Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

I thank the member for Corangamite for his question. The government’s budget strategy is focused on sustaining jobs and economic activity in the shorter term, investing in nation-building infrastructure and skills for the recovery and for longer-term productivity and jobs, and starting the work of repairing the structure of the budget after the damage that has been done by the huge drop in revenue, courtesy of the global recession.

All you have to do is look at the data in the budget to see that the reality of deficits is overwhelmingly driven by that huge drop in revenue. In fact, the total drop in revenue across the four years of forward estimates is slightly higher than the total amount of deficits over that period. So what we are seeing is a huge hit to the budget as a result of that drop in revenue, and it is the government’s position that the most appropriate economic strategy in this circumstance is for us to allow deficits to unfold and to borrow to cover those deficits for a period of time. The budget does of course contain a number of very substantial savings measures which are designed to commence the process of returning the budget to a surplus over time. There are very significant changes with respect to health requirements, family tax benefits, pension entitlements and matters of this kind, and that will start the hard work of returning the budget to surplus.

The government has already been criticised by the opposition for the allowance of the budget being in deficit for some period of time. Therefore it is worth while scrutinising what the alternative might be, the contractionary alternative. It is, admittedly, difficult to discern precisely what the opposition’s position is. Today’s examples that the Prime Minister cited are yet another instalment of that. We have seen over the past 12 months many new commitments on the part of the opposition for new spending, we have seen many new promises that they have made to increase the spending hit on the budget, we have seen them blocking the government’s savings initiatives in the Senate and we have seen not one single new savings initiative. Yet, at the same time, they claim that they would have lower deficits and less debt. So in other words the proposition from the opposition is that they would spend more, tax less and have lower debt and lower deficits. Only an investment banker could offer you that kind of deal: more spending, less tax, lower deficits and lower debt.

In spite of the confusion, we are today finally getting some indication of the true opposition position. I note, as the Prime Minister indicated, that the member for North Sydney stated today that they would run a deficit $25 billion lower than the government’s projected deficit. The Leader of the Opposition said on Sky News, ‘If we were in government today, revenues would be higher, spending would be lower, therefore debt would be much lower and the deficit would be much lower.’ In other words, there would be higher taxes and less spending, although he did not quite say that, but that is what it means.

I got a further insight into this this morning debating the shadow minister for finance, competition policy and deregulation, Senator Coonan, at an accountants breakfast. I am sure everybody in this House knows who the shadow minister for finance is. Senator Coonan opened her contribution by quoting approvingly a quote on the evils of debt from none other than Herbert Hoover at the 1936 Republican convention in Nebraska. Herbert Hoover, of course, was the President of the United States from 1928 to 1932 who relentlessly, rigorously, did absolutely nothing in the face of the Great Depression in order to avoid debt and deficit. He did absolutely nothing, while the unemployment mounted, the businesses failed, the misery—

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