Andrew Leigh (Fraser, Australian Labor Party) Share this | Hansard source

I want to ask the Assistant Treasurer about the government's decision to return the budget to surplus, but I also want to make a couple of observations in that context about the state of the Australian economy, which is today nine per cent larger than it was before the global financial crisis. Like the Assistant Treasurer, I am a subscriber to the Treasurer's Economic Note, which reminds me that, compared with pre-GFC levels, the Italian economy is now five per cent smaller, the British economy is three per cent smaller and the Japanese economy is one per cent smaller. Other economies have grown, but not by much. The United States economy is up by one per cent and it is the same with Germany; the Canadian economy is up by four per cent. So the Australian economy, having grown by nine per cent from pre-GFC levels, really is in a class of its own.

I also want to raise the recent national accounts figures. As the Assistant Treasurer has noted, the release of those figures really did give the lie to those who argue that Australia's best days are behind us. As the Treasurer put it, the release of those figures was a week when the optimists won over the pessimists. It is important to put in place productivity-boosting reforms and they are reforms that Labor is currently undertaking. The National Broadband Network, the historic investment in schools and boosting the quality of Australian schools are reforms that will pay dividends, but they will not necessarily pay off in the year in which they are implemented. We know this from looking back at past reforms. We can see, for example, that the deregulation of the financial sector and the cutting of tariffs in the 1980s paid off in productivity in the 1990s.

In terms of Australia's debt level, which naturally goes to the question of the return to surplus, it is worth drawing on a number of observations made in the press recently. The Executive Director of the Australia Institute, Richard Denniss, has noted that Australia's level of public debt is among the lowest in the world. In fact, he noted:

At less than 10 per cent of GDP, the Commonwealth’s Net Debt is so low that the financial sector has urged the Gillard Government to issue more government bonds than is actually necessary to ensure the ‘liquidity’ of the government bond market.

Stephen Koukoulas, in the Australian Financial Review on the morning after the budget, noted, 'Not once did the Howard or Fraser governments in about 20 years in office achieve a single year where government spending was cut in real terms, while Labor governments have been able to cut real spending in five years since the mid-1980s.' Mr Koukoulas further notes that in the 2012-13 budget the ratio of government spending to gross domestic product will fall to 23.5 per cent, which is 0.7 per cent of GDP lower than the average of the 12 Howard government budgets. 'In today's dollars, that is around $10 billion less spending.' George Megalogenis, writing last year in the Australian, had this headline: 'ALP best manager of money, history shows'. Mr Megalogenis goes through the average annual real spending increase when the economy was growing at better than two per cent a year. Those figures show that under John Howard as Treasurer growth was 2.3 per cent. Under Peter Costello mark 1, it was 1.9 per cent. Under Peter Costello mark 2, in the salad days, it was 3.3 per cent. Under Wayne Swan, it was 1.0 per cent.

There is a fear campaign being run by those opposite against the debt that we took on in order to save 200,000 jobs and tens of thousands of small businesses, which I am sure that the member for Dunkley is deeply concerned about. Yet we still see those opposite running scare campaigns on things like the debt cap, which we have been advised to increase in order to take account of the fact that there are fluctuations in government revenues through the course of the year. We are raising the debt cap prudently. But those opposite seem keener on taking a leaf out of the playbook of the US Republicans.

My question to the Assistant Treasurer is: why is the government returning the budget to surplus and why is this important for maintaining Australia's economic prosperity?

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