Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Is the government prepared to examine further options for reducing spending? Will the minister outline the government’s view on wasteful government spending?

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

I thank the member for Dobell for his question. The Rudd government inherited a budget full of waste and inefficient spending—$457 million was spent by the former government on government advertising within the last 16 months of its term in office; $350 million was spent in one single year on the failed Work Choices regime, the infamous Regional Partnerships grants and of course a rapidly growing federal Public Service, including a 44 per cent increase in the fat cat brigade, the SES level of the public service. In the budget a couple of weeks ago the government put in place $7.3 billion of savings in the forthcoming financial year, $1.6 billion of which were outlined prior to the election and $3.8 billion worth of spending cuts that were indicated post that election. If you look at the detail of these savings, what you will see at the heart of these savings is substantial cuts in government advertising across a very wide range of programs, very substantial reductions in the cost of the industrial relations regime being run by the Commonwealth, the abolition of the Regional Partnerships program and, of course, a small but significant reduction in the overall level of the federal Public Service. There is more to be done. There is a substantial task still in front of us with respect to cutting back on wasteful government spending, but we have delivered a surplus of 1.8 per cent of GDP and got government spending down from running at a five per cent real increase to just over a one per cent real increase.

The opposition’s response to this has been completely confused. In fact, during the past two weeks in Australian politics, it has been almost impossible to identify an issue on which the opposition has had the same position over the time it has been debated in the public arena. Before the budget it said there was no need for spending cuts, there was no wasteful spending, but after the budget it described a reduced spending projection as a high-spending budget. Inflation has variously been described by the opposition as a ‘charade’ a ‘fairytale’ and then, subsequently, as a ‘problem but not a crisis’. It is in favour of means testing the baby bonus one day, opposed to means testing the baby bonus the next. The member for McPherson is running a petition to increase the base rate of the pension, but the shadow Treasurer, the member for Wentworth, has indicated that that is not the opposition’s policy. It was in favour of restoring the tax level to alcopops a couple of weeks before the budget, but, in response to the budget, it has now changed its position. It cannot even agree on whether the member for Mayo is coming or going! It simply cannot take a single position on any issue in contemporary Australian politics.

This mob is giving the word rabble a bad name, and nowhere more so than on the issue of government spending. It is the easiest thing in the world for a political leader to promise free money. The opposition are promising all kinds of things: tax reductions, knocking over things that they do not like, increased spending on things, ‘We’ll keep Regional Partnerships’—all of these things the opposition are putting forward as their alternative to the budget without a single indication of how they would be paid for. But they are not even coherent on that, because in the midst of all of this they are proposing to restore a tax slug that the government has removed on middle-income Australians—namely, the Medicare levy surcharge that applied to people on very ordinary middle incomes. The government has lifted the thresholds to put them back somewhere remotely where they were intended to be—on higher incomes. The opposition—so much for their alleged low-taxing rhetoric—want to restore that tax slug on middle-income Australians.

The money the opposition want to spend—on reducing the petrol excise, on restoring that surcharge, on Regional Partnerships, on reducing the alcopops tax—all has to come from somewhere. The member for Sturt let the cat out of the bag on Friday night when he indicated where it is coming from. It is coming from the surplus. That is where it is coming from. That is why there were no savings initiatives in the budget reply by the Leader of the Opposition two weeks ago—because they have no savings initiatives, they have no source of alternative funding to implement these policies, and the only available source is to reduce the size of the surplus. And that means one thing—that is, higher interest rates. Higher inflation as the result of greater public demand and increased government spending, just like we inherited, would inevitably produce higher interest rates.

The Rudd government have delivered a tough, responsible budget, but we are not going to rest on our laurels. We now have a second stage of the razor gang that is starting work looking for future savings from the systemic approaches of government—the processes, the programs of government—to continually find more money to strengthen the federal government’s budget, because pressures for new spending are ever present. And, unlike the opposition, we understand that there is no free money lying around and that, wherever that money is going to be spent, it has to come from somewhere. We would welcome any suggestions or savings proposals from anybody in the general community. We would particularly welcome them from the opposition, if they can manage to stir themselves into a bit of activity and a bit of coherence for a change. We would welcome any savings suggestions that the opposition have to put. We have not actually seen any savings proposals yet, and we will work hard to ensure that we have a strong, continuing budget surplus that is putting downward pressure on inflation, downward pressure on interest rates and delivering to the Australian people in the long term the kind of economic prosperity that we are committed to delivering. That is what the Rudd government’s budget and fiscal policy position is about, and it stands in stark contrast to the totally confused, chaotic, changing-every-five-minutes critique that we see from the opposition.