Arthur Sinodinos (NSW, Liberal Party) Share this | Hansard source

Exactly! The Treasurer is under great pressure to do so in 2012-13, and they have started already. We saw in the Mid-Year Economic and Fiscal Outlook the re-profiling of spending to accommodate that objective. For example, over $1 billion of infrastructure spending was brought forward to 2011-12. How quickly or responsibly can that money be spent? Is it lying in some state government account earning them interest?

Now, the solar hot water rebate scheme has been terminated prematurely to avoid a budget blowout and to assist in achieving the surplus target for next year. But why was that scheme not being managed to stay on budget? Instead, we get an announcement, literally at close of business and with no advance notice.

The government's stop-start subsidies are disrupting small business, robbing workers of a fair go at a job and giving industry policy a bad name. No doubt more renewable energy schemes are also on the chopping block, and this is something that the Greens will have to keep a very close eye on. I have no doubt that the government has its eye on these as budget savings. If the government is serious it should immediately review its plans for the $10 billion Clean Energy Finance Corporation. I know we are still debating as to whether it is going to be on or off budget. We have written to the chief statistician, I think it is, seeking clarification, given the conflict of objectives of this organisation, which make it appear noncommercial, notwithstanding the stated objectives. If we are now to have the highest carbon tax in the world, why does the government cling onto these various schemes? There seems to be some genuine debate going on in the government about this. Don't they believe that the price signal will work? After all the posturing on markets versus direct action, it seems the government still wants to have a bob each way. So much for the courage of their convictions. This government is firmly in survival mode. Do not expect too many big ideas or reforms going forward.

The Gonski report into school funding, the most comprehensive review in decades, was dead on arrival. The price tag was too high, so off it goes into the bowels of reference groups and Commonwealth-state consultations. Did the government not see that coming when it commissioned the review? Once again, expectations were raised in the community only to be swiftly dashed. Other important budgetary matters are piling up for decision. There is the National Disability Insurance Scheme, the response to the Productivity Commission's report on aged care. The Greens are pushing for a massive new dental health plan. The government was forced to make a down payment on this plan to get its cuts to the private health insurance rebate through the parliament.

Achieving a surplus will also require that nothing goes wrong with the government's economic forecasts. The risks are all on the downside in the current global environment. Below-trend growth will reduce tax revenue and raise welfare spending, putting the budget bottom line closer to the red. Mining tax revenue is also being called into question because of the deal done with the three big miners and the increase in state royalties. Beyond next year the carbon tax revenues are also likely to fall below projections, when we enter the floating price phase. The carbon price is likely to fall in line with global trends towards a floor price of $15 a tonne. The Minister for Finance and Deregulation effectively conceded this scenario in her haste to lay the boot into former Prime Minister Rudd during the leadership stoush we have just been through. The budget outcome will be adversely affected because most carbon tax related spending cannot be adjusted downwards.

There is one upside risk with the budget and that is higher than projected inflation, because the cascading carbon tax will also threaten higher inflation than currently projected or estimated. Prices are already going up in aviation and the biggest electricity generator in the country has warned that electricity price increases will exceed those estimated by the government.

What this leaves is a situation where, whether the election is in 12 months or 18 months, a new government will face a large fiscal challenge. A number of fiscal time bombs are being left behind by this government. But as important as it is to deal with the fiscal matters before the government, we need a new way of doing things—a new process, a more consultative process—so that if we are serious about making reforms stick and if we are serious about making budgetary changes stick then we need proper consultation with the community. When it comes to industry matters, proper consultation with the affected businesses and employees is needed. We need a new approach and new governance around many of these arrangements.

In the case of massive infrastructure projects, Tony Abbott has signalled a 15-year rolling infrastructure plan with transparent, publicly-available, cost-benefit assessments of major projects. This will be important to put more honesty into the process. It will keep the proponents of projects honest, it will keep the government honest and it will provide information to the community to be fully informed about these important infrastructure decisions. That is one place we can start.

There are other elements of government reform that we also need to focus on going forward. We need to be careful in structuring our subsidies to make sure that those subsidies encourage adjustment and encourage change and that we are not just subsidising activities that must ultimately go out of existence. I noted earlier the solar hot water bonus scheme and the impact that had had in artificially inflating that particular sector. Now we are about to see over 6,000 jobs potentially taken away in that sector. That is not the way to grow new industries in Australia. We need to do better than that.

In closing may I say that as a result of Monday's leadership stoush nothing has changed. Expect the mistakes and the short-term fixes to continue. It is a pity that Bob Carr did not get to Canberra. He would have had a ringside seat at the circus and he could have been foreign minister if only for a short time—perhaps up to 18 months—but no doubt it would have been a great ride for him.