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

by leave—At the requestion of Senator Fifield, I move:

That the Senate notes the mismanagement of economic and fiscal policy by the current Government.

The Labor Party in government this time round has done as they always do, and that is to completely mismanage our budget. Labor's mismanagement of the budget does have implications for our economy. Their approach, which is part of their DNA—higher taxes, higher spending, big debt, big deficits—does have serious implications for our economic opportunities into the future.

Let us just remind ourselves of the position the government inherited about 4½ years ago. The government inherited a strongly growing economy, a strong budget position, a budget that had a $20 billion surplus, a budget position where the Commonwealth government had $70 billion of net assets. The economy was growing strongly and the budget was in a good position despite all the challenges that we faced in our period in government. We had the Asian economic crisis, the 100-year-record drought, tsunamis in the region, the floods and the cyclones. We had all the things that of course Labor is now using as an excuse for their severe fiscal mismanagement.

So what has happened to our budget position in four short years? I just pause here. Senator Wong, our Minister for Finance and Deregulation, likes to talk about the supposed $70 billion budget black hole that the coalition has. There is no $70 billion budget black hole that the coalition has. The government quite disingenuously is focusing on a figure that is made up $70 billion of revenue that comes from new Labor Party taxes and then assumes that all of the related expenditure, all of the related spending, all the promises that Labor has attached to the massive new taxes they want to impose on the Australian people, is going to continue as if nothing happened. Of course, nothing could be further from the truth.

The only budget black hole that we have got is a $133 billion black hole that is being accumulated by this government. To put this into perspective, when John Howard became Prime Minister in 1996 and when John Howard and Peter Costello took over responsibility for our fiscal policy in Australia, they inherited a $96 million debt position. It took them 10 years to pay that off. It took them 10 years to get Australia into a position where there was no government net debt. Of course, after they had paid all of Labor's debt, they were able to put money away for the future by investing significant amounts of money into the Future Fund.

People across Australia instinctively know that whenever Labor gets into government, whenever Labor gets hold of the Treasury bench, they are bad at managing the budget. They are bad at managing money. They do not know how to live within their means. They spend too much, which means that they have got to tax too much, and they get into a vicious cycle which ultimately is not good for our economic prosperity into the future.

Very specifically, to reflect on Minister Wong's performance as Minister for Finance and Deregulation, she is here in this chamber day in and day out wanting to lecture the coalition about fiscal policy, when she is the finance minister who in her first year in office as finance minister has presided over a $25 billion blowout in the budget deficit this year—a $25 billion blowout in the deficit under Senator Wong as the Minister for Finance and Deregulation. In December 2010, you would remember that the government's expectation in terms of our fiscal position for 2011-12 was that we would have a $12.3 billion deficit, which of course has now blown out to a $37.1 billion deficit. I say to Senator Wong: do not lecture us. Start doing your job. Start looking at your own black holes, at the $133 billion black hole that you are heading for and your $167 billion accumulated deficits over your first four years in government.

It is true that, comparatively speaking, both from a budget position and from an economic point of view, Australia is in reasonable shape. If you look at the global comparators and what is happening in Europe and the US, yes, we are in very good shape—and long may it last. But the reason we are in good shape is that, firstly, we had a much stronger starting position back in 2007-08 when things started to turn internationally. We had a zero net debt position and a strong surplus position. Secondly, we have got the good fortune to have significant natural resources and are placed in a region that is growing strongly. The fact that we are in a better economic position than other countries in other parts of the world has nothing to do with the performance of either the Rudd or the Gillard government: it has all to do with the fact that we had a very strong position going into this global economic downturn and it is because of the geography and the natural resources endowment that we are so lucky to have.

The other day I asked some questions in question time about the economic impact of the carbon tax, and of course, as so often happens, I was sneered at by Senator Wong and by Senator Evans. At some point I tried to interject and suggest that what we are trying to do on the coalition side is 'grow the cake'. Senator Evans actually took the interjection. He said I tried to make fun of this concept that a coalition government want to grow the cake rather than cut a shrinking cake into ever smaller pieces. That is the contrast between the coalition's approach to economic and fiscal policy and the Labor Party's approach. The Labor Party take the cake they have and they try to spend it all, then they look for new ways to come up with ever new taxes, which ultimately will put lead into our saddlebags as we try to maximise our opportunity as a national economy.

The reality is, even in terms of economic reforms, the Rudd and Gillard governments have taken us in the wrong direction. Where has the reform zeal of the Hawke, Keating and Howard governments gone? The Hawke, Keating and Howard governments focused on how we could make Australia more competitive internationally, how we could improve our productivity, whereas all of the major initiatives of the Rudd and Gillard governments are designed to make us less competitive internationally at the worst possible time in economic development across the globe. Our productivity growth has slowed down to barely a crawl. As measured by GDP per hour worked, work productivity has risen by just two per cent over nearly four years of available data under Labor, compared with an increase of 24 per cent over the life of the previous coalition government. Under Labor, GDP per capita has risen by just 1¼ per cent on the latest data, compared with a rise of over 30 per cent under the Howard-Costello government. Of course, that is how you grow the cake—by encouraging increased productivity, by encouraging economic growth, by driving reforms that make us more competitive internationally and ensure that Australian businesses have the best opportunity to be successful in their endeavours.

The government talks a lot about the so-called two-speed economy. Really, what is implied in this is that we have the mining sector in the fast lane and we have everybody else in the slow lane: 'It is terrible for the mining sector to be so good. Let us slow them down; let us bring them back to the fold. Instead of focusing on how we can make sure that in the Australian economy everybody has the opportunity to reach their full potential, to maximise opportunities, to grow—for all small companies to have the best possible chance to become the big companies of tomorrow—this government focuses on how we can penalise success, how we can bring the successful people back into the slow lane, and that is of course not ultimately in our national interest.

What I put to the Senate and what I put to the Australian people is that having a diversified economy is a good thing. So, when the government talks about a two-speed economy, I say we have a multispeed economy. Thank God we have a multispeed economy because, at different times of the economic cycle, different parts of the economy perform at different speeds, and right now it is true that the mining sector is doing very well. It has not always been the case and it is unlikely that it will always be the case in the future. The demand for our resources could change. The global supply of various resources that we are currently selling to China, Japan and to other places could increase and our terms of trade will not be as attractive as they are now. It is quite possible that will happen in the future, yet the government is pursuing a mining tax to target the most successful part of our economy, to slow the most successful part of our economy down.

The government are also targeting, incidentally, the part of the economy that is currently struggling, given the international economic conditions—our manufacturing sector. They are targeting the manufacturing sector with the carbon tax. Not only are they pursuing a mining tax and a carbon tax, both of which will make us less competitive internationally and put more lead into our saddlebag, but also they are pursuing a mining tax and a carbon tax package that will leave the federal budget worse off.

How can any government design two multibillion dollar new taxes which have serious implications for the international competitiveness of some of our most important industry sectors and still have the budget in a worse position than when we started? The problem again is Labor's DNA, because Labor are spending faster than they can bring the new money in. They come up with new taxes, which we are told will raise about $11 billion over the forward estimates in the case of the mining tax or about $25 billion in the case of the carbon tax, but both of those taxes will raise less than all of the spending that Labor has already committed to. It is no wonder that we had $167 billion worth of accumulated deficits over the first four years of this Labor administration.

The carbon tax will have a bad impact on our economy as well as on our budget. The reason for that is this: the carbon tax will make it more expensive to manufacture goods in Australia than in other parts of the world. Other parts of the world that do not face the same price on carbon and the same cost as businesses in Australia will become more competitive than Australian business. Even the most environmentally efficient business in Australia, having to pay the world's largest carbon tax, will be less competitive than the highest emitting equivalent business in another part of the world. As that happens, those higher emitting competitors of ours overseas will take market share away from the more environmentally efficient businesses here in Australia. How is that good for the economy? As we shift market share to other parts of the world, they will become more competitive as they compete with us on imports or they will become more competitive as they compete with us in the export market. The globe is not going to be any better off, workers are not going to be any better off, the economy is not going to be any better off and the federal budget is not going to be any better off. Who wins here? This is just an ideological pursuit combined with a tax-and-spend approach that is inherent in whatever Labor does when it comes to economic and fiscal policy.

I do not have to go any further than the government's own Treasury modelling of the carbon tax, which points out very clearly that the government expects that, between now and 2050, GDP will be $1 trillion lower in today's dollars than it would be without a carbon tax. So the cost to our GDP between now and 2050 is $1 trillion—our economy will be $1 trillion smaller on a year-by-year basis than it otherwise would have been. That is nearly the whole GDP for the whole of Australia for a whole year, which means that the whole of Australia will be expected to work for a whole year, effectively, between now and 2050 to pay for the cost of the carbon tax. This is how Labor goes about economic policy: they are shrinking the cake compared with what the cake could have been like.

We want to grow the cake. Growing the cake is good for families because they have better opportunities to prosper. It is good for the economy as a whole and it is good for the budget bottom line—the larger the cake, the larger the government's revenue take. Not only do Labor spend too much, not live within their means and then have to pay catch-up by forever coming up with new ad hoc tax grabs, but every ad hoc tax grab that they have come up with in recent years has left the budget worse off. The cake ends up being smaller than it should have been and the federal budget is in a worse position than it should have been. I do not expect Labor senators to grasp this sort of reality—and no doubt that is why, when I talked about growing the cake, all Senator Evans was able to do was sneer at me.

There is a better way. People across Australia instinctively know that the coalition know how to manage their finances. People across Australia instinctively know that the coalition are good economic managers and no amount of Labor Party spin about alleged black holes in the coalition's budgets will convince people otherwise. People across Australia know that the coalition know how to live within their means. We have done it before. People know that we have a track record, that we have the experience and that we have the commitment and determination to do it again. When it comes to economic policy we know it is important to back our strengths. We know that it is important to pursue economic reforms that make Australian businesses across all sectors of the economy as competitive internationally as they possibly can be. We want businesses across Australia to flourish and prosper so they can employ people, so they can contribute to our quality of life across the nation. We do not want to hit businesses and people across Australia with taxes that will make it harder for them to succeed and will ultimately be counterproductive when it comes to raising the necessary revenues for the Commonwealth to invest in the important services that it provides. But it is a matter of balance. It is a matter of stopping the waste. It is a matter of targeting public expenditure efficiently into the areas that we should be involved in.

I will finish where I started. The Labor party in government has done what it has always done: it has spent too much, which has meant that it had to tax to much, which has meant that it had to borrow too much. This has got to stop. We have to return to a circumstance where the federal government lives within its means and where we do not have to go for one new ad hoc tax grab after another. I say to the people of Australia: the coalition stands ready to deliver good economic and fiscal management.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to be able to contribute to the debate this afternoon about the Gillard Labor government's economic policies. Unlike Mr Abbott, Labor members of parliament do not find economics boring, and no-one has a better economics story to tell than the Labor government.

The opposition's economic story is one of contradicting and arguing with each other about the detail but, collectively, they are committed to condemning Australia to a $70 billion black hole of debt. When it comes to economic and fiscal management, the Labor government are about hard work, not about headlines. We are about actively working to transform our economy, not talking it down as Senator Cormann has been doing for the last 20 minutes.

I am very proud of the Labor government's economic achievements and our fiscal strategies that are going to set the nation up for the future. I am also proud that we do things in the Labor way. We believe in fairness, we believe in looking after those who need it most and we believe in giving people opportunities. We are not afraid of making the hard decisions to ensure that those Labor goals are met.

I do not need to remind people, but I will, about the action that the Labor government took during the global financial crisis. One of the greatest achievements of the Labor government was to act quickly and decisively to save the country from global recession. In a time when advanced economies around the world suffered the largest global recession in 70 years, the Australian economy performed remarkably well, and that was not luck or coincidence. The strong performance can be put down to the early and strong action taken by Labor. We injected short-term cash stimulus as well as medium- and long-term infrastructure investment and spending to keep the Australian economy in strong shape. Every time I go to a Building the Education Revolution program opening in schools around my state, I get positive responses from the school communities—the parents, teachers and children; and the builders, designers and tradies who worked on those buildings. They come up and thank us for the $16.2 billion investment that Labor made into our nation's schools. Those 24,000 projects in 9,000 schools have set us up for the future. I defy anyone in the opposition to go to a school like Parafield Primary School in South Australia, which received an investment of $3.2 million, and say to them: 'We don't think you should have had that money. We wouldn't have given it to you. We voted against it.' They will not do that because they are gutless, but we make sure that the communities know that they got it from the Labor government.

Many countries across the world felt the full effect of the global financial crisis and today are still recovering from it. Here in Australia, the government ensured that Australians were protected from the global financial crisis. As I said, the opposition opposed the second economic stimulus package. They quite happily would have let small businesses collapse and stood by as Australians lost their jobs and houses, as happened in the United States and elsewhere. But we on this side of the chamber had the foresight and the competence to act quickly and decisively. We unequivocally guided Australia through the worst impact of the GFC.

So the government has a great track record of economic management. We also have sound policies in place to ensure that that record continues. Our policies are based on Labor principles. We start from the basis of fairness and ensuring that all Australians are able to seize the opportunities that a strong economy provides. For example, the Gillard government has committed to spread the benefits of the mining boom across the nation through the introduction of the minerals resource rent tax, which will return a fairer share of the nation's wealth back to ordinary working Australians. We on this side understand that small businesses and households are doing it tough. It is unfair when you have a mining resources boom in Australia that just a small handful of companies are profiting from the nation's resources. We are committed to ensuring that Australian people receive a better return on the profits made from extracting our resources and to ensuring that the resource sector remains sustainable into the future. As has often been said in this chamber, these resources can only be extracted once—and it is important that the Australian community as a whole gets a fair return for them and that we responsibly put that money towards building a better nation for everybody.

The government has been working with the resources industry to deliver a profits based tax that works better for the industry and delivers improved returns for the community. We want to make sure all Australians get the benefit of that, not just the Gina Rineharts, the Andrew Forrests and the Clive Palmers of the world. We will deliver the benefits of the minerals resource rent tax to everyday Australians, to all Australians, through increases in superannuation for working Australians and tax breaks for small businesses. We will cut the tax rate for all businesses and we will invest nationally in infrastructure, including in the mining states. We will boost the superannuation savings of 8.4 million of our lowest paid workers, meaning that our overall superannuation reforms will see a 30-year-old worker today on average earnings retire with an extra $100,000 of savings. By increasing the superannuation guarantee, we will build up the pool of national savings and further strengthen the economy. We know that there are plenty of senators on the other side who do not agree with that initiative—who do not want Australians to have improved superannuation savings and do not want Australians to share in the benefits of the mining boom.

Another benefit of the MRRT for the economy and for Australians is the tax cuts that will apply to the 2.7 million small businesses across the nation. We know small businesses are looking forward to that, just as they looked forward to the tax breaks that were provided as part of the economic stimulus plan. We will introduce instant asset write-offs, where small businesses can immediately write off each and every asset worth up to $6½ thousand, and a tax rate cut for all companies to 29 per cent on 1 July 2013.

I should point out that the opposition have already said that they will repeal the MRRT if they win government. That means they must either repeal those tax cuts for small businesses and companies and repeal the superannuation increases or find the money from somewhere else. Of course, that creates a big problem for them: where would they find that money? We have asked time and time again: which government services, which government programs, which pensions and which benefits are they going to cut to be able to repeal the MRRT? So far, all we get is infighting within the Liberal Party. The only thing they agree on is that they have dug themselves a very deep economic black hole—a crater, I think it would be fair to say.

There will be a business tax cut for all Australian businesses, including those that are not in the mining boom fast lane. The impact of that will be to ensure that we keep our unemployment rate low. One of the things that we are very proud of in the Labor government is that we have a low unemployment rate in Australia, when other comparable nations do not. In the term of this government the unemployment rate has been five per cent on average and I understand it is currently 5.2 per cent. That is a spectacularly good effort in a difficult global financial circumstance and we are very proud of that. We will work very hard to ensure the low unemployment rate continues because we know the best way to ensure that all Australians benefit from the fortune we have in this country is by getting them into employment. That is the best way to eliminate disadvantage and to ensure people are set up for the future. The government have taken a range of initiatives to ensure that the wealth is distributed more evenly throughout our country so that we can create opportunities for everybody. As well, the government believe strongly in altering the private health insurance rebate so that it is means tested to make it fair for all Australians. It is not fair that Australians on low and middle incomes are subsidising private health insurance for people who, like me, are on high incomes. It is not fair that taxpayers on a very low income, who may not be able to afford private health insurance, should be subsiding the private health insurance of wealthier Australians. Our plan is to retain the rebate in full for low- and middle-income families—nine out of 10 Australians will not be affected at all—and we will means test the top 10 per cent of income earners, people like us in here.

This initiative will see unprecedented levels of savings—estimated to be $2.4 billion over three years and $100 billion over the next 40 years. Where will that money go? It will go to funding hospitals, schools and pensions. The community will benefit enormously from the appropriation of those tax dollars back into services that Australians need. Of course, the opposition oppose this very beneficial initiative. They are going to repeal it as well, if they get into government. Where will they make up the money from that loss? Where will they find that $2.4 billion over the next three years?

The federal Labor government are also working very hard to ensure that we retain jobs across a broad section of the Australian economy. One of the things we are very proud of—and I, being a South Australian, am particularly proud of—is our support for the automotive industry. The opposition want to kill the automotive industry in Australia with their proposed cuts of $1.5 billion to 2015 in future industry support. Thereafter, they would rescind all funding to the automotive industry. You would have to say that there seems to be very little appetite in the ranks of the opposition for supporting the manufacturing sector at all. Labor want to support it and help it adapt and survive. That is what we want to do for workers in manufacturing and particularly in the automotive industry. We want to retain that vital innovative industry in Australia because we know it has fantastic offshoots through other companies that provide research and technology to help us deliver the best possible automotive investment.

The Labor Party are about looking after jobs in manufacturing whereas, of course, the opposition are not interested in looking after jobs. They are more interested in bringing back Work Choices. They cannot help themselves. Their solution to everything to do with jobs is to bring back Work Choices. People should be very afraid should that ever happen. The opposition want to pull the plug on 46,000 Australian jobs directly involved in the automotive industry and on another 200,000 jobs nationwide which rely on that industry. Of course, that will not just get rid of those jobs; it will put an end to the research and development companies and other infrastructure that goes to support the automotive industry and other manufacturing industries.

The government are also ensuring that we are setting up the nation for a bright and strong economic future by investing very heavily in skills and education. We want to ensure we have the skilled workers our country needs into the future. Since coming to government we have created some 750,000 new jobs, including in mining, retail, health and skilled trades. Importantly, we now have more than 460,000 Australians involved in traineeships or apprenticeships, and they are getting real training for great jobs in the future—that could be in construction, automotive, furnishing or tourism trades in particular. Over one-quarter of a million of those jobs were added in 2010 and we know that another half a million jobs will be added over the next two years. We are always doing what is needed to keep people in jobs rather than having people out of work and putting families under pressure.

The Labor government are also ensuring much bigger investment in higher education. Today Senator Evans announced that our decision to uncap the number of university places and increase funding to universities means there will be an estimated 545,000 student places this year, an increase of five per cent on last year's record number. We are also very proud to get more of our young people into tertiary education, which of course sets them up for great jobs in the future.

We are about creating new incentives and opportunities for work, and we about supporting people when they are in work. Of course, we are very proud as well of our Paid Parental Leave scheme, which will help more Australians in the workforce. Eighty thousand Australian families have already received payments under our scheme. We can be absolutely certain that not one Australian will ever receive anything from the opposition's paid parental leave scheme because it will never happen. The Leader of the Opposition does not really support it. He has commented that it would be 'over his dead body'. Regardless of his position, we know the opposition are internally riven about the tax that would have to be levied on all companies to bring into being their paid parental leave scheme. This 'Rolls Royce scheme', as it was called by the Leader of the Opposition, used to grab a few headlines but, of course, it will never actually be implemented. Labor's Paid Parental Leave scheme is in place, is being used, is welcome by families, is funded and is supportable.

Other Labor initiatives that we are proud of, which are assisting us to set up the economy for the future, include the National Broadband Network, which will give us the infrastructure for the future. This is a welcome initiative about which people talk to me whenever I am out and about. Rural and regional areas in particular cannot wait for it to be rolled out. Of course, the opposition will unravel the NBN. That is their plan: unravel it and make sure that Australians are stuck with the substandard and costly internet services that they currently have. Again, the opposition is riven about what to do about the National Broadband Network.

Just to ensure that we are getting the message about the coalition's position on things that are important to Australians, I think it is worth reiterating their position on some of the key economic policies that Labor has implemented or intends to implement. It is pretty easy to go through the list and to preface everything with 'no' because that is pretty much all that the Liberals say about initiatives that will set Australia up for the future: 'no'.

So, they say no to the mining tax, no to 12 per cent superannuation for workers, no to tackling global warming by pricing carbon, no to investing in the NBN, no to health reform, no to a fairer industrial relations system, no to the global financial crisis stimulus that saved 200,000 jobs and put money into every school in Australia, no to banning the exit fees on home mortgages by banks and no to the flood packages that are rebuilding Queensland and Victoria.

I have attempted to outline Labor's plans for the economy, what we have done and what we are going to do. I think that the plans the Liberals have for the economy consist pretty much of saying no. Thank you.

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

All I can say is that on this side of the chamber we have a Rolls-Royce of an opposition leader, who hopefully will be the future Prime Minister, and look at the competition between Holden and Ford on the other side.

In more than four years in office, Labor has failed to convince the Australian people that they are better economic managers than the coalition. If they had managed to do that they would be in a far better electoral position than they are now. Something is wrong, and it began in opposition. Labor failed to make an economic case against the former government when in opposition. Most of you who recall that period will recall that shadow Treasurer Swan, as he was then, really struggled to make an impact on Treasurer Costello. He really struggled because he failed to make an economic case, and by the time of the 2007 election all that Treasurer Wayne Swan was able to do was, essentially, to say that he would carry on the economic policies of the previous government.

What we have seen in the period since then if we look at any set of economic indicators—whether they are the Commonwealth budget balance; net government debt; net debt as a proportion of GDP; net government interest payments; government expenses as a proportion of GDP; the unemployment rate; the increase in employment; long-term unemployed; average annual personal bankruptcies; annual GDP growth; average annual GDP growth; inflation; new private business investment; retail turnover; productivity growth, in particular, labour productivity growth; mortgage rates; and monthly repayments—is that on all the indicators the Howard government scrubs up very well against its successor.

There was no economic narrative, and they have now come to rue that in government. One of the things that they did in opposition was to push cost of living as a very important issue. They promised us Fuelwatch and GroceryWatch, and we got them when they were in government. And what did we get? Both were closed down very quickly because both were gimmicks. And yet today, if there is anything on which Labor is hoisted on its own petard, it is the cost of living. That is the thing that has come back to bite the government big time: the cost of living through the impact of the carbon tax on the cost of living.

Leaving aside the general question of policy confidence and the capacity of the Prime Minister and the Treasurer to make their economic case, it is blowout in debt to accommodate the spending associated with the global financial crisis that has haunted Labor ever since. No-one on this side quibbled with the idea of an initial stimulus. It is a furphy to say that the opposition was against any form of stimulus, but it was the fact that programs were instituted that could not easily be turned off and that, on any reasonable cost-benefit analysis, were too expensive for the benefits being obtained.

Remember how quickly funding for pink batts and Building the Education Revolution went out the door, and the waste which followed? Remember how the former Prime Minister signed off on the biggest infrastructure program in our history on a RAAF VIP flight to suit his hectic travel schedule, and without the benefit of a proper cost-benefit analysis? Under pressure over this massive commitment, Senator Conroy belatedly produced an estimated rate of return akin to the long-term bond rate—about six per cent. He argued that there were many benefits that could not yet be quantified. But the government's own handbook on best practice in regulation requires the use of a higher rate of return to capture the opportunity cost of funds. Both the minister and the then Prime Minister had no idea that the long-term bond rate does not constitute such a return, particularly for major projects of this size and risk—again, a reference to their own lack of commercial experience and qualifications. Is it any wonder that Labor have not yet produced a surplus?

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

They don't know what it means!

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

Exactly! The Treasurer is under great pressure to do so in 2012-13, and they have started already. We saw in the Mid-Year Economic and Fiscal Outlook the re-profiling of spending to accommodate that objective. For example, over $1 billion of infrastructure spending was brought forward to 2011-12. How quickly or responsibly can that money be spent? Is it lying in some state government account earning them interest?

Now, the solar hot water rebate scheme has been terminated prematurely to avoid a budget blowout and to assist in achieving the surplus target for next year. But why was that scheme not being managed to stay on budget? Instead, we get an announcement, literally at close of business and with no advance notice.

The government's stop-start subsidies are disrupting small business, robbing workers of a fair go at a job and giving industry policy a bad name. No doubt more renewable energy schemes are also on the chopping block, and this is something that the Greens will have to keep a very close eye on. I have no doubt that the government has its eye on these as budget savings. If the government is serious it should immediately review its plans for the $10 billion Clean Energy Finance Corporation. I know we are still debating as to whether it is going to be on or off budget. We have written to the chief statistician, I think it is, seeking clarification, given the conflict of objectives of this organisation, which make it appear noncommercial, notwithstanding the stated objectives. If we are now to have the highest carbon tax in the world, why does the government cling onto these various schemes? There seems to be some genuine debate going on in the government about this. Don't they believe that the price signal will work? After all the posturing on markets versus direct action, it seems the government still wants to have a bob each way. So much for the courage of their convictions. This government is firmly in survival mode. Do not expect too many big ideas or reforms going forward.

The Gonski report into school funding, the most comprehensive review in decades, was dead on arrival. The price tag was too high, so off it goes into the bowels of reference groups and Commonwealth-state consultations. Did the government not see that coming when it commissioned the review? Once again, expectations were raised in the community only to be swiftly dashed. Other important budgetary matters are piling up for decision. There is the National Disability Insurance Scheme, the response to the Productivity Commission's report on aged care. The Greens are pushing for a massive new dental health plan. The government was forced to make a down payment on this plan to get its cuts to the private health insurance rebate through the parliament.

Achieving a surplus will also require that nothing goes wrong with the government's economic forecasts. The risks are all on the downside in the current global environment. Below-trend growth will reduce tax revenue and raise welfare spending, putting the budget bottom line closer to the red. Mining tax revenue is also being called into question because of the deal done with the three big miners and the increase in state royalties. Beyond next year the carbon tax revenues are also likely to fall below projections, when we enter the floating price phase. The carbon price is likely to fall in line with global trends towards a floor price of $15 a tonne. The Minister for Finance and Deregulation effectively conceded this scenario in her haste to lay the boot into former Prime Minister Rudd during the leadership stoush we have just been through. The budget outcome will be adversely affected because most carbon tax related spending cannot be adjusted downwards.

There is one upside risk with the budget and that is higher than projected inflation, because the cascading carbon tax will also threaten higher inflation than currently projected or estimated. Prices are already going up in aviation and the biggest electricity generator in the country has warned that electricity price increases will exceed those estimated by the government.

What this leaves is a situation where, whether the election is in 12 months or 18 months, a new government will face a large fiscal challenge. A number of fiscal time bombs are being left behind by this government. But as important as it is to deal with the fiscal matters before the government, we need a new way of doing things—a new process, a more consultative process—so that if we are serious about making reforms stick and if we are serious about making budgetary changes stick then we need proper consultation with the community. When it comes to industry matters, proper consultation with the affected businesses and employees is needed. We need a new approach and new governance around many of these arrangements.

In the case of massive infrastructure projects, Tony Abbott has signalled a 15-year rolling infrastructure plan with transparent, publicly-available, cost-benefit assessments of major projects. This will be important to put more honesty into the process. It will keep the proponents of projects honest, it will keep the government honest and it will provide information to the community to be fully informed about these important infrastructure decisions. That is one place we can start.

There are other elements of government reform that we also need to focus on going forward. We need to be careful in structuring our subsidies to make sure that those subsidies encourage adjustment and encourage change and that we are not just subsidising activities that must ultimately go out of existence. I noted earlier the solar hot water bonus scheme and the impact that had had in artificially inflating that particular sector. Now we are about to see over 6,000 jobs potentially taken away in that sector. That is not the way to grow new industries in Australia. We need to do better than that.

In closing may I say that as a result of Monday's leadership stoush nothing has changed. Expect the mistakes and the short-term fixes to continue. It is a pity that Bob Carr did not get to Canberra. He would have had a ringside seat at the circus and he could have been foreign minister if only for a short time—perhaps up to 18 months—but no doubt it would have been a great ride for him.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Here we go again. Once again there is no policy, no plan, no anything. Why do the coalition continue to embarrass themselves? In fairness—and I always try to be fair—the coalition does have a plan and their plan is to say 'no' to everything, unless, of course, it reeks of looking after their rich mates. That is what they do, such as with the mining companies who are booming along but whose profits need to be bigger. Why would those opposite worry about the country's future when it is more important to worry about their mates, like the big polluters in Australia, or provide paid parental leave for the rich end of town.

Let us look at what we are doing. The Howard government sat on their hands year after year and were only concerned about pork barrelling and about storing up a war chest that they took to each election to wedge the country and to buy their way back into government. I have always had the notion that a government governs for all Australians. The last thing Australia needs is an Abbott-led federal government. He would take us back to the Stone Age. We, the Gillard Labor government, are making the hard decisions now, giving working people a fair share of the resources boom and getting our nation ready for the future by building the new Australian economy. We are managing the economy for working people, fighting for their jobs as we did during the global financial crisis and now in the manufacturing and auto industries. Labor's response to the global financial crisis saved jobs and avoided recessions.

We know what those people on the other side wanted us to do. They wanted us to sit back and sit on our hands. They wanted us to put our heads in the sand and just wait and see. How many times in this chamber did those opposite come in and say: 'Look, you're rushing in. Don't do anything.' We know, as the Australian people know, that the investments that were made to keep the economy strong, to stimulate jobs, to build education have paid off. The Australian people know that. It does not matter how many times those opposite come in and try to rewrite history. We can talk about aged care or health and the $1 billion that Tony Abbott as health minister ripped out of health. We on this side of the chamber know what they did for 11 long years, we know they avoided the very tough decisions. But we are going to help the older community to make that transition into retirement.

I seek leave to continue my remarks.

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

Order! The time allotted for this debate has expired.