We need to do something right now about inequality

I spoke about the cuts in the Turnbull Government's 2017 Budget.

 

Read the speech below.

Ms BUTLER (Griffith) (18:30): It is an honour to have the opportunity once again to rise in this place and speak in relation to yet another budget. The government, like the ancient mariner, has had the 2014 budget around its neck like an albatross for the past three years. And it seems, from this budget, that is in no danger of abating. Yes, some of the so-called zombie measures are were scrapped, finally, like a lot of the cuts that were first instituted in the 2014 budget but never actually passed, but the ghost of that budget still lingers on because this year's budget really is built on the same set of values that that 2014 disastrous budget was established on. These are values like seeking to reduce services to the Australian community and like seeking to favour the top end of town at the expense of ordinary working people of ordinary middle-class households. Those were the values of the 2014 budget that saw the then Abbott government wanting to cut the indexation of the pension. Those values still hold true today as the Turnbull government seeks to find ways to cut school funding and to cut funding to higher education.

 

The centrepiece of this Turnbull budget is a $65 billion tax cut for corporations, including the big banks. And that is often justified on the basis of the pretty discredited idea of trickle-down economics. People say: 'We need to cut corporate taxes so that companies get can get more money in. Then they'll take that money and spend it on creating jobs and increasing wages for working people.' That is the argument often put for the $65 billion tax cut for corporations, including the big banks. But it is just not borne out on the evidence.

 

We have actually got a great control group in the form of the United States of America. They cut their corporate taxes in the 1980s under then President Reagan, and of course you did not see a wonderful jobs utopia, where inequality shrank, middle-class jobs became more well-paid and there were more jobs for everyone. In fact, it was quite the reverse. Middle-class families in the US have had living standards eroded for a very long time. It is just not the case to say that, as soon as you start to improve a company's earnings, the money that is earned is reinvested into making the business bigger and better and creating new jobs.

 

If you want another example of that, there is a much more recent one, and that is what is happening in this country. Earnings for corporate Australia are up. In fact, they are up 18 per cent. At the same time we have seen a trend since the late 1970s and early 1980s where the profit share of national income has been increasing and, correspondingly, the wages share has been dropping. If the conservative argument held true that having companies make more money immediately and necessarily means more jobs and better pay, you would think that right now—when earnings are up and the profit share of national income has been increasing and is very high—we would be seeing that happening in Australia, but we are not. To the contrary, it is just not the case that there is some sort of trickling down effect meaning wages are increasing.

 

Wages growth is the slowest and lowest it has been since this country started keeping the wage price index in 1997. We are at a record low period of wages growth since 1997. That is 20 years, a very long time. I don't know about you, but in 1997 I was watching a bit of Buffy. I was on college, playing a bit of touch footy, playing in the orchestra and going to class. A lot has changed since then. It is a long period of time over which these stats have been kept, and we are seeing wages growth at this really incredibly slow rate right now, despite the strength of our corporate sector.

 

Similarly, we are not seeing a massive reinvestment by the corporate sector of their very strong earnings into capital deepening, into making their companies better. We know this because private capital expenditure has been tumbling. If you look at private capital expenditure, it has actually been falling through the floor—decreasing in the order of four per cent per quarter over the last few. We are not seeing this incredible reinvestment and reinvigoration of Australian corporations, but what we are seeing is really an investment strike. We are seeing record high payments to shareholders in the form of dividends, so it seems that what you get when companies do better financially is that more of that money goes into the pockets of shareholders. It does not necessarily go into the pockets of workers or into capital deepening for that company, into growth for the company.

 

Why is that? It is not as though corporate Australia is in some way ill willed or does not want to invest in capital, of course. There are perverse incentives that incentivise the payment of dividends in order to keep share prices up. This is a real problem, and it is something that needs to be considered, but that is not in and of itself enough of a reason to say, 'Actually, what we should do is just take it as a leap of faith to say that, if we cut corporate taxes, that will necessarily mean more jobs or better pay,' because that is just not the experience. That is not the experience in the US. The analogous situation, where companies have been doing better here in Australia, has not led to more jobs and better pay. Yes, we have some pleasing news on the unemployment front in this country, particularly since the highs that we had just after the 2014 budget actually. Remember that we had unemployment at the time that was at higher rates than it had been even in the depth of the global financial crisis a few years earlier.

 

Unemployment is not as high in 2017 as it was in 2014 after the first coalition government budget smashed this nation's confidence, but it remains high. What is probably more insidious—more difficult to see and to notice—is the record rates of underemployment that workers in this country are facing. It is record rates of underemployment. It is declines in hours worked. This is a new problem that we are facing right now—the abundance of labour and the lack of availability of jobs. People on worksites talk to me about automation.

 

Whether you are a wharfie whose job started disappearing when they got those giant robots that move around the port, whether you used to work on a mine site as a truck driver and the trucks are now fully automated or whether you are looking at the possibility of losing your job to a self-driving train, this is happening across the world. It is not something that is by any means confined to Australia, but it means that we need to have a real conversation about what can be done to ensure that people are not left powerless and jobless as a consequence.

 

This blunt instrument of cutting corporate taxes to make capital more profitable is not good enough. It is not an answer to the problems that working people are facing. We need answers that go to making wages better, to finding ways to create more jobs and to making sure that there are not these weird skews where you have some people working 80 hours a week while others cannot get more than 30 hours. Those are the real issues that a government with vision and leadership needs to come to grips with, but instead all we have seen in this budget is a centrepiece of $65 billion in corporate tax cuts and, I think probably just as terribly and just as disappointingly, the cuts to education. I say that because if we want to be able to deal with the fact that the labour market is changing, that jobs are changing and that the skills that we need are changing that means investing in our people.

 

It means creating a workforce of the future that will have the skills that are needed for the jobs of the future, and I am not just talking about content knowledge. There will be all sorts of skills, attributes and traits that are needed in order to navigate the future. There are big challenges coming. There is one that we are facing right now that, frankly, we are not doing a very good job of facing, and that is climate change. Climate change is posing a very big challenge to our entire world. To respond to that, it is going to take not only the content knowledge of science but also the skills that we need to negotiate, to listen to each other and to work together to solve problems and to not only try to stop the increase in the temperature but also deal with the effects that are already being caused by the change that has already happened. To mitigate the effects of climate change we are going to have to have a population that has the skills that are needed to be able to work together to solve really big, thorny problems.

 

We are also going to need to do something right now about inequality, because a less-equal world is a more conflict-ridden world. It is hard enough as it is. We are already facing conflict across the world as it is. If we keep having situations develop where we allow the exacerbation of inequality that is going to make things much harder than they otherwise would be. Education is important for that, too. It is not just about making sure that the kids of today and the kids of tomorrow get the education they need to be able to get a good job or to live in a society. It is also about making sure that they get the education they need not just for themselves but to help make a society that is more peaceful and more equal, where people do get a fair go, where in fact the opportunity you get is not something that comes from the privilege with which you were born, but from how hard you work and how much you make the most of the natural talents and abilities you have.

 

To me, cutting education funding in these times right now, particularly when the government's intention is to worsen the deficit to the tune of $65 billion with the corporate tax cuts, is not just unfair—it is obviously unfair —but is incredibly reckless and damaging to the nation's future. If we do not fund schools properly we are going to have a range of problems. There are the mundane problems you get when you have only some good schools and everybody gets on the road at peak-hour and goes to those schools and you get all this unnecessary traffic congestion because people do not want to go to their local schools. But there are the bigger problems that come with the inequality that comes from there being great schools and terrible schools. I went to Cairns State High and to Edge Hill State School, two great public schools up north. I loved those schools and learned incredible amounts of amazing things there and I am so proud to have been to those schools. But even I—someone who was at school 30 years ago—understand the difference in opportunity that I had compared with the opportunities kids who went to wealthier schools in capital cities had.

 

That is more pronounced today than it was when I was a student. I want to start to reverse those trends, so we have to fund their education properly. The $22 billion in cuts to school funding must not be accepted. Labor is absolutely right to be fighting the $22 billion in cuts this government is making. They went to the 2014 budget saying, 'We are going to cut $30 billion from schools.' This year they went to the 2017 budget and said, 'No, no. It is all right. We are not going to cut $30 billion; we are going to cut $22 billion.' And we are supposed to be grateful for that—our kids are supposed to be grateful for that? The kids in my electorate, whether they are living in Cannon Hill, Annerley or Holland Park West are meant to be grateful for that? Of course they are not. This country needs a well-educated future workforce and a well-educated future citizenry. That is what we need, and investing in education is the way to do that.

 

It is the same with the kindy cuts. I thought that this government would go to the 2017 budget and say, 'We have finally fixed universal access kindy funding. We have finally got to the point where we are not going to give one or two year extensions. We are going to do a five-year commitment so that kindies can have certainty moving forward.' But they did not. Imagine my shock. I was ready to write to my kindies and say, 'Well done, everyone. You have convinced the government to do the five-year funding.' But instead of running out this year it is going to run out next year. The government says that they wanted more time to negotiate. What we know is that the additional education opportunities that kids get from kindie are incredibly important for their future prospects. It is time the government gave a long-term commitment to the universal access funding and stopped leaving these kindergartens with the uncertainty that they are facing as a consequence of the funding decisions the government has made.

 

Probably closest to my heart at the moment, because of my portfolio as the shadow assistant minister for universities, is the cuts to universities. This government has a budget in which they want to cut university funding by almost $4 billion over four years. At the same time they want to put up student fees—so, increase the fees and drop the public funding. Then they want to make it harder for people on low incomes to be able to get by and save, by dropping the threshold at which you start to make a contribution to higher education. The reason we have an income contingent loan in this country is that there is a view that if you never get to a reasonably high income as a consequence of university fees then you never get to a point where you start to make that contribution. But once you do, you pay more in income tax and you pay a contribution to the cost of higher education. It is fair because there is a private benefit from higher education and there is a bigger public benefit from higher education. We all benefit if there are doctors, if there are lawyers, if there are trained veterinarians and if there are architects. I think that these cuts and these fee hikes, requiring students to pay more for less, are deeply reckless, particularly at a time such as we are facing right now when there are global challenges for which we will need an educated population.

 

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