Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker has received a letter from the honourable member for North Sydney proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The government’s need for higher taxes to pay for unnecessary debt and deficits.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

I thank my colleagues for their support and recognise the fact that they have come in at this late hour to listen to my address in relation to what should be a predictable topic, and that is Labor and rising taxes, rising debt and bigger deficits. When the minister at the table was still watching Romper Room a few years ago, I well recall the current Minister for Finance and Deregulation regaling the House about the need for inheritance taxes and capital gains taxes on the family home and the fact that there were distortions in the tax system that needed to be addressed. It is quite interesting that in question time yesterday and today, when the minister for finance was asked those questions, he seemed to forget his history. Of course, in those days he was Martha and today he is Arthur. He forgot the fact that he railed against the tax system that he saw giving preference to wealthy people. There is the same tax treatment of the family home today as there was in those days, and the minister for finance has now, if you believe his own words in this place, turned over a new leaf.

It is interesting to note, as we start to turn our attention to the reform of the taxation system, that it is undertaken by the people who so opposed taxation reform in the 1998 election and in 2000. As the member for Higgins knows all too well, the Labor Party fought root and branch against tax reform. Their biggest tax reform was to introduce a new tax on what they called ‘Toorak tractors’. I wonder if the people at the dispatch box were the architects of that brilliant policy in 1998. That was the extent of the Labor Party’s tax reform: a new tax on four-wheel drives. They railed against our root-and-branch redefining of the taxation system—a redefining that actually focused on building productivity, growing the Australian economy and setting down the foundations for the future.

Let me remind the House that they were very difficult reforms. They were hard reforms. Introducing a GST was something no government had previously been able to do, especially at an election. Everyone warned us about going to an election promising to introduce a goods and services tax. In fact, the Liberal and National parties had spectacularly failed in 1993 in that regard. But we had courage about making hard decisions on tax reform. As compensation for the introduction of a much-needed goods and services tax, we abolished bank account debit tax, bed tax, wholesale sales tax, financial institutions duty and the stamp duty on the transfer of shares. We gave Australia significant income tax cuts, and we delivered a significant increase in the pension. We did all of that in the face of strident, uncompromising opposition from the Labor Party. Regarding our reform of the taxation system, on 1 July 2000 the current Prime Minister claimed it was a day of—

Opposition Members:

Opposition members—Fundamental injustice.

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

fundamental injustice because Australia got a goods and services tax. This is the same Prime Minister that has commissioned a new review of taxation and has specifically excluded changes to the GST. He was so opposed to the GST on 1 July 2000 that now he not only wants to keep it but wants to quarantine it from what he describes as a ‘root and branch reform of the taxation system’. What hypocrisy! What a surprise!

We have a Treasurer whose best qualifications for this job were that he was the secretary of the Labor Party in Queensland. Those are the best qualifications he has to be the Treasurer of Australia during a challenging time, but it is not such a challenging time that it prohibits him from unprecedented levels of expenditure outside of war, coupled with unprecedented levels of debt not seen since World War II. It is not so challenging as to prevent the Treasurer from spending yet more money. It is not that challenging for a Treasurer who inherits four per cent unemployment, $40 billion of net assets in the bank with zero government debt, a sustainable budget surplus during periods of reasonable growth and the best terms of trade in modern times. It is not so challenging for this Treasurer, a Treasurer that does not have the courage to come in here and debate. Instead, he sends someone who was still a schoolboy in 2000, when the last tax reform occurred.

The challenge now is for the government to show some courage on reform. Even Ross Gittins, someone who is not particularly enamoured with me—it will come as a surprise that my friend the sandshoe-wearing journalist from the Sydney Morning Herald is not particularly a friend of the coalition—is waiting with bated breath for the day that Kevin Rudd will make a hard decision. He knows, as we know, that sooner or later the rubber has to hit the road. You cannot continue to borrow money and spend. You cannot continue down the path of simply spending money which future generations will have to pay for.

The Henry review was commissioned in an environment where there were unprecedented levels of revenue because the economy was performing extremely well. The Labor Party, with the courage of someone running away from a gunfight, commissioned a review of taxation. Now that they have been hit with falling revenues, we start to see just a little glimpse of the true colour of Labor on the front page of a national newspaper. On Saturday, when I looked at the Australian, I thought this is true Labor: capital gains tax on the family home.

We know the Labor Party have form. Do you remember when Bob Carr in New South Wales introduced land tax on the family home? Do you remember when Bob Carr had that bright spark of an idea to introduce a vendors tax which would completely collapse the property market in New South Wales to a point from which it has not recovered? In Western Australia the Labor Party tried to introduce a property tax on premium property but could not get it through the parliament, and it certainly got an appropriate public reaction. I asked myself: are these guys for real? Are the Labor Party going to do it? They were the guys that came up with the idea of fringe benefits tax. It was the Labor Party that invented capital gains tax. It is the Labor Party that have focused over the last few months on tax reform alone.

The irony of the situation is that Labor say, ‘We’re going to leave all these things to major tax reform.’ In the last few months alone, the Labor Party have introduced a new tax on alcopops, increased the luxury car tax, increased visa application fees, reduced the rebate on private health insurance for high-income earners, removed the taxation exemptions for income earned by Australians overseas, removed concessions for employee share schemes, tightened access to non-commercial business losses, changed the depreciation schedules on computer software, changed the fringe benefits tax and reduced concession contribution caps for superannuation. And they say they are leaving tax reform to the Henry review. They are so opposed to ad hoc tax changes that they are doing all of that and leaving it all to Henry.

When it gets hard blame someone else. That is the modus operandi of the Labor Party: blame someone else. I thought to myself: here we are, Saturday morning, front page of the Australiancapital gains tax on the family home in a report commissioned by the Labor Party. This will be interesting. Then we get a statement from the Treasurer, who says:

There has been no request from the Government … to model such proposals, we are advised that no such modelling is being carried out, and therefore no recommendations of this sort will be made to us …

The Government is not considering and will not consider the policy outlined in that article today.

I thought to myself: could this be Labor tricking again? Could they be just focusing on the $2 million proposal in the Australian? So we came into this place and asked them sensible, straightforward questions: ‘Treasurer, have you ever spoken about or have you commissioned any review of tax on the family home?’ The answer was, ‘I don’t know.’ He flailed around and said, ‘It’s all with Henry and you guys have done this and you guys have done that.’ Then we said, ‘Hang on, you’ve got the Bennett review, which recommends an increase in the Medicare levy.’ He said, ‘You know I can’t comment on the minister for health’s proposal and really you guys ought to get back on track.’ That was his distracted answer when he did not want to tell the truth.

The Treasurer and the Prime Minister want to give the impression that they are opposed to capital gains tax on the family home, yet they are saying on the other hand that they are going to have a root-and-branch review of the tax system. But—by the way—they have introduced numerous new taxes since they commissioned that review and—by the way—they are excluding the GST which the Prime Minister and the Treasurer so railed against when they were in opposition and—by the way—the Labor Party is going to have to make some hard decisions. I will tell you what the hard decisions are, and these are our best estimates because it is incredibly hard to dig these figures out. Since the 2008-09 budget, the Labor Party has committed new, additional spending of $106 billion over the forward estimates. Of that stimulus package, $42 billion is to be spent after 1 July 2010. We have had the Treasurer running around the country for the last 12 months saying, ‘We need fiscal and monetary policy to work together in partnership.’ They are together, two arms on the same body. Now we have the Reserve Bank saying that they are going to increase interest rates, clearly stating, as the markets are indicating, 150 to 200 basis points by the end of next year, and we have the Treasurer saying, ‘We’re not moving on our expenditure program, we’re not moving on our stimulus spending, which stretches out to 2013.’ What a fraud! What the Treasurer has done is to accept full responsibility for two things. Firstly, every interest rate rise between now and when we get back to trend growth is right around the neck of Wayne Swan, and it is around his neck because he is so committed for political reasons to additional spending that he will not pull back. Secondly, the Labor Party have a problem with their numbers. I nearly choked on my Weeties this morning—

Opposition Members:

Opposition members interjecting—

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

Please don’t fret, but I nearly did—when I heard the Treasurer say on AM that we used to be a big spending government. Let me tell you: this is coming from the biggest spending Treasurer since we rolled tanks across the Western Desert in World War Two. Here we go: this Treasurer inherited 24 per cent of GDP in expenditure and he has taken it up to 28.6 per cent. Even over the forward estimates to 2013, he is at 26.4 per cent, a full 2½ per cent higher than what he calls our ‘drunken expenditure’. So here we have a Treasurer giving drunken sailors a bad name. He is going to new levels of expenditure and the problem is he cannot fund it. That is why the Labor Party does not want to talk about tax. The Labor Party is not a tax-reforming party; it is a high tax party. Look at what Labor does, not just at what it says. It is the party of higher taxes. It is the party of unnecessarily high interest rates. It is the party that closes down the enterprise that keeps Australia going.

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

This MPI says a lot about the approach of Australia’s opposition. The title of this MPI is:

The Government’s need for higher taxes to pay for unnecessary debt and deficits.

Debt and deficit are unnecessary if you do not care about the human impact of the global financial crisis. Debt and deficit are unnecessary if you do not care about unemployment in this country. Debt and deficit are unnecessary if you do not care about seeing Australia through this crisis and cushioning the blow. This MPI says a lot about the approach of the opposition. We hear a lot from the opposition about deficit. It is their latest fear campaign of choice. Fear campaigns are what they are best at. Let us have a look at the human deficit of their approach. Let us have a look at the human deficit of not going into a fiscal deficit in this current environment. Let us have a look at the 200,000 more Australians who would be unemployed in this country if the opposition had their way. Let us have a look at the social impacts of that. The shadow minister at the table before this MPI came on stood at the dispatch box and said that the best way you can ensure that Australians stay in their homes is to ensure they keep their jobs—and I agree with him. But his policy and the policy of his colleagues would be to increase unemployment in this country. This is a human deficit that this government is determined to avoid, even if those opposite are more than happy to see it happen.

The global recession has wiped $210 billion off government revenue. It is fair to say the opposition accepts that as a fact. I have not heard them question the $210 billion figure. Australia is in deficit for two reasons. The first reason is that, even without a stimulus or government action, the automatic stabilisers would kick in and Australia would be in deficit as government expenditure increased automatically to deal with the slowdown in the economy. So, unless you think a deficit is unnecessary, unless you think a debt is unnecessary to deal with that, you would let that happen. If you thought that debt and deficit were unnecessary, then you would increase taxes or cut spending to see Australia remain in surplus. If the opposition did not think a deficit was necessary in this country, then they would increase taxes or cut spending. That would be their policy. The second reason that we are in deficit is that the government acted. The government instituted a stimulus package. The government said that we needed to stimulate the economy to deal with the slowdown in private sector investment. The stimulus packages, together with the action by the Reserve Bank, have seen retail trade in this country at 5.2 per cent higher than it was in November.

The actions by the government and by the Reserve Bank have seen 118,500 people receive the first home owners bonus—a policy, I think, supported by the shadow minister for housing and local government, who is at the table. We have seen 21.7 per cent of new housing finance commitments in June being from first home owners—double the figure of 12 months earlier. We have seen confidence levels in Australia return to their pre-crisis levels, something that comparable countries have not been able to achieve. With the sensible and admirable decision by employers and employees in this country to show flexibility, we have unemployment in this country at 5.8 per cent. It is too high, it is higher than we would like, but it is certainly better than the United States, at 9.4 per cent; Europe, at 9.4 per cent; the UK, at 7.8 per cent; and Canada, at 8.6 per cent.

If you think economic growth is not important then you might think deficit and debt in this country are unnecessary. If you think it is not important that Australia be the fastest-growing economy in the developed world then you might think debt and deficit in this country are unimportant. The average advanced economy in the world contracted by two per cent in the March quarter. The United States slowed down by 1½ per cent, the United Kingdom by 1.9 per cent, Canada by 1.4 per cent and Germany and Japan by 3.8 per cent. Australia was one of only two countries in the world to grow in the March quarter. If you do not think that is important then you might think deficits are unimportant.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Thank the commodities.

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

We hear ‘thank the commodities’ from a member of the Liberal Party. That has got to go in the Hansard! The former Treasurer, the member for Higgins, raked in gold bars as the commodity boom raced around the country—his biggest problem was that he had to spend his way out of a boom—and the genius from Bowman says, ‘Thank the commodities’! We do not have a commodity boom in this country anymore. What we do have is a global financial crisis, which this government is dealing with. If you do not think it is important to respond on behalf of the Australian people and cushion the blow then you would say, ‘The stimulus packages are not necessary, the deficit level is unnecessary and the debt level is unnecessary.’ That is clearly the approach of those honourable members opposite. They are saying it is not necessary. The member for Bowman, in his usual genius way, has just confirmed that. He said this is not necessary. That is because the opposition do not care about the human impact of the global financial crisis.

If you do not care what every credible economic commentator in the country thinks, if you do not care what every credible economic think tank in the world thinks, then you would say debt and deficit are not necessary. If you do not care what the IMF think, if you do not care that the IMF have said of Australia that ‘the shift into deficit was justified in current circumstances’—

Bob McMullan (Fraser, Australian Labor Party, Parliamentary Secretary for International Development Assistance) Share this | Link to this | Hansard source

They were too left wing for them!

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

Those well-known socialists down at the IMF, those lefties down at the International Monetary Fund, the fellow travellers of the Labor Party, have been at it again. The IMF said they welcomed the quick implementation of targeted fiscal stimulus. They said:

The stimulus provides a sizeable boost to domestic demand in 2009 and 2010 that will cushion the impact of the global recession.

The IMF also noted and welcomed the fact that Australia is one of very few countries that have a plan to get back to surplus. If you do not care what the IMF said then you would think the government stimulus is unnecessary. But, in their heart of hearts, those opposite know that the stimulus is necessary. They know that the stimulus has worked and they hate it. We have gone sitting day after sitting day with no questions from that side of the House on the state of the economy because they hate good news. That is why we have not had an MPI on the state of the economy for a very long time.

First we had the smear campaign defaming the name of the Prime Minister and the Treasurer of this country—which the opposition like to forget—and now we have the fear campaign on debt and tax. The shadow Treasurer, the member for North Sydney, thought it would be amusing to attack the name of Ross Gittins, the economics editor of the Sydney Morning Herald. Sometimes Mr Gittins supports this side of the House and sometimes he supports that side of the House. The member for North Sydney said: ‘I know what I’ll do. I’ll criticise him for wearing sandshoes and I’ll say he’s not a credible economic commentator.’ I wonder why he said that. Perhaps it is because the economics editor of the Sydney Morning Herald has belled the cat on the opposition’s strategy. Perhaps it is because, in a couple of very telling articles, he has explained more eloquently than I could the hypocrisy, the lack of substance and the political opportunism of the members for Wentworth and North Sydney. This is what Mr Gittins said about the member for Wentworth’s approach:

He is exaggerating the size of the debt, misrepresenting the cause of the debt, exaggerating the difficulty we’ll have re-paying it, misrepresenting its effect on our prospects and pretending we’ll end up with little to show for it.

              …              …              …

Turnbull gives the impression the debt will be solely the product of Rudd’s decisions to spend money but, in truth, about half of it would have occurred in any event, being the consequence of the fall-off in tax collections and increase in dole payments caused by the recession.

              …              …              …

This is alarmist nonsense which seeks to exploit the public …

That is the view of that well-known journal of socialism the Sydney Morning Herald. So what we have is the belling of the cat on this scare campaign by the opposition. The scare campaign has been brought to new heights in question time today and yesterday and in the MPI today. They have moved on. They have decided a scare campaign on debt and deficit is not enough, that exaggerating the level of debt is not enough. They are saying we have a mountain of unsustainable debt. In fact, in 2013-14, when the average debt level around the world will be over 80 per cent of GDP, our debt level will be under 14 per cent of GDP. But that is not enough for the opposition. Now they want to move on to a scare campaign about tax. Now they are going to move on to what they do best. They are going to run a scare campaign, from opposition, about tax.

The member for North Sydney had the temerity, the hide, the gall, the front, to come into the chamber, stand at the dispatch box and lecture us on tax reform when for two days he has been orchestrating a scare campaign about tax reform, about the Henry review of taxation. The member for North Sydney has more front than Anthony Hordern’s, as we say in Sydney. We cannot have a proper and sensible debate about the future of the tax system in Australia because he is more interested in making cheap political points.

The opposition can play their silly little political games. The opposition can follow the advice of the member for Higgins and capitalise on the opportunity for cheap political opportunism caused by the global financial crisis. The opposition can do that and the Australian people will cast their judgment, as they have been doing. The opposition can build their straw men and they can play their games of political opportunism. We on the other hand will engage in leadership to get us through this crisis. We on the other hand will be looking to minimise the human impact of the greatest recession the world has seen in 75 years.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

What about Australia?

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

‘What about Australia?’ says the member for Cook.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Morrison interjecting

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

He says it is not the greatest recession Australia has faced, and he is quite right—because the government has acted. The opposition say it is not that bad. ‘You didn’t need the stimulus package,’ they say. ‘It’s not that bad.’ That is their strategy. But, because the government has acted, the Reserve Bank has acted and Australia’s employers and employees have acted flexibly, Australia is getting through this crisis—and don’t the opposition hate every minute of it! This was their ticket back to the easy life. This was their ticket back to the big white cars. This was their ticket back to government. The born-to-rule party said, ‘We know what; we’ll ride this recession back into government,’ and they hate the fact that the Australian Labor government has responded decisively in this crisis. They hate every minute of it. But we will continue to respond and we will continue to show that leadership, because we do care about the human impact.

The Secretary to the Treasury yesterday made a speech. It was a good speech. It received quite a bit of coverage. But there was one bit of his speech which has not received much coverage. He said this:

Economic slow downs—especially recessions—are costly: capital lies idle; unemployment increases; there is a loss of skills in the workforce; and living standards fall. Economic recessions can also have significant negative impacts on self-esteem and health, and increase the risk of poverty. The costs of recessions are exacerbated if the economy remains below potential for a significant period of time.

He is dead right. Recessions do have a very real human impact. The people of Australia look to the Australian government to cushion that impact, to keep unemployment as low as it humanly can be. When unemployment rises around the world, the people of Australia look to the government to keep Australia’s unemployment rate as low as it humanly and possibly can be. We will continue to do that. The opposition has yet again engaged in a scare campaign. The opposition has yet again engaged in cheap political opportunism. The Australian people know that the real impact of recession is on Australia’s people. The human deficit is very important to them. They have passed judgment on the opposition’s scare campaign on the fiscal deficit, and they will continue to pass judgment on its complete lack of regard, lack of care and callous approach to the human deficit of unemployment that it appears to be willing to allow to continue and to worsen.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

What we have seen today is basically a government taking all the credit they can for every tiny bit of good news they can eke out of the economy. But let us just take them through a history lesson. Eight to 10 months ago the great leaders of the world came together at the G20 and were looking for solutions to the crisis that faced them. What Mr Rudd took to those meetings was an economy in fantastic shape, an economy with a wonderful banking and financial sector and an economy gifted with the commodities that could see it through a crisis. Most importantly of all, Australia could look to those commodities and look to the balance sheet to stimulate its economy if it needed to.

We do not need to reinvent the economic history here, but we are looking for a government that realistically places credit where credit is due. Today we have a government that is quite adept at spending—it has done it exceptionally well, as has been pointed out already by the speaker before me. What this government has not yet shown is any strategy, any map, to take us out of the abyss of debt. We have a government that has taken easy decisions. We have a government that has failed to show how it can raise any revenue at all. I think the speaker before me on this side of the chamber referred to the range of tiny taxes attacking the vulnerable and the small groups in society, but there is no willingness to allow the buck to stop where it really counts on tax reform—and that reform remains months and months away. So Australians at home and around the dinner table, Australian families who balance the books in their own family every week of the year, are right to be concerned, and it is because of that concern that this MPI has been proposed.

Let us look at Australia in the context of it being an economy that had a reformed and regulated financial and banking sector the envy of the world. When a new Australian Prime Minister went to the G20, we can understand that he was caught up very much in the excitement. He was after the pic facs, standing next to Mr Obama, his idol. Of course, he was hearing, rightly, the concerns of countries that did not have our enviable financial sector—our regulations around banking, our net interest margins, the protections that our banks can offer and our cost-to-service ratios, which only one other country can boast, and that is Canada.

As we watched those countries that were and were not in banking crisis, we saw one cohort heading south and another cohort performing well. Let us go through the countries. Norway, Canada, Australia, Finland, a range of countries that did not have a banking crisis, were able to actually generate activity through the last eight to 10 months. Do not take my word for it; let us look at all the OECD economies and see how they performed. The great challenge for the government is that they are looking for comparable economies, and there are none. There is no comparable economy to Australia. We need to look at all of them and identify exactly what determined our rather charmed path over the last 12 months.

The answer is this: we had a great and well-regulated financial sector. That is the first thing. Let us look at all those countries that were well regulated. They have travelled very well. Let us look at their unemployment. They started with the same unemployment rate 12 months ago—5.3 per cent, or 5.5 per cent for those that went into banking crisis. What have we seen in the last quarter? We have seen unemployment rising three times faster in economies that are in banking crisis—3.3 per cent in the first quarter versus 1.1 per cent for those that were not in banking crisis. Australia is in a fundamentally better position because of that.

Second, we have an economy based on commodities: food, resources, natural gas—all of the vital antecedents that are required for growing economies like India and China. Australia was able to provide those things right through this year. What we saw was a slight weakening of the terms of trade. But if you just take the economies—and I have made my first point about the banking crisis—that were not in crisis and you look at those that had commodities to call upon over the last 12 months and those that could not, economies like Canada, Norway and Australia contracted by about 0.8 per cent. Those that did not have the commodities contracted by 4.3 per cent.

We are a gifted nation, it has been said before. Many have criticised Australia for not being adequately diversified, but let us remember that over the last 12 months it was those terms of trade that pulled us through and out the other side. Just look at those figures, the exports that dominated our GDP figures. It is a very difficult case to mount that splurging $21 billion in cash payments did anything more than pay off pensioners who desperately needed those payments, and the rest of it, the great majority of it, was saved. Let us have a look at those payments in March and April. It is right to point to the five per cent increase in retail sales. It is right to point to a two per cent increase corrected over the last 12 months. But between $23 billion and $25 billion is an extraordinary price to pay to prop up retail sales. Jobs were certainly created, but many of them would have been created anyway through the commodity boom and the confidence that flooded through Australia with a stable residential housing sector. We never lost a beat.

Let us look at some comparators. In this country we stimulated roughly the same as America when you allow for the fiscal expansion, due to some of their pre-announcements of tax cuts. Australia stimulated like America. Did we ever have the concerns America had? Did we have the financial meltdown that America had? Did we have the housing overbuild that America had? So why did we stimulate?

Let us go and look at the lessons from the OECD, who were encouraging economies to stimulate at between two and three per cent of GDP. If everyone put their shoulder to the wheel and did their part, we were confident that we could minimise the damage, the human toll that was referred to by the minister earlier. Did Australia do that? No, they did not. Our Prime Minister was effectively a young child who rolled over one day, tickled the cat on the tummy and saw that there was a fully paid off credit card when it jumped up. He could not wait to spend it. This is a government that never, ever paid into the credit card in the first place, so we can understand they are not terribly attached to the notion of how to pay debt back. As has been explained by a former leader, it is easy to go down on the escalator into debt but it is very hard to go up because the only way out is up the stairwell. We are yet to see the government’s strategy. There are only steps out of here and none of those steps are easy for the Australian people, for Australian families or for you in government. You have to map out some kind of strategy between now and the next budget.

So what are those three wonderful attributes that Australia was able to boast long before we even encountered this crisis? We had a robust banking system, a commodity based economy and a relatively small high- to medium-tech manufacturing sector, less than four per cent. That was the sector that truly crashed in the global meltdown. Reference those Asian tiger economies that crashed at near double-figure GDP falls, that registered those kinds of GDP falls. Lastly, we had the fully paid off government debt. Let us be frank about it: if we look at all nations that were in debt, we know that for every eight per cent of government debt there was a one per cent fall in GDP in this crash. Very handy to have no debt whatsoever, but something that was not terribly treasured or respected by the other side of the House. There is a simple reason for that. I cannot remember whether the group over there ever had any role to play whatsoever in paying off the debt that they left behind in 1996.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

They opposed it.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

It was tough, it was slow and they opposed every responsible economic decision along the way. It was not easy for a government between 1996 and 2007 to get the nation’s economy to where it was.

I am not saying that I would ever expect our Prime Minister to stand up and give credit to someone other than himself. That may be asking a little too much. But in last night’s speech to the AiG what we saw was a frank airbrushing out of what happened in 2007, the hard work that had been done, the great nick that Australia was left in as an economy. The OECD admits that. What we are debating today is that providence of the next decade. Make no mistake: what we have spent, what we have disbursed, is the providence of the next decade, of the next three election terms, so this side of the chamber simply says, ‘Let’s do it as efficiently and effectively as possible,’ and that is the case that is being made today. That has not been done. Confidence is a big thing and of course when you have a large amount of fiscal stimulus in an economy money has to land somewhere. We are not denying that. What I think people around the kitchen table at home listening to this debate will be asking is:  was it really the best possible spending we could have hoped for? Was there waste that could have been avoided? Do we really need to spend away the next decade of providence? They are good questions. What Australians have seen instead is profligacy.

You are quite right—there will be a whole lot of new buildings opened around the country. Who am I or anyone on this side of the chamber to say that our schools do not desperately need new infrastructure? But in the same case why would I not support giving money to non-profits? Of course I would. It is all good stuff. But in the end this government has to learn at what point you live within your means. It is a principle that is understood by small businesses around the country, and Australia is the nation of small business. It is a principle understood by families around the country. Our concern in this MPI is that it is not a principle understood by the other side of the House.

What we know is that an enormous amount of latitude has been extended to the government over the last 12 months. There were some tough decisions to be taken; we acknowledge that. There were known unknowns 12 months ago, but there also are certain things that we well realised. We knew Australia’s financial position, we knew about its strong and robust financial sector and, of course, we knew that when times got tough we had rapidly growing enormous economies to our north that were always going to need our commodities. They were the three factors that this government is attempting to airbrush away. Let us be honest: if we are going to get through this and find a solution, what we need to first of all do is make sure that every cent spent from now is spent as efficiently as possible. We have not seen that to this point.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

I rise to oppose the matter of public importance that has been brought forward by the shadow Treasurer. I wish to make a number of observations but I will begin by echoing some of the statements the Minister for Financial Services, Superannuation and Corporate Law made. It seems to me that, at a time when we are as a nation facing one of the most significant global downturns in economic history, we see a diversion in the form of this debate about taxation being brought forward by those opposite. Earlier this year the Leader of the Opposition came forward and said that there is only one thing that mattered, and that was jobs, jobs, jobs. Unfortunately since that time he has not spoken a lot about jobs. The only jobs he has been prepared to speak about are the Prime Minister’s job, the Treasurer’s job and indeed his own job. But the reality is that, had the government not taken the decisive action that we have taken in relation to the stimulus measures, there would be 210,000 Australians out of work—210,000 Australians and their families suffering all of the consequences that flow from unemployment. That is the human cost of failing to act.

I see the reference in the MPI topic to the unnecessary levels of debt and deficit. I wish to draw the House’s attention to the comments of the Reserve Bank governor just last Friday, where the governor said:

I do not think you can really say that net debt of 15 per cent of GDP itself is a serious problem.

He went on to say:

…15 per cent of GDP is the low number by virtually any other standard.

It is worth noting that those on the other side would have you believe that there were not any issues internationally so far as the economy was concerned and that Australia is doing okay. It is not the worst recession we have faced in this country. If you look at the figures, we have managed to pull through to this point reasonably well. We are not out of the woods, but the stimulus measures have worked. But those on the other side are not prepared to give credit where credit is due when it comes to those measures. In fact, they seem to wish to argue that the circumstances that we currently face are not the most serious that we have faced in 75 years. All the objective facts indicate that, notwithstanding the fact that the economy is more integrated than it has ever been before and you would expect economies such as ours to have been impacted more in a global downturn than at any other time in history, we have been doing reasonably well. That is as a direct result of the stimulus measures that the government has put in place.

I want to run through some of the comparative figures in respect of other parts of the world. Those on the opposite side have almost moved on from the global recession. They are now talking about tax reform some time down the track. They do not wish to talk about the recovery that this government is intent on delivering—the recovery that will nation build for our future. It is important that we stay focused on that recovery because we are not out of the woods. I heard President Obama say in the United States the other day that, at this point in the US, unemployment is now rising at half the level that it was when he came to office. That was offered up as a vindication of the administration’s policies. We see in other nations, other advanced economies in the world, employment massively declining. In Australia, we have been able to hold on and maintain that at a reasonably steady rate. We acknowledge that things are going to get worse and that there are many Australians who are not working as many hours now as they previously were. But these are the sorts of impacts that naturally flow from a global recession. That is why we have taken those impacts and the potential impacts very seriously. In order to support jobs, we have tried to intervene and to support private demand where the private sector has withdrawn. Now we are about rebuilding and nation building for the recovery.

I note the references to unnecessary debt. In Australia net debt will peak at 13.8 per cent of GDP in 2013-14. Let us compare that to the figures that are expected in other major advanced economies. We expect net debt to reach 83 per cent of GDP in the USA and the UK in 2014. In the euro area, we expect net debt to reach 75 per cent; in Japan, 136.3 per cent; in Canada, 26.8 per cent—80.7 per cent of GDP for the 25 largest advanced economies.

What we are facing in this country is not unique. We are facing the impact of a global downturn. The fact that we are doing that better than the rest of the world does not carve us out or make us some sort of island in the middle of a global recession. We are being impacted by that recession, but the difference between our nation and others is that we have taken decisive action in order to try and cushion the impact and the blow of that global downturn.

If we look at the various measures of success in terms of the effectiveness of government policy in this regard, both the Reserve Bank governor and indeed the Secretary of the Treasury have endorsed the government’s approach to stimulus. It is interesting that those on the other side are not that interested in talking about stimulus any more. As time goes by and the effectiveness of the stimulus measures becomes clearer and clearer, they are less willing to talk about stimulus. They want to start to talk about tax. What a red herring. In the context of what we are facing, they want to talk about a review that is still ongoing and will be dealt with in the fullness of time. But they are looking for a red herring and, as far as red herrings go, this is the fish that even John West would have rejected.

Regarding stimulus measures, let us look at retail trade—up by 5.2 per cent since November last year. Unemployment has been maintained at a relatively steady level of 5.8 per cent but, as Treasury estimates indicate, the action of government has intervened to support 210,000 jobs—210,000 families that would otherwise be affected by the scourge of unemployment. We have seen the impact of the first home owners boost on building approvals—the June data shows that public building approvals were at their highest levels since January 2001. Private building approvals increased for six consecutive months. Finance commitments from the construction and purchase of new dwellings have increased by 59 per cent since October last year.

We are seeing a resurgence of confidence. The NAB monthly business survey showed that business confidence is at its highest level since August 2007. The Westpac-Melbourne Institute survey of consumer sentiment showed the consumer confidence index had its biggest three-month gain since 1975. We are the only major advanced economy that has managed to avoid a recession to this point. It was not a matter of luck but a matter of good management and the intervention of government at the right time—acting early and decisively to step in and invest where the private sector was no longer capable of investing to support the economy, to stimulate activity and to preserve jobs through a difficult time. The early indicators are showing positive success. They are showing that these measures have achieved what they intended to achieve. There is no question that we have a deficit and that we are currently in a position of debt but, when we compare our situation to other economies throughout the world, the relative lack of success of their stimulus packages and the response of their economies to those measures, we can see that the Australian economy is doing better than any other economy in the world.

Those on the other side will not acknowledge that because to acknowledge that would be to acknowledge failure on their part. Let us not forget that each and every one of them voted against the stimulus measures. They want to have it both ways. Today we saw the shadow Treasurer starting to distance himself from the stimulus debacle—the debacle of them voting against the stimulus. He wants a bit of distance between him and the Leader of the Opposition. The stimulus debacle, the failure to vote for the stimulus, is going to be the millstone that hangs around Malcolm’s neck. The shadow Treasurer is determined to make that the case.

He now wants to talk about the next debate—about taxation—because he knows how badly the coalition failed when it came to the last debate. But the Australian people will not forget. When they looked to government to step in, to intervene and to support jobs, the coalition were missing in action. They will be thankful, and I know that they are very grateful for the efforts of the government—for stepping in and fighting hard to try and protect jobs, to stimulate our economy and now to nation-build for our recovery. This is critical and these efforts will be vindicated over time.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

It is patently obvious that the borrowing and shovelling of money out the door have created a substantial debt that the government is fast realising will have to be dealt with at some time in the future. The debt, of course, is accompanied by interest payments. Together, they should see the government’s reckless borrowing, huge debt and expensive waste become a hangover for future generations.

I want to spend some time looking at the issue of unnecessary debt, although in five minutes it is hard to cover all the points of waste. I will start with BER, or the copyrighted term ‘Building the Education Revolution’. This is a very expensive program designed to provide a vertical surface for the Deputy Prime Minister to place a plaque on. My question is firstly about the name, as there is nothing new about buildings. As usual with the Labor Party propaganda, just because you say it often enough does not make it true. What we do know, however, is that the program has wasted a great deal of the taxpayers’ money, or the borrowed money, whichever way you would like to think about it. What we do know is that there are schools around the country that already have libraries but that have been told they can have one more. There are schools that have undercover areas that have been told they can have another one. And that is all before the Auditor-General has looked at this program, who, as we know, will reveal the significant problems that revolve around the program.

Before I finish on the BER, I would like to reflect on the attitudes of people that I have spoken to about the program. People ask me why when we had a surplus we could not afford this sort of spending and why, now that this country has been dragged deep into debt, somehow we can. I have lost count of those conversations. But what I say to these teachers and parents is that you should apply and get your fair share of the money, because in the end you will still have your fair share of the debt.

The BER is somewhat similar to the National Broadband Network, an expensive fiasco of a policy that has only served to provide one outcome: the demonstration that the minister is incompetent and would struggle to buy a beer at a bar. The NBN has been floated with a massive price tag of $43 billion but no business case, and I fear that if the NBN ever does surface it will be an albatross around the Treasury’s and the taxpayers’ necks, as well as being too expensive to attract subscribers.

I said before that the people of WA will get more than their fair share, because this is particularly true in our home state of Western Australia. Already the GST share has been wound back, and the royalties of offshore oil and gas productions are flowing strongly to Canberra. That is in spite of the pre-election statements by Kevin Rudd that WA would get a fair share under him. The reality now is that in this sea of debt, emphasised in mismanaged programs and wasteful spending, the Labor Party will need the royalties coming from the sea off Western Australia. The Prime Minister’s lengthy and exceedingly strident speech in question time yesterday foreshadowed that he sees that his debt and his interest payments will be offset via the hard work of companies and the people of Western Australia. In fact it was abundantly obvious that, in the same way that he falsely claimed the credit for the Gorgon and Pluto projects, he will claim the royalties to service his debt. Far from giving WA its fair share of the royalties generated from WA, he will take even more of it to Canberra.

As an aside, I also note that, thanks to his legislative support of the militant union the CFMEU, there have been some 140 right of entry claims on the Pluto site alone since July. So much for all our hopes of remaining a reliable supplier now that Kevin Reynolds and his boys are back in town! I add to this clear evidence of this government’s blatant disregard for economic productivity the effects of their flawed and dumb ETS, which will undermine the efforts of business to be competitive and to work on a level playing field across the world.

As I have laid out in my contribution, there has been wasteful spending, there has been duplication and there has been inappropriate spending not supported by business cases or any demonstration of economic productivity. There have been changes to laws and legislation proposed that will undermine the economic effectiveness of Australian businesses. Yet it is those very businesses that this Labor government will depend on for its future. The logic is simply bizarre.

I have covered the royalties issue, but before I conclude I will make mention of the review of taxation. A number of serious and disturbing revelations have been made about tax increases. Fortunately, some come from unreliable sources like the Minister for Health and Ageing. Others come to us through the media. What is clear is that astronomical amounts of money have been spent on programs that have not provided the best sorts of returns in terms of economic benefits for the country. The money has been borrowed, put on the taxpayers’ credit card and then shovelled out the door. But the fact remains: one day someone will pay, and it will be our children and our grandchildren.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to refute the assertion in the MPI put forward by the Hon. Joe Hockey, the member for North Sydney. But I should apologise to the chamber upfront. There was a little bit of confusion about who was going to speak, and after the member for Cowan’s performance on the doors we thought he would be over this side performing for us in this part of the MPI, so I was called in at the last minute.

The member for North Sydney put on an incredible performance to kick off the MPI, a performance like a bad actor in a badly scripted soap opera, where he does not really believe the lines, he does not really care about the lines but has to mouth the words so that he keeps getting paid. You could see it in the member for North Sydney’s delivery.

Obviously he does change like any actor—even a bad actor—when the camera is on him. He will change completely. I noticed the other day that he even took a camera with him up Kilimanjaro. It is a shame I did not see him before he went, when we had a bit of a break. I would have loved to have given him one of my books by Ernest Hemingway, called The Snows of Kilimanjaro. It is a pretty famous short story. It is not my favourite Hemingway short story but it begins with the paragraph:

Kilimanjaro is a snow-covered mountain 19,710 feet high, and is said to be the highest mountain in Africa. Its western summit is called the Masai ‘Ngaje Ngai’, the House of God. Close to the western summit there is a dried and frozen carcass of a leopard. No one has explained what the leopard was seeking at that altitude.

That is the pretty famous opening paragraph from that short story. I would have loved to have given the member for North Sydney my copy of that book but, unfortunately, I have already given it to somebody—I think it is with Therese Rein at the moment, actually. I am sure it will find its way back to me.

In his presentation the member for North Sydney obviously forgot to mention some fundamental facts, such as the fact that the global financial crisis has stripped $210 billion from the tax revenues of Australia. He did not mention that. He papered over it. Like a bad actor in a bad soap opera he just papered over that fact and kept talking about the good old days when he was a minister. Anyone who claims to be a shadow minister, and who takes the pay to be a shadow Treasurer, should know from economics 101 that when times are tough you need to borrow to finance any temporary deficits. You cannot strip $210 billion out of the system and expect to keep paying the gas bills. What else would you do? You would have to either slash government spending significantly—and we have heard nothing from those opposite, apart from the bit of show that we had from the member for Cowan talking about the Building the Education Revolution here; obviously when they are back home in their electorates this is front and centre in their newsletter—or increase taxes.

That is obviously what their proposal is, and we could have a real debate about that. There was no mention of that. Economics 101 would state that any other proposal is simply voodoo economics. The Minister for Financial Services, Superannuation and Corporate Law detailed the financially significant consequences of not approving Labor’s Nation Building for Recovery plan—but for this, some 210,000 people out of work. With mum, dad and the kids, that would have meant misery for about a million people if we had not followed the policy that the Rudd government took—which was to pull the levers that we had to prop up the economy. Imagine the number of people that would be out of work if those opposite had found 10 more fools to vote against Labor’s Nation Building for Recovery plan!

The second opposition speaker was the member for Bowman, and it is a shame he is not here now. He only has two speeches, which he always delivers with aplomb. Tonight was the economic speech. Obviously he forgot to go to the planning session for the MPI or did not attend the planning session so he just gave his usual economic speech, which was a little bit encyclopaedia and a little bit economics 101 textbook. He did not actually address the MPI at all. He obviously needs to get a little bit more organised, but, like many of those opposite, he could not organise a rock fight in a gravel pit.

Then we heard from the member for Cowan. I have already attacked him in my opening statements. He wandered all over the place. He did not address the fundamental economic considerations that Australia recognises—that we have come through the worst economic times since the Great Depression. Obviously those opposite need to take note. There is a dried and frozen carcass lying on the benches opposite me, and we need Joe to drag that carcass back to Kilimanjaro. (Time Expired)