Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

My question is to the Minister for Resources and Northern Australia, Senator Canavan. Can the minister outline to the Senate what role the resources sector has played in Australia's recent record trade surplus?

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I thank Senator O'Sullivan for his question. I love getting questions from Senator O'Sullivan because he is positive about the potential of our resources industry to drive economic growth in our country and create jobs. He knows it well in the area that he is from in Western Queensland, and it is also important in my part of the world in Central Queensland as well. He is right to point out that it is a happy moment for this country that we have recorded a record trade surplus on Friday just gone. In the latest statistics we now have a trade surplus of almost $6 billion—$5.8 billion. It has increased by $5.3 billion. It is a record amount. It is the highest amount on record in this nation. $3.2 billion of that $5.3 billion increase was down to an increase in mining and resources exports. So it was something that was driven by the resources sector in some sense. For the mining sector it was also a record amount of mining exports in December 2016 of $16 billion. That is a happy outcome for our nation, too.

So the idea that the mining boom is over or finished is wrong. People who make that claim are dead wrong. The mining boom has not finished, because we are exporting record amounts of mining commodities in history. We have never exported as much iron ore and coal as we are at the moment. Thankfully for us, in the last six months the prices have also been at elevated levels. Those prices may not be maintained at those levels we have seen, and some have certainly come off in the last few months, but we will continue to export near record amounts over the next few years because our sector is very strong and very competitive. It has some of the most efficient coal and iron ore mines and other mines in the world. That is a good outcome for our nation and for the thousands of people who rely on the industry for their jobs.

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

Is there a supplementary question, Senator O'Sullivan?

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Can the minister advise what resource commodities are in greatest demand and who our biggest customers of energy resources are?

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

As I mentioned in the first answer to Senator O'Sullivan's question, there was a record amount of exports from our mining sector as well in December 2016. We are exporting record amounts of iron ore and coal, which is a great outcome for our nation. It is a great outcome for the environment too, because we have some of the highest quality coal in the world. In terms of carbon emissions it is better for the world that the world uses our coal and not some other coal in other countries which is not of such high quality. We have had record growth in our exports to China; even the European Union is increasing as a share of our resource exports. What is really important for our nation is that India and other Asian countries are coming onto the map. India is now our biggest destination for metallurgical coal. These parts of the world have strong growth prospects, so it is good for our mining sector.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Green coal—that is the way to go. Is the minister aware of any obstacles in place that are holding back future growth of Australia's resources sector?

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I will take that as a suggestion and comment from Senator O'Sullivan. He is absolutely right about the government's intent and objective to attract more investment in our resources sector. Obviously the strong outcomes of the sector are helping in that regard, but we are also being proactive and making sure that we facilitate investment coming into this country. That is why we have established the one-stop shop for environmental approvals, a change that we believe will save upwards of nearly $400 million a year in regulatory costs. That will help bring investment to our country, investments like the Amrun project, which was formerly known as the South of Embley project, in Cape York. Senator O'Sullivan would know that full well. That has finally been approved, and it is a great thing for the people of Cape York. It is an area that needs jobs and investment. It has a strong and proud Indigenous community, and they are very proud that that project now takes the name of a local language dialect, Amrun. That is a project of more than $2 billion that is going to drive growth in Cape York. It is another great outcome that our resource industries are delivering for Australia.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. In 2009, you referred to the 'socialism we had to have' under Gough Whitlam, who thought he could 'spend his way out of trouble' and 'went to great lengths to borrow more and more money'. I agree. After three years, Whitlam left Australia with a deficit of $1½ billion, government spending at 24 per cent of GDP and tax receipts at 20 per cent. Your government, after three years, has left Australia with a deficit of $37 million, government spending at 25 per cent of GDP and tax receipts at 22 per cent. Whitlam left no debt. Net debt is now $317 billion. Are you more socialist than Whitlam?

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

I thank Senator Leyonhjelm for that question. The short answer to that question is, of course, 'no'. I refer Senator Leyonhjelm and the Senate to the most recent Budget Paper No. 1 and the very helpful time series on page 10-5 and 10-6 which starts in the year of my birth, 1970, and covers 50 years all the way to 2020. What you will see is that before Gough Whitlam got into government spending as a share of GDP was 19 per cent, and it increased by a massive five per cent as a share of GDP in three short years. In fact, in the last few years of the three-year term of the Gough Whitlam government spending increased above inflation by 19.9 per cent and by 15.7 per cent, respectively. That is unprecedented in that 50-year period that is published in this budget paper.

The only other double-digit increase in spending above inflation that we have experienced in that whole time happened under—you guessed it: the first budget of the Rudd Labor government in 2008-09 when spending increased by 12.7 per cent above inflation and 17 per cent over two years. It took spending back to 25 per cent of the share of GDP. Not to be outdone, the Gillard government locked in further spending increases in legislation. But they were more sneaky; they did it outside the published forward estimates, so it was not obvious in the forward estimates documents. So, when we came into government, spending as a share of GDP was on track to 26.5 per cent by 2023-24 and, indeed, in excess of 30 per cent, according to the intergenerational report, over time. We have brought that back down to 25 per cent. We have got spending growth under control. That has involved some difficult decisions. But, of course, we know that the Labor Party in the lead-up to the last election promised spending that would have worsened the deficit by $16.5 billion.

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

Senator Leyonhjelm, a supplementary question.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Minister, in your previous comments you have referred to the Rudd-Gillard-Rudd government as Whitlam-esque. In the year Rudd left office tax receipts were 21 per cent of GDP and net debt was $202 billion. Tax receipts and net debt are now higher under your government, and you project this will remain the case in the future. Doesn't this make you more Whitlam-esque than Rudd?

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

What Senator Leyonhjelm ignores is the spending increases and tax increases that Labor locked into legislation before they lost government. What we have been doing is dismantling some of it—scrapping the mining tax and the carbon tax, for example, reducing income taxes for hard-working families, proposing at the last election to reduce taxes for businesses that employ Australians to 25 percent in order to ensure that we are internationally competitive. And, of course, we have reduced spending over the medium term in net terms by $250 billion. These are spending reductions not that we have proposed but that we have actually implemented.

The other thing I would say is that we have in our budget a tax-as-a-share-of-GDP cap of 23.9 per cent. Labor have no cap. They went to the last election promising more than $100 billion in higher taxes, which would have hurt the economy and cost jobs. Labor are still the socialist party. They are more socialist under Bill Shorten than they ever were.

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

A final supplementary question, Senator Leyonhjelm.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Minister, the government could balance the budget and pay back debt by cutting spending in the budget bills. The Senate would not be a barrier, as Labor has committed to pass budget bills ever since Gough Whitlam's dismissal. Wouldn't the use of budget bills to balance the budget rather than to blow it be an elegant way to prove that you are not like Whitlam?

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

If only it was that easy we actually would have done that by now. The truth of the matter is that around 75 per cent of total Australian government expenditure is made through special appropriations under distinct legislation, not through the annual appropriation bills. That is, of course, a mechanism that the Gillard government used to tie up Australia in massively unfunded and unaffordable spending growth in the years well beyond the termination of her government for Australia.

Special appropriations established payments which the government is obligated to make by the parliament through such distinct legislation until or unless the parliament agrees to change or remove those specific and distinct pieces of legislation. Indeed, to the extent that we can achieve savings to annual appropriations we have, of course, already done so. That is a matter of public record—that we have done as much as we can through the appropriation bills. But, in the end, the government, as the responsible—(Time expired)