26 June, 2014
Senator EGGLESTON (Western Australia) (17:23): The subject of this debate is that the government budget is an affront to the Australian sense of fairness. What a nonsensical proposition that is, if ever there was one! This government, the Abbott government, is committed to fairness and equity for all Australians. But on coming to office, the government found that the Labor government had left a projected deficit of $667 billion. I will just repeat it so you can think about it: $667,000 million. That is an enormous amount of money. After the Keating government left office they left a deficit of $70 billion—another large amount in the money of that time. It took the Howard government its entire period of office to pay off that $70 billion debt. But here we have this absolutely extraordinary debt of $667 billion left by the Rudd-Gillard government. It is almost beyond belief. What is the reason for this? How did this happen after the Howard government brought our budget back into balance? It is because the Labor governments under Gillard and Rudd had been up to their old tricks of living beyond the national means.
The national budget is very much like a family budget. You cannot live beyond your means without having consequences. Families who live off their credit cards and keep on getting more cards eventually come to a point where the credit card debt has got to be repaid. When the credit card debt cannot be repaid, the banks move in. They foreclose the mortgage on the house. They come and seize the car and other property. It is very sad to see it when it happens. But there is no basic difference, as I have said, between a family budget and a government budget. The Labor government was like a very irresponsible family that lost all sense of proportion in running up the credit card debt, and that is where the problem lay for the incoming Abbott government. We had this enormous debt to deal with, and the only answer to that is a stringent budget so that we can be responsible in spending and do everything possible to reduce debt. That is really the long and short of the story of this budget.
For the opposition to claim that the budget and its measures are an affront to the Australian sense of fairness totally misrepresents the facts. The Australian government is acting with a sense of responsibility—which means fairness, in my view—to the citizens of Australia to ensure that their currency value is maintained and that this country is living within its means. For the ALP senators to claim today that the responsible approach taken by the coalition is somehow wrong and shows a lack of sense of fairness is just bizarre, in my view. It is crazy. It is nonsensical to take that point of view. Is it fair, I might ask in response, for a family to put their home in jeopardy, to put in jeopardy their ability to feed themselves and their children and to put in jeopardy their ability to look after their family when they are ill? Is any of that fair? Well, of course it is not because a family that does that is acting irresponsibly in spending beyond its means and running everything up on credit cards.
There is nothing fair about putting families in financial jeopardy, and that is what Labor has consistently done in the years since Paul Keating came to office. It took the Howard government the term of its office to bring the budget back into balance and, again, we find that, after the Rudd-Gillard government, we have this unbelievable debt of $667 billion. That is massive, so tough measures are needed. It is kind toughness. This government is not an unfair government. This government is not putting people's lives or health or welfare in jeopardy. It is going to maintain services but it has also got to reduce debt, and that is what this budget is really all about. It is just total nonsense for the ALP to claim in this chamber that it shows that the government does not care and that it is breaching the Australian sense of fairness. It would be terribly unfair to have people put in a position where they could not feed their families, look after their kids or pay off their mortgages.
This budget is a key component of the Abbott government's economic action strategy that will build a stronger, more prosperous, safer and more secure Australia. The key message of this budget has been that Australia must contribute and build. This budget calls on everyone and every business to contribute, to join or grow the workforce, to boost productivity and to help build a stronger economy with more investment. The budget redirects taxpayers' dollars from unaffordable consumption today to productive investment for tomorrow. It does this while supporting the most vulnerable in the community—exactly the opposite of what this rather odd motion says it does—and takes significant steps towards ensuring that the government can live within its means. The Abbott government has reduced the Labor deficits by $43.8 billion through to 2017-18. Gross government debt is also forecast to be $389 billion—in other words, more or less half of what it is now—in the 2023-24 budget, compared with the $667,000 million debt that Labor left. The forecast includes providing for future tax relief to address bracket creep.
The signature budget reforms in the Hockey-Abbott budget mean that essentially the days of borrow and spend must come to an end and the time to contribute and build has begun. The infrastructure growth package will take the government's transport investment to $50 billion by 2019-20 and, as a result, total infrastructure investment from Commonwealth, state and local governments, as well as the private sector, will build to well over $125 billion by 2019-20. There will be full deregulation of the higher education sector, which will remove fee caps for universities and higher education providers and expand the demand-driven system to bachelor and sub-bachelor courses at all accredited higher education providers. Australian universities will be able to compete with the best in the world by having the freedom to innovate, a greater ability to invest in world-class research and the capacity to respond to the needs of students and businesses. Some fees may go up, but other fees are expected to fall.
The government will create the world's largest medical research endowment fund, the $20 billion Medical Research Future Fund, and contributions to the fund will come from a new patient contribution to health services and from other health savings from the budget. The endowment fund, when mature, will double the current direct medical research funding, with an additional $1 billion per year.
Young people with a work capacity will be required to be earning, learning or participating in Work for the Dole. Businesses will receive up to $10,000 for employing workers older than 50 who have been on income support for six months or more, meaning there will be stronger incentives to hire older workers.
Most importantly of all, the budget takes steps to ensure the government is living within its means and to rein in the age of entitlement. The government will reform the age pension to make it sustainable. That includes gradually increasing the pension age to 70 by 2035 and linking pension indexation to CPI movements from September 2017. Family payments will also be changed to target payments to those who need it most. Eligibility will be tightened on family tax benefit part B. Low-income single parents will be able to access new assistance of $750 per annum for each child aged between six and 12. All payment eligibility thresholds will be maintained for three years from 1 July 2014, for non-pension payments and allowances like Newstart, and from 1 July 2015 for private health insurance and so on.
This budget is very far from an affront to fairness, as the Labor Party claims that it is. This budget is going to look after the needy in our community, while practising fiscal responsibility. So we might ask: what is the overarching message of reforms to welfare and social services? Why is the government doing these things and how does this fit within our budget message? The government recognises there will be periods during people's lives when they will be unable or not expected to participate in the workforce, such as when they are raising a family, caring and so on. During these periods, the government will support those people who need to be supported. However, we think as a society we need to question whether we have made it too easy for people to not work or study when they have the capacity to do so.
And what about social security and welfare expenses, you might ask—what is the government going to do there? Is this going to be an affront to fairness, as the Labor Party claims it will be? Of course it is not. The Commonwealth social security and welfare expenses make up 35 per cent of the budget, or around $146 billion of expenses in 2014-15. This is a slight increase since 2013-14, when expenses were expected to be $144 billion. The reforms to social services and welfare which the Abbott government has introduced will reduce the medium-term growth in expenditure, and those medium-term projections show that payments in the 2023-24 budget year are now expected to be around $20 billion lower than the estimates at the 2013-14 MYEFO.
Yes, there will be change to pension payments and pensions, but again this is not an affront to fairness. It is responsible financial management. The government promised before the election there would be no cuts or changes to pensions during this term of government and the budget confirms this commitment. The government is making some long-term changes to pensions which include indexing the pension base rate to CPI from 2017-18, freezing the income and assets tests threshold for three years from 2017-18, resetting the deeming thresholds from 2017-18 and increasing the age to be eligible for the age pension to 70 by 2035. Is this reasonable, it might be asked. People are living most longer now and people are able to work for longer periods because they are fitter and healthier. Let us face it, if people are not out there doing something, working, then they often waste away or pass away. So in increasing the pension age to 70 we are recognising the reality of the greying of Australia, the so-called increasing age of the Australian population and the fact that most people in the population want to keep on doing things and if possible have a regular job because working gives people a sense of dignity and a sense of place and provides meaning to their lives. But, you might ask, since Labor has put up this terrible motion about an affront to the sense of fairness of Australians with this budget, what about current pensioners? Will they be affronted and feel that they are being dealt with unfairly? I think not, because in fact there will be no cuts or changes to pensions during this term of government. Changes, including the increase of the pension age, occur gradually and allow plenty of time for retirement planning.
Another issue that people worry about, having been scared by the ALP, is will any pension payments decrease per fortnight under the Abbott budget. The truth of the matter is that current pensioners who are still eligible for a pension from 1 July 2017 will not experience a decrease in their pension payment as a result of changes to indexation of thresholds and rates. The government is changing the way the pension payments increase. Pension payments will continue to increase after the changes come in. The changes to payment amounts represent forgone gains, not a reduction in dollar benefits, and payments will still go up, just by a little less than they might have otherwise. Resetting the deeming thresholds may result in a small number of pensioners receiving a lower rate due to being wrongly assessed as having more income than they actually did.
So how much, you might ask, will this to save over the forward estimates in the medium term? These changes to pensions will achieve savings of about $1.2 billion over the forward estimates. This saving comes in after the next election anyway. According to Treasury medium-term projections, savings in old age and service pensions are estimated to cost around $30 billion nominally over the 2018-19 to 2024-25 budgets. So it is long way away and it will be very gradual.
How does this compare with the previous arrangements? Previously the pension was indexed to the higher male total average weekly earnings pensioner and beneficiary living cost index. The government will achieve savings of around $1.5 billion over four years from 2014-15 by maintaining indexation of eligibility thresholds for Commonwealth payments for three years from 1 July 2014. A further saving of around $450 million over the same period will be generated by indexing pensions and equivalent payments and parenting payments for a single person by the consumer price index, or the CPI. According to Treasury medium-term projections, savings in age and service pensions are estimated at around $30 billion. Again it is a responsible approach being taken by the Abbott government.
I have sat in my office and listened to some of the really quite silly and outrageous claims made this afternoon by members of the ALP in the Senate about the total unfairness of this budget. I find it very disappointing that people who are responsible senators should be scaremongering in that way and seeking to frighten the Australian people when what the Abbott government is doing is acting in a very sensible, restrained and measured way to do something about bringing this $667,000 million deficit under control, reducing it so that Australia has some room to do new and innovative things, to introduce new government programs rather than being crippled by what must be one of the biggest debts in any nation's history when compared to our gross national product. It is quite ridiculous that otherwise sensible people who belong to the ALP should be putting forward such absolute nonsense. I can only say that I am completely mystified by their motivation when they know full well that the Abbott government budget is a very fiscally sound and totally responsible budget.
The ACTING DEPUTY PRESIDENT ( Senator Fawcett ): Thank you, Senator Eggleston, for your contribution to this and many prior debates.