Zed Seselja (ACT, Liberal Party) Share this | Hansard source

I appreciate the opportunity to speak on this very important issue of the budget and how we restore our nation's finances. In order to do that, I need to tell the shocking story of how the Labor Party has made a mess of our nation's finances. So I would like to start by going through some of those numbers, the comparison with what Labor inherited and what they left for future generations and for the coalition to pick up as we come into government. It is a shocking tale of taking the best of times and squandering them, taking the greatest terms of trade in our history and blowing the lot, taking the best budgetary position that any government has ever inherited in this country and rapidly sending us on a path towards a European style way of budgeting and European style debt and deficits. That is the story of the Rudd-Gillard-Rudd Labor years.

Let us look first at some numbers. I think it is really important to put it into context when we look at how much money the government was getting when the Howard government left office in 2007 and what the Labor Party have left in terms of both revenue and expenditure. It tells quite a story and it puts into some context Labor's profligacy. When the Howard government left office Commonwealth revenue in that year was around $300 billion. With $300 billion worth of revenue just six years ago the Howard government was able to deliver a $20 billion surplus. So there was $300 billion of revenue and $280 billion of spending, and even then there were critics saying that the Howard government was spending too much and why didn't they return more in taxes. In fact, there were tax cuts right the way through. So $300 billion in 2007-08 apparently was enough to deliver for a coalition government a $20 billion surplus. Revenue during the Rudd-Gillard-Rudd years grew by around 25 per cent to $374 billion. That is not bad, $375 billion. In six years we saw revenue go up by about 25 per cent but the problem was the spending. The spending went up around 50 per cent in the same period. So from $280-odd billion to around $412 billion from the Rudd-Gillard-Rudd governments when they left office, and that is the fundamental problem that the coalition now needs to fix.

The Australian people are not stupid. The Australian people understand that you cannot live beyond your means. If you live beyond your means for a long time, eventually someone has to pay for it, someone has to pick up the bill. In this case it will be the Australian people. It will be the Australian people who, if we were to go on in the way the Labor Party was taking us, because not only did we see spending increase by 50 per cent over the period of the Labor government, they also then in the never-never promised to increase spending even further—rapid increases in spending in the out years with no ability to pay for it. So we know that the bill eventually has to be paid and the decision that we have as a nation now is whether or not we choose to start paying some of that bill now, to start making the contribution now so that we are not leaving it to our kids and our grandkids to pick up an ever greater bill, ever greater interest payments, in order to bring the budget back to stability. That is the fundamental choice we have and that is the one that the Labor Party has squibbed.

Here in the ACT one of the biggest issues in the budget is the issue of Public Service job cuts. I am a former public servant myself, my wife is a Commonwealth public servant, family members of mine including my father for all of his career or most of his career was a public servant. I understand the importance of the Public Service to this town. As a Canberran I do not want to see any jobs lost in Canberra. What we have got is a situation where even the Labor Party realised spending was so out of control that they in fact started to cut the Public Service. I will use a few figures to illustrate the point. The Labor Party in government, and we saw this in some other areas which they are now denying in opposition, at the very end did start to realise that their policy prescriptions were wrong. We saw it with the boats. Right at the end they said, 'We have to do something because we have lost control of our borders.' And we started to see it in budgeting but of course they were never able to follow through because whilst they proposed some savings in the last budget they now oppose those savings in opposition. And of course they made the decision, and this is important that this is put on the record, to cut 14½ thousand public servants. That was a Labor Party decision. That was the Labor Party recognising that in fact spending was out of control, that they had not controlled spending, that they were living beyond their means.

This is a difficult thing for Canberra. We need to deal with it. We need to do a couple of things that I think are important and it is important to get them on the record. One is that we are not talking about the same as 1996. In terms of magnitude, in terms of the proportion of the workforce, we are talking significantly less, but it is a substantial challenge for the city to deal with. So we need to deal with it in a calm and rational way. What is not helpful is when we have local Labor politicians such as Gai Brodtmann, who was part of a government that decided to cut 14½ thousand jobs, she was part of that decision, and Andrew Leigh, who was in the government that decided to cut 14½ thousand Public Service jobs, Kate Lundy was part of the government that decided to cut 14½ thousand jobs. When they decided to cut 14½ thousand jobs they did not talk about economic crisis in Canberra, they did not use hyperbole to describe it, but they now do. So people should see their hypocrisy for what it is. What we need to do is not talk our economy down, is to recognise that our private sector has grown significantly over the past 20 years. It is more mature

These are going to be real challenges for us to deal with, and I would call on the government to have regard to that as we go through the next couple of years. We want to see Canberra continue to prosper—and I believe it will. I believe it will, but it will take some transitional help. We will need that.

But this is the legacy. Whether it is the Public Service or whether it is in other cuts that we see in the budget, this is the legacy of a Labor government that completely lost control of spending. People understand that. The Australian people understand that, if you are headed for $667 billion of debt, when you are paying $12 billion a year in interest and you are headed for $34 billion a year in interest, you cannot keep going along the same path. We have seen what happens when nations lose control of their finances. When nations lose control of their finances, they lose control of their destiny. We have seen the bailouts in other countries. We do not ever want to go anywhere near that situation.

When spending gets out of control and when we see $12 billion a year in interest, headed for $34 billion a year in interest, that is a major concern. That can very quickly spiral out of control, as you struggle to keep up interest payments, as debt gets out of control and more and more needs to be spent just to service that debt. Imagine what we could do with $12 billion a year if it was not needed to service our debt, if it was not needed for interest repayments. Imagine what we could do in infrastructure, in roads building and rail. Imagine what we could do in health and education.

This is the cost that we have when governments lose control. We do not have to look far to see the kind of attitude the previous government had to spending, which led to the debt and deficit crisis that we now face. We are seeing this week the pink batts inquiry, with billions of dollars wasted and people dying because it was rushed out so quickly without thought—with thought only to tomorrow's headline rather than the consequences of wasting that money in the way that they did. We saw the cheques going to dead people and the cheques going to people living overseas in order to stimulate the Australian economy—$900 cheques sent to people living overseas in order to stimulate the Australian economy; cheques sent years after the financial crisis apparently in order to stimulate the economy during the financial crisis. There is the NBN blowout—which is being seen in the NBN committee that I am a part of. The independent analysis found that it would cost $73 billion to complete the National Broadband Network—some $29 billion more than the Labor government's forecast. These are the legacy issues that we are picking up.

When you see your spending growing at 50 per cent when your revenue is growing at 25 per cent, that represents a problem. When you see interest repayments getting to $12 billion a year and growing rapidly, governments have to act to get the finances back under control. I think it is also worth noting that we do not get the finances under control just for its own sake. Budgetary management is not just about being able to say we can deliver surpluses or we have lowered debt. It has real implications. It has impacts on the economy. It has impacts on confidence.

The comparison between the coalition government under John Howard versus the Labor government under Rudd and Gillard is stark. It is not just about the financial outcomes or the budgetary outcomes; it flows to results in the real economy. I will use some examples—firstly, with the financial outcomes. The coalition left a $19.8 billion surplus; Labor left a $47 billion deficit. That is how much they squandered. The average budget position under the coalition government was $8.1 billion surplus; the average position under Labor was a nearly $40 billion deficit. The interest on government debt in gross terms under the coalition government was $3.8 billion and it is now $12.4 billion. Government spending increases annually under the coalition government was 3.3 per cent; under the Labor Party it was 4.5 per cent.

We often hear about spending as a proportion of GDP. This one tells a story. Government spending as a proportion of GDP at the end of the Howard government was 23.1 per cent. At the end of the Rudd government spending as a proportion of GDP 25.9 per cent. That is a nearly three per cent increase in real terms as a proportion of GDP by that Labor government. That has implications. When your spending grows twice as fast as your revenue you are headed for destruction.

We have seen the benefits to the economy in managing the budget properly and getting the economic settings right. We saw things like average GDP growth. Under the Howard government it was 3.6 per cent versus 2½ per cent under the Labor government. We saw annual retail turnover growth of 5.9 per cent under the Howard government and 3.3 per cent under Labor—a massive difference. Multifactor productivity growth under the Howard government was 0.7 per cent annually and negative 0.7 per cent under the Rudd-Gillard government. We saw living standards going up under the Howard government—2.3 per cent annual GDP per capita growth. Under the Rudd-Gillard governments it was only 0.7 per cent. Employment growth under the Howard government was 2.1 per cent and 1.4 per cent under the Rudd-Gillard Labor governments. When we left government the unemployment rate was 4.4 per cent. It was 5.7 per cent at the end of the Rudd-Gillard-Rudd experiment. The list goes on and on. Real wages went up annually, above inflation, 1.8 per cent during the life of the Howard government and only 0.6 per cent on average under the Labor government.

These are the facts and these are the consequences of good budgetary and economic management versus poor budgetary and economic management. It is there for all to see. Living standards under good management go up. Productivity growth goes up. People have more choices. We see taxes over time coming down. That is the type of nation we should want to be living in.

As to what the Labor Party continues to advocate for, now in opposition: firstly, they say there is no problem—that $667 billion of debt is okay. We say that it is not. We say that $667 billion of debt is criminal neglect towards our children and our grandchildren. It is leaving them with a legacy of higher taxes and lower growth. That is what $667 billion of debt represents. Lowering debt and deficits and increasing economic growth is a way for us to share the burden with future generations, ensuring that we leave our children and our grandchildren in a better place than the place we inherited. That should be the task of any government. Any government's fundamental task is to be able to say that we left the country in a better place than we inherited—that we put in place policies that will leave a lasting, positive legacy for our children and grandchildren; that they will have more opportunity; that they will have more job opportunities; that they will have better living standards; that they will have less debt; that they will have less tax so that they can have more freedom in their daily lives, and so that they can look after their families in the way they choose rather than being burdened by more and more government interference.

The efforts to cut red tape are not simply about saying, 'Cutting red tape—it's politically a good look.' For every bit of genuine economic reform and red tape reduction, we see businesses able to thrive. We see businesses more likely to employ people. We see economic growth, as a result of allowing our businesses to do what they do best, not to be constantly bogged down in excessive paperwork.

In the time I have remaining, I will speak on the shift in focus of this budget. It is cutting spending and reducing spending over time, so that we can lower projected debt by around $275 billion. That is fundamentally important. But there is also a shift in the budget from focusing on spending primarily on consumption to spending on investment—on investment in infrastructure so that we can improve productivity, so that we can improve living standards. That is a fundamental part of this budget. It is an important part of this budget. It is something that I think has not been adequately commented on—the shift to more productive spending.

Not all spending by the government is of the same value. Building productive infrastructure is better spending than throwing away money on pink batts. Building productive infrastructure is better than giving cheques to people overseas in order to stimulate the Australian economy. These are the choices that we have every time we deliver a budget. Fixing Labor's mess is not easy. No-one in the coalition is taking the hard decisions because it is fun, or because it makes you popular or because it gets you a good headline, because it does not. These decisions are being taken because they are the right decisions for our nation. And as we get the budget back to good health, as we get debt and deficit under control, the dividend will be a strong one. The dividend for our economy, the dividend for our communities, the dividend for living standards and prosperity and growth will be significant.

That is what this budget debate is about. It is time that those opposite recognise the legacy that they have left, and recognise that we have to get on with fixing the mess that they have left us and, instead of blocking us, get out of the way and allow us to do it.