Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Can the Treasurer advise the House of the level of state debt? Can the Treasurer also advise the House how state debt impacts on inflation?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for her question. It is the case that there is a substantial amount of state debt out there, a very substantial amount. Why are those borrowings taking place? I will tell you why those borrowings are taking place. Those borrowings are taking place for essential economic infrastructure—the sort of essential economic infrastructure that those opposite would not concern themselves with for 11 long years. The Rudd government has made it very clear that it is prepared to work with the states when it comes to critical economic infrastructure because this is a key plank in its platform to put downward pressure on inflation and downward pressure on interest rates. Eleven years of neglect in infrastructure have produced a situation where the states are having to borrow because the Commonwealth would not come to the table and provide the political leadership that was required so that we could develop a modern economy which was capable of tackling the future challenges.

Luke Hartsuyker (Cowper, National Party, Deputy Leader of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. The point of order is relevance. The question clearly asked, ‘What was the level of state debt?’ He obviously does not know.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

I remind the honourable member for Cowper that it did then go on to ask about what the effect of state debt was.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I am happy to provide the member with the exact figure. We have had the member for Wentworth and now another member, the member for Riverina, wanting to conduct a pop quiz. That is what they have come to; they are just so desperate. Sometimes I will have the details on hand and sometimes I will not.

Opposition Members:

Opposition members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The question has been asked. The Treasurer is giving his response. His response should be heard in silence.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

Let me tell you what I will never do. I will never arrogantly dismiss inflation as a fairy story, like the member for Wentworth has. I will never, ever do that to Australian families. I will never, ever, like the Leader of the Opposition, say—

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. On this side of the House, we are very keen to hear every word that the Treasurer says but he is speaking away from the Speaker. I can understand him not wanting to turn his back on his colleagues, but can he please address—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The honourable member will resume his seat. The members on my left would assist if they sat there quietly.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

The one thing that I will never, ever do is this. I will never lecture working families, after 10 rate rises, saying that they have never been better off. I will never do that, and that is what those opposite did.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order that goes to relevance. I specifically asked two questions, the first being to advise the House of the level of state debt and the second being to advise how that state debt impacts on inflation. Neither of these points has been answered by the Treasurer.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer has the call.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

Mr Speaker, I made it very clear to the member that I will provide that information to her. I will get the exact figure—not a problem. But the one thing that I will never do—

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order on relevance. The Treasurer has said that he does not know the amount of state debt and he will get the details to the member for Riverina, but he has not addressed the primary issue, which is: what is its impact on inflation?

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer is relevant to the second part of the question and he has indicated his response to the first part. The Treasurer is in continuation.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I will be very happy to provide all of that material.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Minister, why is it necessary for government spending to be cut? What steps is the government taking to eliminate wasteful spending and improve the efficiency of government?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank the member for Robertson for her question and congratulate her on her first speech last evening. The government inherited challenging economic circumstances: underlying inflation running at 3.6 per cent, five interest rate increases over the past 18 months—with another one well and truly in the pipeline—and government spending growing by 4½ per cent in real terms. In an economy already being supercharged by very high returns from the mining boom, allowing government spending to increase at that rate is simply and totally irresponsible. I would like to go through one example to illustrate this point—just one example. From the middle of 2006 until the election late last year, over a period of 16 months, the former Howard government spent $457 million on government advertising—almost half a billion dollars within a space of 16 months.

And it is interesting to look at the figures over the preceding five years or so. On a calendar year basis, government advertising spending increased from $95.6 million in 2002 to $368.8 million in 2007. That is a 285 per cent increase—and they did not even get to go the full year. They did not even get to go the full year and they still managed to spend nearly $370 million in that one year. If you divide the spending between campaign advertising and non-campaign advertising—non-campaign advertising is routine stuff mostly; job ads and the like—you will see that it increased from $60.4 million in 2002 to $281.2 million in 2007. That is a 365 per cent increase.

The House and the Australian people are entitled to ask: how did this happen and who was in charge? I note, as the Treasurer did earlier, that in the middle of last year the former Treasurer, the member for Higgins, was quoted in the biography of the former Prime Minister about his worries in relation to government spending running out of control, and I quote:

I do worry about the sustainability of all these things.

That was the then Treasurer in the middle of last year. Well, good on him! Isn’t that hunky-dory—he was there in his office worrying about it all! He was really worried about the sustainability of government spending. Thank goodness he was worried, because you can imagine what they would have spent if he had not been worried! The great pity is that he did not take any action; he did not actually do anything. That is the great pity. The truth is that, as on so many other things, the member for Higgins is all talk, all bluff, all bluster and no action. He is Australia’s champion flat-track bully, and we saw that in evidence last night.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The minister should not debate and bring other individuals into the response.

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Thank you very much, Mr Speaker. Sadly, not much has changed since the election. I note that, in the member for Higgins’s local paper, the Stonnington Leader, he is quoted on 5 February as saying:

Government Members:

Government members interjecting—

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

It is a very interesting newspaper. The member for Higgins is quoted as saying:

If I was still Treasurer we’d have 10 CCTV cameras on Chapel St.

…            …            …

Before the election, I wouldn’t have had to ask Mr Rudd; I would have authorised the cheque myself.

That will be his political epitaph: ‘I just kept authorising the cheques.’

I can assure the House that the Treasurer and I will not be in the business of automatically authorising cheques. We will not be in the business of massive increases in government spending for things like government advertising, because we and the government are serious about cutting government spending and putting downward pressure on inflation and on interest rates. We are particularly serious about cutting out the outrageous misuse of taxpayers’ money on things like government advertising. The previous government spent almost half a billion dollars within the space of 16 months in a desperate attempt to secure re-election. That money could have been invested in infrastructure and in building the skills of this nation to help tackle the inflation problem that has been brewing for some time but instead it was spent in a desperate attempt to secure re-election. There is one big lesson that we can learn from all of this, and that is that you cannot trust the Liberals with public money.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. The Treasurer and the Minister for Finance and Deregulation have said again and again that spending by the federal government is inflationary and that reducing spending by the federal government will reduce aggregate demand and will reduce inflation, and this is part of their anti-inflation plan. Yet, when asked what the inflationary impact of state government borrowings is—which of course funds spending by state governments—the Treasurer is unable to say. Is it the Treasurer’s contention that it is only spending by coalition governments that contributes to inflation?

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The preamble for that question was a little long but I am happy to allow it.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the shadow Treasurer for his question. My contention is that spending to enhance the productive capacity of the economy is absolutely critical to lifting productivity and to putting downward pressure on inflation and downward pressure on interest rates, which is why we have a minister for infrastructure—someone who will work with the states, someone who will provide political leadership. That is why, as part of our five-point plan, we are committed to providing national leadership when it comes to essential economic infrastructure. And, for the record, the shadow Treasurer should have a good look at the commentary on this from the former Governor of the Reserve Bank, Mr Macfarlane, because it simply disproves the ridiculous claims he is making in the House today.