Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation, Senator Wong. I refer the minister to the 2012-13 budget, which forecast that Australia's terms of trade would decline by 5¾ per cent this year and a further 3¼ per cent next year. I also refer to the recent decline in spot prices for iron ore, which have fallen by 20 per cent since the budget. Will the government now come clean and tell us what the commodity price assumptions for coal and iron ore were which they used in the May budget for 2012-13 and 2013-14, especially given that relevant state and territory governments of all political persuasions reveal this information in their budget papers as a matter of course? How much lower will government revenue now be as a result of significantly lower commodity prices?

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

I will make a few points. The senator is correct, and I do congratulate him on being one of the few on that side who are actually aware that we did factor in a reduction in the terms of trade over the forecast period. That is because we did not make assumptions that the sorts of prices that Australia was getting for a number of its exports would be maintained at what might be called scarcity levels. We will consider these issues, as the senator knows, in the usual way in the mid-year review. It is the case, and the Treasurer has made this clear, that there is a decline in the terms of trade over the forward estimates. I would make this point, and I note that the minutes from the Reserve Bank today make a similar point: whilst prices might have come off historical highs, export volumes are still very significant and we are still seeing very significant investment in the resources sector in this country. I am not suggesting this, but I hope that the senator is not joining the 'doom and gloom' chant that that side of politics likes to engage in.

There is no doubt that you also have to look through the boom to what is beyond, and that is why the government is making investments in things like education and in skills in the university sector in a very constrained fiscal environment. Those investments are important, as is the NBN, in terms of the future productivity of the Australian economy. Obviously prosperity is something that you have to build in every period of government, and you cannot assume that the sorts of prices we were getting in 2011 will be the prices we will get to the end of the decade.

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I refer the minister again to the 2012-13 budget, which forecast that Australia's export volumes would increase by 4½ per cent this year and next year. Data released today by the Bureau of Resources and Energy Economics show that, on top of lower commodity prices, production volumes will also be lower than previously expected. What will be the impact on the budget bottom line of this dual decline in both commodity prices and predicted production volumes?

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

I am not sure which piece of data the senator is referring to. If he is talking about the BREE Resources and Energy Economics Quarterly report, which was released earlier, the note I have suggests that overall resources and energy export volumes are expected to grow by a robust 9.3 per cent in 2012-13. In particular, volumes are expected to grow strongly for iron ore, LNG, coal and thermal coal. Whilst export values are expected to climb, for the reasons Senator Smith referenced in his first question, he might be referring to a different data set but the data set to which I have referred shows robust growth in terms of export volumes. This accords with what the government has been saying. If you think about the mining boom, there are obviously different phases of it and, whilst prices may come off their previous record highs, you would anticipate the investment that we have seen would lift export volumes for a significant period of time. (Time expired)

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. When will the minister come clean with the Australian people and reveal how many billions in lost revenue will hit the budget bottom line over the forward estimates due to declining commodity prices and production volumes on top of the government's existing $120 billion black hole?

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

As I have said a number of times in this place, those opposite refuse to comply with the Charter of Budget Honesty that Peter Costello—who they reckon is the world's greatest treasurer—put in place. If you want to talk to us about fiscal policy and the need to be up-front with the Australian people, we will comply. I can give that guarantee. We will comply with the Charter of Budget Honesty; we have made that clear. You have never complied with it. Your economic team have never complied with it. So if you want to come in here and give us a lecture about savings, I suggest you get your own house in order. Let me tell you: what Premier Newman has done is exactly the same as Isobel Redmond in South Australia has done, which was to say, 'Let's just sack a quarter of the public service'—the exact same thing as in Tony Abbott's play book. Your only approach is to hide your savings from the Australian people and then, were you to win government, you would say, 'Oh, by the way, we are now going to engage in mass sackings.' That is the Liberal and National Party play book. (Time expired)