Grievance Debate - Economic Management

ECONOMIC MANAGEMENT.

Wednesday, 1 May 2019.

Mr NEWBURY (Brighton) (14:02):

A strong Australian economy ensures prosperity—prosperity for our state and for our community to reach their full potential. As a nation we have had almost 30 years of consecutive economic growth. But a strong economy should never be taken for granted. Many in our community have only ever experienced a flourishing economy where interest rates are low, as too is unemployment. They have never experienced a contracting economy, let alone a recession. Those that lived through the last recession know that economies are not always prosperous. That is one of the reasons it is so important to be represented by a fiscally responsible government, because governments have a role to keep the economy strong and a role in ensuring that a strong economy delivers community benefit.

As we know, governments have control of some policy levers that can stimulate growth or undermine it. By its delaying of the state budget we now know that the Victorian government intends to pull the wrong policy levels. We know because the government has delayed the budget in the hope of political advantage until after the federal election. The budget delay is in addition to turning this Parliament into a part-time Parliament. In comparison to the rest of Australia, in terms of sitting days this Parliament is almost the least active in the country. This government has set a part-time parliamentary pace to hide from accountability and it has delayed the budget to hide the growing financial challenges of profligate spending as parts of the economy soften. Unfortunately we must endure this ongoing charade for a further month, until 27 May.

What we already know is that Victoria is the highest taxed state in Australia and this government has introduced 12 new or increased taxes. It is now safe to assume that the government will announce new and higher taxes in their budget later this month. We know because the Treasurer has effectively confirmed it. Last month the Treasurer said that the budget would be ‘a budget of hard choices’, and only yesterday he would not deny making changes to tax arrangements.

We know that it is safe to assume that Victorians are about to be hit by new taxes because the government is spending more than it has to spend. That projected spend led the Treasurer to reveal in the final minutes before the election that the government intended to double the state’s debt ceiling. That intention will lift the debt ceiling from 6 per cent to 12 per cent of gross state product. Not long after the election we learned from the Parliamentary Budget Office that Labor’s policies will blow out net debt from $22.5 billion to $38.8 billion over the next three years. In other words, Labor’s net debt to gross state product will increase from 5 per cent to 7.3 percent over that period. Although the government would have you believe that all of their spending is on infrastructure, we know that is not true. As we saw in the Victorian Public Sector Commission report, the state’s bureaucracy has grown by over 30 percent in less than four years. This level of spending is only sustainable if money keeps pouring into the state coffers, and we now know that rate is slowing and will slow further. There is growing concern that if federal Labor is to implement its policy agenda, that slowing will become more profound.

At a state level stamp duty makes up about 30 per cent of the total tax take. We know that the slowing property market and the real reduction in property prices will have a growing structural impact. Part of that gap is currently being filled by other property taxes, including taxes on investors who own multiple properties, taxes on overseas investors and taxes on vacant properties. Under this government land tax collections have increased from $1.7 billion to $3.4 billion—a 96 percent increase.

Despite a slowing property market, the land tax bills arrived this year based on property valuations made in early 2018. Constituents have looked at their bills and repeatedly asked why those bills are based on above current market value. Almost two months ago I wrote to the Premier and asked him directly, and it took him a month to refer the letter to the Treasurer. The Treasurer still has not shown the basic courtesy of responding. With a delayed budget you would think the Treasurer has had the time to attend to basic courtesies. Almost a month ago I wrote to the Treasurer about the vacant residential land tax—another letter the Treasurer has disappointingly failed to respond to. One of the most short-sighted effects of that tax is that it does not account for diplomats and defence workers who travel overseas to represent our state or our country. It is unreasonable for the government to expect Australian families willing to represent our country to choose between selling their family homes and incurring a heavy tax punishment for their service.

Because economic responsibility has been a hallmark of the current federal government I believe this government has been constrained from some of the more extreme views in their party room, including a push to introduce death taxes. By contrast, the federal Labor opposition has unashamedly modelled itself as a big-spending and big-taxing alternative. Setting aside whether this approach is electorally appealing, federal Labor’s fiscal policy approach is a genuine risk. Labor’s underlining intention to redistribute assets is a risk to Australians who have worked hard for their whole lives—Australians who will be self-reliant in their retirement. But more than that, Labor’s policies will not only impact upon private assets. Labor’s aggressive policies were designed to curb aspects of a strong market, especially in the area of property and asset holdings. That aggressive approach will have a profound impact on those areas as they have now softened. Many, including business, are now concerned that federal Labor’s policy approach, described by some as the politics of envy, might tip the scales on a fragile economy.

A federal election campaign is a cauldron where weaknesses in our politicians and their policies are exposed. During the campaign federal Labor’s policies have been exposed as lacking depth. This should worry Australians because policies need to be more than sound bites. Despite the federal Leader of the Opposition brushing off these issues as well meaning, it is clear that Labor knowingly intends to implement punitive policy and in some cases implement policy that it does not fully understand. That is why when asked about the real cost of Labor’s election policies, the federal Leader of the Opposition has repeatedly refused to answer the question. If we look to their state Labor counterparts, it is safe to assume that the real cost will not be fully revealed until after the election, and it will surely be a massive cost blowout. Like this government with its hiding of the state budget, federal Labor will do everything it can to hide its true intention.

What we do know is that if federal Labor is elected, new taxes will start on 1 July. In fact a vote for the federal Labor Party is a vote for $387 billion in additional taxes. That is equivalent to an extra yearly household tax bill of $5400 within a decade. It is worth looking closely at some of those policies to see what impact they will have on this country and on this state, especially as the federal opposition leader has publicly forgotten what his own policies are.

Only recently, when asked if Labor planned to introduce new taxes on superannuation, the federal Leader of the Opposition claimed they had ‘no plans to increase taxes on superannuation’. No plans? In fact, Labor has announced four superannuation policy taxes, four taxes that will see a $34 billion hit to 1 million Australians. Those policies include abolishing concessional catch-up contributions, hitting 230 000 people; reversing deductions for personal contributions, hitting around 800 000 workers; reducing the non-concessional contribution cap from $100 000 to $75 000, hitting around 20 000 people; and reducing the threshold on concessional contributions from $250 000 to $200 000. When challenged on his claim that Labor has no plan to increase superannuation taxes, the opposition leader bizarrely suggested that he must have forgotten those four taxes. That is right—the alternative leader of this country has a policy platform that will hit hundreds of thousands of Australians and he would have us believe that he has forgotten they exist.

But Labor has not only been forgetful with policy. Over the election campaign we have seen their policies unravel, policies that have been shown to lack substance or depth. It is clear that those policies appear to have been announced without a responsible understanding of their impact. One of those areas is carbon emissions and renewable energy. Labor has announced an intention to cut carbon emissions by 45 per cent and set a 50 per cent renewable energy target. Despite those policies requiring a significant economic transformation, the policies disturbingly lack a plan for delivering them. When asked about the cost of the policy, the Leader of the Opposition said:

I can’t tell you what that cost will be …

It gets worse—one of his own shadow ministers said that the policy is ‘impossible’ to cost.

But we know that is not true, because BAEconomics has costed them. BAEconomics recently released its report Economic Consequences of Alternative Australian Climate Policy Approaches. The report found that under a worst-case scenario, Labor’s policy approach will cost the Australian economy $472 billion, cut more than 336 000 jobs and increase wholesale electricity prices by more than 58 per cent. And Victorians should know what a lack of policy detail in this space looks like, because this state government’s own renewable transformation policy similarly lacks policy depth. This state government is yet to develop the strategic infrastructure planning pieces that will support widescale renewable transformation. Effectively, both state and federal Labor have aspirational targets but are yet to develop the infrastructure roadmap to get us there. The BAE report should serve as a wake-up call. Transformative change must be planned and done responsibly.

Alarmingly, the environmental policies that Labor has announced are not the only ones that lack depth or that have the potential to cause economic damage. Labor has announced its intention to change negative gearing and capital gains tax arrangements. Currently, 1.3 million Australians access negative gearing measures. Two-thirds who negatively gear a rental property have a taxable income of less than $87 000 and almost three-quarters have just one investment property. In short, Labor’s housing policies will hit some of the hardest working in our community. Industry has also exposed the broader danger of the policy. Moody’s Analytics economist Katrina Ell has said that ‘already-slowing conditions in the investor segment of the market would be exacerbated’, and that:

As investor participation had already slowed, national home values would be expected to reach a slightly deeper trough and have a slower recovery…

In addition, the Master Builders Association of Victoria has reviewed the policy and found it would lead to up to 42 000 fewer new dwellings being built, 32 000 less full-time jobs and an $11.8 billion drop in building activity. Master Builders Association chief executive Denita Wawn has said that there is no longer a need for Labor’s policy, as the property market has cooled and investor activity has curtailed. When the blowtorch was turned up on Labor’s policy, they simply deleted it from their own website.

Victorians should not only be concerned about what Labor means for the federal economy; they should also be concerned about aspects of their world view. We must never forget that Labor’s deputy leader, Tanya Plibersek, once described Israel as a rogue state and its prime minister as a war criminal. Similar views have recently been expressed by a growing chorus in their ranks. Former Labor member for Fremantle, Melissa Parke, was forced to quit as a candidate in this election after claiming that Israel has a fully fledged system of apartheid. Alarmingly, Western Australian Labor MP Josh Wilson was also exposed for suggesting at a meeting attended by Labor senator Sue Lines that Israeli checkpoints were a place that Palestinians went to die. In addition, Labor’s Northern Territory Senate candidate resigned after sharing videos of a known anti-Semite. Disturbingly, in my own community, Labor has preferenced a candidate in Goldstein who is the convenor of a Melbourne fan club of that anti-Semite. And Labor did not just preference him once—the same candidate ran as a candidate in my electorate in the state election, and Labor preferenced him then too. On several occasions, the Brighton Labor campaign made official complaints about the preferencing deal to their party’s head office—Labor’s head office knew. Not only did they maintain their preferencing arrangement, but they did a deal with the same candidate six months later. Shame! These repeated examples of anti-Semitism show an alarming pattern of behaviour.

Only today, another candidate, Luke Creasey, who is Labor’s candidate for Melbourne, has reportedly been exposed as having shared rape jokes and pornographic material. He has not been disendorsed.

Australians need to think long and hard at this election about the policies offered and about who they trust to keep the economy strong. A federal Labor win will embolden this state government even further. In fact I think this state government forever dreams of being bigger spending and bigger taxing. A federal Labor win will absolutely guarantee it. It will lock it in. The choice on 18 May is not between the status quo and perfection. The current government is a competent government and a government of good character led by a Prime Minister who is a very, very good man. Again, the choice at this election is not between the status quo and perfection; it is a choice between the current government and Bill Shorten.