is not because of concerns about Australian assets. It is entirely unrelated to the Australian economy. A disorderly deleveraging process could force many commercial property projects to sell their assets immediately at whatever price could be obtained—that is, it could lead to a fire sale. Such a fire sale could destabilise the entire commercial property sector and create a vicious cycle where falling prices trigger further fire sales.
A collapse in the commercial property market would have adverse impacts on the Australian banking system and, through the banking system, on the broader health of the wider economy. The Rudd government is not willing to wait for foreign lenders to withdraw their money and have commercial property values fall, resulting in Australian job losses. That is why, on 24 January 2009, the Prime Minister and I announced the government’s intention to establish the Australian Business Investment Partnership, ABIP, with a view to having it operational by March 2009. This legislation does deliver on the Rudd government’s commitment to establish the Australian Business Investment Partnership.
The Rudd government recognises the importance of the commercial property sector to the Australian economy and most importantly to Australian jobs. The commercial property sector provides business and employment opportunities during the development phase and after projects are completed, including in the retail, manufacturing, hospitality and corporate sectors. It also provides important investment opportunities for everyday Australians, including through superannuation funds. The commercial property sector employs 150,000 people, including plumbers, electricians and carpenters. If we do not act, Treasury advises that a combination of weak demand and tight credit conditions could see up to 50,000 people in this sector lose their jobs, with flow-on effects to employment in other sectors.
As we have said many times before, the Rudd government will not sit idly by and watch these jobs and small and medium sized businesses be wiped out by fluctuations in global credit markets. ABIP will provide essential backing for the Australian commercial property sector and the jobs and businesses it supports should that be required. ABIP is—and I say this again and stress it—a temporary contingency measure to provide support for viable commercial property assets where there is a withdrawal from refinancing arrangements due to abnormal conditions in global financial markets. I cannot stress that enough.
The commercial property sector is volatile and of course there is no doubt it is risky. We have been upfront about that from the very beginning. That is why we put in place in this bill a range of safeguards to limit the risk to taxpayers’ funds, and we have been very upfront about that. Under the legislation ABIP has a limited life and will only be able to write loans during the two years to follow its creation. The terms of the loans are not to exceed three years unless they are extended by regulation. ABIP will operate on a commercial basis and it will not provide support to every business that asks for it. It most certainly will not be doing that. ABIP will only provide financing for commercial property assets where the underlying assets and the income streams from those assets are financially viable. I want to make that point very clearly, particularly to the member for New England, who spoke earlier. ABIP will be financing only commercially viable assets with income streams, and it will have appropriate lending criteria which will be consistent with the lending criteria of the four major banks and credit-rating agencies. The lending criteria will be prudent and conservative. As such, it is recognised that ABIP’s pricing will be at a small premium to the prevailing market. ABIP will not be used to refinance loans from the four major banks, and any of the four major banks will need to continue their participation in the loan facility. Borrowers from ABIP will have to engage with ABIP, as I said before, on a fully commercial basis consistent with normal commercial lending requirements. ABIP will only provide financing if a borrower cannot obtain finance from other commercial providers. If the terms of alternative financing would impose an onerous and commercially unrealistic burden on the borrower, the board could determine that ABIP may provide the financing. ABIP will also put in place appropriate provisioning for any bad and doubtful debts.
Despite these arrangements, given the volatility in the commercial property sector, the government is aware that ABIP is not without its risks or losses, as I said before. If a loan becomes impaired, ABIP will take normal enforcement procedures to protect its investment. All resolutions of the board are required to be unanimous, with the exception of enforcement resolutions, where an 80 per cent majority will be required, provided a government member is part of the majority. The Auditor-General will be required to audit the financial statements of ABIP. Finally, we will be required to table the company’s financial report, directors’ reports and auditors’ reports for each financial year in each house of the parliament as soon as practical after their receipt. These measures, as I have outlined, will help to protect taxpayers’ funds while also ensuring that we are able to support the commercial property sector should that be required.
I want to say this again; I want to underline it and I want to stress this: the Rudd government is not willing to stand idly by and do nothing while commercial property prices tumble and jobs are wiped out by events in global financial markets. That is what is driving the government with this measure. The opposition say that no commercial property project or jobs are at risk. I do not know how much more out of touch the opposition could be to make that statement in this parliament. In this environment, there is no guarantee that foreign banks will maintain their commitment to the Australian commercial property sector. Indeed, there has been press in recent days of foreign banks withdrawing—precisely the circumstances that the government wants to address.
Treasury could not name one.
The opposition had their say; the government is now replying. The shadow minister wants to engage across the table. This is one decision that the opposition will regret for a very long period of time, because in this environment there is absolutely no guarantee that foreign banks are maintaining their commitment to the Australian commercial property sector. The Governor of the Reserve Bank was asked about this by the member opposite.
He said, ‘Last resort; top drawer.’
He said, ‘I don’t have any problem with there being a plan in the top drawer to do what should be needed.’ That is what the Governor of the Reserve Bank said. In the House again today the opposition have tried to suggest that there is too much risk, but they know that we have incorporated safeguards in this legislation and governance arrangements.
No you haven’t.
We absolutely understand that. The opposition claim that the collapsing commercial property prices will have no impact on a broader economy. How out of touch can you become with a sector that employs up to 150,000 Australians—150,000 Australians who do not matter at all to those who sit opposite. As I have already outlined, Treasury advises that a combination of weak demand and tight credit conditions could see up to 50,000 people in this sector lose their jobs. Of course, that will have tremendous flow-on effects to employment in other sectors.
How? It is existing real estate.
You can add up, Joe.
The shadow Treasurer reveals his ignorance yet again.
It is existing real estate.
It comes as a surprise to nobody, of course, that the Liberal Party wants to play politics with the livelihoods of something like 150,000 Australians who are tied up in the commercial property sector. The Leader of the Opposition is such an opportunist. He would rather see the commercial property sector fail than see the government’s plans succeed.
Absolutely.
That is the case. It is really that simple. They would rather see the country fail than see the government succeed. We have seen this on display in this House day after day in recent weeks: opposing the stimulus package and opposing the bank guarantee—two initiatives which are absolutely fundamental to supporting the Australian economy, to supporting growth and to supporting employment. They were opposed in toto by those opposite.
When I was at the G20 finance ministers meeting on the weekend I learnt that these are measures which have been implemented by conservative governments around the world. They have not been condemned for being risky. They have implemented them because they are prudent, because we are in extraordinary circumstances. But there is not one measure this government has put in place that those opposite have seen fit to support in order to support Australian jobs. It simply shows that they do not understand the magnitude of the challenge and they have no positive solutions to that challenge. That ignorance has been on display in the House again today as it has been on display since we produced the Nation Building and Jobs Plan some weeks ago, because they would rather see the country fail than see the government succeed. That is the truth of it. They cannot support fiscal stimulus, they now cannot support the Economic Security Strategy and they cannot support the Nation Building and Jobs Plan despite the fact that conservative governments around the world are supporting such initiatives. Everyone sitting around the table at the G20 in London over the weekend was supporting substantial fiscal stimulus, they were supporting measures to stabilise the financial system and they were supporting bank guarantees, but the only people, just about in the world, who cannot support these measures are the Liberal and National parties in Australia. That just shows how out of touch they have become because they are not concerned about Australians losing their jobs; they just want to score a political point.
In the face of potential job losses in the commercial property sector, what has the opposition had to say? This is what the Leader of the Opposition had to say on 26 January. He said, ‘Let the market take its course.’ That is a recipe for lower growth; that is a recipe for higher unemployment; that is a recipe for higher debt; and that is a recipe for human tragedy. That is what it is a recipe for. There were political parties at some stages in this country many years ago who argued that, and it was those sorts of policies that promoted the deepest downturn in the history of this country and the globe. They are at it again, because they would rather see the country fail; they do not want to see the government succeed in dealing with these extraordinary circumstances as we are. So their policy is just to sit and wait and do absolutely nothing. Well, this government will do everything within its power, everything that is responsible, to support jobs and growth in this community.
I have been away for two sitting days. Watching them in the House today I could not believe how embittered those opposite have become. The type of tactics deployed in the House here today were tactics that are really foreign to this parliament. We have an opposition that is so embittered, so consumed by its hatred of the government, that it will not engage in a decent debate about the future of policy and about what we are doing to cushion this country from the effects of a global recession which is growing more savage day by day and week by week. They have a strategy that would simply let tens of thousands of Australians go to the wall.
The Australian people expect more from the opposition and it is not too late for them to see sense. If they do not support this legislation and projects fail and jobs are lost, it will be entirely on their heads. If they do not support this bill and if, in the weeks ahead, jobs are lost as a result of their opposition, that will be entirely on their heads. ABIP is an important part of the government’s response to cushioning Australia from the effects of the global economic crisis. The government is acting responsibly in supporting Australia’s commercial property sector. We are doing it because it is important and because it is a measure that is required by the circumstances of the day. We are acting prudently, with a range of safeguards in place, to help protect the interests of Australian taxpayers. I commend the legislation to the House.
Question put:
That the motion (Mr Tanner’s) be agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Debate resumed from 12 March, on motion by Mr Tanner:
That this bill be now read a second time.
Question agreed to.
Bill read a second time.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Debate resumed.
I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. This bill once again shows Labor’s contempt for those who work hard all their lives to support themselves. This is in fact the politics of envy or class warfare. On this issue the Labor Party is showing no understanding of the ageing crisis in which we find ourselves in Australia. I would like to refer the members opposite to the Intergenerational report on ageing in Australia commissioned by Peter Costello and ask them whether they have any idea of how difficult the challenge is going to be for Australia to meet its commitments to its ageing population.
The proportion of those over 65 is expected to more than double in the next 40 years from 2.8 million to 7.2 million. The number of those over the age of 85 is expected to almost triple. There is an aged-care crisis in Australia and the minister is asleep at the wheel. I have previously spoken on this issue in the House and brought my concerns to the House. I refer to my own speech on 25 November last year on the Aged Care Amendment (2008 Measures No. 2) Bill. I raised issues which concern me about our ability to meet the challenge, which will be facing us in the next 10 or 20 years in Australia, to look after our aged.
Since that speech we have heard silence from the minister. I have been travelling around my electorate talking to people in the aged-care sector and they are very concerned that they do not have the ear of the minister. I have at least two aged-care facilities on my patch which are in danger of closing their doors. This may seem a roundabout way to speak about the Commonwealth seniors health card but, by attacking those who choose to support themselves, we are attacking the ability of future generations to support the aged-care industry in Australia. We need people who are prepared to make the savings and the sacrifices to provide for their own future. This bill attacks that.
The previous government understood this and totally overhauled the superannuation rules of Australia. Why? Because they knew what challenges were facing Australia over the next 20 years. Smart governments support those who work to remove themselves from the welfare system. It is no small achievement to save enough money during your working life to provide for your retirement. Now, with superannuation wealth being washed away in falling equity markets and with cash investments returning record lows, we have a government that is stripping away the few meagre benefits which are enjoyed by self-funded retirees, who make savings of $10 or $20 a week year after year, making the sacrifice. They do not ask for much; they just ask for a bit of acknowledgement from the government on how difficult it is to make those sacrifices. Part of the pledge of the previous government was to provide a Commonwealth seniors health card to those on the borderline to make sure they maintained their position.
This government continues to load debt onto the next generation of Australians. We have had cash splash 1 and 2, Pink Batts, a $6 billion car plan, school gyms instead of teachers and now we have the Ruddbank—all on borrowed money. The government is planning to leave our children at least $200 billion in debt, plus the state borrowings. In five years time this country’s governments will be in debt at least $300 billion. We know the government want kids at school to pay for their own school halls and libraries, and now it attacks those who are prepared to lessen the burden—self-funded retirees. It is all about satisfying the politics of today and the next election and not planning for the next generation over the next decade. The government has stopped saving and is spending savings.
This bill will change the means test to include superannuation payments, which means that around 278,000 people, including service veterans, are in danger of losing their Commonwealth seniors health card. Health card recipients receive concessions on prescriptions, a telephone allowance and a seniors allowance of $128 every three months to help deal with regular bills like power, water and car registration.
Self-funded retirees have often felt unloved. The previous government picked them up said, ‘We will encourage you; we will give you a hand.’ Just on the toughest part of the journey this government have let their hands go and let these people slip. They have failed them. They are victimising them. They are taking away the few meagre benefits they enjoy. The act of including superannuation in the income assessment is a sneaky move. It would have been so much easier just to lower the means test. But the government had hoped they could make this change and it would slip in under the radar. They hoped that it would not be picked up and that those who are retired in our communities would not feel anger at the government. They hoped that the electorate would be duped into believing those with adequate superannuation are wealthy. They are not wealthy; those with adequate superannuation are in fact Middle Australia. They are those who plan for the future. They are those who know they have the ability to help Australia. They have the ability to help future Australians and they are making their contributions. This bill rips away that tiny bit of support and encouragement that we have been giving to them. This is a class-driven attack on Middle Australia; it is also an attack on the future of Australia. It helps remove self-reliance. I oppose this bill.
I rise to make some points about the bill we currently have in front of us, the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. It is no secret that the last government put in place an enormous number of benefits that were able to ease the lives and the burdens of many people in Australia, including seniors, whether they be self-funded retirees or just seniors generally. The Commonwealth seniors health card provides access to discounted pharmaceuticals through the Pharmaceutical Benefits Scheme, the seniors concession allowance, the telephone allowance and the seniors $500 bonus. The fact is that these cardholders can benefit from other concessions at the discretion of providers, such as medical bulk-billing or household, transport, education and entertainment concessions, just for having access to the Commonwealth seniors health card. However, what we have seen is a rollback of all of the great achievements that were put in place.
The coalition’s achievements for self-funded retirees were centred around, firstly, paying off the previous Labor government’s $96 billion debt, which was costing us some $9 billion per annum in interest. Once that was paid off we then moved to extend assistance to self-funded retirees who were not claiming income support. The coalition government at the time improved the eligibility for Australian government concession cards so that over 85 per cent of people over age pension age qualified for a health care card—a Commonwealth seniors health card or a pensioner concession card.
The coalition significantly increased the income limits of the Commonwealth seniors health card in 2001 so that more self-funded retirees became eligible for a CSHC. Due to the coalition government’s measures, around 300,000 people held the Commonwealth seniors health card, compared to just 35,000 when Labor left office in 1996. I think that is a significant number when you look at paying off $96 billion in debt and saving $9 billion a year in interest payments on that debt. The coalition expanded the number of holders of the seniors health card to over 300,000 people, compared to just 35,000 when that significant debt was left by Labor in 1996. These things should not be forgotten, because this is about the climate that we are experiencing now. This is the beginning of the downturn. This is the beginning of the debt cycle, and we have to recognise that when there is a debt cycle such as this, once the money has gone, then people must pay.
The coalition legislated to link pensions to 25 per cent of male total average weekly earnings, MTAWE, and introduced the utilities allowance and the seniors concession allowance. The coalition increased pensions at two per cent a year above the rate of inflation. After January 2007, for pensioners on the land—and I felt this was particularly important to mention here this evening—the concessional asset test treatment was applied to all land adjacent to, and on the same title as, an age pensioner’s principal home, which made a very, very big difference for those people who were on properties and were disadvantaged by the curtilage rule. That was a major advantage. In short, pensioners were no longer penalised for land they had lived on for 20 years or more continuously but were not able to use to produce. That benefited, at the time, around 17,000 people.
We introduced some of the biggest reforms to superannuation ever and we introduced many safety nets for the people of Australia after that debt was paid off. However, we are now seeing that, after 15 months of being in government, the Rudd Labor government are rolling back all of that support that was put in place. During the 2007 election, Prime Minister Rudd promised to ease the cost-of-living pressures for senior Australians. Instead of acting, the Rudd government have now announced that they will roll back those great benefits that were achieved for the people of Australia through the hard yards that the people of Australia were able to do, with some very conscientious guidance from a government that was concerned with fiscal management.
In the short time that I have to speak here this evening, I cannot do justice to this bill, because we certainly have to get this legislation finished this evening, but I will finish by saying that, at this critical time of global economic difficulties, when we have seen many self-funded retirees losing much of their income stream, we seem now to be forcing them to face more uncertainty. They are already living in the most extreme of uncertain times. They are fast becoming the poverty stricken people of Australia. It is time that we recognised what they have given to this nation and stopped penalising those people, who pay for themselves and support themselves for the future and are now being penalised by this government.
During the 2007 election, the Prime Minister and Labor promised to ease the cost-of-living pressures for senior Australians. What a joke! The PM promised he would govern for all Australians—an even bigger joke. Now it is time for the Prime Minister and Labor to guarantee that no senior Australian will be worse off under his government. Clearly many will be.
The bill before us today, the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009, will effectively cut 22,000 senior Australians off from their seniors health cards. It will do this by adjusting the taxable income test for the Commonwealth seniors health card. That test is currently at $50,000 for singles and $80,000 for couples. By including income from taxed superannuation funds, the income will be bulked up, in conjunction with their pension, to create a new income level. While the threshold limits will remain the same, at $50,000 and $80,000 respectively, the superannuation drawings from a taxed fund will remain untaxed for ATO purposes. But these drawings will be added, as I said before, to adjusted taxable income for the purpose of assessing eligibility, effectively pushing many seniors over the income test level and stripping them of their card.
There are some very serious implications of this. Australians who have their cards taken from them will suffer in many ways. Under the PBS, the Pharmaceutical Benefits Scheme, Commonwealth seniors health card holders pay $5.30 per prescription. Once the card is stripped away from them, they will be paying $32.90. Under the PBS safety net, a cardholder pays a total of about $318, I think, as a maximum in any 12 months for their scripts. Without the card, they will pay $1,264.90 before the $5.30 fee applies. If a husband and wife have, between them, five prescriptions a month, the cost to them will be $1,350.
I did a little exercise which none of the speakers on either side of the House have done. I asked: what will this really cost the people who will have their card stripped away? Let me take you through the expenses of a typical husband and wife. With regard to the healthcare card and the pharmaceutical benefits, as I said, five prescriptions a month between husband and wife will cost them $1,356. Then there is the utilities allowance, which is indexed and is now at $514. The bonus plan, presuming Labor continue it—there are no guarantees of that on the basis of their last performance—will be $1,000 between the two of them. For the phone, which has now gone up to $34.60 a quarter, it will be $138. For the doctor—and a lot of doctors use the card to decide whether to give you bulk-billing—it will be another $215. If they go to the movies together once a fortnight, say, over a year that would be another $150 in concessions. Then I got onto a provincial bus company and asked about two to three trips a week of a medium-sized run—in fact, I used my own hometown of Bundaberg as an example. A couple would save $725 in travel a year. If you put those together you would have nearly $4,100. That means an average couple in this usual situation are going to have $80 a week ripped off them. Just think about that. Already pensioners are in dire straits. The previous speaker spoke about some of the things we did to improve the pension: brought in the MTAWE factor, brought in the utilities allowance—all those sorts of things. But, even then, it is way below an acceptable level.
The very core of our philosophy should be that aged people are looked after and looked after properly. How can we improve the lot of older Australians? Labor is content just to strip away benefits and entitlements and to bring everyone back to one standard. The thing that troubles me more than many other things is the suggestion that has come from a number of forums in which Labor members have participated—and I have not yet seen an unequivocal denial of it—that there may be some form of a means test on the family home. The idea that troubles me is that, if someone through some fortuitous means lives in a particular suburb and that particular suburb becomes the fashion of the day—although it may not have been the fashion of the day when the couple built their home—they may be penalised because their home has gone up in value and is worth $1 million or $1½ million. At the end of the day, it is just a house for them. It is the house of their memories, the house in which they brought up their kids. What are you going to do, rip it off them? Are you going to bring in a means test that is so severe that people have to sell those sorts of homes and go into some lower form of accommodation? I think that anyone seeing what is being done with these 22,000 Australians would have cause to be quite concerned. We paid $96 billion of Labor’s debt. That gave us the capacity to do things: to introduce the MTAWE factor, to give bonuses, to arrange superannuation schemes, to bring in the co-contribution scheme—all those things to enhance the income of the modern income earner. All this new government is doing is winding it back the other way. If the family home becomes part of the assets test, it really will be a bad day for pensioners.
Let me speak briefly for those Australians who are on what we might call a modest income. Let me talk about people who are on a below average income whose superannuation scheme is not enough and, indeed, is much less now. A lot of my constituents tell me that the value of their super has dropped 20 per cent, 30 per cent, 40 per cent or even, as I have heard, 50 per cent. That has really denuded their income, and they have become more reliant on the pension. In a Pension Review submission, the AIR challenged the following statement made in the Bills Digest for the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008:
With the income test limits being set at $50 000 single and $80 000 partnered, the CSHC is now no longer a low-income health card.
I think the AIR were right to take offence at this statement because, on the one hand, the government say that a retired couple living on $80,000 a year should not qualify for the card yet, on the other hand, they say a working couple on the same income should receive a $900 bonus.
So this is quite unfair. I would like—but the short time we have been given does not allow me to do so—to talk about the general position of self-funded retirees. This is a very bad move. This cuts at the core of people who have been self-sufficient all their lives. This will lower their standard of income and sends a signal to the retiree community to be very fearful of this government.
I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. I have to say that this is a very savage attack by this Labor government on an estimated 22,000—those are the figures we have—very special Australians. The measures will impact on Commonwealth seniors health card holders, the older generation who helped build this nation. They were always very, very careful with their money and saved for their future, but we have a savings measure here from a government that has already appropriated $52 billion but cannot find the money to provide 22,000 very special Australians with a health card.
Another group who I know are going to be impacted by this very savage measure from a very cunning, heartless Treasurer is our veteran community. I was at a small community hall on the weekend. My good friend and colleague the member for Hinkler would know it well—Goomburra in the Goomburra Valley, east of Warwick. I was there on Saturday. I went inside the hall and saw that the rolls of honour of those who served from that region are proudly displayed there: the First World War, the Second World War, Vietnam, Korea and Malaya. I particularly noticed the First World War roll of honour. There would have been 27 young boys who went away to defend the values that are enshrined in our Constitution. I looked beside that roll of honour and I found that, of the 27, 10 were killed serving our country, one was gassed and another wounded. Almost 40 per cent never returned to Australia, and two who returned were severely maimed.
We may only have one veteran from the First World War still alive in Australia, but the point about the veteran community of this nation is that they were prepared to risk their lives to ensure that we could have a better life. They are going to be caught up in this government’s heartless action that will take away from them the seniors health card, which brings benefits other than just the PBS. One of the things that will hurt, particularly in my rural communities, is the stripping of the telephone concession. The telephone is a vital piece of equipment for people living in rural Australia. It is the way that they communicate with outside communities. But that concession too will be stripped away as a result of this card not being available to those veterans who were entitled to the seniors health card under the former government. Veterans, seniors and couples in rural Australia have to travel great distances and have much higher living costs for petrol and food, yet this government is prepared to strip away a benefit from very special Australians—22,000 of them, as estimated in the budget papers.
This is a direct attack on some of the most vulnerable people in our community, people we should hold up and value and be prepared to thank for their contribution to this nation. What we see from the Treasurer, the Prime Minister and the Labor government is a heartless act. The very cunning Treasurer and Prime Minister have now broken yet another promise—a promise made prior to the last election that they would look after these communities and that they would govern for all Australians. We find now that they are prepared to break this promise. I am ashamed to say that there is a parliament here in Canberra, where the Labor Party has the Treasury bench, that is going to strip away the seniors health card from 22,000 very special Australians. Members of the Labor Party should hang their heads in shame. I will join my colleagues in opposing this bill.
I rise to express concerns about the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. Without speaking about the conceptual issues of the rights and wrongs of means-testing or access to medical services in regional areas, my argument for government to consider and reflect upon is one of timing, with regard to the global and national economic circumstances that we have seen flood this parliament and the lives of many over the last three months. Independent retirees and those who have access to Commonwealth seniors health cards presently are not immune from the rapid changes that we see in so many sectors.
In many ways the timing of this change could not be worse. We see a triple whammy at the moment of low interest rates, a significant fall in share market investments and a focus—in what I consider to be a welcome fiscal stimulus package—on the borrowing strategies rather than the savings strategies. Those who are living off savings are, more than anyone, feeling the full impacts of the triple whammy of the economic changes that are rippling throughout the world. Added to that—in what we could call a quadruple whammy if this change comes through—is the timing of this bill, which is being brought forward in the middle of this year.
It would be unfortunate if government did not consider giving some relief and showing some grace and good faith to those who have been living off savings and to those who have, after the last six months of significant economic change, already lost a substantial amount of the savings they live off. Since these considerations were made in the budget conditions of last year, the circumstances are widely acknowledged by the Treasurer and the executive to have substantially and fundamentally changed, particularly in the last six months. My request—slightly different from everyone else’s—is for an act of grace and consideration by government with regard to the timing of the implementation of these changes.
If there is no change and we are left with the quadruple whammy of low interest rates, the fall in share market investments, the focus in government stimulus on borrowing strategies rather than saving strategies and then this coming in as well, it will lead to a fifth concern faced by many—that is, it might send to some the message that they are unwanted participants in Australian life. I would hope that is not a message that anyone in this place would want to send to the aged community in Australia, many of whom are living on the North Coast of New South Wales and who all play a valuable role in life today. Many people talk about their valuable contributions in the past but many of them are active, healthy and engaged members of communities right now. Many are suffering a triple whammy—hopefully not a quadruple whammy, and hopefully not a quintuple whammy—delivered by government under the current circumstances.
In the short time that I have to sum up—and I know it is unusual to read out letters in the parliament—I would like to read out a letter I received from Ken Smith from Bonny Hills. It is a short summary but it is an example of the letters received by our office and has been picked out because I think it sums the issue up incredibly well. He says:
I am very disturbed to read about the possible changes to the eligibility for the above card. Nowhere are the changes clearly outlined nor did the Government signal these changes when seeking election in 2007.
My concerns are:
a. these changes, if correct, completely change present legislation i.e. superannuation is now included. Not only is it included but that previous allowances will not be allowed.
b. the upper limit of $80,000 has not been indexed since its introduction.
c. investments made since 2007 to get any benefit of higher interest rates will now hurt any application to retain their card. Especially now that interest rates and dividends are falling, recipients for the Health card will have to wait 12 months to regain and or make application even though fully meeting the criteria for the 2009-10 financial year.
d. the government is not making any allowance for a “grandfather clause” i.e allowing those presently receiving the card to have a period of time to revise their finances.
e. I am in receipt of a NSW State Superannuation pension which is fixed annually subject to indexation every September. Those people on an allocated pension can vary the amount withdrawn to stay within the proposed upper limit. Both people are pensioners but are treated differently under these proposals. Is this fair and equitable?
f. these changes are being made retrospective based on the 2008-09 income tax return, again unfair and unreasonable?
g. pensioners such as us will not receive any funds from the $42 billion stimulus package so this could become a double whammy for me.
I raise that not only as an example of one person expressing their concern but also as an example of the concerns felt by many. Local branches of independent retiree groups in the Manning and the Hastings areas have also expressed similar concerns. I therefore ask the government to reconsider this legislation, particularly in the light of current economic circumstances. I ask that of the minister, the cabinet and the executive. In the light of what we have seen in the previous legislation that just passed through this parliament, in the light of $42 billion of fiscal stimulus packages that we have seen pass through this parliament, in the light of the economic circumstances, if there is no window of opportunity or window of grace for the independent retiree and aged communities to continue to have full access to health benefits through the Commonwealth seniors health card then we are a sadder place because of it.
Firstly, I would like to thank all those who contributed to the debate on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009, an important piece of legislation. I think it is important to say at the outset that every single member of the House recognises the very significant contribution that all self-funded retirees have made and, in many cases, continue to make by continuing to work and contribute to their communities.
It is the case that the government recognises the pressure that many self-funded retirees are under as a result of the global financial crisis. There have been a number of changes which we have put in place as a result. I asked Centrelink last November to do a re-evaluation of assets ahead of the normal re-evaluation program, to recognise the pressure that many self-funded retirees were under because of the changes in the stock market. There have been a significant number of reductions in the deeming rates to recognise the reductions in interest rates. I remind all members that last year, as part of the economic stimulus package, we extended the payments that were made to pensioners to those who also receive a Commonwealth seniors health card. Those people received $1,400 each if they were single self-funded retirees on a Commonwealth seniors health card, and $2,100 if they were a couple on a Commonwealth seniors health card. A number of measures have been put in place by the government to support self-funded retirees in what we understand is a difficult time, and that will continue to happen.
I will go to what this bill is really about, rather than some of the extreme statements that have been made. The bill implements a budget measure from last year that amends the adjusted taxable income test for the Commonwealth seniors health card—and this is the important thing—to align the treatment of income received by seniors across different income tests. So it really is a matter of trying to be fair to seniors who are receiving income from different sources to make sure we treat them in a similar way. It really is about fairness and equity for seniors and particularly self-funded retirees. It is also about making sure that in these tough times we support those who are in the most need. That, unfortunately, does not seem to be understood by those opposite.
The relevant shadow minister, the member for Warringah, in his second reading debate speech made it clear that he opposed the bill and the modest savings it will generate for the budget. But in the same speech he actually questioned the affordability of a pension rise, so it seems to us that the opposition, on the one hand, is now opposing a possible pension rise—one that the government, of course, has committed itself to—and, on the other hand, is opposing this modest budget saving. As I said, what we are on about here is ensuring that similar forms of income are counted in the same way for the Commonwealth seniors health card. Of course, that is a card available to seniors who do not qualify for the age pension because their income or assets exceed the relevant test limits. Currently the definition of ‘adjustable taxable income’ used to assess a person’s qualification for the Commonwealth seniors health card—and this is the important thing—does not include income from superannuation that is non-assessable and non-exempt under the Income Tax Assessment Act 1997.
This bill amends the test to create a test that is simpler and fairer by treating income from different sources in similar ways. The inclusion of income from a superannuation income stream with a taxed source—that is, gross superannuation—will treat similar income in a similar way. Under the current rules, income from a defined benefit scheme, such as the Commonwealth Superannuation Scheme for public servants and also some state government schemes, is treated as income when determining eligibility for the card. Those were the rules under the previous government. Those superannuation income streams are treated as income when determining eligibility for the card. But income from some private retail or industry super funds and from account based pensions are not counted as income for the purpose of the Commonwealth seniors health card, so I hope people can see that that is the inherent inequity that we are trying to deal with. It has created inequities as people with substantial incomes from superannuation income streams from a taxed source have this income disregarded for the purpose of assessment for the Commonwealth seniors health card. Individuals who have income that is non-assessable and non-exempt under the Income Tax Assessment Act have, of course, already had the advantage of accumulating their superannuation savings in a concessional tax environment and also benefit from the ongoing tax treatment of their superannuation pension payments after the age of 60.
This is all about treating all income received by seniors, whether received from superannuation or another source, such as employment income, in the same way. The proposal will make sure that the income test is applied to all cardholders consistently. That is all that this bill is about, not all of the other things that people have talked about. Nor does the test currently include income that is currently being salary-sacrificed into a superannuation fund or retirement savings account. The definition of ‘income’ for qualification for the age pension actually already includes income sacrificed into superannuation, and accordingly—and this is an other important equity measure—the changes introduced by this bill will line up the salary sacrifice definition of income for the Commonwealth seniors health card with the existing definition for age pensioners. That does seem to me to be a real issue about fairness and equity in determining eligibility for the Commonwealth seniors health card.
I do understand some of the worries that seniors groups have—that these changes will mean that lump sum withdrawals from superannuation will be counted as income and that this could lead to unfair and what are certainly unintended consequences. We do understand that in certain circumstances cardholders may need to make lump sum withdrawals from their superannuation to pay for things like unexpected medical expenses. I say to those of you who are concerned about this that these lump sum withdrawals may increase an individual’s adjustable taxable income for the test year, so to safeguard against people losing eligibility for their card they can request that their qualification for the seniors health card be determined with reference to an estimate of their income for the current financial year. I think that is important for people to be aware of. This may result in the discounting of the lump sum, where it is shown to be a one-off or not ongoing income. These safeguards do exist within current legislation.
The changes in the bill apply to both veterans entitlements and social security based seniors health cards. The changes are being put to the parliament because we want to make sure that people are treated in a fair and equitable way across different income sources, and they are being done with a number of other changes to support self-funded retirees. We do recognise that there are very significant pressures on self-funded retirees. That is why we have made the changes that we have to the revaluation of assets, to the deeming rates and to making sure that the Economic Security Strategy payments of last year were extended to those on the Commonwealth seniors health card. This bill is all about equity in the treatment of income. I commend the bill to the House.
Question put:
That this bill be now read a second time.
Bill read a second time.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
The following notices were given:
to present a bill for an act to amend the law relating to family assistance and social security, and for related purposes. (Family Assistance and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2009)
to present a bill for an act to amend the Social Security Act 1991, and for related purposes. (Social Security Legislation Amendment (Improved Support for Carers) Bill 2009)
to present a bill for an act to amend the Fuel Quality Standards Act 2000, and for related purposes. (Fuel Quality Standards Amendment Bill 2009)
to present a bill for an act to amend legislation relating to defence, and for related purposes. (Defence Legislation Amendment Bill (No. 1) 2009)
to present a bill for an act to amend the Higher Education Support Act 2003, and for related purposes. (Higher Education Support Amendment (VET FEE-HELP and Providers) Bill 2009)
to present a bill for an act to amend the National Greenhouse and Energy Reporting Act 2007, and for related purposes. (National Greenhouse and Energy Reporting Amendment Bill 2009)
to move—
That the House:
Dorothy Seguna and her husband, Reg, live in my electorate of Cook. Their family home was in Burraneer. Due to advanced dementia, for the past 12 months Dorothy has been a resident of the Stella Maris nursing home at Cronulla. Dorothy and her husband have recently become acquainted with a new resident of Stella Maris, Sister Catherine O’Carrigan from the Sisters of Charity. Sister Catherine’s respiratory condition has limited her mobility and necessitated her taking up residence in the nursing home. I am informed that Sister Catherine has actively fulfilled the role of historian with the Sisters of Charity and perpetuated the achievements of the religious order since its arrival in Australia more than 170 years ago. The anniversary of its arrival was just over two months ago, I am told. I want to take the opportunity of recognising that here in this place by referencing the work of Sister Catherine.
The story behind the arrival of the Sisters of Charity in Australia began in 1838 when Bishop Bede Polding made a request to Sister Mary Aitkenhead for a community of sisters to be established in the colony of New South Wales. The five women arrived in Port Jackson on 31 December 1838 after a long sea voyage aboard the ship the Francis Spaight. The five women were Mother Mary John Cahill, Sister Mary de Sales O’Brien, Sister Mary Baptist de Lacy, Sister Mary Xavier Williams and Sister Mary Lawrence Cator.
Their first mission was to bring Christian love into a jail where up to 800 women lived in degradation and misery. Based at the women’s jail at Parramatta, the work of the sisters had an immediate impact. Bishop Polding wrote to their superiors in Ireland that an almost miraculous change had taken place in a jail that had seemed full of hopelessness, misery and despair. The sisters won much support and admiration amongst the Catholic laity. Even the colony’s governor, Sir George Gipps, showed respect to the sisters, sanctioning their work in the colony’s jails, hospitals and schools. He supported their work by assisting them to establish a laundry and sewing rooms that would provide female convicts with an occupation that would lift their self-esteem. Other examples of their work included visiting the sick and the poor, giving religious instruction in Sydney’s growing number of Catholic schools, providing classes in needlework and visits to the Darlinghurst jail and the Sydney infirmary. While there was much enthusiasm for the work of the sisters and recognition towards the pioneer spirit of the order, the early years were beset with many difficulties surrounding their relationship with the broader church hierarchy.
Today, the Sisters of Charity continue their good work across a broad range of ministries, including prisons, hospitals and education. This is regarded to be a reflection of their fourth vow of service to the poor. The order continues to interpret this vow in terms of asking how they can make themselves ‘extensively useful’. A landmark achievement of the Sisters of Charity was building their own hospital, St Vincent’s, which was established in 1857 at Potts Point. St Vincent’s was started as a free hospital for all denominations but especially for the poor. I would like to thank Dorothy Seguna and her husband, Reg, for bringing this important occasion to our attention. The compassion and dedication of the sisters over 170 years deserves recognition.
My constituents in the suburbs of Deer Park, Caroline Springs, Burnside and Cairnlea are very happy because the decades-old traffic bottleneck around Deer Park and in particular on the Western Highway, also named Ballarat Road, is finally coming to an end. It is coming to an end because the Deer Park bypass is due to be opened to traffic eight months ahead of schedule on 5 April this year. This is a major project in my electorate, costing $331 million and creating hundreds and hundreds of jobs. Along with the Victorian Minister for Roads and Ports and Major Projects, Tim Pallas, I recently had the privilege to visit the bypass. It is truly an awesome spectacle—a 9.3-kilometre link connecting the Western Ring Road at Sunshine West and the Western Highway at Caroline Springs. This is a valuable and much appreciated community asset.
To this day, my office gets regular calls from enthusiastic constituents asking when the bypass will be open to traffic. These people are understandably excited about the bypass. They stand to cut up to 15 minutes from their travel time—and, of course, that is 15 extra minutes they can spend with their families. Indeed, since that is 15 minutes each way, it therefore gives them 30 minutes more time over the course of the day and adds up to a significant amount of time over the course of a week.
This is a big win for the community, and I would like to take this opportunity to acknowledge its contribution to making this project a reality. If ever one needed evidence of the effectiveness of grassroots campaigning, this is it. Residents have been passionate about the issue for years. It was also a major issue for me when I was first elected to this place as the member for Burke, and it remained a major issue for me when I was elected to represent the electorate of Gorton. Working together with residents, we were going to fight and get this project off the ground.
Just how passionate the community felt about this project was evident in the petition and public meetings organised on this issue. Indeed, there were thousands of petitioners’ signatures tabled in parliament. Six years ago, I was overwhelmed with the response to the petition prepared by my office. My office was inundated with signed petitions and messages of support. It was with great pleasure that I presented in this place that petition signed by thousands of my constituents demanding the construction of the Deer Park bypass. I also hosted two public meetings—one in Deer Park and the other in Caroline Springs. Both attracted hundreds of residents who, with a single voice, demanded that the then Howard government end its abysmal neglect of Melbourne’s west and build the Deer Park bypass. So I commend all of those community representatives and community residents who were involved in the campaign and I look forward to the opening of this important link on 5 April.
I rise today to talk about four members in my electorate of Maranoa—four people who have worked hard for the people of Queensland and who are ready to make a change for a better Queensland. These four people have a lot in common but they share one very special quality: they are part of a team, a team that will help Queenslanders this weekend become part of the new Queensland government. This team, which represents the state electorates that come under Maranoa are ready to deliver a better Queensland, not only for Queensland’s regional communities but for all Queenslanders—from banana farmers in the north to tourist operators on the Gold Coast and to the farming and rural communities in western Queensland.
This team I speak of, and of which I am extremely proud, consists of: Lawrence Springborg, the leader of the LNP, the alternative Premier and the member for Southern Downs; Ray Hopper, the shadow minister for food security and agriculture, the member for the Darling Downs and the LNP candidate for the newly created seat of Condamine; Howard Hobbs, the shadow minister for local government, planning and regional development, and the member for Warrego; and Vaughan Johnson, the shadow minister for police, corrections and sport and member for the central Queensland seat of Gregory. There are the fifth and sixth members of the strong LNP team in Maranoa: John Bjelke-Petersen, the candidate for the seat of Nanango; and Ted Randall, the candidate for the seat of Mount Isa, which stretches down to the remote communities of Bedourie and Birdsville in the Diamantina shire in my electorate. Both are respected community members, family men and small business owners, and both are ready to help Lawrence Springborg become the next Premier of Queensland this weekend.
As members of the LNP they are ready to take on the challenges that face the sunshine state. They are ready to end the 11 years of failed Labor government, which has resulted in Queensland having a $74 billion debt. Where did all the money go? Where did all that money go from the mining boom? It did not go into the health system. It did not go into the regional and rural roads. If Labor can take Queensland into a $74 billion debt, during these good times of a mining boom, how can we trust Anna Bligh and the Labor Party to manage the economy in the tough times? Queensland deserves a team who can manage the economy, return our health care to a respectable standard and provide us with an education system that we can all be proud of.
In Queensland right now, under Anna Bligh and the Labor government, they are actually borrowing the money to pay the nurses, doctors, teachers, police and emergency services personnel—this is the disgrace of the Labor government in Queensland that will be thrown out of office this weekend. The LNP members in my electorate are part of a new team— (Time expired)
Surprisingly, after that ‘speech’ that we just heard, I wish to talk about Harmony Day. Harmony Day is celebrated this Saturday, 21 March, which happens to correspond with the state election in which I will be very pleased to see the Bligh Labor government returned. Harmony Day is managed by the Department of Immigration and Citizenship and celebrates the cohesive and inclusive nature of our nation and promotes the benefits of cultural diversity. DIAC supports a range of community events and activities held to celebrate Harmony Day. The key message of Harmony Day is ‘everyone belongs’. It is about community participation, inclusiveness, respect and a sense of belonging for everyone. Since Harmony Day began 10 years ago, thousands of schools, community groups and organisations across Australia have hosted Harmony Day events.
Locally, the Redcliffe Multicultural Community Association in the electorate of Petrie are holding their Redcliffe Harmony Day multicultural festival for 2009. This will be their sixth year. They are holding this on Sunday, 22 March, from 11 am to 4 pm at the Redcliffe Botanic Gardens. This is a free event and a fantastic day out for family and friends. This is about bringing the community together. We have a host of wonderful nationalities in our local community that on this day truly come together and we get to see the different foods, the different clothes, the different dances of the different cultures that make up our local community.
There will be multicultural entertainment, delicious and exotic ethnic food stalls; there will be games for the children, face painting, arts, crafts, stalls—this is what Harmony Day is truly about. I am looking forward to going along on Sunday and celebrating this with my local community. We have a strong Indigenous and Torres Strait Islander community and Samoan community, and I know that on days like this we come together and we truly do embrace our different cultures. With my own multicultural background—my husband is Tongan—I think it is very important that our children and our neighbours and our broader community understand our different cultures and embrace them, but also embrace the things our nations have in common. That is what truly makes Australia the great nation that it is.
In 2006 a group of mates in Nana Glen decided to play some touch football on the town’s new oval. They put up a notice at the general store and started to play during the daylight saving hours. A local community member, Andrew Palmer, would bring along some markers and a football and the group would play for as long as they liked. It proved to be a great way to meet other people and build community spirit. There had never previously been any organised games. There was no fee to play and there was no requirement that you turn up every week. After more and more people began to play, the issue of insurance was raised. According to a local council, the football players are not covered by the council’s casual use insurance because they use the facility more than 12 times a year. The group was told to speak with the local touch football association about insurance, but of course this would have meant formalising the games with registration fees, and that was going to defeat the purpose of the afternoon get-together.
Mr Palmer contacted me about the situation and I contacted the Minister for Youth and Minister for Sport on his behalf. Unfortunately, the minister did little other than to suggest that Mr Palmer should contact the official touch football association—which would have meant, of course, a formal competition and paying fees et cetera—or perhaps linking up with a local church or charity. Friends and families should be able to use public facilities for social purposes without fear of being sued. The whole point of this type of arrangement is the community getting together to have fun without fear of legal obligation and without being obliged to attend and become part of some formalised competition. In these games that are carried on at Nana Glen, no-one really cares about the score or who wins or loses. Everyone is having a good time, everyone is getting some exercise, everyone wins, but at no cost. That is the thing: in regional and rural areas, where people are doing it tough, to have affordable entertainment is certainly something that should be pursued—and free is certainly as affordable as you can get.
This situation is not isolated. There are similar situations occurring right across the nation—this sort of social interaction is being denied because of a lack of insurance. It really raises the question: if a mother takes her child to a playground once a week—that is far more than 12 times a year—is there some form of legal liability starting to accrue in this case? I think it is important that the government investigate ways to facilitate such sorts of informal gatherings without the need for formal registration, without the need for fees to be paid so that the community can get together on a social basis without fear of being sued and without having to pay money for the privilege of doing so. I certainly congratulate Andrew Palmer on his efforts in starting what was a great local community movement. I regret that the rigidities of the insurance system are making it so hard for the Nana Glen community.
It is with great pleasure today that I stand up to speak on a number of events that have happened in my electorate of Forde over recent weeks. To give some background to this, on 6 June 1859 Queen Victoria signed the letters patent that created Queensland as a state. That means that this year Queensland will be 150 years old. This weekend, as the member for Maranoa pointed out, there is a state election in Queensland. Irrespective of the outcome—I know he had some passionate words for his colleagues and those running for office—it is about continuity, understanding the state of Queensland and the importance of the organisations and groups that come together in harmony. The member for Petrie has spoken about Harmony Day, which is also occurring this weekend.
Last weekend I attended the 90th birthday celebrations of the organisation Quota. Quota Australia is a women’s organisation. It has done an enormous amount of work with the community. In fact, it parallels very closely with a lot of the principles of Rotary and is very active in the community with fundraising. The 90th celebration in my electorate, and certainly for the Beenleigh Quota club in the township of Beenleigh, was all about putting on some events that were also celebrating what we are calling the ‘Q150 celebration’ in Queensland—the celebration of 150 years of Queensland. This particular organisation, Quota, matches with other women’s organisations, like Soroptimists, working very closely with similar organisations to fundraise and to provide a range of community services. This particular event was a coming together of the Quota organisations in district 30—the district governor being Janet Hughes. It was a great display of how the community does work well together.
Many of these service organisations are the unsung heroes in our communities. They are selflessly working away raising money for many different causes. Quota in our area has a program called Quokka, which is a program to bring the cops and the kids together for a reading program. It is about providing schools and children with the opportunities for and the understanding of good reading material. There is cooperation between members of parliament, those in the community, the police and the children to sit together and read through a book—whether it is a display of pictures or caricatures or simply for them to read and understand. It is a great program and it is a credit to organisations like Quota and Soroptimists who operate in different areas around the country.
Queensland is 150 years of age this year. We have a state election this weekend, which will be interesting, but we understand in Queensland that continuity is important irrespective of the outcome. All organisations, all members of parliament—federal and state—and certainly local government and councils will work together to keep Queensland the greatest state in Australia.
I rise to record my appreciation for the 123rd annual Castle Hill show, which is commencing this Friday at the Castle Hill showground in my electorate. The show runs from this Friday to this Sunday and is open all day, every day, and is a wonderful event that provides a link with the rural and regional history of my area. Indeed, it provides a contemporary experience for the many thousands of new families who have moved into the suburbs of Kellyville and Rouse Hill. The Castle Hill show is an annual fixture in the Hills Shire calendar. It attracts tens of thousands of locals and visitors to my electorate and the show’s success can be measured on many fronts. Most notably, members would agree that 123 annual shows is a cause for great celebration, particularly when you consider that this is a completely voluntary event without any assistance funding, and has never recorded any government assistance of any description.
A look at the weekend’s schedule gives a good idea of what goes on there. There is a packed program that includes horse events, dog shows, kids dancing, motorcycle demonstrations, sheep mustering, chainsaw demonstrations, fire dancing performances and many other activities. The show also contains its traditional displays of the Hills Shire’s history and its art and crafts and a link to our rural heritage.
I want to thank and congratulate the members of the Castle Hill District Show Society and the Castle Hill and Hills District Agricultural Society, led by its president, Peter Gooch. I want to thank and record the names of the vice presidents, Judith Adam, Peter Dimbrosky and Heather Williams; the secretary, Gabrielle Klopf; the treasurer, Christine Mann; board members Di Dean, Ian Henderson, Ray Parker and Ross Baker; as well as management committee members Dominic Quinn, June Smith and Rowena Burrough. These management committee members work tirelessly each year. Many of them have served for many years in providing the absolute foundation—the bedrock—that is the success of the show. They put in thousands of hours of their own time and ensure that each year this is a great success for everyone within our district. I want to also congratulate and thank my friends and fellow patrons, including: Michael Richardson MP, Ray Williams MP, Wayne Merton MP and my predecessor, the Hon. Alan Cadman.
As a part of the Castle Hill Hills District Show Society, I have worked very hard to ensure that we all support such a great local institution, because it is such a wonderful testimony to the wonderful spirit of the Hills Shire district. We have one of the highest levels of volunteerism in Australia and indeed all of our Lions and Rotary clubs attend this important event and ensure that it is something very special. Fundraising from this event is used to help many disadvantaged sections of our north-west Sydney community. I want to thank again all of the wonderful volunteers for the work that they do—the board, the committee and the management committee—and everyone who attends this weekend and makes it such a fantastic event.
I believe we as a parliament should recognise the just claim of the Greek government for the return of the Parthenon marbles from the British Museum. We should encourage the British Museum to accept and abide by the resolution of the UN General Assembly, which at its 61st session debated the return or restitution of cultural property to the countries of origin. Museums should be prepared to initiate dialogues for the return of important cultural property to its country or community of origin.
The Parthenon is a significant symbol of Greek cultural heritage and western culture in general, and the marbles form an integral part of this most important of buildings. The marbles are not freestanding works of art. They should not be exhibited 2,000 miles away, separate from the actual monument for which they were specifically designed and carved. We should propose to the British government that they return the Parthenon marbles to the new Acropolis Museum, expressly built in order to house all the Parthenon sculptures.
The Parthenon marbles—or, more precisely, the Parthenon sculptures—are integral architectural members of one of the most magnificent and best-known monuments in the world, the Parthenon. The Parthenon is the celebration of the achievements of free, democratic people and for that reason it is an important symbol to the whole world. That is why it is inconceivable that over half of its celebrated sculptural elements should be exhibited 2,000 miles away from the rest. Furthermore, these architectural ads were removed from the monument—actually hacked off—without the consent of the Greek people, who at that time were under occupation.
The Parthenon is the most important symbol of Greek cultural heritage and, according to the declaration of universal human and cultural rights, the Greek state has a duty to preserve its cultural heritage in its totality, both for its citizens and for the international community. The Parthenon sculptures are not properly displayed at the British Museum. Not only do they appear as if they form a whole—which they do not—and there is no indication of where the missing slabs should have been but they are also exhibited on the inside of a wall.
During the 61st session of the UN General Assembly held in November 2006, the return or restitution of cultural property to the countries of origin was debated. This resulted in a new resolution reaffirming previous UN resolutions calling for the protection of cultural property; laws prohibiting illicit import, export and transfer of ownership of cultural property; and further acknowledgment and recognition of statutes based around cultural heritage.
As I said at the outset, museums should be prepared to initiate dialogues for the return of important cultural property to its country or community of origin. This should be undertaken on ethical, scientific and humanitarian principles. I believe that the cooperation, partnership, goodwill and mutual appreciation between the parties concerned could lead to joint research programs and the exchange of valuable technical expertise.
During election campaigns, good things happen and concerning things happen. We currently have a state election campaign going on in Queensland and, in the last week, there have been some terrific announcements for Townsville. I am very pleased that today the opposition announced a $10 million contribution to the Jezzine Barracks upgrade, and that will attract a further $10 million of Australian government funding. This is a terrific outcome. We have also announced $18.9 million to upgrade the Townsville Mall, and that is very welcome in our local community. Further, on the weekend, the Leader of the Opposition announced $80 million for a new subacute facility for the Townsville Hospital—something that is long, long overdue.
But some concerning things have been announced as well. The Queensland Premier, Anna Bligh, as part of her jobs summit in Townsville, announced that extra jobs would be created and sustained in roadworks projects in North Queensland. In particular, she announced the duplication of the Douglas arterial, the construction of stage 2 of the Townsville port access road and the Cardwell Range project. This has been well received. But, unfortunately, I learnt today that there is no money from the state government to go with that promise. The federal government, through its nation-building program, has provided the money for each of those projects. How much money has the state government provided? None. Queensland Main Roads Department must be beside themselves. How do they start projects with no commitment to financial support from their own state government? How do they do that? How can Anna Bligh get up in front of Townsville people and say, ‘I’m going to do these road projects and I’m going to create a whole lot of extra jobs; this will be terrific in North Queensland,’ when the promise is worth nothing? It is worth nothing because the projects cannot start without matching state government funding. This is not good enough.
Some people will think that I am just being part of the state election. I am the local member. I want to see the roads built, and I am just stating the facts to the parliament. I want these roads built. I want to see the state government provide the money. I do not care whether it is the Labor Party or the LNP, as long as my community gets the money. But it is not going to get it from the Labor Party. The people of Townsville ought to know that. The people of Townsville ought to mark down Anna Bligh when she is not prepared to support the north yet she can build a stadium in the south.
The Shortland electorate is a coastal electorate. The eastern border of the entire electorate is the Pacific Ocean, and so part of the identity of the Shortland electorate is intrinsically linked to the beaches along that border. The safety of those beaches is maintained by the surf lifesaving movement. The surf lifesaving clubs within the Shortland electorate play a vital and important role. Because of the quality of those beaches and the environment of Lake Macquarie, state championships are often held within the Shortland electorate.
Within the last month, both the junior and the senior state lifesaving championships have been held at Blacksmiths Beach, with the Belmont Swansea Surf Life Saving Club being responsible for them. On many occasions, the Belmont Swansea Surf Life Saving Club has hosted the junior and the senior state lifesaving championships. Their ability to organise and conduct an event of this magnitude is second to none. On every occasion when the championships have been held at Blacksmiths Beach, the club has ensured that the event flows without a hitch. I was really pleased to attend the presentation at these championships and to see how all levels of government were prepared to work together so that the event was successful. I congratulate the executive and all the members of the club for the fine job that they did in organising the championships. I put on record that they will be held there again next year.
On the previous weekend, Caves Beach Surf Life Saving Club had their ‘Ocean Swim’, which has become a renowned event and involves competitors from all around the state. It was yet again a very successful event and really showcased the wonderful beaches and the wonderful environment of the Shortland electorate. That same weekend, I attended Redheads Surf Lifesaving Club, where they had the junior surf lifesaving club presentation. There were hundreds of young people there who were involved in the club and were learning about surf lifesaving and beach safety and at the same time learning what it was like to be a member of a volunteer organisation that gives so much to the community. I would like to formally congratulate all of the surf lifesaving clubs within the Shortland electorate and throughout the whole of Australia.
Order! In accordance with standing order 193, the time for constituency statements has concluded.
Debate resumed from 12 March, on motion by Mr Brendan O’Connor:
That this bill be now read a second time.
In speaking on the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009 I would like to make some comments about the bill and indicate that the opposition will not be opposing this bill. This measure would allow someone who is claiming Newstart allowance, youth allowance, sickness allowance or Austudy to have a doubling of the liquid assets previously available. They were $2,500 for singles or $5,000 otherwise. People who did have liquid assets above these maximum reserves, would have gone on a liquid assets waiting period. Doubling the maximum reserve of the liquid assets for a two-year period will have the effect of reducing the length of the liquid assets waiting period. The bill will also amend the Social Security Act 1991 to exclude the surrender value of life insurance policies from the definition of ‘liquid assets’ for social security purposes. This bill overturns a savings measure which the former Howard government introduced in the 1996 budget.
In light of the fact that unemployment has now risen to its highest level in four years, these measures are appropriate and will not be opposed. What is concerning, however, is that this is indicative of a much more general approach which is being taken by the government. Rather than having ambitions to create jobs, this is a government which seems to have given up on that front and is now just preparing people for unemployment. Mr Deputy Speaker Sidebottom, you might remember that 25 years ago Bob Hawke was elected on a promise to create 500,000 jobs. That was a government which actually met that promise. We have a Prime Minister who promised before Christmas to create 75,000 jobs. He has scurried away from that promise. He will not stand by the promise he made prior to Christmas to create 75,000 jobs. His ambitions now for Australian workers, for school leavers and for mothers returning to the workforce are now so slow that he will not stand by his commitment prior to Christmas to create 75,000 jobs.
We should look at the track record so far. Before Christmas, Prime Minister Kevin Rudd promised to create 75,000 jobs. In the month of December, the government created 200 jobs across the whole of Australia. In the month of January, the government created 300 jobs across the whole of Australia. In the month of February, they created 1,700 jobs. So, over a three-month period, the Rudd government created 2,200 jobs. Over 12 years, the Howard government created 2.2 million jobs—1.2 million of them full time—and at the same time saw wages increase in real terms by more than 20 per cent. The Prime Minister promised 75,000 jobs and, in the last three months, the government created 2,000 jobs. We would like to know where the other 73,000 jobs are. He has come up 73,000 short.
When we look at this government’s record on unemployment, it is not a happy one. There are now 157,900 more Australians unemployed than there were 12 months ago. So over the last 12 months we have seen an extra 157,900 Australians receiving unemployment benefits, and the bill that we are debating today will only see those numbers increase further. We have a forecast from the government that there will be 300,000 more Australians out of work by June next year, and yet in January and February alone we saw about 80,000 extra Australians receiving unemployment benefits. So we are already seeing that these forecasts from the government of an unemployment rate of seven per cent by June next year—an extra 300,000 Australians out of work by June next year—may actually turn out to be quite optimistic.
Members may be aware that Anna Bligh has promised to create 100,000 jobs over the next three years. Members should be aware that there are now 19,300 more Queenslanders out of work than there were in November 2007, when the Rudd government came to power. So what we see is a Prime Minister who no longer has any ambitions to create jobs. He has given up on that front and is now just happy to prepare people for unemployment. In question time when we asked about jobs and job creation, the answers that we got were about redundancy payments. Rather than talking about working families, the government is preparing people not to be working families but to be redundancy families.
The ABS labour force figures for February 2009, which were released last Thursday, showed a 0.4 per cent increase in the unemployment rate, pushing the Australian unemployment rate to 5.2 per cent. This is a massive surge in unemployment in the space of just one month. It is the largest increase in the unemployment rate since 1991, and we are now back to where we were in March 2005. When we see these statistics, they are not simply statistics. For every person there is an enormous human cost and an enormous social cost in losing a job or in not being able to get a job to begin with.
Youth unemployment is now the highest it has been since 2001. As we know from the previous recessions, in the early eighties and early nineties, there was an enormous cost for those generations who never became established in the workforce. Many of them still have only a marginal attachment to the workforce. It is absolutely critical that the Rudd government address the issue of youth unemployment. One of the great disappointments is that, with all of the money that has been thrown around, there has been no specific initiative targeted at young Australians.
We have a Treasurer who is unable to state how many jobs the government plans to create in its first term. He is unwilling or too afraid to have Treasury revise the unemployment forecasts. This is the same Treasurer who, in his book Postcode: the Splintering of a Nation, talked about the regional differences in disadvantage in Australia. That makes today’s report by the Centre of Full Employment and Equity very timely because it shows that the impact of these jobless figures will not be uniform. The impact of increasing joblessness will not be uniform; it will hit some suburbs much harder than others. The authors of the report have said that they suspect that suburbs which have a high proportion of people in industries like manufacturing, construction, retail, accommodation and tourism, a high proportion of workers with no post-school qualifications and a high proportion of part-time workers will be the suburbs that will be most affected. You will see an impact on what are historically areas of social disadvantage. They will be hit hard. But you will also see many suburbs which they have described as ones of emerging disadvantage. These are what we would call mortgage belt suburbs, where people have had jobs, have mortgages and are stretched. These people will be hit for a six by rising unemployment and by the lack of any strategy on jobs from this government. In his book the Treasurer stated:
We must not concede defeat; we should not accept a culture of dependency.
And yet this is exactly the approach the government are taking. They are preparing people for unemployment. They are not prepared to create jobs. They are not prepared to even state an ambition to create jobs. They are refusing to address the fundamentals, to promote confidence, to promote growth and to promote employment. Instead of focusing on creating jobs and ensuring job security for Australian workers, they are rolling out plans for redundancy.
It is crucial for all members to remember that history tells us that unemployment can increase rapidly. In the early eighties we saw it go from the low point to the high point in five quarters—just over a year. In the early nineties, unemployment went from around five or six per cent to almost 11 per cent—in just two years. We know that, once people lose their jobs or when people do not get jobs, it takes a long time to get unemployment down. Sadly, it will be a long time before Australia has an unemployment rate with a ‘4’ in front of it again. The problem is: when unemployment rises rapidly, it is significantly harder to effect a reverse.
On every conceivable measure, the government seem to have given up. The government refuse to accept responsibility for the rising unemployment. The Prime Minister does not accept that there is one single job loss in Australia which is due to his government. He does not accept that there is one single extra person unemployed due to his government. The government are preparing people for unemployment. The front page of today’s Australian highlights some of the problems with the government’s very own policies. While their own forecast for an emissions trading scheme does predict a 10.1 per cent decrease in economic growth as a result of the emissions trading scheme, some regional centres will be hit very hard. Areas like Mount Isa, Gladstone and Newcastle will be hit hard on jobs. This scheme will be job destroying, especially in those regional centres. The mayors understand this. They understand that the important thing—and why the government were elected—is to create jobs, support jobs and protect jobs. This indicates that there are a lot of problems with the government’s emissions trading scheme. Their emissions trading scheme has very few friends. It is not a jobs-friendly, jobs-enabling emissions trading scheme; it is a jobs-destroying emissions trading scheme.
Mr Deputy Speaker, I rise on a point of order. As passionate as the member opposite may be—
What is the point of order?
about the emissions trading scheme, I have to say that he is really drifting away from the legislation that we are debating here today.
There will be latitude in this discussion, and the member for Boothby is ranging around that area of employment. I know he will be coming back more specifically to the legislation in the next 15 minutes.
To make it clear: the opposition is not opposing lifting the liquid assets eligibility level for Newstart allowance, but I am concerned that the government are passing the buck by refusing to address the real issue here, which is that of rising unemployment and their responsibility. We have gone from seeing a government promising to create 75,000 jobs as a result of their $10.4 billion stimulus package in December to their supporting only 90,000 jobs with their $42 billion spending announcement. The tone has changed and the government have given up the fight. We have had no indication of what the jobs impact will be of their policies, their emissions trading scheme or their industrial relations legislation, and yet they are able to quantify, down to the last job, 75,000 jobs from the $10.4 billion stimulus package.
Unfortunately, this legislation has become necessary now that we have the highest unemployment rate since March 2005 and now that we have had the largest increase in the unemployment rate since 1991. All you will hear from the government is that they refuse to take any responsibility for any of this. They are not responsible for a single job loss nor are they responsible for a single extra person joining the ranks of the unemployed. Regrettably, there is much worse to come. I fear that the government’s forecast of an extra 300,000 Australians out of work by June next year will turn out to be a very optimistic forecast and that there will be much more to say on this.
I rise to support the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. Under the current social security law, people claiming Newstart allowance, youth allowance, sickness allowance and Austudy who have liquid assets above a maximum reserve amount of $2,500 if single without dependants or $5,000 otherwise must generally serve a waiting period called the liquid assets waiting period before being able to access income support. This bill will amend the Social Security Act 1991 to double the maximum reserve threshold for liquid assets to $5,000 for singles without dependants or $10,000 for others for a two-year period from 1 April 2009. The effect of this will generally be to reduce the length of the liquid assets waiting period. The bill will also amend the Social Security Act 1991 to exclude the surrender value of life insurance policies from the definition of liquid assets for social security purposes. This will mean that life insurance policy surrender values will not be taken into account in calculating any applicable liquid assets waiting period or in determining severe financial hardship for the purposes of eligibility for income support. This amendment will ensure that income support claimants are not unreasonably disadvantaged by having to cash in their life insurance policies before they can access income support. These measures will commence on 1 April 2009. There will also be consequential amendments to other pieces of legislation as a consequence of this bill.
The decision to limit the increase by a two-year period provides an appropriate and measured response, in the government’s view, to the current extraordinary financial circumstances. The government has committed to reviewing these arrangements in a year. The threshold levels and indexation arrangements would be matters considered in the review process. This is an important initiative in these troubling times with the global recession. We have heard much about what is happening overseas in Canada, in the US, in Europe and in the UK, particularly about the rise in unemployment in those countries. Certainly we are seeing a rise in unemployment in this country. That is why it is important in these difficult times to provide what assistance we can, when a person finds that they are unemployed, to ensure that they get access to financial support as soon as possible. That is why I welcome these government initiatives by the Minister for Employment Participation.
But of course that is not the only thing that the Rudd Labor government is doing. Through the $42 billion economic stimulus package, there are new employment services, extra services for redundant workers, investment in training and a fairer compliance system. This bill is not introduced in isolation. There are a raft of initiatives and employment services that have already been introduced by this government to assist those people who find themselves unemployed. This is about supporting Australian jobs by stimulating the economy and investing in the skills we need now and in the future. It is crucial to our capacity to ride out the global financial crisis.
Through our new employment services, we are reforming employment services to improve opportunities for every Australian to participate in the workforce and to help build a more productive and competitive economy. Following intensive consultations last year, the Rudd Labor government is undertaking a complete overhaul of the existing Job Network and will introduce new employment services on 1 July this year. These new services will be demand driven, personalised and focused on addressing the real barriers to employment that each job seeker faces. There will be a much stronger focus on equipping job seekers with the skills and training required to gain a job and meet the labour needs of employers. There will be services for newly redundant workers. In light of the global financial crisis, the Rudd government has acted quickly to reduce the impact on workers and their families by providing intensive employment services for newly redundant workers. This came into effect on 24 February 2009. The government announced a further commitment of $298 million over the next two years so that newly redundant workers would be immediately eligible for intensive employment services.
This is so critical and it has been welcomed by training organisations throughout the electorate of Petrie who know about the difficulties faced by workers. Consider those workers who are made redundant in their forties or in their fifties. They have been in a workplace in a particular occupation for many years and suddenly find themselves redundant. They can have great difficulty in re-entering the workforce after they have found themselves on the unemployment line. We need to provide them with dedicated individual assistance, personalised assistance, not only to assist them to get back into the workplace but also to do it in a way that actually assists that person moving forward with their skills as well. This is not just about saying, ‘What skills do you have? That is great. Here is another job that needs those skills.’ This is about asking, ‘What skills do you have and what can we do to add to those skills so you may go out and actually move ahead in your career?’
There are opportunities out there right now. There are people in the workforce, predominantly males, in their late 30s or in their 40s who have been in the construction industry for years but do not have a formal trade qualification. Ask any one of the managers they have worked for and they will say that those workers are as capable as any tradesperson they have had on a job. If that person were to have their skills assessed, to have a recognition of prior learning assessment done, it may be that those individual workers can take up initiatives, engage in a course that requires them to complete a couple of units in a trade qualification and find themselves, within a reasonable period, with the full trade qualification. A group training organisation in my electorate, East Coast Apprenticeships, have been doing this very successfully with TEAs over the last year. In fact, they have had some adult apprentices complete their full trade qualification in less than 12 months by recognising the skills they already have. This is what these services can do—assist people on that path. Workers will receive immediate personalised assistance, career advice, referral to available training places and job search help. A personal employment pathway plan will set out the services and training they need to find and keep a job. Providers will be able to purchase services and training for them through a $550 credit. This assistance has never been provided to redundant workers.
In addition to early access to personalised employment services, the government will invest a further $75 million in 10,000 new training places through the Productivity Places Program. The additional 10,000 places will bring the total number of extra places for workers made redundant as a result of significant economic changes in their industries to 20,000. The $2 billion Productivity Places Program is a major, long-term commitment that will deliver more than 711,000 training places over five years. Already more than 80,000 Australians have enrolled in a training course through the program since it began in April last year.
There will be a fairer and more effective compliance framework. The Rudd government has amended social security laws to introduce a fairer compliance framework for approximately 620,000 people who receive Newstart allowance, youth allowance, parenting payment or special benefit and have participation requirements. The key features of the new compliance framework are a more work-like approach with no show, no pay participation failures, retaining an eight-week non-payment penalty for persistent and wilful noncompliance, a new comprehensive compliance assessment before any eight-week non-payment period is imposed, fair opportunities for payments to be reinstated if job seekers participate in an intensive compliance activity and new hardship provisions to replace financial case management.
That is what we are doing already to assist people who, unfortunately, because of economic pressures, find themselves in trouble due to the global recession. That is what the Rudd Labor government are doing right now. We have heard from the member for Boothby today that he and his colleagues in the opposition will be supporting this bill. We welcome that support because it is an important initiative. Of course, there is always a ‘but’ with support from the opposition. It is unfortunate that the member for Boothby believes that this is somehow indicative of the Rudd Labor government accepting that job losses will occur and that there will be a rise in unemployment. Any developed country will tell you that, as a consequence of the global recession, there is going to be an increase in unemployment. For the member for Boothby to stand here today and say that the government have given up and accept unemployment once again shows how out of touch the opposition are. They have completely not grasped what the government have delivered already through our stimulus package in October last year and through the $42 billion Nation Building and Jobs Plan.
Combined, this is an economic stimulus package that will support jobs across those areas most in need of support—for example, in construction. Again, I take you back to the training organisations in my electorate who say that they have got chippies and carpenters who have been stood down because of the lack of work. They absolutely support the government’s initiative to build infrastructure in our schools and to build social housing. They support our white paper on homelessness and our commitment to build more emergency shelters so that there are fewer homeless people. These initiatives are welcomed by my community.
We heard the member for Boothby, Dr Southcott, refer to Anna Bligh, the Premier of Queensland, and her commitment to jobs. In contrast, the policy of the opposition leader in Queensland, Mr Springborg—come the election on Saturday—is to cut jobs and to cancel infrastructure projects going on around the state. It sounds a bit familiar—for a leader of the opposition in Queensland to have a policy of cutting jobs—when you consider what is happening in the Senate right now, where we have an opposition whose policy is to hold on to Work Choices and to oppose the Fair Work Bill because they want to be able to sack workers more easily. So the opposition’s position, both in Queensland and federally, is quite consistent. They support job cuts and they support the ability to sack workers easily. That is what we see from the opposition. In Queensland, we have seen the largest commitment to nation building and investment in infrastructure building. The Queensland government has committed extensively to roadworks, bridgeworks and infrastructure generally to support the state in the long term.
It is convenient for the opposition to refer to the Howard years and how many jobs were created in the Howard years. But, once again, they fail to acknowledge that the economy has significantly changed since 2007.
Mr Hawke interjecting
I hear the interjection, ‘Since you came into government’—once again, completely ignoring that there is a global recession going on. According to the opposition, there is nothing else happening around the world when it comes to the financial circumstances of other countries; it is only happening in Australia. And, if you believe Mr Springborg, it is not happening in Queensland: there is no recession; it is just a beat-up.
As a consequence of the government’s economic stimulus in October last year, we have seen retail sales go up. What does that mean? It means jobs. It means that people in the retail sector have been able to hold onto employees who otherwise would have been made redundant because of loss of sales. Again today in the Courier-Mail we saw reports that retail sales in Queensland have risen and are much higher than they were this time last year. A shopping centre just down the road from me at Stafford is reported in the paper today, saying that sales in Big W’s kids wear have gone up 50 per cent. Those opposite say that people have wasted their stimulus money. I am sorry but, if parents are spending extra money buying their kids new clothes at Big W, I am for it. I think that is a great way to stimulate the economy—to go out and buy clothes for your children. This is what the government is about. Our Nation Building and Jobs Plan is about supporting jobs.
Yes, I support the infrastructure work in schools. I make no apology for supporting schools in getting multipurpose halls, state-of-the-art libraries and permanent school blocks. I have been working with my schools extensively to provide that support, and I will support any school which is seeking to access the government’s BER funding and which complies with the guidelines.
It is my pleasure to support this bill. It is another initiative, amongst a range of initiatives, that the government has put in place not only to support jobs—through its economic stimulus strategy—but also to support those people who find themselves unemployed, being made redundant. This government is stepping up. That is what a strong government does. It delivers not only in the good times but also when times get tough—and this is such a time. The global recession is putting pressure on businesses and it is putting pressure on jobs across this country. This government is stepping up to the job. The opposition’s alternative policy is to wait and see. In Queensland, it is a case of saying, ‘Let’s cut jobs; let’s cut infrastructure projects.’ In the Senate it is a case of saying, ‘Let’s make sure that we can sack people easily.’ I will support the Rudd Labor government’s policies any day over those sorts of initiatives.
I rise today to speak on the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. This is an interesting bill. It is most interesting to reflect that what we are doing with this bill—and, indeed, the opposition has no objection to this bill—is overturning a Howard government savings measure and restoring the pre-1997 threshold amounts. So people who are applying for income support and have liquid assets will now be able to claim those benefits at the pre-1997 level thresholds. There is no accident about this. Twelve years ago we had a government which was dedicated to ensuring that all Australians had a job or had access to a job. Now, 12 years down the track, we are returning to the pre-1997 level thresholds because unemployment is on the rise and people are losing their jobs. It is not something that we enjoy—it is not something that I enjoy—but it is happening.
It is a strange and unusual argument that the member for Petrie puts when she talks about these dramatic rises in unemployment and says, ‘There is a global financial crisis; the whole world is going through this. Everybody is doing it; therefore we have to do it.’ My answer to that is: under the former government, Australia was one of the world’s leading economies. We did not follow other economies into the Asian financial crisis. We did not follow them into the risky and unusual financial arrangements that we saw with the subprime lending crisis in the United States. The former Howard government, with the Australian Prudential Regulation Authority and ASIC, regulated to ensure that we had better and proper financial arrangements in place, which prevented many of those things happening in our country. This was not an accident; it was the result of good management and good policy.
What we see with this bill is that we now have to prepare for many more people claiming Newstart allowance, youth allowance, sickness allowance and Austudy. All members in this House would agree that this is far from a good development. Nobody should be trumpeting that this bill is some sort of triumph of government policy. No government should be coming in here today with the sort of divisive rant that we heard from the member for Petrie, suggesting we now have better economic policies, at a time when, clearly, we have people flocking to claim government benefits because they have lost their jobs.
What we did not hear from the member for Petrie—and what I suspect we will not hear from members opposite—is how we address the causes of this problem, not how we address the symptoms. What we are doing here with this legislation, which amends the Social Security Act, is addressing the symptoms of a broader and bigger problem, not the causes. Indeed, every time you hear a member opposite attempting to talk about what has caused this problem, we hear nothing but a blame game. We hear that something or someone else is responsible for what is happening—but not them. They are the government of Australia. It is their responsibility to put in place policies to ensure that people can find a job.
Today we are seeing the highest level of youth unemployment since 2001—a return to the days when we lost whole generations of young people to unemployment. When I left university there simply were not enough jobs for the graduates who left university. You could expect not to get a job and not to get a good salary for some time. We are now seeing a return to that. So it is with great trepidation that we support this measure before us today that says we have to return to a pre-1997 measure of welfare delivery because people are no longer able to access employment.
Within the member for Petrie’s submission, we did not hear about things that would help young people get a job. We did not hear anything about the ‘how’—how we will ensure that better employment conditions and circumstances return to our economy. The member for Petrie spoke of the barriers but then did not outline any barriers. I can tell you some real barriers to employment. A barrier to employment is labour costs. If you do not want to affect the wages of workers, which we do not during this time, then labour costs relate to things like payroll taxes, the cost of putting on extra staff or of keeping extra staff, and the definition of a small business—what level you set it at so that you generate the ability of an employer to employ more people instead of fewer.
They are the kinds of things that the government ought to be talking about and thinking about to prevent what we are doing here today, to prevent a return to the situation of 12 years ago. We should not have a triumphant entry into this place today with this bill and this trumpeting of the Rudd government’s mantra. This bill brings a very sad moment. There is nothing for anybody here to be triumphant about. It is unfortunate that we are now going to be seeing more Newstart allowance recipients, more youth allowance recipients, more sickness allowance recipients, more Austudy allowance recipients and more people seeking unemployment benefits, simply because there are no jobs to be had.
We see the government pressing ahead with their industrial relations changes even though the world economy has changed. If things have changed so dramatically on the employment front that we now have to change the Social Security Act, then why would we stick with a pre-election policy on industrial relations? Clearly the ground has shifted so much. Clearly the employment environment has shifted so much. Of course, we know that they are pursuing an ideological agenda, and we can see in this bill before us today that they really do not have a lot of sympathy for the very people who are going to be the unfortunate victims of this crisis.
I think, Mr Deputy Speaker, you will agree with me that if you do not have a plan to address the causes of this crisis, if you simply say, ‘Everybody’s doing it; the whole world is in a recession and therefore we will just have to go along with them,’ then you really do not have much hope of pulling yourself out of it. We accept that there will be a need for the measures within this bill in the next few years. We reluctantly accept that. It is not an instinct that ought to come to any of us easily. However, we do highlight that the main reason that we are facing this crisis of unemployment—the lack of jobs for young people now—is the fact that employers all around the country are laying off parts of their workforce in anticipation of a further downturn.
These are the things that the government should be addressing. They should be addressing how to get people jobs. The answer is not going to come, as the member for Petrie suggested, from a politician in Queensland suggesting that she will just create jobs. The Premier of Queensland has given a commitment that there will be jobs. Well, why didn’t we think of that! If all a government had to do to create jobs was to say, ‘We’ll create jobs,’ then we would create the jobs. Everyone in this place knows that governments do not create jobs. It is business, the private sector, which generates the employment capacity that drives down unemployment in this country. The member for Petrie says, ‘Why don’t we simply create jobs?’ It is because governments do not create jobs, and the government will not be able to create those jobs to save us from this emerging unemployment crisis.
It is with great trepidation that I say that we will accept the need for this measure, but we do not accept that governments should simply be spending dollars on things such as social infrastructure when we have an economic crisis. That is another fact that the member for Petrie overlooked. She trumpeted the Rudd government’s spending on schools. Independently of this debate, spending on schools is a worthy exercise. But when you are trumpeting it as a response to the greatest economic challenge that this country has faced, it does not stack up. You can spend dollars in a way that generates more than a dollar of economic return for every dollar spent. It does not mean that you should not spend money on education. But if you are saying that that is your prime response to the greatest economic challenge of our age, you will find that all the spending in the world on things that do not produce a dollar for dollar return or a dollar for better return will not produce the desired effect. And it will not produce the jobs that they are talking about. That is why the government are hesitant to state the number of jobs that this measure will create. We know that governments will not create the jobs that we need. Indeed, that is why we are seeing the emergence of bills such as the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009.
Here is the Rudd government saying, ‘Let us return to a pre-Howard era policy; let’s go back 12 years; let’s go back to the thresholds of 12 years ago.’ Why are we going back? Why have the government suddenly become conservative in their policy? The conservatism is because we are going back to a situation in which we will have a million Australians out of work. That is where we are going back to. That is why we have to make these preparations. That is why we are having to take these measures in this place today. Nobody here enjoys that; nobody here would seek that situation. But it is coming and the government, instead of focusing on measures that will create employment, generate jobs and produce a real impact in the economy, are seeking to spend money on political and social measures in their own interests.
It is with great trepidation that we will not be opposing this bill. But we would seek from the government a better answer in terms of what they are going to do about jobs and, in particular, how they are going to reduce the highest levels of youth unemployment we have seen since 2001—which will unfortunately rise if nothing is done.
Never have I heard an individual member in this House in the last few weeks talk this economy down so much as the member for Mitchell. What worries me about his feigned unctuousness about the comments that he made is that he is half pleased that we are in a crisis. He shares that with all of those opposite. He talked about a crisis of unemployment. He talked about the greatest economic challenge of our age. Yet he never talked about the global financial and economic crisis. He made it sound as though the crisis that we are experiencing is ours and ours alone and generated by us alone—as if we were globally isolated. That is the story that we have heard from the other side continually for the last few months.
I will make this point very clearly: we are experiencing a global financial and economic crisis. Australia is not isolated from it. We are being buffeted by it. We are doing everything in our power to try and combat that. We do not deny that there will be growing unemployment—nobody can deny that. But to almost gleefully wish it on with unctuousness like some of those on the other side is an insult both to this House and to the Australian public.
The claim that the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009and I quote the member for Mitchell—is ‘unsympathetic towards unemployed people’ is the absolute opposite of the intention of this bill. This bill recognises that we have people in difficult situations and seeks to assist them. It is complemented by our new employment services system, which is designed to both now and in the future not only support people in a financial sense but also prepare them for future employment and to develop their skills. I will return to that a little bit later.
The member for Boothby, who spoke earlier in this House, essentially blamed this government for the economic circumstances that exist now—no mention of the global crisis at all. I remind the member for Boothby and others opposite who may gleefully try to present this type of argument that we have unemployment under an industrial relations system that was introduced by them. He then spent most of his time trying to blame our industrial relations system for causing this unemployment. It was the most specious, illogical argument that I can remember.
It also reminded me that in past times the member for Boothby and the Howard government were very happy to take all the credit for employment growth but never gave any credit to the states for employment growth. Did the states not have anything to do with economic activity in the last 12 years? I think they did. I think they played a pretty significant part, but you would not believe it from the member for Boothby’s statements. But of course under that assessment anything that went wrong under the Howard government was the states’ fault. So why aren’t we, by the same argument, standing up and blaming the states for unemployment in Australia today? That is how silly and illogical these arguments are. And to have spent nearly 20 minutes meandering on with that, no wonder others attempted to intervene on him.
Let us get the facts right: we are in a global financial crisis that is affecting Australia. We are doing everything we can. If the $42 billion economic stimulus is not an attempt to try to sustain employment in this country then I will fly. And prior to that it was $10 billion of economic stimulus to try to maintain and sustain employment in this country. If that is not trying to stimulate this economy I will fly again. That of course should be coupled with the early budgetary fiscal constraint in our last budget, lower interest rates and our other policies in housing which are having positive effects on employment. Turning to the school’s policy for a moment, and to the infrastructure developments for both primary and secondary schools—if that is not about economic stimulus to maintain, sustain and enhance jobs then nothing is. I find it quite extraordinary that arguments like those of the member for Mitchell can be put in this place to say that we are doing nothing about trying to sustain our economy. It is quite extraordinary in its illogicality.
Back to the bill: this bill is sympathetic towards the unemployed. It tries to restore balance. Most of our legislation in this place tries to restore the balance lost in the Howard years, when funding and programs were ripped away from individuals and institutions when they most needed them. This bill will amend the Social Security Act 1991, reducing the liquid assets waiting period for people who, unfortunately, do lose their jobs. This change will enable such people quicker access to income payments such as Newstart allowance. The liquid assets waiting period is a key factor used by Centrelink to assess the financial position of people applying for various income payments. These liquid assets that are available to the person, such as savings in the bank or investments, are assessed to determine when people can start to receive payments. Depending on the level of liquid assets held by a person they can serve a maximum waiting period of up to 13 weeks before they may be able to start to receive income support payments. The current thresholds, which were established in the 1996-97 budget, used for the liquid assets waiting period are $2,500 for a single person and $5,000 for couples or people with dependants. Currently, above these amounts, single income support customers seeking to access Newstart allowance, youth allowance, sickness allowance or Austudy are required to serve a waiting period of one week for every $500 of liquid assets available to them up to that maximum period of 13 weeks. Members of a couple or people with dependant children are required to serve one week for every $1,000 above the threshold.
So what will our amendment mean? Simply, it will mean that single people with liquid assets of less than $5,000 and members of couples or people with children with liquid assets of less than $10,000 will not have to serve any liquid assets waiting period. This would mean, for example, that a single person with $5,000 in the bank or a couple with $10,000 in the bank would wait a week to access income support instead of waiting for five weeks. In recognition of the extraordinary nature of the current economic circumstances, we are reversing a decision by the Howard government taken in 1996-97. This amendment will double the relevant threshold amounts for the period 1 April 2009 to 31 March 2011. This measure will be retained for two years and will be reviewed for the 2010-11 budget. We believe that to be right, we believe that to be necessary and we believe that to be responsible.
Arrangements have been put in place to ensure that people who have an existing liquid assets waiting period as at 1 April 2009 will have their waiting period reassessed under this amendment. This is very important. People serving a liquid assets waiting period on the higher thresholds as at 31 March 2011 will continue to do so until their liquid assets waiting period expires. That of course is only fair.
In addition, and most importantly, the bill will also exclude the surrender value of life insurance policies from the definition of liquid assets for social security purposes. This will be a permanent change. This will mean that life insurance policy surrender values are not taken into account for the purpose of calculating any applicable liquid assets waiting period or determining severe financial hardship. Under current legislation, the surrender value of a life insurance policy is deemed a liquid asset for the purposes of social security law, which means that in order to support themselves people are expected to cash in their life insurance policy before being able to access income support. This amendment will ensure that income support claimants are not disadvantaged.
I would like to put on the record—because I know that this is being broadcast and may be listened to by the public and because it is important that they understand it—what will happen from 1 April 2009 to a person serving a liquid assets waiting period under the old rules. People who have an existing liquid assets waiting period as at 1 April 2009 will have their waiting period reassessed under the new rules. There are potentially three outcomes for people whose liquid assets waiting period is reassessed under the new rules, and I would like to also put these on the record. Any residual liquid assets waiting period may be waived from 1 April 2009; the length of any residual liquid assets waiting period may be reduced; or there may be no change to the length of the liquid assets waiting period.
What about the case of a waiver? The waiver of a liquid assets waiting period will occur when the liquid assets waiting period under the new rules would have ceased on or before 31 March 2009. For example, a person with $5,000 in savings under the current arrangements would serve a five-week liquid assets waiting period but will have this period waived from 1 April 2009 under the new arrangements. What about a reduction of a liquid assets waiting period? This will occur for cases where the person would qualify for a reduced period but the end date under the new rules is still on or after 1 April 2009. For example, a single person with $9,000 in savings under the current arrangements would have served a 13-week liquid assets waiting period but under these new regulations will have this reduced to eight weeks.
Finally, what about no change? No changes will be made in cases where people have significant liquid assets above the increased maximum reserves, as they would still need to serve a liquid asset waiting period up to the maximum 13-week period. For example, a single person with $20,000 in the bank would serve a 13-week liquid assets waiting period under the current arrangements and will still be subject to a 13-week liquid asset waiting period under these new arrangements.
In winding up so that my colleagues can also go on to support this important piece of legislation that supports individuals and families in difficult circumstances, I reiterate that this government has a raft of measures to support people who are unfortunate enough to be in unemployment or who are transitioning to future employment. I point out that we are revamping employment services and undertaking a complete overhaul of the existing Job Network. We will introduce new employment services on 1 July 2009. These new services will be demand driven; that is, they will be necessary and they will be personalised so that people are almost—if I can use the term—case managed on their individual needs. They will be focused on driving through real barriers to employment and will seek to find a way through for every individual who is affected.
This measure makes sense. It is right, and we should do it. I would be absolutely aghast if this legislation were not supported by all those on the opposite side. They should support this legislation. There will be a much stronger focus on equipping job seekers with the skills and training required for them to gain a job and meet the labour needs of employers. At the heart of this measure will be intensive assistance programs. We are working very hard to make those available to people who are unfortunately made redundant through these very difficult times caused by the global financial crisis.
In conclusion, there will be many more productivity places made available to people so that they can gain the training and the skills required for future employment and, hopefully, employment now. We are increasing those productivity places by many hundreds of positions. We are also introducing a fairer, more efficient compliance framework to assist people to achieve their aims through these programs.
The Social Security Amendment (Liquid Assets Waiting Period) Bill 2009 will amend the Social Security Act 1991 to relax the liquid assets waiting period threshold for access to income support by doubling the maximum reserve amount for the liquid assets waiting period from 1 April 2009 to 31 March 2011. This measure will also exclude the surrender value of life insurance policies from the definition of liquid assets for social security purposes.
Before I talk a little more on the legislation, I need to correct some of the misinformation that has been put forward in this chamber today. It really brings home the message that we on this side of the House get each and every day: the opposition says one thing but means something else. When the member for Boothby and the member for Mitchell stood up to speak on this bill, the first thing they said was that it overturned a savings measure introduced by the Howard government in 1996-97.
They talk about trepidation and their great concerns about this type of legislation. They go through, point by point, arguing against the legislation. They say they will vote for the legislation, but then argue against it—and all the time reiterating and emphasising the fact that the Howard government introduced it as a saving measure and how important it was at that particular time and fantasising about what it was like in the good old days when they were on the government benches.
The member for Boothby talked about giving up on jobs and just preparing people for unemployment. I know he voted against the stimulus package that went through the House—the $42 billion stimulus package that will create jobs in just about every sector in Australia. I know he voted against the $14.7 billion going to the schools in Australia—schools in his electorate. I know he did not want those construction jobs to take place within his schools. I certainly know that the member for Mitchell was opposed to those building plans for schools. He said as much here in the chamber today. He reinforced the fact that he was opposed to investment in schools, the building in schools—which creates real jobs in an industry where jobs have shrunk. He is also opposed to spending money on our children—in education. It shows that he has a very, very narrow approach to looking at creating jobs.
He was talking about solutions. One solution that the Rudd government has put forward is the stimulus package and creating jobs in retail. We only have to look at the retail sales figures in Australia for December and January in comparison to other countries to know how successful the first stimulus package was. The member for Mitchell was calling for solutions. The Rudd government has put in place those solutions. What was his solution? It was: ‘Get rid of payroll tax; it’s a state tax.’ He is calling on the Rudd government to get rid of state taxes. I would like to suggest that the member for Mitchell become a little bit better informed before he comes in this House to debate legislation. When he calls for action from the government in relation to having strategies in place to address unemployment, he needs to sit back, look what has happened and maybe have a look at the legislation that has been through the parliament—legislation that I suspect he was told he had to oppose, and which he did oppose.
And did it enthusiastically.
Yes, he did very enthusiastically—you just have to look in the Hansard to see his contribution to the debate. I am sure all the people he represents in this parliament will be looking very carefully to see his solutions—which are none. The solutions of the opposition are simple: oppose, oppose, oppose; do nothing; carp, complain, and criticise; and ‘Let’s not act. Let’s just sit back and hopefully, by doing nothing, we can just complain and criticise.’
The members on the other side talk about the increase in unemployment as if it were an Australian phenomenon. If it were, some of the criticism that they have directed towards the Rudd government would be reasonable. If Australia were an entity that actually existed in isolation from the rest of the world, then some of the criticisms may, just may, be reasonable.
They always wanted to put a fence around it.
As the member for Banks said, ‘put a fence around it’—and you could actually question that in some of the policies that the previous government put forward.
The comparison is the Rudd government knows that Australia is a country that operates in a global economy. We are part of the rest of the world. Our banking system, our manufacturing industry and all of the commercial markets within Australia are impacted on by what is happening throughout the world. That is what the opposition do not seem to get. They do not get the simple fact that the problems that are leading to increased unemployment are not caused by the Rudd government; it is a phenomenon happening worldwide. They need only to look at the US and the UK to see that the situation there is much worse. In the US, President Obama has cited the response by Australia as a response that is worthy of following. In other words: our approach, the measures that we have put in place, is a model for the rest of the world.
It just shows that the member for Boothby, who I think is the shadow spokesman, has such a narrow approach, has such a lack of understanding of the issues, that he seemed to miss this. I was extremely disappointed by the contributions from the other side. The other thing that came across very clearly to me is that they are still the slaves of Work Choices. They are still out there promoting Work Choices as the solution to the problem of unemployment. As long as they have that approach, we are going nowhere. Unemployment is increasing at the moment under the opposition’s legislation. They are very good at attributing blame, but they will not take any responsibility. And they think that if they sit back and complain that maybe, just maybe, they might be able to protect their own jobs and not have to be accountable to the people they represent in this parliament.
As I have mentioned, they have opposed just about everything. They opposed the last stimulus package, which was about creating jobs and building infrastructure—something that they chose to ignore during their term of government. Not only did they ignore the fact that a time of prosperity is when you prepare the nation for times when things are not quite so good by building infrastructure and ensuring that your workforce has the skills that it needs for the future, they also sat back and were too lazy to do anything to ensure that Australia did not end up in a bad position. As one of the other speakers in the debate, I think it was the member for Braddon, said, the opposition are very good at blaming the states. I have often been in this chamber and speaker after speaker has stood up and talked about legislation, made an adjournment speech or a three-minute statement, and they have blamed the states. I do not suppose anything different has happened in the lead-up to the Queensland election. I would be forgiven for believing that we were debating in the Queensland parliament, so please forgive me for that. The members that have spoken in a number of debates today have really missed the point of what this is all about.
When we are talking about increasing unemployment, the state that had the greatest increase in unemployment was Western Australia and Western Australia had a Liberal government. I am not seeking to attribute blame to that Liberal government because I know how dependent the economy of Western Australia is on the export of minerals and its relationship to the rest of the world. So I accept that fact and I am not going to say it is because of the Western Australian Liberal government. But I would like to guarantee this House today that if I were a member of the opposition and I was referring to a state Labor government then I would be up here blaming that increase in unemployment on that Labor government.
It seems that those on the other side of this House are only any good at carping, blaming anyone else and coming up with no solutions other than recommending the Commonwealth take responsibility for an area that the states control. I remember back in 1996-97 when this legislation was introduced and, at that time, I thought it was a little harsh.
Mr Melham interjecting
The member for Banks says ‘a lot’. At the time, I know that a lot of people were caused considerable hardship, particularly if you were a worker who was 54 or 55 years of age and forced to cash in your insurance policy, use all your assets and every bit of savings that you had for your retirement before you would be eligible for any assistance from Centrelink.
I think the changes that have been introduced recognise the fact that we are in a changing environment. It is not about accepting the fact that redundancies should be welcomed and embraced but, rather, it is accepting the reality that we are in the middle of a global financial crisis and it is recognising that those people who are affected by it and who lose their jobs will, hopefully, be able to move forward and have something behind them. They will not have to spend every last cent. They will be able to keep their insurance policy so that they can look towards the future and prepare for their future retirement. They will not be forced into a situation of abject poverty at a time of such hardship.
As I have already mentioned, the current laws require a single unemployed person to have less than $2,500 in liquid assets and that includes cash, shares and term deposits. Once they reach that level, they can receive Centrelink benefits. For every $500 they have over that amount, they must wait a week—up to a maximum of 13 weeks—before they receive any benefits. Couples and those with children are ineligible for income support until they have less than $5,000 in liquid assets and they must wait an extra week for every $1,000 they receive over the amount.
This legislation doubles that amount from $5,000 to $10,000 and the proposed changes will affect people who receive Newstart, Youth Allowance, Austudy and sickness benefit. These changes are changes that are designed for these times and recognise the fact that people are experiencing real hardship. If that was the only approach to addressing the issue of rising unemployment caused, as I have already indicated, very much by the global financial crisis, then maybe some of the criticisms could be justified. But as well as that there has been the stimulus package, which I have spoken about at great length, and there have also been moves to reform the employment service and intensive consultation between all parties involved.
There has been a complete overhaul of the coalition’s failed Job Network, a system that in many cases actually worked against the people that were seeking employment. It will move from being the model that was introduced under the Howard government to being a very workable, vibrant model when it comes into effect in July this year. There will be a stronger focus on equipping jobseekers with the skills and training required to gain a job. The other thing that I think is very important at this period in time is that the families of workers that have just become unemployed will be eligible for intensive employment services. That will be good for families because newly redundant workers will be able to access those services and upgrade their skills very quickly. Also, there will be immediate personalised help.
There have been great improvements in the area of matching apprentices to employers and there has been an increase in the number of apprenticeships that are available. The Rudd government’s approach is a very holistic one. It looks at every aspect of the situation of a person who has lost their job and is seeking to re-enter the workforce, providing them with immediate support at the time and not creating hardship while realising that in the future they will need some financial security. However, to achieve real financial security they will need a job, and every step will be taken to ensure that they get adequate access to training and support to obtain that job.
I rise to support the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. In speaking to this bill, one has to look at the approach to the global financial crisis that the government has taken, as opposed to that of the opposition. The government has taken a position that we need to be there to try to cushion the Australian economy from the worst aspects of the global financial crisis. Compare that position with that of those opposite us, who think we should sit and do nothing and we should wait and see what happens and hope that we can muddle our way through it.
Clearly, you have a distinction between a government that wants to act and an opposition that is absent. It should not come as a surprise when we look at the last 12 years during which they were asleep at the wheel of an economy that was booming and they were not investing at all in relation to infrastructure issues, not investing in relation to any of the nation-building issues that needed to be addressed and not making sure that the capacity constraints that were stopping the economy from developing further were addressed, even though the Governor of the Reserve Bank of Australia said on 20 occasions that they needed to do something about all this. So it is not a surprise that in opposition their position is as it was in government—do nothing.
When you look at the contribution from the member for Mitchell today, it absolutely highlights the opposition’s position on this particular issue. What he has told us is that we should break a promise in relation to industrial relations. It might be something that members on the other side of the House are very happy to do, to walk away from election promises, but I can assure you that government members certainly do not walk away from election promises, particularly those in relation to making people at work more secure in their employment, making sure that they have some security. This was such a major issue at the last election that for the member for Mitchell to say we should just walk away from this key election promise really shows not just how out of touch he is with what happened in the last election but also how out of touch he is with ordinary Australians. This was a major issue in my electorate and in electorates right across this country.
That was one of his propositions. Another proposition was that, as he was trying to tell this House, spending money on schools might have had some social benefit but it did not have any economic benefit. How does he come up with this type of hypothesis? I have been speaking to builders in my electorate and their great concern is making sure they have enough tradesmen to do the work at the schools. Dobell has a higher proportion of tradespeople than most electorates around this country. This economic stimulus in building schools is tailor made for the electorate of Dobell. I submit it is also tailor made for the Australian economy across the board. For the member for Mitchell not to see any connection between building and jobs again highlights just how out of touch he is on these issues.
The other area worth mentioning concerning my electorate and the economic effects of the stimulus package is the effect on retail jobs that the cash handouts have had. In Dobell, the retail sector is the largest employer of any area of work. There are more people employed on the Central Coast who work in retail than in any other area. While that is probably a little unusual, it is not uncommon with 1½ million people employed in retail for retail to be a significant component of every electorate around Australia. Quite clearly, the stimulus package helped cushion job losses that may occur in the retail area—it certainly did in my electorate of Dobell. We are already getting calls following the second stimulus package saying that the shopping malls at Tuggerah, Erina Fair and Bay Village are busier than they have been in a long time. This is a direct result of the stimulus. What does that do? It creates jobs and jobs are retained because people are being employed.
Multiplied by four.
Exactly—multiplied by four. You do not need to have gone to university to know that particular fact. One would expect someone who has gone to high school to know that particular fact, but unfortunately the opposition do not know that fact, in particular the member for Mitchell. The opposition leader does not know that fact either. Even though he started by supporting the position originally, we are now clearly in the situation where the opposition leader has totally walked away from initial support of the stimulus package. So the opposition are walking away from jobs. They have said, ‘Too hard, we can’t deal with this issue. We’re leaving the field completely.’ The Rudd government is committed to jobs. It is committed to doing as much as it can to cushion this economy from the global financial crisis.
I turn specifically to the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009 to look at what this legislation is about. We need to understand what the liquid assets waiting period is. It is period a person must wait before they can be paid income support if they have liquid assets above threshold amounts. Liquid assets can include cash on hand, shares and debentures, term deposits and other money available at short notice. Liquid assets do not include superannuation and termination payments which have been rolled over or are going to be rolled over directly from the person’s employer or proceeds from the sale of person’s principal home in some circumstances. The liquid assets waiting period, LAWP, may be waived in full or part where a person is in severe financial hardship.
There are key changes in this bill. It will double the maximum reserve of the LAWP to help people who have low levels of liquid assets and become unemployed. In my electorate, unfortunately we are all too familiar with unemployment. We already have double the national average of unemployed and have had that consistently, so these issues are very important to the people of Dobell. The liquid assets threshold for single people will be increased from $2,500 to $5,000 and the threshold for couples and people with dependants will be increased from $5,000 to $10,000. The maximum duration of a LAWP will remain, however, at 13 weeks.
We need to look at the reasons the government is making this change. The changes will allow many people to access income support more quickly and reduce the extent to which they must expend or draw down their liquid assets such as savings before getting income support. These families will not be expected to cash in life insurance to surrender values in order to support themselves before being able to access income support. This is an important and permanent change.
This will mean that life insurance policy surrender values are not taken into account for the purposes of calculating any applicable liquid asset waiting period or determining severe financial hardship. Under current legislation the surrender value of a life insurance policy is a liquid asset for the purpose of social security law, which means that people are expected to cash in their life insurance policy in order to support themselves before being able to access income support. Cashing in the surrender value of a life insurance policy disadvantages the policy owner as the surrender value is generally well below the amount paid in premiums. The person’s family or other estate beneficiaries may be further disadvantaged in the future by no longer having life insurance cover in the event of the person’s death. This amendment will ensure that income support recipients are not unreasonably disadvantaged by having to cash out their life insurance policies before they can access assistance.
Supporting Australian jobs by stimulating the economy and investing in skills we need now and in the future is crucial to our capacity to ride out this global financial crisis. That is the reason the government has spent $42 billion on the Nation Building and Jobs Plan. This plan is a critical down payment on our path to recovery and to building a competitive advantage in the emerging postwar world recession. We are reforming employment services to improve opportunities for every Australian to participate in the workforce and to help build a more productive and competitive economy. As I said earlier, even as we speak today we are having tradespeople on the Central Coast telling us that the economic stimulus package is working and that jobs are there. The problem they have on the Central Coast will be making sure there are enough tradesmen to build the schools that are going to be built in my electorate—as will probably be the case in electorates right around Australia.
It was clear today in question time that the only hope for the citizens who live in the opposition seats is that they get a visit from a government member who might be able to go out and advocate on behalf of their citizens to make sure that schools are built in that area, that someone is out there looking after the economy and the schools in those electorates. It is quite clear from question time today that the opposition have absolutely no interest in that whatsoever. We on this side of the parliament take this responsibility very seriously. The government stimulus package is out there. It is working in terms of jobs in my electorate. I would say that it will work throughout the Australian economy.
Following extensive consultations last year, the Rudd government is undertaking a complete overhaul of the existing Job Network and will introduce new employment services on 1 July this year. These services will be demand driven, personalised and focused on addressing the real barriers to employment that each job seeker faces. There will be a much stronger focus on equipping job seekers with the skills and training required to gain a job and meet the labour needs of employers. In light of the global financial crisis, the Rudd government has acted quickly to reduce the impact on workers and their families by providing intensive employment services to newly redundant workers. On 24 February 2009 the government announced a further commitment of $298 million over the next two years so that newly redundant workers will be immediately eligible for intensive employment services. Compare that to the opposition’s approach. The opposition still want to have Work Choices, where workers were not even entitled to redundancy payments. Again, the contrast between this side of the parliament and those opposite is absolutely stark.
These workers will receive immediate personalised assistance, career advice, referral to available training places and job search help. A personalised employment pathway plan will set out the services and training that they need to find a job. Providers will be able to purchase services and training for them through a $550 credit. In addition to providing early access to a personalised employment service, the government will invest a further $75 million in 10,000 new training places through the Productivity Places Program. The additional 10,000 places will bring the total number of extra places for workers made redundant as a result of significant economic changes in their industry to 20,000 people. The $2 billion Productivity Places Program is a major long-term commitment that will deliver more than 711,000 training places over five years. Already more than 80,000 Australians have enrolled in a training course through the program since April of last year.
The Rudd government has amended social security laws to introduce a fairer compliance framework for approximately 620,000 people who receive Newstart allowance, youth allowance, parenting payments or special benefits and to introduce participation requirements. The key features of the new compliance framework are a more work-like approach with no show no pay participation failures, retaining an eight-week non-payment penalty for persistent and wilful non-compliance, a new comprehensive compliance assessment before any eight-week non-payment period is imposed, fair opportunities for payments to be reinstated if job seekers participate in an intensive compliance activity and new hardship provisions to replace financial case management.
This is an important piece of legislation which amends the social security liquid assets waiting period. It is part of a package of programs that has the Rudd government addressing the financial global crisis—making sure that we are putting jobs front and centre of our response, making sure that the Rudd government are there to protect and cushion communities around Australia as much as we possibly can from the global financial crisis. This important piece of legislation should be supported. I commend the bill to the House.
I rise to speak in support of the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. Like the member for Dobell, I voted for the stimulus package and I am very proud of the fact that it is one of the most important votes I have undertaken since I was elected in November 2007. This particular legislation that is before the Main Committee today is allied with it and is an attempt by the Rudd government to cushion the impact of the global financial crisis upon people of my electorate and electorates throughout Australia. The bill will amend the Social Security Act 1991 to relax the liquid assets waiting period threshold for access to income support by doubling the maximum reserve amount for the liquid assets waiting period from 1 April 2009 to 31 March 2011, and excluding the surrender value of life insurance policies from the definition of liquid assets for social security purposes.
We are seeing people tragically lose jobs with the impact of the global financial crisis upon our shores. The amendments in this legislation will enable people to get ready access to income payments, such as Newstart, in these circumstances. The liquid assets waiting period is a key factor used by Centrelink in assessing the financial position of people applying for Centrelink payments. Liquid assets are things such as savings in the bank, cash on hand, debentures, term deposits and other money available at short notice. This amendment will allow people to get access to support more readily and more quickly in the event that they lose their job. That is a good thing for my constituents. What we are doing here is ensuring that people who have faced the travails and troubles of losing employment can access Newstart, youth allowance, sickness allowance or Austudy—and, in the circumstances, that is a good thing.
With respect to the surrender of a life insurance policy, that is a permanent change, unlike the previous aspect. I do not think people would believe it unreasonable in the circumstances. I think people would think it is unreasonable to expect a person to realise the surrender value of their life insurance policy in order to access Newstart. I think most people in my constituency would believe that to be unfair and unreasonable. The permanent change regarding the surrender of the value of life insurance is a good and equitable thing in the circumstances. I think it would have broad community support. Cashing in a life insurance policy really disadvantages the policy owner and also impacts on the party’s family and other persons who may be beneficiaries of the estate. I think that disadvantaging them is really unfair, so I warmly applaud the changes in this regard.
We are doing much, as the member for Dobell said, to ensure that people have as much support as possible. The recent $298 million employment services strategy announced by the minister was a good initiative. The personalised job assistance—the $550 credit—is also something that has been warmly received in my electorate, which has seen 400 new people become unemployed in the last month.
With respect to the impact on the people of my area, I have received a number of phone calls to my office saying how much people appreciated the change to the deeming rate. Recently, the Minister for Veterans’ Affairs said the deeming rate would drop from three per cent to two per cent for the first $41,000 for a single pensioner and $68,200 for a couple. This would also reduce from four per cent to three per cent for the balance of financial investments over these amounts. The lower deeming rate will also assist veterans during these difficult financial times. The changes are effective from 20 March and include payments made from 26 March this year. This is the third reduction in the deeming rate since November 2008. Lowering the deeming rate has an impact in that part-rate pensioners paid under the income test with financial investments mainly in term deposits, shares, managed investments and other accounts will receive an increase in their pension payments to reflect the reduction in their assessable income. That is an important reform which will assist my constituents, particularly the veterans. I have a large veteran community in my electorate, which takes in RAAF Base Amberley. They have warmly received the change to the deeming rate, and it has been widely publicised in the local media.
About 290,000 older Australians will benefit from the government’s $42 billion Nation Building and Jobs Plan. Self-funded retirees who paid tax in 2007-08 through investments or other forms of income earned, or part pensioners—even if they paid one dollar in net tax—will receive a tax bonus of up to $900. In total, excluding normal indexation, the Rudd Labor government has provided an additional $2,337 of assistance to single pensioners and approximately $3,537 for pensioner couples since coming to office on 24 November 2007. We have already said that we are committed to long-term reform of the pension system, and I look forward to seeing what the budget has in store in that regard. We are very committed to ensuring our senior citizens, who have contributed so much to the Australian community and the economy, should have dignity and respect and financial security in their old age. That is why the Rudd Labor government has committed so much across four years to helping our senior citizens—approximately $41 billion in HACC funding as well as nursing home funding. That is a big investment that the Rudd Labor government has made to our senior citizens, many of whom are also doing it very tough in the circumstances.
I want to focus briefly on what the Rudd Labor government is doing for my electorate and the impact that will have. As I say, approximately 400 people have been added to the job queue in the last month in my electorate, so the nation-building package will play a big role in affecting my electorate. Recently we announced that the Ipswich basketball stadium will receive $660,000, inclusive of GST, for a new roof, to replace the court flooring, to install air conditioning, to provide a safety net between the courts, and to build a new canteen and other sorts of infrastructure, which will help with local jobs. I had a meeting with Ipswich Basketball Association recently in relation to this matter. That is another local initiative that will bring jobs into the local economy.
We have 63 primary schools in my electorate and 15 high schools, all of which will also benefit from the Nation Building and Jobs Plan, through capital funding, essential upgrades, and essential new businesses—all of which will help those people who are currently experiencing unemployment and are waiting for assistance. I have 12,553 families in my electorate who will get the Back to School Bonus. There are 119 farmers in my electorate. Some 3,870 students looking for work will receive the Training and Learning Bonus to support their study costs. We have also seen 133 houses committed by the Defence Housing Authority—a $36.3 million injection creating housing in the Ipswich area.
We have also seen a lot of money put into the aged-care sector in the Ipswich area, creating local jobs. The supervising manager of the RSL Care redevelopment project in Ipswich, Milford Grange, to which we are giving $5 million in funding and interest-free loans, is an Ipswichian. When I was out there recently with the Minister for Ageing, he was telling me how many local tradesmen, builders and other workers are on the job at the Milford Grange project. We have also given $1.5 million to Cabanda Aged Care as part of their $9 million redevelopment, which provides major employment in the local area. These are real and practical ways to support jobs in the local economy. There are nearly 70 workers in the Cabanda aged-care facility—a wonderful community project that will make a big difference.
We are also supporting jobs locally because we do not want young people who leave our schools to be in the position where they have to rely on Centrelink and Newstart. There are changes such as the trade training centres we are seeing in Ipswich—a $3 million commitment. We recently announced the $1.5 million Lockyer Valley trade training centre. Training in the wet trades, in carpentry, in engineering and in the automotive trades will also make a big impact in the local economy. But the thing that really strikes me about what we are doing in the local economy in conversations I have had with local businesspeople is how very happy they are that we are providing small businesses with an additional 30 per cent tax deduction for eligible assets costing $1,000 or more which are acquired between 13 December 2008 and 30 June 2009. They are very excited about that. They are very pleased with that sort of investment in the local economy.
We do not want to rely on people going onto Newstart, youth allowance or other sorts of allowances. That is why we are helping to make it easier for people to access social security. This, along with the kinds of investment we are talking about—nation building; small business advice and support through the Ipswich business enterprise centre; establishing an Australian business investment partnership with the major banks; the on-time payment guarantee that we have talked about previously; the first home owners boost; our far-reaching program to slash red tape; the delivery of 711,000 new training places; and the investment in infrastructure—form the matrix of our Nation Building and Jobs Plan to support jobs, to create jobs and to build enterprise locally in our constituencies as well as in the constituencies of those opposite, who voted against the package.
I want to commend the government for this legislation. It will cushion the blow for those people in my area who, sadly, will lose their jobs—and I have met many of them in my mobile offices around the constituency. I want to commend the government for their initiative in the Nation Building and Jobs Plan and also for the heart they have shown with this legislation. The Nation Building and Jobs Plan is full of cerebral economic development—the head. But the legislation we are talking about here is about the heart—helping those in need, helping those who are disadvantaged, helping those who are suffering. This legislation is a good thing and I commend it to the House.
A division having been called in the House of Representatives—
Sitting suspended from 6.19 pm to 6.37 pm
I rise to speak in support of the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. I follow the member for Blair, whose speech I watched with interest. I sit opposite the member for Gippsland. As I look at the two of them, I fear that the in-house hairdressing salon may have recruited a barber from the United States Marine Corps. I am pleased that the member for Canberra, the member for Deakin and I am here—
Making up for it.
Making up for it. In all seriousness, let me give the member for Gippsland a plug. I am told that he lost his locks in a very good cause, raising $1,500 in support of cancer sufferers. I commend him for that.
I speak in support of this bill, which seeks to amend the Social Security Act 1991 to improve access to income support for those who have lost their job as a result of the global economic recession. It will improve access to income support by altering the operation of the liquid assets waiting period. The liquid assets waiting period is a period of time which needs to elapse before a person who has lost their employment and who has liquid assets above a certain threshold can receive income support.
As it currently operates, for a single, that threshold is $2,500. For every $500 above that threshold, a person needs to wait a week before they can receive income support. For couples and people with dependants, that threshold is $5,000, and they need to wait a week for every $1,000 of liquid assets that they have above that threshold.
The rationale for such a waiting period is that people who have some substantial liquid assets ought to in part rely on them before receiving income support. We do not seek to alter that general rationale which currently exists in the long term. But we are seeking a temporary amendment to double these thresholds, and that will improve access to income support. For singles, the threshold will be $5,000. For couples and people with dependants, it will be $10,000. That means that, if you are a single with $5,000 in liquid assets or you are part of a family which has $10,000 worth of liquid assets, you will be able to receive income support after a week, whereas under the current provisions, prior to this amendment, it would take five weeks before income support would come on board. The amendment to those thresholds is sought to be put in place temporarily, for what is intended to be a two-year period, to deal with the current global economic crisis, and this will be reviewed in next year’s budget—that is, the 2010-11 budget—to see whether that period of two years is appropriate.
There is also another amendment in this bill which is sought to be made on a permanent basis, and that is to change the definition of a liquid asset to remove the cash-in value of a life insurance policy. Liquid assets currently include money, deposits, term deposits or even shares—any asset which is easily turned into money pretty rapidly, and of course the cash-in value of a life insurance policy may fall within that category. But to include that in the definition of a liquid asset unfairly penalises people who have been maintaining life insurance policies whilst they have been working. Obviously, it particularly impacts upon those who might ultimately be the beneficiaries of a life insurance policy—the family of the person who is working. So this amendment will remove that from the definition so that there is no drawing down of that value or any pressure to cash in a life insurance policy. Of course, the cash-in value of a life insurance policy is normally far less than the accumulated total of the premiums which have been paid up until the point where the cash-in occurs.
These provisions seek to target people who have lost their jobs as a result of the global economic crisis and, as I have said, it will provide for much quicker access to income support. We are going through a very difficult time, and it is a time which is being experienced across Australia and certainly in my electorate of Geelong. For example, Centrelink in Geelong has reported a 30 per cent rise in weekly claims for the Newstart allowance since Christmas. The Geelong Centrelink office has increased its staff by 20 per cent to deal with the influx in new applications for support, and the Corio office, which operates in the northern suburbs of Geelong, has boosted its staff numbers by a similar amount in anticipation of an increase in requests for support.
In dealing with this measure, we are perhaps talking about the people who are most severely affected by the global economic crisis, and many of those who are losing their jobs through this time are losing their jobs for the first time—that is to say that they are entering the income support system for the first time. Many of these people do have modest liquid assets and this bill is being put in place so that they are able to access income support more quickly but also so that, in years to come when they return to employment, they are not in a position where they look back at the global economic recession of 2009 and say that this was the time when they lost their life’s savings, that this was the time that gave rise to a legacy which will last for years and years. By increasing the thresholds, what we do in effect is ensure that $10,000 or more for a family, or $5,000 for an individual, remains as a nest egg. If it has been built up over a period of time, it cannot be touched as a result of this global economic crisis.
These provisions are sought to be made effective from 1 April and, as I said, it is intended that they are put in place for two years, with a review in next year’s budget. For any person who is currently serving a waiting period prior to receiving their income support on 1 April this year, the provisions contained in this amendment bill will operate upon them. That is to say that, if on 1 April they have met a waiting period sufficient for this bill, any further waiting period would be expunged. If this bill would seek to reduce the waiting period which they would need to serve, then it would be so reduced. Similarly, if the provisions cease to operate two years from now, on 31 March 2011, anybody who is in the middle of a waiting period at that point will only serve the waiting period in accordance with the provisions in this bill.
This does not affect the way in which redundancy payments and leave entitlements, which are paid out at the termination of a person’s employment, operate in relation to the income support system. Those payments will still be subject to an income maintenance period. The rationale is that a redundancy payment is paid in order to tide people over during a period when they are unemployed. So those provisions will not be disturbed. But this will significantly reduce the liquid assets waiting period.
I am very proud to be a part of a government which, during this global economic crisis, has acted swiftly and decisively to deal with the single biggest economic shock which has been experienced by the globe since the Second World War. Immediately on this shock being crystallised, in a sense, we acted to provide a bank guarantee, which has stabilised the Australian financial system. In October, we put in place a $10.4 billion stimulus package, which has helped keep the economy going over the Christmas period and beyond. In February of this year, we put in place the Nation Building and Jobs Plan, which, in turn, provided a stimulus to the economy which will keep the economy going but which gave significant expenditure to much-needed infrastructure in the areas of schools, insulating our homes and putting more solar hot-water systems around houses in this country. All of that will not only give rise to a fantastic legacy from the stimulus package in years to come but will also drive employment during the period of the global economic crisis. In addition to that suite of measures, we have this bill, which is directed at those hit perhaps most harshly by the global economic crisis—those who lose their job through no fault of their own. This will ensure that the savings they have built up through years of employment will not be unduly whittled away by virtue of their having lost their job as a result of the global economic crisis. This is a very important measure and a very compassionate measure, and I commend it to the House.
I rise to speak in support of the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. At a time when the global financial crisis and the global recession are starting to impact on unemployment queues around Australia, this bill will help workers who have been retrenched by making it easier for them to access financial assistance from the federal government. We know that unemployment has now risen to 5.2 per cent, and national job agencies, such as Employment Services Holdings, are now reporting that, in the last six months, their services have gone from dealing largely with the long-term unemployed to dealing with those whose jobs have been entirely wiped out by the financial crisis. That was noted in the Financial Review only a couple of weeks ago. As much as we had hoped Australia would remain immune from the effects of the global recession, inevitably we are going to see even more job losses over the next 18 months. This is something about which we, as a government, have been very upfront with the Australian public.
In my electorate—and this came quite recently and was certainly a big shock—we saw Pacific Brands scale back their manufacturing operations in Australia: 1,850 jobs overall. Two hundred and fifty-five of those jobs were at the Holeproof factory in Nunawading, which is right in the middle of my electorate of Deakin. A lot of those workers at Holeproof had worked there for most of their working lives, or for many years. Although they have skills that are particularly suited to the textiles industry, they are not necessarily suited to other industries and a lot of them, unfortunately, are going to have quite a hard time finding alternative employment, especially in the current employment market.
It is a terrible thing to be suddenly thrown into unemployment and financial uncertainty, especially in current conditions where local businesses, panicked by a sudden drop in demand, can shed jobs in the blink of an eye. It is certainly true, as in the case of the Holeproof workers and everyone else in this situation, that losing your job does not mean that the bills stop coming in or that the mortgage goes away; it certainly does not mean that you do not need to find the money to put food on the table, send your kids to school or meet all of life’s other day-to-day necessities. People who are thrown into this situation very quickly find themselves under a lot of financial pressure, and it is very easy for them to quickly erode what money they have in their family savings accounts.
Under the current Social Security Act, liquid assets can affect your payment if you receive youth allowance, Newstart Allowance, sickness allowance or Austudy. If your liquid assets are above $2,500 for a single or $5,000 for a couple or a single with dependants, there is a waiting period before you can receive any of the payments that I have just mentioned. At times that waiting period can be as short as a week but it can go right out to 13 weeks, and it also depends very much on the financial circumstances of the individual. Under the act, liquid assets are defined as things like cash on hand, shares, term deposits or other money available at short notice. Importantly, in the current climate, liquid assets can include payments made or due to be made by a person’s last employer—that is, redundancy payments or accrued entitlements. This means that a worker could find themselves in a situation where they are laid off by their employer and cannot receive any assistance from the government for as long as 13 weeks, potentially resulting in any savings that they may have being reduced to very low levels, if not wiped out completely. I can certainly tell you how it feels to wait that period of time before you can access benefits.
Before I came to this place, most of my years were spent in the construction industry. Certainly good times and bad times occur in the construction industry. In the good times, the money is good and there are jobs aplenty; in the bad times, you find that you cannot get a job as a skilled tradesperson anywhere in a major city. It is like someone switching off a light. I have been through that. I have saved a bit when I was in a good paying job and I have been thrown into unemployment with no idea of when the next job was coming up. When that happens, it is all very well to think, ‘Okay, I will get a job soon’—and I hope that is the case for many people—but it is not always the case. We need to have certainty in the process, and we also need to have certainty that you do not have to run your savings down to a tiny amount before you can get some help from the government.
Currently, we may also face the silly scenario where people who have become unemployed and who have recently received a bonus payment in some form from the federal government may not be able to spend that bonus over a longer period of time in the way that they might want to while they are unemployed. They might literally be forced to go out and spend it all in one lump sum. This is, of course, good for the economy; but, if people have just lost their jobs, I do not think too many of them would be going out and spending every last cent in their bank account. Michael Raper, the President of the National Welfare Rights Network group, stated back in 2005, following the then Howard government lump sum family payment, that it would be completely wrong for the government to claw it back with the other hand. We must not forget that, in the situation where a job is lost, some of the most financially vulnerable people—single parents, the disabled and the ill—are subject to the same requirements.
The changes to the liquid assets waiting period contained in this bill will double the maximum thresholds for liquid assets to $5,000 for singles without dependants or $10,000 for others, for a two-year period, starting on 1 April 2009. In practical terms, this means that the length of the liquid assets waiting period for most people will be reduced and they will have some much needed breathing space as they consider their move back into employment. The current threshold levels were set by the Howard government in the 1996-97 budget. It was one of a number of measures that they took during their time in office to try and restrict income support to people. The level set by the previous government in their first budget has remained unchanged ever since, despite the obvious fact that $2,500 buys a lot less now than it did in 1997. When the 1997 changes were announced, the then government was criticised by welfare groups and other representative bodies as being overly harsh and arbitrary—two key qualifications for Howard government policy, it seemed.
The Australian Council of Social Service, the country’s peak council of community services and the welfare sector, has pointed out what the effect of these thresholds can be:
… unemployed people are forced to spend almost all of their (often meagre) reserves before becoming eligible for income support. In doing this, they have very little left to meet expenses such as car registration or repairs, replacement of whitegoods, or expenses associated with illness. In many cases they are forced to rely on advance payments and other forms of credit to meet lump sum expenditures, thus reducing their already small weekly incomes. The liquid assets test can also act as a disincentive for people to save during periods of employment.
Under the existing thresholds, a couple with $18,000 saved would be forced to wait 13 weeks before they could receive support. When no income is coming in, it does not take long for that amount of money to evaporate.
The changes made to the liquid assets test are typical of the former Howard government’s brutal approach to the unemployed seeking assistance from their government. Indeed, they should not be viewed in isolation but as part of an 11-year pattern of targeting the most vulnerable people in society. The Howard government destroyed people’s job security with Work Choices and made it easier for bosses to cut their workers’ pay, with AWAs. They made it harder for people to receive income support, with their changes to the social security system, and consistently attacked those groups in society, such as trade unions and non-government organisations, who stand up for those people who have the most trouble getting their voice heard. While we are focused on fairness and acting to protect the Australian economy and jobs, those that sit opposite, as usual, prefer to remain ideological and nasty.
The then Labor opposition opposed these changes. We believed they were regressive and unfair and we are now acting to solve that situation. These changes will, in many cases, ensure that this is not the case. It is a small but potentially significant change that the government can make to help working Australian families. And I believe it is an appropriate and responsible change in the current climate. While the opposition are in the habit of arguing against the government doing anything in the face of the global recession, we on this side of the House understand the necessity, indeed the urgency, of acting to help cushion the impact of the crisis on the Australian people. In light of the current extraordinary economic circumstances, the new thresholds will apply for a two-year period, until 31 March 2011. In a year’s time, a review will take place that will examine the effectiveness of these changes, including consultation with stakeholders—something the previous government did not bother with. Had they done so, the thresholds may have been appropriately adjusted over time.
The bill also amends the Social Security Act to exclude the surrender value of life insurance policies from the definition of ‘liquid assets’. As it currently stands, people who hold a life insurance policy are expected to cash in their policy in order to support themselves before they are able to access income support. I can tell the House that I once had a life insurance policy—many years ago, before super was in—and I put money aside month after month and year after year. I did one day cash it in for its surrender value. The surrender value was not much and, of course, my life insurance cover was gone from that day on. If I had just put the money in the bank, I would have been a lot better off. But I needed the money at the time, so I took the surrender value.
The unfairness of a policy like this should be apparent—people should not be penalised for taking responsibility for their family’s future. It is unreasonable to expect people to do this, and the proposed amendments will remove this anomaly. Under the bill, the value of surrendering a life insurance policy will not be taken into account in determining either a liquid assets waiting period or severe financial hardship.
This is another step in the range of measures taken by the government to lend a hand to those who need it during these tough economic times. They should be contrasted with the opposition, who oppose us every step of the way. Whilst they are busy playing politics and working out what their position is on any given issue from day to day, the government will keep working for the Australian people. This bill is but one part of our commitment to them, and I commend it to the House.
I rise today to support the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009 in recognition of the extraordinary nature of the economic circumstances that we now live in. I invite all members of the House to turn their minds back to a little over six months ago. Go back to a week or two before Lehman Brothers fell over, back in September last year. Up to that point in time, we had rising interest rates. Interest rates were rising at that stage fundamentally to slow down what was considered then as an overheating economy. Within this six-month period, we have seen the direct opposite occur here. We are very much in uncharted waters.
This is very much a time when we are trying to put our shoulders to the wheel with a view to doing what is necessary and making those decisions that are necessary to accommodate these changed circumstances. We have seen only in the last couple of weeks the $42 billion infrastructure package, the building and schools package, as it was developed. There was $14.7 billion to go into schools and $28.2 billion to go into our local councils. Every member in this place—and I know the member for Gippsland is one of those members working hard in his electorate—has sought to use that money for doing infrastructure projects. It is only right that we not be hypocritical about this and that we do go and pursue these projects with a view to generating jobs in our electorates. This is a critical time for this to occur.
There was also a $2.7 billion project announced in relation to taxation benefits for small business people. I know from visiting chambers of commerce in my own local community that that is very significant for small businesses in my area. Indeed, it is significant for every small business operator out there to have financial relief on their purchases of assets. The package also incorporated $12.7 billion, paid out this week, for low- to middle-income earners. This is about keeping our retail industries going. It is about keeping those people who work in the shops and also those drivers who drive the product to shops. As a matter of fact, I have only just left a meeting with Tony Sheldon and Daniel Kicuroski, from the TWU. They are certainly concerned about a range of things and about making sure that this stimulus package actually hits areas that affect logistics and transport throughout this country—and it is only right that they are.
This bill is another in a set of steps. It is critical, but this is also something that delivers fairness for those who are going to be less fortunate, those who will physically lose their jobs. Let us make no bones about it in this place: we know that is going to occur. This is not about finger-pointing; this is just a matter of looking at the economics of it. I, like everybody else, systematically call our job placement organisations to see what the trends are. Let us face it: we all do that. We all know that it is getting difficult out there. This is why this bill has come to pass. We are going to see redundancies coming out there. We are taking these steps to try and reduce the impact that this global financial crisis will have on Australian jobs. That is why we are injecting this $42 billion to stimulate employment. But we know that there are going to be casualties out there, and we have to try to do something for those people.
This bill will help those who lose their jobs by enabling people to have quicker access to income support payments by lifting the liquid assets waiting period. It will reduce the extent to which these people, many unemployed for the first time, must expend and draw down on their liquid assets, such as their savings, before being entitled to income support. The liquid assets waiting period, as it is known, is a key factor used by Centrelink to assess the financial position of people applying for various income payments, whether it be Newstart, youth allowance, sickness allowance or Austudy. Liquid assets, according to Centrelink, include such assets as cash in hand, shares, debentures, term deposits and other available moneys that can be called upon at short notice. Under the existing rules, income payments will not be affected by the liquid assets if they are less than $2,500 for singles and $5,000 for couples.
As I said, we are going to see people experiencing unemployment for the first time. Certainly it is going to be an extraordinary situation for generation Y, once they start seeing the reality of that. It is because of that that we need to do something about this liquid assets waiting period. If we do not then people will have to wait for somewhere between one and 13 weeks before they can draw down on income support. This means that many people who lose their jobs will have to expire all of their savings and possibly wait up to 13 weeks for support. Having been unemployed myself for a period of time, I know what it is like looking for work and doing everything to secure a job while supporting a family. There are difficulties. These difficulties are hopefully going to be confined to these times. We cannot say that emphatically, but we are, let us face it, trying to be positive. We are trying to stimulate the economy, we are trying to move on, but we have to do something for those people who will be caught through this process.
The thresholds that were introduced by the previous government back in 1996-97 came in as a budgetary measure. They were criticised by the then Labor opposition. It was decided to reduce those thresholds. Through this bill, we are taking those thresholds back to where they were at the time the Howard government was elected in 1996. This government is trying to undo the harm that occurred there. This is not seen as a budgetary measure, this is not just a measure where we can spend money; this is doing something genuine for those people who are going to fall through the cracks and find themselves—probably for the first time in their lives—unemployed, worried and wondering what the future is going to be. This is a time that they are going to need support. We criticised what John Howard did back then. There is a litany of Labor speeches that were given to that effect. But let us not dwell on the past. What we have to do is get back to the pre-1997 thresholds and establish some fairness and some decency in the way we treat people who unfortunately find themselves redundant due to this economic position that we now find ourselves in.
Not only is this measure fair, but it is also necessary to provide additional support to job seekers because of these extraordinary circumstances. It is not surprising that those on the other side of the House have various views in relation to this. I know they have taken a very clear view when it comes to the stimulus package itself. This is a time when we should be putting politics aside. We are not walking to an election in the next five minutes—it is not like Queensland here. Quite frankly, the economic position that we have, which has been thrust on the world within six months, and the severity that this economic impact has had globally, require all people in all parties to work together to help resolve this situation. This notion that one side can disengage and blame the other side for pursuing a debt strategy is like fiddling while Rome burns. This is the time when we want people in public office to muscle up, to be counted, to do something for their electorates. As I said, I do not want to embarrass the fellow, the member for Gippsland. I know the minister for infrastructure and local government has cited a number of his letters, but I only put it in this debate to show that the reality is that, despite the way he chose to vote with his party, he really knows in his heart of hearts that this is a good strategy, this is something that is beneficial for his people over there and he is to be commended for that. He can wear the embarrassment: he has shaved his head, so I imagine he can wear any embarrassment.
I will wrap up quickly on this matter. One of the other really perverse aspects of the legacy of the Howard regime is that we formerly included the insurance policies of people in assessing their liquid assets. Like the former speaker, the member for Deakin, at one time I too had to cash in my insurance policies to do something that was necessary for a family commitment. That is not something that people take on lightly. Fortunately, a lot of people have superannuation these days and choose to take out income support or some life insurance through their superannuation, but not everyone does. To have a situation where we would include life insurance in an assessment of their assets to determine how long they need to wait for financial support is absolutely ridiculous. Firstly, the cash-in rate is very low. Once you do that, the likelihood of again taking out life insurance, particularly if you have aged in the process—which most people do—is going to be very hard and very costly. We should not single out for special treatment those people who take out life insurance to protect their families, as is the case in the current legislation. This piece of legislation seeks to remedy that. I will not take any more of the chamber’s time. I do support this legislation. I think this is something that is overdue, and it was an election commitment. If those on the other side are genuine, they would be supporting this piece of legislation.
I too rise to support the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. As many speakers have said before me, this is a time of global financial uncertainty and Australians really need to know that their government is acting. We are making amendments where necessary so that many people who face unforeseen circumstances—people who may never have been unemployed before, as has been pointed out—and actually need some assistance from government get some financial support without having to spend all their savings—their cash in the bank, their shares—or clean out their term deposits just to make ends meet. We on this side of the House are really quite concerned about that, because in times of global uncertainty it is really important that the government do what governments are expected to do and take care of those people, particularly those people, as I have said, who have never been unemployed before. The government want to reverse the decision made by those opposite in the 1996-97 federal budget, because we think it is a fair thing to do. On this side of the House we do not want to put any extra burdens on those people who are already doing it tough, who have found themselves out of a job, possibly for the first time in their lives.
Let us have a look at what these amendments will actually change. The proposed changes will affect people applying for Newstart allowance, youth allowance, Austudy and sickness allowance. Those with limited liquid assets will now access income support more readily due to these amendments to lift the liquid assets waiting period thresholds. Liquid assets include cash, shares, term deposits, moneys due and able to be paid by the person’s former employer, and any other readily available assets. Under the existing rules introduced by those opposite, people seeking income support who have liquid assets above the threshold amount of $2,500 for singles without dependants or $5,000 otherwise would generally serve a waiting period known as the liquid assets waiting period. As we have heard, this could be from one week up to 13 weeks. During times of financial uncertainty, we think it is a fair and reasonable thing to relax liquid asset waiting periods—to loosen the restrictive nature of that which was put in place by the former government.
This amendment proposes to double the threshold of liquid assets to $5,000 for singles without dependants and to $10,000 for others for a two-year period from 1 April 2009 to 31 March 2011. We are doubling it. We are taking it back to what it was in September 1997 when these changes came into effect. But what we have also done is important. We have said that this measure will be reviewed after one year. The former government had no method of review when they chopped it in half, no adjustment to the CPI and no other form of review—and, as we all know, things have changed dramatically since 1997.
Currently, people who are single cannot receive income support payments unless they have less than $2,500 in assets—sources of money available to them. When your income stream ceases, your payments and expenses do not. We need to change these rules to help people, because I do not think that that is okay. Imagine the pressure felt by someone when they get the call from Centrelink to tell them they have to wait for help—that they have to wait for financial support from their government in this time of global uncertainty. This currently applies to a single person facing difficult times, but this unfair rule also applies to couples and people with dependants. They are not eligible to receive income support until they have less than $5,000 in liquid assets. They must wait one week for every $1,000 they have over $5,000 up to a maximum of 13 weeks. These people need to be supported financially, particularly when, in the global uncertainty, there is a great deal of fear, anxiety and worry. We have to do what we can to help them, because they still have to pay their rent, their mortgages, their rates, their insurance policies and their school fees and put food on the table.
Doubling the liquid asset thresholds, going back to the pre-1997 levels, is fair and reasonable and is really an appropriate response when we face such challenging financial times. It makes it really easy for me to stand here today to support this bill. If I have helped people in my electorate, that is a good thing to do at this particular time. This amendment will provide quicker access to payments and, equally importantly, will allow claimants to retain some of their savings in this time of global uncertainty.
The amendments proposed in this bill also seek to change a particular issue we have heard other members talk about, and that is the surrender value of life insurance policies. We on this side of the House once again fall back to the default position of delivering fair legislation—fair to the people of Australia, for those falling on challenging times. As it stands today, there is an expectation that people who hold life insurance policies will have to cash in their policy in order to support themselves and/or their families before being able to access income support. This bill seeks to change this unfair act. As many of my parliamentary colleagues have already argued today, it is completely unreasonable to expect a person to cancel their policy voluntarily. To use the equity value in their policy is a big disadvantage for that person, but there is also a snowball effect. Not only is the policyholder disadvantaged; so, too, is the future of their family or other beneficiaries who might have benefited from that protection. It puts a weight around the shoulders of that family and that individual, a weight they do not need in globally uncertain times.
As I keep saying, we are all aware of the global financial recession and the effects it will have on all Australians, young and old. During these extraordinary financial times, the government has a responsibility to assist Australians who need support, whether that is through responsible policy to help support jobs and small businesses or sound social policy that makes it a little easier for those people who need it and find themselves in difficult circumstances. The Rudd government continues to act quickly and decisively through a number of economic measures such as the $10.4 billion of support payments to carers, pensioners, veterans and people requiring assistance, provided in December last year, and the $42 billion second stimulus package which got through parliament just recently. These measures have been designed to cushion the Australian economy against growing global recession. Unfortunately, we know that unemployment will rise during the global recession and Australia cannot be immune from this. So we have to do what we can to help those who find themselves in difficult circumstances.
What has truly astounded me is the reaction of those opposite during this global financial crisis. I am astounded that to date they do not have a plan to do anything; their plan is to wait and see. We on this side of the House have not really seen that as an appropriate way to act in a time of global recession. As I said, we have had our two stimulus packages. We are trying to provide direct support to individuals but we are also building community infrastructure. Two-thirds of the $42 billion is for infrastructure in local communities, supporting local families and local jobs. That is very important during a global financial crisis. People would have seen recent media reports of the Treasurer overseas at the G20 meeting. Many G20 countries have provided support packages to stimulate their economies. That is what is needed in this time of global financial uncertainty. To do nothing, to sit by, to wait and see what happens or to let the market correct itself is really not an appropriate response.
I was pleased to hear those opposite say that they would support this bill, albeit with a but. It is a very good bill and I am really pleased and proud to be part of a government introducing this measure. We are providing some support to those who need it. I am really pleased we are doing this, but this is not all we are doing. As well as the stimulus packages, we are also changing some of the employment services so that, rather than having to wait at least three months to receive intensive personalised assistance, any Australian worker who is made redundant will now receive immediate and personalised assistance to help get them back into the workforce—another important measure the government has introduced. We have also committed $75 million for an extra 10,000 productivity places, to assist newly retrenched workers needing training and education. The government are acting decisively to assist people in this time of great financial uncertainty. I commend the bill to the House.
I am pleased to rise tonight in support of the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009 and I am extremely pleased to see the changes in this bill occurring. As we all know, the liquid assets waiting period has been a provision in the Social Security Act for some time and its threshold figure was substantially reduced back in 1996-97. In my view, that has placed a burden on many individuals and on the families of many individuals who, through no fault of their own, have been made redundant. The specific changes in this legislation will ensure that the maximum reserve for the liquid assets waiting period will be doubled for single people. It will be increased from $2,500 to $5,000. The threshold for couples and people with dependants will be increased from $5,000 to $10,000. The maximum duration of any period of time in which people will be waiting for benefits as a result of the situation of their liquid assets will remain at 13 weeks.
It is important to cover a few of the reasons why the government is making these changes. Naturally, the primary reason is to allow many people to access income support more quickly and to reduce the extent to which they must expend or draw down their liquid assets, such as savings, before getting the relevant income support. This is consistent with the government’s general actions to try to cushion Australians from the full impact of the global recession. As the member for Franklin, who spoke before me, indicated, the government is proud of the fact that it has taken early and decisive action to stimulate our economy. That includes things like the economic stimulus packages. We saw the Economic Security Strategy last year, with $10.4 billion to strengthen the economy and support Australian households. We saw the Nation Building and Jobs Plan introduced this year. We hope that will provide further support for many thousands of Australian jobs. Having given all of that support, we know that growth will be slow and unemployment will rise. Australian cannot be immune from the global financial crisis, and behind those rising unemployment figures there will be many Australian households and breadwinners who will be finding themselves without an income. In terms of the government’s response to the global financial crisis, we have taken steps to secure the financial system through guaranteeing bank loans. We have taken steps, as I have already said, to stimulate the economy. Also, we are now taking steps to introduce a number of measures to support people who do lose their jobs through no fault of their own as a result of the global recession.
The liquid assets waiting period has been in the past part of a qualifying test for access to social security payments for the unemployed. The way that it has operated has seen individuals with more than $2½ thousand in liquid assets, such as savings, being required to wait an additional week for every $500 they held over that $2½ thousand before they could access social security payments such as Newstart. The threshold for couples was $5,000. This bill will see those amounts doubled and it will also remove the surrender value of life insurance policies from the liquid assets qualifying test. In addition to this small step, we have also seen substantial reforms of the employment services stream which will take effect from 1 July 2009. For these I congratulate the Minister for Employment Participation, Brendan O’Connor, on this fine St Patrick’s Day, a day which I know is important to him and to my colleague the member for Eden-Monaro.
We also saw the Prime Minister, along with the Deputy Prime Minister and Minister O’Connor, announce a further $300 million to ensure immediate access to employment services for retrenched workers, such as intensive assistance with Job Network members. This is an extremely important measure because evidence demonstrates that, after retrenchment, the quicker a worker is assisted into further employment, the better. So I am particularly pleased to see this measure take effect. Unfortunately, I understand it will be 1 April before people will be able to access that entitlement, but it will certainly apply to anyone made redundant post 24 February.
Last night I spoke about the extra funding that has been put into GEERS, the scheme which assists employees who have been made redundant where the company through bankruptcy or liquidation is unable to pay basic employee entitlements. We have seen an extra $70 million put into the GEERS fund. I cannot forget that as part of the Nation Building and Jobs Plan there is an additional $950 training and learning bonus available to someone on income assistance who is enrolled in a structured training course. As I say, there are a number of measures to try to assist those people made redundant through no fault of their own.
In addition to that we have seen the Australian government invest $30.2 million to expand the Australian Apprenticeship Access Program, which provides at-risk job seekers with the support they need to pursue an apprenticeship or training and to move into skilled employment, and $155 million in new incentives for employers and group training providers to take on out-of-trade apprentices and trainees. There are also additional productivity training places to be used in a number of critical industries. Hopefully, we will be seeing the passage through the Senate and the parliament this week of the Fair Work Bill, which will restore balance to Australian workplaces.
I have a couple of examples of impacts that this particular bill may have on constituents in my electorate. I had a man from Gosnells in my electorate made newly redundant. He is 60 years of age. He has been unable to get his Centrelink benefits for a month because he has $5,000 sitting in a special savings account, which he has had for some considerable time. He keeps this account to pay for his funeral. Unfortunately, this gentleman lost his wife a few years back and did not want to burden his children with the cost of his funeral. He was hanging onto that $5,000 come what may. As a result of wanting to support his family in that way he was going to have to wait five weeks before he could access unemployment benefits. I am pleased to see that the legislation does have a phasing-in arrangement so people like my constituent can access some waiver for the remaining period.
It is not only that—$2,500 or $500 in today’s terms is not a huge amount of savings. For example, the average rents in my Perth electorate sit around $350 per week for an average three-bedroom home. You can imagine that for a single person $2,500 is not going to last them long in a period of sustained unemployment. All we need is for the car to break down or require repairs and that sort of money disappears very quickly. I am really pleased to see this measure put in place. I am also very glad to see that the surrendering value of life insurance policies has been exempted. We all know that when these sorts of life insurance policies are cashed out their value is less than the premiums that have been paid. That can be a very stressful situation for those who have no form of death or disability insurance other than that life insurance policy.
I also say that this is becoming increasingly relevant because the statistics on unemployment show that, whilst in many respects in Western Australia and in Hasluck employment remains quite strong, we have seen an increase in unemployment from 2.8 per cent in September 2008—for someone who has reached my age, a 2.8 per cent unemployment rate is not a bad outcome—to 3.8 per cent in the south-east metropolitan area of my electorate. Indeed, recent newspaper reports indicate that the south-east metropolitan area, and in particular the suburb of Gosnells, had experienced a 17.3 per cent increase in job seekers receiving Newstart and associated payments between December and January. In real people terms, that 17.3 per cent increase was only 138 more people. Nevertheless, 138 more people is a lot, and that also includes school leavers.
Whilst we still enjoy a relatively strong labour market in Western Australia, that situation is beginning to change. As the Prime Minister and the Treasurer have said, there will be no easy solutions or quick fixes to this global crisis. There are no silver bullets. There is no one thing that the government can do to make the crisis go away. But the Rudd government stands ready to do whatever it takes to reduce and cushion the impact of the crisis on Australians. I think there is nothing more you can ask of a government but to be responsive in a situation such as this. I am pleased to see the actions the government has taken. This small measure will assist constituents in my electorate, and on that basis I commend the bill to the House.
Sure and it’s a great pleasure to stand in on behalf of the minister, Brendan O’Connor, on this special day!
Wearing your fine green tie, too.
I would like to thank all those members who have taken part in the debate on the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. This bill will assist people who lose their job and who have modest levels of liquid assets to access income support more readily. It is an appropriate and fair measure and in the context of the current global financial crisis it is right to ease the pressure on job seekers resulting from current thresholds. The bill gives effect to the government’s 11 February 2009 commitment to double the relevant liquid assets threshold amounts for social security purposes for the period 1 April 2009 to 31 March 2011. This is a targeted and responsible measure in the current extraordinary economic circumstances.
This amendment will mean that single people with liquid assets of less than $5,000 and members of couples or people with children with liquid assets of less than $10,000 will not have to serve a liquid assets waiting period. The bill also excludes the surrender value of life insurance policies from the definition of liquid assets for social security purposes. This will mean that life insurance policy surrender values will not be taken into account in calculating any applicable liquid assets waiting period or determining severe financial hardship for the purposes of eligibility for income support. These measures will mean that people seeking income support will not have to exhaust nearly all of their liquid assets or to cash in their life insurance before payments such as Newstart allowance become available to them.
Measures in this bill will help people with everyday financial pressures and commitments, often incurred when they were working and earning a wage, who find that they need income support in hard times. The bill provides for the changes to the liquid assets waiting period thresholds to be for a two-year period. The bill also provides a mechanism to extend the period that the changes to the liquid assets test waiting period thresholds will operate if required. The government has also committed to undertake a review to consider the effectiveness of the thresholds proposed by this bill in consultation with key stakeholder groups.
The measures in this bill, together with the government’s $42 billion economic stimulus package, support for apprenticeships, training investments, particularly through the Productivity Places Program, and additional employment services providing immediate access for newly redundant workers announced in February by the Prime Minister and the Minister for Employment Participation—all of these measures—demonstrate that the government is responding to the impact of the global financial crisis on working families and the most vulnerable in our society. That is why the government has acted decisively in responding to the social and economic challenges we face through measures such as those included in this bill. I commend the bill to the House.
Cead mile failte.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
Ordered that the bill be reported to the House without amendment.
Debate resumed from 16 March, on motion by Ms Kate Ellis:
That this bill be now read a second time.
Now that the new university year has well and truly got underway, there are campuses all over Australia brimming with enthusiastic young students, full of hope for their new venture into higher education. They excitedly look forward to the day that they complete their university studies and venture into the real world, to get a real job and to contribute to society. No doubt there will be students of politics entering politics 101. They will certainly learn quickly that there is a huge difference between the policies of an opposition in election mode and the reality of actually governing. What all these students will learn is that the bill before us today, the Higher Education Legislation Amendment (Student Services and Amenities, and Other Measures) Bill 2009, is fundamentally flawed and will ultimately be implemented at their cost.
What we have found since the introduction of voluntary student unionism is that the services that are in demand and cater most to the needs of the students are flourishing, while those services that are unrepresentative or inefficiently managed will struggle. Students will learn that providing funding for services not in demand does not create any incentive for improvement or innovation in these services.
Finance students will realise that what the government is doing is forcing them further into debt, debt that will need to be repaid. The government seems to have missed a few too many finance 101 lectures, for it seems to lack any understanding that money does not grow on trees and will need to be paid back at some point. Finance students will recognise that they will already have a significant student debt incurred in the process of making themselves more desirable in the workplace. They will also recognise that using the SA-HELP scheme will commit them to repaying further debt.
Business students will make the most frightening realisation of all. They will realise that, when they graduate, the Rudd government’s stimulus package will not have delivered any results or sustained the job market in Australia. They will remember that the Rudd government told them that $250 is not much to pay and assured them that it can be paid off one day in the future. They will know that for the rest of their working life they will be paying inordinately large taxes to fund recent government borrowing and they will know that the student services fee they were forced to pay was not money well spent and it is money that they would rather have in their pocket. Meanwhile, more and more of their pay will be used to offset interest payments on the national debt.
Law students will also look at the legislation before us today and wonder how it could be drafted in this manner unless the legislators were intentionally leaving it open for major loopholes.
Politics students will quickly become politics sceptics when learning about Australian politics in recent history. They will quickly learn that things are not ever what they seem with the Labor Party, especially in government, and they will learn that the action never matches the rhetoric. When looking back at the election campaign, they may even giggle that the Prime Minister, the political chameleon, claimed that he was an economic conservative and yet, a short time later, committed Australia to record debt.
Accounting students will reflect on the compulsory fee that they are made to pay to their university for student services and see that this is effectively a flat rate tax on students. Inevitably they will know of some students to whom $250 is more than they can pay, and perhaps others for whom it is a meaningful impost, and question how this system can be seen as fair.
For most of these students, regardless of their academic interests, the other major facet of their life will be the need to work. More often than not students are employed in the hospitality or retail industries or other jobs that can accommodate their university commitments. We know that these industries have been most directly affected by the current economic climate and the flawed economic decisions that are being made. In real terms, this means that Australian students will face the limited opportunity to work and will find themselves under increasing financial pressure.
Giving students the choice whether or not to spend their money on student services or to save for necessities such as books or rent is surely the only sensible option. The youth of Australia, whether they be in employment or in higher education, are the future of our country. They will carry our economy and advance the legacy that we leave them. This government is treating Australian students with the greatest of disdain in seeking to enforce this compulsory student services fee. The government must remember that Australian students know better than to accept this tax on their learning. They know the scheme purports to provide student services they neither want nor need and while the government is taxing student learning, students are learning that the Labor Party means taxing.
I rise to speak in support of the Higher Education Legislation Amendment (Student Services and Amenities, and Other Measures) Bill 2009. The Minister for Education, in her second reading speech, said:
The Higher Education Legislation Amendment (Student Services and Amenities, and Other Measures) Bill 2009 outlines a robust and balanced solution that will not only help ensure the delivery of quality student services—it will also help, once and for all, to secure their future.
I concur. Regrettably, the Howard government remained committed to the past in this area. Students at university talk many times about ideas, philosophies, world views and the way of life, but those opposite seem to be fixated and obsessed about the battles that they engaged in in the 1960s, the 1970s and the 1980s. They are still committed to abolishing student unions, still committed to attacking lecturers and tutors who they do not agree with and still committed to propagandising extreme conservative positions. This is a new and balanced way forward. Those opposite remain fixated on ideologically extreme positions in this regard.
I had a conversation with Professor Alan Rix, who is the Pro-Vice-Chancellor at the Ipswich campus at the University of Queensland, in relation to this legislation—I thought it was important to go to someone who knows about these types of things—to see what he had to say about the reforms. I did not want to rely upon what we are told. I wanted to get someone who I respected and who is a well-known academic, so I spoke to him in relation to the guidelines, the protocols and the benchmarks. Professor Rix’s position was that they would consult the student bodies, the University of Queensland senate, in relation to these matters. His words to me were, ‘The benchmarks are fine.’ His view was that $250 is approximately what the compulsory student services charge was anyway. In an email to me, his words were:
As I said on the phone—
referring to a conversation he had with me—
my personal view is that the guidelines in the areas identified for support, including infrastructure, seem appropriate and would enable an institution to provide services accordingly.
That is the view of Professor Alan Rix, a well-known academic in Queensland, a well-respected person in the Ipswich community. He is someone who I listen to in the circumstances.
Our solution to the way forward is to introduce a national access to services benchmark relating to the provision of information on and access to services such as welfare and counselling services in line with the current requirements for overseas students, and for the first time we are going to introduce national student representation and advocacy protocols to ensure that students have an independent voice on campus. To support the kinds of services which we hope to be quality, over and above these benchmarks we are going to provide that universities have the option to set a compulsory fee, capped at a maximum of $250 per year. We will index that annually. It is up to each university to see whether they are going to charge a fee or implement the amount, but it cannot be above $250. That fee will support student services and amenities. It will support sporting clubs, the kinds of services that students need, many of them living away from home, many from rural and regional areas away from their parents, away from the kinds of support structures that they need.
So this is particularly important to students from rural and regional areas in Queensland, because they have to travel long distances. If a student comes from outback Queensland or regional Queensland and they go to university in Rockhampton, Townsville, Cairns, Ipswich or other places like that, they have to travel a long way. So getting access to information, health assistance, legal advice, physiotherapy, sporting clubs for recreation and clubs for cultural groups are important to university life and they are important to students from rural and regional areas.
It really is a great shame that in the past, under the Howard coalition government, students were forced to pay about $170 million both directly and indirectly, as the minister said in her speech. Universities were effectively forced to redirect funding out of research and teaching budgets to ensure that students, the kinds of students I was talking about, were not disadvantaged. The minister and the government have consulted with universities, and they are supportive of what we are doing. Universities Australia, the peak body representing the university sector, said it very clearly last year. They talked about the fact that universities struggled for a long time to provide the kinds of essential services that they did in the past.
Like many people in the House of Representatives I went to university—the University of Queensland at St Lucia, where I did arts and law. I found the union there to be very helpful in terms of advice and assistance, as did many other students.
Helping university students to achieve and attain educational qualifications is an important social justice goal but it is also important for the productivity levels of our economy and for profitable businesses in the future. Education is not a matter of Left or Right; it is both socially just and equitable. But, if we want to increase our prosperity and economic security, we need to invest in higher education.
Universities in Queensland certainly suffered under the Howard government’s draconian legislation in this regard. I have spoken to many academics in Queensland who were forced to comply with Work Choices, which was difficult. Work Choices even penetrated university funding: you had to comply with individual contracts and other Work Choices requirements for funding to continue. There was always that sword of Damocles hanging over the heads of the universities that their funding would be cut if they did not comply. So much for the previous government’s commitment to higher education and to ensuring the future prosperity of our country. To be so ideologically obsessed that they needed to impose Work Choices on the higher education sector is a disgrace. So universities in Queensland suffered as a result of the Howard government’s so-called reforms. I have listened carefully to the speeches from those opposite, and they drip with ideological obsession on this matter.
Let us have a look at the University of Queensland as an example of what I am talking about. At the University of Queensland, there were two main organisations which were funded from the old student services charge—the university union and UQ Sport. Both organisations continued with reduced funding after the Howard government brought in its voluntary student unionism changes. Prior to that, the annual combined grant to the university union and UQ Sport was $7.5 million, and the university kept some of the student services charge to run its own student support services. This amount was reduced by 50 per cent in 2006, and now the university provides a recurrent annual grant of about $2 million to the two organisations, effectively cross-subsidising the organisations because they cannot run their services properly with such reduced funding. As part of the deal, the university union relinquished ownership of its buildings to the university. So much for those people trying to create and support jobs. Guess what happened as a direct result of the Howard government’s changes? There were extensive job losses across the board for the university union and UQ Sport, with a visible impact on students.
There were large cuts to support for students on welfare, legal, tenancy and academic advocacy matters; large cuts to professional policy and portfolio support for student representatives; and costs for students to use UQ Sport facilities increased from 50 per cent to 90 per cent of the cost of outside providers. There was a substantial increase in prices for catering in retail outlets, making food more expensive for students. Those were direct consequences, in one university, my alma mater—where both of my daughters happen to be attending—of the Howard government’s changes. That is one perfect example.
You could look at what happened at the other universities in Queensland, and the same story could be said of Griffith University, the University of Southern Queensland and Queensland University of Technology. They all had the same experience. Because so many regional students go to the universities in Brisbane and on the coast, the universities in Queensland particularly suffered because the pattern of settlement in Queensland is very different from other states. Queensland is very decentralised, and so regional and rural students were particularly disadvantaged by the Howard government’s provisions.
The changes in this legislation are particularly important, and I am very happy to support it. It will help the University of Queensland, which has two campuses in my electorate—at Gatton and at Ipswich. I commend the bill to the House.
I think it is quite interesting that I have had my name on the Notice Paper for about eight days now, waiting to get up and speak on this bill, the Higher Education Legislation Amendment (Student Services and Amenities, and Other Measures) Bill 2009. It is almost as if the government have been trying to hide this legislation behind ETS and IR legislation. I thought this Main Committee chamber was about non-controversial legislation. This legislation is far from being non-controversial, as anyone who reads the speeches will note.
I note that the member for Werriwa spoke earlier in this debate. I think he is a pretty good guy, and I told him today that if I had a chance to speak on this bill I would say he is a good guy, because I think he is. He suggested that we talk about and hark back to our own university experiences. I went to university as a mature age student, starting in 1990 at Flinders University. The first thing that happened to me was that I was told that the student fee was not compulsory, which was fine, but the problem was that I could do all the work and sit the exams but I would not get the results. Their argument was that it was not compulsory but I had to pay it or I could do all that work and not receive the results. That is hardly a voluntary set-up. It is like saying that you can have a car and drive it but you are not allowed to put any petrol in it. That is how voluntary it was.
I was still running a farm when I was at university; in fact, I was involved in local government as well. I used to go to the university two days a week. I used to drive down in the morning and get there at 9 o’clock. I would go to lectures and tutorials and finish up at 6 o’clock at night. I did my economics and politics degree on two days of the week, because I could not afford to take up all the other facilities that were there. In fact, I think I went to the uni bar on the day I started and on the day I finished, and in between I did not go at all, because I did not have the time to spend at the uni bar. I went home and played sport in my local town. In what I might call my home town of Keith, we give a bit of petrol money to the uni students to come back and play football for their local team rather than playing with the university sports team. That was very good for the Keith Football Club, and I am proud to say that they won the premiership last year, and the B grade and the senior colts won it the year before, so they have done pretty well out of doing that.
Now, though, I live in Murray Bridge, which is about 80 kilometres, or nearly an hour, away from the University of Adelaide or Flinders University. Those people themselves often come back and play at their local club. So they are not getting the benefits of being involved in university clubs. In fact, a lot of those students who are now studying at either of those universities or any of the other facilities they have got are encouraged to come back and play sport in their local town, because country towns rely on sport. It is a very strong part of their culture.
So that is my experience and that is the experience of many of the students in my electorate. In fact, there is no-one in my electorate who lives within, I think, about 60 kilometres of a university and, often, in many cases, they live up to 400 kilometres away from a university. In fact, in some places it is closer to go to the University of Melbourne than it is to the University of Adelaide.
So the problem I have is that this legislation gives the Rudd Labor government the authority to slug students with a regressive tax of up to $250 each year from 1 July 2009, regardless of their income or their ability and willingness to use the services that the fees will contribute to, with no say in how that money will be used. In 2005, it was the Howard government that lifted a huge financial burden from students by making student union membership voluntary and empowering students to choose which services mattered to them. This choice makes for student unions providing better services—that is, ones popular with real students, not student union leaders.
I am reminded of a story I was told when I went to university: that you could make up your own club, get some funding, buy a keg and have a really good party. Well, I am not sure that that is really what student union fees should be going towards. And the list of different organisations you could be involved with was quite outstanding. In fact, when this legislation came up in the parliament in 2005, I listed a whole heap of these loony groups that were getting funding from the compulsory fee that they had at the time. Since then, students have exercised their freedom to not become members of student unions, and have saved on average $318 a year—in some cases, up to $600 a year.
This bill is a broken promise by Labor. Prior to and following the election the Labor Party promised they would not be restoring compulsory fees, whether they be paid upfront or as part of a deferred payment scheme. That promise has been broken. It is a myth that student services have been decimated since the introduction of voluntary student unionism. Services popular with students remain in operation and are available to students. This legislation removes that choice, forcing students to pay $250 for services they may not want or be able to afford. The $250 tax will remove the incentive for student unions to provide the services real students demand. It will increase student debt, the last thing they need amidst this financial crisis.
Recently in this place I spoke about the real costs for students from rural and remote Australia in my electorate who wish to attend university. Their nearest university could be Adelaide or Melbourne, hundreds of kilometres away from the family home. These are students who have excelled in year 12 results but for whom research reports the annual cost of studying at university is between $15,000 and $20,000 per year on top of the $6,000 start-up costs. These are not university fees; they are just the annual costs of keeping a young student in Adelaide or Melbourne to study at university. They are costs which students whose parents live in metropolitan cities do not face. The fees imposed by this bill actually force students to pay for services they might not use. Many students will actually go to university without wanting or needing to use a lot of the services that these fees allegedly provide, as in my case. The compulsory $250 fee is a major blow to young students in Australia already living on shoestring budgets. The fee might mean the difference between one of the students in my electorate being able to afford to travel hundreds of kilometres home for Easter, for example.
In a website poll which I looked at today, in response to the question: ‘Do you oppose the reintroduction of compulsory student unionism?’ 80 per cent voted yes. Let me quote a young university student who recently said of the fee which was abolished: ‘Complete waste of money. I wanted to be no part of them but I wasn’t allowed to go to university unless I became a member.’ Another said: ‘Forced into joining a union to be able to educate myself,’ in disgust.
Labor’s fee will increase inequity amongst university students because it will be levied regardless of a student’s income. It is a regressive tax that will not accommodate low-income students or those from Indigenous or disadvantaged backgrounds, of which I have quite a few in my electorate. The tax will be levied regardless of whether students have the ability to use the services provided by the fee, meaning that students who study by distance education will get absolutely no bang for their buck. They cannot use the services because they are not anywhere near the university. The $250 fee introduced by this legislation is simply a return to the bad old days of compulsory unionism—the Rudd Labor government’s new plan to channel money to student unions.
Labor might well say that this will not end up in the hands of the student unions but I noticed the student union leaders licking their lips with glee at the prospect of this amenities charge. They clearly believe that they will end up with it. When this tax was announced last year, the then National Union of Students President Angus McFarland said he was delighted with the change and further stated that the student organisations are well placed to provide these services. My colleagues and I simply do not trust the Rudd Labor government when it says the money will not end up in the hands of unions or political groups. It is the height of arrogance for Labor to ask us to vote on the legislation without giving us the full details of how it will work.
I understand the power to decide where the universities can allocate the funds will lie with the Minister for Education, Julia Gillard, herself a long-time pro-compulsory union fees campaigner and advocate. The minister’s discretion to decide how the money can be spent with no reference to parliament is extremely worrying, especially with her militant union background. Whilst Labor might say they rule out a return to compulsory student unionism, this bill is clearly a return to compulsory student unionism under the guise of an amenities charge. There is no guarantee that money will not simply be funnelled back to the student unions or into political activities. It is clearly about restoring the union power base on campus; not about restoring important services.
So while the Rudd government might run the line that students will not have to join a union, they will still have to pay fees that end up in union fees. Frankly, I do not see the difference. History shows what happens when student unions get hold of the money—it is spent on political campaigns and other activities of no benefit to students. At Melbourne University in 2008 the student union ripped $2,000 from the limited activities budget to fund a show called ‘From beards to badges: a history of the University of Melbourne Student Union’. In 2003 the Monash Student Association produced stickers that read ‘Bomb the White House’ and in 2007 that same union contributed $1,500 towards the defence of convicted and jailed G20 rioter Akin Sari. More recently the Melbourne Student Union funded the legal costs of a man accused of assaulting police officers and damaging a police station during a riot on Palm Island in Queensland. In 2008 the University of Melbourne Student Union slashed the budget of the clubs and societies in order to fund a $15,000 donation to the extreme left National Union of Students—an increase of 30 per cent. Even without amenities fees they are already channelling that money into political activities.
It is a myth that this bill will prevent student unions from spending money on political activity. They do now, even with their limited funds, and this will give them greater capacity to fund those political activities. The practical effect of the funding protocols for student services and representation is that money will be delivered to student organisations, leaving it open for unions to run rampant with student money. Student unions will still have the ability to waste compulsorily acquired student funds on extreme and non-representative political campaigns, just as they have in the past. The bill essentially is the Rudd Labor government taxing every student $250, regardless of whether they can afford to pay it. Two hundred and fifty dollars might not seem like a lot of money to Labor Party members, who received $37.6 million from unions in campaign funding during 2007-08. However, $250 to a rural student in my electorate—who has done well in year 12, who wants to study at university, and to do so is obliged to pay thousands of dollars a year to board in Adelaide or Melbourne or hundreds of dollars to spend Easter with their family—it is a lot. There is no legitimate argument as to why students should be forced to pay for services when they may not be able to afford to make use of it, or not wish to make use of it.
This is the same minister, in her so-called education revolution, who has decided that Sunrise Christian School, despite having five separate campuses across South Australia hundreds of kilometres apart—in fact one of them, Naracoorte, is in my electorate—will receive only one education revolution grant. So if a hall or gym is built on one of the campuses in Adelaide, it is hardly likely that the Naracoorte students will travel 300 kilometres to use that hall or gym. I challenge the Deputy Prime Minister, even with her limited geography skills and not knowing where Millicent North Primary School is, calling it ‘Milton North’, to explain how children at the Naracoorte campus will be able to use the facilities at Fullarton, for example, in Adelaide, more than 300 kilometres away.
Many parents of Sunrise Christian School have contacted me, rightly outraged at this inexplicable decision of the Rudd Labor government. Children attending the Naracoorte campus of Sunrise should not have to be disadvantaged because they will not be able to share in the so-called education revolution grants readily offered to other schools in the district. The maths is not difficult, Minister: five separate schools, five separate campuses, five separate SES ratings equal five separate grants. Unfortunately, because they are under the one name, they only get one.
Back to the bill before us. There is no legitimate argument as to why students should be forced to pay for services they may not be able to afford or make use of, doubly so for rural students who have distances to travel and might want to go back home and support their local sporting clubs where their families are rather than play for the university club. This is a regressive and unfair tax. It does not matter whether you earn $10 million a year or whether you earn $10 a year, you are still going to pay a $250 tax. Despite the government’s spin, their plan is mutton dressed up as lamb, and anyone in the country would know exactly what that means. Compulsory student unionism is coming back.
Just in response to the previous speaker, the member for Barker, it is a fact of life that we go through our adult life paying for services that we do not always use. I paid for private health insurance from about 1998 to the present day because I was compelled to by a $500 tax passed by the Howard government. It was a levy. That is the way they talked about it; the Medicare surcharge levy. I cannot remember using that private health insurance—
But you might have.
I might have, but equally a student might also use the services provided on campus. You cannot test a proposition by whether or not you may or may not use services. But I do rise to support the Higher Education Legislation Amendment (Student Services and Amenities, and Other Measures) Bill 2009 and take this opportunity to reflect on my university life, as so many other members have, and reflect a bit on this matter, which is a bit of an ideological battle between the two parties.
When I look back to my time at university—I went to the Salisbury campus of the University of South Australia—it was a very working-class campus, actually. There were many young adults from the northern suburbs and a lot of country kids from towns like Kapunda, where I grew up, who travelled in. It was an accessible campus for people who wanted to travel from the mid-north. There were a lot of REC students and, in particular, a lot of them came from the Iron Triangle, from places like Port Pirie, Whyalla and Port Augusta. So it was a very accessible campus. It was a campus where I made a lot of really good friends, like Gavin Rudge, Sondra Mettner, now Lyons, and Lee Odenwalder, who is now a Labor Party candidate for the state parliament of South Australia for the seat of Little Para. So it produced hopefully a few Labor politicians.
In this campus, the student union really was central to campus life. It ran the cafeteria. Most importantly, it ran the bar, which was an important area for social engagement. It ran O week, which was always a lot of fun, but it also ran a lot of important student services—small loans, child care, support services and the like. I knew a lot of people who probably would not have made it through university, or their lives at university would have been much more difficult, had they not had access to those services.
The student union was not party political. It was not part of the National Union of Students. It was a dissenting campus and existed on its own in splendid isolation, unconcerned with international politics, unconcerned with extreme ideologies. I cannot remember anybody ever discussing foreign affairs at the bar of the student union. I cannot remember anybody really discussing politics. I do not know what was going on at other campuses, but evidently we were missing out. But there was no sign of extremist ideologies at Salisbury, and perhaps that is because it was a bit of a working-class campus. We were much more concerned with bread-and-butter issues. We were concerned with HECS fees, and I remember protesting out the front of Trades Hall, of all places. This was before I was a member of the Labor Party, but I remember protesting there about some of the HECS rises. I remember being very concerned about the levels of Austudy, so I think things do not change so much. A lot of students find it very tough to get by with the level of HECS fees charged by the previous government. Often they have to work. They find it very difficult indeed.
Towards the end of my time at university most of the student activism was aimed at saving the campus itself, because unfortunately the management of the University of South Australia decided to close the Salisbury campus. It was a great tragedy, in my opinion. It is just adjacent to my electorate, on the very edge of the electorate of Makin. The campus is now closed. The sports oval was turned into a retirement village—a very nice retirement village, but it fills me full of sadness whenever I go there. Its old buildings are now a very good private school, Tyndale college. I went for a tour there recently, and I must say I got a bit misty eyed when we went up to what is now the teachers lounge but was the old bar. The decision to close that campus was, in my opinion, a tragically short-sighted decision. It undermined the ability of so many of my constituents to attend a local campus. Given the fact that the northern suburbs is the growing area of Adelaide, we now find that students often have to travel very long distances—one or two hours, sometimes one way—to Flinders University or the University of Adelaide. It places great burdens on their studies, their work and their families, and often rural families face having to send their kids to Adelaide.
That is not new; it has gone on for a long time. My first girlfriend, Annette, was from Mildura. She was staying in the accommodation down at Flinders University around the same time that the member for Barker was there. I made good use of the university bars even if he did not. My point is that Adelaide universities need to take some account of the prominence of the northern suburbs and, hopefully, take the opportunity to boost the Mawson Lakes campus of the University of South Australia and the Roseworthy campus of the University of Adelaide. Roseworthy has a tremendous history. It is one of the oldest agricultural colleges in the country and has just had a significant boost with the opening of Adelaide’s first vet school. I think they have taken their first students this year and a terrific new building will open in early 2010. There is a very keen group of students and lecturers there so it is a really positive thing.
In the main, my experience with student unions was that they did their job, that they were not particularly overly political and they existed to help students no matter what their status. This bill really does ensure basic student support services of a non-academic nature—bookshops, counselling, sports establishments, clubs and food. Frankly, I am staggered that people could oppose student representation and advocacy—it is hardly controversial. Yes, there is a small compulsory fee but, as I have said before, fees are just part of life. It is part of adulthood and I think most students learn that. There is a loan facility to help pay for the fee. The fee cannot be used to support political parties or political candidates. That last point is very important.
When I looked through some of the contributions made by members opposite, I was particularly concerned when I read the member for Mayo’s contribution. He spent a great deal of time talking about what he called ‘Labor Inc.’ which, in his fevered imagination, is the link between student unions and the state Labor Party. He made a number of references to my time in this House and at university. I ran for student union office only twice, losing miserably both times. He also reflected on the member for Adelaide, the member for Kingston, Senator Don Farrell, the state member for West Torrens, Tom Koutsantonis, and my good friend Peter Malinauskas and his brother Rob Malinauskas. He suggested that we were all from some student union training ground.
A conspiracy theory.
Yes, a conspiracy theory. Adelaide’s main paper, the Advertiser, has a confidential page, a very successful social page. There was recently a spread on my friend Peter Malinauskas at the races with his new girlfriend. Even more bizarrely, the member for Mayo claimed:
Yesterday, there was a great spread in the Advertiser about the secretary of the SDA, the key union in the Right faction, with his love life posted all over the Advertiserall part of the management of the faction, of course.
I find this an absolutely bizarre claim. When you reflect on it, there is probably a bit of personal jealousy in the attack on the part of the member for Mayo. He is probably desperate to get into the confidential pages of the Adelaide Advertiser, desperate to be part of Adelaide’s A list. I do not think he is likely to get there. It is pretty hard to get into the gossip pages if you are short, portly and boring.
To return to the contrived attack that we are all part of some machine that is linked to student unions, I think it is just a falsehood, it is a fantasy, but it is also chapter 2 out of the conservative dirty tricks handbook. It is all about making us part of some privileged elite that seeks to use the state, student unions and other things for our own benefit. It is an unfair attack. Just for the record, there is no link between any of us from our uni days. We went to different campuses at different times, and we had different results. I think the member for Mayo misleads the public and abuses privilege in what is a pretty despicable partisan attack. I am not so much fussed about the attacks on me, the member for Adelaide or the member for Kingston, but I do take exception on behalf of those who cannot defend themselves in this House, in particular, Peter Malinauskas and Rob Malinauskas.
The member for Mayo ignores the real link between us as individuals, which is, firstly, our commitment to the cause of Labor and, secondly, the fact that we had real jobs. University was not the defining time in my life. The defining times in my life were when I was a fruit picker or a station hand or when I worked as a cleaner or a trolley collector. I know that the defining time in the life of the member for Adelaide was when she worked for seven years as a checkout operator in Arrow supermarkets in Edwardstown. One of the critical times in the member for Kingston’s life was when she worked for Toys’R’Us and was offered an ‘individual contract’—it was a sort of take it or leave it deal. And, just for the record, Peter Malinauskas worked for years doing night-fill at Woolies at Mitcham. Rob Malinauskas was a cadet reporter for the Advertisera job that prepared him for his new role as press secretary to the Deputy Premier, which the member for Mayo referred to in his contribution. Tom Koutsantonis worked as a taxi driver. Senator Don Farrell worked at a kiosk in Cleland Wildlife Park and also as a waiter in Darwin.
That is the link: we all had real jobs, working for real employers in the real world. We know from experience what it is like for working people. I would have been inclined to let some of the comments stand if they had come from the member for Hume, who was an ex-meatworker. If someone like that had made an attack on us because we all came from student unions, I would have been inclined not to reply. But the member for Mayo went straight from university to Business SA.
That’s the fast lane.
Yes, that is the fast lane. Business SA also employed Liberal Senator Mary Jo Fisher. Maybe we should call business SA ‘Liberal Inc’ in future. The member for Mayo has never had a real job in his life. He went from Business SA to work for Rob Lucas—no-one would know him here but he is the leader of the Liberals in the Legislative Council in South Australia. It should be noted that Mr Lucas has also never had a real job in his life. He went from university to Liberal Party HQ and then to the Legislative Council. You cannot find a more sheltered life than that. You cannot find a more sheltered workshop than the Legislative Council of South Australia—a body that should be abolished as soon as possible. That was not enough for the member for Mayo. He progressed into cloud city, into the federal parliament, to work for Kevin Andrews, the former minister for industrial relations, and he finally finished up working in the office of the former Prime Minister. In his biography on his website, the member for Mayo claims to have been ‘the youngest person ever to hold the title of senior adviser’, which is an extraordinary thing to brag about.
Finally, after that you would have thought that the election defeat of the Howard government and the defeat of Work Choices, with which the member for Mayo was so intimately involved, might have brought him back to earth or seen him make sure he went into the private sector and make a million dollars in business or something like that. But, no, what happened was that the conservative machine in South Australia shoehorned him into a vacancy deliberately created by Mr Downer. The conservative machine shoehorned him into Mayo over the wishes of local candidates in a preselection that Liberal stalwart Bob Day, the former Liberal candidate for Makin, rightly observed was designed just to benefit one candidate, Mr Briggs. So he went from university to Business SA to a ministerial office and then into Mayo. One can conclude that the member for Mayo has never worked a day in his life outside his work for the Liberal Party and outside his work in professional politics. If anybody has been so part of a political machine, if anybody has had the benefit of some self-serving political machine, it is the member for Mayo. His attacks, in his speech on this bill, on the member for Adelaide, the member for Kingston, Tom Koutsantonis, Senator Farrell, and Peter and Rob Malinauskas are just rank hypocrisy. They are insincere and driven by a rather divisive partisanship. His contribution sought to invent this powerful Labor machine as some mechanism to explain away the South Australian Liberals’ inability to establish support in the community.
We know they lose elections because of unpopular policies like Work Choices and their rampant and divisive internal factionalism. Mr Briggs is involved in both those things. My advice to him is this: give up your myopic focus on the South Australian Labor Party, give up your myopic focus on trying to invent this fantastic Labor machine which supposedly exists out there, get out into the real world and try to do a real job and get in touch with reality and you might find that Work Choices is not so popular, nor are partisan and unnecessary attacks on your opponents. I commend the bill to the House.
Debate (on motion by Ms Grierson) adjourned.