John Williams (NSW, National Party) Share this | Hansard source

I would like to support what my friend and colleague Senator Boyce has just said in the chamber. Mr Acting Deputy President, I want to take you back many years to when I first started having a close look at the economy and politics and everything else, and I take you back to 1983 when we saw the election of the Hawke-Keating government. The reason I would like to take you back is because we have got to learn from the past. We have got to learn what was good and what was bad and use that experience to see that we do the right thing for the future generations of this nation. I remember in 1983 the election of the Hawke and Keating government and my friends in South Australia saying after a year or two that this was the best conservative government they had ever seen. The government had addressed a debt of around $32 billion and they had put the budget in surplus and we were quite impressed, I must say.

It was only a few years after that that the importance of winning an election became more important than running the economy and we saw the deficits coming along. As I said in my maiden speech on Monday, if governments build debt what they are effectively doing is mortgaging our children’s future away. We saw the debt grow and I remember when conflict came into the then government of the time, Minister John Kerin was made Treasurer. I think he had budgeted for a deficit of $3 billion for the 12-month period and it actually came in at $10 billion, and of course we then saw the debt soar to a massive $96 billion.

I found it amazing today to hear my friend Senator Pratt talking about the big government surplus and I thought: how long is it since a member of the Labor Party stood in either the House of Representatives or the Senate and talked about a large government surplus when they have been in control. I am sure that it has been many years. I look back on the time when the then Treasurer Mr Keating was trying to balance his budgets, and one of the issues I was most interested in that was coming from the country was the price of fuel. I think it was in 1983 that the federal government’s excise on fuel was 6.3c a litre. By the time they left in 1996 it was a massive 34c a litre. They had introduced indexation on the excise of alcohol, cigarettes and fuel. I must pay tribute to a colleague that is no longer a member of parliament, Stuart St Clair, former member for New England. He was the one who pushed the previous government to do away with the indexation on fuel. The people where I come from need fuel as there is virtually no public transport. They simply have to have fuel to even go to town to do their shopping or take their children to sport in nearby towns or whatever.

Coming back to the management of the economy, the reason I look back on those past years is because we saw that it was mismanaged. Now we have a government that is debt free. What a wonderful thing that is to have. I wonder how many federal governments, leading governments in the world, actually do not owe money. I would say that you would probably count them on one hand. The point I make is this: this government have put themselves in a situation where they can gloat about the government surplus. But we know where it came from. There was a $96 million debt—and what would be the interest bill on that a year? Would it be $7 billion or $8 billion? It would certainly be a huge amount. When that debt was paid off it was paid off in two ways of course. One was by the previous government bringing the budget into surplus and the other was selling off assets. I am not a big fan of selling off assets except on condition that when a people’s asset is sold, surely the proceeds must go to paying off the people’s debt.

That is exactly what happened in Victoria when Mr Kennett was appointed to government many years ago. He faced something like a $60 billion debt. He had to sell off the electricity for $19 billion which was used to retire the government debt in Victoria. They were in one huge mess and he had to financially bail out the state. We are now seeing similar things happening in New South Wales. The previous federal government, with a big push from the National Party I must say, implemented the GST. It was a progressive tax that actually gave decent funding to our states so that they could deliver the services they were supposed to such as law and order, health, education, roads and infrastructure. In New South Wales we see big holes in the budget again to the tune of $1 billion. What do they think the answer is? They want to sell off the electricity. The fallout of that, of course, was that they did not sell off the electricity; they sold off most of the politicians—they jumped off the ship that was taking on water.

In this Senate we can look at how good the government’s budget is and we can remember who brought it about. I have always had the attitude that if you cannot manage the money you cannot manage anything. It is concerning that our new-found fiscal conservatives are now putting increases in taxes. A good example, as several have mentioned today, is the luxury car tax. It was not stated before the election that the luxury car tax was going to happen. There was no signal to the public at all that the luxury car tax rate would be increased from 25 per cent to 33 per cent. It was just something that came out of the blue in May and caused a huge demand for a lot of vehicles; hence the fall-off in sales now. I question how those retailers around Australia, whether they are in city or country areas, are coping with the lack of demand for their product.

We all know the costs of running a business. The ongoing costs never vary—whether they are insurance or rate bills, or superannuation and workers compensation for employees. They are the costs of the general running of the business. We now see that the economy is slowing. There is no question about that and the Reserve Bank acknowledged it a couple of weeks ago with the fall in the interest rate of a quarter of a per cent, which I certainly welcome. Over the last 10 years we have basically had two economies in this country. We have had a vibrant urban economy and we have had a flat rural economy brought about largely through drought, through increased inputs in costs and through increases in things like fuel.

I am well aware that the fuel price, of course, is world driven. It is not solely Australia that has driven up the world price of oil. More than likely it is a result of growing economies such as India and China where they develop themselves. No doubt they buy the resources from Australia and, because we are not capable of value-adding to many of those resources, they take them there and they use their cheap labour. As I said, I have been in the factories in Thailand and watched the people work very hard in what I would call deplorable conditions for a pittance of money then go home and live in very basic accommodation. We have seen the price of fuel slowing our economy as we have the seen the world price go from US$70 a barrel up to a high of around US$147 a barrel. Thank goodness it has come down because, with the falling Australian dollar, if the world oil price was still at $145 a barrel we would be looking at fuel prices a lot higher than they currently are at.

The point I make is about this budget surplus that members of our government gloat about. When the previous government was bringing the books into the black, paying off the debt, what support did they get from the then opposition who are now, of course, the government? The then opposition opposed at all times. They would not agree with the budget surpluses put forward by former Treasurer, Mr Costello. They opposed at every corner and now, to their benefit, they have inherited the great result from the previous government, who could manage the economy and had the courage to make the hard decisions.

I recall the election of 1998—it was 3 October, if my memory serves me right—when it was proposed to bring in a GST. The government then, the Howard-Fischer government, had made the hard decision so hard that they had almost got thrown out in the 1998 election. When you make the hard decisions and it does hurt, then you face the ramifications from the electorate at the next election. Luckily they got through and luckily the financial mismanagers were not put back in control or we would not be in the position we are today. Hence, with the election of the coalition in 1998 with a much reduced margin, they went on to run the economy properly.

It was pleasing to see the unemployment rate fall to the low of four per cent because I can recall that when it was 11 per cent about a million Australians were out of work and it was not much fun. If you want to dismiss the confidence in anyone, put them out of a job. This is my fear now as we go onto these increases in tax: what is going to happen to those who are employed in the motor vehicle industry? It is a worry. No doubt this current government is learning from the good things the previous government did.

However the world scene is changing and it is frightening. We see, once again, financial institutions lending money willy-nilly in the hope that real estate prices in America will go up. It is all good when the jet is on the way up; it is all a boom time. But we all know that the jet has to refuel sometime so it must come down. And the booms do not go on forever—and to think that people in America were lent $400,000 to purchase a house to the value of $400,000 and were given more money for stamp duty and ongoing costs. They would buy a $400,000 house and it would cost them $420,000 to get into that house. They would say: ‘She’ll be right, mate. The house will be worth $450,000 soon.’ But it is not the case because many of those areas have up to 10 per cent oversupply of housing. Hence the market is falling and the equity is gone. There was never equity in the first place and now we see the global fallout as a result. We have seen over the last couple of days the huge disappointment of Lehman Brothers, and what a huge fear that has put into the world financial markets. AIG are now being bailed out to the tune of $85 billion, obviously from borrowed money because very few governments are fortunate to have surpluses like Australia does and to be debt free, thanks to the previous government. Now we are seeing the fallout that— (Time expired)

Debate interrupted.