Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I would like to ask a quick question of the government. Given that, some 1½ hours after I asked about the amendments, we still do not have any amendments—I assume the government still does not have a timetable for the amendments—will the government be requiring the parliament to sit longer so that there can be due consideration of their amendments both in this chamber and in the other place?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The Senate, in this case, has set down a program for debate in the committee stage. If there is any requirement for change, then the normal conversations will occur between the whips and leaders, but I am not aware of any changes at this time.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Obviously everybody listening to the broadcast of this would realise that the Labor Party are filibustering their way through this. It is a little bit ridiculous. I want to go through a couple of things Senator Arbib brought up. I want to note on the record that, the day after the US stimulus package, the American share market fell over. It was nothing to do with the bailout package. The bailout package still has not been finalised—not according to the Washington Post, which I have just looked at. So Senator Sherry’s proposition that the US stock market fell over because of the bailout package completely contradicts what the US newspapers are saying.

I have some serious questions. I do not know whether they are ever going to be answered or whether we are just going to have renditions of this debate. It seems peculiar in the extreme that, with the Labor Party wanting to bring forward the Emissions Trading Scheme and the Carbon Pollution Reduction Scheme, they are not part of the forward estimates in this package. For the life of me, I do not know why no reference is given to this—except that it is beyond the time frame of consideration—when the consideration of the ETS is immediate.

In the repayment schedule on page 5 of the updated economic and fiscal outlook booklet of February 2009, you have outlined how you are going to return the budget to surplus. You have put forward to the Australian people how you are going to repay $200 million in approximately two bullet points:

• allowing the level of tax receipts to recover naturally as the economy improves, while maintaining the Government’s commitment to keep taxation as a share of GDP below the 2007-08 level on average; and
• holding real growth in spending to 2 per cent a year until the budget returns to surplus.

That is $100 million per bullet point. The question everybody listening to this wants to know is: how on earth do we repay this money?

Why are we paying for things which, in the past, the states were supposed to pay for, such as schools and boom gates? These things are very meritorious in their own right, but what is the Labor Party’s belief in the role of the states these days? Do they not believe the states have a role? If they do not, that is fine, but let us have it on the record that they no longer think the states are relevant and capable of actually managing their own affairs. Why have the states fallen so far behind in managing to keep up their own infrastructure that now, ipso facto, your stimulus package has to bail them out? In the housing section of your package, the states will sell the land to the developers, so the states will make money; and then the developers will sell it to the Commonwealth, so the developers will make money. But, when the Commonwealth buys the land from the developers, why on earth are we going to pay back to the states the stamp duty and all the other charges when, at the end of the day, we will be delivering back to the states the houses and the land? Why are we going to pay for the houses twice and give them back to the states?

In your dissertation we have this crazy position whereby you are going to net off the debt. You have come up with this magical number of $2.66 billion, which apparently takes into account $7.5 billion in interest expenses. But you have netted it off against HECS, a commercial property vehicle and the Future Fund. The moneys in the Future Fund are supposed to stay within the fund. They are not supposed to be part of netting off anything. They are part of the growth in the Future Fund to cover other liabilities, such as unpaid Commonwealth superannuation.

The HECS debt is a non-determinant income flow. It is about $17 billion, and last year, even on principal and interest, it only returned six per cent. That was the return on both principal and interest, not just interest. Where are your exact numbers on what you really believe each one of those items to be—HECS, the commercial property vehicle and the Future Fund? Why have you changed the determination of where the Future Fund interest is going? What is your logic in netting off Future Fund interest when you know it is supposed to go back towards the corpus of the fund? How do you possibly believe that you can make a determination of what you are going to get back from the HECS fund when we are heading into the middle of a recession? How can you possibly understand what the return on the Future Fund is going to be when we are going into a recession and the share market is falling over?

What is the logic behind netting this off? How strong is your belief that this is going to give you the capacity to net off the debt at $2.66 billion? Why is your rounding error $40 million on the figures that you have given today? The questions go on and on and on. These are the questions that we want answered, rather than this eternal waffle the Australian people are hearing as you try to work out how you are going to stitch up a deal at the eleventh hour. This whole plan is hardly the Mona Lisa, but it sounds like you are doing your very best to put a moustache on it.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I thought I had been responding to questions as they were raised, Senator Joyce. Sure, some senators—on both sides, I would have to say—have engaged in what, at the suggestion of Senator Abetz, was a general debate and questioning. Senator Macdonald raised in the context of the world financial and economic crisis some perfectly reasonable, consistent and logical questions about Storm Financial and the impact that is having on people.

I can provide you with additional information in respect to the net debt position. I detailed the approach before lunch, and the approach of the government and Treasury is no different from that which occurred when you were in government. The net debt position will be $70 billion in financial year 2011-12. That is made up of debt and assets, and the income stream on the assets is $4.8 billion. The income stream on the debt is $7.5 billion. The net interest payment is $2.6 billion, rounded. There is no error, I might say, Senator Joyce. When you are dealing with billions, rounding to the nearest billion or 10th of a billion is appropriate. There is no error of $40 million—it is a rounding. It is the way that figures in the billions or tens of billions of dollars are rounded.

As I was saying, the income stream on the debt is $7.5 billion. The income stream on assets is $4.8 billion. They are netted out. Net debt and net interest payments were used by the former Treasurer. If you borrow $100 billion and invest $100 billion, that does yield a return. It is entirely appropriate to look at the net cost.

You raised an issue about the role of the states. I think we could have a very lengthy debate about the role of the states in our Federation—what is their responsibility and what is not their responsibility. I would make two points: firstly, it is certainly apparent to me that over the last 100-plus years of Federation—and it was certainly apparent to me over the almost 12 years when the Liberal-National Party was in government—there has been a general trend towards the Commonwealth assuming more and more responsibilities in this country, right across the board. That occurred under your former government in areas like health, education and industrial relations. A general trend has been there for 100 years.

This partly relates to the matters that are relevant to Storm Financial. The Commonwealth and I have had the responsibility of overseeing the COAG agreement to transfer the regulation and supervision of the remaining responsibilities of the states in financial services and the distribution of financial products to the Commonwealth. We reached agreement last year, and one of those areas includes margin lending. There are some others. So the general trend has been there and, as I say, we could have a lengthy debate about why that has occurred.

In the case of the financial services—I have given consumer credit as an example—it seems to me that in the modern world economy, and in the financial economy in particular, there is a compelling argument for nation-states and national governments to regulate and supervise their financial systems. Increasingly, I think it will become international. This is no criticism of any particular state of any political colour—Liberal, National Party or Labor. It is simply very difficult for states and territories in a modern financial services economy to regulate and supervise the financial sector. I just use that as an example, but it could be a very lengthy debate.

Senator Milne raised the issue of a bailout and whether any of the $6.2 billion would be used for that purpose. The answer is no. It will only go to new housing. There is $400 million for maintenance and $6 billion for new construction.

On the issue of the five-star rating for residential buildings and the question of it being two stars below the US standard, the government is working with the states and territories through our COAG process to examine and resolve improvements that can be made to the energy efficiency of commercial and residential buildings, firstly, including ensuring greater consistency in the application of building standards across all states and, secondly, an increase in energy efficiency requirements for new residential buildings to six stars. That is partly another issue that relates to the question that Senator Joyce asked about the roles and responsibilities of the states, and as questions are posed, as I have indicated, I will endeavour to inform the Senate.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I thought I would contribute to this debate after listening to a fair bit of it this morning. I suppose I would like to put it into terms that we may get behind in some way. The $42 billion stimulus plan is like a battle plan for Australia to fight the war on recession. The question that has to be answered but may be difficult to answer is: will this battle plan win the war on the recession? And guess what? Nobody knows for sure. In fact, you could ask 10 economists and you would still get no consensus. Will the $42 billion plan win the war? That is what we are debating, but I do know one thing for sure: this $42 billion plan will do little to help the casualties of this recession. Even if this $42 billion is spent there will still be 300,000 Australians joining the ranks of the unemployed. If most Australians knew that, they would be concerned.

I have trouble sleeping at night—300,000 Australians added to the unemployment queue even if we spend the $42 billion. It is a battle all right, against recession, but we have forgotten the innocent casualties that will come from the war on recession through no fault of their own. These are innocent Australians—our fellow Australians—in your street and my street. We will all know someone who loses their job. I have trouble sleeping at night knowing that, even after spending $42 billion, there are still going to be 300,000 Australians added to the unemployment queue.

I went to the government, before the tragic fires, and said, ‘If we’re going to spend $42 billion, don’t you think we should dedicate some of that money to those innocent victims of the war?’ I did not come to this chamber to become like others—I say that a bit tongue in cheek. I do not want to be known as the best negotiator around the table, but, sure as all heck, I will go in to bat for my fellow Australians who are going to fall off the cliff. I have asked for some money to be set aside to assist the 300,000 Australians who are going to be added to the unemployment queue. Frankly, the response I am getting is like chess pieces being moved on a chessboard. It is insulting to everybody. You can tap-dance around it all you like, but I will go in to bat for them every day. We have to do more. We have to make this package work harder. With this package you are displaying the same sheer arrogance that brought the previous government down. You walk into this place and you say, ‘We’re not changing any of it.’ It is disgusting. Are you the only people with good ideas?

A bit of economics here—I will go back to day one. What was happening on day one? The Reserve Bank was going to make a significant announcement, but you guys wanted to hog the spotlight. The economy runs on confidence. You did not even allow the Reserve Bank’s downward adjustment of the interest rate to affect confidence in the marketplace. You wanted to hog it. You should have let that run its course and allowed confidence to build into the economy and then maybe come out with a plan. You did not allow the positive cycle of monetary policy to work itself out. No, no, no. You had to hog it. You had to beat your chests and say, ‘Hey, we’re in control of interest rates.’ Frankly, you should have let that run.

Then there was the second thing you did. You came into this place and basically told us, ‘Pass it, no questions asked.’ Don’t kid yourselves. Do not go to the Australian public and say you agreed to an inquiry. You were deadset against it. You have misread the Australian people. We know we need a stimulus package, but are you sure as all heck that your arrogance is 100 per cent right? That is what you said on day one: ‘Don’t worry about it; just pass it.’ That was step 2—another mistake.

Step 3: these negotiations have been lip-service. You are tap-dancing around here this afternoon. You have put it off to some convenient time when there are no news stories. Stop playing politics. This concerns Australian people, their families and their lives. I am deadset serious about this. This is just a joke. I may not be the best negotiator. I am just a kid from Reservoir, but, sure as all heck, I know when someone is stuffing around. Get serious. Do not treat the Australian public like you treat the Senate.

We need a stimulus package. It is just a shame that the government think that they need no other ideas except their own. It is very sad. It is a very sad day. We put forward a program and you will laugh at it. You will background journos and say, ‘This Get Communities Working plan is just a joke.’ Good on you. Beat your chest out there. Talk and background journos. Do what you like—I don’t care. I want to do something for the 300,000 unemployed Australians—not my numbers but Treasury numbers, and other economists have put the numbers even higher. You walk in here and just say, ‘Don’t worry about it.’

Let us look at the cash payments. Many Australians desperately need the $950. Some of them will get multiple payments. They desperately need them. Many Australians do not need the cash but, sure as heck, will take it. There are many Australians who desperately need the cash who actually will not get it. Then you have $75 million of these cash payments going to people overseas. But, no, no, no—you have it 100 per cent right. Wrong! I do not understand it. I do not know. What do you come to Canberra for? What do you sit in this chamber for? Yes, sure as heck, debate—no problem. But, jeepers, we have to look out for our fellow Australians. I am not in anyone’s pocket. I am not in yours and I am not in theirs, and that makes it an awfully lonely place. But I will go in to bat for my fellow Australians every day.

Sure as all heck, you could give it a go, giving even more of that $42 billion to help find more local jobs for people. Why would you not give it a go? What are you worried about? Are you worried about the opposition having a go at you because you changed your package? That is politics. What are you worried about? You got some of it wrong? Okay. We all get it wrong sometimes. We are all fallible. We are all human beings and we get it wrong. But, blimey, Teddy, you started this out in an awfully adversarial way. Did you not learn anything from watching the other side when they were in government? Work Choices—did you not learn from that? Do not think it was just about IR. Think about how they went about it. Think about how they went about playing politics in this place rather than genuinely looking out for all Australians.

I can only ask you to relook at this package. There are a few hours left before I have to vote on this. I do not know how I am going to vote. I did not sleep terribly well last night. I will certainly look at this from the point of view of those forgotten Australians, those Australians who do not have a voice. I will look at it from the point of view of those families—fathers, mothers and kids. We are going into debt to spend $42 billion and we are still going to have 300,000 Australians on the unemployment queue. You may play politics. You may say, ‘We’re saving up to 90,000 jobs.’ That is good, but I believe you can make this package work harder. But do you know how much time we have? Zero time. We have zero time to look at this package and make it really work so that we can not only try to win the battle against recession but also look after those innocent victims who are going to be casualties of it. Think about someone in your street. Think about what it is going to do to them when they lose their job and they have very little prospect of finding another one. Think about it. Think about it more than on one day, just when you wake up. Think about it for more than the 48 hours that you gave the Senate. I do and, I tell you, I am having trouble sleeping.

The way you have gone about this is really appalling. It really is. I am so surprised that you can be so out of touch. You got us into this mess. We have a $42 billion package in front of us and you are not going to change it. You may tinker with it now after someone has shamed you into it. You may tinker at the edges, but you have no genuine desire to change it. We are in the situation now that if we do not pass it we will lose the confidence of Australia, because you have given hope to people. You could have allowed interest rates to start to work and given us more time to work on this. But you have presented this package in such a way that anyone who does not vote for it is ruining the confidence of Australia. You may very well be right, but you have set that up. It is such a shame that you have done it in such an adversarial way rather than in genuine partnership.

I have been out of work, once. Maybe you have too—I don’t know. It is not a pretty place to be when you cannot find a job. It is awful. We have to make this package work harder. I have a few short hours to work out what I am going to do with this. I am torn between two places and a hard rock. I am sure I am going to get criticised on it. Plenty of people can criticise, but I am genuinely trying to work through this issue. From day one, even before the fires, I was talking about the unemployed, the forgotten Australians who do not have a voice. It is going to hit them like a brick on the head and they are not going to be able to get another job.

Get Communities Working is all about grassroots measures, getting the unemployed working again—maybe in some soft areas that you cannot count in GDP. It is about social capital, the glue in the community. Go and talk to your local councils. Honestly go and talk to them and really find out about it. Building social capacity in a community is not something you can count on a calculator. You cannot count it in GDP. That does not mean it is not worth while. There are going to be valuable Australians who are looking for a job, and not a job where someone could say, ‘You’re just digging holes and filling them.’ Crikey! You are going to use that argument.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I have responses to a couple of earlier questions from Senator Joyce and from Senator Macdonald. Before I give those, I would like to say in response to the contribution from Senator Fielding: I do not sit in your place but I do appreciate your passion and your concerns and the difficulty in making decisions of such magnitude. I do understand that. I have not sat in your place but I do have at least some appreciation of the difficulties these issues present.

If I could just relate a personal experience, I did not live through the Great Depression; my father lived through it. He was an orphan. He lived on cabbages, vegemite sandwiches and rabbits when they were cheap, and he would go out and catch them wild. I did get a lot of stories from my father about those times in the 1920s and 1930s and at times when I was a young kid I thought it was a bit of a lecture about these types of issues. I am not suggesting the world faces a Great Depression, but I do understand, at least related to me by my father, the experiences he went through in the Great Depression. They were very, very tough circumstances, tougher than many others.

I think it is fair for me to observe, Senator Joyce, that when we were elected to government I was very proud to be a new minister. Looking back over the last year, I certainly did not believe a year ago that we would have faced the financial systems firestorm that has erupted all around the world and the sheer number and complexity of issues that I have had to deal with in my particular responsibilities—issues I never expected I would have to consider—because of the way the world financial system in many other countries has collapsed, with the obvious impact on Australia. Now we have to deal with the economic consequences of it, and they are serious. Again as a personal reflection, I would not have thought debates around things like short selling, for example, would have become some sort of mainstream general economic debate. Who would have believed it? There is a whole range of issues. Senator Macdonald has referred to the Storm matters. Whilst I strongly believe that financial regulation should be a national issue, I did not anticipate a year ago, in moving to improve the regulatory oversight of margin lending, just how important that issue would become in the context of Storm and other difficulties we have seen for thousands of Australians.

We all bear the weight on our shoulders now, given what is occurring around the world and its impact. I think we all bear it quite sincerely, and I certainly appreciate the sincerity with which you bring your perspective. The government has put together a very significant package, given the weight of global recession and the emerging events just in the last three months—the pace at which countries have been going into much greater recessions than had been believed possible; the continuing reassessment by, for example, the International Monetary Fund; the impact on a country like China and then the impact on Australia. I sincerely believe, Senator Joyce, that the government has put together a strong package that will assist. But you were right to remind us—

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Madam Temporary Chairman, on a point of order: I think Senator Sherry is referring to Senator Fielding.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am sorry, yes, Senator Fielding. But I do not question your sincerity and passion, Senator Joyce. We will disagree on some of the issues and solutions. The government strongly believe this is an appropriate package for the times. Australia would face a more severe economic downturn and greater unemployment if this package were not passed. I have great respect for Treasury, not just because we are now in government; I had great respect for Treasury in those long years in opposition, often dealing with them in Senate estimates. As best they are able to do—I believe they have done their very, very best—Treasury have given us an estimate that as a consequence of this package there will be about half a per cent higher growth in 2008-09 and around three-quarters to one per cent higher growth in 2009-10. I do understand, Senator Joyce, that there will be an increase in unemployment—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Minister, you mean Senator Fielding.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Senator Fielding, I am sorry—I have in my mind some further answers to Senator Joyce. I do accept, Senator Fielding, that increasing unemployment carries with it a significant economic and social impact on those individuals. I accept your bona fides, I accept your passion, I accept your interest. As you are aware, and the Treasurer, Mr Swan, has said this, there are discussions occurring. I am not party to those discussions. I am here to deal with the bills that we have in front of us and answer questions, and I have been doing that as they have been raised.

I do strongly support the package and I believe it is the appropriate way forward at this point in time. I do not believe we can wait and see just how bad things get and there is no absolute guarantee that it will work. As the Prime Minister has indicated, there is no absolute guarantee but it is incumbent upon us as a government to act. And I understand the heavy responsibilities on your shoulder to make a call about the package and whatever other discussions occur in respect to your meeting, or meetings, with the Treasurer. That is a heavy responsibility just as it is, obviously, for the Greens and Senator Xenophon.

To go to a couple of matters, I have some further information for Senator Joyce. The netting of debt: we do net off HECS, commercial property and the Future Fund. Netting off the Future Fund interest is logical. That has been the approach. I understand it is consistent with accounting standards. It is explained in MYEFO that net debt is the sum of the selected financial liabilities less the sum of the selected financial assets. It has been that way consistently for many years, certainly under the former government. Regarding the claim of no reference to the forward estimates, to the CPRS, it is in the estimates for revenue and expenses but it is not in the economic forecast as it is beyond the forecast horizon of 2009-10.

You and I, Senator Joyce, have been having an exchange about the impact of the stimulus package and the bailout package, as I interjected inappropriately; we are both right, Senator Joyce. My observations and the observations of financial commentators in respect to the—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

You are never wrong.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

We are both right. I am explaining why we are both right. I observed, based on the financial commentary after the release of the bailout package, that the markets in the United States dropped between three and four per cent. It is fact. Senator Joyce updated his observations and made his comments about the stimulus package that was passed, as I understand it, a few hours ago. And you are correct; the markets reacted adversely to that. I was not aware of that, Senator Joyce. I made my comments in good faith based on what I had seen on the wires and CNN and BBC World Service this morning as a consequence of the claimed lack of details on the bailout package.

Senator Macdonald may have some more points on Storm Financial but he did indicate he believed there was a $600 billion to $700 billion liability in respect to the bank guarantee. That is not correct. MYEFO stated that the expected liability is remote and unquantifiable. As I said, I have drawn a clear distinction between a guarantee and a bailout package, which has been occurring in many other economies around the world. Will a part of the $42 billion go to the big four banks? No, it will not. This is not a bailout package where we are passing, as has occurred in many other countries, tens or hundreds of millions of dollars over to financial institutions. That is not the purpose of this package; that is not what is occurring. It is a major package to provide a stimulus to the Australian economy to minimise the impact of the spreading financial and economic crisis. We have gone out of our way to direct this package to low- and middle-income earners and a range of short- to medium-term projects that we believe are appropriate to underpin the Australian economy given the serious and very rapidly developing world financial and economic circumstances.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Senator Sherry, I thank you for your previous answer to my question. I join with you and appreciate the fact that you have indicated to the four major banks and other lending institutions that, having received some support from the Australian government—that is, from the taxpayers through the Australian government—the banks should be very careful about the way they deal with margin loans they have lent. Sure it is their money but there is a way of dealing with them and the early information and evidence from the Storm Financial victims indicates that some banks are not playing the game. I appreciate your urging—dare I call it warning—the banks to be very careful because if the lot of Australians are impacted upon by capricious bank action then they will be named and followed in this chamber.

There are other questions I would like to ask but I know a lot of my colleagues want to ask questions so I will briefly move to the other question I did want to raise with you. As I mentioned in my speech in the second reading debate yesterday, nothing that is happening in the north can, in any way, compare with the horrendous situation in Victoria at the moment. Having said that, there is the community up in the Gulf of Carpentaria—not a big community—that has been without road access for more than four weeks now, almost since the beginning of the year. There is another community between Cairns and Normanton and Karumba—a place called Georgetown—that, again, is cut off by the washing away of the Ainslie river bridge. My question that I do seek a response from you is: where in the spending package will there be money that will assist more than just natural disaster management responses, which are normal—money that might go to not just fix roads that are cut but actually improve them so they will not be cut in the future?

The communities that I ask this question on behalf of are only small. They are a long way from the capital city media outlets, so they do not get as much profile as perhaps they would if they were close to a capital city and had been without a means of getting provisions for over four weeks. The closure of the Einasleigh River bridge, east of Georgetown, will cut off that community from supplies, will prevent transportation of people and stop the very wealthy produce of the north-west and the Gulf country—that is, the cattle—from getting out to the coast where it is needed. I do not want to prolong my question. I want to give you, Minister, an opportunity to answer. Will money be made available?

I mentioned again very briefly in my speech on the second reading the case of the people at Karumba. They have been cut off for more than four weeks. They have an airstrip that is not sealed. The Queensland government has agreed to pay one-third of the cost of sealing the airstrip, but just sealing the airstrip is not what is required. They need more. They need the airstrip extended, and this requires some action by the Queensland government to provide the additional land that is needed. Why do they need this extension of the airstrip? There is no way of getting in and out of Karumba at the moment, although if you can get through to Normanton, you can get on the Norman River on a barge and barge down the very winding river—which is in flood at the moment. If the airstrip were operational, you would be able to fly in relief goods—that is, food and emergency medical provisions—and use it in good times, and they will return. As I said somewhere else, the rain we get in the north does cause problems but it is what makes the north so great. It is what gives us the rainforests, the fishing and all the other attributes that make Northern Australia a very desirable place not only in which to live but also for tourists to visit. If this airstrip were extended then planes like Dash 8s could actually land on it. At the moment they cannot. In times when the community is cut off, it could be the only means of support.

Minister, I ask where in the package—and it relates to bill No. 2, I think—is money being made available for those essential forms of infrastructure? I could spend hours suggesting other forms of infrastructure that would be as useful, as important and as economically productive. Batts in ceilings do not qualify in my view as productive expenditure. I want to concentrate in my question on those communities west of Cairns, right out to the border, that simply do not have the normal facility of road access because of the rains and because of poorly designed infrastructure that will require substantial sums of money to fix.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I have a number of responses in respect of some earlier questions Senator Joyce posed. Thank you, Senator Macdonald; I think drawing attention to the impact of the floods is important. I cannot give a specific commitment in respect of the individual communities you have highlighted. I can indicate that the package contains two elements on page 22, in Repairing Regional Roads and the Regional and Local Community Infrastructure Program—Strategic Projects. I understand that they are to be delivered through local governments. It would be possible for the type of infrastructure issue you have highlighted to be accessed through those two areas. I will also pass on to the minister, Mr Albanese, the specific matters you have raised.

Senator Joyce raised this issue. He asked why, when the Commonwealth buys land, we are refunding stamp duty to the states. The Commonwealth is providing funding to the states to invest further in social housing. The states will purchase houses and units under normal commercial conditions or, where the private sector or the not-for-profit community sector is contracted by state governments, the states and the developers will negotiate these arrangements. Stamp duty may be payable on purchases and construction of these homes. The Commonwealth will not own any housing and is not refunding stamp duty. The Commonwealth and the states have agreed that the states are responsible for identifying social housing projects that are already in their development pipelines and can be brought forward and completed through stage 1 before 30 June 2010. The states will also be responsible for undertaking the process to determine suitable social housing projects through stage 2 for the 2009-10 financial year and onwards.

Senator Joyce also raised a question about the schedule for returning the budget to surplus. In the UEFO it is estimated that the underlying cash balance will be in deficit in 2008-09 and in 2009-10. It is projected to remain in deficit across the forward years from 2010-11 and 2011-12. In saying that I point out that, if you look at the fiscal balance set out from MYEFO to UEFO from 2008-09 through to 2011-12, the fiscal balance is projected at 1.9 per cent of GDP in 2008-09, at 2.8 in 2009-10—which is in fact the maximum—and then it commences a decline in 2010-11 to 2.5 and in 2011-12 to 1.8. As I have indicated, as the economy recovers and grows above trend, the government will take action to return the budget to surplus. When the budget returns to surplus, the government has said it will draw upon surpluses to pay down debt as rapidly as economic conditions permit. The speed at which the budget can be returned to surplus will depend on the severity of the current downturn and the speed of recovery. It is important to note that the fiscal stimulus package has been developed to ensure that it does not lock in increases in baseline government spending. This recognises that the stimulus needs to fall away over time so that it no longer operates when it is not needed.

Senator Joyce, you asked for some components of interest receipts and payments. Again, I do not want to take up too much time with reams of statistics but I will give you some figures. Future Fund breakdown of interest receipts: Future Fund interest 2008-09 is calculated to be $2.3 billion and then $1.9 billion over two remaining fiscal years dropping to $1.8 billion in 2011-12. Interest on cash and deposits: $2 billion in 2008-09, rising slightly to $2.2 billion in 2009-10 and around $2 billion in 2010-11 and 2011-12. There are details of other interest receipts and then a breakdown of interest payments on government borrowings that are projected out to 2011-12. As I have indicated, there is no change in budget of Future Fund earnings. The underlying cash balance is reported, excluding Future Fund earnings, but the Future Fund is included in the Australian government sector general balance sheet.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

The $2.3 billion, $1.9 billion, $1.9 billion and going up to $1.8 billion in 2011-12 would seem to suggest from our own figures that you believe the trajectory of returns for the Future Fund is down. That would seem to contradict in some way your expectation of where you see the economy returning to a position where you can start repaying your debt. So that is an issue. Can you also specify exactly what you believe the amount you are going to get from HECS repayments is in interest? I will look to the Hansard to get specific figures because I want to go through them. I am still unclear about what you mean, if the state government is putting on stamp duties and other charges, why the Commonwealth should be paying them. In essence, at the end of the day we are giving them a house and land. I do not think many of the people listening would like the idea that we have to pay you to give you a house and land, and that is what we are doing with the states.

The concept of how you are going to repay this debt is amorphous, and that is the big thing on most Australians’ minds, if anecdotally my emails are a true indication of it. I want to know in your own words something that any banker or accountant could tell you: what do you believe is too much government debt, a level that Australia could not handle? It is extremely important that you give us a number. If you squib the question, it would seem to indicate that you have every intention that the $200 billion is not going to be the end of the show, that we are going to be stitched up with even more credit card debt than this. What do you think should be the top level of debt? Any other business, any banker or accountant would be able to give you an indication. You might have a grey area but they could definitely say, ‘This level of debt is too high.’ I want to see whether there is the capacity for the government to give an answer to that question.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

There has been no change in the long-term projected rate of return for the Future Fund. It is somewhat like the issue relating to superannuation fund long-term rates of return. In the case of superannuation, Treasury have projected and forecast five per cent over the long term, which is extremely accurate, despite movements up and down from year to year. The Future Fund has not changed its long-term projection on its rate of return. There will be years when it is below and years when it is above.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

If that is the case, this would suggest that, quite obviously, if we have to find $7.5 billion when we net it off it does not mean we have to find an amount less than $7.5 billion; it means that when you net it off, because these moneys are allocated to other provisions and therefore, in fact, cannot be used as a set-off for the $7.5 million, we actually have to find the $7.5 billion to pay the debt. You cannot net it off because the money cannot go from the Future Fund to pay off the bonds; the money from the Future Fund has to go back to the Future Fund. It cannot be set off against the debt. Tell me if that statement is right or wrong or do you believe that the Future Fund money can actually be delivered to set off the debt—that is, sent off to people to pay for the interest on the bonds they buy from the Australian government?

The next issue is that it seems to be apparent, if this is trending down, that even on your net figures your interest payments would have to be trending up. Our debt is going to become more extensive as we fully draw down on the facility. Even by your own figures, you have gone from $2.3 billion down to $1.8 billion. So there is half a billion dollars extra that somebody is going to have to find and pay. I want an answer on that. I really do want to know if the government can give the Australian people a number as to what it believes is excessive debt held by the government.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

There are two points. If we look at the Future Fund interest, I think we have to bear in mind—and I have not gone to the Future Fund and sought a response; I will attempt to do this; it may be the case; I do not want to mislead—that the asset base and the investments of the Future Fund are changing over time. It started off all in cash and then was placed into the markets. That was fortuitous for the Future Fund for the obvious reason that they are predominantly in cash at a time of market downturn, so they are receiving. Their performance is obviously better than if the funds had all been placed in the markets and equities in the last year, given what has happened to the markets. As I understand it, that mix will change over time. It converts from predominantly cash and diversifies into equities because, over the longer term, equities—it is argued, and I think reasonably so—give a higher return than if it were all in cash. It is a diversified portfolio. That may be the explanation. I will check with the Future Fund.

In terms of the netting, we have to agree to disagree. You have a view. I have indicated twice now why the netting occurs and the reason for it and that it occurred under the previous government. It is the way in which the netting is carried out in terms of interest receipts and interest payments.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

We may have a different view but the proposition is completely correct that, if you do not send off a cheque for $7.5 billion to those who hold the bonds, you will not be sending them off enough money. If you send off a cheque for $2.66 billion, you will have a riot on your hands because you will have completely underpaid them.

The reality is—and I think you spelt it out clearly—your income stream from interest is going to become a dividend stream. You quite obviously cannot net off the dividend stream and say, ‘We’re actually collecting money in dividends so we’re going to net that off against our interest expense,’ because they are two unrelated items. That might be how it is stated but it is stated wrongly, because Australia will have to find a cheque for $7.5 billion to send off to pay for the bonds. I believe that is an optimistic view and, I would suggest, undershooting the mark. I do not want to get into a discussion about the Future Fund and the movement of dividend streams and what prospective returns on dividend streams will be like if this recession pans out the way it is, but I am still very interested to know what you believe, as a guide, is excessive debt to be held by the Australian federal government.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I believe that I have already covered the domestic economy. I have also referred at reasonable length to the Australian situation vis-a-vis some other countries. I believe that we have covered the issue. The Updated Economic and Fiscal Outlook document well outlines the impact of the world financial economic crisis in terms of not just the reasons for the package of $42 billion but also the impact on the revenue side and what has occurred so significantly and rapidly over the last couple of months as this international financial and economic crisis has unfolded.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

If you have a commercial premise of a loan, people look for between an eight- and a 15-year run-down of that facility. Do you, as representing the view of the government, have any belief about what is a diligent time over which this should be repaid? Is there any view? If there is a view, can you please tell us over what time frame it should be?

I want to go back to the question of debt. Dr Henry said that he believed a trillion dollars was excessive debt and that Australia could not go to that extent. Do you hold the same view? My third question is: after we have a debt of $200 billion and we then go into the infrastructure package, which seems to be in the vicinity of another $70 billion or so, are we going to be issuing more bonds for that? We will be amortising the interest so we will be up to about $300 billion. We are a third of the way to a trillion dollars, and that is why it is extremely important that the Australian people understand exactly where you are taking our nation and the absolute seriousness of where we are off to with this. What is your path and progression to start removing us from that position? Do you have any assets in mind that you want to sell? Do you have in mind any major restructuring of the Public Service whereby you can make cuts? Is it a belief of having a P&I out of the operating revenue or a taxation proposition of the Australian people? Do you intend to keep the same tax treatment regime that we currently have, or do you envisage a change to it so as to fit your debt requirements? These are the questions that this bush accountant wants to know about.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I understand, and I know that this issue was canvassed by you at the finance and admin committee. I have just been looking at the debate that occurred there. I would agree with Dr Henry’s response on this point. I note that when this matter was raised he indicated that the way most economists think about the deficit question is to think about public debt dynamics. We have had since the mid-1980s in this country a concentration on the level of public sector debt—I would suggest as in no other country on earth. And, as you know, Australia today has negative net debt. He drew your attention and that of other committee members to chart 4.2 on page 46 of the document, which looked at the net debt position of select countries. I added to that in detail earlier in response to a question. Dr Henry observed that the net debt was minus 1.5 per cent of gross domestic product in 2008. You can see in the document by how much that is projected to grow over the three-year period from 2008 to 2010. It is then, corrected, minus 1.3.

So as much material as Treasury have currently available on this issue, and their analysis—and as I said earlier I have great respect for the analysis of Treasury as I have spent many years in opposition questioning them on these issues—mean that they have provided the very best that they could in the Updated Economic and Fiscal Outlook and I believe that the response of Dr Henry on this point was correct.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

With the greatest respect, Minister, I do not think you have answered some of the crucial points of my question, so I will repeat them. We are going to have a $200 billion facility that you are going to have to finance. The expected cost of funds, as you believe at this point in time, is going to be around four per cent, but the more you go into the bond market the more you are going to force up the cost of funds for all Australians because of extensive borrowing. For every per cent you force it up, everybody with a $1 million facility pays an extra $10,000 a year and everybody with a $500,000 house loan pays an extra $5,000 a year. That is the reality that comes home to the kitchen table for everybody.

But here is the question. You are soon going to have a $200 billion facility. When you, on top of that, issue more bonds for an infrastructure package, which we envisage will be around $70 billion, are you therefore going to have a $270 billion facility? And if your cost of funds is at four per cent does that mean that there is going to be another amortisation on top of that—unless you envisage repaying the interest straight off the top. If you are going to amortise it out we are quickly going to get ourselves into a position of a bit better than $10 billion per year that is going to sit on top of that debt. So you are going to have $270 billion plus a multiple in excess of $10 billion—$280 billion. Within a year or two we will be up to $300 billion in debt. Dr Henry says that we cannot afford to get to $1 trillion, so we will be a third of the way there and we will have done it in a couple of years.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I think your questions—and debate—are in large part a debate about what occurs beyond 2011-12. I must say that I did attempt to discuss these issues sometimes with Treasury when I was in opposition. But, in relation to the data we have, the projections and estimates, and the speculation about what may or may not occur beyond 2011-12, I am not in a position to engage in a discussion about that today for the government. We have used an outlook over a period that you used in government and we have based analysis and the package on that period through to 2011-12. I do not believe I can add any more or speculate about circumstances that may arise beyond that period.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Before asking my question I would just like to add that I have had quite a lot of discussions with those involved with Storm Financial, including literally hours with Emmanuel Cassimatis—and I do not wish to even go down the road of Storm. Tomorrow I will be lodging a notice of motion and will leave it to the appropriate inquiries to come out with the details of that, and, as Minister Sherry said, there are already some investigations underway so I prefer not to comment on them.

Last Thursday I spoke in the Senate about batts in the ceiling. There are many people in Australia, especially in New South Wales and Queensland, who live in timber homes. My better half, Nancy, is one who has a small timber two-bedroom home in Bingara near the Tamworth/Inverell area, where it gets extremely hot. Forty degrees is nothing new during summer there. A couple of years ago, she put batts in the ceiling and none in the walls—there is no insulation in the walls. Because of the sun on the walls during the day, the heat comes through the walls and the house gets extremely hot. She has a dual-read thermometer that reads the inside and outside temperatures—it has a little lead going out the window. Of a morning it tells the temperature inside and outside the house.

She will wake up tomorrow morning and I would guess that the temperature will probably be around 24 degrees inside the house and 19 degrees outside the house. What happens is that without insulation in the walls the house is worse. I can assure you that by putting the batts in the ceiling the house is hotter in summer during the day and during the night. Frankly, the place needs air-conditioning the way it is now. To put insulation into the walls, you would have to remove the weatherboards. These are aged houses, and there are thousands of them throughout New South Wales and Queensland. The weatherboards are Cyprus pine. If they were removed, they would simply split and fall to bits. To insulate that house properly, you would have to remove the weatherboards, put the insulation in and then put new weatherboards on and paint them. It would cost thousands of dollars.

Is the minister aware of this? With some 2.7 million homes projected to get ceiling insulation batts, what are you going to do about these wooden homes, especially in northern New South Wales and Queensland? If you put batts in those ceilings, I can tell you that during summer the houses will be worse; they will be hotter inside day and night than if they had no ceiling insulation at all. What is the government’s plan on this? Are you simply going to allow people to spend the $1,600 bonus to put the batts in the ceiling and leave the walls as is? If you are, it is up to you to inform the public of the ramifications: it would be money wasted. Nancy’s home is worse as a result of the batts in the ceiling, which have been there a couple of years. If I had a bit of time, I would certainly remove them.

Are you going to make the people who own those older weatherboard style homes—and there are literally thousands of them in those areas that I mentioned—aware that, if they do not put insulation in the walls, they will be worse off? I can take you to the thermometer and show you the reading tomorrow morning. I am not telling porkies; I am telling the honest truth. This is the situation: the house is worse because of those batts in the ceiling.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Senator, I am not sure whether you are aware that earlier we had a discussion or exchange with Senator Milne about the insulation issue. She raised a number of questions about the comprehensiveness of the approach and the need for energy audits. She made the fair and reasonable point that ceiling batts are not the only solution and that there are other issues, such as minimising draughts, shades on windows and double glazing. We have had a debate about curtains. You have raised a very legitimate issue about wall insulation.

As I indicated, in this package the government is doing something that is very substantial with the ceiling batt issue. We cannot do everything; we cannot cover off every area of insulation of a home. We think, and we are advised, that ceiling batts is the major area where improvement can be made. It does not mean that other improvements cannot be made in other areas. The package attempts to address the main but not the only issue relating to insulation.

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

We have been at this now since about 9.30 am and we do not seem to have moved on much from very general examination of these very important bills. I have a couple of very specific questions. I could make a 20-minute speech, but I will not. I think it is important that we try to get answers as specific as possible from the minister and his officials. What I want to know, seeing that we have touched again on the insulation issue, is this: will the insulation measure result in a reduction in Australia’s CO2 emissions beyond the unilateral five per cent reduction below 2000 levels by 2020? My second question relating to the insulation measure is: does the energy efficiency measure provide an effective subsidy to high emitters by reducing their permit price? Could the minister give me a specific response, please.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

We are endeavouring to obtain the answers to those two specific questions at the present time, Senator Coonan.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

Before I contribute to the debate, I seek leave to make a personal explanation under standing order 190.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I am sorry, Senator Humphries, but I have been advised that that is not applicable during the committee process. It would have to be done when we return to standard business.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

Okay. I will ask a question of the minister and come back to that later. I took part yesterday in the deliberations of the Senate Standing Committee on Community Affairs on the Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009, which looked at the social housing program of the stimulus package. I must say that I was appalled to see how much reliance was being placed by the Australian government on the good offices and effectiveness of the state and territory public housing authorities as the vehicle for delivering some $6 billion—in fact, more than $6 billion—of funding for social housing across Australia, given the quite deplorable record of these agencies in delivering on existing housing programs, particularly under the Commonwealth-State Housing Agreement.

Senators will not be ignorant of the fact, I am sure, that in previous years some $1 billion was invested in social housing by the Commonwealth under the Commonwealth-State Housing Agreement, and the net outcome of that investment appears to have been that the total quantity of social housing in Australia fell. There were fewer social housing dwellings available through state and territory public housing authorities at the end of the relevant period after the $1 billion investment by the Commonwealth than there were at the beginning. With a record like that, it would be a very fair question to ask whether one ought to then increase that investment and hope you get a better outcome.

I ask the minister whether in all conscience he can tell the chamber that he has confidence in state and territory housing authorities to deliver the sorts of outcomes that the Commonwealth expects in social housing in this country given the clearly very poor record that these agencies have to make improvements in the quantity and quality of social housing across Australia. I also ask him to consider this question. This is an opportunity, with such an enormous investment available to the Commonwealth, to drive systemic and cultural change in state and territory housing sectors—to improve, for example, the level of accountability, the thoroughness of processes used to deliver outcomes and the way in which the public housing authorities involve the community housing organisations across Australia. If one looks at the agreement which has been reached between the Commonwealth and the states entitled National partnership agreement on the Nation Building and Jobs Plan—social housing, which is annexed to the report of the Standing Committee on Community Affairs tabled yesterday, one sees a document which demands very little of the states to improve outcomes in this area. Paragraph C18, which is entitled ‘Key requirements for proposals to be funded under element 1—new construction’, sets out the sorts of criteria which have been placed on state and territory housing authorities, and the rigour of these criteria appear to be wanting. It contains phrases such as:

Proposals … will be assessed against the following key requirements:

(a)

increase the supply of social housing dwellings within a jurisdiction …

What does that mean—the quantity, the quality, the total number of dwellings? If a state receives funding of half-a-billion dollars and it manages to increase the number of dwellings by a hundred, does that meet the tests that the Commonwealth is outlining? It appears to me that it does. Another criterion is:

(c)

increase the allocation of housing to people with highest needs on public housing waiting lists …

How many such people? Over what period of time? What are the highest needs on public housing lists? To what extent should the allocation be increased? It is not explained. These are appallingly loose tests being imposed on the states to deliver an extremely expensive program of $6 billion. Another criterion is:

(f)

constructed dwellings are environmentally sustainable …

To what standard and at what level? There are many tests for environmentally sustainable dwellings in this country. Which one does the government propose to use? It is not clear. If this is meant to be driving reform in state housing authorities courtesy of the enormous investment the Commonwealth is making, it is an abysmal failure. I ask the minister why he has felt it necessary, in the haste with which this package has been brought forward, to throw on the table $6 billion, all of it being shovelled out of the door into the coffers of state housing authorities, when such poor accountability mechanisms are in place to make sure that the Commonwealth taxpayer gets from this investment good value for money and to make sure that that systemic reform and cultural change in these organisations are driven and good outcomes at that level are obtained for those in the Australian community who rely on social housing.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I do not believe that the picture of the various state housing authorities, as they are described, from state to state or from state to territory is quite as bleak as Senator Humphries has outlined. I have some local knowledge in Tasmania. I do not think it is as bleak as he has described. However, the agreements under the former government and going back many, many years have been overly focused on outputs rather than on a range of specific criteria for change and reform. If I look at ‘Key requirements for proposals to be funded under element 1—new construction’, I see there is a shift away from outputs to a range of quality criteria. In C18, it says:

Proposals for funding under Element 1 of the initiative will be assessed against the following key requirements:

(a)

increase the supply of social housing dwellings within a jurisdiction;

(b)

having regard to agreed reforms listed … in line with the report to COAG on reforms by December 2009;

(c)

increase the allocation of housing to people with highest needs on public housing waiting lists;

(d)

facilitate or support the transition of persons who are homeless or at risk of homelessness to secure long term accommodation;

(e)

adhere to universal design principles that facilitate better access for persons with disability and older persons;

(f)

constructed dwellings are environmentally sustainable; and

(g)

promote activity in the short term using a variety of procurement arrangements, including spot purchases of house and land packages, purchases ‘off the plan’.

Those are the key requirements. As the Prime Minister has said in no uncertain terms and has made very clear not just in this area but in all areas for implementation of the package where there are state involvements, there will be a rigorous assessment of the key requirements. This is a significant change from the past where there has been a focus on outputs in this area.

So, firstly, I do not accept that the picture is perhaps quite as bleak as you paint it right around the country. Secondly, we do recognise that there is a need for reform and improvement that shifts the focus from outputs in this package or a consequence of this package in element 1, new construction. We do accept that there needs to be a significant change in focus. We intend to ensure that there is very vigorous assessment against the key requirements. As I have said, the Prime Minister has made it very clear—both publicly in announcing the package and in respect of the meeting that took place with the state premiers and territory leaders—that this will be carried out. To their credit, I understand they have accepted the need for these new requirements, the new focus and the very rigorous assessment that will occur.

Senator Humphries, you may not have been present when Senator Milne raised some of these issues and we had a fairly significant question and answer session. Senator Milne raised, for example, the five-star rating in Australia for residential buildings. In summary, I indicated that the Commonwealth does intend to ensure greater consistency in the application of building standards across all states because they vary. The increased energy efficiency requirements for new residential buildings to six stars, or the equivalent nationally, by 2010 and the introduction of mandatory disclosure of residential building energy, greenhouse and water performance at the time of sale or lease by 2010 go to some of the specifics of the key requirements that I referred to earlier. There is no criticism intended—not everyone follows the debate all the time—but there was reasonably extensive debate and discussion with Senator Milne about some of the matters you have been raising.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

I want to go back to the interest expense. Because the rollout of the majority of this debt and this facility will be in the short term and the draw-down facility, as brought to light during the Senate inquiry, will be in the short term, do the government expect that the interest will be paid or is it their intention to capitalise the interest? If the interest is to be repaid, how do they expect that to be repaid from a reduced workforce? Is it their intention to tax the workforce more or to tax corporations more to make up the money? If that is not their intention then ipso facto their intention must be that they are going to capitalise the interest. Is that what they intend to do—capitalise the interest and buy more bonds for it?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I think at least in part the answer to your question, Senator Joyce, is illustrated by why revenue estimates have declined so significantly—the $115 billion. That is because of the world economic downturn, or recession in many cases. As we have indicated, there will be recovery in the Australian economy and there will be recovery in the world economy, which has been so seriously hit by the financial crisis. We have indicated because it is an issue of focus for this government that, as the economy recovers and grows above trend, the government will be taking action to return the budget to surplus. That can mean allowing the level of tax receipts to recover naturally as the economy improves. I have mentioned the significant drop in estimated revenue because of the economic fall-off in this country and the recession in a number of other countries. So revenue will grow when the economy improves, and the economy will improve.

We have maintained our commitment to keep taxation as a share of GDP below the 2007-08 level. Further to that, not just on the income tax receipts, we have given a commitment to holding real growth in spending to two per cent a year until the budget returns to surplus. We have provided over the period through to 2011-12 various estimates and projections, as occurred when the Liberal-National Party were in government—and you were a part of that government. Treasury have provided as accurate estimates as they can make of the various economic indicators—unemployment, employment, economic growth, a range of other domestic economic forecasts on demand and output, and other selected economic measures—through to 2009-10 and, in the case of the budget deficit, through to 2011-12, of both the cash balance and the fiscal balance.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

With all due respect, I listened but I do not think I heard the answer, so I will try and be more precise: are you going to borrow more money to pay for the interest on the money we have borrowed in the short term? From what you say, Minister, it sounds like that is exactly what we are going to do, because you talked about the collapse of income. Can you give me a date as to when the $200 billion for the facility will be fully drawn? These are three distinct questions. The third question is: what effect have you been told the Australian government borrowing money—and, because it has not been denied, it must be sustained that we are going to be $270 billion to $300 billion in debt in the near future—will have on the cost of funds for other Australian individuals and corporations that are in the market? Will everyone else have to pay a one per cent premium, a two per cent premium or a three per cent premium, or don’t you have any advice on that matter?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

On the issue of the date by which the up to $200 billion is to be drawn down, I cannot indicate to you by what precise date that will occur, if it does occur—and note that I say ‘up to $200 billion’. I do not believe anyone, either in Treasury or anywhere else in the private sector as of today, could give you a date. I do not have any advice from Treasury on the impact of government borrowing and the consequent impact on the costs of private borrowing. I suggest it would be an interesting discussion to have at Senate estimates with the Treasury economists as to what the impact, if any, may be. I am not an economist, but it is not simply that the government carries out borrowings and then there is automatically a similar impact on the cost of private borrowing—I suspect that there are a range of different economic factors to take into consideration. I would be interested in listening to that discussion at estimates with Treasury officials, but I am not in a position to have that discussion here and now. I have often heard the saying that there are as many different economic views in the world as there are economists. I suspect there are different answers to the question you pose. I do not have any information from the officials but, as I say, I suspect there would be differing views as to the level of impact of interest rates in the private sector as a consequence of the bond. I cannot provide you with an update or any sort of defined, detailed view, if in fact there is one, in this committee stage.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Has the minister sought advice as to what the effect on domestic interest rates will be from the government being in the marketplace for up to $300 billion—as we are going to have an infrastructure package coming before us in the very near future, which I suggest will have to sit on top of our current borrowings? Did they get advice as to what the effect will be on domestic interest rates—yes or no? The second question is: what is your prescribed repayment time frame for this facility? Do you intend to repay it over eight years, 10 years or five years? In our experience, it took us about nine years to repay the $96 billion. If that is going to go by the same schedule, are we looking at 20 or 30 years to repay the $300 billion?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The latter part we have already discussed, Senator Joyce. You want a time frame and projections beyond 2011-12, and we have discussed that matter. I can provide some additional information—

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

You’re on the filibuster register, are you, Dougie?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Interestingly, I do not think any of my colleagues have participated since—

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Minister, we will keep to the matter under discussion.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Yes, you are on the ball, Chair, about cross-conversations; thank you very much. I have been responding to questions posed by Senator Joyce, Senator Macdonald, Senator Abetz—

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

You haven’t talked to me yet.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Well, give us a few. We have a couple and I hope they are—

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

We’ll give you some more.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Yes, I hope they are coming, as I have indicated. I think I have made my best efforts to answer every question posed; it just takes a little time to get the answers. I am providing a rolling series of answers to questions that were put an hour or two ago in some cases.

I can provide some additional information about this crowding-out issue, Senator Joyce. It is Treasury’s view that there is little risk of Australian government borrowing crowding out private sector investment, because it will remain relatively small when compared with the GDP and the overall size of Australian credit and financial markets. I am just thinking about this issue, Senator Joyce. The argument is that the level of government debt or borrowing will crowd out private sector investment and therefore interest rates will be higher. That argument is not accepted by Treasury. I referred earlier to the levels of government debt in a range of overseas countries. Many of those countries have lower interest rates than Australia at the present time although they have a higher government debt—and they had that higher government debt even before the financial crisis. They had higher debt as a proportion of GDP than Australia and they had lower interest rates, so there are other economic factors. There is little risk of Australian government borrowing crowding out private sector investment, because it will remain relatively small when compared with the GDP and the overall size of Australian credit and financial markets.

The Australian government has a AAA credit rating, and our Treasury bonds are high quality and attractive to investors. That is another factor, Senator Joyce. If a country does not have a AAA credit rating, for a whole range of reasons—not just their budget deficit but other factors—it would stand to reason that that would impact on the borrowing rate. Despite the rise in borrowing, our net debt position will remain strong relative to many other countries that are currently enjoying a AAA credit rating. The borrowing is only a short-term measure which is necessary to finance a temporary deficit and, as I have indicated, once the budget has returned to surplus, additional borrowing will no longer be required and debt can be repaid. I have already alluded in some detail in previous answers to the issues you raised about the repayment of debt, and the parameters I pointed to are the parameters by which that will occur.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

You mentioned a key word there; this is borrowing in the ‘short term’. Can you please define for us what you mean by short term?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will come back to that question shortly. Shortly!—sorry I was not intending to make a pun. I am now in a position to respond to some questions that Senator Coonan posed a short while ago. I can provide some detail to the committee. The insulation measure will reduce emissions beyond the 2020 CPRS target. The measure will work in conjunction with the Carbon Pollution Reduction Scheme. The overall target of emission reduction is set by the CPRS. The Energy Efficient Homes package will reduce household energy usage and therefore lower the cost of abatement. The measure will also lower energy use by householders, leading to lower energy bills and an increase in the comfort of the households.

There was some discussion and questions about insulation in wooden homes—from Senator Williams, I think. Evidence from industry and academia, about experience of insulation in a range of household types, upholds the benefit of installing insulation in ceilings. It will result in improvements in thermal efficiency of houses, and heating and cooling energy savings, and is the most cost-effective, energy-efficient measure.

I have some further information for Senator Macdonald in relation to the dollars available for road access to towns like Karumba. He raised the Karumba community specifically. As a supplement to the previous reference I made to moneys in the package, there is an additional $90 million for black spots, which was based on demonstrated safety and need. There is a requirement to demonstrate a case but Karumba may qualify for that. I am just not in a position to indicate specifically but I have said that I will pass the request and the issue on to the infrastructure minister, Mr Albanese.

Senator Joyce raised, a little while ago—I did respond to a number of the questions—the issue of state responsibilities and he highlighted the issue of boom gates and schools. The states have very significant investment programs, including rail safety infrastructure and schools. The issue with respect to the Nation Building and Jobs Plan is that the states’ investment programs should be accelerated to provide a timely economic stimulus aimed at improving nation building and supporting economic growth and jobs. The Commonwealth will use its financial capacity to provide the states with the funding needed to bring this investment forward—I deliberately emphasise ‘bring it forward’. These have been identified as areas where the description is, I think, ‘shovel ready’—where the detail of the projects is known and they can quickly be brought to bear and brought forward. As I indicated earlier, the Prime Minister is going to be very tough on replacement should any of the states attempt to do that. The accelerated installation of boom gates and other active control mechanisms at high-risk crossings, and the new and upgraded facilities in primary and secondary schools, we believe are very responsible investments in the community. The projects are very easy to identify and very quick to implement; they have been quite deliberately selected to be part of the package on that basis.

To respond to the issue of what is the ‘short term’, I think the difficulty, Senator Joyce, is that no-one can predict the length of this financial and economic crisis. The government has been very upfront about that. As I indicated earlier in response to Senator Fielding—who would have believed some of the impacts of the US subprime crisis, say, a year ago? I would not have believed it. So it is very difficult to predict the length of the crisis. The government has articulated how it will return the budget to surplus. We have touched on that on a couple of occasions in this question and answer session. We do not believe you can put an exact time frame on what is the ‘short term’. But what is important is that this government has decisively and quickly articulated a strategy that we believe is appropriate, given the very serious world financial and economic events that have been so quickly unfolding.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Senator Joyce, I would remind you that Senator Siewert has been waiting for some time.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

I acknowledge that. This is my final question. The answers at best have been nebulous and amorphous, and we are not really drilling down. It is a very specific thing that has a very specific outcome, which is the debt. The interest that the Australian people will have to pay will be absolutely evident. The effects on the budget will be absolutely apparent. The efficacy is the only thing we cannot seem to prove. And now we cannot even get a definition of what ‘short term’ is. We have discovered already that we are not looking at $200 billion; we are looking at up to $300 billion—

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Senator Boswell interjecting—

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

The $70 billion infrastructure fund that is coming. We have discovered also that we are not intending to repay it; we are just going to borrow more money to pay for the interest. We also know that we are a third of the way to where even Dr Henry says we should not be, which is a trillion dollars in debt. This is pretty startling stuff. We could have got through this had we had a longer inquiry. While sometimes we disagree, I concur with Senator Fielding that these are the sorts of details the Australian people want to know. It is absolutely crucial and fundamental in the way people vote around here. I and my colleagues will at times give people the benefit of the doubt and support you on issues if we think that you are being fair dinkum with us, but I do not think you are this time. I suspected it had hairs all over it at the start. The more we get into it, the hairier it gets—hairy and very dangerous, actually.

I am going to come back later on—I will give someone else a chance; I apologise, Senator Siewert—to really go through the efficacy of the spend. But there is one thing the Australian people can gather from this afternoon: that we are on a very treacherous path to a substantial amount of debt and there is absolutely no comprehension whatsoever of how we are ever going to repay it.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will respond briefly. I do not accept your claim about ‘nebulous and amorphous’ responses. I am going to give you another response with respect to a specific issue in stamp duty. But, where the questions have sought quite specific answers, I believe I have given specific detail where appropriate—in fact, Senator Joyce, you objected when I went through some very specific detail with respect to government debt levels as a proportion of GDP and the stimulus packages. It was very detailed. That was in response to not just your question here but the question at estimates.

On the issue of states purchasing homes, and their own stamp duty laws, they would apply to the purchase. That is only likely under some ownership arrangements. The net financial impact on the state is zero. For example, if they paid $10K in stamp duty, less they receive $10K, the stamp duty revenue is zero to net cost. Where the states’ housing authorities have an exemption from stamp duty laws, there is also no financial cost. We understand this is the case with state housing authorities. In neither of these cases would the Commonwealth in effect be funding the stamp duties.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I seek clarification of an answer to a question from Senator Milne, and I also have some questions about those on Newstart. In answer to a question from Senator Milne the minister said that the social housing package relates to new homes. My question is: does it relate to new homes that will start after this package was announced or will it include homes that were started prior to the announcement of this package?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It is to fund new homes. I am told that there may be some circumstances where there is a partially completed home where that could be possible—where it is part way through. But it is to fund new homes.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I wonder if the minister could be more specific about what the circumstances are when a home has been started. Does the government intend to release guidelines around that and the circumstances under which partly commenced new homes could be counted as part of this package? What circumstances does the minister think would be relevant in order for those homes to be paid for out of this particular package?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

There will be a set of strict criteria which will be monitored by the Commonwealth about the purchase of new homes and, where there is existing partially completed stock, about how that would occur. We are not ruling it out. I am not saying that that will happen, but we are not ruling it out because it may be necessary. That is not the focus of the program going forward, but there will be detailed criteria set out to oversight that.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

That, obviously, would be our concern—that it was, in fact, paying for homes that had already been commenced or already built but which were still classed as new homes. That surely would undermine the object of this exercise, which is to stimulate jobs et cetera. I have some questions now around Newstart. They follow up some questions that I asked during the committee inquiry. Some of the answers did not provide all of the information that we need to analyse this package. I also want to ask further questions following on from some of those answers.

From the information that we have received to date, it is very unclear just how many unemployed people—people on Newstart—will actually receive any form of support under this package. I am seeking more detailed data to ascertain, if we can, exactly how many people currently on Newstart will be receiving some form of payment. Treasury responded to questions I asked about the number of people who would be receiving the education entry supplement. Out of that, they said there would be an additional 184,178 people. Of those on the Newstart allowance, there would be 50,925. There are, at this current time, over 450,000 people on Newstart. There is obviously a significant difference between 50,000 and 450,000. The government maintains that people on Newstart will receive other payments under the package. What I am trying to find out is: how many people on Newstart will receive the tax bonus, how many people will receive the back-to-school bonus and how many people will receive the single-income bonus? This will give us a better idea of the number of people on Newstart who will not receive any bonuses.

I presume that it may take a couple of minutes to find that information, so perhaps I should also ask the other questions that I have. As I understand it—and I am asking the question as I am not exactly positive—under the tax bonus system, you lodge your tax return and you actually have to have paid some tax to receive the tax bonus. Is that a correct understanding of the current situation?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Yes, you have to be a net tax payer and you have to have lodged by 30 June.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

That does, in fact, clarify the fact that if you earned below the tax threshold, despite the fact that you have put a tax return in, you still will not receive the tax bonus. So that group of people will potentially miss out on payments? I will leave that question there.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It seems logical, but I will double-check the data.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

As we understand it, this payment—the additional supplement payment—will go to those people who are eligible for the existing $208 education entry payment. The answer to a question on notice that I received following the inquiry said that the projected increase in the number of people that will receive the original payment of $208—because they are to receive both—has not been included in this package. I am wondering if that is going to be picked up by government outside of this package and how, in fact, that will be paid for. It is obviously extra to what was originally budgeted for through the normal budgetary and appropriations process.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

We will have to come back to you on that.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I thank the minister for undertaking to come back to us; I cannot thank him for his answer! The other issue that I would also like to clarify is that, during the committee inquiry, we established that people who become eligible and apply for the education entry payment will still have to go through the normal process that exists under current regulations and rules. That is, if you are on Newstart, you will either come off Newstart and go onto some other income-support process or it will be part of the activity agreement, which, presumably, will in the future then transfer to your employment pathway plan. That will take some time. What start date does the government envisage for this to roll out to people currently on Newstart who are receiving other income support and who are eligible for this supplementary payment? Quite clearly it is going to start and funds will become available much later than the other payments because of that more complicated process.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will take that on notice. We will obtain a specific answer for you.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

So I can be clear, and to save you some additional work later on and while you are finding these figures, I want to go back to the issue of those on Newstart and those in particular who have been on Newstart for the long term or who are long-term unemployed. I am trying to work out how many Australians in that group of people will not be receiving any form of support through this package. I want to be clear that that is the information I am trying to find. I would like you to provide some information on that. I want those other figures because I think it will be useful for us to know who is being helped. I am trying to work out clearly how many Australians will not be receiving support through this package, bearing in mind that we are talking about people who are trying to survive on an income, if they are single, of just over $224 a week. I am trying to find out those exact figures. To date we have not been able to get access to that information and identify that accurately.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

To make progress and get the detailed responses that you need, I have just spoken to the advisers. We do not have an adviser to hand with that specific detail, but I have put in a request to speak to the office of Minister Brendan O’Connor. We have until tomorrow to debate the package, so we will put in a call to Brendan O’Connor’s office and make sure that there is an official available who is able to provide the detailed responses you are seeking, hopefully by resumption tomorrow. Because we are in committee and out of respect for the committee and all senators, the information which you are given—the detailed material you have sought—will be provided to the Senate as well.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I would like to take us back to some of the matters that were raised earlier in the housing portfolio. I am interested in getting some further information, if the minister can provide it, on exactly how the funds for the housing package will be distributed—in particular, the obligations of the coordinators and the people who will be looking after these large transfers of funds to the states. What will be the reporting obligations not only for energy and water efficiency, which we know are in the schedule, but also for the location issues—proximity to public transport, to services, to access to employment and so on? We know that the government has an eye on these issues, but it is very unclear how it will be reporting and benchmarking them, whether these reports will even be made public and on what sort of basis they will be provided to the minister or the parliament.

I would also be interested to know whether the Commonwealth has an intended balance of funding between regional and metropolitan housing for the public housing spend and whether there is any intention, at a Commonwealth departmental level, to target the housing to areas of greatest need or whether this responsibility is being devolved to the states. Does the Commonwealth government have a proportion or target in mind by which the community housing sector, as opposed to state housing commissions or public housing departments, will be managing these properties?

One of the issues that was raised late last year in the debates around the National Rental Affordability Scheme and that was raised again yesterday in the Senate Standing Committee on Community Affairs was the issue of charitable tax status for community housing organisations that are seeking to be part of the management structure of these housing projects. It was put to the committee and was not really satisfactorily dealt with by the answers that we received, albeit at short notice, from the department that a solution was in train and that something would fall out of the Henry review. It was put to the committee by the housing organisations who spoke to us in the committee that that would be too late—that the tax issue, as it remains unresolved to date, is already putting a chill over the community housing organisations that are seeking to be a very important part of the management of these housing projects. My understanding is that the Commonwealth sees them as an important part of the management of these housing projects. We are interested in what measures the government has in place. We will be very disappointed if the answer that comes back is that you are waiting for something to arise out of the Henry review, because we certainly heard evidence that that would be too late. If the minister could provide us with any information on these matters, that would be greatly appreciated. We would be very interested to know how you intend to benchmark the reporting obligations of the states and the various housing providers and whether they are meeting benchmarks on energy, water efficiency and the location issues.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The target figure that you were seeking for the community sector is around 75 per cent. Could you repeat the first question? The official was in transit into the chamber. I also cannot clarify the charitable tax status issue at the present time. I am not going to attempt to refer you to the Henry tax review, but I cannot clarify it now. I will see if I can get some information when we finish the debate. Some information may come in before we finish tonight. Perhaps before we resume tomorrow I can get you some further information.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I thank the Minister for Superannuation and Corporate Law for providing the answer to the second question. The first question goes to the reporting obligations of the people coordinating these large transfers of funds from the Commonwealth to the states. We know that in the schedule to the IGA the government has acknowledged that energy and water efficiency play a huge part in the long-term affordability of housing and so too do access to public transport, services, sources of employment and so on and that these developments will be targeted for the public housing spend. What I am interested to know is how this will be reported. Will it be reported to the minister or, indeed, to the parliament and on what basis? How are you benchmarking such issues as access to public transport? How are you benchmarking energy and water efficiency? How will the parliament be informed of progress and whether you are meeting the targets that you have set?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The coordination and the reporting is being handled through the Department of the Prime Minister and Cabinet, which, in turn, will be reporting to the Council of Australian Governments, commonly known as COAG. I am going to clarify whether that will in fact be made public, but I suspect it would be a decision of COAG to make public the reports on the requirements through the coordinator-general in the Prime Minister’s department.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I certainly do not dispute that COAG plays that coordinating role and an information collecting role but, with the spending of taxpayers’ money on this scale, I would be disappointed if data were not later made available to the public, through the parliament, on whether the benchmarks on the different factors that I have identified are being met. So I seek further information on whether this will be left to COAG or on whether there has been some thinking on that on behalf of the government.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will clarify the extent to which reporting will be made public, how that would be done, the time frame et cetera. I cannot give you a specific response about that level of detail now, but I will attempt to obtain it before we commence tomorrow. I accept your point that there should be public access to the reporting and performance et cetera.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

It has been reported, and it has certainly been part of the debate, that the Prime Minister has made much of what he calls punitive measures, which would be enforced if the states and territories do not adequately discharge their responsibilities. With specific regard to the housing component of the stimulus package can you just outline for us what the punitive measures would look like in this portfolio in the event that the benchmarks are not being met?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

If the state or territory failed to meet the performance reporting criteria that are set down, the funds would be reallocated from that state to other states and territories.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Does the Commonwealth have in mind a system that is similar to what was adopted for the enforcement of national competition policy benchmarks? These were reported in public, and governments were expected to meet certain benchmarks; otherwise, competition payments to the states were withheld. Is what you have in mind something similar to that framework?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You have raised the issue of competition reform and the payments that were made. It is a similar approach but it is not identical. As I have said, we intend to have very clear benchmarks, reporting back and penalties. Competition payments were, I think, withheld or delayed in the case of some states. It was a similar approach, but I think there were legislative requirements underpinning competition policy—I am trying to reflect on the formal process that occurred there. It was somewhat similar but not identical.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

This really goes to the question of accountability—in particular, public accountability—because, whatever you might think of the way competition policy evolved in Australia, governments did know where they stood and the public was informed fairly promptly as to whether the benchmarks that had been set were met. I would like to add to some of the factors and matters that I raised before. This housing, particularly for the cohort of people we would be building for, would require adaptable design components and ageing in place and disability access. I would like to know whether these matters have also been formally benchmarked. I would appreciate it if I could add those items to the questions that I raised earlier about accountability, reporting, benchmarking and so on.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You touched on disability access, for example. Yes, that is an issue. I referred earlier to the universal design principles that facilitate better access for persons with disabilities and older persons. I have referred to that. It does not mean, I have to say, that this applies to 100 per cent of dwellings built. It would be a very high proportion and it obviously depends on the tenant and their circumstances. It may well be that a tenant does not require disability access, but you obviously need to have sufficient housing stock to ensure that you are able to meet the demand from that group of people in society and the special needs of those who are disabled or elderly.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Finally, Minister, the Insurance Council of Australia has been talking in recent days about resilience in housing, particularly with regard to natural disasters, to which Australia is becoming increasingly prone. They are looking at fire, flood, climate change impacts and so on. While some of these measures for resilient housing would increase the upfront cost of some of the housing that we are building, it will certainly reduce insurance premiums charged and paid, which again is another cost to the Commonwealth or to the community housing sector. I am wondering if you can inform us as to what degree you are considering resilient housing measures and adaptability to these sorts of events and what kinds of benchmarks you would be setting for the developers and the builders.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It is quite a complex issue you raise about whether or not there would be a reduction in premiums. For the new stock we are talking about, the premiums would be paid by the housing authorities, where they insure. They may self-insure in some jurisdictions, so that government would be carrying the cost of the insurance itself—in other words, it has not gone and taken out insurance. So obviously there is no change for the governments who do that through their housing authorities. The change would be for the state governments that are self-insuring. Presumably there would be a reduction in claims, not through private insurance but through depreciation and damage, repair et cetera to the building, whatever the circumstances are.

I know a number of actuaries through my interest in issues around superannuation. I think this would be a worthwhile issue, because there would be quite a complex set of issues to consider. Yes, you would expect the cost of insurance to come down over time—as to the extent or the time frame, I could not hazard a guess—but there may be other factors that counterbalance the issue of better designed and constructed homes. For example, and I am just speculating here, it may be that, because you have a shift in the demographics of the population, you do not have a reduction in premiums, for other reasons. I do not know. There would be quite a complex set of factors involved in making an actuarial projection about insurance premiums over time. It would also be reflective of historical claims and whether there is confidence that they would start to decline for the reasons that you touched on. It would be a complex set of issues that actuaries would be able to advise us on, so I could not give an indication today whether or not the premiums would come down.

I am just trying to think of the best way. Perhaps I could organise a briefing through the Government Actuary, who falls within my direct responsibility. The Government Actuary may be able to do that. If you want that sort of briefing before tomorrow, it may be possible to organise it. I am hesitating a bit because I did not anticipate in this debate a call on the Government Actuary, but I can certainly arrange for the Government Actuary to sit down with you and whoever else is interested in this issue to go through the issues and factors and give you a briefing on the matters. I am very happy to organise that for you.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Minister, I will leave this line of questioning there, but I would appreciate, if not a briefing, certainly some indication in the morning of whether the government has considered the issue of resilient housing for people on low incomes and for a very large spend of public housing funds, both in the short term as it relates to the risk for the people living in these houses and also in the long term in terms of the expenses and the costs of insurance and so on.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I have a list of questions, but I fully understand the minister is still dealing with another matter. Once I have the minister’s attention, I will ask them.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Sorry.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

No, it is all right—understood. Do you want to respond to Senator Ludlam?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

We will have a response for you tomorrow morning, Senator Ludlum, on the issue of resilient housing. The offer I made regarding the Government Actuary and insurance premiums still stands. Senator Siewert, regarding your questions in respect of Newstart, we have an officer now available. I do not know whether you wish to run through those issues again now, but the officer is here. We were not able to answer a number of Senator Siewert’s questions earlier.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

My first question is: is there any movement at the station, if I can put it that way? Are there any amendments? We are dealing with a $200 billion package overall and we now have less than one hour’s worth of debating time left this evening. If there are to be amendments to what is a very substantial package which will place a debt burden of $9,500 on each man, woman and child in this country plus interest accruing, I think the opposition is, as a minimum, entitled to consider any proposed amendments overnight. So I would be appreciative if we could be given an indication as to when these amendments might start appearing.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Just one minor correction: it is not a $200 billion package; it is a $42 billion package.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Senator Abetz interjecting—

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The cost of the package is $42 billion, and you well know that. The bill in the package refers to the loan facility of up to—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The Commonwealth Inscribed Stock Amendment Bill 2009.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Yes, I am well aware of it and its provisions. I have been briefed and I have responsibility for it, but the package is not costing $200 billion, as well you know. It is $42 billion. As to movement at the station, as you referred to it, I cannot provide any update about an amendment or amendments at this point in time. You have pointed out, and I am certainly very well aware of, how long the debate has been going. It is now approximately 6 pm. I think we are moving to other business at 6.50 and, of course, we have a full day and night tomorrow—and I am raring to go.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

It is great to hear that the minister is raring to go. We were told that this package had to be passed by last Friday. I have canvassed the arguments. The hectoring and bullying of the Senate by the leader of the government has now been blown out of the water by the evidence of the bureaucrats before the committee. But, if there are to be amendments to such a substantial package, then clearly the opposition and other senators are entitled to know what they are. To simply have an open-ended situation where we might only get to see the fine print by tomorrow morning, if that early, clearly is inappropriate.

For the benefit of the minister, within the package of bills we are considering is a bill entitled the Commonwealth Inscribed Stock Amendment Bill 2009, which at section 5A(3) tells us that there is to be an increase of $125 billion to the total face value of stock and securities, and that is on the existing $75 billion. I confess I was never good at maths, but I thought $75 billion and $125 billion might add up to $200 billion. That is a part of the package that we are being asked to vote on. Sure, the majority of discussion has been on the $42 billion part, but this is a specific piece of legislation which I understood you wanted passed.

I was not going to ask this, but I may just follow up on Senator Ludlam’s questions. Whilst I understand that there is a coordinator-general to be placed in the Prime Minister’s office, if I am not mistaken the reporting by the states will in fact be by a coordinator-general who is a state public servant paid for by the state government who will then be reporting to the coordinator-general in the Prime Minister’s office. If we want robustness and transparency, I doubt that the state coordinator is necessarily going to dob in his or her state and say, ‘We have been missing all the benchmarks and guidelines.’ So, whilst there is somebody, as I understand it, in the Department of the Prime Minister and Cabinet, that person will be reported to by state officials paid for by the state government. I must say that does not give me much confidence that there will be that robustness of reporting. If we look at how the states report on hospitals, education, policing, roads and all their other responsibilities, it does not give one much confidence.

Can I just briefly say that it has been interesting listening to the debate this evening, with people talking about insulation, houses et cetera. The giveaways are all very nice. But, of course, the real thing here is the $200 billion debt—$9,500 per man, woman and child in this country—that will have to be repaid some time in the future.

I made those comments whilst the minister was liaising with his advisers. I have no criticism of that, but I do want his attention for the specific questions that I have. I would like to know whether cabinet approved this package and, if so, when they approved the package. When was the UEFO signed off to go to the printer? By whom was it signed off?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am just endeavouring to find a document which has at least some of that information. I know we have some information, because I had a document earlier, but you were not here and I did not come back to it. We are trying to find out where it has gone. I will—hopefully—finish on the issue of the coordinator-general. The coordinator-general will oversee the work of the Commonwealth and the states and territories in the Department of the Prime Minister and Cabinet. At the Commonwealth level the agencies will nominate by the end of February 2009 a senior national coordinator for each major infrastructure and stimulus measure. The national coordinators will have responsibility for ensuring that the milestones are achieved and that any implementation issues are addressed as a matter of urgency.

The issue you have raised, Senator Abetz, is to do with coordinators being public servants at the state level. I think the advantage would be that they would know the areas which they are coordinating. They would be familiar with them. If anyone got up to any tricks, I would have thought that they would be better placed to identify that. However—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Like auditors who are the company accountants.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Senator Abetz, I think you need to seek the call if you want to provide some input.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I have sufficient confidence in the integrity of all public servants, whether Commonwealth or state, that once they are assigned to a task they will carry it out diligently and ethically. So if you have a state employed public servant carrying out a task set by agreement between the Commonwealth and the states through COAG, I believe that even though they are employed by a state government they will carry it out diligently and in accordance with the agreement. As I have indicated, them having knowledge of the areas that they are coordinating and evaluating would be a particular advantage. I think that, on balance, for those reasons, the appropriate checks and balances in the structure are contained.

The Strategic Priorities and Budget Committee of cabinet agreed to the bulk of the package on Thursday, 29 January, with some fine details settled between the Prime Minister and the Treasurer after that meeting. The Treasurer signed off on the document on Sunday, 1 February. It was sent to the printer at 6 am on Monday, 2 February.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

At what time on Sunday did the Treasurer finally sign off on this document?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am not really sure of that level of detail, but I will see if we can find out what time, where he was, what pen he signed off with, what colour it was—black or blue—and how much sleep he had the night before, which I suspect was not much. There may be some relevance to the level of detail we are getting to, but it has not become immediately apparent to me. It reminds me of when I asked the former Treasurer, Mr Costello, about the check-in and checkout times of the GST committee, when I was in opposition, in order to try and determine who was working on the GST package. It was a high-security zone down in Treasury and I wanted to know who was going in and out at what time. The records existed because of the security situation. There was an electronic check-in and checkout. I have to say that the former Treasurer, Mr Costello, was pretty blunt in his refusal to provide that level of information. I really think we are getting to that stage now. But I will put a request in to the Treasurer’s office about the approximate time, within a few minutes, that he signed off on it.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I thank the minister for that response, but I remind him that that sort of bluster was exactly his approach when I was asking questions of Treasury, at estimates, about Fuelwatch. I was told that, in its production, people were working normal hours and that there was the normal course of business. When we started asking for the detail, we found that somebody had worked 37 hours straight, around the clock, to rush in the now ill-fated Fuelwatch. Can I say that it is from the experience of seeing this government in operation—and rushing things for a political agenda as opposed to any other agenda—that I ask the question. I remember Fuelwatch was so urgent because it was going to be the saviour of everything. It has now been dumped as bad policy. Similarly, this has been rushed in. We were told we had to deal with it by Friday last week. We now at least have an extra week without impacting on anything. So one has to ask again: why the rush?

Allow me to move to my next question. I may have missed the answer to this. If so, I do apologise. I understand that Senator Joyce asked a question as to the meaning of ‘short term’ in relation to the huge, unprecedented borrowings that this nation might undertake if Mr Rudd gets approval for his $200 billion bank card. I was just wondering whether we now have a definition of what ‘short term’ might mean. If that has already been given, if the answer could be provided to me that would be helpful. I think in the context of Australians being told that this is a temporary measure, only a short-term measure, they are entitled to know when ‘temporary’ or ‘short term’ is going to finish or what is the longest that the government anticipates the term ‘short term’ to mean. I think we are entitled to an answer to that. If an answer is still being obtained, that is fine.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Again it was in your absence, Senator Abetz, and that is not a criticism. We had a discussion with Senator Joyce about ‘short term’. I do not know whether you were watching that.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I did not think an actual answer was provided.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It was certainly provided. No-one can predict the length of the crisis. Government has articulated how it will return the budget to surplus. You cannot put an exact time frame on ‘short term’ but, again, the government has articulated a clear and decisive strategy.

I want to come back to the earlier point you made about public servants working hard. What I do know is that, yes, many public servants at certain times work very, very hard indeed. I wish it was not the case but they do work very hard. I have witnessed firsthand the public servants I have had meetings with on very early mornings, at nights, fortunately not too often at the weekends, I have to say, but working very late nights and long hours. The other point I would make, on the question you went to in terms of times and who signed what et cetera, is that it also goes to show just how extraordinarily hard the Treasurer works. On a Sunday he was going through a very detailed and important package. And I know from my contact with him, which is sometimes at weekends, he is working every day and night of the week in an extraordinarily dedicated and committed way. So, yes, there are times when public servants work extraordinarily hard, and with respect to this package the Treasurer was working hard. I spoke to the Treasurer when we were having some discussion about some other matters, and we were both supposed to be on leave at the time. I am not complaining about it. That is just the way government is, and the times and the circumstances in the Christmas-New Year break. So, yes, public servants work very hard. At times they work extraordinarily long hours, particularly on budget type papers. But the Treasurer works extraordinarily hard and, for that matter, the Prime Minister as well, from our experience.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Thank you for that homily on how hard everybody works. That is very nice.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You work hard too, Eric.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Thank you, Senator Sherry. Can I say that it will not throw me off the trace of the term ‘short term’, because basically what the minister is now telling the Australian people is that he cannot define what short term means. Nobody knows when this current period is going to end. Given that, to try to sell to the Australian people that this is a short-term measure, as opposed to a mid-term measure or a long-term measure, is in fact to mislead them. I would have thought that the Australian people in general terms would have thought that short term might be a couple of years or three years. Once we start ballooning out beyond three years, I would have thought that the government cannot say short term, but it has been saying temporary, short term et cetera. I note the government is unable to define it—and to a certain extent, given all the circumstances, I accept that. But what I do not accept is the political spin of the usage of the term ‘short term’. As we have always suspected with this package and the language associated with it, it is about spin rather than substance. I would have thought that if you were to level with the Australian people, to coin a phrase, you would say, ‘I am sorry, we can’t tell you whether this is going to be ‘short term’, medium term or long term because nobody knows when it is going to end.’

In an earlier answer Senator Sherry placed great emphasis on the advice of Treasury guiding government. As I understand it, this was the same Treasury that allegedly advised the government only 12 months ago that the economy was overheating, that the genie of inflation had escaped out of the bottle and that $20 billion had to be taken out of the economy to slow it down by way of extra tax revenues, as witnessed by the last budget, only to have the economy a few months later slowed down and cooling off. This was unpredicted, we were told—albeit the former Treasurer, Mr Costello, during the last election did predict the economic tsunami coming our way, which of course was scoffed at by Senator Sherry and his leader as a tactic designed to scare people about voting Liberal. So all I can say is that the reliance on this Treasury advice is not all that robust and the terminology is a matter of concern. But can I ask one question of the minister: will the money ultimately need to be repaid?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The Treasury officials that you have somewhat criticised are the same Treasury officials that advised you, the Liberal-National Party, in government. These are the same Treasury officials that I have spent many years asking questions of. Going specifically to the change in economic circumstances, economic circumstances and forecasts have changed dramatically—and I stress dramatically—over the last year, given the financial and economic crisis. I can recall, going back over a number of estimates and a number of years, questioning Treasury about, for example, the mining boom and the demand from China and questioning the veracity of the forecasts. Treasury officials had a two-step down, in terms of the value of mining and demand and the revenue impact on the budget, and they kept moving that out because the mining boom went on longer than anyone reasonably expected and they could not identify when it was going to end. They could not identify it was going to come to an end under your government and under our government when we were first elected. But the mining boom has ended, because we have now got a significant change in economic circumstances.

Sure, I criticised Treasury from time to time when I was in opposition. I have criticised them, and I had some strong debates—I would not describe them as personal—and some good discussions when I was in opposition. I did most of the economics and finance estimates committees and had a lot of exchanges with Treasury over the years. They are not infallible, and I do not think they suggest they are infallible. But I do know that, by and large, they all try to get it right. Economics is not a precise science, but I do know that we have got very good officials—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

It is with ETS modelling.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Senator Abetz, you made a general critique; I am responding in a general way. I accept that. I am not going to take an inordinate amount of time in my response. I would argue, and I came to this conclusion very early on in this place and very early on in opposition, that we have very good officers in Treasury and Finance. Yes, there will be disagreements from time to time but we have got very good officers who do the very best they can. They overwhelmingly get it right. There are some occasions when they do make mistakes and there are some occasions when they do not get it right but, overwhelmingly, they do. So I have every confidence in them. That is a confidence I have developed not just over the year in government in my dealings with them; that is the view I developed over many, many years. So I do want to defend Treasury officials. I confess to once having a sharp exchange, and I think I went one step too far with one official in my almost 12 years but, overwhelmingly, they do an extraordinarily good job.

I reflected earlier on the range of issues that have come on this government. I reflected on the range of issues that I certainly did not expect, when I became a minister, as a consequence of this world financial and economic crisis—issues that I would not have dreamt would become public policy issues of such contention, and I specifically mentioned short selling and there are many other issues, because of the very rapidly evolving and changing world financial and economic crisis. I would not have dreamed, a year ago, that you would have the banking system in the US and the UK collapsing. I would not have dreamed it possible that the US would be nationalising banks. I do not think anyone, certainly not my Labor colleagues, would have dreamed that you would see George Bush, US Republican President, nationalising banks. That is just how extraordinarily circumstances have changed in the last year.

I will conclude there. I think it gives you some indication of the very different nature of the outlook that we face today compared to three months ago, compared to a year ago or compared to 18 months ago. I do not believe I have seen economic circumstances, other than perhaps the oil shock of the early 70s, change so rapidly and, unfortunately, detrimentally before around the world in my lifetime.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I am sure the minister overlooked the question as to whether the debt will need to be repaid. That was in fact the question I had asked. Could the minister answer that. And, whilst he is getting an answer together, possibly to be taken on notice so that we can get an answer when we are told with what colour pen the Treasurer signed a certain document—which I did not ask, by the way—can we be advised of when the Treasurer was given a proof copy of the UEFO or previous advice on the revision in revenues shown in the UEFO.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I can give one time and day, and I will try and get the other answers. I will not be going to the Treasurer’s office personally and asking those questions. But I can inform you that the Treasurer signed off the documents at 1 pm on Sunday, 1 February 2009. That is the answer to the question you asked a little earlier.

When will the government pay down the debt? As we have said time and time again, as soon as the economy recovers and grows above trend the government will take action to return the budget to surplus. These surpluses will be drawn down upon to pay down debt as rapidly as economic conditions permit. I did have an earlier discussion with Senator Joyce, and we went through those matters in fairly considerable detail—not to his satisfaction nor, I suspect, to yours—so we did canvass that set of issues much earlier.

Senator Ludlam raised charities’ tax status. I do have a response. Community housing providers will be able to provide social housing in the package without the risk of losing their charitable status. It does fall within core activities of a public benevolent institution. The Treasury will continue its work with the ATO with the aim of providing certainty on this issue, but the advice I am given is that it is not an issue.

Senator Ludlam asked how the funds will be distributed. The states and territories will receive an allocation on a population basis, provided proposals from the states and territories meet key requirements. The Commonwealth will select the projects in jurisdictions that provide the best outcomes against the requirements. If a jurisdiction does not provide proposals that meet the criteria, or if they do not perform against delivery milestones, funds can be redistributed to jurisdictions that can deliver.

Will houses be located close to transport? Proposals from states and territories for new housing will need to identify their proximity to public transport, and this will be assessed in selecting the best proposals. On the funding split and regional or urban targets, there is not a target on this matter but we do want mixed urban-regional communities so we do not have high concentration. We do want to see a share of properties in areas of real need. To digress, personally I look at the circumstances of the north-west coast of Tasmania and I think—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Senator Abetz interjecting—

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Thank you, Senator. I think there is a need on the north-west coast, for example.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

I don’t think he was suggesting that you were responsible for it, Nick!

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will be paying it some attention. I have to put on the record, Senator Ronaldson, that my wife works for Housing Tasmania on the north-west coast of Tasmania so I do get more than passing information about local circumstances and what will happen. I might become one of the coordinators to make sure the money is being spent properly! I will get the inside information. But we do want to see a funding split between regional and urban areas. From a Tasmanian perspective, whilst the entire state of Tasmania is regional, I would be very keen to ensure the north-west and regions outside the south and Hobart receive an appropriate split of these moneys for targeting. The package is targeted to high-need clients. The states must identify in their proposals which dwellings are targeted at particular groups—such as people with disabilities and Indigenous people—and we had an earlier discussion about that.

Senator Siewert asked when the education entry payment supplement would be paid. Those eligible for the EdEP bonus will receive it when they receive their EdEP. If you have already received your EdEP, you will receive the supplement from 24 March 2009. Other people who commence study over the period up to 30 June 2010 will receive the $950 as they start their course, as well as the $208 education entry payment.

I think we are just about up to date on answers to questions so far. I have a couple of extra answers, and Senator Joyce may want to come back because they might be relevant. I will take just two minutes. When was the government first advised the budget was in deficit? The Treasury on 19 December provided advice to the Treasurer on updated economic forecasts and gave an informal indication of the implications for the budget. Following that there were informal discussions between the Prime Minister and the Treasurer about the government’s fiscal position and further work was requested of Treasury in advance of a briefing for the strategic policy and budget committee. The committee was briefed on the economic forecast and fiscal position on 19 January, at a meeting to discuss the further package of stimulus measures to be announced in February. Further Treasury work followed to ensure the fiscal position forecast was sufficiently robust to be released publicly. The digital proofs were returned to Treasury at 8.45 am on 2 February, Senator Abetz. I do not know whether that indicates the Treasurer was up all night through to 8.45 am. I suspect he was working a fair share of that time.

On the Newstart question from Senator Siewert. There is no available data to provide an estimate of the number of Newstart recipients who will receive the tax bonus. This is because they relate to individual circumstances at two different points in time. The tax bonus relating to net tax liability is for 2007-08 and receipt of Newstart allowance relates to a point now or in the future. For example, it is likely that many people who are on Newstart allowance now were employed during the course of 2007-08 and would therefore receive a tax bonus. For a person on Newstart allowance not to receive a tax bonus, they would need to have had no net tax liability in 2007-08.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

With only 15 minutes to go in this debate and in light of there being no amendments before the chamber, I move:

That the question be now put.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Senator Parry is moving closure of the debate under standing order 199. I need to ask you, Senator Parry, whether you have spoken in this debate, that is, the debate on the question that the bill stand as printed.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Madam Chair, I can confirm that I have not participated in the debate to date.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

That being the case, my understanding is that that question is put forthwith without debate.

Question put:

That the question be now put.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

With the government’s prospective $125 billion shortfall in receipts that they have obviously used in the compilation of their requests for an extension of a $200 billion facility, do they believe at this point in time that the $125 billion shortfall is of a recurring nature and, if so, over what cycle would it be recurring? Also, what do they anticipate their peak debt position to be?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Senator Joyce, I just checked the figure you gave of $125 billion. It is actually $115 billion. As the Updated Economic and Fiscal Outlook has reported and as the Treasurer, the Minister for Finance and Deregulation and the Prime Minister announced last week, we have seen a revision down by a total of around $115 billion across the forward estimates since the 2008-09 budget, with more than $75 billion of this revision occurring since the MYEFO at the end of last year. So we have seen effectively two significant revisions down, with that revision accelerating through to the announcement of the new figures.

The sharp decline in revenue from the 2008-09 budget of $115 billion has been as a consequence of the changed forecast with respect to economic growth, and that obviously impacts revenue. I do not have the figures for comparable countries but I do understand that this is occurring worldwide. I do not have the details to hand, but comparable countries are having to deal with a significant decline in the forecast revenues over their forward estimates periods, so we are not alone in this.

I certainly know that one important factor in the Updated Economic and Fiscal Outlook has been the weight of the gathering global recession. That weight, regrettably, has been gathering momentum, and not just in countries like Japan, the US, the UK and other major trading partners; it has moved into a country like China, which is a major trading partner of Australia’s. Key emerging economies such as China and India are now expected to slow markedly. Obviously, the global commodities boom has provided significant stimulus to Australian growth and incomes over recent years. There was some discussion earlier between Senator Abetz and me about the step-down approach that Treasury has taken in terms of forecasts of revenue and the mining boom. That certainly was not expected when the 2008-09 budget was handed down. So we have seen a very extraordinarily rapid change in revenue estimates downwards.

As I said earlier, I cannot recall a period in my lifetime, other than the oil crisis back in the early to mid-seventies, when economic circumstances have changed so rapidly across the globe. That clearly has a very significant impact on the fiscal balance. If you look at the estimated fiscal balance, say, in 2008-09 and updated in the UEFO, it is minus $22.4 billion, moving to $33.3 billion in 2009-10 and then dropping back to $21.5 billion and $23.9 billion. This does not account for all of that negative fiscal balance but it certainly accounts for a very substantial proportion of it.

Progress reported.