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

Thank you very much, Madam Deputy Speaker, and thank you for allowing us to debate this issue, because this is a very important issue which does go to the heart of good governance. You would have thought that other issues such as the debt ceiling should be properly debated in this place, but the government has closed down that debate just as it has chosen to close down any debate about the member for Dobell's one-hour, uninterrupted statement to the House.

When it comes to an issue such as the government's need to rein in spending there is a simple fact that Australians need to remind themselves of each day. The Labor Party has accumulated the four largest budget deficits in Australian history, totalling $174 billion. At the same time, the Labor Party is today spending $100 billion a year more than the last year of the coalition government just 4½ years ago. One of the reasons why this is a significant number is because it was at that time that the now Treasurer, the member for Lilley, said:

If the government pretend that interest rates are low then they do not have to admit that it is their policies that are putting pressure on the rates. What is putting pressure on the rates? What is partially responsible for this? It is the big spending, high taxing government.

He went on to accuse the then Treasurer, the member for Higgins, Peter Costello. He said:

... the member for Higgins, a man acutely embarrassed by his record of taking the proceeds of the mining boom—

Get a load of that! Acutely embarrassed about his record!

spending like a drunken sailor and building nothing that lasts for the Australian people.

I will tell you what we built. We built a surplus of $20 billion a year. We built a Future Fund, with $70 billion in it. We built a government that was $100 billion a year smaller in expenditure than what Labor is today. We built in an economy that had an unemployment rate with a four in front of it on a permanent basis. We built an economy with strong economic growth. We built an economy that was resilient and was able to withstand the worst of the Asian financial crisis. But when it comes to this government, which picks and chooses its measurements, I would say to you that it is the government's own spending that continues to put pressure on the economy and put pressure on the budget, because, when you set the benchmark of expenditure, you would say to yourself that what the now Treasurer, the member for Lilley, said at the time was 'a big spending government'—$100 billion a year less in expenditure; it represented, at that time, 23.1 per cent of GDP. In 2008-09, the government jumped it to 25.2, then 26 per cent, then 24.7 and then 25.1 per cent. Next year, miraculously, somehow it is going to drop to 23.5—and that is because of the money shuffle that we all know about—and then 23.7, 23.5 and 23.6 per cent. The net outcome of that is that, in no year of all the time of Labor in government, nor in the years that it promises to deliver a future budget, will it ever reach the low levels of expenditure of the last year of the Howard government, which they said was 'a big spending government'—a big spending government that was $100 billion a year smaller in expenditure that this current government.

But we know why Labor should not be trusted with money, and it comes back to waste. There is a conga line of example of initiatives, from $900 cheques going to dead people and people living overseas, to pink batts going into homes and causing the homes to be burnt down, to the massively overpriced Building the Education Revolution school halls program, particularly in New South Wales.

Even today we hear of new initiatives. This week we found out in Senate estimates that Senator Conroy spent $526,000 on selecting 11 ABC and SBS directors. He spent $50,000 on each directorship, on finding a director. And, in that situation, he appointed a very respectable but long-standing Labor icon, Jim Spigelman, as the chairman. So he spent $50,000 going through the parade of trying to identify directors. And then they appointed someone that they were extremely familiar with.

On 14 May, Labor allocated $36 million more for carbon tax advertising—and it does not mention the carbon tax. Surely you don't need to be John Singleton to work out that if you are going to spend $36 million on an advertising program you should mention what the product is. That is kind of obvious, isn't it? We do not have to go to the 'Where do you get it?' ads—do you remember those ads in the 70s? 'Where do you get it?' Where do you get the carbon tax? From the Labor Party. Where do get the carbon tax? From Julia Gillard. Where do you get the carbon tax? You get the carbon tax in your bills. That is a pretty simple ad, and you just got it for free. You didn't have to spend $36 million. But I tell you what—what a great use of taxpayers' money: $36 million to tell people that they are advertising a carbon tax and the ad does not even mention the tax itself! But wait—there's more!

The Gillard government is spending $20 million promoting the National Broadband Network, which is a now-$50-billion program that the government thinks people should know about. So, just in case you have not noticed the excavator out the front of your house, they are going to take out ads on your TV to tell you that you should be signing up to the National Broadband Network.

But there is, of course, more. The one that most Australians would be most angry about is the blow-out of $1.7 billion for Australian taxpayers in the costs of managing the asylum seekers arriving on illegal boats—$1.7 billion. This is the latest blow-out. It includes a blow-out of $424 million on this year's figures and it will add a debt cost to taxpayers of an extra $1.1 million a day. So, for so long as you can see, taxpayers are going to have to pay $1.1 million a day just on the interest for the debt that has accumulated because the Labor Party does not know how to control the borders.

But, of all the examples they continue to roll out, the ones that are most on people's minds are the ones where better management could deliver a better outcome. Take Labor's digital set top boxes installation program—an average of $350 per installation per box. Harvey Norman is offering them for $168, and Gerry Harvey would discount that too; he might give you five years interest free on that as well—might toss that in. The Australian reports now that the average installation cost of the set top boxes has risen to $700 a unit. You could buy the whole TV—you could probably get 52 inches for $700, couldn't you?

The Australia Network tender—what a great tender that was! Labor's bungling of the Australia Network tender has cost at least $2 million. It was recommend to the government that Sky News should receive approval to continue with the Australia Network, and then there was an internal struggle—remember that?—between the then Minister for Foreign Affairs and the minister for communications, and they were swapping responsibility between departments. The net result was that compensation is now being paid to Sky News for winning the tender but not getting it.

And of course there are others. The Australian Research Council is spending millions of dollars on questionable research projects, such as on climate change emotion. I will tell you, there is plenty of emotion in here about that. Here is another one: ancient economic life in Italy. Well, we are watching what is happening overseas quite carefully, and I think contemporary Italy is more interesting than ancient Rome. Other projects include: $578,792 to the University of Western Australia for a study of 'an ignored credit instrument in Florentine economic, social and religious life from 1570 to 1790'—

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

It's the missing piece!

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

That is! How did Niall Ferguson miss that one? There was $197,302 for 'sending and responding to messages about climate change: the role of emotion and morality', and $314,000 for a study to determine if birds are shrinking. Just ring up Inghams! Find out about their chickens. They are getting bigger and bigger. In fact, I remember the late Bing Lee saying to me that the birds at Inghams are getting too large for his freezers when he was selling the freezers at Christmas; the turkeys were too large. And they are spending $314,000 on identifying it. Hang on—there was $145,000 for a study of sleeping snails, to determine 'factors that aid life extension'! There was $210,000 to study the early history of the moon. You can imagine Tim staring out longingly from the window at the Lodge at the moon and thinking, 'You know what, Julie? We should have a good look at that. Why don't we spend $210,000 to work out what happened before Neil Armstrong got there?'—as if no-one has ever thought about it for years.

If it were not taxpayers' money it would be laughable. If they were not the hard-earned dollars of so many good, diligent, committed Australians, it would be laughable. But, unfortunately, the Treasurer keeps saying: 'We're doing well; we're living within our means. Let's compare ourselves to some other countries.' Australia's general government expenditure in 2012 was 36.3 per cent of GDP. Let us compare. Switzerland was less: 34.7 per cent of GDP. New Zealand was less: 33% of GDP. Hong Kong, 21.1%; Korea, 21.6%; Singapore, just 17.4%.

The Treasurer is always keen to compare us to the worst. He is always keen to compare us to the nations that are in deep trouble, as if being ahead of those nations is somehow a great achievement, as if being ahead of those nations somehow lays down the foundations for future growth. But our competition is coming from our region and the Labor Party just does not get it. They mouth the words about it being the Asian century, but they do not understand that the competition for our children, and our grandchildren and beyond, is going to be in our region, in our sphere of influence. They are the people who are highly competitive.

We must benchmark our nation against the best, and not the worst. That is what we must do. We must aspire to run faster than anyone else, to do better than anyone else, to put in greater effort and to be more productive and more innovative than anyone else. That is the great legacy we can leave our children, not money being spent on reviews into snails, birds drinking or the history of the moon. We need to spend money on our people—our greatest investment—to give them the opportunity to hope for a better life without the dead hand of a Labor government being laid upon their back at every moment. The great legacy of this Labor Party, apart from incompetent and, dare I say it, corrupt government, is the debt it is leaving Australians. That is the pain it is leaving the next generation of Australians.

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

Mr Deputy Speaker, I rise on a point of order: it is offensive to suggest that this government is corrupt and I ask that the member for North Sydney withdraw.

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

I withdraw. In that case I say to the honourable member: stop running a protection racket for the member for Dobell. Let the parliament debate the issues that go to the integrity of the parliament and let the nation get on with the job of building a better future for our children based on hope, reward and opportunity for effort.

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

I am very pleased to be able to contribute to this debate on a matter of public importance relating to the economy and to add just a few facts to the debate—a few facts that were missing from the contribution from the member for North Sydney. Members will note that at no stage during the member for North Sydney's contribution did we hear anything about the OECD economic outlook that was released overnight. It is an important document that provides a snapshot of where the various economies across the globe are placed at this point in time. It is an important document because it gave a very big tick to the economic management of the Australian economy. In fact, that document reported:

Restoring fiscal leeway while macroeconomic conditions are still favourable, and the terms of trade high, is welcome.

It gave a big tick to our return-to-surplus strategy and it noted the fact that the Australian economy is the standout performer of all OECD economies. In terms of growth, the Australian economy will grow faster than any of the other advanced economies over the coming two years.

In addition to that we have returned our budget to surplus. This is no trivial matter considering what is going on across the globe at the moment. It is worth reflecting on this point. If we have a look at the budget position here in Australia compared to other nations, what we see is that in 2011-12 in Australia we will be delivering a $1.5 billion surplus. That is 0.1 per cent of GDP—a surplus. Let us look at other economies in the OECD. Let us look at the United States. They will still be running deficits; their deficit will be 8.1 per cent of their GDP. The United Kingdom will be running a deficit at eight per cent of their GDP. Japan will be at 10 per cent of their GDP and Canada, another country that is resource rich, will still be in deficit to the tune of about 3.7 per cent of GDP.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

What about Brazil and Norway?

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

Well, you come in here and quote Brazil and Norway. The reality is that if you compare Australia to comparable economies we are the standout performer. We are growing at a rate that demonstrates that this economy today is seven per cent larger than it was pre-GFC. That is a very significant point to make.

It is well worth having a look at what has been happening in other parts of the world. We have been growing 7.3 per cent today on that base pre-GFC. By mid-2014 we would have grown by about 16 per cent on that pre-GFC level. Look around the world: most of the advanced economies have not even returned their growth levels to the levels that they were at before the GFC. We are seven per cent larger. All of these indicators point to the underlying strength of the Australian economy, but the point that has been bought forward, the question for this MPI, goes to the issue of fiscal restraint and reining in government spending. I think it is important that we make a few points and point out a few facts about government spending under this government compared to government spending under previous governments. With regard to government spending as a percentage of GDP—the member for North Sydney comes in here and plucks out figures. He hits us with a volume figure and he does that to mislead the House. I think even the member for North Sydney realises that in a growing economy, if you maintain spending at the same percentage of the economy, then as the economy grows, overall levels of spending will increase.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Sustainability, Environment, Water, Population and Communities) Share this | Link to this | Hansard source

No, he would not understand that.

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

The minister points out that perhaps that is too complex. It has troubled the member for North Sydney to come to an appreciation of that. The real figure that we need to look at is expenditure as a percentage of the economy, as a percentage of GDP. In 2012-13, spending as a percentage of GDP will be 23.5 per cent. Across the forward estimates, we will be containing expenditure to below 24 per cent of GDP.

That represents the longest sustained period of maintaining expenditure below 24 per cent of GDP at any time since the early 1980s.

Compare the record of the Howard-Costello government with what we are doing now and what we are proposing to do for the coming four years. They were big spenders. They spent a lot more as a percentage of the economy than what we are doing. Perhaps the best indication of how tight a fiscal operation this government is running is that the opposition has not been able to propose a single savings measure. The Leader of the Opposition came in for his budget in reply speech—not a single savings measure. The shadow Treasurer went to the National Press Club—not a single savings measure.

If the government was as bloated as these people would have you believe—if there was so much fat to cut—surely they could come forward with a single measure. Instead of coming forward with spending cuts, all they tell the Australian people is that they will take away some of those revenue sources. It is worth also having a look at the other side of the budgetary equation. It is one thing to look at what you are spending. We have already established that. Look at what we are spending as a percentage of the economy. We are spending less today than at any time through that previous government. Over a sustained period we have not been able to contain expenditure growth to the extent that we are doing now, not since the early 1980s.

If you have a look at what is happening on the tax front, we are collecting tax at a lower percentage of GDP today than at any time under the previous government. Tax is 22.1 per cent of GDP. The amount of tax we are collecting is less today than at any time under the previous Howard-Costello governments. That is a fact you do not often hear, but it is a fact. They say that they want to repeal certain revenue sources such as the mining tax. When we first proposed a mining tax they said, 'We're opposed to the mining tax so we're opposed to every single one of the expenditure measures connected to it.' That is what they said. They came in here and they said to the 2.7 million small businesses in Australia, 'You don't deserve a tax cut. We'll vote against a tax cut for you.' And they did vote against tax relief for the 2.7 million small businesses in this country. Fancy that—a Liberal opposition. Menzies would roll in his grave. The party of business—that is what they would like to pretend. They came into this place and they said to 2.7 million small businesses around Australia, 'We're not going to give you tax relief. We'll vote against it.' And they did. When it came to a company tax cut, they said, 'We're against that as well.'

They said back then that they were against the expenditure measures that were connected to the mining tax. We went into the budget and said, 'There's no point persisting with this company tax cut until we can secure a consensus in the parliament. We'll work through the business tax working group to deliver a cut to the company tax rate, but we won't keep pushing this one if we can't get the support in the parliament. If the Liberal Party want to stand side by side with the Greens and deny businesses a tax cut then we'll find a better way to spread the benefits of the mining boom.' So we have.

We continue to invest in superannuation. I am not sure what the latest is on that side. They came out and said they would support retaining the increases in superannuation, but they have been a bit quiet on that recently. They are still opposed to investing in infrastructure, presumably, even though that money will be spent. On investing in small business tax relief, they came into the parliament and voted against the instant asset write-off. Yet small businesses all around the country will be lining up to take advantage of it from 1 July. When we announced that we would spread the benefits of the mining boom to families right across this country through an increase in family tax benefit part A and a supplementary allowance, they came forward and said they would support it. At least, that is what they said in the first instance.

We heard so much about this principled position that they could not support cuts to the company tax rate or the instant asset write-off because they did not support the tax that funded it. Now, all of a sudden, they support the expenditure but do not support the tax. So how are they going to pay for it? They have a $70 billion black hole and it just keeps getting bigger. The only announcement you could remotely describe as having any substance in the Leader of the Opposition's budget in reply speech was a spending measure. He did not have a price tag but it was a spending measure. The $70 billion crater—he is out there with his shovel digging it—is getting bigger and bigger. The capacity to dig craters of this nature could only add to our efforts as far as fielding the mining boom and extracting more resources in parts of this country.

This is a government that is low taxing—22.1 per cent of GDP—lower than at any time under the previous government. This is a government that, when it comes to expenditure as a percentage of GDP, will be containing expenditure over a sustained period at lower levels than in the early 1980s. On both fronts we are lower taxing and lower spending than the previous government. The member for North Sydney came in here today and had the hide to start lecturing this government about expenditure and where expenditure cuts should be made. If it is that easy a job he should be able to come forward and announce one or two expenditure items that he thinks need to be made.

Have a look at what this government has already done. We have already achieved, in this budget alone, $33.6 billion worth of savings measures. That adds to the savings measures we achieved previously. We have made $100 billion worth of savings measures over the last four years. If you think you can still find additional savings measures, come forward and identify them. You hear those on the other side talk about the precarious nature of the Australian economy. What a load of rubbish! We understand that there are challenges in various parts of this economy, but look at the underlying fundamentals of the economy. We have low unemployment, at 4.9 per cent. We have contained inflation. We have growth at levels that the rest of the advanced world could only dream of and a record pipeline of investment. We have a strong economy. But we want to spread the benefits of the boom and that is why we have announced a range of measurements in the budget that will ensure the benefits of the boom are being spread.

Those opposite want to come in here and lecture people about debt. Our net debt is to peak in 2011-12 at 9.6 per cent of our GDP. They talk about us overburdening the country with debt.

Opposition members interjecting—

The member opposite says 'What was it when you came in?' Well, there was this thing called the global financial crisis. And do you know what? We stood up to the challenge and we invested in supporting jobs.

Mr Robb interjecting—

The member for Goldstein says that they wasted money. I will tell you what: if it were left up to him, hundreds of thousands of Australians would have been out of a job. We would have gone into recession. Instead, we were one of the only advanced economies in the world to avoid recession.

There is no excuse for these people—no excuse for the member for Goldstein. At least the Leader of the Opposition's excuse was that he slept through the debate on the response to the global financial crisis. He did not come in here. At least he can say, 'I didn't vote against the government's package to stimulate the economy.' He can say that. He can put his hand on his heart and say, 'I didn't vote against the stimulus package,' because he did not. He was asleep in his office and did not come in on the most important debate that this parliament has dealt with for half a century.

Mr Christensen interjecting—

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The member for Dawson has already been warned.

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

This was the most important economic debate that we have dealt with and he was not even here to vote for it because he fell asleep. He slept through it!

Whilst the Leader of the Opposition might have slept through the global financial crisis, the rest of the world has not. And we acted to support hundreds of thousands of jobs. Since 2007 we have created three-quarters of a million jobs in this country post GFC. When the GFC hit, 27 million jobs were shed around the world. These are the facts of our government's economic management. We have managed the economy so that it is a strong economy, but now we want to spread the benefits of the boom.

We are the only advanced economy that has handed down a budget surplus. All the others are miles back in deficit. We are returning to surplus, and these people, who were high up when it came to spending and higher when it came to taxing, want to come here and lecture us. Australia is a standout performer of all world economies and you should stand up and be proud of that rather than criticise. (Time expired)

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

We have just heard it again. We had this same problem a few days ago. You have to give it to the member for Lindsay, he is the master of spin. He did not refer for one second to the subject of the debate, which is the urgent need for the government to rein in spending in the face of events unfolding in Europe. Former Reserve Bank board member and noted Australian economist Warwick McKibbin recently declared that the government has put the economy in the eye of a perfect storm.

Government Members:

Government members interjecting—

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

Yes, well done, great spin. Best spin I have heard for a while. Off you go!

Government members interjecting—

They are all having a chuckle on the other side about the fact that this government has put the economy in the eye of a perfect storm. Well, laugh on! This is not a game. No wonder we have a view in the community that this government is such a dysfunctional mob and unable to manage money. That is the view, and you know it. You must be getting it. We are getting it in spadefuls everywhere we go. Professor McKibbin said:

The federal government has bet that a crisis in Europe will not happen during the 2012-13 financial year.

Furthermore, David Uren, the respected economics editor of the Australian, observed today:

There is no effort to place Australia's prospects into the context of a global malaise that shows no sign of lifting.

That is what concerns me about the member for Lindsay; he shows no awareness that there is a global malaise that shows no sign of lifting. Mr Uren went on:

Its continuing hold has been seen across the past 10 days, with signs of rapid slowdown in China, renewed crisis in Europe and speculation that the US Federal Reserve will again start printing money to buy its own government's bonds.

These observations are confirmed by the views and the confidence levels of Australian business people. If everything that the member for Lindsay said were true—if this economy is going gang busters, if we are better placed than the rest of the world, if households should not be worried about where the next dollar for their mortgage is going to come from or whether there is any threat to their jobs—then you would expect that the confidence levels of the 2.4 million small business people and the hundreds of thousands of bigger businesses across this country would be at some reasonable level.

Let us have a look. In March 2010 the NAB business confidence level was measured at 17. In March 2011, last year, it was at 11. In March 2012, just a month or so ago, it was at minus one. There has been a significant—

Ms Rowland interjecting—

Members opposite are saying we are talking down the economy. This is facing the facts. This was the subject of the debate. Are you going to get your head out of the sand and look at the dangers that are coming down the line, or which could come down the line? Are you going to restore the resilience that you inherited when you won government? Are you going to restore us to no debt? Are you going to restore the $70 billion of assets? Are you going to restore the confidence of the business sector and households back to what it was? No! Minus one is the reality. You cannot wish it away; it is the reality. It has gone down from 17, to 11 and then to minus one. Business people, who make the investments and who take the risks, are the ones who have no confidence. They are not spending any of the money sitting on balance sheets—and there is a lot of money around. They are not investing it.

There is a crisis of confidence across the business sector and, outside the resources sector, they are not investing at all. Within the resources sector, we are now seeing again over the last week Access Economics warning that $260 billion of projects being actively considered and at an advanced planning stage may be deferred. That is a quarter of a trillion dollars worth of projects on which the Treasurer stood up here today and proudly declared, 'Job done.' They are not even finalised in terms of investment decisions, and Access Economics assess that these projects may well be deferred.

In fact, I went to Perth a couple of weeks ago to talk to a number of senior people within the mining industry. I spent several years working in the mining industry. I got to Perth, and half the people that I went to have a chat with to see what was happening were not there. They were in Africa. All I could hear in Perth was that there are now some 300 Australian mining companies who are actively seeking opportunities in Africa. It is not just Australian mining companies; it is investment dollars. Investment funds by the billions that were coming here out of the United States and other countries are now heading to Africa. Why is that so? What do they say to me when they give me a reason for starting to write down the prospects of mining here in Australia? They say 'sovereign risk'. That is what they say. They say 'the carbon tax' and 'the mining tax'.

Again, there is the very smart decision in the budget to double the withholding tax, which the government had very properly reduced to 7½ per cent, one of the very few measures in the last four or five years that you could commend the government for and that gave any sense to the business community that you knew their circumstances. You have turned around and doubled it, and not only that: you have made it retrospective. So the billions of dollars that were attracted because of that 7½ per cent withholding tax are now going to be thwarted. You will see this dry up. You have sacrificed billions of dollars of potential investment for the sake of $260 million over the next three or four years to try to convey that you have balanced your books, when in fact you have lost billions of dollars of investment on behalf of the Australian community. They talk about the re-regulation of the workforce and many more things. All of these things add up to sovereign risk. It is why the business sector are so down in the mouth about their prospects under this government. It is why they endlessly say, 'Can't you bring on an election? For goodness sake bring on an election.' This country is stopping in its tracks because of the uncertainty of this government.

It is not only all of these policy decisions; it is the way in which you conduct business between yourselves. It is the way in which you protect, cover and spend weeks of time and distraction over a member who really has disgraced himself and the parliament. Yet you are spending time and effort protecting this person, at the expense of the proper operation of this parliament. People see this and cringe. They are cringing in coffee shops, in shops, in factories and in households all over this country, wondering how much more dysfunctional you lot can become. This is why we need an election, and it is for these reasons that you have not in any sense anticipated some of the danger signs coming. Warwick McKibbin is not a man known for his dramatic expression or his overstatement of issues. He said that this government has put the economy 'in the eye of the perfect storm'. You have massive spending commitments. You have increased spending by 40 per cent—$100 billion more than four years ago. You cannot explain this; you simply cannot explain it. Let us forget about the stimulus; that was for two years.

Mr Perrett interjecting—

No, let us except the stimulus. I am talking about this year's budget, which has no stimulus money in it, I am told by you. This year's budget is $100 billion more than four years ago. That is a 40 per cent increase. What about a household? What about any of these people in the gallery? If they increased their spending 40 per cent every four years, their households would go broke in no time. This is unrealistic, yet you are spending $100 billion more, and the member for Lindsay stands up here and makes out that you are being fiscally responsible and tough. You are just full of spin. Explain $100 billion at a time when inflation was 13.2 per cent.

This government has created structural deficits such that, if the mining income comes back by just a modest amount—20 or 30 per cent—we will dive straight into deficits in excess of $50 billion and debt will ratchet up. It is giving no sense that it understands any of this. People have lost confidence. There is a crisis of confidence. We need an election. We need somebody in these chairs that knows how to manage money.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Before I call the Parliamentary Secretary to the Treasurer, can I just request all members of this chamber, when addressing the chair, not to refer to 'you'. Otherwise I will repeatedly pull you up, and your time is limited in the debate. I just give a general warning to everyone: the use of the word 'you' is a reflection on the chair.

Bernie Ripoll (Oxley, Australian Labor Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

Amongst all the noise and pollution coming from the other side, you could be forgiven if you could not hear the laughter. They do say laughter is the best medicine, and I tell you what: the opposition need all the laughter they can get, because they are a very sick mob if they cannot even accept some of the basic premises and facts of what is happening in our economy, whether you compare us to anyone in the world or to no-one in the world. Either way, there are actually some really good things happening in this country and it is time the opposition, like many others, just took note of it and recognised what has happened.

What is also true is that, when you run out of your own ideas, you just start attacking the ideas of others. There is not one idea coming from that side. We saw it in the budget response. It was not a budget response; it was just the usual attack that we get in this place. It is just a lot of noise and a lot of pollution and it brings nothing new to the table. If people are really considering the issue, a matter of public importance has been brought forward here which says the government should rein in spending in the face of current events. If that is the case, where was their case—if that is actually what you are trying to achieve? The opposition comes in here and says, 'Rein in spending.' Where? I was sitting here making notes, hoping for one new idea—maybe we could use it. But there was not one. It was just a sheer, blatant, political attack just to try to gain some advantage. I am not going to use the same rhetoric that was used by my opponents, carrying on about spin and all the rest of it. It would be nice if just once in a while we actually got a contribution in this place, if you are going to raise a matter of public importance, that actually did just that. The fact of the matter is that none of the facts bear out the fanciful half-truths that we get from the other side.

There is something, though, that I really do appreciate, and that is the fact that Australians are really hard working, and I am sure the opposition will agree. They may not know that Australians are in fact the hardest working people in the world. It is true. Consistent surveys in recent years have rated Australians as the hardest working people in the world. We are right up there with the best of them. We work many hours and we work productively as well. We are actually an efficient mob.

It is because of that and because of what this government is doing that we have managed to get through the global financial crisis, that we have managed to weather the worst storms. I heard before that 'there is a perfect storm coming'. Well, there is a storm coming, but I do not know how perfect it will be or how big the opposition would like this storm to be. But on this side, on the government side, on the Labor side, we are doing everything we can to batten down the hatches, and whatever storm might come—we do not know what it might look like or what it might mean—we will work very hard to make sure that whatever happens we have an economy that is resilient to it.

One of the best ways to make an economy resilient is to make sure that people still have their jobs. If you look at any economy in the world that is struggling you see that the first thing that goes is people's jobs. If you do not have a job—if you want to go back to the old 'let's go back to basics' stuff—you cannot pay any of your bills. The reality is that we have got people still in work. We worked hard during the global financial crisis to ensure that this economy survived, that Australia would fare the best of any economy. I will make a wager with you. Travel as far as you like and go and ask any treasurer or any finance minister of any other OECD nation or any other nation whether they would like to trade our economy for theirs. They would hack off their own right arm to do that, because they understand the good fundamentals that we have here. That is something that is inescapable. It is just unimaginable for the other side to even contemplate that that might be true, but that is the reality.

Every time this government—and I am sure this happens on the other side—talks to people from other countries, global forums, financial forums and finance ministers' meetings they all look to us and say, 'How are you guys doing it? How are you managing to keep your economy so strong?' One of the ways we are doing that is through really responsible fiscal management—and responsible in a whole range of areas. It is not just some glib, simplistic approach which says, 'You just need to do one thing; let's just save more.' I love these sorts of things—'Let's just spend less and save more.' What does that actually mean? It must mean something, but they do not tell us what it means. It is a little bit too simplistic for me. If 'save more' means sack people, get rid of people's jobs and shut down industry, then I am not too keen on that. I think there might be a better way. I think we ought to work with industry and try to save people's jobs. I think we ought to keep our economy growing. I think we ought to do something to make sure that people are still working tomorrow as well as the next day.

Who are the workers in this country who actually create this economy? It is the small business owners. It is the people who buy a franchise—the people who create a job, who buy their own job and employ their family members or perhaps a friend. There are 500,000 plus franchisees in this country who create an economy, who create work. There are all the tradespeople who go out and work every day, whether they drive a ute, whether they work for someone or whether they work for themselves. We have to keep them working—and we have done that. We have done it in this budget and we have done it in consecutive budgets. We have made sure that when you do spend money—because that is part of growth; spending some money—you spend it in the right areas. Look at the schools and the investment that we have made in really decent infrastructure in schools which will have a legacy for the next 30 years. It keeps giving for 30 years. Look at the school halls, the science labs and the teaching facilities—30 years.

I heard the member for North Sydney bleating on about the 'Asian century'. What does that mean to him? According to him, we ought to keep up, we ought to be able to run faster and we ought to be able to do things. I would have thought that if you wanted to run faster you would need to train, and if you are going to train you will need somewhere to train and a training program. You would think that training program might start with our kids in schools. So what did we do? We commissioned Gonski, we invested money, we put bricks and mortar into schools and we actually went for the national curriculum and tried to lift the standard. But apparently that is a waste of money. That is the stuff those opposite talk about when they say they want to save money. You are never going to believe this—because I still do not believe it—but they are going to oppose the schoolkids bonus because, apparently, according to them, parents are not responsible enough to spend money on their own kids' education. That is an insult—but I will skip over that for the moment.

If we are to listen to the member for North Sydney, even for a split second, when he says, 'We've got to run faster'—and I agree with him; let's run faster—one might say that he will need to do a lot of training himself if he wants to run faster. If you are going to run faster, sign up to a program and get a trainer—get somebody who might have some knowledge about how you are going to run faster. That is what we are doing. We are putting money into schools, into people, into education—through Gonski and through proper funding. And who is going to benefit from this? Our kids are. I do not believe that any kid in this country should have less opportunity than any other kid in this country no matter where they come from.

So when the member for North Sydney talks about the Asian century, for him it is hollow, meaningless echoes off the wall. He is not training. He is not running faster. From what I can see his is running a lot slower—in fact, his walk has become a dawdle. That is what this opposition is represented by—former ministers who are dawdling and have plenty of hollow rhetoric echoing off walls.

The member for North Sydney loves to attack programs. And it sounds pretty funny to me—programs investigating or researching birds and snails and the moon and all the rest of it. But, under his ideology, you would burn the books and you would get rid of scientists—let's just get rid of all the scientists and all the books!

Opposition Members:

Opposition members interjecting—

Bernie Ripoll (Oxley, Australian Labor Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I am sure this bird and snail research was going on when John Howard was Prime Minister, and we did not hear this side say too much about it. The reality is that there is probably a whole heap of research here which relates to something else and is good for this country in some way. The reason that we have science, research, scientists, teachers, professors and universities and we fund them is because it is good for the economy. It is even good for the philistines who sit opposite, the uneducated mob over there, who would actually shut down every school, because that would save money—'Let's just shut down the schools. There's plenty of savings to be made if we have no teachers and plenty of savings to be made if we don't invest in health'!

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

This is nonsense!

Bernie Ripoll (Oxley, Australian Labor Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

You are right—it is nonsense. That is why I am raising it—because I am trying to make a point. The member for Groom is completely right: it is nonsense. It is nonsense to attack research and science. It is nonsense to attack school funding. It is nonsense not to get behind and support these things. The facts do not bear out the jokes that these guys opposite come up with—and I think the classic one today has to be 'we've got to run faster'. Well, have a look at them. Even with skates they could not keep up!

The truth is our economy is strong. It is really strong and it is in good nick—4.9 per cent unemployment; down from 5.1 per cent. Even if you do not believe it, even if you are sceptical about the number, it is the same methodology and the same data that it has been for 30 years. It is the same data and the same methodology as it was when these guys were in government. Whatever that 4.9 per cent means, it means that unemployment went down and jobs went up. That is all it means. It means more people have got money in their pockets and they can keep the economy strong, because they will spend. They will keep buying. We have done things for small businesses. There is the $6,500 instant tax write-off, there is the $5,500 for the utes; there are things there for the economy to keep growing. It is a strong budget. If you compare it with any economy in the world, we have got inflation under control, we have got debt under control, we have got 9.6 per cent of GDP compared with every other economy on the world. Japan is on 240 per cent. I am proud of the economy we have got. (Time expired)

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

If we are the Philistines then I guess I am a bit of a Goliath man, but that was no David performance. That was not even a pebble of a speech. I simply say this: spending is very, very easy. It is so easy that even Labor can do it. What they cannot do is get value for money. And they cannot stop spending the money—even in the wake of four record deficit budgets. Spending is an addiction and, like any addict, this government are in denial. They simply cannot accept that they have got a problem. They try to justify their drunken-sailor approach to spending by comparing themselves with Greece and Spain. If an alcoholic can name someone who drinks more than them, it does not mean they are not an alcoholic. Labor try to justify their spending habit by saying that debt is nothing to worry about. We have been told by the Treasurer that asking to extend the credit card limit by another $50 billion to $300 billion is 'no big deal'.

I wonder if the Treasurer's counterpart in the Greek parliament ever described the Greek debt level as 'no big deal'. If this is no big deal, how would he describe the debt ceiling when Labor came to government? It was just $75 billion and it was not even needed. But in 2009 the Treasurer increased the debt ceiling to a temporary $200 billion. Remember that? It was going to be temporary. He cited 'special circumstances'. In the last budget he increased it permanently to $250 billion, and now we are told that we are going to be increasing it to $300 billion and it is 'no big deal'.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

And he won't need it, he says!

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

Yes, he won't need it, he reckons—just like the last one. How far do Labor have to take it before they take it seriously? This government can try to trivialise their recklessness all they like, but it is a bit like Shakira's hips: the numbers do not lie. Real numbers do not, anyway, but the rubbery forecast and the smoke-and-mirrors budget delivered by the Treasurer are a pure work of fiction. The numbers for 2012-13 that we will see in about 16 months from now will tell a darker truth. In 16 months time we will see how much of a big deal the debt limit is—whatever it actually may be by then.

The shadow Treasurer delivered an excellent speech at the National Press Club earlier this month. One of the most telling graphics he used gave a visual representation—a very strong pattern of budget surpluses under the coalition. And then you saw this massive decline of budget deficits when Labor had the keys to the cookie jar. It clearly demonstrates that Labor's out-of-control spending has delivered the four biggest budget deficits on record, totalling $174 billion. They are very frightening figures—although I can understand families in my electorate having trouble putting them in perspective, because families are faced with the same issues every day. They have to watch their spending. And why is it that families have to balance their budgets but the Labor government cannot? Families know that, if you spend more than you earn, you either run out of money or you have to tax the credit card. And speaking of credit cards, can I say how sad it is that this government is so bogged down in the muck and mire surrounding the member for Dobell and, to get out of it and focus on the economy once again, they need to clear the air. Today the Prime Minister failed to do so in question time. When she was asked what line the member for Dobell had crossed, there was absolutely no answer—only some dancing, some line dancing, perhaps, to a country song, probably Johnny Cash: 'Because he's mine, he'll walk the line.' Going back to the credit cards, families understand that credit card debt has to be paid back. They do not get voted out and let another family come in to clean up their financial mess..

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Unless you're in the HSU!

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

Yes, unless you are in the HSU. Sooner or later, you have to pay it back. If you do not spend within your means, if you do not rein in your spending, if you spend more than you earn, if you keep borrowing money, you end up in a position where it is impossible to pay back.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Then you call in the coalition!

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

You call in the coalition at that point. I wonder if this same matter was ever a matter of public importance for the Greek parliament. Clearly a pattern of borrowing more and more money did not work over there. We could ask: are we on the same path? We will not be far behind if we keep posting the biggest budget deficits that this country has ever seen. But turning things around will not be as easy as it sounds, because Labor is spending money in two ways. They are recklessly splashing the cash around in sugar hits that they hope will lift their numbers in the polls and mask the impact of the carbon tax. Speaking about the carbon tax, it is very interesting. It is one of those taxes that is actually costing more than it is collecting, so we are told. I had a look on the Clean Energy Future website and I found an interesting article titled, 'Living green, drinking tea and weaving.' I was looking to see what some of the carbon tax dollars will go to. It said, 'This Saturday, 12 May, Auburn Community Development Network will host another "enviro tea salon"'. That is actually thanks to support from the Department of Climate Change and Energy Efficiency. They are giving them $72,000 to do this. What do they do at these enviro tea salons? This Saturday, participants can take part in a basketweaving workshop. What is the Gillard Labor government doing funding basketweaving to the tune of $72,000? How is basketweaving going to mitigate so-called 'dangerous climate change'? Maybe this is an adaptation thing. They are adapting us to life under the carbon tax.

What is perhaps more reckless than this is the fact that they have locked in billions of dollars in spending that will remain even if things in the world go ever so badly. When this government look for the bigger drunk in the room and they compare our economy to other countries, one thing they do not mention is structural deficit. But the economist Henry Ergas did. In an article in the Australian on 7 May this year, he made this comparison:

The International Monetary Fund's fiscal update last week highlights how lacklustre the government's efforts have been. Importantly, the IMF concentrates on the structural budget balance, which nets out upswings and downswings and so captures the burden being placed on future taxpayers.

This is a good indication of how an economy is really travelling, particularly in uncertain times. Ergas continued:

Seventeen advanced economies have materially improved their structural budget balance since the global financial crisis. But not Australia. And six advanced economies will have a structural budget surplus by 2013. But not Australia.

If this government wants to talk about the economy and compare us to the rest of the world, then let us do that. But let us compare apples with apples. We are indeed the Lucky Country. We are ideally placed to take advantage of the global resources boom. Australia went into the GFC with an economy that was the envy of the world, with money in the bank. And here we are, after four years of 'hard Labor', posting record deficits. We have extended the credit card in the middle of a boom. If this government is posting record deficits now, what will we see if the economy actually goes into complete meltdown? If this smoke and mirrors budget surplus is so thin it is actually transparent—like the one we have been dished up—despite it being based on a forecast of a bumper 11 per cent increase in tax revenue, it will actually be a real bumper deficit when it sets in.

If the thought of what might happen when things go pear-shaped globally is not enough to warrant reining in spending then consider this: even if, by some miracle, the forecast $1.5 billion surplus is actually delivered, what will it do to debt? It is hardly going to touch the sides. If Labor managed, by that unlikely miracle, to deliver this long, long series of surpluses, it would actually take Labor 96 years to pay off the debts that accrued in just four years. If the government does not rein in spending and start paying down debt, Australia will continue to spend an extraordinary amount on interest. Interest payments on Labor's debt alone will reach an alarming $8 billion a year.

What Labor's recklessness has cost this country is what could have been bought with that money. For example, the National Disability Insurance Scheme could have been brought in. We could have been spending that $8 billion on infrastructure to ensure a stronger economy into the future. We could have been spending that $8 billion on fixing the Bruce Highway right up and down the coast of Queensland, making it safer for motorists and flood-proofing sections of it. Instead, it has been frittered away on pink batts, on overpriced school tuck shops—

An opposition member: On sleeping snails!

on sleeping snails and on 'enviro tea workshops' where they are going to be doing basket weaving. What a basket case of a government this is! It cannot manage its debt.

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

Mr Deputy Speaker Scott, before I start can I commend you on that wonderful tie that you are wearing and its nice maroon colour. And coming from country Queensland I want to point out a mortal sin that was committed by the previous speaker. He misquoted Johnny Cash—and that is reprehensible!

This matter of public importance is all about looking at government spending, especially in the face of events unfolding in Europe. We have heard from the member for North Sydney, the member for Goldstein and the member for Dawson. It is always easy to find fault with some obscure and esoteric component of a multimillion-dollar budget. But when you are talking about a trillion-dollar budget it really is just smoke and mirrors to trot out one small amount as an example of what this government is doing wrong.

It is funny that I am the third speaker today to quote from the Australian. I hate to do this, but I too am going to quote from that well-known socialist and ALP stooge David Uren. In the first paragraph of his article in today's Australian he says:

The Australian economy is tipped to beat Labor's current budget targets—and grow at one of the fastest rates in the OECD

A government member: The member for Goldstein did not quote that, did he?

No, he did not. In fact, I could not find in this article the bit that the member for Goldstein quoted. But I will go back with a fine toothcomb to find it. Uren said:

The Paris-based OECD last night endorsed Labor's "ambitious" plan to return the budget to surplus. And it said that despite the "fragile" state of the international economy, Australia could expect to continue reaping the benefits of the mining boom …

Then he gives other quotes that provide the correct economic context for Australia. It is a shame that the other speakers who quoted from the Australian were not prepared to quote from that part. I was actually a bit misled by the MPI raised by the member for North Sydney; I thought he was only going to talk about the events unfolding in Europe. But he did not refer to that at all in his presentation, and nor did the member for Goldstein.

Times are tough, we do know that. I have another quote, which I printed off from the Brisbane Times, just to balance the fact that I am quoting from the Australian. It states:

The stocks have shed another $15 billion, bringing losses to May to about $100 billion.

These are serious, important, tough economic times throughout the world. We have got the dollar going down below 98c. In fact, apart from the yen, all currencies are falling against the US dollar—that is simply a part of the global shift. So these are very tough times. But I was interested to see comments from the World Bank—which are in contrast to the member for North Sydney's motion—saying countries could further loosen monetary and fiscal policies. I quote:

Fiscal measures to support consumption, such as targeted tax cuts, social welfare spending and other social expenditures, should be viewed as the first priority.

That is the recommendation of the World Bank. Thankfully, we do have a little bit of room to manoeuvre—but not to do some of the fanciful wish list things that the member for Dawson listed in his speech. Flood-proofing and paralleling the Bruce Highway from Coolangatta to Cairns was not in their budget announcements. In fact, there were not many monetary measures mentioned in either the budget in reply speech by the Leader of the Opposition or in the member for North Sydney's response at the National Press Club. They really are drifting into magic pudding economics. Just five days ago, Mr Abbott reaffirmed their commitment that there will be lower taxes, less government spending and lower interest rates under the opposition. The stuff that they are able to commit to is just magical! He is able to commit to all of this, as well as scrapping the MRRT and the carbon tax, while still meeting the same emissions targets that this side of the House will meet!

The member for Dawson seems to be a bit of a sceptic about harmful pollution.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

He liked your basket-weaving initiative though!

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

I have to remind those opposite that you are committed to exactly the same emissions targets that this side is committed to. John Howard committed to them when he was Prime Minister. He was not prepared to ratify Kyoto but he started the measuring process—and, but for the efforts of Queensland farmers, he would not have been able to meet those targets. Still, I remind those opposite that they are committed to exactly the same targets.

It is important to point out that taxation as a proportion of GDP is currently 22.1 per cent, which is lower than at any time during the previous Liberal government, and that percentages are what is most important when we are talking about dollars. This is especially so in an expanding economy, though it is slightly different in a contracting economy. The people opposite understand this.

We are making life a lot easier for Australians. It is great that we have low cash rates so that a person with a mortgage of $300,000, which is the average, is paying $3,500 less in interest per year. Take the member for Warringah with his, I think, $750,000 mortgage—the one that he forgot to mention on the register of interests. The actual mortgage that is on the register of interest—

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry and Science) Share this | Link to this | Hansard source

The one that's not real.

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

I will take that interjection from the member for Indi. I am only reading from the headline here; perhaps she could correct the record. It says '$710,000 in Abbott loans not declared'. That is the headline of the article in the paper, but I am sure the member for Indi will explain how it is not an actual mortgage. She understands more about the Leader of the Opposition's finances than I do. I am sure he is thankful that he is paying $8,000 less.

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry and Science) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: the member for Moreton is deliberately being misleading. My interjection was relating to the Prime Minister saying people on the North Shore were not real, their families were not real and their mortgages were not real.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

There is no point of order. I remind the member for Moreton that all comments are made through the chair. A couple of times he has directed his comments directly to members opposite. I remind him to keep his comments through the chair.

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

Mr Deputy Speaker, I misunderstood. I took the member for Indi's words literally; but, since she has explained them, I take that on board.

Spending as a percentage of GDP is now at 23.5 per cent, which is much better than at any time under the coalition. Incredibly, we have delivered $33.6 billion in savings in this budget, which builds on the $100 billion in savings over the last four budgets. So we are in a great position compared to the rest of the world, and I see great opportunities.

This MPI debate is potentially quite provocative in the light of what is going on. People in Australia are a little bit scared, they are feeling a little bit of trepidation. They take their lead from their political leaders—and, at the moment, the Leader of the Opposition and the team opposite are setting a tone. On Insiders on the weekend, they compared the happiness index for Australia with that for Spain, and I was amazed to learn that the Spanish, with 23 per cent unemployment and youth unemployment of nearly 50 per cent, are happier than Australians. We have 4.9 per cent unemployment. I think a lot of the responsibility for the unhappiness of Australians lies with the current political discourse, which is so bitter. The jeremiahs are constantly coming at a time when we should be encouraging people to spend more.

Thankfully, we are encouraging people to go to the shops, to look after their local retailers, and to take advantage of the government money circulating in the economy. There will be 4,000 more people in Moreton after 1 July who will no longer have to pay any tax at all. So, by 14 July, when the first pay packet arrives, they will have more money in their hand. Around 45,000 people in Moreton will receive a tax cut of more than $300, and 55,000 people overall will receive a tax cut in Moreton. That money can go into bills, and, by 14 July—Bastille Day—it will be able to go into tills as well. That will be a great boost for my local economy, as will the education refunds and the $69, $250 and $380 for pensioner couples and the $110 for children. All those payments, combined with the Clean Energy advance payments, will be great for the economy. (Time expired)

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise in this matter of public importance debate on the urgent need for the government to rein in spending in the face of events unfolding in Europe. It calls on the government to rein in expenditure because of global economic volatility. The world's economy is in a parlous state, and Australia used up its get-out-of-jail-free cards during the GFC. That is the problem—we have placed ourselves in a position now where there is little ammunition left in the locker should hard times return.

Every bit of good economic news out of Europe seems destined to be followed by two negative bits of economic news. A couple of months ago, only just before the Greek election—it seems so long ago now—it was a great relief to the world that Europe and Greece agreed on a bailout deal. But the results of the Greek election were inconclusive and Syriza, which is a radical party of the Left, has made big inroads. They opposed the refinancing package offered by the EC, and now the residents of Greece are facing another election. It is quite likely that, as a result of that election, the refinancing plan for Greece will be thrown on the scrap heap and Greece will have to leave the eurozone. In Spain it is almost as bad. Portugal, Italy and Ireland have similar problems. And now France has chosen a similar path by electing a socialist president who has decried the austerity approach and wants to borrow and spend more money and reduce the retirement age. Already their debt-to-GDP ratios are in the mid-80s.

I do not commonly quote the former Treasurer of South Australia, Mr Kevin Foley, a man I am sure you know well, Mr Deputy Speaker Georganas. He wrote an article, as you would know, in last week's Sunday Mail, in which he says:

Now the real fear is a third instalment of European tragedy could wash over the rest of us—

the first two he referred to were the two world wars—

minus the human slaughter but just as devastating in economic and financial terms. The crisis now gripping Europe has enormous consequences for the entire world including Australia.

… … …

For two years, Germany, France and the IMF have tried to convince debt-laden countries to get their houses in order.

France's election of a socialist leader has been an alarming development. At any other time I may have been mildly enthusiastic at President Hollande's win but not now and not with his platform.

That is from someone who was the Labor Treasurer of South Australia for over 10 years. He goes on to say that President Hollande was:

… elected promising to wind back Budget cuts, to distance France from the hard-line and appropriate German fiscal position and to deal with this nightmare by going for growth i.e. spend more money. France's debt to GDP is 87 per cent. It is almost as broke as Portugal and Spain, which have levels of debt around 100 per cent of GDP.

Foley goes on to say:

Hollande has no money in the bank so he's going to borrow? Yeah, right.

Meanwhile, back here in Canberra, our Treasurer repeatedly tells us Australia is in fine shape and we have nothing to worry about. However, Australians are distinctly uncomfortable and worried about their futures. Since the GFC, government estimates of growth in the economy and growth in tax receipts have been incredibly optimistic. In the budget for 2008—after the GFC—which was tipped to be a contractionary year, they predicted we would have four per cent growth through the remaining out-years of the budget and beyond. At the time, those figures were highly criticised by people on this side of the House and economists around the nation. And they have proven to have been overly optimistic. In that light, the government have failed to take the tough decisions because they have overestimated the world recovery and the recovery in receipts.

The record is not pretty. In the final budget that Peter Costello delivered, there was a $19.7 billion surplus. But the following years registered a $17 billion deficit, a $54 billion deficit and then a $47 billion deficit. This year the deficit is $44 billion, and the year is not finished. Really quite disturbing is the rise in overall government expenditure, which was around the $270 billion mark in the last Costello budget and is now at $376 billion—an increase of more than 40 per cent for the coming budget. The stimulus was meant to be a one-off shot from the government. The stimulus packages that came through were supposed to ramp up and put some money out in the economy and buy some assets—admittedly, some pretty dodgy assets—and then the money was supposed to be wound back. The stimulus is over but we find the budget now sits at $100 billion more than the last Costello budget. The member for Moreton, just recently on his feet, said that the government had made $100 billion worth of cuts in four years. In fact, their expenditure has not risen by $100 billion in four years, it will rise by $100 billion every year in the budgets from this point.

The problem is that Labor members love being the local Father Christmas. They just cannot say no. They are like a bad parent. They love to give out money. The trouble is that it is other people's money, including that of future generations. The government tell us they have taken the tough decisions, but in four years they have repeatedly lifted the borrowing ceiling, first from $75 billion to $200 billion to deal with the GFC and then to $250 billion. Now, this year, embedded in the budget papers is a move to shift the borrowing limit to $300 billion, an extra $50 billion—even though the Treasurer tells us we are going to bank a surplus. It leaves you a bit speechless.

Yesterday was a red-letter day in this parliament. The member for Longman had another birthday. He was 22 yesterday. We remember well the question he asked in this House. He asked why he should believe that the Labor Party will ever deliver a surplus to this nation when they have never done so in his entire life. He is another year older and they have not done it, again, and it is pretty unlikely to happen in the next 12 months. The lift in the borrowing limit is a clear indication that Wayne Swan has little faith in his budget predictions of a surplus. His attempt to justify the action of the extra $50 billion borrowing limit as 'bumps'—$50 billion bumps!—is simply not believable and is an admission that he has little faith in his budget projections. That is why it is so important that Labor rein in this reckless spending.

Even Ken Henry admitted last week on the ABC's 7.30 that the value of the stimulus spending in many cases was poor. He even went on to say that getting value was not the aim of the program—it was just about getting the money out the door. That was the important thing. It did not really matter what it was spent on or how it was spent. That is what I call reckless spending. It is unbelievably reckless—just shovel it out the door and do not care what it is spent on. It is a disgrace.

The government is insulting the electorate. The electors see through the game. They know that eventually they will pick up the bill and they will pick up the interest. This nation will be paying $8 billion a year in interest in the next 12 months—that is, $22 million a day in interest. That is $1, in round figures, for every Australian every day. A dollar a day in interest for every Australian—man, woman and child—and they will still owe the principal. They will still owe the $144 billion this government has racked up on the credit card.

There is every possibility that this budget is already shot to pieces. The falls in commodity prices pushed by the Greek debt crisis, the announcement by BHP and Rio that they are reconsidering investment, the escalation of strikes around the Queensland coalfields—there is every chance that this budget is already in trouble and the government needs to reposition its spending program.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Order! The discussion is now concluded.