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

The Labor Party has no shame when it comes to casting around for more cash to feed its addiction to reckless and wasteful spending. The Labor Party has got no shame when it comes to rushing things through, pushing things through without proper scrutiny, irrespective of the unintended consequences and the damage that it might do. And it has no shame when it comes to the use of spin to make things appear different from what they are.

Let there be no doubt that this bill, the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012, is a shameless grab for cash from a government which is desperate for more cash to plug its budget holes. This is a rapid, six-month raid on people's bank accounts, first home saver accounts, superannuation accounts and life insurance—supposedly, all lost. But of course the devil is in the detail.

The government are trying to make people believe that this is all about them—all about helping them, somehow, about reuniting them with their money more quickly over the six months, from 31 December 2012 to 30 June 2013. The government will end up with $762 million worth of additional revenue.

This is revenue which was not budgeted at budget time and it is revenue which was not budgeted when the government promised that, in 2012, they would deliver a $1½ billion surplus. This is a measure that was first announced in the Mid-year Economic and Fiscal Outlook and it is a measure which will deliver the government nearly three-quarters of their promised 2012-13 surplus of $1,770,000,000, as advised in MYEFO.

The government is not being upfront with the Australian people. The government is trying to make people believe something that is not.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

It wouldn't be the first time!

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

As you quite rightly say, Senator Nash: this is not the first time. They say it is all about reuniting people with, supposedly, lost super, lost bank accounts, lost first home saver accounts and lost life insurance. But the government will end up with the people's money in order to make it look as though they are achieving a $1,770,000,000 surplus. And their desperation, casting around for more and more cash, is not an isolated incident. But I have to admit this bill does take the cake.

We have had a government which, over the last five years, has delivered $172 billion worth of accumulated deficits. It is a government which inherited a very strong budget position: no government net debt, a $20 billion surplus and $70 billion worth of Commonwealth net assets.

The government, in 2007, was collecting more than $1 billion in net interest payments on its investments. Now the government is heading for more than $150 billion worth of government net debt, is heading for $300 billion worth of gross debt and is now planning to pay nearly $30 billion in net interest payments just to service the debt that it has so far accumulated—and this is even before we get to talk about the $120 billion in unfunded spending promises that Labor ministers, from the Prime Minister down, have been making in recent months.

No wonder they are always casting around for more cash, through new and increased taxes. There were 27 new or increased taxes in the first five years of the Labor government, through more than $150 billion worth of government net debt. And they are also raiding government business enterprises, none more so than Medibank Private, the government-owned private health insurer that, until 2009, was a not-for-profit health insurer. In order to facilitate their raids on the bank accounts and on the capital assets of Medibank Private the government changed them into a for-profit fund, which means that they now have to pay dividends and income taxes.

But not only do they have to pay ordinary dividends out of their ordinary operating profits, they also have to pay the occasional special dividend. Whenever the government is short on cash, whenever it is trying to create a fiscal illusion, it looks around the government business enterprises for more cash. Guess how much cash Medibank Private are expected to put on the table for this cash desperate government?

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

How much?

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

$391 million, Senator Nash. The Treasurer, Mr Swan, is putting his hands straight into the pockets of the people that have their private health insurance with Medibank Private. To put that in perspective, Mr Acting Deputy President, how much profit do you think Medibank Private made this year? They made $126 million worth of profit but they are expected to pay the government $391 million. In fact, since this government turned Medibank Private into a for-profit operation, Medibank Private has been required to pay this government, desperate for cash, more than $800 million in ordinary and special dividends. Once you add the company tax requirements on top of that, this government has collected more than $1 billion in additional revenue from Medibank Private, which of course is money that has been accumulated by people paying their private health insurance premiums year in and year out.

But it is not just Medibank Private. The Reserve Bank of Australia was required to pay $500 million straight out of their reserves, even though only a few years ago the Reserve Bank said that their capital reserves were too low. That was at a time when they were much higher than they are now, but $500 million has come out of the Reserve Bank. You keep adding it up: $391 million from Medibank Private, $500 million from the Reserve Bank, a couple of hundred million from the Australian Reinsurance Corporation. Then there is the $762 million out of people's bank accounts, out of people's super, out of people's first home saver accounts, out of people's life insurance. If you put it all together, people across Australia will readily understand that the promised $1.77 billion wafer-thin surplus in 2012-13 is nothing but an illusion, a figment of the Labor Party's imagination. I have not even touched on the conveniently timed sale of spectrum, which leads to a $3½ billion spike in revenue in 2012-13—conveniently at the time when this government wants to make people believe it will be able to deliver a surplus.

Because this government is always desperate for more cash in order to plug another budget black hole and to feed yet another addiction to wasteful and reckless spending, it has absolutely no shame in pursuing bills like this one with indecent haste. This legislation was first announced in the MYEFO just a few weeks ago. The government wants it to come into effect on 31 December and now wants to have collected all the cash by the end of May. The government did agree to defer aspects of this until the end of May, but that delay is inadequate to deal with some of the consequences of this rushed approach. There is always a cost when you rush these sorts of measures because you want to collect cash quickly. This rush comes at a cost ultimately to people across Australia who are going to be captured by this legislation. Because of the government's judgement and the way it has defined things in this legislation, there is a view that their bank accounts or super accounts are all of a sudden lost.

The coalition will move to amend this bill to delay implementation and if those amendments fail we will oppose the bill. Quite frankly, we think the government should withdraw this bill in order to facilitate a more orderly transition to what the government is trying to achieve. The government did move some amendments in the House of Representatives, which was an admission that they had got their legislation wrong upfront when they tried to rush things through in even more indecent haste than what is happening now in the Senate, but it is still too rushed. Implementing these changes by 31 December this year, which was the original deadline, was just completely impossible for industry and was a recipe for disaster, as the rushed inquiry into this bill also made explicit. By delaying these deadlines at least a bit, the government has finally admitted this. But the problem is that the delay in the implementation deadline to 31 May 2013 is effectively tokenistic and quite ineffective. Before, people were required to have all their payment transfers done by the end of April; that is now going to be by the end of May. So, effectively, it is just a one-month delay.

While delaying to 31 May all the other aspects avoids a disaster over the Christmas period, it still requires banks and super funds to do a second set of processes similar but prior to those required by other government regulation changes or super reforms in the back half of 2013. As such, the extra processing and double handling is still not avoided, just pushed into the front half of 2013, along with the extra costs, the extra risks of unintended consequences and so on. Ultimately, that will be borne by people across Australia who are going to get caught up in this—all to facilitate $762 million in additional cash for this cash strapped and cash desperate government. The rushing of this legislation will impose costs. These costs will be borne in the end by the account holders, the consumers.

The problem with all of this is that we actually agree that the stated objective of the legislation, what the government say they are trying to achieve, is quite sound. If the objective is to reunite people with their money more quickly, that is fine. There is nothing wrong with that. What we get cynical and concerned about is that when the government say, 'We want to get you your money back more quickly,' they end up with $762 million of it in the next six months. How can that be in the best interests of people across Australia?

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

In the best interests of the budget!

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

It is in the best interests of the budget perhaps—perhaps. In our view we should still withdraw this bill to fix up its many and significant shortcomings. However we understand that that is unlikely because this government is desperate for the cash. Therefore the coalition is moving amendments to delay implementation of schedules 1, 2 and 4 for a full year. These schedules relate to what the government describes as lost super, lost bank accounts and lost first home saver accounts. Delaying these three schedules would have the effect of deferring around $600 million in net revenue and around $650 million in gross revenue for the 2012-13 year into the next year, 2013-14.

If these amendments are unsuccessful then the coalition will oppose the passage of the bill. The key changes the coalition has been insisting upon, that were non-negotiable from the outset and would deliver the greatest benefits to consumers and account providers across banking and superannuation, have not been met, which is why the coalition's amendments will delay the implementation dates of schedules 1, 2 and 4 of the bill by a full year, to 31 December 2013, so that banks and super funds could implement the necessary changes to their IT systems and make the appropriate communications with their customers in a more orderly, more efficient and more cost-effective fashion. The full year's delay would allow banks to dovetail these changes into the related processes that the Banking Act requires them to do annually in the second half of the calendar year, a process that had been essentially completed for the year by the time of the 22 October 2012 MYEFO announcement.

This is similarly the case with super funds. A full year's delay would allow super funds to dovetail these changes into the related processes that the stronger super reforms, also pursued by this government and announced in the last budget, requires of them by 1 January 2014.

The constant chopping and changing and putting changes in relation to the same area on top of each other on different time tables demonstrates that this government clearly does not understand what it takes to run a business effectively and efficiently. This government just does not get what it takes to run an economy in a way that does not impose excessive and unnecessary additional costs on business. This chopping and changing, going backwards and forwards, rushing about and going slow, and left and right and up and down, are the sorts of constant changes that undermine our international competitiveness. These are the sorts of approaches, and this is the sort of attitude, that unnecessarily adds to our sovereign risk profile.

Allowing changes to be done at the same time when all of these other regulatory change processes are already underway with specific timetables would be the sensible thing to do. I am sure that even the Labor Party understands that it would be much more sensible to align the implementation timetables for all these processes already underway, or are being put underway through this legislation. There is only one reason why that is not happening and that is because Mr Swan, the Treasurer, is desperate for the cash now. He is desperate for the cash before 30 June 2013 so that he can make people believe perhaps—unless some other disasters happen between now and then—that he will deliver a surplus in 2012-13. That is the only reason he is going for this rapid six-month raid for more cash out of people's bank accounts, out of people's superannuation and out of people's first home saver accounts.

The delay of a full year in implementation dates would have ensured a more orderly and reliable process overall with less risk of mistake, churn, cost and inconvenience to consumers and account providers. This is why for the coalition such a delay was non-negotiable from the outset and remains the case even after the last-minute admissions and compromises by the government. As a result, the coalition will continue to move amendments to introduce more realistic implementation timeframes and if these amendments are not successful we will continue to oppose the bill. We foreshadowed this opposition when the bill was being rushed into the House by the government. It is now clear that the rushed timelines for implementation are driven by nothing more than a desperate government trying to pretend it can deliver a surplus.

More than half the Gillard government's promised surplus—in fact nearly three-quarters, as I mentioned earlier—would come from this bill. The lost super measure alone raises $555 million, more than half the promised $1,077 million surplus for 2012-13. This undue, indecent, shameless haste and lack of proper process in developing these measures is driven by the government 's desperate need for cash to continue to preserve the illusion of a surplus for a little longer.

But I suspect that while all this is happening and while the government is always playing catch-up with more new revenue measures to try to chase their spending tail, the government is still spending like a drunken sailors anyway. I do not know why they even bother trying to keep the illusion going. Here they are, having made unfunded spending promises in the last few weeks to the tune of $120 billion, which come on top of $172 billion of accumulated deficits. This means that we have got a government here which over the last four budgets has spent $172 billion more than they have raised in revenue. Senator Wong during various question times and other related debates always tries to run the argument that this government is a low-taxation government as a share of GDP. They are putting it all onto the tax bill for future generations. Racking up debt, including more and more money onto the credit card—guess what that is—is deferred taxation and, if you want to have a true indication of what the tax burden of Australians is under this government, you have got to add the $150 billion of government net debt to the calculation. Some day or another, as governments in Europe and the US are finding out, the chickens come home to roost. At some point you reach a wall where you cannot keep living beyond your means. This government of course says, 'Oh, well, we are in such a strong position.' But the only reason we are in a strong position is because we had a strong government here up until 2007 that left the government a very strong budget. I move opposition amendment (1) on sheet 7321:

(1) Clause 2, page 2 (table items 2 to 11), omit the table items, substitute:

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

We certainly have to give it to this government! In terms of creating dogs breakfasts with the whiff of a rort about them, this government excels. It is their forte.

When we have the situation where a Greens amendment to a bill of this sort actually improves the bill, we really have to worry a bit. And yet, as we told the government over and over, and as we have said in a dissenting report, there is no way that banks and other organisations could be ready to accept the changes proposed in this unclaimed monies bill by 31 December. Finally, pushed by the Greens, they managed to get it to 31 May.

Of course, 31 May was not what we suggested. We will be moving amendments to try to delay the introduction of this for 12 months. Banks usually do a sweep, as they told us during the very, very rushed hearing on this legislation, well before Christmas. Imagine, during the Christmas period, being obliged to do a sweep of bank accounts to see what is left unclaimed? How desperate was this government to have tried getting this legislation through in the first place? It just smacks of, well, 'ineptitude' is probably the best term to use.

Not only do we have the situation with this legislation where a Greens amendment makes better sense than the government's initial proposal by pushing the date out to 31 May—it is a compromise, but if that is what the government insists on then the Greens have done a better job on this legislation than the government has—but we also have the bizarre situation where it is the Australian Bankers' Association that is telling us that the regulations will confirm that term deposits, linked accounts and children's accounts will be excluded.

The regulations? Where are the regulations? Well, they were not developed before we got the first run of this bill, and they still are not quite exactly with us. So we end up with the banking association—not the government—answering some of the questions around the concerns that we have with this legislation. There is the opportunity that people's accounts would be picked up willy-nilly. The whole point of this, of course, was to attempt to put the budget back into surplus.

If the budget in May 2013 ends up in surplus it is on the back of young workers and people with toothache, because for 18 months there will be no dental scheme funded by this government. We have already had evidence from the superannuation funds that the people who are most likely to have their accounts declared inactive within 12 months are young workers. People who might earn around $22,000 or so in six months are the people who will be most likely to have superannuation accounts under $2,000 and have that money claimed by Mr Swan and his greedy little friends, and then have to go through the business of claiming it back from the government. Of course, that will create a cost for the government, but I guess they are hoping that it will not create a cost in the same financial year. Perhaps they will work out a way to be very, very slow in paying it out.

Over the six months from 31 December 2012 to June 2013 the government is intending to raise $760 million in additional revenue from this bill. Let us look at their moves on bank accounts. Currently, if a bank account is inactive for seven years the money becomes unclaimed and it goes into an account run and overseen by ASIC. Not only are they more than halving the seven-year time frame to three years but this government is also saying, 'Oh no—pay us straight away. Stick it all in consolidated revenue so we can try and pretend somewhere along the line that we got a budget surplus.' Again, it is unconscionable that this is the way it will be gone about. We would have supported the idea of moving the time frame from seven years to five years, but we will not support the nonsense that is currently being proposed.

If we look at the superannuation side of it: as I said earlier, the people who will be most affected by this are likely to be young workers. The lost super is expected to raise $555 million in 2012-13. Let's face it: this is just a con aimed at getting the money in the bank account at the right time so that they can get their house in order.

We have the situation where not only do we have the superannuation levy likely to go to 12 per cent but we now have one of the architects of it, former Prime Minister Paul Keating, suggesting that it should go to 15 per cent. What? So they have a better chance to rip money off people earlier and sooner. It is just a shambles that has been created here.

We also have the Treasury secretary, Martin Parkinson, telling people, 'Well, the concessions we have on super at the moment, we can't let those stand. We'll have to get rid of those. We are going to have to raise revenue somehow and getting rid of the concessions on super would be a good way to go.' The superannuation industry has already undergone three tranches of change put through by this government. They are in turmoil right now and they will continue to be in turmoil if this government continues as it has with 'change this, change that, and let's do this, let's do that'. We have another piece of legislation around superannuation coming up shortly which, once again, the industry has said, 'Well, we're not sure what you mean. 'Oh, you won't have the regulations this time until 10 past midnight. We can't get the regulations.' And this goes on and on.

It is no wonder that the investment climate in Australia is very dicey at the moment and that there is a lack of confidence in the investment sector in Australia when you have this complete incompetence, this complete lack of information and also this complete lack of understanding of how the situation will pan out.

As far as I understand, we have not even talked about first home savers grants which can in many cases be inactive for more than three years. People want to set up a history of saving for four years, which is what they are required to do with first home savers grants, yet if they strike a tough patch after, say, two years and do not put any money in for three years, the government will sweep their account. What a wonderful way to encourage people to save for the future! It is yet another bizarre example of how this government is going. The timing of this is just too rushed. It is unrealistic.

In fact, as the banking industry put out, it is not feasible that they could have met the government's initial deadline and they will have issues and significant extra costs in meeting the 31 May deadline. A far preferable deadline would have been from delaying the implementation of this for 12 months to avoid the sorts of mistakes and the sort of inconvenience that will be caused to bank customers who have their accounts taken.

We even had the bizarre situation, when this legislation was introduced, that it was going to operate at the account level. That meant that if I had five accounts with a bank—and even though four of those may have shown transactions going in and out and in and out—the fifth one, if it did not have transactions in it for three years, would be swept away by the government looking for some money to stick into consolidated revenue and hopefully produce a budget surplus. So the problem with this is that they just do not understand how business works.

So we had the situation where the regulations had not been made and the unclaimed moneys provisions, including what accounts would be excluded, were not set out. It would appear that the regulations are now going to exempt linked accounts from being swept up by Treasury in pursuit of its elusive surplus. But where are the regulations? This has not been thought through properly and we are still not sure, other than having some advice, that it will not affect linked accounts.

During the inquiry, the Australian Bankers Association said the bill:

… seems to have been developed and pushed through the parliamentary process with undue haste While the changes in the legislation appear straightforward, they do in fact have significant implications for banks and for bank customers.

Of course, they have a significant problem. Imagine if you were posted overseas. There is a reasonable likelihood that you may be on a posting of more than three years and simply leave an account here, to earn interest and do nothing else. But if you are already overseas right now, how will you ever know? That is unless the banks spend their money to yet again fix up the government's policies and the shortcomings in the government's implementation. How will you know that account is going to be swept away?

Take accounts set up for children. The government tells us that they are going to exempt those. I am pleased to hear that because accounts for children are often set up by grandparents who simply leave them to earn interest until the children reach 16 or 18. I am glad that we will not have the kiddies of Australia attempting to provide a budget surplus for the Julia Gillard government.

Returning to first home savers grants and accounts, the problems with those multiply over and over. Another thing is that the government is intending—as they tell people in a friendly way—to pay interest on the moneys if and when people claim them back out of consolidated revenue. They intend to pay interest at CPI. Never mind what the account is earning, they will pay you interest at the cost of living index. So where are we going with this? There is a possibility that in fact people will be dudded out of interest payments because the government has claimed their money and it has taken them some time to realise they have.

Another problem is that the way this legislation goes about talking about how one identifies an inactive account is out of kilter with the current way that most people engage with their banks. At the moment it has to be by letter and if you have attempted to correspond twice by mail with someone and they fail to get the correspondence, well, that is it. I know that when I bought the house that I am currently living in it took me something like 3½ years to stop receiving mail for former owners and friends of former owners around superannuation and banking accounts. Each one of these I religiously sent back with 'Address unknown—return to sender' but six to 12 months later yet another one would turn up. So that took over 3½ years to stop happening.

So, despite my attempts to let these organisations know, certainly the systems appear not to be there right now that would allow banking and superannuation organisations to easily know when accounts are genuinely inactive and, when there is lost super, when people genuinely are not here anymore.

I see some attraction in not forcing employers to pay superannuation for people who are working casual work, such as backpackers, so that they are not put in the situation of needing to reclaim it or, as with most cases, forgetting to claim it and having it sit there until it does get reclaimed. I accept the point, and all the banking organisations and all the superannuation organisations accept the point, that having inactive accounts and so-called lost super accounts is a cost to those organisations. The administration around them goes on irrespective of whether they are earning anything. To change this willy-nilly so that the cost of the unclaimed moneys becomes a government cost and attempts to offset consolidated revenue is an interesting point.

The Joint Corporations and Financial Services Committee, of which I am deputy chair, will be holding an inquiry with ASIC early next week. I will be asking them at that inquiry about the degree to which unclaimed moneys are subsequently claimed. You would think that the government perhaps would need to look at whether they should have an offset for all this money, this $760 million that they are hoping to get into consolidated revenue through this measure. Should there be an offset so that, for those who reclaim their funds, the liability for the reclaimed funds is provided for? Or, do we just hope that not too many will do it, hope that this will slip under the radar and hope that nobody will pay attention.

The unintended consequences of the government's ineffective and shambolic implementation of legislation, their shambolic introduction and drafting of legislation—I hasten to add that it cannot be blamed on the people who draft the legislation but on those who make the policy on the run to force the legislation. Their shambolic behaviour is unbelievable and unsustainable in the same way that their management of the budget is unbelievable and unsustainable.

In terms of how the government should handle identifying inactive members and lost super accounts, surely this legislation should also allow for the fact that people use email and computers and that it is quite possible to have a very active association with a bank or a superannuation company without being an uncontactable person. The current regulations define a member of a fund as a lost member if: (a) the member is uncontactable—that is, the provider has never had an address for the member; and, (b), two written communications to the member have been returned to the provider unclaimed and the member's account has not been active for five years.

That clearly needs to be developed further. Once again, without proper consultation and without properly understanding how the industry works this government has got it completely wrong. It is not just the money that is lost or the accounts that are lost; it is also this government that is completely lost. This is yet another example of how poorly it has managed to construct its fiscal environment to attempt to meet the circumstances.

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

Madam Acting Deputy President Pratt, I take this opportunity on the last Thursday of the parliamentary sittings of the year to wish you a Merry Christmas. Perhaps the Christmas spirit has made me more generous than I usually am.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

What about me?

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

And of course my colleagues in the Senate at the moment, in the government and indeed the crossbenchers.

Kim Carr (Victoria, Australian Labor Party, Minister for Human Services) Share this | Link to this | Hansard source

What about your own team?

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

I wish them all a Merry Christmas, thank you, Senator Carr. I am in a generous mood and that generosity is perhaps reflected in the fact that I will concede that the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 is not without all merit. The objectives of the legislation to prevent the erosion of small, lost or inactive account balances from fees and charges and to reunite unclaimed balances with their owners are not unworthy. There are some good policy aims. But the Senate knows that in fact this is a rather cunning plan by the Treasurer to sort of put his hand down the couch, to look under any hollow log for money to somehow pay off the budget deficit. He has to find a billion dollars. As my friend Senator Cormann said before, about half of that, $555 million alone, will come from lost super and, indeed, from the bill as a whole, about $760 million will be acquired, which is about three-quarters of that required to pay off the debt.

Sadly, this is not new. What the government is really doing is taking money that is supposed to be used by citizens for their future retirement and trying to balance the budget today. So the government is living for today and not saving for tomorrow. Sadly, this philosophy has a very long history in Western politics.

You will be aware, Acting Deputy President Pratt, that after World War II, social democratic governments—indeed, even in the United States after about the 1960s, with President Johnson's 'Great Society'—made a habit of spending money they did not have. Social democratic governments got into a habit of spending money they did not have. In other words, they went into debt.

You have heard me many, many times in this place talk about Labor's record on debt since Federation. I always argue—and it is right—that every time Labor leaves office Australia is further in debt. There has never been an exception since 1901. Since this nation was founded, when Labor leaves office Australia is always further in debt. What is the government doing? It is borrowing from our children's future. That is what the Labor Party has done since 1901. I have said many times that it does not matter if it is peace, if it is war, if it is good times or if it is bad times, the Labor Party always leaves the citizens of this country further in debt. There has never been an exception in 110 years of this Federation.

The pea-and-thimble trick that Senator Carr and others like him tried to work out was that citizens, at least the middle-class ones—nudge, nudge, wink wink—would receive more in government benefits than they ever would pay in tax. That was the pea-and-thimble trick—that the middle class, at least, would receive more in government benefits and welfare and entitlements than they would ever have to pay in tax—that developed in Western countries, in the United States from about the 1960s and Western Europe post World War II. That was the assumption. That was the clever trick.

What developed in Western Europe was a giant pyramid scheme—or, perhaps more accurately, a game of pass the parcel. My friend Senator Cormann alluded to it before. You keep kicking the debt down the road. That is what you do. You keep kicking the debt down the years. You keep kicking the debt down the generations. That is what social democracy has done post World War II. And, I have to say, they have got away with it for a hell of a long time—kicking the debt down the street. It was successful electorally, particularly in Western Europe. Fortunately, it was not so successful here in Australia.

If the coalition had not won two out of every three elections since World War II we would have gone down the Western European path of systemic debt. Fortunately, the conservative parties in Australia won two out of three elections after World War II. But what was the story in Western Europe? It was the other way around. The social democratic parties won about two out of every three elections—and look where they are. The pea-and-thimble trick ain't that funny any more. The magic has well and truly gone.

The trick was that if people kept thinking that, if you keep kicking the debt down the road, well, it is magic, no-one ever really has to pay it off—abracadabra, really. We now know that this does not work. We now know that pass-the-parcel economics is exhausted, because in the end, as we have all discovered in recent years, those countries cannot even pay the interest on their debt. So they cannot pass the parcel any further because they cannot pay the interest on their debt. So much for the pea-and-thimble trick! So much for the social democratic magic. So much for debt.

The solution, as we now know, does not lie in Athens. Athens is not the answer. Social democratic governments must be very happy. And do you know why those governments are happy? Because they are spending money belonging to the young—those who are not old enough to vote and those who are yet unborn and cannot vote. They will spend the inheritance of young people who cannot yet vote and those yet to be born. That has been the crux of social democratic economics since World War II. That was the pea-and-thimble trick. That, of course, has become increasingly exhausted.

For years and year, for millennia, parents—as many of us are here in the chamber—have sought to pass down money or property to their children. That is what parents do. Parents pass down money or property in their wills and leave it to their kids. That is what people do. Now, what does our government leave our children and our grandchildren? It does not leave them money or property. It does not leave them something worthwhile having. It leaves debt. That is the present of the current government to future generations.

Mr Swan is not a Santa Claus. He has already taken the money and spent it. The gift from Mr Swan to future generations is an IOU. Can you imagine parents in this country leaving an IOU to their children in their wills?

We laugh, because parents do not do that. But governments in this country and in the Western world are quite happy to leave debts to children and to generations yet to be born. Why do they do it? It is because they can get away with it, because those children cannot yet vote. All the rent seekers and all the interest groups are out there, taking money from their future, taking the kids' inheritance, taking their future from them. That is what they do.

Sadly, the coalition has not always been perfect—I know that. But this lot are even worse. They are spending the inheritance of our children and our grandchildren. Can you believe that this is the story, the legacy, of modern Western governments? There is huge debt to service a lifestyle that governments cannot afford. That is what this is all about. The Labor Party preach to the coalition about social justice. They talk about intergenerational equity.

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

Is there a bill in here somewhere?

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

Yes, and I have mentioned the bill, Senator Evans. It reflects this underlying concern. The government talks about intergenerational fairness and social justice all the time. Well, tell me, what is so just about leaving an IOU to future generations and kicking that bucket down the road? Where is the intergenerational equity in leaving billions of dollars in debt for kids yet to be born? As Peter Costello famously said when he was reflecting on the Intergenerational reportone of the great landmark documents of the last coalition government: 'Intergenerational inequity, in the end, is intergenerational theft.' And everyone, every member of this parliament, should be aware of that. None of us should ever forget it.

There is a wonderful book based on the BBC Radio 4 Reith lectures of 2012, and I urge my colleagues in the Senate to read it. It is by Professor Niall Ferguson, who is an eminent British historian. In it he talks about the partnerships between generations, and he quotes Edmund Burke, the great conservative philosopher. Professor Ferguson writes:

In his Reflections on the Revolution in France (1790), Edmund Burke wrote that the real social contract is not Jean-Jacques Rousseau’s contract between the sovereign and the people or “general will”, but the “partnership” between the generations.

In Edmund Burke's words:

Society is indeed a contract … The state … is … a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.

That is what Edmund Burke said in 1790. Professor Ferguson goes on to say:

In the enormous intergenerational transfers implied by current fiscal policies we see a shocking and perhaps unparalleled breach of precisely that partnership …

He also goes on to say:

I want to suggest that the biggest challenge facing mature democracies is how to restore the social contract between the generations.

To summarise the book and summarise the problem confronting Western nations, it is that: 'The biggest challenge facing mature democracies,'—Australia being prominent among them—'is how to restore the social contract between the generations.'

As Professor Ferguson knows, with current policies in the West, we are stealing the future of our young people. That is the problem. The are reflected in this bill. Governments are unable to resist the rent seekers and the interest groups, so they have to take the retirement savings of citizens to balance today's budget. The challenge for this government—indeed, for all governments in the future—will be to resist the rent seekers, to resist interest groups, and to start representing future generations. I am not suggesting for a second that it is easy. It is difficult for this government and it will be difficult for any government.

The test should always be this: is any expenditure proposed by government justifiable to the young and to the yet-to-be-born? I phrase it like this: if you are going to spend money, could you, in a hypothetical sense, justify that expenditure to your yet-to-be-born grandson or granddaughter? Could you justify the expenditure of that money to your yet-to-be-born grandchildren? If you can, maybe you should spend it. But, if you cannot, if it is to satisfy interest groups, if it is to satisfy rent seekers, if it is to satisfy the particular urgings of groups, if it is simply to win an election and if, by doing that, you bankrupt the future of those children, it is not worth it.

There is a crisis in the Western world. The United States is facing a fiscal cliff. I have only had the time this afternoon to talk about public debt. If you add public debt to private debt, well, God help us all. But this is the issue that is going to confront this government. It will confront the next Abbott government if we get the opportunity to govern. When we spend money, the test for us as well should be—and I do not mind saying this on the record—whether we can justify this expenditure to our children and our grandchildren, not just so we can live a more luxurious lifestyle, not just so we can feel better about ourselves and not just so we can live in greater comfort. No, that will not cut it anymore in the West. Those days are finished.

We have seen what has happened over the last 70 years since the end of World War II—and it is a disgrace. It is a disgrace because the politicians gave in to those rent seekers and those interest groups, and they bankrupted the future of their own children and their grandchildren. There is no money left to pay for social welfare in the social democratic Europe. How are they even going to service the debt? There is rising unemployment and rising social unrest, and they do not know how to get out of the spiral. I know that it is not quite that bad in Australia. I accept that and I think we all accept that.

What I am concerned about and what the coalition is concerned about is this: if we go the same way as western Europe, because it is very tempting, if we go the same way as the United States, if we start to give in to every interest group running around Australia, we too will start heading towards a cliff. Hopefully, someone will stop this nation before we hit the ground, before we hit the bottom of the fiscal cliff. We owe it not just to ourselves, not just to the nation at the moment, but to our children and our grandchildren, and their future. For whatever we do in this parliament in the future, what we cannot do is mortgage their future just so we can live a little more comfortably today.

I know the job of finance minister is extraordinarily difficult and the balances that have to be undertaken are always hard. But I make this plea: whoever is in government must not make the same mistakes as western Europe and the United States, and that someone in the end must stand up for and must talk for our children and our grandchildren and their future. It is not just about how we live today.

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

I rise to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. This bill should be called the 'Government has its hand on my wallet bill', because that is what this is about. While I was listening to my colleague Senator Mason's contribution to this debate, I was wondering how many Australians are overseas and not aware that their parents set up a savings account for them when they were at school. When we were youngsters, just about everyone had a Commonwealth Bank savings account. I wonder how many people have gone overseas and are not aware they have one. Many of them have probably returned to Australia.

This bill basically means that in the six months from 31 December 2012 to 30 June 2013 the government will raise more than $760 million in additional revenue. The lost super measures alone will raise $555 million, more than half the promised $1.077 billion surplus this government have committed to for 2012-13. They certainly need the money because just before I came into the chamber I looked up today's gross debt. It is $253 billion.

Before I continue with my contribution, I want to make a point that at 5.30 today the guillotine will drop on this legislation. Before I handover to my colleague Senator Macdonald, I want to put on the record some quotes from others about the guillotine. On 6 September 2006, when in opposition, Senator Glenn Sterle said:

The Howard government are only too happy to guillotine debate to ram through legislation …

This next one is a good one, Acting Deputy President Pratt, you should listen to this. On 8 December 2005, Senator Stephen Conroy said:

Once again we are seeing the results of the government's complete arrogance and, more importantly, complete incompetence in managing the business of the chamber. You can forgive a desire to get your bills through by the end of a session. What you cannot forgive is this sheer arrogance and incompetence. We are moving this motion today because the government have been able to prosecute their agenda so unsuccessfully that we are hanging around with nothing to do. They jammed two very substantive and important bills through the Senate with almost no debate—the antiterrorism bills. I heard the Prime Minister on radio this morning saying: 'How could the Labour Party possibly complain? They supported the antiterrorism bills.' That is true, but what we did not support and will not support is the massive abuse of gagging the debate on important bills to allow less than one day, or two days for two bills. This is unacceptable.

I think it was said that we had seven seconds per amendment on the IR bills. This is a disgrace. It is a travesty. It is an abuse of this chamber.

And here we are watching the clock tick towards 5.30 and the guillotine. On 5 December 2005, Senator Bob Brown said that the guillotine is wrong. On 1 December 2005, Senator Carol Brown said:

We have seen this out-of-touch government continue its arrogant abuse of the Senate by gagging and guillotining debate …

The last quote I have before going on to the bill is from Senator Joe Ludwig—

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

The bill!

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

The Leader of the Government in the Senator cannot throw his weight around in here these days because of his clever dieting and fitness. He does not have much weight to throw around these days and I commend him on the success of his weight loss program.

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

I'll be back with a bit of padding after Christmas.

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

Hopefully, he will get out of the drought stricken area in the new year sometime. Senator Joe Ludwig said:

What we have now, and it is not even near the end of the year, is the government trying to use its numbers—and probably successfully—to make us sit tonight. All it really demonstrates is that the government has been unable, unwilling and incapable of managing its own program.

That is what we are facing here in the brief time I have to make my contribution before my colleague Senator Macdonald speaks. This legislation is penny-pinching at its greatest. The government is desperate to bring in a budget surplus this financial year. That is why I say prepare for an election in August next year because there will be no way this government will stay after September, when Treasury will deliver the real figures for this financial year. As Senator Cormann said, we have some amendments and if the amendments are not successful, we will oppose this legislation.

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

I thank Senator Williams for cutting short his contribution to allow me to say a couple of words on this grab for cash bill that the Labor Party has introduced. This bill, the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012, is so typical of the Labor Party. They have run out of money and they have promised this mythical surplus of $1.2 or $1.3 billion and half of it is going to come from stealing someone else's money. That is in effect what this bill does: it creates a legal ability to steal money that has been saved by others as a contribution towards their retirement. I concede that if you can come back later and show that they have taken your money they will give it back, but the Labor government would not worry too much about that because they know there is absolutely no way they will be on the treasury benches after the next election to have to find the money to pay back.

Isn't this bill so typical of the dishonesty of this Labor government led by a Prime Minister who cannot tell the truth? I say that and remind everyone yet again, if it needs reminding, that this government is led by a Prime Minister who a few days before the last election, knowing that unless she told a lie she would not have got the votes, promised the Australian people she would not introduce a carbon tax. As soon as she was elected on the strength of that promise, the promise to the Australian people that she would not do this, she turned around and introduced the carbon tax dishonestly. This bill is in that same vein. Indeed, over the six months from 31 December this year to 30 June next year the government intends to raise more than $760 million in additional revenue from measures in this bill the principle of which is stealing, as I say, $555 million of someone else's money.

Wouldn't you think that a bill with these implications—not just on the honesty of this government, not just on their financial mismanagement but on the fact that it is taking someone else's money—would be debated? I know that there are many more speakers who would like to speak on this bill but they are not going to have the opportunity because the Greens political party have joined their mates in the Labor Party to curtail debate on this important legislation. It would appear that this will be the second time today that I am going to be stopped from talking. I do not want to sound like I am taking it personally—

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

Your contribution is the biggest part of why we got the numbers.

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

I did not quite hear that. I thought you are saying, Senator Evans, that you are doing this deliberately to impact on me, on my birthday, I might say. But twice in one day an individual senator—forget who it is—is being prevented from talking in this chamber that we are elected to to look after the interests of our constituents, in my case the people of the state of Queensland.

I know that a lot of this $555 million in so-called 'lost' super, and I put that in inverted commas—I call it stolen money—comes from people who earned the money in my state of Queensland. Queensland is a growth state, a state where until the Labor government came along there was a lot of investment in mines into the future. There was a lot of work in Queensland based on mining and other industries, but the carbon tax and the mining tax that is about to come in are rapidly dissipating that will to invest in Queensland. But it has been there in the past. People have worked in Queensland, they have paid their super contributions and they have moved on to other jobs in different parts of the state, perhaps interstate or even overseas. They have this money left that it is owing to them.

So what is the Labor government going to do? They are going to steal it and put it into consolidated revenue so that this mythical $1.5 billion surplus might appear in the May budget. As Senator Williams so adroitly pointed out, whilst you will be up to fool people in the next budget you will not be able to do it about September next year when the government will be forced, as happened this year, to demonstrate just how shonky are their budget estimates. I am disappointed to say that in the way the Labor Party has cooked the books they do seem to be being assisted by Treasury. I do not like saying that but it is clear that these figures are so shonky and that this bill, along with a lot of the other measures, is just so shonky that it is a pity there are not more people in the Department of Treasury prepared to whistle-blow on the sorts of things that are happening.

This is just one indication of where this government will go to any lengths to try and get to this mythical surplus. You know, Madam Acting Deputy President, that they slashed our defence budget by something like $5.2 billion through the forward estimates to the lowest contribution as a percentage of GDP to defence of our country since 1938.

I could talk for a full 20 minutes but I am not even going to get the opportunity of having my 20 minutes, let alone others on my side who wanted to speak about this. I could go through time after time just listing where these shonky bills and the shonky way the budget has been put together by the Labor Party are just dishonest. It is a typical Labor Party approach. I repeat again the dishonesty of the Prime Minister in the carbon tax debate. We have heard these unanswered questions in relation to the AWU slush fund that the Prime Minister has also not been able or prepared to answer. And you can go through commitment after commitment, promise after promise, by the Labor Party and its leader and you will see that it is a dishonest government, a government shrouded in dishonesty. I will be joining my colleagues in supporting an amendment to this and if it does not go through I will be opposing the bill.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for consideration of this bill has expired. The question is that this bill now be read a second time.

Question agreed to.

Bill read a second time.

The question now is that the amendment on sheet 7321 circulated by the opposition be agreed to.