Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

With pleasure, Mr Deputy Speaker. With all those members and more on the Labor side, the reality is that they are talking down the Australian economy for political purposes. They are talking up the impact of inflation. They are talking up the prospect of market activity in terms of where they think rates will be. The Australian people should question the motives of people like the Treasurer and ask why he feels compelled at the moment to talk down the Australian economy, to shatter business and consumer confidence, in a fragile environment where internationally there are ramifications that will flow to our economy over the coming months and years.

Labor aim to deliver a budget surplus of at least 1½ per cent of GDP in 2008-09. They claim that this will require discipline and an approach to spending which is hardline, particularly in relation to savings. But the truth of the matter is that 1½ per cent of GDP is not exceptional in the present circumstances, when the coalition left a strong, growing economy with low unemployment and zero net debt. When we came into government, $8 billion a year of government revenues flowed straight back out the door to service the interest bill that went with that $96 billion of debt. It is an absurdity for Labor to claim at the moment, with the fundamental strengths of the Australian economy, that they will not have the capacity to reach a surplus well beyond the 1½ per cent of GDP that is forecast. Labor say that future budget surpluses cannot be given back to taxpayers as they are inflationary but at the same time claim that the $31 billion in tax cuts promised in the election are not inflationary.

The point needs to be made that one cannot have it both ways. Either tax cuts put pressure on inflation or they do not. The coalition turned around a budget deficit of over $10 billion in 1995-96 to deliver 10 surpluses in 12 budgets. In their last five budgets when they were last in government Labor produced cumulative deficits totalling $69 billion. Between 1990-91 and 1995-96, net government debt under Labor rose from $16.9 billion to a staggering $95.8 billion. As recently as 2004-05, if you want a better understanding of how Labor manages the economy, the state budgets were collectively in fiscal surplus by almost $4 billion. This year, the budgets of seven of the eight states and territories are forecast to be in fiscal deficit to the tune of nearly $6 billion. That represents a deterioration of around $10 billion in just three years, at the same time that the coalition repaid the $96 billion of debt which Labor had passed on to future generations.

At the moment the Labor Party, particularly the Minister for Finance and Deregulation, is in a mode of running around suggesting that the so-called ‘razor gang’, which is nothing more than a political stunt, will guide the budget back into increased surplus and therefore bring downward pressure on interest rates. The reality is that there has been no transparency on the part of this government, and the most vulnerable have been given no guarantee that they will continue to receive the support they need. The minister for finance is saying that he is going to go out and solve government spending issues by slashing $15 million worth of Public Service travel and that somehow that is going to rectify the economic position—if it needs rectifying. That really goes to what a political stunt mode the minister and the Treasurer are in at the moment.

I think that, at the moment, the Australian people—and, in particular, economists—are seeing through the pretty shallow political path that these people are heading down. There is no substance to the argument they are putting forward. This is a $1.1 trillion economy and the finance minister of this country is going out and suggesting that if public servants’ travel expenses were cut by $15 million, out of a $1,100 billion budget, that would somehow bring downward pressure on interest rates—at the same time that state governments are running up debts at record levels right round the country.

This is an issue that more political journalists need to investigate, because this really is a political stunt which, over the first few months of the Rudd government, has gone terribly, terribly wrong. People are paying for this pain at the moment, given this talking down of consumer sentiment and consumer and business confidence. It really has long-term ramifications. I think that at the moment this is way beyond the grasp of a Treasurer who is clearly completely out of his depth. This is a Treasurer who, at this present time, has no capacity to deal with the complexities that face this government in terms of not just the domestic pressures but also the international pressures on our economy.

The point needs to be made that, over the course of 12 years of economic management under the Howard government in this country, we were able to deal with issues such as the US going into recession. We were able to deal with a significant drought. We were able to deal with the realities that faced our country in an international sense. When economies right through Asia and in parts of Europe were suffering significant downturns, we were able to deal with all of those pressures, including inflationary pressures, right through our period of government.

The reality is that it took a long time for the Treasurer to switch from opposition mode to government mode. He made the transition very difficult for himself by going out and for political reasons talking down the economy so that, if in the future interest rates did go up, Labor would not be saddled with the issue and somehow the origin of inflationary pressures would lie with the former government. That is the political argument that the government have tried to make. It is a false argument that went to the lack of credibility of this Treasurer. It is why when you talk to economists and people in financial sectors right around the country they laugh at the performance thus far of Treasurer Swan. It really has been a politically based performance that has certainly not focused on the economy in the responsible way this person should.

Before the election, Labor pledged to increase financial assistance to older Australians, people with disabilities and carers. But we have heard in recent days that the razor gang wants to cut funding to the most disadvantaged. Labor claimed $643 million in savings. That was, again, a political stunt. Many of the programs are not being cut at all; they are just being moved within the balance sheets and are a mere drop in the ocean relative to the size of the economy and in terms of having a downward pressure on inflation. The true test of the upcoming budget will be whether or not the Labor Party has cost-cutting measures which run into the billions of dollars for single programs. The payment to carers totals about $1.7 billion. If the Labor Party is to commit to that sort of expenditure over the forward estimates over four years, that is expenditure in excess of $6 billion that the Labor Party has now walked away from, and no doubt its ERC process will be looking at ways by which it can slice government expenditure of that order.

In my view, it is incumbent upon the Labor Party to come out and say ahead of the budget which of the sacred cows, if you like, they are going to slash. Are they going to slash childcare expenditure, which enjoyed a significant increase under the Howard government? Are they going to slash expenditure on health, which was an area where significant expenditure existed under the Howard government? Are they going to slash expenditure on defence, which again was an area which received significant support under the Howard government? Are they going to slash support to families through the family tax benefit part A or part B? I say to the member for Oxley: which of those policies would your constituents support slashing? Would they support abolition of the government’s support of the childcare tax rebate or the childcare benefit? With Amberley close to your electorate, would you support the Rudd government slashing the funding to defence? These are the sorts of areas that would need to be cut significantly by the Rudd government if they are to make significant inroads into the tens of billions of dollars that the Treasurer seems to be alluding to.

The Minister for Finance and Deregulation has been talking about the necessity of cutting billions of dollars worth of Commonwealth expenditure. Unless he cuts into those sorts of programs, this will have once again been only political rhetoric and will have made a farce of some of the statements that the Minister for Finance and Deregulation and the Treasurer have made in relation to this debate so far. The reality for people such as the member for Oxley, who has been making false promises to his electorate for so many years, is that some programs of that nature will have to be cut if the Labor Party are to deliver on this promise of slashing government spending, because those are the main areas of expenditure. I see no evidence from the Labor Party as to how they are going to cut expenditure in those areas.

Labor may talk about accountability, but this is not something that it practises in the area of financial management. Labor’s policy of giving state governments free rein over how they spend money from specific purpose payments means that federal Labor is effectively writing blank cheques for state Labor, despite their record of mismanagement and shocking service delivery. They have had terrible performance, particularly in Queensland.

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