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

Mr President, my question is to the Minister representing the Treasurer, Senator Wong. Can the minister confirm that, according to Labor's budget last night, revenue for 2012-13 is expected to increase by a staggering 11.8 per cent to about $369 billion, even though our GDP is expected to grow by only 3¼ per cent and our terms of trade are expected to actually fall by 5¾ per cent? How long before this government has to come out yet again and do what it always does—that is, complain that revenue has fallen away against its overly optimistic expectations at budget time?

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

As the senator would know, the economic forecasts are undertaken on the advice of Treasury.

Opposition Senators:

Opposition senators interjecting—

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

I will take the interjection from the other side that called them a guess. Who they are impugning are the officers of Treasury, the people who advised Mr Costello. You might like to have a go at public servants who are not here to defend themselves! It is true that revenue has not come back for a number of budgets as fast as originally considered by the Treasury. You have seen a number of speeches by the Treasurer and by the head of Treasury which go to some of the structural reasons driving that. If Senator Cormann believes he could have been ahead of that curve, he certainly did not say anything at the time.

In terms of the return to surplus, I make this point: we have chosen to make savings to protect the surplus. In other words, the nearly $34 billion worth of savings in this budget are put in place not just to ensure any new expenditure is offset but so there is a substantial net savings position, which is all about protecting the bottom line because we are determined to bring the budget back to surplus not just in 2012-13 but also beyond.

Mr President, you will see the results of those decisions which are not only a surplus in this coming financial year but surpluses building over time. Our forecasts are broadly in line, certainly in terms of GDP, with those of the RBA and the IMF. I have made the point previously that, in terms of global growth, the Treasury estimates of what is occurring in Europe are probably more conservative than the International Monetary Fund's.

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

Mr President, I have a supplementary question. Can the minister confirm that the last time revenue increased by more than 11 per cent was back in 1987-88, when Australia's GDP grew by 5.6 per cent and our terms of trade actually also rose by 8.7 per cent rather than falling by more than five per cent? In the current circumstances how can anyone trust the overly optimistic revenue assumptions in this budget?

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

I make the point that the drivers behind what is occurring with revenue—as outlined by the Treasurer and others in the Treasury and in the budget papers—are in part structural and in part cyclical. As the senator would know, being a senator from Western Australia, we are in a very strong investment phase in the resources industry, a very capital intensive industry investing very heavily at the moment. By dint of that, for a given amount of economic activity, you will not see the same level of revenue that you would if that economic activity was focused on high levels of production. So the budget papers go through a very detailed discussion of what is occurring in relation to revenue. I say again that this government has demonstrated its determination to return the budget to surplus by making savings to protect the bottom line, something that as yet Senator Cormann has never been able to achieve with his colleagues.

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

Mr President, I have a further supplementary question. Given this government's track record of broken budget promises, having presided over a staggering $34 billion blow-out in the deficit this financial year since the release of the Pre-Election Economic and Fiscal Outlook, why should anyone believe that it will actually deliver on a promise of a wafer-thin $1.5 billion surplus when that is based on an unrealistic expectation of the largest increase in revenue in 25 years?

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

The answer is: because we will. We will do what we have done over the last budget, this budget and the mid-year review, which is to make savings to protect the surplus. But I am asked about promises. Perhaps Senator Cormann can remind everybody in this place that he said very explicitly:

We will not proceed with any of Labor's other promises that they have attached to the mining tax.

He ruled out using any MRRT revenue. Too bad—you have been dumped on that, haven't you? The Leader of the Opposition says he is going to support the family tax benefit increases which are funded from the mining tax. That is completely inconsistent with what Senator Cormann said, completely inconsistent with the way in which those Western Australian senators on that side have campaigned against the mining tax. All of a sudden, magically, that revenue is good enough to use. It was not good enough for a company tax cut, but it is good enough for family tax benefits. You had better go back to Perth and explain that, Senator. (Time expired)

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My question is to the Minister for Foreign Affairs, Senator Bob Carr. Can the minister confirm that keeping our overseas aid budget at 0.35 per cent of GNI for 2012-13 saves the government $447 million in the next financial year and almost $3 billion over the forward estimates? If so, can the minister explain why the government is balancing the books on the back of the world's poorest people, especially since the Australian Council for International Development has said that these funds could have saved 800,000 lives?

Bob Carr (NSW, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I thank the senator for her question and congratulate her on her assumption of the leadership of the Greens. I think all Australians can be proud that in the next three years our aid spending will help to vaccinate more than 10 million poor children against preventable childhood diseases. I think every senator here can be proud that our aid spending over the next three years will see 8.5 million people with access to safer water. I think all Australians can be proud that, as a result of this record budget and the increase in spending on aid, we will have 30 million people in the world who are vulnerable to conflict and famine provided with food. That is as a result of our record aid spending. A further four million boys and girls will be able to enrol in school and 45 million children will obtain a better quality education as a result of our record aid budget. And 2.3 million poor people will access better financial services, including loans and support, to start small businesses as a result of the increase in aid in this budget. While other countries are reducing aid because of the pressures of the international economic situation, Australia is increasing aid. Under acute budgetary pressures, the only concession that has been made is that it will take only one year longer to reach that honourable goal, that noble goal, of 0.5 per cent of gross national income allocated to aid. In all the circumstances, I think it is a good achievement of this government to increase and not reduce the aid budget, and all Australians can be proud of that.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I thank the minister for his answer and note that he did not confirm that that is a saving of $447 million in the next financial year and almost $3 billion over the forward estimates. Also, I note his reference to one country in particular, but they are actually already at 0.6 per cent of GNI. Mr President, I ask a supplementary question. In the bid for the UN Security Council, the Australian government booklet claims repeatedly: 'Australia: we do what we say.' Now that the government has reneged on its commitment to increase Australian aid— (Time expired)

Bob Carr (NSW, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I think the world respects a nation that, despite the pressures of the economic situation, finds the money to increase its aid budget, as we have done. That commands respect. I think the value we get from our national reputation for the way we deliver aid and our focus on aid—aid effectiveness—stands Australia in enormously good stead.

Opposition Senators:

Opposition senators interjecting—

Bob Carr (NSW, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

By the way, there are some interjections on the other side of the House—

John Hogg (President) Share this | Link to this | Hansard source

Ignore the interjections.

Bob Carr (NSW, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

It is useful, while ignoring them, to be stimulated by them and to find the opportunity to comment on the aid record of the coalition government. I know the House will be eager to hear this information. Their overseas aid budget never exceeded 0.3 per cent of gross national income. (Time expired)

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Minister, how can the government continue to claim in the international community that we do what we say when, in fact, we are reneging on the promise that we made in delivering the Millennium Development goals? Won't this decision now damage not only our global reputation but our bid for the UN Security Council? When are you going to split the climate funding from the aid funding so we can genuinely see how big the cut is?

Bob Carr (NSW, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I am happy to give a full account of what our aid funding does in assisting some of the least developed nations of the world, including small island states, cope with the challenge of climate change. I recently discussed in New York with Pacific island states the assistance we provide to assist them deal with the living and breathing reality of climate change. I might say that they appreciate the sincerity of this govern­ment. We can talk seriously in world fora about what we have done on the reality of climate change. I draw the attention of the senator to reductions in aid spending by other OECD nations via a reduction in aid spending across OECD averages. The fact is that Australia stands out in these circumstances by increasing aid spending. Aid spending here is going up, not down.

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

My question is to the Minister representing the Treasurer, Senator Wong. Is the minister aware that last year's budget projected a deficit for this financial year of $22.6 billion? Can the minister confirm that yesterday's budget estimated that the deficit will in fact be $44.4 billion? Since, by the government's own figures, its estimate of the deficit for this financial year was wrong by at least $22 billion, how can the public have any confidence that this year's budget projections will be any more accurate? Isn't it still the case that this government has never delivered a surplus budget and never will?

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

First, this budget delivers a budget surplus on time and as promised. Second, in terms of the 2011-12 figures, I am happy to go through them in detail. In terms of the shift between 2011-12 and now, for the 2011-12 year we had about $9 billion in revenue write-downs. Some of those, obviously, resulted from what occurred in Europe, particularly towards the end of last year. We had a significant bout of global instability, which obviously has an effect on our economy via various mechanisms but particularly through its impact on confidence.

As a senator from Queensland, the senator might also like to know that some $2.3 billion of the increase in the deficit between the mid-year review and the budget was a consequence of natural disasters, particularly in Queensland. We made advance payments to Queensland of $1.3 billion to ensure the rebuild task could continue and we have had to revise up our natural disaster bill for 2011-12 by at least a billion dollars. The senator would also be aware that we have chosen to provide some carbon price assistance up front.

I am asked how we can demonstrate that we will deliver the surplus and I make this broader point. Between the 2011-12 budget and this year's budget, we had about a $10 billion write-down in revenue for the 2012-13 year. We have made savings to offset that revenue write-down and to protect the bottom line. We have demonstrated our determination to protect the surplus and make savings to do so.

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

Mr President, I ask a supplementary question. If the government is so confident of its projection of a surplus as the outcome of this budget, why is it proposing to increase the national debt ceiling by $50 billion?

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

I think the question on debt is the same question I was first asked, as I recall it, by the Leader of the Opposition in the Senate, Senator Abetz. I answered that in detail with reference to the advice of the Australian Office of Financial Management. In fact, I suggested to Senator Abetz that he take the opportunity to speak to Senator Bushby, who sits behind him, because he might be able to explain it to him in more detail. I make this point: if those opposite care so much about a surplus, why will they not front up with their savings? Of course you do not want to know about this, do you, George?

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

I raise a point of order on direct relevance, Mr President. As the minister rightly observes, this question is substantially the same as a question that Senator Abetz asked Senator Wong. I have given her the opportunity to answer to me what she failed to answer to him. Nothing she has said so far bears even remotely on the question, let alone being directly relevant to it. Why is the government increasing the debt limit by $50 billion?

John Hogg (President) Share this | Link to this | Hansard source

There is no point of order. I cannot instruct the minister how to answer the question. It might not be answered in the form or the way you would prefer and you might not be given the answer you would particularly like. But I understood from the minister's answer that she was responding to the question you asked.

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

I refer the senator to the transcript of my earlier answers in which I outlined in quite a lot of detail, I thought, the advice of the Australian Office of Financial Management and the reasons for the increase in the legislated debt cap. I think I have answered that quite fulsomely.

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

Mr President, I ask a further supplementary question. Given the government has now delivered four budgets and four deficits—the four biggest deficits in Australian history, which together amount to $174 billion—should not the Australian people see through the government's promise to deliver a surplus this time as just another unbelievable Labor Party promise based on spin, not facts?

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

The Australian people can look to the determination to bring the budget back to surplus, which is demonstrated by the $34 billion of savings made in this budget. What the Australian people are also entitled to see—and this should be tomorrow night in the budget reply—is the party who claims they would deliver a bigger surplus telling Australians how they would get there. They have never fronted up on their $70 billion black hole. They have never made it clear to the Australian people just what they would cut. Last night my counterpart, Mr Robb, said they would deliver a surplus of $15 billion. To do that, you would have to not pay Medicare next year. You are making glib promises because you want to hide the real savings measures you have in mind. Either that or you are simply not telling the truth.

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

My question is to the Minister for Finance and Deregulation, Senator Wong. Can the minister update the Senate on the importance of setting out a plan to return the budget to surplus?

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

Last night the Treasurer presented a budget which returns the budget to surplus on time and as promised, a surplus achieved by taking nearly $34 billion worth of difficult decisions, a surplus at a time when the government is taking less tax out of the economy than Peter Costello took when he was Treasurer. The amount of tax we are taking, as a proportion of GDP, remains below the level it was at when we came to government.

I would also make this point about spending. The budget papers show that, as a proportion of GDP, expenditure gets down to around 23.5 per cent of GDP in 2012-13. Over the budget forward estimates, spending is less than 24 per cent of GDP. The last time that was achieved for a sustained period was in the 1980s. For all the fine words those on the other side like to use to remind us of his economic performance, it was never achieved under Treasurer Costello. As important as the surplus in 2012-13 is, also important are the growing surpluses over time. Surpluses grow each year over the forward estimates because that is the right thing to do.

This is a budget which is right for the economy, but it is also a budget which is about a fairer community. It is a budget which spreads the benefits of the mining boom, fosters opportunity and supports millions of Australians—families and those on modest incomes. It is a budget which invests for the future and helps Australians with cost-of-living pressures. This is a budget, a Labor budget, which demonstrates that a strong economy is the foundation of prosperity but also that prosperity needs to be shared. Opportunity and fairness go hand in hand and that is why we are determined to spread the benefits of the boom. (Time expired)

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

Mr President, I ask a supplementary question. Can the minister outline why it is important to detail the savings the government is making in order to bring the budget back into surplus?

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

The reason it is important to detail the savings is to be upfront with the Australian people and the markets about how the path to surplus has been achieved. We have had to make difficult decisions as a government as a result of the revenue write-downs which have occurred; some $150 billion has been written off government revenues since the crisis. Delivering surpluses when there is less tax revenue obviously means that a government has to make substantial savings to pay for new initiatives. We have done so. These are responsible decisions which return the budget to surplus for this coming year and for each year after that. I invite the opposition, if they are so keen on surplus budgets, to demonstrate to the Australian people how they would return the budget to surplus. It is quite clear that under Mr Abbott they are incapable of actually coming to agreement on any difficult decision.

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

Mr President, I ask a further supplementary question. Can the minister outline to the Senate any alternative approaches that are a threat to sound economic management?

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

I thank Senator Brown for her final question. It becomes clearer each day that there is really no coherent alternative economic approach from those opposite. Perhaps the case in question is the schoolkids bonus. The opposition want to stand in the way of giving families more assistance with education costs; the coalition want to oppose and block families getting assistance for those costs. That is what they want to do. Remember, of course, that this is the same coalition that opposes the means testing of the baby bonus. A very interesting question was put to Mr Hockey. He was asked:

You've been critical of the School's bonus. What's the difference between the baby bonus and the School Bonus?

Mr Hockey replied:

There is a vast difference.

The host said 'What?' and Mr Hockey said:

You have to have a baby.

You have to have a baby! Babies grow up, and then they go to school— (Time expired)

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Wong. What will the peak gross debt position covered by Australian government securities be in the next financial year?

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

Net debt peaks as a percentage of GDP at 9.6 per cent in 2011-12; gross debt peaks as a percentage of GDP at 18 per cent in the same year. The net debt position is the more accurate measure of the financial position of the government, and I remind the chamber that this is around one-tenth of the level of the major advanced economies—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order on relevance. We have asked for a specific number: what is the peak gross debt position? We do not want to know about the net debt position or the percentage position—we want to know the actual number for peak gross debt. She can either give us that number or she cannot.

John Hogg (President) Share this | Link to this | Hansard source

There is no point of order. The minister is answering the question. As I have already explained once today, I cannot instruct ministers on how to answer questions—but the minister is answering the question.

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

I know Senator Joyce likes to talk about gross debt a lot. I remind him, and I am sure as an accountant he would know this, that in household terms focusing on gross debt only is like looking at the size of your mortgage without looking at whatever money you have in the bank. He does not like the net debt position but that is why net debt—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr President, I have a further point of order on relevance. I asked a very succinct question and it needs a very succinct answer. We just want to know what the peak gross debt number is as covered by Australian government securities in the next financial year. We do not need a lecture on 'gross', we do not need a lecture on 'net', we do not need a percentage—we just need to know the number. She either knows it or she does not know it.

John Hogg (President) Share this | Link to this | Hansard source

There is no point of order, and that is debating the issue.

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

I think statement No. 9 has all of the CGS on issue projected over the forward estimate period. What I gave you was the GDP figure as well, because it is of relevance. The point I was making in relation to gross debt was that it is not the best or a particularly accurate measure of the financial position of a government. That is the reality. Senator Joyce does not like to hear this.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr President, on a further point of order: the number, Mr President—she either knows it or she does not know it. Save us the lecture; give us the number or sit down.

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

Mr President—

John Hogg (President) Share this | Link to this | Hansard source

Senator Evans, I have already ruled there is no point of order.

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

On another point of order, Mr President: it just seems to me that, if Senator Joyce is repeatedly standing up and seeking to argue the point with the minister after she has been at pains to give him all the information she can, it is a disruption of question time and I think it defeats the whole purpose of question time. Senator Joyce ought to be encouraged to abide by the same rules that every other senator abides by.

John Hogg (President) Share this | Link to this | Hansard source

That is not a point of order.

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

I again say that gross debt peaks at 18 per cent of GDP in 2011-12. We commence to pay down debt from the surplus year. I do want to again remind Senator Joyce, in between him hurling abuse at me— (Time expired)

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. What are the liquid reserves available to be placed against the peak gross debt position?

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

I think that is a question about what is included in net debt. What I was trying to explain to the senator previously was that net is more often used in international comparisons to measure the relative debt positions of economies. Net debt only includes those financial assets which have debt like characteristics. On the asset side, it includes term deposits held at the Reserve Bank, cash and other deposits, and loans to students of foreign governments. It does not include equity assets. There is some discussion that as governments have moved towards more diversified assets this perhaps has become less useful as a measure of a government's financial position and that a broader—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I raise a point of order, Mr President, once more on relevance. We have asked for a value of the liquid reserves that are available to be placed against the peak gross debt. She either knows the value or she does not.

John Hogg (President) Share this | Link to this | Hansard source

There is no point of order. The minister is answering the question.

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

Mr President, I am trying to assist the senator. I think I gave him the explanation of what is included in the net debt consideration, a definition— (Time expired)

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. If the government's finance minister does not know what the peak debt position will be in the coming year, if the government's finance minister does not know what the liquid reserves are in the coming year, if the government can put up an appropriation bill at any time during the current year, why on earth has the government asked us for a $300 billion ceiling?

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

To explain this very simply, we use the same budget accounting standards which are used internationally and were used by Treasurer Costello. Those are the accounting standards which drive the definitions of gross debt, net debt, net financial worth and net worth. The budget papers, if one reads them, go through a very detailed explanation about various accounting standards and provide a number of summaries of how those financial concepts have been arrived at. I would also make the point that Senator Joyce continues to talk about gross debt. That is like a household looking only to their mortgage and not looking at a financial asset they may hold in the bank like a term deposit. That is the reality. (Time expired)