OF THE APPROPRIATION BILL (NO. 1) 2002-03
Mr Speaker, I move that the Bill now be read a second time.
Mr Speaker, the past year has again reminded us all that world events can movedangerously and unpredictably.
Last year when I delivered the Budget we did not know that four months later ourworld would change in such a devastating way.
The terrorist attacks of 11 September shocked us all and showed that terrorism canstrike even the most powerful of nations. We cannot take our security for granted. Tonight I will announce measures to upgrade Australia’s security. Tonight I willannounce measures to secure Australia’s borders.
But developments in other parts of the world do not just affect our physical security. They can affect our economic security as well. Through last year country after countryfell into recession. The events of 11 September made things worse. Our tradingpartners:- Japan, the United States and Europe all turned down. Australia found itselfin a very difficult economic environment.
We were not untouched by the global slowdown. But tonight I can report to the Housethat Australia is strong. Other countries went into recession but our economy grew.
The hard work of the last six years helped to shield our country and keep people inwork. It gave us the capacity to respond swiftly with measures to stimulate theeconomy like the additional First Home Owners Grant. It allowed us to respondswiftly with a major contribution to the War Against Terrorism.
But we must continue strong economic policy if we want to be able to respond to theunpredictable events of the future. Strong economic policy has been the hallmark ofthis government. By the end of this coming financial year we will have paid off$61 billion of the Labor Government’s debt. Our Budget for the year is in surplus, asurplus of $2.1 billion.
The Budget will lay out a programme, not always easy, but fair, to sustain importanthealth and welfare services into the future.
And this year we will fund measures to upgrade security, to secure our borders, tostrengthen our defence forces and deliver all of the Government’s electioncommitments in full, on time, on budget.
Mr Speaker, last year I announced the largest and most comprehensive upgrade of ourdefence capabilities for any Australian government in over 25 years. Under that planset out in a White Paper an additional $1 billion is included in the 2002-03 defenceBudget. But, the Government has added to that programme to fund the deployment ofAustralian troops in the War Against Terrorism.
The deployments are being carried out as part of our contributions to the US-ledoperation against international terrorism and the Gulf blockade in support of UnitedNations sanctions against Iraq. They involve around 1,100 Australian Defence Forcepersonnel and comprise land, sea and air operations. The initial deployment includes:
• an Australian special forces task group and other personnel participating in
operations in Afghanistan against the Taliban and Al Qaida networks;
• a naval task group of an amphibious landing ship (until mid 2002) and a frigate,
and the continued presence of a guided missile frigate in the Persian Gulf tosupport the Multinational Maritime Interception Force; and
• an Air Force deployment of B707 tanker aircraft to support air-to-air refuelling
operations and F/A-18 aircraft deployed to Diego Garcia until mid 2002 to supportair defence of coalition forces.
The composition of the deployment is subject to strategic requirements and iscontinuously under review.
The additional funding over the base funding and over the White Paper for thisdeployment in 2001-02 and 2002-03 is around $524 million.
But as we have seen terror and crime can also strike at home. The Government’s firstresponsibility is to defend our citizens and our national security assets. We must do itin a careful way hoping for the best, but preparing against the worst. In this Budget weare allocating an additional $1.3 billion over five years to upgrade security withinAustralia.
Australia’s airport security will be upgraded. Armed, plain clothed, AustralianProtective Service officers now travel on selected flights. Additional AustralianProtective Service officers provide heightened security at Australia’s airports withenhanced capacity for detecting explosives.
The Budget provides an additional $539 million to the Australian Federal Police,Australian Protective Service and Australian intelligence agencies to assist inidentifying potential security threats. There will be increased screening of importedgoods, enhanced cooperation with overseas law enforcement agencies, andimprovements in screening arriving and departing international passengers.
The Government is also investing in the development of leading edge technology thathas the potential to significantly improve passport verification processes. Ifsuccessfully developed, a biometric identifier could record individual features on amagnetic strip on passports and provide distinctive matching for that individual atairports and other points of entry. This will be funded by an increase in the PassportFee.
The Government will be improving the secure communications system of theDepartment of Defence and taking measures to protect our critical informationinfrastructure from attack.
The Government will double the Australian Federal Police strike team capability,allowing for the rapid deployment of more than 200 federal agents around Australiadealing with crimes such as terrorism and politically motivated violence.
We will establish a permanent Australian Defence Force Tactical Assault Group on theeast coast of Australia, to supplement the existing group on the west coast. The TacticalAssault Group is a special forces unit with specialist counter-terrorist training,including hostage recovery.
And we will establish within the Australian Defence Force a permanent IncidentResponse Regiment. This will be a highly trained group able to respond to chemical,biological, radiological, nuclear and explosive incidents. To support our capacity torespond to such an incident — one we hope will never occur — the Government hasalso authorised a national stockpile of chemical antidotes and vaccines.
Mr Speaker, Australia operates a substantial immigration programme which in thecoming year will offer permanent migration places at a base level of 105,000 places. Inaddition we offer around 12,000 places under the humanitarian category for refugees. This is one of the largest offshore humanitarian programmes of any country in theworld.
But to maintain the integrity of that programme humanitarian places should bereserved for those assessed as genuine refugees and those that have complied withAustralia’s offshore processing arrangements. The Government does not intend toallow people smugglers to determine the intake under this programme.
Last Budget we proposed spending $1,635 million over five years on border security. The measures we have taken since, together with the measures I am announcingtonight, will increase that expenditure to $2,872 million.
This will include $219 million to construct and maintain a purpose built Reception andProcessing Centre on Christmas Island which will allow downsizing of other centres atCurtin and Woomera. The Government has allowed $455 million over the next fouryears for receiving and processing asylum seekers at the new facility on ChristmasIsland and, if necessary Cocos Island.
Mr Speaker, the Government has decided to double National Marine Unit surveillance,it has increased Coast Watch surveillance, and it has allocated additional funding tothe Australian Defence Force to patrol Australia’s northern waters to deterunauthorised boat arrivals.
Mr Speaker, it is also important to take steps to reduce the flow of unauthorisedimmigrants to these Australian waters. To this end, the Government has committed$75 million to fighting people smuggling and unauthorised migration through theinterception of unauthorised migrants in transit countries.
• The Government is increasing the capacity of authorities and international
organisations in transit countries to detect and intercept illegal people movement.
• The Government is also increasing support to international organisations, such as
the United Nations High Commissioner for Refugees and the InternationalOrganisation for Migration, for the detention, processing and subsequent removalof people in transit countries.
There is evidence that these comprehensive measures are showing results.
In August last year arrival numbers surged, with some 1,212 arriving in the first threeweeks alone.
Since the introduction of the Government’s strategy to secure our borders, there hasbeen a dramatic slowdown in unauthorised arrivals. There have been no unauthorisedboat arrivals to Australia since December 2001.
Mr Speaker, tonight, as part of the Budget, I am releasing the landmarkIntergenerational Report. This is the first report of its kind and the first time anyattempt has been made in the Budget to look across the generations and identify thechallenges which lie ahead for our society and our governments. What challenges willour children and their children have to confront in forty years time? What shape willAustralia’s finances be in 2042 based on current policies? And what should we do nowto prepare for the generations ahead?
One of the big changes to our society will be that the number of older people willincrease, and with falling birthrates, the number of younger ones will not grow. Theratio of old to young in our society will increase.
The increase in medical science will make more and more treatments available andprolong our capacity to live longer.
Our strong Budget position means we are better placed than most other advancedsocieties to cope with these changes. But we must start now to put in place measureswhich will sustain a decent health system and aged care system into the future. If weignore moderate changes now the challenges will only get greater, the decisions willget harder, and the solutions will slip outside our grasp.
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The cost of the Pharmaceutical Benefits Scheme is growing rapidly as medical scienceimproves and we have a greater ability to treat more conditions. Since 1991 the cost ofthe Pharmaceutical Benefits Scheme has nearly quadrupled from $1.2 billion to$4.2 billion. The Intergenerational Report projects that the Pharmaceutical BenefitsScheme could be the most significant area of pressure in the health budget and in fortyyears time grow to around $60 billion in today’s dollars.
So the Government is taking some small steps to help put the Pharmaceutical BenefitsScheme on a more sustainable basis so it can deliver access to medicines at affordableprices over the longer term. These measures will ensure that consumers, industry,doctors and pharmacists all contribute to containing the rate of increase in thePharmaceutical Benefits Scheme.
From 1 August this year, co-payments for concession cardholders such as pensionersand Seniors Health cardholders will rise by $1 to $4.60 and co-payments for others willrise by $6.20 to $28.60 per prescription. While a concession cardholder will only pay$4.60 for a prescription this is only a small part of the cost of many PharmaceuticalBenefits Scheme medicines.
• Humulin NPH, widely used in the treatment of insulin dependent diabetes costs
• Avonex, a drug used for the treatment of multiple sclerosis costs $1,090.81 per
prescription. A patient on this drug would normally take 13 prescriptions per year.
• Zyban, used for the treatment of nicotine addiction, costs $238.85 per prescription.
New drugs with high costs are coming on to the Pharmaceutical Benefits Scheme allthe time.
Notwithstanding the cost of the prescription the co-payment will only be $4.60 forconcession cardholders.
Safety net arrangements will continue to protect people who need a large number ofmedicines. Consistent with the current arrangements, once concession cardholdershave paid for 52 Pharmaceutical Benefits Scheme prescriptions in the year, they willreceive further Pharmaceutical Benefits Scheme medicines free for the rest of the year. Non concession cardholders who pay $874.90 in a year for their PharmaceuticalBenefits Scheme medicines will be eligible for further PBS medicines at theconcessional rate for the rest of the year.
The Government is also introducing changes to ensure Pharmaceutical BenefitsScheme medicines are used appropriately.
• Doctors will be required to provide additional information about patient eligibility
when they seek approval to prescribe particular drugs.
• The pharmaceutical industry will provide information about prescribing
restrictions directly to doctors through the network of medical representativesemployed by the industry.
• The Government will undertake discussions with individual manufacturers of
generic medicines to secure a price reduction for products they have listed on thePBS. This price reduction will be in return for the Government facilitating greateruse of generic medicines listed on the Pharmaceutical Benefits Scheme.
• The Government will also introduce further initiatives to identify and target fraud
By making the Pharmaceutical Benefits Scheme more sustainable, the Government cancontinue to fund the listing of new, highly effective, but expensive medicines.
Mr Speaker, the Government has a policy of equipping our young in the best possibleway for the workforce. That is why we invested in improving literacy and numeracy inthe education system. That is why we revived the apprenticeship system. And in thisBudget we will focus that further with an extra incentive of $750 to employers willingto take on a new apprentice while he or she is still at school, and a bonus of $750 tokeep them after they have completed Year 12.
We will offer an incentive of $1,100 to employers to take on a new apprentice ininformation technology. For mature age people we will offer training assistance of upto $500 to attain basic skills in computers and information technology. One of the greatbarriers for mature age workers getting into the workforce is lack of computer skills. This training will be available to 11,500 people each year.
Our policy is to encourage people to get job ready so that as the growing economycreates more jobs, they have the chance to get those jobs and move into the mainstreamof the Australian workforce.
The Government’s Work for the Dole Scheme has been a very successful programme todevelop work skills. At a cost of $81.5 million over three years we will fund8,500 additional Work for the Dole places.
Mr Speaker, in last year’s Budget I announced a major programme to reform ourwelfare system called Australians Working Together.
We want to take the next steps in this programme. There are many people who are outof work and on a Disability Support Pension who have no support or encouragementto get back into employment. Since 1990, the number on Disability Support Pensionshas doubled.
We want to take measures to encourage those who are capable of work, including parttime work of more than 15 hours a week, to get back into the workforce. This willimprove their esteem and self-reliance. At present eligibility for Disability SupportPension is assessed as the incapacity to work 30 hours per week. This will be reducedto 15 hours. Disability Support Pension rates and the means test are unchanged.
To provide people with greater opportunity to improve their work capacity 73,000 newtraining and work programme places will be created for those who are currently onDisability Support Pensions. This will cost additional money, but in giving peopleaccess to these services it is expected more people will re-enter the workforce and inthe longer term it will save the taxpayer.
This new measure will apply to all new Disability Support Pension applicants from1 July 2003. Those currently on Disability Support Pension (except those severelydisabled with no work capacity or those who are within five years of Age Pension age)will be assessed under the new criteria within five years of implementation.
The Government will continue its commitment to the most vulnerable anddisadvantaged citizens in our society. A new five year Commonwealth State DisabilityAgreement is proposed with the Commonwealth providing the States an extra$547.5 million over five years for unmet need. This Agreement funds the States andTerritories to deliver Specialist disability services such as accommodation, communitysupport and respite. This means the Commonwealth will allocate $2.7 billion to thenew Agreement — $743 million more than the previous Agreement.
For their part, the States and Territories must at least match the Commonwealth’sincrease, including increases already announced in our disability employment services. They must also provide better accountability, quality, efficiency and effectiveness inthe delivery of their services. Over the same five year period the Commonwealthintends to spend another $2 billion in support of its responsibilities for employmentsupport for people with disabilities.
When Labor left office the home mortgage interest rate was 10½ per cent. Today it is4¼ percentage points lower. Low interest rates have supported Australian familiesgiving them reductions on their mortgage repayments and helping them to make endsmeet.
The First Home Owners Scheme has helped many young Australians to buy their firsthome. This grant which continues at $7,000 from 1 July will help thousands of youngAustralians buy a house for the first time. These grants are expected to total$784 million in 2002-03.
And the Government is going to introduce new measures to help those starting afamily. This is in addition to the higher payments of Family Tax Benefits which wereintroduced back in July 2000.
One of the financial pressures facing those who are starting a family is that theygenerally lose their second income as the mother goes out of the workforce to have thechild. Our baby bonus is going to allow mothers who are out of the workforce withtheir first child to claim back tax they paid while they were in the workforce. Theamount they can claim is up to $2,500 per year for five years depending on the amountof tax they have paid before leaving the workforce. There is a minimum payment of$500 per year for five years for low income parents.
It is expected that around 245,000 families will benefit from this initiative in the firstyear with 600,000 Australian families eventually benefiting.
Mr Speaker, we also know that access to health services is a major concern forfamilies — particularly the families in the outer suburbs of our major cities.
That is why the Government has a plan to encourage an additional 150 doctors to workin the outer-metropolitan areas of the six State capital cities. Under this plan, doctorswho agree to work in a designated outer-metropolitan area and register on analternative pathway to achieve vocational registration will be eligible for higherMedicare rebates. Specialist trainees will be able to access Medicare provider numbersif they work in outer-metropolitan areas. In addition, doctors in the ‘general stream’ ofthe GP vocational training programme will undertake a supervised placement in anouter-metropolitan area. This is an $80 million plan for more doctors for the families ofthe outer suburbs of our major cities.
And we want to make our public places safer for our children. So the Government willfund a strategy for the introduction of retractable needle and syringe technology intoAustralia. This means that exposed needles cannot be left lying around in public placesor anywhere else where children are at risk from needle stick injuries.
In the Budget two years ago I announced a Regional Health Package designed to makea practical difference in improving health services to the regions and the bush. Thisyear we want to add some additional practical, on the ground, services in regionalAustralia.
We want to build six new facilities, outside the capital cities, to improve patient accessto radiation oncology services. A programme of $72.7 million over four years to do thiswill include training staff to international best practice to operate these local services.
Another of the services that needs improvement in rural areas is the provision for agedcare. Older Australians do not want to move away from their local communities intheir twilight years. This Budget has a programme to upgrade or replace high carehomes in rural, remote and urban fringe areas and also includes funding to encouragemore people to take up aged care nursing with 250 aged care nursing scholarships atrural and regional university campuses.
Our Intergenerational Report shows that aged care will require increasing attention asthe proportion of older people in the community increases. Again this year there arenew measures — $654 million over four years — to provide better care for olderAustralians.
• Subsidies for residential aged care will be increased to allow better pay rates to be
offered to aged care nurses so providers can attract and retain more aged carenurses.
The Government’s aged care policy is, whenever possible, to improve and expandcommunity care services to enable older Australians to choose to stay at home and liveas independently as possible in the community.
• The Government will provide an additional 6,000 Community Aged Care Packages
over four years. These packages are tailored to meet the needs of frail olderAustralians who want to remain in their own homes, and can do so if they receivehome help, laundry, meals and bathing.
• The Government will also provide funding to support the carers of older
Australians, carers of people with dementia, and ageing carers of people withdisabilities.
This Budget will also aim to improve the standard of palliative care offered in thecommunity. Funding of $55 million over four years will be provided for bettercoordination between hospital and community care; improved education and furthersupport for general practitioners and other health professionals in palliative care; andfurther assistance for families of people who choose to spend their final years in theirhome setting.
Mr Speaker, over the years this Government has taken major decisions to recognise thecontribution made by our veterans. Tonight, we want to go further. The Government isextending eligibility for the war veterans’ Gold Card (which provides comprehensivefree health care) to Australian veterans aged 70 years and over who have qualifyingservice from post World War II conflicts.
In this Budget we are introducing twice-yearly indexation of the ceiling rate of theIncome Support Supplement for War Widows. The ceiling rate will be increased by thesame percentage as the age or service pension. This increase in income support for ourwar widows is expected to cost $85 million over four years.
Mr Speaker, the Intergenerational Report projects that over the next 40 years thenumber of people of Age Pension age will grow from 2.7 million to 6.3 million. This isexpected to create a significant Budget pressure from age pension outlays.
This Budget provides a number of incentives to encourage individuals to improvetheir retirement incomes by making greater contributions to superannuation.
From 1 July 2002, the Government will make a matching superannuationco-contribution of up to $1,000 per year for qualifying low income earners who makepersonal undeducted superannuation contributions. Individuals with assessableincomes and reportable fringe benefits up to $20,000 per annum will be eligible for themaximum $1,000 co-contribution and those individuals with incomes between$20,000 and $32,500 will be eligible for a reduced co-contribution. This initiative willreplace the existing maximum $100 rebate for personal superannuation contributionsmade by low income earners.
In each of the next three years, the Government will reduce the superannuation andtermination payments surcharge rates by one-tenth of their current levels. This willreduce the maximum surcharge rate from 15 per cent to 10.5 per cent in 2004-05.
From 1 July 2002, self-employed and other eligible people will be able to claim a fulltax deduction for up to $5,000 of superannuation contributions, compared to$3,000 currently. Contributions above the new higher threshold will continue to be75 per cent tax deductible, with a maximum deduction equal to the taxpayer’s agebased limit.
The Superannuation Guarantee system will also be improved by requiring employersto make at least quarterly Superannuation Guarantee contributions on behalf ofemployees. This will reduce the potential loss of superannuation benefits in the eventof bankruptcy or insolvency.
The Government is also introducing measures to make superannuation contributionarrangements more family friendly. From 1 July 2003, members of accumulation fundswill be allowed to split future superannuation contributions with their spouse. TheGovernment will also allow parents, relatives and friends to make superannuationcontributions on behalf of children and is increasing from 70 to 75 the age up to whichworking members of superannuation funds can make personal superannuationcontributions.
The Budget surplus announced tonight has not required any major new tax initiativesnor an increase in the overall tax burden. The Government’s tax reforms have securedthe tax base, proving one of the keys to the strengthening of Australia’s economicfoundations.
The Government remains committed to its tax reform strategies and will press aheadwith the business tax reform agenda, including a review of international taxarrangements.
The Australian economy is expected to continue its strong performance in the yearahead, with robust economic growth of around 3¾ per cent forecast for 2002-03. This ishigher than forecast growth for any of the major developed (G7) economies of theworld and reflects Australia’s sound economic fundamentals.
Business investment is expected to grow very strongly in 2002-03, to be a key driver ofoverall economic growth. Household consumption is also expected to remain strong.
In line with the outlook for robust economic growth, the unemployment rate is forecastto decline gradually to 6 per cent in the June quarter of 2003. An unemployment ratebelow 6 per cent would be achievable over the next couple of years, provided thateconomic growth remains strong and progress is maintained on labour market andwelfare reforms. Since the Government came to office over 900,000 jobs have beencreated in the Australian economy. We expect over one million jobs to have beencreated by Christmas.
With only moderate increases in wage costs and continued strong productivitygrowth, inflation is expected to be around 2¾ per cent in 2002-03 and 2½ per cent bythe June quarter 2003, within the medium-term inflation target band. Largely reflectingthe strength of the domestic economy, the current account deficit is expected toincrease slightly to around 4 per cent of GDP, which is below the average over the1990s.
Mr Speaker, the last year has been difficult in an uncertain world, with a globaleconomic downturn. But Australia has emerged much stronger than comparablecountries.
This Budget is designed to meet the continuing challenges of today, and to projectforward so we can set ourselves a path that will address the challenges of the future.
This is a Budget to keep Australia safe, our borders secure, and to keep our economystrong.