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

I rise to discuss a matter of grave public importance—that is, the failure of the government to be honest with the Australian people about the state of the economy and the budget. Just yesterday the Treasurer said in relation to the release of the IMF Global Outlook Report:

The IMF's World Economic Outlook (WEO) has reaffirmed the strength of Australia's economic fundamentals …—

and—

The Australian economy remains the standout performer of the developed world, with solid growth, low unemployment, contained inflation, strong public finances and an enormous pipeline of investment in resources …

Sometimes I think that the Treasurer lives in a parallel universe, where he is in denial about the true state of the nation. I hate to rain on the Treasurer's parade, but the IMF was not signalling that all is fine with the Australian economy. The IMF revised down its outlook for Australia. The growth forecast for Australia for 2013 was downgraded substantially, from 3.5 per cent to three per cent. The three per cent growth in 2013 will be a marked slowdown from the 3.3 per cent forecast for 2012.

The IMF forecasts that the Australian unemployment rate will rise, from 5.2 per cent the year before, to 5.3 per cent in 2013. This is an increase on the current level of 5.1 per cent. Of course, the IMF has not taken any explicit account of the deterioration in the employment participation rate in Australia as Australians give up looking for work.

The IMF also exposed the Gillard government on its claim that taxes have come down under Labor. The Treasurer recently claimed that this government has already delivered three rounds of personal income tax reforms or, if you like, cuts.

Senator Wong, the Minister for Finance and Deregulation, told the Senate three weeks ago that Australia has cut income tax. Yet the IMF Fiscal Monitor, also released yesterday, showed that Australia has increased both corporate and personal income taxes since 2009.

The Australian economy is facing severe headwinds. The Treasurer's deceit on tax and spending does nothing to instil confidence that he has the capacity to meet the challenges. Even the Reserve Bank is now expressing unease about the prospects for the economy.

Last week's reduction in the cash rate, to 3.25 per cent, took it to levels only one cut away from the lows reached during the financial crisis. The Reserve Bank are cutting interest rates not because the Australian economy is doing well but because the Australian economy is deteriorating. Now we are only one interest rate cut away from the three per cent level that the Treasury described as 'interest rates at emergency levels'. So we are one cut away from emergency levels of a cash rate. So, clearly, the Reserve Bank now see the commodity investment boom coming off the boil. They said in their statement:

… the peak in resource investment is likely to occur next year, and maybe at a lower level than earlier expected.

They went on to say that 'the labour market has generally softened somewhat in recent months'. They suggest:

… the growth outlook for next year looked a little weaker …

But, if you believe the Treasurer, everything is rosy, everything is terrific and we are going up the league table of the size of the world economies. But what he fails to explain is that the people who are falling off the table are Spain, Mexico and a range of other countries. The Treasurer constantly compares us to some of the worst performers and not the best performers, because he is a man who advocates and believes in mediocrity, just like his Assistant Treasurer. Mediocrity: that is what those opposite believe in.

Although the Reserve is usually careful not to comment on government policy, it comes straight out and says:

The introduction of the carbon price is affecting consumer prices in the current quarter and this will continue over the next couple of quarters.

So the carbon tax is actually making things worse. We have the labour markets softening up. We have the cash rate coming down to near emergency levels. We have business confidence down. We have business investment coming off. And what does the government do? It introduces a mining tax and a carbon tax, which increase the cost of business and increases the cost of living.

The IMF and the Reserve Bank are as impartial and professional observers as you can get. They are not talking-down the economy, they are simply telling it as it is. They are reflecting what the data says. Clearly, we are seeing a marked slowdown in the momentum of the economy. The monthly trend increase in retail spending slowed to only 0.2 per cent in August, which is a significant deterioration from the 0.5 per cent increases recorded in April and May.

ANZ job advertisements have declined every month this financial year. I say again: ANZ job advertisements have declined every month this financial year. Job advertisements are now 10.8 per cent below levels seen a year ago. The Sensis Business Index shows that the confidence of small and medium sized businesses declined in the September quarter, which is the third consecutive fall. So it is no surprise that support amongst small and medium enterprises for the federal government dropped from the last quarter and is now at its lowest level since February 1996. That is an independent survey. It says that confidence in this government by small business is at the lowest level since February 1996—the month before Australians got rid of the Keating Labor government.

The Australian Industry Group-Commonwealth Bank Australian Performance of Services Index weakened again in September, falling further into the zone that indicates a contraction in activity. Consumer confidence in October remained in the pessimistic zone for the eighth month in a row. The trade deficit in August was $2 billion, which is the largest in four years. NAB's monthly business survey for September showed a fall in business conditions, which are now well below long-run average levels. Forward orders were noticeably weaker in September, pointing to further weakness ahead.

I am sorry, Treasurer, this is not an economy that is displaying strong economic fundamentals. The more the government spins its lines the more it loses its way and the more it deludes itself that the economy can cope with more regulation and higher taxes. If it does not tell the truth about the state of the Australian economy then it fails to appreciate what everyone is going through. And if it fails to appreciate what everyone is going through, it thinks that the pain threshold of the Australian economy is higher than what it is.

The challenge is reflected best in the budget. The recent release of the Final Budget Outcome for last year shows that the government's fiscal position continues to deteriorate. This is the budget. The underlying cash deficit was nearly $44 billion. The government promised that it would be $22 billion and six months before that it promised it would be $12 billion. It turns out, when the actual number comes in—not what Labor spins, but what actually happens—it is double what was promised at the budget and four times larger than what was promised just 18 months before. The deficit was the third biggest in Australia's history. The government has now run cumulative deficits exceeding $173 billion.

An opposition member: How much?

It is $173 billion, since coming to office. This is the 10th consecutive budget deficit delivered by Labor governments. In 2011 budget papers Labor estimated a net debt of $107 billion. The final budget outcome saw this grow to $147 billion—a blow-out of over $40 billion. The blow-out increased Australia's interest by $1 billion year to $6.6 billion. The net debt figured in the final budget outcome is $5 billion more than forecast in the recent May budget. That means that in just seven weeks alone—after the Treasurer last stood at this podium, at the dispatch box, to deliver a budget—the Labor Party added $90 million a day to the nation's credit card.

To really understand the damage this government has done we need to look at what the Commonwealth government is actually worth. The recent final budget outcome shows that the net financial worth of the Commonwealth government had, in one year, deteriorated to $158 billion, and we are now worth negative $358 billion. This is the lowest—the worst—balance-sheet position since modern accrual records have been kept. This is a government that claims it has the budget under control, that it has the budget in hand.

The Treasurer wants you to believe that the deterioration in the budget position is all about lower revenue and the global financial crisis. That is what he said in answer to the member for Casey's question today. It is not his fault, the Treasurer said. The problem is: Labor knows how to spend money. And it spends it recklessly. Last year, as a percentage of the economy, the government spent 25.3 per cent. That is the usual benchmark for comparing it between governments: apples with apples.

The percentage of the economy spent by the government is 25.3 per cent. This is higher than at any point under the previous coalition government. Labor is now spending $100 billion a year more than the last year of the coalition government. The government says it is doing the hard yards on savings. Do you know what savings are, according to Labor? It is not about reducing expenditure; it is about increasing taxes, according to Labor. Isn't that a novel idea?—to describe a saving as taking money off someone else. That is what Labor does.

They claim to have $33 billion of savings this budget. They will not admit—I challenge old buggerlugs here, the commander from the west of Sydney, the Assistant Treasurer, to respond to the Australian people—

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