Andrew Bragg (NSW, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. Can the Minister inform the Senate how the Morrison government is driving the nation's economic recovery from COVID-19?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I thank Senator Bragg for that very important question. Of all OECD economies, Australia is expected to have the third-lowest fall in GDP in 2020. Nevertheless we do have a very significant challenge in front of us as a nation. We will still have a very significant mountain to climb. Compared to our MYEFO forecasts, it is expected that over $100 billion of economic activity has been lost this year as a direct result of the COVID-19 pandemic. We expect that it will take us two years to get back to the level of economic activity we were at pre-COVID-19, but our government has a plan to lift growth not just in the next few months but over the next five years. Our focus will be on jobs, jobs and jobs, providing the confidence and incentive for businesses to invest and to hire. We have done it before and we will do it again. More than 1.5 million jobs were created across Australia under our government before COVID-19 hit.

Increased investment in infrastructure will continue to be a central part of our plan, and today the Prime Minister announced our commitment to invest a further $1.5 billion to start work on smaller priority projects identified by the states and territories. $1 billion will be allocated to priority projects which are now shovel-ready, with $500 million reserved specifically to target road safety works. That further $1.5 billion builds on around $7.8 billion worth of projects we've brought forward since November last year. In total, our government has committed $180 billion in economic infrastructure over the next decade, with more than half allocated across the forward estimates. We have also announced a priority list of 15 major projects, worth more than $72 billion, in public and private investment.

Scott Ryan (President) Share this | Link to this | Hansard source

A supplementary question, Senator Bragg?

Andrew Bragg (NSW, Liberal Party) Share this | Link to this | Hansard source

Can you inform the Senate why this is the responsible path to economic recovery?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

Restoring growth and getting Australians back into work are critical when it comes to our budget repair effort moving forward. Our budget has taken a hit not just because of the necessary expenditure to support the economy, businesses and jobs through this crisis period but also because of the impact of falling revenues.

Our expenditure measures were targeted and time limited, but the impacts on revenue will be longer lived as the economy makes its way back. That is why we will have to recalibrate our fiscal strategy. We will do that in a responsible way. The budget will be balanced—again, by keeping expenditures under control while boosting revenues through pro-growth policies that lift investment and get Australians back into work. We will not pursue excessive authority nor higher taxes. We will pursue growth and responsible budget management that ensure that the government lives within its means while still guaranteeing the essential services that Australians rely on. We must be very cautious about our expenditure as we navigate our way back.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Bragg, a final supplementary question?

Andrew Bragg (NSW, Liberal Party) Share this | Link to this | Hansard source

Can the minister inform the Senate about the risks of taking a different economic and fiscal policy direction?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

Any suggestion to keep the significantly elevated levels of spending going on forever and ever would harm our economy and harm our budget. It would harm our capacity to fund the essential services of government on a sustainable basis. That is because it would require higher taxes over time, which would harm growth. I know that the socialists on the other side find that very hard to understand.

Harming growth would harm government revenue over time. That of course has always been the Labor way: higher spending funded by higher growth-destroying taxes. Our government put our country on a sustainable and responsible path and will give the nation the best possible opportunity to thrive on the other side of this crisis. The Australian people know this is a government that delivers pro-growth, lower-tax, pro-business and pro-opportunity policies, whereas those on the other side, given half a chance, would go back to impose higher taxes, which lead to fewer jobs—