House debates
Wednesday, 13 May 2009
Questions without Notice
Budget
2:00 pm
Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source
My question is addressed to the Prime Minister. Will the Prime Minister now tell the House what last night the Treasurer could not bring himself to say, that the government is budgeting for a $57.6 billion deficit next year at 4.9 per cent of GDP, the largest deficit in over 60 years?
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
The Leader of the Opposition is correct: the budget deficit will be 4.9 per cent of GDP.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
It is the figure that I said on radio this morning, 57.6. Can I say to those opposite the government welcomes a debate on debt and deficit, a debate which those opposite have joined with such vigour and clarity this morning; there has been such a sterling performance on the part of those opposite in having a uniform position on debt and deficit. You see, the position of the Liberals on this question is actually directly relevant to the question just asked by the Leader of the Opposition, because what they do in the Senate directly affects the shape of the deficit. We know from the last budget what happened with the blocking of various measures, both on the expenditure side and on the revenue side. We do not know from any of the statements which have been made so far what will happen in the Senate on this occasion and therefore the extent to which that affects what the government has by way of the final content of its proposed borrowing and deficit. Therefore the position of those opposite is not just of academic interest; it is of direct interest to the bottom line which will be delivered to the public revenue of the Commonwealth of Australia.
But there we were this morning—can you just picture it?—with those opposite signalling loud and clear: ‘We’re about to have a fusillade on debt and deficit today.’ You are over there in Fort Turnbull in the bunker and you are working out what is going to happen on this day, the first day after the budget. You are going to have a complete blitzkrieg on debt and deficit. So the whistle blows at 0700 and out you go and over the top and you have the field commander out there, the Leader of the Opposition, and the regimental sergeant-major, the member for North Sydney. Out they have gone ready to whack as one and at 0800 the shrapnel starts to fly. What happens then? The regimental sergeant-major is on Channel 7 and is asked a very direct question and that question is along these lines, so this is what Joe was asked: ‘How much debt would you support and how big a deficit would you support?’ The answer is as follows: ‘I’ll give you a figure as a starting point, at least $25 billion smaller.’ So thank you, Joe! Joe has given us a definitive number, 25 billion. Well, thank you very much.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
Order! The Prime Minister will refer to members by their titles.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
They may be equivocating now but it is $25 billion.
Sharman Stone (Murray, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source
Mr Speaker, I rise on a point of order. Can you ask the Prime Minister to properly address the member’s question.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
I already have. I reminded the Prime Minister that he has to refer to members by their titles.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
So the member for North Sydney is out there delivering with crystal-clear clarity for the first time the position of the opposition on their debt and deficit strategy; that is, the government’s minus $25 billion. That is at 0800. At 0816 the regimental field commander himself takes position with the artillery barrage to come and the artillery barrage commences with his time on Sky Television, so Sky actually does an interview with the regimental field commander over there and he is asked the following question about debt and deficit. The Leader of the Opposition says:
If we were in government today revenues would be higher.
That is an interesting proposition: you get your magic wand out and you say, ‘We’re going to create more tax.’ It is just by waving the magic wand. Let us leave that one to one side for the moment.
Revenues would be higher as a product of a direct administrative—
‘decree’, I presume.
spending would be lower, therefore debt would be much lower and the deficit would be much lower. Now the reality is—
and here the journalist, David Speers, asks:
But you can’t say what figure?
Then the Leader of the Opposition says:
Well, no. You can’t because you, because you, I mean you, you could sit down, you could work out a model. But as we see with all of these financial models, you know, each assumption becomes fairly subjective.
So that was at 0816. At 0800 this morning the whistle has gone, the shrapnel is flying and the shadow Treasurer says government debt and deficit minus $25 billion. Sixteen minutes it took for the Leader of the Opposition to say, ‘I haven’t got a clue. I refuse to name a number.’ Well, there we have the regimental field commander and the regimental sergeant-major out there in full flight against the government, saying—
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
The member for Fadden on a point of order.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
Order! The member for Fadden has not got the call.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
Those on my right will come to order. I call the member for Fadden.
Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source
Mr Speaker, I rise on a point of order. May I remind the Prime Minister, if he is going to use military analogies—
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
The honourable member for Fadden will resume his seat.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
Order! The House will come to order. The member for Paterson has indicated that I might be having a bad hair day, and I hope I am not. The Prime Minister has the call.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
Thank you very much, Mr Speaker. So there we have the RSM, the member for North Sydney, out there confirming it, using his gross debt figure this morning—$300 billion minus $25 billion, so $275 billion—with absolute clarity and, 16 minutes later, the Leader of the Opposition saying, ‘Oh, no, I couldn’t possibly confirm a number.’ But the supreme irony is this: they chose the terrain of battle. This is what they wanted to fight us on today and, 16 minutes into the fray, you have got over there Captain Confusion and Colonel Chaos, who could not agree on a single number in terms of their assault on the government.
In this entire debate on net debt and on deficit and on borrowing, there are some very basic questions for the Leader of the Opposition to answer when it comes to his budget reply tomorrow night. Question No. 1: will the Leader of the Opposition confirm what the member for North Sydney has said and therefore borrow in order to meet the $210 billion plus collapse in tax revenue? Question No. 2: to what extent would he in addition fund discretionary stimulus and on what projects? Question No. 3: which of the government’s spending proposals and investment proposals do they support or reject? Question No. 4: which of the $22 billion worth of savings measures do they accept or reject? Unless these questions are answered, what we have from those opposite is just white noise. It means nothing. It is pure political spin—that is all they are engaged in.
Less than 24 hours after the budget, we have seen the single greatest disintegration of an opposition attack on an element of fiscal policy that we have seen in this place for decades. They should be ashamed of themselves. This used to be the once great Liberal Party. It has collapsed in a heap.
Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source
Mr Speaker, I rise on a point of order. Because we are most suspicious of anything that the Prime Minister quotes, we would ask him to table the transcripts from which he was reading.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
Was the Prime Minister quoting from a document? Is the document confidential?
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
Yes, Mr Speaker.
2:09 pm
Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source
My question is to the Treasurer. Will the Treasurer outline for the House the key components of last night’s budget, how it fits into the government’s broader economic strategy, and reaction from economists and industry?
Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source
I certainly thank the member for Page for her question. The central task of this budget is nation building for recovery—an unprecedented $22 billion of investment in infrastructure, an investment in infrastructure that those opposite could never commit to in their whole 12 long years in office. These investments will bring jobs and they will bring productivity for the long term. They are important investments for the long term, not just in hard infrastructure but also in the best human capital: investment in education. These represent the building blocks for the future.
The budget includes $8.5 billion of investment in economic infrastructure. This will mean that when the recovery takes hold our ports will not be straining and our rail networks and roads will not be clogged, and it means we will be much better positioned to take full advantage of the global recovery when it comes. Critically, these investments support jobs now and they will employ thousands of Australians. Nothing could be more important in the current environment than putting in place policies in the short term, the medium term and the long term to support jobs, because these unprecedented investments in nation-building infrastructure are the third phase of our economic stimulus package. The first phase was payments to support jobs; the second phase was the shovel-ready projects that are now taking off right around the country. Thirty five thousand projects have been launched right around the country and including in Page. This is important investment in schools and social housing that those opposite seem to think does not matter—does not count as infrastructure—but it is a lasting legacy for our communities and it is for support of jobs that those projects are taking place right around the country.
Now, of course, we have the commitment to big infrastructure. We have a commitment to a fair go for pensioners. We have the investments in our health and hospital system. We have a historic paid parental leave scheme, something that those opposite could not bring themselves to come to in 12 years of office. And, of course, we have a 50 per cent small business tax break for eligible investments.
This is a budget that charts the way back to surplus. It puts in place the necessary savings that are required. Those opposite are talking about deficit all the time, but they cannot nominate one saving they will make. The weight is on them now. There has been a record $210 billion write-down of the revenue over the forward estimates. They say they support pensions. If they support the pensions and the good things that come with the budget, they will have to support the savings that come with it. The weight is on the opposition to nominate where they would make savings—the weight is on them. But, for our part, we will chart a course back to surplus. We will make the long-term savings that they could not make in all their long term in government.
2:13 pm
Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source
My question is addressed to the Prime Minister. Will the Prime Minister explain to the House why, if the International Monetary Fund’s recent world economic outlook shows the Australian economy growing at only 1.1 per cent in 2010, his budget projects growth in Australia only a year later to be 4.5 per cent, more than four times the IMF’s projection?
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
I thank the honourable member for his question because it goes to the forecasting methodologies used by the Treasury, which have been the subject of some debate in the last period of time. The first change which is evident in the way the Treasury has presented its forecasts and its projections for the years ahead is to add one extra year—that is important to note. It is to bring it into consistency with international practice. For example, in the United States there are three estimates years and seven projection years. In New Zealand there are five estimates years and 10 projection years. In Sweden there are four estimates years and three projection years. In Australia there are three estimates years and two projection years. That is a change that we have made because it is useful in terms of long-term economic planning and long-term economic forecasting to bring these practices in Australia into conformity with emerging practice abroad. That is the first point.
The second point I would make to the Leader of the Opposition goes to the question of the underpinning of the growth forecast in the two out-years of the forward estimates. First, it should be noted by those opposite that the three years of below-trend growth occur in 2008-09, 2009-10 and 2010-11—that is, these are all below trend growth. The two years above trend are the two years at the outer end of the spectrum—that is, 2011-12 and 2012-13, where, as the Leader of the Opposition has just indicated, real GDP is assumed to grow at 4.5 per cent. However, here is the point I would draw to the attention of the Leader of the Opposition: growth is forecast to remain below trend for three years—that is, longer than during the downturns of the 1980s and the 1990s. In the 1980s you had below-trend growth for a year following that recession; in the 1990s, it was below-trend growth for two years. Here is an assumption on our part that it will in fact be a slow return to above-trend growth.
Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source
Mr Speaker, I rise on a point of order. The point of order is on relevance. The Prime Minister has not even mentioned the IMF. The question relates to the mismatch between his forecasts and the IMF’s.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
The Leader of the Opposition will resume his seat. I have been listening closely to the Prime Minister and he is responding to the question.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
So on the whole question of where this fits—that is, Treasury’s projections for the two out-years of what is now the forward estimates—it is in fact more conservative than the projections by the then Treasury concerning recovery from the two earlier recessions, one in the 1980s and one in the 1990s.
There is also an important point to note and it does go to the question that the Leader of the Opposition raised specifically in reference to the IMF and to others who make projections and to the attitude of other commentators on these growth projections. I would draw the attention of the Leader of the Opposition to comments this morning by the Chief Economist of Commsec, Craig James, by the senior economist of Icap Australia, by UBS and by Westpac in its Australian federal budget report, all of which have described the federal Treasury’s forecast in the budget papers as being on the pessimistic or bearish side. That is what they have had to say.
Obviously there is going to be debate among forecasters on the question of methodology, but the government believes in the independent advice of the Treasury and I would say to those opposite that they should respect the independence and integrity of the Commonwealth Treasury. The importance of these forecasts goes to how we actually project ahead with growth.
Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source
Mr Speaker, I rise on a point of order. The Prime Minister was asked about the IMF’s projections. He relies on the IMF when it suits him but he has not mentioned it yet in his answer.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
The Manager of Opposition Business will resume his seat. The Prime Minister has the call.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
As I said, there are a range of views about the future shape of growth. I have just referred to four market economists who actually believe that those contained within the Treasury forecast are on the bearish side.
But, again, the reason that this is relevant is that it goes to the whole question of how we structure our public finance of the future and how we structure debt and deficits into the future and, therefore, the relevance and role of the Liberals in the Senate. I referred before to what was an exercise in policy confusion on the part of those opposite on the question of debt and deficit. That was volume 1. But as they say in the steak knives advertisement, ‘There’s more,’ because later on this morning, at 8.23 am—remember, the charge is on in the question of debt and deficits—we have the Leader of the Opposition on AM on the question of how he would have done this budget differently.
Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source
Mr Speaker, I rise on a point of order. The Prime Minister was asked a specific question about the IMF’s projections. He has not answered the question. If he does not know the answer he should sit down.
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
The Deputy Leader of the Opposition will resume her seat. I have indicated to members that the Prime Minister is responding to the question. The Prime Minister has the call.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
At 8.23 this morning, on AM, what we had from the Leader of the Opposition was as follows:
Well, there is no doubt. Look, I don’t think there is, it is very hard to imagine a circumstance in which the Budget this year would not be in deficit but it may have been in deficit by a very small amount or it may have been in surplus by a small amount with different policies—
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
Order! The Deputy Leader of the Opposition will resume her seat. The Prime Minister has the call and will bring his answer to a close.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
I know those opposite welcome this because, again, we then had the ‘RSM’ come in at 10.20 this morning and say, ‘Well, a lot of that $200 billion is wiped out projected surpluses and of course the budget would go into deficit.’ The Leader of the Opposition said—
Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source
You requested him to bring his—
Harry Jenkins (Speaker) Share this | Link to this | Hansard source
There is no point of order. The Prime Minister has the call.
Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source
It shows the absolute chaos and confusion of those opposite, with the Leader of the Opposition saying that he could produce a budget surplus and the shadow Treasurer saying that there was no hope in hell of producing a budget surplus, and they stand here believing that they have a credible alternative critique to make of this government. They stand as an absolute rabble—utterly leaderless until the member from Higgins moves from his present seat down to that seat.