Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Hansard source

Mr Butler was looking forward to the budget. He described the budget in these terms:

So this will be a very important budget for the future of Australians. A sort of budget that I think people expect to see from a Labor government and didn’t see under the previous government.

Mr Butler was right: this is the sort of budget that people expect to see from a Labor government. It is a high-taxing and high-spending budget characterised by debt and deficit. Mr Butler was also right to say that this is not the sort of budget that you used to see from the coalition. He was absolutely spot-on. The previous government, and I do not want to overstate our case, was not perfect. Out of our 12 budgets, we delivered 10 surpluses. We were not perfect. We had to pay off a little bit of debt, $96-odd billion in our first budget. That was a bit beyond our control.

But I have to give credit where credit is due. The current government have a perfect score: three budgets, three deficits. You have to give them that. You cannot take that away from them. When we were in office, the guessing game at each budget used to be: how big will the surplus be? We have a different guessing game under the current government: how big will the budget deficit be? The government say: ‘We ought to be congratulated. Let’s break out the champagne, because in 2010-11 the budget deficit isn’t going to be $56 billion or $57 billion. No, it’s only going to be $40 billion, so let’s break out the champagne.’ Senator Feeney was saying the government ought to be congratulated. That is the new game.

This government’s budget narrative essentially has three parts, which I do not agree with. The three parts are: this government steered Australia through the global financial crisis; this government imposed fiscal discipline; this government has charted a course to surplus—and the associated media commentary now is that debt and deficit are no longer serious political and policy issues. Each proposition is wrong. The first one, that the government saved Australia from recession, is not true. What saved Australia were world-class prudential regulation, courtesy of the previous government; a strong asset position, courtesy of the previous government; a better fiscal starting position—that is, no debt—courtesy of the previous government. It was also thanks to a resources boom and the Reserve Bank’s monetary policy.

The government wanted to look like they were doing something, so they embarked upon the third biggest fiscal stimulus in the world: three per cent of GDP. The government want us to believe that it is the fiscal stimulus that made the difference. If that were the case, the UK and the US would not have gone into recession, because the fiscal stimulus would have stopped it. We faced a very different circumstance to that faced by the US and Europe. The editorial in today’s Australian says:

Ultimately, capitalism has been much kinder to Kevin Rudd than he has been to it. The politician who, in his essayistic period, babbled about the failure of the “great neo-liberal experiment”, did not sufficiently trust the automatic stabilisers of the open Australian economy, and its fundamental strengths, when trouble struck two years ago. Mr Rudd and Mr Swan have generally been poor judges of the economic cycle.

So we do not owe thanks to the government for saving us from the recession. I will have the good grace just to focus on the quantum of the stimulus rather than its profile or quality. I will not focus on the junk spending, other than to say that I think every one of those stimulus signs on school fences around Australia will actually be a reminder to voters as they walk past of the government’s recklessness.

The second flawed proposition is that of the government’s fiscal discipline. Exhibit 1: in 2009-10 the budget deficit will be a peacetime record of $57 billion—three budgets, three deficits, as we know—not exactly what I would call a fiscal straitjacket. Exhibit 2: claimed savings of $30 billion over four years. This government has invented the new concept that you count new revenue measures as savings, an interesting concept. Of the $30 billion in savings, half is from new revenue: the increase in the tobacco excise and the increase in the mining tax. New taxes do not represent fiscal restraint; they demonstrate weakness and policy sloth.

In relation to savings, the most absurd statement I have heard in support of the concept of Labor’s fiscal constraint came from the Treasurer himself, who said, ‘What you are not seeing is the money we are not spending.’ So the government now have to be given credit for spending commitments that they have not made. It is a weird concept that you count, as savings, programs which you have not embarked upon. That is a seriously weird one. I am not quite getting my head around that one. Exhibit 3: spending in this budget will increase by $26 billion over the next three years, relative to last year’s record spending forecast. Exhibit 4: the government are going to be borrowing $700 million a week. Exhibit 5: government debt is going to be $94 billion in 2012-13. Exhibit 6: the interest bill will be $6.5 billion.

The third proposition of this government is that it has charted a course to surplus. Wrong. What has led to this forecast surplus are parameter changes, stronger growth, stronger recovery, new taxes on tobacco and mining and heroic assumptions. This government operates on the assumption that, the more you tax and the more you hit an industry like mining, the more revenue you get and the more it grows. This budget also assumes no new spending between now and 2014. It is a con, it is a hoax and it will not happen.