Jane Hume (Victoria, Liberal Party) Share this | Hansard source

I rise to speak in response to this matter of public importance submitted this morning by a parliamentary colleague from Queensland, Senator Hanson. Senator Hanson has asked the Senate to consider the need for the Commonwealth to introduce a debt ceiling on how much the Australian government can borrow. The Turnbull government, as indeed have been all coalition governments, is deeply committed to budget repair. But an arbitrary and blunt legislative instrument to try and cap debt is not the answer. A debt ceiling, though noble in its intentions, is a poor policy mechanism to attempt to curb government expenditure which fails to acknowledge the nuance required of fiscal management on a national scale.

This government will bring the budget back to surplus. Last month, the Treasurer delivered a budget in the other place centred on the notions of fairness, security and opportunity. In this budget, the Treasurer demonstrated how Australia's net debt will peak in 2018-19. This is a government that can deliver budget repair. There is no need for a debt ceiling.

The economic rationale behind a debt ceiling is meagre, to say the least. In the first instance, a defined debt ceiling does not respond to changes in the general price level due to inflation. A debt ceiling is blunt. A debt ceiling is static. Additionally, the use of a debt ceiling is largely prevalent in jurisdictions where executive functions are distinct from the legislature and where legislative bodies that seek to curb reckless expenditure do so to try curb that expenditure by the executive. This simply is not relevant to the Australian system. There can only be one possible economic rationale for the introduction of a debt ceiling in Australia—that is, somehow that a debt ceiling instils an economic discipline into policy makers. While this might be a noble goal, there are better ways to go about it.

We cannot allow this country to follow the path of the United States, the United States Congress in particular, which has been forced to pass successive increases to its own debt ceiling in order to enable the federal government to continue functioning. Even the staunchest of anti-debt congressmen and senators in the states have not been willing to truly allow the government to shut down over its debt ceiling. Allowing Australia to get in this position is simply irresponsible. Quite simply, though budget repair and return to surplus are vital important economic issues and are core commitments of this Turnbull government, the wheels of government have to be kept turning. Federal employees must be paid, Commonwealth services must be funded, and Australian citizens must be able to have faith in the continuity of the Commonwealth government.

Since 2008, when Kevin Rudd's Labor government put Australia back into deficit, more than 75 per cent of our gross debt, around $370 billion, has been raised to pay for everyday expenditure in welfare, in health and in education. Obviously this is simply unsustainable. In 2018-19, we will return to surplus and we will be no longer be putting these everyday expenses on the Commonwealth credit card. This is what living within your means—not austerity; living within your means—is all about.

The Rudd-Gillard-Rudd Labor governments accumulated deficits of just under $240 billion in just six years of government. This equates to 16.9 per cent of GDP. Under the coalition, over six years from our first budget in 2014-15, the coalition's deficit is approximately 30 per cent less than those opposite. Never forget that Labor inherited the Liberal gift of a structural surplus of over $19 billion, whereas the coalition inherited the Labor curse of baked-in spending and a structural deficit.

Net debt is projected to peak in 2018-19 at $375 billion, or 19.8 per cent of GDP, before declining to 8.5 per cent of GDP over the medium term. The immediate increase in gross debt reflects the government's borrowing to support our productive capacity through investment in vital infrastructure and Defence capability and borrowing over the medium term to avoid drawing down on the Future Fund to pay for unfunded superannuation liabilities. These measures will save a century of taxpayers from having to meet these costs.

Under the coalition we have stemmed the growth in our gross debt by two-thirds, from over 34 per cent under Labor to less than 10 per cent in this budget. In this budget real growth in spending is at 1.9 per cent over the forward estimates, which is significantly lower than the profligate 3.7 per cent we inherited from Labor, and average real growth in spending under the Turnbull coalition government is lower than the average of each of the previous five governments, extending back over almost 50 years.

When we were elected payments as a share of the economy were rising to 26.7 per cent, having already reached 25.1 per cent, but they will fall to 25 per cent over the forward estimates. The Turnbull coalition is delivering budget repair.

My point in demonstrating these vast economic achievements it to show unequivocally that this is a government delivering on its promise of budget repair and that the legislative debt ceiling is simply not necessary. I applaud Senator Hanson for bringing this matter to the Senate's attention. It is vitally important to have the discussion, to have the debate as part of our civic discourse. That said, we must not be tempted to introduce a blunt instrument such as a debt ceiling. To do so would be akin to responding to a nuanced and complex problem which requires the delicate touch of a metaphorical scalpel with an unwieldy sledgehammer. I sincerely thank Senator Hanson for her introduction of this MPI but implore the Senate to ultimately reject the notion that this nation needs a debt ceiling.