David Bushby (Tasmania, Liberal Party) Share this | Hansard source

You've read about it? Well, you have done very well. I have a copy here of the Treasurer's budget speech and I am going to read some excerpts from it. I am sure you will find this very interesting. I will just read a few bits and pieces. I quote:

Our predecessors had Australia on a path of deficit and debt to the next century.

Make no mistake, this path would only make future choices harder, future possibilities bleaker and rob Australians of the future opportunities they deserve.

Our Government could not stand back and ignore the problem. Although we did not create it, we will take the responsibility to fix it.

The measures I announce tonight will reduce the underlying deficit by around $4 billion this year and $7.2 billion over two years. These measures will balance the budget over the term of this Parliament. These are the net effect on the budget bottom line after the introduction of new policy to meet the Coalition's election commitments. These measures represent a historic turnaround in Commonwealth finances.

The speech goes on to say:

Mr Speaker—

and that is a hint there, 'Mr Speaker'—

you don't turn around a nation's finances, a nation's future without making some hard decisions. But if we avoid the hard decisions now they are only going to get harder in the future.

The tightening measures have to be fairly shared. We cannot expect those who rely on pensions and allowances—low income earners—to bear the cost. So we are asking high income earners to make a contribution and business to make its contribution too.

The measures are balanced, strong and fair.

Of course, that Treasurer speech is not the speech that will be delivered tonight. It was speech that was delivered by the member for Higgins in respect of the 1996-97 budget year. But it is a speech that could be delivered tonight, because the words of that speech very accurately reflect the challenge that we face now—that being that, if we do not address the challenges that we currently face in our fiscal position, the consequences down the track will be far more severe, as Senator Birmingham mentioned in his comments.

During the 2007 election campaign I was travelling around campaigning with my colleagues in the Senate team. We went to a restaurant and we met a waiter, and the waiter said to us, in the context of the then election, that he saw the two major parties in this way: 'When things are good and you feel like you've got a bit of money and it's all very comfortable, you throw a party and you invite everybody around and you drink and you eat and you trash the house and you make a huge mess, and you wake up the next morning and you've got a massive hangover and the house is horribly trashed and it's a real mess, and you look around and you say, "Well, the Labor Party threw a good party, but we need to get the Liberals in to clean it up."' I think that is what we saw in 1996. We had to get John Howard and Peter Costello in to address the mess that was the legacy of the Hawke-Keating years—particularly the Keating years. And it is what we see now, with the budget that we are facing tonight. We have got a horrible fiscal mess following the party that the Labor Party threw with reckless abandon, spending money on things that just do not deliver any outcomes for the people of Australia, and leaving a huge fiscal hole that needs to be plugged. And tonight that is what we will try to do. We will actually deal with the mess that Labor left us.

This is not something that we want to do. The decisions that will be in the budget tonight—and, unlike the Labor Party, I am not completely au fait with what we will hear tonight, and I look forward to hearing it—represent the bitter medicine that is needed to avoid further consequences of the disease that Labor left us. They are not something that we necessarily want to do. But this is something that we were elected to do. We were elected to fix this problem.

We would much rather have inherited a situation like the Labor Party did in 2007 where we were in surplus on an annual basis, we had money in the bank, and things were very comfortable. That is one of the main reasons why we compare so well with other countries now: we started so far ahead of them. There are other reasons, but that is one of the main reasons. Unfortunately, we did not inherit that situation. We inherited a situation very similar to that which the Howard-Costello government inherited in 1996, and we again face the challenge of having to address that problem—to clean up after the party that the Labor Party threw.

Senator Di Natale also mentioned that he thought that the Commission of Audit was a piece of theatre. Well, the committee that he referred to was set up, stacked with opposition and Green members. Because it had the numbers, it decided who the witnesses were. It decided when the hearing dates were. It set the findings in the reports. It was even quorate without any government senators being there, so it could hold meetings when and where it wanted to and if coalition senators could not make it then it did not matter—they could just proceed anyway. I suggest that the only reason that that committee was set up was as a piece of theatre.

The National Commission of Audit was a serious attempt to actually examine all lines of spending of the government, with a view to seeing where savings could be made. It made recommendations to the government—and I guess we will find out tonight which of those recommendations, if any, have been accepted. But, in terms of a piece of theatre, I have never seen anything more theatrical than the select committee that was set up to look at that. It spent months examining the Commission of Audit that had been set up, when no findings had been released. It was purely there to run a scare campaign: highlighting all sorts of things that it might find needed to be cut and then scaring the people who might be affected. Talk about theatre! That was it.

Senator Di Natale also mentioned how we compare with other comparable nations. This is very interesting to me. They look at our percentage of debt to GDP, and they say, 'Look—we are so much better off than other nations.' Ignoring the fact that when Labor came into government in 2007 we had no debt, the fact is that, yes, we might compare well with other nations—if we have 13 per cent of debt to GDP and they have 30 per cent, then we compare better to them—but if they were at 60 per cent, would it be okay to have a debt-to-GDP ratio of 30 per cent? If they were at 90 per cent, would it be okay for us to have a debt-to-GDP ratio of 60 per cent?

It is not about the relativities; it is about the absolutes. And the absolutes show that if we have the debt that we currently have, we are going to be paying $12 billion worth of interest every year. That is $1 billion of interest a month, and that comes at a huge opportunity cost. That is hundreds of billions of dollars we are going, largely, overseas to borrow, and $12 billion that we are sending overseas to pay the interest on that debt. That is $12 billion that we are not spending on the types of things that Senator Di Natale outlined: the very worthwhile projects that all Australians think that government should deliver. But we are still taking that $12 billion. We are taxing people to pay interest on debt.

Twelve billion dollars is a massive amount of money. It is equivalent to around half of Australia's defence budget. It is around the same amount that the government spends on aged care. So the same amount that we are spending on aged care annually we are, because of decisions that the Labor Party and the Greens made when they were in government, currently paying in interest and sending overseas, largely to people who we had borrowed money from—the same amount of money that we spend on aged care annually. It is also more than the government spends on universities. I heard Senator Tillem talking about what may or may not be in the budget tonight affecting education. Well, I will tell you what: we could fund education a lot better if we were not sending $12 billion a year in interest to people who we had borrowed money from during the Labor-Green years, every year.

Also, the concerning thing about our relative position is the trajectory of the rate of growth of debt. The International Monetary Fund recently found that Australia's spending is projected to grow faster than any of the 17 advanced economies profiled. So if you are looking at comparing Australia to any of those other 17 advanced economies, and you say, 'Our debt-to-GDP ratio is nowhere near as bad as theirs,' we are growing faster than they are and we are catching them. A lot of those countries have actually decreased their debt in recent years at the same time as we are rapidly increasing it. In the absence of any decisions such as those that we are likely to make tonight, that debt will continue to grow rapidly at a rate that puts us in a position where, within 10 years or so, we will owe three-quarters of a trillion dollars in debt, and that $12 billion of interest that we are paying is likely to be three or four times that amount—up to $50-odd billion that we will be paying in interest. So that is money that we take off Australian taxpayers and we send off somewhere else before we can spend one dollar on delivering services to Australians. To me, that is not the best use of taxpayers' money. I would rather be spending taxpayers' money delivering the services that Australians want and need.

And if we do not make the tough decisions early, we are going to have to make far tougher, far more draconian, far deeper cuts in order to be able to deliver those services. As I said before, we need to take the medicine now to deal with the problems that we are likely to have. Even if that medicine tastes a bit bitter tonight, it is going to taste a lot better than the consequences of the disease that will result if we allow our debt position to continue to get larger and larger, along the trajectory that we are currently facing. Just bear in mind that in the 1980s Greece had roughly the debt-to-GDP ratio that we have now.