Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

The Treasurer has meticulously created a falsehood about our debt levels, used it to savage the budgets of families and pensioners on the basis that he needed to reduce the debt, but at the end of the day failed to decrease the debt at all relative to the fiscal position at the election. It is all pain and no gain.

To understand the sleight of hand, we need to look at how the Treasurer managed to double the deficit in just four months between the Pre-Election Fiscal Outlook in August 2013 and the Mid-Year Economic Outlook in December, then how he extrapolated that exaggeration through another seven years to 2023-24 to get the figure he uses to justify savage cuts to pensioners and families. Senate estimates gives us a bit of perspective on the two EFOs. Treasury Secretary Martin Parkinson was asked about PEFO and MYEFO and explained the difference. About MYEFO, he said it is always a decision of government. About PEFO, he said that PEFO is the only document that the Treasury and the Department of Finance have their names on. In fact, it is not even Treasury and the Department of Finance; it is the two secretaries. All other documents are documents of the government. So PEFO is independent of either Labor or Liberal influence, and MYEFO is very much the Treasurer's EFO.

MYEFO shows a worsening of the underlying cash balance for the year 2013-14, with an increase in the deficit from $30 billion to $47 billion, an additional $17 billion hole in the budget relative to the independent PEFO before the election. $10.3 billion of that is caused by the Treasurer's spending decisions shortly after the election, including plans to repeal the carbon tax and giving $8.8 billion to the Reserve Bank. The other $6.6 billion and most of the changes through the following years up to 2016-17 are caused by more pessimistic assumptions of higher unemployment, slower growth and reduced tax revenue. Whether the Treasury got the assumptions right in PEFO in August or whether it was something happening in the economy or conversations in the Treasurer's office after the election that caused Treasury to downgrade their projections remains to be seen. So at that point the Treasurer had doubled the size of the accumulated deficit to 2016-17 and was using his new 'improved' deficit, including his own new spending, to beat up on the previous Labor government. Worse, it was an excuse to rip away support for the most vulnerable people in our community.

But then it gets worse. A budget press release from the Treasurer shows how Mr Hockey supercharges the deception by taking the already doubled deficit figure of $123 billion at the end of 2016-17, assuming no change in trajectory for the following seven years, coming up with a figure of $667 billion in debt for 2023-24, then accusing Labor of having left that debt in 2023, when we lost office in 2013. Every time any member of government or media says, 'Labor left over $600 billion in debt,' they are referring to a fictional supercharged figure for 2023-24. It took a lot of effort to make the figure up, so it's not surprising that they are using it over and over again.

Now comes the third strike. Having doubled the debt, extrapolated it out to 2023-24 in order to get a figure big enough to scare people, having used it to beat up on pensioners and families, you would expect that the budget projections would show an improvement—but they don't. The debt and deficit are worse in the budget than the projected PEFO for the budget year and for every year of the forward estimates out to 2017-18. Relative to the independent Treasury and Finance picture of the economy immediately prior to the election, they have not reduced either the debt or the deficit—in fact, it is worse. So how does that happen? How can a government that is prepared to inflict so much pain on the Australian people in order to 'fix the deficit' not manage to reduce the deficit at all? Well, they planned on going on a bit of a spending spree. Additional items in the budget on both sides of the ledger reflect the priorities of the government, most notably the cuts to pensions, deregulation of universities, cuts to science and R&D, cuts to families and GP tax, but $5 billion per year for the paid parental leave scheme, presumably in the contingency reserve because there is no budget line; tax cuts for mining through the abolition of the Minerals Resource Rent Tax; cuts for big business through the repeal of the price on carbon; tax cuts for business generally; cuts to many infrastructure projects including all urban rail; new expenditure on infrastructure; and $20 billion over several years to the medical research fund. At the end of the day, add it all up, put their priorities in and it is worse than PEFO for each year: $5.8 billion in 2014-15, then $12.4 billion in 2015-16, then $6.4 billion in 2016-17. They actually bring the budget back to surplus some two years later than the PEFO projections. The greatest fiction of all is that they now claim that all the pain inflicted on families and pensioners was necessary to fix their largely inflated debt and deficit disaster, and they didn't.