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

At the request of Senator Fifield, I move:

That the Senate notes the 2012-13 Federal Budget does nothing to strengthen the Australian economy in the face of storm clouds on the global horizon, as it:

  (a)   fails to cut spending;

  (b)   increases taxes;

  (c)   lifts the debt ceiling to $300 billion; and

  (d)   imposes the world's largest carbon tax.

Before I move into the debate, may I associate myself with the remarks by senators around the chamber wishing Senator Sherry well for his future. I am sure that, given his expertise in the areas of superannuation and retirement planning, he would have planned well for what lies ahead. May I also congratulate him for the enormous contribution that he has made to the public policy areas of financial services and superannuation in particular.

Every single year, as the Treasurer, Mr Swan, has been about to deliver a budget, he has made commentary in the media about what a budget it would be. There is one word that he has used to describe it—that word was word 'tough'. 'It will be a tough budget' he said of the 2008-09 budget, for 2009-10 and again for 2010-11—and he has said it now for 2012-13. Of course none of them, not a single Labor budget delivered by the current Treasurer, Mr Swan, has been a tough budget. They have all been typical Labor budgets, that is true—with excessive spending, massive new taxes and increased levels of debt and deficit. This is a government that inherited a very strong economic and fiscal position. This is a government that inherited a strong budget position: a budget with no government net debt, with a $22 billion surplus, with $60 billion in reserves in the Future Fund. And it is, of course, a government that, rather than having to pay interest to service the debt, was receiving interest payments. Not only was there no government net debt, the coalition had put successive surpluses into the Future Fund in order to make provision for the unfunded superannuation liability of the Public Service.

This budget really has been very disappointing, because we face significant economic storm clouds on the global horizon. The events in Europe this past weekend, which are likely to continue to develop in the weeks ahead, do raise a significant concern. Clearly, the global economy is in a pretty precarious situation right now and, because of the actions of the Labor government over the past 4½ years, Australia is in a weaker position to face those challenges than it should be. This government spends way too much money, way too quickly. Yes, we are in a stronger position compared with other parts of the world—of course, because we started out in a much stronger position. This government says, 'Look, our government net debt is expected to peak at 9.6 per cent of GDP, which is much less than in most other parts of the world.' That is true, but we started with zero per cent of government net debt! And when you start from zero per cent going into a crisis you are not going to be at the same level as those countries that started with 60, 70 or 80 per cent of government net debt as a percentage of their GDPs.

In this budget we have more wasteful spending, more new taxes, more debt—there has been a significant cooking of the books—and, yet again, the government wants to lift the debt ceiling. We just have to remember: this is now the third time the government has asked to lift the debt ceiling. Not so long ago the debt ceiling was $75 billion. The government said, 'Well, because of the global financial crisis we have to increase it to $200 billion.' Then in last year's budget the government said that it wanted to increase it to $250 billion. Now we are being asked to lift the debt ceiling yet again, to $300 billion. You have to wonder why a government that is promising surplus after surplus over the current forward estimates would want the parliament to give it another blank cheque, to increase the amount of money that this government can put on the nation's credit card to $300 billion. In talking to this motion I also want to deal with a particular myth that the Treasurer, Mr Swan, has been perpetuating in recent times. This myth is that somehow the reason we have this massive deficit again this financial year, this $44.4 billion deficit this financial year, is that revenue has collapsed. Whenever the budget position deteriorates, rather than looking at what happened with excessive spending and rather than looking at how we can cut spending, show more restraint and live within our means, this government collectively throws its hands up in the air and says, 'Oh, revenue has collapsed.' That is not entirely true. I point you to the 2009-10 budget and what the government's expectations were then as to what would happen in 2011-12, because 2011-12 was at that time part of the budget forward estimates cycle. They thought the deficit this financial year would be $44.5 billion. Guess what! We were told in the budget on Tuesday that the deficit this financial year will be $44.4 billion. So, back in May 2009 the Treasurer was pretty close to the mark as to where we would end up.

The problem is that in the lead-up to the last election he wanted to create the illusion that somehow we were back on track on the path towards a surplus. He wanted people to believe that things were going to be better than he thought, back in May 2009, they would be. Of course, just before the election we were told in the updated economic and fiscal outlook and in the pre-election economic fiscal outlook that the deficit in 2011-12 would be $10.4 billion. So, instead of what we were told in May 2009, namely, that the deficit this financial year would be $44.5 billion, in order to make it look like significant progress had been made the Treasurer told the Australian people, 'Look at this; we are doing well. The deficit is not going to be $44.5 billion after all; it is going to be $10.4 billion, and in 2012-13 we are going to have a surplus.'

The important fact I want to point you to is the revenue and expense forecast given in the budget the Treasurer delivered in May 2009. In May 2009, Mr Swan, the Treasurer, told us that he expected revenue in 2011-12—this financial year—to be $310.2 billion. Guess how much the revenue actually is in 2011? I invite anyone to help the chamber out. I will tell you what it actually is—it is $330 billion. Revenue in this financial year is $20 billion higher than the Treasurer, Mr Swan, told the Australian people, back in May 2009, it would be. So, rather than have a deterioration in the revenue outlook, he has actually had a $20 billion windfall compared with what he thought just three years ago. He has actually had a significant improvement in the budget bottom line in terms of revenue estimates.

Revenue has gone up by $20 billion, but what happened to the expenses side? And remember, it was back in May 2009 that the Treasurer told us, 'Yes, the deficit in 2011-12'—this financial year—'would be $44.5 billion.' Guess what? Expenses then were expected to be $351.9 billion. So what has happened to the expenses side? You guessed it. The expenses also went up by $20 billion. The expenses went from $351.9 billion to about $371.3 billion. That is an increase in expenses of $20 billion in that period. If the government had truly shown restraint, if the government had stuck to the spending that it expected for 2011-12, back in the 2009-10 budget, we would actually be $20 billion better off this financial year. But of course the government did not do that. More money was coming in because of all of Labor's new and increased ad hoc tax grabs. You remember them all: the mining tax, the carbon tax, the flood tax—actually they have not collected the mining tax and the carbon tax yet, but there have been 20 or 21 new or increased Labor Party taxes, starting with the alcopops tax, the condensate tax, the increase in the luxury car tax and a whole heap of other new taxes and revenue measures. But instead of using that money to balance the books to ensure they would get closer to a surplus more quickly, what did this Labor government do? They just spent it all.

This government has not only spent all of the additional revenue they did not expect back in 2009—the $20 billion of revenue they did not expect us to have this financial year when they put the budget together in 2009—but now, with the mining tax and the carbon tax, when they announced these additional multibillion dollar tax grabs, they actually spent more than those taxes were expected to raise. When the government announced the MRRT, the cost of the measures and the promises that were attached to the mining tax were billions and billions of dollars greater than the government's expected revenue from that same tax, which is of course why in this budget the government has had to scrap many of the promises that were previously attached to the mining tax. They have scrapped the cut in the company tax rate, they have scrapped the early cut in the tax rate for small companies, they have scrapped the standard deduction for individuals' work related expenses and they have scrapped the 50 per cent discount on interest income. You name it.

We always said that the mining tax was a fiscal train wreck in the making. We pointed to the fact that only the Labor Party can come up with a multibillion dollar new tax that actually leaves the budget worse off. Only the Labor Party can do that. The Treasurer has ended up with a massive black hole in what he has delivered. That black hole is the $174 billion worth of accumulated deficits over his first four budgets. That is the true black hole—the actual black hole—that is here on the table. The Labor Party likes talking about this fictitious non-existent $70 billion that the coalition supposedly has. There is no such black hole on the coalition side. But the Treasurer, the Prime Minister and the Minister for Finance, Senator Wong, would, I am sure, have read Vladimir Lenin's advice that 'a lie told often enough becomes the truth'. That is a direct quote from Vladimir Lenin. The Labor Party think that, if they keep repeating this absolute lie about a $70 billion black hole, somehow it will become the truth. Well, it is not the truth. The only truth is the truth that is there for all of us to see in the budget papers, and that is $174 billion worth of accumulated deficits. The truth that is there for all of us to see in the budget papers is that government net debt was zero dollars and it is now heading towards $145 billion. That is what it is heading for now. The real black hole is that $145 billion on which this government now have to pay interest. Of course the interest that this government have to pay on the debt that they have accumulated since they became the government totals nearly $30 billion over the forward estimates—nearly $30 billion in interest payments to service the debt that this government have accumulated since they came to power. How many good things could we do with $30 billion if we did not have to spend it on servicing the debt that this bad Labor government have accumulated over the 4½ years they have been in government?

The Treasurer wants us to believe that everything is going to be different next year. We had a deficit in 2008-09, we had a deficit in 2009-10, we had a deficit in 2010-11 and we have a deficit in 2011-12. The deficit this financial year is $34 billion worse than we were told just before the election, yet somehow the government wants us to believe that next year, miraculously, nothing is going to happen to this $1.5 billion surplus. How are they achieving this surplus? They assume that revenue is going to increase dramatically—revenue is going to go through the roof; we are going to have the largest increase in government revenue in the last 25 years. We are going to have an increase in government revenue of 11.8 per cent. According to Treasurer Swan, government revenue is going to go up by $39 billion. Instead of collecting $330 billion, as we are this year, somehow next year we are going to collect $369 billion. It is unbelievable—an 11.8 per cent increase in government revenue. Of course that is against a background of GDP growth, according to the government, of 3¼ per cent and a reduction in our terms of trade, according to the government, of 5.75 per cent.

The last time there was growth in revenue of more than 11 per cent was back in 1987-88. We will recall that the situation back in 1987-88 was that we had GDP growth of 5.6 per cent and we had an improvement in the terms of trade of about 8.7 per cent. That was the background against which we had a growth in revenue of more than 11 per cent. It is quite difficult to achieve a growth in revenue of 11 per cent. The Treasurer knows two things. He knows, firstly, that it is highly unlikely that he will ever have to be accountable for the delivery of the final budget outcome. After September 2013, given the current political trends, even he would accept that there is only a slim chance that he will have to defend the performance of the government against budget, so he is reasonably safe in putting wildly optimistic revenue assumptions into the budget. Secondly, even if the Treasurer is still the Treasurer in September 2013, do you know what he will do? He will bring out the trick that he comes out with every single time and say, 'Shock, horror—revenue has collapsed, revenue has fallen away; we thought that revenue would increase by 11.8 per cent'—even though that was based on completely unrealistic expectations—'and we thought that we were going to have a $39 billion increase in revenue from 2011-12 to 2012-13, but it did not happen. It is somebody else's fault: nothing to do with our massive increases in spending, nothing to do with our wasteful spending, nothing to do with the fact that we treat taxpayers' money with absolute contempt, nothing to do with the fact that we cannot wait to shuffle $500 million out the door before 30 June, in the next six weeks, by bringing spending forward from 2012-13 into this financial year.'

By the way, I make this point to the Treasurer: shifting expenditure from the next financial year into this financial year is not a spending cut next financial year—it is cooking the books. It is trying to create the illusion of a surplus in 2012-13 where there is none. If people in corporate Australia used the accounting standards that this Treasurer and this government live by, they would be locked up. People in corporate Australia would not be allowed to fiddle the accounts the way this Treasurer has been fiddling them in recent weeks.

In the middle of all this we have the carbon tax. 'Carbon tax' is a term that the Treasurer dare not speak. In his whole 11-page speech bringing down the budget he never really engaged with the issue that supposedly is this big achievement and this big policy challenge that this government has confronted, and that is the government's approach to climate change. I was interested to read in the Financial Review today that former Labor leader Mark Latham was similarly surprised that a government that is supposedly so proud of its achievement of imposing a carbon tax on the Australian people did not have more to say in the budget speech on why it is doing what it is doing with the carbon tax—a carbon tax which will push up the cost of everything, which will make us less competitive internationally, which will make it even more expensive to do business in Australia, which will shift jobs and emissions overseas and which of course will do nothing for the environment although it will impose sacrifices on everyday Australians by pushing up their cost of electricity and their cost of living.

The reason the Treasurer did not say more about it is that increasingly people inside the Labor Party are embarrassed about what the government is doing; increasingly people inside the Labor Party understand that what they are doing is inappropriate, that they are going to hurt Australians through increased cost-of-living pressures without doing anything beneficial for the environment in return. Ministers in the Labor cabinet are briefing the media that they think they should scrap the carbon tax, we have had Kristina Keneally saying that we should scrap the carbon tax and we have backbenchers coming out and saying that too. When we are the government and we rescind the carbon tax, I am convinced that the Labor Party will sit side by side with us to make sure we get rid of this toxic tax.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I was really interested to hear Senator Cormann quote Lenin. What did he quote from Lenin? 'A lie told often enough becomes truth.' I thought he was talking about Tony Abbott, because the lies from the coalition about climate change, government debt and the global financial crisis are repeated time and time again in an attempt to try and make them truth. But they have failed.

If you want to quote Lenin, let me quote someone who did not achieve quite the international standing of Lenin—Robert Menzies. In a broadcast on 24 July 1942, when he was talking about his Liberal creed, Menzies said:

Nothing could be worse for democracy than to adopt the practice of permitting knowledge to be overthrown by ignorance.

Yet time and time again we see ignorance overthrowing knowledge on the opposite side. There are many in the coalition who understand the science of climate change, who understand the physics of climate change, but allow ignorance to overthrow both the science and the physics for short-term political advantage.

Menzies went on to say:

Fear can never be a proper or useful ingredient in those mutual relations of respect and good-will which ought to exist between the elector and the elected.

We have just heard a breakdown in that goodwill from Senator Cormann. The appeal to fear in his speech is typical of the coalition. They run fear campaigns on the budget, on climate change and on the global financial crisis—they are just totally consumed with fear campaigns. They should listen to what their spiritual leader Robert Menzies said about fear never being a proper or useful ingredient in mutual relations.

Senator Humphries interjecting—

As soon as you mention Robert Menzies and you start to identify what is supposedly the creed of the coalition, coalition senators get all antsy and uptight because they know exactly what Menzies was saying and they know that the Menzies creed is being destroyed, day in and day out, by the coalition under Tony Abbott. They know that there is no Liberal creed anymore. It is no wonder the coalition get all upset about being quoted the words of their spiritual leader—they are so far away from Robert Menzies, they are so far away from their spiritual leader, that they cannot sit quietly and listen to his words. They know they have rejected the creed and philosophy of Robert Menzies.

In that July 1942 broadcast, Menzies went on to say:

And so, as we think about it we shall find more and more how disfiguring a thing fear is in our own political and social life.

We have just witnessed from Senator Cormann a supposed analysis of the Labor government's budget, an analysis based on fear. What else did Robert Menzies say back in 1942? He said:

A political party must never be a party which chronically says "No."

This is the man who established the philosophy of the Liberal Party and he says you should never chronically say no. What is Tony Abbott about now if not chronically saying no to every issue? Menzies continued:

If it never loses sight of its own ideas, it will be positive and creative.

Where are the positive aspects of the coalition? They are nowhere to be seen. Where is the creativity of the coalition? It is nowhere to be seen. The coalition is about fear and negativity. That is the creed of the coalition in this parliament—fear and negativity.

Robert Menzies went on to say:

In brief, Australian Liberalism must present itself as the party of action, and the party of the future. We are not the ANTI party, but the PRO party.

I cannot see what the Liberal party or the coalition stand for. I know what they are against. They are against pricing carbon—when they were for it under John Howard. They are against spending government money to keep people in jobs. They are the anti party, the party that Robert Menzies said they should not be. They should not be the party of fear, he said, but they have become the party which promulgates fear, day in and day out and in every speech. Senator Cormann's speech was typical of the fear campaigns being mounted by the coalition.

Listen to your spiritual leader. He was not that great but at least he had the right idea on some of these issues. You should not promulgate fear, you should not promulgate negativity—you should actually have ideas of your own. But you have lost that capacity under the leadership of Tony Abbott. And what is this motion, which I oppose, saying? It says there are 'storm clouds on the global horizon'. At last, the coalition have actually lifted up their eyes from their own bootlaces, looked around the world and decided there are problems in the global economy! They have actually done it. I was shocked when I read the resolution, because since 2008 they have been denying that there is a global financial crisis. I remember senators on the other side describing it as the 'North American crisis'—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

North Atlantic.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Go back and check Senator Bushby's statements on the record. So there was no global financial crisis according to them. When you look at their analysis—and I use the word loosely; I use the word 'loosely' about anything Senator Cormann says—you cannot find any talk of the global financial crisis. They say, 'We went from a surplus to deficit,' as if nothing had happened in the global economy, as if banks were not collapsing all around the world, as if governments were not propping up banks around the world, as if multimillions of workers were not losing their jobs around the world, as if industry had continued to invest as they had been investing prior to 2008, as if investment in the global economy had not dried up. In 2008 the Lehman Brothers and the global financial crisis were not in the lexicon of the coalition. They try and wipe it out, as if it had never happened.

That is why I was so surprised to see some recognition from the coalition that there was something happening globally and that there was a problem that governments around the world had to deal with. By the way, welcome to the real world; you have actually got there! There are problems out there, problems that governments all around the world have been trying to deal with and issues that you have been trying to pretend are not there.

Senator Fifield's motion says there are these 'storm clouds on the global horizon'. Well, big storm clouds have been around for a long time, and they are not on the horizon; they have been here since 2008. The Labor government have been dealing with them in a way that every other government around the world wishes they could have dealt with them—with speed, efficiency and effectiveness, and in a timely, targeted and temporary manner. That is what we did during the global financial crisis. We also underpinned 210,000 jobs in this economy. And what did the coalition say at the time? They said, 'We should just wait and see.' And who were they echoing? They were echoing former US President Herbert Hoover, who basically said 'do nothing' on the advice of the Hayekian economists of the time. 'Do nothing. The market will fix this if you just let the market take the time to resolve this. Government should stay out of it and everything will be okay.' Everybody knows that was a nonsense. Everybody knows there had to be Keynesian stimulus to bring economies back to some kind of normality. Everybody knows that that was what had to happen. Yet the coalition were arguing that we should just 'wait and see' what happened. If we had waited to see what happened, 210,000 jobs would have been lost; communities, workers and families around this country would have been devastated; government debt would have been far greater than it is now; and this economy would have been struggling to recover. Instead, we are the envy of the world. We are an economy with a AAA rating, something the Howard government could never get across all of the rating agencies. We are a government that put in place, as I said, in a timely, targeted and temporary manner, initiatives to keep this country running.

Those opposite then go on to say, 'How dare you lift the debt ceiling to $300 billion?' I am always amused when Senator Joyce gets up to talk about debt, because he was the shadow finance minister who probably lasted the shortest period of any shadow finance minister in history. I am glad Senator Sinodinos nods and agrees with me.

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

No, I don't.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I thought I had better have a look at what Senator Joyce was saying, because I am not an economist. I know Senator Joyce says he is an accountant—I would not trust him with the limited accounts I have!—while I am only a humble fitter and machinist. So I went back and had a look at this debt issue. The best advice I could get was from the Budget Policy Division of the Australian Treasury—not a bad place to go, Senator Sinodinos; what do you reckon? That is where you should go to get some advice. I know you were there during your time. I know John Howard went there. I do not think Peter Costello went there very often, because he was not very successful. They had an internal paper for discussion within the Treasury, and it says:

Understanding debt and its historical trends is important, as the level of debt provides one measure of the strength of public finances. Levels of public sector borrowing fluctuate in line with the economic cycle and the budget position. This paper briefly describes the various measures of debt and trends in government borrowing.

That is from the experts. This is the experts in Treasury talking about government debt. And what do we hear from Senator Joyce, the shortest lived shadow finance spokesman in the history of the coalition? He keeps talking about gross debt. So what do the experts say about gross debt? They say:

Gross debt represents a portion of the total liability a government owes to creditors.

It tells you what the main component is and says:

While the gross debt measure provides information on government finances, it is only a partial indicator.

You would agree, Senator Sinodinos, those are the facts—it is only a partial indicator. You could not argue against that. It goes on:

Gross debt does not incorporate amounts that are owed to government by other parties. Also governments, like an individual or businesses, hold assets which can be sold to meet their financial obligations. To capture the asset side of the equation, net debt needs to be considered.

It goes on:

Net debt is the most commonly quoted and well-known measure of a government’s financial strength.

I never heard even Peter Costello, with all his failings, foibles and weakness, talk about gross debt. I never heard John Howard talk about gross debt. I heard them talk about net debt and net debt is what all economists look at; it is what governments around the world look at; it is what the IMF looks at; it is what the OECD looks at. And the Treasury officials say:

Compared with gross debt, net debt is a better measure of a government’s overall indebtedness as it also captures the amount of debt owed to the government.

So when you see Senator Joyce stand up, you have to understand that he is an accountant—my view would be he is not a very good one. He is not an economist. You should rely on the experts. Then in the Treasury paper A history of public debt in Australia, by Katrina Di Marco, Mitchell Pirie and Wilson Au-Yeung—they are the ones who know what they are talking about, not Senator Joyce—they say:

The case of Japan most clearly illustrates how only considering gross debt can result in a skewed interpretation of government finances.

Skewed interpretations is what the coalition want the public to look at—not honesty but a skewed interpretation. They say that, if you looked at that, the gross debt measure for Japan is 173 per cent. They go on to say:

Canada, which has a comparable amount of gross debt to France, Germany and the US, has a significantly lower level of net debt—

So you cannot look at gross debt and Senator Joyce needs to understand this. We get told we should run the government like a business. We had better not run it like Fortescue Metals, like Twiggy Forrest, with a total debt of $5.997 billion and a total equity of $3.141 billion. What is the debt to equity ratio for Twiggy? It is 190 per cent. I know Senator Cormann is very close to Twiggy. I know Senator Cormann would do anything the mining industry tells him to do, but when he comes in here and lectures us about debt he should understand that the people he is arguing for have debt to equity ratios of 190-plus per cent. So do not lecture us about this.

Senator Sinodinos was a key government adviser. What did we end with after the period of the Howard government? We had a failure of investment in this country, with less than two-thirds of profits reinvested. We had a failure of innovation, with among the lowest R&D innovation in the world. We had productivity declining, at the bottom of the OECD. We had a failure of development. We had elaborately transformed manufactures diving. We had a failure of balance. The balance was all about putting in Work Choices to try to crash workers down to increase productivity through lower wages; it does not work, Senator Sinodinos, and you were up there. And we had a failure of sustainability. Even though you were advising, and former Prime Minister John Howard was advised to do something about climate change, it never happened. The best we got was a $10 billion investment in the Murray and that was done without even going to cabinet—the ministers did not know anything about it. So do not lecture us about credibility. You have none.

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

What do you say about a contribution like that except that it was relentless negativity? You accuse the opposition of negativity but we get relentless negativity from the government. Senator Cameron, my advice to you is to stick to fitting and turning. Senator Bob Carr, the Minister for Foreign Affairs, on Lateline talked about the 'nattering nabobs of negativity'. I think it was you he had in mind, Senator Cameron. I will come back to your contribution in a little while.

May I commend Senator Cormann on his remarks on this motion, because at the end of the budget week we have a chance to reflect on what we have seen and heard this whole week. I believe this budget will be remembered for being one with no coherent economic strategy, which fails to deliver economic growth or sustainable budget surpluses or to tackle debt in a sustainable way. This is a budget in which the Prime Minister is on her knees seeking forgiveness from the Australian people over the carbon tax. We see this through the relentless procession of the further handouts in this budget—the sugar-hit payments like the new schoolkids' bonus and the further increase in family tax benefit part A and other benefits for households. No-one argues that households do not deserve benefits, but to keep her faith with the Australian people over compensation and to try to improve the compensation, she has had to break a series of other promises and reverse positions on a whole history of matters.

Labor has dumped its promised company tax cut. Remember how much the Prime Minister and the Treasurer, Wayne Swan, made of the importance of company tax cuts to improve our competitiveness in the region? They talked about the fact that our company tax rate was out of kilter with those of the region. Ken Henry produced a whole report in which he argued about the need to reduce company tax rates by five percentage points in order to make us more comparable and competitive in the region. Ken Henry knows, business knows and observers know that today we do not benchmark or compare ourselves against the US, the UK or Europe; today for us the competition is in the emerging economies and in Asia. So we have to benchmark our tax against them and take measures to improve our competitiveness and productivity. Here we have a situation where the Prime Minister under pressure, fearing the reception to the carbon tax on 1 July, was forced to make further changes to compensation and that is why she translated these company tax cuts into further measures focused on households.

In the process of trying to bring in a surplus budget the government has broken its promise on foreign aid spending. There has been much argy bargy about that in this place. The reality is that the government has deferred its commitment on foreign aid and in the process saved $3 billion or $4 billion dollars over the forward estimates. You could justify that on budgetary grounds, but you do not need to keep denying that you have done it—just accept that you have done it. We have seen both the Minister for Finance and Deregulation and the Minister for Foreign Affairs in this house appearing to obfuscate and not accept that reality. If there is one thing that this government will be remembered for, it is that capacity not to admit that something has been reversed—accept it, take it on the chin and move on. Instead they seek to rationalise, justify and obfuscate.

In her promise of seeking to achieve a surplus budget, the Prime Minister broke her commitment, her solemn promise, to increase the funding for our defence forces by three per cent in real terms per annum. Instead there has been a cut of a further $5.5 billion to defence, a total of $8 billion of cuts to defence over the last two budgets. Labor has cut defence spending as a proportion of GDP to historically low levels. It is almost three years since we had the defence white paper. I was involved as deputy chairman of the consultative committee that went out to consult the community about what we do about defence. It is good that the Parliamentary Secretary for Defence has joined us. I was part of that committee and a report was put together—a report which promoted the need for adequate defence spending and with a particular flow-on to defence industry. In one fell swoop, or a couple of fell swoops if you include the last budget, the government has reneged on those commitments. It has left the Defence Force with very low morale, fearing that they have a minister who will not prosecute their case in cabinet and making them feel like they are taking a disproportionate share of the burden of meeting the government's surplus target.

This does not conclude the number of flip-flops the government has undertaken in the process of trying to achieve a surplus budget. There was big talk over the last few months about the commendable agreement between the government and the opposition that we should move towards a National Disability Insurance Scheme, but in the budget, what did we get? Instead of the $3 billion or $4 billion that the Productivity Commission had indicated was appropriate for the start up of the NDIS, we got $1 billion committed over the forward estimates. It may be that the Prime Minister has some great plan that, if she wins the next election, she will come back to this issue and give us a great big infusion over the balance of the forward estimates. But, as we stand today, the commitment of this Labor government is $1 billion over the forward estimates to get this process started. Again, it is a major constituency where the Prime Minister made a big hit last week, I think it was, when she went to a big congress and announced with great fanfare, 'Don't worry, in the budget we will look after you.' Those expectations were dashed with this $1 billion over the forward estimates. Let us not forget that when the NDIS is up and running, the total additional cost on a per annum basis will be something like $6 billion to $7 billion to $8 billion per annum. That is a very big commitment that we have embarked on in this area. Again, I say she has dashed those expectations.

The Gonski review into schools education is to receive $5 million, even though Gonski put a price tag of something like around $5 billion for what needs to be done in this area. The government could have come clean and said, 'Look, we just can't afford this,' but to put in $5 million and say there will be an ongoing process of consultation and to engage in what I might describe as a kabuki dance with the states about who will provide what in this area is a great shame, because expectations have been raised and again they have been dashed. That is not all.

Every time the coalition puts out a good policy, the government steals it. There is no better example of another flip-flop or back flip than Labor allowing business to claim carry back losses of up to $1 million per annual for two years. The government criticised this very measure when it was announced by the coalition in April 2009. It was announced by that venerable stalwart of the opposition Malcolm Turnbull when he was the Leader of the Opposition. He announced that small businesses wanted to be able to carry-back tax losses, to help see them through the downturn as well, as to bring them forward. He talked about how it was a critical part of the economy. 'In these difficult times,' he said, 'small firms must be given the appropriate support to equip them to lead the economic recovery.' The govern­ment poo-pooed it; they argued against it; they said it would be too expensive and too ineffective. And yet here, down the track, is yet another damascene conversion to coalition policy and it is in the budget.

One of the underlying themes that I am trying to bring out here is that in seeking to make amends for its broken promise on the carbon tax by increasing the amount of compensation going to households, the government has had to break a whole series of other commitments and promises. In political terms, what that does is reinforce in the minds of the community the very reservation they have about the government. They cannot trust the government. They cannot trust the government to keep its word: the government chops and changes; it switches. There is no better illustration of this than the fact that to get to a surplus in 2012-13, the government has indulged in reprofiling, as it is called, of various expenditures. The loading of the back-to-school payment into the back of the 2011-12 year and the bring forward of Common­wealth grants to local government into 2011-12 have assisted the government to save more than the $1.5 billion that is the surplus in 2012-13. Again, the public are entitled to be cynical if these are the sorts of tricks that are used in order to create the artifice of a $1.5 billion surplus in 2012-13.

More importantly, when we look back on the record of this government, since coming to government Labor has deviated from its previous budgets over the last four years by $74.7 billion. Over the last two years the government has deviated from its budgets by $28.7 billion. On budget night 2010, Wayne Swan told Australia that the deficit for the financial year 2010-11 would be $40 billion. Instead, it delivered a deficit of $47.7 billion, a $6.9 billion difference. Last year on budget night, Wayne Swan told the Australian people the deficit for the financial year 2011-12 would be $22.6 billion. This week he told the Australian people that the deficit is expected to be $44.4 billion—a $21.8 billion difference. The public are entitled to ask, 'Why should we therefore trust the proposition that you will do this year what you have not done in the last at least three out of four budget years?' And they are entitled to have that view. That view is also cemented by looking at the budget assumptions.

There is no doubt that the budget is underpinned by some rosy economic forecasts, some rosy forecasts about growth, because the budget assumes that we resume trend growth, 3¼ per cent, in the next fiscal year. At a time when the Reserve Bank has become increasingly pessimistic about the path of the Australian economy, we have had a 50 basis point reduction in interest rates because the Reserve Bank has recognised that it overestimated growth over the last few months, and all indicators—of business and consumer confidence, the retail sector, the construction sector, the housing sector—have been that the economy in the non-mining parts has actually been growing very slowly or in some cases going backwards. There is no doubt the mining sector is growing strongly. There is no doubt mining investment is going gangbusters. And there is no doubt that that 20 per cent of the economy is contributing the bulk of the growth to the economy.

The RBA, the Reserve Bank of Australia, have seen through that. They have looked at the softness in the non-mining part of the economy and they have recognised the need to take interest rate action. That is why they gave us 50 basis points on the first Tuesday in May. They are looking at the budget and they will be looking at the accounting tricks. They will not be signing off on this budget, in my view. They will be looking for the continued softness in the economy. They will look with a jaundiced eye at these rosy economic forecasts. They will look with a jaundiced eye at the optimism that the budget displays about the international economic picture, as we established in question time over the last couple of days.

There is no doubt that the situation in Europe is deteriorating. It is deteriorating as we speak. It is deteriorating in Greece, where there seems little hope of having a stable government. It is deteriorating in France, where the new president is going for growth as opposed to austerity. Already we are seeing Spain teetering on the edge of financial implosion. Bond yields in Spain have exceeded six per cent. That is an indication that investors are starting to flee Spain; they are starting to get worried. It is one thing for Greece, two per cent of the Eurozone, to have problems. But there will be a bigger issue if Spain gets to a situation where the Spanish government is unable to fully bail out the Spanish banks. That will have implications all across Europe. Those are the downside risks that we are dealing with at the moment.

This is in the context where, apart from those rosy growth assumptions, we have rosy assumptions about how much the mining tax will raise and how much the carbon tax will raise, and if there is slippage in any of these then ultimately the government has admitted it will take further fiscal action. It will actually have a discretionary tightening of fiscal policy. What that means is that, if the budget deteriorates because the economy grows more slowly than they thought, they will actually take discrete policy decisions to tighten policy again, which means either further spending cuts or tax increases.

In his contribution to the debate today, Senator Cameron omitted to mention some of his own writings in this regard. He quoted Menzies and he quoted others, but he did not quote some of his own writings. In an article in the Daily Telegraph on 7 May we had laid out the Cameron manifesto. Forget about Menzies and the forgotten people; it is Cameron and the forgotten measures. These are the measures that I think he would have had in the budget. He called for an expansion of the minerals resource rent tax beyond coal and iron ore to other minerals. He called for a financial transactions tax to get at all those smarties in the financial sector, to put a bit of sand in the wheels of commerce. He argued about greater taxation of trusts. All those farmers and others out there, all those small businesses that have trusts, Senator Cameron wants to come after you. He wanted to earmark taxes to pay for the National Disability Insurance Scheme, to pay for the Gonski review and to pay for reforms to aged care. If we earmark these taxes, what sort of money are we talking about? In the case of the National Disability Insurance Scheme we are talking about raising an extra $8 billion per annum. In the case of Gonski, we are talking about an extra $5 billion. In the case of reforms to aged care, again, we are talking about $3 billion or $4 billion over time. This is the Cameron manifesto.

The reason I raise it is that, while Senator Cameron may be a humble member of Her Majesty's government, the fact of the matter is that, in the near future, if the budget starts to slip, if we start to see the surplus unravelling—

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

Oh, that could never happen, could it?

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

I have to say, Senator Mason, based on previous experience, this is a distinct possibility. Then we have Senator Cameron's ideas on how he would pay for all this. There has been much made of the issue of debt—net debt versus gross debt and all the rest of it. It was fantastic that Senator Cameron found his way to the Treasury in order to speak to someone or at least get someone to give him a piece of paper that would explain all this. But the reason this is an issue is that people in the community are told that the government is going to achieve a surplus of $1 billion in the next financial year and simultaneously they are told, 'Oh, but the government is also going to have a bill in the parliament to raise the debt ceiling to $300 billion.' Then people ask, 'Hang on, if they are running a surplus, why do they need to borrow?'

There are many explanations as why that is the case. Part of the explanation, of course, is that the government is not only borrowing for itself, to fund its own activities and operations; it is also borrowing on behalf of public sector non-financial corporations such as the Clean Energy Finance Corporation and the National Broadband Network. The theory there is that the government borrows on its credit rating, it passes on the money and then these parties will invest the money, and because they will make a commercial rate of return we do not need to worry. We will have an increased liability on that side of the balance sheet; we will also have an increased asset on the other side. This overlooks the fact that the Clean Energy Finance Corporation and the NBN have both been costed as being unlikely to make a commercial rate of return.

Senator Conroy's own study, which he finally relented and agreed to have done on this, indicated that at best the NBN could generate a six per cent rate of return—and this is as a monopoly. A six per cent rate of return is the 10-year bond rate or something to that effect, not a commercial rate of return, not the rate of return you need when you are risking money in that sort of industry. So when people out there hear that the government is raising the debt ceiling they become confused. They think: what is the message here? It further increases the cynicism that people in the community have about the government and what the government is about.

In the time I have left I want to dwell on one matter, and that is the matter of means testing rebates and various benefits. There is a justification for means testing certain benefits, but if we take this too far the danger we run is that we increase the poverty traps. We increase the effective marginal tax rates in various ways up the income scale. That is an important issue, because it can deter people from working, saving and investing. In particular, it can have an impact on the secondary income earners in families, which tend to be the women in the families, the partners. So it is fantastic when people talk about the budget implications of means testing, but let's also think about the participation implications of excessive means testing. This is a theme I will come back to because there is no doubt that in some of the measures the government has taken it has created a situation where, contrary to the rhetoric of the Treasurer, who prides himself on being someone who spent part of his working life seeking to reduce effective marginal tax rates, he is now actually making it worse.

In conclusion, may I say that this budget will not be remembered for too long. There are too many other events occurring in this place which will overtake the budget. Even the best budget has a limited shelf life; this one will have an even shorter shelf life. People will see this budget through the prism of what they believe about this government, and ultimately what they believe is they cannot take what the government says at face value. They have had too many promises broken, too many expectations dashed, and the government's budget confirms all of those impressions.

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

I was relieved to see Senator Fifield's name attached to this motion in the Notice Paper today. I must confide to the Senate that I was becoming worried about Senator Fifield's wellbeing. As the Senate will be aware, Senator Fifield has been engaged in some very dangerous activities in the past week or so. He has been busy organising a coup within his own party, trying to depose his colleague Senator Kroger as a Senate whip and doing so against the wishes of his leader. We learnt that Senator Abetz was also a party to this little plot and that it was only quashed when Mr Abbott intervened and said that Senator Kroger was to be left alone.

Yesterday it was also revealed in whose interest Senator Fifield has been engaging in his rather inept plotting and scheming. Senator Fifield, it seems, is the agent of the man who made his career: his former employer, Mr Peter Costello. Yesterday we learnt that the former Treasurer is trying to come back to Canberra so that he can depose Mr Abbott and seize the Liberal leadership, a position for which he has in his own mind always been destined. Senator Fifield, it seems, is his point man in the Senate.

This motion begins by asserting that the budget 'does nothing to strengthen the Australian economy in the face of storm clouds on the global horizon'. Leaving aside the question of what a global horizon might be, this astonishing statement reveals just why the opposition might well want to bring Mr Costello back to Canberra. I could say a lot of things about Mr Costello's performance as Treasurer, but I am fairly certain he would never have said such a ridiculous thing as we can find in the motion we are considering right now.

Has the opposition noticed that the central feature of this budget, which is to cut or defer spending and increase revenue so as to put the budget back into surplus, is a motivation to strengthen the economy of the nation? Has the opposition not noticed that the debt crisis in Europe is all about the markets punishing countries which do not exercise the fiscal discipline necessary to keep their budgets in surplus? Has the opposition not noticed that the Australian economy is amongst the strongest economies in the developed world? Has the opposition not noticed that we will be the first economy in the developed world to move back to surplus? Has the opposition not noticed our low unemployment, our low interest rates, our strong trade position, indeed our healthy demographics? Has the opposition not noticed today's employment figures, in which unemployment has fallen yet again to 4.9 per cent?

Let me quote the independent economic commentary website Economy Watch:

Spurred by robust business and consumer confidence, Australia’s economy is expected to grow even quicker in the next five years. 2011 to 2015 should see Australia’s GDP … grow by 4.81 to 5.09 percent annually … Likewise, Australia’s GDP … per capita is expected to experience healthy growth.

I am not surprised at all that there are Liberal senators who want to bring Mr Costello back to Canberra, because the performance of their frontbench on the economy since they have been in opposition has been little short of laughable. First we had their appalling response to the global financial crisis in 2008. The shadow Treasurer then was Ms Julie Bishop. What was her response to the GFC? 'Wait and see,' she said. Wait and see! What a masterful piece of inspirational leadership that was. Fortunately for Australia, this government did not wait and see. Our Treasurer, Wayne Swan, acting on the advice of Treasury and the great majority of economists, responded rapidly and responded effectively with our stimulus packages, which saved this country from the kind of recession that afflicted most of the rest of the developed world and which, I am sad to say, is still afflicting much of Europe. While I am on my feet addressing this subject, let me pay tribute to Senator Nick Sherry, who was a member of the ministerial team that planned and executed Australia's highly successful response to the GFC—the most effective and successful response in the world. Senator Sherry gave us his valedictory speech earlier today, and he had every right to look back with pride on his long career in the Senate and in the ministry. He shares the credit for the success and strength of our economy today, which is in such glaring contrast to the state of many other developed economies around the world. I thank Senator Sherry for his service to the Labor Party, the government and the Senate and, like everyone else, I wish him well for the future.

Ms Bishop's brilliant performance as shadow Treasurer led to her being replaced by Mr Joe Hockey—the thinking man's Clive Palmer, the man who did such a great job in 2007 of persuading Australians that they should embrace the Work Choices legislation. Building on that success, Mr Hockey's comedy routine as shadow Treasurer has been ably assisted by his straight-man sidekick, Mr Andrew Robb, as shadow finance minister. These two have bumbled and blundered for the past three years, passing the buck between them, contradicting and undermining each other, putting out figures and retracting them—and then denying that they ever said it.

On Tuesday's Lateline, in response to the budget, we saw a breathless Mr Hockey insist that if he were in government he would cut much deeper. No wonder senators opposite want to bring Mr Costello back to Canberra. Perhaps they should get the band back together and bring John Howard back as well. Then they could give Australia what it really wants: the son of Work Choices! And if anyone thinks that is an idle threat they should read Mr Howard's speech to the postbudget breakfast in Brisbane, in which he said:

At some point this country has to revisit the area of industrial relations reform.

We all know what industrial relations reform means to Mr Howard and indeed what it means to those opposite. It means the return of Work Choices. And if we should forget that, we have Mr Howard's proxy, Senator Sinodinos, here to remind us.

What is the first item on the opposition's indictment of our budget? That it fails to cut spending. This is curious, because ever since Tuesday night the opposition and its friends have been castigating us precisely because the budget did cut spending. The budget in fact cut spending by $33 billion. Let me quote a source that senators opposite might respect: the Wall Street Journal:

Mr. Swan unveiled the biggest package of budget cuts in 30 years hoping to turn a deficit of $A44.4 billion in the 2011-12 fiscal year ending June 30, into a surplus of A$1.5 billion in fiscal 2012-13.

That is what the Wall Street Journalsaid—'the biggest package of budget cuts in 30 years'. Of course, when one contemplates the time span of 30 years, that means that this government has already achieved bigger savings measures than anything the Howard government ever managed.

So we have indeed cut spending in this budget. But, according to the opposition, this is a terrible budget, precisely because it has made some cuts or deferrals in the areas of defence, foreign aid and so forth. Yesterday John Howard described the cuts as 'shameful'. These cuts are real and, certainly in the defence area, they will cause the deferral of some desirable projects. So to suggest that this budget does not cut spending is just ridiculous. This is a government that makes tough decisions on spending when those tough decisions are necessary.

This line of attack by the opposition of course raises the obvious question: if the opposition thinks that a $33 billion cut in spending is not enough, what figure would they nominate? How about $70 billion? That is a nice round figure. As it happens, it is the one that both Mr Hockey and Mr Robb have put forward at various times—and then denied at various times, and then put forward again at various times. And although they have been trying to run away from that number, it is plain that the opposition's ERC—if one could dignify it with such a term—does not know whether it is cutting or spending, leaving or arriving. If the cuts we have made are not enough for the opposition, what would they cut? Education? Pensions? We saw the shadow Treasurer speaking in London about the wickedness of a culture of entitlement. So pensions no doubt sit somewhere on their list. But what else? Medicare? Defence? I notice that the opposition has been remarkably silent on the questions of defence in this place. These are the big-ticket items in the budget, and it simply is not possible to make deep cuts in government spending without cutting into these areas.

My advice to those opposite, particularly Senator Sinodinos, is to stop wasting your time costing Senator Cameron's manifesto and turn your minds to costing your own policies. But this opposition always tries to have it both ways on spending. This is an opposition that could run into itself coming through the door. They criticise the government when we make cuts to spending, but they promise the Earth to the various interest groups that support and fund their parties. They conceal their own plans—plans that must involve massive cuts to spending if they are to repeal the mining tax and lose the revenues it will produce and yet not put the budget back into deficit. I think it is time the opposition came clean about where they are and by how much they would cut spending. I hope Mr Abbott will do this in his budget reply speech tonight. But, as I recall his lamentable performance in his budget reply speech of last year, I must confess that I am not confident about that.

Today the opposition cries crocodile tears about foreign aid, but foreign aid is always the coalition's first target of choice for spending cuts. It is an easy target for the right-wing populism that coalition parties like to engage in when no-one is watching. I am sure the Senate remembers Senator Joyce's incoherent rambling speech in February of 2010, when he called into question our foreign aid budget in its entirety, especially our funding to the World Bank for poverty alleviation. Peter Reith—who remains influential in the Liberal Party, helpfully commenting on its fortunes from time to time—said recently that foreign aid is a waste of money. The website of Liberal MP Jamie Briggs recently ran an article calling for the scrapping of Australia's foreign aid to Pacific Island countries to help them cope with climate change. So this is the commitment of those opposite to foreign aid, and their support for its financing will last mere days.

The motion before us also refers to the world's biggest carbon tax. If the opposition thinks that we on this side are going to make any apologies for putting a price on carbon and carbon emissions, taking the first step on the long road to decarbonising the Australian economy, they are mistaken. This government has many achievements to be proud of, but I think history will record that the final passage of the carbon price legislation was one of our finest hours. We would of course have reached that milestone in 2009 had the coalition parties honoured the agreement Mr Turnbull reached with the government and passed the CPRS legislation. Instead, they allowed Mr Abbott, they allowed Minchin's militia and they allowed his fellow climate change denialists to seize control of their party. They reneged on their solemn agreement with the government and they chose the path of cynicism and obstructionism, something for which future generations of Australians will undoubtedly condemn them.

Eventually we succeeded in passing the carbon price legislation, along with its associated compensation packages. From 1 July this year, Australia will start to see the benefits of that package flowing to them. We have never denied that putting a price on carbon will impose some costs on some sectors of the Australian economy, an economy which we all understand is heavily dependent on fossil fuels and indeed coal exports. But we strongly believe that, in the longer run, it is in Australia's interests economically, socially and environmentally to take a leadership position in the slow and difficult struggle to save the world from the effects of human induced climate change.

In conclusion, I completely reject the terms of this motion. Those opposite have no grounds to criticise this government's record of fiscal responsibility. Yes, we went into deficit in 2008 and in subsequent years as part of our response to the GFC, a global financial crisis that those opposite still deny ever happened. The government did the right and responsible thing. Contrary to the primitive Thatcherite views of those opposite, there are times when deficit financing is necessary and responsible to stimulate an economy in danger of sliding into recession. We make no apologies for that and indeed the performance of the Australian economy is lasting testament to the effectiveness of the government's actions. But now it is time to bring the budget back into surplus and that is what we have done. That has certainly involved some pain, including in my own portfolio areas. But as a great Social Democratic Prime Minister of France, Pierre Mendes France, said:

To govern is to choose.

All parties have to choose what path to follow. We have chosen the path of discipline and responsibility by bringing down a budget that delivers a surplus while protecting those who rely on Labor to safeguard their welfare and their lives. Those opposite have chosen the path of irresponsibility, obstructionism, hypocrisy and even deceit. I am confident that the Australian people will recognise which side of the Senate has acted in the national interest.

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

I was actually enjoying Senator Feeney's speech. It was quite well written. It had good wordcraft in it. It had proper pitch. All around, it was almost Shakespearean. It is a shame he is leaving the chamber because I was hoping he would go for longer. The trouble is it was a load of rubbish. That is the problem—it was a complete load of rubbish. It was going so well that I was waiting for the punchline and then it came to the part where they are decarbonising the planet. That is the part that always throws you. Once they talk about decarbonising the planet, you know, 'They're back; it's the Labor Party.' This is the height of lunacy. There is one group in Australia who will benefit from the carbon tax—they will absolutely reap the rewards from the carbon tax—and that group is the coalition. We are going to use it as a mechanism to kick those opposite out. It is so obvious—it is as obvious as the nose on your face. The Australian people hate it and those opposite know they hate it. I do not know why they pursue it. They should have some gumption and stand up about it. Even if they believe in a lot of the tripe, they should have the gumption to stand up in their party room and say: 'This tax is going to destroy our party. If we go forward with it, it is going to destroy us. Unfortunately, policy is never bigger than a party and the policy has to go.' But they have not done that. They are carting themselves to oblivion.

Let us deal with the budget issues. The NBN is going out of the back door. It is absurd. The NBN is now just racking up major cost overruns. It does not have the customer base it was supposed to have. In accountancy there is a thing called impairment that you have to place on assets when you realise they are not making money, that what you paid is not what you would get if you had to sell it. Believe you me, after you spend all your money on the NBN, if you go to sell it you are not going to get your $50 billion back. You are going to have to book an impairment and that loss is going to be massive for the Australian people. It is a crazy idea. You have to look at where your overdraft is right now. You have applied for an extension of your overdraft to $300 billion. You do not have the capacity to go on frolics—it is not there. If you do, it is completely and utterly criminal because you are lumbering your mistakes onto other generations to come after you.

Another one is this schoolkiddie's bonus, or whatever you call it. Why? It is $1.3 billion, but it is $1.3 billion that we do not have. It is another $1.3 billion that we have to borrow. It is not our money. It is the good people of China's money and the good people of the Middle East's money; it is not our money. We are going to borrow $1.3 billion just to basically throw it and hope it lands in the appropriate spot. There is no logic behind it, no committee behind it, no peak industry body behind it. There is nothing behind it but a desire of the Treasurer—though probably it was a desire of the Prime Minister—to try to buy favour. That never works. It is the last refuge of a scoundrel, even after patriotism. It just never works. You cannot buy love. Even Mr Thomson could probably tell you that. It is a case where you will get an outcome, but you will not get the affection of the Australian people. Of course they will take the money. People will always take your money, but it does not mean they are going to respect you for it. The question everyone is asking of course is: why didn't you put it into the National Disability Insurance Scheme? That is something that is supported. It is a logical outcome. It is probably a far more appropriate place than to just throw it out the door.

The next one is defence. You are throwing out the insurance policy. Looking through the figures with defence, the cut to it against GDP takes us to levels that we have experienced in Australia before. From what we can see, prima facie, it is starting to look like levels we had around 1938. I am not suggesting for one moment that there is something, but it is just foolish. It is foolish for you to let that crucial portfolio go to such a low level. It is reprehensible that you have taken your eye off the ball, because with all this fiasco with Mr Slipper and Mr Thomson happening in the foreground, with Mr Rudd being absolutely carpeted by his colleagues and with the undignified way in which the Prime Minister of Australia carpeted the former Prime Minister, we in the opposition did not need to be an opposition—you do it to yourselves, every day. It is just absurd. It started to reflect that the dignity of office was lost. We knew as soon as the polling started to come out that the Australian people would switch off you, and they have.

While that absurdity was happening in the foreground, the absurdity in the background was our finances and the issue that I have always been concerned about, which is debt. It is not a case of just the level of debt but the trajectory of debt and the year-in, year-out, week-in, week-out, structural deficit that was becoming clearly apparent in your cash flows. It continues to this day. You cannot pull wool over people's eyes, borrow week after week $1½ billion, $2 billion, $3 billion and say, 'This is not a problem.' Of course it is a problem; it is a major problem.

I remember one week when you borrowed $3 billion. I was trying to think about that with housing. It is 6,000 houses at $500,000 a pop. You have about two-and-a-bit people in a house and that is a count of 13,000 or 14,000 people who you just purchased for the week. This is not logical and you cannot go on. Of course, it is not going to go on. Every promise you make on a financial footing, you break. It is all right giving people bad news—as an accountant, I can tell you that—but you must hit your target. You have to hit your target and when you are out, not slightly out but miles out, that sense of confidence in what you are saying goes.

Two years ago you told us that this year we would have a $13 billion deficit. Okay, that is a bad outcome. Then, a year later, you said, 'No, no, we've got it wrong. It's going to be a $22 billion deficit'—just slightly less—and then the year after that you go, 'No, we got it wrong again'. It was a $44 billion deficit. So there is a trend. Each year you are about 100 per cent wrong. Then you say, 'Even though we have got it so drastically wrong, you now must believe us.' Senator Feeney said, 'We have delivered a surplus'. You have not delivered a surplus. That is also another untruth. You have made a promise of a surplus—a promise that will not be able to be ascertained until 30 June 2013, for which the final figures will come in around about September. Between now and then we have to believe your promise.

Let us work on that. What other promises has this government made that we can therefore say makes it believable?

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

The carbon tax.

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

You can start with the carbon tax, that is the obvious one. It is a key policy. Or you could start with their deficits, their debt—it does not matter where you go. You could start with the latest one of a pecuniary interest for Mr Thomson. We are trying to find out who knew what in the Labor Party and who paid the bills. You cannot believe anything they say any more. It is one of those absurd things where we have to go through the ritual of asking the questions and then realising that there is nothing they say that you can trust.

The honour of office has been desecrated, destroyed and we are just going through a ritual until we get to the election. The election is coming. We went through this ritual in Queensland as well, but at least in Queensland, I would have to say, Ms Bligh had respect. There were people who thought that there was something slightly honourable about the way she was working.

Going back to exactly where we are: our gross deposition on market value was $265.84 billion by 30 June this year. It is just fantastic. I do not deny that you did not start with a gross deposition but it was about $58 billion. It has just taken off. Then we have to rely on the trust that you can somehow bring the show back under control. But notice that our gross deposition keeps heading north, even with your own figures. You are telling us about surpluses. The reason you do that is that you are banging things on the capital account but you are not booking your impairment value. So in every way we go around your books they are just a load of absolute tripe.

What do Australians see at present? How do they get a sense of confidence? We walk into the restaurant called the Australian Labor Party. We are greeted at the door by the maitre d', the Speaker of the House, Peter Slipper, and he sits you down at the table. Out the back you have the cook, the Prime Minister Julia Gillard. Not one thing she says is on the menu ever turns up, not one. There is not one thing you can believe. It does not matter what you buy; it will not turn up. And whatever you buy is going to cost vastly more than is on the menu. Have a look at the accountant, Mr Swan. This restaurant has had the four biggest losses in our nation's history. It now has the biggest debt in our nation's history. The entertainment? I do not know who you put down for the entertainment. I suppose Craig Thomson. The member for Dobell is the entertainment.

You can see it is not something that we placed on you. You guys—the Labor Party—placed it on yourselves. You did it to yourselves. The one thing that never lies is debt. Debt never lies. It does not matter how you cut it or dice it, you just have to pay it back. When you are up to $300 billion in debt—no doubt that is where you will get to—then you will come back with some other spurious excuse, just like the three previous times, about why you have to extend it. There will be some weeping and gnashing of teeth about how something went wrong and how we have to borrow more money. There was the ridiculous effort of the finance minister of the Commonwealth of Australia, who could not even nominate the nation's peak debt position. It was excruciating to sit here during question time, having asked the question, and have a palaver of percentages of GDP and net debt. We asked a simple question and we cannot get it.

We know that the competency to manage the economy is just not there and that every day the task gets harder. Every day the calibre of the people who are supposed to be managing it comes more under question. We did not put the country in this position; you did. Now you are desperately calling out, saying, 'Tonight, Tony Abbott must tell us how to fix our shop.' It is your shop and you made the mess. It is not a mess we made. The first thing we have to do to fix this mess is to get rid of them. (Time expired)