The budget is a great opportunity for the government to reset and to focus on the problems that ordinary Australians are facing, and never was there a greater opportunity squandered than when the Treasurer stood up before Australia a little over a fortnight ago and delivered his second budget.
After a year and a half of overpromising, underdelivering and absolute downright deception, what we have seen is another lost opportunity for the people of Australia and for this government to do something to help the people who really need it. They have failed in their fundamental mission. They have failed in the test that we set for them, and that was to deliver a budget which was going to kick-start economic growth, drive employment, deal with unemployment, boost confidence and get back on track. Instead they have delivered a budget which does none of those things, increases debt and increases deficit. So it has failed the test that they set for themselves, but it has also failed the test which we set for the government, and that was to deliver a fair budget.
There are many people in my region who are forgiven for thinking that the Treasurer needs a map to find his way down to the Illawarra, because there is little evidence within the budget that they know the region exists. This is a time when the people of the Illawarra were looking for some assistance and for some recognition of the struggle that they are facing. Two weeks ago the Australian Bureau of Statistics released its latest unemployment data. People picked up the local paper and saw emblazoned across the front page 'Unemployment hits 9.4 per cent'. You may not be aware of it, but this is the highest rate in over five years, from a Prime Minister who said unemployment was going to be his No. 1 priority. They like to say that they are a government of work, not welfare; the truth is that they are a government of neither, because the jobs are not there for the Illawarra—9.4 per cent unemployment—and there is no hope of any strategy to turn it around in this budget.
Let's contrast this to the steps that we put in place when we were in government. Labor understands the needs of regions like the Illawarra and like the electorate of Throsby, which I represent. In going through the global financial crisis, we understood the pressure that the region was going to face. We put in place stimulus measures which ensured that people remained in jobs but also that much-needed infrastructure projects were attended to. We brought forward what would probably have been in normal times around a decade's worth of infrastructure spending, whether that was on school infrastructure, civil works projects, works at the university or other nation-building projects. We put those things in place.
We put in place a local employment coordinator. The Illawarra was designated as a priority employment area because of the higher-than-average levels of unemployment. A coordinator was in place to connect job seekers with job opportunities and to ensure the people who were looking for work were actually ready for work and had the skills and ability to meet the needs of the labour market. If you think that you are a party of work, not welfare, then one of the things you would have done is said that position is absolutely critical, but in one of their first decisions they defunded those local employment coordinators. There was no priority for helping people in struggling regions—particularly areas of high youth unemployment—in coordinating that work and ensuring people found their way from school to work, from unemployment to work.
In fact, they have gone even worse than that. In our last budget Labor made provision for some major infrastructure projects within the Illawarra. I have in mind in my own electorate and my colleague the member for Cunningham's electorate the Maldon-Dombarton rail link, a critical piece of infrastructure. Labor wanted to harness the excitement of the private sector to invest in this project by putting up over $50 million worth of seed funding to get started on a public-private partnership to get that crucial piece of freight rail built to join the inland rail network to the port of Port Kembla. And what does the government do? It cancels the funding. The project has not gone ahead.
We can contrast this government's cuts to higher education with over $150 million worth of capital works which were put in place in the University of Wollongong alone to ensure that that institution was fit to change to educate the workforce of the future.
Everywhere you look throughout the Illawarra, whether it is schools, whether it is hospitals, whether it is TAFE, whether it is the university, you can see an attitude of either neglect or indifference to the situation facing the Illawarra. But, if there were an area needing attention—if there were an area where the government needed a pivot, if you like, to stop, reconsider and change direction—it would be in the area of health. I want to talk on two areas in particular.
At the 2014 budget, in relation to primary care, the cornerstone of the government's budget strategy was a fundamental alteration to the way that Medicare rebates and GP visits are dealt with. The first part was a $5 co-payment which would have costed consumers close to about $3 billion over four years. The second part was a freeze on Medicare rebates, which meant a cut of around seven per cent between 2014 and 2018. According to the Medical Journal of Australia, the cost of that measure alone would have been about $8 a visit by 2018.
The government has dumped the first part of that proposal—for now. They have changed their strategy, not their minds. The health minister has confirmed this. They have dumped the co-payment—the dreaded GP tax—but they remain committed to the second part of this radical re-alteration, and that is the freeze on the GP rebates. As I said, over $8.40 per visit will be the net impact of this by 2018.
So that was the first part. The legacy of those decisions is to render many medical practices financially unviable. There will be parts of Australia—and particularly in regional and rural Australia—where medical practices will simply not be able to survive because of the impact of these freezes on Medicare rebates. Doctors in these areas know that they are simply unable to pass the costs on to their patients, because the patients cannot afford them.
So the first legacy of last year—we were looking for some change in this policy but it simply does not exist—puts a big question mark over the economic model which drives GP practices around the country. If you say you are interested in doing something about small businesses, well here is a small business which is crying out for some help. It is a small business which provides an absolutely critical service in over 12,000 places right throughout the country and there is no salvation on the horizon.
The second area in the last budget went to hospital funding. Deputy Speaker, this is an area which I know your own state government in Victoria has been highly critical of. In fact, the last two Victorian governments have been highly critical of decisions taken by the federal government in relation to hospital funding. We need to go back a few years to understand the importance of this. Under the previous government an agreement was reached—a hard-fought agreement—with all the states and territories. It effectively broke the cycle of the periodic healthcare agreements, where states and territories would come cap in hand to the Commonwealth, seeking an increase in their funding for hospital costs, and put in place a rational formula which dealt with the increases in hospital costs and which built in a sustainable formula upon which states and territories could do health system planning well into the future.
One of the first decisions of the Abbott government was to tear up the health and hospitals agreement with the states and to restrict Commonwealth funding to CPI funding plus growth. Now, as anybody who knows anything about health system funding, health price increases are always significantly in advance of general CPI increases. The net effect of this decision is that we have built in unsustainability into our hospital systems around the country. Over the next few weeks, as state and territory treasurers are standing up around the country delivering their budgets, they will either have to find cuts and savings from other areas of their budgets—which means cuts to other state services—or they will be cutting their health and hospital funding to accommodate the federal government's cuts. Those are $57 billion worth of cuts. Instead of reversing this decision, it has actually been built in and added to in the budget bottom line.
In the week after the budget the Minister for Health made a great song and dance about an agreement that she has reached with the pharmaceutical industry, including the Pharmacy Guild of Australia. She said that the result of this agreement was going to be that the Commonwealth and people who were seeking to get their prescriptions filled in pharmacies were going to get access to cheaper medicines. Well, nothing could be further from the truth.
It is true that within the medicine and Pharmacy Guild agreement that the government has achieved savings. But those savings have not been passed on to the consumer. At the same time the government introduces a bill to give effect to the pharmacy agreement and the medicines agreement in the House of Representatives, over in the Senate, in the other place, there is a bill, which you are still committed to, that will increase the cost of pharmaceutical benefits to all Australians—an increase of up to $6—and restrict access to the PBS safety net. The net effect of this is that, far from helping health consumers, you will be paying the medical and pharmaceutical companies less for the drugs, but you will be charging the consumers more for them. You have to ask yourself: how is that fair? You will be paying the pharmaceutical companies less for the drugs that we are purchasing through the PBS, but you will be charging the consumers more through the increased co-payments and the restriction in access to the safety net. These are just a few of the cuts and the inconsistencies that we saw in the government's first budget that are reinforced in this budget.
When families hear the government say the word 'fair', they know they have to beware. Entrenched in this budget through a range of cuts, through independent modelling, we have seen families who can afford it least slugged with cuts. A family with a single income of around $65,000 a year and two children will be, on average, $6,000 a year worse off by 2018 under the measures built into this budget. A single mother with an income of $55,000 a year and two children will be around $6,100 a year worse off. This is just an example of where the government failed to use this budget as an opportunity to atone for the sins of its first budget, to reverse direction and to put in place the measures that the country really needs.
Thankfully there is an alternative. In his budget speech in reply, the Leader of the Opposition set out the beginning of a plan which deals with putting in place a fair tax system, tackling loopholes in superannuation, putting in place measures which will crack down on multinational tax avoidance, ensuring that we have an education system which is fit for the future, and encouraging innovation through a $500 million new smart investment fund which will back great ideas that we think are out there ready to innovate and build the new industries and the jobs of the future. There is an alternative. The government has missed an opportunity, and the people of Australia will not miss the government when it comes to the next election.