Parliamentary Secretary for Defence Senator David Feeney welcomed today’s opening of the Royal Australian Navy’s new $18 million training facility at HMAS Creswell, Jervis Bay.
The new damage-control training facility will enable Navy personnel to build their skills in responding to toxic hazards, fire fighting and conducting emergency repairs afloat.
Senator Feeney said the site was one of the best Navy training facilities in the world.
“This $18 million simulator can replicate the most serious circumstances which could occur while ships are at sea,” Senator Feeney said.
“This is precisely why the Navy trains its people so thoroughly and is providing outstanding facilities. Simulators such as this one are a cost-effective and smarter way of doing business.”
Federal Member for Fraser Andrew Leigh also welcomed the investment.
“Ships at sea cannot call on emergency services in the unlikely event that things go wrong. Sailors have to be prepared to deal with any number of rare but potentially hazardous situations,” Mr Leigh said.
“This $18 million facility will be great for Jervis Bay and the Royal Australian Navy.”
The new Damage Control Training Unit differs from the old in that simulated ship’s compartments are hydraulically mounted to deliver the rolling motion ships experience at sea. Trainees now have to deal with ship movement while they fight fires or stem water flow in flooding compartments.
The Royal Australian Navy School of Survivability and Ship Safety is contained within HMAS Creswell at Jervis Bay. The new training facility is part of the $83.6 million HMAS Creswell redevelopment project, which has also seen the refurbishment and expansion of trainees’ accommodation and classrooms.
It also includes a new physical-fitness centre providing an indoor swimming pool, cardio fitness room, weights room and multi-purpose hall.
HMAS Creswell is the home of officer training in the Royal Australian Navy.
Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011
21 June 2011
Productivity lies at the heart of raising Australian living standards. As US economist Paul Krugman once said, 'productivity isn't everything, but in the long run it is almost everything.' So the challenge in raising Australian living standards in the future is to crack the nut of higher productivity.
During the 1980s and the 1990s, tariff cuts, competition policy and enterprise bargaining were among the key policy drivers of raising productivity in Australia. Today, one of the policies most likely to boost the rate of productivity growth is education reform. Raising the human capital of the workforce is essential if we are to adapt to changes in the labour market. This agenda involves both raising the quantity of education—boosting the average number of years of schooling that each person receives—and boosting the quality of the school system.
Labour is focused on both of these agendas. We are keen to ensure that, as technological changes diffuse through the Australian economy, workers of the future are able to adapt and use those new technologies. In the case of schools, we want to create incentives for students, teachers and principals—the whole school community—to perform at their best. If we can do that, education reform will also be a great economic reform.
Part of this agenda also involves ensuring that Australian universities work as effectively as they can, that Australian universities serve more young people and that they do so as effectively and efficiently as we can ensure.
On coming to office, Prime Minister Gillard, as the then Minister for Education, commissioned the Bradley review to look into our higher education system. The Bradley review confirmed the need to boost student numbers in Australia. In the words of the review there was a 'decisive need for action' to boost numbers of qualified people in Australia. The report noted that, in 2003, 43 per cent of the young people in the United Kingdom aged between 18 and 30 participated in university and that, by 2020, Britain is hoping to have raised this number to 50 per cent. Ireland already has a participation rate of 55 per cent and is aiming for 72 per cent in 2020. But, by comparison, in the last years of the Howard government only 29 per cent of Australians aged between 25 and 34 had a bachelor's degree or above. This government has an unapologetically ambitious agenda in skills and training, and a critical part of that is ensuring that we boost university participation. By 2025, we hope to have 40 per cent of Australians aged between 25 and 34 years holding at least a bachelor's degree. This does not come at the cost of our trades. In fact, the two sectors complement one another. As the economy grows we will need more skilled workers across a whole range of skills.
We recognise that in the context of operating within our region we need to ensure that Australia's workers are well trained; that they have not only the skills for the jobs of today but the skills set that allows young Australians to engage in lifelong learning—to continue to adapt as technological change happens. One thing we can be sure about is that for a mechanic graduating now the cars of 30 years hence will not look much like the cars of today. For an engineer graduating today many of the engineering technologies of the future will not look like the engineering technologies of today. So we need to ensure that our education system encourages lifelong learning.
A demand driven model of university funding ensures that Australia is prepared for these opportunities. Rather than governments guessing at future labour market trends and determining numbers—a command and control approach—this government is uncapping university places. Undergraduate places will no longer have to be rationed. From 1 July universities will have the flexibility to set student numbers based on industry and employer needs.
The bill of course retains the ability for the government to respond to any new skills shortages and, if necessary, to the oversupply of graduates in particular areas. But we are responding to a key insight, which is that forecasting future labour market trends is difficult. I refer the House to a paper by the Centre for Independent Studies' Andrew Norton titled Mismatch: Australia's graduates and the job market. Andrew carefully takes the reader through a range of evidence on the poor quality of labour market forecasts. He points out that:
Some industries are cyclical. Civil engineers are in tight supply now, but during the early 1990s recession a construction downturn left 30% of recent graduates unemployed. In the late 1990s, the Australian IT industry argued that it faced severe shortages of workers. As it turned out, many IT professionals struggled to find work in the early 2000s.
The key problem with forecasting labour demand—working out from a central planner's point of view which industries are going to grow and which are going to shrink—is that often it is technology that is driving industry change. Because technology changes discontinuously—we cannot of course forecast the new innovations that are going to come in—we tend to be quite poor at forecasting the industries or occupations that will grow and those that will shrink.
I cannot say that the legislation before the House today will entirely satisfy all of the demands that my friend Andrew Norton would want, but I hope it goes at least some way to addressing his criticisms. He has very articulately set out his concerns about the mismatch between the graduates Australian universities produce and the labour market demand and the difficultly of predicting with precision supply and demand for graduates.
The bill also will require each university to enter into a mission based compact with the Commonwealth. Compacts provide assurance concerning the alignment of university missions with the Commonwealth's national goals in the areas of teaching, research and innovation. They do so in a way that recognises that the objectives of government and universities are often shared objectives. The government will continue to work cooperatively with higher education providers through compacts to ensure that individual university missions serve Australia well in teaching, research and innovation.
Consistent with the Bradley review's recommendations on demand driven funding, we are also abolishing the student learning entitlement. The student learning entitlement currently limits a person's ability to study at university as a Commonwealth supported student to the equivalent of seven years full-time study, subject to exceptions specified in the act, which allow for further periods of 'additional' SLE and 'lifelong' SLE to be allocated. The student learning entitlement has introduced an additional layer of red tape into an already complicated system and it trips up genuine students who have done nothing wrong. By abolishing it we are again going to help to free up universities and allow them to get on with the job of teaching the next generation of students and not miring them in difficult red tape.
We know that application of the SLE has resulted in instances of hardship for particular students. Take for example the instance of a student who completes a three-year undergraduate science degree and then wants to re-enrol in a six-year medical degree. In that case the student would exceed their SLE and no longer be eligible for a Commonwealth supported place. They would have to complete their degree as a full-fee-paying student. Is that what we really want? Is that what this House supports? Do we really want to say to science graduates: 'No, you cannot train as a doctor unless you are willing to pay full fees for part of your study'? I do not think that is what we want to say. That is why scrapping the SLE is good policy.
Increasingly, a degree will be necessary for people to access high-skill, high-wage jobs. We want to encourage people to pursue higher education rather than erect barriers to participating in the higher education sector. We particularly want to encourage those Australians who want to go back to university to add to their qualifications. We do not want them to be caught up in red tape.
The problems with the SLE have been recognised by those opposite. In July 2006, in a speech to the John Curtin Institute of Public Policy about university regulation, the member for Curtin described the student learning entitlement as 'red tape'. The member for Curtin also indicated that the Howard government was at that time, in 2006, considering its abolition. She said:
Turning to the ubiquitous issue of government red tape—I am happy to listen to sensible suggestions as to how I can remove impediments to diversity and increase flexibility. As a result of the AVCC 's report on red tape, I have agreed to consider the abolition of the Student Learning Entitlement, which measures a student's consumption of Commonwealth supported education.
But we are now in this extraordinary position where the coalition is fighting to defend a policy that the then coalition federal minister for education had handpicked to be scrapped. The student learning entitlement is a discredited rule dating back to 2003. It ties universities up in red tape and trips up genuine students who have done nothing wrong. Sadly, what we see today from the coalition in opposing the scrapping of the student learning entitlement, a measure which should enjoy bipartisan support, is what we are seeing across the board in other policies. It is one thing for the coalition to walk away from reforms that we have long championed and they have long opposed but, on an increasing number of issues, we are seeing the coalition rejecting coalition policies. We have seen it on climate change where, in 2007, the coalition went to the election supporting a price on carbon and are now opposing a price on carbon.
We have seen it in respect of fuel taxation. In 2003, the then Treasurer, Peter Costello, announced reform of LPG taxation, reform that we are now, after an eight-year phase-in period, implementing. But those opposite have now decided that they want to walk away from that reform. And we are seeing it with the student learning entitlement policy, which those opposite wanted scrapped in 2006 but are now pursuing the maintenance of. This Nelson-era piece of red tape should be abolished but, instead, it seems that the coalition want to tinker with it at the edges and add to the bureaucracy.
Australia's universities have long been required to divert resources to administer this costly and ineffective entitlement system. In a submission to the Productivity Commission, in 2009, they argued:
There is ... no policy objective being served by the SLE, and there are considerable savings that can be achieved from its removal. As the first students subject to the new arrangements will shortly be exhausting their SLE, it is particularly timely to solve this issue now to avoid problematic decisions having to be taken regarding upcoming enrolments.
It is extraordinary that, after almost four years of hearing nothing from the coalition on higher education, this is almost the first issue that they are prepared to take a stand on. Abolishing the student learning entitlement will free up universities and they will be able to get on with what they do best: teaching the next generation of students. Its removal has been supported by almost every higher education group in Australia: the National Tertiary Education Union, the National Union of Students, the Australian Medical Students' Association, the Australian Technology Network and the network of Innovative Research Universities. All of these organisations support scrapping the SLE. But the Liberal Party continue to block SLE reform.
By contrast, the government is getting on with the job of ensuring that more Australians can study at our universities and that those universities are doing as good a job as they can. This year we will fund more than 480,000 undergraduate places at public universities. With an anticipated four per cent growth, next year this figure will rise to over half a million places, a 20 per cent increase since 2008.
To fund this historic expansion of opportunity, the government has provided an additional $1.2 billion in this year's budget, bringing the total demand driven funding to $3.97 billion over successive budgets. I know this will be welcomed right across Australia, and possibly nowhere more welcomed than in my own electorate of Fraser where I am proud to have the University of Canberra, the Australian National University, the Australian Catholic University and UNSW@ADFA.
Finally, I want to say a few words about free intellectual inquiry. The bill will amend the Higher Education Support Act to promote free intellectual inquiry. It is an important principle, underpinning the provision of higher education in Australia. Free intellectual inquiry will become an object of the act. The government's funding arrangements should not be used to impede free intellectual inquiry. Universities will be required to have policies that uphold it in relation to learning, teaching and research. Naturally, most universities already have such policies and I know that they are all as keen as we are to support research and teaching environments that promote free intellectual inquiry.
By focusing our reform agenda on the neediest students, there is also another pay-off. I have spoken of education policy as great economic policy, but education policy is also the best social policy that we have ever developed. A great education is a first-class antipoverty vaccine. If you read biographies of people who grew up in disadvantage, so often a great education is what makes the difference. I commend the bill to the House.
National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011
21 June 2011
The Australian dream of owning your own home is usually only possible through a home loan, yet taking out a home loan can be the biggest financial commitment that most Australians make. Credit cards promise that bit of help to manage the family budget. Whether it is helping to get access to cash in an emergency or helping to pay for those little extras like a holiday, accessing quick and easy credit is an attractive option for most. But, in the excitement of thinking about a first home or a new home, or the possibilities of what can be bought with a credit card or an extended credit limit, the obligations that banks and other credit providers place on consumers can be forgotten.
When you are thinking about moving into your first house, the last thing you want to do is read through the fine print in a dense home loan contract. When you are planning your overseas holiday, you do not read the clause about the additional charges associated with a cash advance. The changes proposed in this amendment are part of a broad suite of reforms that seek to increase fairness for consumers seeking credit, help to better educate consumers about what it is they are signing up for and create a set of uniform laws across Australia.
It can be extremely difficult to work in an area where every day you see people suffering from extreme financial hardship.
I would like to use this opportunity to commend the consumer rights advocates in my electorate for their hard work. Some of the groups doing marvellous work include Moneycare, provided through the Salvation Army, Street Law, the ACT Welfare Rights Centre and Care Inc., which includes the financial counselling service and the Consumer Law Centre for the ACT.
My friend Liz Dawson has shown me around Moneycare at their Dickson offices and I have seen how hard they work to provide assistance to people in the community who are under pressure from their debts. Moneycare reminded me that many people suffering from financial difficulty as a result of credit card and home loan stress often end up with depression or anxiety as a result.
Care Inc. is the main consumer law advocacy body in the Australian Capital Territory and also provides advice and assistance to consumers. They wrote a submission on the financial services and credit reform green paper that preceded the range of legislative reforms. They rightly point out that, even though low-income earners carry less debt than high-income earners, the potential for that debt to have a negative impact on their lives, families and general wellbeing was far greater. Here in the ACT we boast some of the highest living standards in the country. But even in a relatively well-off electorate like Fraser there is still disadvantage, and we need to remember that, even though those generalisations about Fraser might be true for many, they are certainly not true for all.
Care Inc. told me that a local elderly woman on a pension was given a mortgage for the exclusive use of her son to purchase a business. The son was unable to repay the mortgage and the elderly pensioner was at risk of losing her home because of the loan, which she clearly could not service and from which she received absolutely no benefit. Care Inc. also told me that they had a client who was a homeless man living off a credit card. The man was unemployed and had a range of financial and other legal difficulties, yet he was still given a credit card.
In addition to low-income earners suffering from mortgage and credit card stress, financial counsellors agree that in the last five years there has been a significant increase in the number of middle-income earners suffering mortgage stress. One way that we can help people, regardless of their level of income, to avoid financial stress due to debt is to assist them to understand what it is that they are signing up for. The Gillard government have introduced a range of measures through the National Financial Literacy Strategy—measures that Tony Abbott included in his 'hit list' to pay for the flood reconstruction. The government are doing this in recognition of the fact that this is an important way of helping Australians to understand and pay their debts.
Requiring banks to provide their information in a simpler and more concise format is one part of how the government are helping consumers. We need to remember that the most vulnerable members of our community are the ones least able to access legal advice to assist them to understand their rights and obligations. The most significant changes—the changes that will provide genuine assistance to vulnerable consumers—are requirements to provide consumers with information that is easy to understand.
The key facts sheets to accompany a home loan will enable consumers to better compare home loans and better compare the loans offered by the big banks with loans offered by credit unions and other smaller providers. Potential credit card borrowers will also be provided with a key facts sheet showing interest rates on purchases, cash advances and promotional offers. These facts sheets will help those who do not have the ability to wade through pages and pages of complex legal and technical terms to understand what they are signing up to.
In the House Economics Committee's inquiry into this bill—ably chaired by the member for Dobell—we heard a range of witnesses support this measure. In fact, research by University of Queensland law lecturer Paul O'Shea, referred to in the explanatory memorandum, has taken an innovative approach to assess the impact of simplified disclosure statements. He has shown that, when a sample of respondents were presented with current disclosure statements, only 37 per cent correctly answered a question about the maximum interest rate. With a redesigned disclosure statement, 80 per cent answered the question correctly. On a question about the time to pay off the credit, only 13 per cent gave the right answer when presented with the current disclosure statement, as compared with 100 per cent when given a redesigned disclosure statement. The research provides empirical support for what many of us would have intuitively thought—better disclosure improves customer knowledge.
It is important for us to encourage banks and other lenders to produce their material in a format that is comprehensive yet easy to understand. This is just as important a part of developing financial literacy as teaching consumers how to read complex credit contracts. We are going to ensure that loans are easy to compare by ensuring that all financial providers—banks, credit unions and building societies—have to put their key facts sheets in the same format. That will mean that consumers can compare like with like.
Care Inc., the local service I mentioned earlier, rightly points out that financial service providers can afford lawyers to draft their standard term contracts, whereas the most vulnerable in our society do not have the capacity to obtain legal advice on their rights and obligations prior to entering into credit contracts. Care Inc. also notes that in their experience their clients do not read the contracts in full and several do not even keep a copy of their contract to refer to if required to challenge any of its terms.
The changes to ban unsolicited offers to borrowers to increase their credit limit are also important to help consumers understand their financial obligations. Credit limit increases are targeted to consumers with outstanding credit card balances who are struggling to maintain their repayments. They target people with an immediate need for credit, and agreeing to the offer is often made very easy. The decision to increase credit is not done in a competitive market with an ability to compare interest rates and card features to take the most financially appropriate option. The people targeted by such offers are often not in a financial position to benefit from a competitive market.
Letters offering increases are presented as marketing or promotional material rather than as an application for additional credit. This is misleading. Many consumers assume that the financial institution has done an assessment of their capacity to repay before sending out the offer and they have an unrealistic expectation of their own capacity to repay. The bank nominates the amount of increase and it does not necessarily reflect the financial capacity of the consumer. This is almost a predatory practice that preys on the most vulnerable members of our community. This bill will stop lenders from placing consumers in further financial hardship. I used to think that it was really important to educate people to understand complex financial documents. I thought we should be encouraging citizens to see the importance of carefully reading each and every document, regardless of how dense and confused these might be. But now I take a different approach. My philosophy now is that, rather than forcing consumers to do the hard work, we should be looking at reducing complexity. Why do we need to have confusing documents rather than easy-to-read tables? Sure, there is still a need to understand contractual terms, but a one-page document will enable consumers to understand the most important points, and they will know where to look if they need more advice, detail or information.
There are so many interesting things to do and to read in life: brilliant literature, trashy fiction as a guilty pleasure, movies to watch, sports to participate in and families to spend time with. Why should people be forced to spend their valuable leisure time wading through complex documents? I would rather we encouraged people to read for pleasure, rather than spending excessive time on financial contracts. Put another way: we should look at financial literacy as an obligation for lenders as well as for consumers. Through this bill and previous changes to the National Consumer Credit Protection Act, Labor has demonstrated a commitment to eradicating predatory lending practices and promoting better information for consumers. As the Treasurer said in his second reading speech, this bill 'is part of our commitment to always stand on the side of consumers'. I commend the bill to the House.
Dr Chris Bourke MLA
Member for Ginninderra
ACT Legislative Assembly
Inaugural Speech 21 June 2011
I seek leave of the Assembly to make my inaugural speech.
Thank you, Mr Speaker. I thank my Assembly colleagues for the opportunity to deliver my inaugural speech today. I am pleased to begin by acknowledging the Ngunnawal people, on whose land we meet. I cherish their continuing contribution to the life of our community and pay my respects to their elders and to those present today.
I am humbled and privileged to represent the people of Ginninderra and the Australian Labor Party in the Assembly. To take up the seat vacated by Jon Stanhope is a particular honour. My background, skills and knowledge are different from those of my Assembly colleagues and it is my intention to use them to enhance the decision making in here to build a better Canberra.
Vision is best gleaned with hindsight – when time has sieved the mundane from the magnificent. Looking back in time within the Australian polity two extraordinary figures stand out to me – Don Dunstan and Gough Whitlam. The extent of their vision for Australian society, as evidenced by the reforms which they promulgated, has changed our social and political landscape forever. They are the heroes who inspired me to join the Labor party.
During Dunstan's premiership South Australia was socially transformed. His reforms in the fields of Aboriginal land rights, equal opportunities, consumer protection, town planning, the environment and the restructuring of electoral law are close to my heart. His support of the arts, particularly for the Adelaide Festival Centre, the State Theatre Company, and the establishment of the South Australian Film Corporation were also inspired.
The Whitlam Government, led by my other great hero, fostered Australian participation in international agreements and became an active player in international organisations. By ensuring Australia was party to these agreements, the Whitlam government initiated Australia’s first federal legislation on human rights, the environment and heritage. Whitlam laid the foundations of modern Australian life with the Family Law Act, the Australian Legal Aid Office, the Consumer Affairs Commission, the Racial Discrimination Act, Medibank, the Trade Practices Commission, and the Australia Council.
On 16 August 1975 Gough Whitlam as Prime Minister formally handed the Gurindji people at Wattie Creek in the Northern Territory title deeds to part of their traditional lands.
Could we imagine an Australia without these progressive social changes?
Progressive social change was also a hallmark of Jon Stanhope’s ACT Labor Government with the long struggle to legislate for civil partnerships.
Jon spoke out against the Howard Government’s attacks on personal liberties and human rights describing the NT intervention as racist; and he justly criticised the mandatory detention of asylum seekers.
The ACT Human Rights Act, also a Stanhope initiative and an Australian first, introduced important new duties for the Executive and the Legislature to ensure all policy, administrative action and legislation could be compatible with human rights principles. Consideration and debate about human rights are now an integral part of government action and all Canberrans will benefit.
Jon Stanhope’s achievements for Canberra in economic development and social justice coupled with his championing of human rights have established his reputation as another great Labor leader. I now look forward with anticipation to being part of the new Labor team in the ACT under Katy Gallagher as Chief Minister.
The journey to where I stand today began a long time ago. My Aunty, my father’s sister, celebrated her 78th birthday this year. It is remarkable to consider the Australia of her childhood. In 1928, five years before her birth, Mounted Constable Murray, a Gallipoli veteran, lead a punitive raid against the Warlpiri in the Northern Territory. 70 Aborigines were shot dead.
In Victoria and New South Wales Aboriginal protection laws were on the books; they controlled the movement, association and employment of Aborigines. The laws said where you had to live and whether your children could be taken away to State institutions to be trained as farm labourers or domestic servants.
My aunty completed her secondary schooling at Wangaratta High School in Victoria and then went on to Geelong Teachers College in 1953, the first of our family to achieve a tertiary education. She provided the example and inspiration for my father to follow in her footsteps. Together they inspired my cousins, my siblings and me to aspire and achieve.
My mother and father were committed to life-long learning before it became a slogan. During the 1960s and early 1970s my father completed degrees in Commerce and Education at Melbourne University. My mother, who had only received a primary education to grade 8 in country Victoria undertook and completed a teaching degree. From an early age I was immersed in a home where education, achievement, and community service were highly prized.
Our home also embraced multiculturalism. I am personally proud of the cultural diversity of my own ancestors. My great great grandparents came from Ireland, England, China, and the Kamillaroi nation.
The cultural mix of my family was further enriched in the 1960s when two aunts married men from Italy and the Netherlands. I was shaped by my close experience of cultural diversity. Of course, we should remember that this country has been multicultural for more than 40,000 years with 300 different language groups and diverse geographic conditions of islands, deserts, mountains and rivers. It has continued to be multicultural despite the support, denial or antipathy of Government policy since 1788.
In high school I was attracted to science and I enjoyed working with my hands. Coupled with a strong desire to help others, these interests led me to dentistry. And looking back after more than 30 years that decision was extremely sound.
When I began dentistry at Melbourne University in 1977 the environment was very different to my aunty and father’s times at Geelong Teachers College in the 1950s. By this time it had been recognised that education, and in particular tertiary education, was essential to the sharing of Australia’s wealth and opportunity between Indigenous and non-Indigenous Australians. Support for Indigenous tertiary education had been instigated by the National Union of Students in the mid 1960s in a program called Abschol. I was able to benefit from these initiatives and with hard work and determination completed my dental degree in 1982, becoming the first Aboriginal dentist in Australia.
My first job as a dentist was with the Victorian Aboriginal Dental Service, travelling country Victoria and southern NSW with a dental caravan. It was the beginning of 10 years in public dentistry working in Aboriginal dental services, school dental services and public dental clinics. I also involved myself in community work on Aboriginal education committees and community health. I wanted to capitalise on this experience with additional qualifications so I completed the Graduate Diploma in Public Health at Adelaide University. My unease about the career potential of public dentistry and my developing political awareness were heightened during this postgraduate study. This led to two key decisions. I decided to seek employment in private practice dentistry and I joined the Australian Labor Party.
In 1991 I travelled to Groote Eylandt in the Northern Territory for a two year contract providing a private dental practice to the manganese miners and their families and public dentistry to the Andilyakwa people. The contrast between the dental surgeries provided for the predominately non-Aboriginal mining community and the Andilyakwa people was stark. In the Aboriginal communities the equipment was old and dilapidated; the emphasis was on blood and acrylic – extractions and dentures. It was outrageous and a situation which I complained about loudly. I am pleased to say that the NT Health Department was able to refit these clinics with proper equipment during my contract.
In 1993 it became clear to me that I needed to be here in Canberra where my ex-wife had moved with our children. She had grown up in Canberra and many of her family members are Canberra residents. I bought a dental practice in Turner and later moved to Civic. This financial commitment sharpened my appreciation of the ups and downs of running a business with employee relations, overdraft financing and cash flow management. I sold the practice in 2009 and stopped working there in January this year in order to make a career change; although I was not expecting the one which brought me here today!
Outside business my community involvement in Canberra was initially with the ACT Branch of the Public Health Association. In 1997 the ACT Government, under Kate Carnell, decided to establish an Indigenous Education Consultative Body. I applied to join this body because of my commitment to the improvement of educational outcomes for Indigenous children. I was elected as the inaugural chairperson.
During my term as chairperson the Consultative Body signed a Compact between ACT Indigenous families and the Department of Education and Community Services; this agreement acknowledged the past and set out significant commitments by Indigenous families and the Department to achieve improvement in Indigenous education.
I helped found the Indigenous Dentists’ Association of Australia in 2004 and was the inaugural President. The principal objective is the promotion of good oral health for Indigenous Australians through supporting Indigenous dentists and dental students. With no resources, other than the personal sacrifice of its members, the Association has been able to influence policy development at the highest level. Oral health goals are now integral to national Indigenous health policy.
For the last two years I have been Chairman of the ACT & Southern Highlands division of the Australian Dental Association. I am proud of two initiatives which this division instigated. Firstly, in conjunction with the Salvation Army and ACT Health we have reached out to a group of people here in the ACT who cannot afford to seek dental treatment.
I want to pause here to acknowledge the work of volunteer dentist Dr Colin Seaniger, and I also want to acknowledge Liz Dawson whose untiring efforts have supported this program.
The second initiative has been about introducing dental assistants into the school based apprenticeship scheme. This meant that dental practices could take on year 11 or 12 students who want to be dental assistants – they work part-time, continue with their year 11 or 12 schooling and attend CIT for the Certificate III qualification. This is a great opportunity for Canberra dentists to find a solution to the perennial problem of staff shortages. I enjoyed my visit to one of these CIT classes last week.
I am a strong supporter of the Arts in Canberra, especially through my role as a Board member of the Capital Arts Patrons Organisation. CAPO has raised nearly 2 million dollars over the last 28 years to support Canberra artists. This effort is the direct result of generous donations by Canberra businesses and artists.
Great cities include public art as an integral part of the urban landscape. The diversity of works - in style, theme and scale - engages citizens and visitors with their urban surroundings and enhances their experience of the city. In Canberra through public art we can enjoy the works of some of Australia’s best Indigenous artists. I personally applaud the role of contemporary public art to engage, delight, and question.
I am proud to have been elected during Reconciliation week, the first Indigenous Member of the ACT Legislative Assembly. It is an important event not just for Canberra’s Indigenous community but also the half a million Aboriginal and Torres Strait Islanders in Australia who continue to be under-represented in our democracy. It is the opportunity to provide an Indigenous perspective in the Assembly.
For me the purpose of reconciliation is nation building. In 1788 this country was invaded and the dispossession of Aboriginal and Torres Strait Islanders began. This knowledge is a whispering in the heart of the Australian conscience. How long can we continue to pretend our history was different? A better Australian story, the story we want to tell our children, eludes us. We cannot change our history, as much as we might desire it. We cannot ignore our history, because it has made us. But we can change our future to become an Australia without shame, embarrassment or the anger of dispossession. Reconciliation will be the nation building task of this century - a nation building that redefines what is Australia and what it means to be Australians. As Phillip Pepper, Gurnai elder, said “We are what we make ourselves to be”.
In her speech last week to the National Congress of Australia’s First Peoples Linda Burney talked about consensus decision making and the capacity for narrative - story telling - and how her craft as a politician has been enhanced by these Indigenous attributes. Being a good local member for the people of Ginninderra begins with listening - it’s also about finding solutions and explaining policy.
I would not be here today if it were not for the support and encouragement of a large number of people. There are too many to thank individually but I would particularly like to acknowledge my wife Julie; my 2008 campaign team led by Ross Maxwell and Michael Pilbrow; the wise advice of Bob McMullan and Bill Wood; the members and affiliates of the Australian Labor Party, particularly Matthew Cossey, former ACT Branch secretary; my sub-branch—the Belconnen branch; and the ACT Indigenous Labor Network.
Thank you very much, Mr Speaker.
21 JUNE 2011
DR ANDREW LEIGH - FEDERAL MEMBER FOR FRASER
PARLIAMENT HOUSE, CANBERRA
Topics: mortgage exit fees, refugees, live exports, burqas, climate change,
Andrew Leigh: Joe Hockey has today announced that the Liberal Party is going to do its best to bring back mortgage exit fees - fees which are unfair on Australian households for two reasons. Firstly, we should always trying to reduce bank fees wherever we can but secondly mortgage exit fee detracts from competition because they stand in the way of someone walking down the road to get a better deal. A front loaded fee, unlike a back loaded fee, allows someone to make a choice with their feet and gives us all a better banking system. But the decision on exit fees is really just symptomatic of what’s going on Australians politics today:
In the case of carbon pricing the Labor government is getting on with delivering a carbon pollution scheme which will deal with dangerous climate change and assist pensioners and households.
In the case of the mineral resource rent tax we’re putting in place arrangements that will see Australians get a fair share for the minerals that are their birth right – Tony Abbott says no.
And in the case of the National Broadband Network we’re creating infrastructure that will be the highway network of the twenty-first century – Tony Abbott says no.
At every turn Labor are standing up for families and Tony Abbott is standing in the way of serious reform.
Happy to take questions.
Journalist: Andrew on the exit fees question – isn’t it only that the opposition wants to block some exist fees, for example there is still support for mortgage exit fee bans against the big banks, credit unions and building societies but they want them to be lifted for non-lenders?
Andrew Leigh: Well one exit fee is one exit fee too many in my view. I think we should be promoting competition right across the spectrum, that’s what Labor’s reforms will do. From the first of July we will be scrapping all mortgage exit fees. For some reason that I can’t work out, frankly Joe Hockey wants a return to mortgage exit fees. Thinks Australian mortgage holders should pay higher fees. Thinks that they ought to have fees that stand in the way of competition ...
Journalist: ... but only if they’re with non-bank lenders.
Andrew Leigh: The point still stands. I don’t see a distinction here. I don’t see why any serious politician should be saying: what the Australian banking system really needs is some more mortgage exit fees. That I just don’t understand.
Journalist: Andrew, we had the 730 Report reveal last night that there had been $16 million paid out to pay the cost of mental health for refugees who had been inside the system. Doesn’t this prove, more than anything else, the shear madness of mandatory detention?
Andrew Leigh: Mandatory detention is a system, Stephen, that has been in place since the early 1990s. It’s important in order to perform health and background checks. But I’m a strong supporter of the expansion to the humanitarian intake that’s been put in place by this government.
I spoke in Parliament last night about the vast contribution that refugees have made to Australia. From Frank Lowy to Majak Daw, Australia has been enriched by its refugees.
Journalist: But on one hand Labor is increasing the intake, praising the contribution refugees have made and on the other hand you have several thousand people locked up suffering terrible mental health problems and costing the taxpayer millions of dollars.
Andrew Leigh: Well Stephen it has been a really major priority of this Government to get kids out from behind razor wire – to make sure that as few children as possible are in dentition. That’s not going to be possible in every case. If you have the instance of a 16 year old who arrives unaccompanied not speaking English it might actually take awhile to find a family who speaks the same language and is a suitable, caring home for that person. But Minister Bowen is very much committed to making sure that wherever we can, we’re getting kids out of detention. That’s an important value I think for all of us.
Journalist: Do you expect to see an announcement on the Malaysia deal this week? Have you been briefed on how discussions are going and has there been any breakthrough?
Andrew Leigh: This is important complicated policy. We’re dealing with a global challenge in refugee flows and we’re looking to find a regional solution. That regional solution has been praised by the UNHCR’s regional representative Richard Towle, whose recognised that if we can find regional solutions we’re in a much better spot than if each country simply goes it alone. I’m not going to set down timetables on that. The discussions are complicated and ongoing. But they are about trying to make sure that we boost the humanitarian intake while at the same time breaking the business model of the people smugglers.
None of us wants to see little kids put on boats with the tragedies like we saw at Christmas Island and that’s what this plan is about.
Journalist: Are we being a bit too lenient with our taking in of refugees? Figures show that we’re taking in many more than the average?
Andrew Leigh: Australia takes 1.6 percent of the world's asylum seekers. That to me seems a fair share. A decade’s flow of asylum seekers wouldn’t fill the MCG. This seems reasonable amount that we are taking given our level of development and also given the generous spirit with which I think many Australians view refugees.
We had a scholarship ceremony yesterday in Canberra City for recipients of the Canberra Refugee Support Scholarships. And these young refugees are just extraordinary people.
I spoke about one of them, See Mu Paw, an 18 year old Dickson College student in Parliament last night. She is an amazing young women and she’ll make a great contribution to Australia. So no, I don’t think we’re taking too many refugees.
Journalist: Yesterday in Sydney there was quite a landmark decision over the wearing of burqas. Do you think women should be allowed to wear full burquas?
Andrew Leigh: I think Australia is an open tolerant society and I don’t think we ban particular forms of dress. I don’t think we ought to be prescribing the tie that I wear out here this morning and I don’t think we ought to be banning burquas.
Journalist: One live cattle exports, is it acceptable that stunning is only optional in Indonesian abattoirs?
Andrew Leigh: I believe in the case of live animal exports we should be putting in place stunning. But this is a matter of finding a solution which can be lasting, which doesn’t affect Indonesia but also all the countries that receive Australian live exports.
The independent review is looking at live exports overall. It’s really critical for the industry that we find a lasting solution to this. I know that the exchanges I’ve had with cattle farmers, they’re as shocked as anyone by the Four Corners images and they want as much as anyone to make sure that we have a sustainable system of live cattle exports.
I frankly don’t understand why Mr Abbott would want to race back into the live export trade with the risk that we again have some of the shocking images that came on our TV screens just a couple weeks ago. I think we need to be calm, methodical about this and I think we need to get it right.
Journalist: If there is a plebiscite on the carbon tax do you think you’d win?
Andrew Leigh: Tony Abbott’s call for a plebiscite is just an extraordinary one. He says that there ought to be a plebiscite on the carbon price and then he says that he wouldn’t stand by the result.
Frankly Tony Abbott is on this issue, as on many, the erupting volcano of Australian politics. He’s all smoke. He’s all puff. Causes a lot of disruption to Australians but isn’t actually able to produce anything constructive.
If you like next time a Liberal Party spokesperson steps to this microphone ask them for their constructive idea for the country. Ask them for their optimistic vision as to what Australia ought to be. That’s what Australians want to hear from their politicians. Australians are an optimistic people and we want to hear politicians who have ideas, solutions, to the challenges facing Australia – not just the erupting negativity that we see day after day from Mr Abbott.
Thanks very much.
I spoke last night about the great Australian life of Jamie Mackie.
20 June 2011
I rise to pay tribute to Professor Jamie Mackie, who passed away on 21 April, aged 86. Jamie was a key player in the deepening of Australia's engagement with South-East Asia and the campaign to dismantle the White Australia policy.
Jamie's first exposure to South-East Asia came as a 19-year-old gunner on HMAS Warramunga. He was part of General Douglas Macarthur's amphibious landings against Japanese positions. Visiting Manila, he was struck by its heritage, 'a history that almost none of us in Australia then knew anything about'. This spurred a lifelong interest in the region.
He knew interesting people. At Geelong Grammar, his history master was Manning Clark. At Oxford, Jamie got to know Rupert Murdoch, who was then secretary of the Oxford University Labour club. Jamie quipped that perhaps history might have been changed had Murdoch taken up Jamie's offer to go and see Citizen Kane together.
In the 1950s, Jamie volunteered to go to Indonesia as part of the new volunteer graduate scheme launched by Herb Feith. He worked in the State Planning Bureau in Jakarta, and lectured in economic history at Gadjah Mada University in Yogyakarta. These lectures eventually became his first book, to be followed by a spate of articles about the political economy of Indonesia and Australia's foreign policies. His group at Monash University's Centre of Southeast Asian Studies earned the title of 'a second Cornell', in recognition of its concern for human rights in Indonesia.
Jamie's engagement with Indonesia naturally brought him into an active role in campaigning against the White Australia policy. With Ken Rivett, he wrote an influential 1959 pamphlet, Immigration: Control or Colour Bar?, arguing that the policy was not just morally wrong but also against Australia's national interest. In his obituary of Jamie, David Jenkins noted that the values in this argument underpinned much of the modern multicultural Australia we value today.
But articulate pamphlets were not enough. My father, Michael Leigh, a close friend of Jamie's, says that one of the turning points for him came with the Sharpeville massacre in 1960. After the brutal killing of 69 civilians, including 10 children, the Labor opposition called on the Menzies government to pass a censure motion against the South African government. Menzies refused.
My father told me that this was the moment that people like he and Jamie decided that a street demonstration would be necessary to express horror at this brutal manifestation of the consequences of racial exclusivity and of the Prime Minister's refusal to join international condemnation. Victoria Police refused permission for their march and warned that they should not proceed outside the boundaries of Melbourne University. Yet proceed they did with police lining both sides of the road. Australia is a better country for the courage of these marchers.
I had known Jamie since I was a child, and enjoyed the way he would often drop into my ANU office unexpectedly to share an idea or an anecdote. After more than a decade as a professor in the ANU Research School of Pacific and Asian Studies, and as co-founder of the annual Indonesia Update conference, Jamie clearly delighted in strolling the halls of the labyrinthine Coombs Building. He would buttonhole me about economic policy, the treatment of refugees or Australian foreign policy. Jamie would hold forth at length until—like the junior academic I was—I would eventually explain that I had to get back and do some research. He always left me with a new idea and, looking back, I wish I had asked a few more questions and been a little less precious with my time. ANU professor Tony Reid wrote:
'Jamie Mackie epitomized the best in the reformist enthusiasm of post-war Australia to open out to its region. For him as for many of that generation, Indonesia pre-eminently represented the Australian 'other', the Asia with which Australia had to come to terms. Because he was himself very much an Australian of that era—warm, open, maverick, visionary, irreverent, unpretentious—he understood better than most how exciting and challenging, but painfully difficult, a prospect it was to get that relationship right. He played his part like no other, and it will be impossible to think of the development of that relationship without him.'
One of the great Indonesian poets is Chairil Anwar, who passed away in 1949 aged just 26. Aku, perhaps his most famous poem, ends with the line: 'Aku mau hidup seribu tahun lagi.' Which translates as: 'I want to live for another thousand years.'
Chairil Anwar did not. Jamie Mackie did not. But their influence might.
I spoke in parliament yesterday about the contribution that refugees have made to Australia.
World Refugee Day
20 June 2011
What do all these great Australians—researcher Gustav Nossal, entrepreneur Frank Lowy, scientist Karl Kruszelnicki, academic Eva Cox, commentator Les Murray, comedian Ahn Do; sportsman Majak Daw, television presenter Yalda Hakim, the late businessman Richard Pratt and Justice James Spiegelman—have in common? They were all refugees. World Refugee Day is a day to reflect on the generosity of Australia. We are a big country with a big heart This is something we should be proud of. Since 1945, over three-quarters of a million people have resettled in Australia. Those who have sought refuge in our country have made significant social, economic and cultural contributions to the nation we are today and to the nation we will be tomorrow.
Today, along with the Minister for Immigration and Citizenship, I attended the Canberra Refugee Support scholarship ceremony. For the past six years the Canberra Refugee Support scholarship program has brought together the ACT government, local businesses, community organisations and individual citizens in helping refugees overcome hardship and persecution through the benefits of education and vocational opportunities. Today 22 refugees from Burma, Iraq, Afghanistan, Sudan, Iran and Ethiopia were awarded scholarships to assist and acknowledge their determination and resilience in achieving their dreams.
One such recipient was See Mu Paw. See Mu is 18 years old and currently in her final year at Dickson College where she is studying to attain the ACT Year 12 Certificate. Gentle and caring, she is an active member of the Refugee Bridging Program. Before moving to a refugee camp in Thailand, See Mu had spent her young life in a small village in Burma. From the camp in Thailand, See Mu and her family settled in Australia in 2009. Se Mu's teachers comment on her kindness and her willingness to support others in need. She is planning to study childcare at the Canberra Institute of Technology next year. See Mu's scholarship was sponsored by Athol Morris in memory of his mother, Helen Morris. A refugee herself, Helen came to Australia before World War II, escaping the Nazi regime in 1936. The letter she wrote to Prime Minister Joseph Lyons made its way to his office via, of all places, the CSIRO. Wanting to help people in her situation, Prime Minister Lyons granted her an entry permit.
Helen's story highlights that Australia's generosity and understanding predates our commitment to the 1951 United Nations Refugee Convention and the formation of the United Nations High Commissioner for Refugees. Australia was a founding member of the 1958 UNHCR executive committee and, before that, the 1951 advisory committee. This government is committed to Australia taking more refugees and has expanded the humanitarian program to 14,750 places per year. Last year we provided $50 million in funding to the UNHCR.
In my electorate of Fraser, I am proud to work with and support the work of Canberra Refugee Support and its president, Geoff McPherson, vice president, David Cran and secretary Ben Pynt; the Canberra Multicultural Community Forum; the Dickson College Refugee Bridging Program; the senior multicultural information and learning exchange; and the Refugee Resettlement Committee with president Gabriel Blair, vice president Peter Peterson and community liaison officer Bev Purnell.
World Refugee Day celebrates the contribution of refugees to Australia and other nations. This year is the 60th anniversary of the United Nations refugee convention. Today we celebrate the diversity and richness refugees have brought to our country. But today is also a sobering day because, as far as we have come and as generous as we have been, we face the new challenges of working with our regional neighbours and the UNHCR to provide humane and respectful resettlement services while ending people smuggling.
Through the contribution of those who have chosen to call Australia home, refugees to Australia have brought employment and job opportunities to thousands. Brought an awareness of civic engagement and the importance of equality. Brought a curiosity and passion for the sciences. Brought a sense of fairness and justice. Brought laughter into our busy lives. The possibilities are limitless for what a new generation of refugees will bring to Australia.
(I hit my time limit in the chamber half way through the last paragraph.)http://www.youtube.com/v/NWe0CHjC_ck?version=3&hl=en_US
Tax Laws Amendment (2011 Measures No. 5) Bill 2011
20 June 2011
The great achievement of the Labor government has been a serious ongoing commitment to tax reform. It is with taxes that we build society and a hallmark of this Labor government has been focused and consistent attention on tax reform. We, of course, commissioned the Henry review, a root and branch tax review, which has for the first time in a generation looked across the tax system at how to make it work more effectively. As the Henry review in its opening noted:
'A 21st century tax and transfer system should meet its purposes efficiently, equitably, transparently and effectively. Critically, it would support per capita income growth rates at the upper end of developed country experience by encouraging high workforce participation, a more efficient pattern of saving, and stronger investment in education and physical capital.'
The Henry review noted that revenue raising should be concentrated on four robust and efficient tax bases: personal income; business income; private consumption through broad, simple taxes; and economic rents from natural resources and land.
The Henry review has underpinned much of what the government has done on tax reform. Commentators, I think, have missed one of the big stories about the recent budget, which is that it contains substantial tax reform, not the sort of tax measures that we saw all too frequently during mining boom mark-1—recycling revenue into badly targeted measures—but measures that focus on how to make our system more efficient and more equitable, and operate on a simpler basis. It is for that reason that this government is going about putting in place a minerals resource rent tax, a tax that will ensure that Australia's big mining companies at last pay their fair share, a tax that sits very much in the tradition of the progressive side of politics of ensuring that taxes are paid by those who can best afford them and that taxes impose a minimum deadweight cost on the economy. Growth is a Labor value. Increasing the size of the Australian economy is absolutely critical and the minerals resource rent tax will see us do that. Another substantial tax reform is carbon pricing. We are recognising, through a fixed carbon price and then an emissions trading scheme, that the best way of dealing with dangerous climate change is to go to the heart of the problem, which is dangerous carbon pollution. At the moment, polluters can put as much carbon pollution into the atmosphere as they like. They do not pay for carbon pollution. Carbon pricing has been presented as an environmental reform but it is of course also an economic reform. The most effective way of getting carbon abatement in the Australian economy is to put a price on carbon, not through the coalition's grab bag of subsidies for polluters but going straight to the issue, putting a price on pollution and bringing about a smooth transition to a cleaner, greener economy, taking Australia from its current position as the most carbon intensive country in the developed world to a position where we are able to compete effectively for the green jobs of the future.
The Gillard government is also putting in place substantial reform on fossil fuels through legislation which is finally enacting reforms originally foreshadowed by then Treasurer Peter Costello in the 2003 budget. What is tragic about these fuel reforms is that the coalition, at the last moment, have walked away. For the best part of the last eight years they have been in the cart on this fundamental economic reform but at the last moment saw a populist slogan and leapt out of the cart. I am glad to see the Assistant Treasurer here in the chamber. I am sure he would be as pleased as I am at the passage of those reforms through this House in the most recent session.
When crisis has hit, Labor has also used taxation reform exactly as economists would have us do. We put in place a modest flood levy to deal with the rebuilding cost required from the natural disasters of the most recent summer. Looking back further to the economic downturn, we used a fiscal stimulus that was timely, targeted and temporary, recognising that household payments and infrastructure investments were the most efficient way of getting the economy going again. On each of the tax reforms I have listed, Labor listened to the economic mainstream. While the coalition were listening to who knows what zealots, we were there focused on the economic mainstream and on delivering real reforms.
And it is those real reforms that lie at the heart of Tax Laws Amendment (2011 Measures No. 5) Bill—reforms recognising the importance of phasing out outdated payments. One of the key reforms in this legislation is removal of the dependent spouse tax offset. The dependent spouse tax offset existed at a state level prior to the 1930s but was first introduced at a federal level in 1936. During the second reading debate, one member justified the measure saying he felt it was the duty of a husband to maintain his wife and therefore it was right and proper that a husband would receive a deduction for it. I do not think that such a sentiment would be shared by most 30-somethings in the labour force today. Most families without children would not think feel it is the duty of a husband to maintain his wife and in an era in which we are trying to boost labour force participation, in which we hear much talk of skills shortages, it is important that we remove disincentives to work.
As the dependent spouse tax offset phases out, it imposes an effective tax rate in the phase-out range. If a dependent spouse earns more than $282, under the current program the entitlement reduces by $1 for every $4 the dependent spouse's income is above the threshold. The effect of this is to put in place another 25 per cent tax rate in addition to the current marginal tax rates for the first $10,000 earned by a so-called dependent spouse.
We are steadily phasing out this measure. It will be phased out for taxpayers born after 1971, recognising that some of those who have been recipients of this payment may now be in a position where it is not straightforward for them to enter the workforce. Taxpayers who are invalids, permanently unable to work or are carers will not lose this benefit. The phase-out is applying to able-bodied taxpayers, those aged under 40 and those who—certainly from the discussions I have had with my electors—would not have the social norms that were expressed in this place when the dependent spouse tax offset was put in place. This measure modernises the Australian tax system. It brings the Australian tax system up to speed with contemporary values and it boosts labour force participation—an absolutely critical measure.
We are also making the Australian tax system simpler and fairer for business and the community. It has long been recognised that the entrepreneurs tax offset is poorly targeted for small businesses. There is little evidence it has acted to encourage the establishment of small businesses. More than 80 per cent of small businesses were eligible for the offset. Rather than allowing a small business to grow, the entrepreneurs tax offset encourages businesses to structure affairs in a particular way, despite the market opportunities that might be present.
The assistance is provided at a fairly low level to very small businesses. The maximum claim is $2,500, but the average entrepreneurs tax offset claim was less than $500, with 70 per cent of claims being below $600—a fair bit of paper work for a relatively small sum of money. The entrepreneurs tax offset is difficult to administer and adds to the complexity of our current tax system. There are better ways and more effective ways to help small businesses. The $5,000 immediate deduction, which will come into place from 2012-13, is a far more efficient and effective way of helping our small businesses grow and so boosting employment in this critical sector.
The budget also puts in place important reforms to fix the current system of fringe benefits taxation for cars. This is a system which is both inequitable and inefficient. The existing statutory formula method for determining the taxable value of car fringe benefits delivers a greater tax concession the further the car is driven. Car fringe benefits arise when an employee uses salary sacrifice for an employer provided car for private use. Under the statutory formula method, the person's car fringe benefits are determined by multiplying the relevant statutory rate by the cost of the car. The current statutory rates are designed so that a person's car fringe benefit decreases as the distance travelled by their vehicle increases. People can therefore increase their tax concession by driving their vehicle further. The Henry tax review reported evidence showing that this is exactly what people do.
Anecdotally, in my electorate one hears stories that, as the end of the tax year approaches and as a taxpayer feels that they are not necessarily going to be in the most favourable mileage bracket, they will lend the keys of their car to a teenage son to drive to the coast for the weekend. Their child might otherwise have caught a bus to the coast. These sorts of environmentally unsound practices are effectively encouraged by a poorly structured tax concession. So we are reforming the statutory formula method, replacing the current statutory tax rates with a single rate of 20 per cent that applies regardless of the distance travelled. The reform will only apply to new vehicle contracts entered into after the announcement on budget night so, of course, it will not affect people who have already entered into contracts. That shift to the single standard 20 per cent rate will be phased in over four years. Naturally, people who still use their vehicle for a significant amount of work related travel will be able to use the operating cost or log book method to ensure that their car fringe benefit excludes any business use of their vehicle. Over the forward estimates this measure will result in an increase in revenue of nearly a billion dollars, and this is additional revenue which is then available for more efficient and more equitable tax reforms.
I am very proud to be part of a Labor government which is committed to good economic management and important tax reforms, tax reforms that I hope will outlive many of us in this place, tax reforms that reflect the understanding of those of us on this side of the House that it is important to draw on the best evidence available and tax reforms that recognise that the Henry review has laid down much that we can draw on in the future. I commend the bill to the House.
Governance of Australian Government Superannuation Schemes Bill 2011
15 June 2011
The bills before us concern the retirement savings of people who serve our nation. The good men and women of our military, as well as those in our public service, many of whom reside in the ACT in my electorate of Fraser or in the neighbouring electorate of my good friend and colleague the member for Canberra, will benefit from the changes in this legislation. The bills seek to consolidate the main civilian and military superannuation schemes under a single trustee. The merger will see the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Force Retirement and Benefit Scheme all administered by a single trustee, the Commonwealth Superannuation Corporation, or CSC. The CSC will be a statutory agency, as will ComSuper.
The consolidation of these schemes will help modernise the governance arrangements. The outdated position of Commissioner for Superannuation will be replaced by a chief executive officer. A board of 11 directors will govern the CSC. The governance model is in keeping with a common model used right across the broader superannuation industry. The CSC board composition will reflect member interests as well as employer interests. There will be three nominees from the ACTU, two nominees from the Chief of the Defence Force. and five nominees from the Minister for Finance and Deregulation with input from the Minister for Defence. The government will also appoint the chair.
I note in passing that those opposite have raised the bogeyman of the ACTU having representation on the CSC board. It is sort of odd, is it not? They are quite happy to have their positions on health dictated by British American Tobacco and they are quite happy to have their positions on the mining tax dictated by a few mining magnates, but they are not happy to have workers representatives—representatives of millions of Australian workers—on a superannuation board.
I note that some in the community, particularly the ex-service person community, have raised concerns that amalgamated trustee arrangements might not recognise the uniqueness of military service. This concern was raised about the original 2010 bill. Submissions to the Senate Finance and Public Administration Legislation Committee raised this issue of ensuring that ADF personnel were adequately recompensed for the unique role they play in the defence of our nation. It is important to note that the bills before the House do not disturb, and the previous incarnations of these bills did not ever disturb, members' entitlements or benefits. No existing features or benefits of military schemes are disturbed. There is no change to scheme entitlements for ADF personnel and there is no change to scheme entitlements for Commonwealth public servants. The 2010 bill recognised the uniqueness of military service, something noted by the Senate committee report's citation of the joint submission by the departments of finance and defence. That submission concluded:
Overall, the Bills seek to recognise the special nature of military service (noting that this principle is relevant to all aspects of military conditions of service) without taking away from a superannuation trustee's essential function of managing the superannuation schemes for which it is responsible on behalf of all scheme members and safeguarding members' benefit until they retire.
The submission of the Defence Force Retirement and Death Benefits Scheme Authority, or the DFRDB Authority, to the Senate committee acknowledged that the uniqueness of military service was recognised by the relevant scheme rules and not by the composition of the board. The DFRDB Authority concluded:
In the context of the above, the DFRDB Authority accepts the assurances of the Australian Government that the interests of the DFRB and DFRDB members will appropriately represented by the CSC. Therefore it is the view of the DFRDB Authority that it is not necessary to retain a separate board to administer the military superannuation schemes.
The government recognises the unique nature of military service. I recognise that too. One of the great privileges of this job is having the opportunity to honour those who have sacrificed their lives for our freedoms and to acknowledge the work that many of our service people make on our behalf. It was never the intent to dispel this recognition with these administrative changes.
Recognising the concern, the government engaged with our military community on the proposed administrative changes. These consultations have led to changes to make clear the uniqueness of military service. The bills before the House require the CSC board to have regard to that uniqueness, as provided for in the schemes established by the relevant military superannuation acts, when acting under such legislation. Further, when the board is making decisions concerning matters solely related to the military schemes, at least one director appointed by the Chief of the Defence Force must be present. As I outlined previously, the CDF will appoint two representatives to the board and the appointment of the employer representatives by the finance minister will be in consultation with the defence minister. The bills also provide for the establishment of the Defence Force Case Assessment Panel within the single trustee model. The panel will undertake functions currently performed by the DFRDB. We will also review the arrangements after the first five years to ensure that the changes have been effective.
The consolidation of these government super schemes into a single trustee arrangement is not occurring in isolation. There has been a trend in our local superannuation industry towards consolidation. In 2006, the merger of the Australian Retirement Fund, the Superannuation Trust of Australia and Finsuper created AustralianSuper, one of our largest industry super funds. This was followed in 2008 by the creation of Media Super from the merger of Print Super and JustSuper. In 2009, the Stevedoring Employees Retirement Fund and the Seafarers Retirement Fund consolidated into Maritime Super. Consolidation, particularly for smaller funds, allows the benefits of economies of scale, economies which some fund managers believe necessitate funds having at least $5 billion under management to survive effectively.
The advantage of scale is backed by studies and the experience of funds not only here but also overseas. A study by the Australian Prudential Regulatory Authority, APRA, found that large funds outperform medium and smaller funds by at least half a per cent and in some cases by a full percentage point. The APRA study, based on data over a 10-year period, was consistent with studies overseas. For example, a US study of pension fund data showed larger funds outperformed smaller funds by over four percentage points.
Scale has the potential not only to deliver higher investment returns but also to reduce administration costs. A 2009 study by Deloitte Actuaries and Consultants examined the public disclosure statements of 60 industry superannuation funds. That study found that:
operational costs, which largely relate to the number of fund members, in a fund with more than 500,000 members can be reduced by about 32% when compared with a fund of between 100,000 and 500,000 members. These costs are reduced even further (about 44%) when compared with a fund of between 50,000 to 100,000 members; and
investment fees as a percentage of total fund assets, using the default investment option, were 0.57% in a fund with over $10 billion in assets, compared with the higher 0.76% in a fund with between $1 billion and $2.5 billion in assets.
In investigating the net benefit of consolidation, the Department of Finance and Deregulation's actuary, Mercer, calculated that based on the 2008 figures net investment returns had the potential to be $10 million better in 2008, $15 million better in 2018 and $19 million better in 2028.
The bulk of the potential return of $10 million in 2008 would have benefited the military schemes as $7 million of the net return is related to those schemes.
While all funds in a consolidation benefit, it is the smaller funds that achieve the greatest benefits. There is a future risk that, without this consolidation, the military schemes could become smaller relative to other funds and then have problems obtaining good investment returns.
The larger the fund the greater the ability of a trustee to pool funds and thereby lower investment costs and drive higher returns. This is because a merger sees a better spread of age profile of members amongst all the schemes. That allows a better spread of assets across age bands and risk categories. The practical implications for fund members will be an increase in the super savings of over 90 per cent of our current serving personnel. Just a 0.5 percentage point increase in the net return of a cadet who joins the RAAF and retires as a group captain will be $95,000 if that person serves a full career or $41,000 if they serve for a decade. The benefits, though smaller, will also flow through to the government's main civilian superannuation schemes.
It is easy to forget that if those opposite had their way we would not be talking about administrative changes to strengthen investment returns for those who serve our nation. Those opposite have always stood against superannuation reforms. I would like to draw the House's attention to a terrific after dinner speech delivered last night in Parliament House by the Assistant Treasurer—who I am pleased to see in this place—in which he took the audience through the history of superannuation and pointed out that when Bob Hawke took office in 1983 just 40 per cent of the workplace had super cover and that by 1991, after the Hawke Labor government's major superannuation reforms, 72 per cent of the workforce had superannuation cover.
But the Assistant Treasurer also pointed out some of the statements of those opposite when Labor under the Keating government moved to introduce a superannuation guarantee levy. The Assistant Treasurer said:
… Wilson Tuckey drew on his 'long history in the racing industry' to compare the legislation to the 'worst type of jockey … both stupid and dishonest.'
Wilson Tuckey continued:
'When the poor old employer levy gets to 12 per cent, what will it deliver? Luckily, it might deliver an overseas holiday and a few presents for the kids, but it will not deliver a retirement income at the inflated costs of those days.'
As the Assistant Treasurer pointed out, a 12 per cent super guarantee will provide a worker now aged 30 on average full-time wages with a real retirement benefit of over $553,000 at age pension age. That is certainly more than 'an overseas holiday and a few presents for the kids.'
These sorts of statements of doom and gloom at the introduction of compulsory superannuation were not restricted to members who have left this place. Then Senator Bronwyn Bishop told the Senate at the time of a conversation that she had had with a small business person. That small business person had told Senator Bishop:
But now that this compulsory superannuation payment has gone through, yesterday I had to sack a part-time employee and turn a full-time employee into a part-time employee.
The late Senator Peter Cook, for whom I had the privilege to once work, interjected very speedily and said that, given that the law had not yet come into effect, it was difficult to see how small business people would have been affected by it. But Senator Bishop was as unmoved then, as she is now, by the facts. She finished the 1992 debate as follows:
I heard Senator McMullan said, 'The difference between our systems on superannuation is that ours is compulsory and theirs is voluntary.' That is very true. That is an essential difference. Our policy is designed to make it attractive for people to provide for themselves in later life whereas this Government's is designed to penalise business, to regulate it out of existence.
Of course, that is what those opposite have often thought about compulsory superannuation—that it is an imposition.
The Leader of the Opposition once called Labor's superannuation guarantee 'a con job'. Those opposite have been fundamentally uninterested in superannuation. Perhaps the reason for that is that it is so far in the future. When you are just focused on getting your face on the evening news, why should you be thinking about things that are going to happen a couple of decades hence? No, you want to focus on the here and now, the latest poll and the latest snappy grab.
But superannuation is about much more than that. Superannuation is about ensuring that Australians enjoy dignity in retirement. Because of the lag in investment accumulation, the decisions we are making now are going to affect people like my one- and four-year-old sons, who will enter the labour market possibly around 2030 and continue in it possibly as late as 2080. My little boys are among those who will benefit from having a good superannuation scheme. It is those long-run reforms—that many of us will not be around to see—which lie at the heart of superannuation reform. It can sometimes look like a technical detail but, let me tell you, it is anything but. It is about securing dignity in retirement and ensuring that Australians are able to enjoy their retirement, comfortable in not having to worry about being able to pay the bills. I commend the bills to the House.
(Update: The bills passed both houses on 21 June.)