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

Mr Speaker has received a letter from the honourable Leader of the Opposition proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government’s failure to prevent wasteful spending

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—

Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Last Thursday the Secretary of the Treasury, Dr Henry, gave a speech which included this insight:

Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing.

Sadly, barely a day goes by without fresh evidence of reckless spending by this government that fails any plausible cost-benefit test. Billions of borrowed dollars are being squandered in ways that are doing nothing for our nation. In his determination to put government at the centre of the Australian economy, the Prime Minister is presiding over the largest expansion of the public sector in our history. Commonwealth spending in 2009 is forecast to be a staggering $65 billion higher than in 2007—a rise of 24 per cent since Labor was elected less than two years ago. For every $4 that was being spent under the coalition, Labor is now spending $5. The question we must ask is: how much of this vast increase in expenditure, almost entirely funded by borrowing, fails the test set out by Dr Henry? How much of this spree represents a wasteful diversion of resources that detracts from the nation’s wellbeing? Regrettably, a great deal of it fits that description.

Consider some of the recent examples of this government’s fiscal recklessness and inability to deliver value for money to taxpayers: Julia Gillard memorial libraries, assembly halls and gymnasiums are being thrust upon primary schools across the nation, including, as we have discovered, a number that are slated to be closed down—and a $250,000 assembly hall for a school with a single, lucky student! More than $40 million is being outlaid on an Indigenous housing program that is yet to deliver a single house, that is yet to involve the laying of a single brick, and hundreds of millions of dollars is being spent on imported pink batts. Cheques for $900 are being sent across the country and, as we have learnt, across the world, including to the deceased, to pensioners living abroad and, according to the press, to a number of pets. More than $215 million has been spent on government advertising and a further $49 million on government spin doctors and on community infrastructure grants that appear to be astutely targeted at marginal Labor electorates. The justification for all this was given by the Minister for Finance and Deregulation today, and I am delighted that he has come into the chamber.

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

Especially for you!

Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

That is very touching. I am deeply touched by the minister, but not as touched as the taxpayers’ pockets are. The minister was asked: ‘What was the cost-benefit analysis done on the Julia Gillard memorial assembly hall program?’ The minister replied that it was justified because of the global financial crisis. He said it was necessary to get money into the Australian economy as quickly as possible to sustain jobs and that the money was therefore spent because ‘it could be moved quickly into maintenance, into infrastructure, into building things, into sustaining the construction sector’.

What the minister has said is that the quality of the spending was irrelevant and the only thing that mattered was the quantity and the timing. In other words, he was taking up, in a less extreme version, the example, given by John Maynard Keynes, of stimulatory spending to avert a recession: paying men to dig holes and then to fill them in again. No consideration at all was given to the $14 billion Julia Gillard memorial assembly hall program, nor was a cost-benefit analysis done. Yet, when the minister was in opposition, a little over two years ago, he said in this House:

… there is another dimension which is often overlooked—

in addition to the quantity of government spending—

that is, the quality of government spending. What is that money being spent on? Quantity is obviously vital and the settings are vital but so too is the quality.

The approach the government took to spending money on schools stands in marked contrast to the approach the coalition took when we were in government and to the approach that we took when we set up an alternative program to the government’s $42 billion stimulus package. One of the great falsehoods told by the Rudd government, in their Orwellian way, is that the coalition opposed any form of stimulus. Nothing could be further from the truth. Our objection was to the amount of money being borrowed and spent and the manner in which it was targeted. We were focused on both the quantity and the quality. As far as schools were concerned, we pointed to the success of the Howard government’s Investing in Our Schools Program. That program, in which $1.2 billion was spent, was successful because, rather than imposing Julia Gillard memorial assembly halls on primary schools whether or not they wanted them or needed them, the federal government reached out to school communities and asked them: ‘What do you need? What are your priorities? What is your dream? How can we help you realise your ambitions for your school and your community?’ Those proposals then came back, were assessed and most were funded.

The coalition proposed an extension of that program back in February, with funding of $3 billion over three years, which would have resulted in less money being spent on these school buildings, but every dollar of it would have been spent on a project, on a building, on a structure, on a playground or on equipment that was actually wanted and needed by the school community because they would have made the decision. It would have guaranteed value for money.

The Prime Minister is currently claiming credit for the strong performance of the Australian economy relative to other developed economies. He points to the good figures on business and consumer confidence. We of course are delighted that the Australian economy is performing well, but we are appalled, as are most Australians, at the graceless and ungenerous way in which the Prime Minister constitutes himself as a latter-day Winston Smith. Yes, the Prime Minister is impersonating a character out of George Orwell’s Nineteen Eighty-Four. In that book there was a Ministry for Truth, which of course was responsible for telling lies on behalf of the government. There was something called a ‘memory hole’, into which inconvenient facts and matters of history were dropped by Mr Smith, who is now reincarnated as the Prime Minister, thereupon to be destroyed—rewriting history, in other words. That is exactly what we are seeing at the moment.

The fact of the matter is that we have done better in this downturn than other comparable developed economies because of the strong state of our economy and our public finances set up by the coalition. The true reasons for our superior performance have very little to do with the stimulus spending from the Rudd government. In fact, it is quite clear that we entered this crisis with the strongest financial system in the developed world, and that is almost entirely due to the prudential and regulatory framework put in place by the coalition. There was no banking crisis in Australia. There was no subprime crisis in Australia. Whereas other countries entered this downturn with massive public borrowings, we entered it with zero net public debt and $45 billion of cash in the bank—one of the strongest balance sheets in the world, thanks to a decade of budget surpluses, debt repayment and financial discipline presided over by the member for Higgins as our Treasurer.

We have an open and deregulated economy with a highly efficient export sector focused on our immense natural resources and our close economic relations with China and other fast-growing Asian economies. That was the result of a quarter-century of economic reform and restructuring under the Hawke, Keating and Howard governments. Unlike the Prime Minister, Mr Rudd, we recognise that there were important reforms undertaken by our predecessors. We recognise that both of the major parties have played a role in the strength of our economy today. Those of us who were unfortunate enough to have to listen to the Prime Minister’s Winston Smith impersonation at the launch of Paul Kelly’s book yesterday would have heard him say that nothing good was ever done by any party other than the Labor Party. Above all, Australia had a mature and flexible labour market. That flexibility in our labour market has been cited again and again as the reason for our strong economic growth with manageable inflation during the boom years. This is the reason we have come through this downturn with lower levels of unemployment so far than many had predicted. As the Australian’s economics editor Michael Stutchbury recently wrote:

... a more flexible job market has allowed business to cut costs by reducing working hours rather [than] sacking big chunks of its workforce. The pain has been shared around rather than concentrated.

Every reform under our administration, under the Howard government, that established that flexibility was opposed by the Labor Party. But, above all, the greatest single domestic stimulus we have seen was the substantial easing in monetary policy—the reductions in rates delivered by the Reserve Bank of Australia, whose credibility and independence also reflects the legislative protections provided to it under the coalition and which were opposed by the Labor Party.

All of these advantages, all of these strengths, reflect the legacy of economic and structural reform under governments of both political persuasions from the 1980s onwards. As I said a moment ago, we, unlike the Prime Minister, are not so graceless or conceited as to claim the credit for all of these reforms. It has been a long work by both sides of this House and this parliament. But history recalls nonetheless that during the years of the Howard government the Labor Party voted against virtually every one of the Howard government’s reforms that made Australia’s economy so strong and resilient—whether it was giving independence to the Reserve Bank, whether it was waterfront reform, whether it was the workplace relations reform or whether, indeed, it was the tax reforms and the GST, which the Prime Minister described as being the foundation or the instigation of what he called ‘fundamental injustice day’. The single biggest tax reform in our history, the most complex and challenging tax reform in our history, and one which is now part of our fiscal architecture, was strenuously opposed by the Labor Party. They opposed Work for the Dole and the crackdown on welfare rorts. They opposed employers having the right to choose their own superannuation fund and they opposed every single one of the 11 budgets under the Howard government that helped create more than two million new jobs and eliminate the $96 billion of net debt that the Keating government had left behind.

It is clear that since the end of 2007, under a very different Labor government to its 1983 and 1996 predecessors, there has been a sea change in the way economic policy is approached in this country. The Prime Minister claimed the Labor Party’s monopoly on economic reform yesterday. But we all waded through that incredible innings from the Bradman of boredom—that long essay in the Monthly—in which he denounced the whole neoliberal experiment, Howard-Costello and Hawke-Keating, as being all as bad as each other. He proclaimed, with a Whitlamesque commitment to big government, that the government should be at the centre of the economy. What we have seen is a reckless spending and a reckless borrowing that are inevitably going to lead to higher taxes and higher interest rates for Australians in the years ahead.

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

Sometimes politicians get accused of not knowing what day it is, and I must confess that this morning I was close to leaving myself open to that accusation. When I got the topic for the MPI, signed by Malcolm Turnbull, and saw the words ‘the government’s failure to prevent wasteful spending’, I had to check the date—I thought it might have been 1 April. This is a genuinely surreal proposition being advanced by the opposition. It is perhaps somewhere in the same league as the Leader of the Opposition telling us how he created the republic or saved HIH. Of all the areas in which the opposition, and particularly this Leader of the Opposition, might seek to claim the high moral ground, wasteful government spending is very much at the bottom of the list. For the opposition to be putting forward this debate is truly in the surreal world of two-way mirrors of politics.

I want to start by drawing some attention to the recent track record of the Leader of the Opposition and his party in government just to illustrate what the Rudd government inherited by way of government spending—that is, the situation when we took office at the end of 2007. We took office at the end of a period when there had been four federal budgets in a row with virtually no significant savings measures. We took office at the end of a period when, over five years, the total headcount in the federal public sector had risen from 212,000 to 247,000, a dramatic increase in the total number of public servants on the federal government payroll. We took office at a time when the federal government, at a time of economic boom with the mining boom turbocharging the Australian economy, was budgeting for five per cent real growth in spending. There are some circumstances where that kind of spending is appropriate, but not when the economy is already going along at a rapid rate and inflationary pressures are building.

We took office within weeks of an Auditor-General’s report into the Regional Partnerships scandal, in which government funding was provided to assist in the establishment of a cheese factory that had closed down before the funding had been provided, to assist in the creation of a heritage steam railway where no trains had ever run and to provide a carriage for the Queen. This, to my mind, was probably the most spectacular example of wasteful government spending. The Howard government budgeted for and provided $350,000 to subsidise a private citizen’s gift of an ornate carriage to the Queen—$350,000 of taxpayers’ money for a private citizen’s birthday gift to the Queen! That was the kind of standard that was being set for wasteful government spending by our predecessors when we took office.

We may want to actually consider the approach that was taken by the Leader of the Opposition when he was a minister. We well remember the infamous $10 billion water plan announcement. It was all dreamed up on the back of an envelope or a serviette. It was announced without consultation with the departments of treasury and finance. My predecessor as minister for finance, Senator Minchin, was asked about this the following weekend on Meet the Press. He was asked, ‘Will this be costed by the department of finance?’ His answer was, ‘Yes, this will be costed in due course.’ In other words, a program of $10 billion was announced by the government without even being costed by the department of finance.

I can move on to other spectacular examples such as the fact that, from about 2002 to 2007, the Howard government’s spending on discretionary grants rose from about $450 million to $4.5 billion per annum, a tenfold increase, as well as the scandalous misuse of taxpayers’ money on government advertising. In the last 16 months of the Howard government, according to advice from my department, $457 million was spent on government advertising. So that is the recent past of the Leader of the Opposition and the Liberal Party.

We cannot forget the Leader of the Opposition’s decision as a minister to grant $10 million, five times the amount recommended by his department, to somebody who was well known to him and lived near him in his electorate who indicated that he would be able to make rain and that he was exploring new technology that might be able to make rain. That is the recent track record of the opposition when in government.

We now consider the coalition’s track record in opposition and their practice when dealing with the question of fiscal responsibility. Numerous announcements have been made by both the Leader of the Opposition and his predecessor about their commitments to the Australian people were they to be elected to government. We have heard proposals for a 5c a litre cut in fuel tax which are yet to be formally repudiated. We have seen proposals to cut the capital gains tax on the retirement of small business owners which have never even been costed and have never been withdrawn. Proposals have been advanced to pay a proportion of the superannuation liabilities of small businesses.

Opposition Members:

Opposition members interjecting—

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

Mr Deputy Speaker, are you awake over there? I am getting persistent interjections.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The minister for finance will withdraw that comment. I am quite awake. If he wants to be flippant like that, he will be asked to sit down.

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

I withdraw. I asked for some order because I am getting persistent interjections.

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

The minister for finance has the call.

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

Thank you, Mr Deputy Speaker. I will turn to the most recent example, which is the opposition’s response to the Carbon Pollution Reduction Scheme. Their proposal, which they could not quite sign up to as policy but which they wanted us to sign up to as policy, would involve an additional hit of about $1.3 billion to the budget by the time we get to 2020 in order to buy a lot more international emissions permits than are permitted under the government’s scheme.

We have seen the opposition relentlessly block government savings initiatives in the Senate. We have seen them block the government’s alcopops initiatives for months. We have seen them block reform of Commonwealth dental services which would ensure that dental services are delivered to the people most in need. Most recently we have seen them block the government’s reforms to the private health insurance rebate, which will deliver huge amounts of savings to the budget in the longer term.

They are doing all of these things while at the same time posturing about how, if they were in government, they would have a much lower deficit and much lower debt. This is all at the same time as not announcing one single savings initiative—none. In opposition, we announced savings initiatives, sometimes ones that attracted political controversy. There has not been one savings initiative. The only proposal they have advanced that could be categorised in this way is a tax hike on cigarettes. In order to ensure that the Leader of the Opposition and other wealthy Australians can still get subsidised private health insurance, they want to increase the price of cigarettes.

That is the Liberal Party’s track record. Here they come today criticising the government for alleged wasteful spending. Their track record in opposition is one that simply cannot stack up against their rhetoric about what the government is doing. In government they set global records for waste and misuse of taxpayers’ money and global records for excessive spending. In opposition all they have consistently done is propose more spending, block government savings measures and, indeed, fail to deliver any savings options themselves.

I will turn now to the government’s record, because that has been impugned in the MPI proposal today. The government’s record is this: first, in the budget last year, a total of $33 billion of savings over four years, and $7.3 billion in the 2008-09 year. The bulk of that was in spending cuts—$5.4 billion in cuts to spending. In this year’s budget, the savings for the four years were slightly lower at $22 billion, but there were many substantial, tough decisions that will deliver much larger savings once we get to the five- to 10-year period, because the savings steadily increase over time. A number of those savings decisions were hard decisions that will inevitably attract and have already attracted significant political controversy and complaint. I mention these just as examples to indicate how important it is and how much priority the government places on getting the budget back into surplus. Reforming the private health insurance rebate, reforming indexation of the family tax benefit structure, freezing the top end family tax benefits indexation arrangements in order to—

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

28½ per cent of GDP!

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Member for North Sydney!

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

I am trying to help him!

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

No, the minister has the call.

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

Finally, among these examples is the increase in the pension age to 67.

I want to mention a number of other, more specific matters. I have given you the big picture of government efforts to initiate savings and to strengthen the budget and to get it back into surplus off the back of the huge hit to the budget that has occurred from the global financial crisis. First, we initiated a one-off two per cent efficiency dividend across virtually all departments and agencies, reducing administrative costs. Second, we reformed many grants programs—in particular, the climate change related grants programs. When we took office, there were around 65 different government grant programs purportedly dealing with climate change, some of them rather peculiar to say the least.

We have set in place a new structure with respect to rules governing discretionary grants made by ministers. There is much greater disclosure, with the requirement that any grant has to be made public on the relevant website within seven days of that decision being made. Where a decision has been made contrary to Public Service advice, it has to be fully documented. And a report has to be provided to me when a minister makes a grant in his or her own electorate. All of these changes indicate some of the dodgy things that occurred under the previous government.

We have increased funding for the Auditor-General. We have initiated massive reforms to government procurement to gradually eliminate the huge waste and inefficiency which occurred from the totally decentralised model of procurement under the previous government. We had an inquiry by an international expert, Sir Peter Gershon, into IT procurement which made a number of recommendations and which is putting in place processes that will save hundreds of millions of dollars in the short term, and billions in the long term, for the government. That process is now well underway, with the implementation process occurring.

We are following through in a similar vein in areas like travel procurement. Members may be aware that an announcement was made only a couple of days ago with respect to procurement of travel services. That will significantly improve what the government does with respect to its own services and activities. We have made similar changes with regard to communications procurement and we are working on the process of procurement of property and rental property and things of that kind.

Again, all we need to do is look back into the relatively recent past to find some examples of how this was done by our opponents when they were in office. A couple of examples of IT procurement come to mind. In the families and community services department there was one case—and in the defence department there was another—where an IT project of over $50 million was abandoned because it turned into such a disaster. More than $50 million in both cases simply went out the window.

To continue the list of initiatives: we have cut ministerial staff and we have substantially cut government advertising. Campaign advertising expenditure in the calendar year 2007 was approximately $254 million. In calendar year 2008 it was around $85 million. And of course we now have a structure where the Auditor-General scrutinises any proposed advertising campaign on the part of the Commonwealth that is going to cost more than $250,000 in order to determine that it is not political advertising but genuine advertising.

There are a couple of important things to mention in this context. First is the Operation Sunlight set of transparency reforms, which means that it is much easier for government decisions and financial arrangements to be scrutinised by outside parties and by the parliament. There is serious program information in the budget for the first time in many years, after it was taken out by the previous government. And of course there is the fact that on processes of government—on the administration of government alone, leaving aside cuts in entitlements or programs—we are saving around $5 million over five years.

I will conclude by suggesting to the opposition that they perhaps should try a somewhat different tack, that they need to think again about their line of approach. It is about time they stopped acting like a minor party in the Senate and started acting like an alternative government. I have a lot of experience of being in opposition, sadly, and one thing I know is that giving in to the temptation of behaving like a minor party in the Senate—going for the cheap point, contradicting yourself, trying to get yourself in the media at all costs no matter how silly what you are saying is—does not take you anywhere in the long term. They have got a giant shock waiting for them when they get to the election campaign. (Time expired)

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

The Minister for Finance and Deregulation has delivered two Tanners over the last few months: Tanner number 1 was the man who believed in death duties and taxes on the family home, Tanner number 2 does not believe in those things anymore, he said they were too far away. Tanner 1 was, in fact, the man who demanded value for money and quality spending, yet today we had Tanner number 2, who says, ‘Get the money out the door, it does not matter how the hell it happens. Get the money out the door.’ As he walks out of the chamber, I say to the minister that it was two plus two that equals five that brought down Winston Smith. Winston Smith is the man in 1984 that was brought down because he accepted that two plus two equals five. Here we have two Tanners: two plus two equals five.

If you believe the rhetoric of the Labor Party, they are the custodians of an economic recovery that they are unsure about. On the one hand, one person in question time praised the government for its performance during the economic downturn and recognised that the enormous amount of stimulus actually made a perfect storm redundant in the Australian economy. Perplexingly, they seem to forget a number of the key initiatives that have delivered only one quarter of negative economic growth so far. On the other hand, other ministers get up and say, ‘It is really tough out there.’ We have had examples of that from the Deputy Prime Minister.

There are five key reasons why Australia thus far has been able to survive the global financial crisis. Number 1: the economy that the Labor Party inherited was in great shape as Australia faced the impact of the global financial crisis. The Labor Party inherited an economy that had four per cent growth and four per cent unemployment, and they inherited $45 billion of net government cash assets in the bank without any government debt. So they went into the storm with a budget and an economy that was at a record speed and at record levels of performance.

Number 2: the government inherited a financial system which was the envy of the world. Through the Wallis reforms and the Financial Services Reform Act, which the Labor Party spoke against at times and moved amendments to, and through excellent financial management by the coalition government, they did not inherit a Lehman Brothers or a Bear Stearns or a Merrill Lynch or a Royal Bank of Scotland—they did not have one of the major banks in Australia end up as the equivalent of Citigroup. In fact, the four major Australian banks entered into the top 12 banks in the world and, as my leader said on Sunday, ‘The top four banks have had a very good war,’ delivering, perhaps, up to $16 billion of accumulated profit in a period that covers the global financial crisis.

It is also the case that they inherited very good regulators: APRA, the Australian Prudential Regulation Authority, which was set up by the coalition; ASIC, which was set up by the coalition; and the Reserve Bank, without the burden of prudential supervision. They inherited three key regulators that, with separated powers, on the one hand were able to deal with the credit crisis and deal separately with the potential impact on the balance sheet of the banks on the other.

The third reason is monetary policy. Do you remember the Labor Party blaming us, the coalition, for all of those increases in interest rates? I have got some news for them: we are going to apply the same test to Labor that they applied for 12 months—to make the government responsible for every single interest rate increase. The Liberal Party had monetary policy in place through the Reserve Bank that reduced the cash rates from 7¼ per cent to just three per cent in an incredibly short period of time. That gave the Australian public the opportunity to significantly reduce the after-tax costs of a mortgage on their households.

Australia is blessed, in one sense, with a high-transmission factor; that is, the majority of Australians have variable rate mortgages and when the Reserve Bank moves it flows directly to the bottom line of the Australian people, and the same on the way up. The difference between the last time that interest rates went up and the next time that interest rates go up is that we had a strongly growing economy last time, and households had a 22 per cent increase in real wages. Next time and if, as the markets say, interest rates are going to go up by up to 200 basis points by September next year, Australians are going to be hit with a double whammy: Labor’s cocktail of higher interest rates and higher unemployment. Last time interest rates were rising, unemployment was dropping—it dropped to four per cent. Under Labor you are going to find the Australian people facing rising interest rates and rising unemployment.

The fourth reason Australia has been able to survive the economic crisis was because of our terms of trade. We have had the benefit of a flexible exchange rate, an initiative undertaken by the Hawke government, with the support of the coalition, to float the Australian dollar. When the Australian dollar fell to 48c against the US dollar during the Asian financial crisis the coalition did not panic. It held its nerve and we maintained the dignity of an independent and floating exchange rate. That has delivered substantial benefit to this contentious mob, who actually do not understand the benefit of a floating exchange rate. When we were near parity with the US dollar it dropped to 60c at exactly the right time. It is back up to over 80c, and it has delivered the best terms of trade that anyone could have hoped for during an economic crisis. The terms of trade today are more favourable to the Rudd Labor government than they were at any time under the coalition. As of today the terms of trade are more favourable than the day we lost government in 2007.

The fifth reason why Australia has survived the global financial crisis is stimulus spending. I want to recognise that because we always have recognised it. Our difference with this government is that they have spent too much money. The best evidence that the stimulus package, the total government expenditure, has not delivered is that the economic results that they are claiming credit for are due to the simple fact that since the 2008 budget this government have announced $106 billion of new spending initiatives and 40 per cent of it kicks in after 1 July next year. So at the same time as interest rates are rising—according to the markets, they will be up 200 basis points around the middle of next year—40 per cent, $40 billion, of extra, new additional spending kicks in until 2013.

I say to the Labor Party: stop spending the money. It is not yours; it belongs to taxpayers, and they are going to have to pay it off for years to come. If you stop spending so much money, it will put downward pressure on interest rates. At the moment your spending is putting upward pressure on interest rates. It is going to lead to higher taxes, and Australians are going to have seven years of deficit to pay for one quarter of negative economic growth. The Labor Party’s contempt for the taxpayers of Australia is legendary, but they are taking it to an all-time high with this massive spending binge.

Ms Catherine King (Ballarat, Australian Labor Party) Share this | Link to this | Hansard source

Listening to the contribution of the Leader of the Opposition this afternoon, with his rolling negativity on the economy, I really had to stop and have a good think about whether I was actually here in the House of Representatives chamber, because the only conclusion that you could possibly draw from the Leader of the Opposition’s contribution is: just what sort of parallel universe is this bloke living in? Perhaps he actually thinks he is an avatar in Second Life, in a world where he is not just Prime Minister but the world economic supreme being who knows all, sees all and is the world economy—an economy where there has been no crisis, merely a little blip. But the reality is that even Second Life has been hit by the global financial crisis. This is just how inconsistent the Leader of the Opposition has been on this issue.

First he told us that we were exaggerating the scale of the global financial crisis. Then he told us that there was no need for stimulus to the economy, voting against the government’s measures. Then each time there has been data on sectors of the economy, whether it is the retail sector not having as sharp a downturn as expected or the building and construction industry just holding up, he has said that it has absolutely nothing to do with the government’s stimulus package. Now he is telling us, just as there are very early signs that some elements—and I emphasise, some elements—of the economy are improving slowly, that we should go through a slash and burn exercise and cut the remaining stimulus package. Counter to advice of the IMF, the OECD and the Reserve Bank, Malcolm knows better.

If we take all of these things together, the views of the Leader of the Opposition are that the global financial crisis is really not happening; that if it is happening then it does not need to be responded to; that if it does need to be responded to then it does not need to be responded to with much; that even if we did respond a little, it really would not have an effect; that even if it is having any effect, it is nothing to do with the response; and, finally, that if it is actually having an effect, it is now time to stop responding despite the fact that people are still losing their jobs, that private sector capital is still not flowing into the economy and that funding from the building and construction component of the stimulus has only just started to flow. If you are confused, imagine what a member of the coalition would be feeling at the moment when trying to be consistent with their leader’s views. No wonder many of them have actually stopped trying and said, ‘Blow it; I’m going to say whatever I think.’

Let us remember where we actually are. When we came into office we were following a government that had done little to set this nation up for long-term productive growth. Those members opposite failed in a number of key ways. They failed to invest on the back of the mining boom. They failed to allocate funding across our nation fairly. They failed to set up our nation’s economy in critical areas of education, health and roads and rail infrastructure. They sat on their hands and watched the clock tick by, with no new ideas. Now it seems that nothing has changed for those opposite. The clock is still ticking and they are still recommending that we all sit on our hands. They have no new ideas, no consistent policy and no alternative government.

When this government announced our economic stimulus, we did so on the basis of a number of factors. The main ones were that the world was facing the onset of the global financial crisis and the possibility of Australia falling into a recession. Also, we knew that without action Australian jobs were at risk. So we acted. We did not sit on our hands while thousands of Australians lost their jobs; we acted. We invested in productive areas of the economy: in education, health and infrastructure. What this stimulus has done, and will continue to do, is provide support to our nation’s economy when economies around the world are at their weakest. The Rudd government first acted to support families with cash payments that flowed through to the retail sector. Second, we invested in crucial infrastructure that could be delivered in all regions in a reasonable time frame. Then, finally, we invested in large long-term infrastructure to support jobs into the future, creating three phases of economic stimulus to provide continued support to the Australian economy.

We now have the Leader of the Opposition with this MPI that reflects his underlying objection to taking action and protecting Australian workers’ jobs through economic stimulus. Our national economy and subsequently the thousands of businesses and workers who drive it have faced tough times over the course of the past year, and although they have battled hard, worked hard, now is not the time to pull back on our efforts. Without the economic stimulus package there is no doubt that Australia would have been in recession. The last national accounts showed that without our swift action Australia would have experienced three consecutive quarters of negative growth.

But those opposite are saying we are out of the woods and that the stimulus should now stop. I am not sure where the opposition is getting its advice from. It is certainly not from the International Monetary Fund, the OECD, the Reserve Bank or Treasury—they are all expecting that Australia will experience sub-trend growth over the coming period. These expectations are not on the basis that we halt all economic stimulus today. These expectations are on the basis that the stimulus package, as originally planned, is fully implemented. The Rudd government has a plan to withdraw as the economy recovers, but this does not mean ripping away funds from regional communities in particular who are relying on Australian government support.

This year the House Standing Committee on Infrastructure, Transport, Regional Development and Local Government, which I chair, has been travelling across the country, to regional Australia, as part of the inquiry into the impact on our regions of the global financial crisis. Let me debunk some of the things the Leader of the Opposition seems to want us to believe. Regional communities have made it absolutely clear to me and members of this committee that combating the impact of the global financial crisis on regional and rural Australia is critical to their long-term prosperity. Regional Australia is experiencing continued unemployment growth. Unemployment has already risen by almost two percentage points, and nowhere is this more evident than in regional areas. Regional industry is telling us that the programs announced by the Rudd government are critical to their survival. Business after business and local government after local government appearing before the committee have given evidence of the stimulus payments supporting local economies, from Geraldton to Broken Hill to Townsville to Ararat.

To put the brakes on now would be disastrous for communities who are seeing many projects just on the verge of implementation. If the opposition leader is sincere in his belief that our spending has been wasteful then he really needs to get out of his Sydney office and have a chat to the thousands of workers and businesses across regional Australia who are relying on this stimulus package and the nation’s leaders to assist them. If we do not continue to act we put at risk thousands of jobs. The Liberals’ plan would see over 200,000 Australians out of work.

The Leader of the Opposition cannot say on the one hand that we should cut spending and on the other that we should not. In the last budget we put forward a number of savings measures to combat the ripping of $210 billion from the government’s bottom line as a result of the global financial crisis. The opposition decided to block these savings measures. They blocked these measures because the opposition leader wants it both ways. It is hypocritical for the opposition leader to introduce an MPI attacking the government’s fiscal strategy when he is the very person who is blocking savings measures that would have assisted in the very area of his concern. A perfect example is the private health insurance rebate, which is a key savings measure to be blocked by members opposite. They argue that they would have a lower deficit and lower debt yet they have not introduced a single savings measure of their own, other than a tax on cigarettes, nor supported savings measures introduced by the government.

This government does have a clear plan to bring the budget back into surplus by 2015-16. As part of the 2009-10 budget, the government made tough choices to deliver $22.6 billion in savings over four years. Yet many of these savings measures were blocked by those opposite. These were savings that were expected to halve the deficit over the next three years and see it return to surplus in 2015-16. Again, these measures have been blocked consistently by an opposition failing consistently to introduce savings measures of their own.

The former government squandered the economic prosperity from the mining boom. They had the opportunity, whilst such an unprecedented level of government revenue was coming in, to invest in productive areas of the economy—infrastructure, education, schools, road and rail. They declined to do so. We, in response to an unprecedented financial crisis, have invested important stimulus that will boost the supply side of the economy so that the economy has a greater productive capacity without a trigger for inflation. We have acted to protect Australian jobs. We have acted to invest in the nation for the short, the medium and the longer term. And we make no absolutely no apologies for continuing to act in the interests of the Australian people on this issue. They expect no less of this federal parliament.

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

In March this year, the finance minister was quoted by AAP as saying that the government debt burden kept him awake at night. In March of this year, the government debt burden was already keeping the finance minister awake. Since that time he has been part of a government that has continued to borrow $2 billion a week. This minister must be pacing endlessly around his room in the evenings now, because the debt continues to grow. And, unlike what was said in the intervention from the previous speaker, the reality is that Labor has no plan whatsoever to ever pay that money back. The finance minister has good reason to be sleepless every night. Yet he is a part of a government that continues to go out and spend, spend, spend.

Indeed, the only criteria for choosing spending projects when the government was designing its stimulus package was: ‘How fast can we get the money out the door? It doesn’t matter where it goes, so long as it goes.’ This was an irresponsible approach to financial management. There was no feasibility study, no investment plan and no discussion about the relative merits of projects, just ‘Let’s get it all out the door.’ Indeed, billions of dollars went out, on simple formulas, to schools that were under a particular size or over a particular size. The fact that a school may have been slated for closure did not stop it being funded. The fact that there may have been only one student did not mean that he could not have a $250,000 library. I do not know how many books he is going to have to share amongst himself! This is the kind of stimulus package that this government has said we should be supporting.

The Prime Minister said before the election that he was a fiscal conservative and that he would stop the reckless spending of the Howard government. Yet he has been out there spending, spending, spending, without any comprehension of the value and the worth of projects that are being funded. Today in the Australian Financial Review we saw further evidence of the way in which this government is spending its money. It is clearly devoted not to stimulating the economy but to stimulating Labor’s electoral chances in their marginal seats. If you look through the spending in relation to many of these local discretionary programs, the hand of the minister for regional development, Mr Albanese, is very clear. The Labor marginal seats, particularly in New South Wales, have been slated for extra-generous attention.

In his pathetic attempt to try and justify it today, the minister dragged in other spending programs to try and reduce the starkness of this spending focus on Labor electorates. In Victoria, Labor electorates received $100 million compared with just $57 million in coalition seats. In New South Wales, Eden-Monaro, the famous bellwether seat at election time, gets $4.4 million. Bennelong, a seat narrowly held by the new member, gets $5.9 million. Swan, in Western Australia, gets $4.5 million for a seat Labor wants to win. And $9.1 million was spent to try and shore up the seat of Brand, which is one which is always going to be close to the line. That is how Labor chose where it would spend its money in relation to this stimulus package: in the marginal seats. Of course they have much form in relation to that. Remember, 82 per cent of Labor’s off-highway network roads program funding is going to Labor electorates. Almost 100 per cent of the funding for the Better Regions program has gone to Labor seats and to fulfil the promises made by Labor candidates at the last election.

If you do not live in a Labor seat, you cannot even apply for the money. It has already been spent, with 100 per cent of it going to Labor electorates. It is a rolled gold rort. We know it is a rort. This minister for regional development is devoting all of his efforts into funnelling and shovelling this money into seats held by his mates. But the reality is that this government has not carefully and properly managed its program. We are going to get about $10 billion worth of school buildings at a cost of $16 billion as billions are raked off the top for commissions to the state governments and to pay consultant fees that get no results. I visited a school the other day that expects to get $100,000 worth of painting and plastering out of a $200,000 grant. (Time expired)

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

The member for Wide Bay, in his contribution, was talking about how fast we can get the money out the door. That reminded me that, 51 minutes prior to the last election being called, the then parliamentary secretary of his party, the National Party, spent over $3 million in allocations to Regional Partnerships. That was pretty fast. I think that takes the cake for getting the money out the door really fast—51 minutes prior to the election.

Just having to sit there and listen to the humbug about the spending, I remembered very well that, with the Regional Partnerships, one-third of the funding went to just 10 coalition electorates. All of this was documented. It was not only documented but was also in an ANAO report. It said of Regional Partnerships:

... the manner in which the Programme had been administered ... had ... fallen short of an acceptable standard of public administration ...

It said a number of other things as well. It also said—and we have heard here today—that there was the $1.5 million for the Gunnedah ethanol plant that does not exist. We know that $420,000 went for the cheese factory that closed down and also an extra $22,000 went to it three months after it closed. It was unbelievable, sitting there listening to the member for Wide Bay.

One other thing: today the member for Wentworth was talking about quality and saying that was really the issue now. Before that, though, it was quantity. Then we had the member for North Sydney saying, no, it is really about quantity. So what is it? Is it quality? Is it quantity? We do not know what it is. It shows the division that exists within the opposition and within their party. They do not where they are on this. You have some people out there applauding the stimulus package, like the member for Cowper. In the newsletters he does in his local electorate he talks about how wonderful it is, welcomes it and explains it to the people in his seat. He says how good it is. How can it be wasteful spending—and that is what the accusation is—when every economic organisation, institution and commentator has endorsed the government’s stimulus plan?

The fiscal stimulus has recognised that it has kept people in jobs, kept retail figures up, was responsible spending and was timely, targeted and temporary. We all know that. They are the inbuilt elements of a stimulus package. It has to be timely and it was; the government acted decisively. It has to be well targeted and it has to be temporary. All those elements exist. How can it be wasteful spending? I look at my electorate of Page. The money that has gone into schools is keeping people in jobs, building infrastructure and providing better facilities to students and teachers. Home insulation: how could that be wasteful spending? In my area there are already 249 applications.

Just the other day, the Parliamentary Secretary for Employment—the member for Blaxland—and Bill Kelty were in Lismore. We had a jobs forum. A local company, Power Results, had 20 employees and now have 130 because of the insulation. The parliamentary secretary, Bill Kelty and I went and met the workers. We saw them about to install the insulation, and we talked to them. They had also come off jobs, they were long-term unemployed, they had come into the workforce and they talked about what that meant. That is what this is about. Stimulus is about nation building, recovery and supporting jobs—jobs for now and jobs for the future. These guys told us what it meant to them to have a job. Firstly, it meant money; secondly, it meant they had some sort of a life, they had connection and they were somebody in the community. We spent time with them. How could that be wasteful spending? Indeed it is not.

Last week in the Northern Star, the local newspaper, the editorial talked about it. The headline on Thursday, 3 September was ‘In the market for a boost to confidence’. It said:

So far we are the only developed country in the world to avoid a recession in the world’s major economic downturn.

           …         …         …

The Coalition must be seething and will continue to play up the country’s debt as the legacy of this Labor Government.

But thanks to the Labor Government … the country has beaten the odds— (Time expired)

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

Order! The discussion is now concluded.