Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

The President has received a letter from Senator Fifield proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:

The Rudd Labor government’s record level of debt.

I call upon those senators who approve of the proposed discussion to rise in their places.

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

The Treasurer, Mr Swan, promised that this would be a very Labor budget. Mr Swan was right. He was good to his word. This budget is indeed built on two great and enduring Labor principles—debt and lies. I think we all recall the great indignation which was provoked before the last election whenever the coalition suggested that there was a continuity between Rudd Labor and old Labor. But, ‘no’ said Mr Rudd, and we were told in television advertisements that Mr Rudd had often been accused of being an economic conservative. It was, he said, a badge he wore with pride. That is a paraphrase, and I am always very careful not to verbal Mr Rudd, so I went back and I got the transcript of the TV advertisement. As I said before, what the TV transcript, the script, said was:

A number of people have described me as an economic conservative.

But Mr Rudd was actually very careful. He was very specific. He wanted to narrow down and be very precise about what that definition of being an economic conservative actually meant. What he went on to say in that ad was:

When it comes to public finance, it’s a badge I wear with pride.

He specifically defined economic conservatism in terms of public finance. All I can say to that is, ‘Some mothers do have ’em’—that’s for sure.

And how the coalition were at times ridiculed at the last election for suggesting that Mr Rudd and Mr Swan were not what they seemed! We were accused of running a scare campaign. The big-spending, debt-bingeing Labor Party was supposedly a mythical beast, for this was Rudd Labor, almost indistinguishable from Howard-Costello Liberals. Only a mother could tell them apart. Australian politics, the electorate was led to believe, had entered some post-ideological budget nirvana. But, on this side of the chamber, we said ‘no’. On this side of the chamber we maintained that the best predictor of future behaviour was past behaviour, something any first-year psychology student will tell you.

What do I mean about the best predictor of future behaviour being past behaviour? Let me refresh your memory, Mr Deputy President. In 1996 Labor bequeathed to the Australian people a $96 billion debt. How those look like the good old days today—only $96 billion! But, back then, we did not know that Labor could do worse. They exceeded all expectations. That situation in 1996, of course, was not of our making, but we took responsibility to fix it. Over the next 10 years we paid that debt down with no help from the Labor Party, who opposed each and every measure we put forward to bring the budget back into balance. In 2007 we held the very unfashionable view at that time that Labor would revert to form. We still held this view when the 2008 budget was delivered, a budget which forecast a surplus. I read from last year’s budget speech, where Mr Swan said:

We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.

This honours and exceeds the 1.5 per cent target we set in January …

I do not need to say any more on that particular quote. It speaks for itself.

We did not believe Labor then. We did not believe them because we know them all too well. We know that Labor have only ever viewed balanced budgets and budget surpluses as some kind of a political strategy at best—a political virtue but never a policy virtue. Labor always have and always will see the true sign of economic virtue as debt. The greater the debt, the greater the virtue. Does anyone who thinks to themselves, ‘Look, I am really committed to economic responsibility; I am committed to balanced budgets,’ also think, ‘I should go and join the ALP to pursue those objectives’? I don’t think so. And I do not think any senator opposite would have thought to themselves, ‘I have got to join the ALP; I have got to run for preselection, because I want to champion fiscal responsibility and surplus budgets.’ That just does not happen. That is why, in November 2007, we knew that Labor would never, ever deliver a surplus budget. Last night’s budget confirmed that this is the most reckless, ill-disciplined government in Australia. What a performance by Mr Swan last night. He was lacking in all courage. He could not bring himself to utter the budget bottom line—the $58 billion budget deficit.

Can you imagine the state that this budget would be in had the coalition not handed the ALP a $22 billion surplus? Can you imagine the state of the Commonwealth finances had this government not been bequeathed no net government debt by the coalition? But somehow, according to Mr Swan, his deficit and his debt are the fault of the previous government—hello? When we clocked off, the budget was in surplus and there was no net government debt. Eighteen months later there is a $58 billion budget deficit and a debt heading towards $188 billion. Clearly, no honest observer believes that the current budgetary situation is the fault of the coalition. In fact, if not for our responsible management, it would have been far worse.

The other defence Labor cite for the budget situation is that falling revenues are due to a slowing economy. No-one would contend for a moment that a slower economy does not impact revenues. But Labor would have us believe that this is the full story of the budget situation. It is rubbish. Two-thirds of the debt owed by taxpayers in 2012-13 will be due to spending decisions taken by Labor over the last 18 months. Labor have announced measures since November 2007 totalling $124 billion. That is an average of $225 million per day. Labor pretend that the trashing of the budget is all due to the global recession and nothing to do with Mr Rudd and Mr Swan; they just stumbled across the scene. It is Forrest Gump meets Chauncey Gardiner—just a pair of disengaged observers. But Labor, as we know, have made a challenging situation far worse. They have lost control of the nation’s finances; there is record spending, a record deficit and rising unemployment. Labor have made the task of recovery that much harder. Labor will, we know, inflict unnecessary pain on Australians who have to pay off that debt.

If you want to know how it could have been different, well, that would have required us to have managed the economy over the last 18 months. If those opposite want to know how we would have conducted ourselves, they only need look back over the preceding 11½ years. But it is always the Australian people who have to pay and who have to foot the bill. It took the coalition the best part of a decade to repay Labor’s $96 billion debt. It will probably take 20 years for us to repay that debt again. One thing I know for sure is that Labor will never deliver a surplus budget; they will never repay this debt. I see a time after the next election when a Liberal Treasurer will again go to the dispatch box and repeat the words of Mr Costello in 2006 and say, ‘Although this problem was not of our creation, we will fix it.’

Mark Arbib (NSW, Australian Labor Party, Parliamentary Secretary for Government Service Delivery) Share this | Link to this | Hansard source

Another day; another scare campaign. We are getting used to it. We are getting used to it in the Senate chamber, and the Australian public are certainly getting used to it. In 2001, it was asylum seekers. In 2004, it was the scare campaign on interest rates. Last election, it was unions, and unions are getting a bit of a run today. Yesterday in this chamber, the coalition were back onto asylum seekers and today they are back running a scare campaign on debts and deficits. I will give the coalition this: they get an A for effort. They get an F for consistency and an F for substance because they are running a dishonest scare campaign on debt. It is not based on fact; it is based on dishonesty. It is a scare campaign that is being revealed today but is also going to be revealed tomorrow night in the other place when the Leader of the Opposition stands up and has to put forward his own policy, his own position on a deficit—and we are all waiting for it.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

He is having a surplus.

Mark Arbib (NSW, Australian Labor Party, Parliamentary Secretary for Government Service Delivery) Share this | Link to this | Hansard source

I will take the interjection. He is having a surplus, so we heard this morning. We all know that this was the most difficult budget to frame since the Great Depression. The budget deficit was caused primarily by our revenue almost going off a cliff, the result of the global recession and the ending of the mining boom. For weeks now I have been asking coalition MPs to explain how they would meet this revenue shortfall, how they would meet this collapse. A number of times, coalition MPs have put forward the figure that the coalition debt would only be $20 billion less than our borrowing. Tomorrow night, they will have to answer that charge. The evidence so far is that they will struggle. They will struggle primarily because they are confused. They cannot even get their own facts straight. Let us go back a week to 7 May. The shadow minister for small business, independent contractors, tourism and the arts was on Sky Agenda and was asked what level of debt he thought was acceptable. This is what he said:

I mean this false notion that Labor puts forward that under the Coalition, debt would be only $20 billion less is just absolutely farcical.

Imagine my surprise this morning when I turned on Sunrise and there was his boss, shadow Treasurer Joe Hockey, and this was his response to a question from David Koch:

David Koch: How much debt would you support and how big a deficit would you support?

Joe Hockey, the member for North Sydney: Our deficit would be smaller. I will give you a figure as a starting point—at least $25 billion smaller.

What was absolutely farcical last week is now coalition policy this week. He has admitted it. Well, he has sort of admitted it because straight after the shadow Treasurer came out, out came the Leader of the Opposition. It was about 20 minutes later when he was asked a very similar question. Let us hear what he said:

Malcolm Turnbull: The reality is … if we had been in government, the debt would be much lower.

          …            …            …

David Speers: But you can’t say why.

Malcolm Turnbull: Well, no, you can’t. I mean, you could sit down and work out a model but, as we’ve seen with each of these financial models, each assumption becomes fairly subjective.

That was the Leader of the Opposition this morning, 20 minutes after the shadow Treasurer.

As I have said, the truth is coming like a freight train. The global recession has meant that companies are just not making the profits that they used to make. Therefore they are not paying the same tax that they used to. There is currently a $23 billion write-down in 2008-09. It is the largest one-year downgrade revision in government receipts since the Depression. In 2009-10, it is a $49 billion write-down in tax receipts. The total write-down over four years is $210 billion. These downgrades have made a budget deficit in Australia inevitable. They are also responsible for two-thirds of the deterioration in our budget position since the last budget was delivered.

So tomorrow night these are the questions for the member for Wentworth: what would the deficit be if the Liberals were in government? If they claim they would have a smaller deficit than the government, what services will they cut? What programs will they cut? What jobs will they cut? If they are not going to cut, what taxes will they raise?

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

Senator Williams interjecting—

Mark Arbib (NSW, Australian Labor Party, Parliamentary Secretary for Government Service Delivery) Share this | Link to this | Hansard source

I will take the interjection from Senator Williams. They are already floating—right now in coalition policy—that they are going to get rid of the insulation program that the government put in place with its stimulus package. It is a very, very interesting move, Senator Williams. The program not only provides effects in reducing carbon but saves families about $200 a year. You said earlier, ‘What does this do for country families?’ It does a lot: it saves them $200 a year in heating costs. It might not be much to you, but it is certainly a lot to these families. You have lost touch, Senator Williams; there is no doubt about it . You have been sitting on that side of the chamber too long and you have certainly lost touch.

So these are the questions that the Leader of the Opposition is going to have to answer tomorrow, and we all wait, because after tomorrow the scare campaign will be totally revealed. We all know, as Senator Williams has revealed today, that on that side of the chamber they are completely out of touch.

Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

It’s so scary Wayne couldn’t even mention the figure.

Mark Arbib (NSW, Australian Labor Party, Parliamentary Secretary for Government Service Delivery) Share this | Link to this | Hansard source

Just wait one second, Senator Fifield; I am coming to you. I do not need to remind anybody in this chamber of how bad the economic downturn is. Senator Fifield barely mentioned the global recession in his 10-minute speech; he just glossed over it. It is really not a big issue for him. During downturns like this, governments must act decisively and step in to stimulate the economy, support jobs and small business and take the burden off families. That is the reason why governments build up large surpluses in the good times: to prepare for the bad, difficult times. Those times have arrived.

It is not just Labor politicians saying we need to stimulate the economy. Economists globally, including some of the most conservative economists and economic institutions globally, are supporting our policy. The IMF, the World Bank and the OECD all support a stimulus package. The thing about stimulus packages is that you must act early and quickly. Senator Fifield agrees with this. Senator Fifield and I do a Monday morning spot on Sky News’s Agenda, and it is always very enjoyable. I enjoy his company, I have to say. I went back to one of the transcripts today.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

They call that the Stockholm syndrome!

Mark Arbib (NSW, Australian Labor Party, Parliamentary Secretary for Government Service Delivery) Share this | Link to this | Hansard source

That may be the case, Senator Evans, but he is a nice bloke. He gets a bit misguided, but he is a very nice man. On 13 October last year, Senator Fifield made a comment. People seem to forget how bad it was in October last year: the global economy was going over a cliff, the banks were on the verge of folding and 30 banks globally had either collapsed or been taken over by government. We took action with the stimulus plan, and Senator Fifield agreed with it and supported it. So did the Leader of the Opposition then. Times have changed, but let us just get Senator Fifield’s quote in. Senator Fifield said on Sky News on 13 October:

We’re in a crisis at the moment. This is an economic crisis. And you need to make quick decisions. You need to respond quickly.

Thank you, Senator Fifield; that is exactly what we did. We acted quickly and decisively to stimulate the economy, and you supported it. Your opposition supported it as well, and Malcolm Turnbull said it would work to stimulate the economy.

The government has an economic strategy to get through the global recession. We have a strategy to support jobs and business and cushion the economy through the global recession. It started in November last year with stage 1, the first stage of the stimulus package: the Economic Security Strategy. The start of it was increasing the first home owners grant from $7,000 to between $14,000 and $21,000, boosting the building industry and helping first home buyers. It is working. First home buyers are rushing back into the market. I urge all the coalition senators on the other side of the chamber to go out into their communities and talk to builders and master builders, to tradespeople, to plumbers and to electricians. Ask them about the stimulus strategy and the first home buyers grant. They support it. They pressured the government to keep it in the budget because they know it is having an effect. Something like 59,000 first home buyers are back in the marketplace because of this measure, part of the stimulus package which you supported.

But it did not end there. Stimulus payments were made to pensioners, to carers, to veterans. These payments were an immediate injection into the economy to stop businesses shutting down, to stop unemployment going through the roof. And, Senator Fifield, you supported those payments. But that was just part of the strategy. That was only stage 1. We moved on to stage 2 in February, with the Nation Building and Jobs Plan. This is where the bulk of the government’s infrastructure really came into play. The fact is that 70 per cent of the government’s stimulus is in infrastructure. In February, in that package, the government delivered shovel-ready infrastructure that could start quickly—small and medium-sized projects that would stimulate the economy immediately.

Those senators on the other side of the chamber do not think this is high-quality infrastructure. They do not think that putting infrastructure in schools, in primary schools—building halls, libraries, classrooms, language labs, science labs—is high-quality spending. They do not think it is high-quality investment. Can I tell you, all the teachers, principals and school communities I have spoken to believe it is investment for the future, investment in our children. We are proud to have put that school modernisation program in place. You on that side of the chamber should be ashamed that you opposed it. You opposed money for schools.

We are spending massive amounts now on roads. Go down to Albury and have a look at the Tarcutta bypass. It is going to support 700 jobs. Go to Tasmania and look at the Brighton bypass—380 jobs. A week ago I was in Ulladulla at a youth complex. Who was I standing next to? The Liberal member for Gilmore, who gave a thumbs up to the infrastructure, a thumbs up to 200 jobs locally in the South Coast community. Everywhere I travel in relation to rolling out the stimulus package, Liberal mayors come up to me. The Liberal mayor for Mosman came up to me and said: ‘Mate, I told Tony Abbott that we get nothing under the Liberal Party. It is only Labor that delivers on infrastructure.’ This was a Liberal mayor. He was not the first and, let me tell you, he will not be the last.

The third element to the strategy obviously was the budget last night. This builds on the infrastructure that the government put in place in the Nation Building and Jobs Plan, with $22 billion on big road projects, metro rail projects, rebuilding our highways and fixing our ports. This is funding that should have been spent earlier. We know the truth. We know that the previous government underinvested in and neglected our infrastructure. Talk to Don Argus about the 11 years of neglect—10 per cent down to GDP ratio. We know what the coalition did on infrastructure. This government is fixing it. Not only are we building the infrastructure for tomorrow; we are supporting jobs and small businesses right now in the community, and we are proud of it.

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

We have heard a lot of discussion about the issues around the growing debt and deficit in this country. We do not hear a lot of discussion about the growing social deficit in this country, which is going to be expanded under this budget. We of course have concerns around the deficit, but we also believe that many Australians share with us the view that in tough times we need to invest very carefully in measures that soften the blow to those hardest hit during those tough times, during recession. We agree we need to be investing in building infrastructure that supports our future prosperity and we need to be doing this with well-targeted stimulus measures. However, we are deeply concerned that we are not investing that money in areas that meet the needs of those hardest hit in Australia.

I believe that many Australians share my shock and disappointment with the kinds of measures that were introduced yesterday. The items that Wayne Swan has been running up on our nation’s credit cards are not giving people a fair go and they are increasing the social deficit that we face in this country. This is not a budget that seeks to share the pain by helping out those hardest hit. It does not seek to deliver equity and a fair go during tough times. This is not a budget that seeks to trim back on unnecessary spending and prioritise the investment in important priority areas. It is not a budget with an eye to the future, that invests in measures that tackle the threats to our sustainability and invests in a growing new green economy.

There is not a fair go for single parents and the unemployed, who have been overlooked in this budget. There is not an increased investment in helping our social services to address the growing problem of unmet need and to build their capacity so they can support the growing wave of those who are facing crisis. There will be new people seeking extra support who have become unemployed. We all expect that their numbers, unfortunately, will continue to grow. There are more and more families who will not be able to keep up with their mortgages, will not be able to meet the rising cost of living, and they will be needing emergency relief, financial counselling and emergency accommodation. There will be more stress placed on their relationships and, unfortunately, there may be more mental health episodes. The budget does not address the growing crisis in aged care and it does not address many other areas which I have not got time to go into.

After all the weeks of leaks and prebudget spin, most Australians were expecting a tough budget. Many of us were in fact prepared to share the pain, to dig deep to make sure that the nation was on a steady course and to help those most disadvantaged in our society. What we were not prepared for was to be asked to face a massive deficit so that we could fund further government largesse on tax cuts, a massive boost in defence spending and ever more money for clean coal. This was without a fair go for those most disadvantaged and without sufficient funding for services and support for those most in need.

Many Australians have become very aware of their job security in these uncertain times and are increasingly concerned that they could suddenly, through no fault of their own, find themselves without a job. Right now, the Newstart allowance is $227 per week for singles. Losing your job seems to us like the first step on a slippery slope to poverty. Unfortunately, for many, there is a real risk that they will end up in long-term unemployment, losing skills, motivation and employability—precipitating financial and family crises. Unfortunately, this may end up in their sliding into poverty and despair. Where are the extra jobs and the job ready measures that we were all expecting in this budget?

The Greens have been calling for a long time for a greater investment in social services and community building. The previous government were guilty of squandering the benefits and the opportunities of the good times and failing to invest in those measures that build a truly sustainable social infrastructure. They undermined the sustainability of our community services, pushed through unjust and unfair Welfare to Work measures and contributed to a growing gap between the haves and the have-nots.

I refer to the report that was released by the Australian Council of Social Services in looking at the winners and losers from the pension increases and the measures that we believe are going to create a growing social deficit in this country. The Greens of course welcome the increase to the single age pension. We have campaigned on that issue for many years. However, we think it is despicable for the government to pick only some pensioners to be winners. To leave out single parents—300,000 single parents—and their 600,000 children is unconscionable. If it is unacceptable for a single age pensioner to try to survive on $285 a week, it is unacceptable for single parents to try to raise their children on less than that. It is unacceptable for those on Newstart to try to exist on $227 per week. If age pensioners cannot meet their budget requirements, how can single parents and how can those on Newstart?

I did some simple calculations the night before last, looking at what a single parent on a pension gets with family tax benefit A and B. It is $123 less than the minimum wage—and, of course, the minimum wage does not include that family’s access to family tax A and B. Those families on the minimum wage struggle to survive. I ask again: how does this government expect single parents to survive and bring up their children outside of poverty on less than the minimum wage? It would seem that this government have reversed the Hawke mantra of ‘no child shall live in poverty by 1990’. It seems to us that their mantra is now ‘the children of single parents will all be living in poverty by 2020’.

It is unacceptable that a budget deficit of this size does not deliver for all those most disadvantaged in our community. It will take us many years to claw back the budget deficit. How long will it take us to recover from the looming social deficit that this budget will create, where the government clearly picks winners and losers? Of course, this impacts not only on those families who are not getting this support, who have to deal with the issues of sliding into poverty and existing in poverty, but also on our community. It breaks down community resilience and cohesion. It results in anger in communities and the building of fences and walls between the haves and the have-nots. It does not create a cohesive society that we in Australia value so much. Those divisions will get wider. Those divisions will not be repaired unless we give those most disadvantaged in our community the support they need and give them a fair go.

I will acknowledge that the previous government started differentiating single parents with their punitive Welfare to Work regime, which put single parents on a lower income on Newstart than they had when they were on parenting payment single. But, instead of redressing that outrageous measure, this government continues that demonisation. Is that why we are picking on single parents? Is it because we want to demonise them? Are they somehow undeserving of government support? Are those on Newstart suddenly undeserving of government support? This is not only a social deficit issue; looking after the unemployed and single parents and their children—so their children are not being raised in poverty—is an economic investment as well, because we all know the implications of poverty on— (Time expired)

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

Well, this is going to go down as one of the greatest horror movies of all time. When the financial situation started to turn around, I remember the Labor Party saying that they were going to do something about it, and they came out with, ‘Go hard, go early, go household’—like some kind of B grade movie of dubious nature: ‘Go hard, go early, go household’—and now that has stuck with us. After all that, they now come out with: ‘Well, what would you do if you were as silly as us?’ That is how they are trying to explain themselves: ‘What would you do now if you were as silly as us? What would you do if you turned up to a wedding without your strides on?’ I do not know; I would not get myself into that situation. That is the issue before us in this chamber.

Financially, the Labor Party have been caught with their strides down, and that is the whole problem. Mr Hyden, the CEO of the Australian Office of Financial Management, said when we started this that the $200 billion facility had alarm bells ringing everywhere. We said, ‘When will this debt be drawn down?’ He said, ‘It’ll be drawn down in 2012-13.’ That is what he said at Senate estimates not last year but in February. Well, it is quite apparent that it is going to be drawn down right now. So we are out by 2½ years—but what’s that between friends when the Labor Party is in power—and we are heading towards $300 billion in debt.

In fact, I was looking at the report on the government’s net financial worth. It shows that total liabilities are $283 billion this year, then $343 billion, then $402 billion, then $461 billion and then half a trillion dollars by 2012-13. This is what Australians now have before them. These geniuses are now running the country, and this is the result. As a little old bush accountant, I always see these clients turning up. They never have a clue and they can’t work it out. They have been on a bender for about two years. Then they turn up with the plans for the house and they can’t work out why they haven’t got any money. It is so simple. You just have to say to them, ‘Lock up your chequebook.’ But they can’t do it. We now have a position where the whole nation is really in a pickle. We have really got ourselves into trouble.

When I heard the deficit last night, I thought back about the troubles they had in California. When they had a deficit of $42 billion the place was bankrupt. They couldn’t pay the public servants. The whole place went into meltdown. I was interested in it so I went and found what Governor Schwarzenegger said. He said, ‘The deficit is a rock upon our chest and we cannot breathe until we get it off.’ That was the sort of decision they had to make to try and get themselves out of that situation. Debt is your biggest problem. You must go forward with a plan, an exit strategy. Anytime you go to see the bank manager, the most obvious thing he will say to you—and I know this from my time in banking—is: ‘What is your exit strategy? How are you going to get out of this? If things go bad, how are you going to pay this debt back?’

Mao had his little red book, and Wayne Swan had his little yellow book with the stimulus package back in February. It had two bullet points—on pages 6 and 7 or pages 7 and 8—that basically said, ‘When things get better, we’ll pay the money back.’ What an epiphany: when things get better, you pay the money back! So I thought: I’ll have to try that out on some of the bank managers back home. I will say, ‘Mrs Smith wants to borrow $2 million.’ They will say, ‘That sounds brilliant. How is she going to pay it back?’ I will say, ‘When things get better, she’ll pay the money back.’ It is so ludicrous, it is so financially naive. We have this immense financial naivete just oozing from the other side. They grab onto anything. They say, ‘If you understand John Maynard Keynes you will understand that, within the cycle, you have to go into deficit.’ Well, the deficit cycle starts as soon as the Labor Party gets into power, and we go out of the deficit cycle about three, four or five years after the coalition starts paying off the debt. This is exactly what is happening here.

And then we have to look at your cost of funds. I have been fascinated by your cost of funds. You are looking at around five per cent on your cost of funds, yet you are saying at the same time that you believe there is going to be 4½ per cent growth. This is remarkable. The whole world economy boots up and drags the resource sector out. The whole world is out there demanding money but you are managing to get it cheap. This is clever, this is brilliant. How are you going to do that? At the same time, you will have an absolutely diluvial debt that will drown out the opportunities for all Australians, wherever they are.

When we start getting out of the global financial recession, interest rates will go through the roof because of what you have done in the last 18 months or so. You are responsible for this. I remember when there was a premium on debt. I always used to judge management by the difference in premium between the United States benchmark price of money and the Australian benchmark price of money. Our coalition colleagues, the Libs, did an extremely good job. Under their management, they got it down to about 1½ per cent at one point. It was extremely good management. Congratulations. Under Keating it blew out to about 8½ per cent. I have always called that ‘the management factor’, because it shows whether you know what you are doing.

The other point I would like to pick up on is the statement that everybody in the National Party agreed to the first stimulus package. We did not. If you look at the vote you will see that we did not vote in support of the first stimulus package. In fact, I stated that the stimulus would be spread across the carpet on Christmas Day with ‘Made in China’ written on the back of it and that it was a complete and utter waste of money. Time has proven us correct. So this is what we have got.

In closing, I want to go to where you have spent the money. It is wonderful to be able to drive around on new motorways in the family car but it is not what you invest in if you want to pay money back. What you should be investing in is things that move the coal and iron ore around our nation. What happened to the inland rail? You leaked it to the Australian but then withdrew it. We need things that increase the aggregate capacity of our nation. You have gone away from things that increase the aggregate capacity of the nation. You have gone to sugar-coating certain seats with things that will make people feel good. But you have not been prepared to make the brave decisions, the hard decisions, to invest in things that increase the aggregate capacity of our economy. You have failed to grasp the nettle. You have run away from the hard decisions. You have not done anything that seriously shows that you understand our plight with this debt.

Let us look at the cost of funds. We have Matt Johnson and Lindsay Tanner basically agreeing that you are going to have to increase debt to $300 billion in the short term. What is the cost of funds for that, and who is going to pay the Australian people? (Time expired)

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

It is my pleasure to make a contribution to this debate for no other reason than that I have been motivated by Senator Joyce to expose the most ridiculous representation of the facts that I have heard for an extremely long time. In fact, the investments that Labor is making to stimulate the economy are precisely the kinds of investments that we need to provide for growth opportunities in the future. They are precisely the kinds of investment opportunities that the Howard government neglected to make for 13 years in government.

I remember on so many occasions standing on the other side of this chamber calling on the former government to account for making cuts to our education system, cuts to our capacity to invest in research and development, cuts to our capacity to service the infrastructure needed to allow our economy to make the best use of the growth around at the time. I challenge those senators opposite to come in here and talk about capacity constraints. They are guilty of making those constraints through that period of neglect under the former Howard government. It is a disgrace. It is a problem that the Labor government inherited. It is a problem we knew we would inherit. It is a problem we took to the Australian people and the Australian people said, ‘We need the Labor government to fix this problem.’ It was part of our platform coming into office that we would make these investments in the way necessary.

No-one predicted at that time what was going to happen to the global economy. Since we were elected, circumstances have changed completely. We now find ourselves in the grip of a global recession, resulting in significant downward revisions to tax receipts. As we know, some two-thirds of the projected deficit is because of that reduction in revenues. We find ourselves in an extraordinary situation. What does a Labor government do? A Labor government stands up and takes responsibility for jobs in this country and for opportunities to provide growth through the economic recession. We know what the Liberal Party would do. We know that they have no clue at all. They will not stand up on the other side and say what measures they would pull out of this budget. Malcolm Turnbull said not that long ago, indeed in February this year, that he would spend up to $177 billion—barely 10 per cent less than what we are spending.

Now the opposition have the audacity to come into this chamber and criticise Labor for the level of debt. This opposition are all over the place and they know it. They are embarrassed by it. They have nowhere to go. Labor are setting a new standard in proactive policy decision making in Australia that will save jobs and buffer this country through a critical and difficult period, and we will do it in such a way that will see us emerge stronger than ever from this crisis. I would like to go to those issues now.

The debt that we carry as a proportion of our GDP is far less than for comparative developed nations. The other side of the chamber do not like to hear that fact, in fact they have gone a little quiet because they know it is the truth. They know that we are able to manage this debt quite effectively. We know that the types of investments Labor are making to stimulate the economy with the two stimulus packages, and now an excellent budget package to complement that, are about creating jobs, stimulating building and construction, and stimulating investment in research and development, higher education and health infrastructure. All of these measures will have the effect of not only creating economic activity right now when we need it most but also building capacity in all things that will serve this nation well as we emerge from this recession. I would like to mention a couple of those matters specifically because they are critically important.

In direct contradiction to the claims made by Senator Joyce just before, we are investing in hard infrastructure to remove the capacity constraints—in roads, in ports and in rail. We are doing that because for 13 years the Howard government neglected to do that despite having a budget surplus. We have also delivered the promised tax cuts and, through previous stimulus packages, $900 to eligible families. Why? Because that keeps the economy ticking. It makes sense. A responsible government uses the policy tools available to it to take care of the society it represents, and that is exactly what the federal Labor government are doing. Why? Because we care and the coalition parties do not. To come in here and say that they would not take this action, means that they would say—

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Bernardi interjecting—

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I put this to you: write to all the people who you would deny their tax cut or their pension increase. Write to them and tell them why. Write to them and say, ‘We don’t support these spending measures.’ If this lot opposite come in here and, as they say they will, make noises about not supporting this budget, this is the letter that they will need to write to Australians whom they will deprive.

Another area that I would like to touch on is the investment in a critical piece of infrastructure: the National Broadband Network. The National Broadband Network is economic infrastructure. I have watched for many, many years the former Howard government play with this piece of public policy to the detriment of just about every Australian business and every Australian person who has tried to get decent internet access and is still paying far too much for it—the legacy of the Howard government’s policies. The National Broadband Network has such foresight and vision. I have to say, and I have said it many times lately, that I did not think I would ever see such a fine policy that got it so right with respect to a fibre-to-the-home network. I am very proud of Labor for making that investment.

The other thing I would like to mention is very future orientated: clean energy. Federal Labor are very clever for investing in renewable energy and clean energy initiatives through both the stimulus packages and now the budget. These are truly future orientated policies. If we are going to be investing in industries of the future, what better industry to invest in than one that will help us provide clean energy. This will help us lighten the carbon print.

As we now know, and this has been reinforced today in every debate like this, Labor are the only party that have the capacity in government to deliver real climate change initiatives. The opposition cannot even work out where they stand on this issue. It must be very awkward for them over there because they are so confused on this. They do not have a substantive position on the very important issue of climate change. They find themselves writhing around, changing their position at regular intervals. In fact, I have seen an excellent document which tracks the contortions that Mr Turnbull finds himself in almost on a weekly basis when it comes to the opposition’s position on climate change and emissions trading schemes and so forth. So it will be very interesting to see where the opposition end up on that critical issue when it comes before the parliament.

Finally, I would like to say a few words about what is going on in my own electorate. I think that is a very important issue for all of us, and I know all of my colleagues in this house understand it very well. This is about real initiatives—real initiatives for all of the primary schools, the secondary schools, our hospitals, our community facilities, our relatively humble investment in the Albert Hall, a wonderful place of civic celebration here in the national capital, and our national capital institutions. Problems are being solved through this budget. In that sense, the investment through the various measures is very welcome in my own electorate of the ACT. There are road chokes and problem areas that are being resolved, and that infrastructure investment will serve the purpose of maintaining a dynamism in our construction industry, which, of course, is on a trend to falling flat as a result of the recession. So we have a clever budget designed for the times, and they are very tough times. It is only the Labor government that has got the measure right, got the balance right and got a budget that is right for the times.

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Having listened to the debate and the contribution from those on the government benches, I, frankly, am appalled. I have listened to Senator Lundy talk about what she knows and about the investments that this government is making. But there is a simple question that she was not prepared to talk about, and that is: when will this government repay the onerous debt burden it is foisting upon the Australian people for decades to come? That is the single question. It is right for the Australian people to be alarmed about the direction in which we are going.

I listened to Senator Arbib verbal Senator Fifield for his outstanding contribution, by selectively quoting some references from Sky News. What Senator Arbib did not actually reflect on was that Senator Fifield said that you do need to respond quickly and taking a quick decision on pensions would be one of the most direct things you could do to help stimulate the economy. That was rejected by this government, when people were in need and they were delayed in getting it. So do not come in here and say that you are the party of compassion and you are investing in the future, because you neglected the needs of the people whilst your budget situation was deteriorating. You refused to confront it, and you refuse to confront the issue of how you are going to pay this back. To paraphrase a song: you are on a magical mystery tour. You do not know where you are headed and you do not know how you are going to fix the problems that you are creating. It reminded me of a phrase that was repeated to me often as a child: ‘People seem to know the price of everything and the value of nothing.’ Well, let me tell you, the Australian people know the price of this government. It is $188 billion and it could go much higher. But we also know the value of this government, because that is absolutely zero. This government is so reckless and irresponsible in its spending that it is going to shackle every man, woman and child in this country with thousands upon thousands upon thousands of dollars worth of debt. It is going to shackle this nation with an interest bill, at current interest rates, which we heard today is going to exceed $7½ billion.

We also know, as does anyone who has a basic understanding of economics and finance, that the only way governments can repay debt is to inflate the economy and create inflation, which causes interest rates to go up, which will make a complete mockery of their claim of $7 billion worth of annual interest payments. It will probably be $15 billion or $20 billion a year that the Australian people will have to toil to repay so that ‘Kevonomics’ can have a go at working. It is an absolute farce and the government should be ashamed. I am sorry, Mr Acting Deputy President, that you have had to listen to such nonsense from the other side of the chamber. The other way, of course, that a government can repay debt is to increase the taxation requirements on the people who are working so hard to support their families, build businesses and invest in assets. The government are going to either inflate their way out of debt or tax their way out of debt, but we do not know when. They are going to keep putting the magic pudding in front of them and saying, ‘Let’s hope the public don’t wake up to this.’ But they are waking up. They are waking up to the reckless, irresponsible image and conduct of this government.

In extending the olive branch briefly to the government, I will say that there is an international financial crisis and it is absolutely apparent that the international financial crisis is caused by too much debt. Anyone who understands finance understands that. Yet, the cure for too much debt is not to go into more debt. Any family understands that, any individual understands that and any business understands that. I wonder how many in the Labor Party run their households at home by incurring more debt when they are already struggling to meet their repayments. I bet nary a one. But somehow it is okay for the country to go down this path. Senator Joyce mentioned that it was like a horror movie. I think it is bit more like the Wizard of Oz. We have the frightened Swan, who was too afraid to mention the budget deficit of $58 billion in his budget speech. We have the Prime Minister who thinks somehow he is just going to click his red heels together and, in five years time, everything will be fixed up and he will be back in Kansas. I suspect this Prime Minister will be lounging around his $5 million beach house in Queensland, such is his compassion for the Australian people.

We have got a bunch of people pursuing a brain, thinking, ‘We can redefine economics, we can spend our way out of trouble and spend our way into prosperity.’ It does not work like that. Every dollar borrowed today is going to have to be repaid threefold, and the Australian people are going to have to wear the burden of this. There is a crisis in this country. There is a crisis of confidence in this government, there is a crisis of currency in this government. The Australian people are waking up to the fact that this is a government without a path. It does not have an agenda save to keep things plodding along as quickly as possible so that they can win their way back into government again. The Australian people cannot afford it. We cannot afford a debt burden which is going to lie on our chest as we struggle to breathe as a nation. We cannot afford it. We need to break away from this cycle of irresponsible and reckless spending. Yet the government does not quite see it like that. It thinks somehow it is doing us a favour, doing the Australian people a favour by penalising and placing this debt burden on our children. What we can see is that it has put the package together, put a yolk on the children, the very future of our country, and asks them to toil and toil to pay for Kevin Rudd’s indulgence. It is a wrong course of action. It is a course of action that is going to do untold damage to our economy. It is a course of action that is going to do untold damage to our economy. It is a course of action that is advocated only by those who are prepared to be responsible.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order! The time for consideration of the matter of public importance has expired.