The Hon Josh Frydenberg MP, Federal Member for Kooyong
Parliamentary Secretary to the Prime Minister
Hon Josh Frydenberg MP: Coalition inherited this problem: We are going to fix it
6 June 2014
This budget is not just about paying back Labor’s debt, it’s about growing the economy.
OVER recent days, the Prime Minister and Treasurer have been subjected to a torrent of abuse.
Our political opponents have seen our leaders’ wives and their children as fair game.
Not to mention hysterical overreactions to winks, cigars and a bit of singing and dancing.
It says much about the standard of political debate that in the crucial days after the budget, these frivolous issues moved from the margin to the centre of the media’s reporting.
It should not be thus. The budget and its ramifications for the future prospects of our country are just too important to be sidelined by distractions.
At the heart of the budget are two key themes.
First, paying back Labor’s debt and second, creating more jobs through higher economic growth and enhanced productivity. On both counts, the numbers do the talking.
Over the next 10 years, government debt will be reduced by nearly $300 billion, saving taxpayers around $16bn a year on the interest bill alone.
In terms of job creation, productivity and growth, the government’s budget strategy is based on a three-pronged attack: a record investment in infrastructure stimulating $125bn worth of projects Australia-wide; increased spending on education and innovation to enable our universities, our apprentices and our researchers to be the best in the world; and measures to boost workforce participation with programs to get more over 50s, under 30s and women into full and part-time work.
The Australian public must understand that business as usual is not an option.
This was the conclusion of the Commission of Audit and confirmed more recently by the Parliamentary Budget Office.
The commission’s diagnosis was alarming and its prescriptions were urgent.
It found “the fiscal situation is far weaker than it should be and the long-term outlook is ominous due to an unsustainable increase in expenditure commitments”.
It documented how government spending, in real terms, had nearly tripled in recent decades and as a percentage of GDP has settled well above the average of the past 20 years.
This is compounded by an ageing population, which will see the ratio of working-age Australians to retired Australians fall from five to one today to 2.7 to 1 by 2050. It is easy to see the extent of the problem.
Significant structural reform is needed. But if one looks at the reaction in some quarters to five of the most debated aspects of this budget: Medicare co-payments, pensions, university deregulation, school and hospital funding and the earn or learn policy, one could be forgiven for thinking the government has removed the safety net altogether.
Nothing could be further from the truth.
We have lowered the Medicare safety net thresholds for individuals and families and in the event the patient is one of the 8.3 million Australians with a concession card or is a person under 16 years of age, the co-payment will be capped at 10 visits.
From Europe to the Americas, Scandinavia to New Zealand, co-payments for equivalent services exist and are nearly always at rates higher than the $7 now being proposed.
As a result of this budget, pensioners will still get a twice yearly increase in their pension and only in 2035 will the pension age rise to 70.
Considering that when the pension age was introduced in 1908 the life expectancy of a 15-year-old male was just 64 compared to 80 today, such a change reflecting modern society is long overdue.
Watching university students riot in recent days, one could be forgiven for thinking they were being asked to pay for their degree up front and were shouldering the majority of the load.
The reality is somewhat different. The HELP debt is repaid only on incomes of more than $50,000 and still then, student contributions will represent only 40 per cent of the cost of that individual’s education.
The taxpayer funds the rest.
Funding for schools and hospitals will increase significantly following this budget by more than 37 and 40 per cent respectively over the next four years.
The premiers and chief ministers may look aggrieved but they, too, are seeing their funding increase by nearly $60bn over the next 10 years.
Finally, for unemployed under-30s, we are putting in place policies that can help move them from welfare to work by equipping them with the skills that will leave them less reliant on the state.
Youth unemployment rose from 19 to 27 per cent under Labor, so it is clear the ways of the past have not worked.
A new approach provides hope with the one caveat that those who are unable to work more than 30 hours a week or who have obligations as a parent or a principal carer will continue to receive government support.
While it is fair to say that in Australian politics no single political party has a monopoly on compassion, there is only one party prepared to address our serious demographic and spending challenges.
We inherited this problem and now we are going to fix it.
Josh Frydenberg is the parliamentary secretary to the Prime Minister and the Liberal member for Kooyong.