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

The government have a terrible track record when it comes to the management of our public finances. They are big spenders. As they are big spenders that is why they have to come up with one new tax hike after another. They have a track record of waste, mismanagement and incompetence, which is why they are unable to pursue genuine tax reform focused on simpler, fairer and lower taxes. Ad hoc tax grabs from an ad hoc incompetent government—that is what we have experienced under this Labor administration over the last three years.

We have been given all these reasons as to why one tax hike after another is justified. Whenever Labor see a problem they think the only solution to address the problem or challenge is yet another tax. It is important for us to remember that this Labor government’s mismanagement of our public finances started from the word go. It did not start with the global financial crisis, as the Labor government so very often want us to believe.

I remind the chamber and people across Australia that in their first budget Labor increased taxes by a staggering $20 billion and increased net spending by $15 billion. This is a government which inherited from the Howard-Costello government a very strong fiscal position. They inherited no government net debt. They inherited a government with $45 billion in the bank. They inherited a government with a $20 billion surplus.

But since then what have we experienced? We have experienced three successive deficits and, in fact, we have not had a single surplus budget from this government in a year where they have been fully responsible for our nation’s finances. The last surplus budget was the 2007-08 budget, which was the last budget that was crafted by the Howard-Costello government. Since then we have had a $27 billion deficit in 2008-09, a $54.8 billion deficit in 2009-10 and we are looking at an estimated $41.5 billion deficit this year. We are looking at $94.4 billion worth of net debt. Presumably, if the government have a chance to continue in government that will be only the start.

Compare and contrast this with our record in government. When we were in government we had surplus after surplus. We paid off debt and we implemented income tax cut after income tax cut. Labor fail on all of these grounds.

Labor would say, ‘Our circumstances are more difficult. We have been faced with a global financial crisis and now we are being faced with what are very tragic events in Queensland.’ The events in Queensland are tragic and all Australians should and will pull together to rebuild and to take Queensland and Australia forward again. Of course, that will happen, but we should also put it all into context.

These are tragic events but Australia has faced tragic events in the past. In fact, Australia has faced tragic events under the previous coalition government. Under the Howard government we had the Asian financial crisis, we had all of the events related to the war on terror, the Bali bombings, record droughts, the tsunami in Indonesia, avian flu, the ACT bushfires—an extraordinary tragedy that happened back in 2003—Cyclone Larry and various bushfires in Victoria and South Australia in 2005.

Madam Acting Deputy President, do you think that the response at that time was to whack on another tax? No, it was not. When you have a good government and a strong fiscal position, when you have a government that lives within its means and when you have a government that knows that it has got to balance the books and have a surplus, then you are able to handle the challenges you face as they come along.

The best insurance and the best way to inoculate yourself against the fall-out from these sorts of tragic events is to have a strong surplus. This is the great failure of this government. This government has mismanaged our nation’s finances to such an extent over the last three years that we are now in a position where they think the only way that they can keep some sort of semblance of fiscal responsibility is to whack on one tax after another.

Let us look at some of their track record. We had the response to the global financial crisis. The then Prime Minister, Kevin Rudd, and Wayne Swan clearly panicked. They looked at what was happening in the US and the UK. They noted there was fiscal stimulus happening over there: ‘Let’s go and spend like drunken sailors because that’s what they are doing in the US and the UK. So we should go down the fiscal stimulus path.’ Never mind that the circumstances in Australia were very different from the circumstances in the US and the UK.

In the US and the UK interest rates were close to zero. They were printing money and the governments over there thought there was still further stimulus required so off they went with fiscal stimulus. In Australia our interest rates bottomed out at three per cent. The Reserve Bank did a great job. They reduced interest rates very rapidly from 7.25 per cent down to three per cent. If further stimulus was required there was still scope for monetary policy to achieve it.

But what have we got now? We have a circumstance where the Reserve Bank and the government are going in opposite directions. We have had seven successive interest rate rises from the Reserve Bank at the same time as this government continue to shuffle money out of the door, so the government continue to stimulate the economy with taxpayers’ money and they continue to push the accelerator while the Reserve Bank is applying the brakes. So the Reserve Bank is putting up interest rates to reduce the supply of money in the market and this incompetent, wasteful government continues to put the money out the door.

It is quite rare to have fiscal policy and monetary policy going in opposite directions to the extent that we have experienced it in Australia over the last 18 months. This government would not know what a tax hike was if it fell over one. We have had more than $40 billion worth of tax hikes over the last three years. And what did the Prime Minister say on Meet the Press on Sunday? She said that over the last three years since 2007 ‘we have implemented more than $80 billion worth of savings’. Madam Acting Deputy President, I am sure that you would have been as surprised as I was to look at the fine detail and see more than half of the $80 billion worth of savings claimed by this dishonest Prime Minister were actually tax hikes. More than $40 billion of the things that this Prime Minister claims as savings are increased or new taxes. They include such pearlers as the increased alcopops tax, the tax that Labor gave us because they said it would reduce binge drinking and the tax that Labor said was going to reduce the consumption of alcopops. All the while, when Treasury were in the background assessing the revenue from that alcopops tax hike they were actually working on the assumption that consumption was going to go up—as it has since. This is the sort of dishonest tax-grabbing type of rhetoric that we get from this government: ‘Tell them that we want to reduce binge drinking while all the time we expect that binge drinking is actually going to go up.’

We have the tax on the North West Shelf and the luxury car tax, which was supposed to be on Maserati drivers and Porsche drivers—never mind that they were a direct tax hit on families with station wagons. We have the mining tax, the carbon tax and now we have another increase in the income tax hit on people across Australia. Why? To raise $1.8 billion to address the fallout from the tragic events up in North Queensland.

A government that has its finances in order and under control is able to deal with these challenges without having to whack on yet another ad hoc tax. It is time that this government took a strategic view of our tax system. It is time that this government delivered on its promise to have a tax summit by June. We were promised a tax summit by the end of June—that is four months away—to discuss openly, transparently and inclusively our tax system moving forward, a fairer, simpler tax system and lower taxes. Wayne Swan, the Treasurer, is running away from it. He does not want to have a tax summit. He does not want to be forced into a strategic look at taxation reform because he wants to continue with ad hoc tax grab after ad hoc tax grab to feed his addiction to spending, to help him cover up the mismanagement of the public finances after three years of Labor. It is high time that a good and strong government took over the Treasury benches so that the finances can be brought back under control. It is not enough for you to put John Fahey in charge of one of your programs to fix up your whole government. It is time that you put Tony Abbott in charge of the whole shop.