Senator McALLISTER (New South Wales—Deputy Opposition Whip in the Senate) (09:37): I rise to speak on the Productivity Commission Amendment (Reducing Inequality) Bill 2017. This bill places inequality firmly on the agenda of one of our country's most influential economic policy institutions. We consider the bill at a time when inequality in Australia is at a 75-year high, and when global leaders are warning that inequality threatens the global economy.

The Productivity Commission is tasked with providing research and policy advice on industry, industry development and productivity. Its scope is broad; it encompasses both specific industries and the productivity performance of the economy as a whole. Its influence is significant. Most people in this chamber could easily identify economic debates in the last 30 years where the commission's intervention has been decisive, and on many of these occasions its advice has, of course, been hotly contested. What is uncontroversial is that its advice has been central to government decision making, and we can no longer afford to allow this advice to be developed insensibly to the significance of economic inequality. The commission is already required to consider a range of considerations—everything from ecological sustainability to regional development is listed in its enabling legislation. Inequality should be on this list.

We can also no longer afford to starve our government of credible, focused research on inequality. The Productivity Commission is well placed to apply its substantial resources to generating just this type of analysis. The bill would require the commission to do just this: tabling an inequality report every five years, aligned with the production of the Intergenerational report. Doing so would bring valuable analysis into a debate that is already raging.

There has been growing discussion of economic inequality in the media and in these corridors in the last 12 months, and it is not just because people have got around to reading a couple more chapters of Thomas Piketty's book. There is a palpable fear that inequality has bred populism in Australia and overseas, and that it threatens the economic consensus that has held sway since the 1990s. Just this week we heard the governor of the Reserve Bank calling on workers to demand higher wages and the head of the Business Council of Australia writing that, rather than being allowed to pool in certain cities or among certain citizens, the business community must ensure that the benefits of growth are felt by all.

I am heartened by those sentiments but, in the flurry of sudden interest, we cannot forget that inequality is not, in fact, new; nor is the imperative to address it. Inequality was important before Brexit and it was important before Trump. Inequality affected ordinary people's lives well before it affected our political systems. Inequality threatened families' security and their stability well before it threatened business's access to global markets. We should not have to look to shock election results to find an imperative to address inequality, because the imperative lies in basic fairness—in families who are working harder for less, sandwiched between one generation that fears it may never be able to afford to buy a house and another generation that fears it may never be able to afford to retire. The imperative has always been there, and I am glad we are starting to get the momentum to address it.

Australians like to think that we are removed from the stark inequality that we see in America and the United Kingdom—and in some ways we are. Income and asset concentration in Australia is a fraction of what it is in the United States. The GFC did not hit us hard, as we entered it with significantly less inequality than other nations and, during the 2000s, Australia's middle incomes grew strongly—unlike other countries in the OECD that experienced slow growth or falling middle incomes. A Labor government responded to the GFC with a strong stimulus that prevented widespread joblessness and the inequality that comes with it. We should be proud of that intervention, but it has not insulated us from the broader trends that have been in play since the 1980s. Over the past four decades incomes for the top 10 per cent have risen nearly four times as fast as they have for the bottom 10 per cent, and this is not just the result of high-income earners being able to negotiate better pay packages. It reflects broad changes in the way our shared prosperity is divided.

During the 1990s wages decoupled from productivity growth, and even though Australian workers are more efficient and productive than ever before they are not being rewarded for it in wages. The labour share of national income in Australia has dropped from 75 per cent in the 1970s to just 53 per cent in 2016. The share for business, on the converse, is increasing. Let us be very, very clear about what this means: it means that investment pays better, much better, than work. But only—and this is critical—for those who can afford to invest. These dynamics are starting to weigh on our social structures and on our economy. Wealth is far more unevenly distributed than income. In 2003 the wealthiest 20 per cent were worth 57 times more than the poorest 20 per cent. Ten years later that figure has risen substantially: they are now worth 71 times more. The three richest Australians own more than the million poorest Australians put together. Today inequality is at a 75-year high. Australia now sits in the bottom half of the OECD's rankings for economic inequality.

We may live in a time of deepening economic inequality; however, it is worth reflecting that for most of our history since Federation we have actually experienced falling levels of inequality. At the start of Federation, we were a very unequal nation. When the Anzacs headed to Gallipoli, inequality was at its peak—one per cent of Australians owned one-third of all wealth and earned one-eighth of all income—but for the next 60-odd years inequality steadily fell, reaching a low point in the 1970s. The point I want to make is this: what happened over those six decades was not an accident, it was not a quirk of trickle-down economics; it was a direct function of the progressives' project to make Australia a fairer place for everyone. The labour movement and its political representatives have fought and won policies that shared Australia's growing prosperity much more fairly over those 120 years, and those policies became part of Australia's social contract. They evolved into institutions that were able to survive changes of government. This social contract drove down inequality in the postwar period and, to the extent that it survived changes in the 1980s and 1990s, it helped Australia avoid the excesses of inequality that we see today in the US and the UK, and there are a few aspects of it I want to briefly touch on, because they go to role of Labor governments in navigating the transformation of our economy to become more open and yet still fundamentally fair.

The first element, of course, is having a targeted welfare net. Between the health care provided by Medicare, and now the NDIS, the payments and the income support available, we seek to protect our poorest from the very worst effects of inequality. We do that very efficiently. The second element is having a progressive taxation system, reflecting the principle that those who earn more can afford to contribute more. The third element is publicly available universal education, a system of public schooling and the wide availability of tertiary education. But perhaps the most important element is our protection for wages and workplace conditions. In 1904, the world's first Labor national government started to put in place systems to manage workplace conciliation and arbitration. The systems developed by the labour movement in those early years were uniquely Australian. It was a solution that shaped dramatically the relationship between the labour movement and the state, and it formed the basis for decades of industrial outcomes that lifted the living conditions of millions of Australians.

But, like so many of the other bulwarks against equality, this has been eroded by continuing conservative calls for deregulation. And it starts to have consequences. Earlier this week, as I mentioned, the Reserve Bank governor said he would like to see workers asking for more pay increases. I agree. But it is not timidity or a lack of ambition that is holding Australian workers back; our industrial relations system has been reshaped to limit the bargaining power of workers in their workplaces. It shows in the level of unionisation today, dropping to only around 10 per cent of the private sector workforce. We need to be careful about this. The Australian social contract lifted living conditions and reduced inequality for Australians for much of the last century, and Labor has been a proud part of that story. But under conservative governments, as welfare payments are cut, workplace protection slashed and penalty rates removed, inequality has started to increase. Australia is the most unequal it has been in 75 years.

There are some people who might say, 'So what?' They say we should be focused on prosperity, not inequality; that as long as the pie is growing, it does not matter if some people are taking bigger and bigger pieces. I do not agree, and neither do most Australians. When surveyed, almost three-quarters of Australians agree that differences in income are too high. Inequality is not just about money; inequality shuts the door to opportunities, and Australians are not happy for wealth to decide the quality of someone's education or their health care. We do not think that your wage should depend on what your parents earned.

What has also become increasingly obvious in recent years is that the dichotomy between prosperity and fairness is false. More equal societies grow more quickly. That is not just wishful thinking from those on the Left. It is the considered view of hard-headed economists in institutions like the IMF. On a microeconomic level inequality creates barriers to people starting a business or going to university or being able to participate fully in the economy. It is a drag on growth. More broadly, income inequality affects the way an economy operates. Increasing the pay of low- and average-income earners boosts growth more, much more, than increasing the return to the well-off. These households spend more of their extra incomes, stimulating the economy. The OECD estimated that income inequality between 1985 and 2005 reduced economic growth among its member states by almost five per cent. As the head of the IMF, Christine Lagarde, explained: the benefits of higher incomes are trickling up not down.

Why this bill then? Whatever excuses there may once have been for ignoring economic inequality, they have dropped away. All the signs demand action: economics, political pragmatism, not to mention basic fairness. I do want to be clear that I do not believe that passing this bill will solve inequality. We need concerted action to level access to education, to strengthen workplace rights, to make our tax system more progressive and to make our welfare system fairer and stronger. This bill does not tackle those specifics. Instead, it is a step in building the policy infrastructure to make sure we do these things. It aims to fire up the Public Service institutions and to build the expertise that we need to look at inequality and properly address it. It aims to build a wealth of expertise and knowledge within an eminent public policy institution through establishing a requirement for a five-yearly inequality report produced by the Productivity Commission. It seeks to use that capability to bring these issues before the parliament regularly for our consideration and response.

I am from the political Left, and I am conscious that over the years there have been regular calls from within that tradition to dismantle the Productivity Commission. I understand the hesitation that some may have in tasking it instead to look at economic inequality. My own view is that nearly always we are best to build on and transform the institutions we already have.

Australia has a proud tradition of innovative public mechanisms to deliver on public policy. Medicare remains an extraordinary achievement. Globally, our superannuation system is much admired. We have also proven skilful at recasting older institutions to meet new challenges. In the 1980s and the 1990s under Labor, we transformed Australia's political and economic institutions to respond to a more open world. To provide just one example, the Reserve Bank's role changed profoundly in the eighties, reorienting its activities to deliver effective monetary policy in a newly opened financial system.

Today we need to retool all our institutions once more to address the challenge of our times: the growing disparity in wealth and income. The Productivity Commission has changed direction and purpose before, and it will have to again. From the Tariff Board of the twenties through to the Industry Assistance Commission of the seventies up until its present form, this institution has been repurposed to respond to contemporary policy imperatives. But, institutions matter. They have a rhythm of their own and they develop momentum that survives changes of government.

The great Nugget Coombs, arguably one of our most celebrated public servants, understood this. He played an incredible role shaping the institutions of the postwar period. Reflecting on that he said, 'I was not a fan of revolution.' He said there is:

… only reform—the creation of new institutions, the recasting of those already existing, the revitalisation of the moral and social imperatives which lend them vigour.

This bill seeks to ensure that the Productivity Commission is alive to one of the most significant moral and social imperatives of today: economic inequality.

Senator PATERSON (Victoria) (09:55): I listened with great interest to the contribution from Senator McAllister, my valued colleague on the Finance and Public Administration Committee. It was thoughtful and measured, as her contributions typically are. But I was listening very carefully for one particular point in her speech, which did not come, and it is an important one in the debate about inequality. The particular question that advocates of action on inequality must answer is: how much inequality is too much inequality and how much inequality is an acceptable level of inequality? That might sound like a strange thing to ask. One might assume, if one agrees that inequality is a terrible thing, which most people do, that there should be no inequality. But if there were no inequality then that would mean complete equality of outcomes, and I do not think anyone in this chamber advocates that. I do not think Senator McAllister advocates that. I do not think Senator Whish-Wilson, who I understand is speaking next, advocates that; although perhaps his colleague Senator Rhiannon would advocate that. I do not know how much her thinking has evolved on these issues.

It is an important question to answer, because if we agree that complete equality is not a good idea and that complete inequality is not a good idea, where do we draw the line between complete equality and complete inequality as to an acceptable level of inequality? I have not yet heard in this debate, nor in dozens of debates on this issue by economists, academics and others who take an interest, anyone nominate an acceptable or tolerable level of inequality. I think that is an important thing to nominate, because if we are seeking to address a problem then we have to know how to define it in an empirical way, know when we are making progress on it and know when we are falling behind. I look forward to later contributions in this debate and seeing whether anyone will rise to that challenge.

Inequality is a problem and is something which government has a role to tackle in some ways, but it is a much less serious problem than poverty. Poverty is something which demands much greater attention from all of us than inequality. I make that point very deliberately and will expand on it. Many of the measures of inequality and poverty sometimes are deliberately or perhaps accidentally confused. Senator McAllister in her contribution referred to a number of facts and figures about how the top 10 people in Australia have more wealth than the bottom 50 per cent. All these sorts of figures get thrown around in this debate in Australia and also internationally. They typically come from reports which are deeply flawed and which overlook the much more important human imperative, which is to abolish poverty and to lift people out of poverty. Sometimes lifting people out of poverty and reducing inequality are in fact competing and contrasting imperatives that do not always move in the same direction at the same time. There is a specific example I will come to later.

One of the reports that purports to be about poverty is an annual report produced by ACOSS, the Australian Council of Social Service. It purports to measure of poverty in Australia, but what it in fact measures is inequality. It defines poverty as anyone being below 50 per cent of the average wage. If you define poverty as a proportion of the average wage then it does not matter how much the average wage increases: you will never eradicate poverty. That is a disturbing thing, because we know that poverty has been largely or substantially eradicated in the wealthy Western world and we have made great gains towards eradicating it around the world, particularly in the latter half of the 20th century.

Oxfam International annually publishes another report on inequality, which advocates often rely upon. It sometimes has seemingly alarming statistics about the top five wealthiest people in the world and their share of global wealth compared to the bottom half of the population, but it has some fundamental flaws. One of the flaws is that it accepts as a premise that capturing someone's wealth at a single point in time is a good proxy or a good measure for their standard of living. But we know that that is not the case. It is often a very bad measure of their standard of living and within the Oxfam report we have a very good example of why that is the case. When measuring someone's wealth, for the purposes of comparing them for inequality, they of course take into account, as may be appropriate, any debts that a person may hold. Obviously, a person who has debts—particularly a young person who is perhaps a university student—has the potential to have negative wealth. So a young Australian university student or a university student at Harvard will be measured by Oxfam as having negative wealth.

In many parts of the world you cannot get a loan. In the developing world it is sometimes very difficult to get a loan. So a subsistence farmer in Africa may not have any debts, they may even have a few assets to their name. Maybe, for the purposes of Oxfam's inequality report, they may be listed as having small net positive assets, even if only a few hundred dollars. If you listen to Oxfam and you take them at their word, a privileged student in the Western world studying at university who has a HECS debt is poorer than a subsistence farmer in sub-Saharan Africa. That highlights I think very powerfully the lack of quality research in this area and the way in which statistics can be abused to give you a very misleading impression. If you took Oxfam at their word, you would believe that a substantial number of those people who are suffering severe inequality are in fact in the Western world when clearly the reverse is the case—by any standard we are the wealthiest people in the world.

If we really care about poverty and poverty is what we seek to alleviate then economic growth is the best way to do that. Sometimes economic growth does come at the cost of inequality. The best example of this is the economic growth that China has experienced over the last 40 years. It has been, in my view, one of the most positive developments of the second half of the 20th century and the first decade of the 21st century. Over 600 million people have been lifted above the poverty line—the absolute measure of poverty. Their lives have been transformed in a fundamental and wonderful way. People who did not have access to electricity now have access to electricity. People who did not have access to refrigeration now have access to refrigeration. People who did not have access to education now have access to education. The standard of their food, clothing and technology has improved in a profound way. While this magnificent reduction in poverty has taken place within China in the span of 40 years—one of the greatest reductions in human poverty in history—inequality has increased.

If you listen to those opposite and their concerns about inequality, and if you read Thomas Piketty, then you would think that inequality must be fought at all costs. I understand where they are coming from and it is a good place to come from—inequality on its own, as a premise, sounds like a bad thing. But what do you think the people in China who have been lifted out of poverty would have rathered? Would they have rather been lifted out of poverty as they have been while, at the same time, some people in China have accumulated great wealth—billions of dollars of wealth—or would they have rather stayed, as they were for most of their history, in real poverty? I think, if I was someone living in China and I could choose to remain in my station in life, in relative poverty, in order to keep others in poverty at the same time so that we could be relatively equal, or I could choose that my wealth would increase modestly and my living standards would increase modestly while others' standards of living increased spectacularly—far more than mine—I would accept the latter. I would accept an increase in inequality for me and for my society in order to have a decrease in poverty. Poverty is a far more important thing to fight than inequality.

I think we had a really wonderful contribution to this debate, in a general way, in the maiden speech last night by Senator Gichuhi from South Australia. She spoke very powerfully of her own journey from Kenya to Australia and about her experience of the welfare state in Australia and the effect it had on her and her family. The observations she made were very powerful. I think we should always bear in mind, as Senator Gichuhi said, that the best path out of poverty is employment and jobs. That has been and always will be a priority of my side politics and of this government.

Finally I want to turn to the Productivity Commission Amendment (Addressing Inequality) Bill 2017 itself, which was proposed by Senator McAllister. While I, like her, respect the Productivity Commission as an important institution and, I like her, respect its work, it is for that reason that I am concerned about this specific proposal. I think it seeks to politicise the Productivity Commission in an inappropriate way. As Senator McAllister admitted, she is the person of the Left and she wants to see the Productivity Commission produce reports that align with, and address, her political priorities.

I do not think that is an appropriate thing to do with an independent economic agency like the Productivity Commission, which has provided such important reports and advice to government. I think it is best that, as far as possible, it be kept at arm's length from government and not dictated to by the politics of the day, so that it has the greatest potential to provide independent, dispassionate advice to the government. I think it is unwise to try and seek to direct the Productivity Commission to address the political priorities or philosophy of any party in this place. There are certainly changes we could make to the Productivity Commission's charter to address the priorities and concerns that I might have and ensure that the Productivity Commission's reports in the future more closely match the political priorities I have; but I recognise that I am a member of a political party and that I have my own views and preconceptions, and it would not be a good idea to ask the Productivity Commission to take those on and reflect those.

I appreciate the concern of Senator McAllister and all senators in this place about inequality. But I would finish on the note that, while inequality can be and is important, poverty is far more important. If we ever have to choose between the two, as some people have, including in China, the best one to choose is to alleviate poverty. The best way to alleviate poverty is through free markets and economic freedom. Every country that has gone from relative poverty to relative prosperity has gone through a period of inequality as a result. It is the advanced capitalist countries of the world, like Australia, that are relatively equal by world standards, and it is through a state of far reaching and complete capitalism that inequality is best tackled, rather than through government intervention.

Senator WHISH-WILSON (Tasmania) (10:07): I commend Senator McAllister for bringing forward the Productivity Commission Amendment (Addressing Inequality) Bill 2017. The Greens would support, in principle, any enhancement or refocusing of our attention on what is arguably one of the greatest issues of our time. My party talks a lot about climate change. But economic inequality, while it is tied to issues like poverty, as Senator Patterson outlined, and issues like climate change, is all-encompassing and one of the biggest challenges that we face—and not just here in Australia but right around the world. What we can do here is put a lens over every piece of legislation we look at and ask ourselves: is it making economic inequality worse in this country? When we deal with foreign aid or participate in overseas conflicts, international treaties and international trade deals, we should ask ourselves: are we making inequality worse around the world? These are the questions we should ask ourselves every chance we get.

Having said that, I have spent nearly every round of estimates since I became a senator asking the same question to our agencies here in Australia, especially to Treasury officials: what holistic approach do you take to tackle the issue of economic inequality in Australia? The answers have always been a source of disappointment. Whether it is the Reserve Bank, focusing on inflation and interest rate targets, and everything else will fall into place, or APRA focusing on financial stability, or ASIC investigating matters in relation to the Corporations Act—the one thread that is missing is a holistic approach to one of the greatest challenges of our time.

Whether the Productivity Commission itself is the right body—and I am happy to be advised on that, and on what kinds of legislative implications that might have—I would be interested to hear more and I would certainly be interested to hear from the Productivity Commission itself about this amendment. It is independent—fiercely independent. It has produced some good work. I do not say that lightly. We do not always agree with some of its recommendations; nevertheless, we respect the fact that it should be independent.

Recently I met with the economics committee, with the Reserve Bank governor, in a private meeting. I will not go into any details of that private meeting. The Reserve Bank governor in Australia has been playing a very interesting role in public debate. He has been commenting on issues like economic inequality, lack of infrastructure spending, housing risks, and pressures to the financial system. He sees himself as having an interesting role in at least informing public debate. That is probably the closest thing I could say. And of course the Reserve Bank produces occasional papers which allow them to do research projects. So, the governor has played a very important role; nevertheless, I would like to see a much more holistic approach to this issue in Australia.

So who does tie together the threads on economic inequality in Australia? It is left to the not-for-profit sector or the private sector, and here I have an excellent report called Inequality in Australia 2015—which I am not using as a prop; I am just having a look at it. It is produced by ACOSS, who tie together the threads and do their own research. It is very well respected. While these kinds of things are critical for the public debate—and I am about to summarise some of the key findings in a minute—it would be good to see the government taking a holistic policy approach to economic inequality.

What we often overlook when we think about economic inequality is that it is very closely tied to the politics we are seeing around the world at the moment—the backlash we saw in the US, which allowed Donald Trump to get elected. Many commentators have, I think rightly, pointed out that one of the key underlying reasons he was elected was that there was discontent related directly to economic inequality in the US—not poverty, as Senator Paterson alluded to as the critical problem, but economic inequality. And with Brexit— the reaction we saw in the UK—it was economic inequality. I would say— and I know you would be very interested in this, Acting Deputy President Bernardi—that the outcome of the recent UK elections, with the rise of Jeremy Corbyn, is another sign that economic inequality is being taken very seriously by voters and citizens, who have a considerable amount of frustration.

We have seen all these issues rise to the surface following the GFC, during which the financial system around the world was shaken up. We are seeing retaliation against globalism building all around the world, including I suppose Mr Trump himself, reflecting the views of his voters—cancelling the Trans-Pacific Partnership Agreement and other policy initiatives. And we are seeing it in this country. Let's not hide our head in the sand; economic inequality is a very significant issue here, and I will go through some statistics in a minute. Obviously it is not anywhere near what we are seeing in other countries. Nevertheless, it is an issue that should be addressed. In fact, I might go to some of those issues right now, because they tell a very important story and paint a very stark picture of how we should be responding to these issues in the legislation and the policies we look at in this place.

Inequality in Australia is higher than the OECD average, which I think is a recommendation and a conclusion that people would be surprised by. A person in Australia who is in the top 25 per cent income group has around five times as much income as someone who is in the bottom 20 per cent. Strong employment growth over the past 17 years has helped to reduce inequality, and I think Senator McAllister alluded to this, as those at the bottom end of the income distribution had greater access to the workforce and more workforce related hours. However, wages growth was very unequal over the period and acted to increase inequality. Over the 25 years to 2010 real wages increased by 50 per cent on average but by 14 per cent for those in the bottom 10 per cent of workers, compared with 72 per cent increases for those in the top 10 per cent of income earners in this country. In other words, the wealthier you are—the more money you earn—the better you have done over this period.

When we look at an average of 50 per cent increase across the board, let's break that down: if you are poor in this country, or a low-income earner, you have hardly any of that 50 per cent increase. That is nearly all gone to the top 10 per cent income earners in this country. It is no wonder the Reserve Bank governor this week, once again contributing to public debate, has called on workers to stand up for their wage increases. And I will acknowledge Senator McAllister and her colleagues, who have been in the Productivity Commission estimates and have continually raised this issue around penalty rates and cuts to penalty rates and why these things were not considered by an institution such as the Productivity Commission in relation to inequality—what kinds of impacts that is going to have on the economy—because it is actually an accepted fact that economic inequality, particularly when it becomes more acute, is a drag on economic growth and the economy. That is why wage rises themselves can be very useful for stimulating economic activity, because of course with the circular flow of income that money, that pay, gets reinvested back into the economy.

Increases in investment income, for those at the very top of the distribution, increase inequality, with investment income for the top 10 per cent doubling between 2004 and 2010. This increase is responsible for most of the increase in inequality over this period, despite forming only a small component of income. Looking at the demographics of this, people who are more likely to be found in the bottom of the income distribution are those over 65, sole parents, people from non-English-speaking countries and those reliant on government benefits as their main source of income. And may I say that since I have been in the Senate—for five years—they have been the target of policy in this place, especially by the Liberal government, to raise revenue to balance budgets. The most vulnerable people in this country have been targeted.

Remember the zombie budget cuts of 2013, and how the Greens and mostly Labor and other people in this place stood up to Joe Hockey's and Mr Tony Abbott's cruel budget? That is taking action on inequality; that is running the inequality lens over every piece of legislation that we consider in this place. So, why is it that these demographics are clear yet have been the target of our economic policy and legislation in this place? It is exactly the opposite of what we should be doing. And I want to see more of what we saw in this chamber this week: taking $6 billion off the big banks—$6 billion of tax that will pay for schools and hospitals from some of the wealthiest companies in the world. People who are more likely to be found in the bottom income distributions are the ones at whom we should be targeting our policies towards tackling inequality.

Income is not evenly distributed across the states and territories. We all know that. For example, people in my home state of Tasmania are more likely to be in the bottom 20 per cent, whereas people in Western Australia are more likely to be in the top 20 per cent. So, why do Western Australian senators come in here, Senator Bushby—through you, Chair—and ask for more money from my state of Tasmania, when we have a GST system in this country, horizontal fiscal equalisation, that is designed to transfer wealth from the wealthier states to help the poorer states? We are a federation. That is what this was set up to do. There are those states that, through an accident of geography, for example, do not find themselves sitting on some of the biggest mineral deposits in the world, but those states that do should be sharing that income with other states. Yet we constantly hear in this place that Western Australia should be getting more money and Tasmania should be getting less.

Let's talk about the distribution of wealth in Australia today. Wealth is far more unequally distributed than income—that is the really bad news. The average wealth of a household in the top 20 per cent wealth group in Australia, so the top 20 per cent of richest people in this country, is around 70 times the average wealth of a household in the bottom 20 per cent in this country—70 times. Who wants to get a jelly bean for guessing what the key reason for that is? I will tell you: it nearly all comes down to land prices and real estate. The top 10 per cent of households own 45 per cent of all the wealth in this country, so the richest 10 per cent of Australians own nearly half of the wealth in this country. Most of the remaining wealth is owned by the next 50 per cent of households, while the bottom 40 per cent of households—get this—nearly the bottom half of households in Australia own just five per cent of this country's wealth.

Home ownership is the particular asset I just referred to. Australia is one of the most concentrated places in the world for home ownership. Let me tell you why: the group with the top 20 per cent of wealth distribution owns over 80 per cent of all wealth in investment properties, and shares over 60 per cent of all superannuation wealth. Wealth held in the home is relatively evenly distributed across income groups, largely due to the high levels of home ownership of older retirees, who are more likely to be in low-income groups. One positive is that wealth inequality has declined since the global financial crisis because, obviously, we have seen a fall in asset prices, particularly in financial markets. That has now recovered, but it has increased over the longer term, Senator Seselja, between 2004 and 2012.

These statistics are stark, so why wouldn't a logical, rational person—a senator in this place who is fortunate enough and privileged enough to not only have the pedestal to raise these issues in debates like this today, but to put up legislation, as Senator McAllister has, that could try and hone our focus on tackling these issues—do just that? Why aren't we doing that? What kind of legislation should we be looking at? In my last few minutes I would say that, given these very black-and-white statistics on wealth ownership in this country, why do we still have perverse incentives that give property investors the opportunity to corner the housing market? That, by the way, is not just increasing economic inequality in this country, but is adding very severe risks to our financial system that have been recognised by international investors and, very recently, by the ratings agencies, who have basically said that we are close to a crisis in the housing market.

Why don't we kill two birds with one stone and remove these investment incentives—these perverse incentives like negative gearing and capital gains tax concessions? They are taking revenue out of the tax system that could be used to pay for schools, hospitals, pensions for retiring people and unemployment benefits, social safety nets and health care. That money is contributing to inequality and instability in our financial system. It is an absolute no-brainer, but no-one has the political courage in this place to tackle this. We have been banging on about this for nearly 10 years. Labor has a version of a policy to at least ratchet back some of those investment incentives, but we should actually remove them. Then we will have tens of billions of dollars that we can allocate to where it is most needed.

What other things could we be doing? We could be taking government money—debt, long-term capital issuances are at record low interest rates—and investing in the future of this country. The government could be playing an active role in our life by investing in productive infrastructure that would also tackle economic inequality, create jobs and growth—if I can use that term, as much as it makes me cringe—and, of course, reduce housing bubbles. The Reserve Bank governor has also said that investing in long-term infrastructure, especially public transport, is one of the best ways to reduce housing inequality in this country.

What else could we do? We could invest money in a federal housing trust to build accommodation for the many homeless in this country and those who cannot afford their own home. My colleagues Senator Rhiannon and Senator Ludlam over the years have done some fantastic work in setting up what a federal housing trust would look like. We have nearly half a million people in this country who cannot afford to buy a home. Where is the role of government? Where is the provision of low-income housing that we see in overseas countries, especially in Europe? It is almost non-existent. There is so much we could do; there are so many positive, proactive things I could talk about here today to reduce inequality. But, to go back to Senator McAllister's bill, unless we focus on economic inequality we are never going to fix it. We are always going to be burying our head in the sand. We are always going to be dealing with the short-term political issues of the day—which leadership struggle gets the most eyeballs on social media, in the papers or on TV sets? It is personality politics.

We are fortunate and privileged in this place to be able to tackle these issues. Other governments around the world are moving to tackle these issues—and they are not just economic issues or social issues. I would argue that economic inequality is one of the biggest sources of political instability around the world. I have read Thomas Piketty's Capital in the Twenty-First Century. It is difficult reading—I must confess that it took me a long time to read it, but I did finish it. There is a lot of empirical data there, and the conclusions are stark: we are entering a period of unprecedented economic inequality all around the world and it is creating political instability. We owe it to our democracy, which is the best system we have, to tackle this issue because it is, all around the world, undermining our democratic institutions. People are fed up. They do not believe in trickle-down economics. It has failed. The neoliberal experiment has failed. We need to find a new business model that looks after people and puts people before profit and has an increased role of government in our lives. That is what the Greens propose.

Senator LINES (Western Australia—Deputy President and Chair of Committees) (10:27): I want to put on the record comments that take a perspective different from the remarks of Senator Whish-Wilson. I am a WA Labor senator and I have spoken in this place about the need for Western Australia to receive more GST but never have I suggested, for a minute, that it should be at the expense of Tasmania. I do not think any Labor senator or MP in the other place has suggested that. We want to see a fairer distribution—we have never suggested taking from one state or territory and giving to another. I do remind the Greens party that poverty exists across this country, and to somehow claim that Tasmania has a greater need than Western Australia is to ignore the state of poverty in Australia and indeed in my home state.

The other point I would make, and this Productivity Commission Amendment (Addressing Inequality) Bill goes some way to addressing it, is that Senator Whish-Wilson said that somehow the Greens have been banging on about this for 10 years. That is the problem—we have had words but not actions. I do remind senators in this place, and particularly the Greens senators, that it is Labor that has put in place a whole range of reforms—superannuation, Medicare, parental leave. We had policies in government that did tackle homelessness and affordable housing. We had a bill in the other place, which the government knocked off, to try to protect penalty rates. We have put those actions in place but sadly they have not gone far enough. Also, every time the conservatives come into power, whether as state governments or federal governments, we see the situation eroded. This bill says let us start tackling and reporting on economic inequality. That is at least a start.

Recently I attended the Women's Forum in New York, which looked at women's economic empowerment across the world. It is shocking—wherever you look across the world, Australia is no different. We might be a little better off than our sisters in some Third World countries, but, nevertheless, women are not treated equally in this country—despite the reforms that Labor governments have put in place. And, certainly, that equality is absolutely under attack from the Turnbull government. It has been under attack since the day that they were elected.

With issues such as penalty rates, who on earth thinks that penalty rates will somehow magically lead to greater employment? It is an absolute nonsense. It takes pay out of the pockets of, particularly, low-paid workers—of women workers. We know that in Australia we have one of the most highly gender segregated workforces in the world. Men work in traditional male occupations; women are clustered in low-paid jobs and they rely on penalty rates. Yet, the Turnbull government, come 1 July, are going to take money out of the pockets of those women. It is an absolute disgrace and, quite frankly, I cannot believe that they think it is somehow going to create more employment. Of course it will not. So we will see women who work in hospitality and retail, come 1 July, get less money in their pay packets to support their families, to go to university or to do whatever else they rely on. The reason women and men work on weekends is to supplement low income. I do not get which bit of that those opposite just cannot understand. It is an absolute disgrace that on 1 July we will see people in this country lose income, and they will do so at the hands of the Turnbull government. I will never let the Turnbull government forget that. Labor has said that we will address this. We will put it back. We will make the changes to the Fair Work Commission to make sure that low-paid workers cannot be attacked by the Turnbull government.

On 1 July what else will happen? Millionaires will get a tax cut. On the very day the Turnbull government is taking money out of the pockets of low-paid workers—particularly women stuck in those areas of low pay—they will be giving their millionaire mates a tax cut. What a disgrace. They still believe, in this day and age, that somehow this trickle down will work. It will not. In the same way as when they cut superannuation, they refused to pass on the next percentage increase. That damages long-term retirement incomes, but they boasted that somehow that would create employment. Well, it has not, because we have seen record unemployment under the Abbott and Turnbull regime as prime ministers of this country. That is actually what we have seen. And the jobs that have been created are low-paid jobs, casual jobs—jobs in areas where workers will lose penalty rates. So this bill will actually start to hold up a light. It will start to say, 'We need to report on inequality in this country.' That would be a first step.

Using the Productivity Commission will take the political spin out of it. It will look at the impacts of inequality on the Australian economy, and it will produce a report—like Closing the Gap—that we will have to address as lawmakers in this country. We did see evidence during the inquiry—I was fortunate enough to be able to attend one of the hearings in Sydney—that inequality is stark, particularly for women. Women around this country, quite frankly, are a bit sick of just keeping on talking about it. We have known this for a very long time. We know we have a highly gender segregated workforce. Yet, despite some effort, we are not getting women into those STEM areas. We really need to do much more than we are currently doing to encourage the break-up of the gender segregation that we see. On the other side, in the caring industries and in retail and hospitality, men are never going to work in those industries in large numbers. Why? Because the pay is appalling. It is poverty wages.

For an educator working in the early education field, it is one of the most important jobs you could do in our society, because we know that for young children the vast majority of brain development happens between one and three years of age. What are we paying those workers? We are paying them poverty wages—about $21 an hour. That is what we are paying low-paid educators. Those wages are so bad. In an industry predominantly funded—almost 100 per cent—by those opposite in the federal government, the wages remain at poverty levels. It is not that educators do not love their jobs. It is incredibly rewarding working with young children, particularly young children between the ages of one and five. But they are forced out because they cannot afford to stay, or, alternatively, they are working two and three other jobs and that means that when they come to work in the morning to work with young Australians—our future leaders—they are tired and that automatically puts them at a disadvantage. But if they want to stay in the job that they love they have to work elsewhere, or they have to rely on another wage in their family. That is disgraceful.

At the other end of the spectrum we have aged care workers who, again, care for some of the most vulnerable in our society—senior Australians who have worked and have contributed to our economy, have paid their taxes, have raised families, have built homes and have led decent lives. Yet, at the end of their lives they are cared for by workers who are very low paid and part-time, who also have to work at least one other job to make ends meet. What is the key feature of these two sectors? Women. Women are clustered in aged care and early childhood, and an aged care worker earns about the same as an early childhood worker—about $21 an hour—but they rely on penalty rates, because the caring industry is seven days a week, 24 hours a day. But you can bet your bottom dollar that now that the Turnbull government has simply closed its eyes to the attack on penalty rates in retail and hospitality they will come for the aged care workers—the first they came for. We all know that sequence of events.

But it will not stop at hospitality and retail. What we have seen from the Turnbull government is that they are doing nothing to stop the attack on workers wages. In fact, many in the Turnbull government applaud the loss of penalty rates. They think it is a good thing for our economy. What is less money in our economy a good thing? Why is taking money out of the pay of low-paid workers a good thing? Why is giving someone less money to spend each fortnight when they get their pay packet good for our economy? No-one believes that. But somehow those opposite in the Turnbull government think there is going to be this magic proliferation of jobs.

Even if there were more jobs created as a result of this—I do not believe that, but let us assume for a minute that we will create a few more jobs—what will they be? More low-paying jobs—not good for our economy, not good for our tax system, and not good for individuals' prosperity. Yet, those opposite will champion it.

So, education and early childhood education—low-paid workers—women; aged care workers—low-paid women. Than there is the disability sector. How proud am I to be a Labor senator and to have been part of the government that introduced the NDIS? It is a revolutionary reform. Like Medicare, it will become a very important part of our economy. The NDIS is there. From the work that Labor did, we know that we need a massive increase in the workforce into the future.

What are the key features of the disability services sector? Low pay, and guess what the gender is—female. It is a feminised, low-paid workforce. Yet those opposite have done absolutely nothing to address the needs of that workforce into the future. You cannot have choice and control, which is a key part of the NDIS, if you do not have the workforce to match. We will not be able to attract the workforce we need unless we do something about the pay. Again, we see that those workers are on about $21 an hour. They want to look after and support people with disability to be able to manage in their own homes. They do an incredible job and they are unsung heroes, as are early childhood educators and aged care workers. But there will be a shortage into the future if we do not act on the pay. I think that those opposite think that the answer to that is to just import workers. Of course that contributes noting to our economy either.

So not only do we have to encourage women into STEM areas and traditional male areas of our workforce; we need to fix the pay and working conditions in low-paid areas so that we attract a different workforce. We want diversity in our workforce. We recognise that male workers bring a different perspective to these sectors, particularly early childhood workers. We want to encourage males in, but we will never get them unless we address this shocking poverty pay that exists in these areas. So having Senator McAllister's bill here, which is going to force us to report on a whole raft of things in relation to social injustice and economic inequality in our country, is a really positive issue.

The other issue we have to address as a society, as a community and as legislators is that we really have to start speaking about the unpaid work that women do. We know that, despite many men being much more enlightened than perhaps my father and men that went before him, we do need to share the family work that is traditionally done by women, because that prohibits women from going out and finding higher-paid jobs. If you have to be there to do school pick-up or to care for an aged parent, you cannot take a job that requires you to work from 3 pm to 5 pm. You are prohibited from doing that. We know that in our country the unpaid work is traditionally still done by women. We need to start to talk about that.

But of course we have a government that is characterised by those famous comments by former Prime Minister Abbott, when he talked to the women who apparently do all the ironing in the country. If you have MPs and senators opposite with a view that somehow it is our normal destiny as women to take on this unpaid caring role, we are in trouble. It is time that we started to challenge that and to measure the sorts of unpaid work that women do in our community and really start to change that. For that to happen we need flexible workplaces. We need to actively encourage men to take time to care for children, to take days off when their children are sick, to take time to go to school assemblies and all of the things that traditionally in our community we rely on women to do. We need our workplaces to be much more flexible to the needs of men when they have family commitments.

This is not some utopian socialist dream. This is actually good for our economy. It is good for our economy when we have workforce flexibility for men and women, when we encourage employers and hold up private employers to role model where flexible work actually works, where men are taking a share of what happens in family life. Until we start to address the unpaid work done by women, we will still be talking about inequality in 20 years. It is a major impediment to women fully participating in the workforce.

Gone are the days in our country when the male worked full time and the woman worked part time. That is no longer acceptable. If that is an arrangement people choose, good on them, but let us make a real choice for men and for women. Across your career in the paid workforce there might be times when both of you work part time and times when both of you full time, and that unpaid component of family life is shared equally between men and women. We are a long way from that, unfortunately, but that is something we need to consider as a community, and to role model best practice when we see it.

At the inquiry the Australian Industry Group talked about barriers for flexible workplace issues, so it is not just the Labor side of politics talking about this, but the Australian Industry Group, too. They indicated to us that flexibility was something most employers wanted to offer to staff and they felt that inflexibility made it very difficult for employers to implement alternative working arrangements for workers who desire or require more-flexible working arrangements. I think all of this in this place and many Australians struggle when our children start school. That is probably a time when it is very hard to manage full-time work and also pick children up from school and make sure they are properly cared for. If we had that flexibility, particularly across the early years, we would create more-productive workplaces.

With regard to the gender pay gap, despite Labor making great inroads on pay inequality in the famous cases that were run in the industrial commissions in this country, wage inequality still exists. It is 16 per cent and has been stubbornly stuck there for 20 years—that is generations of workers—and in my state of Western Australia it has been stubbornly stuck at 24 per cent. These are issues that need urgent attention from the government and indeed this parliament, yet they simply get overlooked. It is not acceptable in this day and age to have such inequity in pay continue on and on without being addressed.

Senator IAN MACDONALD (Queensland) (10:47): Listening to this debate, and particularly the previous two speakers, with their socialist rhetoric, brings to my mind some maxims that were first mentioned in the 19th century by the philosopher Reverend Bottger, sometimes attributed to Abraham Lincoln and elaborated upon by Winston Churchill. I think it is always important to remind ourselves of those 10 maxims, which are as important and evident now as they were when they were first uttered. I notice some schoolchildren in the gallery. I love to see them here. It is good to see them watching parliament in action in the cause of democracy. They too might be interested in these 10 maxims. I am going to repeat them because they are so germane to the debate we are having today. The first one is: you cannot strengthen the week by weakening the strong. Winston Churchill elaborated on that by saying you cannot make the poor rich by making the rich poorer. You cannot bring about prosperity by discouraging thrift. You cannot help little men by tearing down big men. You cannot lift the wage earner by pulling down the wage payer. You cannot help keep the poor by destroying the pitch. You cannot establish sound security on borrowed money. You cannot further the brotherhood of man by inciting class hatred. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by destroying men's initiative and independence. And you cannot help men permanently by doing for them what they can and should do for themselves.

Those maxims are self-evident, and they are what made America great, a little before Australia was made great by people following those principles. They are a series of thoughts that I was delighted to hear our newest senator, Senator Gichuhi, mention, not in those words but in the themes that she addressed yesterday in her maiden speech to this chamber. Of course, they are the principles upon which the Liberal Party of Australia is based. It is a tenet of the party that I belong to that you must look after those who are disadvantaged and those who are not as fortunate as we are. Through the majority of the Commonwealth, when we have had Liberal governments, those principles have been put in place.

This Productivity Commission Amendment (Addressing Inequality) Bill 2017 is a private member's bill from a Labor senator, and I congratulate Senator McAllister for bringing forward for debate a sensible policy proposal—not one that I necessarily agree with, but I appreciate the fact that it is an attempt to have a sensible policy discussion in this place and does not, as with many of Senator McAllister's colleagues, simply to make some very base political point or attack members of the Senate who are not members of their party. So I am pleased that this debate is before us. I should point out to Senator McAllister that the Intergenerational report, which she mentioned both in her second reading speech and in the explanatory memorandum, is produced not by the Parliamentary Budget Office, as she said, but by the Treasury. I do not think that error in your second reading speech makes a great deal of difference to the bill before us, but it is important to make sure we all understand these things.

The Labor Party want the Productivity Commission to do another investigation and another report. If you have plenty of money and plenty of time, that is sometimes a useful way to go. Rather than doing reports, investigations or studies, the Turnbull government is actually addressing inequality with policies to boost economic growth that generates greater employment and income for hardworking Australians whilst targeting assistance to those who need it most. Again quoting our newest senator, Senator Gichuhi, yesterday in her first speech, the best form of welfare is a job. The best form of welfare is a job, and that is what our government are attempting to do.

The previous, Labor speaker, Senator Lines, mentioned that the current government has presided over record unemployment. Clearly, the previous speaker has not been here long. I am proud to say I have been here 27 years and am currently the longest serving parliamentarian, and I have seen it all before. I happened to be here when, under the Keating Labor government, unemployment across Australia was at almost 13 per cent. Youth unemployment in the Keating years across Australia was upwards of 35 per cent. Yet Labor speakers come in here and try to suggest with non-factual comments that unemployment under this government is at record levels. It clearly is not. I can tell you, though, Mr Acting Deputy President Bernardi, that it is at record levels in the city where I have my office, the city of Townsville. We are, regrettably, a state with a Labor government which has done little on the economy. In fact, it has done little on anything. It is adopting the principle that if you do not make a decision and you do not do anything, then you are not going to offend anyone, so your chances of getting re-elected at the next election are better, because you have not put anyone off side. More than that, they have employed another 12,000 public servants, most of whom are not needed in Queensland but who, I guess, are grateful for their job and will show their gratitude in the upcoming state election in Queensland.

But in my home city of Townsville, unfortunately, unemployment is at very high levels. Why? Because of the mining downturn and because the state government, who control the local economy, have done nothing. The federal government has tried to help in Townsville, with commitments to the Eastern Access Rail Corridor project, to the Townsville Stadium, to the ring road around Townsville, to beef roads and to regional roads. The money from the Commonwealth for dams and for water studies has really flooded into the north, but, unfortunately, whilst the Commonwealth government provides the money, with the way our Constitution is set out, the work has to be done by the state government, who own the roads and who own the rivers. We, federally, can only provide the money, and we have done that. Regrettably, the state government have not used that money for the benefit of the people of North Queensland.

Credit where credit is due, I will give the Labor Premier of Queensland credit for staring down the opponents in her own party, including her Deputy Premier, by—reluctantly, I think—eventually supporting the Adani project to build a long railway line in Queensland to go from the central Queensland coalfields to the Abbot Point port near Bowen. For young people who might have heard of this debate, can I say to you: please do not believe the rhetoric of the Greens and GetUp, who tell you that opening a coalmine about 500 or 600 kilometres inland, behind the Great Dividing Range, is somehow going to destroy the Great Barrier Reef. I live on the Great Barrier Reef. All of the people of that part of Queensland, who are represented by members of the Liberal-National Party—not of the Labor Party—know that the reef is carefully managed. It has ups and downs, but, generally speaking, it is a resilient organism that will continue to flourish, because it is well managed by, principally, the federal government, in conjunction with the Queensland government.

I have diverted a fraction from saying that the Queensland Premier, against opposition from within her own party, did in fact supports the Adani railway and mine project, which will also, as an adjunct, help the South Australian steel industry, because all of the steel for the railway will be sourced from Whyalla. That project will provide real jobs, will provide some sustenance to small businesses who are struggling in that area and will, consequently, help with the equity of those who are less fortunate in the North Queensland region at the moment.

The previous speaker also made some reference to the abolition of penalty rates on 1 July. Somehow this is the fault of the Turnbull government, even though it was a decision made by the Fair Work Commission, whose members are principally ex-union workers and ex-union bosses appointed by the Labor Party.

Senator Seselja: Under a Labor piece of legislation.

Senator IAN MACDONALD: Under a Labor piece of legislation—that is quite right, Senator Seselja. This independent commission, made up of mates of Senator Cameron who his government appointed to the job, took evidence and looked at it all. They understood the facts and figures, and they—not the Turnbull government—made a decision to adjust penalty rates for Saturday and Sunday work. Why? It is because the evidence clearly showed that penalty rates discourage employment opportunities. I know, without a study by the Productivity Commission or the Fair Work Commission or anyone else, just from my contact with my constituents, that there are so many small businesses who will not open on Saturday and Sunday because they cannot afford to pay the penalty rates. They cannot afford to compete in wages, because they have to pay huge penalty rates, whereas the big chains—like Maccas, Kentucky Fried and those fast-food chains; Myers and David Jones; Woolworths and Coles—thanks to a union deal, do not have to pay those same rates.

Why? It is because Mr Shorten, when he was a union leader, did these deals with that sector of the industry and said, 'You don't have to pay these huge penalty rates,' but the small businessmen, the mums and dads trying to compete with these multinational chains, 'Sorry you've got to pay these prohibitive penalty rates,' which means that most of them do not open. With a more realistic approach to penalty rates these small businesses, the mums and dads, will say, 'Yes, we will open on Saturday and Sunday, because we can afford to employ people.' That means more people will be employed, and that sort of thing will address the critical unemployment situation in my home city of Townsville. Fortunately, this is not shared by most of the rest of Australia at the present time, but it will make a difference there and right across Australia.

As I said before, it is my party's vision—it is in our DNA and it is certainly in the DNA of coalition governments federally—to look after those who cannot look after themselves, the more disadvantaged in our society. I will give just one example: the National Disability Insurance Scheme. I concede this originated in the term of the Labor government, but it was a proposal that was fully supported by the then opposition, which was our party, something you do not see today in this parliament. Anything that comes to this parliament, whether it be good, bad or indifferent, is automatically opposed by Labor and the Greens, just because we brought it forward. The Liberal Party in opposition thought that the NDIS was a good idea. It is part, as I say, of our DNA to look after those not as advantaged as the rest of us.

It was a good idea, but at the time we warned, 'Is this being paid for?' As I mentioned before in one of those important maxims, 'You can't keep out of trouble by spending more than you earn.' That is what Labor governments do all the time. That is what they did with the NDIS. That is what they do with everything: 'Yeah, good idea, it will get a few votes: let's promise we'll have a national disability insurance scheme. How's it going to be paid for? Don't worry about that; let's get the credit for setting this up and we'll worry about that later.' Of course, the Labor Party never provided money for the NDIS. It has been left to this government to actually fund the National Disability Insurance Scheme.

We are asking Australians to contribute, with the Medicare levy to be increased by half a percentage point from two to 2.5 per cent of taxable income. This means that one-fifth of the revenue raised by the Medicare levy, along with underspends within NDIS, will be directed to an NDIS savings fund to ensure that this good scheme can continue and be fully funded into the future—a proposition, an arrangement that the Labor Party had neither the wit nor the courage nor the understanding to introduce.

This is a measure because we do have those hated rich people that Senator Lines spoke about. Fortunately they are rich, because 2.5 per cent of their income will mean a huge boost to looking after those who need the NDIS. I repeat that maxim: you cannot establish sound security—social security in this instance—on borrowed money. Because we do have people who earn a lot, they contribute more—and thank goodness we do have them.

Similarly, this government understands inequality in education. That is why Senator Birmingham is bringing in a scheme that is equal across the board. It makes sure that people, no matter which category they are in, have money to be properly educated. As a state school veteran—all my school years were at a state school; I could not afford to go to university; I did my tertiary studies externally—I understand how important it is that all students should be helped by the federal government and the state governments. People say to me: why is the federal government giving Catholic and private schools so much money and state schools so little? The reason is that the state governments in our Federation give the state schools all the money and the Catholic and private schools very little at all. So what the Commonwealth has always done, since the Menzies days, is try and equalise that. We do not care where kids go to school; as long as they are getting a good education, they should all be treated relatively equally.

Across the board, coalition governments, since time immemorial, have tried to lessen the inequalities within Australia by sensible policies that work and that do achieve results;. That is why every serious social reform, and indeed environmental reform, that has ever come before the Australian parliament has been a product of Liberal governments over the decades.

Senator CAMERON (New South Wales) (11:07): I am pleased to have the opportunity to participate in the debate on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. I support this bill and congratulate my friend and colleague Senator McAllister on her initiative in bringing this bill before the Senate and commencing a debate on inequality, one of the great social and economic issues facing the nation. The bill amends the Productivity Commission Act 1998 to expand the general policy guidelines for the exercise of the Productivity Commission's functions to require consideration of inequality. The bill establishes a framework for the Productivity Commission to regularly report on economic inequality.

I have been a long-time critic of the Productivity Commission since appearing before the commission and former Commissioner Banks on the future of the vehicle and component industry many years ago. I appeared in my role as the national secretary of the Australian Manufacturing Workers' Union. Arising from that hearing, the commission set the stage for the destruction of the vehicle and component industry in this country. It did not do a lot for equality and it did not do a lot for working people. The commission, in my view, is far too dominated by economists. Worse still, these economists are predominantly advocates of neoliberal economics who argue that the economy will reach equilibrium, in which all resources will be fully employed, if only government is minimised.

These people in the Productivity Commission are the acolytes of the Austrian school of economics, influenced by Friedrich Hayek, and the Chicago school of economics, influenced by Milton Friedman. It is my view that, unless there is an injection of economists who understand the role of the state and Keynesian economic principles, the majority of the reports will be guided by an increasingly discredited economic theory that increases poverty and inequality. There must be an injection of economists who are not bogged down by their ideological presumptions, such as, 'Markets are always efficient,' or, 'Government is always inefficient.'

The Productivity Commission can always be relied on to minimise the role of government and maximise the role of the so-called free market. We therefore need a renewed debate on the role of government in reducing inequality while moving away from the sterile and unrealistic slogans of the coalition, such as 'jobs and growth' and 'innovation agenda' and the empty rhetoric of trickle-down economics, of which we heard so much about from the previous senator in this debate, Senator Macdonald.

As the renowned Nobel economics laureate Joseph Stiglitz stated in his book Freefall: America, Free Markets, and the Sinking of the Global Economy:

Economics had moved—more than economists would like to think—from being a scientific discipline into becoming free market capitalism's biggest cheerleader.

The Productivity Commission is an example of this. The economists in the Productivity Commission, who can pontificate on any issue that the government brings before them, were missing in action and failed to analyse or understand the problems being created by greed and corruption in the US finance sector which led to the great recession. Where were all the alarm bells from these right-wing economists in the Productivity Commission that there was something happening in the US that would lead this country into what almost became a recession?

We would have been in a recession if we had not had a Labor government in place to actually use Keynesian economic principles to keep people at work, keep communities operating and keep businesses and corporations going. Labor in government, in my view, should not solely rely on advice from the Productivity Commission, unless the dominance within the commission of free market economists is balanced by economists who understand the importance of the role of government in the economy. Unless we do this, the good aspiration contained in this bill that the Productivity Commission consider inequality and establish a framework to regularly report on inequality will be frustrated by the dominance of the Chicago school of economics thinking of the economic staff in the Productivity Commission.

What are the drivers of inequality? The drivers of inequality are the neoliberal economics we just heard from Senator Macdonald. Again, he just used the same tired, old, regurgitated rhetoric that the coalition have been using for years about trickle-down economics. They think that, if they give a $65 billion tax cut to big business who do not pay their fair share of tax now, there will be economic growth and jobs will be created. What a load of tosh from Senator Macdonald and the coalition on this issue. They argue about too much tax and small government. Small government means that you end up not having the capacity to provide the health services, the education services and the infrastructure that this country needs to continue to compete at an international level.

They do not deal with multinational tax avoidance, which is a great driver of inequality. They constantly attack the union movement. We heard from Senator Macdonald. He is full of rhetoric about the trade union movement without understanding the benefits that the trade union movement brings to working class people in this country through decent wages and decent conditions and how that flows on to small businesses across the country because workers have a dollar in their pocket to spend in those small businesses.

Another driver of inequality is the budgetary decisions of the coalition. No-one should ever forget the 2014 budget. It was the epitome of inequality created by government policy. If you ever want to look at what would drive inequality, go back to the 2014-15 budget of this government: changes to welfare for young people; reductions in hospital funding and health expenditure, including new patient contributions to the cost of medical services; and reductions in school funding. That is where they really are. The only reason they are trying to put up a smokescreen that they are interested in education is that they were being killed out there, day in day out, in the political debate on education and school funding. That is the only reason they have actually been dragged kicking and screaming to any semblance—and a pale imitation—of what Gonski is really about. They actually reduced family tax benefits in that budget. They reduced the indexation of the age and disability pensions. Cuts to pensioners was their DNA in their policy and their budget. And these cuts, including reduced funding to higher education and increased student contributions, mainly affected low- and middle-income households.

I will not be lectured by any of that mob, that rabble of a government across there, on inequality—absolutely no way. They all, like lemmings, supported these cuts when they first came to government and argued that this was good for the economy. Well, they destroyed people's lives! I will not accept any criticism of Labor policies from a mob who just do not understand inequality. In that budget, young people under 30 were denied access to income support for six months of every year, losing up to $255 a week. Young kids were supposed to starve if they did not have their family looking after them! What an obnoxious policy to bring in a country like Australia—which had an international reputation for egalitarianism. Young people aged 22 to 23 were transferred from Newstart allowance to the lower youth allowance. Young people with disabilities were reassessed, with income reductions of up to $214 a week in the disability support pension.

Indexation changes were put in place that would erode the real value of payments over the long term with the loss of $80 a week in a decade. They abolished the pensioner education supplement. And they tightened access to family payments, impacting mainly on low-income families with children—in particular, sole parents. They made changes to family tax benefit B. Sole parents with a youngest child aged between six and 12 lost $37 a week and those with a youngest child aged over 12 years would lose $58 a week. This is their understanding of inequality. This is how they behave when they think they can get away with it.

Do not listen to any coalition member who ever stands up here and talks about looking after working class people in this country, because it is not in their DNA. They do not care about working people. They care more about the big businesses that put the dollars into their election funds, whether that is done legally or in the back seat of a Bentley with a property developer up in Newcastle handing over $10,000 in a brown paper bag to the coalition. They do not care about working class people in this country.

The coalition want us to change the payment indexation for pensions. They have changed it from the CPI to wages. That would erode the value of the pension by $80 a week over 10 years. That is how much they care about pensioners. They extended the qualifying age for the age pension without any increase in the Newstart payment, reducing income for those unable to work up to 70 by between $64 and $166 a week. This was the coalition in action. Boilermakers, fitters, builders and labourers are being told, 'You've got to work until you're 70.' What a nonsense!

Then look at the group of Australians who are suffering most from inequality—Aboriginal and Torres Strait Islanders. One hundred and fifty programs were consolidated into five. The government cut $493.7 million from Aboriginal and Torres Strait Islander support, and $160 million of the cut was from a reduction of expenditure on Indigenous health programs. So no wonder the government cannot deal with inequality. It is because they just do not know what it means. There are cuts to Indigenous language support programs of $9.5 million. They reduced funding to the National Rental Affordability Scheme, which was putting low-income people into houses, with the loss of round 5 incentives and 12,000 dwellings that should have been in there for low-income households.

They cut funding to homelessness services and they did not give any indication that they would continue funding. They have defunded housing help for seniors and defunded the first home saver account scheme. That was when they first came into government. Now in the most recent budget they have put it back in. They do not know if they are Arthur or Martha, this mob. They will just do anything to try to save their necks, because they are such a rabble of a government. They are so divided internally. They do not want to deal properly with the issue of inequality. They do not want to deal with the issues that really go to ensuring that there is a fair and egalitarian society in this country.

Who could ever forget the sight of former Treasurer Hockey, who was telling everyone there were 'lifters' and 'leaners', becoming the 'leaner-in-chief' over in New York? Who will ever forget him and the current Minister for Finance, Minister Cormann, celebrating the imposition of all this inequality on Australians with a fat Havana cigar. It probably cost more for one cigar than they expected an Australian in trouble to survive on for a day. It was absolute nonsense. The current Prime Minister, Malcolm Turnbull, in an interview said he supported every aspect of that horrendous budget. So the coalition cannot criticise anyone in relation to what we are doing to try to deal with inequality.

Inequality comes at a cost to the whole economy. There is a vicious spiral when inequality is not dealt with. Look at what has happened under this government—record underemployment, record-low wages growth and record-low share of national wealth, down from 75 per cent in the 1970s to 53 per cent now. There is the highest level of income inequality in 75 years and yet the government still support cuts to penalty rates for 700,000 of the most vulnerable, low-paid workers in this country. They are an absolute disgrace.

Thankfully, in more and more countries around the world they are getting rid of these policies of globalisation, privatisation, competition policy and austerity. Thatcherism is dead—it is just that these people do not understand that. Even the International Monetary Fund has identified that reductions in the number of trade unionists and the taking away of the rights of trade unions results in more inequality. That is the speciality of this mob—they know that if they can destroy the trade union movement, weaken the trade union movement, working class people will suffer more and more inequality. When the International Monetary Fund is saying that, then we should all be very concerned about what they are about. Deunionisation weakens earnings for middle- and low-income workers. That is what they are about—giving $65 billion of tax cuts to big business on the theory of trickle-down economics and, while they give tax cuts to millionaires, increasing taxes on ordinary working families. That is their view of inequality. That is how they try and deal with inequality. They do not have a clue.

The trade union movement is absolutely essential to dealing with inequality. We have seen a position where every time this government gets an opportunity they try and weaken the rights of workers who belong to trade unions. They try and diminish the capacity of workers to enterprise bargain effectively. And the push to enterprise bargaining has created a position where multinational corporations can use all of their resources against workers and their unions, but the unions cannot take any coordinated action across that company. I think it is a disgrace. That should be changed. The right of entry for union officials should be liberalised so that we can actually get in there and talk to workers about the problems they have on the job. But this government is so busy with its ideological obsession, with destroying the trade union movement, cutting rates for pensioners and getting rid of decent funding for education and health, that they do not care. They are an absolute rabble and a disgrace of a government. (Time expired)

Senator LEYONHJELM (New South Wales) (11:27): I rise to oppose Labor's Productivity Commission Amendment (Addressing Inequality) Bill 2017. This bill would require the Productivity Commission to prepare five-yearly reports on the effects of inequality. A saving grace of this is that this requirement is not loaded with an assumption that inequality is bad and the government should counter inequality. The Productivity Commission would hopefully measure the things that matter to people, how equally these things are distributed and the effect of this distribution.

Some people want more money, more goods and services and more assets, so the commission would measure inequality in these things and assess the effects of such inequality. But consumption is not all that matters to people. Inequality is found in many areas of life. Some people at death's door just want to survive, while others with poor health just want to be able to enjoy everyday life. The lonely among us long for friends, meaningful relationships and family. Many yearn to have children. Some people long to find meaningful employment and have fulfilling careers. Some people are tired of carrying the tax burden for others. Some just want a bit of respect. Some people have a spiritual gap in their lives and some people wish they were better looking or still had hair on their heads. Good luck to the Productivity Commission if it has to measure and assess inequality with respect to all of this. Given the problems confronting the governments of Australia, this exercise does not strike me as the best use of the Productivity Commission's time.

However, the critical component of the bill before the Senate today is a requirement on the Productivity Commission, in performance of all its functions, to have regard to the need 'to mitigate the negative effects of inequality on the Australian economy and the Australian community.' This requires the commission to accept, before it has done any investigation, that inequality has negative effects that should be mitigated. This undermines the usefulness of having an organisation where staff are tasked to gather evidence and come to their own conclusions.

As it happens, inequality does have negative effects, namely: envy. But the moral thing for the government in response to this envy is to do nothing. The role of government should not be to do whatever the median voter wants, which could very well be to seize the property of the minority. The role of government is to protect life, liberty and property and, more broadly, to do other beneficial things that businesses cannot profitably provide due to free riding. In other words, liberty should trump democracy. This is in the long-term interests of Australians, including the median voter.

Currently the bipartisan obsession with spending other people's money has us on a slow path to self-destruction. I urge parliamentarians, whenever they are thinking about spending more of other people's money, to consider what Australia will look like in decades ahead if such behaviour were to continue. Equality in poverty is not something we should aspire to.

Senator KETTER (Queensland) (11:31): I rise to speak in support of the Productivity Commission Amendment (Addressing Inequality) Bill 2017. In opening my comments I want to congratulate my colleague Senator McAllister for bringing on a debate on such an important matter. For those of us on this side of the chamber the recent decision of the Productivity Commission to recommend a reduction in penalty rates makes the case very, very strongly that this reform is long overdue. The Productivity Commission is the brainchild of the former Howard government, and, while, I must confess, sometimes its reports have been useful—and I will come back to that—its most recent recommendation in respect of penalty rates in the retail, hospitality and fast-food sectors has given cover for the industrial commission to follow through with devastating cuts, which are going to further entrench inequality.

On this side of the chamber we know that equality of opportunity is core business for people in political life. If we are here for nothing else, we should be here to ensure that all Australians have equal opportunities. We know that it has become mainstream economic thought that inequality is inextricably linked with economic growth, so we really need to tailor our institutions to focus on this issue and ensure that it is an important consideration. But it is not just economic linkage. We know if there is a sustained perception of inequality in a society then that will have political consequences. I would argue that the rise of President Trump and the events in the UK with Brexit are all symptoms of people's perception that they are not adequately benefiting from the growth of the economy, and that is therefore leading to dissatisfaction, disaffection, dislocation and disengagement. This is something that, as a body politic, we need to nip in the bud, and I think Senator McAllister's proposal for the Productivity Commission is a good starting point for focusing one of our key institutions on the issue of inequality—amongst other things, of course. They will always need to address other criteria, but inequality should be up there, of equal importance, with those other issues.

We know that Australia's inequality level is the challenge of our time. Even the Treasurer, Mr Morrison, has indicated that low wages growth is probably the single most important economic issue that we confront. Having said that, the government will not do anything to prevent the cuts to penalty rates and prevent the take-home pay of many low-wage employees being further affected. It is a very hollow observation on the part of the Treasurer. We know that wealth is growing more quickly at the top of the spectrum, and over the past four decades real earnings for the top 10 per cent have risen nearly four times faster than they have for the bottom 10 per cent. That is a huge concern. Unless we do something about this trend of increasing inequality then, as sure as night follows day, we are going to see a continuation of it and things will get a lot worse before they get any better.

I was somewhat heartened, and a bit surprised, to see the new Governor of the Reserve Bank come out in support of workers demanding a greater share of the economy's profits to drive up record low wages growth. The Governor of the Reserve Bank is not normally seen as a champion of workers' rights, though to be fair to the governor he has made a number of other comments as well—but this was a central tenet of one of his recent speeches. He identified that there is a real need to address this issue of demand in the economy, and we need a sustained pick-up in wages to enable us to move out of the abnormally low interest rate settings that we are currently in. It is surprising to see the Governor of the Reserve Bank make those comments.

We have also seen comments from the Business Council of Australia's chief executive, Jennifer Westacott, who has written that the sense of resentment in the community over the changing economic outlook is real and it must be understood. She has said:

Economic liberalisation is a social compact. In exchange for rising incomes to help them look after their local needs, people are asked to accept an ever-changing economy with industries that rise and fall with the tide of global progress.

After a decade of phenomenal income growth, built on the back of a deregulated economy that reaped the benefits of increased global trade, business investment has now slowed and wages growth has fallen flat.

She says that the crisis really is in real wage growth. This is coming from an unusual quarter—even people on the business side of our society are saying that enough is enough, that we have seen surprising income growth in certain quarters but the people who most need the benefit of the growth in our economy are not seeing that.

Almost three-quarters of Australians agree that differences in incomes are too high. We do not have the sorts of levels of income inequality that you might see in the US, for example, but that is because of many of the institutions that we now take for granted in our country. I am very proud to be a Labor politician and to be able to point to many of those institutions as having been initiated, created or sustained and protected by the Labor Party in the course of 100 years, whether it comes to forms of welfare which were absolutely necessary—payments to mothers, in the first instance, going back 100 years or so; along the way, through Medicare and our occupational superannuation system; and, as we go forward, the NDIS. There are many other initiatives that the Labor Party has taken which form part of the fabric of the safety net we have in this country that has been so effective in the past in ensuring that the benefits of economic growth do flow through to those people that really need it.

It is of continuing concern to me that, despite the fact that many credible economists identify this as one of the reasons why Australia does have this relatively low level of inequality, we continue to see from the other side of politics continued attacks on these institutions and concepts. Really, if there is one area that should have bipartisan support, it is buttressing the institutions which prevent levels of inequality such as we see in the United States. I call on colleagues opposite to get on board with that.

The tide is turning and there is a need for us to adjust our thinking, out of the Thatcherite and Reaganist era, if we are going to lift economic growth out of the doldrums it is currently in. Although we have had a sustained period of economic growth, and there are a number of reasons for that, it is low growth and it is growth that is not flowing through in benefits to low-income workers. When we talk about this safety net, we are also talking about the trade union movement, as it is an integral part of it. We should get our heads out of the Thatcherite and Reaganist era, when there was a hard Right attack on the union movement because they interfered with the free market. That type of thinking, trickle-down economics, should be confined to the dustbin of history, and we should be adopting a more enlightened approach, one that is more in line with the facts and with the empirical evidence.

It is not just Labor saying this. For example, the International Monetary Fund has made the comment and has actually quantified the extent to which inequality is an inhibitor of economic growth. So as a former trade union official I join with Senator Cameron in saying that, rather than continuously attacking the trade union movement—which is at a low ebb at the moment, and we should be frank about that; levels of union membership in this country are quite low, historically speaking, and I would put that down to the fact that there is a lot of emphasis given to sensationalist media reporting—it should be considered, and it is, as I said in my first speech in this place, an integral part of the system of transmitting the proceeds and the benefits of economic growth through to ordinary working people. That is where I stand and that is what I support.

As I said, while we do not have those extremes of inequality that we see in other countries, we are below the OECD average, and the Gini coefficient, which is a well-respected metric in this area. Whereas the OECD average is 0.32, Australia's is 0.33. We are not doing as well as we should and as well as we have done in the past. We know that 2½ million Australians live below the poverty line. I have indicated that inequality is a drag on economic growth and a destabilising force in society. I have touched on that point. The OECD has estimated that from 1985 to 2005 inequality reduced growth among member states by almost 5 per cent. That is an extraordinary figure. The IMF's chief, Christine Lagarde, has warned leaders as the World Economic Forum recently that economic growth can only be sustained if it is equitable. It comes back to the need for an institution like the Productivity Commission to focus on this particular issue. I started by talking about the penalty rates decision, which I think is the most egregious example of the Productivity Commission looking at a set of facts and coming up with a conclusion that is unhelpful to our economy and our society. We know that the McKell Institute has done work in respect of what happens when you cut penalty rates. They have identified that the retail and hospitality trade is a particularly important trade for rural Australia. We know that the retail trade, as far as the workforce was concerned, was 11 per cent in the 2011 survey, and we had accommodation and food services at seven per cent. That is a significant part of the rural workforce.

We know that when you cut penalty rates, you take that spending power that exists in those regional communities out of regional communities and repatriate it back to the head offices of companies, so that that money is used someone else rather than in the local community. We know that regional and rural communities are already struggling, so we are going to see significant impacts from 1 July. When we should be doing all that we can to support our regional communities and we see this coming forward, this is going to be a devastating new impact on regional communities.

We should do a number of things when talking about inequality. We should establish measures for economic inequality. We should be looking at things like geography, gender and age in respect of inequality. We know that governments do not work effectively if they cannot measure and quantify the problem so we can prioritise our efforts in dealing with these types of issues in a policy setting. Unless you do that sort of thing, the community remains unaware of the extent to which inequality is connected to social and other outcomes.

This is a significant concern for me as a Labor politician. I want to highlight the concern that I have in respect of cuts to penalty rates and the impact that that is going to have on future economic growth. We know that households are under extraordinary pressure at the moment. There are 700,000 households across Australia that are going to be directly impacted by the penalty rate cut. Albeit the cuts will be phased in over a period of time, the failure of people's incomes to keep up with other increasing prices is going to be a significant problem for economic growth into the future. It will make it so much harder.

Of course, we also know that households are suffering under a huge amount of debt. Australia is something like third in the world when it comes to household debt as a percentage of GDP, which I think is something in the order of 125 per cent. That is already causing the consumer side of our economy to languish. If we want to see people loosening up their purses and wallets to spend in the economy, we need to provide better wage growth for them. That can only be done if we have lower levels of inequality, so that people can start to enjoy the benefits of economic growth. If we do not do that, it is a very serious issue. We do not want to see the instability in our society that we have seen across the world. Australia has a great track record but it is under pressure, and measures such as those in the bill will go some way to addressing that concern. (Time expired)

Senator ROBERTS (Queensland) (11:51): The Productivity Commission Amendment bill 2017 amends the Productivity Commission Act 1998 to expand the general policy guidelines for the exercise of the Productivity Commission's functions to include consideration of inequality, and establishes a framework for the Productivity Commission to regularly report on economic inequality.

The purpose of this bill is to improve the quality of information and analysis available about economic inequality in Australia and to ensure that proper consideration is given to inequality in the public debate about economic policy. We firstly compliment Senator McAllister and the ALP for putting forward this bill, even if we have some reservations, as expressed quite well by Senator Leyonhjelm.

I will firstly discuss inequality. Inequality of wealth is an important economic phenomenon that should be properly and independently measured and analysed; however, it is a result, not a cause. A significant level of inequality is not in itself an economic issue. It is whether someone has sufficient and growing wealth to pay the bills, not whether someone else has even more sufficient and growing wealth. So, provided this is used correctly, and not politically for pushing a philosophy, it will be a valuable addition to the debate in this country.

Inequality only makes economic sense as one possible indicator that something may be askew with the levels and trend of real net wealth. Real net wealth is driven not by inequality but by factors such as real income and wages versus the real cost of living. The latter, cost of living, is partially and imperfectly measured by the CPI, which nevertheless clearly shows why poor and middle-class Aussies continue to struggle. The poor in fact get hammered by regulations, which seem to be the solution to many of the problems or challenges that the ALP see. The ALP, along with their Greens allies, quite often put forward an increase in regulation. Regulations bring with them an increase in cost, a decrease in quality and a decrease in production, which hurt the poor most of all. Regulations are an indiscriminate and regressive impost on the poor.

The Productivity Commission has been a bastion of sound economics and common sense for decades. The Productivity Commission will be aware of the primary role that too many government interventions, such as in the form of regulation, tax and money supply, have in reducing real net wealth as possibly indicated by significant levels of inequality. Thus, no government agency is in a better position to be tasked with assessing inequality than is the Productivity Commission.

Inequality can be very difficult to define. Senator Ketter has already attempted to discuss some of those aspects. Is it gender inequality? Is it geographical inequality? Is it inequality of tax? Is it inequality of wealth? As I said, regardless, when it comes to economic considerations, inequality is a result, not a cause.

Senator Ketter raises the question of declining union membership. That is no secret. A lot of people are aware of this. And then he raises the point about penalty rates. It is all too clear that the people who have pushed the decrease in weekend penalty rates, for example, are the very union bosses that have complained no about the Fair Work case result. Some in the media are referring to the Leader of the Opposition as Electricity Bill. That is not something I would do in this chamber, but that highlights two things. That is what people are seeing, and that gets to the heart of Senator Ketter's comments: these are open, everyday things. The penalty rates decision was preceded by the union bosses doing deals with the big end of town to strip penalty rates out of enterprise agreements. The decrease in penalty rates has been led by union bosses.

We then see energy policies—electricity especially. As the famous saying goes, the road to hell is paved with good intentions. Some work by our staff indicated that single pensioners pay 11 per cent of their income, which is not discretionary, on energy. It is now a highly regressive tax to increase energy prices, which is at the core of Labor Party policy with its 50 per cent renewable energy target and its now support for the disgraceful Finkel report, which has no sound economic merit at its base. (Time expired)

The DEPUTY PRESIDENT: The time for this debate has expired. Senator Roberts, you'll be in continuation when the bill is brought back on.

Senator BUSHBY (Tasmania—Chief Government Whip in the Senate) (11:58): I present the seventh report of 2017 of the Selection of Bills Committee. I seek leave to have the report incorporated in Hansard.

Leave granted.

The report read as follows—

SELECTION OF BILLS COMMITTEE

REPORT NO. 7 OF 2017

1. The committee met in private session on Wednesday, 21 June 2017 at 7.23 pm.

2. The committee recommends that—

(a) the provisions of the Australian Citizenship Legislation Amendment (Strengthening the Requirements for Australian Citizenship and Other Measures) Bill 2017 be referred immediately to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 4 September 2017 (see appendices 1 and 2 for a statement of reasons for referral);

(b) the Corporations Amendment (Modernisation of Members Registration) Bill 2017 be referred immediately to the Economics Legislation Committee for inquiry and report by 11 September 2017 (see appendix 3 for a statement of reasons for referral);

(c) the Environment and Infrastructure Legislation Amendment (Stop Adani) Bill 2017 be referred immediately to the Environment and Communications Legislation Committee for inquiry and report by 13 September 2017 (see appendix 4 for a statement of reasons for referral);

(d) the provisions of the Regional Investment Corporation Bill 2017 be referred immediately to the Rural and Regional Affairs and Transport Legislation Committee for inquiry and report by 14 August 2017 (see appendices 5 and 6 for a statement of reasons for referral);

(e) the provisions of the Social Services Legislation Amendment (Better Targeting Student Payments) Bill 2017 be referred immediately to the Community Affairs Legislation Committee for inquiry and report by 7 September 2017 (see appendix 7 for a statement of reasons for referral);

(f) the provisions of the Social Services Legislation Amendment (Payment Integrity) Bill 2017 be referred immediately to the Community Affairs Legislation Committee for inquiry and report by 7 September 2017 (see appendices 8 and 9 for a statement of reasons for referral);

(g) contingent upon introduction in the House of Representatives, the provisions of the Social Services Legislation Amendment (Welfare Reform) Bill 2017 be referred immediately to the Community Affairs Legislation Committee for inquiry and report by 4 September 2017 (see appendix 10 for a statement of reasons for referral); and

(h) the Vaporised Nicotine Products Bill 2017 be referred immediately to the Community Affairs Legislation Committee for inquiry and report by 13 September 2017 (see appendix 11 for a statement of reasons for referral).

3. The committee recommends that the following bills not be referred to committees:

Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017

International Monetary Agreements Amendment Bill 2017

Liquid Fuel Emergency Amendment Bill 2017

Petroleum and Other Fuels Reporting Bill 2017

Petroleum and Other Fuels Reporting (Consequential Amendments and Transitional Provisions) Bill 2017

Productivity Commission Amendment (Addressing Inequality) Bill 2017

Safe Work Australia Amendment (Role and Functions) Bill 2017

Treasury Laws Amendment (2017 Measures No. 3) Bill 2017.

4. The committee deferred consideration of the following bills to its next meeting:

Clean Energy Finance Corporation Amendment (Carbon Capture and Storage) Bill 2017

Competition and Consumer Amendment (Truth in Labelling—Palm Oil) Bill 2017

Education and Training Legislation Repeal Bill 2017

Education Legislation Amendment (Provider Integrity and Other Measures) Bill 2017

End Cruel Cosmetics Bill 2014

Great Barrier Reef Marine Park Amendment Bill 2017

Imported Food Control Amendment Bill 2017

Live Animal Export (Slaughter) Prohibition Bill 2017

Migration Amendment (Regulation of Migration Agents) Bill 2017

Migration Agents Registration Application Charge Amendment (Rates of Charge) Bill 2017

Migration Amendment (Validation of Decisions) Bill 2017

Public Governance and Resources Legislation Amendment Bill (No. 1) 2017

Statute Update (Smaller Government) Bill 2017

Treasury Laws Amendment (2017 Measures No. 4) Bill 2017.

5. The committee considered the following bills but was unable to reach agreement:

Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017

Telecommunications (Regional Broadband Scheme) Charge Bill 2017.

(David Bushby)

Chair

22 June 2017

APPENDIX 1

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Australian Citizenship Legislation Amendment (Strengthening the Requirements for Australian citizenship and other Measures) Bill 2017

Reasons for referral/principal issues for consideration:

Determine whether the changes to citizenship requirements will improve national security. Consideration of human rights implications and discriminatory nature of the measures to people of non-english speaking backgrounds.

Possible submissions or evidence from:

Human rights Commission

Australian Law Council

Migration Solutions

Committee to which bill is to be referred:

Legal and Constitutional Affairs Legislation Committee

Possible hearing date(s):

11 August 2017

Possible reporting date:

11 September 2017

(signed)

Senator Kakoschke-Moore

APPENDIX 2

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Australian Citizenship Legislation Amendment (Strengthening the Requirements for Australian citizenship and other Measures) Bill 2017

Reasons for referral/principal issues for consideration:

The complexity of the Bill means it needs investigation.

Possible submissions or evidence from:

Department of Immigration and Border Protection

Federation of ECCA

the Migration Council of Australia

Refugee Council of Australia (RCoA)

the Settlement Council of Australia (SCoA)

Committee to which bill is to be referred:

Legal and Constitutional Affairs Legislation Committee

Possible hearing date(s):

To be determined by the Committee

Possible reporting date:

16 August 2017

(signed)

Senator Urquhart

APPENDIX 3

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Corporations Amendment (Modernisation of Members Registration) Bill 2017

Reasons for referral/principal issues for consideration:

Bill addresses a deficiency in corporate governance.

Possible submissions or evidence from:

Brett Stevenson

Alex Malley (CPA Australia)

Governance Institute of Australia

Committee to which bill is to be referred:

Economics Legislation Committee

Possible hearing date(s):

August 2017

Possible reporting date:

September 2018

(signed)

Senator Kakoschke-Moore

APPENDIX 4

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Environment and Infrastructure Legislation Amendment (Stop Adani) Bill 2017

Reasons for referral/principal issues for consideration:

Use of taxpayer funding for subsidies for multinational mining corporations

The poor environmental history and questionable track record of the Adani group

The need to review the Adani group's environmental approvals in Australia

Whether the NAIF Act should include a fit and proper person test

Whether the "environmental history" test in the EPBC Act should be strengthened.

Possible submissions or evidence from:

The Adani group

The NAIF

The Minister for Resources

Environmental Justice Australia

Committee to which bill is to be referred:

Environment and Communications Legislation Committee

Possible hearing date(s):

Mid-July

Possible reporting date:

13 September 2017

(signed)

Senator Siewert

APPENDIX 5

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Regional I nvestment Corporation Bill 2017

Reasons for referral/principal issues for consideration:

To investigate claims that the Regional Investment Corporation will help to fast-track the construction of dams and priority water infrastructure projects needed to stimulate investment, economic growth and increased agricultural productivity in rural and regional communities.

To investigate what is the cost benefit to determine that it makes sense to locate the Regional investment corporation in Orange, NSW.

To investigate if the farm business concessional loans programme and National Water Infrastructure will be budget neutral over their life.

Any other related matters.

Possible submissions or evidence from:

State and Territory Governments; Department of Agriculture; the Department of Finance.

Committee to which bill is to be referred:

Rural and Regional Affairs and Transport Legislation Committee

Possible hearing date(s):

To be determined by the Committee

Possible reporting date:

4 September 2017

(signed)

Senator Urquhart

APPENDIX 6

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Regional Investment Corporation Bill 2017

Reasons for referral/principal issues for consideration:

Due consideration and scrutiny of the bill and the implications of the ANAD audit.

Possible submissions or evidence from:

Department of Agriculture

State Governments

NFF and state farmer peak bodies

ANAO (re: their Administration of Concessional Loans Programs report)

Committee to which bill is to be referred:

Rural and Regional Affairs and Transport Legislation Committee

Possible hearing date(s):

8-10th August (if necessary)

Possible reporting date:

Tuesday 15th of August 2017

(signed)

Senator Siewert

APPENDIX 7

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Social Services Legislation Amendment (Better Targeting Student Payments) Bill 2017

Reasons for referral/principal issues for consideration:

Better understand impact of the cuts

Ensure affected groups and expert groups are able to contribute

Ensure that vulnerable groups are not negatively affected by the changes

Ensure that all Australians have adequate opportunities to undertake study to find and keep employment

Possible submissions or evidence from:

ACOSS

Social Security Rights Network

Brotherhood of St Laurence

National Union of Students

Foundation for Young Australians

St Vincent de Paul

Carers Australia

National Council of Single Mothers and their Children

Catholic Social Services

Committee to which bill is to be referred:

Senate Community Affairs Legislation Committee

Possible hearing date(s):

Not required

Possible reporting date:

7 September 2017

(signed)

Senator Urquhart

APPENDIX 8

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Social Services Legislation Amendment (Payment Integrity) Bill 2017

Reasons for referral/principal issues for consideration:

Better understand the impact of the measures

Ensure proper scrutiny of the Bill

Possible submissions or evidence from:

ACOSS

Social Security Rights Network

Brotherhood of St Laurence

National Seniors

St Vincent de Paul

Carers Australia

National Council of Single Mothers and their Children

St Vincent de Paul

Salvation Army

Catholic Social Services

COTA

Federation of Ethnic Communities' Councils Australia

The Parenthood

Committee to which bill is to be referred:

Senate Community Affairs Legislation Committee

Possible hearing date(s):

To be determined by the Committee

Possible reporting date:

7 September 2017

(signed)

Senator Urquhart

APPENDIX 9

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Social Services Legislation Amendment (Payment Integrity) Bill 2017

Reasons for referral/principal issues for consideration:

Implications for pensioners, families

Possible submissions or evidence from:

ACOSS, NSSRN, Anglicare Australia, UnitingCare Australia, Catholic Social Services

Committee to which bill is to be referred:

Community Affairs Legislation Committee

Possible hearing date(s):

Possible reporting date:

(signed)

Senator Siewert

APPENDIX 1 0

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Social Services Legislation Amendment (Welfare Reform) Bill 2017

Reasons for referral/principal issues for consideration:

Better understand the impact of the measures

Ensure proper scrutiny of the Bill

Possible submissions or evidence from:

ACOSS

Social Security Rights Network

Brotherhood of St Laurence

St Vincent de Paul

National Council of Single Mothers and their Children

St Vincents Health

Salvation Army

Catholic Social Services

Assoc. Prof. John Fitzgerald, University of Melbourne

Homelessness Australia

National Drug and Alcohol Research Centre

Rural Doctors Association of Australia

Royal Australian College of Physicians

Anglicare Australia

Committee to which bill is to be referred:

Senate Community Affairs Legislation Committee

Possible hearing date(s):

To be determined by the Committee

Possible reporting date:

4 September 2017

(signed)

Senator Urquhart

APPENDIX 1 1

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee:

Name of bill:

Vaporised Nicotine Products Bill 2017

Reasons for referral/principal issues for consideration:

Raises important health and personal choice issues.

Possible submissions or evidence from:

Can provide extensive list based on Select Committee inquiries on Nanny State and also Red Tape.

Committee to which bill is to be referred:

Community Affairs Legislation Committee

Possible hearing date(s):

No preferences

Possible reporting date:

By 13 September

(signed)

Senator Leyonhjelm

Senator BUSHBY: I move:

That the report be adopted.

Senator McGRATH (Queensland—Assistant Minister to the Prime Minister) (11:58): I move:

At the end of the motion, add "and, in respect of the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017 and the Telecommunications (Regional Broadband Scheme) Charge Bill 2017, the provisions of the bills be referred to the Environment and Communications Legislation Committee for inquiry and report by 8 August 2017".

Senator GALLAGHER (Australian Capital Territory—Manager of Opposition Business in the Senate) (11:59): The opposition agrees with the amendment, but I would like to rise and make a few comments about the Selection of Bills Committee report and, in particular, the referral of the Australian Citizenship Legislation Amendment (Strengthening the Requirements for Australian Citizenship and Other Measures) Bill 2017 to the Legal and Constitutional Affairs Legislation Committee for inquiry. We support the referral to the committee, but the opposition would like to put on the record our concerns that were raised at the selection of bills meeting last night about the conduct of that inquiry. The Legal and Constitutional Affairs Legislation Committee is an important and powerful committee of the Senate. Its job is to scrutinise important legislation and report to the Senate, and it is critical for the Senate to be able to perform its responsibilities as a house of review.

Labor has informally raised concerns before that we had about the conduct of previous inquiries, whether it be specific legislation or through the estimates process. Specifically, our concerns are about the ability of the chair to conduct hearings which are respectful both of senators and of witnesses and professional in their approach at all times. The Australian Citizenship Legislation Amendment (Strengthening the Requirements for Australian Citizenship and Other Measures) Bill is an important piece of legislation. It is vital that the inquiry is professional, that witnesses are respected and that senators are able to perform their duties as provided for by the relevant standing orders without obstruction or harassment. Whilst it is regrettable to raise these issues in the chamber, in this instance Labor believes it is important to bring our concerns to the attention of the Senate.

Senator McKIM (Tasmania) (12:01): I endorse the comments made by Senator Gallagher and want to offer a few thoughts with regard to Senator Macdonald, the Chair of the Legal and Constitutional Affairs Legislation Committee, who, in conducting himself in that role, has consistently demonstrated bias and incompetence. We have seen badgering and bullying of witnesses—

The DEPUTY PRESIDENT: Senator McKim, resume your seat. I will just remind you that you cannot reflect on a senator in those terms, so I ask you to withdraw those remarks.

Senator McKIM: I do withdraw those remarks. I guess I cannot call him a lickspittle either.

The DEPUTY PRESIDENT: Senator McKim, I have cautioned you. Please do not take licence with that.

Senator McKIM: In that case, what I will say is this: the conduct of Senator Macdonald as the Chair of the Legal and Constitutional Affairs Legislation Committee risks bringing that committee and this Senate as a whole into significant disrepute in the minds of the Australian people. We have seen Senator Macdonald trying to evict me from that committee for doing my job as a senator representing the Tasmanian people and the Australian people, trying to prevent me from asking questions and trying to prevent me from holding the government to account.

The Australian people have witnessed the difference in the way he conducts himself with regard to some witnesses that have appeared before that committee and the contrast in that behaviour with the behaviour he engages in with regard to government ministers who are appearing as witnesses before that committee. If you look at the 14th edition of Odgers, it says, on page 462, this:

It is in the … committee] room that careful, calm consideration can be brought to bear upon a subject, and [senators] can work harmoniously in spite of party differences.

We are in danger of not meeting that standard. We are in danger of undermining public confidence in the Legal and Constitutional Affairs Legislation Committee as a result of the way that that committee is chaired.

With regard to citizenship legislation, which is part of this report, the bill is nothing other than an attempt to remake Australia in Peter Dutton's narrow-minded and bigoted image. It is aimed at demonising—

The DEPUTY PRESIDENT: Senator McKim, resume your seat. Senator Macdonald, on a point of order?

Senator Ian Macdonald: I do not think I need to make my point of order. I think you were about to make the point.

The DEPUTY PRESIDENT: Thank you, Senator Macdonald. I do remind you Senator McKim to refer to those in the other place by their correct titles, and I will ask you to respect them as members of this place and to withdraw that comment.

Senator McKIM: I withdraw that. But I will make the point here again that the citizenship legislation proposed by Minister Dutton, with the support of the entire cabinet, including Prime Minister Turnbull, is aimed at demonising and ostracising people who are already living, working and raising families in Australia. They are men, women and children who show every day how much they love this country and how hard they are working to contribute to our society and community. They want to make Australia their home. They want to build their lives, or rebuild their lives, in this country. For all their hard work, the government wants to spit in their faces. This legislation is like the policy of a carload of drunk thugs shouting abuse at passers-by. It is the policy of the Cronulla riots.

This legislation assumes the very worst in people—like high-standard English language tests that, I suspect, members of the cabinet would struggle to pass.

Senator McGrath: You're a dirtbag.

The DEPUTY PRESIDENT: Senator McGrath!

Senator McKIM: It is no coincidence that these kinds of English language tests were a hallmark of the White Australia policy.

The DEPUTY PRESIDENT: Senator McKim, please be seated. Senator Whish-Wilson on a point of order.

Senator Whish-Wilson: Deputy President, you heard exactly what Senator McGrath said. He needs to withdraw that.

The DEPUTY PRESIDENT: Senator McGrath, I invite you to withdraw those remarks.

Senator McGrath: I withdraw those remarks.

The DEPUTY PRESIDENT: I remind all senators that senators are entitled to be heard with respect and in silence. Senator McKim.

Senator McKIM: It is no coincidence that high-level English language tests that are designed to set people up to fail were a hallmark of the White Australia policy. This legislation and this government now want to lecture people about violence against women, despite the Minister for Immigration and Border Protection, Mr Dutton, trying to prevent a pregnant woman suffering serious health problems from being let out of detention in Nauru and coming to a hospital in Australia. This government, which impugns the independence of our legal system, including the AAT, now wants to lecture others about the rule of law. This government is trying to bend Australia to its will, to force Australia to give in to our fears, to put up the shutters and to build the fences. But I will tell you now that the government will not succeed, and it is the Australian people who will stop them from succeeding, because whether or not this government manages to change the laws to make it harder to become a citizen in this country, they will not change the fundamental character of our country, because the people will not let them. (Time expired)

Senator HINCH (Victoria) (12:07): Going back to the original issue that started this whole thing, without going into the side lines of Senator McKim, as a participating member of the committee I want to say that I endorse Senator Gallagher's remarks.

Senator IAN MACDONALD (Queensland) (12:08): I am the chair of the Legal and Constitutional Affairs Legislation Committee, to which the citizenship bill has been referred. I have already been in touch with the secretariat to try to work out a schedule for approval by the committee at an urgent meeting, which we have just called, so that we can deal with this before the Senate rises. I have given the committee some suggestions as to when hearings could be held in Melbourne, Sydney, Brisbane and Canberra to give everybody the widest opportunity to discuss what is clearly a very important bill, on which there will be lots of different views. Senator McKim espouses one view, which a minority might espouse. This is not the place for it, of course. If my suggestions are adopted, Senator McKim, as a full voting member of that committee, will have at least four occasions in public hearings to question witnesses. But when he questions witnesses he will, while I am chairman, do it respectfully and properly and in accordance with the standing orders.

Another senator in this chamber, who I will not mention, has complained to me that even in the committee he cannot hear what is going on because he sits near Senator McKim who consistently interjects. A senator has raised the same point in this particular chamber, not in the committee, complaining to the President that he cannot hear the President because of the consistent and constant interjections of Senator McKim. I have said many a time in the committees that I chair that I will not stand for that type of behaviour. It is bullying and it is disrespectful, and, as I proved with Lieutenant General Campbell, when senators disrespect witnesses I will insist that those senators either withdraw or remove themselves.

The DEPUTY PRESIDENT: Senator McKim, a point of order.

Senator McKim: Quite frankly, I could not care less what Senator Macdonald thinks about me.

The DEPUTY PRESIDENT: That is not a point of order.

Senator McKim: The point of order is that you required me to withdraw personal reflections on Senator Macdonald. I ask that you hold him to the same standard and require him to withdraw those personal reflections on me.

The DEPUTY PRESIDENT: Senator McKim, I asked you to withdraw comments which I considered to be unparliamentary. I am listening very carefully to the comments made by Senator Macdonald. If he or any other senator in this place makes unparliamentary comments, I will hold them to the same account.

Senator McKim: I am making sure that you heard Senator Macdonald call me a bully.

The DEPUTY PRESIDENT: I do not believe he talked about—

Senator McKim: He said I engaged in bullying behaviour. I ask you to reflect on that.

The DEPUTY PRESIDENT: Senator McKim, I do not believe the use of that term to be unparliamentary.

Senator IAN MACDONALD: Talk about a glass jaw! What I am repeating are actual facts. There has been a senator stand up in this chamber, not in the committee, and request the President to get Senator McKim to be quiet so that senator can exercise his right to hear what is happening in the chamber. The same thing happens in my committee. I have a constant and consistent barrage of interjections from Senator McKim that I will not stand for. There is one member of the opposition—again, who I will not name but those on the committee will know to whom I am referring—who does the same thing. These two senators think they are somehow special and that there are special and different rules for them that do not apply to anyone else.

Senator McKim is also concerned about the fact that, in the committees that I chair, I try to give every senator a fair crack of the time available. It is my consistent position—as all the senators in my committee know—to give each one 15 minutes at a time; no more and no less. They can come back and have another 15 minutes later. That way every senator gets to have their say. That does not suit Senator McKim or the Labor senator I am talking about, who want special privileges. Well, it will not happen. I work on the basis that the questions at estimates should be roughly proportional to the make-up of the Senate. It is my practice, which I will continue, to have one Labor, one Liberal, one Labor, one Liberal and then one crossbencher, because that is roughly the proportions of this chamber. Nothing can be fairer than that. But, of course, it does not suit Senator McKim because he is a member of a very minor party, which is becoming more minor, and he does not get the same say as a member of the Labor Party, who have two or three times as many senators as he has in this chamber.

I can understand why Senator McKim is going around the chamber trying to get some support to get me taken off chairmanship of the committee. I treat that as a badge of honour. He would not want to get rid of me if I was not an effective and fair chairman, and I will continue to be an effective and fair chairman. I will not be bullied by the likes of Senator McKim and one other senator. (Time expired)

The DEPUTY PRESIDENT: The question is that the amendment moved by Senator McGrath be agreed to.

Question agreed to.

The DEPUTY PRESIDENT: The question now is that the amended motion that the report be adopted be agreed to.

Question agreed to.

Senator BUSHBY ( Tasmania — Chief Government Whip in the Senate ) ( 12:16 ): by leave—On behalf of the chair of the Red Tape Committee, Senator Leyonhjelm, I move:

That the Red Tape Committee be authorised to hold a private meeting otherwise than in accordance with standing order 33(1) during the sitting of the Senate today.

Question agreed to.

Senator IAN MACDONALD ( Queensland ) ( 12:16 ): by leave—I move:

That the Legal and Constitutional Affairs Legislation Committee be authorised to hold a private meeting otherwise than inaccordance with standing order 33(1) during the sitting of the Senate today from 1:55 pm.

The committee wishes to meet at 1.55 pm to determine a schedule for its hearings.

Question agreed to.

Senator McGRATH (Queensland—Assistant Minister to the Prime Minister) (12:46): I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bills read a first time.

Senator McGRATH (Queensland—Assistant Minister to the Prime Minister) (12:46): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

TREASURY LAWS AMENDMENT (2017 MEASURES NO. 3) BILL 2017

This Bill is an administrative technical amendment to the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001. The Bill eliminates potential legal risks that have recently become apparent by validating certain past agreements that were made to employ or engage a small proportion of ASIC staff before the end of 9 March 2017.

From the commencement of this Bill, the validation of the agreements means that those affected staff will be taken to have always been valid staff members who were effectively delegated ASIC's functions and powers.

These amendments address various administrative oversights including one that occurred in 1999. At that time, legislative changes shifted the power to employ or engage staff outside of the Public Service Act from ASIC itself to ASIC's Chairperson. However, relevant delegation instruments were not updated to reflect this change.

ASIC only recently became aware of this oversight. Successive previous governments have not been aware of it. The irregularities only potentially affect a small proportion of ASIC staff employed outside of the Public Service Act.

The passage of this Bill ensures that previous actions taken by those ASIC staff will be effective. In turn this will remove any doubt about the validity of any sanctions that have otherwise been legitimately imposed on people; and any doubt about the effectiveness of the relief that ASIC has provided.

The amendments will have no impact on any current or former ASIC staff members beyond ensuring the validity of their employment and actions. The legislation maintains the status-quo, under which the Chairperson of ASIC has the ongoing ability to employ or engage staff members and for ASIC to delegate its powers and functions to them.

Full details of the measure are contained in the explanatory memorandum.

Senator GALLAGHER (Australian Capital Territory—Manager of Opposition Business in the Senate) (12:46): I rise to speak in support of the Treasury Laws Amendment (2017 Measures No. 3) Bill 2017 and its expeditious passage through the chamber. ASIC has discovered that certain delegations being relied upon did not meet particular requirements under the ASIC Act, leading to a defect in the employment of staff and consultants, and legal uncertainty as to whether people employed by ASIC were lawfully entitled to exercise certain functions and powers. Those functions and powers include coercive powers, such as compelling the production of documents that may then have been used in evidence in court proceedings. So, a range of outcomes under those acts, and the other laws ASIC had administered, may be open to legal challenge.

The bill before us today is to validate certain agreements to employ or engage ASIC staff that were purportedly made before the end of 9 March 2017, and thus provide a legal basis for the exercise by affected staff members of delegated functions and powers of ASIC. The amendments also deal with the consequences are validating those agreements for the purposes of provisions of the Corporations Act, and the ASIC Act, dealing with the transition from the old Corporations and ASIC legislation.

It is important that the operations of our corporate markets and financial services regulator are beyond reproach. A properly well-functioning regulator ensures there is confidence that the financial system is operating properly for the benefit of all Australians. As I stated in my opening remarks, Labor supports this bill and will support its speedy passage through the Senate this morning.

Senator RYAN (Victoria—Special Minister of State and Minister Assisting the Prime Minister for Cabinet) (12:48): Given the motion passed yesterday and the understanding of the Senate in allowing this to be dealt with in this period of legislation, I will not add a great deal to the debate, other than to thank senators for their understanding. I commend the bill to the Senate.

The ACTING DEPUTY PRESIDENT: The question is that the bill be now read a second time.

Question agreed to.

Bill read a second time.

The ACTING DEPUTY PRESIDENT ( Senator O'Sullivan ) (12:49): As no amendments to the bill have been circulated, I shall call the minister to move the third reading unless any senator requires that the bill be considered in Committee of the Whole.

Senator RYAN (Victoria—Special Minister of State and Minister Assisting the Prime Minister for Cabinet) (12:49): I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

The TEMPORARY CHAIR ( Senator O'Sullivan ) (12:50): The committee is considering the Australian Education Amendment Bill 2017. The question is that amendments (1) to (3) on sheet 8177, moved by Senator Hanson-Young, be agreed to.

Senator JACINTA COLLINS (Victoria) (12:50): Whilst we are dealing with Senator Hanson-Young's amendments to the government's amendments which would establish a schooling resource body, it may be useful if, as I did last night, I refer to elements of our subsequent amendments in relation to establishing a more independent student resourcing body and canvass a number of issues where the current arrangements here are not yet adequate. This will, of course, allow senators an opportunity between now and 4.30, when we are back again on this bill, to contemplate further improvements that could be achieved in relation to the establishment of this body.

The discussion last night covered issues such as its independence, which Labor believe is critical and which is dealt with in our amendments. Another issue is that it be tasked to do this review of the SES, quite clearly, which is dealt with in our proposal. Another suggestion last night, from Senator Bernardi, that it should address educational outcomes was, I believe, a very good suggestion, and if Senator Bernardi has not yet had the opportunity to look at couching that as an amendment then that is something Labor are prepared to address between now and when we return to this at 4.30.

The other suggestion was in relation to students with disability. There have been significant concerns raised about how this bill will deal with students with disability, and the circumstances there—and again we will probably come to this later in the day—are quite critical. We know that with only limited additional funds we are looking at doubling the number of students over which those funds will be distributed, and we have very little understanding of or information about how just picking up the current nationally consistent dataset will occur and what the impact may be on students already receiving support with respect to a disability.

Another issue that I have heard others comment on is how this relates to the NDIS. I think it is important that a schooling resource body be tasked with helping to develop the implementation of the application of a nationally consistent dataset across students with disability and also with helping the implementation of the NDIS and the line that distinguishes how support is delivered to people with disability if those people are, indeed, school aged. It is a very sensitive area, because historically schools, particularly special schools, have provided a range of supports through their schooling arrangements and, as we move down the path of the implementation of the NDIS, the last thing we want to do is compromise the existing resourcing of students within schools. We want to develop a model that works consistently with the NDIS. So Labor would be open to considering an amendment here that would specify the work that should occur there for students with disability. With the goodwill of the senators here now, hopefully, these are issues that we may in the very limited time be able to deal with between now and when we return at 4:30.

Of course, that leads me to Labor's more ideal position, which is that we should not be addressing these issues under these circumstances. These are very important public policy issues where reviews that should have occurred have not occurred, reviews that should have been conducted under the National Education Reform Agreement have not occurred, the minister—possibly because he has been given far too broad responsibilities as the only minister in his portfolio—has not got on top of these issues and now, for crass political reasons, we are being asked to shove this through the sausage factory. We should not be shoving this through the sausage factory. We should be very carefully considering these issues.

Unfortunately, it was the will of the Senate that the Senate committee's consideration of these factors was far more brief than it should have been. Labor at the time through selection of bills asked that a more appropriate amount of time be provided so that we could address the broad myriad of issues that are now, of course, coming up in this debate here. As I said last night, thank God for our Australian parliamentary system, because at the end of the day we know that these issues do come back to the floor of the Senate. Senator Xenophon understands, for example, that there are a broad range of complex issues—and I know the Greens do too—that need to be addressed before we set up a framework to apply under one version for 10 years. Parliamentary process and Senate scrutiny should not be occurring under these circumstances.

Sure, I understand the raw politics of this for the government. I understand that, once they believe they have the crossbench in the cart, they do not want to allow more time, because they might jump back out of the cart when further information becomes available. But this Senate committee process will be the opportunity for the opposition of the day to highlight what a dud arrangement this is in many respects.

Further to that, though, if at the end of the day we establish a schooling resource body and we set it up the right way, that will allow further scrutiny of some of these issues. But, as I mentioned to senators last night, we have crossbench senators coming onto the floor here and telling us things that are factually incorrect. This highlights the concerns when the government, failing to consult adequately, secretly convinces behind closed doors some crossbench senators that certain circumstances are so and then those senators come onto the floor here, attempting to justify their position, and do not even have the facts right.

Again, Minister, probably because your responsibilities are far too broad and Mr Turnbull did not give you any other executive support in your portfolio, you are not able to provide senators such as Senator Hanson-Young with the information she needs to justify her position. But the suggestion, quite apart from the discussion overnight about students with autism, that state governments do not provide funding to non-government schools is wrong. I went through some of the history of that, but I show that as one of the starkest examples of why we remain concerned that we still do not have your reply to the Senate's order for production of documents.

I understand only from your comments that it is just a letter, so I suspect it is just a letter which says, 'Nothing to see here.' If it says, 'Nothing to see here,' that is the problem in itself. The problem in itself is that you have not properly modelled the changes that you have proposed in this bill. If that is the case, it is incumbent on the Senate here to highlight that inadequacy. However, if you have argued a public interest immunity—that this information should not be available—then that of course is another issue that we should address, because why not? Why can the Senate not understand the impact of these changes that you are so determined to pursue?

And let me run through that determination in the remainder of the time I have here, because you are right, Senator: it is reckless. But let me run through that story. The story starts with outrage that those rent-seeking Catholics could dare complain that what we learn now is $4.6 billion is being removed from their system. Your own senators in the past have run worse lines. But no: this minister here is happy to get up, presumably under the endorsement of Mr Turnbull, and call Catholic educators rent seekers. That is outrageous. But of course they have backflipped on that one now, because the government is out there peddling that what they said for so long was a special deal is not actually a special deal.

Overnight I ran through the details of how government at the time, when I was working with Minister Garrett on school education, responded to the Gonski report in a range of areas. I know I will again be criticised for focusing on just this one area. There will be others in this debate, but this one area is the one that highlights the worst—the extremes—of this minister's behaviour. So, the remainder of the story is that I have argued this consistently, I have demonstrated where his own department has done somersaults to try to protect its minister and failed—needed the furnish the Senate with corrections to the material it provided us—because his argument that the SES had been refined was blatantly untrue.

Now, this is not the only area where the minister has not come up with a correction to this chamber. He also said in question time the day before last that there was an increase in the share of funding for Catholic education, which is wrong. Even the PBO had already highlighted that that is not true. I understand that a minister who is responding to questions in question time might not, on the face of it, respond as clearly as perhaps he should. But I invited the minister to correct his answer, and he has again simply ignored that invitation. He has ignored my invitation, a call made as recently as this morning, to show the common courtesy of providing the senator who has requested it an order for the production of documents that this Senate endorsed. Contempt of the Senate is pretty much the issue here. He has refused still to provide me with a copy of that response.

We will—maybe—get to the tabling of documents, and that may be available to the Senate later today. But those who understand the vagaries of Senate process understand that we may never get to tabling, because of the hours motion that the crossbench and the government agreed to. So, accountability and scrutiny in this parliament have been affected by the hours arrangement that crossbench senators agreed to. The Senate cannot even see the response to its own order for the production of documents. If that is the minister's idea of how to protect what information he might have provided secretly, so be it—although a number of crossbench senators say, 'Well, actually there's nothing there; we haven't seen anything.' If that is the case, so be that, too. My job is to demonstrate that the minister has not adequately modelled the impact of his arrangements.

So let me ask, at the conclusion of these comments: what modelling has been done on the impact of the provisions that I was highlighting yesterday?

On page 11 of the bill, amendment (36), subsection 54(3), you are repealing the table. The table shows the current capacity to contribute arrangements for non-government primary schools. We discussed how Senator Back told us on the doors this morning that he was happy with the amendments, but what the minister still has not made clear is why Senator Back believes he has gotten the best he can out of this minister. I do not believe that he is even convinced that it is good enough. It is not a full moratorium. It is putting the cart before the horse if the government proceed with these amendments before the SES review has occurred. (Time expired)

Senator LAMBIE (Tasmania) (13:05): I have a few questions. First of all, I want to ask questions about the resource board. I was wondering if you could give me a little bit more detail on exactly what is going to be involved in that, how long that process is going to take and who will be involved in that process on the table, please, Minister.

Senator BIRMINGHAM (South Australia—Minister for Education and Training) (13:06): Senator Lambie, thank you for your question. The resource board is intended to be an ongoing entity under the legislation. In that sense, it is expected that it will always be there. It is expected that it will have representation from, and therefore the confidence of, the states and territories, the Catholic education system representatives and the independent school system representative bodies to make sure everyone has a seat at the table. But, importantly, there will be flexibility there in terms of the numbers of members, such that the government of the day will be able to make sure that there not only are representatives bringing particular stakeholder perspectives to the table but also is independence around that table as well, which I think is critical and essential, and the government would want to ensure that that is the case.

I also think it is critical that the combination of those nominated by the government and those nominated by the other stakeholders will be broadly representative of the community to make sure that we have, for example, younger people having their voices rightly heard through a process such as this so that, indeed, those who perhaps have a more contemporary understanding of life at school actually have a seat at the table as well. It is important, of course, that a clear understanding of those who have come from different walks of life will also be reflected there—especially people who understand that educational services in parts of our country have to confront a whole range of circumstances of disadvantage and challenge that not only are fixed in a school community but also require, of course, the engagement of the school community with the entire community, and people who understand how it is that the funding, the resourcing, the support and the actions within schools and their systems helps to support those communities who need it most.

We want to make sure that the recommendations, the process et cetera of this body will be transparent, which is why we have made sure that there are provisions in here for copies to be provided to all of the relevant stakeholder groups and for their reports and findings to be presented within the parliament so that they are public, for the world to see, and, therefore, governments of the day are held to account with regard to any recommendations contained in the reports of the body. The statement I have given already is that the first body of work it would undertake relates to the SES methodology and its interactions with the capacity to contribute arrangements. We have given a commitment that it will have a look at disability loading arrangements and the continued implementation of the NCCD—in particular the striking of those different loading levels across the three different categories for students with a disability to ensure that they are receiving the type of adjustment support necessary for their full participation in schools.

I think it is important to highlight as well that this body, over time, would clearly be undertaking work in terms of whether or not the types of loadings, the types of structures and the funding arrangements were actually getting and delivering improved outcomes in schools. I know that has been a topic of debate. We already have the review taking place through the second half of this year, identifying how funding should be used to achieve educational excellence in schools. That will inform the types of conditions that are set out in proposed section 22(1) of the bill, where states and territories will enter into agreements around school reform to make sure that expert evidence around the implementation of school reforms is committed to by the states and that they then follow through on them.

Good examples, I guess, of where we want to ensure that commitments from the states are acted upon are the important issues of teacher quality, teacher training and so forth, on which we have existing agreements with all states and territories, through the COAG Education Council process, to enhance teacher training at our universities, to have primary school teachers undertaking subject specialisation and to ensure minimum standards in terms of the literacy and numeracy skills of teachers leaving university, getting registered and going into the classroom. I think it is only appropriate that we should expect the states and territories to be held to account to follow through on those sorts of things they have already agreed to do.

But, Senator Lambie, to come back to your question, I do think that it is essential in terms of the composition of the board that we make sure that, yes, there is suitable expertise and experience but also that it is suitably representative of the need across the Australian education landscape and is not, if I can put it this way, just the usual faces but ones that actually bring a degree of fresh perspective to these debates as well so that everybody can have confidence in the future that they are truly focused on student outcomes—what is best for kids and what is best in schools—not necessarily just the technicalities of funding formulas.

Senator LAMBIE (Tasmania) (13:12): I am still a little concerned about time frames. I have been here for nearly three years. I have seen recommendations come and go—and go on the shelf. That is where they go. This is what is bothering me. We are going to pull these people together. They are not going to be cheap, I imagine; they will have to be paid to be on a board. I want to know, when everybody comes to an agreement, whether the Liberal party is just going to sit there and ignore those recommendations. I know this is hypothetical, but let's face it: that is a pattern of behaviour in here. We are discussing disability funding and we are still not sure if there is going to be a shortfall. Now, if that is proven straight away, I want to know if you are going to implement that money within seven days and put it back into the system if you have got this wrong. They are the sorts of things I want to know, Minister.

Senator BIRMINGHAM (South Australia—Minister for Education and Training) (13:13): We will absolutely move as quickly as we can to appoint this board. We have given the commitment that the work on the SES methodology would be complete by the middle of next year and we have given the commitment that changes around that, should they be necessary, would be implemented in time for the 2019 school year. So it is absolutely the government's intention and commitment that, once we are in receipt of that report, we will act as quickly as we can to implement any findings of the reviews that would be undertaken by this body and make sure that, if adjustments to funding models are required, they are brought in as quickly as they can be and, equally, as fairly as they can be in terms of their impact on schools and systems, with sufficient notice ahead of each school year, and their funding arrangements.

Senator JACINTA COLLINS (Victoria) (13:13): The question that Senator Lambie asked that the minister has not responded to is: what is the budget allocation? It is not a hard question, Minister. Last night you took on notice my question about what the various calls would be on section 69A of the act. You told us that that is where the funding was going to come for this mystery $50 million fund that seems to have assured Senator Back that that is the best he is going to get. But you still have not come back to us about what other calls there are on that provision, and now you have ignored Senator Lambie's question about what the budget allocation is for this resource body. I understand the game here. I know you can ignore my questions. Ultimately public scrutiny will hold you to account for that. But ignoring Senator Lambie's questions in the current circumstances, I find absolutely bizarre. Why would you ignore her quite valid questions about what the budget allocation for this body is? It is not a hard question. The department should be able to tell you the answer to that question.

While we are on that question, let's ask some further questions about the information you gave us last night on this $50 million fund we read about in the press. You told us that the estimate was $46.5 million to assure Senator Back that he would have a moratorium on the existing arrangements that apply to non-government schools. I highlighted last night that that was not the full monty. It was nowhere near the full monty. The $46.5 million is even less, far less, than what the estimate of that figure would have been back in 2013, when I was working with Minister Garrett on these issues. The only way I could understand to justify it—and, on our assessment of your amendments overnight, I think my fears have proven correct—is that you have failed to remove your changes to the capacity-to-contribute arrangements from this bill.

I am going to ask questions which will highlight for all those concerned in this debate that that really is what the fix is. The first question, Minister, is: what would that estimate be under the existing provisions in the act? If you were to preserve the system weighted average arrangements for non-government schools that have access to them—and let's add in those systems that you have possibly deliberately stalled as well while you were thinking about these savings—what would the estimate be then? My suspicion is that the estimate you have given Senator Back, and perhaps other crossbenchers, is based on the provisions in the bill that change the capacity-to-contribute formula in an arbitrary way with no policy justification at all and certainly no policy justification ahead of the review of the SES that is planned to occur.

Let us see what that difference is. The simplest way to highlight that is for the minister to answer the question: if we leave in place all of the funding arrangements that currently apply to non-government schools—the system weighted average, the capacity-to-contribute formula—what would that estimate be then? I would like to understand that change. I understand now it applies for only the 12 months, but what is the impact of that change, state by state? Tell me, as a senator for Victoria, what the change to the capacity-to-contribute formula will mean for Victorian non-government systemic schools. Tell Senator Lambie what your unilateral change to the capacity-to-contribute formula, with no policy justification, will mean for Tasmanian non-government systemic schools.

Do not try to pretend this is all just Catholic rent-seeking, because it is not. Most states have schools, such as Lutheran schools, operating in very poor rural communities. They have schools, such as Anglican schools and a range of low-fee accessible schools, serving the interests of educating disadvantaged students. Minister, you may not have had much exposure to these schools, but that is why the Gonski review made special arrangements for the non-government schools that are what we call sole providers. These are the schools that exist in the Northern Territory—as an example—providing education to Indigenous kids. The Gonski review recommended that those schools receive full public funding.

The Gonski review then said there are other low-fee systemic schools that also deserve to be protected in ongoing funding arrangements—the sorts of schools that Senator Lambie has talked about from her own personal experience, the schools that are available to Australian families when their circumstances are down and out, the schools that not only provide access to education for those students but reside within a community parish environment that provides support and assistance to those families. These are the very schools that are compromised by your unilateral change to the capacity-to-contribute formula.

I am in a parish where the schools are further up the capacity-to-contribute curve. I am in a parish where, on the whole, the SES ranking would regard students as coming from families that could perhaps afford to pay a little bit more. But I have families from my own parish—as I said last night, I have had, for me, the unique experience of receiving emails from parents in my own parish who do not know me because I do not get an opportunity to participate as I might if I were not a federal member of parliament—lobbying me on this issue. And they are not talking about their own personal circumstances and capacity to contribute. They are talking about Senator Back's comments about their values and about co-responsibility. These families want to be there to assist others. Some of them want to pay fees higher than they might otherwise so that their school community can cross-subsidise the Australian families that, at that point in time, need that extra hand, need that extra help. This is what your unilateral change to the capacity-to-contribute formula is going to destroy unless you fix it.

I can ask the minister, till the cows come home, to quantify that impact, in order to display to the Australian public at large that the minister is failing to respond to legitimate questions about what that impact is and that he is failing to respond to a Senate order for production of documents that would allow us to understand what impact modelling might have occurred. To date, he has failed to do so. Indeed, the crossbench, in supporting him here, has failed to allow the Senate committee legislation process to do a proper review to scrutinise these changes. Perhaps, if I had been busier operating in a completely different portfolio area, he might have succeeded in hiding these issues.

Well, you cannot, Minister. This may have become, to use a phrase used by one of the witnesses that the government has been verballing in this process—I think it was Mr Pratt, from the principals, who eventually retreated to, 'This is just so wickedly complex,' and he is right—'wickedly complex'. What you have set up in this bill is wickedly complex, but, fortunately, some of us know enough about this very complex issue to be able to expose what the real deal is.

The minister might like to say that Catholic parents are whingeing, Catholic educators are scaremongering and the Catholic education system is rent seeking—very, very sad behaviour from this government—but the facts will speak for themselves. And if, at the end of the day, you manage to convince the crossbench that they should support this stuff then ultimately their behaviour will be exposed too, because it will be on the record, even if the minister persists in not answering the question, which, on the whole, probably about 80 per cent of the time, has been his response so far.

If the minister needs more time to answer these questions about the capacity-to-contribute formula then let's allow that time. His own department's submission to the legislation inquiry indicated that, in terms of timing, this could be dealt with in the first few weeks of next session. I do not know what the political imperative, which Senator Birmingham has convinced the crossbench of, is, other than the raw politics of what has been occurring in the media overnight. In advance of any vote here, the Prime Minister has had a win, and maybe he has managed to shore up his leadership. Then again some of the other commentators are highlighting that this is such a dog's breakfast and such a bad deal that it is going to come back to bite them. I agree: this will, if it is passed, come back to bite the government, the crossbench and indeed the National Party, for just rolling into this. I am appalled that the deputy leader, Barnaby Joyce, of all people in the cabinet, has allowed this to occur. In this place, Senator Canavan, also in cabinet, has allowed this to occur. This is appalling. I have heard other cabinet ministers described as having said: 'Oh, I was not there at the time.' That excuse is just not credible. It is not credible at all. We know these matters were considered by cabinet over many months. It would be irresponsible and—to pick up Senator McAllister's point before—quite reckless for any minister to suggest to his constituents: 'No, I am not responsible for this. It is all too late. There is nothing I can do.'

Senator Williams implied a moment ago in an interjection that there were not any questions. There were questions. The minister has them and he is not answering them, and that is what I am reflecting on at the moment. I have asked for the state-by-state impact of this 12-month moratorium. I have asked what that impact would be, unlike the dodgy figures he provided us yesterday, were we to—as an amendment that we are moving subsequently—retain the existing capacity to contribute provisions in the act. In the remainder of my time here, let me make clear to people what those provisions do. Last night, I was referring to the Gonski review and the advice that it gave government at the time about how to shape the capacity-to-contribute arrangements. The factors they referred to there were quite important. We had to balance those arrangements so that they allowed schools of all different types of characters to continue to operate, in particular, low-fee, systemic, non-government schools, because this panel understood how education is currently being delivered. It is those schools that are compromised by the unilateral shift the minister has made.

We had the department at one point suggest—to give Mr Cook credit, we clarified this point later—that there is nothing in this bill that deals with fees. Capacity to contribute is a hard concept to get your head around. The Gonski review described it as the 'anticipated private contribution'. The anticipated private contribution is essentially the fees you would expect parents to pay. What this government is doing under the provisions in the bill is unilaterally changing that assessment. I have a range of questions, Minister, about the impact of the shift of that curve at the various levels of the SES. (Time expired)

Senator BIRMINGHAM (South Australia—Minister for Education and Training) (13:29): I will resist the temptation to waste the committee's time by responding to all of Senator Collins's verballing and unsubstantiated claims and otherwise. But I will very quickly deal with a couple of her questions. I am not quite sure Senator Lambie did specifically ask this, but I am more than happy to say that the four-year budget entitlement or cost for the National Schools Resourcing Board is $7.2 million, providing funding to ensure that the board has sufficient resources to commission data, modelling and expert work as it sees fit. While Senator Lambie is not here, we will make sure that her office is alerted to those figures, should she wish to know them.

Senator Collins also asked, in relation to the measures we were discussing with Senator Back last night, for a state-by-state breakdown of the funding provision to provide equivalence of the maintenance of system weighted averaging for systems next year: for New South Wales it is $10.5 million for the Catholic system and $0.5 million for independent school systems; for Victoria it is $9.2 million for the Catholic system and $2.4 million for independent systems; for Queensland it is $7.5 million for the Catholic system and $0.9 million for independent systems; for South Australia it is $2.5 million for the Catholic system and $1.5 million for independent systems; for Western Australia it is $2.5 million for the Catholic system; for Tasmania it is $0.8 million for the Catholic system; for the ACT it is $5 million for the Catholic system and $3 million for the independent systems; and for the Northern Territory it is $0.2 million for the Catholic system—totalling the estimate of $46.5 million that I indicated last night to the committee. Of course, as I indicated last night, it is an estimate and is subject to enrolment numbers and such other normal factors.

In terms of the other modelling that the senator has asked for: I am not aware that there is modelling of the precise nature that she wants. What the department has produced, and which has been provided at Senate estimates and elsewhere, is modelling that demonstrates all of the integrated changes, whether they be changes to the capacity-to-contribute arrangements, changes to indexation, the shifting of systems in schools to receiving, over time, a common share of the schooling resource standard, the needs based funding arrangement—all of those are integrated changes. They all of course impact upon one another in different ways. That is what provides us with the different funding that has already been tabled in relation to funding for different systems.

Senator JACINTA COLLINS (Victoria) (13:32): I will be brief, Senator Hanson-Young, on this point, because the minister has not answered the critical question here, which I think I asked three times, and that is: what would those estimates be if they were calculated under the existing provisions in the act for the capacity to contribute? You have given me the figures, which in our understanding we are pretty clear relate to, as you have said, the integration of a range of other factors. But my question is—

Senator Birmingham: It depends on all the other factors.

Senator JACINTA COLLINS: Exactly! It does. That is why I am asking this question. I will ask it for the fourth time. The question is: if we accepted Labor's amendment to maintain the existing capacity-to-contribute arrangements in the act then what would those estimates be? That is the only way we can highlight exactly what this minister is doing. He is still gaining savings by shifting the existing arrangements. In the past he has explained them as special deals. I have explained, I think quite clearly to the chamber, why they were structured in the way they were at the time. I do not believe they were special deals. I understand the policy justification for why the existing formula is in the act. You are asking us to change that formula. I am asking you to quantify the impact of that change rather than just try and hide it in these integrated factors. If the department needs more time to go away to answer that question then that is fine—we will be back here at 4.30—but a non-answer is not adequate.

Senator HANSON-YOUNG (South Australia) (13:33): I just want to draw the chamber's attention to the issue before us, which is an amendment I moved last night in relation to the establishment of the independent resources body. I have subsequently circulated a secondary amendment to that amendment, after discussions with the government and others. I just want to draw senators' attention to the fact that that has been circulated. We heard from the minister last night that the government was willing to accept points (1) and (2) of my first amendment on sheet 8177. I would like to draw the chamber's attention to the amendment to that amendment on sheet 8179. This point goes to the naming and shaming powers of an independent resources body. We need the ability for an independent body to shine a light on what is going on.

We have just agreed, through over eight weeks of a very heated debate in relation to schools funding, that there needs to be an injection of money into our public, independent and various other school systems. We want that money to be spent on a needs basis. I think all of us, across all sides, regardless of what political colours we wear, have come to a point—and this is one of the things we should reflect on in a positive light at the end of this debate, hopefully sometime this evening—where all sides are now committed to spending government money on a needs basis. That is, schools that are in need of extra money and support get it; students who need extra money because of various loadings get it; and we ensure that public money is being spent in the best way in order to get educational outcomes, and that means helping to lift those schools that are below their resource standard up faster and quicker.

If we agree that needs based funding is the principle, we must put in place the ability to ensure that that is what is going on. If we are going to hand a cheque to a school system, hand a cheque from the federal government to a state or a territory, then this chamber has a responsibility to make sure that the money gets spent in the way we have asked for. We need to make sure that there is public transparency. A lot of the debate that has been carried out over the last couple of weeks and months in relation to this funding issue has been about the immense lack of transparency that surrounds the spending of public money throughout our various school systems.

We want to make sure that transparency is at the heart of the distribution of funds. The minister has previously spoken—we have heard him many times, I would almost suggest ad nauseam—over and over again about 27 different deals, which means that it is difficult, impossible, to understand really how that money is being spent and why and on what basis. They are getting rid of the 27 different deals—okay; that is step 1. Step 2 is to make sure that we know how that money is being spent. If you want money to go to the poorest schools, let us make sure that it happens.

We know there are schools in all of our states, whether they are in the private school systems or the public school systems, that get more money than others. We know that state governments tend to prop up their most prestigious state governments at the expense of those in poorer and less affluent suburbs. That is the truth. State governments and territory governments will not want to admit it, but that is what happens. We have seen it happen for decades. In the Catholic school system we have seen poorer Catholic schools lose out at the expense of money going towards more wealthy Catholic schools. We have seen issues of a lack of transparency and openness in the independent school sector. This is Australian taxpayers' money. They deserve to know how it is being spent, when it is being spent and whether it is being spent in line not just with the expectations of the parliament but also of the goodwill of the taxpayer.

It is hard to argue against needs based funding. It is impossible to argue against it if you actually believe in investing in education and that education is the most fundamental foundation of giving every Australian child the best opportunity to thrive and be able to achieve. If we believe needs based funding is an important principle, we must give the power to this body to report that that is what is going on—or, indeed, report that it is not. We should not be afraid to give an independent body like this the power to name and shame. If the government is not prepared to do that, I call into question whether they really want transparency at all. We have been talking about this for months. David Gonski and the original Gonski panel advocated this strongly. Let's put in place a body that actually shines a light, acts as a watchdog and ensures that the enormous amount of money that is about to flow to our public and private school sectors is spent where it needs to be spent.

Senator JACINTA COLLINS (Victoria) (13:41): I will respond in part to Senator Hanson-Young's points here, which perhaps warrant some thought depending on whether these particular amendments succeed. As I said earlier, Labor has its own amendments but we are open to improving those if this one does not succeed. We still are concerned about the lack of independence of this body. The points that Senator Hanson Young has made here are quite critical. If the body is not independent, we risk returning to things like the fantasy figures that the department has published—and that is to know is advantage. I agree with Senator Hanson-Young that transparency is important, but it needs to be well-informed transparency.

I am sure Senator Hanson-Young appreciates what some people looking at the information that might be available do not necessarily understand. For example, across any school system, public or private, the most significant cost factor is teachers wages, so school budgets are often the captive of the composition of their teaching staff. For schools in the nice leafy suburbs of Melbourne or Sydney, whose teachers are quite happy and comfortable teaching in that environment and have been doing so for decades, the wage costs are different compared to the issues facing schools in more disadvantaged urban areas or in regional and remote areas. That is not to say that that factor alone should mean that those schools should continue to be able to capture, by virtue of student-teacher ratios or other formulas that systems might apply, the larger amounts of funding.

That is why a composite review of those issues is important for any school system. That is what informed the process that the Gillard government went down—in fact, it was the first Rudd government—with the national partnerships for school funding. What the government said at that time was that we had to find a mechanism, running across these other factors that operate in how schools are funded, to get more money to the areas where we know that money will make a difference. I was incredibly privileged in government. One of my roles was to visit the best-practice versions of those national partnerships and see what a difference that additional funding was able to make in many disadvantaged Australians schools.

In that case, the Commonwealth rather than any particular individual school system used the approach of saying, 'All right, if we just use the basic accounting arrangement about how to distribute funds we are still not going to get the money where we know it will make a difference; we need to look at other funding mechanisms than just this minister's one-size-fits-all approach to target disadvantage.' That is what those national partnerships did. They targeted disadvantage.

It was that policy work that then informed the development of the Gonski loadings. But of course we have not reviewed those loadings to see how effectively the settings of those loadings currently work. Senator Hanson-Young, those loadings were part of that design feature to overcome the basic accounting assessments of how funding for schools should be distributed across schools and systems. If we just rely on the factors around the number of students, the number of teachers and the wage cost of those teachers, who will quite naturally prefer live in, stay in and teach in more comfortable environments, then we are not going to get the resources to the schools we know we need to.

Sure, you can pick up Senator Back's concerns about co-responsibility and systemic concerns about co-responsibility and do some things that way, but what Gonski 1 did was attempt to draw that into the funding formula itself. What Senator Hanson-Young is quite legitimately saying is that schools and systems need to be accountable for how they are following that formula. As I mentioned before, there will be factors in individual schools or individual localities that involve quite legitimate reasons for why one school will not be funded exactly as per the formula, which is why I asked the minister questions in relation to accountability factors that we have already addressed in amendments to the bill. But an independent, well-resourced student resourcing body that will allow for properly informed accountability on these issues is important. We need that debate to be well informed. We need people who understand how these arrangements work and can make competent recommendations about how these issues can be addressed or, indeed, about how change can sensibly be achieved.

We have seen discussion during the debate on this bill and in the committee process on different views about how different systems have responded to Gonski 1. I have been pleased to see that there obviously has at least been some response to the issue that systems need to rethink and not be bound by these narrow accounting formulas about how these funds should be distributed. I say, 'Hear, hear!' on that point. I am with you, Senator Hanson-Young, on the need for systems to continue to be accountable. I understand too the point that you have made, which is that the government system also directs funding to more prestigious public schools in ways that need to be addressed. You are right, Senator Hanson-Young—we do need to get the funding to the most disadvantaged schools if we are ever going to achieve a difference in our educational outcomes.

The concerning thing is that Gonski 1 set up some settings to try to shift systemic thinking about some of these things—and some systems have done better than others historically on these factors—but we have never reviewed the settings. The process that was established in the national education reform agreement was not reviewed because this government was lazy. Sure, you can say responsibility shifted from Christopher Pyne to Senator Birmingham, but that is really not an excuse. It is not an excuse because this minister has been in this portfolio long enough to have received advice long ago on the consequences of these matters not having been addressed.

My understanding is he received information in relation to the SES and its need for review 12 months ago, and yet now he sits in this Senate and now we have to spend many hours fighting this issue when a competent minister would have responded to this issue 12 months ago and saved the Senate the time and occupation that has been required to ensure that that matter has properly been addressed.

But I am still a long way from convinced that it has been competently addressed. The minister has not even taken up my invitation to use the time available between now and when we return to this bill to come back with the information about what would be the estimate of the amount involved in this fund to deal with the system-weighted average if it were calculated on the current provisions in the bill. So I will return to that issue now and highlight for the Senate—and the Nationals here groan because they do not like being held accountable for their poor behaviour in cabinet—

Senator Williams interjecting—

Senator JACINTA COLLINS: We are on the issue. We are very much on the issue. To help Senator Williams, who is not really following this debate: I am on page 11 of the bill.

Senator Williams: I find you boring.

Senator JACINTA COLLINS: I am more than happy for you to find me boring. Page 11 of the bill sets out the new settings of capacity to contribute, but let me highlight for those senators listening to this the differences that are involved here and why we know the impact is much bigger than the $50 million that Senator Birmingham has very reluctantly come forward with.

Let's have a look at item 8. Where the measure for capacity to contribute for a school with an SES score of 100 was 12, it rises to 16. It is currently in the act 12 per cent. This minister has unilaterally said we should lift that up to 16 per cent without assessing the impact and, indeed, without reviewing the SES, quite contrary to the Gonski review.

Senator Williams: Do you have questions?

Senator JACINTA COLLINS: Yes, Senator Williams, I have yet another question on this, which is: what impact assessment has occurred of this unilateral change? Are you seriously telling us, minister, you have proposed this change with no impact assessment? Is that what you are saying? Are you saying that the department did not give you advice of what the impact of that change would be? It would be incredulous for you to be here and to say there is nothing available to assure this Senate that the government has competently assessed that impact. That is ludicrous.

Let me run to point 9.

The TEMPORARY CHAIR ( Senator Marshall ): Could you resume your seat, Senator Collins. Senator Xenophon on a point of order?

Senator Xenophon: Firstly, I never find Senator Collins boring. I think it shows you how on top of her brief she is in terms of these matters. But my point of order is this: we are currently debating amendments moved by Senator Hanson-Young, and I would be grateful if Senator Collins could address those amendments. I do want to speak in relation to those amendment whenever I get the call and I understand that Senator Collins has another three minutes and seven seconds. I just make that point of order gently and respectfully.

The TEMPORARY CHAIR: Senator Collins, you have the call.

Senator JACINTA COLLINS: Thank you, Senator Xenophon. You have not been here the whole time that I have been making this point, but I am happy to be very brief on it. The point is that, yes, we agree with the sentiment here—that a body like this is required to take the politics out of this process—but at the same time I am making the point that a body such as this can help us understand the impact that this government is not providing. The impact that the minister is not providing is, for example, the increase for a school on an SES score of 101—a primary school—which is estimated at 13.5 per cent, as is currently the case, and rising to 17.9 per cent. These are the Catholic systemic schools. They are on an average of 101, but the crossbench has been hoodwinked that the minister's changes fix the problem. They do not. There is roughly a five per cent increase in the estimate of what fees parents should pay.

Senator XENOPHON (South Australia) (13:54): As I understand it, what is before the chamber are amendments (1) and (2) on sheet 8177 moved by Senator Hanson-Young on behalf of the Australian Greens, and also amendment (1) on sheet 8179, and that Senator Hanson-Young is not proceeding with amendment 3) on sheet 8177, which relates to government amendment (7) at item 106. My understanding, very clearly, is that the first two amendments on sheet 8177 relate to the National School Resourcing Board and that there must be an independent review annually, but that Senator Hanson-Young has substituted amendment (3) on sheet 8177, so the issue of the reviews is the issue that it addresses, rather than requiring the publication of information.

I think that gives more discretion and does not force information to be published. I thought that was a more sensible amendment in the context of this. Can I say, on behalf of my colleagues, that we support these amendments. We think that the first two amendments may be redundant in light of proposed section 22A and proposed amendments to section 78 of the act, but I do not think there is any problem in it being restated in respect of that. We think that these are sensible in terms of transparency and how the funding is distributed, and also in relation to measuring improved educational outcomes for students against the rate of school funding. These are good transparency measures and I and my colleagues will support them. I will not speak any longer because I understand that my colleague Senator Lambie may have something to say about it.

The TEMPORARY CHAIR ( Senator Marshall ): Just to clarify the proposition you have put to the chamber, the question before the chair is in fact amendments (1) to (3) on sheet 8177.

Senator XENOPHON (South Australia) (13:57): I will seek your wise guidance, Mr Acting Chair, but would it be more appropriate for the amendments to be split so that amendments (1) and (2) be put and amendment (3) be put separately, if at all? Is that correct?

The TEMPORARY CHAIR: Those amendments are effectively amending amendment (7) of the government's amendments. I would have to take some advice on whether separating those three amendments has the same impact of amending the government's amendment (7). By the time we get to that we will have an answer for you.

Senator LAMBIE (Tasmania) (13:57): I will be supporting these amendments. The board has not been worked out. There is nothing locked in. I believe that while we are paying all this money to have a board, they can extend themselves right across. I believe that this is a safety net and it has been done very, very well. Whether or not it has the authority—it should have the authority and it should have full authority. If we are going to invest money into this board it should have the authority and the safety nets put in place that are required. Otherwise it is going to be a wasted board. So whatever safety precautions it takes and whatever more we have to put on them to examine, the better. That is what we are paying them for. So I will be supporting these amendments.

Senator BERNARDI (South Australia) (13:58): I want to put on the record that I appreciate the Greens heeding my words from last night and incorporating the educational outcomes into this amendment. I have a single concern, which Senator Hanson-Young may be able to answer in the next 30 seconds. Have you done any estimates of the cost of this sort of review?

Senator HANSON-YOUNG (South Australia) (13:59): This is simply giving the power to the board being created by the government to let the public know what is going to do—that it can publish the information.

Senator BERNARDI (South Australia) (13:59): Can I confirm there is no additional cost attached to this? You might want to put that on the Hansard record.

Senator HANSON-YOUNG (South Australia) (13:59): There is no additional cost.

The TEMPORARY CHAIR: It being 2 pm, the committee will report progress.

Progress reported.