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

I have to say, Senator Mason, based on previous experience, this is a distinct possibility. Then we have Senator Cameron's ideas on how he would pay for all this. There has been much made of the issue of debt—net debt versus gross debt and all the rest of it. It was fantastic that Senator Cameron found his way to the Treasury in order to speak to someone or at least get someone to give him a piece of paper that would explain all this. But the reason this is an issue is that people in the community are told that the government is going to achieve a surplus of $1 billion in the next financial year and simultaneously they are told, 'Oh, but the government is also going to have a bill in the parliament to raise the debt ceiling to $300 billion.' Then people ask, 'Hang on, if they are running a surplus, why do they need to borrow?'

There are many explanations as why that is the case. Part of the explanation, of course, is that the government is not only borrowing for itself, to fund its own activities and operations; it is also borrowing on behalf of public sector non-financial corporations such as the Clean Energy Finance Corporation and the National Broadband Network. The theory there is that the government borrows on its credit rating, it passes on the money and then these parties will invest the money, and because they will make a commercial rate of return we do not need to worry. We will have an increased liability on that side of the balance sheet; we will also have an increased asset on the other side. This overlooks the fact that the Clean Energy Finance Corporation and the NBN have both been costed as being unlikely to make a commercial rate of return.

Senator Conroy's own study, which he finally relented and agreed to have done on this, indicated that at best the NBN could generate a six per cent rate of return—and this is as a monopoly. A six per cent rate of return is the 10-year bond rate or something to that effect, not a commercial rate of return, not the rate of return you need when you are risking money in that sort of industry. So when people out there hear that the government is raising the debt ceiling they become confused. They think: what is the message here? It further increases the cynicism that people in the community have about the government and what the government is about.

In the time I have left I want to dwell on one matter, and that is the matter of means testing rebates and various benefits. There is a justification for means testing certain benefits, but if we take this too far the danger we run is that we increase the poverty traps. We increase the effective marginal tax rates in various ways up the income scale. That is an important issue, because it can deter people from working, saving and investing. In particular, it can have an impact on the secondary income earners in families, which tend to be the women in the families, the partners. So it is fantastic when people talk about the budget implications of means testing, but let's also think about the participation implications of excessive means testing. This is a theme I will come back to because there is no doubt that in some of the measures the government has taken it has created a situation where, contrary to the rhetoric of the Treasurer, who prides himself on being someone who spent part of his working life seeking to reduce effective marginal tax rates, he is now actually making it worse.

In conclusion, may I say that this budget will not be remembered for too long. There are too many other events occurring in this place which will overtake the budget. Even the best budget has a limited shelf life; this one will have an even shorter shelf life. People will see this budget through the prism of what they believe about this government, and ultimately what they believe is they cannot take what the government says at face value. They have had too many promises broken, too many expectations dashed, and the government's budget confirms all of those impressions.