Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

This government carved out a sorry place in Australian political history last night, for in just 18 months this government has caused the biggest budget turnaround—from surplus to deficit—in living memory and it has run up the largest public net debt since World War II. That is the legacy of this government. With apologies to Winston Churchill: never in the field of Australian government finances has so much been squandered so quickly for so little benefit.

The Rudd government has outspent all that have gone before, with government spending now 29 per cent of GDP. It is the biggest spending government in over 50 years, with debt and deficit as far as the eye can see. For years the labour movement has been searching for a way to rewrite the disastrous and chaotic history of the Whitlam years. With the handing down of this budget last night the Rudd government has achieved what others have failed to do: it has made the Whitlam government now look fiscally responsible by comparison.

The Treasurer was so ashamed of the government’s mishandling of the country’s finances last night that he could not even say in the budget speech the phrase ‘a $58 billion deficit’. That is the first line he should have told the Australian people about last night. He could not bring himself to level with the Australian people and say ‘$188 billion of net debt’, and he did not dare get caught on camera saying that there will be one million Australians unemployed under the Rudd government. The last time there were a million people unemployed in this country was under the Keating government. So now we have Whitlam, Keating, Rudd. Yes, this was a true Labor budget all right. Debt, deficit, recession: that is a Labor budget.

The Treasurer knows that Labor have blown it. The Rudd Labor government inherited the best set of accounts of any incoming federal government in Australia’s history. There was no government debt. There was money in the bank. We had savings and surpluses. We were living within our means. The Rudd government must have thought that it had hit the jackpot. It started spending. In the true Labor tradition, it spent all the taxpayers’ money that had been saved away in government coffers. It spent all of that then started borrowing. It could not get enough borrowing onshore so it started borrowing offshore. But it kept on spending.

The Rudd government has announced the equivalent of $220 million a day in additional spending. That is $220 million in additional spending initiatives every day since it came to office—$124 billion in additional new spending announcements in 18 months. This is a government that knew revenues were decreasing but went on a spending spree like there was no tomorrow. Of the $188 billion in net debt, $124 billion is as a result of the profligate spending of the Rudd Labor government. They remind you of Arthur, the black sheep playboy son of the billionaire. He squandered his entire inheritance, unable to control the spending. When this government ran out of money, it started borrowing uncontrollably. Gross debt is likely to top $300 billion. You did not hear the Treasurer admit that to the Australian people in his budget speech last night.

This government has lost control of the nation’s finances. No wonder the Queensland Media Club is pleading for people to attend the Treasurer’s post-budget lunch next week; people just do not believe this budget. The government’s so-called deficit exit strategy is as believable as a fairytale. Having run up the largest debt in Australian history with additional spending of $220 million per day, the government now wants Australians to believe it is going to return the budget to surplus, but it makes the following assumptions: first, that no government will undertake any new spending until 2017. That is what it wants us to believe. Another assumption is that there will be an unprecedented run of growth at 4.5 per cent for at least two years, and then there is a projection of above-trend growth for another four consecutive years. Colleagues, they are asking the Australian people to believe that there will be six consecutive years of growth at 4½ per cent. There have only been two periods in the last 50 or 60 years when growth of 4½ per cent has been maintained, and that has only ever been for two years at a time. This is simply unbelievable. This assumption flies in the face of forecasts from the IMF, the Reserve Bank and most respected Australian economists.

The government have been selectively quoting, but it is interesting that they have not quoted from the rating agency Moody’s. What Moody’s said is:

We do recognise the trend in deficit and debt is unfavourable and represents a weakening of the government’s financial strength.

Moody’s went on to say—and I ask members of the government to listen to this:

If deficits were to extend beyond the period Swan has projected—

and of course they are, based on those wild assumptions—

we would have to begin thinking about the manageability of the whole situation.

That means the credit rating would be under question. So the government is saying, ‘There’s no problem with the credit rating,’ but that is based on these unbelievable assumptions of no new spending until 2017 and six consecutive years of growth, which we have never seen in the last 60 years.

Make no mistake: this budget is a political document. The growth forecast has been adopted by the government to create a fantasy that it has a plan to restore the nation’s finances. These assumptions are not credible and the government must release all of the Treasury advice and all of the options presented to the government. We know how the government chooses to portray Treasury advice. We know how the government shamelessly spins the advice it is given. Take the Prime Minister’s bald-faced assertion that Treasury advised the government last year that the first cash splash of $10 billion would create 75,000 new jobs. When they were forced to reveal the actual Treasury advice through freedom of information, we found out that Treasury in fact provided a general formula linking employment and economic growth, with numerous optimistic assumptions about how much of the cash splash would be spent and how much would be saved. It was heavily qualified, yet the Prime Minister came out and said that Treasury advised that the $10 billion cash splash would create 75,000 new jobs. He knew that that is not what Treasury said. He knew it would not happen, it has not happened and it was never going to happen. So this government must take responsibility for the political decisions it has taken in framing the budget.

The public deserves to know why the government has suddenly changed the way it predicts economic growth. Just as the government moved the goalposts last November in the Mid-Year Economic and Fiscal Outlook with regard to the assumptions on interest rates to suit the political purposes at that time, it must also say why it has moved the goalposts this time on growth to suit its political purposes. It must stop hiding behind Treasury forecasts or projections and tell the Australian people that they are political decisions that frame this budget, and it must take responsibility for them. It is not the government that is going to pay off this debt and deficit. It is the young people of Australia, the young taxpayers of the future, who will be paying off this government debt for years to come. This government has no money of its own; it only spends what it takes from the people in taxes or what it borrows. The next generation will be paying. (Time expired)

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