Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. Is the new Treasurer, Mr Morrison, right to say that under this finance minister spending as a percentage of GDP is at 26 per cent and that is not sustainable?

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

I thank Senator Urquhart for that question. That is an objective fact. What I can say is that it is much lower than it would have been if Labor had stayed in government. When we came into government we inherited a spending growth trajectory.

Opposition Senators:

Opposition senators interjecting—

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

Labor never want to hear this. There were two big spending boosts under Labor. One was the 17 per cent increase above inflation in the context of the global financial crisis, which was supposed to be crisis level spending which Labor locked in as the new base. Then, as they were staring down the barrel of losing the election, in they came and they legislated all these massive increases in expenditure on the NDIS—a very important initiative, of course, but without fully funding it—on Gonski and on a whole range of other things. Labor locked spending growth into legislation without properly funding it.

The government are dealing with the unsustainable spending growth trajectory that you left behind. Is government spending in Australia too high? You bet it is. Do we need to keep working on bringing it down as a share of the economy? Absolutely. Of course there are two ways of doing it. Increasing the economy and strengthening growth will, of course, help bring down spending as a share of the economy, and so will making sure that spending is on a more sustainable foundation for the future. We are doing it.

When we came into government we inherited spending growth of about 3.7 per cent above inflation, on average, per annum. As a result of the efforts of this government over the past two years we have been able to bring that down to about 1.5 per cent above inflation, on average. Is there more work to be done? Of course there is more work to be done. Would we like to have made more progress by now? Yes, we would have. Have we faced some additional challenges, including in the Senate? Yes, we have. We are doing the best we can and we are in a much better position than we would have been if the worst finance minister in the history of Australia was still in office.

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister confirm that spending as a percentage of GDP is now higher than when the coalition came to government?

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

The answer, again, is yes. But here is the important point, which Labor clearly do not understand. It is lower than it would have been if we had kept the policy settings that Labor put in place. When we came into government, the advice we got was that on Labor's policy settings we would reach an expenditure as a share of GDP of 26.5 per cent within the decade. Of course the Intergenerational report showed that under Labor's policy settings expenditure as a share of GDP was heading for in excess of 30 per cent. We are working in an orderly and methodical fashion to get spending growth under control over the budget forward estimates. The projections are that expenditure as a share of GDP will come down to about 25.3 per cent. That is still not good enough. There is more work to be done. If Labor were really so concerned they would join us in our efforts. A good start would be not to make ongoing, unfunded spending promises, which Labor are still doing. (Time expired)

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Doesn't Mr Morrison's criticism confirm Mr Turnbull's view that the Abbott government's economic team, including the finance minister, has not been capable of providing the economic leadership our nation needs?

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

I completely reject the premise of that question. Obviously, over the last two years the government have worked very hard to put Australia on a stronger economic and fiscal foundation for the future. The Turnbull government, building on the progress that has been made over the past few years, will of course do everything we can to strengthen growth and create better opportunities by making sure we are more productive, more competitive and more innovative. We will continue the important task of preparing the budget. From a personal point of view, given that you directed part of the question directly to my performance, I am obviously very grateful to the Prime Minister that he has chosen to put his trust in me to be a continuing member of his economic team. As part of that team I will continue to do the best I can to help put Australia on the strongest possible economic and fiscal foundation for the future.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

I ask that further questions be placed on the Notice Paper.