Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The Labor Party in government always stuffs up our public finances. It always comes down to the coalition to fix up the fiscal mess that the Labor Party in government has left behind. People across Australia instinctively know that the Labor Party always spends too much, which is why it always has to tax too much, which is why it always drives up government net debt, and that is why it always comes down to Liberal and National parties in government to sort it all out, to pay down debt, to deliver surplus budgets, to deliver income tax cuts, to deliver all of these things that people across Australia have become used to from Liberal-National coalition governments.

Instead of strengthening our economy, instead of making our economy more resilient, instead of making our economy more competitive internationally, instead of focusing on our productivity growth, this government has hit our economy with one new tax after the other, with one new bit of red tape after another—in fact, more than 18,000 new bits of red tape under this government over the past four years. You cannot keep adding more and more lead to our saddle bags and think it is not going to have an impact somewhere along the way. When you have a government that keeps putting more lead into our saddle bags, eventually it slows down even the most resilient and strongest of economies.

It is worthwhile at this point to reflect on a bit of history. Back in 1996 the Howard government, as a coalition government always does, inherited $96 billion worth of Hawke-Keating Labor Party debt. It took us 10 years to pay that off, and not only did we pay off $96 billion worth of Hawke-Keating Labor government debt, but we also delivered surplus budget after surplus budget, we delivered income tax cut after income tax cut, we delivered genuine tax reform through the introduction of the GST, which replaced wholesale sales tax, which was inefficient, and a whole series of inefficient state taxes. We also left the budget in the best shape of any budget in the history of the Commonwealth. When we left government in 2007 the budget was $22 billion in the positive. We had a $22 billion government budget surplus. There was no government net debt—zero—. There was $70 billion worth of Commonwealth net assets, and the government in 2007 was collecting more than $1 million in net interest payments from the net Commonwealth assets that had been invested.

In just under five short years, this government has completely turned that around. In less than five short years, we are now looking at a situation where this government has delivered $174 billion worth of accumulated deficits, where this government is heading for $145 billion worth of government net debt, and instead of collecting $1 billion in net interest payments from the investments in the Future Fund, this government is planning to spend nearly $30 billion just to pay the interest on the debt that it has accumulated over the past 4½ years. Just imagine what the government could do with $30 billion if it did not have to spend it on interest payments to service that debt that it has accumulated over the past few years.

This is not enough for this government—$174 billion worth of accumulated deficits, $145 billion worth of Commonwealth net debt is not enough; they have to go harder. In the few months that might be left for this Labor government, they are thinking: 'We've got to be true to ourselves; we've got to be true to our DNA. We've got to go harder when it comes to the reckless spending.' So in the last few weeks they have been spending like drunken sailors. Spending commitment after spending commitment after spending commitment—all in relation to meritorious issues. We are not questioning the issues. There are a lot of things that would be nice to have but, ultimately, the question is whether we can afford all of the spending commitments that are being locked in by this government right now. That is why we are now looking at a $120 billion budget black hole under this government, which comes on top of the $174 billion worth of accumulated deficits.

We have a government that spends too much, which is why it always has to cast around for more cash, which is why it is always coming up with yet another ad hoc tax grab—some of them retrospective in order to really make sure that it really collects a lot of money—and which is why it is always looking at borrowing more money and pushing up the levels of debt.

On top of all of that, we have a government with a Treasurer who hates success, who hates successful people. Not just through his rhetoric is that blatantly obvious; it is also obvious through the policy initiatives that have been pursued by this government over the last 4½ years that invariably seek to penalise success. The truth of the matter is that, for Australia to be successful, we need the Australian people to be successful. For Australia to be successful, we need Australian businesses to be successful. To hit them with tax after tax after tax and with 18,000 new pieces of red tape is not the way to incentivise and encourage success.

We have a Treasurer in Australia who is somehow inspired by Bruce Springsteen to actually go after people who are successful. This is a Treasurer who does not really seem to like success. That is not the way to take Australia forward. As a result, this is a government that is taking Australia in the wrong direction. We are now less competitive internationally than we were 4½ years ago. The cost of business has consistently gone up and up and up. It is now harder to attract investment into Australia than it was 4½ years ago and, of course, that will have significant medium- to long-term consequences for Australia and for our economic prosperity moving forward if it is not corrected by the next government very quickly.

Under this government, over the last 4½ years we have had 26 new or increased taxes. Obviously, the mining tax and the carbon tax are the most high-profile taxes, but we have had a whole series of others. The first big tax grab, the first big lazy cash grab, was the alcopops tax in April 2008. That was going to fix binge drinking—there would not be binge drinking anymore as long as we put in place a 70 per cent increase in the form of the alcopops tax. We had the condensate tax; we had the increase in the luxury car tax; we had the flood tax, the mining tax and the carbon tax; and we had successive increases in tobacco taxes. Despite all of these increases in taxes and despite the best terms of trade in 140 years, over the last 4½ years this government has not been able to balance the books. So when we are talking about $174 billion worth of accumulated deficits under this government, which are there in black and white for all to see in the budget papers, it comes after and despite 26 new or increased taxes and it comes despite the best terms of trade in 140 years.

We have had ad hoc tax grab after ad hoc tax grab to feed Labor's addiction to wasteful spending. They are still not on top of it and they are still dealing with budget deficit after budget deficit. And, with a $120 billion Labor Party budget black hole moving forward, guess what? There will be more from where the others came from. There will be more new taxes and there will be more new debt in order to fund the spending spree of the last few weeks. One of the things that the Labor Party are particularly bad at is coming up with a tax that actually leaves the budget better off.

You would think that, if a government comes up with a new multibillion dollar tax, if a government has a significant fiscal challenge, if a government is looking at a gaping big hole in its budget—a government that has $174 billion worth of accumulated deficits—like the mining tax, the least it would do is use it to help bring the budget back into surplus. But, no, this government is so good at spending. It spends faster than it can bring the money in, which is why the mining tax—that is, the mining tax revenue minus the cost of all of the related spending commitments and various measures—left the budget worse off than when the mining tax package was announced.

How can you do that? How can you come up with a multibillion dollar new tax which has massive implications for a very important industry for Australia and end up in a situation where the budget will be worse off to the tune of $4 billion over the forward estimates, and even more worse off over time because the revenue from the mining tax was always going to moderate whereas the cost of the related spending commitments was always going to go up? There is much wrong with the carbon tax and the mining tax. Without getting sidetracked by the detail of everything that is wrong with those taxes, the carbon tax package leaves the budget worse off too. The government aims to collect $25 billion over the forward estimates, but it has already spent $30 billion. There are all these new taxes and still the government is going deeper and deeper and deeper into the red. No wonder this government is not able to ever balance the books.

Since the government announced the mining tax and the carbon tax, they have been confronted with a few developments that are further undermining their fiscal position. There are serious doubts over the revenue the mining tax will raise. There is no doubt in our mind that this is because, firstly, the government seriously overestimated the commodity price assumptions and production volume assumptions underlying their mining tax revenue estimates. Secondly, because of the direct incentive the federal government has given to state governments to increase their state royalties on iron ore and coal, given that the federal government is going to credit royalties on iron ore and coal against any mining tax liability, the revenue will again be less than they thought. Since the dodgy mining tax deal was negotiated exclusively and in secret between the Prime Minister, the Treasurer and the three biggest mining companies, five out of six states have increased state royalties either on iron ore or coal—five! Both Liberal and Labor governments have increased royalties on iron ore or coal since Wayne Swan and Julia Gillard signed that dodgy mining tax deal. Western Australia, of course, removed the concession on iron ore fines, which is an effective increase in the royalty rate. South Australia increased royalties on iron ore. Tasmania increased royalties on iron ore. New South Wales increased royalties on coal. Queensland on Tuesday announced an increase in the royalties on coal. When Tasmania and South Australia increase their royalties nobody takes any notice, because the volumes are actually very low. When New South Wales, Queensland and Western Australia increase their royalties, it has a more significant impact. Fundamentally, the way the government have structured their mining tax deal has exposed the federal budget to structural risk, and it is a structural risk of the government's own making, because the government's budget is now hostage to decisions by state and territory governments to increase their royalty arrangements.

They have removed the floor price on carbon. They still want us to believe that their expectation is that in 2015-16 the carbon price will be $29 a tonne. If that is what they truly believe, if they truly believe that the carbon price in 2015-16 will be $29 a tonne, why did they see the need to remove the floor price at $15 a tonne? Because they know what experts around the world know: that the international carbon price in 2015-16 is not expected to be anywhere above $10 a tonne. That is another massive budget black hole, because the revenue will be significantly lower than what the government thought it would be.

Then we have the spending frenzy that has been happening in the last couple of weeks. Everybody knows full well that this government do not have a clue as to how they are going to actually fund all these promises that they are making. It seems that this government have completely given up. They do not actually care whether they need to somehow come up with the money to fund all of the promises they are making—otherwise, you would think that the health minister and the Prime Minister would be on the same wavelength when they explain how they are going to fund the dental scheme. You would think that the Prime Minister going to the National Press Club on a Monday lunchtime to outline the government's response to the Gonski report would actually say where the money was coming from to fund all the promises that she is making in the context of education. But, no, there is none of that. We just get spending promise after spending promise without any indication whatsoever as to how the government are going to fund them.

The government wants us to believe that everything is going to change this financial year, that this financial year is going to be totally different from last year, the year before that, the year before that and the year before that—in fact, that this year's budget is going to be a completely different budget from any Labor budget for the last 20 years. The government wants us to believe that this year we are going to have a $1.5 billion surplus. It ain't gonna happen. It ain't gonna happen unless the government comes up with some very serious spending cuts in the Mid-Year Economic and Fiscal Outlook. The other alternative, of course—the one the government pursues quite readily—is it goes for some more massive increases in the tax take.

The reason I can say that with a lot of credibility is because I look at Labor's track record. Look no further than the last financial year. Back in July 2010 the Treasurer told us that the deficit would be $10 billion—that we were back on the path to an early surplus by 2012-13. So the deficit in 2011-12 was only going to be $10 billion. But six months later that was $12.3 billion, six months after that it was $22.6 billion, six months after that it was $37.1 billion and another six months after that it was $44.4 billion. Within less than two years the deficit for the last financial year had blown out by $34.4 billion. It has more than quadrupled. And this government want us to believe that they are going to deliver on a $1.5 billion surplus in the context of these revenue write-downs and the spending sprees that we have just experienced in recent weeks! Give us a break—it ain't gonna to happen. In fact, senior economists have been telling us that in their assessment the government are currently on track to deliver a deficit this year of 1.5 per cent of GDP, or in the order of $21.6 billion. It is time for the government to come out with some answers. It is time for the government to come clean.

In the short time that is left to me I want to touch on some of the comments that Senator Marshall made. Senator Marshall was suggesting that debt was low in Australia by international standards. That is true, because our starting position in Australia was very different from the starting position in the countries of Europe and in the US. In Europe and in the US they have been at it for longer—the high spending, the high taxing and the high levels of red tape. They have been at it for longer. This government is working very hard to catch up. But, yes, it is true, even this government in 4½ years has not quite been able to get to the incredible levels of debt that we have seen across large parts of Europe. But do not get too cocky about it because, if you look at where Ireland was four or five years ago and where we are now, it does not take much to actually significantly change that particular proviso. Senator Marshall says that net debt will peak at 9.6 per cent. That was before the latest spending spree. That was before the latest revenue write-downs.

Let me make one more observation about this assertion that Senator Marshall made that somehow the reason the government is in bad shape financially is that the revenue has collapsed in the wake of the financial crisis. That cannot be true for the 2011-12 financial year, because for the first budget after the global financial crisis—the 2009-10 budget—Treasurer Swan estimated that the revenue from 2011-12 would be $310 billion. It ended up being $330 billion. That is a $20 billion increase in revenue for that year compared to what he thought. Just because he inflated his expectations along the way does not mean that revenue has collapsed. It only means it has collapsed against his excessive expectations.

I am going to run out of time. There is much more to be said about the mess that Labor has created and there is much to be done to fix it up. Only a coalition government will fix up Labor's fiscal mess.