Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance and Deregulation (Senator Wong) to a question without notice asked by Senator Brandis today relating to the economy.

In case senators have forgotten what this is about, Senator Brandis asked about delivery of a budget surplus, the carbon tax and the accuracy of budget forecasts. In answer to the question, Senator Wong was happy to reaffirm that the Gillard government intended to deliver a budget surplus in 2012-13. It is good that they are determined to deliver this budget surplus. They have wavered a bit in the last few months. It was an aspiration at various stages, but they seem to be back on track now. 'We're going to deliver a budget surplus,' they tell us.

I think we are justified in asking the question: why the big deal about this? The Howard government delivered 12 budgets, and almost all of them were budget surpluses. It did not seem to have so much trouble doing it. The reason delivering a budget surplus under this government is such a big deal is that, in trying to deliver a surplus, the ALP is fighting its nature. It is fighting its history and it is fighting its very DNA as a political party, because Labor governments do not like to deliver surpluses. It is not what they do. It is not their modus operandi. I know that because I look back over 20 years of political history, and at the federal level I do not see a single Labor budget surplus—not one. I look back over 20 years, even at state and territory Labor government level, and I see very few budget surpluses, because it is not what the ALP does. The ALP does certain things very predictably in office. It offers support for trade unions, it increases government spending, it increases taxation levels—preferably through introducing new taxes—it runs up deficits and it runs a debt. That is what Labor governments do. But right at the moment the ALP has a particular problem, particularly at the federal level, because the electorate is now much more sensitised to the question of budget surpluses. They want to see governments running balanced budgets. They want to see budget surpluses, probably because under the Howard government they saw how effective those surpluses were in delivering important social and economic outcomes—tax cuts, more spending on health and education, a stronger defence force, and so on. They want to see governments which can sustainably offer support for important social and economic goals in this country, and they are judging governments by their ability to offer surpluses. This government are huffing and puffing over delivering a $1.5 billion surplus next financial year. That is less than half of one per cent of total Commonwealth outlays projected for 2012-13. A budget surplus half of one per cent is miniscule and wafer thin. It is because it is so thin that the government are in all sorts of trouble right now, when basic economic conditions and assumptions are not working out for them. They planned a deficit for the present financial year of $22 billion but, unfortunately, it has blown out to a $37 billion deficit—a 68 per cent variation in just six months. That is pretty much the case for all the deficits they have brought down in the last four years. They do not work out as the government plan them to. Perhaps they are hoping that, if their deficits are inflating each year beyond expectations, maybe the surpluses will as well after 2012-13. Unfortunately, the more your deficits inflate, the less large your surpluses are likely to be. At $1.5 billion you do not have much of a margin for error.

This government are desperately trying to defeat their own history—their own legacy—of mistakes and extravagant spending. We know that they took a $70 billion net positive position in the Commonwealth in terms of assets and money in the bank and turned it into $133 billion of net debt in just the last four years. That is what the Labor government are fighting, not the global financial crisis as Minister Arbib just said and not other extraneous things. They are fighting their own history of being unable to contain spending, reduce taxes and return budgets to surplus. That is why we are entitled to say that we are sceptical about this government's capacity to deliver a surplus. People do not need to be sceptical about the coalition's ability. We showed it in almost every budget we brought down. We delivered surpluses, we delivered them strongly and they grew and grew. Under this government you simply cannot make the assumption that the same thing will happen.