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

It is with pleasure that I rise to take part in this discussion of matters of public interest today, because, if there is one thing that is of interest to the people of Australia, it is the Labor Party's continued denial of economic reality. This government was elected overwhelmingly by making it clear to the people of Australia that we had three key priorities. The first was that we would stop the boats, and the success of Operation Sovereign Borders in doing that is obvious. Yes, the work goes on, but there has not been a single successful people-smuggling venture to Australia since last December. Those opposite said it could not be done, yet it is being done. The second key priority was to scrap the carbon tax and the mining tax, which we already would have done if only those opposite had respected the clear mandate the people of Australia gave this government last year. I am pleased that, with the arrival of new senators in this place, we now have the opportunity in coming days to deliver on our commitment to put an end to these unnecessary taxes. The third and most fundamental promise was to get the nation's books back in the black and build a stronger economy.

When this government talks about getting the budget back to surplus, we actually mean it. In the six years those opposite were in office, they were very good at talking about the need to make tough decisions. They were even better about talking about getting the budget back into surplus. What they were not terribly good at was delivering on their talk. Labor did not make tough decisions, and, for all their talk and all their promises, they did not deliver a single surplus budget during their most recent period in office. Talk is cheap. It was about the only aspect of the previous government that was cheap, because everything else they did was massively, and in many cases unnecessarily, expensive and financed on massive debts—debts which this government is now determined to repay so that future generations of Australia do not have to. Indeed, as a result of the decisions taken in this budget, the interest payments on government debt are projected to be $16 billion lower in a decade. That is freeing up money to be spent on crucial health and education services, on support for families and for seniors and to build vital infrastructure.

I think it is worth spending a couple of moments considering how we got to the fiscal position Australia finds itself in today. When the previous Howard coalition government left office in 2007, Australia had no net government debt. That meant that we were not shelling out billions of dollars every year for interest payments. Coupled with that was the exceptionally strong budget position Labor inherited. In the 2007-08 budget, which was Peter Costello's final budget, the end result was a surplus of $19.8 billion. Compare that with what Labor produced in their final budget—a $47 billion deficit. That is Labor's record, and no amount of distraction or hiding can hide that simple and important fact. They came to office with an exceedingly strong fiscal position and proceeded to squander it through poor decisions, runaway spending and ballooning debt. But, from reading Labor's budget speeches during their time in office, you would never know it. Labor swore to us that, like the Loch Ness monster or the bunyip, the surplus existed. They just could not actually show us where it was. So in 2008-09, when Wayne Swan told us in his first budget that he would deliver a surplus built on disciplined spending, the result was a $27 billion deficit. The next year, we were told the budget would put us on a path to surplus by 2015-16. The result that year was a $54.5 billion deficit. For 2010-11—the final budget under Kevin Rudd—Mr Swan said his program would see the budget return to surplus in three years time. That year the deficit was $47.5 billion.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

What year was that?

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

2010-11. It might be a year you would like to erase from your memory, Senator Gallacher. The next year, 2011-12, under Julia Gillard, the Treasurer's speech claimed, 'We'll be back in the black by 2012-13, as promised,' while delivering a $43.4 billion deficit. The next year was 2012-13, and the budget speech was the most fundamentally dishonest of all Wayne Swan's six performances. In it, he claimed:

This Budget delivers a surplus this coming year … and surpluses each year after that …

What it actually delivered was a deficit of $18.8 billion. Last year, in Mr. Swan's final budget, we heard a familiar promise: 'This budget sets a sensible pathway to surplus.' Naturally, when the coalition came to office late last year, what we actually found was that Australia was on course for a deficit of $47 billion.

Six Labor budgets, six years of promised surpluses, six years of deception, six budget deficits—that is what Labor delivered to the people of Australia. Yet today the same Labor Party have the gall to come into this parliament and talk about broken promises. Not only do they revel in the hypocrisy of that action but they also seem to exist in an alternative economic universe. If you have listened to the comments of those opposite in the two months since the budget was delivered, the constant refrain you will have heard is that there is no budget problem, that the debt and deficit crisis that Australia faces and which this government is determined to address has somehow been confected or invented. No sensible Australian would believe that to be the case. Labor's financial management record is there for all to see in black and white—or, more accurately, in red and white. The trouble for Labor is that every time they repeat this claim they seem increasingly shrill, desperate and isolated.

But do not take the coalition's word for it. Do not take my word for it. Let us look at the views of some respected, independent experts, including people that Labor worked closely with when they were in government. Let us start with the secretary of the Treasury, Dr Martin Parkinson. At the beginning of this month, Dr Parkinson had this to say of critics of this government's action plan to tackle the debt and deficit challenge:

It is one thing to argue that reform proposals should be designed with fairness in mind … It is quite another to invoke vague notions of fairness to oppose all reform.

Using this kind of concept to defend what is clearly an unsustainable status quo means consigning Australia to a deteriorating future.

Consigning Australia to a deteriorating future—that is what we will be doing if we fail to act on reducing our budget deficit and the nation's debt. Yet those opposite seem quite comfortable with that notion, if their comments and behaviour on the budget thus far are anything to guide our considerations.

Dr Parkinson summed up Labor's denial of economic reality very well during the recent budget estimates, when he said, in relation to Australia's levels of government debt:

I have been saying this. The Governor of the Reserve Bank has been saying this. The head of the independent Parliamentary Budget Office has said this, most recently last week. If the two most senior economic bureaucrats in the country are saying, 'People, we have a challenge, and it's about time we had a serious community discussion' and the independent head of the Parliamentary Budget Office says the same thing, it is actually in the hands of the political class.

He is quite right. The challenge of dealing with these issues is in the hands of the political class. And one side of politics is failing that test, and failing the Australian electorate, dismally.

So, as Dr Parkinson points out, we should also turn to the head of the Parliamentary Budget Office, a body that was established during the years of Labor government to provide this parliament with independent budget advice. Again, during budget estimates hearings recently, the Parliamentary Budget Officer, Mr Bowen, confirmed that the debt and deficit challenge Australia is facing is not 'confected', as those opposite would want you to believe. Instead, it is very, very real. Indeed, when the proposition that the budget crisis is 'manufactured' was put to Mr Bowen, he said, as reported in The Australian Financial Review on 27 May:

"I don't agree with that."

"If you just continued on the trajectory of payments and revenues prior to the budget, net debt is forecast to grow rapidly, I think, at the highest rate in the OECD …

Mr Bowen went on to say why it is imperative that we deal with the situation now:

… frankly we don't want to find ourselves where the rest of the world is … You've got to have a buffer. One of the reasons we came through the global financial crisis so well was because we started with assets.

The 'assets' being referred to, of course, were the strong budget surplus and debt-free position inherited by Labor when they won office in 2007.

Again, I make the point that these quotes do not come from the government. They come from independent experts who worked closely with the former Labor government when it was in office. They agree there is a problem. They agree that we must act. They agree that this government's budget is what is needed. Yet those opposite put their fingers in their ears and refuse to listen.

These warnings were echoed by respected economic commentator Henry Ergas, in The Weekend Australian Magazine just last weekend. He said: 'As well as shifting onto tomorrow's taxpayers the burden of paying for today's benefits, greater debt will limit the borrowing capacity of future governments, reducing their scope to use fiscal policy to cushion the impact of adverse shocks. As a result, when an adverse shock comes'—and this is important—'the cuts will have to be deeper and the hardship more widespread and prolonged. And such shocks are not merely possible; they are probable.' In the same newspaper on the same day, the Governor of the Reserve Bank, Glenn Stevens, warned that we are living in uncertain international economic times. He said:

… it would be foolish, I think, to pretend that one can precisely forecast in that effect of all those forces …

“I don’t think we can, and nor do I think that it’s within our capacity to guarantee some kind of finetuned, very smooth outcome.

Labor almost seem to think these independent experts are part of a conspiracy to make them look bad. Well, if there is a conspiracy, then it must be an international one, because agreement about the need for Australia to deal decisively with its debt and deficit problem has gone global.

There is paranoia from those on the opposite side, yet they also seem to be unconvinced by the expert opinions of both the International Monetary Fund and the OECD. In February of this year, as the government was preparing the budget, the IMF issued its economic report card for Australia. The IMF Country Report, No. 14/51, found that Australia had the fastest growth in spending of the 17 major economies surveyed, and, equally worrying, the third highest growth in net debt. These are areas where being at the top of the table is not a good thing. Yet, only one side of politics in this country has actually produced a plan to deal with the situation.

Just last month, the government's budget measures, which are designed to deal with the debt and deficit crisis in a methodical and comprehensive fashion, won the endorsement of the OECD. Again, this is something that those opposite want to overlook, and that they do not want to hear. But the OECD's Secretary-General, Angel Gurria, was reported by the ABC on 10 June this year as saying that the Abbott government's budget strategy is 'dealing very directly and decisively with the budget deficit.' He went on to further endorse the Abbott government's efforts to get spending back under control. He said:

You [Australia] went for 80 per cent cuts, one-fifth tax increase. We're always saying you should at least keep it balanced, this is a more sustainable, more durable type of solution. Once you cut the expenses it stays low, with taxes there are certain temptations …

So, to summarise the state of the economic debate in Australia today: on one hand, there is the Abbott coalition government that is determined to deal with the economic mess left to us by our Labor predecessors. We are prepared to act, because we recognise that Labor's legacy of $123 billion in projected deficits—

Senator Sterle interjecting—

Senator Polley interjecting—

Your legacy, Senator Sterle; your legacy, Senator Polley.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

It's a heartless government.

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

Don't encourage me to go on. I feel your pain. I feel your embarrassment. Your Labor legacy of $123 billion in projected deficits and debt on a trajectory to reach $667 billion if no action is taken. It is utterly embarrassing. It is totally unsustainable. You should be ashamed.

On the other hand, there is the Australian Labor Party—the self-proclaimed friend of working people—who want to lock Australia into becoming a high debt, high deficit economy with low employment growth. What is more, Labor want Australians to trust them. Australians are ready and able to take a new challenge, to prepare themselves for a better budget outcome, to protect themselves from the future shocks in the international economy.