Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Hansard source

I note that the Prime Minister extended the length of question time just then in order to avoid further scrutiny over the next few days about the details of his package. The interesting thing is that we had at least another 30 questions that people were prepared to ask on the details of the package and the bills which we received today. Forty-two billion dollars is asked of the Australian people, and the Labor Party is scurrying out of the chamber after delivering these bills to us today.

The bill that is most alarming is not one of the appropriation bills—even though we are going to vote against them; it is the Commonwealth Inscribed Stock Amendment Bill 2009. The bill itself is less than one page. But that one page is perhaps the most deadly page to the Australian economy and to future generations of Australians that we have ever seen in economic terms, because that one page says that this Commonwealth government can increase the size of its credit card from $75 billion to $200 billion. I did not hear that in the Prime Minister’s speech yesterday. I did not hear it in the press conference. I did not get any early warning about this. But the Minister for Finance and Deregulation introduced this bill this morning to increase the credit card limit of the Commonwealth from $75 billion to $200 billion.

‘Take it or leave it,’ they said. They said: ‘You have to pass this bill. This bill must be passed by the House of Representatives today.’ Even as now scheduled the House of Representatives will sit until at least 10.30 tomorrow morning, because every one of my colleagues will use their right to have a say. The government can threaten the gag at two o’clock or three o’clock or four o’clock in the morning, as they have said they are going to, but we are standing on a matter of principle. It comes down to this one-page bill, which says that the Australian government is prepared to borrow up to $200 billion and wants 24-hour approval from this parliament, without detailed explanation for that massive borrowing binge.

Why $200 billion? That is the first time we have seen a figure of that scale anywhere in the papers or even in this UEFO, the Updated Economic and Fiscal Outlook, copies of which not all members of parliament were able to receive because it was not widely circulated yesterday. The interesting thing is that it does not say anything in here about borrowing $200 billion, but the legislation does. The legislation that we have to pass today and the Senate has to pass tomorrow says ‘borrow $200 billion’. If the government is expecting there to be a default for financial institutions associated with any of its guarantees, it should say so. I have no reason to believe that that is the case. If the government believes that there are going to be some other defaults that will require it to provide emergency funding either to corporates or financial institutions, then they should advise us—if not publicly, then privately.

If they believe, as I suspect is the case, that state governments will continue to have problems raising money in financial markets and that indeed the Commonwealth needs to start issuing bonds to raise money to pay for the states, then they should come clean with the Australian people and certainly they should tell us. Today, question No. 1 from the Leader of the Opposition to the Prime Minister, was: why on earth does this government need to increase the credit card limit of Australia to $200 billion from $75 billion today? And the $75 billion today is not even issued. Even if we are in the debt markets—which we are, even though the previous coalition government paid off government debt—the reason we stayed in those debt markets was to keep some liquidity in the markets and to have a yield curve that would provide some guidance and stability in the markets. That is why we still issue bonds.

The interesting thing is that we did not have $75 billion on issue and we certainly do not understand why this government wants to have a borrowing capacity of $200 billion. The interesting thing is that when you look historically at the underlying cash balance of the Commonwealth as a percentage of GDP—and, naturally enough, the government issues bonds to pay for its deficits—you would say to yourself, ‘Well, of course there are various times when it exceeded the levels that are in the projections contained in UEFO.’ In fact, the Commonwealth has from time to time, particularly under the Whitlam government, gone to 3½ or four per cent of GDP. The largest one, on scant reading, was 1992-93 under Paul Keating when we went to 4.1 per cent of GDP as a deficit.

But in the main economic parameters revealed in the Updated Economic and Fiscal Outlook you can see the government says that in 2009-10 its forecast is for three-quarters of one per cent growth in GDP, and then it is going to go to three per cent the following year and three per cent the year after. I will tell you what: you will want to strap in in 2009-10 for the joyous ride of a massive acceleration in GDP growth! Do you know what? The government is going to have a significant deficit, not just in 2010 but in 2011 as well, which is completely at odds—as the shadow Treasurer said—with its so-called plan to put the budget back into surplus when the economy gets to its average growth rates.

Do you know what the interesting thing is, Madam Deputy Speaker? These figures—particularly projected revenue—are ambitious. The information that I have been able to obtain is scant. It includes the 45-minute briefing from the Treasury for the Leader of the Opposition and the shadow Treasurer—and I might say it was not even from the top officials at Treasury—during which they could not give us the answers to the questions that we were asking—for example, about a $50 billion drop in corporate taxes over the next few years. What is the assumption about the profitability of corporates over the next few years? They could not give us the answer, but do you know what it is, Madam Deputy Speaker? The government’s projections assume that corporates in Australia over the next few years are going to be, on average, more profitable than they have been over the term average of Australian economic history. So they are saying corporates are going to continue to have above-average profits while the Australian economy drops, while unemployment goes to seven per cent, while the terms of trade collapse. They are still projecting in their revenue estimates that corporate tax, which is probably the most volatile of the taxes in terms of estimated revenue—and I think the Minister for Finance and Deregulation would agree—is going to be above average. Go figure.

And do you know what? Under the scenarios that all the economists and global experts are talking about, every dollar spent today may well have a value of $1.50 at a later date. If it is well spent, if it is targeted, it will provide the stimulus to create real and sustainable jobs when there is confidence. When you see economic projections such as these—which are ambitious, if not extremely optimistic—you say to yourself, ‘These guys are not being fair dinkum with the Australian people.’ And yet the government come into this place and they say to us: ‘Approve a credit card limit of $200 billion. Approve immediately the biggest fiscal stimulus in memory, of $42 billion. Approve it now, without question, without demur—and, by the way, we are telling you the whole story.’ Well, they are not telling us the whole story.

I want them to come clean about their fears about the current account deficit. I want them to tell the truth about the great risk that the overseas purchasers of all our minerals and energy are going to default on their contracts. I want them to be fair dinkum with the Australian people. The Prime Minister said last year that he rang up the President of China and got an assurance that China would continue to buy all of our minerals and energy. They gave him an assurance that they would honour the contracts. They did not deliver on those words, if they were in fact the words provided by the President of China. So do you know what happens, Madam Deputy Speaker? Australia faces this unenviable position where the government is being overly optimistic with its projections, it is not being fair dinkum about the risks, but it is asking us to sign off on the biggest spending initiative in Australian history.

I will go one step further. As the Intergenerational report stated at various times—there are various volumes of the Intergenerational reportthere is a danger of a structural deficit for Australia. That structural deficit, by the initiatives of this government, has just got a whole lot worse. It is hard yards to get it back into surplus. The reason why it cuts to our core to see a new government come in and spend money is that we know what you have to do to get back into surplus. It is hard yards. There are thousands of economists out there who will say to you: ‘Spend, spend, spend,’ under these circumstances, but it will be those same economists in 10 years time who will say, ‘Cut Medicare in half, take $50 to $100 off the pension, abolish the family tax benefit, cut the defence budget.’ All the things that will really hurt the fabric of the Australian nation those economists will argue for in good times. And do you know what? They should not be listened to in those good times, just as surely as they should not always be the bible during bad times.

When we start citing economists, I look at Ross Gittins last year, who said the government should dump the Costello tax cuts. I look at Access Economics and Chris Richardson, who said the government should dump the tax cuts because at the end of 2008 they would be awash in so much money they would not know what to do with it. I reflect on the fact that the Prime Minister said that Australia was going too fast at the beginning of last year, that the inflation genie was out of the bottle. And I well remember the Treasurer referring to the ‘inflation monster’. At that time, the then Leader of the Opposition, the member for Bradfield, the then shadow Treasurer, the member for Wentworth, and I were all saying: ‘Guys, look at what is happening to credit markets overseas. There has been a complete meltdown in confidence in credit markets, not just in the United States but around the world. The tsunami will hit Australia.’ And at that time the Prime Minister was urging Australians to rush down to the beach to have a look. What a mistake that was, a dramatic mistake—180 degrees wrong.

And then the Prime Minister talks up the panic. ‘It is going to be bad, really bad,’ he said on 12 October. If there was any confidence left amongst Australian consumers, it was wiped out by the Prime Minister’s words on that weekend: ‘It is going to be bad, really bad.’ You know what? You can put $100 into the hands of someone but if they think for one second that they might not have a job in 12 months time, that they might not be able to feed their kids, that they might not be able to pay the rent, they will be holding on to that $100 because they might need it on a rainy day. When the Prime Minister says that there are graphic storms on the horizon and that they will hold them back, we say the Labor Party are the party of debt and deficit. We say the Labor Party are the party of debt and deficit; that is what they are. That is why today we will not support them with their initiative—because it is bad policy with bad consequences, particularly for our children.

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