David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

COLEMAN () (): The world is at a dangerous juncture. The combination of rising security threats and weakening finances will cause great challenges over the next decade. Australia's financial position is much stronger than virtually all of our peer nations, but that strength is not assured in the future and we must defend it.

The coalition has always stood for the bedrocks that make Australia strong: personal freedom and sound financial management. We believe that people's innate desire to pursue their dreams is the most powerful force for good in our society. We believe that government must always manage its finances well so that our nation has resources when it really needs them. Today, Australia's level of gross government debt as a proportion of the economy, at 37 per cent, is much lower than our peers into the developed world. That didn't happen by accident. After years of exceptional economic management, Prime Minister Howard and Treasurer Costello left Australia with no net debt and $50 billion in the bank. The Rudd-Gillard Labor government spent all of the $50 billion and then left Australia with debt of more than $300 billion and a deficit of $44 billion by 2013-14. Throughout the term of the coalition, this deficit level was consistently reduced to the point where a surplus was recorded in 2018-19. This was achieved through a disciplined focus on reining in government spending, expertly led by former finance minister Mathias Cormann.

In early 2020 COVID hit, and extraordinary measures were put in place—they had to be. Without JobKeeper, Australia would have experienced unemployment and social dislocation unseen since the Great Depression. JobKeeper worked, and we came out of the pandemic in a better position than virtually any other nation on earth. The pandemic has eroded the finances of the developed world, leading to debt levels that have no precedent in modern history other than during the Second World War. In the United States, the UK and France, central government debt is bigger than the size of the entire economy at more than 100 per cent of GDP. In the world's third largest economy, Japan, central government debt is more than 200 per cent of GDP.

The risks posed by high debt aren't academic. Many nations have been pulverised by the impact of debt, including some formerly great economies. Even the biggest economies in the world have limits to how much they can borrow. The recent reaction to the UK mini budget is instructive. Debt markets severely marked down the UK economy, sending the price of borrowing up for both the government and homeowners. In effect, the market was saying, 'Enough debt,' forcing the hand of the UK government. This is not a good place to be, as it places too much power in the hands of debt holders relative to the sovereign government. We must never allow that to happen here.

On our side of the House, we feel this issue in our bones. Many of us have run businesses, and we know that too much debt is a dangerously bad thing. But the Labor Party doesn't understand that. During COVID, they wanted to spend far more than the coalition. They wanted to extend the JobKeeper program and they wanted to pay people to get vaccinated, amongst other things. All up, their COVID-era policies would have seen Australia's debt increase by $80 billion. Since coming to government, Labor's own budget papers say that its decisions will increase deficits and debt. Three years from now, its election commitments and other priorities will make the deficit $6 billion worse than it would otherwise have been—it's on page 78 of budget paper 1. We can't see what happens after that because the forecasts don't go that far, but we can be sure it will be even more.

As Liberals, we are instinctively opposed to charging Australians more to pay for the cost of government, but it is very clear that this is where the government is headed through its national conversation on the budget. A good national conversation for the government would be, 'So far, our decisions have increased debt and deficit, but we're going to change that to reduce our debt levels with a sensible approach to spending.' But the real national conversation is going to be, 'We the government have increased debt and deficit, and our spending plans are going to increase it by much more, so you're going to have to pay more to us in tax.' We don't need a tax. We need sensible budget management, something the coalition has always provided and that Labor fails on every time. This issue always matters, but in unsettled times it matters even more.