Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

There is no-one in this chamber who lacks for patriotism. There is no-one in this chamber who does not honour deeply the work that our serving personnel undertake, and the nature of that service has been most tragically brought home in recent weeks. That is not what this bill is about.

What this bill is about is whether or not the government is able to change the indexation of superannuation payments to some military personnel. I have sat through many debates in the almost nine years I have been here and, I have to say, cynical, sometimes hypocritical, contributions do occasionally make their way into the Senate chamber—but today would probably have to be amongst the top five. I say this to those people who firmly and with great merit advocate for increases in indexation: the position of the opposition should be judged not just by their words—sometimes 'fine'; sometimes feigned indignation—in the chamber today. They should be judged by what they did in government, when they never funded this. Eleven years in govern­ment with revenues being upgraded every year, particularly for much of that last period of government, and they never sought to fund this. They did not properly fund this in their election campaign. Those are not my words. You can look at the way in which their costings were considered by the department of finance and the Treasury. They have not funded it properly in this bill, and I venture that they will not properly fund it in the election costings campaign for the forthcoming election.

On this, one is judged not by what political points you make in the chamber but how you find the money to do worthy things. One of the things that finance ministers experience—and I am sure Senator Minchin would agree with this—is that you are generally making decisions between meritor­ious requests for funding. There are some which are not, but by and large what come before the Expenditure Review Committee are things that are worthy of funding. Generally, you do not make decisions, because this would be easy, about funding or not funding things that are not worthy. You often have to make decisions between things which are worthy. I again say: judge the opposition not by the contributions they have made today; judge them by 11 years in government when they had the opportunity and never funded it, by an election campaign when they had the opportunity and did not properly fund it, by today when it is not funded, and by whether or not they fund this in the election campaign in a couple of years—whether they actually make the savings to fund this.

Senator Humphries interjecting—

I will be very interested, Senator Humphries, if you do it.

There are a few points I want to make. The first is in relation to numbers. There have been a few numbers thrown around. The hard edge—and this is probably why the Howard government, in 11 years, never funded this—is that this bill has a fiscal cost of $1.7 billion over four years and an under­lying cash cost of $175 million over four years, and it will increase the Common­wealth unfunded liabilities by $6.2 billion. If it were to be extended to all Commonwealth superannuation schemes, this would have massive costs: an immediate increase in the unfunded superannuation liability of $32.9 billion, a cash impact of $322 million over four years and a fiscal impact of $12 billion over four years. They have gone very quiet over there, Madam Acting Chair.

They say they have savings. Let us examine that carefully, because, when you are judged as a party of government on your policies, you are judged by where the rubber hits the road, which is whether you actually find the money to fund it. Let us look at where the coalition would currently be in terms of the budget were they in government. For all their fine words, the coalition, first, before they did anything, would have entered this parliamentary term with an $11 million black hole.

Senator Humphries interjecting—

Senator Humphries sighs. That is what the Department of Treasury and the Department of Finance and Deregulation found, Senator, if you do not like it—if you do not like what Peter Costello set up as the Charter of Budget Honesty.

The coalition have subsequently blocked savings measures the government has put forward worth $5 billion. Add to that the $11 billion black hole savings measures blocked, which worsen the budget position by over $5 billion. Additional savings measures not supported were $7.7 billion, and in the 2011-12 budget—and we have not seen their final position on this; I notice there is a lot of argument about it—they are also proposing to not support a range of government savings measures. This would again worsen the bottom line. In addition—this is inter­esting—they also double-counted savings. They used savings for their election policy, which they still say they are going to fund, which include a contribution to but not full funding of this policy. They then used some of those savings for the flood package. You cannot go to the same well twice. You cannot use one set of savings for a range of different expenditures; it just does not add up. You cannot say, 'We are saving this amount of money here and we are going to use that money twice, at least, to fund things such as rebuilding Queensland after the floods or funding additional superannuation indexation.'

So what is the total impact of the coalition's set of decisions from the election campaign until now? There are really two propositions that people need to know about. The coalition would be in deficit every year until 2013-14 and potentially beyond. They would not have a deficit in 2012-13. They would have a deficit in 2013-14. They would be some $12 billion worse off than the government's budget position over the four years out to 2014. And then they tell us, 'We found the savings to fund this.' It is laughable. You are prepared to play with the legitimate concerns of a constituency because you know you do not have to actually find the money. The cynicism of that, I think, is shameful. You know you cannot fund this, but you are cynically playing politics with people who would like an increase in their indexation, because you want to make a political point. You should be judged pretty harshly on that.

I want to make a point about the hypocrisy of the coalition. On the one hand they say, 'We want a strong budget position; we want a surplus,' but on the other they proceed to seek to wreck it. Senator Ronaldson used the old line that it is okay because they would not have wasted so much money. Let's be clear about what he is actually saying. What the coalition are actually saying is that they would not have put money into the economy during the global financial crisis. What Treasury tells us about the effect of that stimulus is that some 200,000 Australians would have been on the dole queues were that stimulus not put into the economy. So essentially Senator Ronaldson's position is, 'We would rather have had 200,000 families without a wage earner than have put the stimulus in.' That is not good economic policy and it is not an answer to the fact that you do not have the money to fund this today.

There are some in the coalition who understand this. It is interesting that in this chamber today we do not have any of the hardheads. We do not have Senator Minchin making a contribution to this debate. We do not even have Senator Cormann, who osten­sibly is one of their economic spokespeople in the Senate, explaining how they would fund this. We have Senator Humphries, who is making an ACT political point against Senator Lundy, and Senator Ronaldson, who is playing a bit of politics with a constituent. So we do not actually have the people who will make the decision about the budget.

Senator Minchin made this point. He was reported on by the Australian Financial Review:

Even as he leaves, Minchin, a former finance minister, has been trying to instill in his party some respect for good policy.

He's been banging this drum for some time, going back at least to a meeting of the Coalition economics committee earlier this year that considered a Liberal MP's private member's bill to award a higher rate of indexation to veterans' pensions.

Confronted by arguments that the move would be very "popular", he told his younger colleagues, in part, that such a proposal risked being a "thin edge of the wedge".

If veterans were given a higher rate of indexation on what was already a defined benefit pension, he argued, what was to stop others wanting the same thing?

The Coalition had to protect its credentials as fiscal conservatives, he said …

Senator Minchin's views became more public when he confronted Mr Abbott, as reported in the press in recent times, in the party room about the need to support good policy. I could not have put it any better than Senator Minchin myself. It is interesting that he, as a former finance minister, is not prepared to come in here and argue this, because he knows he did not do this for good reason and that you do not have the savings to do this.

I had a few more issues, which I may need to into in another part of the committee debate. The coalition claimed that they have moved a second reading amendment, which I think is already before the chamber, which simply calls on the government to reassess the growth in civilian bureaucracy, within the DoD, including in the Defence Materiel Organisation. They should be aware that the government took some $1.2 billion worth of savings in this budget. I think Senator Humphries referred to this. He said, 'They must be real because the government took them.' The government did—in addition to the efficiencies the government is also finding through the Strategic Reform Program.

Those savings, Senator Humphries, go to the budget bottom line and to help fund things such as the mental health package; to help fund things such as the extension of family tax benefits to teenagers, which you supported; and to help fund things such as the increase in the childcare rebate, which is obviously an ongoing expenditure of the Commonwealth. These are the hard decisions that you refused to engage in. Are you saying those savings are hypothecated only for this policy, in which case you should be up front with people and say, 'We are, therefore, not going to take those savings which are already taken for the mental health reform package'? You are very quiet. These are the decisions you refuse to be transparent on. You refuse to be transparent on them because you know that those savings are not real and you are not prepared to be up front with the Australian people about how you will reprioritise expenditure in order to increase the indexation of payments in the way this bill proposes.

I might have to do this in a subsequent contribution, but I also want to address the extraordinary comments in the dissenting report that the opposition has made and the response to it by the Australian Government Actuary —'setting the record straight'—which I think the Senate should be referred to. I will do that subsequently.