Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance—

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

Dr Jensen interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Solomon will resume his seat. The member for Tangney will withdraw from the House for one hour.

The member for Tangney then left the chamber.

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Will the minister outline the benefits to the economy of maintaining a strong budget surplus, and are there any threats to this position?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank the member for Solomon for his question. There are a number of reasons why it is very important to have a strong surplus in the budget settings. There are a couple that are particularly import-ant. Firstly, this is in order to ensure that the budget is putting downward pressure on interest rates. We inherited an inflationary bud-get setting, with spending growing at five per cent per annum in real terms. We have shifted that growth down to one per cent per annum. Secondly, it is very important that we have a strong surplus to build the infrastructure investment funds that the government has put in place: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund, which will invest in the long-term productive infrastructure that this nation needs to invest in. It will invest in national broadband, it will invest in major upgrades of hospitals, it will invest in new university infrastructure and it will invest in major transport—road and rail—infra-structure around this nation. That is why the emphasis in the budget was on the long-term economic prosperity of this country—not the irresponsible, short-term, politically-driven spending that had characterised recent budgets.

The opposition is threatening to blow a serious hole in this surplus by its behaviour in the Senate. It is seeking to undermine the government’s efforts to assist the Reserve Bank in the struggle to keep interest rates as low as possible, and it is also seeking to undermine the government’s ability to build the surpluses that will be invested in that long-term infrastructure for the nation’s future. I note that the opposition appear to believe that, somehow, nothing that has happened since 24 November reflects in any way on anything that they did before 24 November of last year. Alan Mitchell, a respected commentator in the Financial Review, who has, from time to time, criticised Labor governments rather vociferously—and who certainly could not be seen as a biased commentator—observed on 6 August:

If any politician is to blame for the current tight monetary policy and its consequences, it is Peter Costello.

It is Peter Costello, the member for Higgins. So much for the suggestion that, somehow, the 12 interest rate increases in a row can be retrospectively attributed to the Rudd government.

I note that, on the weekend, the Leader of the Opposition was calling on the government to make a major economic statement about the issues facing the nation. I think Laurie Oakes deserves a Gold Logie for keeping a straight face while he was interviewing him in response to this statement. It is the best example of projection that I have ever seen. There is definitely a need for a major economic statement in this parliament, but it is a statement from the opposition that is definitely needed. It is very clear where the government stands on the major issues of the day, whether it is the size of the budget sur-plus, cuts in government spending, climate change or investment in skills and infrastructure. But we do not know what the opposition believe is the appropriate level of the surplus. We do not know what they think the right setting for fiscal policy is. We do not know where spending cuts are going to be made by the opposition to pay for the billions and billions of dollars that they have already made in spending promises since the election. We do not know what agenda they have for long-term investment in the nation’s infrastructure. We do not know what tax reform plans they have, and we certainly do not know what their climate change strategy is because we are not even sure whether they believe climate change is real or not.

I note that the opposition is clothing its vandalism in the Senate in the guise of tax reform. I would make two points. One of the initiatives the opposition is opposing is, in fact, to remove a tax slug on middle-income Australians—namely, the Medicare surcharge levy, which was introduced by the government to apply to high-income earners. Because it was not indexed it has gradually come to apply to people earning $50,000 per year, who the opposition apparently still seems to think are high-income earners. Finally, Mr Speaker, if you look at the statistics in the budget papers you will see that the proportion of the nation’s economy going in tax from the federal government for this financial year, for the next one, for the one after that and the one after that is lower in each case than every one of the last six budgets of the Howard-Costello era. The tax take is lower under the Rudd government. It will continue to be lower.

Warren Truss (Wide Bay, National Party, Shadow Minister for Infrastructure and Transport and Local Government) Share this | Link to this | Hansard source

My question is to the Treasurer. How will the government’s increased registration charges and fuel excise for heavy vehicles reduce inflation?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

The most fundamental thing that we can do to reduce inflation is to build a significant budget surplus—absolutely. What we have got to do is make our economy much more productive. We have got to do something about the capacity constraints in this economy that were left to us by the previous government. The 20 warnings that the shadow minister opposite ignored when he was a minister of the Crown in the transport area signify more than anything the abject neglect of those opposite when it comes to real, longstanding, lasting action in the transport industry. Whilst they are frustrating our surplus, whilst they are blowing a hole in it, they cannot lecture anyone about inflation.