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

Two weeks ago, Australians witnessed the tale of two budgets. Over in Western Australia, where I come from, the Liberal-National government delivered a responsible budget with a budget surplus. It also introduced initiatives to support business, initiatives like a break from payroll tax over the next couple of years. So we were able to witness what a Liberal-National government can do in delivering a responsible budget in difficult economic times. Over here in Canberra, the Rudd government achieved what had previously been thought impossible. Its budget made even the Whitlam government look fiscally responsible. I know that Labor is about rewriting Labor Party history, but this—making the Whitlam government look fiscally responsible—was an extraordinary way to do it.

This government has certainly made history. In just 18 months, it has caused the biggest budget turnaround in Australian history. It took the budget from a $22 billion surplus to a deficit of $58 billion. That is the largest budget turnaround in living memory. And that will be legacy of this government: the fact that it lost control of the public finances just 18 months into its first term. The Rudd government has outspent all other governments that have gone before it. Government spending is now 29 per cent of GDP, making this the biggest spending government in at least 50 years. On the question of debt, it has now run up the largest debt of any federal government in living memory.

But you would not have known this from budget night, because on budget night the government was desperately trying to hide from the Australian people the extent of the budget deficit and the extent of the mountain of debt that it will build up over the next few years. That is why the government has gone into overdrive in its spin, avoiding saying that the budget has a $58 billion deficit and that public debt will hit at least $300 billion.

We know that the budget deficit is the difference between what the federal government spends and the revenues that it receives in a particular year. When revenue exceeds spending, we have a budget surplus; when spending exceeds revenue, we have a deficit. The former coalition government delivered surplus after surplus in its budgets, ensuring that our spending did not exceed our revenue. It is called ‘living within your means’ and the Australian people understand that you have to live within your means.

In fact, the Labor government used to believe in living within your means. Back 12 months ago, the Treasurer assured the Australian public that there would be a budget surplus of $22 billion in 2008-09. He assured the Australian people that revenues would exceed spending. The Australian people believed him, because in the lead-up to the last election the Prime Minister, then Leader of the Opposition, told the Australian public that he was an economic conservative and that he believed in budget surpluses. In fact, to drive home the point, he took out very expensive advertisements to tell the Australian people what we now know to be a lie: that he was an economic conservative absolutely committed to budget surpluses and that he believed in budget surpluses, the bigger the better. Yet at the first sign of trouble, all fiscal responsibility has been thrown to the wind.

It was quite concerning that on budget night the Treasurer was not able to utter the phrase ‘$58 billion in deficit’. The whole point of a budget is to inform people of the state of the national finances and to provide forecasts and projections of what lies ahead. But not once in his 30-minute address to the people of Australia did the Treasurer tell them what they needed to know about the state of the budget: that it was in deficit to the tune of $58 billion. The Treasurer also could not bring himself to state the level of debt, whether net debt, gross debt or peak debt. He could not—he would not—nominate the figure of debt. And he certainly avoided being caught on camera saying that the unemployment figure was likely to reach one million. People have long memories. They recall that the last time one million Australians were unemployed was the last time that Labor was in government federally. Then Prime Minister Keating ran up a $96 billion debt. People were astounded by the size of that debt and by the fact that a million people were unemployed.

This government has made that pale by comparison—pale into insignificance. The debt is not $96 billion; the unemployment figure is certainly likely to reach more than a million. But as for the debt figure, this is where it becomes quite curious. Having noticed that the Treasurer would not say the level of debt to which this government has committed the Australian people, we thought that perhaps the Prime Minister, who so often says he is ‘levelling with the Australian people’, would be honest enough to tell the Australian people the level of debt that this government has consigned us to. But it reached such farcical levels that it has almost become comical, ridiculous, the extent to which the Prime Minister and the Treasurer went to avoid telling the Australian people the level of debt to which they have committed each and every person in this country.

I think it is worth reading into Hansard the interview on Lateline on 19 May 2009. The Prime Minister was speaking to the Australian public on the ABC about the level of debt that Labor had managed to run up in just 18 months in government. The interviewer asked:

What’s the peak figure of the projected public debt in terms of tens or hundreds of billions of dollars in the coming years? What’s the peak figure?

The Prime Minister was asked for a figure. The Prime Minister:

Well, these are clearly outlined in the Budget papers and they’re usually expressed in terms of a percentage of GDP. We peak, in around about 2013, at about 13.8 per cent of GDP.

The interviewer:

How much of that is in tens of billions or hundreds of billions of dollars; how much is that?

The interviewer, Tony Jones, was asking the Prime Minister to level with the Australian people and give them the figure. How much debt has this government assigned to the Australian people? We know that it is a mountain of debt. Say the figure. The Prime Minister:

Well, let me step back in terms of the elements of this. First of all, 70 per cent of our overall position here is determined by a $214-billion collapse in tax revenue. That’s one slice of it.

The interviewer:

OK. I understand - we understand that. So what is the figure of peak debt in hundreds of billions of dollars? What is the actual figure?

It was a very straightforward and simple question. By this stage the viewers must have been sitting on the edge of their chairs waiting to hear the Prime Minister say how much debt this country was going to accumulate under the Rudd Labor government. The answer:

Well, Tony, I’m about to come to that when I go to constituent parts. About $214-billion comes from a collapse in tax revenue and that is happening right across all the advanced economies across the world—

Blah, blah, blah it goes on.

… Then you go to the remaining third of it, which is made up of what we’re investing in infrastructure and other forms of temporary stimulus. And of that remaining one third of our total borrowings, the largest proportion is made up through infrastructure investment and the smallest proportion is made up through other forms of temporary stimulus. Put that altogether …

At this point the interviewer interrupts again.

But all I’m asking for is one figure.

The Prime Minister, not to be outdone:

Well, I’m about to come to that, Tony. I’m taking you to the constituent parts. Put all that together and you’ll see clearly outlined in the Budget papers that we’re aiming to a gross figure of 13.8, which comes out at about $300 (billion). The Liberals have said about $275 (billion) and then they’ve failed to nominate or to support $22-billion of savings in the Budget, which makes our positions virtually identical. That’s the point I was making.

No, the point the Prime Minister was making is that he was too ashamed to admit to the Australian public that the figure he was grappling for was $300 billion. It did not get any better. The interviewer then said:

That figure is $300-billion, is that right?

What does the Prime Minister do?

As I said before, 13.8 per cent of GDP as described accurately in the Budget papers. There’s nothing new about that.

The interviewer put it so specifically:

TONY JONES: Is there a political spin rule which says the Prime Minister must not say that figure? Because it seems very hard to get you to say $300-billion.

The Prime Minister gave another evasive, prevaricating answer—refusing to say the words ‘$300 billion’. It was farcical. It certainly did not behove a Prime Minister of this country to be so prevaricating in his answer—and effectively mislead the Australian people and be so contemptuous of their intelligence. People understand the figure of $300 billion. Why was the Prime Minister avoiding any opportunity to have him say those words?

Apart from the fact that he confused net debt with gross debt and apart from the fact that the figures that he gave to the interviewer were not the accurate figures in the budget—apart from all that—this was an appalling example of evasiveness, dishonesty and not levelling with the Australian people. It continued all week to the point where the Prime Minister has made himself the subject of ridicule, not only amongst cartoonists but also amongst more serious-minded journalists in this country.

That brings us to the point. The fact is that the Rudd government inherited the best economic conditions of any incoming government in the history of federal politics. There was no government debt—absolutely no national public debt on the part of the federal government. That is because the previous coalition government had paid it off—every single cent. It took us 10 years to pay off $96 billion. We know the government already has in place a facility to borrow $200 billion and we know that the Prime Minister is now admitting to a figure of $300 billion in government debt, but has the government given us any idea of how it intends to pay back that $300 billion, let alone the interest that will accrue on it? We have not heard the Treasurer admit to the amount of interest.

It was rather interesting last week to read an analysis by the respected financial expert Ross Greenwood. This is what he wrote:

$200 billion is $200,000 million. The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of 20 years.

Now here’s where it gets scary … really scary.

The repayments on $200 billion come to more than one and a quarter billion dollars—every month—for 20 years. It works out we—as taxpayers—will be repaying $15.4 billion in interest and principal every year … $733 for every man woman and child - every year.

That is just the interest.

The total interest bill over the 20 years is—get this—$108 billion.

Ross Greenwood goes on to say:

And remember, this is a Government that just 18 months ago had NO debt … NO debt. In fact it had enough money to create the Future Fund to pay the future liabilities of public servants’ superannuation … and it had enough to stick $20 billion into the Building Australia Fund last year …

So in 18 months not only has the government racked up the largest debt in living memory but the interest repayments on that debt, according to Ross Greenwood, are $108 billion over 20 years. That is money that will not go to schools, hospitals, roads and infrastructure. When you drive the country into debt and borrow $300 billion, interest accrues and the interest has to be paid back year after year and the principal has to be paid back. And who is going to pay it back? The government does not have any money of its own. The government gets the money from the taxpayers, so the taxpayers of Australia will be paying for this government’s profligacy and for the fact that this government has spent more than it earned, that this government has borrowed to go into debt and that this government has no plan, no exit strategy and no idea how to get the country back on an even keel, how to get the budget back into surplus or how to pay off that debt.

In the budget papers there were some simply unbelievable assumptions that the government asked us to make. First of all they said they were going to return the budget to surplus on the following assumption: no government will undertake any new spending until 2017. That is simply unbelievable, but that is the assumption the government wants us to make The second assumption is that there will be an unprecedented run of growth at 4½ per cent for at least two years and a projection of above-trend growth for another four consecutive years. These are, at best, the most optimistic figures that anybody is putting forward, and a fiscally conservative government would be looking at options that are achievable, not the wildest options that you can come up with. There have been only two periods in the last 50 years where growth of 4½ per cent has been maintained, and that has only ever been for two years at a time. So the assumptions that we are being asked to make—that there will be no new government spending until 2017 from a government that has spent billions of dollars since it was first elected and that growth will be above historic levels for the next six years or more—make the plan to return this budget to surplus just a fantasy. The Australian people know that and, had it not been for the government’s ridiculous spin in refusing to say $300 billion of debt and a $58 billion deficit, this government should not be standing here delivering a budget of this kind in this environment.

There are some other areas of great concern where the coalition have said that this is not the way to bring the budget back into surplus. One of those is private health insurance. Private health insurance is part of the private health system. We need a strong private health system in this country to keep the public health system strong. We need to ensure that there is a balance between private health and public health. The public health system on its own could not cope if all the people in private health insurance went into public health. The people most affected would be the lower income people, those in the lowest socioeconomic levels in Australian society. They would be negatively affected by an imbalance between private health insurance and public health. Private health insurance is so important because it keeps people in private health, yet for ideological reasons this government chose to attack private health insurance rebates as a means of coming up with savings. It tells you that this government’s priorities are all wrong. This government’s priorities are about ideology, not about sensible, reasoned, logical budget planning. This government will go down in history as the biggest spending one, as the government that has driven the country into the biggest debt that this country has ever seen. (Time expired)

See this speech in context