Cory Bernardi (SA, Australian Conservatives) Share this | Hansard source

I would like to talk about debt—not the sophistry of good debt and bad debt but the brutal reality of what debt actually does. Debt doesn't really matter until suddenly it does matter. Then debt enslaves and erodes freedoms. It cripples economies and enterprise. It destroys relationships and creates disharmony. And I fear it's coming our way. A recent headline in The Australian newspaper details an explosion of debt by the states, which is expected to exceed $184 billion in the next five years. Commonwealth debts exceed $500 million. Investment bank Morgan Stanley estimates that household debt is 189 per cent of income, amongst the highest in the world. Interest rates are at historic lows and yet over a million households in Australia are deemed to be in mortgage stress. Debt is sowing the seeds for a very difficult period for the Australian economy. Little wonder that the Reserve Bank has flagged more interest rates cuts in a bid to stimulate our economy.

The traditional theory behind this is that, if less money is used on debt servicing, more will be spent and the economy will benefit from this extra cash flow. Low rates may encourage greater borrowing for consumption and investment, as capacity to repay is increased. Both of these scenarios depend on consumer and business confidence to be effective, and therein lies the problem. Individuals will borrow to invest or they will continue to spend if they expect their returns to exceed the cost and risk of those expenditures and investments. People will spend more as their debt servicing levels fall if they are confident that their personal financial situation is stable and improving. In the absence of that confidence, lower rates do little to entice people to do anything except repay debt. This, of course, is a long-term virtue, but it does little to stimulate a flagging economy over the short term.

This is the scenario facing Australia today. The economy is slowing, confidence is down and there are few economic levers left for the managers to pull. The miraculous growth over the recent decades has been the product of immigration, escalating house prices propping up spending, and of course the resources boom. It has been aided by growing levels of government and consumer debt, which seemingly have been used to perpetually avoid the day of reckoning.

Human nature lends itself to a cycle of economics. Confidence leads to overexuberance and then a reality check comes along, which lends itself to a more gloomy outlook. Over the decades, governments have sought to avoid the cyclical nature of the economy through programs and stimulus that effectively only paper over the cracks. In effect, they defer the problem until it can't be avoided any more. The global financial crisis of 2008 was one such scenario, which had a devastating impact on the global economy. Australia was largely immune from that impact due to an unprecedented spending and debt package of government. But a lot of the problems that caused that crisis—and I say debt levels were mostly responsible—still exist today. In fact, they're much, much more in many instances. Some forecast that another period of global instability lies ahead.

Australia seems to be at the tail end of the global cycle. Our 28 years of economic growth has been a product of immigration, as I mentioned before, rather than productivity. Individuals and businesses are being squeezed by fees, charges, the cost of living and uncertainty about the future. A reduction in interest rates to even more record lows won't help change that too much.

I don't doubt that many measures that have been utilised overseas, like quantitative easing, may be suggested here, but the consequences of such activities can actually make things worse. The answer to expanding our economy is actually to confront the cost of doing business. We need to not only confront but contract the cost of doing business. We need to confront the growing size of government, and we need to contract the size of government. And we need to diminish its voracious appetite for the taxes of the ever-diminishing group of net taxpayers in this country.

To unleash prosperity for all Australians, we need to remove red tape, green tape, blue tape, black tape, brindle tape—whatever tape has been invented by well-intentioned but misguided programs, or the bureaucrats responsible for administrating them. We need to restore confidence in government; we need to restore people's confidence in their ability to gain and hold a job; we need to restore confidence in business owners, large and small; and we need to give every Australian more confidence in the future if we are to ensure our economic growth will continue. This requires predictable, measurable and accountable policy settings. It's not good enough to say, 'This program or policy didn't work and so we need to expand it a little bit more, throw more money into it, borrow more money in the hope of achieving some miraculous outcome.' To achieve the things we need to do in this country, we need to grow our economy.

If we want to alleviate our debt problems that reside in households and governments and businesses across the country, we need a government that recognises that, in many instances, the less they do, the more our economy will benefit. Every dollar that government takes from taxpayers, every dollar it borrows and mortgages—and, hence, mortgages the future of our future generations and those who will be responsible for funding the repayments—every dollar it takes out of the productive economy is a dollar that diminishes the potential growth of that economy. This has been proven throughout the history of economic management and government. Every dollar it takes from the productive economy reduces the ability of that economy to grow, to expand and to deliver prosperity. If we are to make sure Australia is prepared for the future and the potential financial crisis that will be triggered by debt levels across the globe, we need to make sure that the government gets back to what its business is—defending our nation, providing an environment where individuals feel confident in the future and businesses can deliver the jobs and the profits they need to, providing services and opportunities and inspiring others to achieve everything they possibly can in our country.

I don't mind saying that I've been heartened by the start, in many instances, the government have made in pursuing aspects of this policy agenda. They have sought to cut taxes. I lament that they haven't been cut immediately and I'd like the cuts to be deeper, but it is a step in the right direction. I would also appeal to the government: why not reinstate the red-tape and green-tape repeal days that were once so proudly and virtuously proclaimed by the now Treasurer and deputy leader? Those red-tape repeal days meant that, despite some of them only being administrative tasks, there was a real ability to say: 'We are going to remove regulation. We're going to allow people to take a bit more responsibility and care for themselves. We're going to allow businesses to work for the benefit of both owner and employee.' When businesses are better off, the whole country is better off. More profits are made, more taxes are paid and more investments are made. This country will benefit immeasurably from that. To the government: I will back your policy agenda as far and hard as I can, but I would appeal to you to do a little bit more by actually trying to do a little bit less.