Barnaby Joyce (Queensland, National Party) Share this | Hansard source

Yes. When is the penny going to drop that this money is actually somebody else’s money? We have heard about the netting off effect. Let me tell you some of the things against which they net off this debt. They net off the debt against HECS debt, for one. How reliable is that as something to net your debt off against? Are you going to rely on someone who has disappeared into the ether owing the government money and say, ‘Well, as to the money we owe on the bond market to people from the People’s Republic of China, Saudi Arabia and Japan and the smaller and smaller group of wonderful citizens who actually want to buy these bonds, we’re going to net off the very real debt to them against HECS debt.’ It just does not stand to reason. The only thing that is absolutely fundamental and real is that you issue a bond or a note and the world looks to you and says, ‘You will repay it or you’ll be the next Iceland or the next Ireland.’

As we head towards $300 billion of these out there—and we have said that, in exactly the same real form, there is $150 billion plus of subprefecture debt of the states, which is real money, owed to real people who have a real expectation of repayment—we are starting to get to some very scary numbers in the very immediate future. And then, if we start to look at a reasonable cost to funds—six to seven per cent—we are going to be looking at $27 billion just in interest—real money that has to be paid. You can net it off all you like but the fact is that, somewhere, you are going to be sending a cheque off for that money and, if you do not have that money, watch out. A position—and I think we are there—where we cannot repay the interest and we actually have to borrow more money to pay it is, if you are dealing with the bank, economic palliative care. As I said before, that is ‘goodnight Irene’; you cannot even pay your interest. What is more, when the proposition of that is coming forward, surely that is the time you come up with an extremely dynamic statement of an exit strategy, whether that is assets you are going to sell, whether that is absolutely fundamental change in the way your expenditure is going forward or whether that is a more efficient way to run government. If you do not have the courage to grasp the nettle and do that, if you believe you are just going to manage the debt, you are entirely misguided, because you will get to a point where the debt will manage you. It does not matter what you want—that is irrelevant—because how you deal with it will be forced upon you. People always believe that there is an out clause, and the out clause is quantitative easing. Of course, once you get into the process of quantitative easing and of printing the money, your money is worthless. You become a complete financial basket case.

I remind the chamber, in closing, of what I said earlier today. I remember very clearly when California had a deficit of $42 billion. They were financially illiquid, they could not pay their public servants, there was huge dislocation, there was a lack of capacity to pay the hospitals and a whole range of things. It all starting collapsing in on itself. Arnold Schwarzenegger made a statement along the lines that he had to remove the deficit, as it was like a rock on his chest and he could not breathe with it there. We are beyond their deficit and we do not have the dynamism of California, which, if it were its own country, would be the fifth biggest economy in the world.