Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

Senator Conroy is here interjecting, but the truth is that Labor put Australia on an unsustainable spending growth trajectory, recklessly and irresponsibly, and of course Senator Conroy is not able to look ahead to where the trajectory they have put Australia on is taking us. The trajectory that Labor put Australia on is taking us to a situation where consistently, as far as the eye can see, spending would exceed our revenue. That needs to be addressed by being realistic about what is likely to happen to our revenue collection in the years ahead.

There is absolutely no question that Labor put us on a spending growth trajectory to 26.5 per cent of spending as a share of GDP. If Labor, as Mr Shorten has indicated, is committed to a surplus and is not prepared to support spending cuts, what that necessarily means is that Labor would have to increase taxes as a share of GDP to 26.5 per cent in order to balance the books. That is the mathematical reality. If Mr Shorten is not prepared to bring the spending growth trajectory down, then the only way he can balance the books is by massively increasing the tax growth trajectory as a share of GDP and that of course would hurt our economy and would hurt jobs. It would cost jobs because it would make our economy fundamentally uncompetitive internationally. These are the challenges we have been facing as a government.

About 85 per cent of Commonwealth spending at a Commonwealth government level is essentially a transfer of payments through the welfare system, through the health system and payments to the states. Only a very small part of the expenditure of the Commonwealth is, unlike in the states, paid on wages for public servants. Most of it, essentially, is taking money out of taxpayers' pockets and handing it out to somebody else, whether that is through the welfare system, whether that is through the Medicare benefits system, whether that is through the pharmaceutical benefits system, whether it is through payments to the states. You name it: we are essentially just taking money from here and handing it over there. We have to do that in a way that is affordable for the country.

If we do not do this, if we continue to go down Labor's path where we are putting a significant chunk of our day-to-day living expenses on our national credit card, without ever paying any of it off, we would be in the situation where we would have to hand over that credit card to our children and grandchildren down the track for them to pay it back. Every parent knows that that would be a completely unreasonable and unfair expectation. No parent in Australia would put a chunk of their grocery bill on their credit card every week and every month and, at the end of their life, say to their kids, 'Thank you very much, Son, thank you very much, Daughter. And I now want you to pay these off.'