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

Last night the Treasurer introduced his fifth budget, which he was proud to say stayed true to his Labor ideals. I have to say it was a true Labor budget. It was confused and full of deceit, made promises and broke promises, and failed to mention that it was increasing tax and increasing debt. This will be remembered as the carbon tax budget—except there was no mention of the carbon tax in the budget speech. It will raise $24 billion in this budget.

Importantly, it is also the case that the handouts that the government announced last night, which were dressed up as student tax rebates or increases in family tax payments, are all about the carbon tax and have nothing to do with the proclaimed intention. Equally importantly, it was a budget that had no coherent economic strategy to drive growth in the economy, to lift productivity or to create jobs.

Australia is crying out for leadership to restore confidence to get its economy performing at its very best. Economic growth under Labor has been very poor, averaging 2½ per cent or less in its first three years. This is an underwhelming record at a time when Australia is benefiting from the highest terms of trade in several generations and record demand for its exports from overseas. Productivity has stalled. GDP per hour worked in the final quarter of last year was lower than two years earlier. And what about jobs? In 2011, there was no growth at all. It was the first time in 20 years that no new jobs had been created.

So what has the Treasurer done to restore stronger growth, kick-start productivity growth and lift job creation? The answer is that he has set the bar pretty low. He has promised that the economy will grow by 3¼ per cent next year. That is on the upside of trend, and we would be able to generate growth of at least trend or even higher after years of below-trend growth if we created the conditions for businesses to invest, grow and take on more workers. Clearly the Treasurer has no confidence that he has the skills or the policy to do that. His track record suggests that he will undershoot even his relatively low bar. In last year's budget he forecast growth this year of four per cent. He has now revised that down to three per cent. But even this looks too strong given the weak growth in the first half of the year and market estimates for another tepid quarter of growth in March.

Certainly the Treasurer's ambitions for job creation suggest he really expects only modest economic growth. The unemployment rate is now expected to increase from the current 5.2 per cent to 5.5 per cent and remain there for two years. On the morning of budget day—just yesterday—the Treasurer said, 'It makes sure we support jobs.' I remember last year, when he said the budget was all about 'jobs, jobs, jobs' and he forecast growth in jobs of 500,000 over two years. Not only has he failed to reach that target; he is nowhere near it, with an expected and revised estimate of just 200,000 jobs being created. His track record suggests that we should be sceptical even of that more modest ambition.

And yet the Treasurer wants us to believe it is a 'jobs budget'. Of course, he has had many descriptions. It started off as a 'tough budget', but he does that every year. Then he said it would be a 'responsible budget'. Then he said it would be 'a budget that will whirl the economy back to a fiscal surplus'. Then he alluded to the fact that it was a 'Robin Hood budget'. And then it was 'battlers' budget'. This, of course, is the way the Labor Party does it. They use that invective to try to describe something that they cannot describe themselves.

The biggest flaw with this budget is its reliance on the continuation of the mining boom. It assumes that the terms of trade will stay close to highs so that company tax receipts and mining tax receipts continue to be high. The terms of trade assume a decline in 2012-13 of 5.75 per cent, and 3.25 per cent the following year. However, the government's own sensitivity analysis confirms that a fall in the terms of trade of around four per cent would reduce the underlying cash surplus by $3.4 billion in the first year and $7.1 billion after that. A relatively small decline in the terms of trade from record highs is going to wipe out the government's claimed surpluses. This just shows how critical the mining boom is to the government's fiscal strategy and how precariously balanced the budget is.

I could compare this government's lack of vision with the coalition's strong agenda to drive economic growth, productivity and employment. Our first step in government will be the restoration of sound public finances by cutting the waste, reducing the spending and paying down public sector debt. Secondly, we will lower taxation to enhance the rewards for effort and to reduce the fiscal drag on the economy. Thirdly, we will have a strong productivity agenda with higher labour force participation, reduced red tape and the facilitation of further restructuring of industry. Fourthly, we will facilitate even stronger engagement with our trading partners, with a particular focus on Asia. The coalition has clear plans to grow the economy and create jobs. We have done it before and we will do it again.

As I said, the Treasurer claimed at first that this would be a tough budget, as he does every year. First, of $33.6 billion of so-called savings over the forward estimates, more than half are increased or new tax measures. There are six new or increased taxes in the budget, taking the grand total since the government came to office to 26 new or increased taxes. The government always reaches for the tax lever in order to fill a budget hole. Second, spending this year will be $100 billion higher than when the coalition left office, and yet Labor said that the Howard coalition was a big-spending government. At no stage in the last few years, or over the next four years, does the government get anywhere near the levels of the last year of the Howard government in terms of percentage of GDP in expenditure. This is not a tight budget. How can it be when there has been an alarming deterioration in the numbers over the past year? Last year's budget forecast was an underlying deficit of $22 billion for this year. That has now doubled to $44 billion, the third highest deficit on record. The cumulative deficit under Labor since they have been in office is $174 billion.

What is worse is that the tiny surplus of just $1.5 billion that they are claiming they will deliver next year has clearly been manufactured. First, it relies on a $39 billion surge in revenue, of which $34 billion is tax. Second, they have shuffled money out of 2012-13 into the current financial year. We first identified this in the Mid-Year Economic and Fiscal Outlook, but the government have dreamed up new measures. These include the schoolkids bonus, shifting around $662 million from next year into this year, and $1.2 billion of financial assistance grants to local government that has been brought forward from July to June in order to avoid next financial year. Of course, the government have raided the hollow logs, taking $750 million extra out of government business enterprises next year as a special dividend, including from the Australian Reinsurance Pool Corporation and the Export Finance and Insurance Corporation.

The heart of the deceit in this budget is that the debt continues to rise even though the government claim it is going to be in surplus. How can that be? The Treasurer had a rather awkward moment in question time today when asked about how much gross debt is going to be. When it was related to the debt limit that is imposed by this parliament, predictably he got the figure wrong by responding with market value instead of face value. That is what you would expect from this Treasurer. He does not understand the markets. He accuses us of not understanding them, but he does not understand them. What we do know is that, if projects like the National Broadband Network and the Clean Energy Finance Corporation were included in the budget bottom line, on his own numbers the budget would remain in deficit to 2014-15. That is one of the reasons that net debt continues to rise next year and the year after to a peak of $145 billion, the highest on record. That is why the government have flagged that they will need to increase the debt limit from $250 billion to $300 billion. What is it with the Labor Party and credit cards? Whether it be a credit card from a union or a credit card from the Australian people, they cannot help but smoke the credit cards. In this case, they are doing it with taxpayer money.

They are indifferent to the impact of that sort of challenge. Last year the Treasurer called the increase in debt 'tiny'. He went on to say, 'It's very low,' minutes later on 2GB. Later on Sky News he was asked the peak debt level and he did not know the answer. I can assure the Treasurer that the taxpayers of Australia think debt is a very big deal. Repaying the debt is a big task, and the Treasurer claims he will pay it off by the end of the decade. I said earlier today on radio, 'Pigs might fly'—although I concede that pigs are more likely to fly these days, because last night they increased the pig slaughter levy, which is another hidden tax increase. To pay off the debts the government will have to deliver surpluses bigger than one per cent of GDP for the next six years. The cost of interest is $8.2 billion a year to 2015-16—that is, $22 million a day that Australian taxpayers have to find just to pay the interest on Labor debt.

But what about the broken promises? The government not only made new promises last night but broke the promises they had already made. The one that is ringing in our ears is the commitment to company tax cuts. The Prime Minister herself said only two months ago in this House:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.

On over 70 occasions the Treasurer has said that he would be introducing legislation to cut company tax. We are waiting for it. The Greens have already indicated that they would support company tax cuts for small business. But no: the Treasurer is trying to lay it on us by blaming us for not passing it. The legislation never came to the parliament. It is like the Malaysia solution. We are still waiting for the legislation the Prime Minister was daring us to vote against. We are also still waiting for this company tax cut legislation which the Prime Minister says we voted against. We have not even seen the legislation. I thought the government had abandoned its plan to cut company tax, paid for with another tax, but the budget is still warm—delivered only last night—and the Prime Minister was on Sky News's Agenda saying: 'We're open to company tax cuts. We'll engage in further discussion.' So she is changing the budget. Normally under Labor the budget lasts from Lateline to lunchtime, but it did not quite make it past the clock on this day.

What we find is that Labor are playing and fiddling with the numbers. They are shuffling money about. The education tax rebate now has nothing to do with education and the family tax benefit part A and the allowance increases have nothing to do with giving people a fairer share of the mining tax. They are all about compensation for the carbon tax, the tax that dare not speak its name in the budget or in the budget speech. There is no clear, articulate strategy to grow the economy. There is nothing that reduces the cost of living for everyday families and there is nothing in the budget that creates jobs. There needed to be an economic strategy that Australians could believe in, that helped to give Australians confidence that the volatility offshore is not going to affect their everyday lives. Instead it was a budget that had handouts but claimed to be tough. It was a budget that has left Australians confused. It was a budget to save Julia Gillard's job instead of the jobs of everyday Australians. (Time expired)

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