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

I have 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 failure of the Government’s budget to secure Australia’s economic future.

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 note that the Treasurer has again refused to debate me on a budget matter. It should not come as a surprise that he has sent the howdy-doody doll, the pretend Paul Keating, out to do his bidding yet again. Yet again the Treasurer has turned away the opportunity to debate me about issues relating to the nation’s finances or the nation’s economy. That should not be a surprise because we have a Treasurer that is more interested in spin than substance given the various different prebudget spins that he used. At first only a few weeks ago, on 19 March, he said it was ‘pie in the sky’ to contemplate surpluses earlier than those that had been previously forecast. He said that to Kerry O’Brien. When I actually wrote an op-ed in the Australian Financial Review outlining how the government could in fact bring the budget back to surplus earlier, not only was that ridiculed but in fact the Treasurer was so unimpressed with that contribution that he tried to do it last night in the budget. He has failed the test, and the test is reality. This government has a tendency to make promises that it cannot deliver. He has a tendency to create expectations that cannot be met. Consider the rather undignified way in which the Treasurer stood up in the chamber today and urged us to come clean on when we would deliver a surplus, when in fact as Treasurer he has never delivered a surplus and as Treasurer he never will deliver a surplus. Yet he is calling on us to give him the path, to set the route, to delivering a surplus some time into the future.

Labor will never deliver a surplus under Kevin Rudd. Labor will not do so because even after last year’s budget with a $54 billion deficit, which was the biggest spending budget in a generation, and even after last year’s budget where the government predicted the end of the world as we know it—so even under the terms of those budget parameters—in this budget the government has increased spending by $26 billion. If you thought they were throwing in the steak knives, wait because there is more. There is a 2010-11 budget that will spend an extra $26 billion. In fact, the 2010-11 budget forecasts a massive $40.8 billion deficit. It took 25 minutes for the Treasurer to get the words out last night of a deficit of $40.8 billion. Do you know why? Because the fact of the matter is that, when they actually deliver a surplus according to their own forecasts, by that stage this government would have borrowed over $700 million a week to fund their deficit. That is $100 million per day, every day, to fund their deficit. Then the hard task of repaying the $93 billion starts. What is it with Labor and $90 billion debts? Anna Bligh now has apparently something like $90 billion of debt in Queensland. Paul Keating left $96 billion of debt. If a change of government does come at the next election, how much is the Labor Party debt going to be? Around $90 billion. It is something that is fixed in the DNA of the Labor Party: leave the debt and get the coalition to do the hard yards of paying off the debt. That is because the Labor Party loves to spend money.

Of the entire budget numbers, of all the budget parameters, of all the budget estimates, there is only one number you can rely on Labor to deliver, and that is how much they are going to spend. But it goes even further. That is not even an accurate figure from time to time, because in 12 months under this government we have had blow-outs on the NBS. We have had a $1 billion-plus blow-out on the PBS. We are now spending $1 billion to fix up their failed border protection policy. We are now spending $1 billion to fix up their pink batt program—what a disaster that was, costing four lives. Now we are spending $500 million on a new health bureaucracy. What upsets me most about that spending program is that only a few weeks ago Kevin Rudd solemnly promised the Australian people that there would be no new health bureaucracy associated with his hospitals plan. That is what he promised. Well, he misled the Australian people—$500 million on a new health bureaucracy.

This is the Prime Minister who said that the greatest moral, social and economic challenge of our time was dealing right now with climate change. Of course, what happens? He dumps the ETS. Again, we remain a little confused, as Australians would be, with last night’s budget. The Treasurer spent a lot of time talking about the emissions trading scheme and dealing with climate change, but it was not in the budget numbers. Let us get this right: last year, the government had the ETS in the budget numbers but they failed to deliver it. This year, they have not got it in the budget numbers but they say they are going to deliver it. This is everything about Labor. Do you know why they took it out of their budget numbers? Because it would have added a full one per cent of GDP to their expenditure and about the same, one per cent of GDP, to their revenue, which would have made them by far one of the biggest governments in recent times.

The government set the parameters on expenditure and revenue. They could not meet those parameters three weeks ago, so they go into a flat panic and start to change everything that they promised. Remember the double drop-off for mums at the last election. The government were going to deliver more than 200 child-care centres. They dropped off the double drop-off. They dropped it off. Those child-care centres—whoosh—disappeared. We remember that they were going to have pink batt program mark 2. Pink batt mark 1 was such a successful program that they wanted to do it all again. They were chiding us to support program mark 2. We did not agree to that—and, thank God, we did not, because they could not hold that policy for 24 days, let alone 24 months.

When it comes to expenditure, the Labor Party never let you down on the programs from the last election. Remember computers in schools—a $1 billion program; it is now $2 billion, probably for half the number of computers. Remember the $150 million solar panel program. It blew out by $850 million. Everything seems to be $1 billion. Everything rounds out at $1 billion. There is $1 billion extra on computers in schools, $1 billion extra on border protection, $1 billion to fix up pink batts, and the government is going to deliver $1 billion surplus in three years time. As if that is a monstrous figure to Labor—a $1 billion surplus in three years time! Roughly, it is somewhere between one-third and one-quarter of one per cent of expenditure under Labor.

The heroic deed out of last night’s budget is that Labor are laying claim to a budget surplus they will never deliver. Labor are laying claim to something three years in the future, and they are doing it heroically as if they have been the poor sods that have had to carry the whole world on their shoulders over the last 12 months. Kevin Rudd saved the world, and now Kevin Rudd is redefining the world as a world that revolves around his spending promises and, today, a world that he says revolves around his values. The Prime Minister is a person who does not have values when it comes to the management of the country. The Prime Minister used the most powerful words a Prime Minister could invoke: ‘the greatest, moral, social and economic challenge of our time’. Imagine if Keating, Hawke, Howard, Whitlam, Fraser, John Curtin, Ben Chifley or Robert Menzies were to use words as powerful as those—you would walk into the trenches with them, you would walk out of the trenches with them, you would follow them to the end of the earth because, as our Prime Minister of Australia, they are using wartime words that declare the greatest challenge for our nation in the view of our leader. And then the Prime Minister dumped that. He claimed just before the dumping that you would be a political coward if you did not move now. The Prime Minister has defined his own person. He is a political coward.

The Prime Minister said: ‘It is the greatest moral, social and economic challenge of our time.’ I will tell you what the greatest moral, social and economic challenge of our time is: it is to get rid of Kevin Rudd. That is our great challenge. And we are going to do it because the Prime Minister is reckless. The Prime Minister is reckless with his words. The Prime Minister is reckless with his actions. The Prime Minister is reckless with his spending. Australians are going to pay a heavy price, because it is not just about the $100 million every day that this government is borrowing in order to spend between now and 2012-13; it goes beyond that. It is a $93 billion debt, with a $6 billion interest bill every year. That is $6 billion that cannot be spent on health, education, national security or defence. It is $6 billion that is not available every year to help the most vulnerable and the most needy in our community.

This government talks about caring but it does not care. This government talks big on rhetoric but it is not a government that is built on substance. It is not a government that is built on values. We have come to the conclusion, as have the Australian people, that the more the government talks about values, the fewer values it has. The more the government talks about courage, oh what little courage it has. The more the government talks about fiscal conservatism—as the Leader of the Opposition identified today—one wonders why it is that they suddenly become fiscal conservatives around election time. It is because the Prime Minister is a chameleon.

Between elections, the Prime Minister spends recklessly. He spends money on a whole range of different things. One that we happened to come across in the budget papers only last night was a $10 million grant to a trade union for an education fund. It is a one-off $10 million grant to one of the Prime Minister’s anti-Work Choices campaign mates, the Trade Union Education Foundation, for the development and delivery of national workplace education programs. Strike me light! Of all the things you could spend $10 million on, a development and delivery program for national workplace education initiatives is the one that would ring the bells.

I was at a fundraiser for Charlie Teo’s Cure for Life on Saturday night where I heard the most distressing stories, as did a thousand other people, about people who have suffered brain tumours. Ninety-four per cent of people who suffer a brain tumour die. It is very sad. As the people from Cure for Life were desperately trying to raise money from the audience I thought to myself: ‘Wouldn’t a million dollars make a huge difference here? Wouldn’t a million dollars or $10 million or $100 million or a billion dollars make a huge difference to the lives of so many people if it were money well spent?’ That is why my colleagues and I get so damned angry about the waste. That is why we get so angry about the government’s spending $1 billion fixing up a pink batts program, spending $1 billion fixing up a failed border protection program and spending $500 million on new health bureaucrats. We get upset because the job of doing the right thing for Australia is unfinished.

Money is precious and our future is precious, but we have a Prime Minister who is careless and reckless. He is reckless with our money and careless with his words. We stand for the right of the Australian people to a prosperous and vibrant land in the future, but the government is doing everything it can to destroy the opportunities for our children and beyond.

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

We have heard a lot from the opposition about deficits in recent times, but we have a shadow Treasurer with a massive credibility deficit in this country. We have a shadow Treasurer who cannot make a basic or simple point about the budget papers or the budget. You know an opposition is having difficulty on the day after a federal budget is brought down and you know they are not attacking matters of substance in the budget when they start attacking the forecasts, when they start attacking the Treasury modellers and when they say, ‘Our biggest problem with this budget is the forecasts; our biggest problem is the modelling.’ That is always the case with an opposition. You know they are in trouble when they start doing that. But it is particularly the case with this opposition, because this shadow Treasurer has form.

We had projections and forecasts in last year’s budget, as we do in every budget, and the shadow Treasurer came out then and said they were wrong. He said, ‘We don’t believe the forecasts; we don’t believe the projections.’ On 13 May last year he said:

The Treasury has some pretty heroic assumptions in their forecasts for how quickly we come out of this recession.

Of course, forecasts and projections are not an exact science. Things can change. But last year’s forecasts and projections were the Treasury’s best estimates. They were conservative. They were the best indication that the Treasury could give about what would happen to the budget and the economy. We know now that they were not exactly right, but they certainly were not ‘heroic’. They certainly were not too optimistic. The shadow Treasurer now has an even bigger credibility problem because he is trying to rewrite history. He is trying to airbrush the transcript. He is trying to rewrite what he said 12 months ago in order to boost his credibility today. He tried to do this just yesterday, almost 12 months exactly from the day on which he said that the Treasury’s estimates last year were too optimistic. He said this:

They were saying, and we were taking their advice, as you were, that this was the end of the world. Well, it wasn’t the end of the world.

Last year the shadow Treasurer said the Treasury was too optimistic, and now he is saying that last year they were too pessimistic. So the shadow Treasurer has a credibility deficit problem of Greek proportions. If Standard and Poor’s were rating the credibility deficit of the shadow Treasurer they would give it junk bond status because he has no credibility. There is a yawning credibility gap when it comes to his statements about this budget, and this is before we get to the shadow Treasurer’s comments about how long it would take this government to return to surplus. In his famous interview on Sunday on Insiders, he was asked by Barry Cassidy:

What’s a reasonable timeframe, a reasonable timetable for returning to surplus?

The shadow Treasurer replied:

Well they could do it if they tried in three to four years … But the thing is Barrie they have locked in five to six years of deficits for just three months of negative economic growth—five to six years of deficits.

That is a pretty spectacular own goal from the shadow Treasurer—the alternative Treasurer of this country. The decent thing for the shadow Treasurer to do after he said that on Sunday would be to say, ‘Well, I said if they tried they could do it in three years, and they have. Well done. I said if they made cuts and made an appropriate fiscal policy setting then they could do it in three years, and they have done it. So good on them. Well done.’ But this shadow Treasurer would never do that, and this Leader of the Opposition would never let him. That is why this shadow Treasurer has a massive credibility deficit.

The opposition does not want to talk about the return to surplus, but I do. I want to talk about this budget’s projections and this budget’s forecasts because they are so important. But the shadow Treasurer will raise every other issue that he can think of to avoid talking about the projections for return to surplus because it has undermined the very centrepiece of the opposition’s political campaign. It has undermined the very centrepiece of everything they have said for the last two years. Everything the opposition have said about the government’s fiscal settings lies in tatters.

The fact of the matter is that, when this country was faced with a massive downturn in the world, the worst downturn in 75 years, the global financial crisis, we took the view that it was necessary and prudent to stimulate the economy. We did that because we felt it was the best way to keep unemployment as low as possible, but we also did it because we felt it was the best way to keep government finances as robust as they could be for as long as possible. We knew that, if you had a long and sustained downturn with unemployment higher than necessary, government revenue would go down, government expenditure would go up and you would have a bigger deficit for longer than you needed. We knew that. We made the judgment that it was necessary to stimulate the economy—yes, to go into deficit and, yes, to stimulate the economy through expansionary policies but to do so in order to maintain and protect government finances in the medium term by avoiding a long, prolonged and deep downturn.

The opposition took many positions on this. It took them a long time to work out what their position was, but eventually they decided that this stimulus would not work. The shadow Treasurer and the then Leader of the Opposition said it would not create one job, it would not work and it would not stimulate the economy and they opposed it. Fair enough—that was their position, but their position today lies in tatters. They said the government would lead us to what they called monstrous, unimaginable debt and huge deficits. They warned that Australia may go into default. They warned that catastrophe would rain down upon us because this government dared to stimulate the economy to keep unemployment low and to protect finances in the long run. They warned of calamity and it has not happened.

In fact, something quite the opposite has happened. We have a deficit this year of 2.9 per cent of GDP, compared to the average for major advanced economies, the nations we compare ourselves with, of 9.5 per cent. We have our net debt peaking at 6.1 per cent of GDP. The average for major advanced economies will peak at well over 90 per cent of GDP. We will have Australia returning to surplus before any other advanced economy, and we will do so while protecting our AAA rating, all through the downturn and in the upswing as well. We are doing what we said we would do. When the budget went into deficit we said we would implement some fiscal rules to make sure it returned to surplus as soon as possible. We said we would limit real growth in government spending to two per cent and we would bank any improvements in tax revenue to see us go into surplus.

I saw the shadow Treasurer again on Insiders, in a particularly sloppy performance, educating the Australian people and lecturing us about what ‘real’ means. He said, ‘You’ve got to remember, when they say it’s real growth, that is over and above inflation.’ He pointed out that it is possible for government spending in total terms to increase by more than two per cent. We appreciate his insights into that, but he was saying it was easy. He was saying, ‘They don’t have a real test on government spending. It’s not a proper restriction on government spending. It’ll be very easy to meet.’ The analysis shows that in fact the previous government rarely met that test. In eight out of the 10 years before the global financial crisis, government spending grew by more than two per cent in real terms and the average was 3.7 per cent—almost double. Now that they have the luxury of opposition, where they can carp and criticise and whine, they say, ‘Two per cent is easy,’ but it is something they could not achieve in their 12 years in office. And we are doing this while we are setting up the economy to the future.

The MPI today is about the budget’s so-called failure to secure the future of the economy. We are returning the budget to surplus ahead of any other major advanced economy while we are conducting a major reform of the health system, making a massive investment Australia’s health and hospital system and making a very significant investment in skills so that when the economy returns to growth we are not faced with the sorts of skills crises and skills shortages that economies often are faced with as they come out of a downturn. We are doing things like reducing corporate tax, but, perhaps most importantly, we are doing so while setting up Australia, with the ageing of the Australian population, with massive improvements to our superannuation system. We are increasing the superannuation guarantee from nine per cent to 12 per cent, effectively repaying the contributions tax of low-income earners and allowing people over 50 to catch up on their superannuation payments if they have a low balance. As our population ages it is so important that we bolster superannuation. We will add half a trillion dollars to the savings pool in superannuation over the next 25 years with these reforms, and the opposition just do not get it. They oppose it. They oppose the increase in the SG and they say there is no link to the resource rent superprofits tax. They say the SG will not cost the government any money. The shadow Treasurer said this in that infamous interview on Sunday and he said it again last night. It appears he has not read the budget papers, because the budget papers make it clear that the increase in the superannuation guarantee will cost the government in revenue forgone over $3 billion a year by the time the superannuation guarantee hits 12 per cent. The shadow Treasurer says it will not cost one dollar—he is right about that: it is not one dollar; it is $3 billion and it is linked to the resource rent superprofits tax. He just does not get basic economics.

They oppose these measures. They oppose our measures to introduce a fairer, more equitable and more efficient tax system in Australia, which all the modelling shows will increase economic activity, both in the mining sector and more generally. The party who are supposedly the party of free enterprise opposes the reduction in the broad corporate tax rate. They oppose the reduction in corporate taxes for small business. They oppose the reduction in corporate taxes for big business and they would whack a big tax on all big and medium sized business in this country. They are supposedly the party of lower tax, but they ran a government which was the highest-taxing government in the history of the Australian Federation. They have the temerity after all that to introduce a matter of public importance in this House which alleges that the budget has not secured the future of the Australian economy.

The Australian economy has been through a difficult time. The world economy has been through a difficult time. And two years ago, if you had predicted that the Australian economy would have performed as well as it has over the past two years, many people would have questioned your prediction—and, indeed, may have questioned your sanity. The Australian government, working together with businesses, employers, unions, other governments, the Reserve Bank and exporters, has seen the Australian economy come through the global financial crisis in the best shape of the world’s advanced major economies. That is an achievement the opposition would deny for cheap political purposes. That is an achievement they stood against when they stood in this chamber against the stimulus, when they voted against the stimulus at four or five in the morning, when they debated through the night to oppose the stimulus because they saw it as such an important matter, and when they saw it as a matter on which they stood as a major distinction between the government and themselves. They stood against jobs. They stood against keeping government finances robust by stimulating the economy to avoid a long and deep recession in Australia. They stood against the creation of 200,000 jobs. They stood against a plan which saw the Australian economy grow when every piece of modelling shows it would have shrunk, when every other major advanced economy of comparative size in the world shrank over that period.

Our actions and the actions of Australians who worked with us saw the economy grow and jobs created. And the opposition still does not get it: the challenge now falls to us, having helped Australia through the global financial crisis, to assist Australia in the recovery, to build on that, to capitalise on that. The opposition stood against those things, and that is their right, but now they stand against Australia building on our achievements of the past two years, on the achievements of all Australians. They simply do not get economics, and perhaps that shows why we have seen today the weakest response to a federal budget that we have seen in living memory. It is a response from a shadow Treasurer and a Leader of the Opposition which has left commentators gasping with disbelief that they could be so poor in their response, that they are reduced to attacking the Treasury modellers, as they did last year and as perhaps they will do in the future. But it just goes to show: the Liberal Party of Australia and the National Party of Australia have lost all claims to economic credibility.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Last night’s budget simply lacks credibility. It is a budget that is closely associated with spin, but has no spine. It is a typical Labor document: all about the spin but completely lacking in substance. The Treasurer said it was going to be boring, partly because he had released all of the details in the previous weeks to make sure there would be nothing interesting on budget night. He did this because he had a secret plan. He hoped that by pretending the budget was boring and had nothing of content in it he could get away with quietly and secretly putting his hand in your pocket to take more money out—to hurt Australians across the country with higher taxes and increased burden, but little value upon which it was spent.

The centrepiece of this budget is clearly three or four major new taxes. The most obvious one is the big new tax on mining to raise billions and billions of dollars. This is not just a tax on big multinational corporations, as the government would try to pretend. It is not even just a tax that will affect the super funds and mum and dad investors. All of those are also being hurt. Indeed, in the very first week we saw something like $15 billion wiped off the value of Australia’s superannuation funds as a direct result of Labor’s big new tax. They claim they are the friends of superannuation. They have their acolytes out there boasting about and welcoming some kind of additional tax on employers so that there can be better superannuation savings. But, at the same time, they are imposing taxes which tear away at the investments of individuals for their retirement and severely damage the superannuation funds.

But this great big new tax affects us also in everything else that we do. Our electricity prices will be higher because coal and gas will be more expensive. Our houses will be more expensive to build because bricks and cement will be more expensive. Our food will be more expensive because the fertiliser and the farm input costs all go up as a result of Labor’s big new tax on mining. So this is like so many other Labor taxes: a tax on ordinary Australians. It is a tax on the household budget. It is not just a tax on Rio Tinto and BHP and other large corporations; it is a tax on pensioners, it is a tax on Australian families and will badly damage their day-to-day budget.

The second tax, which I have already mentioned, is the big new superannuation guarantee levy, which will add substantially to the cost of all Australian employers, including hundreds of thousands of employers who are not going to get any tax cuts. The government has been boasting about the fact that they are offering some small taxation concessions for company tax to small business. But only about 12 per cent of small businesses pay company tax. And yet all of them who have employees are going to have to pay the new superannuation tax.

Of course, the third big Labor tax that is lurking around like a redback in an outback dunny is Labor’s Carbon Pollution Reduction Scheme. One minute it is gone, the next minute it is back. We do know there is funding in the budget to keep the bureaucracy rolling over, and everyone knows that in reality, after they have endured all of this taxation splurge, there is still more that Labor has in its mind. No-one can ever escape those taxes; they are going to cost jobs and investment and prosperity all over the country, and that is especially going to be in regional Australia because so many of these industries that are going to cop the big new taxation regime are employing people outside of the capital cities.

But in spite of all these new taxes, we still have a deficit this year in the budget of almost $41 billion—the second-highest deficit since World War II, when our nation was mobilised to fight a rather expensive war on two fronts. Australia had a lot to show for the deficits in the 1940s: we won a war, we secured our peace. But I do not think the people of Australia are going to march on Anzac Days in the future to commemorate the construction in 2009-10 of school halls and dodgy roof insulation. I do not think they are going to be as joyous about the building up of a huge deficit for wasteful government programs as they were when our country was at war.

If you want to look at the centrepieces of the expenditure side of this budget, look no further than the $1 billion for the cost overruns on the school computer program, the extra $1 billion for managing asylum seekers and the $1 billion to undo the insulation scheme. The latter is an extraordinary program—$1.4 billion to put insulation in people’s roofs and now $1 billion to take it out. It reminds me a bit of the old Whitlam RED scheme—dig the hole and then pay somebody else to fill it up. That is what we have in this particular instance—$1.4 billion to put insulation in people’s roofs and $1 billion to take it out. And it is all on the budget deficit; it all adds to the budget deficit, and it will all have to be paid off.

The great honour of the Rudd Labor government, its great legacy for the people of Australia, is that it has delivered the two biggest peacetime budget deficits in our nation’s history. That is the record of the Rudd Labor government. The fiscal conservative, the person who said on television screens before the last election that he was going to balance the budget, that he believed in balanced budgets, has delivered the two biggest budget deficits in our nation’s history. I heard last night that Visa had sponsored Labor’s budget party in Parliament House—probably an appropriate choice of sponsor because another $41 billion has gone on the Australian government’s Visa card. In this instance, the Australian people have to pay it all back.

The Treasurer last night told us that the cards were all going to fall into place and that it was all being done under the highest standards of responsible economic management. Yet he is basing this budget on the predictions that we will have the best terms of trade our country has seen for 60 years, that our exports will grow every year, that there will be substantial investment growth, of something like 20 per cent a year, that unemployment will fall and that inflation will not go above 2½ per cent. This is simply not credible. All that is supposedly going to lead to a $1 billion surplus in three years time. Well, as we heard in question time today, Labor cannot keep budgets within tens of billions of dollars, so anyone who believes there will be a surplus of $1 billion in three year’s time simply has not been watching Labor in government.

One other point that I find very interesting is that the government is predicting that the new excise slug on cigarettes will result in fewer people smoking. That is the excuse for this big new tax. So a 25 per cent increase in the excise on smoking is going to reduce smoking; however, a 40 per cent tax on mining is going to increase, to boost, mining expenditure! That is simply not logical.

The finance minister came in today and said—and he said it once previously—that this budget kills stone-dead the coalition’s debt and deficit argument. He is wrong, by $100 million a day. Every day, with this budget and the budgets that are to follow, Labor will be out in the marketplace borrowing $100 million from the Chinese, from the Middle East, from Europe and from Australians. The government will be competing with business and with homeowners for money to pay for their deficits. As a result, there will also be upward pressure on interest rates. So I assure the finance minister that the coalition’s debt and deficit argument is not stone-dead—it is well and truly alive, and it is alive by $100 million every day. Every day we wait for a change of government we will be $100 million poorer as a nation.

Labor’s previous budgets did not stand the test of time. None of them fulfilled their promises. This time, we are being asked to believe it will be third time lucky. That is simply not going to happen. Labor’s adherence to the Charter of Budget Honesty is in theory only. The Prime Minister’s claim to be an economic conservative is simply empty. This is a big-taxing, big-spending government. They have learnt nothing from the damage they have inflicted on the Australian economy over the last couple of years. The Australian people are going to continue to pay $100 million every day to pay for the debt in the budget that has been brought down and for Labor’s plans for the future. This is not a responsible government. They have lost the right to be the managers of the Australian economy. (Time expired)

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

I wish to support the view that the government budget of last night helps secure Australia’s economic future, building on our previous actions. Last night’s budget aims, with responsible management, to halve peak debt and to get back in the black in three years—three years early.

Firstly, my case relies upon the fact that the details of the budget are good for ordinary people, with the tax cuts and key investments which have been spelt out. Secondly, many independent commentators have assessed last night’s budget, which has been put before the parliament, very positively. Thirdly, any fair-minded comparison with the rest of the world shows that that our actions are working well. The alternative solutions proposed by the opposition are both inconsistent and not in the national interest.

Every year with a budget is a tough year, and, with the global financial crisis, recent years have been tough and they have been messy. The Rudd government understand that we face an opposition that is hungry to sit where we sit and to have the power that we have, and they will not be too scrupulous about how they achieve that. I also acknowledge that, now that the luxury of watching the Liberal Party’s imbecilic leadership vaudeville show is over, the opposition will grit their teeth and unite behind the Leader of the Opposition because there is too much at stake for them not to. Malcolm Turnbull, the member for Wentworth, has been in the tent, has been out of the tent, has tried to pull the tent down and is now back in the tent. But I am sure that even he will pull his head in as the election approaches. They will throw every economic smear, every economic scare campaign and every economic label they can at us. I acknowledge they are led by a man with 20 years experience inside the Liberal Party, as a staffer, a minister, a confidante and a hatchet man of the former Prime Minister. He has been known to describe himself as the ideological love child of the member for Mackellar and the former Prime Minister.

Indeed, looking at economic strategies, I understand that in the film Back to the Future Marty McFly and the doc required a souped-up DeLorean sports car to travel back, whereas in this case the Leader of the Opposition simply did it by naming his shadow cabinet. I acknowledge that as part of their economic strategy they have exhumed the political careers of a number of people, probably to their own surprise. We need to remind the public of what this opposition stands for economically. We also need to remind the public that the government is the party of the big picture, the big idea and the big policy.

I believe that this budget passed last night demonstrates that we are not distracted by the 24-hour news cycle or the carping of commentators who would attack this government. Last night we announced major changes to the tax system. We will lower company tax for small business. We will raise retirement incomes for workers by increasing employer superannuation contributions to 12 per cent, and we will look after lower income earners with a $500 rebate. Superannuation was opposed by the conservatives when the last Labor government brought it in, and the rate remained stuck on nine per cent through the Howard years. Now there is progress in superannuation—the best and most sustainable way for Australians to fund their retirements.

We will also be changing the tax system so that Australians get a fair share of the profits from the development of our mineral resources—those resources which are our birthright as the lucky country. The $35 billion in revenue lost in the past decade as mining profits raced ahead of royalties paid will not be lost over the coming years. It will be contributed towards the infrastructure we need for our future, to helping lower tax rates, so ensuring that other parts of our diverse economy can in fact thrive.

I believe last night’s budget did demonstrate that we are the party of economic responsibility in the interests of ordinary Australians in Australia. We have aimed to end government debt by 2012-13. We will have better health with $2.2 billion for hospitals and the significant addition of skills training to make sure that our workforce is equipped to tackle new challenges and that economic recovery does not stall because of the skills shortage. Indeed, we have delivered on the tax cuts we promised and have also made it easier for people to claim a tax deduction with a tick-and-flick approach rather than the lengthy and laborious process that is currently in place. We are determined that people will get the opportunities they deserve. In particular, we are engaged—as I alluded to—in the largest reform of health since Medicare, trying to secure a sustainable future for public hospitals in primary care.

I acknowledge that the project is almost vertigo-inducing in its scope and ambition. It is a project that will affect and support every Australian who uses a hospital. Our skills policy will ensure that we have the right set of skills for people. But it is also easy, when we look at last night’s budget, to forget how far we have come economically in recent years, to forget how much has changed over the past two and a bit years since the Rudd government was elected and to forget what in fact has been achieved.

I believe that, when you look at the steps of our stimulus package and the support of our financial institutions, we have weathered in a far better capacity the economic storms that the rest of the world has experienced. All reasonable comparisons with other major advanced economies throughout the world demonstrate that the Australian economy is in good shape. This has occurred through a combination of factors, but there can be no doubt that the macroeconomic policies of the government in the past year and a half are part of the contribution towards the success of our economic performance compared with the other major developed economies with whom we trade. The fact that our debt as a proportion of GDP is so much smaller at 2.9 per cent than the 9.5 per cent average across our major advanced economic partners demonstrates how well we have been performing. The fact that unemployment, which is such an important issue, is so much lower on average than that of our economic partners demonstrates our ongoing commitment to making sure that fighting unemployment remains not just a priority but the outcome of our economic policies. Keeping people in jobs—supporting people in jobs—through the global financial crisis has in fact been one of the hallmarks of this successful government.

Third-party commentators—people who do not have a particular axe to grind for either the Liberal Party or the Labor Party or the country branch of the Liberal Party, the National Party—have made observations to which I would like to draw the attention of the House. Kyran Curry, from Standard and Poor’s, said:

The projected deficit and additional borrowings over the next three years did not alter the sound profile of Australia’s public finances, which remained the strongest of its peer group.

Robert Jeremenko, from the Taxation Institute of Australia, said last night:

The Taxation Institute welcomes the government’s positive steps towards simplifying tax time for millions of Australians. The government’s moves to introduce an optional $500 tax deduction for work related expenses and also managing tax affairs, phasing up to $1,000, is a great step that will vastly reduce compliance costs for millions of taxpayers.

Pauline Vamos, from the Association of Superannuation Funds, said last night:

By confirming their response to the Henry review, what the government has done is ensure that the majority of Australians will retire on an adequate and comfortable standard of living.

She also said that we have seen equity restored by allowing low-income earners a rebate in their contributions tax. From the Macquarie Group, Brian Redican said last night:

What’s positive is that they—

the government—

are allowing the improvement to flow through to the deficit rather than spending more, which is always a temptation in an election year.

This temptation, I sadly report, was not one which the now opposition could resist in the years that they were in government. To continue his quote:

That, in turn, means there’s less upward pressure on interest rates.

John Brogden, former New South Wales Liberal leader and now CEO of IFSA, said:

The policy announced by the government eight days ago is good for Australia and good for Australians.

This is referring to the superannuation changes. He also said:

It will deliver an extraordinary benefit to the economy, and there is no argument that it can’t be afforded by business.

John Brogden went on to say:

This is visionary policy. It is visionary for Australia’s retirement incomes, and it is visionary for the Australian economy.

Maxine McKew (Bennelong, Australian Labor Party, Parliamentary Secretary for Infrastructure, Transport, Regional Development and Local Government) Share this | Link to this | Hansard source

He’s right.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

And he is right. I understand, as the member for Bennelong says, Mr Brogden is right. He said:

I understand what the critics of the super tax on mining are trying to do. They are trying to link the negative effect on the mining industry with the negative effect on the superannuation industry.

These figures today here indicate pretty clearly that it simply does not hold up. It does not hold up in the short term and it does not hold up in the long term. Through this budget and by supporting the other measures, which we have done in the past two years, Australia is becoming a better and fairer place due to the Rudd’s government’s determination to meet its economic commitments with fairness. It should not be forgotten that we raised pensions for the aged and for people with disability. Unlike previous governments, which have sought to buy the votes of pensioners with one-off handouts, we have put it into their base rate, which allows people to count on it. When I listen to the Liberal Party’s scare campaign on debt, I think that the fact that we are going to pay off our debt quicker than anyone expected demonstrates the solidity and responsibility of an excellent budget last night.

Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Link to this | Hansard source

This budget and its outcomes are simply not believable. It is a house of cards. It is a con. The surpluses forecast in this budget are manufactured with new taxes—taxes pulled out of the hat some two to three weeks ago when the government saw that the budget parameters were not going to be met. This government was spooked. This government had knee-jerk policy for crass political purposes. These surpluses are based on minerals growth and new taxes yet the minerals growth will be choked off by the biggest of these taxes, the $9 billion a year tax on mining. No-one can have confidence in the forecast as a consequence of these new taxes—new taxes which were literally conceived in the last two to three weeks, new taxes which received no consultation with business, new taxes which put $9 billion a year on our strongest and most profitable sector in this economy in a world which faces great uncertainty.

I had a call from a friend of mine a few days ago. The friend runs some significant mines in countries in Asia, countries that have some political risk. This friend of mine rang the other day and said he is no longer being asked about political risk in Asia. He said the sovereign risk which has always dogged his attempts to raise hundreds of millions of dollars to invest in these Asian countries is now similarly enjoyed by Australia. Australia is now the laughing stock of sharemarkets around the world because they cannot understand how the government of Australia—so blessed with resources, so blessed with the opportunity to protect itself against further shocks in the world financial markets—would seek to tax those companies that exploit those resources in a way which would make Australian companies uncompetitive. They cannot understand how a government would reduce the competitiveness of our mining companies and impose an effective tax level of 57 per cent, when the nearest tax level of other competing countries is 40 per cent in the United States, 38 per cent in Brazil and lower for every other country.

This means that many of the new projects—the $310 billion worth of projects that are being considered by companies at the present time—will not pass the hurdle rate, will not pass the necessary return on investment, because our mining industries are facing an effective rate of tax of 57 per cent. It is a disgrace. It does indicate the lack of instinct that this government has for the risk associated with business, for the way in which decisions are taken with regard to these major resources. It does show the political crassness of this government and the way in which it goes about constructing important documents like this budget.

There is great uncertainty associated with the forecast side of resources. By putting a great big new tax on, already we are seeing many projects that are no longer being considered or are being put on a shelf so that companies can reconsider where those investments go. Already people are being put off in terms of potential job opportunities. Combine that with the forecast increase in spending—a $26 billion blow-out in spending over the next three years in this budget—and you see the pressure on interest rates going up, and uncertainty associated with the spending programs and with the forecast revenue. This budget confirms this is a government that is losing its way. (Time expired)

Ms Catherine King (Ballarat, Australian Labor Party) Share this | Link to this | Hansard source

I have to admit that when I saw the terms for the MPI moved by the opposition this morning I had to check the date, as I thought it was April Fool’s Day and someone was having a lend of me. Here we have a budget that reflects the policy successes of the past 18 months, reflects that the economy is in recovery and builds on these successes to secure our economic future, and the opposition moves this motion in these terms. They must be kidding themselves.

Look at what has actually happened over the course of the last year. We come to this debate from a period of severe economic difficulty across the globe. Many OECD countries have fallen into recession as a result of the global financial crisis. The GFC has cost many countries a considerable number of jobs and has provided a severe dent for their long-term economic sustainability. Just last year the IMF forecasted that the Australian economy would contract by 1.4 per cent in 2009. But, as a result of the stimulus package put in place by the government in the last budget, the Australian economy actually grew by 1.4 per cent across 2009. That growth has not happened by accident. It has been on the back of the stimulus and on the back of the hard work of local communities and employers keeping people in work. Had we followed the opposition’s advice—which in essence was to do nothing—we would be in recession today and thousands of people would be out of work. We now find ourselves in a position where the Australian economy has performed where other countries have not. Thankfully, because of the Rudd government’s economic management, we are now in a strong position to move forward.

The government understands that, while we may have proven resilient throughout the global financial crisis, we now need to use this opportunity to set our economy up for the future—not throw away opportunities as happened under the Howard government. When we came to government the economy was facing significant capacity constraints, through lack of investment by the previous government in infrastructure, skills and training. The previous government had failed to invest in those areas to drive the productivity and future growth of the economy.

The government used the opportunity of the economic stimulus in last year’s budget to try and turn this around so that, as the economy recovered from the global financial crisis, we would be in a stronger position to grow. This budget seeks to build on that investment. Firstly, there is our commitment to keeping our finances strong. The government took action to protect jobs during the global financial crisis, and we now plan to protect and create jobs into the future by securing our economic position. Our strong financial discipline, as shown in this budget, ensures we get back to surplus in three years—three years earlier than predicted, and ahead of every major advanced economy. While other advanced economies have faced recession, subsequent job losses and longterm deficits, Australia has avoided a recession, created 225,000 jobs and will return the budget to surplus earlier.

It is no secret that our population is ageing and the cost of health is rising. We have recognised the challenges that this poses for our nation, and that is why the Rudd government has focused on health and hospital reform. This budget supports our National Health and Hospitals Network by further delivering $2.2 billion of investment into health over the next four years. We have worked hard to reform and invest in our health system because we know how important this is for the longterm sustainability of the healthcare system.

The 2010-11 budget also addresses the cost-of-living pressures for families. It is Australian families that have worked so hard in the wake of the global financial crisis, and it is Australian families that are now being rewarded for their hard work. The government is supporting families with a new round of personal tax cuts from 1 July 2010. This is the third round of tax cuts in the three years of this government. The budget also addresses our actions towards improving Australia’s economic capacity. I am delighted that this budget invests significantly in skills and infrastructure, with a $661 million investment to help people boost their qualifications by taking part in some 40,000 additional training places and support for 22,500 new apprentices, which builds on the Apprentice Kickstart program. We have also expanded on our nation-building agenda by continuing our commitment to local roads and infrastructure.

With this budget we have acted to create jobs, to fund and reform our health and hospital system, to save and bring us back to surplus early, to invest in infrastructure and build our nation’s capacity, and to boost renewable energy and tackle climate change. This budget is all about taking advantage of our strong economic position and setting our nation up for the future.