Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I thank my colleagues for supporting me in this matter of public importance—the appropriate protocol to follow at this juncture. It is not quite the same melancholy duty as a former prime minister had but, certainly, it is my melancholy duty, from an economic perspective, to inform the House that at the close of business last Wednesday, 24 June, the outstanding Commonwealth debt on issue passed the sad milestone of $100 billion. This comprised bonds of over $78 billion, indexed bonds of $6 billion and treasury notes of $16.1 billion. The milestone is all part of Labor’s plan to run up government debt of over $300 billion, a level unprecedented in our lifetime.

Interestingly, we saw this week revelations that state debt has now exceeded all expectations and by June 2013 state debt will exceed $230 billion, which means that, under Labor, Australian governments will have over half a trillion of government debt—of taxpayer debt. That is a massive amount of money. Why is Labor doing this? It is money borrowed from the next generation. In fact, I lie—I mislead the House: it is not from the next generation alone; it is from all generations. In order to repay this money it will have to be the old, the seniors, the young—every age group will have to dig deep. People not born yet will have to pay off this debt.

The economic slump will not last forever. The government’s own budget forecasts have the Australian economy recovering to above trend growth by 2011-12. We think the government’s overall forecast and projections are ambitious, to say the least. Having said that, let us accept what the government says: let us accept that for three years there is going to be growth in Australia of less than trend. It begs the question: if we are going to have three years of below trend growth, why do we have to have seven years of government deficits? Under the Labor Party, even on their projections, there are only three years of below trend growth. It is not three years of negative growth; it is three years of below trend growth. And yet we have seven years of deficits which are leaving Australians with over $300 billion of debt.

What is the impact of this debt addiction? It pushes up interest rates. The crowding out impact results not only from the government being a borrower from the Australian people and a borrower in international markets, but from the fact that the government is a very powerful borrower in the market. It is AAA rated and when the government borrows money it ends up being in competition at some point with business—big business, small business and everyone else.

See this speech in context