Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Hansard source

Here we are—the incompetence pouring out of those opposite. So you have a situation where this person finds that he now can only afford a mortgage of $300,000 to $350,000 and not $500,000. But he has got a 25-year commitment. He has got a problem. He has to sell the house and get a smaller mortgage. He has to take tough decisions to live within his means. He has a structural deficit. He has long-term commitments, but the income to pay for those long-term commitments has not persisted.

It is the same thing with this country. We have long-term commitments, nearly $100 billion of debt that this government is building up, and we have spending programs that will continue. They are recurrent expenditure. They will come year in, year out as annual commitments that this government is making that have no end, yet they are funding those commitments out of the proceeds of the mining boom. They are wasting the mining boom. There is an illusion about the state of the books of this country. They are going to use the mining boom money to meet current commitments, maybe in 2012-13. But what you find is that, when you allow for the mining boom and commodity prices going back to normal—and they will—there will be a supply response, and the demand will come off at some stage. There are 1,000 mines around the world that are now being put into production. There is infrastructure being built in Mongolia, in South America, in Africa, in Eastern Europe and in North America. There is port infrastructure to take the resources from thousands of mines to meet demand. So the supply response will increase. We think we are awash with gas, and we are, but we have still only got two per cent of the world’s gas reserves. So we will face competition. We will still do well, but the mining boom will come off, and it may come off sooner than we anticipate. It is all right to predict 10 years.

I was in agriculture for 18 years and there were always booms and busts. Every time there was a boom in grain, people would move out of sheep into grain and everyone would always predict a longer boom that what really occurred. Invariably, it was because no-one anticipated the supply response, not only the extra grain production within the country but the extra grain production around the world. Invariably, the price came back. It did not necessarily collapse; it came back to more normal levels because of the supply response. It invariably came back sooner than everyone predicted. There is a sort of boom mentality where people want to make assumptions about how long these things are going to last.

We have those on the other side feeding in 10- and 15-year assumptions about the mining boom. It is unrealistic. It demonstrates their lack of contact with the real world—with the commercial world. We now have a situation where, in the 2009-10 budget papers, the government featured this structural deficit. There had been a small structural deficit beginning at the end of our previous term in office, but it was about $2.5 billion. You know what it is today? It is $50 billion. There is an underlying structural budget deficit that has been identified by Treasury. It was first put in the budget papers of 2009-10. In 2010-11 there is no reference to it; it has disappeared. Six months after last year’s budget, Treasury quietly put out a paper that updated the structural deficit. It showed the structural deficit was growing astronomically—that, instead of coming out of it in 2015-16, we would come out of it in 2020. So we have a structural deficit of a large order.

The reality of the budget as identified by the Treasury, as agreed by the government but never talked about by the government, is that the government have an underlying budget deficit which is going to go through at least to 2020. This means we will not have paid off one cent of debt—you do not pay off debt until you are into a real surplus—until 2020. We will not have paid this debt off until 2030. We are talking 20 years until the debt is paid off.

What an absolute disgrace that this government would put us in such a vulnerable position. We are a small, open economy. If there is a double-dip recession or if there is a serious downturn in any way—instability coming from the Middle East with oil prices going up—then we are vulnerable. This government needs to restore the economic resilience that they inherited and subsequently trashed—that economic resilience that we need as a small country to work our way through things that are outside of our control, and the rest of the world’s control. But no, we go on blindly as though everything is fine. Spending, spending, spending; more commitments, bigger structural deficit, off into the future using all of the mining industry money. What a disgrace. What an absolutely irresponsible, inconsiderate, highly politicised approach to government. They are just looking to save their own jobs every three years. That is the total preoccupation of this government. That motivates all of their major decisions and it is has driven the spending, spending, spending approach of this government. They need to be held to account.

These appropriations are a huge symbol of the waste and incompetence and politicisation of this whole budget process. This is a government which needs to take stock. It needs to do what every family in Australia is doing—that is, seeking to live within its means. For at least 12 months now every family in Australia has delayed incurring expenses they were going to incur and delayed things they were going to purchase because they can no longer afford them; the electricity bills have gone up 35 per cent in three years and interest rates have gone up $6,000 on the average mortgage in the past 12 months. This government’s $100 million a day in the finance market is putting pressure on interest rates. At least half of the interest rate rise is due to the excessive spending of this government. So $3,000 a year is due to the incompetence and politicisation of this government and its spending programs. That is the contribution they have made to average families in Australia, and it is putting enormous pressure on them.

If this government exercised the same fiscal rectitude, if it exercised the same restraint that families who need to live within their means are exercising, then we would find that the economy would start to take some shape. But all we hear is spin and all we see is illusion. They have created the illusion of progress, and it is not there. Look at the structural deficit. Explain the structural deficit. Explain the worsening of the structural deficit. The government tried to say in 2009 it was due to the stimulus spending. What do they say now as it grows and grows and grows in the face of a mining boom of unprecedented proportions? It beggars belief that we are seeing this unfold. An opportunity to set Australia up for the future, to set Australia up to be resilient against any major events outside of our control has been squandered by this government.

We need some checks and balances here. We need a situation where these sorts of things can be exposed. At the present time the government hides behind the so-called independence of the Treasury. Of course it is not independent; it is there to work for the government of the day. Most of the material in the red books and the blue books that came out after the election is blacked out. You could not see what any of the figures were; you could not see the really tough advice that was given to this government. All we ever see from the public service is what the government wants us to see.

We have not got any group that is capable of providing some independent assessment. This is why we put up a proposal for a Parliamentary Budget Office at the last election. We were looking to have an independent and well-resourced statutory authority located in Parliament House, an authority tasked with providing objective and impartial advice and analysis on the Commonwealth budget and the budget cycle, on the medium- and long-term budget projections and on the cost of policy proposals. Look how politicised that was last time. We put up $50 billion of savings and the whole process was politicised by this government. I met with Ken Henry for 3½ hours and, on nearly all of the proposals for which the government subsequently pilloried us, the only difference was assumptions. Even when we put up a case, in most cases the head of the Treasury said, ‘We’ve made our decision.’ Sometimes it was a case of just two per cent—82 per cent versus 84 per cent—in terms of a take-up factor, but when you put that over four years, in a big program, it looks like a $900 million hole. They were simply assumptions and they were very close together. But Ken Henry said: ‘We’ve made our decision. That’s what we’ve put into our model. You can like it or lump it.’ That was the politicisation of this process.

We need to take the politics out of the budget and the campaign process. We need a Parliamentary Budget Office. The government fought this proposal all the way through and denigrated it when we put it forward during the last term, but they accepted it when the Greens and the crossbenchers insisted upon it. But what are we seeing? Nothing as yet. It is our expectation that this office will be three desks in the corner of the library; that is what we will get. It will be another political response to a very legitimate concern. If we were in government we would have to face this scrutiny and objective assessment as well. This is not something put up to advantage us on one side of politics. This is a genuine, legitimate and sensible proposal. We should have an independent body, stationed within Parliament House, that can respond to any member or senator in terms of individual issues, deal with the policy costings of both sides of politics well in advance of an election and find numbers that everyone accepts are the right numbers. We can then have a debate about policy in the election and not some orchestrated political process in a campaign which seeks to denigrate the opposition because the government has numbers and assumptions which may differ from other authorities. This is a really important proposal and it needs to be adequately financed so that we get the politics taken out of this process.

I have another example of the great hypocrisy associated with this government on many issues. If you look at the forward estimates you will find that, in the latter years, the appropriation for natural disasters is the lowest in 10 years. I talked about it being an illusion if we get to a surplus. The government is seeking to manufacture a surplus. The appropriation is $80 million. We have just had to agree to $5.6 billion of expenditure for natural disasters. The government has a provision of $80 million, which is the smallest amount in 10 years. When the Minister for Finance, Senator Wong, was the climate change minister, she warned that:

Climate change is expected to increase the frequency and intensity of extreme weather events, including cyclones, storms, droughts, heatwaves bushfires and floods.

The finance minister is on record saying we are going to experience far more natural disasters in the years ahead, because of this government’s belief in the consequences of climate change, yet she has reduced the appropriation for natural disasters to its lowest level in 10 years. What hypocrisy! It just shows that there is an attempt across this government to manufacture a surplus in 2012-13 and ignore the structural deficit. This is politics. This is another example of the hypocrisy of this government in the way in which it is constructing and running the finances of this country.

This government needs to tackle the cost of living. This was its big election pitch in 2007 but it has failed on all counts. There are families around this country who are facing deep financial pressures but living within their means. This government needs to take a leaf out of the book of Australian families and live within its means. (Time expired)

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