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

I have received a letter from the honourable member for North Sydney proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government’s failure to keep control of the nation’s public finances.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

Last night I heard a member of the Labor Party describe this budget as a traditional Labor budget. I thought how true that is—big deficit, big debt and more people unemployed. This is the Labor way. It is like groundhog day in this place. The Labor Party comes in and Australia heads towards recession. The Labor Party comes in and we reach record levels of deficit and debt. The Labor Party comes in and spins fiscal responsibility, and yet they have become the biggest-spending government in modern Australian history. There is a lesson here: you always have to look at what Labor does and not at what they say. For months now, the Labor Party has been telling us that the decimation of the budget, the massive debt that is being accrued as a result of significant deficits, is all caused by the collapse in revenue. And yet, when you have a good look at the budget papers, you can identify this: finally the truth emerges during the lock-up that the Labor Party, through its unbelievable expenditure since the Rudd government was elected, has become the biggest-spending government since World War II. Of the $188 billion of net debt, two-thirds of that is directly linked to new spending initiatives by the Rudd government.

They are not just new spending initiatives but reckless spending initiatives. They are reckless spending initiatives that not only blow the proceeds of the last mining boom but seek to spend all the proceeds of the next mining boom. This is reckless fiscal management. It is an assault on the public finances of Australia that we have not seen in generations. They have done it wilfully and they have done it without any care for the future. On each day that they come into this place and lecture us—the Liberals and the Nationals—about fiscal responsibility I want everyone to remember that in 1996, when the coalition were last elected into government, we inherited a debt of $96 billion. We inherited a $10 billion black hole. We were left with nothing in the cabin. We had to make hard decisions to repair Labor’s mismanagement—they were damn hard decisions. I was elected in 1996. There was hardly a government service left in my electorate in North Sydney after that budget. It was a budget that had to be done by the former Treasurer up there, the member for Higgins, who had to make the hard decisions.

Let us remind Australians for the record that the Labor Party opposed us on every single decision, root and branch, that would get the budget back into surplus and that would pay off Labor’s $96 billion debt. The more I hear these sanctimonious fools lecturing us about responsible opposition the more I reflect on the fact that when they left us with $96 billion of debt, when they left us with a black hole of $10 billion, they voted against all the tough initiatives, such as the reform of higher education, a tough initiative; the PBS reform, a damn hard initiative; changes to the disability pension; and HECS increases. They voted against privatisation not once but on a number of occasions over the whole 11 years. They voted against the super surcharge levy, and then they voted to try and keep it some years later. They voted against the closing down of Working Nation, where they fiddled the figures about the real impact of the Keating budget.

And then it came to structural reform, the stuff that lays the foundations, the important stuff, the important initiatives that actually make a difference to the fabric of the nation—tax reform. How hard was that? I remember sitting in this House day after day, arguing with the then shadow Treasurer, Simon Crean, as they were tearing apart the hardest structural initiative in modern times. It was major tax reform, and they voted against it. Even though we won an election with a mandate they voted against it. Even though every election we sought a mandate and even though we won a mandate on privatisation they voted against it. Even today how ironic it was to see the Minister for Small Business, Independent Contractors and the Service Economy coming to the dispatch box and saying: ‘We have fixed the R&D tax concessions. The coalition reduced it from 150 per cent to 125 per cent but—good news, Australia—it’s back at 150 per cent.’ Do you know why we reduced it? Because we ran out of money. Do you know why we ran out of money? Because of Labor.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Labor had spent it.

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

Labor had spent every dollar in the can and, what is more, they had hocked the future. We are in a situation today where the Labor Party is back in government. And what happens? Groundhog Day; it all happens again. They not only spend the money that was there, but they actually spend all of tomorrow’s money as well.

I think it is the first time in my recollection that a Treasurer actually stood up to deliver a budget speech and did not tell us what the budget was. I cannot recall—and in fact a number of members of this House and outsiders actually could not recall—a situation where the Treasurer did not have the courage to come into this place and give a fair dinkum assessment of the real impact of the budget. Do you know why? Because the Labor Party were desperate to spin this budget into total confusion. And in some way they got away with it. They talked tough before the budget came down. They leaked all these figures out to pretend that it could be terrible, far worse than anything that happened. Of course when they delivered it was better than expected and they said: ‘Isn’t it great we’ve got only 8½ per cent unemployment? Isn’t it fantastic? We’ve done so well. It could have been 10. It could have been 15 per cent. But you know what? We’re delivering 8½ per cent unemployment. We’re so good.’ That is what the Labor Party say. That is great, isn’t it. It was four per cent 18 months ago, and the Labor Party take pride in one million Australians being unemployed. They are saying the budget deficit could have been $70 billion next year: ‘And you know what? It’s fantastic. Aren’t we great? We’ve delivered $58 billion. Haven’t we done a wonderful job? Forget that it’s the largest budget deficit since World War II. Forget that. That’s irrelevant.’

This is the 13th episode of Fawlty Towers. I am having terrible flashbacks of Manuel and Basil Fawlty—all of them, the whole team. I am reminded of that song Ship of Fools because it is a ship of fools over there. The problem for us and the problem for all Australians is this: the ship of fools is running the country. The ship of fools is running up the biggest deficit in modern Australian history. The ship of fools is running up the biggest debt in Australian history: $9,000 for every man, every woman and every child in Australia. And you know what? It will be bigger. I am prepared to bet everything I have that the Labor Party deficit and debt will be far bigger than what we heard last night, because that is how they do it. The Labor Party has no restraint; the Labor Party has no control.

It is very interesting, isn’t it? They come in here and selectively quote from so-called authorities about how they have got a plan to get out of it. There will be the usual sycophantic so-called business representatives that will say that the Labor Party has a plan to get out of debt and deficit. But I tell you what: the ANZ described the budget as having ‘optimism’ around the economic forecasts, suggesting there is considerable scope for slippage. ‘Slippage’—this is a new one! And the National Australia Bank said:

Our real concern is that the budget does not lay out a credible medium-term policy to return the budget to a more sustainable footing …

Damn right—the NAB is absolutely right. In perhaps the most truthful analysis of the forecasting and the Labor Party’s so-called plan to get the budget back into surplus, JP Morgan says:

Swan Diving into the Red Sea

                   …                   …                   …

Crucially, the Treasurer’s “cross your fingers” strategy for returning the Budget to surplus relies principally (and optimistically) on a return to strong, above trend economic growth, rather than the “hard decisions” he promised.

Amen. Hard decisions represent one per cent of all expenditure over the five years that they are citing. One per cent—that is the ‘hard decision’. If you believe the Labor Party’s commentary, our position on that is going to decide the future of the nation’s finances, with one per cent—one per cent!—of total expenditure going to be saved. That is the big political issue today. That is why they are a ship of fools.

They do not understand that it is the structural issue that is the problem. When you give people a so-called plan, it had better have credibility. The Labor plan has no credibility. It is based on assumptions that the IMF and the RBA do not agree with—not that the IMF and the RBA are always right, but there is a level of credibility associated with them, as there is with JP Morgan, the National Australia Bank and everyone else who says that these figures are rubbery.

Do you know what? Underpinning this estimation—that they are going to get out the deficit, and that is not even the debt but the deficit—is an assumption that Australia is going to come out of this recession faster than anyone really thinks, but we are also going to have the longest period of above-trend growth than anyone can remember. It will be the mining boom on steroids that gets these guys out of a deficit and a debt. The problem is that every Australian is going to have to pay for this. And, lo and behold, out of all of this the key issue is—we believe it when the government says it, as does everyone else—that this government will not make one new spending decision between now and 2017. Do we believe that?

Opposition Members:

Opposition members interjecting—No!

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

Do we believe that?

Opposition Members:

Opposition members interjecting—No!

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

No-one believes it. Here is a Prime Minister that has committed over $200 million a day in new spending initiatives since he was elected, and they are asking us to believe that the deficit will be no worse because they will not have one new major spending initiative between now and 2017. They are a ship of fools. If they believe the Treasurer, who is the navigator on the ship of fools, and if they believe the Prime Minister, who is the captain of the ship of fools, then they deserve their place on that ship.

The challenge for us is to keep this government accountable. The challenge for us is to stand true—which we will do—to our core principles. You should aim to spend only that which you collect, you should aim to create jobs not just for today but for tomorrow, you should be fiscally responsible, and, most importantly of all, you should not leave the next generation of Australians with a level of debt that will be a ball and chain around their legs and will prevent them from seizing the opportunities that the coalition have worked so hard to deliver over 11 years of government.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

This is another example—

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

Mr Hockey interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for North Sydney will resume his seat. The member for North Sydney was heard in silence.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

This is another example of the Liberal mythmaking machine in overdrive. As we have seen in the last 24 hours, it is another example from the member for North Sydney. According to the Leader of the Opposition, according to the member for North Sydney and according to the other spokespeople, if only the Australian people had had the good sense to keep them in office everything would be rosy. Everything would be fine—the deficit would be lower; the debt would be lower; unemployment would be lower. According to their narrative, everything would be fine if only the Liberal Party had retained their rightful place as the born-to-rule party of this nation.

But at the heart of their narrative there are two patently false claims—two claims so laughable that I would have thought the opposition would be embarrassed by the paucity of their argument and by the plain sophistry of their narrative. The first false proposition is this: the deficits would be lower in future years under the opposition’s plan, because they would not have made the direct payments to families that we made. That is proposition No. 1. They say, ‘We wouldn’t have had the cash splash, we wouldn’t have sent $900 to working families, so our deficits would be lower.’

Let us put aside the fact that those payments have been so important in keeping the Australian economy as robust as it is compared to the rest of the world. Let us look at the fiscal impact of that decision. We went down the road of payments to families because they were temporary and because they were targeted, because they would wash through the budget, because almost all the impact would be in the 2008-09 financial year and they would not be a drag in future years. And what did the opposition say at the time? They said: ‘We wouldn’t do that. We’d oppose that. We wouldn’t make the $900 payments to families.’ Instead, they said, ‘We’d have tax cuts—permanent tax cuts.’ The Deputy Leader of the Opposition called them ‘broad and sweeping tax cuts’. The Leader of the Opposition made a virtue out of the fact that they would be permanent. He even trotted out academics—John Taylor from Stanford University—to say that people need to know that the reduction in their tax is permanent so that they increase their spending. Of course, a permanent reduction in tax means a permanent drag on the budget bottom line—a different approach from this government, not temporary, not targeted, but a permanent drag on the bottom line. That means that, whereas our stimulus payments to families have no impact on the budget in the out years, theirs would have an ongoing impact. They come in here and claim the mantle of fiscal responsibility. They say, ‘We stand for lower deficits; we stand for lower debt,’ when their policy would directly mean higher deficits and higher debt. They are hypocrisy personified.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

Mr Robert interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Fadden is warned!

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

They are engaging in a blatant falsehood with the Australian people; they are taking the Australian people for mugs. The second false premise is closely related to the first—that is, that the increase in the debt and deficits over the forward estimates is not primarily due to the revenue write-down that the government has experienced. We have just heard the shadow Treasurer say again that the main impact on the deficit situation has been government spending. It has not been revenue write-downs, they say.

This reached its most ridiculous last week on 7 May on the Sky News AM Agenda program in a debate between our colleague the Minister for Small Business, Independent Contractors and the Service Economy and the shadow minister for small business, the member for Moncrieff. I confess I did not see it myself; I heard about it. I have a bit of a soft spot for the member for Moncrieff, but I could not believe it. I thought the story must have been embellished. So I checked the transcript, ready to leap to the defence of the member for Moncrieff, but unfortunately it was indefensible. He said this:

We put forward our proposal for the stimulus package this year, which would be about 50 per cent of Labor’s. Therefore, this year the deficit will be 50 per cent or less.

Let us just think about this. He said, ‘Our stimulus would be 50 per cent less, therefore our deficit would be 50 per cent less.’ There is a small problem with this equation, as the minister for small business correctly pointed out during the program, because it completely ignores tax write-downs. It completely ignores the wrecking ball that has gone through the Australian budget as a result of the global economic downturn, the fact that tax receipts have fallen so dramatically. The revenue loss in 2008-09 is $23 billion, but that did not happen according to the opposition. The member for Moncrieff says that it did not happen because he says that the only driver of the deficit is the stimulus program. If we have 50 per cent less stimulus then we would have 50 per cent less deficit. That is just not right, putting aside the fact that arguably they would not have had a 50 per cent smaller deficit because they believed in, as the Deputy Leader of the Opposition—who is present in the chamber—said, ‘broad and sweeping tax cuts’. Her economic narrative is that they would make the government money. Remember that? Broad and sweeping tax cuts would actually make the government money—just before she lost the shadow Treasurership of Australia without seeing one budget. I wonder why that happened, when they engage in voodoo economics. We cannot be too hard on the Deputy Leader of the Opposition and on the member for Moncrieff, because it comes right from the top. It comes from the Leader of the Opposition himself. Even today, the Leader of the Opposition said to Sky News this morning:

In 2012-13 there will be a net debt of $188 billion, an almost inconceivable figure. Since he was elected, Mr Rudd has spent  $124 billion, so in fact about two-thirds of his debt is represented by his spending since he got elected. Yes, the economic downturn has hurt us—no question. It has affected tax revenues, but the biggest contribution to that debt has been discretionary spending by the Rudd government.

Let us have a look at the Leader of the Opposition’s maths. He says that net debt in 2012-13 will be $188 billion. Yes, he got that from the budget papers. He says that the new government expenditure is responsible for $124 billion. If that is correct, that means the revenue write-down would be $64 billion, but we heard the shadow Treasurer last night say he accepts that the revenue write-down is $210 billion. The Leader of the Opposition needs to explain his maths. He needs to justify his sums. He needs to say how he came to that figure. If he cannot, he is clearly engaging in sophistry of the most wilful and disgraceful type. The Leader of the Opposition said on Sky News this morning, ‘You can’t argue with the numbers.’ Well he is arguing with the numbers and he has come off second best, just as he might argue with the numbers and come off second best in the Liberal party room in a couple of months, I suspect.

We also had the official opposition response last night in the shadow Treasurer’s press release. I thought that this would be good—two pages, obviously a considered press release with a great deal of thought going into his position. We would welcome that. The first page of the shadow Treasurer’s press release condemns the government for the deficit. It says that the deficit is too high, that we should have been tougher, et cetera. If that is the line they are going to take, fair enough. The second page condemns our savings measures. It says we have saved too much. How dare we deal with the private health insurance rebate, how dare we deal with structural change to the budget deficit. But the best bit comes towards the end. This is my personal favourite. I almost fell off my chair when I read this and I feel obliged to share it with the House. We come to education and training and the shadow Treasurer, the member for North Sydney said—brace yourselves, this is good:

… the Government is offering nothing new for Australian schools at all.

I am not sure where the shadow Treasurer has been but I seem to recall the government delivering the biggest rebuilding program of Australian schools in our history—which the opposition opposes. Now he comes in—this is a press release—and says that the government is offering nothing new for Australian schools at all. So having opposed the biggest rebuilding program, now the opposition is calling for us to do more. But it gets better! The shadow Treasurer then goes on to say:

Universities have been let down.

Universities have been let down by this government! That is from a member of the only government in the entire OECD to preside over a reduction in higher education funding. This government has delivered in this budget $5.7 billion over four years for higher education, and the shadow Treasurer says that universities have been let down! So presumably he would like to see more spending. So they call for a lower deficit, they oppose the spending cuts and they call for more spending! I am not quite sure how that works.

The shadow Treasurer says that universities have been let down. The chairman of the Group of Eight, Professor Alan Robson, said:

In a difficult budgetary environment, Ministers Carr and Gillard are to be commended for their long-term vision and commitment to Australian higher education.

And close to home the Vice-Chancellor of the University of Western Sydney, Professor Reid, said:

This has been a landmark Federal Budget for university teaching and research funding—one that promises to transform Australia’s higher education landscape.

So the shadow Treasurer says that universities have been let down. The universities do not agree. He calls for more, yet the opposition also call for a lower deficit and a lower debt. Is it any wonder that all the evidence is that the Australian people have lost all confidence in the economic management abilities of those opposite?

If the opposition were in charge it is highly unlikely that we would have seen some of the endorsements of the budget that we saw last night. It is highly unlikely we would have seen Standard and Poor’s saying:

The budget articulates a plan for fiscal consolidation as economic conditions recover. The successful delivery of this strategy of returning the operating position to surpluses over the cycle and maintaining lower debt will be consistent with maintaining the AAA rating of Australia.

I wonder if that would have been the case if we had had the voodoo economics of those opposite, with their voodoo dolls, saying, ‘How do we do this? I know what we’ll do: we’ll lower the deficit, we’ll spend more and we’ll oppose savings measures.’ I wonder if we would have seen that sort of endorsement then.

Why did we see that sort of endorsement? We saw it because the government was dealing with the long-term pressures on the Australian budget, including the long-term pressures of demography—not only the global financial crisis but the ageing of the Australian population and the pressures that that will place on the Australian budget in years to come.

It has been said by many people that demography is destiny. That was said by the Leader of the Opposition. He said it in his first speech. I remember it well; it was the same day as my first speech. The Leader of the Opposition said:

The demographic storm is coming. How hard it blows and how well our children weather it will depend in large measure on the decisions we take today …

Well said. It was a good contribution. It was a good first speech. I was sitting on the opposition side, listening to it. The issue of demography is why decisions that we have taken—like dealing with the aged pension—are so important. People are living longer. The proportion of the population that is ageing is growing rapidly and unless we make decisions now about how to deal with the ‘demographic storm’—as the Leader of the Opposition calls it—we will be leaving it to our children and we will be doing them a disservice.

Policy decisions about dealing with the age pension and dealing with the private health insurance rebate are the sorts of decisions that the government has had to make. They are tough decisions—decisions which were not made lightly; decisions which were not made with alacrity. They were decisions that were made over a long period of time in a careful and considered way. They are tough decisions. The opposition says that they are not tough decisions but the opposition are not sure whether they are tough enough to support them. They say, ‘You haven’t made any tough decisions, but the decisions you have taken are too tough for us to support.’ That seems to be the other confused narrative that we get from the Leader of the Opposition.

Budget time is not a test just for governments. As much as it is a test for governments it is also a test for oppositions. And tomorrow night will be a test for this Leader of the Opposition. Last year it was a test for the member for Bradfield—a test that he failed, and he paid the price. Tomorrow night will be a test as to whether the Leader of the Opposition can live up to his title. Is he a leader or is he an opportunist? It will be a test as to whether he is willing to act or willing just to whinge. It will be a test as to whether he is interested in the nation’s interest or his own self-interest. It will be a test as to whether he is up to the job of the Leader of the Opposition. The Australian people do not look just to the government for leadership in times like this; they also look to the parliament.

The Leader of the Opposition has been strong on rhetoric about bipartisanship in the face of this crisis. He has been very good at the rhetoric. Tomorrow night he has the chance to come in here and lend some bipartisan support for this government’s efforts to keep the economy strong, to provide stimulus to the economy and to put us on a sound structural footing going forward. It is a test that we will wait and see whether he can pass.

Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

This government carved out a sorry place in Australian political history last night, for in just 18 months this government has caused the biggest budget turnaround—from surplus to deficit—in living memory and it has run up the largest public net debt since World War II. That is the legacy of this government. With apologies to Winston Churchill: never in the field of Australian government finances has so much been squandered so quickly for so little benefit.

The Rudd government has outspent all that have gone before, with government spending now 29 per cent of GDP. It is the biggest spending government in over 50 years, with debt and deficit as far as the eye can see. For years the labour movement has been searching for a way to rewrite the disastrous and chaotic history of the Whitlam years. With the handing down of this budget last night the Rudd government has achieved what others have failed to do: it has made the Whitlam government now look fiscally responsible by comparison.

The Treasurer was so ashamed of the government’s mishandling of the country’s finances last night that he could not even say in the budget speech the phrase ‘a $58 billion deficit’. That is the first line he should have told the Australian people about last night. He could not bring himself to level with the Australian people and say ‘$188 billion of net debt’, and he did not dare get caught on camera saying that there will be one million Australians unemployed under the Rudd government. The last time there were a million people unemployed in this country was under the Keating government. So now we have Whitlam, Keating, Rudd. Yes, this was a true Labor budget all right. Debt, deficit, recession: that is a Labor budget.

The Treasurer knows that Labor have blown it. The Rudd Labor government inherited the best set of accounts of any incoming federal government in Australia’s history. There was no government debt. There was money in the bank. We had savings and surpluses. We were living within our means. The Rudd government must have thought that it had hit the jackpot. It started spending. In the true Labor tradition, it spent all the taxpayers’ money that had been saved away in government coffers. It spent all of that then started borrowing. It could not get enough borrowing onshore so it started borrowing offshore. But it kept on spending.

The Rudd government has announced the equivalent of $220 million a day in additional spending. That is $220 million in additional spending initiatives every day since it came to office—$124 billion in additional new spending announcements in 18 months. This is a government that knew revenues were decreasing but went on a spending spree like there was no tomorrow. Of the $188 billion in net debt, $124 billion is as a result of the profligate spending of the Rudd Labor government. They remind you of Arthur, the black sheep playboy son of the billionaire. He squandered his entire inheritance, unable to control the spending. When this government ran out of money, it started borrowing uncontrollably. Gross debt is likely to top $300 billion. You did not hear the Treasurer admit that to the Australian people in his budget speech last night.

This government has lost control of the nation’s finances. No wonder the Queensland Media Club is pleading for people to attend the Treasurer’s post-budget lunch next week; people just do not believe this budget. The government’s so-called deficit exit strategy is as believable as a fairytale. Having run up the largest debt in Australian history with additional spending of $220 million per day, the government now wants Australians to believe it is going to return the budget to surplus, but it makes the following assumptions: first, that no government will undertake any new spending until 2017. That is what it wants us to believe. Another assumption is that there will be an unprecedented run of growth at 4.5 per cent for at least two years, and then there is a projection of above-trend growth for another four consecutive years. Colleagues, they are asking the Australian people to believe that there will be six consecutive years of growth at 4½ per cent. There have only been two periods in the last 50 or 60 years when growth of 4½ per cent has been maintained, and that has only ever been for two years at a time. This is simply unbelievable. This assumption flies in the face of forecasts from the IMF, the Reserve Bank and most respected Australian economists.

The government have been selectively quoting, but it is interesting that they have not quoted from the rating agency Moody’s. What Moody’s said is:

We do recognise the trend in deficit and debt is unfavourable and represents a weakening of the government’s financial strength.

Moody’s went on to say—and I ask members of the government to listen to this:

If deficits were to extend beyond the period Swan has projected—

and of course they are, based on those wild assumptions—

we would have to begin thinking about the manageability of the whole situation.

That means the credit rating would be under question. So the government is saying, ‘There’s no problem with the credit rating,’ but that is based on these unbelievable assumptions of no new spending until 2017 and six consecutive years of growth, which we have never seen in the last 60 years.

Make no mistake: this budget is a political document. The growth forecast has been adopted by the government to create a fantasy that it has a plan to restore the nation’s finances. These assumptions are not credible and the government must release all of the Treasury advice and all of the options presented to the government. We know how the government chooses to portray Treasury advice. We know how the government shamelessly spins the advice it is given. Take the Prime Minister’s bald-faced assertion that Treasury advised the government last year that the first cash splash of $10 billion would create 75,000 new jobs. When they were forced to reveal the actual Treasury advice through freedom of information, we found out that Treasury in fact provided a general formula linking employment and economic growth, with numerous optimistic assumptions about how much of the cash splash would be spent and how much would be saved. It was heavily qualified, yet the Prime Minister came out and said that Treasury advised that the $10 billion cash splash would create 75,000 new jobs. He knew that that is not what Treasury said. He knew it would not happen, it has not happened and it was never going to happen. So this government must take responsibility for the political decisions it has taken in framing the budget.

The public deserves to know why the government has suddenly changed the way it predicts economic growth. Just as the government moved the goalposts last November in the Mid-Year Economic and Fiscal Outlook with regard to the assumptions on interest rates to suit the political purposes at that time, it must also say why it has moved the goalposts this time on growth to suit its political purposes. It must stop hiding behind Treasury forecasts or projections and tell the Australian people that they are political decisions that frame this budget, and it must take responsibility for them. It is not the government that is going to pay off this debt and deficit. It is the young people of Australia, the young taxpayers of the future, who will be paying off this government debt for years to come. This government has no money of its own; it only spends what it takes from the people in taxes or what it borrows. The next generation will be paying. (Time expired)

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Climate Change) Share this | Link to this | Hansard source

There are two issues that I think are evident, listening to the opposition speakers on this matter of public importance debate. One is that it is apparent that the coalition does not understand that there is a global economic recession. It is almost as if the Australian economy is considered in complete isolation from what is happening internationally. The second issue that is evident from the contributions made from the opposition is that it has no plan and no idea how to address these circumstances—not one constructive idea to contribute to these difficult economic times. The fact of the matter is that this country faces the worst economic recession internationally since the Great Depression, and I think it is useful to contribute to the debate some of the figures that evidence that case, because they do not appear to have been considered by the opposition.

In 2009 the budget has indicated negative growth in this country of 0.5 per cent, but for our major trading partners the recession will have the impact in 2009 of causing a two per cent contraction. In all the advanced economies the contraction is as great as 3.75 per cent. In the G7 economies, the economic recession internationally is causing a contraction to the tune of four per cent. In Japan the figure is a terribly alarming six per cent. That is the international environment in which the government had to frame last night’s budget announced by the Treasurer. We have experienced the worst fall in revenue since the early 1930s: $210 billion over the forward estimates. That contraction in revenue is the impact of the global economic recession on the framing of the budget, but none of the international economic circumstances seem to be considered in the analysis that the coalition has brought to bear—if you can elevate it to that terminology. The terms of trade have deteriorated significantly. Commodity prices have fallen extremely significantly, in many areas by as much as 50 and 60 per cent. Almost all of the major economies are in recession.

This government is determined to make the hard decisions to confront this challenge. It has made decisions to formulate the budget by building the nation; to invest now to support jobs and to support the future economic foundation of this country; to shield Australian working families to the best extent the government possibly can from the harsh impact of this recession; importantly, given the terrible impact that unemployment has in our society, to fight unemployment and build for the future; to stimulate economic activity; and to take the hard decisions to bring about savings over the forward estimates.

If you look at some of the key budget measures, they underpin the decisions that the government has taken or are clear evidence of them—and the coalition will need to consider its position on these measures as we head towards the parliamentary processes in this place and in the Senate for the passage of the appropriation bills necessary to implement them. Key measures are a $22 billion investment in building the nation’s infrastructure which includes $3.4 billion for roads, $4.6 billion investment in metro rail and $389 million for ports and freight infrastructure; a $4.5 billion commitment in the Clean Energy Initiative which includes $1 billion of existing funds; a $2.6 billion investment in projects focused on universities and research from the Education Investment Fund, with a consequence that in the university sector 50,000 additional places for students will be created by that investment; $3.2 billion in projects focused on hospitals and health infrastructure from the Health and Hospitals Fund; and partnering with the private sector to build the National Broadband Network.

In addition to those measures in infrastructure investment, the government has committed an additional $20 billion to rebuild our hospitals, extended the first home owners boost, provided an improved tax break for small businesses, increased the pension and built on the education revolution with a $5.7 billion investment over four years, as well as a host of other measures including the implementation of a paid parental leave scheme. These are enormously significant measures—decisions taken by the government in active consideration of the economic circumstances internationally and how they impact on our economy. What this is telling you is that this government is prepared to face the challenges and take the difficult decisions, not hide from them. And without this action, the contraction in our own economy undoubtedly would be far worse and unemployment would be higher.

Now, is the coalition up to that challenge? We have heard nothing from the coalition to suggest that there is any plan to deal with the global recession. It is all political opportunism. The Labor government must have been created the international recession! That is what you could conclude from their contributions. There is no plan to support working families in this difficult period. There is no plan to address rising unemployment. It is a classic political opportunist strategy: ‘Blame Labor for the lot.’ Ignore the fact that we have got a global economic recession; blame the Labor government. Oppose and complain about stimulatory investment and infrastructure spending, complain about the deficit and the borrowing to underpin nation building and economic stimulus, but turn up at media opportunities, of course. As the Minister for Infrastructure, Transport, Regional Development and Local Government has indicated on a number of occasions, ‘It’s okay to oppose all this, but you turn up at a media opportunity to announce local infrastructure projects.’

When under pressure about how they would meet a $210 billion collapse in revenue, the coalition pretend they would not borrow to fund the deficit. When under pressure about not borrowing, they try to avoid saying what services they would cut or what taxes they might put up. But you cannot have it both ways. If the coalition will not support nation building and economic stimulus to meet the global economic circumstances and their impact on our economy and if the Liberals will not support jobs and investment in the future of our country then they are admitting that, under them, unemployment would be higher and the economy would contract further and be deeper in recession. That is the simple fact of the matter. You do not need to know too much about economics to work that out. And, if the coalition do not like any of that analysis, the alternative conclusion could be that they too would be running a deficit and borrowing to fund it. The only other conclusion you could draw is that they would be making massive cuts.

We heard today that the shadow Treasurer has forecast that the coalition would have a deficit reduced to the amount of approximately $25 billion; I think that was the contribution made. Tomorrow night, in the budget reply, it will be incumbent upon the Leader of the Opposition to declare to this place and the Australian people how that would be achieved. The shadow Treasurer has determined what the budget deficit would be under a coalition government; how would they fund it? What taxes would go up? Mr Turnbull, the member for Wentworth, has indicated that revenue would be higher under the coalition. What taxes would be going up? He has also indicated that expenditure would be lower. What savings would be made? What would be cut? What measures would they take? The fact of the matter is that I doubt we will hear anything too specific.

The government has made hard decisions to meet the worst economic circumstances since the Great Depression, and there is clear evidence that the government strategy is working and will continue to work. The Treasurer has articulated a strategy to exit the temporary deficit situation by 2015-16. The Treasury has published the detail of the assumptions which underpin that plan. The government has set out a strategy for stimulating the economy, building the nation, supporting jobs and investing in the economic foundations of this country, and the coalition should support it. (Time expired)

Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

What we have seen in this matter of public importance debate and over the last 20 hours or so since the budget was brought down is the essential problem with this Rudd Labor government: their problem with the truth. We saw scripted performances and the stretching of the English language—everything possible to mislead or conceal the truth from the Australian people. When the Rudd government was first elected, we heard a lot about working families. Before that, before the election of the Prime Minister, we used to hear a lot about how the buck stopped with him—not a phrase you hear very often anymore. All of those opposite know that because they get the script from the Prime Minister’s office. They must get cookies or Caramello Koalas for every time they say the word ‘decisive’; we hear them all saying it. We used to have a Prime Minister who said the buck stopped with him. We also used to hear another phrase more often than we do today: ‘working families’. We do not hear that as often today, as working families become redundancy families.

Exactly a year ago today, the first Rudd budget was brought down, and it is interesting to have a look at the language of that budget speech compared with the language absent from last night’s budget speech. The Deputy Leader of the Opposition has pointed out the astounding omission of the budget deficit figure from the budget speech last night. In over 30 minutes and around 3,000 words, the Treasurer did not mention the budget deficit figure. He thinks that, if he does not mention the figure, the Australian people will not know. It was interesting that last night he mentioned working families once in the speech. Last year, he mentioned working families 13 times—he even had ‘working families’ as a heading in last year’s speech—but last night just once.

We have seen the ridiculous language of the Prime Minister and the Treasurer in recent days about ‘temporary deficits’. These are temporary deficits that will last for six years if nothing goes wrong and everything they say is right, when almost everything they have said since the last budget has been wrong. ‘Temporary’ for six years—let us think about that for a second. We should be glad that Kevin Rudd and Wayne Swan do not run a garage. When you put your car in for a service, you would get a temporary car, which you would normally expect to have for a day. Imagine turning up every afternoon for six years to get your car back, with the Prime Minister and his sidekick the Treasurer coming out with another excuse—the excuse factory.

This misleading language, this omission, this inability to say the most basic, truthful statement to the Australian public is catching up with this government halfway through this parliament. On the Neil Mitchell program this morning, the interview started like this:

Mitchell—Will you apologise to the Australian people for directly breaking the promises you made before the election?

Rudd—Neil, I accept full responsibility for that and for not being able to fulfil some of those policy commitments.

Mitchell—No, it’s not that—it’s the promises broken.

Rudd—No, policy commitments.

Mitchell—Promises broken, Prime Minister.

Rudd—Policy commitments that we haven’t fulfilled.

(Time expired)

Kerry Rea (Bonner, Australian Labor Party) Share this | Link to this | Hansard source

Once again I rise to contribute to an MPI put forward by the opposition that is flabbergasting in its audacity and hypocrisy. Many times in this House and in the media they have accused the Labor government of reckless spending, yet they were the government that presided over the biggest cash splash in our history. It lasted for about 12 years. It was not a cash splash designed to stimulate our economy. It was not a cash splash designed to support our retail sector and employment. It was not a cash splash to deal with unique economic circumstances. It was a cash splash designed to prop up their marginal seats. It was a pork-barrelling cash splash. So to have them coming in here and talking about government spending leaves me speechless.

It is also amazing that they talk about government spending and that they were able to do this because they were such good controllers of finances. They managed to completely waste the incredible resources that we received from the most significant resources and mining boom that we have seen in this country and they sold off some of our most significant assets—the family silver. That is how they managed to keep a surplus and throw their cash around willy-nilly, and they did it to support marginal seats.

It is incredible to hear the former government, which had such reckless policies, come in here and not acknowledge the significance of the very carefully targeted spending program of this government. It is also incredible that for 30 minutes the opposition have been speaking about the Australian economy and not once have they mentioned the global recession. Not once have they even acknowledged that we are in the most significant global financial crisis since the Great Depression—and they pretend to believe that they are the alternative government in this country. It is an indictment on their role as parliamentarians and on their commitment to steering our economy and our community out of these very troubling and, indeed, very difficult times.

This government has kept control of the finances and it has done it in a very responsible way. It has done it by supporting jobs, by investing in infrastructure and by ensuring that we do have community assets through projects out there that get people working on assets that we will have in this nation for the long term. Not once did they do that. Not once when they had incredible revenues did they invest in infrastructure or support our local communities. In this budget we have acknowledged that we have to face difficult economic circumstances and that we have to take them head-on. We acknowledge that it means going into debt and the budget being in deficit.

But let us just get this one into perspective. Let us have a look at the situation around the world. Currently our net debt as a percentage of GDP is 4.6 per cent, and certainly no debt would be much better. But what is the situation in the United States? It is 61.7 per cent of GDP. In the UK it is 56.8 per cent of GDP, and in Japan, a nation that has such a long history of economic productivity and manufacturing, it is 103.6 per cent of GDP. So I know that the Australian people will be much cleverer at understanding the crisis and putting our economy in perspective when they look at those figures. Basically, to me there is a choice—and it is a bit like buying a house or choosing somewhere to live. You accept the coalition’s argument that you just simply pay dead rent because even if they were in government they would be in debt. What we are doing is taking the decision to responsibly invest in a mortgage, buy an asset and pay it off, because that will be there for the long term. (Time expired)

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The time allotted for this discussion has now expired. The discussion has concluded.