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

I move:

That this bill be now read a second time.

It is with regret that I stand here today to give the second reading speech in relation to a bill that has to increase the debt limit of the Commonwealth of Australia. It is with regret that I am doing it, but I am not surprised that I have to, because the previous government recognised that ultimately whoever was elected after the election would have to deal with this issue. The proposal before the House increases the legislative debt limit from $300 billion to $500 billion. The legislative limit has been lifted three times since it was introduced by Labor in 2008. Of course, we never had to have a debt limit, because we paid off the debt that we inherited previously from Labor. And, what's more, we left the previous Labor government with more than $50 billion in the bank. So, we did not need to have a debt limit, because what we did was wipe out all of the net debt and left money in the bank.

But the member for Lilley, previously the Treasurer, thought it was a terrific idea to put a speed-limiter on his own colleagues and have a debt limit of $75 billion in 2008. The problem was that the Labor Party could not keep to that debt limit and it was increased in 2009 to $200 billion. That was part of a package of measures designed to stimulate the economy in the wake of the GFC. We said the stimulus was way too much. Labor pledged never to get near the $200 billion. In the interim, they kept spending and spending. Then they came back to the parliament in 2011 and said, 'Hang on, we just need an extra $50 billion—but, don't worry, we're not going to get to $250 billion'. We were sceptical; we argued the case against it. But we did not vote against it, because we knew that it would be irresponsible, in those circumstances, to create the uncertainty associated with blocking the appropriations and the associated increase in the debt limit.

And of course, in this place, the member for Lilley, well after the GFC had finished, then said, in the 2012 budget, 'We need to increase it to $300 billion'. He said that was only necessary because they needed to have a buffer of between $40 billion and $60 billion so that the Australian Office of Financial Management, the AOFM, could properly deal with the refinancing lumpiness. We had extensive debates in this place about whether that buffer was needed, and the member for Lilley tabled, in an unprecedented way, the advice, the minute, from the Australian Office of Financial Management, warning that they needed to have a buffer of between $40 billion and $60 billion above what they expected peak debt to be so that there could be a proper refinancing regime that would not in any way disarm the markets. And we did not oppose that bill. We accepted the advice of the AOFM, in opposition, and we accepted the government's statement that the debt would not go above $250 billion—in fact, because he was going to a $300 billion debt limit, the then Treasurer pledged that the Labor Party would never need to take the budget beyond $250 billion. We were sceptical, and we were right to be.

The member for McMahon, in an economic statement literally just weeks ago, said the debt is going to get to $370 billion. But the debt limit is $300 billion. The debt limit is $300 billion and he said, 'We're going to have to go to $370 billion'. Did he raise this during the election campaign and accept that they were fully responsible for this mess, that the debt was going to $370 billion and they were going to have to deal with it? No: it was just buried in the papers. But I want the member for McMahon to explain how he can now be so wedded to $400 billion when he delivered a number of $370 billion and he had received written advice that you need a buffer of between $40 billion and $60 billion. As I said in question time: it doesn't add up. A peak debt of $370 billion, plus $40 billion to $60 billion for refinancing, means that the $400 billion does not add up. What a surprise: the Labor Party couldn't add up when they were in government; how would you expect them to add up when they are in opposition!

Mr Bowen interjecting—

I'm going to send you a calculator for Christmas—that's what I'm going to do! The old abacus has gone a little wobbly, old son! I'm sending you a calculator. And I'm going to make sure it's not a scientific one—I'm going to keep it simple, with nice big digits! That is what we are going to do.

So the member for McMahon—this is a cracker—walks into caucus and says, 'Hey guys, I've got a great idea: let's lock 'em into $400 billion; they'll need to explain themselves when they get to $400 billion'. But he failed to tell the caucus that in fact he was taking it to $430 billion. How did that happen? My Lord, what a surprise!

And of course the Greens were roped in. There is the Leader of the Greens, Senator Christine Milne, thinking, 'It's a terrific idea to have a limit of $400 billion'—but, only weeks ago, she put out a press release saying you shouldn't have a debt limit at all! There is no problem with debt! Go your hardest on debt, she said, a few weeks ago. But now, all of a sudden, this is a very serious issue. The Labor Party, in partnership with the Greens, caused the debt and they are now trying to stop us from dealing with it.

It is not just the $430 billion, though—that was the last published number from the Labor Party. We have introduced bills today that seek to reduce the debt by $20 billion. We are getting rid of the mining tax and the associated expenditure. That saves over $13 billion. We are getting rid of the Clean Energy Finance Corporation, the CEFC. That saves over $7 billion. It was $10 billion of borrowed money, but we cannot stop what has gone out the door from going out the door—it already has, and we are meeting our contractual commitments—but I tell you what: we don't want to have to borrow another dollar to put into the CEFC.

So, hang on, let me get this right. Labor say the debt should not go past $400 billion but, even on their own advice, it was going to $430 billion. Then they want to stop us from paying down $20 billion. So that would take us closer to $450 billion, I would suggest. But there is more. And why is there more? I will tell you why there is more: because the Reserve Bank—

Mr Bowen interjecting—

The member for McMahon came before this place today—

Mr Bowen interjecting—

Hey, listen mate: you're not Treasurer anymore; you haven't seen the details. I would urge the member for McMahon—

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