Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance and Deregulation (Senator Wong) to a question without notice asked by Senator Brandis today relating to the economy.

In case senators have forgotten what this is about, Senator Brandis asked about delivery of a budget surplus, the carbon tax and the accuracy of budget forecasts. In answer to the question, Senator Wong was happy to reaffirm that the Gillard government intended to deliver a budget surplus in 2012-13. It is good that they are determined to deliver this budget surplus. They have wavered a bit in the last few months. It was an aspiration at various stages, but they seem to be back on track now. 'We're going to deliver a budget surplus,' they tell us.

I think we are justified in asking the question: why the big deal about this? The Howard government delivered 12 budgets, and almost all of them were budget surpluses. It did not seem to have so much trouble doing it. The reason delivering a budget surplus under this government is such a big deal is that, in trying to deliver a surplus, the ALP is fighting its nature. It is fighting its history and it is fighting its very DNA as a political party, because Labor governments do not like to deliver surpluses. It is not what they do. It is not their modus operandi. I know that because I look back over 20 years of political history, and at the federal level I do not see a single Labor budget surplus—not one. I look back over 20 years, even at state and territory Labor government level, and I see very few budget surpluses, because it is not what the ALP does. The ALP does certain things very predictably in office. It offers support for trade unions, it increases government spending, it increases taxation levels—preferably through introducing new taxes—it runs up deficits and it runs a debt. That is what Labor governments do. But right at the moment the ALP has a particular problem, particularly at the federal level, because the electorate is now much more sensitised to the question of budget surpluses. They want to see governments running balanced budgets. They want to see budget surpluses, probably because under the Howard government they saw how effective those surpluses were in delivering important social and economic outcomes—tax cuts, more spending on health and education, a stronger defence force, and so on. They want to see governments which can sustainably offer support for important social and economic goals in this country, and they are judging governments by their ability to offer surpluses. This government are huffing and puffing over delivering a $1.5 billion surplus next financial year. That is less than half of one per cent of total Commonwealth outlays projected for 2012-13. A budget surplus half of one per cent is miniscule and wafer thin. It is because it is so thin that the government are in all sorts of trouble right now, when basic economic conditions and assumptions are not working out for them. They planned a deficit for the present financial year of $22 billion but, unfortunately, it has blown out to a $37 billion deficit—a 68 per cent variation in just six months. That is pretty much the case for all the deficits they have brought down in the last four years. They do not work out as the government plan them to. Perhaps they are hoping that, if their deficits are inflating each year beyond expectations, maybe the surpluses will as well after 2012-13. Unfortunately, the more your deficits inflate, the less large your surpluses are likely to be. At $1.5 billion you do not have much of a margin for error.

This government are desperately trying to defeat their own history—their own legacy—of mistakes and extravagant spending. We know that they took a $70 billion net positive position in the Commonwealth in terms of assets and money in the bank and turned it into $133 billion of net debt in just the last four years. That is what the Labor government are fighting, not the global financial crisis as Minister Arbib just said and not other extraneous things. They are fighting their own history of being unable to contain spending, reduce taxes and return budgets to surplus. That is why we are entitled to say that we are sceptical about this government's capacity to deliver a surplus. People do not need to be sceptical about the coalition's ability. We showed it in almost every budget we brought down. We delivered surpluses, we delivered them strongly and they grew and grew. Under this government you simply cannot make the assumption that the same thing will happen.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I rise to take note of answers given by Minister Wong. It is noted from time to time that, unfortunately, the Senate and senators are not adequately consulted by our brothers and sisters in the House of Representatives, and it does seem that this is one of those occasions when the opposition Senate team did not get the memo from their team in the House of Representatives. You may not be aware of this, Senator Humphries, but your party, the coalition, is presently embarked on a process of crab-walking away from its own commitment to a surplus. You say that we are fighting our past; I say that you are fighting your present. But, from the Labor Party's point of view, no matter how hard any day gets we know we always have Joe Hockey working hard for us. As you would be well aware—

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

Order! Senator Feeney, before we go any further there are two matters. Please direct your remarks to the chair and refer to people in the other place by their correct name, title or by the salutation of mister.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

As this parliament is well aware and as has been discussed extensively in the public debate, the opposition's policy proposition is teetering on the brink of ridicule and destruction. I admire the courage of the opposition for dragging it in here for us to survey today. The opposition's very own documentation was leaked to the press and revealed the frenzied mutterings of its razor gang as they sought to come to terms with the fact that their very own future prescription for this country was $70 billion short.

Here we have the spectacle of Senator Humphries condemning us for a real surplus that is not large enough when the coalition's imaginary surplus is going to be $70 billion in the red. How is it that it is $70 billion in the red? That number deserves some study. It will cost the opposition $27 billion to axe the carbon tax. As part of that $27 billion expenditure we find the economic vandalism of those opposite exemplified by Tony Abbott, the Leader of the Opposition, recommending that Australian business neither purchase carbon permits nor participate in the scheme. Of course, $3.2 billion of that $27 billion will fund the opposition's direct action plan. It is a direct action plan which, as you know, Mr Acting Deputy President, was inspired by the public policy offerings of 1980s East Germany and 1970s Romania—a command economy model whereby Labor's market is swept aside so that the tsars of the coalition can sit in council and decide which of their friends around Australia receive plans and moneys to abate carbon.

But wait; that's not all! We find that there is $24 billion in the coalition's imaginary budget which is required to refund big polluters for carbon permits. It will be an extraordinary spectacle to see a future coalition government handing $24 billion back to the companies whose carbon emissions, the coalition tells us, its own policy is trying to abate. But we should not be too shocked at the spectacle of the coalition handing back government revenues to big polluters. In fact, $11.1 billion of a future coalition budget would be lost revenue because of the coalition's resolve to hand back moneys raised through the minerals resource rent tax. We will see the extraordinary spectacle of would-be Prime Minister Abbott handing a cheque for billions of dollars to some of the wealthiest people in Australia—in fact, as has been revealed recently, perhaps the wealthiest person on the planet. The Liberal Party insist that their resolve to hand back these moneys is a matter of virtue when every Australian can see that pulling $11 billion out of the federal budget to reward those who are already billionaires serves no public policy process and amounts to no public virtue. It is simply a dogmatic resolve by those opposite not to accept the moneys raised by the minerals resource rent tax and to zealously protect and preserve their friends. In addition to all of this, the coalition is maintaining its commitment to $8 billion in pledged tax cuts. How is it that those opposite have the gumption to come in here and dare cast aspersions on our real surplus when their own imaginary and shadow budget is $70 billion in the red? Of course the answer is: they dare not have their own numbers studied.

If they were to have their own numbers studied, then two possibilities reveal themselves. The first possibility is that these nonsensical utterances in opposition will not be honoured, that the $11 billion will not be handed back. That is, perhaps, what I hope for, but I cannot underestimate— (Time expired)

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to take note of answers given by Senator Wong and I cannot avoid addressing some of the issues that Senator Feeney has just raised. The budget surplus is maths; it is not science. You have manipulated science to create a revenue with your carbon tax. We know how you can manipulate things.

The finance minister has only one response when she is questioned on anything in relation to this—just slag the opposition. Senator Feeney has just made an art form of addressing my colleague in the lower House, the shadow Treasurer, Joe Hockey—blame the opposition for everything. It is as if Senator Feeney and Senator Wong think that we actually are the government. I remind the minister that the coalition has been out of office since November 2007—4.25 years ago—and they are still referring to it.

Minister, take responsibility for your own actions and the actions of the Labor-Greens government you represent. Stop bagging all those on this side of the chamber for your mismanagement of the economy. We have not had the treasury bench for 4.25 years! As a finance minister, you have direct responsibility for the spending in other portfolios of the Gillard-Brown administra­tion. How about directing your attention to curbing the spendthrift impulses of your ministerial colleagues? The problem is that Labor and the Greens believe the only way to govern is by spending the money of taxpayers. It is not your money. It is raised from every Australian that pays taxes. You would not run your own bank account by spending more than you earn, so adopt the same approach to the finances of govern­ment. It is very simple.

I know that a surplus in the budget is not a concept that the Rudd-Gillard governments are familiar with. My colleague, the member for Longman, Wyatt Roy, reminded me only last night that he was not even alive when the Labor Party delivered its last surplus, and he is in his 22nd year. It is called a balance—you have got to find a balance—and for the sake of all Australians you have got to get back to it.

Senator Feeney talked about 'crab-walking'. It is economics 101. Hands up on the other side those who have ever run a private company that has done a capital raising. Let the record show that no hands go up! Hands up on the other side those who have ever had to have a repayment—

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

Order, Senator Edwards! Again I have to remind you, as I did Senator Feeney, to direct your remarks to the chair. You cannot ask questions of the government across the chamber. Please continue, Senator Edwards.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

It would be interesting to know how many hands would go up if I was able to ask any on the other side if they had ever gone back to a banking institution with a capital repayment program. I notice no hands go up, Mr Deputy President.

We are a party that understands business on this side. As my good colleague, Senator Humphries, referred to, it is endemic and enduring in the Labor Party that they cannot understand, and do not understand, what surpluses are. A surplus, for the edification of those opposite, is where you have an operating profit. That is what it is termed in private practice, an operating profit which you can then return to your shareholders, in this case, the people of Australia, in the way of more services. However if you deliver a deficit, that means you have to borrow more. In the case of Australia, that means that you have to compete with Australians for borrowings from offshore, putting the price of money and capital for the small businesses that you protest you are looking to protect, beyond reach, doing them great harm with these deficits. The capital raising that you are doing out there to fund this project, the $37 billion debt that you talk about, will come at a great cost to all Australians.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I assure Senator Edwards that no-one on the side of the chamber thinks that the opposition is the government and he would be well served not to believe their rhetoric. This government does not believe that the economy is a shambles. This is a myth that you are trying to promote.

Australia's economy is the envy of the developed world. It is now in its 20th consecutive year of economic growth, a record unmatched by any other advanced economy. Senator Edwards, do not go—you should stay and you should listen to this. Australia's GDP is significantly higher than its pre-GFC level, while many advanced economies are still struggling to make up lost ground. The unemployment rate has fallen to around five per cent and is now lower than all but one major advanced economy, and Australia has lower government debt and lower budget deficits than any of the other major advanced economies and will return to a budget surplus sooner than any other advanced economy. So I really find it quite puzzling that the opposition would come in here and take note of this particular question.

I suppose that it is a symptom of predetermining before question time which question you will take note on, because Senator Wong simply wiped the floor with the opposition in respect of the economy. And she said, behind every falsehood and every wrong assertion lies a $70 billion black hole of the opposition. I understand why Senator Edwards struggled so much in any defence of the position put because he must have been well and truly embarrassed by his side in their feeble attempts to actually score any points on economic grounds against this government—this government, that has done more to defend this economy than any other. If we had done what the opposition wanted to do at the beginning of the global financial crisis this country would still be deep in recession. We would have hundreds and hundreds of thousands more people unemployed. They would not care about that; they would rip the guts out of this economy. That was their plan: to let the market rip, and no Australian should ever forget that.

This was the government, this was the Treasurer and this was the team that actually defended this country from economic ruin—something that you opposed, and that the Australian people will remember. As I said earlier, we enjoy and are the economic envy of the rest of the developed world, and we will continue to maintain that position. We will bring this budget back to surplus—something that Senator Humphries finally got around to agreeing with, even though he started by saying that we would not bring it back to surplus, but that when we did, it would only be wafer thin because it would only be $1½ billion. By the time he ended his contribution he had actually talked himself into the position of accepting that we would in fact be in surplus.

But here we are, this is the Liberals; they want to pretend that there was no global financial crisis, no turmoil in Europe, no natural disasters last year and no high dollar. It is the same economic team whose advice would have sent Australia into recession and would have sent unemployment skyrocketing. The Liberal Party has failed the budget test countless times, and their credibility is in absolute tatters.

Only recently we saw the Leader of the Opposition saying that they may not get a budget surplus in the first year or anywhere after that if they are elected. After giving previous commitments that they would move into a budget surplus quicker than the Labor government, they are now walking away from that promise. In fact, it is an aspiration. A budget surplus for the Liberal Party has become an aspiration. Why is it an aspiration? Because they know they can never get there. They can never get anywhere near there because behind all their rhetoric and behind all their promises is a $70 billion black hole of commitments and promises they have made which they know they cannot fund. They know they cannot fund them. But in order to try and buy their way into an election victory they will promise everything. They will promise a spend of $70 billion at the moment, and the election campaign has not even started for them. We know that that $70 billion will continue to grow. They are economically irresponsible. (Time expired)

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

I have to say that Senator Marshall really lives in his own little world over there. To suggest that Senator Wong wiped the floor with her responses to questions on the economy just defies belief. I do not know where he was during question time, but he clearly was not listening to Senator Wong's responses.

To the suggestion that this government has saved the country from economic ruin, all I can say to Senator Marshall is, 'Thank goodness you had a coalition government that handed you a large surplus so that it bankrolled the government spending for its first few years in office'. Not all governments are so fortunate.

I also just have to pick up for a moment on a couple of comments and observations that Senator Feeney made earlier on. He seemed to talk about the opposition only. He was given an opportunity to talk about the government's response—Senator Wong's response—to questions and all he could talk about was the opposition; what our vision was for the country and what we would do if we were in office. I was sitting back thinking that it really was not surprising that he did not want to talk about what the government had achieved because what they have done is indefensible.

Since the election in November 2007 they only have a record of incompetence, spending and increasing debt. So what could he talk about? Why would he not want to deflect attention away from the government's track record and focus on the opposition's? So I am not surprised that he talked about the coalition's vision and plans, which he did, because to talk about the government's achievements would be incredibly embarrassing for him.

We do live in a great nation, but it could be so much better. We could be world leaders in industry and innovation, but what is holding this country back is the incompetence and the ineptness of this Gillard government. We have raised before and during questions—and Senator Wong would not address the fact—that the Treasurer, Mr Swan, said last year that this year, the year ahead, would be all about jobs, jobs and more jobs. But only last week we heard that another Australian bank has reported 1,000 jobs being lost over the last few months. This is on top of the reports from Westpac and the ANZ in relation to other job losses in January.

Only today, at an aluminium smelter near Geelong—the Port Henry aluminium smelter—the operators have announced that they are conducting a review of that smelter that is essentially putting the jobs of 600 people there in limbo. They will be very, very concerned as we speak now about what their job security is and what this next 12 months holds for them. And for good reason: the Prime Minister and those on the other side continue to ignore the fact that the carbon tax is going to cost more jobs. She continues to ignore the fact that it will reduce economic growth in Australia and is just going to hurt us more and, in particular, hurt real wages.

In the 2010-2011 financial year the Gillard government said that their budget deficit would be $12 billion, and yet we saw MYEFO estimate that the budget deficit would be $25 billion. And what do we see? The actual deficit was $37 billion. They are not particularly good at managing. The last few years have been another demonstration of what an ALP government actually delivers when in office, and economic strength and viability of the country is not one of them.

This government has turned $70 billion in net Commonwealth assets into $133 billion of net Commonwealth debt. To the people of Australia I say: bring on an election; get rid of the Prime Minister you have because this country will be in a crisis if you keep with it.

Question agreed to.