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

I inform the Senate that 8.30 am today four proposals were received in accordance with standing order 75. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Hanson:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The need to introduce a debt ceiling on how much the Australian government could borrow.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times for each of the speakers in today's debate. With the concurrence of the Senate, I shall ask that the clerks set the clock accordingly.

Pauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

What is on the mind of Australian people around the country is: how much more debt can we afford to carry? And the answer is: no more. We are in debt to the tune of $563 billion. It was just a few weeks ago that the Treasurer, Scott Morrison, said that we are going to raise it to $600 billion. The debt ceiling was taken out. We did have a debt ceiling but that was changed around 2009. The Labor Party had a debt ceiling, but Tony Abbott's government and also the Greens removed the debt ceiling that we had in Australia. I do not believe that it can go on the way that it is going. Scott Morrison has said in the past that we do not have a revenue problem, we have a spending problem. But, well and truly, I say that we have both. We do have a revenue problem and we do have a spending problem.

If we have a look at the debt, we can see that it is accumulating at a rate of about $14 billion a year. That is how much we are going further into debt and, at this rate, we will never be able to pay it back. The government is increasing the debt. At budget time they tell us that we will be back in surplus in a matter of years, but that is not the case. We need to rein in our spending, and I can give a few examples of where we could do this. Firstly, we could look at the remuneration packages paid to a lot of our organisations—as I raised in the chamber, the CEO of Australia Post was on $5.6 million a year—$5.6 million a year he has paid himself—and the head of NBN is actually on $3.6 million a year. Looking at chancellors of universities, we can see that the top one is on just over a million dollars a year and that the top 21 are probably bringing in $700,000-plus a year.

Then you can look to some of the other positions in Australia Post, where you have people who are on $1½ million a year, and then at the board of directors, who are on another $1.2 million a year. And the CEO of the ABC is on approximately $900,000-plus a year. This is completely out of the realm of what the average Australian finds acceptable. We are now getting a divide in Australia where we have ordinary Australians who are trying to work extremely hard for the average wage. And though some may say it is around about $45,000 or $50,000 a year, many are only receiving their $35,000 and are having to live on that. When you hear of these people and these wages that I have been talking about, such as the $5.6 million for the CEO, people are furious about it, and I do not blame them.

When I raised in the parliament about what the CEO of Australia Post was getting paid, the Liberal Party, the government, said: 'Look, we will fix that. We will change what he can be paid.' And they put out a remuneration package here that he should actually come under, which has the classification of band E. It is quite interesting: if you go through bands A, B, C and D you will see they start from a certain amount and they have a total amount that they can be paid. But that is not the case under band E, which says, 'from either $380,230 or from $469,340', but it does not say to what amount. The government has actually given carte blanche to the board of Australia Post to stipulate what they want to pay the next CEO of Australia Post.

Australians are not going to put up with this anymore. We cannot continue to have the divide in this country, which is becoming the rich and the poor. The remuneration packages we are paying these people in Australia is far superior to what people in the same positions in other countries around the world are paid. This has to change.

Another thing about our debt and where we can rein it back in is that we had assets. We had Telstra which, in 1996, made a profit about $2.2 billion—but no, the government wanted to sell Telstra, and now it is making a profit of about $6½ billion a year. Then you have the Commonwealth Bank, which was also sold off and is now looking at making nearly $10 billion profit a year. We are seeing too many of our assets being sold in this country, and Australians are fed up with it. Their assets belong to them. It is not up to governments to decide when they wish to sell off an asset to gain just a couple of billion dollars that they continually waste, and then we do not have the revenue coming in from those assets.

A case in point that I am going to talk about is the Adani mine. The government is looking at lending the Adani mine $1 billion to build this railway line. I am all for the coalmining; I have no problems with it; we need it for the jobs—it will create around 1463 permanent jobs, but building the railway line will create more jobs in the interim. If we build the railway line—the mine is supposed to be productive for 60 years—Adani will have to cart its coal and the average cost of carting that coal will be $10 a tonne. At the height of production, they are looking at 60 million tonnes which equates to $600 million a year—revenue we will have from that railway line. It is not only Adani but other coalmines in the area, and that would amount to another $60 million a year. If the government owned the railway line, it could pull in at least $1 billion a year. Why are we going to allow a foreign company to own the railway line and to pull in the profits from that? Unless we start looking at turning that around and getting people in this parliament with business acumen who know what they are doing to stop selling Australian people out, we are not going to have the money to run this country—our hospitals, schools or to pay those people who need the pension, including the sick and the aged. We will not be able to look after future generations and we will be leaving a hell of a debt for them. That is exactly what we are doing.

The welfare system needs to be reined in. I am suggesting an Australian identity card so that anyone who is on taxpayer-funded services must apply for the card, present their 100 points of proof of who they are—we have too many aliases, too many rorters, too many people ripping off the system. If you have a card, then when you go to the doctor you swipe your card. It must have your picture and your palm print because that cannot be duplicated. We have overseas visitors coming to this country who get a Medicare card and go to the doctor. They get scripts and some are ending up in the hospitals that we are paying for. There are numerous people who are collecting welfare payments and there are people rorting the educational system. If we want to be fair dinkum at reining this in, this is the only way we can go about it. We need to address concerns about it.

Another thing on the minds of the Australian people is our gas fields. On the North West Shelf, we have multinationals taking our gas, selling it to Japan. They are getting it 65 per cent cheaper than what Australians are paying for it. The deals done in this country disgust me. We have no equity in our gas fields. We get royalties out of it, but we do not know exactly how much gas they are taking. It is a sham that has been going on. It disgusts me to think that they will bring out gas from America and release it in Australia more cheaply than we can provide it to our own people. Australians are at a point where they cannot keep being taxed further and further. The government must rein the debt in. I say that we need to stop allowing the government to increase the debt ceiling whenever it suits them. It has to be changed; we have to control this government and future governments.

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

I would like to begin by congratulating Senator Hanson and her One Nation colleagues for bringing to the Senate's attention a very important issue. Of course, when we talk about debt ceilings and their suitability or otherwise, what we are really talking about is whether or not the excessive levels of government expenditure can continue to be supported by the Australian taxpayer into the future. I, like other coalition colleagues and I am sure colleagues from the One Nation Party, absolutely agree that this level of expenditure—not of our money but of taxpayers' money—can simply not be sustained into the future. If we agree on that, the conversation necessarily becomes one about the sorts of constraints that we can put on government to ensure that government expenditure over time is reduced, that the burden is removed from Australian taxpayers and their families, and the economy is allowed to flourish as a result of that.

I am big enough to be able to say that I was disappointed when the coalition government decided to remove the debt ceiling. I am certainly one of those people in the camp who believes that debt ceilings are necessary and important institutional mechanisms that help constrain the size of government and, in the process, take the pressure off Australian taxpayers and their families. Unfortunately, we do not live in an ideal world, nor do we live in a policy vacuum. The government at the time was forced to confront some very serious issues around government expenditure that had been left to it—no surprises—by the Labor opposition. That is not an excuse, because I would hope that one day we would absolutely get to the place where we can again restore debt ceilings because I think they are important institutional mechanisms to give people a degree of confidence to make sure that public monies are being spent as wisely as possible.

On top of that, of course, I am one of those Liberals that believes we should be reducing the size of government. There is much that government is doing in this country that is detrimental to the prosperity and livelihoods of ordinary Australians. Australians are very able to get off their backsides to build businesses and to raise their families; they do not need government and the size of government constantly in their way and constantly in their lives. So I am aspirational that we will be able to get back to that particular point in time.

If I could diverge for just one moment, I would like to see us restore the integrity of our constitutional document and to restore the integrity of section 51 either by taking away from the federal government certain activities it currently does or by actively saying to state governments, 'This is your responsibility.' In the federation reform white paper that had been advanced by the former coalition Prime Minister, Mr Abbott, there was a key word in that document that I am sure senators who think like we do were drawn to. That word was 'subsidiarity', meaning that decisions should be made as close as possible to the people they affect and the funding decisions that are attached to those should be sourced closely to the people that actually benefit from those decisions. I came to this place five years ago, strongly committed to the original compact our forefathers designed—what great brilliance they were able to demonstrate in the late 1890s! I come to this place saying that the people of Western Australia, the people of South Australia and the people of Queensland can be trusted to make decisions for themselves that are in their own best interests. The Commonwealth can focus on those traditional areas of responsibility. But I digress.

I would like to just put in context the dilemma the coalition government finds itself in and the constructive work it is doing to deliver a better budget outcome not just for the government but for every Australian. Then, if my time allows, I want to briefly reflect on the critical issue of wages growth—more particularly, the lack of wages growth in our country and the real dilemma that presents for ordinary families.

In May of this year, following the federal budget, the Treasurer, Scott Morrison, was able to detail for the Australian community exactly the size of the challenge the government still faces, even though it was elected in 2013, to return the government's finances and indeed the finances of the Australian population to a much better and reliable format. In his contribution he talked particularly about the importance of Australia living within its means. The Treasurer said:

Since 2008, when the Rudd Government put Australia back into deficit, more than 75 per cent of our gross debt, or around $370 billion, has been raised to pay for everyday expenditure in welfare, health and education.

From 2018-19, ten years after Labor put us on that track, we are getting off it and will no longer be putting every day expenses on the credit card. That is what living within your means is all about.

Under Labor they accumulated deficits of just under $240 billion in six years or 16.9 per cent of GDP. Under the Coalition, over six years from our first budget in 2014-15, our deficits are $70 billion or around 30 per cent less.

What that means is, we are working towards a better budget outcome—not yet achieved, but making progress. The Treasurer went on to say:

The other key difference is Labor inherited the Liberal gift of a structural surplus and we inherited the Labor curse of baked in spending and a structural deficit.

Net debt is projected to peak in 2018-19 at $375 billion or 19.8 per cent of GDP, before declining to 8.5 per cent of GDP over the medium term. The increase in gross debt reflects the Government's borrowing to support infrastructure and defence capability and borrowing over the medium term to avoid drawing down on the Future Fund to pay for unfunded superannuation liabilities—

Of course we know—

that will save a century of taxpayers from having to meet these costs.

The Treasurer went on to say:

Under the Coalition we have cut the growth in our Gross Debt by two thirds—from over 34 per cent under Labor to less than ten percent in this budget.

(Time expired)

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to participate in this matter of public importance. This particular issue is one that does greatly interest me: this issue not only of debt but also the question of economic management.

There is no doubt in my mind that the Turnbull government, and Liberal governments for that matter, are the most prolific spenders of any government in history. You do not have to take my word for that. I encourage our colleagues in One Nation to take note of this. I have raised this previously: profligate spending is something which an IMF working group looked at in 2013. The IMF working group looked at a range of industrial economies—55 economies in all—and they looked across those major industrial economies to find which were the periods of government which had the most wasteful government spending. I suppose it is to the chagrin of the coalition that, in fact, the IMF working group found that it was in two periods of the Howard government that profligate or wasteful spending occurred. This is an uncomfortable fact for the senators on the other side of the chamber, but this is a finding of a respected working group of the IMF.

The first period was 2003, at the height of the mining boom. Senators opposite always talk about the level of debt at the time that Labor took office, but it also needs to be said that in the time of the Howard government, particularly in the early part of this century, the mining boom was leading to rivers of gold flowing into government coffers. There was not a great deal of expert management required to deliver surpluses in those periods of time. The coalition government at that time found ways to conduct wasteful spending. As I said, 2003 was the first of the two periods of wasteful spending. Then the 2005 to 2007 period was also identified as a period of wasteful spending, at the end of the Howard government.

This government has gone backwards in its attempts to manage the budget, with debt accumulating at a 35 per cent faster pace than when Labor were in power. Even more importantly, the Turnbull government is failing in job creation and lowering the unemployment rate, which remains high. Figures released last week revealed that there are only seven days to go until the Turnbull government crashes through half a trillion dollars in gross debt for the first time in Australia's history. The Australian Office of Financial Management's figures show that gross debt has hit $499.2 billion, and two expected debt issuances this week, worth a combined $950 million, will see it eclipse the $500 billion on Friday.

Mr Turnbull, Mr Morrison and Senator Cormann like to blame everybody else but themselves for this mess, but this milestone exposes the depths of their failure. Their $65 billion tax cut for the top end of town is just one example of why the Prime Minister and his colleagues are part of the problem, not part of the solution, when it comes to skyrocketing debt. The Treasurer was forced to raise the nation's debt cap from $500 billion to an unprecedented $600 billion last month, a threshold that will not even cover the $606 billion in gross debt expected by the end of the forward estimates or the $725 billion projected by 2027-28, and with no peak in sight. The Turnbull government's budget also projects net debt to hit record levels over the next three years and the deficit to be 10 times bigger in the coming year than was predicted in Mr Hockey's first budget in 2014.

Higher interest payments on record debt is the price Australians are paying for four years of Liberal division, dysfunction, chaos and incompetence. But, as we know, or as the Treasurer likes to tell everyone: 'There is good debt and there is bad debt.' Fake spending on infrastructure is 'good'; fully funding our schools is 'bad'. At least, that is how the members of this incompetent government view spending. The fact is that, for all their bravado, this budget and this exuberant amount of debt does not produce a dollar of new investment for public transport until well after the next federal election.

The Prime Minister's admission came today after the Queensland government was forced to go it alone in funding the Cross River Rail project in Brisbane in its 2017 budget, because the Prime Minister—to his eternal shame, in my view—has refused to support the project. Mr Turnbull likes taking selfies on trains, trams and buses, but he refuses to invest in trains, trams or buses, despite repeated warnings that traffic congestion is acting as a handbrake on the nation's economic development. Cross River Rail is urgently needed to provide a second rail crossing of the Brisbane River in the city's CBD, because the existing Merivale Bridge is reaching full capacity. Continued delay in commencing the project will inhibit economic growth in Brisbane and right across South-East Queensland.

In last month's budget, Mr Turnbull created a $10 billion National Rail Fund, which he says could be used to invest in Cross River Rail, as well as other public transport projects, like the Melbourne Metro and the AdeLINK light rail project. In question time today, I understand that Labor's Anthony Albanese asked:

Is the Prime Minister aware that under the so-called National Rail Program not a single dollar is available in this entire term of parliament? There is nothing this year, nothing next year and nothing the year after that. Isn't the National Rail Program in fact the new NAIF—the 'No Actual Infrastructure Fund'?

That was the question, and I tend to agree. Cross River Rail was approved by Infrastructure Australia in 2012 and was ready to commence in 2013, under a deal between the former Labor government and the former coalition Queensland government. But it was cancelled by the incoming federal coalition government, which has subsequently not provided a single dollar of new investment in public transport.

Without significant investment in infrastructure, this chaotic government is leading us down to the point of no return. We need a government that is willing to take the risks and invest in the public good, not a government that tries to cut corners. Just look at the state of the NBN. This is a self-proclaimed 'Innovation Prime Minister', and Mr Abbott refers to him as 'the man who invented the internet'. But listen to this: Mr Turnbull has now purchased 15,051 kilometres of copper for his NBN rollout to date. That is 15 million metres of copper, enough to wrap around Australia. This copper splurge represents a growth rate of 736 per cent from Mr Turnbull's 1,800 kilometre tally in October 2015. You cannot make this stuff up. This feat was finally revealed by NBN Co in response to a question from Senator Urquhart that was already 18 days overdue. Mr Turnbull's use of taxpayer funds on last century's copper is yet another indictment of his failed, second-rate NBN. Mr Turnbull's ongoing broadband stuff-ups, with his second-rate copper NBN, rates a mention in the budget papers, including confirmation of his backflip on limiting public funding of the NBN to $29.5 billion. The budget papers also confirm funding for sites identified in the 2016 election campaign for the Mobile Black Spot Program. The government bungled the first funding round and was comprehensively criticised by the audit office. It found that one in four new towers failed to provide any new or extended coverage.

With the handing down of the 2017-18 budget, this government has once again failed to provide a coherent vision for the future of Australia and has done nothing to address growing debt. This is putting our AAA credit rating at risk and damaging the future prosperity of all Australians. When I think about the achievements of the Turnbull government, it is pretty dim. So I just want you to listen to my final summary at the end of this MPI: Under the Turnbull government we have: the slowest GDP growth since that GFC, record government debt, company profits surging, real wages falling, homeownership at 60-year lows and inequality at a 75-year high. If you think the Liberals are better economic managers, you really need to think again.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Australia is internationally recognised as having some of the lowest debt-to-GDP levels in the world. It is also internationally recognised that we have the highest household debt levels in the world. If you want to talk about a debt that is a problem in this country, let's talk about household debt. It came up repeatedly during estimates. That is the issue we should be focusing on here.

Senator Hanson comes in here—I note she did not stay for the rest of the debate to listen to the other speakers, where she might have learnt something. I wanted to point this out very clearly. When she talks about a debt ceiling, what she is saying is that debt is bad. That is code for, 'austerity measures are good'. That is code for, 'more zombie cuts to government spending'. That is code for, 'attacking the vulnerable in Australia'. We have been through this in the last four years with the Liberal-National government—cutting the most vulnerable in this country.

I supported, and the Greens supported, the government lifting the debt ceiling because we supported a more mature conversation in Australia around the use of debt. I am very pleased that in the recent budget the government has adopted the Greens approach of splitting up the accounts into debt for capital, which is often referred to as 'good debt'; and debt for a current expenditure, which unfortunately is referred to as 'bad debt'. Both those debts can be seen as investment. They are investment in our people, in our social safety net, in our health care and in infrastructure projects that actually raise productivity and return long-term benefits to the Australian community, workforces, businesses and citizens. Debt itself is not bad. Whether you see the level of debt as being too high depends on debt serviceability, the ability to service the debt.

I have no doubt that One Nation has come in here today to raise this issue because they want to set limits on investments we can make in our people. When they say they want a debt ceiling, what they really want is a compassion ceiling in Australia. They want to cap the amount of good that this parliament can do to help Australians. I philosophically disagree with Senator Smith. I believe that government should play a strong role in our life—yes, it is a healthy thing—I agree. I agree the government should play a strong role in our lives. It should be setting up an infrastructure bank in this country and co-investing with the private sector and directly investing in long-term infrastructure projects. I chaired a select committee that showed we had nearly a trillion dollars in underinvestment in this country. That is how you produce sustainable jobs and sustainable growth.

The Greens believe we should be putting long-term debt funding—off-balance-sheet capital funding—into Renew Australia—$70 billion to transition out of coal fired power into clean energy. We want to see money go into a federal housing trust to build housing for low-income Australians. My colleague Senator Rhiannon has done a lot of work on that. We can have debt in this country at manageable levels. We are nowhere near the debt troubles that we see internationally. If you focus on debt, it is actually not the debt that the credit rating agencies were worried about; it was economic growth and growth forecasts. So let's get that straight.

What we have a problem with in this country is household debt. Extremely high, dangerous levels of debt leverage financial system risk, not to mention that debt, like a black hole, sucks up capital out of the economy. That is productive capital that could be going into investment. This is what people who understand economics and finance are talking about in this country, not what One Nation is in here talking about—some arbitrary debt ceiling—because somehow they think they are going to get a cut-through headline. Debt to One Nation, debt to the Liberal Party means austerity. It means cuts to expenditure; it means attacking the vulnerable. I had hoped that this parliament had moved beyond this, with some of the measures we saw in the recent budget, to at least have a sensible discussion on debt. We do not need any more trickle-down economics nor the idea that somehow we should be promoting austerity agendas or leaving it all to big business.

Government should play an active role in our life. That means government should spend money carefully. It should make sure that it is targeted in the right areas and that it is an investment in our people, in our health care, in our education, in our infrastructure—the kinds of things that Australians expect us to perform as parliamentarians. There should be no more of this rubbish about debt ceilings.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in response to this matter of public importance submitted this morning by a parliamentary colleague from Queensland, Senator Hanson. Senator Hanson has asked the Senate to consider the need for the Commonwealth to introduce a debt ceiling on how much the Australian government can borrow. The Turnbull government, as indeed have been all coalition governments, is deeply committed to budget repair. But an arbitrary and blunt legislative instrument to try and cap debt is not the answer. A debt ceiling, though noble in its intentions, is a poor policy mechanism to attempt to curb government expenditure which fails to acknowledge the nuance required of fiscal management on a national scale.

This government will bring the budget back to surplus. Last month, the Treasurer delivered a budget in the other place centred on the notions of fairness, security and opportunity. In this budget, the Treasurer demonstrated how Australia's net debt will peak in 2018-19. This is a government that can deliver budget repair. There is no need for a debt ceiling.

The economic rationale behind a debt ceiling is meagre, to say the least. In the first instance, a defined debt ceiling does not respond to changes in the general price level due to inflation. A debt ceiling is blunt. A debt ceiling is static. Additionally, the use of a debt ceiling is largely prevalent in jurisdictions where executive functions are distinct from the legislature and where legislative bodies that seek to curb reckless expenditure do so to try curb that expenditure by the executive. This simply is not relevant to the Australian system. There can only be one possible economic rationale for the introduction of a debt ceiling in Australia—that is, somehow that a debt ceiling instils an economic discipline into policy makers. While this might be a noble goal, there are better ways to go about it.

We cannot allow this country to follow the path of the United States, the United States Congress in particular, which has been forced to pass successive increases to its own debt ceiling in order to enable the federal government to continue functioning. Even the staunchest of anti-debt congressmen and senators in the states have not been willing to truly allow the government to shut down over its debt ceiling. Allowing Australia to get in this position is simply irresponsible. Quite simply, though budget repair and return to surplus are vital important economic issues and are core commitments of this Turnbull government, the wheels of government have to be kept turning. Federal employees must be paid, Commonwealth services must be funded, and Australian citizens must be able to have faith in the continuity of the Commonwealth government.

Since 2008, when Kevin Rudd's Labor government put Australia back into deficit, more than 75 per cent of our gross debt, around $370 billion, has been raised to pay for everyday expenditure in welfare, in health and in education. Obviously this is simply unsustainable. In 2018-19, we will return to surplus and we will be no longer be putting these everyday expenses on the Commonwealth credit card. This is what living within your means—not austerity; living within your means—is all about.

The Rudd-Gillard-Rudd Labor governments accumulated deficits of just under $240 billion in just six years of government. This equates to 16.9 per cent of GDP. Under the coalition, over six years from our first budget in 2014-15, the coalition's deficit is approximately 30 per cent less than those opposite. Never forget that Labor inherited the Liberal gift of a structural surplus of over $19 billion, whereas the coalition inherited the Labor curse of baked-in spending and a structural deficit.

Net debt is projected to peak in 2018-19 at $375 billion, or 19.8 per cent of GDP, before declining to 8.5 per cent of GDP over the medium term. The immediate increase in gross debt reflects the government's borrowing to support our productive capacity through investment in vital infrastructure and Defence capability and borrowing over the medium term to avoid drawing down on the Future Fund to pay for unfunded superannuation liabilities. These measures will save a century of taxpayers from having to meet these costs.

Under the coalition we have stemmed the growth in our gross debt by two-thirds, from over 34 per cent under Labor to less than 10 per cent in this budget. In this budget real growth in spending is at 1.9 per cent over the forward estimates, which is significantly lower than the profligate 3.7 per cent we inherited from Labor, and average real growth in spending under the Turnbull coalition government is lower than the average of each of the previous five governments, extending back over almost 50 years.

When we were elected payments as a share of the economy were rising to 26.7 per cent, having already reached 25.1 per cent, but they will fall to 25 per cent over the forward estimates. The Turnbull coalition is delivering budget repair.

My point in demonstrating these vast economic achievements it to show unequivocally that this is a government delivering on its promise of budget repair and that the legislative debt ceiling is simply not necessary. I applaud Senator Hanson for bringing this matter to the Senate's attention. It is vitally important to have the discussion, to have the debate as part of our civic discourse. That said, we must not be tempted to introduce a blunt instrument such as a debt ceiling. To do so would be akin to responding to a nuanced and complex problem which requires the delicate touch of a metaphorical scalpel with an unwieldy sledgehammer. I sincerely thank Senator Hanson for her introduction of this MPI but implore the Senate to ultimately reject the notion that this nation needs a debt ceiling.

Kimberley Kitching (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak about the need to introduce a debt ceiling on how much the Australian government can borrow. Before I do that I want to hark back to those distant days of good financial management by a federal government. Let's look at where the debt ceiling came from. It came about under the Rudd Labor government. Who abolished it? Smoking Joe Hockey, former Treasurer of Australia, abolished it in a 2013 deal done with the Greens political party. A little history: in 2013 a Labor government set a ceiling on the amount that the Australian government could borrow, and that ceiling was $75 billion. In November 2013, then Treasurer Hockey requested parliament's approval for an increase in the debt limit to $500 billion, saying that the limit would be exhausted by mid-December 2013, a month later. With the support of the Australian Greens, the Abbot government repealed the debt ceiling over the opposition of the Australian Labor Party.

Let's fast forward from those halcyon days of a Labor government making good and responsible economic choices for Australia. Let's move forward to May of this year, to budget night. What do we find? We find the member for Cook in the other place describing his budget as 'making the right choices for Australians who are working hard to secure better days ahead'. Better days ahead? How is that possible with the dysfunction of this current government?

Let's take a closer look at that dysfunction. After all, it is not only Senator Paterson, my fellow senator, who is from Victoria, sometimes referred to as the Massachusetts of the south and also known for the many sound economic managers it has produced at both state and federal levels of government. I refer, of course, to former Premier Brumby, also a state Treasurer of great renown, and my former boss, former Treasurer John Lenders, a very safe pair of hands of the Victorian economy. But I digress. Let us go back to Senator Paterson, who in his maiden speech in March last year called for parliament to reimpose a debt ceiling. With gross debt exceeding $400 billion, the government should have to seek permission from the parliament to increase it, Senator Paterson said. And now where are we? The debt ceiling increased last month to $600 billion. The debt figure hit $490 billion on 5 May, according to the Australian Office of Financial Management, so in the nick of time, a few days later, the debt ceiling was raised—but wait; there is more. In the budget papers, gross debt is predicted to blow out until it hits $725 billion in 2027-28. That is a 48 per cent increase in debt.

But the dysfunction does not even stop there. The Minister for Finance did not even want to admit the figure when interviewed the night after the budget. He was asked six times on Andrew Bolt's program what the gross debt numbers are and, like Peter, who denied Jesus thrice, the finance minister doubled down on that and, while given six opportunities to answer the question, finally left his interviewer saying, 'I won't push it.' Of course, the gap between the Treasurer and the Minister for Finance in their enthusiasm for increasing debt has been put to me by a member of the coalition—politely, I have to say—as being 'significant'. But let's go to the transcript.

Andrew Bolt: Why is peak gross debt a secret? Why can't you tell us how much the debt will go to? I mean, this is very important. You were the guy that was very strong on debt and deficit, I would like to know what the figure is.

Senator Cormann: What I am telling you is that the debt number that actually matters is Government net debt and it will peak at $375 billion in 2018-19. It will peak at 29.8 per cent as a share of GDP.

Andrew Bolt: I got that. I am just asking that the debt ceiling is $600 billion, when will you go above that? You are the ones that talked about the debt ceiling yesterday. I want to know is it going to be broken?

Senator Cormann: Actually I have not talked about the debt ceiling. The Treasurer has made a decision to ensure that the operations of Government can continue in an orderly fashion and he has made an administrative decision which is on the public record …

Of course, the finance minister would be nervous. Look what happened in his home state of Western Australia. His Liberal Party state branch drove the economy of that great and proud state of Western Australia off a cliff. The result? In their state election earlier this year, the Liberal government were soundly routed and rightly removed from office.

Let's go back to where we started. Let's go back to the Treasurer. Where is Sco-Mo, perhaps more properly and formally referred to as—

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

Order! You should refer to the members of the other place by their appropriate titles, Senator Kitching.

Kimberley Kitching (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. The Australian Treasurer has been notably absent. His on-point and pithy communication skills are very hard to find post-budget. So after question time I did a little research for his last comments. His last media release on the Treasury website was on 7 June. His last speech was on 1 June. The last transcript was for 7 June. He is MIA. I will leave the Senate with a quote. As one of his colleagues said to me recently: 'Sco-Mo is psychologically in Tahiti.'

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

'Grant me the serenity to accept the things I cannot change, the courage to change the things I can and the wisdom to know the difference.' The Australian government cannot change global warming. We emit two per cent of global greenhouse gas emissions. Policy in China, the US, Russia, India, Saudi Arabia, Indonesia, Iran, South Africa, South Korea, Japan and Brazil is not driven by what we do here. We should have the courage to abandon our job-destroying, poverty-inducing Paris commitment, and we should have the serenity to only actively seek to reduce emissions when they do.

What the Australian government can do, can change, is the debt that it leaves to the next generation. For the sake of our children and our children's children, we should muster the courage to arrest the growing debt and then start repaying it by delivering budget surpluses. What got us into this mess is short-term spending on handouts to people who do not need it and excess public-sector wages. We have been borrowing to spend rather than to invest. We have been doing it for a decade and it is set to continue. We need the wisdom to reject the madness of rebadging the Renewable Energy Target as a clean energy target while pretending that it is not a carbon tax. We need the wisdom to restrict government spending to the needy and to cut Public Service wages so that we deliver budget surpluses, pay back debt and leave our children with a better standard of living than we have enjoyed.

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

I rise to speak on the motion put by Senator Hanson in relation to a debt ceiling. I suppose it will not be lost on you, as it is probably not lost on anybody else here, that it is absolutely important that we live within our means. I was listening to the contribution that Senator Whish-Wilson gave to this place in relation to this matter. I was quite astounded to hear him say that he thought that more debt was a good thing. As you would be aware from your own family businesses, Mr Acting Deputy President Bernardi, you do not actually live beyond your means. You only borrow money so that you can invest in the prosperity of another day, and you do not actually borrow against your children. I think it is absolutely important that we accept the fact that we have an extraordinarily responsible government in power at the moment. This government has made it very, very clear that debt and deficit recovery is one of the most important things we will ever do. For us to be standing here listening to comments like those we heard from Senator Whish-Wilson in relation to the fact that he thought it was a good thing for us to increase debt, and, in doing so, to increase the debt for our children—I know for one thing that I have been brought up with parents who believed very, very essentially that it was always nice to pass something on to your children. I can assure you that I have absolutely no intention whatsoever of passing on to my children a debt. I think any responsible government would think the same thing.

When it comes to the debt ceiling, it was interesting to hear those opposite crowing that they were the ones who brought in the debt ceiling and we were the ones that took the debt ceiling off. We also need to accept the fact that there are different reasons, Mr Acting Deputy President—I think it is the first time I have seen you in the chair since I have been speaking, so—

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

It is a good look.

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

it is a very fine day for me and I am sure it is a very fine day for you too. But we have different types of debt. You can borrow money to invest in the future and you can borrow money particularly, as we would, for a business, a house or an investment. In doing so, you are actually borrowing money in the hope that you may realise more money at some time in the future. I think that is pretty much how all investment and business develops everywhere in the world. It is something that has been happening for a million years and will probably happen for a million more. But there is also debt where you actually have to borrow money just to pay the interest on what you have already earned—you have to borrow money to pay for your recurrent expenditure. It is a little bit like borrowing money to pay off your credit card. It is not a very smart thing to do. It is certainly not something that is sustainable in the longer term, as many people have found out to their detriment. First of all, I think it is a little disingenuous for the Labor Party to come in here and start talking about the fact that they were the ones who introduced a debt ceiling and that we were the ones who took it off, but I think we certainly need to understand the difference between different types of debt. For that reason I commend this government for their responsible fiscal management.

Eric Abetz (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Financial stewardship is one of the most important tasks with which governments and parliamentarians are entrusted. We all individually have a solemn responsibility which requires a determination of purpose and a strength of character. Too often governments and parliamentarians, aided and abetted by elements in the media, think that public office is simply about tickling people's ears, getting their votes and spending their money. This is a contemptible, shallow and dishonest approach and it is why, some time ago, I called for the reintroduction of the debt ceiling. Let us be clear: Labor had a debt ceiling that they knew could not be kept. They had a trajectory which they knew would break through that ceiling and, try as we might to restrain expenditure within this place, the Labor Party, led by Mr Shorten, deliberately voted against $5 billion worth of their own savings that they took to the election—savings which they promised the Australian people they would make. We put forward the Labor savings and Labor, the Greens and others then rejected those savings.

Government does not have any money of its own—it either borrows it or takes it out of the pockets of our fellow Australians. Our expenditures here are very, very serious, and we need to consider them in that light. The simple fact is that no country has ever borrowed or taxed its way into wealth. We have to be responsible with our expenditure, and it is absolutely reprehensible when this generation of leadership in Australia seeks to maintain its standard of living at the expense of the next generation, which will have to repay that debt with interest. That is why some of us are, quite rightly, exercised about the size of the ever-growing debt burden, and I congratulate the government for reining it in. But even more needs to be done, and I call on all senators to join in that task to ensure that we have genuine intergenerational financial responsibility.

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

I am surprised that Pauline Hanson's One Nation would propose that the Senate speaks on the need to introduce a debt ceiling, because we already have a debt ceiling via a self-imposed credit limit that serves as a ceiling on how much Australia can borrow. One Nation members might think it best to have two ceilings, but they would be the only ones who do. Australia is facing real issues, and this debt ceiling does nothing to address them.

Even on the issue it attempts to solve—government spending—it does absolutely nothing. A debt ceiling does not commit the government—

Senator Abetz interjecting—

Senator Williams interjecting—

Senator Bushby interjecting—

Senator Smith interjecting—

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I am sorry, Senator Lambie. Senators, I can hear your conversation perfectly, and I think you should tell them to their face what you just said. I would like to hear Senator Lambie. Senator Lambie, you have the call.

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

Even on the issue it attempts to solve—government spending—it does nothing. A debt ceiling does not commit the government to a dollar in savings. It does not change how much the country is borrowing or what we are spending it on. It is a feel-good act of symbolism, and a redundant one at that. I have spoken about it for a minute, and I can assure you that it does not even deserve that.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

Nothing demonstrates how out of touch and dislocated from the Australian people this parliament is more than the debate we have had today—such as from Senator Lambie there, who clearly does not even understand what a debt ceiling is. A debt ceiling, Senator Lambie, used to have to come to this parliament to be voted on to extend it. Right now, the Treasurer can just wave his magic wand and say, 'We're going to increase it whenever we like'. It is not a ceiling at all; it is an arbitrary figure.

To have the argument on this side of the chamber that Joe Hockey, the then Treasurer, removed the debt ceiling so that he would not have to justify the expenditure that he was incurring—to have them justify this—is extraordinary. Let me remind those on this side of the chamber that they joined up with the Greens, who are now openly advocating that we should be spending far beyond our means far into the future and that we should run up debts, moral obligations, for our younger people to pay for successive generations. It is extraordinary that the spendthrift group on the other side are the voice of fiscal sanity at this point in time, with Senator Kitching and others—I will damn her with faint praise—saying a debt ceiling is actually quite important. That is amazing. They voted against lifting the debt ceiling. A debt ceiling is simply a mechanism to ensure the primacy of parliament in this place. It means that those treasurers who simply mislead us, as they all have—every single one since 2007—that a mythical surplus is just around the corner, will be held to account and will have to eat humble pie by coming in here and begging for more money. They will have to justify every lousy, wasteful expenditure program. I support a debt ceiling because it is about accountability. It is about making sure that governments cannot simply promise the pie-in-the-sky surpluses, which we have heard today and which will never exist in the next decade.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Senator Bernardi. If there are no further speakers, we will now go to consideration of documents.