Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source

I rise to address the budget bills. Let me start with a personal story. Some two years ago, when I was campaigning to be elected to this place, I was out doorknocking. Many times I would come across good Liberal supporters who would say to me: ‘We can’t let the Labor Party get into power here. If the Labor Party get back in, within a term we will be back in $100 billion worth of debt.’ I would nod my head sagely and agree with them. In my heart I never thought that this could possibly be the case. It is an extreme disappointment to see not only that occur but a far worse situation.

Here we are with a budget of unprecedented peacetime debt and it is only early days yet. How can we believe the government when we have had a full year of budget and growth revisions? Remember that just 12 months ago the Treasurer told us that, because of his incredible fiscal rectitude, he was delivering a budget surplus of $23 billion, that delivering a surplus was the most important thing that he could do for the Australian economy and that only he and Kevin Rudd could save us from hyperinflation. All that happened just before the economy was hit by a truck that the Treasurer did not even see coming. Make no mistake: this Labor government is unlikely to ever deliver a surplus of any sort.

How long ago it seems. All year the Treasurer and the Prime Minister denied that the budget would run into deficit, then that Australia would have to endure a recession, and then came the excruciating display, as we all tried to get either of them to tell the unpalatable truth—$315 billion debt. I wrote in my last newsletter that the government had been deliberately trying to fudge the difference between millions and billions. I heard a great example the other day: one million seconds is equivalent to 11½ days; one billion seconds is equivalent to 32 years. That is the difference between a million and a billion. No wonder the Prime Minister could not mouth the words. He knows exactly what that debt means. The net debt means that, by 2016, every man, woman and child in Australia will owe in excess of $10,000. Considering that less than half our population is in the active workforce, and that ratio is moving the wrong way, a young person starting work in 2016 is quite likely to be responsible for a Commonwealth debt of $20,000 plus. To that you can now add state government debt, which is likely to double that amount, and then you can add interest to all of it. It is not a very appetising thought, is it?

Let me go to the subject of interest rates. Following the Prime Minister’s claim that debt will be retired in 2022, it is worth examining the assumptions in the budget which plan for a government bond rate of 4.75 per cent over that period. It also assumes a very gallant 4.5 per cent growth rate for the two years coming out of the recession that the government did not think would happen, followed by growth averaging four per cent over the next four years. Those estimates have been discredited by almost all in the financial sector, but let us just assume for a moment that this perfect world scenario can be achieved. Does anyone seriously believe that, with growth exceeding four per cent for more than six years, interest rates will remain at less than five per cent? We need some honesty about this debt level and the interest rate debt risk.

The problem is that many on that side of the House actually believe the hyperspin being fed to them. Following the delivery of the budget, I attended an in-house dinner at which an appraisal of the economy was given by KPMG. There was an opportunity for questions and, as we had not been able to get an answer out of the Treasurer in parliament that day, I asked when he expected to pay off the debt he was accumulating on behalf of the Australian people and when he though the government would retire that debt. The telling point, however, came from a near neighbour, a Labor backbencher, at the table I was sitting at, who muttered, ‘In 2016; why don’t you read the budget?’ In 2016! Clearly he had not understood the difference between deficit and debt. The deficit is expected to disappear in 2016, not the debt. That is just when we can start paying off the by then $210 billion of net debt. In any event, I did not get any better answer from the consultant than we had received from the Treasurer on the day in the House. However, speaking to some of the presenters later I found that they were of the opinion privately that the government has no intention of retiring the debt. Mark this space: the Australian people are being prepared for permanent debt. I predict that if this government is allowed to stay in office the language will change. We will be informed that it is responsible for governments to carry debt. Remember that Australia’s unprecedented growth in employment and wealth was generated in a low-tax environment engineered by the no-debt policies of the previous government.

John Howard once said that the times would suit him. Now I think the times are indeed suiting this Labor government. The global financial crisis has given them an excuse to do what Labor governments have always done: spend other people’s money. In this case, it is our children’s money. As they are spending this money, they are positively gloating over their contribution to Australia. We have heard all the lines: ‘building Australia’s infrastructure for the future’, ‘addressing the backlog’ and ‘an education revolution’ et cetera. This is all being put on our children’s credit cards, and it is being done with an attitude of impossible smugness. If this government had paid for just one thing as a result of its own tough decision, we could maybe give it some respect; but it is doing things on money saved by the previous government or borrowed from future generations. It is a disgrace.

There are some signs in the economy of an early recovery. If this comes to pass, the government will claim it was all because of their good management. However, much of the good news is generated by a still strong export industry. Nothing in any of the government’s packages has been aimed at stimulating exports. In fact, some of the decisions have impacted negatively on it. If exports are to lead us out of the gloom and if we have already bottomed, Australians will ask in the future: ‘Why did we continue to rack up debt after the turning point? Why are many of these super-spending programs ramping up in the second and third years of the budget forecast when even the budget papers expected us to be back in a strong growth phase?’ They will ask: ‘Why did we keep spending, and did we get value?’

Yesterday in the House I raised the question of hyperinflation in the school building sector and gave the example of a school in my electorate that has seen its construction program cut by more than half. This is because in the last two months the buildings that it was expecting to buy had more than doubled in price. A huge cash splash in small sectors of the economy will always create distortions. Companies know that, if a government department has money that it has to spend or if it has an unrealistic time line, they have a chance to top slice, bottom slice and middle slice. I do not think this example is isolated. I have been approached by members from both sides of politics and they are seeing exactly the same thing in their electorate. This is not an isolated example. I have had a number of schools tell me the same story. The taxpayer is being ripped off by state government departments and corporate builders. The program needs real management, and it is not getting it. In the end, $14 billion may well buy $7 billion worth of poorly planned, slapdash school buildings—too much, too fast, with not enough thought and in too narrow a sector.

Let us look at some of the specifics of the budget. Nothing could upset me more than slamming the door in the faces of regional and rural students who are trying to access tertiary education. The changes to the youth allowance regarding the qualifications for independence have effectively spelled the end of the gap year. I have recently released a discussion paper on this topic which suggests measures to address what has for years been an inequity. The system we had was far from perfect. However, the budget changes are about to make things worse. It costs around $16,000 a year more to have a student at university who has to leave the family home than one who can live at home. This is over and above the normal costs associated with attending university. One of the few ways that country students have been able to get some assistance is by getting a good paying job in the gap year, often doing seasonal work. Things are tougher now and jobs are harder to find. The budget tells us that we are heading for a million unemployed. Now kids are being told that they need a job for 30 hours a week and for 18 months over a two-year period. Those jobs are just not there.

The new stipulation requiring a two-year qualification period for students to apply for the independently assessed youth allowance effectively ends the gap year. It has left thousands of students in limbo who have taken the year off in order to qualify. Unfortunately, these moves will make tertiary education unattainable for many, and it will not be just parents saying, ‘You can’t go to university.’ Well-advised children—children who are in touch with their family situation—will make that decision. They will say: ‘No. I really don’t think I want to do that. I’ll go and do something else instead.’

The government’s attitude to agriculture has been confirmed in this budget, with the funding cuts to the Australian Quarantine Inspection Service being fully exposed. The export industries, which I touched on earlier, must thrive if Australia is ever pay off its debt. However, the government is withdrawing $40 million from the quarantine service. The government says that industry must carry the full weight. Many of the inspection protocols, which are driven by political agendas in other countries, impose higher levels of examination than our competitors have to deal with—in effect non-tariff trade barriers. This is part of the uneven playing field presented to our Australian producers, and the government is saying, ‘You’re on your own.’  At the same time, it is claiming credit for strong exports.

Further, the agriculture minister has acquiesced to another $12 million being ripped from his department as an efficiency dividend—the only department this is being required of. He is overseeing the closure of Land & Water Australia, and the cutting of a further $12 million from the Rural Industries Research and Development Corporation—all of this at a time when we are telling our farmers that they need to adopt new technologies to survive in a low-carbon world.

Now let us have another look at the government’s extravagant promises. Take broadband: prior to the last election, the Prime Minister promised a $10 billion fibre-to-the-node network to 98 per cent of Australians, with private enterprise picking up half the cost. To achieve this, the government ratted the $2 billion telecommunications fund put in place to provide for future technological changes in rural Australia. That is the one thing the government has achieved in its broadband revolution: it has grabbed the money. It is pretty good at that.

When this deal collapsed due to lack of support by the private sector, you would have thought that the government would have been just a little bit crestfallen, a bit embarrassed. No! It was a victory—a victory for spin if nothing else. The Prime Minister proudly announced that, because of the failure, they would now build a fibre-to-the-house network costing $43 billion. Of this $43 billion, half again is to come from private enterprise. I wish someone could explain to me how, if private industry could not work out how to make a profit out of a $5 billion commitment, they will—with exactly the same number of customers; not one extra—make a profit out of spending four times as much. But not to worry—if private enterprise does not come to the party, the taxpayer will fund the lot. And guess what? What is in the budget for all this? $54 million over the forward estimates. That should do it! What a joke. The extra $42.963 billion is yet to show up in the forward estimates. And, to add insult to injury, if this network is ever built 10 per cent of Australians, rural Australians, are to receive the second-class highway. They will get a first-class bill—they will get their full share of the $43 billion debt—but they will get second-class service.

Depressingly, the overall message from this budget is one of oppressive debt—a message that Labor are, once again, intent on playing Father Christmas with our grandchildren’s credit cards; that they do not understand the long-term implications that higher debt and interest rates have for the whole nation; and that they do not understand what sucking $300 million out of the economy, plus the state debts, will do to long-term interest rates and the ability of the economy to grow in the medium term. This is a reckless budget: a big taxing, high spending Labor budget—a traditional Labor budget. It is a budget which most of Australia will regret in the longer term.

See this speech in context