Arthur Sinodinos (NSW, Liberal Party) Share this | Hansard source

The first point I make is that the context was missing from the questions we received from the Labor Party today—and the context is very clear. The terms of trade, export prices to import prices, peaked in 2011. The national income of the country, the stimulus coming from the terms of trade, peaked, and ever since then the terms of trade have been coming off. What did Labor do during the period 2011 through to 2013, when they were in charge of the budget? They continued to spend. They did not trim their cloth accordingly. They kept promising budget surpluses. They kept raising the expectations of the Australian people. At the Press Club the Treasurer, Mr Swan, talked about how he would keep cutting until he got to a surplus, even if it meant offsetting the impact of the economy on the budget—the automatic stabilisers. Those are the lengths to which he was prepared to go in order to claim that he would get a surplus. They kept spending in the face of the revenue pressures that they were under. The result was to bequeath us an emerging spending and budget problem that had to be met.

This is the context. The context for us today is that we have to get spending under control and we have to get productivity up. We have to double the rate of productivity growth if we are to get the average annual increase in national income that we have had for the last few decades. That is the equation we face—and we face that against an ageing population. There is this idea that we can be in denial of these budget questions, as if the good old days can just roll on. Well, they are not rolling on. The Australian economy has been like a balloon that the air is coming out of as the terms of trade have turned. We have to adjust to that emerging reality. We have to adjust to an ageing population, so spending has to be sustainable.

In the short term, what has the government been doing in areas like education? School funding was going up: by 9.3 per cent from 2014 to 2015, 8.2 per cent from 2015 to 2016 and 9.1 per cent from 2016 to 2017. The government was trying to protect the economy in the short term while also seeking to put in place longer-term measures, including measures like raising the retirement age to 70 by 2035—not by tomorrow. The pension changes that were talked about last year were about adjusting the rate of indexation. They were not about cutting pensions; they were about adjusting the rate at which pensions continue to increase. That was the basis of the debate. It was a complete red herring to talk about cuts. Pensions have continued to go up.