Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

It is not three years since the election of this Labor government, and at that time nearly three years ago the member for Griffith as the Leader of the Opposition and all the members of the Labor Party pledged to the Australian people that they would ease the burden of a rising cost of living. They gave a solemn promise to the Australian people that they would do something to reduce the cost of fuel, the cost of groceries and the cost of doing everyday banking. The Labor Party promised that they would do something to make life easier for Australian families facing rising costs, in particular rising everyday costs. The Labor Party believed at that time that the rising cost of living could be addressed by setting up websites: Fuelwatch to address the rising cost of fuel, GroceryWatch to address the rising costs of groceries and vegetables and ‘Bank Switch’ to address the rising cost of banking. If only it were so easy—if only you could simply set up a website and in so doing ease the burden of a rising cost of living.

At the same time as the Labor Party failed in their endeavours they also and most significantly did not understand that their very own actions—the very deliberations of a government to increase the tax burden on individual goods—would cause the price of those goods to rise and have a flow-on impact on the everyday cost of living. So, when this government in the 2008 budget, and without any global financial crisis, introduced a new tax on alcohol, the price of alcohol went up. When they introduced a higher tax on motor vehicles, the cost of motor vehicles went up. When they took a baseball bat to private health insurance, the cost of health care went up. They did not understand the fundamental principle that, when a government increases the tax, the prices of goods rise.

The Labor Party’s solemn commitment to the Australian people to ease the burden of the cost of living was broken. It was broken to the great cost of everyday Australians and, as the Leader of the Opposition explained during question time today, those everyday costs of living have risen significantly and well above inflation over the last three years. Electricity is up 34 per cent. Gas is up 26 per cent. Water and sewerage—everyday services—are up 29 per cent. You would think that with Medicare, a universal health program, health care would be free. But it is not. Everyone knows that you have to pay for dental services, for some pharmaceuticals, for optical services and even for hospital care, and under the Labor Party the cost of health care has risen by up to 18 per cent. Education—the on-costs, school uniforms and all the things that are associated with the everyday challenge of education—is up 17 per cent. The price of bread is up 12 per cent, and that is a staple that every Australian household needs. Even rent is up 17 per cent over the last three years. You would say to yourself, ‘Prices do rise.’ The fact is that Australia had a significant economic downturn in those three years and inflation came down, yet these everyday prices kept rising. The Labor Party in government does not understand the link between their own actions as a government and rising prices.

Let me give you another simple example of the rising cost of living. The everyday challenges for most Australians do not seem to be taken into account, and I am talking particularly about those people in Sydney, Melbourne and, increasingly, Brisbane who have to pay everyday tolls. I calculated that a person living in Riverstone in central-western Sydney going to work each day in the Sydney CBD has to pay $15.83 one way to go to work in the morning and $11.83 to go home. That is $28 a day, $138 a week and up to $7,000 a year in tolls to go to work for someone living in Western Sydney. That is not taken into account when those in the Labor Party talk about easing the burden of the cost of living. It was in April of this year that the Treasurer said, and I apologise for the grammar here:

… this Government has had very much a cost of living agenda in place for working families.

In July he said:

We will do everything as we go forward to ensure we minimise those cost-of-living pressures …

But there is a challenge. There is the challenge of the government’s taxes, none being more significant than the looming dark shadow of a carbon tax, which this government did not have the courage to tell the Australian people about just a few weeks ago, before the election—a carbon tax that will apply to electricity; electricity that has already risen significantly and will continue to rise significantly in the absence of a carbon tax. That burden, which is faced by every business, which is faced by every household, which is faced by every pensioner, which is faced by every parent, will increase everyday costs of living in a most dramatic fashion.

On top of that, on top of the cost of carbon, and on top of the increasing burden of taxation, the Labor Party is going to create an environment where interest rates will rise—and rise they will. Most respected market analysts will say there is a broad expectation that interest rates will rise by around one per cent over the next 12 months. Interest rates rise primarily because the Reserve Bank is trying to address the challenge of inflation. Inflation is affected by expansionary fiscal settings, and this government have had the most dramatic expansion of fiscal policy in Australian history. In addressing the challenge of the global financial crisis, the government gives these sanctimonious lectures about how it is now engaging in the greatest fiscal consolidation in modern Australian history—but they are doing so because they have had the greatest fiscal expansion in modern Australian history. They are saying that they are coming down the biggest mountain in the world not because they climbed the biggest mountain in the world but because they are smart. Well, they are not smart.

With a budget deficit in excess of $50 billion last year and a budget deficit in excess of $40 billion this year, and a budget deficit next year, and if you believe Access Economics—and I tend to, because there are some heroic assumptions in the budget about the ongoing value of commodities—this government is going to deliver to a generation of Australians a burden of debt that will put upward pressure on interest rates for Australian families for as far as the eye can see. When you are running an economy at full capacity—and the coalition has; we did it before and we will do it again—the challenge for a government is to get into surplus as quickly as possible to minimise the public sector demand and to allow the private sector to flourish, to allow capital to be invested, and to ease the burden and costs associated with much needed debt that is going to fund the expansion of the private sector.

Lots of commentators over the last two years have given the coalition, and me in particular, a rather lengthy soliloquy about the relationship between government debt and the need for the government to go into significant debt to save the Australian economy. The coalition said during the election campaign, and we say going forward, the great challenge for Australia during these times is to get the budget to surplus as quickly as possible and to start to pay down Labor’s debt. Once you pay down Labor’s debt, you can take away from the everyday Australian the burden of paying that debt but, more significantly, there is no need for businesses to compete with that debt. Every business out there, every home borrower out there, is faced with a challenge. The challenge is this federal government borrowing $100 million a day in competition with small business, in competition with farmers, in competition with everyday Australians. If you are a bank, and cash is sacred, who are you going to lend to? Are you going to lend to a AAA rated government, or are you going to increase the cost of borrowings and lend to small businesses and homeowners, and have increases in the cost of credit cards and mobile phone? What are you going to do?

When someone is competing for much needed money, the challenge is for the government to get out of the way. That helps to make funds cheaper. This is something this government does not understand. It is basic economics. When the economy is running at full capacity, when we are meeting head-on the challenges of growth and the expansion of the demand out of China and India and other places, the great challenge is doing the hard yards. You cannot set up a website to ease the cost of living. That is rubbish. It is a sanctimonious and irrelevant solution, and now they know it, after three years. You can only ease the burden of the cost of living by doing hard yards, making hard decisions. This coalition had the courage, this year, to lay down in graphic detail more than $45 billion of savings out of the budget—hard savings, politically difficult savings, but we did it because we know that you have to be prepared to do the hard yards—in order to get the budget back to surplus; to pay off, again, Labor’s debt and get the cost of living burden off the back of everyday Australians.

The Treasurer, old china, is very fond of spinning and twisting and turning. Haven’t we seen that dramatically with his explanation of the carbon tax? The IMF said in its report, released today:

As the recovery proceeds, we recommend saving stronger-than-anticipated revenue to help avoid potential overheating from the mining boom.

Well what does that say? The IMF goes on:

The increased supply of sovereign debt worldwide could eventually put significant upward pressure on funding costs.

This is the IMF and they are sending a clear warning. There are great challenges with the United States, the United Kingdom, Europe and other countries having record levels of sovereign debt. There is only so much money in the world. Australia relies on that money because we cannot fund ourselves. When you have a government accessing that limited pool of money in competition with small businesses, farmers and everyday Australians the cost of money goes up. If small businesses and manufacturers get the money, they increase the costs of the goods they produce in Australia, and that flows directly into higher electricity and water prices, higher school fees, higher healthcare costs and higher everyday expenses.

The Labor Party do not care because they do not understand that their reckless spending is putting upward pressure on interest rates and that their reckless indifference to the hard yards that are necessary to properly manage an economy is making life harder for everyday Australians, not easier. The coalition are prepared to do the hard yards because we understand the basic principles of the costs of living. The Labor Party are reckless and indifferent to the interests of the Australian people.

See this speech in context