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

I thank the member for Page for her question. Members who have perused the budget papers will note that the government is forecasting a dramatic drop in government revenue over the next few years, and I particularly draw their attention to the figures for the next two financial years: $49 billion and $55 billion. Of course, the government is projecting deficits over those two years of $57 billion in each case. This does indicate that the vast bulk of the problem the government is dealing with in this fiscal situation is derived from the fact that we have had a huge hit to government revenue as a result of the global recession. That has been a major contributor to the fact that we are now in a position of temporary deficit.

These circumstances do present the government with a choice. The government can either seek to contract the economy, to contract to the fiscal position, to increase taxes and to reduce spending in order to cover that deficit or, alternatively, borrow temporarily to cover that deficit. That is essentially the choice that the government is presented with. The government has chosen to borrow over that period of time and it has chosen to stimulate economic activity through its Nation Building and Jobs Plan and other initiatives in the budget to sustain jobs, to sustain economic activity and to sustain businesses in the face of the most savage global downturn in living memory. Treasury estimates that this package will sustain GDP to the tune of about 2.75 per cent in the forthcoming financial year and 1½ per cent in the year after that and that it will in the process support over 200,000 jobs in the economy.

I note that the Australian Financial Review in its editorial yesterday stated this—and it is not normally given to praising the government in its editorial, I might add. I am sure the Prime Minister will be astonished to hear that! Normally it does not praise the government in its editorial but it did on this occasion state:

The government cannot be faulted for running deficits to stimulate activity and protect jobs. That is what governments are meant to do when the world economy turns down …

That is the Financial Review. The opposition, of course, are advocating an alternative strategy which they say would mean a much lower deficit, which inevitably would mean either higher taxes or lower spending, or both, and in particular would mean sucking vast amounts of money out of economic activity—that is, tens of billions of dollars out of the economy, out of sustaining jobs, out of sustaining business activity. That is precisely the error that conservatives in many countries made in the 1930s through things like the Premiers Plan in Australia, which cut wages, which cut benefits and which ultimately compounded the problem of recession and turned it into the Great Depression. It created a downward spiral of ever-mounting unemployment, ever-mounting business losses and ever-mounting misery. We do not intend to repeat the mistake that conservatives made in the 1930s.

But it is still unclear what the opposition’s position actually is on these issues. We note that the member for North Sydney says that the deficit should be $25 billion lower than what the government says, yet the Leader of the Opposition says that if he were in charge there might even be a small surplus. So you have got a deficit of $30-odd billion from the member for North Sydney, but the Leader of the Opposition suggests that if he were in charge there might have been a small surplus.

We will see some indication of where these divisions land this evening. This evening when we finally hear the budget reply we will see some indication of how these divisions within the Liberal opposition come into collision and where the final landing point is. They have become so divided and such a rabble that in recent weeks they have even been given to giving themselves names that are so offensive I am not even allowed to mention them in parliament! They have even been able to give themselves and their internal workings some appellations that would be unparliamentary if I referred to them in this House. That is an indication of how bitter and how deeply divided the Liberal opposition have become and how incoherent they have become on the fundamentally important issues facing this nation.

Tonight the opposition has to front up and explain how its position of less spending and lower taxes would lead to lower deficits and less debt and yet without any savings and with lower taxes how that all would add up to a single coherent position. Tonight is the time you have to front up, when all of the one-liners and all of the rhetoric and all of the contradictory grabs between the member for North Sydney and the Leader of the Opposition have to be added up to a single position. Tonight we will be watching with great interest to see where all this lands and how the great Ponzi scheme of the Liberal opposition’s position adds up. We wait with great interest to see how you can get together more spending, lower taxes, lower debt and lower deficit into a single position in a single reply.

See this speech in context