Mr ALBANESE (Grayndler—Leader of the House and Minister for Infrastructure and Transport) (14:08): by leave—I move:

That the order of the day be referred to the Main Committee for debate.

I ask that I be associated with the comments of the Prime Minister and the Leader of the Opposition on the loss of this great Australian.

Question agreed to.

Mr ALBANESE (Grayndler—Leader of the House and Minister for Infrastructure and Transport) (14:10): by leave—I move:

That statements, by indulgence, in relation to the death of the Honourable David Bruce Cowan AM be referred to the Main Committee.

Question agreed to.

Mr ALBANESE (Grayndler—Leader of the House and Minister for Infrastructure and Transport) (14:15): by leave—I move:

That further statements by indulgence in relation to the death of Mr Claude Stanley Choules be referred to the Main Committee.

Question agreed to.

Mr FITZGIBBON (Hunter—Chief Government Whip) (16:47): by leave—I move:

That the following bills be referred to the Main Committee for further consideration:

Tax Laws Amendment (2011 Measures No. 2) Bill 2011

International Tax Agreements Amendment Bill (No. 1) 2011

Aviation Transport Security Amendment (Air Cargo) Bill 2011

Customs Amendment (Export Controls and Other Measures) Bill 2011

Intelligence Services Legislation Amendment Bill 2011

Question agreed to.

Mrs ELLIOT (Richmond—Parliamentary Secretary for Trade) (16:48): by leave—I move:

That Mr Secker be appointed a member of the Parliamentary Standing Committee on Public Works.

Question agreed to.

Mrs ELLIOT (Richmond—Parliamentary Secretary for Trade) (16:49): by leave—I move:

That Mr Neville be made a participating member of the Joint Standing Committee on the National Broadband Network.

Question agreed to.

Mrs ELLIOT (Richmond—Parliamentary Secretary for Trade) (16:49): by leave—I move:

That, in accordance with the provisions of the National Library Act 1960, this House elects Mr Adams to be a member of the Council of the National Library of Australia and to continue as a member for a period of 3 years from 13th May 2011.

Question agreed to.

Mr WILKIE (Denison) (16:54): On behalf of the Joint Select Committee on Gambling Reform, I present the committee's report, entitled The design and implementation of a mandatory pre-commitment system for electronic gaming machines, which incorporates a dissenting report, together with the transcript of evidence, submissions and tabled documents.

Ordered that the report be made a parliamentary paper.

Mr WILKIE: by leave—I present the first report of the Joint Select Committee on Gambling Reform entitled The design and implementation of a mandatory precommitment system for electronic gaming machines. There are 95,000 Australians addicted to poker machines and another 95,000 at risk. For every problem gambler, between five and 10 people are adversely impacted. Poker machine losses amount to some $12 billion a year, 40 per cent of which is from problem gamblers. Individual losses average $1,200 an hour on current high intensity electronic gaming machines. Even if the industry estimate of $3 billion for the cost of implementing precommitment is proven correct, this still represents little more than half what problem gamblers lose in a single year.

The implementation of a mandatory precommitment system on electronic gaming machines—or poker machines—was a major recommendation of the Productivity Commission and is a key aspect of my own limited support for the government. Mandatory precommitment—requiring players to preset limits before they start to gamble—will reduce the harm of poker machines and encourage all players to make rational and conscious decisions about their gambling behaviour. It will result in fewer people becoming problem gamblers in Australia.

This report makes 43 recommendations, most significantly the fitting of mandatory precommitment on all high-intensity poker machines by 2014. Players will need to pre-set their loss limit and will be locked out when that limit is reached. There will be cooling-off periods for limit increases, safeguards to prevent venue or machine hopping and an effective self-exclusion function. There will be no licence to punt and no fingerprinting. Venues will have the choice to change some or all of their poker machines for low-intensity machines having a $1 maximum bet and other loss-limiting features. The 88 per cent of poker machine players who currently wager a dollar or less will barely notice the change except that they will almost always finish their gambling session with more money in their pockets.

The report also recommends that smaller venues—those with 15 machines or less—be given until 2018 to implement the scheme and the establishment of a transition fund to assist them. Foreign tourists in casinos will have the option of being given a 24-hour card to override pre-commitment. And a new independent national body will be established to oversee implementation.

The committee received 119 submissions and heard from a wide range of witnesses from industry, from social service and church organisations, from academia, from experts and, most importantly, from a number of former problem gamblers who bravely chose to share their stories with us and offer their insights. I sincerely thank all these witnesses, as well as the members of the committee and the secretariat staff, for their contributions and efforts.

During the course of the inquiry, it became clear to me from various articles and public comments that unfortunately coalition committee members had already decided their position and that this would be one of dissent. This is disappointing given that they were, like other members of the committee, so strongly affected by the stories of those brave problem gamblers to whom the committee spoke. So too the poker machine industry has been a strident critic of these poker machine reforms. But the industry's multi-million dollar advertising campaign against the reforms—a fear campaign—not to mention intense political lobbying and a smear campaign against me personally, shows how desperate some in the industry are to overturn this historic opportunity for federal intervention in problem gambling.

Yes, we did hear many in the industry express their concern for problem gamblers and I believe that many of these concerns are genuine. But I ask of the others in the poker machine industry why they continue to criticise the Productivity Commission's work and its considered estimates of problem gambling, continue to misrepresent the evidence of precommitment trials, continue to exaggerate the costs, continue to complain about unachievable timelines, continue to overstate community contributions and continue to blame problem gamblers for an addiction caused by a fundamentally unsafe product. The number of Australians touched by or at risk of poker machine problem gambling in one form or another can be measured in the millions. No wonder our children will judge the members and senators of the 43rd Parliament on our willingness and success in seizing this historic moment and doing something about it, as they should. I commend the report to the House.

Mr CHAMPION (Wakefield) (17:01): I seek leave to make a statement on the report.

The DEPUTY SPEAKER ( Hon. BC Scott ): Is leave granted?

Mr TONY SMITH: Mr Deputy Speaker, I reluctantly grant leave but point out that the government itself rightly stipulate the program for the day, which states that Mr Wilkie would move that the House take note of the report, the debate be adjourned and Mr Wilkie would then move that the order of the day be referred to the Main Committee. We make the point that it is interesting that government members themselves do not want to follow the program of the manager of government business, but that is obviously a matter for them.

The DEPUTY SPEAKER: I understand that there has been no real objection to leave being granted. Leave is granted. I call the member for Wakefield.

Mr CHAMPION: I thank the member for Casey for his forbearance. The issue of poker machines is an issue that is very close to my heart. In my maiden speech, I spoke on how poker machines might be regulated in the community and this has been an issue that I have spoken on in the House many times since. So it is a great honour and pleasure to speak on the tabling of the Joint Select Committee on Gambling Reform's report in the House.

It was an honour to work with the committee, particularly with the member for Denison and Senator Nick Xenophon. I think they have done a good job in putting this issue in the public's mind and to the forefront of the business of this parliament. So I hope that the report is read and considered by members and that it helps form a policy response for members.

Great damage is done by poker machines, electronic gaming machines, in our community. If you take the time to meet with people who have become addicted to these machines, you hear a lot of stories about the hardship and sorrow for the victims of these machines: the addicts, and their families, as well as the people around them. We know that one in six Australians who regularly plays these machines becomes addicted to them. We know that on average they lose $21,000 a year. We know that the losers, the addicts, contribute about 40 per cent of the $12 billion in profits that are generated by these machines. Nearly $5 billion is poured into these machines by problem gamblers.

I have seen the damage done by these machines in my own electorate, which I have outlined to the House. I have a treatment service in Salisbury, and I can tell you that some of the people attending that treatment service lose a lot more than $21,000 in a year. The damage that is done by these machines demands a policy response. The two major reports by the Productivity Commission and this parliamentary report provide, I think, a strong foundation for a coherent policy response by this parliament.

There are a number of important recommendations in this parliamentary report entitled The design and implementation of a mandatory pre-commitment system for electronic gaming machines. I would ask the House to pay particular attention to recommendations 2, 11 and 34, which look to having a national jurisdiction for the regulation of these machines, the harmonisation of the standards—the so-called national standard—and also a national research capability. We simply do not regulate these machines appropriately, and we simply do not research their effects enough. Recommendation 12, which outlines our commitment to a pre-commitment system, is particularly important, as is recommendation 23, which outlines the committee's strong support for a self-exclusion scheme that will help addicts exclude themselves from playing these machines when they do not want to. It effectively allows them to bar themselves. I think recommendation 36, which recommends low-intensity machines, is a great step forward. It will do a lot of good in the community and prevent a lot of harm. Finally, recommendation 39 proves that the committee did listen to clubs and small venues and that it is aware of the very genuine concern that they would have trouble in the transition. The committee did listen to industry, to the addicts of these machines as well as to the social welfare organisations.

In conclusion, it has been a great privilege for me to be deputy chair of the committee. Again, I would like to thank the member for Denison for his very good work in chairing the committee. He was very fair to all members of the committee and ran a very good inquiry into this issue.

This is a very important report for the parliament, as I said. It will receive the strong support of the government. I sincerely hope that the recommendations find strong support in this House, and I commend the report to it.

Mr WILKIE (Denison) (17:05): I move:

That the House take note of the report.

The DEPUTY SPEAKER: In accordance with standing order 39(c), the debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.

Mr WILKIE (Denison) (17:05): by leave—I move:

That the order of the day be referred to the Main Committee for debate.

Question agreed to.

Mrs ELLIOT (Richmond—Parliamentary Secretary for Trade) (17:06): I move:

That the amendments be considered at the next sitting.

Question agreed to.

Debate adjourned.

Mr PERRETT (Moreton) (17:07): Thank you, Mr Deputy Speaker. It is nice to see you after the break nice and comfortable in your seat. I rise to give my strong support for the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011, or, as I call it, the 'handbrakes for handshakes' bill. I say from the outset how proud I am to be speaking on a bill that addresses an issue that has long been a bone of contention for many Australians but, unfortunately, has been all too readily relegated to the political too hard basket.

Most Australians would agree that executives who put in the hard yards, who produce good results for their shareholders, their company and the community, and who treat their employees well deserve an appropriate remuneration. Certainly, in an increasingly global jobs market, Australian companies need the flexibility to compete for the best CEOs and executives. Our world-class companies need world-class leaders. Hopefully, they will be led by Australians, but sometimes the best person for the job might be from another country. Nevertheless, many Australians are fed up with the largesse of executive salaries and the gross excess of corporate greed.

For example, in 2010 the Commonwealth Bank's CEO, Ralph Norris, pulled in more than $16 million in total remuneration, including salary, incentive payments and bonuses, superannuation, shares and other benefits, or $43,835.62 per day. That is about $8,000 per hour before tax, rounded up. Woodside Petroleum's Don Voelte took home $8.3 million—up a ridiculous 210 per cent from 2009. I choose these two companies first and deliberately, but also we could look at Rio Tinto's Tom Albanese, who earned $9 million—a staggering 328 per cent rise on the previous year. I worked in industrial law for awhile, and you do not often find increases such as a 328 per cent rise slipping through Fair Work Australia. With average yearly earnings for ordinary Australians at around $60,000, even the most diehard free marketers opposite would have to agree that these numbers and increases are nudging towards greedy. People of faith, whatever their god or creed, might even suggest that for every individual there is actually a salary ceiling and that once one goes beyond this amount one can only be defined as avaricious.

Thankfully, my good friend the Parliamentary Secretary to the Treasurer, David Bradbury, has demonstrated the courage and the conviction to do something about excessive CEO pay packets. In the last parliament, the Labor government passed legislation to address excessive payouts for executives and company directors by giving shareholders greater veto power over the so-called golden handshakes. This bill implements the recommendations of the Productivity Commission to beef up the regulation of executive pay. It is about: (1) improving accountability, (2) giving shareholders more information and (3) eliminating conflicts of interest in the process. It amends the Corporations Act 2001 to strengthen the non-binding vote on remuneration. It introduces a two-strikes test—not a three-strikes test but a two-strikes test—that requires the board to stand for re-election when they do not adequately respond to shareholder concerns over two consecutive years. When a company's remuneration report receives a 25 per cent or more 'no' vote, they receive a strike. Two strikes in two years will trigger a spill resolution whereby the board will be required to stand for re-election within 90 days. That is: two strikes, not three, which would then mean that they are out of here.

Directors and executives will also be excluded from voting in the non-binding shareholder vote on their own remuneration and on the spill resolution. This provision strikes the right balance and sends a strong signal to boards that want to push the boundaries of executive pay. Those boards that approve excessive packages for directors and executives will run the gauntlet when it comes to the shareholder vote. No longer will they be able to use shareholders as a rubber stamp for outrageous pay packets.

This bill will also put a stop to directors and executives hedging their incentive remuneration. This will ensure that their remuneration is linked only to performance. This initiative ensures that management is rewarded for looking after the interests of shareholders and vice versa, not themselves exclusively. It will also simplify the remuneration report by limiting disclosures to the key management personnel of the consolidated entity only.

Recent surveys that have received a bit of media attention show that more and more Australians are investing in shares; therefore we need to make it easier for all shareholders—both the experienced investor and the novice—to understand a company's remuneration arrangements so that they can then make an informed vote.

The legislation before the House will also reduce the regulatory burden on companies, which is another example of the Labor government slashing red tape. The bill also seeks to eliminate the conflict of interest that can arise with remuneration consultants. It is sometimes the case that these consultants are asked to provide advice on the remuneration of officers who can influence whether their professional services are used again in the future. It could be seen to be in the consultant's interests to provide advice the executive directors want to hear concerning their remuneration, and obviously this does not pass the common sense transparency test. So, to ensure greater independence, this bill will require these consultants to first report their advice to non-executive directors or the remuneration committee rather than the actual company executives.

This bill will help address the growing community concern about the executive pay of our companies. Most importantly, it also sends a strong signal to corporate Australia that enough is enough. To be fair, all companies have had their chance to rein in corporate greed but some have failed to do so. The Gillard government have had no other option than to act and I am very proud that we have. I look forward to the next speaker supporting this legislation along with the rest of the opposition. I commend the bill to the House.

Mr HAWKE (Mitchell) (17:14): I rise to support many of the provisions contained in the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011. However, the member for Moreton presented me with an interesting opportunity to make comment on some of the intentions of the Gillard government and their methodology in conduct their legislative program in this House, and I am happy to take up that opportunity. I start by making a deeply personal confession to this House: my rugby league team is not doing very well at the moment. It is a source of great personal concern to me and it is something I struggle to cope with every day lately. I note the member for Moreton also supports a very lousy NRL team for different reasons.

Mr Perrett: Premiers.

Mr HAWKE: Yes, they are much worse than mine. The Eels are doing badly at the moment, but I know the member for Moreton would agree with me that when Wayne Bennett became available this year and was seeking to coach another club, he would not have been concerned at the thought of his club paying the $3 million, $4 million or $5 million price tag to get Wayne Bennett. They certainly need him! He knows that you have to pay the price for the best in the business. Many Australians would understand that when you want someone to do a job, you have to pay them the remuneration that they deserve.

Instinctively, I do not have a problem with shareholders and boards setting an appropriate level of remuneration for their executives. I think it is lame for members of the government to come into this House and provide specific examples of executive remuneration, without reference to the performance of those companies. This legislation is intended for those people who take what is regarded as an unacceptable remuneration when the company involved has not performed, where there is no return to the shareholders. But it is the responsibility of shareholders and the owners of these companies to set that remuneration and to rise and fall on the merits of their decisions.

Once again, we are seeing a constant procession of Gillard government backbenchers in this place, whether it be the member for Fraser or the member for Moreton, wanting to dictate terms on how to run corporations and what should be a fair level of remuneration. It is a notion that I reject. I am more a proponent of the Adam Smith model, the invisible hand in the economy, that says that these things will work themselves out—and they should be worked out by those people.

Too often in our society today we want a great return, big bucks, for our shares. That is a great thing, a good instinct, but when a company fails, we cannot separate the concept of risk from return. There is a risk in investing in companies and there ought to be risk. There are successful companies and we want to make sure that we have a government that runs a great economy that allows for great success. But of course there will be failure.

Some of the provisions in the legislation before the House today improve the ability of shareholders to have a greater say over the management of their corporation. We do not instinctively oppose those provisions. There should be transparency in regulation. There should be great transparency for shareholders in what happens within their own entities. It is important that government backs up that principle wherever possible. Some of the provisions in this legislation can assist that. We are reducing the level of complexity through some of these provisions and they are noncontroversial from the opposition's point of view. However, in other ways, this legislation does not recognise that in recent years there has been a great correction in many businesses and in the activities and interests of shareholders. And that is a good thing. I note Wesfarmers capped salaries and reduced bonus payments a few years ago. That was a great example of the market correcting itself. If I was a shareholder in an enterprise and I was speaking to shareholders around this country, I would tell them that this is something they should pay attention to. This is something they should take a great interest in. For every good example of course there is a bad example, but I say to every member in this place: we have more good examples than bad examples, and Wesfarmers is a very good one.

I agree with the member for Bradfield who made the peculiar point about baseball, where too often in public policy we seek to make simplistic policies, two strikes and you are out, referring to a sport that really has no connection with good public policy. In reality, if baseball had five strikes and you are out, it would be five strikes in policy. It is quite populist nonsense. As proposed, the coalition have some concerns with this two-strikes rule. I agree with the coalition's amendments. The member for North Sydney and others have foreshadowed an amendment when it comes to the level of support required to reject a remuneration report, which can lead to a spill of the board—a very dramatic turn of events within a corporation—where the bar has been set too low. This amendment will reduce the two-strikes rule not just to 25 per cent of votes cast but 25 per cent of the total amount of votes. I think it is a very worthy amendment for the government to consider.

If you set this threshold too low, we will not be assisting the ability of companies to perform well and to get on with the business that they need to be getting on with—that is, running their own entities, primarily. We should not disconnect what a senior executive is and the source of those business traditions. In the 1800s, as corporations grew, there was a need for particular managers to not just manage the business but manage the interests of shareholders within corporations. This is a very important concept. Today that is still the role of senior executives. They are there to manage the interests of shareholders, the people who have invested funds in those businesses. Any good senior executive sees the interests of his or her shareholders as their prime responsibility, and so it should be. Of course there will be those who do not do that. Telstra, notably, is a good example of the system not working. But I say to those sceptics: in situations like Telstra where there was a massive government monopoly, the process of deregulation and the privatisation of Telstra will be fraught with difficulty until we get to a more free market approach in this country. In Sol Trujillo's time there was a very interesting situation. When the company was performing badly in terms of its share price, the situation of the chief executive's pay structure and the board's pay structure was outrageous. Shareholders have a right to do that and an obligation to regard it as unacceptable and to do something about it. So, in terms of what this bill proposes, you can see in the government's efforts some good attempts to fix some of these problems. When we say remuneration should match performance, again that is something that is very difficult for us to regulate specifically. The proposal in this bill to change regulation with respect to the use of remuneration consultants is fraught. We cannot design a regulation or legislation to say you should use consultants in a certain way and should derive a certain outcome. That is going to be fraught with a whole series of undesirable and unintended consequences if this law is passed. Businesses are complex; the modern economy is complex. Often these attempts by Labor governments in particular, where their instinct is to regulate first and think later, lead to things that we do not want. While we may be doing things like prohibiting the hedging of incentive remuneration, and there are certainly issues around that and some worthy objectives about how proxies can vote and other things, specifically mandating about the use of consultants and how to apply a remuneration consultant again I do not think is going to add a lot of value to this process. It will not deal with what the member for Moreton just raised as a concern. I do not think it will deal with what the member for Fraser raised as concerns. Yet it does have the capacity to create opportunities for inadvertent criminal conduct. The fact that this will be backed by criminal sanctions again expands the concept of personal risk at the senior management level.

When you think about why someone would be paid such an amount of money, we need to remember that this is not the Middle Ages; this is not a person who has been born into this role—not a person who has inherited it; not someone who has the absolute force of government to appropriate wealth off ordinary citizens. These are people who primarily earn their wealth; who are being paid to perform at a very, very high level under pressure that most of us are not under, at a personal risk level, and in the face of criminal conduct. This bill adds to that burden, and I note that for the House. We are adding to the personal risk taken on by a director and the potential opportunity for them to be sent to prison by the government for acting inappropriately. Of course the government has a role to regulate and legislate, and company directors need to act ethically and within the law. It is important that we make sure they do.

The member for Fraser came into the House and went on with an expansive diatribe about who has wealth in our society. In one sense I am happy about that because it is the genuine socialist intention of the Labor Party coming to the fore in the member for Fraser, and I say we should have more of it. When socialists were socialists and conservatives were conservatives, I think things were better. With the modern Labor Party today it is hard to work out what they are. The member for Fraser certainly went on with a diatribe about who holds wealth in our society. What he failed to recognise with the increase in personal wealth of the top one or two per cent or the top five or 10 per cent was that with that increase in personal wealth came a massive increase in the wealth of our entire society. What we are seeking as a government and as a nation is to increase the wealth of all of us, to increase the ability of a person to earn a living, to have access to opportunity to make good for themselves. We should not instinctively get upset about it when somebody does well for themselves and earns a great pay packet, even if it is more than ours. I can tell you, each one of those people named by the member for Fraser and the member for Moreton earns probably more than I ever will in my lifetime, but I do not have a problem with that. It is the best system devised by man. As Winston Churchill once famously said, democracy is the worst of all systems, except for all the rest. He was right about that. Some people lament that capitalism produces very wealthy people, but capitalism lifts everybody in our society. Every other system that the member for Fraser mentioned drags everybody down—workers get dragged down, corporations get dragged down, executives get dragged down. That dragged-down model that the member for Fraser highlighted as a paragon of virtue makes us all poorer. It has been established in every Eastern European country and other parts of the world that experienced communism or socialism that to the greater degree they had such a system, the poorer their nations were. Many of them are still going through great reconstruction.

I do think that, every time a government backbencher comes in here and says that we have some individuals in our society, whether they be a Wayne Bennett or a company executive, who make more than the rest of us, we have to remember that Wayne Bennett is lauded as a hero in our society regardless of how much money he makes. And so he should be. We should not deride and denigrate those architects of great wealth in our society who are in the private sector. Every time this government says it has created all these jobs, I say it has not created those jobs; they have been created by the capacity of the private sector to invest and to create and grow the wealth of our nation. They are the people who do those things. They are the people who generate the jobs. Every day the Prime Minister says they have created so many jobs. The only jobs she has created through her pink batts scheme and other great spending schemes have come at an exorbitant cost that nobody would pay. If we had the same accountability that company directors face every day from shareholders and regulation, and other systems in this place, I do not think this government would stand up to much scrutiny at all in terns of its expenditure and use of public money and the cost per job of the jobs it says it has created. Any cost-benefit analysis of the jobs created by government expenditure would show they are not competitive with jobs in the private sector. In fact, the cost is exorbitant, lavish and unsustainable.

That is why on legislation like this I am happy to speak in favour of provisions that empower shareholders and give them greater transparency and allow them to carry out their legitimate function, but I do say to the government that this is not an opportunity for them to denigrate those individuals in our society who work so hard and produce great wealth for everybody. It is not the opportunity to lament a system which allows all of us to earn more and do better. We have great small businesses in our country that can become medium enterprises or large enterprises, and that is a great thing. We have people who can start their own enterprise and become very wealthy, and that is a great thing. We have people who choose to become senior executives or managers of companies in our society, and they should be free to earn what they deserve to earn, as decided by their shareholders and other people. This narrative that the government is building around this bill does not match the reality of what these provisions are actually going to do. Many of these provisions are good and ethical, and many of them I think will add to the regulatory burden, which will create greater and greater risk. My main point in supporting this bill is simply that we should not always seek to regulate first and think later.

Mr NEUMANN (Blair) (17:29): I support the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011. When I heard the member for Mitchell speaking about communism and socialism I thought I was back in the 1940s and 1950s. He never gets past history lessons—it is extraordinary. The member for Mitchell and so many of those opposite truly believe in Reaganomics, the trickle down, giving bits and pieces, cents and pennies to the serfs, while they suck up to the captains of industry. It really is quite extraordinary.

We are looking at transparency and accountability in corporate Australia. Those opposite parade and pose about being supporters of the market and free enterprise. Yet it took a Labor government to bring in trade practices legislation in 1974 and consumer and competition reform. Those opposite did not do it. Did those opposite want to open up the banking system? No, they did not. It took a Labor government to do that—to lower tariffs, to internationalise the economy, to float the dollar, to bring in superannuation, all the great reforms with respect to economic development. But the idea of those opposite when they were in power was simply to tax the Australian public and they never found a rort they did not want to support with respect to middle-class welfare. They always side with big tobacco, big distillers and big business.

We hear speeches from those opposite saying this sort of thing all the time, accusing us, through this legislation, of communism or socialism. For heaven's sake! We are trying to empower shareholders. We are trying to strengthen the regulatory framework to empower shareholders when their outrageous and egregious rorting of what the average person would think is overly generous executive remuneration takes place. That is what we are trying to do. I have heard the member for Mitchell speak. You would not think he was speaking in support of the legislation. You would not think those opposite actually support the legislation but in fact they do because they know very well that when you go to AGMs for public companies and to corporate boardrooms executive remuneration is always a topic of discussion.

We know that the Australian public does not like egregious executive remuneration packages and we know that particularly in view of the global financial crisis. We know what happened in America, across Europe and in this country at that particular time. Did we see a diminution in the payouts given to executives? Many of those companies failed. I am not going to start naming those companies here. It was on the public record. Australians, Americans, Europeans and people across the globe saw payouts from government, we saw bank guarantees and massive amounts of taxpayers' dollars propping up the corporate sector—banking, finance and business. Yet did we see the reciprocity of stringency? Did we see thriftiness? Did we see cutbacks generally from the corporate barons? No, we did not. We saw those people take the public money but they kept the private money for themselves in their profits.

Middle- and working-class Australia supported the corporate sector during the global financial crisis. Taxpayers did it. That is why we went into deficit—to support jobs and to support the business sector. Still there was no mutuality from the corporate sector. We did not see the same degree of frugality that was necessary.

Here we are making sure that mums and dads who are shareholders, small business operators, middle Australia, battling Australia, people who have been doing it tough in the past few months, in cyclones, floods and fires across this country, who are shareholders through their superannuation funds or privately in their family financial arrangements, have a better say with respect to corporate democracy and greater transparency and accountability, but those opposite cannot even see that. They make speeches in this place like the member for Mitchell, putting up straw men and hailing to the chief of Reaganomics.

The trickle-down effect is what those opposite believe in. We believe in free markets and we believe in free enterprise. We think that giving small business operators and mums and dads who are shareholders a greater say in corporate democracy will be good for the Australian economy, good for financial security and good for regulatory and corporate practice. That is why we are doing what we are doing. And, I say to the member for Mitchell, we are following the advice of the Productivity Commission.

As far as I am aware, the Productivity Commission is not affiliated to the Australian Labor Party. It is full of people who actually believe in free enterprise, who recommend in the main that we adopt free enterprise solutions with respect to economic prosperity and the economic development of the country.

In April 2010, the government announced reforms to strengthen the remuneration framework in response to the Productivity Commission's report. Does the member for Mitchell think somehow that the Productivity Commission is a bunch of closet communists or socialists? I do not think so. You can read any of their reports with respect to so many areas—for example, they handed down a draft report on aged care earlier this year. I cannot see that somehow that is full of communist rhetoric or is something Karl Marx would have loved. We have taken up this particular recommendation from the Productivity Commission and we have carried it out.

The Productivity Commission actually said that corporate Australia in terms of its governance and remuneration framework was amongst the best in the world and ranked high internationally. That is what they recommended. They made a number of recommendations which would improve that and this bill contains those measures. The Productivity Commission made clear that directors need to be accountable to shareholders for decisions with respect to executive remuneration, to address conflicts of interest, particularly with respect to setting the processes for executive remuneration. The Productivity Commission recommends things and we have followed up those recommendations. The point of the matter is this—and those opposite should really take note of this. The catalyst for this inquiry was the concern that executive pays had got out of hand. Some people in this place have actually listed some executive pays. Let me say this about the banking sector in this country—the big four—which, through the global financial crisis, benefited from the federal Labor government's management and its provision of bank guarantees. They have some of the highest paid executives in the country, with the Commonwealth Bank of Australia now at the top of that list. Their chief executive, Ralph Norris, earns a remuneration package of $16.2 million. He might have skills, talent and ability which deserve money in the marketplace, but if you were a police officer and your wife a part-time secretary and you were living in flood affected Booval, in my electorate, you would think that $16.2 million is a pretty large salary.

That is not the only example. There are people like Westpac chief executive Gail Kelly, who earns $9.6 million. We want to make sure that, if these types of salaries are paid, shareholders have a say in decision making about it and that it is not simply driven from above, with boards of directors running the show in a way that lets them set their own remuneration with little transparency, accountability or corporate democracy.

The chief executive of the Australian Shareholders Association recently welcomed this report, saying:

The Global Financial Crisis demonstrated the consequences of excessive risks taken by many companies and their executives. We saw corporate collapse and billions of dollars of shareholder value disappear into thin air from poor management decisions. However, executives were never really held accountable.

He also said:

We have long argued that the interests of directors and executives should be aligned with those of shareholders and the community. It seems somewhat difficult for the average Australian to comprehend how his or her job and financial survival can be constantly questioned, while senior executives can preside over huge losses and destruction of value, and at the same time receive a bonus.

This bill does address those concerns. It contains a provision to subject directors to greater scrutiny and accountability through the two strikes test, which people have talked about, if they do not respond to shareholder concerns on remuneration issues. The provision will give shareholders the opportunity to remove directors if the company's remuneration report receives a 'no' vote of 25 per cent or more at two consecutive annual general meetings.

New transparency requirements will apply to remuneration consultants—and I know the member for Mitchell is not happy about that—where there are conflicts of interest. The package eliminates those conflicts by prohibiting directors and executives who hold shares from voting on remuneration issues. I cannot see how that is a problem. If there are conflicts of interest in local government, people abstain. I have been on the board of numerous church and charitable organisations and, if there are conflicts of interest, people abstain. I cannot see a problem in that regard with respect to corporate Australia.

The bill will ensure that shareholders have the ultimate say in the composition of the board. Public companies will be required to obtain the approval of shareholders in order to declare, at a company meeting, that there are no vacant board positions. And that is the way some boards of directors run the show at times—you get your little group together and, if you are all of one mind, you can all look after one another. We want to make sure that that is open and transparent as well.

I think the bill demonstrates the proactive leadership of the government in this regard and I think the average Australian will think it is appropriate to empower shareholders in this way. I think the average Australian in my electorate—in Blair, in Ipswich or in the Somerset—will think that we are responding appropriately to the Productivity Commission report and that we are doing the right thing by investors.

I think that corporate Australia needs to have a look at community trust. I think there is a fundamental issue in that regard. I think corporate Australia really needs to have a look at that. We understand that there is a shift to incentive pay structures. We understand that—that is what is happening globally and, if Australian companies want to compete in the global market, that has to occur. We can understand wanting to hire the best person for the job and the need to pay that person appropriately—to structure the pay, the salary and the remuneration to maximise their performance. When I was in business myself, as a senior partner of a law firm, and I hired staff, I did that—I made sure I got the best person possible and I paid them the best salary I could to do so. It has often been described as a war for talent. We know that.

But we cannot pay egregious salaries in a way that betrays community trust. The instances of excessive executive payments and perceived inappropriate behaviour simply reduce the confidence of investors and reduce the confidence of Australian taxpayers, and the Australian community generally, in the corporate sector. We do not want corporate Australia to be criticised by the Australian public; we want the Australian public to support the corporate sector. We want that because we want to make sure that every kid who lives in my electorate and electorates across the country can have a job, get financial security and achieve everything they want in life. We want those kids to aspire to become teachers and doctors and lawyers and company executives and engineers and politicians and physiotherapists. We want them to achieve everything they want in life, but we do not want them to lose trust in the employment arrangements of corporate Australia, whether the employer is in banking, finance, superannuation or anything else.

This legislation is good. It is not about communism; it is not about socialism; it is about supporting community trust in the corporate sector in this country. It is about transparency and accountability. It is about good practice. It is about making sure that boards are accountable to shareholders in the way the Productivity Commission recommends. This is not about a betrayal of free enterprise and the market system; this is about strengthening that. It is only Labor that truly believes in free enterprise and it is only Labor that truly believes in the market economy. Those opposite say one thing but when they get into power they do something else. The whole history of the Liberal Party is about betraying the workers and the forgotten people that Robert Menzies claimed the Liberal Party should aspire to support. Their whole purpose has been to betray and to be on the side of big business, and that is why the member for Mitchell make speeches such as the one he made tonight. (Time expired)

Debate adjourned.

Mr BRIGGS (Mayo) (17:48): I rise to speak on the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011. The coalition, as indicated by the shadow Treasurer, largely support the bill but we have reserved our right to move some amendments at a later time and in another place. We support the bill because it implements some of the recommendations made by the Productivity Commission in its recent inquiry into executive remuneration in Australia, which reported on 14 January 2010. It was one of the myriad reports and inquiries that the Labor government has implemented since it came to office in November 2007.

Of course, talking on a financial bill on budget day is a coincidence. I note to the House that tonight we will see some of the consequences of the Labor Party's mismanagement of Australia's finances and Australia's budget situation when we see, in just a couple of hours, one of the biggest deficits ever laid down in this place.

It is a concern any time the Labor Party moves any sort of regulation in this space because we see that when they move into this space they do not do it well. The action usually has more of a consequence than was intended in regard to the problem that they are seeking to solve.

The coalition understands that there is broad community concern about executive remuneration, particularly during the bank reporting season. In some respects I understand that the numbers paid to some top executives are beyond community expectations. It should not surprise anyone that those concerns are raised through the media, through our offices and through discussions at community forums around the place. However, there is always a danger in this game that we identify problems without any reasonable expectation that we can solve them. It is easy to play the politics of envy and it is easy to do the 'us versus them', but we do our constituents a grand disservice if we raise expectations of fixing a problem we cannot ever realistically address. The truth is that company directors and the shareholders of companies make decisions on how much they pay their executives, their CEOs and their staff.

The other fact of the matter is that we are part of a global economy and we have to compete for labour and skills at all levels. And this is one of the areas in which we have to compete for skills. So we do need to be careful, in some of the contributions from members opposite, that we are raising expectations in the community that these amendments will massively change the way that these salaries are brought about and the amounts that do seem at times to be beyond community expectations, because the fact is that even with these changes we are not going to see smaller executive remuneration in the very near future. In fact, I would hazard a guess that this year we will see some quite extraordinary amounts of money paid to individuals based on the performances of their companies. In particular, as we have a very strongly performing mining sector, we are going to see some very large amounts paid to people involved in it. The government is not going to stop that, and constituents in my electorate will understand that the government and, for that matter, those of us on this side do not seek to do so. What we do seek to do is empower shareholders more, particularly when the Productivity Commission, whose work I have a very high regard for, is making some sensible recommendations on how we do that. The recommendations in this bill, as I said at the beginning of my contribution, in large part are recommendations that the coalition can and will support in amending the bill.

I referred to the politics of envy that those on the other side occasionally like to play on these matters—the raising of 'us versus them' because it is cheap and easy politics to get a run out of. Recently we saw a very bad example of that. The Treasurer, who will shortly deliver the budget, a budget in which he is handing down a $50 billion deficit to add to our massively building debt, a month or so ago made some ill-informed and unfortunate comments in the media in relation to the payment structure for the Governor of the Reserve Bank. I know there have been people on my side of politics who have been critical of some of the actions of the Governor of the Reserve Bank, but while those on the other side like to pat themselves on the back for their management of the economy during the global financial crisis I think there is little doubt that Glenn Stevens, through the actions that he took through monetary policy, played a very significant role in ensuring that Australia survived the worst of the global financial crisis. He has had a very well thought through and clearly set direction in the way in which he has managed Australia's monetary policy in recent years, and it was a big mistake to raise the issues in relation to his salary, given the amounts that people who are managing similar institutions are paid in his industry not just in Australia but also around the world. The governor goes about his job in a very competent fashion and he does what we in this parliament ask him to do, which is manage Australia's monetary policy. He does an excellent job particularly within the band of inflation. It was very ill-informed of the Treasurer to go down the populist road and raise those issues just a few weeks ago in a 'politics of envy' style. Unfortunately, it was what we have come to expect from a man who should really be focusing on how to bring the Australian fiscal position back to a much more reasonable position. If the Treasurer did his job half as well as the Governor of the Reserve Bank does we probably would not be seeing some of the numbers in tonight's budget.

As I said at the beginning of my contribution, the coalition largely supports the direction of this bill. We will have some concerns in the Senate, which the shadow Treasurer so ably, as usual, outlined in his contribution to this place some time ago, back in March. Amendments to the bill will be well thought through and well-considered. It is a bill which seeks to empower, largely, shareholders. It seeks to make some changes around voting. It seeks to make some changes in relation to remuneration consultants. I understand that the member for Mitchell reflected on those earlier, which seemed to start up the comical contribution of the member for Blair; it got him a little bit worked up earlier. The bill deals with the hedging of incentive remuneration. It deals with the declarations of no vacancies at annual general meetings. It deals with the way that proxies and remuneration reports are dealt with and with recommendations out of the Productivity Commission, which should be taken seriously. I do not think there is any doubt about the quality of the work that the Productivity Commission does for the Australian public; it is always there.

In those respects the coalition is broadly supportive of this bill and will not oppose it, but we will be seeking to make some changes at a later time.

Debate adjourned.

Sitti ng suspended from 17:58 to 19:30

Mr SWAN (Lilley—Deputy Prime Minister and Treasurer) (19:31): I move:

That this bill be now read a second time.

Introduction

The purpose of this Labor government, and this Labor budget, is to put the opportunities that flow from a strong economy within the reach of more Australians.

To get more people into work, and to train them for more rewarding jobs. So that national prosperity reaches more lives, in more corners, of our patchwork economy.

To take full advantage of the seismic shift in global economic power, which positions us as a prime beneficiary of tremendous economic growth in our region.

And to succeed in the good times as we did in the bad—by choice, not by chance—by applying the best combination of hard work, responsible budgeting, and well-considered policies to the difficult challenges ahead.

This budget is built on our firmest convictions:

That just as our focus on jobs helped Australia beat the global recession, so too can a focus on jobs ensure we maximise our advantages in the Asian Century.

And just as deficits are the right thing to fight a global recession, or to rebuild from natural disasters, so too are surpluses right for an economy set to grow strongly again.

We have imposed the strictest spending limits, delivering $22 billion in savings to make room for our key priorities, ensuring our country lives within its means.

We are on track for surplus in 2012-13, on time and as promised— and this provides the solid foundations for the targeted investments we announce tonight.

Australia emerged strongly from the global recession, creating hundreds of thousands of jobs while our peers shed millions of jobs.

Our public debt is a tiny fraction of that carried by comparable economies, our fiscal position is the envy of the developed world. An investment boom is gathering pace.

Yet our patchwork economy grows unevenly across the nation.

Natural disasters have devastated families, cities and towns. The high dollar hurts our tourism and, of course, many manufacturing industries, especially small businesses.

For some, talk of an investment boom seems divorced from reality. Wages are growing, yet many live paycheque to paycheque. Not every region prospers. Not every health service is as good as it can be, especially for the mentally ill.

Unemployment has a four in front of it, yet some households have never had a breadwinner. The economy cries out for workers, yet too many are left behind, unwilling or unskilled—and untouched by the dignity of work.

That is why the core of this Labor budget is:

a plan to build the more productive workforce our economy needs, including a $3 billion training package, new ways to get people into work, and critical new investments in economic infrastructure;

a plan for better schools, hospitals, and health care, including a total of $2.2 billion for mental health services and $1.8 billion for regional health facilities;

and cost of living relief for families, investments in a sustainable Australia, and new assistance for small businesses and manufacturers.

All while making the difficult decisions necessary to get back in the black by 2012-13—light years ahead of other major advanced economies.

Economic Outlook

Nobody will forget the recent natural disasters which destroyed lives and livelihoods, here and abroad. The human tragedies are foremost in our minds, but there are economic consequences as well.

The floods and Cyclone Yasi will cost our economy $9 billion in lost output and reduce real GDP growth by ½ of a percentage point in 2010-11.

Combined with the impact of disasters in New Zealand and Japan, the hit becomes ¾ of a percentage point this year—pushing growth well below its long-term average.

These events have shaken our economy, but they have not knocked our economy off its course. Real GDP growth is forecast to be a strong four per cent in 2011-12 and 3¾ per cent in 2012-13.

Over 300,000 jobs have been created in the past year and the unemployment rate is forecast to fall further, to 4½ per cent by mid 2013, creating another half a million jobs. Mining investment will rise to around eight times the level preceding the boom to $76 billion in 2011-12, underpinned by the highest sustained terms of trade in 140 years.

But not every family or business is feeling the immediate benefits.

The dollar is around post-float highs and this makes it difficult for some sectors, particularly those that compete in international markets.

We see lingering effects from the global recession in consumer caution, a slow improvement in people's wealth, and tighter credit, all of which have had an impact on government revenue.

But with the investment pipeline ramping up and unemployment falling, the boom will test our economy and our workforce, and price pressures will re-emerge.

That is why we have strict spending limits—so that we do not compound these pressures—and why this Budget will help get more Australians into better jobs, improving productivity and participation.

Building the Productive Workforce our Economy Needs

Tonight I announce Building Australia's Future Workforce, a plan to help industries get the skilled workers they need, to modernise apprenticeships, and to ensure more Australians enjoy the economic and social dividends of work.

Training

Our plan begins with a new approach to training:

Putting industry at the heart of a $558 million National Workforce Development Fund that will deliver 130,000 new training places over four years;

Better meeting the needs of industries and regions with a $101 million national mentoring program to help 40,000 apprentices finish their training;

Accelerating apprenticeships, letting them progress as they acquire the right skills, by investing $100 million in more flexible training models;

Plus up to $1.75 billion, in addition to our existing $7 billion investment, to leverage ambitious reforms of the vocational education and training system with the states;

And funding 30,000 more places in the Language, Literacy and Numeracy Program to provide the basic skills essential for a job.

Along with training more Australians for work, we also need to attract highly-skilled migrants to live and work in regional Australia.

For the first time, we will allocate 16,000 skilled migration places to the regions, complemented by Regional Migration Agreements for communities with skill shortages, and we will introduce Enterprise Migration Agreements for large resource projects in return for a financial contribution to train Australians for the future.

Participation

Better training is essential for the workforce our economy needs, as is encouraging, rewarding, and insisting on the participation of more workers.

Providing opport unity, demanding responsibility

We believe in extending the benefits of work to every capable Australian—single parents and jobless families, young Australians, the very long-term unemployed, the disabled, and older workers whose experience we need and value.

In a growing economy like ours, we cannot justify the fourth highest proportion of jobless families in the developed world.

A wealthy country like ours has no excuse to leave people out of work.

So we will cut effective tax rates for 50,000 single parents by up to 20c in the dollar, invest $80 million in their skills, and transition more parents with high school kids onto job search payments.

To remove tax breaks that encourage people without kids to stay at home, we will phase out the dependent spouse tax offset beginning with partners under 40.

To remove incentives for young people to leave study for the dole queue, we will extend Earn or Learn requirements to 21-year-olds and create new pathways to full-time employment for early school leavers.

To get the very long-term unemployed into work, we will invest $233 million in new support programs and 35,000 targeted wage subsidies—encouraging employers to hire those who have not worked for more than two years.

To slow the growth of disability support pension numbers and get more people in the workforce, we will bring forward strict new work tests, update the definition of incapacity, introduce new requirements for younger recipients, provide more wage subsidies, and allow more hours to be worked before payments are suspended.

To address entrenched disadvantage, we will introduce participation plans for teen parents and new requirements for jobless families. We will extend income management, and develop new place-based programs to support local and regional employment.

For seniors, our work bonus now allows an extra $125 a week of earned income before their pensions are affected, and we will better recognise their skills and experience.

Infrastructure

Our focus on training and participation is crucial to building productivity, as is our focus on infrastructure.

That is why we are building the National Broadband Network and investing $36 billion in vital roads, railways and ports, like the Moreton Bay Rail Link in Queensland, the Gateway project in Western Australia, the Western Ring Road upgrade in Victoria, and now additional funds to duplicate the Pacific Highway.

Tonight I announce new approaches to supplement our proud nation building record.

We will help remove barriers to private investment in nationally significant public infrastructure by reducing the tax uncertainty that lengthy and complex projects face.

We will strengthen Infrastructure Australia with extra funding and greater independence, and we will produce the first ever national construction schedule to give super funds and other investors the certainty they need to invest with confidence.

Better Hospitals, Health Care And Schools

We will keep our economy strong so that we can invest in the things all Australians rely on: better health care and education wherever they live.

Health Care

We are already guaranteeing $16.4 billion in additional growth funding for public hospitals over six years, and another $3.4 billion over four years for emergency departments, elective surgery and 1,300 subacute hospital beds.

I announce tonight a total of $1.8 billion in investments in hospitals and health care for our regions, from the latest round of the Health and Hospitals Fund.

New funding of $717 million over five years will expand access to diagnostic imaging services and make new medicines and immunisations more affordable.

An extra $53 million will improve access to public dental services, particularly for those on low incomes, as a first step towards significant reform in 2012-13.

Tonight I am particularly proud to announce new improvements to mental health services.

Untreated mental illness can lead to disengagement, unemployment, family breakdown, substance abuse, homelessness and, sadly, suicide.

We demonstrate our commitment to addressing mental illness by making the room in a tight budget for $1.5 billion in new initiatives, as part of our $2.2 billion package to deliver better care.

This package will focus on support for the severely ill by funding organisations to co-ordinate both clinical and social support and helping to relieve the pressure often felt by families and those with a mental illness in navigating a complex system.

We will also address prevention and early detection for young people, by investing a further $419 million in headspace and early psychosis prevention and intervention centres, as early intervention often avoids a tragic cycle of hospitalisation and social isolation.

We will also invest in better access to primary care, a more responsive system and a new National Mental Health Commission that will drive future reforms.

Schools

This budget also builds on our proud record of lifting education standards, providing $425 million to reward top performing teachers.

The Teach Next initiative will provide $18 million for new pathways into a teaching career.

We will invest $200 million to support disabled school students and we will also extend the National School Chaplaincy program, taking new investment in schools to over $800 million in this budget.

Helping Families, Regions And Businesses

While our national economy is strengthening, not all Australians automatically share in the opportunities this creates.

So this budget will help families under financial pressure, regions under pressure to modernise and grow, and industries under pressure from the rising dollar.

Cost of Living

We take seriously our responsibility to deliver financial assistance when it is needed and to provide extra support for families with kids at school.

From July this year, we will deliver up to a further $300 a year of the low income tax offset into pay packets, rather than at the end of the year.

We will increase family tax benefit part A for older teenagers by up to $4,208 a year, $161 a fortnight, on top of the $460 million we are providing to extend the education tax refund to cover school uniforms.

We will allow payment advances of up to $1,000 for family tax benefit part A recipients at any time to meet unexpected family expenses and give parents greater choice in when they receive childcare support.

And we recognise prisoners of war from World War II and the Korean War with an additional payment of $500 a fortnight from 20 September 2011.

We know too many Australians are squeezed by rising costs of living and we help where we responsibly can.

That is why we cut income taxes substantially in each of our first three budgets, so that an average income earner now pays around $1,000 a year less tax and that is why we have ensured pensions are now $128 a fortnight higher for singles and $116 higher for couples since the announcement of our historic boost two years ago.

Regional Policy and Sustainable Australia

We want prosperity and opportunity to reach all corners of the nation, especially our outer suburbs and regional towns. This is crucial to managing population growth and promoting sustainability right around the country.

Among the most important things we can do to help deal with population pressures is to make regions more attractive places to work and raise a family.

This budget delivers for regional Australia like no budget before it.

Our Sustainable Australia strategy starts with $4.3 billion of investments in regional hospitals, health care, universities and roads.

These investments, along with the NBN, will help lift living standards outside the big cities, provide better health services and educational opportunities and help regional communities reach their potential.

These are crucial investments, but they are only the beginning.

The Prime Minister will lead a rigorous COAG process that asks state premiers to partner with the Commonwealth on reforms of particular relevance to their jurisdiction: from labour mobility to our west to easing congestion in Sydney.

We will begin with $232 million in new strategic investments, including $100 million for suburban employment hubs and $61 million for smarter motorways.

Small Business and Manufacturers

Australian businesses embrace fierce competition, but many are feeling the pinch of workforce shortages and our rising dollar.

So in this budget, we do what we can to help small businesses in particular, by replacing the narrow entrepreneurs tax offset with tax reforms that are available to all 2.7 million small businesses.

Last year we announced that from 1 July 2012, we would allow small business to immediately write-off assets below $5,000.

We know the main asset of many small businesses is their ute or van, so the first $5,000 of the cost of a vehicle can now be immediately written off as well.

Because cash flow is the lifeblood of small business, we will reduce tax instalment payments by $700 million in 2011-12, giving vital relief when conditions are tough.

We will give small businesses a head start on the company tax cut that will be funded by our minerals resource rent tax.

And to make sure local enterprises can seize the opportunities presented by the boom, tonight I announce a $34 million package to help Australian manufacturers better supply resource sector projects.

Getting the Budget Back in the Black

Mr Speaker, 2011 has been a difficult year for many Australians who have endured floods and cyclones. We have made the necessary decisions to rebuild their communities, including a modest temporary levy.

Despite the total cost to government of over $8 billion, our commitment to tightening our belt has not diminished one bit.

We will be back in the black by 2012-13, on time, as promised.

The alternative—meandering back to surplus—would compound the pressures in our economy and push up the cost of living for pensioners and working people.

We will reach surplus despite company taxes not recovering like our economy.

Losses built up during the global crisis are larger and lingering longer, contributing to reduced company taxes of $8 billion in this budget over two years.

This overhang from the GFC and the global recession, along with a higher dollar and record mining investment and associated tax deductions, are all slowing revenue growth.

Since the last update, tax receipts are down $16 billion in the first two years, taking the whole write-down since the crisis to $130 billion over five years.

The lower tax receipts in this budget account for all the increase in the deficit for 2010-11 and about two-thirds of the increase over 2010-11 and 2011-12.

It means the deficit for 2011-12 becomes $22.6 billion, and net debt will now peak at 7.2 per cent of GDP that year, a tiny fraction of comparable countries.

Our spending restraint means real growth in spending averages one per cent a year over the budget estimates, the lowest average rate in a five-year period since the 1980s.

This is putting us on track for a $3.5 billion surplus in 2012-13.

Just as it was right to step in and support the economy during the downturn, it is now right to step back and make room for private sector activity.

Good decisions now will avoid unnecessary pain in the future.

$22 billion in difficult savings in this budget will strengthen our structural position over time.

We will reform the fringe benefits tax arrangements for cars by introducing a single rate regardless of how far a car is driven, saving $954 million over five years.

This is one of 12 reforms since the last budget which deliver on directions identified by the tax review, including the phasing out of the dependent spouse tax offset, and replacing the entrepreneurs tax offset with better small business policies.

Extending the freeze on the higher income limits for family payments for two more years will also save $1.2 billion and make the system more sustainable. And we will increase the public service efficiency dividend, saving $1.1 billion.

We don't take our savings decisions lightly, and we take no joy from making them. But we take comfort in knowing they are right and necessary to ensure we don't compound the pressures of the boom.

Economy in Transition

Labor governments of the past managed the transition from a closed economy to an open economy competing in the world.

Now that the world is changing, we must change as well.

Ours is again an economy in transition.

Global economic weight shifts from west to east—bringing growth and dynamism closer to Australia than ever before.

Our economy transitions from sluggish growth to stretching at the seams; our budget from deficits in tough times to surpluses in better times.

Our industries must transition to the clean-energy technologies of the future, encouraged by a price on carbon.

Having beaten the global recession, we now face these new challenges.

Managing them is the key to our future.

With the right policies and decisions, we can convert an unprecedented mining investment boom into an opportunity boom for more of our people.

We believe in the Australian promise; that if you work hard, you won't be left behind.

We believe our economy can't afford to waste a single pair of capable hands.

And we believe this budget, our tax reforms, and our plans for a carbon price, will set Australia up for the prosperous future all our people deserve.

I commend the bill to the House.

Debate adjourned.

Mr SWAN (Lilley—Deputy Prime Minister and Treasurer) (19:59): For the information of honourable members, I present the following documents in connection with the Budget of 2011-12:

Budget Strategy and Outlook 2011-12,

Budget Measures 2011-12,

Australia's Federal Relations 2011-12, and

Agency Resourcing 2011-12

Ordered that the documents be made Parliamentary Papers.

Mr SHORTEN (Maribyrnong—Assistant Treasurer and Minister for Financial Services and Superannuation) (20:01): I move:

That this bill be now read a second time.

Appropriation Bill (No. 2) 2011-2012, together with Appropriation Bill (No. 1) 2011-2012, is one of the principal pieces of legislation underpinning the government's budget.

Appropriation Bill (No. 2) 2011-2012 proposes appropriation for agencies to meet:

payments direct to local government, and some national partnership payments through the states, the Australian Capital Territory and the Northern Territory;

requirements for departmental equity injections; and

requirements to create or acquire administered assets and to discharge administered liabilities.

Appropriation Bill (No. 2) 2011-2012 seeks approval for appropriations from the Consolidated Revenue Fund totalling $7.396 billion.

Appropriation Bill 1 and Appropriation Bill 2 include a one-off contingency clause apportioning the appropriation for the Department of Human Services between the Department of Human Services, Centrelink and Medicare Australia should the Human Services Legislation Amendment Bill 2011 not receive the royal assent by 30 June 2011. This will enable the three agencies to continue operating from 1 July 2011 until the legislation receives the royal assent. Importantly, these clauses will not change the total amount appropriated by the bills.

Bill 2 also provides for amendments to the Commonwealth Inscribed Stock Act 1911. The amendments will increase the limit on the face value of stock and securities on issue to $250 billion and repeal the special circumstances provision. These amendments provide for the government's financing requirements over the forward estimates and ensure flexibility in implementing the government's objectives for maintaining a liquid and efficient Commonwealth government securities market.

In addition, amendments to the CIS Act will establish two special appropriations. One is for the costs and expenses incurred by the Commonwealth in relation to the issue or sale of stock and the other is for the costs and expenses incurred by the repurchase and redemption of stock prior to maturity. These special appropriations are intended to provide greater flexibility in managing the debt portfolio and thereby support the efficient management of the government's debt portfolio.

These amendments increase the legislative limit on Commonwealth government securities issuance and borrowings as well as establishing two special appropriations for borrowing and debt management activities.

Details of the proposed appropriations are set out in schedule 2 to the bill, the main features of which were outlined in the budget speech delivered by my colleague the Treasurer earlier this evening.

I commend the bill to the House.

Debate adjourned.

Mr SHORTEN (Maribyrnong—Assistant Treasurer and Minister for Financial Services and Superannuation) (20:04): I move:

That this bill be now read a second time.

The purpose of the Appropriation (Parliamentary Departments) Bill (No. 1) 2011-2012 is to provide funding for the operations of the three parliamentary departments.

The total appropriation sought through this bill is $180.166 million. Details of the proposed expenditure are set out in the schedule to the bill.

I commend the bill to the House.

Debate adjourned.