Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Hansard source

I just point out the obvious that it is now clear that there is a majority in this chamber to pass this $42 billion spending package. I inform the committee in relation to the third reading that will soon occur that the opposition does continue to oppose this spending package and I am certainly proud of the principled stand which our parties are taking on this matter. It is one we knew would not be popular. It is never popular to say that we think that what are now $900 handouts to Australians are not the way to resolve our economic problems, that putting assembly halls in every primary school is not the way to deal with our problems and to put pink batts in people’s roofs is not the way to deal with our economic problems.

We have said that this package of $42 billion, some four per cent of GDP, at what is clearly a very early stage of what is going to be a difficult economic cycle for Australia, is irresponsible. It is a panic reaction and it is not consistent with responsible economic management of this country. It is a package that is going to drive the Australian budget into deficit much faster than would otherwise have occurred. It is a package which already appears to be one that will incur some $200 billion in debt, which will hang over the head of this country for years and years to come. A simple bit of mathematics: it will take a decade of $20 billion surpluses simply to cover a $200 billion debt, and that is not allowing for the interest payments.

We are reminded, tragically, of the situation we inherited upon coming to government, with nearly $100 billion of debt in 1996 terms. We were spending more on interest in the budget than we were spending on defence—an extraordinary situation. Regrettably, the next generation of Australians are condemned to inherit exactly the same situation from this Labor government, which has, in our view, completely overreacted to the economic circumstances and rushed out with this extraordinary and extravagant package of some four per cent of GDP, or $42 billion. It is not directed to productive investment in the economy; it is not directed to enhancing the capacity of this economy to repay the debt which is now going to be incurred.

While we were in a position to exit the government from government business enterprises, despite the opposition of the Labor Party, that opportunity will no longer be available to future governments. How will future governments, either Labor or coalition, be able to repay this debt, given that we are now facing an ageing of the population, which already makes it quite difficult? Fortunately, our government was able to set aside some $60 billion to $70 billion in the Future Fund to ensure that the unfunded public superannuation liabilities of this country are covered, which will relieve some $4 billion annually from the budget. That was done despite the opposition of the Labor Party and is a great boon to future generations. But now those future generations, our children, are going to be lumbered with some of the greatest debt this country has ever seen.

This government inherited probably the best set of books in the Western world as a result of the good work that our government did. It is tragic for me, I must say, as Australia’s longest serving finance minister, to see that situation turned around so quickly. This government is condemned to a situation where it will probably never in its history deliver a surplus. The next budget of this government will be a deficit budget and we see deficits for years and years to come. The government now has saddled us with this debt. It has left itself very little room to react to the developments that are going to occur in what we acknowledge is a very dangerous situation for the world economy. It is now borrowing and borrowing without any of that money going into productive investment in this economy. The government’s economic strategy is completely wrong; that is why we have opposed this package.

Regarding Senator Sherry’s remarks, it is a complete misrepresentation to suggest that the opposition’s position is to do nothing. That is a nonsense. As the party that has championed and built the strength of this economy and of this nation, we recognise that in a downturn it is appropriate for the government to respond accordingly but responsibly and in a targeted fashion. A re-elected Howard government would of course have responded to the global downturn with a stimulus package, but it would have been one that was much more modest and much more in keeping with the international community’s view that a response at this stage of about two per cent of GDP, or some $20 billion, would have been much more appropriate. It would have been targeted much more at stimulating productivity through tax cuts and investment in the productive side of the economy. So it is an absolute furphy, an absolute nonsense and a complete misrepresentation to say that our position was to do nothing—but we could not in good conscience agree to this package. It is an irresponsible package and one that we could not support.

It is a shame that the government did not have the wit, in the face of the economic downturn which this country faces, to come to the opposition and say that there should be a proper bipartisan approach to dealing with this crisis that the country and the world are facing. We hope that in future the government will have the wit to behave accordingly. Now we find that the government has gone to the crossbenches to do what amounts to a cross-trade. We heard fine words from many in the crossbenches about how they would never cross-trade, but that is exactly what has occurred. It is interesting, may I say, that the crossbenches were trenchant in their criticism of this package. They have been vocal critics of this package. The Browns—the Greens, I am sorry—