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

I thank Senator McGrath for that question. Of course we agree with the Business Council of Australia that we need to work to put Australia on a stronger foundation for the medium-to-long term. The consequences of doing nothing—the consequences of keeping in place the policy settings that we inherited from Labor—would be weakening economic growth and a lowering of living standards over time. That is not an option for this government.

We need to ensure that spending growth is affordable and sustainable over the medium-to-long term. The situation that we inherited from Labor was one where, within the decade, we were on track for $667 billion of government debt—and rising. Right now we are spending $1 billion a month on Labor's public debt interest. As the Business Council said today, there is actually an opportunity cost here. We are spending more on Labor's debt interest a month than we are spending on higher education right now. That is the opportunity cost because of the debt that Labor has exposed Australia to.

The truth is that not only did we inherit a challenging starting position; not only did Labor put us on a difficult forward trajectory over the medium-to-long term; we are actually facing some structural challenges as a nation in any event, related to the ageing of the population, which is putting upward pressure on expenditure and which is also having implications for economic growth given that the ageing of the population results in lower workforce participation. We are also facing challenges as a result of volatility in terms of trade, and we cannot keep spending money that we have not got. We cannot stay on the trajectory that Labor put Australia on, because over time, as we continue to grow the public debt burden, it crowds out private sector investment, it crowds out the opportunity to grow the economy and that— (Time expired)