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

I move the motion standing in Senator Fifield's name:

That the Senate notes the failure of the Gillard Government to live within its means or to develop a coherent fiscal strategy.

The Labor Party in government does not know how to manage money. They manifestly do not know how to live within their means. In their first four budgets they spent $172 billion more than they raised in revenue, and of course this year was supposed to be the year—the first time since 1989 that a Labor government was going to deliver a surplus budget. But sure enough, in the shadow of Christmas, while the Treasurer was hoping that Australians were distracted and starting to focus on some Christmas cheer and end-of-year celebrations, he snuck out there and gave a press conference, and finally fessed up to what everyone across Australia already knew: that this government would not be delivering a surplus in 2012-13 either.

This Labor government does not know how to manage money. This Labor government does not know how to live within its means. This is a government that spends too much, which is why they are always casting around for more cash, which is why they are always looking for more new Labor Party taxes, which is why we are, yet again, talking about increased taxes on people's superannuation savings.

The government will say, 'Well, we've got very difficult circumstances.' And, yes, there was a global financial crisis. However, you have to look at our circumstances here in Australia. Firstly, the Labor government in 2007 inherited a very strong budget position: no government net debt; $70 billion worth of Commonwealth net assets; a $20 billion surplus. And of course we are here, in the Asia-Pacific—a very strongly growing part of the world. Australia, in the first four years of this Labor government benefited from the best terms of trade in 140 years, and if you look at other resource based economies around the world, they have all been delivering surplus budgets, and they are all in a much stronger fiscal position than Australia under the administration of both the Rudd and Gillard governments.

Not only did they inherit a strong budget position, with no government debt, a $20 billion surplus and $70 billion worth of Commonwealth net assets; not only did they benefit from the best terms of trade in 140 years, because we are a resource based economy and because we are in the Asia-Pacific right at the heart of the rapidly-growing part of the world; they also imposed 27 new or increased Labor Party taxes—27 new or increased Labor Party taxes, so far.

You would remember, Madam Acting Deputy President Stephens, that last week the Prime Minister gave a speech to the National Press Club and in her speech there was no coherent economic strategy on how to grow Australia's economy more strongly—nothing! There were only two things in the Prime Minister's speech: an election date of 14 September, and an assertion that somehow the Australian people are not paying enough tax. It was a clear threat, because of course the problem that the Prime Minister has, and the problem that the Treasurer has, is that not only has Labor spent $172 billion more than they have raised in revenue in their first four years, they have already made $120 billion in unfunded election commitments.

So here we have it: we have a government that has spent too much. We have a government that is always desperate for more cash—always casting around for another tax grab. Yet it is still not enough. They still have not been able to balance the books, and they have made so many additional promises that they need more cash. So here we have the Prime Minister letting the cat out of the bag at the same time as she is announcing the election date. In the next budget, the Prime Minister says, there will be some tough decisions—some tough decisions, the Prime Minister says! We, of course, know that 'tough decisions' from a Labor Prime Minister like Ms Gillard is code for more Labor taxes.

Over the last two or three weeks, spin doctors out of the Treasurer's office and out of Mr Shorten's office have been busily backgrounding the press gallery trying to make the case that somehow there ought to be increased taxes on people's superannuation savings. That is not quite the way they put it. The way the Labor Party put it when they want come up with a new tax is that they essentially go out there and try to demonise a group of Australians that they are about to hit with a new tax. Usually the words they use are, 'There are some rich people out there that are taking advantage of some perks that they do not deserve.' That is their modus operandi. Remember we had the luxury car tax in their first budget, and the Treasurer went out and said: 'This is a tax on the rich. This is a tax on Australia's Maserati drivers. This is a tax on Australia's Ferrari drivers. Don't you worry, aspirational middle class; this will not be a tax that you will have to pay.' But guess what! Over the last four years, who has paid most of the revenue that came from those increased luxury car taxes?

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

Who?

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

It is families across Australia buying a new family station wagon or the like, because this government might have a political strategy to demonise the supposedly rich—because that is what they want to do for their political purposes—but, when it comes down to it, their tax increases invariably hurt low- and middle-income earners. And so it is now with superannuation. People out of Mr Shorten's office and the Treasurer's office have been out there busily trying to make the case that there are all these rich Australians who are taking advantage—quasi-avoiding tax, quasi-dodging tax—of tax concessions that are available to those Australians who are doing the right thing by saving to achieve a self-funded retirement.

That is what we have had. Of course, the first thing the government were looking at—and spin doctors out at Mr Shorten's office and the Treasurer's office were quite up-front about it as they were backgrounding off the record—was taxing super payment for over-60s if those payments were taken as a lump sum in the range of $800,000 to $1 million. The Prime Minister was shamed into ruling that out, because she could see that the outcry across Australia from people who have been doing the right thing was so significant. Even Labor people—even people like former Senator Nick Sherry, a highly reputable contributor to the superannuation policy debate over a very long time—started to attack this government for the tax grabs that they were considering, and the Prime Minister was shamed into ruling that particular tax grab out. But that will not stop them from going down the list of all of their other increased tax options that they are currently considering. They are looking at taking more money away from super savers by fiddling with the transition to retirement arrangements. They are looking at lowering concessional contribution caps even further.

A Labor government that looks at doing these sorts of things to Australians doing the right thing by saving for their own retirement should at least be across the facts. Today I asked the leader of the Labor Party in the Senate—the Prime Minister's representative in the Senate, the Leader of the Government in the Senate—whether he was aware how much tax people saving for their retirement pay on any contribution to superannuation above $25,000 a year—and you know what? The minister did not know; Senator Conroy did not know. You would think that a government that was considering whacking on another tax would at least know the facts, because when we talk about concessional contribution caps—when we talk about the 15 per cent tax rate that applies to those Australians who make contributions of up to $25,000 a year—that is not a perk. People that are saving $25,000 are not rich people. That 15 per cent tax rate is an incentive to encourage people to save more now, to lock their money away for 20, 30 or 40 years until they retire so that it is available for them in retirement, along with the earnings on those funds invested.

The government has already reduced those concessional contribution caps from $50,000 and $100,000 down to $25,000 because it is desperate for more cash. It wanted people who were saving more voluntarily to superannuation to pay more tax. That is what this is all about. It wants Australians saving for their retirement to pay the price for its wasteful spending because it cannot balance the books, because it cannot live within its means, because it has had $172 billion of accumulated deficits and because it has already got $120 billion in additional unfunded spending commitments—it has to go after savers across Australia and put its hands into their pockets and try to get some more out of it. There is this $1.34 trillion pot of money. There are $1.34 trillion worth of super savings invested in superannuation and the Labor Party thinks, 'We want a bigger share of it.' Why? Because this Labor Party in government does not know how to manage money, because it does not know how to live within its means and because it has failed to develop a coherent fiscal strategy.

But there is more. Not only has this Labor government considered imposing a tax on super payments for the over-60s, not only is it looking at taking more money away from super savers by fiddling with the transition to retirement arrangements, not only is it looking at lowering the concessional contribution caps even further; I put it to you that the government right now is looking at scrapping the government superannuation co-contribution for low-income earners completely. Even though the Labor Party promised before the 2007 election that they would make no change to superannuation, over the last five years the Treasurer, Mr Swan, has cut government super co-contribution benefits for low-income earners by more than $3.3 billion—and if anyone is interested in the detail, I have a printout here listing all the measures in budget after budget, in Mid-Year Economic and Fiscal Outlook after Mid-Year Economic and Fiscal Outlook. I repeat, this Labor government has cut government super co-contribution benefits for low-income earners by more than $3.3 billion—so far. And I have absolutely no doubt that people in Mr Shorten's office and people in the Treasurer's office are looking at this yet again to make further cuts.

The other thing that I am led to believe Mr Shorten and the Treasurer are looking at is to lower the threshold from which the increased 30 per cent contributions tax would apply. That is the measure that was in the last budget, when the government said they would impose a 30 per cent tax on contributions for anyone earning more than $300,000. By the way, that was supposed to come into effect on 1 July 2012. We have not seen any legislation yet because the government is too incompetent even to process their tax grabs through this parliament. Do you know why? Because they have not found a way yet to sort out the implications for politicians and public servants. They are embarrassed that they are imposing one rule on Australians out there while living with another rule for themselves. They are quite quick at imposing additional taxes and cutting benefits for low-income earners, for the middle class. They are not quite as quick when it comes to imposing additional hardship on themselves.

The other thing I am absolutely convinced about is that, whatever Labor say before the election, after the next election a re-elected Labor government would scrap the low-income super tax offset because Labor cannot afford it. Whatever their rhetoric before an election, they do the opposite, every time, after the election. Remember this promise in 2007: 'We won't make any change to superannuation'? In successive budgets the Treasurer cut concessional contribution caps, pushing up the tax that people who save more have to pay. They cut the super co-contribution benefits for low-income earners by more than $3 billion. In total, they have imposed more than $8 billion in additional taxes on those Australians doing the right thing by saving for their retirement—Australians doing the right thing by trying to get themselves into a position where they can look after their own retirement needs rather than being a burden on the public purse. We know that there is more to come because all of those tax grabs in the past were not enough.

The reason Labor will have to scrap the low-income super tax offset if re-elected is because they have attached it to the minerals resource rent tax—and what a fiasco that was. Only a Labor Treasurer can come up with a complex new tax targeting an important industry for our nation which hardly raises any revenue at all. In fact, only the Labor Party can come up with a complex new tax targeting an important industry for Australia which leaves the budget worse off. Right now, the government has spent more on administering the minerals resource rent tax than what the tax has raised in revenue. It is just a complete joke, a complete fiasco. Yes Minister gave us the hospital without patients. Slim Dusty gave us the pub with no beer. And Mr Swan gave us the shrinking, secret, mining tax with no revenue. How incompetent do you have to be? No wonder this government cannot live within its means. No wonder this government is all over the place when it comes to its fiscal and economic strategy.

The mining tax is a complex, distorting, highly inefficient, costly to administer, costly to comply with tax which hardly raises any revenue at all. The government have already spent all of the money they thought it would raise, and more. And guess what? Everyone in the Labor Party is so embarrassed about what a mess Mr Swan has made of the mining tax that they are scrambling around wanting to cover up the costly consequences of his incompetence. He came up with a complex new tax, the ATO is spending more than $50 million to administer it so far and the smaller miners are spending more than $20 million complying with it so far to prove that they actually do not have to pay it. It has raised hardly any revenue at all, certainly no meaningful revenue, and the three biggest miners who signed the deal with the government have not paid any mining tax at all.

Clearly, everyone from the Prime Minister down in the Labor Party is severely embarrassed. So what do they do when people ask: how much revenue have you raised? They duck for cover. Do you know what they tell us? They say: 'We're not allowed to know how much it is because it is secret. If we told you how much revenue this tax had raised, somebody would have to go to jail.' That is the advice that was tabled by the government earlier today. If somebody from the ATO told the Treasurer how much his failed mining tax had raised, that tax officer would have to go to jail. How ridiculous is that? A government that comes up with a new tax, makes predictions on how much it is going to raise and spends all the money they think it is going to raise should be accountable for whether or not it has raised what they predicted it would at budget time. That is basic common sense. That is basic accountability of the executive government to the parliament—but not for this government. They say, 'You're not entitled to this, this is secret.'

I say again: this is a government that has made a complete mess of things from the Prime Minister down, but I would say the weak link in particular is the Treasurer. It was the Treasurer that stuffed up the initial mining tax. It was the Treasurer that stuffed up the second version of the mining tax. I have to say if I was Mr Rudd I would be rather upset because it was Mr Swan who made a mess of the mining tax and it was Mr Rudd who got the sack. It was Mr Swan who stuffed up the mining tax and, while Mr Rudd got the sack, he got a promotion. This government has made a complete mess of things. This Treasurer has made a complete mess of our budget, he has made a complete mess of the mining tax, and if he had any decency he would resign.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

What a great pleasure. What a joy to be asked to participate in this debate. What a great pleasure it is to stand here and reflect upon the record of this government in terms of economic management and fiscal rectitude over the last five years. I cannot believe I was so fortunate as to be contacted by the Whip's office and asked to make a contribution. It is almost delight on a stick to be able to reflect upon the solid work and the great set of achievements seriatim, which I will refer to in due course, of this government and by this government for the last five years.

Before I go to my remarks, speaking in the context of delight upon a stick, let us refer to the motion at the outset before the chair, which says: 'The failure of the Gillard government to live within its means or to develop a coherent fiscal strategy.' For those in the public gallery, this is not a new motion. Senator Fifield, sitting over there on the front benches of the opposition, brings this motion to the chamber about every 18 months and, indeed, Senator Fifield brought it last September. So we have had five quarters of economic statistics since the last time Senator Fifield brought an almost identical motion to the chair. Do you know what, Madam Acting Deputy President? On every set of economic statistics, every indicator in the last five quarters, whether it be inflation, interest rates, employment growth, unemployment levels or overall growth, the set of statistics for last five quarters are better, and better than they were when Senator Fifield brought the motion before us last September. We are happy to have a re-run of this debate. We are very happy—in fact, we are delighted to run up the attack flag and, one by one, rebut the assertions outlined by Senator Cormann and the other assertions undoubtedly to be put forward by other contributors from the opposition.

At the outset, the government says, 'We are proud of our economic record, proud of our economic achievements and proud of all the key economic indicators that are published every quarter or every six months in this country.' I do not say that with any sense or sentiment of arrogance or hubris. I simply say it with quiet, contemplative pride. We say that a whole set of economic indicators and standard reflections are a reflection themselves of the government's sound fiscal strategy, restrained government spending and discipline in achieving taxation aggregates measuring no more than 23½ per cent of GDP over the life of this government. We say in terms of those sound economic indicators that we are proud.

Madam Acting Deputy President, I hear you think out loud, 'What are those key economic indicators that Senator Bishop is referring to?' Let me go through them one by one, and I will do it slowly for all the slow learners in the opposition. One by one we will go through each of those indicators. Let us look at the growth rate, the unemployment figures and the inflation outcomes. Let us look in detail at current interest rates for homes, families and business, and, more importantly, let us look at the investment figures, actual and proposed, of a capital nature into businesses in this country. Let us say, right at the outset, that that set of indicators can lead to only one conclusion, and that is an impressive record of outperformance in economic management by this government, by this Treasurer and by this fiscal team.

What are the indicators? What do the figures independently show? What are the objective figures released by Treasury and the Reserve Bank? What are the figures referred to every week and every fortnight in the press? Firstly, it is growth. Our economy grew solidly in the September quarter—half a per cent—with growth around trend for the last 12 months of 3.1 per cent. No mean achievement. Three per cent growth every year means rising living standards. Compare that with the United States, Western Europe and most of the rest of the world. 3.1 per cent growth.

The second key economic indicator statistic to look at are levels of inflation. It is simple to say inflation remains well contained at 2.2 per cent for the calendar year to December 2012—minuscule, in the scheme of things, with the trend line down, continuum down, no suggestion of an upbeat and no suggestion of an increase. A remarkable achievement, and something we are proud to have achieved, proud to reflect upon and proud to yell out from the rooftops

What is the third indicator that has some bearing in this debate by which you can make an objective assessment of the performance of the economy and how well or otherwise it has been administered by this government? It is the most important thing to every working Australian, to every person who has employment, to every member of every family who has a job and to businesses that employ hundreds of thousands and millions of Australians. What is the unemployment rate in this country? It remains low at 5.4 per cent. It must be said it is one of the lowest in the industrialised world at 5.4 per cent. It is the lowest in all of the OECD countries, better than all of Western Europe's, better than all of Central Europe's, better than that for all parts of the United States—5.4 per cent and going down, a remarkable achievement that so many Australians have been in work, continue in work and will continue in work going forward. So 5.4 per cent is a wonderful outcome and a great statistic.

So a 5.4 per cent unemployment rate is good now but it can be improved as we go forward. So what do we think is going to happen as we go forward? We know the answer to that. If we look at the capital investment figures, actual and projected, we see there is a direct link between growth in capital investment into new enterprise and infrastructure with consequent growth in employment across the board.

So what do we have in terms of committed, actual and projected investment going into this country over the forward 12 months? What we have again is another stunning figure, another wonderful outcome. We have a huge pipeline of investment of $270 billion in resources which will provide a huge boost to export income and to earnings for years and years and years. I could not remember a more upbeat report on the consequences of that huge pipeline of investment than was given to us at the last two rounds of Senate economics estimates when the Governor of the Reserve Bank and the Secretary of the Treasury in turn were asked to reflect upon the level of investment, the changing nature of that investment and the consequences. They were asked those questions not by me as chair or by government senators; they were asked those questions by a series of opposition senators, including, I think from memory, Senator Cormann. What those two highly respected officials said was this: that the nature of investment is changing, that it has gone from being finance led with the building of plants and mines and roads and ports and the like, and that we are now going to the most important stage as to all those ports, roads, mines, dams and all of the other stuff—all throughout Western Australia, Queensland, parts of New South Wales, South Australia and the NT—as we are shifting from the preparatory stage to the production stage. So heaps of mines are built, heaps of roads are built, heaps of railways are built, heaps of ships are there waiting to be loaded and we go into production—and when you go into production you increase your labour, you increase your output, you increase your income and companies increase their earnings. They said, believe it or not, that growth in production is going to continue for the next eight to 15 years—in evidence. The Secretary of the Treasury and the Governor of the Reserve Bank said it. It is almost a perfect circle: massive investment, useful infrastructure, mines and the like coming into production, massive exports, a huge increase in earnings to companies, a huge increase in income to government. It is all coming about on the watch of this government and under sound fiscal administration and under the implementation of sound economic policy by this government.

That is fine for business and for those people who are employed, and that is fine for those who might be greatly benefiting from receiving high wages in those sorts of areas. But because we have been so disciplined in our spending and because we have borrowed so little and because we are achieving surplus budgets over time, what has occurred with that? The cost of money has gone down. Interest rates are going down. Interest rates are currently around three per cent, the lowest they have been in this country since 1996. Over the last two years they have come down and down and down and some reputable forecasters suggest they might even go down by another half a per cent this year, down to 2½ per cent. Now there ain't too many parts of the world where you can borrow money over time—five, 10 or 15 years—at 2½ or 2¾ or three per cent.

What does that mean to business? It means they know that there is a sound economy properly administered and well run with disciplined spending by government. But for individuals and families it means that for every one per cent reduction in the interest rate—from six to five to four to three—on a $300,000 loan there is a $150 a month saving in outgoings. So over the last four or five years interest rates have come down from a little bit over six per cent to a little bit over three per cent. Three per cent turns into something like $150 to $200 a month in savings.

Now $600 or $800 cash in a worker's pocket every month, month in and month out, is a consequence of low interest rates, and those interest rates are a direct reflection of careful levels of spending by this government. So business has profited and done well and is investing, workers are getting lots and lots of work and more employment and high wages, and families have much more disposable income—hundreds and hundreds of dollars every month—to do with as they wish, because the interest rates on their home loans and their car loans and the like have gone down, keep going down and remain down. As I said, it is a wonderful set of statistics to argue, a wonderful set of statistics to put forward and something everyone—every person—on this side is proud of in a quite contemplative manner because we have set out to do our job and we have done our job.

So what is the net of that stunning list of statistics? What does the rest of the world say about those matters I have just referred to and put on the public record? Let me provide a very brief quote from the OECD. It says:

With 21 years of uninterrupted growth Australia stands out amongst OECD countries.

So there we have the results. Unlike most of the rest of the developed world, we have solid growth, we have low unemployment, we have contained inflation, we have low interest rates and, most importantly, we have record investment, actual and committed, going forward. That it is a pretty solid quintet of achievements. Let me repeat the quintet of achievements again: solid growth, low unemployment, contained inflation, low interest rates and record investment. That builds upon this government's impressive record of our performance during the worst global conditions since the Great Depression. Not since the 1930s, which is now 80 to 90 years ago, has the world faced such dire economic circumstances. When you speak to the myriad officials from the United States, Europe, the United Kingdom and parts of Asia you meet when you are overseas or when they come to this country from time to time you hear how impressed they are about the administration of the economy in this country.

That quintet of achievements—solid growth, low unemployment, contained inflation, low interest rates and record investment—builds upon our impressive performance record during the worst global conditions since the Great Depression. What does 'building upon our impressive performance record' mean? Let us look briefly at the United States, Western Europe, the United Kingdom, a range of Mediterranean countries and others in Europe. The facts are pretty well known. Debt is at levels that are barely manageable, and they are having great difficulty in servicing that debt. It is up around 150 per cent or 200 per cent of annualised GDP. Budgets still have not been brought into balance. Countries are still borrowing, not as heavily as they were, long term at unacceptable levels. Average unemployment across Europe is 11.7 per cent. The last figure I saw for unemployment in the United States was 8.7 per cent. So in Europe it is over 11 per cent and in the United States it is over eight per cent. Compare that to the results in Australia. For the last few years unemployment has been around five per cent. That is a remarkable achievement.

The final indicator is the forward investment figures into business in Europe, which without exception across the board are trending down. Business does not have the confidence to borrow. Business does not have the confidence to invest. Government demands are too great. As a consequence, the 11 per cent unemployment figure for Europe and the eight per cent figure for the United States are unlikely to shift in a meaningful way for at least the next three to five years. Compare that to the administration of the economy in this country. The government's budget papers published in May this year will show unemployment contained at around five per cent to 5½ per cent. There may be a little bit of drift either way, but it will not be six, eight, 10 or 11 per cent—it will not be going the wrong way, as is the case in Europe and perhaps in the United States.

Let me go through the consequences of that sound administration of the economy. What does it mean when you put it all together? It means that, unlike the rest of the developed world, we have avoided recession and we have saved hundreds of thousands of jobs in this country. Our economy has grown by 13 per cent since the Labor Party came to power back in 2007. It is 13 per cent larger than it was. There has been 13 per cent growth over a period of four or five years. Other developed economies are still clawing back lost output. We did not lose any output. We have not lost any output. Our economy keeps growing and we keep employing people. Thirteen per cent growth, with an average of a little over three per cent each year, is a wonderful achievement. More than 800,000 jobs have been created since Labor came to power whilst in the United States, Europe and parts of Asia something like 28 million people have been displaced and thrown on the scrap heap of unemployment. We did not do that. (Time expired)

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

One of the great joys of serving in this chamber is to be present for a contribution by Senator Mark Bishop. I must confess to being a little fond of Senator Bishop. His contributions are always marked by a degree of charm. I particularly enjoyed today because Senator Bishop was very much in character. He was very much role-playing a senator who is a supporter of Prime Minister Gillard. He was very much role-playing someone who accepts and believes Treasurer Swan's economic narrative. I have difficulty believing that Senator Bishop does accept the Treasurer's economic narrative because Senator Bishop is a very intelligent person. He is nobody's fool. Given my fondness for him, I have to give him the benefit of the doubt that he was merely in character here today.

I did mention in a preface to a question to Senator Wong yesterday that I did work as a senior adviser to the former Australian Treasurer, the last one to deliver a surplus. The sole point of me mentioning that was that Mr Costello was the last Treasurer to deliver a budget surplus. I do not say that to claim to have a significant role in the creation of those surpluses. I was a mere adviser. But the point is that I was in the very fortunate and privileged position to be a witness to history and to the hard work of Treasurer Costello as he sought to pay down Labor's $96 billion debt, as he worked hard to bring the budget back into balance. One of the things about Mr Costello is that it looks to those outside as though it was a fairly effortless exercise to repay that amount of debt, to bring the budget back into balance. So effortless did people think that it was that the Labor Party came to assume that budgets just automatically and necessarily would find themselves in surplus. They thought that managing the economy was something that was straightforward and easy to do, that did not require tough decisions. I think we have seen—and the nation has learnt the hard way—that running an economy is actually difficult. It requires sound judgement and it requires tough decisions.

Like you, Mr Acting Deputy President Bernardi, I recall seeing Mr Rudd in those television ads before the 2007 election say, 'I am often accused of being a fiscal conservative, but it is a badge that I wear with pride.' We laughed and we smiled at this. Essentially, what Mr Rudd was trying to do was to say to the nation, 'I am a slightly younger and funkier version of John Howard.' These are relative concepts, I grant you. Mr Rudd went further—I think we recall it was a campaign style launch speech— and, of the then Howard government, he said, 'this reckless spending must end'. I will leave you to draw the conclusion or the comparison between the spending of the Howard and Costello government, and that of the Rudd, Gillard, Swan government. There is a dramatic difference.

I will come directly to the motion that I have put here, and that is that the Senate notes the failure of the Gillard government to live within its means, or to develop a coherent fiscal strategy. Senator Bishop said that this is a motion that I frequently put forward, and he is exactly right—it is, because it is no less true today than it was last year, the year before, the year before that, and the year before that. It is proving to be fairly timeless under this particular administration. The problem is that this government has never had a fiscal strategy, let alone an economic strategy. All it has ever had is a political strategy. We first saw that come into stark relief in the wake of the global financial crisis. You will recall before that, Mr Swan's first budget in which—this is one of my favourite budget speeches, Treasurer Swan's first one—he declared, 'We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.' Mr Swan was saying in this budget speech that basically Peter Costello was one of the easy beats: 'You thought what you delivered were surpluses, wait till you get a look at my surplus: $21.7 billion and 1.8 per cent of GDP.' Well, it did not happen, because the global financial crisis came along, and that has been the excuse that the Labor Party has used for each and every one of their budgets: 08-09, 09-10, 10-11, 11-12, 12-13 and no doubt for 13-14 as well.

The Australian Labor Party would want us to believe is that what saved Australia from recession, what saved the nation from suffering a similar fate to that of other developed advanced economies, was their $10 billion fiscal stimulus, and then their $42 billion fiscal stimulus—which had a few well-known elements like school halls and pink batts. That is a contention I completely reject. The reason why the Australian economy continued to grow, the reason why we did not suffer the fate of the US, the UK and other European nations, was because we had a different starting point—we were completely debt free. But the other reasons why we came through that period well was that we had a floating exchange rate, we had the demand from China, monetary policy—the Reserve Bank cutting interest rates—and Australia had the world's best credential arrangements courtesy of Mr Costello. That is why we came through that period well.

I think the Australian Labor Party—certainly at least some of them and possibly Senator Bishop himself—actually understand that. Of course, they cannot admit it as they have got to be in character and play their role in this place. But a number of Labor senators and Labor colleagues in the other place actually do understand that. We only need to look at the Asian financial crisis to prove the point. The Asian financial crisis happened under the watch of Mr Howard and Mr Costello, and Australia continued to perform well in the absence of economic stimulus, in the absence of fiscal stimulus. You would have thought that if there was an economic challenge that would have seen Australia go into recession, it would be one that affected our region, where our trading partners were in recession. Despite that, we continued to grow. The global financial crisis—yes, it was dramatic; yes, it was severe; yes, it was profound—was fundamentally based in the United States and Europe, not our key trading partners. So if you can survive a significant external economic challenge in your own region, when your own trading partners are in recession, without economic stimulus, you should be able to survive a profound economic challenge that comes from the United States and from the Europe. We know that the policy settings were appropriate to ensure that happened. I will go through them again because I think it is worth doing. Australia had no net government debt. We had the floating exchange rate. We had the demand from China. Monetary policy was doing its job and we had the world's best prudential arrangements. Comparing those two scenarios bears out the point.

I think the reason the Australian Labor Party put in place the $42 billion stimulus package and the $10 billion stimulus package was because they wanted to be seen to be doing something. Being seen to be doing something was far more important than actually doing the right thing. Under that cover of being seen to do something, the Labor Party had the opportunity to indulge a number of pet projects but also to indulge themselves in spending that they thought would be of political benefit. That was a huge indulgence which the nation will be paying for over a long, long time.

There are a few fiscal myths that the Labor Party have sought to perpetrate in an effort to convince the nation that they do indeed have a fiscal strategy rather than a political strategy. The first of those myths was that they had a plan to get the budget back into surplus in the 2012-13 financial year that we are in. That represents the second budget speech that Mr Swan presented where he forecast a surplus. There were promises on 500 occasions that there would be a budget surplus in 2012-13. The Prime Minister herself accounts for 150 of those occasions. She went so far as to say on 4 July last year:

We saved jobs, we stayed out of recession and got back to surplus.

That did not happen, it was not true. It is not going to be true.

Mr Swan, the Treasurer, said on 18 August last year:

Well, we're getting back to surplus in three years. Come hell or high water.

There was no qualification there. There was no fine print. It was, come hell or high water, he would get the budget back into surplus. He is not going to. Having former Prime Minister Bob Hawke in the other place this week prompted a number of people to recall that the last time there was a Labor surplus was when Mr Hawke was the Prime Minister, which is a little while ago now. That was in the 1989-90 financial year. We are not going to have a budget surplus.

The second fiscal myth which is put forward as the cover for that is revenue write-downs. We have heard a lot about revenue write-downs since the Labor Party have been in office. When the government say there have been revenue write-downs, the impression that they want to leave with the public is the year-on-year revenues have declined as a result of circumstances beyond our control: falling company tax and turmoil in the global economy, which is affecting the profitability of companies who pay tax. That is the impression that the government seek to leave, that there has been a reduction in revenue year-on-year. That is simply not the case. Just look at the period from when the current government came into office. This government is estimated to be collecting $70 billion more this financial year than in the last year of the Howard-Costello government. This year alone Labor forecast a jump in revenue of $37 billion from 2011-12.

Although the prediction of the revenue to come in has been reduced, the fact is that year-on-year revenues are still increasing and have been increasing. In that situation, the only explanation as to why the budget will not come into surplus as forecast is because spending has gone up at a greater rate than revenue. This government is spending more than it is bringing in. That is not the fault of declining revenue forecasts because, as I said, revenue is still increasing. That is the second great fiscal myth of this government.

Another great fiscal myth is that Labor have a lower tax-to-GDP ratio than the Howard government. That is true if you take a very narrow view of the total call on the taxpayer by the government. If you add non-tax revenue and debt that is borrowings, there is a very different picture. That ratio goes up to 25 per cent of GDP, rather than the 22.5 per cent of GDP in 2012-13 that the government are so fond of claiming.

The fourth fiscal myth is that Labor is a lower-spending government compared to the coalition. That is wrong. Labour is spending over $90 billion a year more now than the last budget of the Howard government. Myth five is something that I touched on a little earlier: Labor say that their record debt is low in comparison to other OECD countries, but the government do not compare the situation to that of like countries. They are very fond of comparing our situation to that of Japan, the US, the UK and Europe, who all had massive debts going into the global financial crisis. A much better comparison is with a number of developed commodity-exporting countries like Chile, Sweden, Finland and Norway, all of whom are in the black. The sixth fiscal myth is that Labor has identified over $250 billion worth of savings since coming to office. Close to 80 per cent of the $16.4 billion identified as 'saves' in the government's 2012 MYEFO were revenue measures.

The plain, simple truth is this government has never had a fiscal strategy; it has had a political strategy. Every spending decision and every so-called 'savings' decision, most of which are in the form of tax increases, has been taken and viewed through a political prism. Managing a budget is difficult; we all accept that. Running an economy is hard. You have to prioritise. You have to work out the difference between that which is necessary as opposed to that which is merely desirable. This government has not done that at any point in the last five years. It is going to take more than 10 years to pay off all of Labor's debt. I often use the rule of thumb that, for every year of bad government, you need three years of good government to undo the damage. I will let you do the maths as to how long that means the coalition would need to be in office.

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

I think it is at least 15.

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

I think Senator Mason is right.

I cannot imagine what it would be like to be Mr Swan. The result of the next election is in the hands of the Australian people, but for the sake of argument let's say that there is a change of government. Imagine being Mr Swan going to job interviews where they ask him, 'What was your role?' and he responds, 'Well, I was responsible for running the finances of Australia.' Then they ask, 'How did you fare?' and he responds, 'Well, I actually didn't get the show into black in a single year that I was the Treasurer.' That is not a proud record; that is a disappointing record—being the Treasurer who never delivered a single budget surplus.

There does need to be a change of government. Only this side of the chamber has the discipline and the character to bring the budget back into balance and to pay down Labor's debt so that we do not squander future opportunities for the nation.

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to be able to contribute to this debate this afternoon, because Senator Fifield is actually quite right in what he has just said. Running an economy is very hard. Making budgetary decisions is very difficult. They do require responsible decision making; they do require discipline; they do require prioritising; they do require a sense of understanding the whole. When we think about how well our economy has fared over the life of the Labor governments and compare that to the wonderful announcement today of a draft economic policy outlining a plan to provide tax incentives and direct payments to turn the tropical north into an economic powerhouse, it seems peculiar to say that the least you could accuse the Gillard government of is not having a coherent fiscal strategy, because I do not think that anyone could claim a coherent fiscal strategy is one to split Australians into different personal tax zones and forcibly shift hundreds of thousands of public servants to cities north of the Tropic of Capricorn, out to Karratha or to Perth or to Darwin or to Cairns or to Broome. Crazy-brave maybe, but certainly not a coherent strategy. The fact that the proposition actually clearly breaches the Constitution is besides the fact. I do have to think that the headlines today that Mr Abbott has gone troppo are probably the best expression I can think of. It is hardly a surprise that the opposition is in retreat about this leaked document. If the number of emails and calls that our offices have been receiving is any indication, I am sure that the opposition has been receiving many more. Hardly a coherent fiscal strategy coming from the opposition today. But I have to say that not everyone actually thinks it is a dud. One Daily Telegraph reader, Alastair of Newrybar, posted online this morning:

Been saying for years that this should happen to diversify our work force and increase our productivity as mooted by Lang Hancock and Joe Bjelke-P. Logical development in the top end could see Australia becoming the food bowl to the world, with plenty of Asians only too happy to migrate and develop market gardens and farms. With an adequate water supply, anything will grow and having worked on the mine developments in the 60s, the weather is not too oppressive. Just when I was doubtfully wondering if you have the cojones to do something radically productive rather than drift along playing politics, you show you may have a spine after all Tony. Try raising the voting and drinking ages back to 21, re-establishing National Service and see the votes roll in.

Yes, that is exactly right: that proposal came straight out of the Bjelke-Petersen era with support from not only Lang Hancock but also, of course, his daughter, Gina Rinehart.

By contrast, the Gillard government's fiscal strategy has not only been coherent; it has been fair and it has been equitable, certainly not slugging the ordinary folk so that the rich can become richer or kowtowing to the Gina Rineharts of the world; not tearing the heart out of communities; not playing with people's lives but putting in place a well-thought-out package of measures to help people make ends meet, to spread the benefits of the mining boom and to be responsible economic managers. Senator Bishop spoke very passionately about Australia's economic record, where Australia's economy really stands as a beacon of resilience in the world. Unlike other countries, we have avoided recession, we saved hundreds of thousands of jobs in the face of the worst global financial conditions since the Great Depression and we bullet-proofed the Australian economy. We kept it out of recession. That is something that is very difficult for the opposition to acknowledge. It did not happen by accident; it was a result of shrewd, strategic thinking about what decisions needed to be made, about what investments needed to be made and about what stimulus had to be injected into the economy—and it required courage to act on those decisions.

I will remind listeners and those who are interested in this debate today that since December 2007, when Labor came to power, the Euro area economy has shrunk by 1.7 per cent, the Japanese economy has shrunk by 1.7 per cent and the US economy has grown by just 1.2 per cent. But here in Australia our Australian economy has actually grown by almost 13 per cent since that time. That is the significant message that we all need to understand—and that only came about from a very coherent fiscal and economic strategy.

Let us get back to the matter of jobs. Worldwide, unemployment is on the increase. It is a tragic situation. We know that the cornerstone of good economic management is to keep people in work or to get people into work. Around 800,000 jobs have been created since we were first elected. That is jobs created, not axed and not packed up and spirited away to Karratha or other points north where there is not even the infrastructure to support them. And it is not the 12,000 public servant jobs that Mr Abbott is determined to get rid of—12,000 public servants and their families to be cast on the scrapheap of unemployment.

Our fiscal policy is designed to support families and individuals and to help industry grow and help the economy to grow. We have put in place a fairer tax system, with cuts to the income tax rate for most Australians so that they have more money to spend every fortnight, and we have tripled the tax-free threshold, which means that more than a million people not only do not need to a tax return but also do not pay any tax out of their take-home pay. They are able to spend that meeting cost-of-living expenses. And we have made many, many other economically responsible and coherent changes that have improved the lives of Australians and have underpinned strong economic growth.

The fact that we have invested so much in paid parental leave is very important in building some productivity into our economy. Now that it is in place we are actually going to see the benefits of that investment, with more than 160,000 new parents across Australia benefitting from up to 18 weeks leave under the paid parental leave scheme. The support that we have provided to families through family payments is really very significant. Those issues are part of a coherent strategy.

For more evidence, let us look at the way we have means tested the private health insurance rebate, meaning that low- and middle-income earners are no longer being forced to subsidise the health insurance of higher-income earners. And why should they have to do that? We have invested $4.6 billion in dental care. That means that more than three million kids are going to be able to get to see the dentist, and it will significantly boost public dental services for Australians on lower incomes. That of course boosts the overall health of the nation.

This morning here in Parliament House we had the very important launch of a new campaign, a new alliance, called the Social Determinants of Health Alliance—a very significant piece of work that links together productivity, economic development, economic costs and the social benefits of improved health and wellbeing of Australians. We need to think about that. The overall health of the nation is not just about economic health; it is about the social and mental health of our families as well. It saves wasting money on unnecessary and available health interventions. Senator Fifield, in his motion, talked about living within one's means. Well, living within one's means means strategically, thoughtfully and responsibly allocating resources so that they provide the best outcomes for the economic and social wellbeing of the country.

Our coherent approach in managing the economy has a big-picture focus. There is the household assistance for the carbon price, which I talked about in the chamber yesterday. Australian families and pensioners are getting payments to help with their utility bills now and over the coming months. And we are investing wisely in the future, because of our recognition that the science of climate change is a reality that we cannot ignore. It is responsible and critically important to make $3.2 billion available to the Australian Renewable Energy Agency to support stable research and development, and $200 million for clean technologies. These are all part of a coherent fiscal strategy that is about investing for our future.

And what about the National Disability Insurance Scheme, a coherent policy—coherent with Labor values; coherent with Australian values? It is a responsible, thoughtful approach to a problem that has been ignored for far too long. That is what the Gillard government talk about when we talk about vision. That is in very serious contrast to the opposition's so-called 'Vision 2030', which people are laughing about today—laughing, if they were not actually scratching their heads trying to make some sense of what is going on with an opposition that proposes to carve $800 million out of a foreign aid budget to be diverted to this incoherent megaproject in Northern Australia. It really does not bear much more consideration.

As I said, under the Gillard government, the Australian economy grew by 3.1 per cent last year—faster than any other advanced economy. We are now the 12th-largest economy in the world. Since Labor came into office we have moved up three places. IMF Article IV from 16 November last year says, 'five years on, both the economy and the financial sector continue to outperform most of their peers'. That is the IMF's judgement on Australia's performance.

Our investment outlook is strong—we have an incredible investment pipeline—as is our credit rating, with 'AAA with a stable outlook' from all three rating agencies for the first time in our history. Our net debt as a percentage of GDP is a mere fraction of our peers'. Our interest rates are low. When the Liberals left office, interest rates were 6.76 per cent. The Reserve Bank's official cash rate now is three per cent. Our interest rates are the lowest since 1996. There is a benefit to mortgage holders. On a $300,000 mortgage—a pretty average family mortgage—families are now paying $5,000 a year less compared to when the coalition left office. So there is nothing to be gained by Senator Fifield bleating about the way the government has managed the economy.

We are held up as an example in the developed world. If it is coherence Senator Fifield wants to see, then Labor has it in spades. Think about what Senator Fifield's own leader, Mr Abbott, said in his speech to the National Press Club, he gave some early insights into what is in store for Australia under a coalition government. There would be massive cuts to the Public Service: 12,000 jobs—12,000 families—and massive cuts to front-line services. I think about the public servants who are doing so much at the moment, out there on the front line, like the people at Centrelink. Those people are doing amazing jobs and they are the ones who are going to be hit by Mr Abbott's policies.

Mr Hockey has promised to deliver a surplus in the first year and in every other year. Already we know that he has a huge credibility problem in how to do that, because he still has to explain to the Australian people how he is going to fund his multibillion dollar black hole and where his razor gang is going to start slashing and burning. The irony of it all is that the policy paper released by Mr Abbott, which is called Real solutions for all Australians, is actually going to have a devastating impact on many Australians. It will certainly cause anxiety for people as they come into the election campaign, waiting to hear just what it is that Mr Abbott has in mind for them.

Let me remind senators again: we have a hugely strong investment outlook. We have a record $268 billion in infrastructure projects at an advanced stage. Senator Bishop talked before about the investment pipeline, where things had started to be identified; planning is in place and now we are starting to see the implementation and the construction of those major infrastructure projects and the delivery of outcomes, which will mean improved exports and opportunities. We have low debt and strong public finances. We have the 12th largest economy in the world. Many of us here in this chamber have had the opportunity in the past 12 months to travel overseas and to understand very clearly how Australia is held up as a beacon around the world. People ask us how it is that we have an unemployment rate of five or 5½ per cent. Last year, in November, I was in Ireland, and there were desperate questions from the Irish government about the situation there, where the unemployment rate now is over 15 per cent generally but the youth unemployment rate is now over 40 per cent. There is a desperation in countries like Ireland, Argentina, Greece, Italy and Portugal about almost a lost generation of young people who will never actually be able to recover.

What did we do during the global financial crisis? We put in place a massive effort to ensure that we did not lose our skills base, so we are not in the situation of countries like Ireland, who sent more than six per cent of their population overseas last year—many of them here to Australia—repatriating money home. Thank God we are not in that situation and never will be. And we will not be, because we have a strong fiscal strategy. We have a strong economy and we have a government that is responsible and strategic about the way in which these things will be considered and managed. We have a government that is governing for all Australians and seeking to make sure that the economy supports us all, that the economy does not pick winners and losers and that we can be a good society as well as a strong economy. That is the government that I am proud of, and I think it is a very coherent strategy and one that I will be delighted to be propagating during the next six months.

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

I would like to make a few comments on Senator Stephens's presentation to the Senate, referring to Ireland. The last thing I would ever do would be to attack Senator Stephens—because of my respect for the lady. Being a lady from out of Cessnock, it is a pity she never joined the National Party when she became political! But seriously, I do respect Senator Stephens and I am not going to go into any sort of personal attack on what she said, but she mentioned Ireland.

I was with Senator Stephens a few months ago when we met with some of the Irish politicians. Ireland has a population of 4½ million, and they owe $120 billion. They took it out of the debts of their bank. But I want to take you to Queensland. Queensland also has 4½ million people, and they have a debt of $72 billion—and going up, heading towards Ireland's level of debt. How did Queensland get that debt? They got that debt from years of Labor government.

People have been critical of the Campbell Newman Liberal-National Party government in Queensland for tightening the belt and reining in the spending. The other option is: go down the road of Ireland. As I said, they have the same population. Queensland has 4½ million people; Ireland has 4½ million people. Ireland has $120 billion of debt and Queensland is on $72 billion and has been forecast, under the previous government, to go to $85 billion by 2015, and some $100 billion by around 2020. It is getting to the same parallel financial mess as Ireland. Luckily there is a new government there that realises that managing money is important, but that is a tough job they are facing. Just like in New South Wales, when the O'Farrell-Stoner coalition government was elected on 26 March 2011. Guess what? In the year's budget: a $5 billion black hole. What's new?

Let us look at Senator Fifield's motion—'the Gillard government's fiscal strategy'—which is a very important motion of general business here today. Yesterday, Senator Cormann and I moved a motion in the Senate calling on the final budget outcome to be released before election day, 14 September. The ALP government and the Greens voted it down. Why did they vote it down? Why do they not want to let the Australian people know how much money they will borrow this financial year, which of course concludes on 30 June like any other financial year? Over the last five years, the final budget outcome has been released between 24 and 30 September. This year will be no different. The budget outcome of this financial year will be released after the election. I wonder why they chose the date of 14 September? So that the election can be held before the final budget outcome is known—the facts, the truths of this year's budget from which we were going to have a surplus. On more than 400 occasions the Prime Minister, Ms Gillard, and the Treasurer, Mr Swan, have said, 'There will be a budget surplus'. But hang on, the Christmas break comes along, 'Sorry, the budget surplus has been dumped. There will be no budget surplus; there will be another debt.'

I wonder how much debt? We will get a bit of an indication in the May budget this year when Treasurer Swan delivers it. He might say this year that there is not going to be a $1½ billion surplus like he said in the MYEFO back in November. It will be about a $4 billion deficit; that is what he will say. He will make his forecast for the next financial year and that will be another figure probably in the red. He might tone it down a bit—$1 billion or $2 billion in the red—but borrowing more money. However, you wait until we get that final budget outcome towards the end of September. It will be greater than the $4 billion or whatever Mr Swan says. There is nothing surer than that because the government will go on a borrowing and spending spree. We will only be able to monitor the Australian Office of Financial Management's website to see where the gross debt is going.

The government will borrow money to buy votes—that is exactly what they will do. As sure as I stand here, the figure forecast for this year's budget deficit in May will be higher come September when we get the real figures. They will borrow money to buy votes. That is all the Labor Party knows—debt, debt and more debt. Remember when Ms Gillard was made Prime Minister, and the new transparent government she would lead? Where is the transparency when you are hiding the budget figures? Why did you not support Senator Cormann's and my motion yesterday? What have you got to hide?

We know the Greens will back you up in hiding the budget figures, because the Greens never, ever look at budgets. They are a closed shop. They will not let the media in to their conferences. When it comes to managing money, the Greens are probably worse than the Australian Labor Party. Spend, spend, borrow, borrow, penalise success and reward failure—that is the attitude of the socialists in this place. That is what will happen and that is what we will see more of. Penalise success, penalise effort, penalise hard work and reward failure—that is what socialism is about, and this nation was built on what? Hard work, hard sweat and effort. Go back to the first export of our nation, wool.

Senator Fifield interjecting—

Senator Ludwig interjecting—

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

Order! Senators on both sides of the chamber will respect the right of the senator on his feet who has the call to be heard in silence.

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

Thank you, Mr Acting Deputy President, I could not agree with you more. Let us go back to the early days of European settlement when a worker went into the scrub, cleared the country, cut the trees down, split them with wedges, dug the holes with crowbars and shovels and built the fences over some pretty rough country. Along came the sheep and the shearers bent their backs—those very same shearers who started the Australian Labor Party under the Tree of Knowledge at Barcaldine in Western Queensland—and were the workers. We do not have any here today. We do not even have a shearer amongst the Labor politicians. I think they must be quite ashamed about that, for the shearers are on our side of the parliament. Amazing, isn't it? That is where they came from and that is where they have gone to. 'Let us penalise hard work!'

We will see more of it in superannuation. Superannuation was one of the good schemes the Hawke-Keating government brought in, so that people would save for their retirement and not have to rely on the taxpayers to pay for their retirement. Now, if you are going to get to $1 million we will cop into that because the $1.34 trillion—an enormous amount of superannuation savings—is the nest egg that the Labor government says, 'We can get some of this to help us fill our black hole of budgets.' As of last Friday gross debt was $262 billion. Those people listening on the radio should go to the website of the Australian Office of Financial Management—AOFM. Bring up the website www.aofm.gov.au, and every Friday afternoon, right in the middle of the home page, you will see the gross debt of this government.

I will be honest: it started off at around $50 billion. I discussed this with former senator Nick Minchin and asked: 'Did we really have a $50 billion debt when Labor was elected in 2007?' and he said, 'Yes, there was'. He said we kept it there to keep the government bond market open. Then we put $50 billion in the bank to neutralise it, so that it was zero. So, it started with $50 billion in 2007 and last Friday it was $262 billion—an increase of $212 billion in just five years of this government. Of course, some of that is through residential mortgage-backed securities, buying loans off small institutions to give them liquidity to lend money during the global financial crisis. And a fair bit of it went on the National Broadband Network, which is not even in the budget. But it is, 'Just draw off the government's AOFM. Draw out the money and we will pay it back later when the scheme gets profitable.' Well, do not hold your breath for that. So we have this debt. It is going to cost about $12 billion a year in interest alone. We must refer to the gross debt, the $262 billion, because what we have on the good side in the bank we cannot touch. There is $82 billion in the Future Fund we need for public servants' retirements. There is $22 billion of HECS fees. We cannot charge the students interest on their debt. Once they get a job and start earning $30,000 a year or more, they start paying it back. We have about $16½ billion of residential mortgage backed securities—those loan packages the government bought. We make a whisker of profit on them.

Let me explain it another way. If you owed the bank a million dollars and you were being charged, say, seven per cent interest, you would have to find $70,000 a year. But if you had half a million dollars in the bank, you would have a gross debt of a million dollars but a net debt of half a million. The half a million you had in the bank would be earning interest at, say, 4½ per cent, so you could use that money to help pay your debt. But you cannot use any on the government's good side of the ledger to help pay the debt, so we have to pay the interest on the gross amount of debt. Forget the net amount; the net amount does not earn us any money. We have to pay off the gross debt this government has built.

In November 2011, the Reserve Bank lowered interest rates from 4.75 per cent to 4.5 per cent. They said the economy is slowing, it is not going well. A few months before that I was talking to Mr Martin Parkinson at Sydney airport. I said to him that the interest rate movement will be down and he laughed at me. I suppose he is a bit embarrassed when a broken down old cocky got it right and the boss of Treasury got it wrong. The fact is I live in the real world. I see what is happening to small business and I see what retail sales are doing, and they are terrible. So I picked it right. He might be embarrassed that a broken down shearer picked the economy right and the boss of Treasury did not. For once in my life, I was right. I have been wrong many, many times.

What was the government doing then? Why was the Reserve Bank stimulating the economy? Prior to that, the Reserve Bank put up interest rates. They were raising interest rates while the government was borrowing money and stimulating the economy. Economists will say this is the right thing to do. 'The Reserve Bank is raising interest rates, so we are going to keep borrowing and spending money to stimulate the economy.' It is like driving your car with your foot on the accelerator and pulling on the handbrake at the same time. The Reserve Bank was pulling on the handbrake while the government was borrowing money and spending it. That is crazy and now we this huge debt. That is what we are left with.

Where did they spend it? If you run a business and you borrow money, you borrow money to improve your business, to grow your business—better machinery to make you more productive. They did not build any train lines to make our freight system more efficient. No Melbourne to Brisbane train line was built. They gave $900 to people to spend on whatever they wanted to spend it on. They could buy a TV or go to the club and put it in a poker machine. No infrastructure was built except for what the states are responsible for: the Building the Education Revolution. In my hometown of Inverell one of the schools had four perfectly good classrooms. What did the government do? They pulled down those four perfectly good classrooms and replaced them with four new classrooms. That is supposed to be spending money wisely. That is stupidity.

I remember the Nationals campaign launch for the last election in 2010 down at Wagga Wagga. I was not there but the team was there. It was not a windy day that day, but a big covered outdoor learning area that had been built in Wagga Wagga fell over. It just collapsed. They said, 'Stand back, it's going down.' What a good investment that was! They built a new covered outdoor learning area and it just collapses on the day of the Nationals election campaign launch.

We could go to pink batts also. Sadly, four lives were lost and houses were burnt down. If people want insulation in the roofs of their homes, they should put it in themselves. They will save electricity and they will insulate their houses better. It is not something for governments to do. If you are going to borrow money, build some infrastructure to make your business more efficient. But, no, they never went near that.

The decision of August 2008 to roll out the red carpet for asylum seekers has now seen Australia $6.6 billion out of pocket for their costs. We are a generous country. My hometown of Inverell is a proud country town. We have 12,000 people. We have Sudanese refugees. A lovely lady at home went and basically freed them. One lady came here with her four children. Her husband had been murdered and her brother had been murdered, and she got a new opportunity in life in a beautiful country town like where I live at Inverell. These are the genuine refugees we need to help whose lives are under threat. But we have an industry where people pay to get on a dangerous leaky boat and run the risk of losing their life. That is the industry we have and one that is also costing the taxpayers an enormous amount of money.

During the 2007 election campaign, we heard that there were not going to be any new taxes. But we saw the alcopops tax and the luxury car tax. If someone has been successful and worked hard, and can afford a more expensive car, that is wrong so tax that car. Penalise success, reward failure—that is what socialist governments are about. Then came the cigarette tax and the flood tax, and now the carbon tax.

And there was the minerals resource rent tax. How embarrassing it must be because those three big mining companies just sucked the Prime Minister in. I have seen the signed paper where all the royalties must be credited. If you want to get a better share from the royalties, simply let the states raise their royalties. Those resources in the ground belonged to the Crown. The Crown is the state. All you have to do is tell the states to raise their royalties then Canberra pays less to the states. Money saved is money made. That is how you run business, instead of this minerals resource rent tax mess—budgeted to spend so much yet not raise a red cent.

Then there is the liquified petroleum gas tax. It was introduced by the coalition—brought in as a clean fuel. Run your car on gas and you have 30 per cent less emissions, so less pollution. If you want to lose an election, upset the taxi drivers because they talk to a lot of people. I do not know how many millions of taxi fares a year there are, but the tax on clean fuel is going to go up to 12½ cents a litre. Where is all this clean energy in the environmental programs? You are taxing the very clean energy that we have a big supply of in this country. It is not imported. It is our very own Australian fuel that you are taxing to try get your bottom line up to this budget surplus that is 'not negotiable; we will deliver; hang on, we'll go back on our word again'. The point is that so many Australian people do not trust this government to manage money, to spend it properly. They are spending $100 billion a year more in their annual budget than was spent in the last year of the Howard government. Just 5½ years later and they are spending $100 billion.

That is incredible. The people do not trust the government on carbon taxes, promises or caring for our aged. It is amazing that in the stimulus package our aged-care facilities, a federal responsibility, never got a red cent. Wherever I go around Australia, in many of the country towns I visit I see that the aged-care facilities are doing it so tough. No, we went and put in all these school buildings in state schools, which are a state responsibility—pulled down perfectly good buildings and replaced them with new buildings. You could go to Kingstown, where a little building about 10 metres long by six metres wide cost $330,000. That would build you a huge four-bedroom brick home but they got this little hut. You could go out to Tottenham, literally in the centre of New South Wales, where it cost $600,000 for a tuckshop and they could not fit the microwave in it.

That is why people do not trust you to spend the money properly. You take the money off the taxpayers and off business and you waste it like that. These are the people I speak to all the time when I travel around regional New South Wales, and have they got a set on this government. Even in New England, the electorate in which I live, many of them have been scathing about their local member, Mr Windsor, for giving us this government. Likewise in Lyne, in Port Macquarie and those areas they are scathing about Mr Oakeshott for giving us this government. Those traditionally conservative seats that have been held for many, many years show and the Senate vote in those seats shows—those people in New England and Lyne will get their day on 14 September to have their say. As I often say: 'Seats don't belong to politicians; they belong to the people.' You betray your people and they will let you know at the next election.

All my life, whether it be state or federal Labor governments, they have sent us broke. They have mortgaged up. They have filled up the bankcard, filled up the mastercard and mortgaged our children's futures away. If they did some good with it and built some decent infrastructure you would say, 'That's not a bad investment.' But the amount of waste has been unbelievable. Hence, that is why I support this motion of Senator Fifield's. The fiscal strategy of this government has been an absolute disgrace. We have $262 billion of debt. I do not know how we are going to pay it off. It will be hard work and economic management that will achieve that in time.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

While Mr Abbott and those opposite would like to pretend that it never happened, the global financial crisis was the most difficult global economic period since the Great Depression, and its effects are still being felt. There continues to be uncertainty in the global economy and, recently, the unusual combination of a persistently high dollar in the face of lower commodity prices has hit Australian company profits, which means the government is receiving less in taxation revenue than expected. In fact, over the last five years, government revenues have been written down by $160 billion. Revenue for 2012-13 alone has been written down by a staggering $20 billion. These dramatic falls in revenue put significant pressure on the federal budget. However, the government has a strong track record of making savings to reprioritise spending and maintain our budget position. In the mid-year review, we made $16.4 billion in savings, on top of over $130 billion in savings made over our last five budgets. We also have a strong record when it comes to making structural saves that have contributed to the long-term health of the budget position.

Indeed, if you look at the mid-year review we released last year, it took stock of these and other changes and reported that, without these savings, net debt would be $250 billion worse in 2020-21. Unlike the opposition's claim in this motion, we are spending less and making responsible savings. One of the most effective ways to assess government spending is to look at it as a proportion of GDP. Spending is at or below 24 per cent of GDP over the budget period, which is the longest sustained period of spending at this low level in over 30 years. In contrast, the Howard government was the highest taxing and most wasteful government in Australia's history. Research by the IMF shows that this government has made responsible spending decisions, while the Howard government clearly missed opportunities to effectively use the mining boom and strong global economic conditions to invest in Australia's future. The report again debunks the myth frequently repeated by Mr Abbott, Mr Hockey and those opposite that the Howard government exercised spending restraint.

This government's tough decisions have led to positive results for the Australian economy. Unlike the rest of the developed world, we avoided recession and saved hundreds of thousands of jobs. Our economy is now 13 per cent larger than it was when Labor came to office, while other advanced economies are still clawing back lost output. More than 800,000 jobs have been created since Labor came to office, while 28 million have been lost worldwide. The only jobs strategy the Liberal Party has is the slashing of jobs, straight out of the Campbell Newman and Barry O'Farrell playbook. We have strong public finances and low debt, with net debt expected to peak at one-tenth of that across major advanced economies. We are one of only seven countries that have a AAA credit rating, with a stable outlook, from all three ratings agencies. This was never, ever, achieved under the coalition.

The opposition talk about 'living within your means', and it is fine for the opposition to talk about fiscal responsibility. We welcome discussions like the one we are having today about fiscal responsibility. That is why we have given those opposite full and complete access to the Parliamentary Budget Office. Because the Australian people know that, while the braggart down the pub will tell you they climbed Everest, hit a century for Australia and knocked out Muhammed Ali, unless they show you the photos you know that they are, to put it politely, full of hollow boasts. Those opposite are full of hollow boasts. We have repeatedly called upon them to cost their policies using the expertise of the Parliamentary Budget Office. They have refused.

Those opposite have said they will release their costings before the election. Unlike those opposite who appear not to trust anyone or anything, I do trust that they will release their costings before the election, although I suspect it will be on 13 September. It is irresponsible for those opposite to make promises of more spending, lower taxes and higher surpluses without detailing how they are going to pay for it. It is meaningless to announce policies without providing credible costings. Costings are only credible if they have been verified by Finance and Treasury or the independent Parliamentary Budget Office and released publicly. Costings are not credible when they have been prepared by a private firm acting in the interests of their client rather than in the public interest.

It is imperative that those opposite release their costings and release all their policies, because there is great fear in Tasmania, my home state, about what will happen were those opposite to get into government. There is growing outrage at Mr Abbott's plans to strip $700 million in GST revenue from Tassie's budget to boost the coffers of his Western Australian state Liberal mates, and there is growing fear about Mr Abbott's leaked 'Vision 2030'—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Order! It is now 6 pm and time to move to the consideration of government documents.