John Williams (NSW, National Party) Share this | Hansard source

It is absolutely true. What happened to your bank in South Australia, Senator Farrell? It had to be cashed in to clean up some of your debt. It was all brought on by the Labor Party. It has not changed. On 26 March this year, there was a state election in New South Wales. I think those opposite would probably like to forget about that date. They should remember it. It was when the people of New South Wales really had their say on what they thought of that state's Labor administration after 16 years. And guess what: the Treasurer has now confirmed there is a $5 billion hole in the New South Wales budget and forward estimates. Does that surprise anyone? Not at all. All my life I have talked to people in the street and they say, 'Every time Labor gets into government they send us broke.' Nothing has changed; it is the same here.

Let us have a look at what is happening now. Senator Fifield pointed out earlier that this current financial year has a budget with some $41 billion deficit, and $9 billion has been added to that. There was $50 billion borrowed this year. It is amazing. Yesterday I looked on the website of the Australian Office of Financial Management. It stated that the debt was $187.7 billion and growing.

I find the stimulus package amazing—the $42 billion stimulus waste that was brought forward to this parliament. That package had a section in it where the government could borrow up to $2 billion. That was the overdraft. I think we will have to extend the overdraft. If we are on $187.7 billion now, by the end of this month it will be $190 billion; yet next year's budget forecast is $22.6 billion. So it will be back to the parliament to extend the overdraft.

There is not only concern about the federal government's debt but also concern that this parliament has underwritten the states' debts for some $240 billion. If the federal government's gross debt goes to $220 billion and there is $240 billion for the states, we would be looking at a $460 billion debt between the states and the federal government of Australia. With a $1.3 trillion GDP, we will probably be looking at 40 per cent. It is only a guess.

The real problem is what this is going to do to working families. Remember that prior to the 2007 election it was all about working families. These are the same families that had $2 billion taken out of their family allowances in Mr Swan's budget last night. hat this means is higher interest rates. I have told the Senate before about the days of Treasurer Paul Keating. At one stage he was the so-called 'world's greatest treasurer'. For what—borrowing money and running up debt? We were paying an interest rate of 22.25 per cent on the farm. People cannot believe that today. It is a figure I will never forget, and I hope Senator Cameron does not forget it. We have now had seven interest rate rises. The cash rate was at three per cent but it is now at 4.75 per cent and there is more to come.

When interest rates go up, there are two effects. The Aussie battlers, those buying their home and trying to fulfil their dream, are the ones who will pay. People in small business, with their debts, will pay. The farmers, after eight years of drought and with many having their crops washed out over the summer months last year, will pay. That is what happens with interest rates. But the bad effect of all this is that the higher our interest rates go in Australia, the greater the difference between Australian interest rates and overseas rates. And then what happens? We have foreign investors investing in the higher rates in Australia and we have a stronger Australian dollar, and the stronger the Australian dollar gets, the more income is wiped out of regional Australia again. This is why, when the government say they are out to promote jobs and help unemployment, the higher interest rates and the higher Australian dollar are going to have a very negative effect on the future of our regional economies.

What concerns me is that, for the next four years, the government's interest bill will be close to $20 million a day. That is quite amazing. Last night, when I was watching Sky TV, I saw the member for New England, Tony Windsor, saying, 'Don't be concerned about the deficit, it is really not a problem.' How far he has turned to the left since he has been in alliance with the Labor Party and the Greens!

We have seen the budget deficit growing and this is on top of increased taxes. First of all, there was the alcopops tax, then there was the car tax and then the flood tax. Soon there will be a mining tax and then there will be a carbon tax, the tax we were never going to have. We had a promise from Ms Gillard that, under any government she leads, there will be no carbon tax. And we had the magical words of Treasurer Swan on the hysterical accusation that if Labor won the election in August 2011 they would introduce a carbon tax. Of course, it is on the way. So that is the situation we face now.

But I want to raise a smaller issue—it might not be big to people in here—and that is the funding of our cooperative research centres, which do all the research. Look out for cures for disease in animals, whether it be in the poultry industry, the pork industry, the sheepmeat industry, or in the cotton industry now that we have $33.4 million sliced out of the funding to our CRCs.