Speech to the Main Committee, APPROPRIATION BILL (NO. 3) 2009-2010, 4 February 2010

Mr BRIGGS (Mayo) (11:49 AM) —It is with great pleasure that I rise to speak on the Appropriation Bill (No. 3) 2009-2010 and the Appropriation Bill (No. 4) 2009-2010 following the member for Dobell, whose contribution is one I always follow with great interest. We will, I think, be working closer after a recent phone call I had about a committee that we are on, so in the next little while we will enjoy each other’s company even more than we have in the past. I look forward to finding out more about the member for Dobell’s past and what he got up to in those days.

These bills are an opportunity to discuss the appropriations of the government more broadly. It has been the tradition in this place that we can talk about the appropriations of the government and the programs and policies that they have been implementing in what is now just over two years, and of course we are now not too far away from the next general election, which will be held some time later this year. In the national parliament Deputy Speaker Georganas will of course know that we have a state election in South Australia in the coming weeks and I think a few people will be surprised at the outcome.

We are talking today about how the Rudd government is travelling after two years, particularly in relation to the management of the economy as it gets to the appropriations of the nation’s taxpayers’ money that we in this place spend. Yesterday we heard a ministerial statement by the Prime Minister telling his story about how he has handled the economy in the past 12 or 18 months since the global financial crisis began in September 2008—it really began, probably, a little bit earlier than that, in late 2007, with the subprime crisis developing in the United States; it did obviously have a flow-on effect throughout the world—it sent shockwaves throughout the world—and governments in different countries responded in different ways. In some ways, they responded in a more collegiate fashion than has probably happened in the past and that obviously has some good aspects to it, but it also raises some questions.

We heard the Prime Minister’s version of how he believes he has managed the economy and the effect he has had on the economy. We saw, I think, a Prime Minister taking a great deal of credit for the economic performance of the country, which is obviously something prime ministers and governments like to do from time to time. But the problem with the speech yesterday is that it stands in contrast to the facts. The Prime Minister claimed yesterday—and the member for Dobell supported this claim in his contribution a short time ago—that the government’s stimulus packages were the reason, and I say ‘the reason’ very clearly, that the economy had performed so well in comparison to the rest of the world. We are in growth, unemployment has remained relatively low—off a low base—and our debt position in comparison with the rest of the world is reasonably good when compared to the United Kingdom and the United States. His claim was that the huge amounts of money spent—$23 billion in handing out $900 cheques to everyone in the country; $17 billion on school halls, which I think has increased by a couple of billion dollars from the initial announcement, but what is a couple of billion between friends these days!—were the reason that unemployment stayed low and growth continued. He claimed that it was because of the decisions of the government that that has been the case. The truth is of course that the stimulus package has had a very minor effect on the economic performance.

The truth is that our economy has performed well because it now relies very much on the performance of the South-East Asian economies—the tiger economies of China, India and the economies throughout the Asian region. Those countries are also performing quite well. China had a slight dip to, I think, 7½ per cent growth for one quarter, but it is now back to its raging 10 per cent growth, which it is expected to have for some time to come yet. It is introducing into its middle class some 200 million people a year—they are figures that we struggle to comprehend—and therefore their desire for our resources has never been stronger.

In Australia we stand on the border of a massive upswing and a massive opportunity for our country, particularly in South Australia—Deputy Speaker Georganas, this will please you particularly—where we have a real opportunity to be part of a golden era as far as our economy goes if we are able to get the expansion of the Olympic Dam and other sites going without any problems. Those economies in India and China are growing so quickly that the desire for resources, uranium in particular, to help spark that growth is such that we have a real opportunity to be part of that story.

So really what we have seen over the last 18 months has been the effect of a structural change in our economy that has occurred over the last 10 years or so. Whereas 10 or 15 years ago we were very reliant on the United States and Europe, that has changed significantly to the point where the downturn in the United States has not affected us to anywhere near the degree that we first thought it would. It certainly affected people in Sydney and Melbourne in the financial services arena. There were quite substantial job losses there, as there was around the world, but more broadly the employment conditions have stayed very strong. They were coming off a very low base, of course—the Howard government left the Rudd government four per cent unemployment; they were extraordinary record lows—but unemployment has moved up slightly. All increases in unemployment are unwelcome because they bring problems arising from the human impact.

We now have an economy which is performing very well on the back of very strong growth conditions in South-East Asia. That is the reason; it is not because of the stimulus package at all. It is very difficult to find anyone who actually supports the Prime Minister’s contention that it is all because of his brilliance in developing a policy where you hand out 900 bucks to everyone and borrow $23 billion to do it.

I have encapsulated the reason that the Australian economy is performing quite well. It is a great story. It has huge potential for South Australia. We will soon overtake the boom in Western Australia and ours will be the growth state of the country. I am sure that Deputy Speaker Georganas will agree with me there. That growth is a great thing because it means increased revenue for the states, which means better services and so forth. I think we have a real opportunity there.

We are in such a great position because of the structural changes made over the last 10 or 15 years. I do pay some credit here to former Prime Minister Paul Keating and former Prime Minister Bob Hawke, as well, of course, as former Prime Minister John Howard. The three of them together showed real economic leadership in the way that they were able to change the structure of the Australian economy—I think Paul Kelly points this out very well in his book—so that we were able to participate better and take better advantage of the opportunities from the growth in China, India and the South-East Asian tigers.

This brings us to a couple of the dangers that are on the horizon for the Australian economy, or issues which could help restrict that growth. The first one is something I made a contribution about today in The Punch, the very well-read website run by News Limited, on an issue which was identified very well by Matthew Stevens in the Weekend Australian: the plans in the Henry tax review for a federal resources rent tax. I know there are members on the other side who understand the potential implications of such a tax on the booming resource sector in Western Australia and on so much potential that we have in South Australia—in particular, in Olympic Dam. We saw in the Weekend Australian a story by Matthew Stevens about BHP quietly sending the message out that, if we do have this federal rent resources tax recommended by the Henry review, we can kiss Olympic Dam goodbye. To South Australians, that is a real concern. It is a real and present danger to our potential to write our own ticket for a very long time. Olympic Dam, members understand, is potentially the biggest hole ever dug by humans. It has something like a trillion dollars worth of resources in it. It will have a life span of something like 60 or 70 years. Environmental studies of it are going on at the moment. BHP are committed to the investment. They have challenges with water and electricity; they are working through those at the moment, with some help from the South Australian government. They would probably have increased help from the South Australian government if a Liberal government had been elected in late March, but we will not get into that today. So there is real potential.

A real danger coming out of the Henry tax review is a new federal tax on the mining industry which will create huge difficulties for potential growth in South Australia. As we know from the briefings from BHP, it will potentially stop the Olympic Dam development. Why would you put a new tax on the resources sector at a federal level? Because you have such a large debt. That is ultimately the big problem that the stimulus package will create: a debt burden on future generations because the spend was too big, too much upfront. We are going to see, unfortunately, the impact of these decisions. As we know, Labor governments spend too much and then tax too much to catch up. That is the real danger. Hopefully, the South Australian government and Premier Mike Rann, although he has other challenges on his plate, can focus on this issue and make very clear to the Prime Minister in the lead-up to the South Australian election that this would be a bad decision and would damage our economy enormously.

The second aspect which is potentially going to have an impact on the growth of the Australian economy and the opportunities for the Australian economy at the moment is the increasing industrial activity in Western Australia and in other parts of the county. In Western Australia, the big unions are back in town. They have been given an adrenalin boost with a massive injection from the Fair Work laws, which began operating in large part on 1 January. They are using those laws to create the industrial havoc which unfortunately damaged our economy so much and so often in the early to mid-1980s, and again early in the 1990s until former Prime Minister Paul Keating realised that we needed to start to change this culture if we were going to take advantage of these great opportunities in the future.

You will have seen stories in the Australian earlier this week about unions forcing a $50,000 pay hike: ‘Woodside dispute threatens to widen’; ‘Business to appeal against a “flawed” Fair Work ruling’; Paddy Crumlin from the Maritime Union saying, ‘Only dinosaurs work harder for more pay’; and ‘Sides dig in despite return to work at Pluto’. Pluto is the project which the Prime Minister was so proud to take credit for last year, and now Woodside are engaged in a very nasty industrial dispute about the quality of hotel rooms for the fly-in fly-out workers. If there was a bigger signal that the unions are back in town—

Mr Gray interjecting—

Mr BRIGGS —I am talking about the Appropriation Bill, Parliamentary Secretary. The tradition has been that you can talk more broadly on challenges for the economy. I would have thought industrial relations was a challenge for the economy. You are the parliamentary secretary for Western Australia, are you not? Big strikes are up—and this is the big difference here. It is going to create that resource bottleneck, which Glenn Stevens talks about, that you do not want to create in the economy.

We need to have a balanced look at these laws, and I think the Deputy Prime Minister has gone too far with the Fair Work laws. The leader of our party has said very clearly that in some aspects the previous government went too far on workplace relations. Unfortunately, what we have seen is the Deputy Prime Minister paying back significant debts—and we saw some of those debts earlier this week with the donation figures in the papers. She has taken this—

Mr Melham interjecting—

Mr BRIGGS —I will take that interjection!

Mr Melham interjecting—

Mr BRIGGS —When our leader was former minister for workplace relations, I think he was part of the government that created two million jobs. We do have a real challenge in Western Australia, in particular, and in other places with the way that these Fair Work laws are operating. What we are seeing is that they are fair for the unions but not all that fair for the Australian economy.

I will touch on some specifics relating to this bill, namely the appropriations of our country and the payments to Fair Work Australia, which is the new Industrial Relations Commission—the new umpire in the system—and how it is interpreting what were always very vague rules in relation to how good faith bargaining would work. The act was written in such a way that it leaves open for interpretation how the good faith bargaining laws will operate.

At the time of the bill, it was very difficult to point explicitly to how these things would work until there were decisions. Now we are seeing decisions. That is the important aspect of the operations of these laws. What we are seeing now is that the good faith bargaining provisions of the Fair Work laws will be the next legislative instrument that the unions will use to get back into every workplace that they possibly can. There was a dispute just yesterday about this. Fair Work Australia lifted the bar on notice requirements. What they have done is made it far easier for unions for walk back into work sites where they are not welcome, create disputes, get themselves back in the picture, increase membership and lift up industrial disputes—which are the bottlenecks that Glenn Stevens identifies are a real risk for Australia’s growth and for interest rates and which will restrict our ability to be part of this golden age of economic opportunity that China and the South East Asian economies are producing.

The Fair Work changes by the government are very much at the heart of the dangers to the Australian economy. Make no mistake: we stand at the edge of a huge opportunity for this country. We are at the beginning of an upswing the likes of which we probably have never seen before if the predicted growth levels for China come true. Our resource sector is doing extraordinarily well, as is our services sector. We have intergenerational challenges and so forth, but we have real opportunity.

These laws will potentially reduce our opportunity to do well out of this. These laws are a clear and present danger for our economy. We have seen that in recent days with the stories in the Australian and in the rulings from Fair Work Australia. They have gone too far. It would be wise of those on the other side who understand the economy better than the Deputy Prime Minister to reel them back in and get back to a fair balance, particularly in relation to industrial disputes.

Two years on and at the beginning of an election campaign, we see an economy that is travelling very well because of the hard work of Australian business and its workers. There are some real dangers because of changes that the government has made. There are some real dangers because of the level of debt that the government has entered into to fund its spending. That is going to create challenges for us into the future which we did not need necessarily to have. There has been misspending; badly focused spending. That has caused some of the great difficulties and challenges that we now face.

Then there is the Henry review of tax, which we have not seen. The government will not let anyone into it. We are waiting with bated breath to see what is in it. We have heard rumours about what may or may not be in it. But those on the other side who have a genuine interest in the mining industry in this country will be very concerned about this potential federal resource rent tax and the implications that it will have. Anyone from the mining industry will tell you that it will stop projects going ahead and stop economy growth and opportunity. It will do so in states like South Australia, which sits at the edge of a golden era of opportunity. If it is recommended I hope that the government sees that it is a bad move. We could know today, but the Treasurer will not let us in on the secret of what is in this review. We wait with bated breath to see what comes out of that.

From our side of politics, this year we will see a very forward-thinking and positive agenda as far as management of the economy goes. I know that our new leader is very focused on the economy and how we can make it better and stronger. We will see some very good plans released in the near future about what the next Liberal government’s approach to managing the economy will be. His record in government was outstanding. He was part of the team that created over two million jobs, real wage increases of 25 per cent and real opportunity for future generations. That is what we need from the government in this country, rather than huge spending, waste and wrong priorities that will put pressure on our budget into the future.