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Kim Beazley’s 2000 Budget Reply Speech

This is the text of Opposition Leader Kim Beazley’s Budget Reply speech in the House of Representatives.

Budget Reply speech by Kim Beazley, Leader of the Opposition.

BeazleyMr Speaker, as I have travelled around this country over the last 12 months, wherever I go, I hear the same questions.

People are asking me “if the economy is supposed to be going so well, why are things so tough for me and my family?”

They are asking me why, when the Government says the economic good times are rolling, their local public hospital is overcrowded, and can’t cope with more than the most urgent cases?

They ask me why the local public school is run down, the computers broken, and the classrooms overcrowded.

They ask me why they are getting hit almost every month now with another rate rise on their mortgage.

And they are asking why, when things are supposed to be going well, the society they live in is getting harsher, less caring, more divisive.

Those people who have asked me these questions over the last twelve months would have found no answers on Tuesday night from this Budget.

Indeed, all that Australian families would have found in this Budget would be higher taxes, higher prices, and more pressure on interest rates.

Even more importantly, they would have seen this Budget on Tuesday night for what it is – a Budget of lost opportunities – lost opportunities as the Government squanders its bottom line, gleaned from cutting sound programs in education and health and regional services, to spend on what?

Nothing but the GST.

For all the big talk in the Budget about doing the “hard yards” and all the talk about historic reforms and strong prospects – it’s all invested in just one thing – the GST.

At the core of this Budget, after nine successive years of growth, we find nothing to comfort Australians, to reassure them the Government believes in a future for this country.

After the billions of dollars in cuts made to Government services in its first term – this Government has been forced, beyond all the limits of prudence in a growth economy, to spend all the proceeds, and then some.

The Treasurer knows he is stuck with this Budget to bring in the GST. But he knows it is the wrong Budget to ensure a sound economy at this stage of the economic cycle.

When he should have been assisting the Reserve Bank to keep interest rates low, the Treasurer instead has been forced to accept a tax he once described as snake oil – John Howard’s GST.

And he’s been forced to accept the huge spending bill to try to compensate people for its effects.

The amazing thing is, that with all of that spending, $6 billion in this Budget alone, they have still managed to leave substantial numbers of Australians without any form of compensation.

Remember, this is the Government which has cut $5 billion from social services since coming to power – much of it directed at families. Now it is imposing a $30 billion GST which will principally be borne by families. A tax, which means that every time you have a child, you effectively go up into a new tax bracket.

The fact is, as most Australians know, mortgage rises are already chewing up the so-called GST compensation for families with children on an average income, and an average mortgage.

Their tax cuts are already gone before they arrive; and the full GST is only 51 days away.

Even more vulnerable is a family like John and Wendy, from the Government’s own GST TV ads.

If John and Wendy are expecting a child in December this year, and John has an annual income of $30,000 and Wendy $28,000 they will, under the new tax system, when Wendy stops work, lose $67 a fortnight in the existing parenting payment.

Even the Government admits this leaves John and Wendy only $12 a fortnight to pay the GST. And the latest analysis shows that they will be $16 a fortnight worse off after the GST.

You know, Mr Speaker, we had a look in the Budget on Tuesday night, and actually found $15 million to set up an office to look at cases like John and Wendy’s. But there was no money in the Budget to pay them any compensation. So we have the farcical situation where the Government will spend $15 million to discover that John and Wendy are worse off, but won’t spend a cent to help them.

To further confound and confuse Australian families we had the spectacle last night of the Treasurer – in a fit of pique over the Budget’s poor reception – saying the promised tax cuts were not meant as compensation to people for the GST. – “Income taxes had to be cut anyway,” he said.

This was exactly what Labor has always argued – that you can have tax reform without a GST.

What the Treasurer is telling families is that the inadequate compensation package for the GST – is actually no compensation at all. It was owed to people for the effects of inflation since the Howard Government came to office.

But that’s this Government all over – it’s like someone who comes along and pinches $1000 out of your back pocket, returns 4 years later with a fifty dollar note, and expects you to fall on your knees in gratitude.

Mr Speaker

The one piece of news in this Budget was the $2.8 billion surplus. Yet, almost immediately that was shown to be a giant con trick.

Nine years into economic recovery, we find in reality there is no surplus at all.

The $2.8 billion was conjured up literally out of thin air – out of the sale of communications spectrum for an estimated $2.6 billion. The Treasurer himself has told us asset sales should not be included in the Budget bottom line. A business could not get away with that, but the Treasurer thinks he can.

Take away this fiddle, and the Budget would be in surplus by a paltry $200 million.

Today the situation became dramatically more serious. The Parliament learned that because of the false classification of a major payment to the States – the Budget is actually in deficit.

Combined with other fiddles, the outcome of this Budget is really a $2.1 billion deficit.

It has taken all of 3 years for this Treasurer to turn a $10.7 billion projected surplus into an effective $2.1 billion deficit.

And this at a time of strong economic growth, and huge growth in revenue.

According to the measure used by a prominent economics forecaster, Access Economics, the true structural deficit is actually more than $5 billion.

Is it any wonder then that this has been of all their Budgets the most critically received by the economic commentators?

You know, in the past four Budgets we have seen Peter Costello smirking his way through his Budget speech, as he went around trying to convince the markets and the commentators the pain would be good for us, the gains would soon be here.

But on Tuesday night – the smirk had gone – and all that remained were thin lips, and a hushed backbench.

What this week has done – make no mistake – is finally expose what we on the floor of this Parliament have known all along. This Treasurer has a glass jaw.

He’s had it easy in his short political career, but as soon as the heat’s turned up, he starts to go to pieces.

I was trying to recall when I had last seen him look so uncomfortable. Was it when he verballed Alan Greenspan and single-handedly moved the US bond market? Was it when he did the Macarena with Kerri-Anne Kennerley? No, it was when he suffered the ultimate humiliation of being made Alexander Downer’s deputy.

Mr Speaker

I have said this is a Budget of lost opportunities.

And this is because of what was not in it – no plan for the future, no vision for Australia, no ideas.

It is a tragedy for this country that at such a time of change – with new communications transforming the workplace, innovations coming thick and fast- we have a Government so backward-looking.

Like most other Australians, members of the Labor Party have been debating how our education, training and communications networks will measure up to the challenges of the future, and how we can and must invest in new ideas.

Do we see any evidence of this debate in the Government ranks?

People look to their Government at times like these to provide leadership.

The tragedy is that at the very time we need it most, we face a Government without inspiration, ideas or vision.

This Budget reveals that in spite of the enormous challenges we face in this country to become a Knowledge Nation – this Government under Prime Minister John Howard can only focus on a 1960s European socialist tax idea – the GST.

Mr Speaker

Australians are already paying the GST. They know that prices are already going up. In the supermarket, in the department store, on their car and home insurance, and in so many other ways.

Let us briefly examine some of the things we know this tax will do.

We know it will take $30 billion out of the pockets of ordinary Australians each year – a figure, by the way, you will labour in vain to find in the Government’s Budget speech, although they do finally admit to it in the fine print.

This tax, we now learn, will lead to immediate price rises of a staggering six and three quarters percent – a figure you never heard mentioned by the Howard Government in any of their GST propaganda.

Before the election we were told prices would only go up by 1.9 percent.

So we will have this big increase in prices which – as we all know – will hurt the most vulnerable in our community – the elderly, new parents, students, self-funded retirees, pensioners and others.

Economists are predicting more interest rate rises for homebuyers as a result of this Budget. Already we have seen four rate rises since last November.

And if you think the surplus is disappearing, just wait until you see the tax cuts disappear.

We now know the Government does not think the tax cuts compensate people for the GST.

But even if somehow families did see them as some form of compensation, their effect, according to the Government’s own Budget papers, is snatched back after just one year.

The total tax take from individual taxpayers bounces right back to their levels of this year after only 12 months. And a year later, taxpayers are on average $600 a year worse off. So these tax cuts are a mirage.

The other great neglected story of this tax is the huge burden of paperwork it will add to owners of small and medium businesses around this country.

We know the struggle they are going through right now trying to install new software, wrestling with complex regulations trying to gear up to become government tax collectors all around this country.

These businesses are, in fact, spending $4 billion on that process.

Mr Speaker

Let me state very clearly that a future Labor Government will be committed to rolling back the Howard Government’s GST to make it fairer and simpler.

While we will roll it back, we know the Howard Government’s agenda – to roll the GST forward. Everyone knows this Government wants a GST on all food – they wish it was on all food now.

Likewise, everyone knows that under the Howard Government, the GST rate will rise.

To roll it back, we need to know how this tax operates over the next 12 to 18 months. We need to know who is hit hardest, and what its surprises are.

And we need to know how much money is available to roll it back responsibly, while attending to our other priorities.

Even the Government – as is amply clear from its vanished Budget surplus – doesn’t know what the Budget will look like at the next election.

For my part, I will not make any promises I cannot afford. Unlike the Prime Minister with his core and non-core promises in the 1996 poll.

I will tell the Australian people our plans before the next election – an election that should be at the end of next year, after another Howard Budget.

For the moment, I can assure them that our priorities will be:

  • Fairness to the weakest and most vulnerable in society, including charities;
  • Lifting the burden on small business, especially the administrative complexity;
  • Lifting the burden on education and health
  • Lessening the impact on jobs

At the next election, the Australian people will know fully what we intend – and they can decide between a Beazley Labor Government which will roll the GST back, or a Howard Government they know will roll it forward.

Mr Speaker

Perhaps the greatest cost of all of the GST is the way it robs the future to pay for the past.

The way it takes more than $25 billion out of future Budget surpluses to pay for a tax, instead of going towards the Knowledge Nation.

To position ourselves to take advantage of the huge scientific and technological changes we are facing.

There are far more important issues for this country to debate than issues of taxation – like how to develop a highly paid, highly skilled workforce using the best technology to improve the production of goods and services.

Yet, this is an agenda this Government publicly derides.

They simply do not understand that these ideas are no longer optional extras for Governments. They are a new economic reform agenda for modern nations around the world.

We all now largely agree on the old agenda – the need for fiscal discipline, an independent monetary policy, deregulation of financial markets, the floating of the dollar, low inflation, and a more open economy.

The agenda is moving on, but not the Howard Government.

There are many dimensions to the Knowledge Nation, and I want to spend just a little time on a few of them.

I begin with what was meant to be the focus of this Budget, regional development.

Mr Speaker

Regional policy is about investing in modern infrastructure. It’s about making the regions part of a vibrant national economy. It’s about making them part of a successful Knowledge Nation.

Without this vision we face an ever-diminishing, and aging, rural and regional population. Labor has higher aspirations for country Australia than this.

We know what problems many of our regions are confronting — population decline, young people moving away, jobs drying up, and country towns disappearing.

Some of our regional communities have shown that it doesn’t have to be this way. They’ve got answers. They know what regional Australia needs – investment in Information Technology so they can create new industries and new jobs.

They know it means better-funded regional universities and TAFE colleges to bring in new skills. And new measures to tackle the salinity crisis to protect the land, and give agricultural industries a secure future. But they need the Commonwealth Government to give them the resources so they can get on with the job.

The Howard Government has totally failed to invest in the future of our regional communities. There is no new infrastructure spending. No new money for country roads. No new money to improve access to communications bandwidth, and no new money to help sort out mobile phone problems.

Deputy Prime Minister John Anderson said his political mission was to “meet the reasonable expectations of country people”. With this Budget, he has well and truly failed.

And while I am on the subject of his failure, let me talk about his failure to stand up to his Liberal counterparts on perhaps the most important asset rural and regional Australia has to connect itself to the new economy – that’s Telstra.

No government I lead will sell Telstra.

This is not ideology – this is commonsense. We need Telstra – to make sure it meets our national priorities.

I note from this morning’s Financial Review that Telstra has finally found who its true enemies are – not those of us in the Labor Party who want to see it prosper and thrive.

Its enemies are those in the Government who have been talking down its value for their own ideological reasons.

Mr Speaker

The second Knowledge Nation area I want to tackle is the vital one of education.

Our education system is a vital national asset. We must develop it or see our stocks as a nation fall.

Yet the Treasurer’s speech on Tuesday night contained just two paragraphs on education. Two paragraphs on what is without doubt the most important responsibility the Government has.

Every leading competitor nation of ours is investing its wealth in human capital.

In the United States, Al Gore has pledged to increase investment in education by 50 per cent by 2010 if he is elected President.

Just a few months ago the Singapore Government announced a twenty per cent increase in education spending.

And on Tuesday night Peter Costello announced new education initiatives of just $62 million over four years. That’s 86 cents per Australian, per year. The price of a cheap ball point pen – like this one.

What’s more, it’s barely one-sixth of the $360 million this Government is spending on its GST ad campaign – propaganda for a tax no-one wants, versus investment in the skills everyone needs. Those are priorities for you!

The Government took up one of our good ideas in the bonded scholarship for doctors to go to regional Australia – how about picking up one or two of our education ideas, as well.

Like our Teacher Development Contracts to assist teachers to go back to university to gain specialist knowledge.

Or our Teacher Excellence Scholarships to attract to the profession high-achieving school leavers in fields such as maths, science and IT.

Every parent knows instinctively what the latest research confirms — that well trained and motivated teachers are the best chance their child has got to succeed at school and in life.

And yet, this country under this Government is going the other way. We are unique among developed nations in reducing our public commitment to education.

Five years ago Commonwealth spending on education was at 2.2 per cent of GDP. This year it will be 1.8 per cent. In another four years if this government is not thrown out it will be at 1.7 per cent and Australia’s chance of becoming the Knowledge Nation will be ruined.

And just today the Science and Technology Budget statement revealed a further fall in Commonwealth support for science and innovation.

This Budget proves beyond doubt the Howard Government has given up on the elements we need to become part of the new economy.

Mr Speaker

While I welcome the Government’s move to assist some regional non-government hospitals, I believe the Government still does not understand the Number One issue in health: the state of our public hospital system.

Across Australia the main issues are the absence of public hospital beds, the waiting times for certain procedures, and, sadly, the poor quality of care now available.

If Australians can’t have confidence in their public hospitals, what sort of country have we become?

We are all affected. Yet the Howard Government refuses to provide greater hospital funding.

The Government has a report from an independent expert which says that over the next four years the system needs an extra $620 million just to provide the existing level of services to our growing and aging population.

A good government is willing to invest in community infrastructure, such as quality hospitals.

Just imagine, if the $360 million this Government is spending on its GST ad campaign was invested in public hospitals you could fund an extra 1200 new hospital beds.

Mr Speaker

What is really needed right now is a driving, active, nation building government – one that has the will to forge real change in this country.

Governments must provide leadership to create the climate in which our best minds can work together to bring about new knowledge and translate ideas into economic growth.

This is not politics. This is the future. It’s not about the next election or who wins and loses. This is about what sort of country we really want for our kids.

Because we have a chance to shape this nation.

The role for Government is to provide an excellent education system, the best incentives for scientific and technological research, underpinned by a first class communications network.

That’s what the Labor Party promises.

Mr Speaker

Finally, let me say the lack of vision in this Budget is not surprising from a Government in love with the past and at war with the future.

We have seen it on the republic, on Aboriginal reconciliation, on foreign policy.

Now we are seeing it all through our domestic economy.

One thing that has amazed me is that in the selling of this Budget so much of the Government effort has been aimed at attacking us – the Labor Party.

Since the poor reception for this Budget has unfolded, and as the Government has become more sensitive to public fury over the GST, their need for a deceitful and personal political strategy has become evident.

When you can’t defend your own Budget, you demand the Opposition produce its 2002 Budget right now.

When this doesn’t work you attack the Opposition Leader.

If that doesn’t work you demand the right for one more victory over Paul Keating.

My advice to my fellow Australians is when you hear any of this, reach for your wallet.

You will find it minus your share of the $360 million GST ad campaign.

Recognize this strategy for what it is – a lushly-funded smokescreen over a Judgement Seat they hope you will never sit in.

Mr Speaker

On Tuesday night the Treasurer delivered this Budget speech.

And it is a very telling document.

The first eleven pages – predictable, stodgy, unsurprising.

But the last five pages tell the tale.

They are all blank.

These are the pages the Government could have used, and the pages that will be used under Labor, to set us on the road to the Knowledge Nation.

These pages should have told us how our kids would be better educated to face the great challenges of the new economy.

These pages should have set down the way in which this country can establish a better health system.

These pages should have been used to restore the welfare of families who are at the centre of our society.

Labor will fill these pages. We will fill them in a way that answers those questions I am so often asked by Australians – questions about how to achieve economic growth with fairness.

Fairness for Australian families.

That’s the Australian way.

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