Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Hansard source

The Medibank Private Sale Bill 2006, before the parliament today, empowers the government to initiate a sale of the government’s holding of Medibank Private. As you have heard previously, the opposition opposes the legislation. There are a number of issues that are particularly significant in the process aspect of this legislation, which I will refer to in a little while and ultimately will relate to the mishandling of the issue by Senator Minchin, the Minister for Finance and Administration.

Senator Minchin is renowned in the press gallery and elsewhere as the great hard man of conservative politics. Rarely is there a profile of him without some mention of his mythical toughness—how hard he is to deal with; a strong man who is a great factional operative in the South Australian branch of the Liberal Party—and his being quite a scary fellow. When you read these profiles, you tend to worry that he should not be let out near small children. In practice, though, his record as Minister for Finance and Administration—the portfolio where you do have to be tough, where it is essential for the good governance of the country that you are tough and where it is necessary for good fiscal policy and wider public policy that you are tough—is that he has actually been the Father Christmas of finance ministers.

We have seen in the space of six months, between the end of 2005 and May 2006, the ratcheting up of projections of receipts for government revenue for three financial years, commencing with the current financial year, to about $41 billion as a result of the minerals boom. In other words, the projections for the amount of government revenue over this financial year and the next two financial years increased by the order of $41 billion within the space of six months. Notwithstanding the efforts of Senator Minchin, in the lead-up to the budget this year, and in the budget, the government managed either through increased expenditure or through tax cuts to effectively spend an additional $43 billion.

When was the last razor gang? When were the last serious expenditure cuts? They were years ago. The government has been showered in money through its good fortune from a rapidly escalating demand for our mineral products. This has flowed through company tax receipts and indirectly through income tax receipts, and the government has spent the lot. It is not investing for the future. Very little of that revenue has gone into things like education and training. The government has spent the lot, while Senator Minchin, Father Christmas, has sat there going: ‘Ho, ho, ho! There’s a present for every child.’

It is a good political strategy in the short term because the government can hand out money to all sorts of people, look like they are doing good things and, because there is so much money, still keep the budget in surplus. But it is not going to last. You will see evidence of this in the budget papers themselves. There is an indication of how precarious the finances of the Commonwealth are in the medium term when you look at company tax. You will see that, between 1998-99 and 2007-08, the proportion of total government revenue provided by company tax rises from 14 per cent or thereabouts in 1998-99 to almost 25 per cent projected in the next financial year.

That means the government is relying on a giant ratcheting up of company tax revenues as a basis for handing out largesse throughout the community. All sorts of little grants and fiddles and indiscriminate one-off payments will inevitably not last. That huge ratcheting up of company tax revenue will not last. But old Father Christmas has been asleep at the wheel. He has been there, with his big bag of toys hanging over his shoulder, handing out toys indiscriminately to every backbencher who wandered past. Meanwhile, the underlying structural strength of the Commonwealth finances is eroding. Already the impact is starting to be felt on interest rates.

The budget this year did have an upward impact on interest rates—not a huge impact. It was a modest impact but, nonetheless, it did have an impact on interest rates, and we are now seeing the consequences. Unfortunately, it looks likely that in a week’s time we will see more of those consequences. So it is long overdue that old Father Christmas took off his red suit and his white beard and started to behave like the tough guy he allegedly is. Instead of him letting down the taxpayers of this country by sitting there asleep—having had too many beers after he has gone down the chimney—with his big sack of toys and a big smile on his face, it is long overdue that he started to behave like the tough guy he actually is.

The problem—and this legislation is another example of it—is that his track record on dealing with privatisations is equally poor. He championed the Snowy Hydro privatisation, which federal Labor and Labor state governments supported. Suddenly he had a serious bout of Alan Joneses and belatedly discovered that the Snowy Hydro was a national icon and that, therefore, there were cultural reasons why you could not privatise it. In the long term that is going to cause some problems, I suspect, for Snowy Hydro, particularly for its capital base. But Senator Minchin, that great champion of privatisation, suddenly discovered culture.

Then we had the fiasco with T3—a fire sale at the most inappropriate time. It was in the middle of a giant regulatory battle that was creating great uncertainty about the share price—all a result of the government’s bungling with respect to telecommunications regulation—and that has culminated in the attempted appointment, yet to be confirmed, of Geoff Cousins, the Prime Minister’s confidant, onto the Telstra board as a means of punishing the Telstra board and pulling them into line. So what we have seen is a privatisation being done at the worst possible time. We of course oppose any sale of Telstra, full stop, but we are not in charge.

The government have a different philosophy and that is what they are pursuing. They have done this at the worst possible time and in a way that is calculated to damage the interests of existing Telstra shareholders and taxpayers. To make the privatisation fly, the government have had to trick it up with all sorts of gimmicks and giveaways in order to ensure that they would actually be able to sell the shares. It has been successful thus far. Surprise, surprise!

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