Ms Anna Burke (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 to address Australia’s deteriorating fiscal position.

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 have sought to refresh my memory of the Labor Party's commitments over the years to living within their means.

Mr Fitzgibbon interjecting—

I am glad I have the support of the member for Hunter. I imagine the member for Griffith is equally pleased to have his support. Speaking of the member for Griffith, I reminded myself that it was in 2007, just before he was elected Prime Minister, that he declared:

I am an economic conservative.

Not to be outdone, at the National Press Club in 2007, his then shadow Treasurer said:

Like Kevin Rudd, I am an economic conservative.

Chris Uhlmann also asked the now Prime Minister the same question on the ABC in 2007. He asked:

Are you also an economic conservative?

Julia Gillard replied:

I'm an economic conservative. … I've always believed in the value of hard work and I certainly believe we need to keep the budget in surplus …

Not that Labor ever has delivered a surplus! The member for Griffith, the member for Lilley and the now Prime Minister are fingers on the same hand—they are all tinder dry economic conservatives so committed to delivering surplus budgets that they do not have to worry about debt or about putting anything on the national credit card. They were so unconcerned about their ability to properly govern the country that they introduced a bill—the Commonwealth Securities and Investment Legislation Amendment Bill. It was Chris Bowen, the member for Prospect, who introduced this. Remember that he was the author of a number of different watches—and he was not a watchmaker. He brought in Fuelwatch and GroceryWatch—all his ideas and he did such a great job with them! But little did the Treasurer know that the then Minister for Competition Policy and Consumer Affairs was issuing a debt limit bill. I suspect in the depths of my heart that the member for Prospect knew that Labor could not live within its means, so he wanted to put a little handcuff in there without the Treasurer knowing. Let us give him the benefit of the doubt. In his second reading speech he said:

The government's commitment to strong fiscal discipline means that there is no need to issue debt securities to finance spending.

Five years and $200 billion later, with a debt interest bill of over $12 billion a year, how those words must ring in the ears of the Labor Party. How those words about living within your means must ring in their ears.

They are always quick to give Australians a lecture about how the Australian people should live within their means. 'But don't worry about us,' they say, 'We're borrowing money—and we are borrowing money because we cannot deliver a surplus.' Labor has not delivered a surplus since 1989. The member for Longman, up the back there, was not even born in 1989. In his lifetime, he has never seen a Labor surplus—and I expect that, in his lifetime, he never will see a Labor surplus. And long may you live, Member for Longman.

The truth is that Labor do not know how to live within their means. They are like someone with a credit card who is out of control. When the member for Prospect introduced that prophetic bill, the Commonwealth Securities and Investment Legislation Amendment Bill, he said: 'Don't worry—we only need a $75 billion limit. That is all we need. Really that is a bit more than we need; we are going to have plenty left.' It is like a compulsive spender going into the bank and saying, 'Look, can you lend me 10 grand—I don’t need 10 grand; I'm only going to spend three or four but 10 grand is the limit I want; I want you to handcuff me.' And that is what they did. But then they feared they would exceed the limit, so they went from $75 billion to $200 billion in 2009.

They said it was a financial crisis, a calamity. Okay, there was an impact on revenues—I fully accept that, and I always have. But $200 billion? They said at the time, 'Don't worry, it is the GFC—the GFC has done it; we've seen the worst of it and we've come through it because of what Labor has done.' Then, in 2011, three years after the GFC hit the budget, they said, 'Two hundred billion is not really enough; we need to increase our debt limit.' So they go back to the bank—the parliament—and say, 'Two hundred billion is not enough; can we take it to $250 billion?' We said, 'Hang on, you said $200 billion was the limit, and before that you had said $75 billion was the limit. What is your limit?' They said, 'No, $250 billion is the limit; that is the limit we will legislate for.' They were supported by their mates, the Independents, and the Greens. The Greens would have a trillion dollars if they could. The bottom line was that they said $250 billion was the limit.

Last year, along comes the Treasurer. He says, 'Good news, Australia—we are going to run a surplus. We are going to live within our means and we are going to pay it all back by the end of the decade. But, hey, can you increase the limit to $300 billion? We are not sure, we might exceed $250 billion, but I give you a guarantee'—as he did in this place—'that at the end of the financial year we will not get above $250 billion; we will just pop up and down because we have different debt issuance instruments, and the timing is a bit here and there, but don't worry, we will not exceed $250 billion at the end of the financial year but we need to go to $300 billion.' So now we are just a few weeks from the end of the financial year and the debt is $263 billion.

Madam Speaker, we asked the most simple questions, and you bore witness to them. You were in the chair, Madam Speaker, and you heard that our questions of the Treasurer were simple and straightforward: 'Will you keep your word that the debt will not exceed $250 billion this year?' He could not answer the question. It was agony to watch—it was painful. Anyone watching in the gallery or on TV must have been aching just a little bit for the Treasurer. But not me. I know, and I suspect all of my colleagues know, that at the end of the day it is the taxpayers who have to pay back this debt. At the end of the day, someone has to pay this money back. They cry crocodile tears about cost-of-living pressures on Australians and yet they keep jacking up the taxes—27 new or increased taxes since they have come in. Not to be outdone, the Prime Minister has declared that she is going to introduce a tough budget. We know what a tough budget means—it is tough for the taxpayer. The Labor Party has no respect for taxpayers. But the Labor Party have no respect for the meaning of their words—they are just words; just spin. They have no regard for the impact of their decisions on everyday Australians.

I have confessed to a couple of friends here that my old mate Peter Costello—he remains a very good mate—said to me, '$250 billion is quite an ask, Joe.' I said, 'Do you know what, Peter, it is quite an ask. And, by the way, when Labor last left office they left a $96 billion debt, but there was a Telstra to sell, a Qantas to sell'—not that it is worth as much as it once was—'and a range of different assets to sell. I haven't got any assets to sell if I become the Treasurer.' The NBN? I could not give it away. If anyone wants to buy the NBN for one dollar, it is for sale right now. Come on, Emmo—a gold coin will do it. The CEFC? What is left? There is nothing left.

I will tell you what we are left with—as of today, $263 billion of debt, and $12 billion a year in interest payments, which is more in interest each year that the Commonwealth government has to find than the entire yearly proceeds of capital gains tax in Australia. It is four times the total collection of fringe benefits tax each year. It is far more than the carbon tax—in fact, it is more than the carbon tax and the mining tax combined. That revenue alone would not meet the interest bill on the Labor Party's debt. They say not to worry about it; the rest of the world is in great shape. But when they compare us with the rest of the world they are comparing us with Europe. Gee, Europe is doing well; it is a cracker. European countries are benchmark states for us. That is exactly who we should be comparing ourselves to! Or the United States, with its fiscal cliff. They are doing really well, too, with unemployment hovering around nine per cent. Using the United States for comparison is a great idea! Maybe Japan? How well is Japan doing? It has been in a cocoon for a decade or more, and yet those opposite compare us with Japan. They compare us with the slowest runners in the field, at a time when we should be the fastest runner in the field.

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

Who do you want to compare us to?

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

Don't interject, old son—listen carefully. When you compare us to the fastest runners in the field, Australia with its11.6 per cent of GDP debt compares with Norway, whose debt is minus 169 per cent. That means they have more savings and they have not got any debt. Finland's debt is minus 51 per cent of GDP, and Sweden's debt is minus 17½ per cent of GDP—but, no, the government says we have been hit really hard by a loss of revenue. So I thought, 'Well, how do we compare?' I go back to Norway. Norway improved by 45.8 per cent over the last five years. Finland was roughly stable. Sweden improved 5.1 per cent. Our debt deteriorated 17 per cent. So who are they comparing us with?

Why does Labor keep doing this? Why does Labor embrace mediocrity? Why does Labor embrace the lowest common denominator, when you should compare us to the best? Because we want Australia to be best. We do not want to be second best or third best; we want our nation to be the best that it can be. We want our nation to be the best in the world, and we want to ensure that our children start at the top of the mountain, not at the bottom of the mountain. We want to ensure that we give the next generation and those beyond a better quality of life—an even better quality of life than that which we have. Yes, we have a better quality of life than our parents and our grandparents, and so it should be. But we owe that to others. Why? That is the way humanity should run. We should aim to be better. We should aim to leave a better legacy.

One of the reasons why this debt level from Labor hurts so much is the terms of trade: the demand for what is in our ground or in our oceans is far greater now than it has been at any other time in our history. The terms of trade are higher now than any day during the previous, Howard government. Yet it was the Howard government that had to pay off Labor's $96 billion of debt and left $60 billion to $70 billion of extra money available, and it is Labor that comes in and spends all of that and then keeps adding to the debt bill so that we have over $263 billion to try and repay. You know what, Madam Deputy Speaker—Mr Speaker—Mr Deputy Speaker—

I know, 'There is no sex in the chair,' as Joan Child once said. I say this to you, Deputy Speaker Scott: we are ready to climb this mountain. We are ready to pay back the debt. We are ready, on behalf of the Australian people, to do the hard yards. It starts here. It starts within the size of government. It starts on the basis that we have to live within our means before we ask the Australian people to suffer more at the hands of Labor. We are the ones that are determined to turn the place around. We are the ones that are determined to deliver hope to generations of Australians that tomorrow will be better than today, because we are the ones that know how to live within our means, and we will not ask the Australian people to do anything that we are not prepared to do ourselves.

Craig Emerson (Rankin, Australian Labor Party, Minister for Trade and Competitiveness) Share this | Link to this | Hansard source

This matter of public importance is a welcome debate because we are witnessing a sharp contrast between the position of the Labor government and that of the coalition in opposition, and that contrast is this: Labor consider that the economy is strong and that the economy can be strengthened further, and we are implementing policies to do that in order to secure jobs for the working men and women of this country and for the young generations coming through, while the coalition consider that the economy is ailing, it is sick and it needs the sort of radical surgery that the shadow Treasurer just outlined—savage cuts to government spending, and big tax increases. I will substantiate my arguments by going through, one by one, the areas where they would cut and the areas where they would increase taxes.

I do note that the shadow Treasurer, in his opening remarks, declared that he is a good mate of Peter Costello. Peter Costello has been in the news in the great state of Queensland recently, yet again, and the reason is that he has overseen the preparation of a second audit commission report. The first audit commission report contained cuts in government services that were not outlined by Premier Newman before the Queensland state election. The second audit commission report contains recommendations for the privatisation of government services, including hospital services. So, when I speak of the radical surgery that the coalition considers essential because it believes the economy is ailing, you need look no further than the second audit commission report, where the coalition—the LNP in Queensland—under the recommendations of the shadow Treasurer's good mate, is proceeding to cut vital hospital services. This points to the fundamental difference between Labor in government and the coalition in opposition.

Labor in government note that, here in Australia, we are growing faster than any other major advanced country; the unemployment rate is relatively low; and the official inflation rate is low. Interest rates, the Reserve Bank cash rate—which went up 10 times after the coalition government promised in the 2004 election to keep interest rates at record lows—have fallen from 6¾ per cent under the coalition government to three per cent. That means, for a mortgage holder with a $300,000 mortgage, a saving of $5,000. We consider that to be good. The coalition considers all of these indicators to be the signs of an ailing and sick economy.

We consider that investment at 50-year highs is a sign of a healthy economy. The coalition considers that the Australian economy is weak and ailing and in need of radical surgery. We consider the fact that three international ratings agencies, for the first time in Australia's history, have rated Australia triple A and stable to be an indicator of a strong economy. The coalition considers this to be an indicator of a weak and ailing economy that needs radical surgery. We consider car sales going through the roof to be a sign of a healthy economy. The coalition considers car sales going through the roof as evidence of an ailing and weak economy. We consider a pick-up in consumer confidence to be a good sign, along with a surging stock market and improving retail sales and house prices—all indicators of a strong economy that is getting better. The coalition considers these things indicators of a weak economy—a sick and ailing economy—which needs radical surgery.

It is through the device that the coalition have already supported in Queensland that they would pursue their radical surgery. I refer, of course, to the shadow Treasurer's mate Peter Costello and his device of an audit commission. The coalition, in opposition federally, have said that they would have an audit commission just as Campbell Newman has had an audit commission in Queensland. The reason they want to have an audit commission is that they want to conceal from the Australian people, just as Campbell Newman tried to conceal from the Queensland people, savage cuts to services and to jobs; they do not have the wit or the courage to explain to the Australian people where they would make their savage cuts to what they consider to be a sick and ailing economy.

The opposition leader's Liberal Party, in contrast to the Liberal Party of the member for Wentworth, propose policy prescriptions such as $180 billion in cuts to government spending. The shadow Treasurer referred to the global financial crisis—at last he has acknowledged that it did occur—but this opposition leader's Liberal Party are saying that, when there was a hit during the global financial crisis of $180 billion to government revenue, the opposition would have cut spending commensurately. They would have matched a $180 billion write-down of government revenue with $180 billion in cuts to government spending.

I refer now to statements by the shadow education minister, who said late last year:

Well, if there had been a Coalition government for the last five years, Kieran, I think most people accept that we would have had continuing surpluses.

This is my point—they would have matched the $180 billion write-down in taxation revenue with a $180 billion cut in expenditure. The shadow Attorney-General said:

Well, we think the budget should never have been put into deficit.

Again, this indicates that they would have matched $180 billion in government revenue cuts with $180 billion of cuts to government spending. What would such cuts have inflicted on the Australian people? They would have inflicted a deep and prolonged recession. That is why I think the Australian people should rightly be fearful of a coalition that are led by this opposition leader. A cut of $180 billion in government spending is an example of the cuckoo policy prescriptions they have in mind for the Australian people and for the Australian economy, which they consider so sick and so ailing that it needs radical surgery.

We know from the mouth of the opposition leader that his preferred policy prescription for dealing with the GFC was a recession for Australia. He said:

For instance, in New Zealand they have tried to reform their way through the global financial crisis under the new government's leadership, and they seem to be doing pretty well.

But what happened in New Zealand? There was a recession that lasted five quarters—1¼ years. That is what happened in New Zealand, and that is the policy prescription of the current Leader of the Opposition, supported by the shadow Treasurer. When they lecture us on ensuring that we have responsible fiscal policy they ought to look at their own admissions, because they personally have admitted that they already have a $70 billion funding hole. The opposition leader said:

Well, this $70 billion figure is a fanciful figure. It is plucked from the air by government ministers and I'm surprised you're retelling it to me.

Who gave the $70 billion figure? It was the shadow finance minister. He said:

The $70 billion is an estimate of the sort of challenge that we will have.

He went on to say:

The $70 billion is an indicative figure of the challenge that we've got.

He was asked:

Is it a furphy?

He replied:

No, it's not a furphy. We came out with the figure, right?

That is the coalition admitting that they have a $70 billion funding hole—and they have been trying to plug the hole ever since.

Just recently the shadow Treasurer has been fluffing his lines. The coalition know that they are going to make, through the concealed device of an audit commission, the $180 billion in cuts. When talking about the fact that they would remove the mining tax if they were elected, the shadow Treasurer was asked by a journalist:

What about the hole in the money?

He said:

The expenditure against it is going to go.

He had already mentioned, in the same context, the government's increasing the superannuation guarantee from nine per cent to 12 per cent, so he was saying that the increase in the superannuation guarantee from nine per cent to 12 per cent will go if the coalition is elected. The journalist then asked him:

So what would you cut?

He answered:

I just outlined them. I can go through them again if you want.

The journalist asked:

So you would cut all those initiatives?

The shadow Treasurer answered:

Absolutely, you can’t afford them.

So he was saying, at about four o'clock in the afternoon, that the opposition would cut the nine per cent to 12 per cent increase in the superannuation guarantee. But, by the time the six o'clock news put what he said to air, he tweeted to reprimand National Nine News for reporting what he had said—the words that came out of his own mouth. The shadow Treasurer said, in a moment of candour, that the increase in super from nine per cent to 12 per cent would go under a coalition government. Of course, what he said was repudiated by the Leader of the Opposition because the Leader of the Opposition did not want the smelly cat out of the bag before an audit commission. But the cat is out of the bag—and a dirty, smelly creature it is. The coalition would cancel the increase in superannuation from nine per cent to 12 per cent. They were the words that came out of the mouth of the shadow Treasurer.

But it gets worse. In only the week just gone, the shadow Treasurer discussed the tax-free threshold. I refer to the increase in the tax-free threshold from $6,000 to $18,200 which has liberated more than one million Australians from being taxpayers; it has taken more than six million Australians out of the tax system and offered them cuts of more than $300 a year.

Mr Van Manen interjecting—

I am reading from a transcript. I know that members opposite do not think that transcripts have any credibility. Certainly the member for Forde does not believe a transcript has any credibility and neither does the shadow Treasurer, because he expunges embarrassing material from transcripts. He said:

Let me be very clear, if there is no carbon tax then there is no need for compensation.

He was asked about the tax-free threshold and he actually said, '$3. That is what you said'—turning to the Liberal candidate for Parramatta—'$3.' It is not $3; it is $300, and that part of the transcript was expunged. Why? Because, again, the shadow Treasurer tripped up on his words. He let that dirty cat out of the bag, that dirty, smelly cat, and the opposition leader said, 'Put the stinking creature back in the bag because that is going to come out if we get elected, through the audit commission process after an election.' We know that the shadow finance minister has said that they have got all their policies. They are already costed. They are all ready to rock-and-roll. He said: 'We have identified 49 errors of policy. I have got on my desk 49 policy documents with covers'—very nice covers, apparently—'and the costings.' But, of course, once they get a bit of pressure on the costings, they then run away and seek refuge in this audit commission.

What is the truth of the matter? The truth of the matter is that they have these policies, but they have personally said that they are going to wait until after the budget in order to reconcile. Then they said they were going to wait 10 days into the actual election campaign. The Deputy Leader of the Opposition said, 'No, no, we're going to wait until 30 September for the final budget figures,' which is after the election. The truth is that they would wait for this audit commission to make all of these errors add up through the savage cuts that they would deliver. Of course, they have form. We know that last time they botched it to the tune of an $11 billion funding hole. And, on 12 February this year, the shadow Treasurer was asked:

Your costings were wrong before the last election.

The shadow Treasurer said:

I don't accept that at all.

It was objectively shown to be the case.

I go back to where I started: we believe that the Australian economy is fundamentally sound. We can strengthen it further. It does not need the sort of radical surgery that the coalition believe it needs and want to conceal from the Australian people until after the election. The Australian people deserve better. They deserve accountability. They will continue to get that from the Gillard Labor government. The cowardice of the coalition in saying, 'We'll do it after an election,' is unacceptable, and this economy does not need the radical, savage surgery that they have in mind for it. (Time expired)

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

I rise to speak on this matter of public importance: the failure of the government to address Australia's deteriorating fiscal position. It is good to follow the Minister for Trade, but I cannot say that much of what he detailed here in the chamber was relevant to the topic. Perhaps he could have been more relevant if he gave us one of his 'improv' karaoke renditions of Horror Movieand maybe it could be in tune this time—because a horror movie is really what we have got with Australia's current fiscal position. Indeed, it is because of that that it is a matter of urgent public importance. The fiscal mess that this government is creating is a mess that the public will be left to clean up.

Today's debt is tomorrow's taxes. Our children will pay the price of this government's reckless waste through taxes and lost opportunities. This government's failure to address Australia's deteriorating fiscal position is this government's selling-out of our children's future. But, according to the Treasurer, 'That's not a problem.' Our escalating debt is not a problem, he reckons: 'Move along—nothing to see here.'

If you want to know why this Labor government is failing to address the problem, it is because it denies there is a problem in the first place. Here is what the Treasurer said about this nation's debt—the excuse for incompetence that he dusts off and trots out on a weekly basis. He says, 'Compare with other major advanced economies.' He just loves to compare Australia to a handful of the worst performing economies in the world—not the big resource economies that are out there like ours but the ones that are floundering and are currently groaning under enormous debt levels. That is his aim. That is where he wants us to be.

He knows we are a long way back, but, boy oh boy, he is trying to catch them. It was a late start, because he had to overcome the handicap of actually having some cash in the bank and a strong economy when he took the reins, but he is coming—he is coming through with a late surge! He has got the blinkers on and he is riding that one-trick pony home, and he is going to catch them. He is! And here is how much he is gaining on them. In the outline of the economy, he laments the fact that the size of the task before him might actually be beyond him. He says:

Even at its peak, net debt will be a tiny fraction of the average of the major advanced economies.

Then there was this encouragement from the cheer squad, the Prime Minister, in a speech to the Queensland Media Club on 12 October 2012, where she said:

Australia's debt is lower than any major advanced economy—our net debt will peak at 6 per cent of GDP in 2011-12.

Let us skip ahead to what the Treasurer said in MYEFO, the mid-year budget update in October last year:

The average net debt position of the major advanced economies is projected to peak at 95 per cent of GDP in 2016, almost 10 times higher than the expected peak in Australia's net debt of 10.0 per cent of GDP in 2011-12.

So, from October 2010 to October 2012, Labor's forecast for net debt changes from six per cent to 10 per cent of GDP. He is catching them. He is coming in with a late run.

The truth is that those opposite actually have no idea when net debt will peak, because in government Labor will never see net debt peak; it will just keep going up and up, because they have got no idea how to stop it from growing. It is very easy, Wayne: just spend less than what you earn. There are seven million households in Australia, in the real Australia out there, who understand that fact. But the world's luckiest Treasurer, or whatever Euromoney magazine named him, cannot quite grasp that fact. Poor old Swanny. He cannot get his head around how a household budget actually works, and he wants to. He tries really, really hard. I can picture him, sitting there at the kitchen table, doing his homework with a firm grip on the crayon and a wrinkled brow, biting his tongue. And, after much constipated endeavour, he works his sums hard enough to come up with the debt analogy that he loves the most. Even the Prime Minister has picked it up and run with it. I return to a quote of hers that I used earlier, from the Queensland media club, where she said:

… our net debt will peak at 6 per cent of GDP in 2011-12 …

Her next line was straight out of Swanny Junior's big book of sums. She said that that was:

… equivalent to someone who earns $100,000 a year taking out a $6,000 loan.

Mr Perrett interjecting—

I am sorry—it was straight out of the Treasurer Junior's big book of sums:

… equivalent to someone who earns $100,000 a year taking out a $6,000 loan.

Well, that is what she said. A couple of months earlier, the Treasurer used the same line in a doorstep. On 4 August 2010, when net debt was at six per cent, he said:

That’s the equivalent of someone who’s earning $100,000 a year borrowing $6,000 a year.

But, on 22 November 2011, we had the then Minister for Financial Services and Superannuation upping the ante:

… Commonwealth government debt is at seven per cent. That is the equivalent of $7,000 out of a GDP of $100,000.

By the latter half of the next year the Treasurer was crowing on ABC on 16 October 2012:

Our debt in international standards is very, very low. It's like someone earning $100,000 a year owing a modest $10,000 …

Up and up it goes, and that is lovely.

But the problem is that comparing your debt to everyone else's is not a very good analogy. Viewing debt as a percentage of GDP might be useful if you are comparing it with other countries'—especially if the other countries have similar economies that are resource based. But to use the figures to compare to a mortgage is just as reckless as your spending—as the government's spending, Mr Deputy Speaker Scott, not yours.

GDP is produced by everyone. The seven million households out there have their own debts to worry about, and when their mortgages are paid off they will actually have a house. But what will the government have? What the Treasurer will have to service his debt is government income, raised mainly through taxes. Government income, which can be used to service government debt, was $329.9 billion in 2011-12. That is what we collected in revenue last year: $329.9 billion.

So let us take the Treasurer to the bank manager and see if he can get a loan like the one he describes as 'tiny' and 'very, very low'. Let us imagine Mr Swan saying to the bank manager, 'I want a loan for $144 billion, Mr Bank Manager.' That is the net debt that we have currently. The bank manager: 'Certainly, Mr Swan; what was your income last year?' Mr Swan: 'It was roughly $330 billion.'

Yvette D'Ath (Petrie, Australian Labor Party, Parliamentary Secretary for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I have been very tolerant, but my point of order is that the member continually refers to the Deputy Prime Minister inappropriately and should refer to him by his correct title.

Bruce Scott (Maranoa, Deputy-Speaker) Share this | Link to this | Hansard source

The parliamentary secretary has made a point of order. The member for Dawson will refer to members by their title or their relevant ministry.

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

Here the bank customer is the Treasurer. So the Treasurer walks in and says, 'I want a loan for $144 billion, Mr Bank Manager.' The bank manager: 'Certainly, Mr Treasurer; what was your income last year?' The Treasurer: 'It was around $330 billion.' The bank manager: 'Okay, Mr Treasurer. Let's go through your actual expenditure. Oh boy! It looks like you've got a lot of dependants. I've got down here that you've got a lot of welfare recipients. Foreign aid's increasing. You're letting other people into your household as well—asylum seekers. You're increasing expenditure on that. I see that you've bought some school halls and the value of them is about half of what you actually paid for them. And what's this purchase here for flammable pink batts? What's that all about, Mr Treasurer?' After the bank manager has gone through the books and had a look at all the expenditure, he turns to the Treasurer and says: 'So, Mr Treasurer, what was your expenditure actually last year?' And the Treasurer mumbles something. The bank manager says: 'What was that, Mr Treasurer?' The Treasurer: 'Oh, it was about $374 billion.' The bank manager: 'That's about $43 billion more than you actually earned. You are spending more than you have earned. Mr Treasurer, how are you going to actually pay back this loan that you are trying to get from me?' The Treasurer: 'Oh, that's easy. I'll just come back to you and get another loan and I'll pay the interest off with that.'

That is what the government is doing: raising the debt ceiling again and again and taking out another loan to pay off the interest that this nation currently owes. That loan will get even bigger next year. He will raise the debt ceiling again and borrow more money to pay that interest. We see something from the West Australian today where they actually state that:

The interest bill on the nation’s $267 billion gross debt, to be revealed when the Budget is handed down on May 14, is expected to be at least $1 billion worse and could be pushed out even further.

That is a terrible legacy to leave for our nation because today's debt, the debt that this government has engaged in, is tomorrow's taxes. We are saddling a whole generation with this, and the money that we are using to spend on interest is not going into worthy infrastructure projects around the nation which would otherwise be funded.

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

I rise to speak on this matter of public importance, discussing in particular Australia's fiscal position. In doing so I follow on from Dr Emerson, my next-door neighbour, who is the minister at the table. I would like to contrast his contribution with those of the member for Dawson and the member for North Sydney.

I do not know the member for North Sydney's electorate that well, though I think I have been in his electorate. I know that if I stand in the southern part of his electorate I am in Kirribilli. So I have been there once, for a function—I think with the minister, in fact—with the Chinese community. If you stand in the southern bit of my electorate you are in Acacia Ridge, which is quite a different part of the world. But I know that when I am in Acacia Ridge talking to the people about debt and what sort of debt is manageable—and I refer to the member for Dawson talking about the seven million households in Australia and how we should approach debt—most people understand that debt is not a bad thing. Debt, in fact, can change your circumstances.

I have here a newspaper story from Simon Benson from June 2010 talking about the Leader of the Opposition taking out a mortgage for $710,000 for his house. Even for someone in their 40s or 50s, as the Leader of the Opposition would have been when he took out this loan, debt is not necessarily a bad thing. It is good if you can keep interest rates under control. So I am sure the opposition leader would be thankful that, under this government, the interest that he is paying on that mortgage has probably halved in the time that we have been here. I think we even gave him a pay rise as well. So I am sure he is very thankful for that to this side of the House.

Craig Emerson (Rankin, Australian Labor Party, Minister for Trade and Competitiveness) Share this | Link to this | Hansard source

He has not mentioned it!

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

He has not mentioned it, but I am sure as a good Christian that he would mention it at the appropriate time. The reality is we need to put everything in context, like the spin that comes out of the member for North Sydney—we need to put things in context. We need to remember that Australia has a $1.3 trillion national economy. We are not just talking about a small trucking business and not just talking about one household: we are a nation with an economy of $1.3 trillion.

It is important that we look at some of the other countries. The member for Dawson said, 'You should compare our situation to comparable countries, like resource-rich countries such as Canada.' He did not mention Canada, but obviously that is very comparable in terms of size, resources and population. Canada is very comparable. As I read through the list of significant countries in terms of GDP growth, we outdo the lot. In fact, I think the only one that is outperforming us that is comparable would be Taiwan, which is good for some of the constituents in my electorate.

When we are compared to Norway or Sweden—as mentioned by the member for North Sydney—or to the United States, Canada, Japan, the United Kingdom or France, we are outperforming those countries. The reality is we are outperforming these countries. We have had 3.1 per cent growth and 0.6 per cent in the December quarter. However, what do we hear from those opposite? If they are overseas, they say that it is good. But no, because they are here, we hear the member for North Sydney say that our economy is flatlining. It is out and out misleading the public.

We have the Leader of the Opposition say that it did not grow. It did grow 3.1 per cent, but he says that it did not grow. The member for Dawson calls it a 'horror movie'. It must be like the Scary Movie version of a horror movie, because the reality is that when our economy grows like that it actually brings smiles to people's faces. Obviously, there are some stresses and this high Australian dollar is obviously something of concern. It is nice if you are an importer and your business is selling tires or something like that—as I inspected at one of my businesses yesterday. But to have a high dollar and these declining terms of trade is obviously something that is of concern to the government. Obviously, we could take a leaf out of the John Howard a playbook. If we taxed at their rates of taxing, we would have an additional $30 billion in taxes per year.

Craig Emerson (Rankin, Australian Labor Party, Minister for Trade and Competitiveness) Share this | Link to this | Hansard source

Easily in surplus.

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

Yes, in surplus in five, six or seven years easily if we taxed at the rate that John Howard did, which has a record in history as the highest taxing government ever at 24.2 per cent of GDP. Instead, we have made the decision to be a much lower taxing government at 22 per cent of GDP. Sadly, obviously the reality is that no government in more than 30 years has run a surplus with a tax to GDP ratio below 22 per cent. That does bring some strains and stresses to the government, but obviously we are not hearing those opposite say that we should be taxing at the same rate as John Howard.

I do know what we should do. The member for Dawson said that we would have nothing to show at the end of the process and compared acquiring a house to what the government does. I can tell you what we do: we invest in education, we invest in the NBN and we invest in infrastructure. I want to return to those three points, because the member for Dawson—so typical of people down here in Canberra—mocked our investment in education and insulation. Of course, he goes to the school facilities that have had their curriculum improved and that have had their quality of educational delivery improved, and he mocks the NBN.

In fact, we have the Leader of the Opposition make that incredible statement during his contribution that he would nationalise the NBN if he was in power. He did not say that term, but he forgot that the government does not actually own the NBN. He said that he would effectively nationalise the NBN and then sell it for $1. That was his offer; it is on Hansard today. He did not realise that that is the major contribution that this government is making to improving productivity. It was ironic to have someone from the region—the Mackay area—not mention the NBN and the contributions that it makes to the local economy.

In terms of productivity, I well remember that when we took office in 2007—the member for Petrie and I were elected on 24 November 2007—productivity for that December quarter was at zero. That is not all the fault of the Howard government, admittedly. I know it does fluctuate a little bit. But the reality is that now we are starting to improve productivity, because—as everyone knows—productivity drives growth in living standards. We have got a bit of a pick-up in labour productivity. In fact, the labour productivity in the market sector grew by 3.3 per cent over the year to December, which is well above the 1.5 per cent average annual growth rate over the last 10 years.

Productivity is a sure indicator as to whether the economic engine is tuned correctly. Anyone that understands economics understands that you just cannot cut wages, which is the Work Choices way—the lazy way—of bringing improvements to the economy. You cannot make people work harder by cutting their wages—that just does not work. You have got to be smart about it. What do you do? You invest in infrastructure. It is a disgrace to have one of the economic brains of those opposite come in and say, 'I guarantee that I will nationalise the NBN and then sell it for $1.' I would like him to go to the Islamic college in the minister's electorate and tell them that the NBN is not worth anything. I say that because I received over 1,000 letters from the students in that school saying that they want the NBN rolled out faster to them, because they understand the jobs of the future will not necessarily be in their neighbourhood but will be throughout the Asian region. How do we engage with the Asian region? We invest in the NBN.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Which private company owns the NBN?

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

It is not the government. The reality is that it is not actually owned by the government. For the Leader of the Opposition to commit to nationalising that company and to then sell it off for $1—and for the snickers to come from those opposite—shows that those opposite do not get technology. The reality is the digital age is upon us. I know we have a Leader of Opposition who says: 'I do not get technology. I do not worry about banking.' They go into the bank with their little passbook and say, 'This is the way to do things.' We need to invest in productivity, the NBN and the infrastructure in schools. That is what we need to do to improve our economy and make sure that we maintain this strong position.

The member for Dawson said we should be compared to other countries, and the member for North Sydney said we should be compared to other countries. I think the member for North Sydney mentioned Sweden and Finland. When you look at their actual GDP growth, when you look at their unemployment, when you look at the size of their economies and not just the fact that they have got some particular resources, Australia comes out ahead by a mile. (Time expired)

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the matter of public importance, which is about the failure of the government to address Australia's deteriorating fiscal position. It is always good to follow the member for Moreton. He has given a brief description of his electorate in Queensland, so I might take the opportunity to give a brief description of my electorate in Western Australia. Before I do that: I do not think it has been mentioned today in the chamber that there was an election in Western Australia on the weekend. Part of what the incumbent government in Western Australia went out to the population with was that Western Australia is heading in the right direction and now is not the time to take the risk of changing the government. Despite leading a minority government, Colin Barnett's leadership is providing certainty and direction to the state's economy. That is something this federal Labor government fails to do—provide certainty and direction to our national economy. Barnett's leadership and determination has ensured that Western Australia has remained secure and prosperous during difficult economic times. By standing up for our state, we Liberals are leading our country and leading the world. Whether it is through jobs, access to better health services at state-of-the-art hospitals, a revitalised city centre—

Craig Emerson (Rankin, Australian Labor Party, Minister for Trade and Competitiveness) Share this | Link to this | Hansard source

We've had the election.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

If the member does not want to hear about it, he is welcome to leave the chamber. Whether it is through support for the vulnerable and disadvantaged; new train carriages; more police and new laws to help them; new and upgraded roads and highways; or a new world-class sports stadium, the Liberals make decisions and get things done. They are securing Western Australia's future. I believe the Minister for Defence said there was a federal drag on the election for WA Labor—they will not even mention 'ALP'; they just call themselves WA Labor. Anyway, Western Australians have made their choice. They have chosen security, certainty and direction in their state economy, which unfortunately this federal government cannot provide.

We heard the member for North Sydney speak today. He started off talking about Mr Rudd, Mr Swan and Ms Gillard, who described themselves as economic conservatives and promised to keep the budget in surplus. The member for Longman, who is sitting in front of me, has never seen, and probably will never see, a Labor surplus. For the member for Longman, let us hope that, one day, Labor will keep their promises. At the moment, they are failing to do that, and they are failing to address Australia's deteriorating fiscal position. They keep going with the same policies, driving us further into debt.

We also heard the member for North Sydney talk about the credit card limit—and the member for Dawson also mentioned it—and how we have gone from a debt ceiling of $75 billion to a debt ceiling of $300 billion. Is that something to be proud of? Is that something that the government should put on their CV and say, 'This is the right direction for any country to head in'—into a ridiculous debt situation? And we heard the member for Moreton continually quoting about the Howard government. That was nearly six years ago, but he kept talking about them. He never once mentioned that there was a $20 billion cash surplus with the Howard government at that particular time.

We also heard the member for North Sydney mention that this is taxpayers' money, not the government's money. That is what this is all about—the failure of this government to address Australia's deteriorating fiscal position. All it has to worry about is spending the money, not earning the money. It talks about a reduction in income tax from businesses. But, if you look at the way the PAYG system works, businesses are still paying their tax on last year's income. They are paying their forward tax, as you know—and I can see the Minister for Trade. I know that because I am doing it myself. My company is still paying tax on profits that were made two years ago; we are still paying it as we are going through. So you are still getting the income. But what is going to happen at the end of this financial year, when companies are not paying the same level of corporate tax? The government is going to have to repay all that money to those companies who have not made the same profits they were making one or two years ago. I am sure that has been allowed for in the budget as well.

I remind the House that Labor has produced the four biggest budget deficits on record, totalling $170 billion. We have now heard that there will also be a deficit in 2012-13. We have heard more than 500 times the government promise that it is going to achieve a surplus for all that time and for this particular year. We also know that the net interest payments are close to $12 billion per year. This government's expenditure has risen from just over $250 billion under the Howard government to over $350 billion this financial year. That is not a bad rise in spending—$100 billion within five years.

We have also heard that we are $263 billion in debt. How are we going to deal with that? Have we heard from this government how it is actually going to address that deteriorating fiscal position? We have heard two speakers from the government side, and they have said nothing about addressing the situation that this MPI is about. They have talked about the history. They compare themselves to Europe and other countries that are behind Australia's benchmarking, but they never want to benchmark us against countries that are better than us.

At the last sitting we heard the member for Moncrieff, Steven Ciobo, ask the Treasurer a question about the mining tax, which is particular to Western Australia. I call it the WA tax. He asked:

Given the mining tax has raised just $126 million its first six months of operation, when will the Treasurer face the fact that all his revised tax has achieved is that his credentials have indeed been shot to pieces?

The member for Lilley, the Deputy Prime Minister and Treasurer, answered:

It is the case that, in the second half of last year, which coincided with the first two quarters of the MRRT, there was a huge crash in resource prices. The consequence of that has been less revenue. … All of our profit based taxes—company tax, capital gains tax, superannuation tax, resource rent taxes—have taken a very substantial hit from global volatility at the end of last year.

That is something that he has to deal with. He could not foresee that and kept saying, 'I promise: this surplus is definitely going to happen. There are no ifs or buts: it will happen.' It never happened, and it is not going to happen. It just will not happen. So we need to hear from this government how they are going to address the deteriorating fiscal policy situation.

I also asked the Treasurer a question about the Gateway project, which again he tied in an interview in 2012 on 6PR to the mining tax. That is an expenditure of $685 million for the Gateway project in my electorate in Western Australia and he said it is in the budget bottom line. If it is tied to the mining tax and you are not getting an income from the mining tax, how are you going to pay for it? We hear, 'More debt, more debt.' We are going to borrow money from overseas again to pay off a project that was tied to the mining tax. Again we hear the government talking about how well they can manage the economy when they cannot even get the funding right for the small—actually it is a pretty decent size—Gateway project in Western Australia, in my electorate. We would like to get an answer from the government on how they are going to address Australia's deteriorating fiscal policy. We have had an answer that says nothing at all and just talks about the fact that it is in the budget bottom line, which we know it is not. We know it is not there.

In Western Australia, as I said before, we have a government that provides security and confidence in the economy, a government for the people of Western Australia to vote for—and that is what we achieved on Saturday. Now all we would like to see from this federal government is the same strict fiscal policies that will create the surplus for this nation which we are still waiting to see.

The member for Dawson talked about family budgets. People have been coming up to me at various places around the electorate saying that this is a government you could not put in charge of your own household budget because they just have no way of controlling spending and no way of budgeting correctly to provide Australia with a secure and certain future in the economy. In summary, I would like to say in support of the Australian people that we need this government to come out with some direct policies to address the fiscal deterioration in our nation.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

It is a very sad day in this parliament when the man who would be the Treasurer of this country has 20 minutes to address the serious economic circumstances that we face in this country and spends that time lamenting nothing more than the fact that, were he Treasurer, he would have nothing left to privatise. He spent the rest of the time ridiculing the economy and the country with which, were he Treasurer, he would be out there attempting to strike a trade and economic relationship. The people in my electorate would be very sad indeed if they were to witness this debate. They would be sad but not surprised because they saw a Liberal Premier in New South Wales come to office promising not to privatise the Port Kembla harbour, but the very first thing they did when they came into office was to privatise the Port Kembla harbour, an asset worth well in excess of $100 million, and give nothing more than $10 million back to the local community. Is it any wonder that the would-be Treasurer of Australia, a member of that very same party, stands here and seriously suggests that, if he could, he would sell the National Broadband Network off for $1? In fact, he would rather give it away. This is from the man who would like to be Treasurer of this country.

We have some good news in this country. It is good news for Australia but bad news for people who hate good news, such as those on the other side of the House. We are growing as an economy, and that marks us off as one of the few countries in the world that can say that. We are growing at around three per cent on trend. Indeed, our economy, the Australian economy, has pulled itself through the worst recession in the world in over 100 years and it is now 13 per cent bigger than it was in 2004. This on its own is nothing short of a miracle. But when you add on top of that the fact that over that self-same period an additional 850,000 new jobs have been created it is no wonder that when people get off the plane at Mascot airport they ask, 'What are you guys doing in Australia? We've come here to learn because you guys must be doing something right and we envy your economy. We envy the economic circumstances that you have here in Australia.'

I was tempted to describe the economics proffered by those on the other side as 'bonehead economics' or 'Flintstone economics', but that would be wrong because bones have weight. There has been absolutely no weight and no substance to the contribution that has been given by each of the three speakers in this debate so far. They would have you believe that the only right thing for a government to do is sit here and deliver a surplus, year in and year out, no matter what the economic circumstances are. It does not take a year 7 economics student to work out that if your economic recipe for this country is to deliver a surplus no matter what the economic circumstances are, if your promise to the Australian people is that you will deliver a surplus year in and year out no matter the economic circumstances, your promise to the Australian people is twofold. Firstly, you are promising to tax them more than you need to because, if you are a government that consistently collects more revenue than you are spending, you are a government that is consistently taxing the Australian people more than you need to. Is that the sort of economic recipe that they would have for this great country of ours? The second thing they are promising is to do the wrong thing at the wrong time. If as a government you are proposing to deliver a surplus no matter what the economic circumstances are, you are promising to do precisely the wrong things at the wrong time in the economic cycle while taxing the Australian people more than you need to. It is little wonder that we hear that from those on the other side and the man who would be Treasurer of this country because they wear the gold medal for the highest taxing government in this country’s history, at 24.2 per cent of GDP in 2004-05.

Those opposite have spoken for well over 40 minutes in contributing to this debate. Is it any wonder that the one report they did not mention is a recent report from the International Monetary Fund which has belled the cat? It has said that the Howard government was the most profligate, the highest spending government, in the nation’s history. It was the most reckless-spending government in this nation’s history. When the economy was raining gold bars, what that government should have been doing was addressing some of the long-term problems, the long-term issues, that we have in this country. As members from the National Party would often lament, it should have been spending more on infrastructure, more on roads. It is a source of great embarrassment to those in the National Party that this government has spent more on roads and more on rail—more on critical infrastructure—than the coalition ever did when it was in government. That is a source of great embarrassment to every single National Party member who sits on the other side of the House.

If you reject bonehead economics such as those offered by the other side and you are committed to doing the right thing, then you ensure, at the time in the economic cycle when the government needs to act to support jobs and growth, that you stimulate the economy. If that means going into deficit, then that is the right thing to do. As the economy starts to recover, you start to pull back on spending—and that, indeed, is exactly what this government has done.

We are looking at stimulating, with targeted expenditure, those areas of the economy that need assistance but pulling back on some of those longer term spendings and expenditures which are going to create structural problems over the long term. That is why we have delivered $130 billion worth of structural savings to the budget—indeed, over $16 billion since the Mid-Year Economic and Fiscal Outlook. That is the right thing to do. You will not hear that from the economic lightweights on the other side. All they can do is crack jokes about how much they would like to privatise the assets of this country, or denigrate our great trading partners, the people they would like to strike up an economic relationship with.

Deputy Speaker, you will hear a lot of whinging from those on the other side about government spending. But when they go back to their electorates they are talking about the projects they wish the government would fund. The longest line in my electorate is that of Liberal Party councillors and Liberal Party supporters who are knocking on my door saying, 'Whatever you do, you've got to stop that Tony Abbott, the Leader of the Opposition, from tearing up the NBN; and for God’s sake can you ensure that it turns up to my business, to my house, to my school before that bloke ever sits on this side of the House.' The longest line in any electorate office will be the line of Liberal Party people who are pro the NBN—people who want to see the NBN rolled out in their neighbourhood, to their business, to their school, to their university. They will not be talking about these sorts of things in their electorate, but when they come here to Canberra these are exactly the sorts of things that they are saying the government should be doing.

I have spoken about spending on infrastructure. Is it the investments such as we are proposing to create a revolution in our school education system that they want us to axe? Is it the funds we have set aside for regional development in this country that they want us to axe? I heard the previous speaker say that the minerals resource rent tax has delivered only $125 million in the last six months. That is $125 million more than it would have collected if those opposite were in office, and I can tell you it would go a long way to delivering much needed infrastructure projects in my electorate. The tax is actually working in exactly the right way. It collects more revenue as company profits increase and less revenue when they do not. These are the sorts of things that a government will do if it is not wedded to the sort of bonehead economics of those on the other side of the House.

We are talking about taxation and we are talking about revenue and expenditure. As we go into the next election those on the other side of the House will go to their electorates promising tax cuts for the wealthiest, tax increases for the poorest and pension cuts for people who can least afford it. This is the sort of bonehead economics that they are so wedded to. They do not look beneath the talking points. They are following the empty slogans of their leaders. But the facts do not lie: low unemployment, trend growth, an economy which is the envy of the rest of the world and public finances in good shape, as every respected commentator will testify. These are the sorts of things we should be doing if we are serious about economics in this country.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

We have just listened to a wonderful 10-minute contribution from the member for Throsby on vapourware and Keynesian economics, which are well and truly discredited in this day and age. Again we stand here discussing the government's inability to manage its own budget circumstances. Maybe we should clear up a couple of misconceptions at the outset. If you take the amount of debt that this government has added to the Australian people's credit cards over the past five years as a percentage of spending on GDP, it is well in excess of anything the Howard government ever spent during its term. I love the fact that those opposite say they have had budget savings over the past five years. The Australian people, including those in the gallery, should know that they include in that 27 new or increased taxes which they are saying are savings. The last time I checked, increasing taxes was not a saving.

We stand here today debating this MPI because this government has a serious and undeniable spending crisis. We are faced with a government that over the past five years has succeeded in destroying a fiscal foundation that took 10 years to create. This fiscal foundation was predicated on a sound budgetary policy of surpluses—surpluses which paid off $96 billion of debt and surpluses which allowed us to put funds away to save for the future and for future generations.

This prudent fiscal management resulted in the creation of not only the Future Fund but also the Higher Education Endowment Fund, with an initial investment of some $5 billion, and the Health and Medical Infrastructure Fund, with an initial investment of some $2½ billion. The objective of these funds was to utilise the earnings to fund capacity improvements in higher education and health and medical infrastructure, whilst leaving the capital to accumulate for future generations. But in 2008 the Labor government rolled these funds into the nation-building funds, and within those funds they created the opportunity to spend not only the earnings but also, crucially, the capital, which had been set aside for the longer term. Of these funds, only the Future Fund now remains intact; however, due to the government's financial profligacy, it has not had any additional funds added to it in the past five years.

We know two things about this Labor government: they cannot manage the economy and they cannot be trusted. Businesses and households now know they cannot believe a word the government say about the budget or the state of the economy. We see the government frequently complain that their dire fiscal position is due to falling revenue, when the fact is that revenue has remained reasonably steady over the period. However, the differences occur when comparing the actual revenue received to what was forecast, and therein lies the tale of this government's fiscal and economic ineptitude. During a period with some of the best terms of trade in our history and despite the government introducing, as I said earlier, 27 new taxes and increased taxes and a whole range of fees and charges, we have seen a gross deterioration in our nation's fiscal position. This deterioration has not been due to the community's lack of effort or our business community's drive to improve their business but is directly a result of the Labor government's failure to adequately manage their finances and live within their means.

We have witnessed over the past five years the greatest fiscal deterioration in our nation's history. We have seen a government that calls tax increases savings. We have seen a government that has spent some $172 billion more than it has collected in revenue over the past five years, resulting in the Australian people now owing more than a quarter of a trillion dollars. In the current budget year, 2012-13, the government has increased the debt limit to a record $300 billion. It was only some $75 billion in the 2008-09 year. Australians know that that debt needs to be serviced and repaid. Today's debt is tomorrow's taxes. More debt means more money spent in the future on interest payments instead of on schools, hospitals or lowering taxes. As the member for North Sydney quite rightly pointed out, our gross interest bill is now some $12 billion a year.

I would like to say today that this government has seen the light and learnt the lessons from its profligate spending. However, sadly that appears not to be the case. An analysis by the Australian Financial Review last year reveals that future governments will need to raise some $120 billion by the end of the decade to pay for Labor's unfunded spending commitments. The budget bottom line has already been hit by Labor's multi-billion-dollar blow-out on border protection. It will be further hit by Labor's massive unfunded commitments in disability services, defence, education and now dental care. Australians are entitled to ask, 'Where is the money coming from?' I would like to give you a list of some of the unfunded commitments: the National Disability Insurance Scheme; aged care; increases for low-paid workers in the social and community sector; offshore processing; an increase in the refugee intake; defence; the dental care scheme; and the Gonski review implementation. We all agree that education is extremely important for our children, but we need to pay for it in a sensible and considered way so that, when they enter the workforce, it is not their taxes that are paying for their education.

More recently we have seen the Business Council of Australia make the following comments in regard to the budget, 'It is in urgent need of repair,' and 'The government’s fiscal strategy is not working and needs a major rethink.' In addition, analysis by Deloitte Access Economics shows that this Labor government has added almost $50 billion to the budget in new spending programs. This is the fundamental underlying issue for this Labor government: it does not know how to control its spending. It is interesting to note the comments made by the authors of a European Central Bank working paper on the effect of the size of government on economic performance. The results of their studies show 'a significant negative effect of the size of government on growth'. They say:

Interestingly, government consumption is consistently detrimental to output growth irrespective of the country sample considered …

In conclusion, they surmise that the more resources required for financing government spending, the greater the reduction in the optimal level of private consumption as well as productivity.

We have a government that continue to spend like a drunken sailor. They talk about improving productivity within our economy, yet their very profligate spending policies are actually greatly detrimental to increasing our productivity and our national wealth. This is why the coalition is focused on ensuring that, if we are elected to government at the next federal election, we will live within our means, reducing the negative impact of profligate government expenditure on the Australian economy. It is important to note that the budget will always be in a stronger position under a coalition government because good economic management is in our DNA. It is only a coalition government that has the desire to restore hope, reward and opportunity to the Australian people.

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

Order! The discussion is now concluded.