Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. I remind the Prime Minister of the statement by the member for Denison this morning: 'The government is being dishonest. In its estimates late last year it was aware of what the commodity prices were. So, if it was only to do with commodity prices, then those estimates for the tax should have been written down substantially last year, and they were not.' Isn't the member for Denison right?

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

For the benefit of the member who asked the question and those on that side of the House, as well as the member for Denison, I will explain the way in which the budget works and forecasts are done. I am surprised that the member asking the question does not know, given that she served as a minister in a government. But apparently, from the question, she does not. So let's go through the way it works.

What government does is we make decisions, we make policies, we make budgets, we make fiscal strategies. We work with the experts at Treasury, who ensure, with the experts at Finance, that policies are costed and that budget projections are done, including revenue projections. So I would remind the member who asked the question that the revenue projections, whether they are for the minerals resource rent tax, whether they are for company tax, whether they are in fact for personal tax—the tax that workers pay—or whether they are for capital gains tax, are put together by experts at Treasury using the best of their expertise, all with goodwill. It is done for this government; it was done for governments in the past, including the Howard government; and it will be done for governments in the future.

Then, of course, we see the actual performance against their forecasts and projections, and there are times in which there is a variance between the two. There is a variance now across many of the revenue categories of government, which was not forecast by Treasury and which means that we are seeing revenue, as a percentage of GDP, at its lowest point since the 1990s. That is, revenue has not returned in the way in which Treasury has predicted. So it is defying the usual economic orthodoxy and economic models.

There are a variety of factors feeding into this. Commodity price volatility is certainly one of them. And the high Australian dollar is certainly a very strong factor feeding into it. Not only does it press on industry sectors like manufacturing and tourism and suppress profits, but it actually has implications for the resources sector when contracts are priced in American dollars. Then, of course, continued sluggishness in the global economy also has implications for the Australian economy for revenue and for projections.

The member opposite, in asking the question, should recognise the importance of understanding these factors to being able to project plans for jobs and growth in the future. So no-one should go around insulting the professionals at Treasury. That is not appropriate and not right. We will continue to focus on jobs and growth, despite the negativity of those opposite. (Time expired)