Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

That is right. There were six separate ministers—a revolving door of small business ministers—and the member for Fraser comes in here and tells us about the wonderful things the previous Labor government did for small business. Dear, oh dear, oh dear, Deputy Speaker. Then he talks about consumer confidence. Well, if you want to damage consumer confidence, you run around the nation engaging in misleading scare campaigns. That is exactly what we hear from the opposition since the budget was handed down: we hear them running out scaremongering, scaring pensioners and students. What they should be out doing is telling the truth.

Firstly, the truth when it comes to health care: there are no cut; there is a nine per cent increase this year, a nine per cent increase next year and a nine per cent increase the year after that. In education, it is eight per cent this year, eight per cent next year and eight per cent the year after. But what upsets me most about the damage they are doing to consumer confidence is the way they are scaring young students, telling them these outrageous stories about how this coalition government is supposedly ruining their future. Let us get some facts right: in this country the coalition plan is to give the opportunity to give 80,000 more young Australians to get into higher education and learning. And you know what? They will be able to do so without spending one cent up-front. We know, also, that if you leave year 12 and go on to get a university education, throughout your life you will earn on average 75 per cent more than your peer who leaves school at year 12. Over a lifetime that is an additional million dollars.

That is the value of education. That is the message we should be out there telling our kids and our young people: get that education because it will allow you to earn a much greater living in the future and to make a greater contribution to our nation. Yes, you will have a HECS debt, but the taxpayer will pick up at least 50 per cent of the cost of your education. You will only have to pay 50 per cent, and that is one of the best deals those young people could ever get. That is the message we should be out there telling the young of Australia, not the scare campaigns that we are hearing from the opposition.

Getting back to the report of the Reserve Bank, what this report actually shows is the dangerous denialism we are hearing about the debt and deficit crisis that we have in our nation. We all know that back in 2007 we had no net debt—zero. We actually had money in the bank. Then of course the Labor government was elected and we heard that we would have a temporary deficit. Well, we had six years of so-called 'temporary' deficits, the six largest deficits in our nation's history. The debt that this nation now has outstanding at the end of June, as per the budget papers, is expected to be $358 billion.

What is the cost of that? The cost is the interest payments to service the debt. We must pay this back sometime in the future, but until we do that we have that interest cost, the cost of the debt. At the moment, that cost is $12 billion every year—a billion dollars every month, $33 million every single day. That is the cost. That has an opportunity cost. Instead of spending on the services that we need—the infrastructure, the aged care, the hospitals, our kids with disabilities, more money on education—we have to put that money aside and we have to use it to pay the interest bill on the debt that the previous Labor government ran up. And we have to do that forever until we start paying that debt back. We know that if nothing is done and we continue in the direction we are going, that debt will not be $300 billion. We are heading in a decade's time to a net debt of $666 billion. If we ever hit that day, the interest payments would not be $12 billion a year; they would be close to $36 billion.

But we must remember one thing about the cost of this debt and how we are stuck with it forever and how we are lumbering this onto our children and our grandchildren who will have to pay it: what will the bond rate be in 10 or 20 years time? At what interest rate will this nation be able to go out there and sell government bonds in 10 or 20 years time? At the moment, that billion-dollar a month we are paying is done on the current 10-year bond rate at around 3.7 per cent. So I do not care how far-sighted or how clever anyone is. No-one knows what rate we will have to sell those bonds again in 10 or 20 years time if we do not start paying that debt off.

We do know how inaccurate the long-term economic forecasts have been. If we look to the past, most of the long-term economic forecasts that have been made are simply wrong. So again I ask: what will the interest rate be in 10 and 20 years time? If we go back through history, that can give us an idea of where it could possibly be in the future. The long-term average of the bond rates between 1969 and this year is 7.78 per cent. We are now half the long-term average. In fact the highest bond rates we had were back in May in 1982 when we were selling government bonds for 16.4 per cent—16.4 per cent versus 3.7 per cent. One of the biggest risks we have in this nation going forward is what happens if there is a spike in global interest rates and those bond rates creep up to where they were for the long-term average of the last 40 or 50 years?

If they do, we will not be facing interest repayments of $30 billion. We as a nation could be facing interest repayments of up to $60 billion.

Just imagine if future governments had to find another $30 billion on top of the present debt. That is the risk we are putting on our kids. This is why we need to take this action, to get our debt under control, to reduce it. I do not want my grandchildren or great-grandchildren to have around their heads the burden of needing to pay this huge amount of debt and interest or the risk that it could blow out and double because of the increases in the long-term bond rate. That is one of the risks that this— (Time expired)

Debate adjourned.

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