http://archive.malcolmturnbull.com.auRSS feeds for Malcolm Turnbull MP60http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/173/What-about-relieving-cost-of-living-pressures-on-Australian-families-seniors-pensioners.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=173http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=173&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/173/What-about-relieving-cost-of-living-pressures-on-Australian-families-seniors-pensioners.aspx Suspension of Standing and Sessional Orders Mr TURNBULL(Wentworth) (3.34 pm)—I move: That so much of the standing and sessional orders be suspended as would prevent the Member for Wentworth moving immediately: That: (1) this House condemn the Rudd Government for the misleading claims that its first budget would fight inflation, when instead, the Treasurer has delivered a budget that increases inflationary pressures and does nothing to relieve cost of living pressures on Australian families, seniors, pensioners and small businesses; and (2) for delivering a budget under the cover of a mountain of spin that, in reality, increases taxes on cars, tourism, alcohol, health insurance, computer software to name a few, along with other measures that will generate a revenue windfall of $19.5 billion for this same old-style tax and spend Rudd Labor Government.” This is an urgent matter for the House to consider now and we must suspend standing orders because this budget is built on a mountain of falsehood. For months, the Treasurer has wandered around the country saying that he was going to fight inflation with massive cuts in spending and what has he done? He has brought in a budget that increases spending. When you look at his own budget papers, when you look at statement 3 of Budget Paper No. 1, you see there that the result of his own policy measures, his own decisions, is to increase spending in every year of the forward estimates. We need to debate this now, urgently, because, far from delivering a budget that was in accordance with what he told the Australian people, the Treasurer has delivered the exact reverse. And now he stands up and says, ‘It’s only a mild tightening.’ Well a few weeks ago he was saying it was going to be a massive cut in spending. What sort of Treasurer do we have in this country? He is so incompetent that he will mislead the Australian public about what will be in his own budget, claiming it will put downward pressure on inflation. He is so dishonourable in this House that he will misrepresent public research from market economists. This is a Treasurer who quoted just a moment ago the approval, so he said, of the Commonwealth Bank and yet here we have the Commonwealth Bank’s own research. What does it say about the budget? “The government has fallen short of its own rhetoric of putting downward pressure on inflation in the short term”. That is precisely what we have been saying. Market economists do not normally make scathing remarks about budgets, but there you have it from the Commonwealth Bank. The Treasurer did not want to table the research from Goldman Sachs JBWere. He did not want me to do it either because what that research says, in a passage that he chose not to quote, is this: “While the ALP has gone to great lengths to claim that this Budget will ease inflationary pressures, most of the supply enhancing initiatives involve large implementation lags. In reality, the ALP’s biggest contribution to inflation is that it is not making the inflation process worse”. That is not a citation for an inflation-fighting medal; that is the faintest of faint praise. We need to suspend standing orders urgently because of the dishonesty and the confusion associated with this budget. We have heard from the Prime Minister and the health minister that the new tax on alcopops will decrease consumption. Yet, every single year of the forward estimates, the massive revenue from this new tax goes up from $600 million to more than $800 million in just four years. The Prime Minister wants us to believe that that is nonetheless a reduction in consumption. The Prime Minister no doubt has advice from great mathematicians and economists behind him, but how can you have a tax based on volume of alcohol which increases year after year if there has not also been an increase in the volume of alcohol sold? So, after days of obfuscation, they finally produce a Treasury paper which suggests that this tax, this $3 billion of additional revenue, may reduce consumption from what it otherwise would have been by—wait for it—four per cent. That is what they are arguing for. That is going to save the young from drinking RTDs; a tiny reduction in consumption from what it otherwise would have been, and a massive revenue windfall for the government. That is the best they can produce. This is nothing more than a tax grab, a blatant tax grab. Then we come to the dishonesty of their ‘soak the rich’ programs. Let us talk about the means test on the baby bonus. A household with two parents, each earning 40 per cent above the average weekly earnings, would be caught by this means test. A household that earned $75,000 in the six months after the birth of their child would receive the pre-tax equivalent, in terms of income including the baby bonus, of $83,300. If they earned $76,000, they would be nearly $7,000 worse off. That is the result of the extraordinary effective marginal tax rate the Treasurer has created. What a disincentive to work. It has no taper rate. There is no consideration for what it does to incentives. What this tax will do is provide a real and massive disincentive to work for households who have just had a baby. If they are going to earn a dollar more than $75,000 figure, they lose the lot. They do not lose a few dollars; they lose the lot. The effective marginal tax rate is disgracefully, unprecedentedly high. Remember that the Treasurer is the man who said famously, ‘nobody knew about EMTRs until I came along’. Well, nobody has seen an EMTR as big as the one he is creating here. This will save $70 million, and that is without any taper rate, with a totally unjust arrangement and a huge effective marginal tax rate. It will save $70 million out of a $1.5 billion program. This is a $70 million fee to buy a headline ‘Soak the rich’. What about the other ‘soak the rich’ tax—the tax on so-called luxury cars? We have heard about the large families who have a lot of kids and need to buy people movers and vans. They have no choice. They are not buying a car worth $57,000 or more because they want to roll around in leather in a Ferrari or anything like hat. They are doing it because they have a big family and they need to move them around. But they will pay the tax. It is not a tax on the rich; it is a tax designed to get a headline about ‘soaking the rich’. It is a tax that hits large families. A hundred thousand cars a year are sold that fall into this bracket and the vast majority would not be regarded as being cars of the rich. There are hardly any Bentleys, Rolls Royces or Ferraris. These are cars bought by large families who need to move around with their family. They are going to be paying a higher price for that. Next we come to the greatest con of all: the funds. This is not an investment in infrastructure; it is the creation of a bank account with ‘infrastructure’ written on the title page. There is no guidance and no indication of how that money will be invested or what economic return will be sought. How do we know whether it will be given away to inefficient state utilities? This is a Treasurer who has said, year after year, that the member for Higgins ran big surpluses and hoarded them so that he could dole them out at election time. He said yesterday at the National Press Club of Australia that ‘this fund can fund election promises’. In other words, he is creating a special Labor Party slush fund which will be drawn from at election time to subsidise the inefficient and incompetent utilities of his Labor mates in the states. (Time expired)Fri, 16 May 2008 05:09:00 GMTf1397696-738c-4295-afcd-943feb885714:173http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/163/Address-to-the-National-Press-Club.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=163http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=163&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/163/Address-to-the-National-Press-Club.aspxCHECK AGAINST DELIVERY  Mr Rudd has promised us new leadership with new ideas. Courage, vision and a readiness to take on the great challenges of our times.  And as the Federal Budget is “the embodiment of the total program of the Federal Government”[1], then we would expect this new Government coming into power after 12 years of Opposition to reveal its vision for Australia’s future. But instead this was a Budget of indecision, missed opportunities, and challenges that have not been faced. We were told our greatest immediate economic challenge was the inflation genie: out of the bottle and out of control. A horror Budget with savage cuts in expenditure would fix all that. An anxious nation flinched last Tuesday night bracing for the axe to fall. And then nothing happened. The Budget was as mild as its authors’ rhetoric was fierce. No bang, all whimper. And so we see the most consistent theme of this Government and this Budget – spin and hype. There has never been a Government more hypocritical or less sincere. Ready to talk the talk – too weak to walk the walk. This is a Government that says climate change is the greatest long term economic challenge of our times, but presents a Budget with nothing to say about the likely impact and costs of an emissions trading scheme due to start in less than two years. A government that kills off the solar energy industry in one blow. This is a Government that says it wants to stop young people drinking RTDs, but has $3 billion of new tax revenue banking on the RTD binge continuing to grow. A Government which promises to bring down petrol and grocery prices, but can do nothing but pay people to watch them go up. This is a Government that feels our pain about the crumbling public hospital system, and then manages to drive half a million people or more out of private health insurance. A ghastly trifecta of more pressure on public hospitals, higher premiums for those remaining in private health insurance and a revenue windfall for the Federal Government. This is a Government that preaches accountability – but then establishes a $40 billion Labor Party slush fund, advised by its mates and without any rules, any limits, any investment benchmarks. Nothing to stand in the way of buying the next Federal election or bailing out incompetent State Labor Governments, their mismanaged utilities and great infrastructure disasters. This is a Government fond of symbols – but delivers a Budget whose symbolic measures speak of meanness, division and the politics of envy. And this is a Government that speaks endlessly of reform, but whose Budget offers no reform of its own – just a six month old tax package designed by Peter Costello. Macroeconomy Kevin Rudd likes to ask his own questions and in that spirit, Wayne Swan set his own test for his first Budget. It was to be an inflation fighter – big cuts putting maximum downward pressure on inflation and maximum downward pressure on interest rates. And what did we get? A Budget result that was roughly neutral. A Budget that far from cutting spending, actually increased it and by about $15 billion over the next four years. A Budget that imposed new tax measures that put up the price of alcohol, cars and private health insurance. And a Budget full of fiddles designed to boost the 2008-09 surplus at the expense of other years. In his defence, MrSwan has argued that spending will grow next year at a lower rate than it had in the last few Costello budgets. But in 2009-10 spending is projected to grow at a faster rate than in all but one of the the coalition’s budgets years, the 2000-01 Budget when the GST was introduced. But why should I complain that Wayne Swan’s Budget failed to meet the test he set for it himself? Consider what last Tuesday’s backflip tells us about our Treasurer. Did Mr Swan simply lose his nerve and fail to take the tough decisions he believed were necessary? Or can we assume that he never really believed his claim that inflation was out of control and that only a brutal Budget could put the genie back behind the stopper? So is he gutless or disingenuous? Take your pick. What is certain is this: that effective macroeconomic policy depends on having a credible, consistent economic narrative, translated into durable policy settings – policy settings that can guide markets in their decisions. This is the crucial weakness in Wayne Swan’s “say one thing, do another” approach: all it does is muddy the waters. Either way, from Budget Night on Wayne Swan owns every interest rate rise. Budget measures Economists and central bankers like to focus on the Budget outcomes – the surplus, growth in spending – the effect the Budget will have on overall demand. But important though the aggregate quantity of the Budget outcomes may be, it is the quality of the individual budget decisions that really show us the character of the Government that presented it and a sign of things to come. What do you say about the cynicism of a Government which justifies its largest single new tax measure – the increased excise on RTDs – on the basis that it is a health measure? $3 billion over the next four years, rising from $640 million next year to $893 million three years later. An alcohol prevention programme which makes $3 billion from people drinking more and more? Under pressure in the House the Minister for Health produced an odd little paper, written that very day – after the Budget – which showed that Treasury was assuming this high impact health measure would reduce the rate of consumption of RTDs by, wait for it, 4 per cent. It also assumed that the tiny handful who were deterred from drinking RTDs would not drink anything else.  Labor didn’t market this as a tax grab from young girls. Unsurprisingly, the real world is confounding Treasury’s assumptions and around Australia liquor stores are reporting a drop in sales of RTDs and a pick up in sales of spirits and soft drinks.  That’s economics 101. One should never underestimate the enterprising ingenuity of the Australian drinker. Medicare Levy Surcharge What about raising the Medicare Levy Surcharge threshold?  The Treasury expects that this will cause 486,000 taxpayers to drop out of private health insurance. The industry says it will be double that number. This is good news for the Tax Office because the amount of revenue lost by reason of the increased surcharge threshold is less than the amount of tax expenditure saved by fewer people claiming the private health insurance rebate – a windfall gain for the new Government of $300 million! There was no calculation of the cost to those remaining in the private health insurance pool – 27 per cent of whom earn less than $48,000 (or less than half the new threshold) per annum.  There was no calculation of the cost to an already overstrained public hospital system. And the Australian Health Insurance Association estimates the additional cost to the public hospital system to be $1.76 billion over four years. An Access Economics report to the Australian Medical Association says that: “The sharp increases in the thresholds for the Medicare levy rebate sends a very confused message.  The Government has adopted a policy that harms the insurers and the private hospitals while adding further burdens to an over-stressed public hospital system and the long term fiscal position” The Access Economics report also says that the estimated net saving in 2008-09, and the pattern of savings over the four years is “highly implausible”. This again shows that Labor has no vision for the future.  The two Intergenerational Reports published by the Coalition show the pressures on the health system from an ageing population demanding ever better medical treatment.  Yet this decision damages the Government’s long-term fiscal position. As Liberals we believe in promoting self reliance and independence – taking responsibility for your own life. Practical people of any political stripe recognise that the cost of providing health services is rising all the time and that we all have an interest in encouraging a viable, competitive private health sector. This was possibly the most ideological, most misguided but most revealing element in the Budget. An assault on self reliance with the aim of undermining competition and choice in the health industry. Vouchers It was not the only assault on choice. In Government we funded vouchers to enable parents to obtain extra tuition in literacy and numeracy. We empowered parents to make their own choices, to find the best tutors they could. That and other similar programs have been shut down. Instead of tackling literacy and numeracy from the grass roots, the Labor Government will be investing in a top-down, bureaucratic programme of the State Education Departments. Means Testing The least revenue but the biggest headlines were acquired by imposing the means test on the Baby Bonus. Now, I am not opposed to, or unfamiliar with means testing. Payments or benefits designed to remedy low or no incomes should be means tested. I am opposed to means testing the baby bonus because I do not regard it as a welfare payment designed to improve the position of someone on a relatively low income. Rather, the baby bonus was designed to send a message that children are a social good, that childbearing and motherhood should be recognised and respected and that all of us have an interest in each other’s children. That message was more powerful by being universal. Was it effective? Well, all we know is that during a time when the Howard Government focussed several policies on promoting families, we saw an almost unprecedented reversal in a declining birth rate.  It is too early to say for sure that the baby bonus was a catalyst for this reversal, but it must be a strong candidate. The baby bonus means test will mean that a household that earns $75,000 in the six months after the birth of their child will receive the $5000 bonus – a pre tax equivalent of $83,333. A couple who earned $76,000 would not receive the bonus. They would be $7,333 dollars worse off. That is, I believe, an effective marginal tax rate of 733 per cent – surely close to a record. This clumsily designed measure will save about $70 million a year – out of a $1.5 billion programme. If a taper rate is introduced commencing at $75,000, and that must be done to avoid the absurd circumstance I just described, then the saving will be even less. Luxury Car Tax The same comment can be made about other measures in that vein.  An increased tax on “luxury cars”?  It should be called a Tarago tax. The vast bulk of the cars sold in that $57,000 and more category are not regarded as particularly luxurious. It is not a tax on people of high incomes. It is a tax on those people who for whatever reason – perhaps because they are ferrying several kids around, or maybe out of a desire to buy a more fuel efficient vehicle – choose to buy a car worth more than $57,000. Surely an environmental Government would have given some credit to highly fuel efficient vehicles. No way, the Hummer and the Hybrid are equally caught by the new tax. What is the explanation for this tax? Is the $100 million a year really the objective? Or is it that almost all of the cars in this category are imported? It does fit in nicely with the protectionist inclinations of the new Government. Climate Change Climate change is the greatest long term economic challenge facing Australia. The Emissions Trading Scheme is the central mechanism to decarbonise our economy. It will put a price on carbon and affect the price of everything. It is likely to raise $10 billion a year at the outset and more over time. It will commence in 2010 – that’s two years away and the forward estimates are for four years. But apart from providing for a few consultants fees there is nothing in the Budget about the ETS’ likely effects on the cost of living, economic growth, unemployment, productivity, interest rates and our trade accounts. Throughout last year it was hard to find Kevin Rudd unaccompanied by a solar panel.  In fact I assumed that Peter Garrett was following him with several panels strapped to his back ready to set them up as a backdrop for another speech about our clean, green future. The Coalition’s $8,000 rebate for solar panels was not a social welfare measure! It was designed to drive further demand for solar panels in order in turn to drive greater efficiencies in production installation and of course research. Now the reality is that given our low electricity prices even with the subsidy solar panels are an expensive investment and far from being an economic proposition. The rebate was designed not as a social welfare measure but to correct that “externality”: to reduce the private cost of opting for solar, thus more fully reflecting the resulting social benefit.   By imposing a $100,000 means test, Labor has ensured the vast majority of people who can afford to buy solar panels are deprived of the subsidy. Needless to say, demand has collapsed and the Australian solar industry fears it will collapse as well. It is though Labor’s interest in climate change subsided as quickly as the applause the Prime Minister received in Bali after ratifying Kyoto. Infrastructure Nowhere in the Budget is Labor’s spin more dangerous than with the so-called “nation building” Infrastructure Funds. These are Labor slush funds. No rules, no investment benchmarks, no prudential limits, not even a clear description of what they will invest in. The product disclosure statement is a blank sheet of paper. This is not a surplus prudently saved for the long term – it is in truth just deferred expenditure, literally a Labor election war chest. Cynically, Labor has tried to trade off the deserved high reputation of the Future Fund, the $60 billion investment fund set up by the Coalition to relieve future generations of the cost of unfunded public service pensions. The Future Fund has a clear investment mandate to deliver a long term return of CPI plus 4.5 per cent – 5.5 per cent. The capital and income are all committed to the one purpose – it is locked up by statute in order to stop sticky fingered politicians prying open the till. Wayne Swan has said he will ask the Future Fund board to manage the new infrastructure funds pending decisions to invest the money into infrastructure. Of course you couldn’t allow anyone as hard headed or numerate as David Murray, Future Fund Chairman, to have any say in what infrastructure projects should be funded. But how is the Future Fund to invest Mr Swan’s $40 billion of infrastructure funds if it does not know when they will be drawn down, or for what purpose? What financial or economic returns will be sought from these funds? How can we be sure they will not simply be used, at an electorally convenient moment, to subsidise inefficient State Government infrastructure ventures, or for “strategic” projects in marginal seats? If we believe that we are short of investment in infrastructure, we have to ask: Why? Labor says it was John Howard’s fault. But if our cities have underinvested in water infrastructure was it because of a lack of money? Of course not, all of our cities can afford to have all the water they need. The State Government owners of the water utilities chose to under-invest and strip surplus earnings out those businesses.  Or consider the lack of investment in east coast coal loading facilities. Compare it to the rapid, privately-funded, and successful investment in the Pilbara. In the midst of a coal boom, it is hardly credible that increased capacity cannot be funded.  Again the failure has been inappropriate regulation and an unwillingness to reform – not a lack of money. Labor’s infrastructure funds offer the prospect of more spending without reform – billions of dollars to bail out incompetent Labor State Governments, their inefficient utilities and their white elephant infrastructure programs. And the more the money piles up, the more difficult to resist will be the claims upon it. Pensioners Australia has over 2½  million pensioners and self funded retirees.  Many of them are doing it very tough. Like others on low incomes they spend a higher proportion of their income on food, fuel and housing – all items whose prices have been rising strongly. In Government, the Coalition worked hard to deliver successive Budgets that prepared for the ageing of our population, increased pensions by linking them to Male Total Average Weekly Earnings (MTAWE), encouraged retirement savings, improved aged care services, helped older Australians receive flexible care in their own homes, greatly increased spending on aged care and importantly delivered our on commitment to share Australia's prosperity with older Australians with the payment of the lump sum Seniors Bonus. By contrast, the Rudd Government’s Budget has failed to offer older Australians relief from rising costs of fuel and groceries, and instead confirmed they will scrap the Seniors Bonus after this year. Older Australians deserve better than Labor's Budget. We are reviewing all our policies that impact on our seniors and along with carers and those with a disability, with our first priority being to secure their financial future with greater assistance and genuine support. Going forward This is a Budget that does not do what it claims to do. It does not help those in need. Rather, as is clear from its treatment of pensioners, it ignores them. It does not reward enterprise and achievement: rather, it punishes them: often in ways that are all the more telling for being so trivial, small minded and poorly conceived. It does not set out a program of reform that could increase efficiency in areas such as health and education. Rather, it undermines choice, weakens competition and entrenches inefficient, State Government suppliers – all of which may benefit the public sector unions, but only at the expense of ordinary Australians. It does not ensure the huge gains we are reaping from the minerals boom will be used for the long term benefit of all Australians. Rather, by putting that windfall into Funds that have little accountability  and are unencumbered by restrictions against spending their capital, it ensures we will see repeated at a Commonwealth level the infrastructure disaster story that is the Labor States. And last but not least, it does not set out a coherent vision of macroeconomic policy, that could give individuals, firms and markets the confidence and predictability they need in uncertain times. Rather, it talks tough but looks, feels and smells weak. It  betrays an indecision, an underlying lack of character, a gormlessness in substance and delivery, that is in striking contrast to the successive Budgets of the Howard Government. In short, Morris Iemma comes to Canberra. It would be easy for us, as the Opposition, to stand back at this point and simply compare Labor’s first Budget with ours, and our subsequent record of achievement. And a monumental achievement it is. Eleven and a half years of Coalition Government saw all Commonwealth debt repaid. Future unfunded public service pension obligations are provided for.  Thirty-five year lows in unemployment, record highs in participation rates and the longest continuous economic expansion in our history.  Real wages increased by over 20 per cent. More Australians than ever have the means to realise their ambitions. But all that was the result of hard work, a preparedness to take tough decisions and above all a preparedness to embrace reform, to recognise that changing times demand new approaches. And it is in exactly the spirit of that hard work and preparedness to take tough decisions that we must recognise that, although we are only five months into Opposition, we must move on with new ideas and new policies. Our review of all Coalition policies is underway and being ably led by Julie Bishop. Our principal alternative proposal last week was a 5 cent reduction in petrol excise.  As the Labor Government talks endlessly about rising petrol prices, but does nothing, it is a concrete proposal which will reduce the price of petrol.  This is an important and meaningful proposal.  The Coalition proposal is in stark contrast to Labor’s Fuelwatch scheme, costing over $20 million, that has already proven itself to be a failure in Western Australia where fuel prices are regularly higher in Perth than elsewhere in the country.. And on this question of the petrol excise, let me just remind everyone that in 2005 Mr Swan, as Shadow Treasurer, was asked if he were Treasurer would he remove the fuel excise. His response was to say that removing the excise was: “…not a promise I would be making at the moment but it would be something, if I was in Government, I would be reviewing as the Treasurer ought to be doing.”[2] A second important announcement by Dr Nelson last week was the Coalition’s proposal to reduce capital gains tax for small businesses.  Small businesses are the heart and soul of the Australian economy. Indeed, it is one of the pillars of Liberal belief — men and women taking a risk, borrowing money to create or buy a small business and employing other Australians. The current 15-year rule with respect to waiving capital gains tax on the sale of a small business entity on retirement from age 55 was an incentive to small business introduced by the Coalition in government. To further encourage small business men and women to invest in establishing or taking over a small business, the Coalition will introduce a five-year rule for capital gains tax on sale of the business for retirement. After owning and operating a small business for five years, the Coalition believes you should be entitled to capital gains tax relief should you sell your business for retirement. We will always honour the achievements in our past, but we cannot be captured by them. We must ensure those achievements are not wasted by a Government that seems committed to turning back the clock. It is here that the underlying differences in philosophy between us and Labor become clear. Our premise is that Australia’s prosperity rests first and foremost on the initiative, enterprise and energy of its people – not on the efforts of its governments. We believe that government should enable choice, rather than take the choices on our behalf. Under the Howard Government, we moved steadily to expand access to choice: to create alternatives to the services so inefficiently provided by the State Labor governments. We enabled the growth low fee independent schools, offering a wider range of choice for parents and greater competition in education. Equally, in health, we moved to reverse the catastrophic decline in private health insurance, and to encourage the growth of a private hospital sector that could set clear benchmarks of efficiency for and take some of the burden off the already stretched public hospital system. Now, without having the guts to say so, everything the Rudd Government is doing points the other way. The poorly conceived, half baked changes to the Medicare levy are only the most visible example of that trend at work – a trend to undermine the private sector alternatives which the Howard Government’s reforms helped develop. It is also for this reason that I have taken the lead in promoting comprehensive tax reform, commissioning Henry Ergas to undertake a wide-ranging review of our current tax system.  The introduction of the GST, and the changes that came with it, were landmark reforms. But our tax system is still too complex, still imposes too great a burden on taxpayers and the economy, is often unfair, and if left unchanged, will, in the longer run, erode our productivity and competitiveness. It needs to be changed so as to more clearly encourage enterprise and achievement, remove distortions, cut the burden of compliance and promote efficient investment. Finally, it is again on the basis of our fundamental premise – that governments should empower choice, rather than take it for us – that we must approach the management of our Budget surplus. Wayne Swan and Kevin Rudd say time and again that their approach ensures that our surpluses will not be “squandered”: but who is more likely to “squander” those surpluses – ordinary Australians or the men and women who managed the infrastructure programs of Bob Carr, Morris Iemma and Peter Beattie? Ordinary Australians or the men and women who between them share responsibility for infrastructure fiascos as ineptly managed as Sydney’s Cross-City tunnel, South East Queensland’s water grid, the pipeline to drain water from an already near empty Goulburn Murray system to Melbourne and the debacle at Dalrymple Bay. These are the people Wayne Swan has asked to help him ensure our savings our not squandered. We don’t believe him – and who would?  Rather, for our part, we put our faith in ordinary Australians –  we know they have every incentive to carefully husband their savings, and are therefore convinced that taxpayers’ money those savings should, whenever possible, be returned to them to manage. Deep in its political DNA, the Labor Party mistrusts freedom and small business. It believes that Government knows best. When it deals with business, it prefers the big end of town. Labor’s budget has cut a series of programmes designed to assist small business and entrepreneurship notably axing the Commercial Ready program which supported research and innovation by small and medium businesses. I am familiar with businesses large and small –  chief executives of vast multi-nationals and entrepreneurs chasing a dream with little more than an overdraft. And I know from my own life’s experience that the prosperity of this country, the prosperity that enables so much of our freedom, that underpins our living standards is built more than anything else on the enterprise and initiative of millions of Australians, having a go, taking risks. This Budget has left Australia less free. And as the pensioners are reminding Mr Rudd, it has left us no fairer either. But it has served one purpose. It has meant that Mr Rudd has to nail his colours to the mast. And they are true Labor colours. The politics of envy instead of aspiration. A Government which knows best rather than one that enables each of us to do our best. For our part, we will put our faith and our political future on the side of freedom and choice. Our Liberal vision is for a Government that works for you. That enables you to have the freedom  to realise your vision, your aspirations and plans for a better future for yourself, your children and grandchildren. [1]Frank Pace “ The Federal Budget” 1949 American Academy of Political and Social Science [2] Today Show 14 September 2005  Fri, 16 May 2008 04:43:00 GMTf1397696-738c-4295-afcd-943feb885714:163http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/161/Labors-cuts-make-it-harder-for-families-to-plan-for-the-future-with-confidence.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=161http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=161&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/161/Labors-cuts-make-it-harder-for-families-to-plan-for-the-future-with-confidence.aspxThe Rudd Government’s attack on Choice of Superannuation continues     Labor’s misguided reduction in funding for the Choice of Superannuation Fund policy is set to make it harder for Australians to make the best informed choices possible, and to plan for the future with confidence.     Shadow Treasurer Malcolm Turnbull said that it is not surprising that Labor is trying to put obstacles in the path of the Choice of Superannuation Fund, given Labor’s fierce opposition to the policy from the time of its announcement.     While the Budget acknowledges that the Coalition successfully implemented Choice, it then backhandedly adds that funding to the ATO and ASIC will be reduced.     “Choice provides greater competition between funds to reduce costs and increase returns. It has been successful in helping Australians plan for their retirement, enabling them to make informed judgments about the management and financial condition of funds,” Mr Turnbull said.   “Labor claims that this cost cutting is responsible economic management, which is extraordinary considering that is exactly what this measure was helping Australians achieve when planning for the future.”     The Opposition remains concerned that Labor will place obstacles in the way of Australians having their own self-managed superannuation funds – an attack on Choice and competition in another guise.Thu, 15 May 2008 04:17:00 GMTf1397696-738c-4295-afcd-943feb885714:161http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/160/Labor-policies-destroying-jobs.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=160http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=160&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/160/Labor-policies-destroying-jobs.aspx   The Rudd/Swan Labor Government appears to have included the impact of the first stage of its rollback of workplace relations reforms in its Budget forecast for 134,000 job losses in the next 12 months.   With Labor’s full rollback of workplace reforms to take effect from January 2010, Labor must release the Treasury advice about further job losses and increasing inflation from the full rollback of workplace relations reforms.   The Australian public deserve to know how many working families will become welfare families under Labor policies. Labor has for the fist time admitted that jobs will be lost in the next 12 months due to its policies.   Prime Minister Kevin Rudd has claimed that an increase in unemployment is an essential part of his strategy to rein in inflation. Mr Rudd told ABC Radio's AM program that "there will be a modest increase on that score [unemployment] as projected through the Budget papers, but we believe that our responsibility for overall balance in the economy is to make sure that you're doing what you can through Budget policy to put downward pressure on inflation and downward pressure on rates."   Unemployment reached a low of 3.97% in February 2008 and has since risen by 0.2 percentage points to 4.2% in April 2008. Unemployment has increased by 29,800 in two months.   Labor’s Budget forecasts a halving of the employment growth rate, a rise in unemployment, and a stagnant and slightly declining participation rate.   Rudd/Swan Budget forecasts employment growth will be halved, falling from 2.5% in 2007-08 to 1.25% in 2008-09 unemployment will rise from 4.25% in 2007-08 to 4.75% by the June quarter of 2009 labour force participation will not increase, remaining at 65.25% in 2008-09, and declining to 65% by the June quarter of 2009. Thu, 15 May 2008 04:15:00 GMTf1397696-738c-4295-afcd-943feb885714:160http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/159/Changes-to-Medicare-levy-surcharge-adds-to-the-bad-news-for-Australian-Families.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=159http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=159&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/159/Changes-to-Medicare-levy-surcharge-adds-to-the-bad-news-for-Australian-Families.aspx“Changes to the Medicare levy surcharge introduced in thishigh taxing, high spending, budget will add to the bad news for Australian families” the Member for Wentworth Malcolm Turnbull said today. Malcolm said “Labor clearly stated in the past that they would keep the Medicare levy surcharge, yet by increasing the threshold in the budget at which singles are now required to pay the Medicare surcharge, they have opened the door for hundreds of thousands of mostly young people to leave private health insurance”.   “The impact of this will be quite dramatic” Malcolm said, “as these people will need to access the already burdened public hospital system if they become ill and they have not retained their private health insurance.   This is effectively an attack on the private health industry, because if you attack private health insurance you attack health funding overall. “Private health insurance adds money to the health system overall” Malcolm said. “9.4 million Australians have private health insurance and as a result of this decision, private health insurance premiums will go through the roof”. “The people who will drop out will be young people who are less likely to make claims”. Malcolm said “and as they are the best customers for private health insurers, this is heading towards what appears to be a calamity for private health insurers in Australia”   These Medicare changes proposed by Kevin Rudd will also result in a significant influx of public patients in NSW hospitals, putting even greater pressure on our overworked doctors and nurses.   Malcolm said “This is also a sleight of hand move to reduce Rudd government expenditure on the Medicare Rebate even though there was a clear pre-election commitment to keep it”. “By potentially removing around 400,000 people from the Medicare rebate system, the Rudd government is expecting to make savings of almost $1 billion”.Thu, 15 May 2008 04:11:00 GMTf1397696-738c-4295-afcd-943feb885714:159http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/158/Malcolm-questions-the-Rudd-Governments-Budget-strategy-in-Parliament.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=158http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=158&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/158/Malcolm-questions-the-Rudd-Governments-Budget-strategy-in-Parliament.aspxThe failure of the Government to act decisively to set out a clear economic strategy which addresses the cost of living and pressures on Australian families. Mr TURNBULL (Wentworth) (3.37 pm)—The key test that the Rudd government set for itself in this budget was whether it would strengthen the Australian economy and put maximum downward pressure on inflation and interest rates. The government, and in particular the Treasurer, has failed miserably on both counts. Most importantly, the government has failed to act decisively. It has not set out a clear economic strategy which addresses the cost of living pressures on Australian families.   The first budget of the Rudd government is not an inflation-fighting budget. It is not a budget that lifts a single finger to help Australians battling with the rising costs of living—petrol, groceries, private health insurance and home interest rates. The only bright light in which we can all take comfort is the strength of the Australian economy and the cuts in personal income tax, which are all courtesy of the previous coalition government.   The Rudd government has inherited the strongest, most flexible and dynamic economy in our nation’s history. It could not have inherited a better fiscal situation. The substantial surplus is a tribute to strong economic management over many years. Remember that when the coalition was elected in 1996 interest expense was two per cent of GDP, a two per cent cost to the budget. If that were still the case, this budget would be in deficit and substantially. Instead, today the Commonwealth is a net lender and interest next year, at over $6 billion, is more than one-half of one per cent of GDP to the revenue account, and that does not include the income from the Future Fund. Australians had high hopes for this government. We were told that the Rudd government would provide new leadership. We were told the buck would stop with Mr Rudd. But they were just empty slogans. It is time to look behind all the spin and the rhetoric. The reality is that the budget is a missed opportunity. The Treasurer failed to seize the moment and do what was right for the future. In truth, we have the same old Labor Party budget.   In January Mr Rudd unveiled his five-point plan to tackle inflation. What happened to it? Where has it gone? There was no mention of it at all in the speech last night. The government’s five-point plan has been the key focus of this government over the last few months. We were told that spending would be reduced and maximum downward pressure would be placed on inflation and interest rates. Back on 23 January the Treasurer said:… we have said from day one, that we have got to deal with the inflation problem that we have inherited … This is urgent. We haven’t got a minute to lose. It is a big challenge but we are up to it.   What happened to the urgency? Was the Treasurer so fearful and inexperienced that he could not take the hard and courageous decisions that were needed?   It is clear from last night’s budget that the Treasurer thinks that increasing spending is cutting spending, that increasing taxes reduces inflation and that fiscal profligacy is fiscal rectitude. Australian families will be scratching their heads today. The effect of this government’s policy decisions will be that spending will go up and tax revenues will increase. Where is the five point plan?   Australians will be reading today’s newspapers thinking they are back in the late 1980s and that this is the same old Labor Party, and they would be right. The budget reveals that this government is wedded to the same old Labor way of managing the economy—higher spending, higher taxes, higher unemployment and lower economic growth. That is what the budget forecasts, and there is no clear economic strategy to address any of these issues. It is an ad hoc set of measures, none of which will strengthen the economy or put downward pressure on inflation. The Coalition left the Australian economy in the best shape it has ever been in. Real wages increased by more than 20 per cent. Real GDP per capita grew by 32per cent. The unemployment rate was halved and is now at a 34-year low. More Australians are now in work than ever before. Labor’s $96 billion debt was eliminated and there was no net debt. Inflation was kept at 2½ per cent, on average, over the cycle. That did not happen by accident. It was the result of sound economic management by the coalition. The one thing Australians knew about PeterCostello’s budgets was that they were decisive. The coalition took strong decisions and took action. There was a coherent economic strategy and the dividend was a strong and resilient economy that increased living standards for all Australians.   With results like these there was good reason for Australians to remain optimistic and confident about our economic future. But since the Rudd government came to office that optimism about our economic future has faded. Business confidence and consumer confidence have plummeted. Nothing in the budget will do anything to lift that confidence. The Treasurer does not inspire confidence at all. He exudes weakness, nervousness and uncertainty. He is not even prepared to sit here and engage in the MPI debate about his own budget. He is hiding in his office and he sends his junior minister along to front. What a gutless wonder. His anxiety and inexperience are written all over the budget documents. He does not know what he is doing.   Time and again the Treasurer has gone around the country saying: ‘Government spending will be cut—massive cuts.’ And so has the Minister for Finance and Deregulation, who said on 11 April:   We will have substantial spending cuts … They will involve some pain, spread pretty widely across much of the community. That’s part of getting the budget back under control …   That was the story—big cuts and big downward pressure on inflation, because aggregate demand would be reduced by big cuts in government expenditure. And we believed them. We thought they might go too far. Obviously, any cut in net spending that was less than half a per cent of GDP would not make any difference, so we assumed that they would be true to their word.   But what have they done?   As the budget papers show, as a result of the policy decisions taken by this government, spending will increase by $14.9 billion over the four years of the forward estimates, and that does not include the extra spending of $3.1 billion as a result of policy decisions taken in this financial year. How is that cutting spending? We know what he actually meant when he said he was going to cut spending. The Treasurer seems to think that, if you cut $15 billion in planned coalition spending and replace it with $30 billion of Labor spending, you are still cutting spending. So the only spending he believes in cutting is coalition programs.   There we have it. The Treasurer seems to think that when you increase net spending you are really cutting it. Can you believe it? Is that what we can expect from the Rudd government during the rest of its term—that when you spend more you are actually spending less? How will that kind of economic logic strengthen our economy? Under MrSwan’s new accounting rules, spending more means spending less. What hope is there of putting downward pressure on inflation and interest rates? Is that what the Prime Minister meant when he talked about new leadership? Well, it is certainly new economics. It is voodoo economics. It is unbelievable economics from an unbelievable Treasurer.   Here is another example. The Treasurer is directly increasing the price of cars and alcohol in this budget by increasing taxes on those goods. The budget papers clearly show the government expects people to dropout of private health insurance, which, as the Prime Minister conceded today, would put upward pressure on premiums and private health insurance premiums will go up. What Australian families are entitled to know is: how does increasing the price of goods and services reduce inflation? I asked that question of the Treasurer in question Time. He could not answer it; there was no answer. It is just part of the voodoo economics. You do not have to provide answers. What on earth is he thinking? What on earth are they thinking, imagining that we can be conned, that this country can be conned, with the claim that the increased tax on alcopops is actually going to reduce consumption. And yet we know from their own budget papers, Budget Paper No. 2, that the revenue from that increase in excise will go from $600-odd million in the first year to over $800 million in the fourth year. How can that happen unless there is more consumption—unless there are more alcopops drunk and more excise paid? And yet we have the health minister saying, in blindness to what was in the budget, it will reduce consumption.   Here is another example. The big anti-inflationary so-called trump card in this budget was supposedly, after a big surplus was generated—no thanks to the Treasurer or his colleagues—to take money out of that surplus and put it away in several new funds. Let there be no mistake. What the Treasurer has done with the Building Australia Fund is nothing at all like the coalition’s Future Fund. When the coalition introduced the Future Fund, it put in place a strong governance structure with an independent investment manager with a responsible investment mandate. The Future Fund’s earnings were quarantined and reinvested in the Future Fund. We never claimed the fund’s earnings as part of the fiscal surplus. There was no confusion about what the Future Fund was designed to do. It was designed to deal with the unfunded obligations to Public Service pensions and take the burden off future generations. It was very clear, very accountable and very transparent.   What has Labor done? It has put $20 billion into a Building Australia Fund; a Labor Party slush fund paid for with the savings of Australians. What rate of return will investment proposals have to achieve? There is no investment structure, no governance structure and, most importantly, no guarantee that the money will be spent wisely. We will not know what financial or economic return the fund is required to seek. You could not raise $20 for infrastructure in the public markets with that lack of detail, but this Treasurer—this absent and gutless Treasurer who will not stand in the House to debate his own budget—believes he has the right to draw a cheque payable to himself with the savings of Australians without providing any of the details that are owed to Australians as to how their savings are going to be dealt with.   Compare that to our commitment of $10 billion under the National Plan for Water Security—real money for real infrastructure needs. We made it very clear precisely where that money was to be invested. We made it clear what return we would seek in terms of shared water savings. Everything was laid out and the commitment of the funds was set out in the budget papers. Everything was transparent. Nothing, not one dollar of these investments from the infrastructure fund, has been dealt with in the budget papers—not a dollar. We do not know when it is going to be spent, how it is going to be spent, what the return is going to be or how it is going to be managed. It is just a bank account with ‘infrastructure’ written on it, and that is all we know.   While Labor inherited the strongest budget in our nation’s history, the strongest surplus courtesy of decisions taken by the coalition, it is now sowing the seeds for wasteful spending, leading inexorably to budget deficits and debt in the future. A responsible and decisive Treasurer  could have taken action today and put his foot down. He could have insisted that the taxpayers’ money in this fund be quarantined and the funds spent wisely. He could have laid down some conditions and parameters. There are plenty of precedents for it, but he chose to do nothing. He lacked the courage and the guts to do it. Instead, all we have is a series of vague suggestions, a blank cheque drawn by the Treasurer to himself.   The budget also does nothing to secure the economic future of Australian families. We know that one of the great challenges we face is the challenge of declining birth rates. Indeed, a few years ago, you could not find a demographer in this country or anywhere that would say that Australia’s birth rate was not inexorably destined to go down to 1.6 and keep falling. But, instead, it has gone up. The reason it has gone up, alone in the developed world, is that the coalition made a commitment to send a strong social message, to send a statement that children are a social good and that all of us have a vested interest in each other’s children. Part of that strong social message was the universal availability of the baby bonus, and now the Labor Party proposes to means test it. That means test, which is clumsily designed and will create many disincentives, will save $70 million a year out of a $1.5 billion program—a sum of money which is tiny in contrast to the budget. It is $70 million paid to achieve one thing: a headline entitled ‘Soak the rich’—an appeal to Labor’s divisive envy politics. (Time expired)Thu, 15 May 2008 04:08:00 GMTf1397696-738c-4295-afcd-943feb885714:158http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/157/How-does-increasing-prices-reduce-inflation.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=157http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=157&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/157/How-does-increasing-prices-reduce-inflation.aspxThe key test the Government set itself in this budget was whether it would strengthen the economy and put maximum downward pressure on inflation and interest rates. Regrettably, it has failed miserably on both counts.   Most importantly, it has failed to act decisively and has not set out a clear economic strategy which addresses the cost of living pressures on families. The Rudd Government's first budget is not an inflation-fighting budget.   It is not a budget that lifts a single finger to help those battling with rising costs of living - petrol, groceries, private health insurance and home interest rates. The only bright light in which we can all take comfort is the strength of the economy and the cuts in personal income taxation - which are all courtesy of the previous Coalition government.   The Rudd Government has inherited the strongest, most flexible and dynamic economy in Australia's history. It could not have inherited a better fiscal situation. The surplus, which is substantial, is a tribute to strong economic management over many years. The reality is that the budget is a missed opportunity. It is tinkering at the edges. There is no new leadership. There is no decisive action. There are no courageous decisions. In truth, we have the same old Labor Party.   Families must be scratching their heads. The effect of this Government's policy decisions will be that spending will go up and that tax revenue will increase. The budget reveals that this Government is wedded to the same old Labor way of managing the economy: higher spending, higher taxes, higher unemployment, and lower economic growth. That is what the budget forecasts, and there is no clear economic strategy to address any of these issues. It is an ad hoc set of measures, none of which will strengthen the economy or put downward pressure on inflation.   The Coalition left the economy in the best shape it has ever been in. Real wages increased by more than 20 per cent. Real gross domestic product per capita grew by 32 per cent. The unemployment rate was halved and is now at a 34-year low. More people are now in work than ever before. Labor's $96 billion in debt was eliminated and there was no net debt. Inflation was kept at 2.5 per cent on average over the cycle. That did not happen by accident. It was the result of good economic management by the Coalition. The one thing people knew about Peter Costello's budgets was that they were decisive. The Coalition took strong decisions and took action. There was a coherent economic strategy.   The dividend was a strong and resilient economy that increased living standards for all. With results like these, there was good reason for people to remain optimistic and confident about our economic future. But since the Rudd Government has come to office, that optimism about our economic future has faded. Business confidence and consumer confidence have plummeted.   Time and again, the Treasurer, Wayne Swan, has gone around the country saying that government spending would be cut. But, as the budget papers show, as a result of policy decisions taken by this Government, spending will increase by $14.9 billion over the forward estimates. And that does not include the extra spending of $3.1 billion as a result of policy decisions taken in this financial year, 2007-08. The Treasurer has been beating his chest for the past few months about spending cuts. Now we know what he actually meant. He seems to think that if you cut $15 billion in planned Coalition spending and replace it with $30.1 billion of Labor spending, you are still cutting spending.   So there you have it: this Treasurer seems to think that when you increase spending, you are actually cutting spending. Perhaps that is what Mr Rudd meant when he talked about "new leadership".   Here's another example. The Treasurer is directly increasing the price of cars and alcohol in this budget by increasing taxes on those goods. And the budget papers clearly show that the Government expects people to drop out of private health insurance, which will put upward pressure on premiums. What families want to know is: how does increasing the price of things reduce inflation?   What on earth was Mr Swan thinking? He apparently has a cunning plan to put maximum downward pressure on inflation and interest rates by increasing prices. Is that what we can expect from the Government during the rest of its term? What hope is there for families struggling with higher prices, when the Government's only strategy is to increase prices? Is this what new leadership is all about?Thu, 15 May 2008 04:04:00 GMTf1397696-738c-4295-afcd-943feb885714:157http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/156/Budget-Fails-Australian-Families.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=156http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=156&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/156/Budget-Fails-Australian-Families.aspxThis is a high taxing, high spending old fashioned Labor Budget. The Rudd Government’s first Budget is not an inflation fighting budget.     It is not a Budget that lifts a finger to help Australians battling with rising costs of living – petrol, groceries, private health insurance and home interest rates.   The only bright light in which we can all take comfort is the strength of the Australian economy and the cuts in personal taxation all courtesy of the previous Coalition Government.   Comparing the Treasurer’s rhetoric this year to the Budget papers, we have to ask whether Mr Swan knew what was in the Budget?  It is one thing to manage expectations, but it is quite another to have the Budget contradict almost everything the Treasurer has been saying all year.   What was Mr Swan thinking when he said the Budget would slash spending to put downwards pressure on inflation?   Spending has gone up by $3 billion in this current financial year and by $14.9 billion over the forward estimates (see attached table).   Over the forward estimates, Labor has cut $15.2 billion off Coalition spending programmes, but it has more than matched that with $30.1 billion of new Labor spending programmes.   Why didn’t someone tell Mr Swan that inflation is caused by rising prices? After years of Coalition tax cutting budgets, Mr Swan is introducing new taxes to raise the cost of alcohol, motor cars, health insurance and energy all of which contribute to inflationary pressures.   All up Labor’s high tax policies are adding $19.5 billion in increased revenue over the forward estimates.   Preliminary economic modelling estimates that Mr Swan’s new taxes and charges could add up to 0.4 percentage points to the CPI. We call on the Treasury to provide a detailed estimate of the inflationary impact of these tax hikes.   Mr Swan has been running around saying it would be an heroic effort to achieve a surplus of 1.5 per cent of GDP.   The Budget reveals the surplus this year will be $16.8 billion, 1.5% of GDP and would have been 1.7% of GDP without Mr Swan’s decisions.   Next year 2008-09, the surplus is estimated to be 1.8% of GDP.  Mr Swan has been awash with money but apparently completely unaware.   The Rudd Government is always talking about the threat of climate change and the need for an Emissions Trading Scheme, however the Budget Papers make no provision whatsoever for the revenues from the Emissions Trading Scheme due to commence in 2010 – well within the period of the forward estimates.   How can the Rudd Government seriously propose to put $20 billion of Australians’ savings into an infrastructure fund without any indication of what kind of economic return the fund will be expected to deliver?   Australian taxpayers are entitled to question whether this will just be a Labor slush fund to subsidise the inefficient water, transport and energy infrastructure of State Governments? Mr Swan has written himself a blank cheque with the savings of a nation.   And when it comes to the massive, and worsening challenge of water scarcity, the best the Labor Government can do is spend a net additional $1 billion over seven years over and above the commitments made by the Coalition in the National Plan for Water Security.   The Budget Papers discuss Australia’s capacity to weather the international financial crisis. But can our economy survive Mr Swan?   Far from being a new excursion into economic conservatism, Mr Swan’s first budget is an economic con.   Contact:  Brad Burke – 0447 463 161 2008 BUDGET KEY POINTS    ·    This Budget lets Australian families down.   ·    It is a typical Labor budget – it increases taxes, massively increases spending, plays the politics of envy and it shows that they don’t know what they are doing in running the economy.   ·    This is a Budget of confusion – a budget that confirms Labor has no real idea how to deal with the economic challenges facing Australia.   ·    The Treasurer is out of his depth.  Mr Swan claimed this Budget would ease the pressure on inflation and honour Labor’s election commitments to families.  But he’s failed his first test.     ·    This Budget will do nothing to meet Labor’s promises to keep down grocery prices, petrol prices and home interest rates.   ·    In fact there are multiple decisions that will actually increase inflationary pressures on Australian families.   ·    This is a typical Labor Budget.  It is not ‘new leadership’ but ‘old Labor’.  It is the first Budget in years to introduce new taxes.   ·    Australians should take no comfort from the decision taken by an inexperienced Treasurer to raise taxes on cars, alcohol, energy, computer software, fringe benefits, passenger movements, passports, visa applications and increase the costs of private health insurance.     ·    Mr Swan’s first Budget will be remembered as a taxing Budget.  It confirms Labor stands for higher taxes.   ·    Since the Treasury forecasts at election time last year Mr Swan is expected to collect an additional $8.3 billion in revenue for 2008-09 over and above the estimates made then.   ·    Even with the implementation of the Coalition’s tax cuts, income tax revenue will increase from $203 billion to $245.8 billion over the next four years, an increase of $42.8 billion or 21.1%.     ·    Labor has failed to incorporate any revenue collection figures for its Emissions Trading Scheme which starts in 2010, even though the forward estimates go up to 2012.  This is a major fudge in the Budget that cannot go unanswered.   ·    Higher taxes will put upwards pressure on inflation.   ·    Expenditure has increased by $11.9 billion in this Budget.  Treasury figures show that the real growth in Budget payments in the financial year 2009-10 will be 5.5%, the highest since 1991-92 (leaving aside the introduction of the GST).  Rather than a ‘meat axe’ being taken to the public service the numbers will drop by only 0.5% - virtually a statistical blip.   ·    The Treasury numbers show that new expenditure resulting from Labor’s policy changes over the next four years amounts to $30.1 billion.  Despite the rhetoric about spending cuts, this increased expenditure is matched by $15.2 billion in decreased expenditure.  The balancing item is a whopping $19.5 billion in increased revenue due to Labor’s policy changes.   ·    In fact, according to Treasury figures, the Budget surplus would have been larger in 2007-08 (ie 1.7% of GDP instead of 1.5%) if Mr Swan had done nothing, rather than increasing expenditure.   ·    Labor was left the strongest fiscal position in the history of Australia.   ·    Labor promised to ease the pressure on working families, but they have failed the very people they promised to help.  They project fewer ‘working families’ and more welfare families.   ·    Unemployment will increase following this Budget - with Treasury forecasts showing 134,000 fewer people in jobs.   ·    In fact, despite all the rhetoric about ‘education revolutions’ and lifting productivity, the participation rate in the workforce is forecast by Treasury to fall.   ·    Labor cannot be trusted to keep its promises.  It confirms what Peter Garrett said before the election: “Once we get in, we’ll just change it all”.   ·    With respect to the various Investment Funds on infrastructure, education and health, there is an appalling lack of detail with no clear explanation of what criteria will be used for the administration and expenditure of billions of dollars in taxpayers.  Indeed Budget paper No 1 says that “both capital and earnings of the [Building Australia] Fund will be drawn down over time” (page 1-27).   ·    Labor is addicted to spin, while Australians wait for Labor to deliver on its election promise to ease the pressure on household budgets.   ·    Labor has chosen to play politics with the Federal Budget. Australians deserve better than that.   ·    Labor can’t be trusted to keep its promises.  It promised to not touch private health insurance. It is gutting it.  It promised to leave the baby bonus alone, it is slashing it.   ·    Labor was left a strong economy by the Coalition Government, which had a clear strategy to keep the economy growing so all Australians could plan their future with confidence.   ·    In contrast Wayne Swan’s Budget is a political grab bag.  It is not an economic strategy. Decoding Labor’s 2008-09 Budget Policy Decisions     2007-08 $ million 2008-09 $ million 2009-10 $ million 2010-11 $ million 2011-12 $ million 4 year total from 2008-09 $ million 5 year total $ million Labor’s Revenue Decisions 238.6 2352.3 4097.5 6369.7 6646.2 19 465.7 19 704.3 Labor’s Expense Decisions 3119.5 1324.2 4204.4 4532.9 4843.3 14 904.8 18 024.3 Net Revenue less Expenses -2880.9 1028.1 -106.9 1836.8 1802.9 4 560.9 1 680.0                 Labor’s dropped spending -998.2 -4170.9 -3529.9 -3813.7 -3710.4 -15 224.9 -16 223.1 Labor’s added spending 4117.7 5495.1 7734.3 8346.6 8553.7 30 129.7 34 247.4  Tue, 13 May 2008 04:01:00 GMTf1397696-738c-4295-afcd-943feb885714:156http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/155/Wayne-a-word-in-your-ear.aspx#Comments0http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/RssComments.aspx?TabID=105&ModuleID=403&ArticleID=155http://archive.malcolmturnbull.com.au/DesktopModules/DnnForge%20-%20NewsArticles/Tracking/Trackback.aspx?ArticleID=155&PortalID=0&TabID=105http://archive.malcolmturnbull.com.au/MalcolmsBlogs/tabid/105/articleType/ArticleView/articleId/155/Wayne-a-word-in-your-ear.aspxIf the Treasurer is looking for some ideas before Labor hands down its first budget in 13 years, here are a few suggestions, writes Malcolm Turnbull. WHEN Wayne Swan delivers Labor's first federal budget in 13 years on Tuesday, he has to deliver higher living standards and a more prosperous economy for Australians. That's what the Coalition did for the last 12 budgets. The best bit of this week's budget will be the tax cuts. But they aren't Wayne's idea - he's just the postman. They were the Coalition's election promise immediately copied by Kevin Rudd. In this budget, Mr Swan has to do something himself. Here are some suggestions. First, he must stop talking down our economy and instead restore confidence. But Mr Swan is a creature of political habit, and I suspect that he will do neither. To date, his only achievements as Treasurer have been to cause consumer and business confidence to nosedive and to exacerbate inflationary pressures with his claim that the inflation genie is out of the bottle. He said that just before a Reserve Bank Board meeting. Can you believe it? What other Treasurer in our history has rubbished our economy and effectively egged the Reserve Bank on to put up rates? He got what he wanted with higher interest rates, but now recent news suggests that there is a real risk that this irresponsible rhetoric could set off a wages breakout. Second, Mr Swan has been saying that the overall level of Government spending needs to be cut to help reduce inflationary pressures. When the Coalition released its first budget in 1996, it cut government spending significantly in order to pay off $96billion of Labor debt and a growing budget deficit. Labor is already behind the eight ball on spending. When it took office it had more than half of the 2007-08 fiscal year to slow Government spending. As I said in March this year, if Labor was serious about slashing spending to fight inflation, why didn't Mr Swan deliver a mini-budget straight after the election and cut spending in this financial year? If Mr Swan does not fulfil Labor's commitment to reduce the overall level of spending and by a very big sum, then he will make no difference to overall demand in the economy and so no difference to inflation. He needs to be honest with the Australian people and admit that cutting Coalition programs and replacing them with profligate Labor spending and tax increases will do nothing to reduce inflationary pressures. Only cuts in net spending will slow down the economy in the way he has said he is going to do. Labor should be fiscally responsible and reverse its decision to raid the Future Fund and spend its earnings. If it does not do that, it should at least count those earnings as revenue, and revise past surpluses to reflect this change. As an example, last year's budget surplus of 1.6percent of GDP would be about 1.8percent of GDP had the Coalition included the Future Fund earnings. Third, Mr Swan must follow through on his promise to eliminate wasteful or inefficient spending. I have always argued that irrespective of the level of inflation or the state of the business cycle, government spending programs should be frequently examined to see that they will not be wasteful and that they will achieve their objectives. That acid test should be applied to every single one of Labor's spending proposals that are announced on Tuesday night. Fourth, Labor promised that it would not increase tax revenue as a proportion of GDP. But Mr Swan appears to have foregone that opportunity too with tax increases on spirit-based ready-to-drinks and on diesel fuel. Who knows what other taxes or nasty surprises are hidden in the budget next week? Mr Rudd and Mr Swan claim to be economic conservatives. So far we have seen a lot of symbolism and the only new Labor measures announced involve raising taxes. We will see on Tuesday whether the budget is economically conservative, or just an economic con.Mon, 12 May 2008 03:59:00 GMTf1397696-738c-4295-afcd-943feb885714:155