Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source

It gives me great pleasure to rise in this matter of public importance debate on the urgent need for the government to rein in spending in the face of events unfolding in Europe. It calls on the government to rein in expenditure because of global economic volatility. The world's economy is in a parlous state, and Australia used up its get-out-of-jail-free cards during the GFC. That is the problem—we have placed ourselves in a position now where there is little ammunition left in the locker should hard times return.

Every bit of good economic news out of Europe seems destined to be followed by two negative bits of economic news. A couple of months ago, only just before the Greek election—it seems so long ago now—it was a great relief to the world that Europe and Greece agreed on a bailout deal. But the results of the Greek election were inconclusive and Syriza, which is a radical party of the Left, has made big inroads. They opposed the refinancing package offered by the EC, and now the residents of Greece are facing another election. It is quite likely that, as a result of that election, the refinancing plan for Greece will be thrown on the scrap heap and Greece will have to leave the eurozone. In Spain it is almost as bad. Portugal, Italy and Ireland have similar problems. And now France has chosen a similar path by electing a socialist president who has decried the austerity approach and wants to borrow and spend more money and reduce the retirement age. Already their debt-to-GDP ratios are in the mid-80s.

I do not commonly quote the former Treasurer of South Australia, Mr Kevin Foley, a man I am sure you know well, Mr Deputy Speaker Georganas. He wrote an article, as you would know, in last week's Sunday Mail, in which he says:

Now the real fear is a third instalment of European tragedy could wash over the rest of us—

the first two he referred to were the two world wars—

minus the human slaughter but just as devastating in economic and financial terms. The crisis now gripping Europe has enormous consequences for the entire world including Australia.

… … …

For two years, Germany, France and the IMF have tried to convince debt-laden countries to get their houses in order.

France's election of a socialist leader has been an alarming development. At any other time I may have been mildly enthusiastic at President Hollande's win but not now and not with his platform.

That is from someone who was the Labor Treasurer of South Australia for over 10 years. He goes on to say that President Hollande was:

… elected promising to wind back Budget cuts, to distance France from the hard-line and appropriate German fiscal position and to deal with this nightmare by going for growth i.e. spend more money. France's debt to GDP is 87 per cent. It is almost as broke as Portugal and Spain, which have levels of debt around 100 per cent of GDP.

Foley goes on to say:

Hollande has no money in the bank so he's going to borrow? Yeah, right.

Meanwhile, back here in Canberra, our Treasurer repeatedly tells us Australia is in fine shape and we have nothing to worry about. However, Australians are distinctly uncomfortable and worried about their futures. Since the GFC, government estimates of growth in the economy and growth in tax receipts have been incredibly optimistic. In the budget for 2008—after the GFC—which was tipped to be a contractionary year, they predicted we would have four per cent growth through the remaining out-years of the budget and beyond. At the time, those figures were highly criticised by people on this side of the House and economists around the nation. And they have proven to have been overly optimistic. In that light, the government have failed to take the tough decisions because they have overestimated the world recovery and the recovery in receipts.

The record is not pretty. In the final budget that Peter Costello delivered, there was a $19.7 billion surplus. But the following years registered a $17 billion deficit, a $54 billion deficit and then a $47 billion deficit. This year the deficit is $44 billion, and the year is not finished. Really quite disturbing is the rise in overall government expenditure, which was around the $270 billion mark in the last Costello budget and is now at $376 billion—an increase of more than 40 per cent for the coming budget. The stimulus was meant to be a one-off shot from the government. The stimulus packages that came through were supposed to ramp up and put some money out in the economy and buy some assets—admittedly, some pretty dodgy assets—and then the money was supposed to be wound back. The stimulus is over but we find the budget now sits at $100 billion more than the last Costello budget. The member for Moreton, just recently on his feet, said that the government had made $100 billion worth of cuts in four years. In fact, their expenditure has not risen by $100 billion in four years, it will rise by $100 billion every year in the budgets from this point.

The problem is that Labor members love being the local Father Christmas. They just cannot say no. They are like a bad parent. They love to give out money. The trouble is that it is other people's money, including that of future generations. The government tell us they have taken the tough decisions, but in four years they have repeatedly lifted the borrowing ceiling, first from $75 billion to $200 billion to deal with the GFC and then to $250 billion. Now, this year, embedded in the budget papers is a move to shift the borrowing limit to $300 billion, an extra $50 billion—even though the Treasurer tells us we are going to bank a surplus. It leaves you a bit speechless.

Yesterday was a red-letter day in this parliament. The member for Longman had another birthday. He was 22 yesterday. We remember well the question he asked in this House. He asked why he should believe that the Labor Party will ever deliver a surplus to this nation when they have never done so in his entire life. He is another year older and they have not done it, again, and it is pretty unlikely to happen in the next 12 months. The lift in the borrowing limit is a clear indication that Wayne Swan has little faith in his budget predictions of a surplus. His attempt to justify the action of the extra $50 billion borrowing limit as 'bumps'—$50 billion bumps!—is simply not believable and is an admission that he has little faith in his budget projections. That is why it is so important that Labor rein in this reckless spending.

Even Ken Henry admitted last week on the ABC's 7.30 that the value of the stimulus spending in many cases was poor. He even went on to say that getting value was not the aim of the program—it was just about getting the money out the door. That was the important thing. It did not really matter what it was spent on or how it was spent. That is what I call reckless spending. It is unbelievably reckless—just shovel it out the door and do not care what it is spent on. It is a disgrace.

The government is insulting the electorate. The electors see through the game. They know that eventually they will pick up the bill and they will pick up the interest. This nation will be paying $8 billion a year in interest in the next 12 months—that is, $22 million a day in interest. That is $1, in round figures, for every Australian every day. A dollar a day in interest for every Australian—man, woman and child—and they will still owe the principal. They will still owe the $144 billion this government has racked up on the credit card.

There is every possibility that this budget is already shot to pieces. The falls in commodity prices pushed by the Greek debt crisis, the announcement by BHP and Rio that they are reconsidering investment, the escalation of strikes around the Queensland coalfields—there is every chance that this budget is already in trouble and the government needs to reposition its spending program.

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