Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Hansard source

I table the following documents:

The Budget 2020-21—Statement by the Treasurer (Mr Frydenberg), dated 6 October 2020.

Budget papers—

No. 1—Budget strategy and outlook.

No. 2—Budget measures.

No. 3—Federal financial relations.

No. 4—Agency resourcing.

Ministerial statement—Growing a strong and resilient regional Australia—Statement by the Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development (Mr McCormack), dated 6 October 2020.

I seek leave to move a motion relating to the documents.

Leave granted.

I move:

That the Senate take note of the statement and documents.

When I tabled my first budget statement in the Senate, it had been a longstanding convention that budget statements were tabled at 8 pm. As Treasurers of both political persuasions were stretching out the half-hour that the budget debate was meant to take, it was difficult to do because we had to leave the Treasurer's speech early, so we delayed it from 8 pm to 8.30 pm. And tonight there's another innovation, as I'm making a brief contribution as I table the statements. You have to keep the innovation going.

For every one of our first six budgets, a key budget message was a focus on the importance of our budget repair efforts to underpin our strength and resilience in the face of any global economic headwinds that may come our way. No-one expected a storm of the magnitude Australia and the world had to confront this year, but the hard work we did as a nation during our first six years in government put us in a strong position to do what needed to be done when the pandemic and the COVID recession hit.

The budget the Treasurer has delivered, and which I have just tabled in the Senate tonight, is our plan to get Australia out of the COVID recession. It's a plan for hope and opportunity, and it is our plan for jobs: to keep saving jobs; to restore the jobs that we lost; to create as many new jobs across the economy as possible. As we set out to grow out of this COVID recession, private sector businesses across Australia will be the key to the jobs recovery and jobs growth our economy needs and which our budget needs. That's why, in this budget, most of the fiscal support is aimed at giving businesses the confidence to invest in their future growth and success, because genuinely viable, profitable and growing businesses will hire more Australians, and those Australians will pay more in income tax, while fewer will have to rely on income support.

Let me make a number of observations about our fiscal position, as reflected in this budget. It is self-evidently a challenging fiscal position. It is not the fiscal position we expected to be reporting on in this budget this time last year, but, when the crisis hit, we had the fiscal firepower to deal with it. We're now facing significant deficits and, for Australia, historically significant levels of debt. Our deficit is expected to peak at 11 per cent of GDP this financial year, before falling to 1.6 per cent of GDP at the end of the medium term. Net debt is expected to peak just below 44 per cent, while gross debt is increasing, before stabilising at around 55 per cent of GDP. While this is higher than we're used to, it remains sustainable and it remains low compared with most advanced economies globally, particularly in this current global economic context. That sustainability will also be assisted by historically low interest rates.

As I've said in this chamber, and on various occasions before, we all know why we're here. We're firstly here because of the fiscal impact of the COVID recession on our tax receipts and our welfare payments. We're also here because of the fiscal impact of the policy measures we had to put in place to support our health system, to cushion the blow on the economy and on jobs, and now to facilitate the strongest possible recovery moving forward. Just based on parameter variations—not policy decisions by government but parameter variations—tax receipts are down by $41.6 billion and payments are up by $18.9 billion in the 2020-21 financial year alone. Over the forward estimates, tax receipts are down by a whopping $227 billion and payments are up by $47.8 billion. Again, none of that was based on decisions of government but because of parameter variations driven by the economic impact of the COVID recession on tax receipts and welfare payments. Importantly, the fiscal impact of our deliberate policy decisions to provide fiscal support is very much temporary. I commend to my colleagues and to the chamber Budget Paper No. 1, page 3-30, which has a graph which illustrates that very well. You can see the temporary nature of the fiscal support and how the payments trajectory pretty well is aligned and goes back to what it was expected to be in MYEFO 2019-20, before the coronavirus pandemic hit.

To illustrate that point: average annual real growth in payments over the four years from 2020-21 is expected to be just 1.7 per cent per annum. That is actually very low by historical standards and might at first blush appear to be counterintuitive, but, somewhat uniquely, in this budget real payments growth is highly variable across the forward estimates years. This reflects the temporary nature of the policy decisions we made in response to the COVID recession, with especially significant investments in the 2019-20 and 2020-21 financial years. The combined effect of the economic impact and the impact of policy decisions on our payments in this financial year, 2020-21, is expected to lead to real growth in payments of 22.6 per cent, the highest, certainly, since 1970-71, which is how far back the time series published in the budget paper goes. However, this is followed by a real reduction in payments of 17.5 per cent in 2021-22 and a further 0.6 per cent real reduction in payments in 2022-23. As the economy recovers and temporary support measures are gradually withdrawn, the level of payments is expected to continue to decline from the peak in 2020-21 and over the medium term and broadly return to levels projected in the 2019-20 Mid-Year Economic and Fiscal Outlook. This very much demonstrates the targeted and time-limited nature of the government's response to the pandemic and the resulting COVID recession.

Finally, let me finish my brief remarks where I started. This budget is our plan to get Australia out of the COVID recession. It is our plan for jobs. Jobs restored and more new jobs created by genuinely viable, profitable businesses are what our economy needs and what our budget needs. It's what will give Australians hope and the opportunity to get ahead, and it will ensure we can restore our public finances and continue to guarantee the essential services Australians rely on.

Debate adjourned.