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

I thank all senators for their contributions to this debate. I will briefly—given the hour—respond to a few issues. Obviously, senators would be aware that these are the appropriation bills and they form the core of this, the fourth, Labor budget, a budget that builds a more produc­tive workforce, including a $3 billion training package. This budget delivers a plan for better schools, hospitals and health care, including a significant spend on mental health services and regional health services. It will also ensure that we remain on track to get in the black by 2012-13.

There have been a number of comments made about debt, and I just want to respond briefly to them. I would make the point that this is a budget that returns to surplus by 2012-13, with the budget growing both in size and as a share of GDP by 2014-15. This does represent the fastest fiscal consolidation since at least the 1960s, around 3.8 per cent over two years. This has been achieved despite significant revenue weakness from the legacy effects of the global financial crisis, an event which had an extraordinarily significant effect on the global economy and particularly on many developed economies but which the opposition appears to forget.

In terms of real spending growth, Senator Cormann made an assertion about two per cent. The two per cent cap is part of one of our fiscal rules. We have actually done better than that over the forward estimate periods. The average across the forward estimates averages one per cent per year, which is the lowest average real growth in expenditure over a similar period since the 1980s. And, of course, that is compared with real spending growth in excess of two per cent for most of the period the coalition were in government—an average growth of 3.7 per cent. The budget achieves savings of $22 billion in addition to the $83.6 billion identified in the last three Labor budgets. It delivers a net improvement to the bottom line of $5.2 billion across the forward estimates.

In many ways the following two facts are most important. Government spending as a share of the economy falls. So, for those on the other side who like to speak about the importance of small government, it is a Labor government that is actually delivering a reduction in government spending as a share of the economy to 23.5 per cent of GDP by 2014-15. And, in case people suggest that is just because it is at a higher level because of the GFC, I would make the point that that is actually less than the average of the 10 years preceding the global financial crisis.

A number of comments were made about net debt. Australia's net debt is forecast to peak at 7.2 per cent of GDP in 2011-12. This compares to an average net debt position of around 90 per cent of GDP in 2016 for most major advanced economies. Our peak net debt position is less than one-tenth that of comparable economies.

Senator Cormann made some comments about the government seeking to hide the debt cap. I think that is somewhat disingen­uous, given that it is in the legislation before the parliament and being debated. The senator also made some comments about the carbon price. We previously discussed that at length in estimates and in other fora. I would again make the point that the government have said very clearly: we will account for the carbon price in the usual way, after the package has been finalised—just as former Prime Minister Howard accounted for the GST well after he first announced it.

Senator Macdonald stated that someone has to pay back the debt. We agree, which is why we have put forward a budget with savings measures. I would make the point that in fact it is the coalition blocking a range of savings measures in this parliament that have an impact on the budget bottom line. If they are keen on a surplus, they need to demonstrate that by voting the right way.

I do welcome the comments that were made in the other place in recent times, including comments made by Mr Andrews yesterday:

We have said that, if we are going to oppose measures which the government puts forward and that opposition will lead to a cost to the budget, we will identify where the savings are going to be made in the budget in order to compensate for that loss to the budget.

If that is the new coalition position, I welcome it, because it is a new position and it is not the position that they have previously held. In fact, as I indicated prior to this debate, if the coalition's position in terms of their voting record and their $10.6 billion black hole were included, the coalition would in fact be in deficit in every year of the forward estimates—not the party of surpluses but the party of deficits.

Senator Joyce made some comments. I am not sure if they are able to be responded to. He did make a point about debt and I thought he might like to be reminded of what Moody's ratings agency said after the budget:

Moody's notes that Australia's government debt remains among the lowest of all Aaa-rated governments.

Goldman Sachs in their report state:

In order to avoid further interest rate rises it—

the government—

proposes a Budget that represents the biggest fiscal contraction since 1970 when comparable data commenced.

…   …   …

The Budget makes a genuine attempt to keep its commitment to return the Budget to surplus.

CBA Economics Update of 10 May 2011 states:

… the Budget is dominated by savings measures—new spending is limited and any significant revenue initiatives are largely deferred to the Tax Forum …

…   …   …

The Budget meets all the requirements of the government’s medium-term fiscal strategy and it adheres to the exit strategy from the GFC-stimulus period.

On that basis, I commend the bills to the chamber.

Question agreed to.

Bills read a second time.