Andrew Leigh

BUDGET 2018: THEY CUT, YOU PAY

SPEECH – MATTER OF PUBLIC IMPORTANCE

HOUSE OF REPRESENTATIVES

WEDNESDAY, 9 MAY 2018

We've seen many Malcolm Turnbulls over the years.

We've seen the Republican Malcolm Turnbull and the Malcolm Turnbull who says that it's ‘not the time’ to become a republic.

We've seen the multicultural member for Wentworth and the member for Wentworth who appoints Peter Dutton.

We've seen the member for Wentworth who wanted a Labor Senate spot and we've seen the member for Wentworth who would spend a million dollars of his own money to win an election.

We've seen the Q&A member for Wentworth and the member for Wentworth who cuts the ABC.

We've seen the member for Wentworth who was in here in 2016 wanting to raise income taxes and the member for Wentworth who was in here saying he was going to cut income taxes.

We've seen the member for Wentworth who crossed the floor to support an emissions trading scheme and the member for Wentworth who is presiding over an increase in Australian emissions.

We've seen the member for Wentworth who said that there was never a more exciting time to be Prime Minister and the member for Wentworth who struggled to stay awake last night!

Now we're seeing the street-spruiker member for Wentworth saying, 'It is time for the closing-down sale—grab a bargain.'

Australia deserves better than this grab bag of a budget. A good budget, a better budget, would invest in Australia's productivity, ensuring we had a good National Broadband Network, increasing infrastructure investments as a share of national income—not falling, as we've had under this government—and making productivity investments, such as properly-funded schools and universities.

Today the vice-chancellor of the Australian National University, Brian Schmidt, wrote a letter to the university in which he said:

In the long-term, capped places will mean fewer of our citizens will be able to become the skilled graduates that our nation needs to retain and increase its productivity. As my fellow Nobel Laureate Paul Krugman said, "Productivity isn't everything, but, in the long run, it is almost everything … "

He goes on to talk about how essential education is and how important it is to invest in skills for the future.

A good budget would also tackle the challenge of inequality. It is now at a 75-year high after a generation in which the top one per cent's share has doubled and the top 0.1 per cent's share has tripled, after a generation in which we have seen wages grow three times as fast for the top 10 per cent as for the bottom 10 per cent.

From when the ABS began collecting comparable wages data in December 1998 through to September 2013, when the Abbott-Turnbull government took office, wage growth was running at 3.6 per cent a year on average. Since September 2013, wage growth has run at 2.2 per cent on average—that is, a full 1.4 per cent slower. So when a worker on $53,000 a year is looking at their $530 tax cut, they will be saying to themselves: 'This might make up for one per cent slower wage growth, but I've had 1.4 per cent slower wages ever since the Liberal-National government got into office.'

A good budget would tackle the challenges of risk: the household debt to income ratio at an all-time high, the geopolitical risks that we know our nation faces. Yet we don't have anything in this budget that de-risks the economy, that builds up the social insurance that Australians need.

We have in this budget a company tax cut costing $80 billion. Independent economist Saul Eslake talks about the evidence that the government has given to support the impact of company tax rates on wages, and he says:

They've certainly not been able to point to any contemporary or recent examples where cuts in company tax have produced the results suggested by economic theory.

He goes on to say:

It's not at all clear that Australia needs to lower its company tax rate in order to attract more foreign investment – or indeed that if we do lower our company tax rate, we necessarily will attract more foreign investment.

The thing about street spruikers is they are never as good as promised. A 0.1 per cent surplus in 2019-20 could be blown over by a light breeze. As Saul Eslake says, ‘the idea that wages growth will be running at 3½ per cent per annum… stretches credulity’.

The fact is, this is yet another Liberal budget, brought down not by Santa Claus but by the Grinch. And, as always from the coalition: they cut, you pay.

ENDS

Authorised by Noah Carroll ALP Canberra