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Productivity Commission Amendment (Addressing Inequality) Bill 2017 – 10 August 2017

Senator REYNOLDS (Western Australia) (11:15): I, too, rise to speak on Senator McAllister’s private senators’ bill, the Productivity Commission Amendment (Addressing Inequality) Bill 2017. What I have just heard from those opposite in this debate is what I would characterise as nothing short of left-wing ideological hubris. For Australia, not just is it great hubris and arrogance for anybody in this place to say they have a mortgage on moral compassion; but this bill is about much more than that. It’s not about reducing the cost-of-living pressures on Australian families, it’s not about reducing the cost of energy prices, and it’s certainly not about economic growth and jobs. It is simply about another big bureaucracy. Somehow you can wave a magic wand and, by doing more studies and more surveys by the bureaucracy, that will change inequality.

But it is not only about that. More importantly—and, perhaps, more sadly—for Australians, this issue of inequality is all about Labor’s re-election in two years time. At the last election we had ‘Mediscare’—remember that? In 2014 we had the mother of all scare campaigns, and now we have ‘inequality’. It is very clear from what the Labor Party are doing already that the next election will employ the same tactics of fear, division and envy—just as they did on their outrageously incorrect campaign that lied—instead of actually inspiring, motivating and talking about positive policy, directions and the things we actually need to do in this country to grow our economy, reduce inequality and raise wealth, which is about economic growth and about jobs. Those opposite have a long, sad history of the politics of envy. Far from developing and locking in social cohesion, they are actually the enemies of social cohesion, because what those opposite have just said again is all about pitting Australian against Australian. There is nothing cohesive, there is nothing positive and there is nothing redeeming about the strategies of those opposite.

Sadly, for Australia and for all Australians—and for Australian democracy, I believe—the ALP is clearly taking the low road once again. Their tactics are not only those of ‘Mediscare’ from the last election; we can clearly see we are going to be hearing one word, ‘inequality’, over and over again between now and the election. This is straight out of the playbooks of Corbin and Sanders. It’s: ‘Let’s find an issue and a word that can be as divisive as possible.’ But it’s not just about division and the politics of envy and that base level of scaring people anymore; it’s actually also a huge lurch to the left, which is, as I said, straight out of the playbooks of Corbin and Sanders. A big new department and bureaucracy to tell us what is wrong without providing any way of implementing change for growth is a complete and utter waste of time. What’ve they done? They’ve picked a single word, and I guarantee, Australians, you will be hearing that word for the next two years. As Medicare was at the last election, it will become their new mantra, over and over again. They will continue to demonise those on this side of the chamber—we’re the nasty opposition; you’re the only ones who care about Australians. Of course, everybody who is in this chamber is here because they want to leave Australia in a better place. The difference is we disagree fundamentally on how we actually get there.

To channel the great Maggie Thatcher—and it is clearly inherent in this bill yet again—’The problem with socialism is that you eventually run out of other peoples’ money.’ That is something that those opposite time after time clearly do not understand. Again Maggie Thatcher said, ‘There is no such thing as public money, only taxpayers’ money.’ The last speaker was again talking about expending all of this money, as if somehow that will fix all social and economic problems in this country. Of course it won’t. The question is: where is the money going to come from?

Let’s have a look at this issue of inequality in a bit more detail. It’s not the first time that the ALP has run this flag up the flagpole. In fact, in 2014 we had a community affairs Senate inquiry on this exact issue. In 2014 we had a community affairs majority report by the Labor Party. It was absolutely full of the same invective and inflammatory rhetoric, which was designed to do nothing more than leverage political advantage for the Labor Party at election time. The problem with their analysis of inequality back then in 2014 was it absolutely ignored the facts. I point out to those in this chamber that just because you assert certain things over and over again does not make them true. Let’s actually have a look at some of the facts on this issue and at some of the things that we identified in the 2014 report and where they have progressed from 2014 to this year.

When looking at inequality firstly you actually have to look at the facts. We found that the opposition consistently in that 2014 report conflated the concept of income inequality with wealth redistribution. They are two completely different concepts, which I think were deliberately conflated to press a point. Wealth redistribution is a political philosophical concept of how you redistribute wealth. Obviously both sides of the chamber have very different opinions on that political philosophy, and that actually drives a lot of our policy positions. But that is very different from a measure of income inequality.

First of all, when anyone listening and anyone in this chamber start to hear those opposite talk about the issue of income inequality and inequality they should start to look at the facts. Are they talking about income inequality, which is already quite effectively measured, or are they talking about a left-wing concept of wealth redistribution from the nasty wealthy to the poor? That is the first thing to actually understand. They conflate it and they correlate it, but correlation is not causation—a bit of an inconvenient factual truth for the Labor Party. Those opposite did it in 2014 and we are hearing them doing it yet again.

What should we expect as we go forward with this debate and discussions on inequality? What should we expect? Let’s have a look at what they did in 2014 in this report. The report made numerous sweeping statements about inequality in Australia, without providing evidence of such. As I said, the Labor Party report regularly conflated income inequality with wealth redistribution. It was replete with emotive and unsubstantiated arguments, as with facts and figures, and frequently discarded the significant evidence of Australia’s overall egalitarian economic context.

As I said, there was also a tendency throughout their report to conflate income inequality and wealth redistribution. As one distinguished professor noted to the committee at the time, ‘Of the tendencies that are harmful to sound economics, the most seductive and the most poisonous is when you focus on questions of distribution.’ He said:

… of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparent limitless potential of increasing production.

One thing that was studiously missing in the majority Labor report was the evidence from almost the majority of submitters, who stated that the best way to decrease income inequality was—guess what; surprise, surprise—through employment, jobs and empowerment. But, of course, that was a bit of an inconvenient truth that was omitted largely from the report from those opposite. The majority report also failed to note that substantial tax and transfer systems were already in place in Australia which seek to alleviate poverty—something here we believe strongly in and work very hard to achieve but, again, a little inconvenient truth for those opposite.

In terms of the facts and measurements of income inequality itself—putting wealth redistribution aside—there are already a number of different statistics and measurements which can be used to measure inequality The report consistently disregarded the fact that income is not the only measure of equality. It is one very important measure of equality but not the only one. For example, Treasury officials actually said that income inequality measures typically do not take into account the effects of in-kind transfers, public health, subsidised medication and education, which are, of course, very important factors in working out income inequality—particularly globally.

According to an ABS statement in 2014, the Survey of Income and Housing showed that, if in-kind transfers are taken into account, the average real disposable incomes in Australia for those at the bottom two deciles have grown by as much as the top two deciles between 2003 and 2010-12—slightly different from the rhetoric in the majority report from those opposite. But, also, submitters to the inquiry made this point: that, overall, average incomes, including even in the lowest socioeconomic bracket, have risen over the last two decades, even as the gap between the richest and poorest may have widened.

Mr Acting Deputy President Whish-Wilson, we have a statistic—a bit of information in there—that will be of particular interest, I think, to you as a Tasmanian. The report noted in 2011-12, while Tasmania recorded the lowest mean net worth at $600,000 or 17 per cent below the national average, Tasmania at the time, despite that, actually had the lowest Gini coefficient, which actually meant that Tasmania was more equal than any other state. Again, two very different statistics and information—and clearly the Tasmanian situation showed that there is no direct correlation. You can have one but also have the other, which is completely at odds with the rhetoric from those opposite.

There is one other significant issue which the Labor Party at the time in the majority report completely failed to do—as they are doing yet again here in the chamber today. What they didn’t note is the budget context and the relationship between income inequality. Treasury, themselves, stated:

In light of the current budget situation and Australia’s ongoing current account deficit, prudent fiscal policy is required to ensure that we grow the economy to support employment growth and address inequality.

The report from those opposite, again, conveniently failed to take account of the debt and deficit context and assumed that policy changes, such as increasing welfare payments, can be implemented without any cost—clearly ludicrous, which is why I am sure you did not put it in the report because it completely undermines the arguments then and, again, your arguments today. Coalition members at the time, including me, rejected the majority report, because we noted that burdening future generations with debt is also a very damaging form of inequality.

Let’s have a look at where the statistics are today. We’ve heard a lot of assertions about income inequality and related issues, but we have been very short on the facts. Let’s have a look at what the situation is today in terms of income inequality. Roger Wilkins, deputy director of the Melbourne Institute who prepares the HILDA survey—the Household, Income and Labour Dynamics in Australia survey, which is widely regarded and used—firmly rejects the notion of growing inequality. He said, ‘If anything, inequality has actually been declining.’ This is particularly the case when we take into account Australia’s progressive tax and transfer payments system and our experience post GFC. Let’s look.

Universally, the internationally recognised Gini coefficient is used to measure household disposable income. Based on the HILDA data, guess what? It decreased. Between 2011 and 2014, right before this report, evidence showed that that had actually decreased.

Senator McAllister: Under a Labor government.

Senator REYNOLDS: What has happened in 2016, Senator McAllister? I know this is going to be terrible news for you, with your nice ‘Corbynista’ style policy here. The fact is the 2016 census data showed—this Gini coefficient based on gross household income—guess what? Income inequality has declined from 0.382 to 0.366 since 2011. On the facts, it is actually declining. Not surprising we don’t hear that from those opposite because it actually contradicts their narrative. So, let’s have a look at some more facts from the ABS and other credible sources.

Between 2006 and 2014, the largest fall in household wealth occurred in the richer households, with the measure for the top one per cent of income earners falling nearly 10 per cent, while the lowest 10 per cent in society had an actual increase of 25 per cent. So, again, that directly contradicts your mantra that income inequality is actually getting worse. Between 2001 and 2014, the HILDA survey did show a small decline in that coefficient, but now it is declining even further. So where income has been constrained in families, the government’s safety net does provide great value. According to the ABS, the poorest 20 per cent of households, on average, receive cash transfers and social service benefits more than eight times what they pay in tax. I will say that again: the poorest 20 per cent of households, on average, receive benefits and cash transfers more than eight times what they pay in taxes.

According to the OECD, in an analysis released in 2015, while income inequality has risen in most OECD countries over the past three decades, in Australia it has increased by substantially less than most OECD countries—that is over the last 30 years. Also, in 2015, the Productivity Commission itself found that 40 per cent of families paid no net tax after taking into account their transfer payments like family tax benefits. So already 40 per cent of families pay no net tax. By contrast, the top 10 per cent of income earners pay almost 50 per cent. So the top 10 per cent of income earners pay 50 per cent of personal income tax. The top one per cent pay 17 per cent of all tax received. I think this is paying a pretty fair share. To then say their tax rate should be increased even further is nothing more than a lazy, cynical tax based on envy and division.

Coming back to the bill and to the regulation, it will achieve absolutely nothing. Those opposite are choosing to waste time with token ideas rather than actually getting on with the job of addressing real inequality, which is what this side are actually doing. This bill is nothing about reducing the burden of the cost of living. I challenge Senator McAllister to say how this bill, by creating more paperwork, will actually make a single difference to one Australian. It will not lift any of the burdens of cost-of-living pressures. It doesn’t deal with energy prices or with the creation of jobs, whereas this side of the chamber are doing everything we can to reduce the cost of electricity and provide more gas to the nation. We are securing more gas supply, which will ease the cost-of-living pressures on this nation. We’re also creating more jobs than ever, as you’ve seen over the last few months. We are now creating more jobs every single month, and that is what we on this side of the chamber believe will reduce inequality. It is through jobs. It is through educating children for the jobs of the future. It is not about left-wing ideological measures such as those proposed by those opposite. So, for all of those reasons, I do not support this bill and I urge the Senate to reject it.

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