Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

Net debt roughly comprises two things: income and expenditure. Income, generally speaking, for the government is a matter of tax. In the last term of the Labor government in response to a campaign promise there was a very significant tax reduction for many Australians. At the same time there was also an increase in the single pension rate. That substantial increase in the single pension rate was much overdue. There was also an increase in the utilities allowance for pensioners. There were some tax increases by the previous government as well. Significantly, there was the alcopops tax and the lifting of a tax exemption for offshore gas industries.

In bringing forward this matter of public importance about the budget strategies and debt I presume the coalition are not proposing to take away the tax reductions that were given to ordinary Australians last term and are not proposing to take back the increase in the pension rate. So what would the coalition have done if they had actually won? They talked much during the election and in the short time since we have been back about tax increases in a Labor government, but what would the coalition actually have done? In the election and subsequently their election promises were shown to be poorly thought out and unable to sustain reasonable analysis. I think Laura Tingle in the Australian Financial Review on 3 September 2010 said it better than I could. She said:

There are two possible explanations for how an opposition presenting itself as an alternative government could end up with an $11 billion hole in the cost of its election commitments.

One is that they are liars, the other is that they are clunkheads. Actually, there is a third explanation: they are liars and clunkheads.

But whatever the combination, they are not fit to govern.

And I think the debate that we have had subsequent to the election illustrates that very well. The opposition policies would not have stood up if they had won the election. They have opposed Labor’s proposed mining tax right from the beginning. They have denied any discussion on it. We have to ask now, when we are discussing the matter of income and expenditure, whether it is reasonable that income from Australia’s non-renewable resources should be used to fund critical nation-building infrastructure and in developing our skills base. Those on the Labor side, and now that is the government side, say, ‘Yes, they should be in some form or another.’ The mining tax as proposed by the former government will be changed significantly after consultation, I suspect. I think the mining industry was indeed expecting a change in the mining tax regime. It does make sense, particularly in the two-speed economy that is so much talked about now, that we do get some return from our non-renewable resources and that we do use that to boost the income side of the equation when we are talking about net debt.

But I will move on to the expenditure side of things. Here again we have the opposition waxing very passionately and long about reducing expenditure. One of their key platforms, apparently, is to freeze the Public Service, so if people leave the Public Service then there is a freeze on that number. That would dramatically reduce services and our skills base in the Public Service.

What are the proposals from the government? What are the actual, real policies that are proposed by the government and that the opposition opposes? We have, principally, the National Broadband Network. We heard Senator Joyce earlier repeat one of the accusations the opposition make about this—that the National Broadband Network is not useful; that it would merely help people to download movies faster. This betrays a very serious lack of understanding of many aspects of the way that the digital system works in our economy. It also betrays from those opposite, who often come in here and lecture this side of politics about their business acumen and experience, a very poor understanding of how business operates in the modern world. My husband is involved in the IT business. I know how important both download and upload speeds are to his business.

The opposition seem to have failed to understand this despite the fact that many of them represent regional areas. We have seen in the recent past many small businesses start to operate from regional bases because they have a reasonable broadband speed that allows them to sell globally on the internet and to download information. Farmers are doing it and small business people are doing it in regional cities and small regional towns. This is why the Independents are supporting a national broadband network and why they believe that that expenditure is worth it. It is critically important in a modern world; and Australia, as I understand, wants to be part of the modern world—even the opposition do.

The second major aspect of criticism is in the area of infrastructure. The inland rail network is coalition policy. The Nationals have made promises, saying, ‘We will invest in critical road and rail infrastructure and stimulate private investment in major infrastructure projects around regional Australia to reduce the burden on the taxpayer.’ That is just the sort of lack of rigorous policy and costings that we have come to expect from the opposition. They speak vaguely about bringing in private investment, and this at a time when private investment is only just starting to recover around the world. By and large this scale of investment, if we are talking about critical road and rail infrastructure, is not able to be supported by Australian investment. Here in this place earlier today Senator Joyce complained about investment coming in from China and the Middle East and having to pay back that money; and yet his party are promising major infrastructure investment from private investors. Does he seriously expect that private investment to come from within Australia? I do not think so. This is fudging and an example of doublespeak from the Nationals.

Again, Senator Joyce said earlier today: ‘You have to pay back that debt. God help you if you can’t pay them back.’ And again that illustrates his lack of understanding about the way that government economies work. I have sat in estimates with Senator Joyce and in other hearings of the Senate Economics Committee and seen Treasury officials and other economists patiently, time after time, try to take him through exactly how the economy works and why the Australian economy has a AAA rating and most of the states have a AAA rating. The net debt that he is talking about does not operate the way a small business does. We are not in danger of imminent default, as he and many others in the opposition keep saying and keep trying to scaremonger on. It is nonsense and this motion is nonsense. I have been in many meetings and had this patiently explained to me, and to others from the opposition. There is now a Treasury paper reconsidering the link between fiscal policy and interest rates in Australia which answers this motion precisely. I will just read from the abstract:

This paper examines the empirical relationship between government debt and the real interest rate margin between Australian and US 10-year government bond yields. Results for the period 1990 to 2009 suggest that Australian general government net debt has no impact on the short-run real interest margin, and has only a small effect on the long run. Further, the estimates suggest that movements in US general government net debt have a considerably larger effect than Australian general government net debt—implying that US influences take greater prominence in explaining the real interest margin.

I know that if he really tries Senator Joyce, and others in the opposition, will understand that. I have no economic background; my interest is limited. But that seems pretty clear to me and should be pretty clear to those in the opposition. I would like to see those in the opposition focus on a genuine debate. God knows, in these difficult economic times there are enough genuine issues of economic policy to focus on, without spurious and deliberately misleading motions like this one.

Let us have a look back, in the couple of minutes I have left, on the coalition record on interest rates. There were 12 consecutive interest rate rises in a row between 2002 and 2008 under the previous Liberal government—interest rate rises that occurred in the teeth of Reserve Bank warnings about an overheating economy and inflation. That is the legacy of the Liberal government: 12 consecutive interest rate rises in that six-year period. And they come in here and try to lecture this government, which has seen Australia safely through a global financial crisis, about interest rates and deliberately ignore Treasury advice. The last Liberal government did not leave us a budget deficit, and senior ministers and Prime Ministers in this government have acknowledged that and have given due credit to the previous government for that.

What the last Liberal government did leave were two very important deficits. They were a skills deficit and an infrastructure deficit. Despite the global financial crisis, this government has decided that those twin deficits cannot be left any longer. They must be addressed, even at the risk of a short-term government deficit, because it is now urgent. If Australia is to take itself out of the boom-bust of renewable resources and set itself up as a modern, productive economy which is lined in with the digital economy, we must take urgent steps now to deal with those infrastructure deficits and skills deficits. That is what this government has been focused on since it has got in and I hope that, despite our minority status, we will be able to take it up with renewed vigour in this new term of government. I hope that we will get some practical support from those opposite and from the other parties and independents in this place.