Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

This Labor government is addicted to spending, which leads to an addiction to new and increased taxes. It has delivered record levels of debt and deficit. This government has tried to hide under the cover of a global economic downturn. Those in the government want us to believe that this profligate spending only started after the global economic downturn started in 2009. But nothing could be further from the truth. Right from the word go, this Labor government was a high-spending, high-taxing, big-debt, big-deficit government—immediately causing significant pressure on interest rates moving forward.

In its first budget, net spending increased by $15 billion. There were additional taxes of $20 billion. Labor in three years in government has not once delivered a surplus budget in a year in which it was fully responsible for our nation’s books. The last surplus budget in Australia at a national level was the 2007-08 budget, and that was still in part, of course, under the stewardship of the Howard-Costello government. There was $15 billion in additional spending and $20 billion in additional taxes in Labor’s first budget, the 2008-09 budget—a $27 billion deficit—which was followed in 2009-10 by a $54.8 billion deficit. This next financial year we are looking at a $40.7 billion deficit.

We have a new Minister for Finance and Deregulation, Senator Wong. She is telling us this government has already made so many savings. Senator Wong says the Labor government has made $83.6 billion worth of savings over the last three years. But nothing is ever as it seems with this government. People out there in the community, people who might be listening to this broadcast, might think: ‘Well, $83.6 billion worth of savings? This government must have made some difficult decisions. This government must have made $83.6 billion worth of decisions to cut spending. This government must have looked at how to genuinely bring the budget back into surplus by making some difficult spending cuts.’

I tried to get some information from Minister Wong in estimates as to where that $83.6 billion worth of savings was coming from. More than $30 billion of what Minister Wong claims are savings are in fact tax increases. I will mention a few. I have here a list of all the increased taxes in Labor’s first three budgets in government which Minister Wong is claiming as savings, as if they are somehow spending cuts. There is the Orwellian-sounding ‘better targeting of personal income tax cuts’—that is, taking income tax cuts away—of $5.3 billion in Labor’s first budget. We have the tax on alcopops of $3.1 billion in Labor’s first budget. We have the tax on the North West Shelf gas project of $2.5 billion in Labor’s first budget. We have the fringe benefits tax ‘tightening of exemptions’—read ‘increased taxes’—which was also to deliver $1.4 billion. There was the increase in the luxury car tax of $550 million. There was the increase in the passenger movement charge of $459 million. All these tax increases continued, budget after budget. Then we come to 2010-11. Bearing in mind that we have had a record budget deficit of $54.8 billion in 2009-10, what do we see in 2010-11? Twelve billion dollars for—you guessed it—the mining tax. Minister Wong is claiming the $12 billion in additional revenue for the Gillard Labor government as a saving. I do not think that anyone across Australia would agree with the minister that imposing a $12 billion new tax on an important industry like mining is a spending cut or a saving. It is a new tax.

This government struggles with the definition of what a tax actually is. Senator Cameron tried to claim the benefits of speaking out, and we have heard him say in committee hearings in the past that, really, all the money is the government’s money and the government decides how much money people are allowed to keep. Senators on this side of the chamber, like Senator Bushby, Senator Ryan and Senator Parry—and you, Mr Acting Deputy President Trood, I am sure—take the view that it is the people’s money and that the government should take as little of it as possible; as much as necessary but as little as possible. We believe in lower taxes, smaller government and less wasteful spending.

With this Labor government here in Canberra for the last three years there has been waste and mismanagement everywhere, deficit after deficit and an addiction to spending, and of course this has already had an impact on interest rates. The problem is that there is now a fiscal policy at the federal level which runs completely counter to the monetary policy pursued by the Reserve Bank. When we were confronted with the challenges from the global economic downturn, the Rudd Labor government thought that it should do the same as the UK and the US, irrespective of our circumstances being very different. The Rudd Labor government inherited a strong budget position and a strong economy. There was a lot of scope for the Reserve Bank to reduce interest rates to stimulate the economy. In the UK for the last two years there have been interest rates at one half of one per cent. They have actually had to start printing money to stimulate the economy. Even that has not been enough. The government there thought, ‘We have got to stimulate the economy by fiscal measures—additional spending.’ In the US interest rates have been at about one quarter of one per cent for the last two years, and they too are printing money. But even that has not been enough, so the government there has had to circulate additional funds through fiscal stimulus.

However, here in Australia interest rates bottomed out at three per cent, which is much higher than they are in either the UK or the US, and they have increased much faster than in any other part of the world. In fact, we have had six increases in interest rates since October last year, and the consensus among economists is that interest rates will be one per cent higher again by the end of next year. We have a government that continues to shuffle the money out while the Reserve Bank tries to put the brakes on. If the government had not put billions of dollars in wasteful spending into the economy, the Reserve Bank would have had much more flexibility with its monetary policy. The Reserve Bank could have continued to reduce interest rates and stimulate the economy without leaving us hundreds of billions of dollars in debt and future generations of Australians not having to pay the price for the wasteful spending of this Labor administration. This generation of Labor senators and Labor members should hang their heads in shame because they are leaving generations of Australians with a burden of debt that they should never have been left with.

There were other ways. There was the way of less wasteful spending and there was the way of letting the Reserve Bank do its job for longer than it was ultimately able to. Of course, since the election nothing has changed. We have asked the Minister for Finance and Deregulation, Senator Wong, again and again, ‘Where are your spending cuts?’ Do not tell us about your plans for more tax increases. We know that you describe tax increases as ‘savings’. That is not what we want to know. That is not what the Australian people want to know. The Australian people want to know when you are going to start spending less so that you can tax less. The Australian people are tired of all the new taxes. They are tired of having to pay $10 billion a year in interest payments to pay for Labor’s debt. This is a government which inherited a strong economy and a strong budgetary position from John Howard and Peter Costello. It is a government that has wasted the money that was available to it when it won government, and here we are after three years of Labor government just short of $100 billion worth of debt with the government still borrowing about $100 million a week to pay for its spending. Of course, this is continuing to put upward pressure on interest rates, and that is not in our national interest.