Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I move, at the request of Senator Fifield, this motion standing in his name:

That the Senate notes the Gillard Government's failure to implement a sound fiscal strategy.

Both the Rudd and Gillard Labor governments have been governments that spend too much, borrow too much and then, of course, have to tax too much. The Gillard government is a government that has com­pletely mismanaged our public finances. We have to remind ourselves that this is a government which inherited a very strong fiscal position. It is a government which inherited a budget with no government net debt, a budget which was $22 billion in surplus. It is a government that had billions of dollars invested in the Future Fund, billions which this government, whatever it wants to say, is trying to use now to make its budget figures look better—and more of that later. This is a government which has delivered four successive deficit budgets. It is a government that wants to tell us now that it has rediscovered fiscal discipline. It is a government that is trying to make us believe that, because they keep spending below a target of two per cent in real terms moving forward, somehow this is new evidence of fiscal rectitude. But what they have not been telling us is that, under the Labor administration, spending has gone up by 17 per cent in real terms over their first two financial years. That is Whitlamesque. For them to now suggest keeping spending growth to less than two per cent from an inflated base—one that has gone up by 17 per cent in their first two years—is a ridiculous proposition. Because this government spends too much, because there is too much waste and mismanagement and because they are so reckless with the taxpayers' money, they have to forever look out for yet another ad hoc tax grab. That is why this government cannot pursue genuine tax reform.

We have had, of course, the Henry tax review. Remember the Henry tax review, the once-in-a-generation opportunity for root-and-branch reform of our tax system which was going to make our tax system simpler and fairer? What was the only thing we got out of that? A multibillion dollar new tax to be imposed on an important industry for Australia which—and this is the ridiculous part which demonstrates yet again how bad this government is at managing the fiscal affairs of this nation—would help the government create the illusion of an early surplus in the short term but leave the budget in a worse position over the medium to long term. When the mining tax was first announced it was supposed to raise $12 billion, but that was over the second half of the forward estimates and there were only two years of the forward estimates for which there was going to be mining tax revenue—importantly, the 2012 and 2013 financial years. Most of the cost of the related measures—things like increasing com­pulsory super and the company tax cuts and various other bits and pieces that the government was proposing to do—only start the year after; that is, the final year of the original forward estimates.

But there is more. The proposed increase in compulsory super starts off very slowly—a quarter of a per cent in the first year that that comes into effect—and the mining tax revenue starts to be collected on 1 July 2012, with hardly any costs related to that particular measure in that first financial year. So the government can collect all of that revenue to make its fiscal position look better and then in 2013-14 various measures kick in slowly, in particular the proposal to increase compulsory super from nine to 12 per cent. In the first year that increases by a quarter of a per cent and it takes all the way until 2019-20 before that measure actually is fully implemented. In that financial year, according to the government's own budget papers last year, that measure alone would cost $3.9 billion.

Treasury modelling released under FOI indicates that by that time the MRRT is expected to raise $3 billion. The compulsory super measure on its own is going to cost more than the mining taxes expected to be raised in that particular year. In fact, conservatively, the Senate's mining tax inquiry has estimated that over the next decade the mining tax will raise about $20 billion less than the cost of the related measures.

Let us just look at the short term and let us look at the government's own budget figures. In 2013-14 the increase on the compulsory superannuation levy from nine per cent to 9.25 per cent will cost $240 million; the superannuation tax rebate for low-income earners, $830 million; the 50 per cent discount on interest income, $480 million; the increase in concessional contribution caps for over-50s, $785 million; phasing down interest withholding on financial institutions, $70 million; small business instant asset write-off, $1 billion plus $30 million; standard deduction for work related expenses, $410 million; lowering the company tax rate, $1.4 billion; and the Regional Infrastructure Fund, $866.8 million. That is $5.2 billion worth of expenses. There is a cost of $5.2 billion in 2013-14 against an expected revenue that financial year of $4 billion. So the mining tax is going to raise at least $1.2 billion less in 2013-14 than the cost of the related measures.

Only the Labor Party can come up with a new tax that is going to leave the budget worse off. Surely when you come up with a new tax because you have spent too much, borrowed too much, your debt is going up too much. If you are going to come up with a multibillion-dollar new tax which is going to have a significant impact on an important industry for Australia, on our economy, on jobs, on investment in the mining industry, you would at least want to make sure that the multibillion dollars of new revenue is going to leave the budget in a better position, that it improves our fiscal position. But, no, this is a government that just always chases more cash to feed its spending addiction. Yet, after all of that, the budget is still in a worse position.

Just bear in mind that Treasury, towards the end of last year, already observed in an independent assessment that the Australian government is likely to be in structural deficit until at least 2019-20. That was before all these multibillion-dollar new taxes, which actually leave our budget in a worse position. Increasing taxes, introducing new taxes and still having the budget in a worse position than when you started, because of all of the spending commitments and all of the related measures that you have attached to it, is not sound fiscal management.

Of course, this is before the absolute farce—the crediting of royalties under the mining tax deal that was signed by the Prime Minister, the Treasurer and the Minister for Resources and Energy with the three big mining companies. Instead of doing the hard yards on tax reform, instead of talking to state and territory governments about the federal-state financial relations implications of the proposed new national tax, they completely ignored the states. The Prime Minister was happy to have a tete-a-tete with Marius Kloppers and various other CEOs of the big mining companies, but, no—no conversations between government and government. That is not the way to run the country. Here you have the Prime Minister, the Treasurer and the federal Minister for Resources and Energy signing on the dotted line, promising to those three big mining companies—in the shadow of a difficult election, clearly under political pressure—a promise to credit all state and territory royalties against any mining tax liability. It was a promise which included any future increases in state and territory royalties.

You would think that any competent government—any government that was focused on sound fiscal management, any government that was focused on making sure that its budget management was under control—would have picked up the phone to some of the premiers and said, 'What are your intentions? We are about to sign this deal. We're in a bit of a political pickle. We're in a bit of a mess. We've stuffed this thing up. We've lost a Prime Minister over it. And we now want to do a deal with these three big mining companies.' Surely somebody around that table would have said, 'Let's pick up the phone to Colin Barnett or Kristina Keneally, or to the state government in Tasmania or in South Australia and let's find out what their intentions are in relation to state and territory royalties.' Nobody did. Instead they just went ahead and gave this open cheque promise to credit all state and territory royalties against the mining tax liability, which of course had the obvious consequence.

The obvious consequence is that now state government after state government is either removing longstanding royalty concessions or increasing royalties. People on the other side have said, 'Oh, well, that's just all these Liberal-National Party governments.' That is not true. Look at what the South Australian state Labor government has done; look at what the Tasmanian state Labor government has done. Because 99 per cent of iron production happens in Western Australia, because 65 per cent of the mining tax revenue is expected to come out of Western Australia, if the government in Western Australia makes a decision to remove a concession on royalties, which has the effect of increasing the royalty rate payable, that has a more significant impact on the federal budget bottom line—courtesy of the mining tax deal this government has entered into. But the principle is the same, whether it is a $2 billion hit on Wayne Swan's budget courtesy of a decision in Western Australia to remove a royalty concession on iron ore fines, or whether it is a $1 billion hit on the federal budget courtesy of a decision in New South Wales to increase royalties on coal production, or whether it is an impact of a couple of million dollars because the state Labor government in Tasmania decides to increase royalties on iron ore in that state. The principle is this: we had a promise from this government that the Henry tax review would lead to a once-in-a-generation opportunity for genuine root-and-branch reform of our tax system. Let us go back to what the then Treasury Secretary Ken Henry and his committee actually recommended. They recommended a national profit based resource rent tax to replace state and territory royalties. I happen to think that is a bad idea, but let us just bear with the argument for a moment. Here is the Henry tax review recommending to the government a national profit based resource rent tax to replace state and territory royalties. The argument went that, if you are a small mining venture that is not making a lot of profit, having to pay state royalties on production irrespective of profits would cause you to either not get up in the first place or, if you are in the decline phase, to close down sooner. The argument went that a profit based tax would remove those distortions from investment and production decisions.

Is this what we got from the Gillard Labor government? No we did not. All these state and territory royalties are still there. All these smaller mining ventures, in their start-up phase or in their decline phase, will continue to pay the state and territory royalties without getting any refund in relation to the mining tax at all. Only if your mining tax liability is higher than the state and territory royalties that you have paid will you get a refund. If you are in the decline phase you can accumulate credits for as long as you want, but you are never going to get a refund because you are never going to have an MRRT liability that will exceed the state and territory royalties that you have paid. Clearly this is more complex, less fair and less simple than what we had before. Here is the next recommendation from the Henry tax review: the Australian government should negotiate with state and territory governments about the implications of all of this. It never happened. That is the reason for yet another significant fiscal mess of this government's own making.

This is not the only example, because then we got the carbon tax. On budget night Senator Wong and I were on Lateline sitting next to each other. I was listening very carefully to what Senator Wong was saying and she changed the language on the budget impact from the carbon tax ever so slightly. You might recall that our criticism of the budget was that the budget was not worth the paper it was written on because it did not include the information about the carbon tax. Our argument was that, without the information about the carbon tax, the budget was wrong. The revenue figures were wrong. The expenditure figures were wrong. The CPI figures were wrong. The jobs assumptions were wrong. A whole lot of information in the budget was wrong, which meant that the consequent information in relation to all of these matters in the budget were wrong, so it was not worth the paper it was written on. What did the government say at that time? It said the carbon tax was not going to have any impact at all; it was going to be budget neutral. But on that night on Lateline this is what Senator Wong said, 'The carbon tax is going to be broadly neutral.' My ears pricked up and I thought: 'What does broadly budget neutral mean? What is the difference between being broadly neutral and actually being budget neutral?' We now know it is at least $4.3 billion, and probably more.

We now have another tax, the carbon tax. We are told the carbon tax is going to raise $24.7 billion over the forward estimates, but the government is going to spend at least $4.3 billion more than what it is collecting. Here we have two massive new taxes. We have the mining tax, which is going to leave the budget worse off because of the increasing cost of the related measures, which are going to increase way beyond what is going to be raised by the mining tax. In fact the mining tax revenue, if anything, is going to come down over time. We are currently experiencing record terms of trade. As the Treasurer himself said, 'These are the best terms of trade in 140 years.' So the revenue expectations from the mining tax are really high and, if anything, I expect them to come down over time. Not only are they expected to come down over time, the revenue estimates from the mining tax are actually highly volatile. They change according to commodity prices. They change according to exchange rate changes. They change according to what happens with production volume. They change in relation to a whole range of things. It is all information that the government is keeping secret.

The mining tax is a tax that has not even been legislated yet. It is a tax that has not even been introduced, yet we have had about half a dozen different revenue estimates. It was $12 billion to start off with. Then the government was trying to make us believe that all of the concessions they made only cost $1½ billion in revenue. We found out that they had been fiddling with the assumptions and that, if the same assumptions had been used for the RSPT as were being used for the MRRT, it would have actually raised $24 billion over the first two years rather than $12 billion. We now know that Treasury thought that, over a decade, the RSPT would have raised $100 billion, rather than the $38.5 billion from the MRRT. Since the announcement on 2 July we have had the $10½ billion estimate, then we had the $7.4 billion estimate and now we have had the $7.7 billion estimate. It just keeps bouncing around. This is a tax that has not even been introduced yet. It is completely fiscally reckless to link the cost of measures that are going to continue to increase, in particular over the medium to long term, to this mining tax package revenue, which is going to be volatile and downward trending.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

You have a $70 billion black hole.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I will take Minister Wong's interjection about a $70 billion black hole. It is a complete furphy. It is one of these Labor lies. It is one of these things where the government, because they are so desperate, think that they have to verbal shadow spokespeople. This is such a desperate government that, whenever they do not have any explanations for their repeated stuff-ups and fiscal incompetence, they have got to come up with yet another furphy.

This government is introducing all these multibillion-dollar new taxes, and they are talking about the revenue from these taxes as if there were no expenditure linked to it, no expenditure at all. They are talking about the revenue from these taxes as if they were not going to spend billions and billions of dollars in the context of increasing compulsory super, something that we have said we would not do. They are talking about it as if somehow this revenue is going to be in some vacuum—they are going to have all this revenue from the mining tax and there is no cost related to it all. They want to talk about it as if it is something that is going to go straight to the bottom line. I know that Minister Wong knows better than this. I know that she is playing the political game and wanting to verbal the shadow Treasurer and the shadow finance minister because it suits her political purposes. It is time for a bit of a reality check, Minister, and the reality check is this: you inherited a very strong fiscal position, you have made a mess of it, you have delivered four deficit budgets in a row and you are putting new taxes in and linking spending to them, which is going to leave the budget in a worse position instead of a better one, and that is just completely irresponsible.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

It is probably useful at the beginning of this debate to remind ourselves of the motion before the chair, which is:

That the Senate notes the Gillard Government's failure to implement a sound fiscal strategy.

When I was first asked to speak in this debate, I read the notice of motion and I was taken aback. I was surprised that the opposi­tion would mount an attack on the govern­ment in the terms currently before the chair. If there is one ground of strength that this government has created it is that it has maintained, it is committed to and it works for, day in and day out, the proper administration of the economy in this country. I will come to the objective tests for the assertion I make of why it is 100 per cent correct later on. The proposition is that, somehow or other, this government, which has been in power for the last three or four years, has not had sound budget policy and has not had proper fiscal strategies. Let me say at the outset that that is a nonsense. I say with pride and without equivocation that the administration of the economy in Australia is world's best practice and is the best of any country in the globe. It has been that way for many, many years.

As part of that superior economic management, there has been necessarily sound, indeed exemplary, budget practice and sound and exemplary fiscal strategy. Basically, what does that mean in ordinary speak? It means that this government lives within its means, it resists the temptation to create debt, it resists the temptation to spend that which it has not received through taxation—no more, no less than that—sound receipts, sound spending, sound administration, sound budget policy and sound fiscal strategy.

I am not so churlish or so selfish to say at the outset that the last three or four years of this government are solely responsible for the fine economic situation that we find ourselves in now. That is a product of history, more particularly, it is a product of economic history. It goes way back to the early eighties when the first Hawke government came into power. I am not going to go through the lengthy recitation of their virtues, but we know all of the superior things they did in terms of product market reform, labour market reform, financial market reform and addressing tariff issues. We know that worked over a period of 12, 13 or 14 years.

When the Howard government came into power in 1996 it was able to implement a policy of continuing that which it inherited from the Keating government and its predecessor the Hawke government. That allowed the Howard government, between 1996 and 2007 when it left office, to engage in fiscal consolidation, debt retirement and sound budget practice. When the current government came into office in 2007, firstly under Mr Rudd and then under Ms Gillard, it received that situation of a balanced budget. It is true that there were savings. They were part of a continuum that went back to the very early days, starting in 1983, when Mr Hawke was elected to power. He saw the necessity to reform the Australian govern­ment and, with the assistance of his cabinet and Mr Keating in particular, moved over a long period of time to implement those reforms. So be it.

How do I then assert that we have not, contrary to the arguments put by Senator Cormann in his contribution, somehow or other wasted money, raised taxes, spent money uselessly and wasted money on programs? What I do is this: I return a response with the fact sheet issued by the Treasury, not a fact sheet issued by the government, but the fact sheet objectively put together by the Treasury and circulated to thousands and thousands of people. If you go through that fact sheet there are a whole series of headings: economic growth; inflation; interest rates; labour market responses; growth in wages; savings ratios; productivity; external sector; levels of debt.

Let us go through them one by one and, looking at the results, apply an objective test of the administration of the Australian economy by this government since it came into power in 2007. Firstly, we know the figures for the last quarter's GDP growth, which was 1.2 per cent. Annualise that and you will get five per cent. I do not annualise it, but anything that gives you over one per cent growth in the June quarter is a remarkable achievement. Then inflation—our headline inflation is less than three per cent. There is no blowout in spending, there is no waste on the expenditure side, taxes are received, taxes are allocated and taxes are spent. There is no blowout. As such, inflation has not been an issue in this country for many, many years.

I can remember back in the seventies and the eighties when every day of the week we would receive advice that inflation was 17 or 18 or 20 per cent. Inflation, of course, had the effect of ruining homes, families and savings. In the last three or four years we have set ourselves a particular purpose and a particular objective in headline and actual inflation rates, and we are under three per cent. In an economy which has been growing every year for 20 years, to maintain inflation at less than three per cent and to have it decelerating is a remarkable achievement. You see how remarkable that achievement is in the real interest rates available for lending and borrowing for homes. The RBA cash rate is 4¾ per cent, the standard variable rate for home mortgages is 7.79 per cent, and it does not take much to get around, get a bit of competition and get down to the low sevens or high sixes in interest rates. Those two things—low inflation and continuing low interest rates—are a direct consequence of the fiscal policy implemented by this government.

We go on to the next objective test: how well the economy is being run. Look at the labour market. In a number of states unemployment is headlined by the figure four. It is 4.3 per cent in Western Australia, 4.2 per cent in Queensland, in other states over 4.8 or 5.1. But unemployment has continued—prior to the GFC, through the GFC and post the GFC—to be no higher than six per cent. Since the Rudd government came to power in October 2007, it has been around four to 4½ per cent and trending down.

You only have to go to any suburb or town or region in my home state of Western Australia and all through the shopping centres there are signs on the windows: help wanted; above award wages offered; flexibility offered; high wages and super­annuation. You cannot go through inner-city areas in Perth or out in the regions without being struck by the fact that companies and businesses and small employers cannot get sufficient labour. A strong and growing labour market is a direct consequence of sound budget policy, non-wasteful expenditure on the part of the government and sound receipts practice.

The number employed in this country now approaches 11½ million people. Ten years ago that was less than 10 million people; four years ago, take 700,000 people off that figure. So since the Rudd government came to power in October-November 2007, the economy has been run well. In the fourth test we apply, levels of employment have grown by 700,000 people and unemployment remains generally around the figure of 4½ or five per cent. That is not a bad result. If Mr Hawke or Mr Keating or Mr Howard, or anyone else who was in a senior position in those governments, could have stood up in a debate like this and said, 'Our unemployment is four or five per cent,' they would have been regarded as exaggerating.

Let us turn to how one continues that sound growth and sound budget policy which results in growth in GDP, inflation continuing to moderate, interest rates continuing to be low, and employment continuing to grow? Over the past three or four years the household savings rate has gone up. People are no longer borrowing. They are retiring debt in their tens of thousands and millions. They are rejecting the continuing use of credit cards. The household savings rate for the June quarter was 10½ per cent. That means that, instead of banks borrowing in the wholesale market or the retail market from overseas to fund consumption in this country, we are growing sufficient savings for banks to use in this country. We are paying our own way as a country; we are paying our own way as an economy. There are sufficiently high savings that we will shortly turn into a net capital exporter on a quarterly basis. Again, that is a most remarkable achievement, not greatly understood but a bellwether to the future. Under this government savings rates have gone from negative to neutral to over 10 per cent. Any country that maintains a savings rate of over 10 per cent for any period of time turns into a net capital exporter and does not have to rely on overseas debt.

How is that savings rate manufactured? How is it achieved? At one level it is achieved by people simply spending less, paying off debts, not borrowing. When you multiply that by millions it has the effect I talked about. But one has to ask a previous question: how do people have the capacity to save now when they did not have it years ago? The answer is simple: people are working harder, they are working longer and, as a consequence, the productivity growth in this country is again on the upsweep. The productivity rates are up and the labour productivity growth over the last 10 to 15 to 20 years has gone from one per cent to three per cent. So we are working harder, spending less, saving more. We generate a capital pool which is used for borrowing and for consumption and expenditure.

Turning to expenditure and capital, an article in the Australian Financial Review some two weeks ago showed the forward capital expenditure for the next 12 months in this country going up from $148 billion to $176 billion, almost 15 per cent growth on an annual basis. What does long-term growth in capital expenditure mean? It means companies are tapping into the savings pool in this country. They are borrowing at lower interest rates and they are investing it in infrastructure, factories, machines, roads, ports and mines and the like. That means tens of thousands of people are continuing to be employed, and additionally tens and tens of thousands of people will continue to be employed, and they are being employed all over this country—all through New South Wales, Queensland and Western Australia—in high-reward, high-value, high-paying jobs. It is a circle of such virtue that it would seem almost impossible to create it. If you had given that statement of economic measures, economic growth, inflation, interest rates, labour market rates, wages, savings rates and productivity to any government in this country prior to 2007 and explained—as I have done—the significance of those figures, people would have said you were living and talking in fairyland. Let us go back now to the motion before the chair:

That the Senate notes the Gillard Government's failure to implement a sound fiscal strategy.

As I have explained, if we on this side understand anything, we understand one thing: the importance of strong, credible, ongoing fiscal strategies. We have a very clear fiscal strategy and we have been delivering on it. As a result our budget position is one of the strongest, if not the strongest, in the developed world. Our budget management has been endorsed by rating agencies and the like and by the IMF.

If you want to see how stellar we are in comparison to the rest of the world, open any paper and see what the economic indicators are for the United States, see what the economic indicators are for the United Kingdom, see the levels of debt that are rampant in Greece, Portugal, Spain and Italy. You do not have to be a Rhodes scholar to understand that, when one or more of those countries eventually default on their debt, there are going to be all sorts of unpleasantness unleashed.

In this country we do not have debt of 150 per cent of GDP. We do not have debt of 200 per cent of GDP. What is our level of debt? The level of debt in this country is less than five per cent of GDP. It is nothing. Go to the United States. Go to those countries I just mentioned where the norm is 140, 150 or 160 per cent—that is, nearly all government expenditure, all consumption, is funded by borrowing from the bond markets and has to be repaid at increasingly higher yields.

In this country the government does not borrow at those levels. In this country we have a workforce that saves. In this country there are deep liquid capital markets where people can borrow at a very, very reasonable rate of interest. And all of those things are a direct response, a direct consequence, of the sound financial administration and the sound budget policy that has been implemented by this government under Ms Gillard and the previous government under Mr Rudd and then successive governments going right back to the early eighties.

We cannot allow this debate to go on much further without at least a passing acknowledgement of the significance of what happened almost three years ago to the day when Lehman Brothers collapsed and that sent shock waves through the world's financial markets. On that day almost three years ago, the world looked into an economic abyss. Most of the world kept walking and most of the world fell into that abyss. But in this country, under the then leadership of Prime Minister Rudd and his government, we looked at the abyss. We said, 'We're not going to fall for the three-card trick; we're going to make an appropriate budgetary response so that the temporary shock of the GFC is not unnecessarily inflicted upon working people in this country.' So the government took those steps. We borrowed some billions of dollars. We spent those billions of dollars immediately on schemes that resulted in tens of thousands of people continuing to be employed.

You only have to look in every state of this country at the extent of the physical modernisation of the school system, whether it is the state system, the Catholic system or the independent system. Every school in this country—something like 10,000 schools and 24,000 projects—has had somewhere between $2 million and $3 million allocated to it. There are new science labs. There are new art houses. There are new ovals. There are new classrooms. There are new childcare centres. It does not matter where you go. I do four or five school openings a week when I am back in Perth in the electorates of Swan, Hasluck and Tangney. I can tell you that people come up to me and say: 'Thank you very much, Senator. Thank you for coming along. Thank you very much for your government—our government—showing concern and modernising our school. We can't believe the difference that the $2 million or $3 million has made to the school. We can't believe how pleasant it is. We can't believe how the morale of teachers has improved.'

That is because this government, back in early 2008, took the hard decision, the bold decision, to avoid falling into an economic abyss. It borrowed some billions of dollars, and those billions of dollars were not wasted. They were spent on new and necessary infrastructure which modernised the school system around this country. The money has been doled out over a period of three years. There are still another 12 months of school openings to go. People have seen tens of thousands of tradesmen, workers and product suppliers continuing to be employed, continuing working, continuing to make a contribution, because this government took the logical, necessary and correct steps to implement its response to the— (Time expired)

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

I am not quite sure where that fairytale of Senator Bishop's comes from. I was much interested to hear him talking about all those shops that have 'help wanted' signs in them. My immediate response to that was: well, those are the ones that are open. There are far more shops right now with signs that say 'for lease' than there are with signs saying 'help wanted' in them. The effect of this government on the economy of Australia has been appalling. Senator Bishop was at least right about one thing, in that there was best practice economic management in this country for many, many years; he just forgot which years they were—and it has definitely stopped since 2007.

I find it quite bemusing that somehow Senator Bishop would suggest that because we are not a complete basket case of an economy we should thank the government for that. Why would not being a basket case be something to thank the government for? Wow, thank you, Ms Gillard and co.; we don't have a government debt of 150 per cent of GDP! Unfortunately, the way this government is going, if indeed—God help us—this government gets to stay there long enough, that is where it will take us. Its management of the economy and its attempts at fiscal reform have been appalling. It talks and talks and talks about it but it does not do anything about it. It keeps talking and talking and talking but not doing anything. We had the lovely spectacle the week before last of the government finally working out, apparently, that all the cries from manufacturing for at least six to 12 months about their situation were true. It was only when a big company with a big union attached to it like BlueScope announced that it was going to get rid of 1,000 positions that this government finally noticed that there were problems in the manufacturing industry and had been for a very long time.

So what was the government's strategy for assisting the manufacturing industry? For a start, we had the wonderful pink batts solution. That was a great solution! That really helped the manufacturing industry and the service industries of Australia! Company after company was left with a million dollars or more worth of stock that was in fact worthless because when this government finally worked out how appalling its implementation had been it simply turned off the tap. Manufacturers had quite reasonably, under a program that this government had set up, bought batts and other insulation products—but, no, the government just turned the tap off. The attempts of these manufacturers and service providers to find out what assistance they could get from this government fell on deaf ears. In fact, half the time they did not even get a response from the government about what they were to do with these products.

Then we have the wonderful current example of the immense governance of superclinics. I think the Redcliffe superclinic is a great example. The government promised this would be opened midyear. They told me that 'midyear' actually meant the end of August, but I was prepared to live with that timetable. Is it open? No. Is work going on? No. Is the whole project in complete disarray? Yes. The state health minister has actually called for an audit of that project. That is how responsible they are in using their funds to help build Australia.

But let us go back to what they say and what they do. The biggest problem is that I do not think they have quite worked out yet that it is private enterprise that keeps the economy functioning. You do need to talk to them. Giving money to unions and working out ways to increase the bureaucracy is not going to strengthen Australia or Australia's economy. They talk about mental health reform, but when you look at their figures their sleight of hand means that instead of making an increase of about 30 per cent they have made an increase of about of six per cent and have just continued on what was already being done.

Let us look at disability reform, another classic example. It is a reform that is supposed to increase the number of jobs in the area—a very worthwhile idea. But you have to have employers ready to take on people with disabilities. How much money has the government put into that? And what has it done to the current disability employment service providers? It has called for a retender of the whole situation. Just to make them feel confident that this government cares about their future, it has said: 'Everyone can retender now. Just in the middle of a change, we will make another change. We will make you retender for the work you have had.' Mr Acting Deputy President, I am sure you know how much confidence that would instil in an organisation about its future and its ability to continue to service this sector and to create jobs.

The problem is that the government is so incompetent at fiscal management that it cannot work out where the taxpayers' money is. Certainly one place it is not, as Senator Wong and the Treasurer, Mr Swan, have revealed recently, is in the Future Fund. They are having a little raid of the Future Fund. They are taking that money, which was to be used for paying the superannuation of public servants. They are just taking a little $250 million out—hardly anything! Just $250 million is coming out. But that was meant to be there to pay superannuation commitments. It is another classic example of how this government manages money. If it were the local school tuckshop, you would have shut them down and called in the administrators ages ago—except, of course, the tuckshops that they build are too small to fit the administrators in. This is a classic example of their bungling under the Building the Education Revolution program.

Let us go back again to the imple­mentation of e-health. How much money has been wasted there? Let us look at who this government has used to do this work. A contract was let recently to IBM. Did local medical software suppliers get a chance to put their tenders in for this? No, not really—because the way it was written by people who did not understand the industry properly meant that there was virtually no opportunity for local tenderers to apply. The government seems intent in so many areas on destroying small, private, innovative, entrepreneurial manufacturing and service industries in Australia and replacing them with overseas bureaucracies and organisations that have an agreement to do whatever the union says. That seems to be where we are heading with all of this.

The other one that you can add now to the pink batts situation is the complete mess in the solar cells area with renewable energy certificates. That is another one to add to the list—renewable energy certificates, the money for which has not been passed back to the solar installers, who are left holding the bills. Once again, this is a government that does not understand how private enterprise works. Why would we be surprised that they do not understand that they need to generate good private enterprise to keep this country going? Virtually none of them have ever come near private enterprise and they do not know anything about it. One of the best examples of why this government does not have the confidence of Australians and why Australians are keeping their money in the bank because they do not trust this government is the live cattle export debacle, which this government managed to produce all by itself. Senator Ludwig and others had no help in creating the most bizarre outcome. I was in Mount Isa, Boulia and Cloncurry recently and the people there are often quite angry about government policy. These people were not angry about government policy. These people were not angry about the live cattle export situation. They were past angry; they were in absolute despair. They said: 'We can cope with floods. We can cope with droughts'—and they have coped with both in the last 12 months; that is how serious their position has been—'But things were finally starting to look up and then this came completely out of the blue.' Senator Ludwig just turned off the tap for live exports—a complete overreaction to a television program. Did Senator Ludwig know the implications of what he was doing? I would hope not because it would have been criminal if he had behaved as he did and knew what was going to happen. There are people out there who have had to put all their staff off. There are people out there who are looking at shooting stock. There are people out there who are expecting the bank to foreclose on them any minute. And not just that, but there are the knock-on effects of this on transport and on jobs in local towns. The consequences are horrific and are leading to despair.

No wonder the savings in this country continue to rise, and it has nothing to do with Senator Bishop's idea that everyone has so much extra cash to splash around. That is not the case. He glossed over quite a few things in his speech—for example, capital expen­diture increasing. Yes, it is. I interjected—and I know I should not have done that, Mr Acting Deputy President—'Tell us about how much of that is going into the non-mining industry.' It will only be through building confidence in the private sector that this government can ever hope to have a sound fiscal strategy. They are not going to get it by the way they are behaving right now. The cycle says that people are not spending money because they do not trust this government to manage the economy. They do not trust that they will have a job next week, so they do not spend money. Far from shops full of 'help wanted' signs, there are shops full of 'for lease' signs. As private businesses close down, what happens next? Jobs will go, and we start the cycle again. It is the lack of confidence in this government's ability to run an economy and to keep things flowing that is holding Australians back from spending at the present time.

Let us look, for example, at the proposal for the carbon tax. In amongst that there are some moneys going to small businesses with incomes of less than $2 million. They will get a net amount of $1,500. I think the alleged grant is about $6,000—but that is a re-announcement of other things—but they will get a net benefit of $1,500. What level will the help to households cut out at? It will cut out at an income of $80,000. Anyone who is running a company with an annual turnover of more than $2 million who is paying themselves up to $80,000 will get nothing at all from this government to help with increases due to the carbon tax.

Unlike the GST, the carbon tax is a cascading tax. Everything you buy, everything you use, everything that has ever been on a truck and everything that includes any steel, aluminium, cement or electricity will go up in price. So there is the perfect example of how this government is setting out to drive people out of business. There will be no help for companies if they have a turnover of more than $2 million, irrespective of their profits. When you look at how few of them are just holding on and keeping their heads above water right now, you will find that not many of them would be making significant profits. And there is nothing to help individuals, so they cannot use any of those funds to try to keep their businesses and their jobs going.

One other area I would like to talk about is the Gillardbank—an example of the way this government is taking money from Peter, splashing it all over the place and putting half of it back into Paul's account. The great new bureaucracy, the Clean Energy Finance Corporation, or the Gillardbank, will get a $10 billion budget. I think we can imagine what will happen there. It will not be permitted to invest in carbon capture and storage projects, because that would be suggesting that there was something positive about coalition policy in that area. It will not be allowed to invest in exactly the sorts of things that would assist in the development of Australia.

I would also like to point out that in his budget speech the Treasurer managed to finally realise that there is a patchwork economy. What is being done about it? Nothing. Ms Gillard managed to have a meeting a couple of weeks ago with some of the manufacturers and the unions and to give them the impression that perhaps there was going to be an inquiry to see what we could do about it; but, no, she has changed her mind on that one too. There will not be an inquiry, and I guess in some ways that is good because at least now business knows that this government cannot fix it. It is not that they will not but simply that they cannot fix the problems that they have created.

The manufacturing figures since this government has been around, and since the GFC, are appalling, and I have no idea how Senator Carr manages to keep his portfolio, let alone hold his head up. Manufacturing right now is the worst it has been in 20 years, with under a million people employed in manufacturing. It is 20 years since the figures have been that low. And, despite Senator Bishop's view on employment, job losses are spreading out of manufacturing now and into the retail and service sectors for the reasons I mentioned. People are saving but not because they have so much cash to splash around.

Retail sales last financial year were the weakest in 20 years. Business failures in the retail sales sector have gone up by 40 per cent in the June quarter from what they were the previous year. I hope it is not going to take Myer suggesting it is going to have serious job losses for this government to notice that the retail sector is having problems too. Hello, government? Let us wave our hands! The small to medium sized side of the industry and the private enterprise side can only expect further complete mismanagement and a complete lack of understanding from this government. In no way can this lead to the sort of fiscal responsibility that would improve the economy to the extent that people were game to once again begin spending and begin thinking that they had the ability to hold onto their jobs. Without that, you can waste all the money you like on every project that it has been wasted on, but you must re-instil in the Australian people some level of confidence that you know what you are doing.

I cannot believe that this can happen. As I said, it is not that the government will not understand; it is just that they cannot understand. Senator Carr, who continually tells us about the joys of manufacturing—having destroyed a lot of very satisfactory programs established by our government—is one of the chief architects of the destruction of the manufacturing sector. (Time expired)

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak against the motion moved by the opposition in regard to 'the Gillard government's failure to implement a sound fiscal strategy'. Clearly, the Gillard government have implemented a sound fiscal strategy, with our key objective being to get back to surplus by 2012-13. In order to achieve this objective, the government are engaged in one of the fastest fiscal consolidations in at least 40 years. The government understand we need to cut spending so we do not add to pressures arising from the mining boom. In order to keep the nation's growth strong and boost economic activity, we are continuing to invest in training, skills, infrastructure and the NBN and, importantly, are delivering tax cuts to small business and moving Australia to a clean energy economy.

One of the key focuses of this Labor government, as it is of all Labor governments, is jobs, jobs, jobs. Jobs are the heart and soul of all Labor government activity. They are vitally important to our economy and vitally important to our families. We saw this Labor government act extremely quickly and decisively during the global financial crisis to provide a stimulus that kept Australia out of recession, unlike most OECD nations. The stimulus provided much-needed investment in infrastructure and in schools through the BER and, despite Senator Boyce's assertions, it allowed us to retain confidence in our retail sector. All these measures kept our economy ticking over and saved 500,000 jobs. I recently had the pleasure of visiting some schools in South Australia, and all positively com­mented on the workers that the projects directly employed—a very positive contri­bution. In fact, Labor have been able to oversee the creation of over 700,000 jobs since coming into government. That is one of the key reasons we are in a position to produce a sound fiscal policy that will return the national budget to surplus. It is something that all Australians will never forget. There is no surprise that our economy is the envy of the developed world. Our economic fundamentals remain strong, with low unemployment—at 5.3 per cent, compared to the US's 9.1 per cent—and net debt around five per cent. By comparison, places like the US and Europe have a significantly higher debt to GDP ratio. It is expected that job growth will continue on a positive trajectory and that, by 2020, we will have about 1.6 million more jobs.

Australia's economic and fiscal policies have been given a glowing assessment by the International Monetary Fund, and we will continue that good work. I would like to quote some of the points that the IMF made in regard to our economic and fiscal management. Firstly, the IMF said:

The economic outlook is favorable. After a temporary setback in the first quarter due to natural disasters, activity is expected to bounce back in the second quarter. We project real GDP growth of 2 percent for calendar year 2011 and 3½ percent in 2012 …

Importantly, they also project that our unemployment rate will remain below five per cent. The International Monetary Fund add:

… we commend the authorities for remaining committed to returning the Commonwealth budget to surplus by 2012/13, despite the worsening of the budget balance in 2010/11 as a result of natural disasters. Fiscal consolidation will strengthen fiscal buffers and take some pressure off monetary policy and the exchange rate. This consolidation is faster than in many other advanced economies and is more ambitious than earlier envisaged, with an adjustment of almost 4 percent of GDP over the next two years on a cash basis. We support the emphasis on expenditure control.

This is something the Labor government is extremely proud of. Compared to the rest of the world, we are going in the right direction and we will continue in that direction.

It is very likely that without our critical action the economy would have been struggling like that of the United States or many other developed nations. But we are not; we are a nation in one of the strongest economic positions. I can only imagine the trouble this country would be in if the coalition had been in the driver's seat during the GFC or if they were in it for this period of mark 2 of the mining boom.

In this budget we are investing $36 billion in roads, rail and ports. Also, the government will be removing tax impediments to infrastructure investment. The government will invest in the NBN, a world-class, 21st century broadband system that all Australians will be able to access. It will bridge the distance between regional Australians and Australians living in the major centres. The visit to the specialist from Broken Hill to Royal Adelaide—many hours in a car or half an hour or so in a light aircraft—perhaps will not be required. Broadband will bring the reality of having a consultation with a specialist over the internet, and many regional centres, particularly South Australian regional centres, will enjoy a much improved health service and its productivity benefits.

We will have internet services that will bring us out of the bottom rankings of the OECD in terms of speeds and costs. The NBN will boost productivity, drive innovation and lift economic output. Crucially, it will lift the GDP and, as I have said, it will be of immense benefit in health, education and business. Once the NBN is out there and being utilised to its full potential, its use in health, education and business will become more apparent, the productivity improvements will become apparent, and that will drive more and more use. Students will get better access to education systems. Businesses will conduct their work in a much cheaper and more effective way. For example, small business will be able to utilise teleworking, e-commerce, cloud computing, VoIP and videoconferencing in real time. These opportunities have been around for a number of years but they have not taken off because of the critical speed factors—you need to have real-time videoconferencing. This does not even account for the endless innovation that will come out of the introduction of the NBN. We do not know what the bright young people who are in this space will come up with but we are certain there will be economic improvements.

The Optus Director for Government and Corporate Affairs, Mr Krishnapillai, stated in an article for IT News that broadband is crucial to Australia's future prosperity and 'fibre is indisputably the best way to deliver high-speed broadband in the long term'. We hope that we can now move beyond the broadband debate and get on with the job of building a world-class broadband network—a network which will bridge the divide between regional and metropolitan Australia and ensure Australia remains one of the world's leading economies for many years to come.

The Gillard Labor government is also investing in skills and training. During the last budget, it was highlighted that 320,000 young Australians currently do not attend school or are not employed or in a training program. There are also around 230,000 people who have not been in employment for more than two years. This has made training a key objective for the government. Over six years, the Gillard Labor government will deliver $3 billion in new skills initiatives, strengthening our apprenticeship system and creating 334,000 training places with the simple view to getting more Australians engaged in the workforce—a direct benefit to them and the economy. These initiatives complement our sound fiscal strategy, ensuring that Australia's economy remains strong and productive in the short, medium and long term.

I do remember what the coalition did to trick Australians into believing they were taking action to increase productivity. It was Work Choices. Work Choices was simple, cutting entitlements and wages for workers and making it easier for employers to sack working Australians. It just goes to show the lack of understanding the coalition have in dealing with these issues. Their attitude is to cut wages, cut conditions, make it easier to sack people and think that is productivity. Our attitude is to create training and apprenticeships and give opportunities to people to participate fully in society. Cutting wages and entitlements does not drive productivity. Investing in infrastructure and skills is what drives productivity, and that is what this Labor government is doing.

What the Gillard Labor government seeks is for all Australians to benefit from our economy, not just a few. The Labor government has a complete economic reform package to fulfil, even with our fiscal consolidation. But obviously the main issue debated currently is the carbon price, where the top 500 polluters will pay a price in relation to their carbon emissions. I heard an economist say that positive and negative incentives do work. His simple proposition was that if it was free to pollute, people will continue to do it; if it costs something to pollute then people might change the way they operate. It is the right thing to do for the future generations of Australia, especially when looking at the benefits of a clean energy economy.

The economic opportunity is one that we do not want Australia to miss. Putting a price on carbon will drive investments in clean energy technologies for our children, grandchildren and the people who come after us. It will provide smart and clean jobs for future generations. Obviously, we will expect price rises to flow on to households, an increase of approximately of 0.07 per cent of the CPI, but as credible economic managers the government will compensate households and industries so that they can adjust to these changes. In fact, nine out of 10 Australians will receive compensation as tax cuts, increased payments or both.

Over four million Australian households will get an extra buffer with assistance that is at least 20 per cent more than the expected average price impact. One million Australians will no longer have to lodge a tax return with the increase in the tax-free threshold raised to $18,200. The payment increases will also be seen in the pension, family tax benefit, Newstart allowance, and extra payments for self-funded retirees. The government, as a credible economic manager implementing a sound fiscal policy and dealing with a patchwork economy, understands that not everyone reaps the benefits of the minerals resource sector. That is why the Labor government has worked hard at easing the cost-of-living pressures that working families face and recognises that not all Australians are benefiting from strong sectors in the economy. These are only some of the initiatives that this government has provided.

The Labor government's reforms in the minerals resource sector will spread the benefits of the mining boom, which will keep our economy strong and support jobs. The Gillard Labor government will give small business a cut in the company tax rate. I will repeat that: the Labor government will give small business a cut in the company tax rate. I did not hear any applause from the other side but I am sure they would agree with that. Small business drives the economy. It generates employment. The Gillard Labor government is also facilitating the instant asset write-off further to help 2.7 million small businesses.

I have highlighted some of the policies this government will go ahead with, driving growth, productivity and returning the budget to surplus. I reiterate that Australia's economic outlook remains strong and, to continue along the road of economic growth aided by the demand for minerals from Asia, this government is, as I say, engaging in the fastest fiscal consolidation for over 40 years. This is in line with our objective to get back to a surplus in 2012-13. The Gillard Labor government is committed to investing in infrastructure, skills and participation. You simply cannot do one job and not the other. The government has also put in place spending restrictions while providing services Australians want and the infrastructure the economy needs. So it is a bit of a mystery why this motion was moved today. From a comment yesterday in the lower house, the coalition will not submit its policy costings to either Treasury or the PBO prior to the election. It is far from surprising that the coalition wants to hide from scrutiny and not have its election costings verified again. After all, this is the same mob who last time around were exposed after election day for having a humiliating $11 billion error in their costings. Just earlier this year the Liberal Party was working with the government in a bipartisan manner to deliver a Parliamentary Budget Office. The PBO was designed to deliver, in the words of the member for Higgins, who sat on the committee, 'a system of transparency and accountability'. However, in recent times we have seen the new revelation from the coalition that it has blown a spectacular $70 billion crater in their own budget costings. So there is little wonder that it now is determined to run away from any process that would demand it be accountable. This is the sort of pathetic strategy you resort to when you are led by a man who says that he is bored by economics and believes economists are stupid.

That the coalition will go through another campaign hiding their costings yet again reinforces the idea that this is the least qualified economic team ever presented to the country. Their incompetence at every turn when it comes to the budget demonstrates that they are completely incapable of managing the economy. As the golden rule goes, if you can't manage the economy you're not fit to govern.

The Gillard Labor government's track record has the runs on the board: creating jobs, steering us through the GFC, investing in schools and education—in the words of some of the people I have spoken to in the education system, 'making dreams come to reality'—putting in 21st century facilities for children to learn. We will get the NBN going. Those children in new halls and facilities now will come into the economy and push this country further up the path of economic success. This is about jobs, jobs, jobs. Keep the economy constrained, if you like, to get back to a surplus, but keep investing in and educating our people. Look after the people who have fallen through the cracks, the unemployed, put in place apprenticeships and all of those things that get people back into the workforce so that they are contributing usefully to society, enjoying a good life and participating fully with their families. This government will conclude the work that it started of getting people back into jobs and maintaining the solid fiscal position that was articulated by our Treasurer in the budget. It will continue investing in infrastructure, skills, ports, rail and the whole gamut of economic activity that has been well run, well resourced and well put into place by this Labor government. Our economic activity is the envy of the developed world.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I do not know what planet those opposite were on when they cooked up this notice of motion this afternoon, but it certainly was not Mother Earth. This motion seeks to criticise the Gillard government's fiscal strategy. This is completely at variance with the fact that the International Monetary Fund, the ratings agencies and the OECD have all given a resounding tick of approval to this government's fiscal strategy. It is completely at variance with the fact that a recent Stanford University study of 38 leading economies in the world found that Australia ranked No. 1 on sovereign fiscal responsibility. It is completely at variance with the fact that because of our stimulus strategy during the global financial crisis we kept Australians in work and now we have an unemployment rate which is the envy of nations throughout the world—it is half that of the United States and half that of the United Kingdom. The Leader of the Opposition is going around making irresponsible commitments to policies that cannot be funded and that will lead to a severe budget black hole. He is completely out of touch on economic management.

We on this side understand the importance of a strong, credible fiscal strategy. We understand the importance of acting as the government did during the global financial crisis, when it put stimulus into the economy and protected the jobs of 200,000 Australian workers. That policy is still being opposed by those opposite. But 200,000 Australians and their families do not oppose the stimulus package, and they do not oppose the actions of a government that since 2007 has created 750,000 jobs in our economy.

We have also acted responsibly and within our means, because we know that the global financial crisis ripped a hole in government revenues to the tune of some $130 billion over five years. This is papered over by the opposition—they want to pretend that it did not occur. But this government has put in place a clear strategy to return our budget to surplus. Firstly we said that we would exercise restraint in spending, and we did. Secondly we said that we would keep taxes below those that we inherited from those opposite, and we are. Finally we have said that will make responsible decisions to reprioritise expenditure and so deliver net savings to the budget.

We have one of the strongest fiscal positions in the developed world. This was recently confirmed in a study by Stanford University's Institute for Economic Policy Research published in April 2011. It said:

In the wake of the recent financial crisis, and in light of escalating deficits and mounting debt burdens in a number of major industrialized nations, the issue of fiscal responsibility and sustainability has moved to the forefront of global discussions and political debates.

…   …   …

This prompted Stanford University and the Comeback America Initiative to try to develop a sovereign fiscal responsibility index. Our SFRI needed to incorporate both quantitative and qualitative metrics that allowed one to extensively define 'fiscal responsibility' as well as carry out cross-country comparisons. This study by Stanford University was commissioned by the United States government to look at exactly where America sat when it came to fiscal responsibility throughout the world. The study looked at the 34 nations that belong to the OECD. It also looked at some of the emerging nations: Brazil, Russia, India and China. In total, it looked at 38 leading economies throughout the world. It looked at a definition of fiscal responsibility and said that it involved three factors:

… a government’s current level of debt, the sustainability of government debt levels over time, and the degree to which governments act transparently and are accountable for their fiscal decisions.

The study continued:

This implies that responsibility is more than managing one’s annual deficits. Creating sound institutions, rules, and procedures that regulate the budget process are essential.

When the study was done—when all these factors and these issues were taken into consideration—a league table was produced. The results of that study are very interesting. Unsurprisingly, Greece came in last among the 34 nations that were studied. The United States was 28th on the league table when it came to fiscal responsibility. Germany was 25th on the league table. The United Kingdom was ninth. China—a very strong economy in our region with massive levels of foreign reserves, a booming economy and growing employment—came in fifth. But what was interesting was the nation that came in first, none other than Australia. Australia was the No.1 country. In 2011 Australia was the No. 1 country when it came to sovereign fiscal responsibility, yet those opposite seek to criticise this government for our record of fiscal responsibility, demonstrating just how completely out of touch they are when it comes to economic management. According to this study, we cannot do any better: we are No. 1 in the world when it comes to fiscal responsibility. Yet those opposite seek to come into the Senate this afternoon and criticise the government and, indeed, waste the Senate's time with a motion about the government's record on fiscal responsibility.

What this motion is really about is the politics of economic envy, because those opposite cannot stand to acknowledge what the Stanford study acknowledges. They cannot stand to acknowledge what the International Monetary Fund, the OECD and, indeed, the leaders of many other nations—all credible economists—recognise and indeed what the Australian people recognise: that this government has done a first-class job and will continue to do so when it comes to managing our nation's finances and growing our economy. In fact, we managed one of the most severe economic downturns since the Great Depression. We did so by protecting jobs, so 200,000 Australian workers are still in employment because of our actions. We did so whilst maintaining growth. Despite some hiccups along the way, we did so whilst maintaining growth. We have done so with a great pipeline of investment in business in this country. We have done so with record profits in a number of sectors of the economy. Also, we have a credible, detailed, transparent and costed plan to return our budget to surplus in 2012-13. I might add that the ratings agencies have recently given the tick of approval to that plan, because once again they have seen that the Australian economy is rated AAA when it comes to these issues.

The real issue behind this motion is that those opposite cannot get over the fact that when it comes to great nation-building economic reforms it always falls to Labor in government to deliver them for the Australian people, whether it be Medicare or superannuation in this country—opposed by those opposite and now providing $3 trillion worth of investment funds and growth in our economy. When it came to liberalising our economy, reducing tariffs, opening up the economy, floating the dollar and creating an efficient market based economy for trading within the international community, it fell to Labor to deliver these economic reforms. It is about the politics of economic envy.

When the coalition were in government for the 11 years of the Howard government, what were the two big economic reforms that they delivered for the people of Australia? What was their economic record? There were two things: the goods and services tax, and Work Choices. They were the two big economic reforms that those opposite delivered, yet they come in here and seek to criticise the government for its record on fiscal responsibility. The government stands on its record of fiscal responsibility and does so proudly, in sharp contrast to those opposite.

I mentioned fiscal responsibility and fiscal transparency as one of the issues that the Stanford study took into account in assessing and ranking nations when it came to sovereign fiscal responsibility. Yet those opposite refused, during the last election campaign, to have their policy costings analysed by the Treasury.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

We had them analysed independently.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Yes, you are right, Senator Brandis; you did have them analysed.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Independently.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

You did. And we saw why, when they were analysed independently, because your auditors refused to give an unqualified audit of those figures. The reason they refused to give an unqualified audit was that the costings came up $11 billion short when it came to the crunch. Post the election we found that an $11 billion black hole existed in the costings. Imagine what it would have done to our rank under the sovereign fiscal responsibility index as judged by Stanford university if those opposite had been in government with an $11 billion black hole! They do not seem to have learnt any lessons from this foolish approach to the last election campaign because they are continuing to announce irresponsible, unfunded election commitments. Far be it from me to be critical of this, because finally others in our nation are beginning to wake up to this game of those opposite. I draw to the Senate's attention a quote from the editorial of the Daily Telegraph of 13 August 2011 when the Daily Telegraph editorialised:

The—

Liberals'—

hairy-chested approach would be more convincing ... if Hockey and his mates had the gumption to wield their razors against wasteful and irresponsible promises made by their leader.

But, then again, there are many in the Liberal Party who know that their leader has no idea of fiscal responsibility and economic management. I again draw the Senate's attention to a quote from none other than a former Leader of the Liberal Party, John Hewson, who, on 24 May 2010, when speaking of the Leader of the Opposition, said:

Tony is genuinely innumerate. He has no interest in economics and no feeling for it.

And those opposite seek to criticise us for our economic management. They cannot go on like this forever, with these announcements of irresponsible spending commitments and the claim that they will return the budget to surplus, because eventually they will have to say how they will do it. To date they have not. They just go around making these irresponsible spending commitments, but they will not come clean with the Australian public about how they will do it. However, some months ago we did find out from a leaked shadow cabinet minute how they were going to balance the budget, despite the fact that they do not have and will not have the revenue from the minerals resource rent tax and despite the fact that they will have no revenue from carbon pricing. They will do it by cutting $70 billion worth of government outlays and services. There is a $70 billion black hole in the opposition's spending commitments—$70 billion! Senator Brandis said earlier that this was a misstatement; this was a lie.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

A falsehood

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

A falsehood, Senator Brandis. I draw your attention to the comments of Andrew Robb on Meet the Press on 4 September 2011, when he was asked a question by the interviewer, Fran Kelly, about that figure of $70 billion. The interview reads:

FRAN KELLY: It's not like a furphy, then?

ANDREW ROBB: No, it's not a furphy. We came out with the figure, right? So it is a furphy to call it a 'black hole'. That is just—it's just Labor's spin again to avoid any discussion about why we are looking at $70 billion as the sort of out-marker.

There is an admission there from Andrew Robb that a $70 billion black hole exists in the opposition's costings, because of $70 billion worth of reckless unfunded election commitments.

What does this mean for the Australian public? It means that they face the prospect of $70 billion worth of cuts to services. Yet, the opposition will not come clean with the Australian public. I have asked several of their representatives in public forums: 'What programs do you intend to cut to achieve a budget surplus? Is Medicare on the line? Is the childcare rebate on the line? Are the increases to pensions on the line? Indeed, is the reduction in the company tax rate that Labor has promised to deliver to businesses throughout this country on the line?' And they seek to criticise us for our fiscal strategy.

I mentioned earlier the importance of fiscal transparency. This government is acting on the advice of a unanimous report of the Joint Select Committee on the Parliamentary Budget Office on the establishment of a parliamentary budget office. This important reform will provide greater transparency in policymaking and ensure that the Australian people are better informed and have confidence in the commitments that are made by political parties in the lead-up to an election. These commitments will be independently assessed by a body to ensure that the Australian people can have confidence in them.

Bear in mind what I said about the importance of transparency, because only yesterday the shadow Treasurer, Joe Hockey, said in the parliament:

... the coalition will not submit its policy costings to either the Treasury or the PBO prior to the election.

And the opposition come in here and seek to criticise the government for its record on fiscal management—this from those who refuse to acknowledge the strong performance of our economy over recent years; this from those who continue to make irresponsible spending commitments that are underfunded; this from those who refuse to tell the Australian people how they will return the budget to surplus and what programs they will cut.

The Gillard government has a sound fiscal strategy and a plan to return our economy to surplus in 2012-13. It is a plan that has delivered protection for workers during the global financial crisis—the protection of 200,000 jobs—continued growth in our economy, a wonderful pipeline of investment in business and a process for transitioning our economy into a clean energy future. It is a plan based on transparency and openness that will provide confidence to the Australian people.

Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Link to this | Hansard source

From the performance we have seen from government senators opposite, I am not sure if they quite have their heart in it, because I have not seen the same degree of passion that I have previously seen. The best they can seemingly do is to compare Australia to the broken nations of Europe and North America. What they do not do is compare Australia to those nations that are our competitors. It is as if you are saying that, if your neighbour had more debt than you, the bank would not foreclose on you. It is as if you are saying that it does not matter if you do not compare yourself with your competitor business; you are comparing yourself with one in some other state and some other part of the world. You do not understand that we are not competing with the nations of Europe. We are not competing with North America. Australia, as a capital-importing country and with our banks being some of the largest wholesale funding borrowers in the world, needs a strong fiscal position. There is in fact a significant trade-off between a government that had no net liabilities and our banks that had some of the largest. They were massive users of wholesale funding markets. No-one is quibbling with the wholesale funding guarantee that was provided when the markets lacked liquidity. What we are quibbling with is that this government is actually putting extra burdens upon those in Australia that do need to import foreign capital to expand the agricultural sector and the mining sector, or to sustain what is left of the manufacturing sector after Labor is finished with it. This even comes down to our home loans and our small businesses, because this government simply does not understand the impact that its behaviour with respect to its unsound fiscal position is having upon Australia's economy.

Despite all the commitments of those opposite, despite the aspirations, despite the bumper stickers and the slogans, unlike in the stock market past performance does provide a predictor of future behaviour. These people opposite have never even come close to delivering a surplus. What they have done is undertake a sustained attack on the Australian private sector economy. The budget when the previous government left office was just over $260 billion. The budget now is over $350 billion and heading north to $370 billion. That sort of massive increase in spending is utterly unsustainable and it shows that the driver of this government's fiscal situation, the driver of these deficits, is in fact the uncontrolled spending of this government.

First of all we had the waste. I sat on the inquiry into the stimulus packages that came in in early 2009. We had a number of witnesses—prominent economists from around Australia, people who supported it, people who opposed it, Treasury, Finance and Prime Minister and Cabinet. When it came to programs like pink batts, this government was warned that, when you throw out a few billion dollars into the economy with no checks and balances and allow entry into a market that is suddenly awash with funds, you are going to get people who do not live up to the sorts of standards that we would expect. You are going to have the taxpayers of Australia ripped off. That is exactly what happened.

The truth is this government do not listen. They were warned. They were warned before it happened. They were warned while it was happening. They tried to hide it after it happened and it was only after a sustained campaign that this government were called to account for the massive waste. They did not even have the guts to say to that minister: 'You are out. You are not welcome here after several billion dollars of taxpayer funds have gone missing. You are out of here after we have had several deaths.' I can only imagine the outrage from the unionists opposite if something like that had happened in a program administered by a coalition government.

We heard from the previous speaker that apparently this government has saved 200,000 jobs. I recall the number being less than 200,000 and more than 200,000. I recall claims that jobs were going to be created. But there is no evidence to prove that at all. It is nothing other than an assertion. An assertion repeated often does not become a fact, despite the best efforts of those opposite. No economic data demonstrates that the stimulus waste saved jobs in this country. The truth is there were many economists who warned the government that a stimulus of that size was not required. After the first stimulus at the end of 2008, the size of the stimulus package the government proposed was an overreaction that went to the wrong people in the wrong way. Again, they did not listen. They did not listen before it happened. They did not listen while it happened and then we had the billions of dollars of waste in the school halls program.

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

It supported jobs. People had jobs. They still have jobs.

Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Link to this | Hansard source

Senator Farrell, there is no evidence whatsoever that jobs were saved. An assertion does not make a fact in economics. The truth is that this government cannot actually rein in its own spending. The opposition contests the numbers thrown around by the previous speaker, the alleged $70 billion. If we go over the forward estimates and do some rough calculations using the government's own numbers, that $70 billion, even if it were accepted, which it is not, would only come to just over two per cent of government spending over the forward estimates. This government belittles and attacks even a two per cent cut in its own spending, yet what they achieved in the 1980s was much more substantial—real cuts in spending over a number of years. We give credit to the Hawke-Keating government. There was a miserly surplus of, I think, about $26 million in one year before Paul Keating drove the budget back into deficit. That government did deserve credit for reining in spending and for doing it in real terms, but this government shows absolutely no signs of being able to replicate the efforts of its predecessors. All it does is keep chanting the term 'surplus' and keep talking about restraint, but it does not actually do anything about it. We do not have a polity in this country that actually accepts mere slogans. What you do is more important than what you say you care about. Yet for this government it is all about the illusion of performance, the illusion of activity and the illusion of fiscal responsibility. The truth is that none of that is actually being implemented.

The most important way to achieve the fiscal responsibility that was referred to by the previous speaker is relatively simple: do not continually spend more than you collect in revenues. Yet this government can only rely upon increased taxation in the hope, I would suggest a vain hope, of achieving a budget surplus when it was promised. We have already seen the language start to change. We have already seen the excuses start to be made. I am certain that very soon we will hear a term like 'eurocrisis'. 'Eurocrisis' will start to come out of Wayne Swan's mouth every few hours, several times a day. It will go onto the Labor talking points so we will hear it in this chamber day after day in an attempt to generate an excuse for the inevitable failure of Labor to achieve a budget surplus.

That is what Labor has been about, just like it has at the state level. There are so many successful state operatives across from us. The previous speaker almost channelled a state election campaign, trying to whip up fear about police numbers, hospital beds and education, but the truth is, at a federal level, people know that when the government borrows unsustainably and irresponsibly they are going to have to pay higher taxes or accept lesser services in the future. This is the point the government does not want to talk about: every dollar borrowed today is deferred taxation. Every dollar borrowed today means higher taxes in the future for any given level of services, plus the interest costs in the meantime. What the government does not want to tell you is that the cost of servicing the interest as we speak is already exorbitant. The Productivity Commission outlined how the unmet need for disability services was in the order of $6 billion to $6½ billion. Go to the budget papers and check exactly how much this government is spending on interest payments each and every year. It is $6 billion. The truth is that $6 billion could otherwise be directed towards those in dire need. I think everyone across this chamber agrees that we should aspire to do that as soon as possible.

There is a real cost today to this government borrowing at such unsustainable levels—more than $100 million a day. I remember when $100 million was actually a lot of money. To this government it is nothing more than loose change. This government has undermined the private sector economy which will in the future undermine this country's ability to have a solid tax base to bring the fiscal situation back into a sustainable position.

One thing that has gone a little unnoticed about the mining tax debate is what it truly represents for this government. We have a complex system of horizontal fiscal equalisation in which the cost variations between states in delivering services are taken into account, along with their revenues, with the aim of equalising their funding so that all Australians are in a position to experience the same level of services. There is a reason this government tried to seize the royalties of the states. The difference is this: when Western Australia and New South Wales raise their royalties and they flow into the Western Australian and New South Wales state budgets, within four years those funds are put into the pool used to effect that equalisation across the states. My home state of Victoria, which does not have a mining industry of such significance as Western Australia and New South Wales, will benefit in three or four years from the royalty increases in Western Australia and New South Wales because the GST grants to Victoria will accommodate the fact that New South Wales and Western Australia are increasing their level of revenue from royalties. The government tried to prevent royalties being raised so that it could raise royalties via the MRRT. But there is a key difference: the revenue increase would not flow to the state governments via the GST pooling arrangements; the revenue would actually flow to the Commonwealth to support its desperate effort to plug its gaping deficit.

It will become increasingly apparent to the citizens of all the other states around Australia, particularly those that do not enjoy the benefits of the mining boom in a direct sense, that their state governments, which provide schools, hospitals, disability services, police and public transport, will benefit from the increasing royalty rates in Western Australia and New South Wales. They benefit directly because it comes to the state government treasuries. It does not have the ticket clipped on the way through the Commonwealth Treasury. It is not there for the Commonwealth Treasury to use and to dole out to preferred groups, like the renewable energy industry, or groups such as those they tried to protect during the GFC with the Ruddbank, which was going to put $10 billion of taxpayers' money at risk in order to protect the commercial construction industry.

The importance of defeating this MRRT is that it maintains mining revenues and royalties within all the state budgets, not just one or two states. This government's attempts to vilify the governments of Western Australia and New South Wales will fail as taxpayers and citizens in other states directly benefit from better trains, more police, better schools and better hospitals, because the money flows to all the states after a period of four years, not just to the Commonwealth. That is the unspoken story of this tax grab. It is an attempt, yet again, by Labor to seize financial autonomy from the states and to prevent the state governments from providing the services which the people in those states expect.

Time restrains me from going through all the problems with this government's fiscal policy, but I would like to mention a few before I conclude. Lord Keynes famously said that when the facts changed he changed his mind. The problem is that this government is not learning from what is happening all around the world. We are seeing massive stimulus packages being tipped into Europe and into the United States and they continually fail, just like in the 1970s. In fact, if you look at the 1930s, there are many economists who have substantial data which shows that some of the packages tipped in actually restrained the recovery from the Great Depression.

Yet, the Labor Party hangs onto the dream—'the fatal conceit', as it was once described by a famous author. It hangs onto this dream and conceit that it can control the economy, that it is not the private sector that invests and creates jobs, but is the Labor Party and the few people who sit around, the gang of four, with a few bureaucrats in the cabinet room and say, 'Who's going to get a few billion dollars today or tomorrow? This is going to save the economy from what might be a profound imbalance.' The problem with that is not only that it forces costs onto future generations, not only that it drives up interest rates through the government crowding out private borrowing, not only that it drives up the dollar by the virtue of interest rates having been driven up—and Australia is actually a place where a lot of people are investing overnight money at the moment because you can make good money with high interest rates and a high dollar—but that it is actually going to build in the risk of stagflation. We have not seen or heard this for decades. It has barely existed in my lifetime. It was something I studied in textbooks. This government is putting our low inflation at risk and it is doing so by pumping money into the economy.

A number of people have written that the so-called NAIRU, the non-accelerating inflation rate of unemployment, is actually climbing. We have a problem that, as our unemployment decreases, our risk of inflation gets higher. I suppose that is not the only NAIRU this government does not like! It should be aware of the impact of what it is doing when it is re-regulating the labour market and building in higher inflation.

The truth is that redistributing money is not the creation of wealth. Taking money or borrowing money, particularly when it is domestically borrowed, and redistributing it around the nation via payments through Centrelink—even if it is done through a dodgy school hall program where people get paid more than they need to—does not actually create a single dollar of wealth; it just redistributes it. We know that, with the first stimulus payments, a lot of it was saved, so it merely went to pay off debt. A small portion of it was invested in domestic consumption and the government then came to the conclusion that, even if people went and bought imported goods like plasma televisions, at least the sales people got a commission. That is true; they did. But, if you think the idea that a few per cent being added to the economy out of a few hundred million in expenditure is good value, then I challenge you to take that to the Australian people.

The truth is what works is cutting taxes. The truth is what works in terms of stimulating the economy is tax cuts, not one-off tax cuts, not rebates—which are different words for patronage or, effectively, welfare-type payments where money is taken from one to give to someone else—but tax cuts that allow people to invest over the longer term, that give people certainty and that are not based on deficit borrowing. There are people that behave rationally and they know that, when the government borrows money now just to give people a one-off payment, that money will come back and they will have to pay it back later on.

I would like to finish on the assumptions that go into the budget. Traditionally Treasury in Australia has undertaken static assumptions when budget costings are made and when policy proposals are costed. Those assumptions are that reducing a tax, particularly on corporate taxes which might lead to further investment, probably leads to higher economic growth than would otherwise be the case. The truth is that our Treasury, in order to keep a conservative fiscal bias, has not undertaken those assumptions. That way, if you get a surprise at the budget, it is a good one.

Yet when it comes to the mining tax and some of the tax cuts flowing from that which the government allegedly is cutting Treasury has moved to what is called in the United States as dynamic scoring—effectively, dynamic budget costings that allow for, 'We think this tax cut might cost a few billion dollars but it will lead to higher economic growth and, therefore, might only cost us a net $1.5 billion.' There is some recent research out in the United States by some of the world's leading economists that says you can almost get a 50 per cent 'return' on a tax cut on capital gains because you get the future investment and have people cashing in their gains earlier rather than deferring them to avoid tax and when it comes to taxes upon labour you can effectively get about a 20 per cent 'return'.

It is not something that I would traditionally like to base a budget upon, but I note it is something which this government is basing its budget upon. It is something that this government is doing to hide the true cost of its policy proposals, yet at the same time it refused to allow the opposition to make the same assumptions in our policy costings. For example, on a different issue, the opposition did propose a change to the conservative bias in the contingency fund in the budget papers. The Labor Party pilloried us for that, yet coincidentally it then adopted it.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

Outrageous.

Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Link to this | Hansard source

You would think so. We would like to think that the fact that it is adopting a conservative budget bias would be a good thing. It would be a nice change.

But it is important to note that the assumptions upon which Labor's numbers are based are getting more and more rubbery. Labor might make allegations that we contest about $10 billion or $11 billion of estimates that we challenge them on, but their budget has been out by more than that every single year. If Labor's budget was only out by $10 billion or $11 billion, the Australian people would be relieved because they know that, thanks to you, their children and their children's children have $200-plus billion to pay back that they did not have four years ago. You can have all the slogans you want, you can have all the bumper stickers you want, but every Australian knows you cannot trust Labor with money. We know that, when Labor say there is a balance over the budget cycle, that means Labor run the deficits, the coalition run the surpluses, and only under us will Australia once again be in a sustainable fiscal position.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise in today's general business debate on the Labor government's fiscal strategy. Let us be clear right from the start: no-one has a better story to tell on the economy. The Labor government has implemented strong fiscally responsible policies and has a solid record of economic management. We compare the solid economic management of the Labor government to the economic performance of those opposite. I am really at a stretch to understand where Senator Fifield gets the audacity to propose such a preposterous general business motion.

Let us just focus on the sort of behaviour those opposite like to partake in when it comes to the Australian economy. Those opposite are involved in conjecture and talking down the Australian economy, which is unfounded and not helpful. Whilst those opposite continue to engage in negative discussion about the Australian economy, they also have a track record of not being able to add up their own costings. Who could forget the humiliation of the $11 billion black hole found in their election commitments? You would think after an embarrassment of being $11 billion in the red with their election costings, those opposite would take extra care in any future costings that they may make. But, no, not those opposite—yet again they have been found out, except this time things have got a whole lot worse.

We have recently found that the opposition costings are a whopping $70 billion out. What does this mean? It means that those opposite are now faced with the prospect of trying to find $70 billion of savings. Whilst the opposition shadow Treasurer, Mr Joe Hockey, yesterday made it clear that those opposite will not submit—

Senator Farrell interjecting—

I know it is surprising and many people here will be surprised about this because we all know there was a Joint Select committee on the Parliamentary Budget Office and my under­standing is that all the recom­mendations were supported by none other than Senator Barnaby Joyce and Mr Christopher Pyne, senior members of the coalition. But now we find out that those opposite will not submit their policy costings to either the Treasury or the Parliamentary Budget Office prior to the election. We do not really have to wonder why—we know. It is because they cannot add up and they are now faced with the task of trying to find $70 billion of savings. What does $70 billion exactly equate to? Other senators who have contributed to the debate here today have illustrated what $70 billion could well add up to. To find $70 billion of savings we would have to perhaps stop Medicare payments for four years, stop the age pension for two years—

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

Oh, come on!

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I know you do not have to worry about the age pension at the moment, Senator Ronaldson, but one day you might. It will stop assistance to people—

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I think that was an ageist sentiment.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Senator Ronaldson is a very active senator, a long way away from the age pension. It would stop assistance to people with disabilities. This is very serious. This is what your $70 billion mistake could well lead to—stopping assistance to people with disabilities for three years, stopping family tax benefit payments for three years and requiring savings equivalent to 1½ times the GST for a year. Whilst those opposite focus on negativity and talking down the Australian economy, the Labor government is getting on with the business of providing sound economic management. Recent global economic turmoil has been felt across the world, including concerns about the debt situation in Europe and the United States. It will take time for the European and United States economies to get their houses in order. They will have to make tough decisions to reduce their debt to ensure that their budgets are sustainable. This will impact on the outlook of the global economy for some time. However, we should remember that in Australia the fundamentals of our economy remain strong in comparison to the rest of the world. The International Monetary Fund highlighted recently that in Australia we have very low public debt, low unemployment and a massive pipeline of investment and we expect to bring the budget back to surplus—although, as the Treasurer has outlined and highlighted, this task has been made much tougher due to the current global events.

This government has a strong track record of economic management of the Australian economy. Look at our record during the global financial crisis. In a time when advanced economies around the world have been suffering from the largest global recession in over 70 years, the Australian economy has performed remarkably well, and that is no coincidence. The strong performance of the Australian economy can be put down to the early, decisive action taken by the Labor government. We have injected short-term cash stimulus as well as medium- and long-term infrastructure spending to keep the Australian economy in strong shape.

What did those opposite want us to do in these times of global financial crisis? They advocated a sit-on-the-hands approach. That is right: they wanted us to do nothing. They wanted to send the Australian economy down the gurgler and, along with it, Australian families. But not on this side of the chamber. The Labor government's decisive action, stimulus measures and sound fiscal management helped cushion the Australian economy from the worst impacts of the global financial crisis.

Recently more proof of the strength of the Australian economy was forthcoming with the release of the national accounts for the June quarter. The encouraging figures tell us that our economy grew by 1.2 per cent in the June quarter. These figures represent the strongest quarterly results in four years. Whilst there was a slight increase in the unemployment rate to 5.3 per cent, let us not lose sight of the big picture, which tells us that there are 140,000 more people employed today than there were 12 months ago. The Treasurer has also said that we expect to create another 500,000 jobs in the next couple of years. This is on top of the 750,000 jobs we have already created since coming to office in 2007, including 189,000 in the last year alone.

Whilst there was a slight increase in unemployment last month, fundamentally our labour force participation rate remains strong, especially in comparison to the rest of the world. The unemployment rate in the United States is 9.1 per cent. It is 7.2 per cent in Canada, 7.7 per cent in the United Kingdom, 9.7 per cent in France and 20.9 per cent in Spain. As the Treasurer has highlighted, when we entered the global financial crisis Australia's unemployment rate was the same as that of the US. If that were still the case and we had the same unemployment levels as the United States, an extra 486,000 Australians would be out of work.

Our swift action during the global financial crisis has ensured that Australians have remained in work and that our economy is the envy of the rest of the developed world. We have ensured that every new spending measure is offset with the appropriate budget savings measure to maintain the integrity of the budget bottom line. Savings will be delivered that will combat any write-down in government revenue as a result of the high dollar. We have maintained the tough provision of a spending cap on new budget initiatives to ensure that we act in an economically responsible way. We are doing what we can to support families. We have deployed three rounds of tax cuts to help with the costs of raising and educating kids. We have an ongoing economic plan to build productivity and expand our economic capacity so that we have growth and low inflation into the future. And we are doing all this under a strict fiscal strategy to see us get our budget back in the black, well ahead of every major advanced economy.

We, unlike those opposite, are working hard to support Australians, to continue our sound fiscal management of the economy and to bring the budget back into the black. Whilst we are focused on strong economic management backed up by fiscal responsibility, we are also in the process of getting on with good government, which stands in stark contrast to the action taken by those opposite when they were in government. Those opposite were busy riding on the economic boom time. They failed to invest in vital infrastructure and productivity needed to help drive the Australian economy forward to the future. They also ignored vital human services such as health, education and income support. Whilst those opposite are busy trying to score cheap political points, as we see today in this general business motion, we, the Labor government, on this side of the chamber, are getting on with the business of delivering our ambitious long-term reform agenda. Since coming to office we have invested in the vital services and infrastructure needs across the country, with a renewed focus on regional Australia, and we have done so in the face of the toughest global economic conditions in 70 years. In spite of these extremely tough economic conditions, the Labor government has helped to shield and protect the Australian economy through the implementation of our nation-building and jobs stimulus package. And, yes, this has worked. The evidence backs it up. In fact, as has been outlined numerous times, the Australian economy has fared the best out of all the advanced economies around the world. We have implemented our historic pension reform, providing age pensioners with the largest single increase to the age pension. As part of the budget, the Treasurer announced that we will provide more tax assistance to 6.5 million Australian taxpayers on lower incomes. This will help encourage work and also provide some help with cost-of-living pressures.

The government will increase the low-income tax offset from 50 per cent to 70 per cent. This will put an extra bit in the weekly pay packet. Whilst it is a modest amount, every little bit helps. The increase to the low-income tax offset will mean that someone with an annual income of $30,000 will get an extra $300 in their regular pay during the year.

The government has also delivered, as part of the budget, a $2.2 billion mental health package, which aims to provide more intensive support services and better coordinate those services for people with severe and persistent mental illness who have complex care needs; to target support to areas and communities that need it most, such as Indigenous communities and socioeconomically disadvantaged areas that are underserviced by the current system; and to help detect potential mental health problems in the early years, supporting young people who struggle with mental illness.

Whilst those opposite were in government they neglected Australia's hospital system for over a decade, and we in Tasmania know that better than anyone. They left the country's health system in a shambles through a tale of neglect and via the removal of $1 billion from the health system. It is also worth remembering that those opposite capped GP training places. However, the Labor government has delivered a health funding agreement with the states and territories, with the federal government investing $16.4 billion into the health system. This will help deliver 1,300 new subacute hospital beds, more than 6,000 new doctors, strict deadlines for emergency departments and elective surgery waiting times, and tough national standards, such as a four-hour emergency waiting time—just to name a few elements of the new deal.

The Labor government is also making key investments in education with the largest school modernisation program in the country's history—our Building the Education Revolution. This is providing our children with the best environment in which to learn as well as supporting local jobs and local communities. Right around the country we are delivering much-needed school halls, libraries, science and language centres and classroom upgrades to many schools that for too long were neglected under the watch of those opposite.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

They weren't too cheap, though. They weren't good value.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

They were excellent value. You will not find one Tasmanian Liberal senator going down to any school in Tasmania saying that they were not good value.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

What did Brad Orgill say? Brad Orgill said they weren't good value.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Get them to go down there. They love it down there. The school communities love it, the principals love it and the students love it, because they are worth it and they needed them. They supported the local economy and also supported jobs—

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

They weren't good value. Just get that through the Labor Party's head.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senator Brown, resume your seat. Senator Mason, stop hectoring the speaker. Senator Brown has the call.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

My apologies, Mr Acting Deputy President. I should not let myself stray from my line of thought. As I was saying, many of those schools were for so long neglected during the Howard years. We are introducing a national curriculum to ensure that all students are achieving their full potential. We introduced the $2.5 billion Smarter Schools National Partnerships, which will be delivered over seven years to help support up to 1,500 schools of low socioeconomic status across the country.

These are just a few of the many reforms we have implemented. We are also helping Australian families with back-to-school expenses by encouraging an estimated 1.3 million families to take advantage of the $4.4 billion education tax refund scheme. Eligible families can claim refunds on a range of back-to-school items, including computer equipment and textbooks. I know that will come in handy for many families. Families can also claim 50 per cent of eligible education expenses—up to $794 for high-school children and $397 for primary school children.

The government is also delivering on its commitment to build a $43 billion National Broadband Network. All Australian homes, businesses, schools and hospitals, no matter where they are located in Australia, will be able to benefit from affordable high-speed broadband services. This access will be at a rate that is 1,000 times faster than that which many people can experience today. In my home state of Tasmania we have already had three towns—Smithton, Scottsdale and Midway Point—receiving high-speed broadband services for the first time. We now have a take-up rate for fibre connection that exceeds 50 per cent, and after only a few months. The take-up of these services already exceeds the annual rate that the McKinsey-KPMG implementation study concluded would be needed to make the NBN viable with affordable prices for consumers.

In Tasmania we are also progressing towards connecting more than 11,000 homes as part of the stage 2 rollout of the NBN. Construction work has also begun on the first five release sites, in Armidale in New South Wales, Townsville in Queensland, Willunga in South Australia, Minnamurra-Kiama Downs in New South Wales and Brunswick in Victoria. The government's plan is for 19 second release sites to have fibre deployed in 2011.

We are also introducing major economic reform by taking action on climate change to build a clean energy future. The time for inaction has passed and the time for delay is over. The time to take action is upon us. That is what the Gillard Labor government are doing. We have a plan to tackle climate change by placing a price on carbon. It is imperative for the future of our economy and our environment that we reduce greenhouse gas emissions and begin to transition our economy to a clean energy future. We know that greenhouse gas emissions are causing the world's climate to change and we must take action.

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I cannot, regrettably, agree with one of the comments made by Senator Carol Brown this afternoon, and that is her accusation that I am an active senior. I am indeed active but I most certainly do not consider myself a senior. I agree that I might be lurching towards that, but I am not at this stage a senior. I am active, yes, but most certainly not a senior. I am grievously hurt!

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order. I am sure that in my contribution I did not say that Senator Ronaldson is a senior. I do not think that at all. I do think he is active, but I never once said he was an active senior. I hope that will be borne out in the Hansard.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

I do not think that is a point of order, Senator Brown.

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I actually fear that Senator Brown might be right. It may have been one of my colleagues who made the comment. I know one of them did at some stage!

As we are finishing another successful sitting week for the opposition and a diabolical one for the government, I will just go through a number of matters in the time left to me. I want to refer to a couple of comments made by the Prime Minister, Julia Gillard, and by the Treasurer, Mr Wayne Swan. I would also like to refer to some comments from the now Minister for Finance and Deregulation, Minister Wong. I will go through these slowly so that everyone can hear them and to refresh the memories of those opposite. The first one is:

There will be no carbon tax under the government I lead.

This was the Prime Minister on Channel 10 news on 16 August, 2010. On 20 August, 2010 in the Australian the PM was quoted as saying:

I rule out a carbon tax.

In relation to a carbon tax, the Treasurer, Wayne Swan, on The7.30 Report on the ABC on 12 August, 2010 said:

We have made our position very clear. We have ruled it out.

Next week in this chamber we will be debating a package of carbon tax bills.

But what did Minister for Finance and Deregulation, Minister Wong, have to say about a carbon tax over the last two or three years? I will just go through that. She said:

I have been very upfront about why I think a carbon tax isn't the most sensible thing for Australia.

That was Senator Penny Wong in a press conference on 3 November, 2009. She also said:

… a carbon tax is not the silver bullet some people might think.

That was Senator Penny Wong at the CEDA state of the nation conference on 23 June, 2010. She also said:

A carbon tax does not guarantee emissions reductions.

That was Senator Penny Wong in the Australian on 23 February, 2009. She also said:

A carbon tax … is a recipe for abrupt and unpredictable changes, as the government would need to adjust the tax frequently to try to meet the emissions reduction target …

We know for a fact, on the government's own evidence, that the emissions reduction target will be increasing progressively over future years. Last but most certainly not least, Senator Penny Wong on Sky News on 30 April 2009 said:

… we know that you can't have any environmental certainty with a carbon tax.

So what is this about? I will tell you what it is about. This is about a dirty political deal between the government and the Greens. It is a dirty political deal because the only way the Prime Minister was going to be elected was by saying she would not have a carbon tax and we know full well the only way she was going to remain the Prime Minister was for her to have one, because it was demanded by the Greens.

In the minute left to me, can I make it absolutely clear—

Senator McEwen interjecting—

The interjections from those opposite serve no good purpose at all. Next week we will be legislating a lie. We will be legislating a lie from the start of next week. Those opposite must hang their heads in shame because every one of those lower house members and those Labor senators here was elected on the back of a lie. They cannot look at us or the Australian community with a straight face and in any way plead that they would have been elected had the Prime Minister said six days, five days, two days or two weeks out from the election that there would be a carbon tax. They know that and I know that. They are being utterly duplicitous in their speeches given in this place in support of a carbon tax that they promised the Australian community they would not introduce—not 12 months or six months out from the election but two weeks, 10 days and five days out from the election. We are going to fight against this legislated lie. We will fight it, and we will fight it, and we will fight it. Those opposite can be assured that we will continue fighting it well after the outcome of the dirty deal between the Labor Party and Bob Brown and the Greens. We will be fighting it well after that dirty, dirty deal has been enshrined in legislation. (Time expired)

Debate interrupted.