Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Hansard source

The discussion this morning in this stage of the Committee of the Whole is certainly ranging far and wide. There are some very significant questions that we on the opposition side would like to ask the government that were unable to be asked during the inquiry of the Senate Standing Committee on Finance and Public Administration. It comes back to Senator Sherry’s earlier point about the level of government debt. Excessive debt, as we all know, has been the cause of the global financial crisis, so I must say that we on this side of the chamber are somewhat concerned and bemused about the prospect of a significant increase in public debt, which is the inevitable consequence of this package if it is passed in its current form.

Not to put too fine a point on it, the Updated Economic and Fiscal Outlook shows that accumulated deficits between 2008-09 and 2011-12 are projected to be $118 billion. Of that, policy decisions taken since the May budget make up the majority—that is, policy decisions that have been taken by the Labor government have accounted for almost all of that figure: $67 billion over the forward estimates, including $29 billion in 2008-09. The government’s own figures show that, in the absence of its policy decisions—and we are highly critical of the policy decisions because we do not think they are targeted or timely, and we certainly do not think they are going to have a temporary effect—the budget would still be in surplus in 2008-09.

This Rudd Labor government has simply run up Commonwealth debt. Its amendments to the Commonwealth Inscribed Stock Act, which we are being asked to look at as part of this examination of the bills in the Senate, seek authority for borrowing up to $200 billion. We had evidence from Mr Ray from Treasury that almost all of that figure is accounted for and will be needed to support the stimulus packages.

Whichever way you look at this, it shows us two things. First of all, it is an absolutely unprecedented amount for Australia. So, rather than Senator Sherry raving on about whether somebody spends their $950 on the pokies, at McDonald’s or wherever they want, let us concentrate on where this country is heading. We are heading for an unprecedented bill of $200 billion, which, as I think Senator Abetz said a little earlier, is $9,500 for every man, woman and child in Australia. People who want to receive $950 and have discretion over how they spend it will find that it will cost them $9,500 for whatever they might choose to do with it. That is certainly not good for the people individually and it is certainly not good for the economy more broadly. It is a burden on Australian taxpayers that will simply reduce Australia’s growth. This is really the nub of it.

The concerning thing is that Treasury was unable, in the time frame given, to provide an estimate of the interest cost of the debt. I want to ask for that now as part of this debate. We have all done some calculations—even in the press. I note that David Crowe, in the Australian Financial Review yesterday, estimated that the interest cost of the proposed debt would rise to $7 billion a year. It will probably be more. It clearly shows that the net deterioration in the Commonwealth’s budget position between 2007-08 and 2008-09 is projected to be three per cent of GDP. Whichever way you look at it, and however you want to crunch these figures, it is similar to the deterioration under the Whitlam government, where they went from a surplus of 1.9 per cent of GDP in 1973-74 to a deficit of 1.8 per cent of GDP in 1975-76. The interesting point—I think Senator Abetz made it earlier—is that, under the current government, the deterioration is projected to occur over the course of a single year. That is twice as fast as the deterioration under the now infamous Whitlam government.

The important thing about this argument, I think, is that we are about to plunge this country into an unprecedented level of borrowing. We do not yet have a clear idea from Treasury, and certainly not from anything that we have heard from any government minister, what the interest rate will be, nor how long it is expected to last—and I will come back to that in another contribution. It is important that we have a very clear idea of just what it is we are being asked to face.

Senator Sherry, in his last contribution, did not mention the highly prescriptive nature of this package, whereas we noticed earlier—and it was said earlier in contributions from Senator Milne and Senator Abetz—that really there are many aspects of this package that are just ‘one size fits all’. If you happen to come within it, good luck to you; if you happen to fall outside of it, you are going to miss out. So we on this side of the chamber think it is incumbent upon the government to actually make a clear statement about what the level of indebtedness will be, what this chamber is being asked to pass in terms of the authorised increase in the cap on borrowing up to $200 billion and precisely what the interest rate will be. What will the interest rate be over, say, the next 10 years? Could I have those figures?