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

It is Senator Hanson. I corrected that—sorry. Senator Xenophon is assuming that spending more and the impact that the additional expenditure has does not have flow-on consequences elsewhere given the higher deficit and the higher debt that it would generate or the higher tax burden it might require in order to fund it. There is a net effect. How you pay for something matters when it comes to the economic effect. How you pay for something matters. The level of tax—

Senator Xenophon interjecting—

No. Again, you might disagree with my proposition, but you are asking: is it true that if we spend more this would have a beneficial impact? Sure. If we can keep spending more ad infinitum, it would have a great impact. But the point is that, if you spend more, you cannot just look at the effect of additional expenditure in isolation without considering the cost to the economy of either higher taxes or higher deficits and higher debt. I guess the government has to make these judgements, and the government has made these judgements. They are reflected in the budget. What is in front of the Senate here today implements a key feature of the government's economic plan.

Just in relation to the car industry, Senator Xenophon well knows that there are transitional arrangements in place and that there is significant funding provided by the Commonwealth for transitional arrangements. You might think it should be more, but there is transitional funding in place, and of course the Commonwealth is working with relevant state governments and relevant car manufacturers to ensure that people are assisted through the transition into finding other jobs.

I remember Paul Keating providing a very comprehensive interview to Kerry O'Brien a few years ago where he was questioned about the impact of lower tariffs on various manufacturing industries, and what he said was right. He said, 'Well, these people had bad jobs and they got new and better jobs.' There is always change in the economy, and we always have to focus on what we can be genuinely competitive at and where we can genuinely be successful. There is a need to assist workers that are impacted by that transition through the transition, and that is something that the government is doing. But to just willy-nilly throw more money at something is not the right way forward.