Mr HUSIC (Chifley—Government Whip) (11:13): I would like to congratulate the Deputy Prime Minister and Treasurer on the budget he delivered in the House two weeks ago. This budget is astoundingly good on so many levels and will help not only the nation but also communities like the ones I represent out in Western Sydney. Despite economic conditions that have seen government revenues fall by $150 billion, the Treasurer was able to put together a budget that delivered a surplus on time, as promised. Although the Treasurer faced an imperative to find savings in the budget, he managed to achieve this while continuing to share the benefits of Australia's mining boom. While there will be those who will paint a picture of the economic landscape as being worse than it actually is, draped in doom and gloom—arguing this mainly because of their political priorities rather than based on what the nation needs—the economic reality is somewhat different. The greatest economic challenge Australia is facing comes from the relative strength of the Australian dollar fuelled by the growth of the resources sector. The dollar's strength in recent times has dampened Australia's export earnings, increased the cost-of-living pressures and also made it difficult for manufacturing. Labor understands the pressure many families are facing and that is why it is important we delivered a budget that was both responsible and supportive. Returning the budget to surplus provides a buffer in uncertain global economic times and gives the Reserve Bank room to cut interest rates, a theme or an issue that I would like to come back to later in this contribution.
It is worth bearing in mind that interest rates now are lower than at any time under the previous government and that a family on a $300,000 mortgage is paying around $3,000 a year less in repayments. Commenting on the merits of achieving a surplus, the International Monetary Fund said:
In the case of Australia, we welcome the authorities’ commitment to return to a budget surplus by 2012-13 to rebuild fiscal buffers, putting Commonwealth government finances in a stronger position to deal with shocks and long-term pressures from an ageing population and rising health-care costs. With little evidence of inflationary pressure, the RBA cut its policy rate by 50 basis points last week to support demand.
That was the IMF.
While we are delivering a surplus through targeted and responsible savings, we are protecting the frontline services Australians rely on as well as helping families with cost-of-living pressures. The budget ensures that the benefits to our strong economy of the mining boom are shared with all Australians to help them meet these cost-of-living pressures. I endorse the measures announced by the Treasurer in the budget aimed at helping families, understanding full well the relief it will provide to them.
There are a great number of measures in the budget that will provide real assistance to families living in the Chifley electorate. Fifteen thousand, one hundred and fifty local families in Chifley are expected to receive a total of $410 a year for each child in primary school and $820 a year for each child in high school. The schoolkids bonus that has been announced as part of the budget will replace the education tax refund from 1 January 2013 and will be paid to families of about 26,650 local kids in school. Under the existing system, 2,450 families in Chifley have not been claiming what they are entitled to, mainly because they could not afford the upfront costs involved in educating their children or, in some cases, they have not had access to accountants who can help them with this type of refund. Under this new system, there is no need to keep receipts for vital education resources; it will be paid automatically into the bank accounts of eligible families.
In my electorate I know that this money will be used where it is most needed. Representing one of the lowest SES electorates in the country, I was quite frankly offended at suggestions that families would waste this money on plasma TVs. It is an offensive suggestion that families that want the money to be able to help their children with their school costs would be frittering this money away, and I find it hard to believe that the Leader of the Opposition could really be so out of touch in making those statements. I can certainly tell him that there are many families, not only in the electorate that I am proud to represent but right around Australia, who are holding out for this payment. Changes to the family tax benefit part A, which will flow from 1 July next year, will provide families with much-needed relief, with more than 19,000 families in Chifley receiving up to a $600 increase in their family tax benefit payments.
The cost pressures that affect most families in Chifley are the rising utility prices and, for those most vulnerable—the unemployed, students, parents on income support with young children—those pressures are hard to absorb.
In Chifley, we are delivering vital assistance through this federal government to help with the cost of living and this will be provided to 17,240 local young people, single parents and the unemployed who are currently receiving allowances, and we will be doing this by providing cash payments to help them meet the cost of their essential services like electricity, gas and water. Singles will receive a supplementary allowance of $210 and couples will receive $350, with the first payment commencing March 2013.
Chifley has a large number of vulnerable families and there are large numbers of children whose parents have never completed school. UnitingCare Burnside runs a tremendous program in Bidwell known as HIPPY, which stands for the Home Interaction Program for Parents and Youngsters. I have had a chance to visit that program and I have seen with my own eyes the great benefits that this program provides. This two-year program helps parents and carers take an active role in their children's education and provides access to a tutor and practical learning activities and materials. In order that this program be expanded to assist additional families in need, the government committed a further $55.7 million to ensure that Australia's most vulnerable children are better prepared to start school.
I was also delighted to see the government commit its share of funding to build a National Disability Insurance Scheme. I advocated for this scheme over the past two years and I applaud the Gillard government's investment of $1 billion over the next four years. From the middle of next year selected launch sites around the country will begin serving people with a disability, expected to number 20,000 by 2014. This is a significant social reform delivered by a Labor government in the same tradition as Medicare and paid parental leave. In my electorate of Chifley, groups like the Endeavour Foundation, which I have had the pleasure of visiting, have welcomed this NDIS initiative and they, along with a number of other groups, have been vocal champions of the NDIS. I thank Kathy Breen and Ed Mason from the Endeavour Foundation for their passionate advocacy in our local area for this initiative. Many families in Chifley will also welcome the $500 million boost to dental health. This will deliver a blitz to reduce public waiting lists where people are waiting for dental health care assistance. It will also tackle workforce shortages in dental health.
I am disappointed, however, that more credit has not been given to the crucial reform the government has announced for aged care. A new $3.7 billion funding commitment towards aged-care reform will see more in-home care and support so that people can live independently longer and will not be forced to sell the family home to pay a bond. Again, when I speak about this with many residents in my electorate of Chifley, they welcome it. Most people, rightly, share a concern and a desire to see that their parents, as they age, have quality, accessible care for the years ahead. With an ageing population expected to increase enormously in the coming years and life expectancy continuing to increase, the existing aged-care system would not be able to cope with the demand. That is why it is important that we develop new support services to allow people to live at home for longer.
While this budget has been unapologetically family focused, we have not forgotten that small business is feeling the pressure of a patchwork economy. The Treasurer announced a measure to allow companies to carry back tax losses by providing a tax benefit of up to $300,000 per year. Businesses are currently able to carry forward their tax losses to offset future profits and reduce future tax liabilities. About 110,000 small businesses across the country will be able to benefit from this and they will be able to carry back their losses, offset past profits and get a refund of tax previously paid on those profits.
From 1 July 2012 the 10,000 or so small businesses in Chifley can expect additional benefits. For example, the government will deliver tax breaks for small business such as an increase in the instant asset write-off threshold to $6,500. For those businesses seeking to purchase new vehicles—for example, tradies wanting to purchase a new ute—they will be able to write-off $5,000 from that purchase. Again, 10,000 businesses in Chifley will take advantage of these measures.
Not only is this budget, as I have indicated before, family friendly but it is business friendly. The measures I referred to a few moments ago are quite obvious. The economic climate we are promoting has higher growth and is beating most advanced economies, with inflation contained and unemployment down to 4.9 per cent. By way of contrast I put this to the chamber: imagine the type of political discourse in this country if we were to be experiencing an unemployment rate equalling that of Spain right now—20 per cent unemployment compared to 4.9 per cent in Australia. Our unemployment rate is phenomenal. The economic conditions we have provided are tremendous. On top of that the assistance that I have mentioned earlier in this speech that is being provided to families provides a further important platform for economic growth and is of potential benefit to the retail sector. It is worth bearing in mind that, when the GFC hit, when the financial system froze, when mistrust and risk aversion began to choke our economy, this government provided vital economic stimulus through fiscal policy. With conditions exceptionally better, now is the time to pare back that spending. That is what this budget does.
With the economy strong, especially relative to the subdued conditions affecting other economies, the time is now right for further investment and development—and it is right that we focus on monetary policy and what it can do to drive further growth. When we focus on monetary policy, we naturally need to focus on the actions of the Reserve Bank of Australia. I often have businesses, small and large, smaller businesses and major corporates, tell me that they are wanting to invest and that they are ready to invest but that finance is hard to come by and they believe interest rates are way higher than they should be. I have raised this previously and I say it again: my view is that the RBA effectively has a sleeper hold on the economy. They are moving too slowly on the issue of interest rates. They should be moving to reduce rates. Businesses of all sizes are saying that this is the right thing to do.
This week I wrote in the Daily Telegraph that I thought it important the Reserve Bank recognises this demand. Given that our economy is strong relative to many parts of the world, this is, as I have said, the time for us to provide that interest rate cut for businesses, particularly those on the eastern seaboard of Australia, to enable them to take advantage of economic opportunities now. What I am most worried about is that the RBA will be slow on this issue of interest rates and only move when it is absolutely forced to.
Inflation is contained, as I have said. The IMF recognises that as well. Why the Reserve Bank walks with clay feet on this issue astounds many, particularly in business. Cutting interest rates would provide a shot in the arm for confidence, it would provide a platform for investment and it would help the economy drive further growth. Why we would be holding back further cuts is a source of bewilderment for many. There have been calls for the Reserve Bank to broaden and balance out its view—rather than just having an absolute driving focus on inflation, it should look at employment too.
A division having been called in the House of Representatives—
Sitting suspended from 11:27 to 11:39
Mr HUSIC: Before the break I was mentioning the room to move to reduce interest rates, particularly when you compare what is happening overseas—Canada: interest rate one per cent; the UK and US: half and 0.25 per cent respectively. We certainly have the opportunity with our cash rate at 3.75 per cent to move below that and be able to provide the impetus and the confidence for business to invest further. We know we have $450 billion in the investment pipeline but, again, it is about both sides of our continent being able to flex their industrial muscle, for the benefit of the nation.
This budget does ensure we go to surplus, does pare back fiscal policy at a time when the conditions warrant it and does provide support for business and for families. We will now ensure our focus on monetary policy remains there and, given that those other economic conditions are ripe, time is ripe too for further cuts in those rates to benefit business and drive further economic growth. I commend this budget to the House and certainly commend it to the residents and businesses of the Chifley electorate I am proud to represent.