Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

Mr Deputy President, I rise to move:

That the Senate take note of the answers given by the Minister for Finance and Deregulation (Senator Wong) to questions without notice asked by the Leader of the Opposition in the Senate (Senator Abetz) and Senators Cormann and Sinodinos today relating to the Budget.

Although it was sorely tempting to take note of answers given by Senator Ludwig to non-questions asked by Senator Sterle, I did have to resist temptation!

Senator Wong's answers do deserve to be taken very careful note of, in particular answers given by her to questions in relation to Labor's $120 billion budget black hole. When that proposition—the $120 billion black hole—was put to Senator Wong, she cited a laundry list of previous Labor policy commitments that have been implemented and that have been in the budget. Her justification for not providing an answer to funding for the $120 billion worth of unfunded commitments was: 'Well, look at our previous commitments.' She said that they have all been funded and they have all been accounted for.

Now, she is technically correct. There are appropriated dollars for all of those previous Labor commitments. The question is, how were they funded? The senator gave the impression that, if these have been funded and have been provided for in the budget, it must be as a result of savings measures. That is the impression she sought to leave—but it is not the case. The bulk of the previous Labor commitments which she cited have been funded by borrowing. They have been funded by debt and have led directly to successive Labor deficit budgets. And that is the point that we are making here: you can fund anything—you can fund any commitment. It is not a problem for a government to provide in a budget for every single commitment that it makes—that is easy. The Commonwealth has the power of taxation. That is not what we are questioning.

What we are questioning is where that money will come from—and we know where the money for the $120 billion will come from, should Labor get re-elected, and should they implement those commitments. Every dollar of it, just about, would come from borrowing. Every dollar would come from borrowing that is additional to the $100 billion-plus of net borrowings that this government currently has. That is our point, Mr Deputy President. Any government can make provision, but it is how you make provision. Senator Wong has often made reference to the savings that this government has identified, but the bulk of those savings have been tax increases.

There are two great untruths at the heart of Labor's fiscal story. The first is that the budget has been in deficit, year after year, because of bad luck. And how does bad luck manifest itself? It manifests itself in declining revenues. Yes, there have been declining revenues and, yes, this government has had a lot of bad luck, most of it of its own making. The fact is that the reason why the budget is in deficit under this government, year after year, is policy decisions—that means decisions by government to spend. That is why the budget is in deficit. You cannot blame revenue write-downs, you cannot blame the global economy; it is because of spending decisions by this government. That is why the budget has been in deficit, year after year.

The other great fallacy of Labor's fiscal story is the contention that they have made savings, and that they have funded their commitments from savings. As I said before, that is not the case—these senators opposite count tax increases as savings. So you will understand, Mr Deputy President, why we are more than a little cynical about the $120 billion of unfunded commitments.

If Labor were successful at the next election, we know that the way those commitments would be funded would be through more borrowing and more debt, and we would see further deficit budgets. The government needs to live within its means. It needs to cut its cloth according to the circumstances. This government has never done that, not for one budget. It has never delivered a budget surplus.

I predict that, for so long as the Australian Labor Party is in government, they will never, ever deliver a single budget surplus because they cannot. They lack the will and they lack the strength of character to make the decisions to prioritise what is important above what is merely desirable.

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

I rise to take note of answers as referred to by Senator Fifield. Senator Fifield speaks of untruths sustaining a fiscal story. On that, no-one can doubt the credentials of the coalition. In fact, Senator Fifield raises the spectre: what happens if Labor is re-elected? I can tell you that one of the first things we will do, Senator Fifield, is thank you, because it is the political strategy crafted by you and your colleagues which I am sure will be a critical enabler to that glorious day, should it ever come.

The coalition come to this conversation, and come to this political debate, sitting on top of a policy edifice which could not possibly look weaker and which could not possibly look more ramshackle. A $70 billion black hole underpins the political proposition of those opposite—a $70 billion black hole which those opposite are determined to avoid and refuse to accept acknowledgement for—and now they have the temerity to attack the policy and the fiscal position of this government.

As Senator Wong made clear in her answer, the government that holds the record for having the highest level of spending as a percentage of GDP is the Howard government, at 24.2 per cent of GDP. While that number had fallen to 23.7 per cent by 2007, that is still far greater than it is today. In fact, the difference is some $24 billion per annum. So, in fact, rather than the Labor government, those opposite have the record of pulling more money out of this economy through taxation regulation. But, of course, you would never know that if you were to listen to the opposition—and there are a lot of other things you would not know as well. You would not know that those opposite propose to axe the carbon tax at a cost of $27 billion to the budget and that $3.2 billion of that is required to fund chairman Abbott's action plan.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

The Leader of the Opposition.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Senator Feeney—

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

The Leader of the Opposition and his action plan—the action man with the action plan. While those opposite might rail against a carbon tax, that $3.2 billion action plan is in effect the coalition's very own carbon tax. The $24 billion is required to refund big polluters for carbon permits. While those opposite like to spruik about sovereign risk, we find them roaming the highways and byways of this great country of ours telling business not to buy permits and not to participate in this scheme.

There are $11.1 billion of unfunded promises from those opposite, because they have resolved to hand back moneys raised through the minerals resource rent tax. And, to make this position of theirs even more farcical, they are determined to keep the benefits that flow from that taxation but have resolved to give up the revenue. They have resolved to give up the revenue so that they can hand it back to the likes of Gina Rinehart and Clive Palmer—although one must speculate that those opposite must be regretting the idea of handing Clive a cheque this week at least. To add insult to injury, while those opposite are determined to hand back $11.1 billion to the mining industry by disposing of this tax, we see in Western Australia and Queensland state coalition governments raising royalties on those very same commodities—thus making an absolute mockery of the coalition's claim to be the friend and defender of these industries.

We also see $8 billion in pledged tax cuts from those opposite. And, not content with a $70 billion black hole, we see those opposite peddling false hope in defence spending. Today we saw Senator Johnston have the temerity to ask a question about defence cuts compromising our national security—an outrageous assertion he could not make out. But where are the coalition's promises on defence spending? Where are the coalition's commitments to restoring defence spending to the level they say is appropriate? Of course, there is no such commitment; we just have weasel words from an opposition that cannot put before the Australian people a proposition that adds up or makes sense. Instead we see a coalition that are determined to walk both sides of the street, to peddle fear and to peddle false hope to various constituencies.

This week we heard that the Deputy Leader of the Opposition begged and beseeched Senator Joyce to stop helping. One might invite her to make the same request of all of those in her Senate team because, right here and right now, those opposite do not have a proposition before the Australian people that makes political sense or economic sense—and your political future will be destroyed as a consequence.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I rise also to take note of answers given by Senator Wong to questions asked by Senators Abetz, Cormann and Sinodinos. I note Senator Feeney was referring to allegations that the Howard government was the highest spending government as a percentage of taxation over GDP—something which Senator Wong also referred to in her answers to questions. But this of course is not the best way of actually determining whether a government is a wastefully spending government. What you really need to look at is a combination of both tax and borrowings, because borrowings is of course deferred taxation. If you only look at the taxation as a percentage of GDP you are not getting the full picture, you are not getting the full understanding of how much money a government of the day is actually spending as a percentage of the overall economy. The truth requires that you look at both tax and borrowings and then look at that percentage. A better indicator would be spending as a percentage of GDP rather than taxation.

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

On the 24 per cent—first time since the 1980s; 40 years. I'll take that.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Wong was interjecting there, but the reality is that spending gives you a much better idea, particularly if you take into account those things that are off budget, like the NBN—another spending which this government is incurring which formed part of its $120 billion budget black hole.

So let us have a look at the $120 billion budget black hole that this government is facing. It is now presenting Australians with this black hole, and it is growing by the day. A lot of the spending that is being added to this black hole is occurring because the government is desperate. It is looking to make promises—to solve problems all over the place—but there is no money to back it up. The government thinks that it can promise the world and it will worry about how it will pay for it later. The budget bottom line has already been hit by Labor's multibillion dollar blowout on border protection, as an example. Labor's budget will be further hit by massive unfunded commitments in disability services, defence, education, dental and maybe even now childcare payments to private sector employees.

Australians are entitled to ask where the money is coming from. We asked Minister Wong that question today, but the minister's answers were certainly deficient and the only option she had when asked those questions was the classic Labor Party tactic of divert and attack and to try to turn it all around and attack the opposition, using the spurious lines that it uses against us. Labor does not know where the money is going to come from. It has no idea. It is just going out and making promises, with no ability to actually back up those spending commitments with real dollars. In doing so, it is raising the hopes of Australians that a lot of these very serious issues—things that actually do need consideration—are going to be dealt with by this government, when the reality is that the money just is not there to be able to do that. The government continues to make heroic promises and there is no detail of where the money is coming from.

Let us look at what that $120 billion budget black hole is comprised of. It is important to remember that this $120 billion budget black hole is not actually included in the budget. This is all over and above the money that the government has indicated that it is going to spend in the budget. So what have we got? We have got the National Disability Insurance Scheme, which represents about $10½ billion a year once fully operational from 2018-19 and the many billions that are needed to be spent to get the thing up and running between now and 2018-19. In aged care, the government has promised a further $3.7 billion in new money over the next five years. For low-paid workers, there is an extra $1 billion government contribution to Fair Work Australia for the pay rise for social and community sector workers—taking the total commitment to $3 billion to 2021.

For offshore processing, there is $2.1 billion for reopening Nauru and Manus Island, on top of the cost blow-out that has already occurred as a result of the huge increase in numbers of people arriving by boat. The increase in the refugee intake to 20,000 is estimated to cost an extra $1.4 billion over the forward estimates. In defence, there is $36 billion for submarines and $16 billion for joint strike fighters—all unaccounted for. The Greens dental care scheme that they have been pushed into—a $4 billion package which was announced on 29 August 2012—is unfunded. There is $6.5 billion a year for implementation of the Gonski education reforms. But the Prime Minister has tried to hide the true cost by placing it outside the forward estimates.

Then there are Labor's off-budget commitments of $50 billion for the NBN and the $10 billion for the Clean Energy Finance Corporation. I could go further but, with $120 billion unfunded, where is the money coming from?

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Fifield pontificated that the position of the Australian economy at the moment is a direct result of decisions made by this government. By George, I agree with him! The position of the Australian economy at the moment is in fact directly related to decisions made by this government. Let us look at the position of the Australian economy. Unemployment, at 5.1 per cent, is almost half that of Europe and the United States. Interest rates in this country, at 3.5 per cent, are lower than they ever were under the Howard government, and inflation is under three per cent. Since this government came to office in 2007, 800,000 jobs have been created. More people are in work in Australia than ever before. Our debt levels are eight per cent of GDP, which is lower than most averages throughout Europe and, of course, the United States. How many businesses in this country have a level of debt less than 10 per cent? How many households have a level of debt less than 10 per cent? Not too many. This government gets a big tick when it comes to management of the debt situation.

Spending as a proportion of GDP is lower than it ever was under the Howard government. We managed to be one of the very few economies to avoid recession during the global financial crisis. So when Senator Fifield talks about the decisions of this government and their bearing on the economy, we are proud to stand on our record of economic management. But do not take it from me; take it from the independent experts. Today, yet again, Standard & Poors have reaffirmed this nation's AAA credit rating—a rolled-gold tick of approval for this government's management of our economy, the strength of our economy, the low levels of debt, the strong budgetary position and the Gillard government's strong management of our economy.

I find it highly hypocritical for those opposite to come into this chamber today and criticise the government for its budgetary position, particularly given that they refused to announce many of their election promises and have them costed. They refused to take part in the independent process of verification of election costings that was set up under the former Howard government by Treasurer Costello and is now overseen by the independent Parliamentary Budget Office. So they are completely hypocritical in coming into this chamber and criticising this government for its fiscal position and management of our nation's budget.

There is also the issue of who the government manages the economy for, and we see this in many of the government's decisions, such as introducing a minerals resource rent tax to ensure that the benefits of the mining boom are spread evenly amongst our economy and workers. The private health insurance rebate has been made much fairer under Labor. We are working towards the provision of a national disability insurance scheme and we are delivering increases in funding to education. These measures are completely opposed by the coalition.

We can see, in the management of the states, how the coalition would approach budgets should they come to government federally. The Newman government in Queensland cut 14,000 jobs from the public service. And these are not back-of-house jobs but important front-line jobs: nurses, teachers, doctors, palliative care workers and firefighters have all been cut because of the Newman government's decisions relating to their budget.

In New South Wales they have cut $1.7 billion from education, with every student in every school to be affected; and they have cut $3 billion from health. In Victoria, they have taken an axe to the TAFE system and vocational education and training. And they come into this chamber and lecture this government, which has just had its management of the economy and our nation's budgetary position reaffirmed with a AAA credit rating. They criticise this government's fiscal management and fiscal rectitude—and this is from the mob whose accountants at the last election ended up being fined, who get a catering company to do their costings and who will not commit to the Charter of Budget Honesty.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

I also take note of answers by Senator Wong to questions asked by Senators Abetz, Cormann and Sinodinos. The Labor government currently have two choices. They are going to have to increase taxes or they are going to have to fold at the next election. From the way they are currently conducting their business, it seems pretty clear that they are promising to spend up big while they think they still have the opportunity to make promises, but they have no way whatsoever of knowing how those promises are going to be funded when—if—they ever return to government.

It is pretty clear that there is a real move within this Labor government to increase taxes. Of course, that is the sort of thing you expect from a Labor government: get yourself into extreme debt and then try to wiggle your way out of it by increasing taxes. The major newspaper in my own state, the Courier-Mail, quotes Senator Doug Cameron as saying:

'When you see what is happening in Queensland and New South Wales … of course we can't criticise these other governments if we are doing the same thing ourselves. If the tax base doesn't increase, my concern is we will end up losing jobs and import-ant programs.

That is going to be the outcome. They are going to have to cut jobs, increase taxes or simply fold up their tent and let the party that is the party of good economic management clean up their mess yet again.

It has been interesting to watch Treasurer Swan and Prime Minister Gillard attempt to somehow suggest that the issues in Queensland and New South Wales have been curtain-raisers for the way an Abbott government would behave. An Abbott government will not behave like that, but the one thing an Abbott government will have in common with the Queensland and New South Wales governments is the fact that we are left to clean up the mess created in budgetary terms by a Labor government—typical yet again. They can spend and spend and never feel that they have to be accountable for that, because they go off on their little ideological trips and forget about what needs to happen.

It is extraordinary when we look at the extent of the unfunded proposals put up by this government. The National Disability Insurance Scheme is something very dear to my heart, but it is something that will break the hearts of thousands and thousands of people with disabilities and their families if it does not come to fruition. But there is nothing that this government has done to suggest that it will have the money needed in the next budget and the other budgets up until 2015 to progress the National Disability Insurance Scheme unless it increases taxes and cut jobs. There is nothing to show that they will have the funds to undertake their airy-fairy election-winning—hopefully, I think, for them—promises with regard to the Gonski education reforms.

Then of course we have the cruellest joke of all, which is the unfunded dental scheme which would be extended from children between 12 and 18 to children between two and 18. This would completely replace what has been a very successful chronic disease dental scheme that was developed under the then health minister, Tony Abbott. What Labor forgets to mention is that for the 19 months between when they closed down the Chronic Disease Dental Scheme and start their own scheme, there will be no funding of any sort from the Commonwealth government for dental. I continue to be bemused by the fact that the Greens could have gone along with this unfunded scheme that is on the never-never like so many of the other bubbles of pretend policy that come out of this government.

Question agreed to.