Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

I rise to speak to Appropriation Bill (No. 3) 2007-2008 and Appropriation Bill (No. 4) 2007-2008. I want to provide a perspective from the opposition in relation to these very important cognate bills before the House. The coalition supports the appropriate appropriation of moneys from consolidated revenues to the programs outlined in the detail of the bill, but the point that needs to be made in this debate is that this is an exercise in blatant political skulduggery by those opposite—in particular, the Minister for Finance and Deregulation. This is a political stunt because the government has used this bill as an opportunity to include $643 million of so-called cuts, many of which include underspends in programs. Much of the detail in the $643 million includes transferring some of the spending across to other programs and also some cuts into programs which the coalition announced before the election or that we undertook to deliver to the Australian people prior to the campaign period but which were not implemented for administrative reasons.

This causes us some concern because, over the last few weeks, in talking about the $643 million of so-called cuts, the finance minister has attempted to rewrite history. He has used the figure of $643 million of so-called cuts to try and provide an example of the way in which his government intends to affect pressure on inflation in the Australian economy at the moment. The reality is that we have a $1.1 trillion economy. We have a leading international economy. We have government expenditure running at about $1 billion a day. Although $643 million certainly is a lot of money, for someone to suggest that $643 million would exert downward pressure on inflation is an embarrassment beyond belief, not just for the finance minister but for the haphazard Treasurer in the Rudd government.

When we look at the detail of the $643 million in so-called cuts, we see that there are some that we would agree with and some that we would not. But what is missing from the $643 million is any suggestion from the Labor Party that they could add to that figure. When we go through the funding commitments—the election promises that Labor made—we see that they are of a very similar nature to some that they have included in the $643 million figure. On the one hand, Labor are saying that they are working to rein in government expenditure, that they are trying to exert downward pressure on inflation by making $643 million in cuts in a $1.1 trillion economy; yet, on the other hand, it is okay for them to knock out funding for a sports stadium or for a particular sporting group in an electorate when they have made a very similar promise in one of their own marginal seats. It seems that that is okay; government expenditure does not extend that far. All this does is underscore the fact that this is really nothing more than a political stunt.

The Australian public is fast learning just how incompetent the Rudd government is in managing the Australian economy. That, of course, is of great concern not just to Australian families but also to Australian small and large business—the employers in this nation who have contributed so much to where we are as a nation and as an economy today.

Over the last few weeks, ministers have made coordinated speeches and spoken similar lines. Their speeches have obviously been formulated by the Prime Minister’s office. None of them are capable of writing their own speeches. All of their speeches have been formulated in the Prime Minister’s office. This government has ministers who are incapable of determining their own speeches or programs. They need to follow a script from Mr Rudd’s office. This shows their lack of depth and, in particular, the incompetence of the Treasurer and the minister for finance.

As part of this debate it is important to put on the public record the fact that, when Labor were elected to government at the 24 November election, they inherited a very strong economy. The fundamentals of the economy had remained strong because of the last 11½ years of coalition government, and they will remain strong for many years to come—we hope. We hope that Labor do not undo many of the programs that the coalition put in place. Labor did not support all of the programs that we had in place to eliminate the $96 billion worth of debt when we came into government. Unemployment under Labor was running at 10 per cent, and we brought that down to just over four per cent. We had high inflation under the Labor Party, and we brought that within the band required by the Reserve Bank. Labor opposed every step that we put in place to deliver those measures and a balanced budget outcome for the Australian people. What we fear most is that they will revert to their old ways over the coming period that they may be in government.

The point is that that sends a very disturbing message to people in this country who are making investment decisions in not just capital expenditure but also their business in terms of human capital investment as to whether or not they are going to put on staff. If we start to see a zapping of confidence in the business sector in this country then that is of great concern because unemployment will rise from there and confidence will quickly disappear. That is of great concern to the future of this country.

It is of course worth noting and recognising, as part of contributing to this debate in a factual way about the economic position that the coalition left this country in, that we inherited a $10 billion deficit and we converted that into around a $10 billion surplus year on year after we came into government. We inherited levels of government spending equal to about 25 per cent of GDP and they are now equal to about 21.2 per cent. We certainly inherited a ballooning unfunded superannuation liability, which we have now addressed by closing the PSS and creating the Future Fund, something that Labor when in government was never capable of doing. We introduced accrual accounting to provide details of the full cost of service delivery. For the first time we published a balance sheet for the general government sector and the whole of the public sector. Last time under Labor we had no idea what the value of the government’s assets were or of key liabilities like the unfunded superannuation liability. We introduced for the first time consolidated whole-of-government financial reports audited by the Auditor-General. We introduced the outputs-outcomes framework to place the focus on what was actually being delivered for the money spent. We increased the efficiency dividend on government departments to ensure money was being spent on services at the sharp end rather than on administration. We completely reformed property management and procurement practices to ensure best value for taxpayers’ money.

After having done all that hard work, the point that I make is that when we were coming into the November election we said to the Australian people, ‘If you change the government, you change the country.’ And at the moment we are seeing great evidence of that, because it is widely recognised that the Treasurer is a person who is completely and utterly out of his depth. This is a person who is spooking the financial markets at the moment. This is a person who has demonstrated that he has no capacity to understand basic economic terms. He is a person who I think will lend himself to allowing government spending to get out of control. He is a person who I think does not have a grasp on the future picture of where the Australian economy should be over the next decade.

When you look at what it is that government at the federal level under Labor will deliver, I think you need to look at the position of the state Labor governments and the way they have managed their respective economies over the last decade or so. The reality is that Labor is in no position to lecture the government on financial management. This Prime Minister ran around the country during the election making multi-million-dollar decisions and promising huge expenditure in every city. Labor’s attempt to identify savings to fund these promises has been riddled with errors and inconsistencies, which is a common theme that we have seen at a state and territory level under Labor mismanagement over recent years. Now Mr Swan is trying to pretend he can fund Labor’s election commitments from the contingency reserve, which is simply an adjustment to the forward estimates that is made to ensure maximum accuracy.

It is important to recognise exactly where state Labor debt is at the moment. Labor are going to rack up something like $50 billion in debt over the next four years. People at home might ask how on earth that is possible in today’s day and age when we have a robust economy, when we have low unemployment, when we have high participation rates and when the economy generally—not in all sectors but generally—is doing quite well. There are a number of reasons for it, but primarily it is because Labor do not have the experience to manage money. Whenever they have managed money in the past they have racked up government debt, particularly at a federal level. As I say, it was a staggering figure of $96 billion in debt when we came into government—about $8 billion a year in interest payments just to service that $96 billion of debt. I do not want the Australian economy to return to that, and Mr Swan at the moment is giving us no encouragement to believe that that will not happen.

I think we need to recognise that the coalition, when in government over 11½ years, managed the economy particularly well in relation to unemployment. We had a participation rate which peaked at about 63 per cent under the coalition government. That was an all-time high. That allowed people who before had never had the opportunity to be employed in a gainful way to participate actively in the economy, which not only provided benefits to the economy, to business and to growth but, importantly, gave those people self-respect and the ability to contribute not just to themselves but to their families as well. That opportunity was never given to at least a million people who were on the unemployment queue when Labor were last in government. At the moment the Labor Party are running around the country trying to rewrite history. They are in a honeymoon period at the moment as far as the media and in particular the gallery are concerned. That will come to an end at some stage, we hope. What we need to be mindful of is that, during this honeymoon period, Labor are not able to get away with this joke of an argument that they were left with a basket case of an economy. The Treasurer, by his own admission, says that the Australian economy was strong and is strong. But if this inept performance by this Treasurer continues then confidence will quickly go from the economy and it will be indeed a self-fulfilling prophecy.

This Treasurer has—as has my counterpart, the Minister for Finance and Deregulation—been running around arguing on the one hand that they need to honour their commitment of $31 billion of tax cuts because that was a commitment they made to the electorate in the run-up to the 24 November election and that those tax cuts, on their argument, would not be inflationary but tax cuts in out years would be. I think that goes to demonstrate how incapable this Treasurer is of carrying an economic argument. How can you on the one hand argue that, in 2011-12 or 2012-13, $30 billion of tax cuts would not be appropriate because they would be inflationary yet on the other hand argue that, in 2007-08 or 2008-09 or 2009-10, $31 billion of tax cuts would not be inflationary? You cannot walk both sides of the street. The Treasurer may well have done that in opposition, but in government he needs to be mindful of the fact that people are very closely scrutinising his every word. There are financial markets in this country which are depending on and watching every word that this Treasurer says. He cannot be out there running this politically expedient line and at the same time attempting to maintain his economic credibility, because on that front at the moment this Treasurer has a score of zero.

I think we need to be mindful of the fact that, if Labor are allowed to get away with this rewrite of history that has been conducted over the last few weeks, this argument that the coalition government threw on them some huge problem with inflation, it would be a great disservice to the history of the proud record that the coalition had whilst we were in government. At every opportunity we should defend that record, because it was a very strong record that saw the Australian economy improve, benefiting millions of Australians.

I do not want to see the federal government running around over the coming weeks, talking down the Australian economy. Mr Swan somehow says, on the one hand, that he inherited a strong economy yet he says, on the other, that it is a basket case. I do not want to see him getting away with that, because it is factually incorrect. I think the onus is particularly on the media to pull the Treasurer and the Minister for Finance and Deregulation into line when they are out spouting these untruths.

I think most Australian people would say to themselves: ‘Hang on, I can remember when interest rates were 17 per cent under Labor, when unemployment was well over 10 per cent and when the participation rate was very low, and then I can remember the years of the coalition government, when interest rates were driven down from those 17 per cent highs, unemployment came down, inflation came down and the participation rate went up. How can we now have a Labor government denying the reality of the last 11 or 12 years?’

I think the government should be put on notice that we will not tolerate a continuation of this nonsense. As I said in my opening remarks, it underscores just what a political stunt this is when the minister for finance runs around saying that a spending cut of $643 million is going to exert some sort of downward pressure on inflation in a $1.1 trillion economy. The argument just does not hold, and he really does himself a disservice when he goes out peddling those sorts of stories.

The coalition opposition will be watching the performance of the Treasurer very closely over the coming weeks, because his performance is paramount in where we are headed as a nation. He should know that—to put it very succinctly—we are watching his performance very closely, as I think most Australians are, particularly most small business people, because they are very concerned about where this Treasurer is headed. We will make sure that we attack him at every opportunity for any sort of nonsense that he continues to carry on with, particularly if he has these half-baked ideas about economic policy which just do not carry any weight whatsoever. They are clearly a politically convenient argument and they really do not serve any purpose beyond that at all.

I want to turn to another issue which really goes to show what a sham this argument from the government is in relation to the state of the economy they inherited from the coalition and how inept I think the current government will be at handling the issue of inflation. This Treasurer argued that, through their First Home Saver Account scheme, they would add about $3 billion to $4 billion to savings in this nation over the estimates. The Treasurer is arguing that $3 billion to $4 billion added to savings over a four-year period would help bring downward pressure on inflation, yet at the same time he is out there saying that state governments contributing to debt—that is, state governments going into the money market to borrow money to finance their debt arrangements—do not put upward pressure on inflation. Again, it is one of those arguments where he wants to walk both sides of the street. He says that the federal government adding $3 billion to $4 billion to savings is a good thing, which it is, but that state Labor governments running up $80 billion of debt borrowing from the same source that the Commonwealth would have otherwise is not an inflationary pressure on the economy.

Today it was amply demonstrated that the Treasurer had no capacity to understand this very simple economic argument. I think that, when commentators and economists look at these basic failings of the Treasurer, it will shortly be incumbent upon the Prime Minister to have a ministerial reshuffle and put the Treasurer into a position that he is capable of handling. The opposition really does have a concern about the way in which the Labor Party at the moment is trying to rewrite the economic history of this country. It is unacceptable, and at every opportunity we will provide the factual alternative to their political proposition.

Whilst we are examining these bills and the expenditure of the government, we will be paying particular notice to some of the funding commitments that the Labor Party has made to marginal seats right around the country. We will be asking the question of the Minister for Finance and Deregulation why it is not appropriate that some of those measures be included as part of or in addition to this $643 million if it is so important to increase that figure to bring, as he says—quite wrongly—downward pressure on inflation. These bills provide the capacity, quite correctly, to appropriate money from consolidated revenue across to the proper running of particular government departments, and the detail of that is provided in the bill. I look forward very much to continuing our discussion with the government on this very important issue of economic management over the years ahead.

See this speech in context