Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

We have just listened to a wonderful 10-minute contribution from the member for Throsby on vapourware and Keynesian economics, which are well and truly discredited in this day and age. Again we stand here discussing the government's inability to manage its own budget circumstances. Maybe we should clear up a couple of misconceptions at the outset. If you take the amount of debt that this government has added to the Australian people's credit cards over the past five years as a percentage of spending on GDP, it is well in excess of anything the Howard government ever spent during its term. I love the fact that those opposite say they have had budget savings over the past five years. The Australian people, including those in the gallery, should know that they include in that 27 new or increased taxes which they are saying are savings. The last time I checked, increasing taxes was not a saving.

We stand here today debating this MPI because this government has a serious and undeniable spending crisis. We are faced with a government that over the past five years has succeeded in destroying a fiscal foundation that took 10 years to create. This fiscal foundation was predicated on a sound budgetary policy of surpluses—surpluses which paid off $96 billion of debt and surpluses which allowed us to put funds away to save for the future and for future generations.

This prudent fiscal management resulted in the creation of not only the Future Fund but also the Higher Education Endowment Fund, with an initial investment of some $5 billion, and the Health and Medical Infrastructure Fund, with an initial investment of some $2½ billion. The objective of these funds was to utilise the earnings to fund capacity improvements in higher education and health and medical infrastructure, whilst leaving the capital to accumulate for future generations. But in 2008 the Labor government rolled these funds into the nation-building funds, and within those funds they created the opportunity to spend not only the earnings but also, crucially, the capital, which had been set aside for the longer term. Of these funds, only the Future Fund now remains intact; however, due to the government's financial profligacy, it has not had any additional funds added to it in the past five years.

We know two things about this Labor government: they cannot manage the economy and they cannot be trusted. Businesses and households now know they cannot believe a word the government say about the budget or the state of the economy. We see the government frequently complain that their dire fiscal position is due to falling revenue, when the fact is that revenue has remained reasonably steady over the period. However, the differences occur when comparing the actual revenue received to what was forecast, and therein lies the tale of this government's fiscal and economic ineptitude. During a period with some of the best terms of trade in our history and despite the government introducing, as I said earlier, 27 new taxes and increased taxes and a whole range of fees and charges, we have seen a gross deterioration in our nation's fiscal position. This deterioration has not been due to the community's lack of effort or our business community's drive to improve their business but is directly a result of the Labor government's failure to adequately manage their finances and live within their means.

We have witnessed over the past five years the greatest fiscal deterioration in our nation's history. We have seen a government that calls tax increases savings. We have seen a government that has spent some $172 billion more than it has collected in revenue over the past five years, resulting in the Australian people now owing more than a quarter of a trillion dollars. In the current budget year, 2012-13, the government has increased the debt limit to a record $300 billion. It was only some $75 billion in the 2008-09 year. Australians know that that debt needs to be serviced and repaid. Today's debt is tomorrow's taxes. More debt means more money spent in the future on interest payments instead of on schools, hospitals or lowering taxes. As the member for North Sydney quite rightly pointed out, our gross interest bill is now some $12 billion a year.

I would like to say today that this government has seen the light and learnt the lessons from its profligate spending. However, sadly that appears not to be the case. An analysis by the Australian Financial Review last year reveals that future governments will need to raise some $120 billion by the end of the decade to pay for Labor's unfunded spending commitments. The budget bottom line has already been hit by Labor's multi-billion-dollar blow-out on border protection. It will be further hit by Labor's massive unfunded commitments in disability services, defence, education and now dental care. Australians are entitled to ask, 'Where is the money coming from?' I would like to give you a list of some of the unfunded commitments: the National Disability Insurance Scheme; aged care; increases for low-paid workers in the social and community sector; offshore processing; an increase in the refugee intake; defence; the dental care scheme; and the Gonski review implementation. We all agree that education is extremely important for our children, but we need to pay for it in a sensible and considered way so that, when they enter the workforce, it is not their taxes that are paying for their education.

More recently we have seen the Business Council of Australia make the following comments in regard to the budget, 'It is in urgent need of repair,' and 'The government’s fiscal strategy is not working and needs a major rethink.' In addition, analysis by Deloitte Access Economics shows that this Labor government has added almost $50 billion to the budget in new spending programs. This is the fundamental underlying issue for this Labor government: it does not know how to control its spending. It is interesting to note the comments made by the authors of a European Central Bank working paper on the effect of the size of government on economic performance. The results of their studies show 'a significant negative effect of the size of government on growth'. They say:

Interestingly, government consumption is consistently detrimental to output growth irrespective of the country sample considered …

In conclusion, they surmise that the more resources required for financing government spending, the greater the reduction in the optimal level of private consumption as well as productivity.

We have a government that continue to spend like a drunken sailor. They talk about improving productivity within our economy, yet their very profligate spending policies are actually greatly detrimental to increasing our productivity and our national wealth. This is why the coalition is focused on ensuring that, if we are elected to government at the next federal election, we will live within our means, reducing the negative impact of profligate government expenditure on the Australian economy. It is important to note that the budget will always be in a stronger position under a coalition government because good economic management is in our DNA. It is only a coalition government that has the desire to restore hope, reward and opportunity to the Australian people.

See this speech in context