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

My question is to the Minister for Finance, the Minister representing the Treasurer, Senator Cormann. What was the state of the budget when the government came to office and what were the causes for the budget outlook?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Fawcett for that question. The state of the budget was very bad. It should not really surprise us that it was very bad, because Labor governments across Australia have a history of leaving behind budgets that are in a mess. That is what happened when John Howard became Prime Minister and that is what happened when we came into government. Of course, the previous government inherited the situation of no government net debt—a $20 billion surplus, more than $50 billion in the bank. We were collecting more than $1 billion in net interest payments on the back of a positive net asset position. What did Labor do? They delivered $191 billion in deficits in their first five budgets and another $123 billion in projected deficits in their last budget. They took us on a trajectory to $667 billion of gross debt.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

No one believes you.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Senator Cameron says that nobody believes us. But do you know what? I suspect that even the people voting for the Labor Party know that the Labor Party do not know how to manage money. Here we are having to borrow $1 billion a month in order to just pay the interest on their debt. Do you know what $1 billion a month would pay for? It would pay for 47,719 hip replacements. It would pay for 49,371 knee replacements. And it would for 371,885 cataract surgeries. Instead, what do we have to do? We have to pay it every month. We have to borrow a billion dollars every month and spend it just on the interest on Labor's credit card bill. We could spend that money on so many better things if only we did not have all of this Labor debt to deal with. It is very important that we get the budget back under control so that in the future we can fund these important health services even better than we are now.

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

Mr President, I ask a supplementary question. Minister, how may decisions made by this parliament on proposed savings and revenue measures change the budget outlook?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Fawcett for the supplementary question. The choice for the Senate is clear, really. Either we stay on Labor's expressway to more debt and deficits or we turn the situation around and build a stronger, more prosperous economy where everyone can get ahead and where we can get the budget back into balance. Of course, we know that the previous Labor Treasurer, Wayne Swan, used to sell the virtues of surplus budgets. Every year he would promise us another couple of budget surpluses. 'The surplus years are here', he would say, and then he would deliver another couple of deficits. Of course, the Labor Party has not delivered a surplus budget since 1990. The Labor Party has not delivered a surplus budget in 24 years. This Senate needs to join the government in helping us fix the budget mess that we have inherited so that we can strengthen the future for our children. (Time expired)

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

Mr President, I ask a further supplementary question. Minister, what are the risks to all Australians if this parliament fails to address Australia's budget problems?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The risk is that on the back of continuing to borrow to fund our consumption today we will expose our children and grandchildren to lower living standards and we will force them to pay higher taxes and accept lesser services in order to pay for our cost of living today. That is of course entirely inappropriate. I have been reading out a few quotes in recent weeks and I came across this quote from John Edwards, the RBA board member who was appointed by Mr Wayne Swan and who was former Prime Minister Paul Keating's principal economics adviser. This is what he said:

I've no doubt there is a budget crisis. We're accumulating debt as a higher share of GDP and of course in absolute terms, [it's] absolutely astronomical …

This is Paul Keating's economic adviser:

… compared to far more serious episodes in Australian history, including recoveries from serious recessions.

So Paul Keating's economics adviser thinks this is worse than it has ever been. (Time expired)

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

I direct my question to Minister Cormann, representing the Treasurer. Considering that yesterday the Treasurer stated on Sky News that, 'the most significant individual item in the budget is a savings measure, it's a reduction in foreign aid.' Considering that the differential of any money allocated for a department that is not spent goes back into consolidated revenue, do you plan to make savings from the aid budget by slowing down expenditure on overseas aid programs? If so, which parts of the overseas aid program will experience reduced expenditure?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government has been very transparent in the savings that we intend to make out of the foreign aid budget. Given the debt and deficit disaster that we have inherited from the Labor Party, we have no choice but to focus on getting our own affairs in order before we start spending money that we have not got. The Labor Party and the Greens might want us to continue to borrow money to give it away, but we think we have a responsibility to our children and grandchildren to repair the budget, to build a stronger, more prosperous economy, to create opportunity for everyone to get ahead, but we are not going to continue to spend money that we have not got. The spending growth trajectory in foreign aid that former Prime Minister Kevin Rudd locked Australia into in his quest to become the next Secretary-General of the United Nations was completely unsustainable and it was completely unaffordable. Our children and grandchildren would not have to pay the price—

Stephen Parry (President) Share this | Link to this | Hansard source

Pause the clock. Senator Rhiannon on a point of order.

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

Mr President, I rise on a point of order on relevance. The question was quite simple and direct and was about slowing down expenditure on overseas aid programs. Could you draw the minister back to the question please?

Stephen Parry (President) Share this | Link to this | Hansard source

The minister has just over one minute left to answer the question. I draw the minister's attention to the question.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

As I was saying, the Australian people should not have to pay the price for Mr Rudd going out and trying to stack the numbers in his quest to become the next Secretary-General of the United Nations. In this budget we have frozen the foreign aid allocation, the foreign aid budget, this year and next year at the same nominal amount. Then we are increasing it by the CPI instead of taking it up to 0.5 per cent of gross national income—as we transparently said we would do before the election and as we transparently said we would do in the budget. That is the responsible course of action given the debt and deficit disaster that we inherited from the Labor-Green government when we came into government in September. But of course, if the Greens support our agenda for stronger growth, if the Greens support our agenda to repair the budget, if the Greens support our agenda to get back into surplus, we will have more money available in order to invest in causes like foreign aid. But in the meantime, while we have to borrow a billion dollars a month just to pay the interest on Labor's debt, we just cannot afford more than what is in the budget.

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, how do you reconcile the Treasurer's statement made last October—that the ambitious goals of eliminating extreme poverty will be meaningless unless strategy is actively pursued to achieve those goals—with the Treasurer's statement of yesterday that, 'We just have to reduce the expenditure as part of our budget savings.' Are you committed to reducing aid spending or to poverty alleviation?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The Greens might not understand—and these days it seems the Labor Party does not either—but the only sustainable way to increase spending on foreign aid is to get the budget back under control. The budget situation is such that we cannot continue to borrow money just to give it away. The Labor Party wants us to borrow money and give it away for all sorts of causes. Taken in isolation, you might say that every single cause has got merit, but, do you know what, when you are the government you actually have to prioritise how you allocate your resources. The truth is that you are in a situation where you are heading for $667 billion of debt, which the Labor Party wants our children and grandchildren to repay. I see Senator Cameron smiling. He does not care. Maybe he is quite happy to give his children his credit card with all of his grocery expenses on it for the next couple of years, as well as the interest bill. Would you do that, Senator Cameron? Would you put your groceries on your credit card over the years and then tell your children, 'Well, that's now your problem' or would you say, 'Actually, I've got to take responsibility for my own expenditure'?— (Time expired)

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

Minister, considering you have really just linked the aid budget with the surplus, how will further cutting the foreign aid budget deliver the new aid paradigm announced by Foreign Minister Julie Bishop and retain excellent aid programs that have seen over a million boys and girls enrolled in school and about 2.8 million children vaccinated against life-threatening diseases? These are some of the programs that are under threat if you continue to reduce spending in the coming period.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Foreign Minister Bishop is doing an outstanding job to make sure that the investment in foreign aid actually delivers real outcomes, because, under the previous administration, Mr Rudd was doing his work to do the numbers to become the next United Nations Secretary-General. Not only did he spend a lot of money on wasteful programs; he also spent a lot of money on massively increasing the size of the Public Service. The increase in the number of public servants in AusAID was much higher than the increase in actual funding into programs. What we are doing is saying, 'We can't continue to spend money that we haven't got. That would be irresponsible to our children and grandchildren. So we need to get the budget back under control.' That is what we are doing. Once the budget is back under control, we can have a conversation about how we best prioritise future spending decisions. But, in the meantime, while we have a deficit— (Time expired)