PARLIAMENT HOUSE, Canberra: I rise to speak on these appropriation bills. There are three things I would like to outline in the time I have available. Firstly, I would like to outline the rationale for the budget and what we are hoping to achieve through the decisions that the government has made. Secondly, I would like to address some particular concerns raised in the community. Thirdly, I would like to outline some of the initiatives that specifically impact on my electorate of Aston.
Let me start with the budget rationale.
This, as everybody knows, is a tough budget. We acknowledge that. We have had to reduce some expenditure. We have had to initiate a debt levy on high-income earners. We realise that some of these measures are not popular, but the government has done these things for a reason. The reason is that the public finances are in an absolute mess due to the decisions of the former government. We are simply spending beyond our means and this is simply not sustainable. This budget is about restoring our finances because we cannot have a strong, prosperous economy without a strong budget. Let me outline the figures to illustrate how unsustainable the financial position was before this budget.
Firstly, having gone from a $20 billion surplus in 2007, Labor ran up the six biggest budget deficits in Australian political history, totalling $191 billion. Secondly, their forecasts were for a further $123 billion in deficits over the next four years. This meant that the aggregate debt was to grow to $667 billion. That means about $25,000 for every single man, woman and child in this country. The interest alone on our present debt today is about $1 billion a month. That $1 billion represents the cost of a public hospital. So without this interest bill we could build 12 public hospitals this year, but we cannot because we are spending $1 billion per month. We are simply spending way more than we are earning and, as every householder knows, you just cannot do that indefinitely.
The Coalition did not create this fiscal mess but we accept the responsibility to fix it. This budget brings the finances back under control. It eliminates almost $300 billion worth of debt. It reduces the deficit by $44 billion over the next four years, which is the budget period. It shows a pathway back to surplus, having reduced the deficit in 2017, the final year of the budget estimates, from $18 billion to $3 billion.
There are tough decisions to get to this position. I acknowledge that and I wish we did not have to make those tough decisions. But we would be abrogating our responsibility as a national government if we did not take action now. We were elected to fix up the financial mess left by the former Labor government and we are doing exactly that through this budget.
I want to address some concerns raised in the community. The first one is the allegation that we have made substantial cuts to hospitals and to schools. I would like to clarify that by pointing out exactly what we are doing over the four-year budget period. Firstly, far from making cuts to hospitals, we are increasing hospital expenditure to record levels. Next year we will increase hospital expenditure by nine per cent, the year after by a further nine per cent, the year after that by a further nine per cent and in the final year of the budget four-year period by six per cent.
Let us look at schools. Again we are increasing school funding to record levels. Next year we will increase school funding by eight per cent, the following year by a further eight per cent, the year after that by a further eight per cent and the year after that by a further six per cent.
These are very substantial increases in funding to hospitals and schools, and it is simply wrong for Labor to allege that we have cut funding to hospitals and schools and placing fear in the community and leading people to believe that hospital beds will be closed or there will be fewer teachers next year as a result of this budget. It is simply incorrect; we are increasing funding to hospitals and schools to record levels.
It is similar in relation to pensions. Let me be very clear: there are no cuts to pensions in this budget. The pension will continue to increase every six months. It increased in March, it will increase further in September. It will increase again the following March and the following September and so on. Every single pension supplement will continue as it has done previously to this point in time.
The only two decisions that have been made in relation to the pension are, firstly, to increase the eligibility for the pension to 70 years of age by 2035. Of course, nearly every single person who is 70 by 2035 will have been earning superannuation for most of their careers; presently superannuation is accessible at the age of 60. Secondly, the other decision we have made is to ensure that pensions are indexed according to the CPI from 2017. This means that the pension will continue to increase in real terms from 2017 according to the CPI. So we have not cut pensions, as the Labor Party would make you believe. In fact, they will increase every six months, as they have always done; we have just made those two changes that I have mentioned.
In relation to universities, there are some very substantial reforms in this budget. We have deregulated the university system to enable our universities to flourish, to enable them to be world class. This will mean in some cases that some university fees will go up, but in other cases university fees will stay as they are. In further cases they may in fact come down. Importantly though, there will be no upfront fees. Even if fees do go up somewhat, they will still be part of the overall HECS scheme, which means there are no upfront payments and every payment is only made once the person has graduated and is earning more than $50,000 in salary.
In addition to that, there are some very substantial measures that will particularly benefit low-socio economic students. In particular, for the first time HECS will be available for subdegrees—for associate degrees and for diplomas. HECS will also, for the first time, be available for private higher education providers. The combination of those two measures means there will be an additional 80,000 university opportunities for students across this nation, and predominantly those opportunities will be taken up by families who typically may not have had a university graduate before because sometimes a diploma is a pathway through to going on to a higher degree.
Finally, I want to touch on the Medicare co-payments. The government is asking Australians to pay $7 when they go to a doctor in order to try to make Medicare sustainable. Expenditure on Medicare is growing exponentially, a growth which is simply not sustainable. The Medicare levy covers less than 20 per cent of health costs so that is not necessarily a mechanism to ensure the sustainability of Medicare over all.
The $7 co-payment is similar to the co-payment that Labor introduced for the Pharmaceutical Benefits Scheme. Labor introduced that co-payment for precisely the reasons that this government is advocating the co-payment for Medicare—that is, to make the system sustainable over the longer term. We want to see it sustainable. We want to see Medicare be a central part of our system.
Importantly, with these co-payment measures there is a safety net which covers about 40 per cent of all Australians. Everybody with a concessional card and all children under the age of 16 would only have to pay a maximum of $70 in any one calendar year. Further, a doctor will still have discretion to waive that $7 fee, if a particular individual has financial hardship. The overall aim is to ensure that there is a proper safety net but that the Medicare system as we know it today is sustainable well into the future.
I will conclude by mentioning some of the measures in the budget which are specifically targeted at my electorate. Firstly, there are some community safety measures which I have announced locally already. These were election commitments which I made, and I am very pleased to see that they are being delivered in my electorate over the course of the 2014-15 financial year. It includes security cameras for three shopping strips, better lighting at Scoresby Village and Alchester Village and some mobile security cameras for Knox police.
There is also some infrastructure funding to support the upgrade of some of the local community sports facilities. That is important because we want to have as many young people participating in sport or other community activities as possible. If young people are participating in these activities it keeps them busy and it keeps them off the street. Importantly, the large sporting clubs are also places where young people can get mentored by older people. So I think these funds for sporting infrastructure provide a benefit, not just to the people directly using that community infrastructure but to the entire community.
Of course, there was additional funding for the East West Link—a further $1.5 billion, bringing the total federal contribution to $3 billion for the East West Link. That will have enormous benefit for residents of my electorate in Aston to ensure that they can get into the city and across the city more quickly.
There are a number of other measures that I will continue to fight for, including important roads such as the extension of Police Road to take the pressure off Bergins Road. I am going to continue to fight for improvements to Napoleon Road. I will continue to fight to improve Boronia Heights Primary School, which is in need of an upgrade. I will continue to support and fight for the upgrade to the Bayswater CFA. Of course, I will never stop fighting for the Rowville rail, which is long overdue.
Let me conclude by saying that, yes, this was a tough budget. I acknowledge that. In an ideal world we would not have to deliver a tough budget. We would not have to make expenditure cuts and we would not have to put in place measures such as the debt levy on high income earners. But the simple fact is that the budget position was unsustainable. Our nation was expending far more than we were raising in revenues, and that position was unsustainable. You simply cannot continue to spend more than you raise; otherwise you get into a situation like Greece, Spain or Italy. We certainly do not want to go down that path.
So this is a tough budget but it is ultimately necessary for the public finances to be restored to a healthy position. And, overall, it is good for the nation.