Wednesday, 24 June 2009
Matters of Public Importance
It is with pleasure that I rise to speak about the debt that this nation is being plunged into. I spoke some months back about Labor’s traditional management of money. I look back on the history at a federal level; when have the Labor Party in government ever reduced a debt before they were thrown out of government? I look back at the Whitlam era and I see the outrageous borrowing and spending back in the seventies. Of course the Whitlam government was thrown out by a huge majority. Then I look at the Hawke-Keating government. Mr Keating was the so-called world’s greatest Treasurer at the time, the very same time when I was paying 25.25 per cent interest rates along with my brother and our families on the land. I believe the debt was around $36 billion in 1983, when the Hawke government was elected, and by the time it was thrown out 13 years later that debt had grown to a massive $96 billion, growing at a rate of $10 billion a year.
I referred to this growing of debt, mortgaging our children’s futures away, in my maiden speech to the Senate on 15 September last year. I drew an analogy between running the family farm and running our country. I said that if a family farm carries too much debt then when the tough times come it cannot survive financially. That is what is happening now. We have seen this government in this current financial year budget for a surplus of $22.5 billion, but the reality is that when this financial year concludes in only a few days time there is going to be around $30 billion of debt—a turnaround of more than $52 billion in the 12 months of this current financial year.
In the following financial year the budget forecast is for a deficit of $58 billion, so we are going to see $112 billion or $113 billion in government debt within 12 months. It took the previous government 10 years to pay off the $96 billion debt, and the forecasts are that the gross debt of this government will rise to a massive $315 billion. Let’s look at an interest rate of just six per cent. Six per cent interest on $300 billion is $18 billion a year, and we will be looking at another $900 million for the extra $15 billion, so we are going to be looking at about $19 billion a year if this is allowed to proceed—to pay interest only. The point I make is that, in the future, when a government sets a budget it will have to take out almost $19 billion—assuming interest rates are not above six per cent—before they pay one nurse in an aged-care facility, before they put one bullet in the rifle of one of our soldiers. Before they pay anything at all, they have to find $19 billion, and that is without paying even one cent of principal off the debt. These are frightening figures.
The alarming thing about all this is that, when the whole economy turns around—and hopefully that will be soon—the recovery is going to be very slow. Because we will have such a huge debt, no doubt taxes will have to rise. Because the government is borrowing up to $3 billion a week, that in itself is putting enormous upward pressure on interest rates. Money is like any other commodity: when demand exceeds supply, its price rises. We have seen the government causing huge demand for money through its outrageous spending. But you can see that is nothing new if you look back to state governments in the eighties and nineties. I remember well when Victoria basically went bankrupt with a $60 billion debt. South Australia was the same, Western Australia was the same and Tasmania is also included—of course, all under the careful financial management of the Labor Party. As the debt continues to build, the big question is: who is going to pay it off?
I want to make a point about where this money is being spent. There have been questions during question time about Building the Education Revolution and where the money is going. I am not going to name anyone, but I am going to give an example of how Building the Education Revolution is a farce. We have all read and heard about schools getting facilities they do not need because there is nothing wrong with the existing ones. What about the inflated prices being tendered and accepted? I can give one instance in north-west New South Wales where a reputable licensed builder tendered for a covered outdoor learning area, a COLA, at a particular school. His tender for this COLA, with walkways included, was $60,000. But his quote was not in the ballpark of the accepted tender.
A Sydney firm came in with a price of $228,000, and that did not include the walkways. Guess who won the tender? It was not the local builder in north-west New South Wales, with a tender of $60,000 to build the COLA, including the walkways. It was a Sydney firm, whose tender excluded the construction of walkways, with a tender of $228,000—four times the price. The small builder was a reputable licensed builder who I believe had done substantial work for the public sector prior to applying for this tender. This scenario has been played out in many schools in north-west New South Wales. This Sydney firm is getting many of the school contracts, so how is the Australian taxpayer getting value for money? This Sydney firm is winning these contracts with hugely expensive quotes, far above local builders’ quotes. That, to me, is a blatant waste of not only taxpayers’ money but borrowed money as well.
Surely, if the government were going to plunge our future generations into debt, they would spend the money wisely. They would put it into infrastructure—rail, road, ports and all the things we need to give us a more efficient economy—so we can earn more later and have some hope of paying the interest and principal on this debt. But, no, it is being wasted on things like school buildings, where builders tender $60,000 to build a project, including walkways, and the company that gets the tender charges $228,000. That is a disgrace, and I can assure you, Madam Acting Deputy President, that when we return in August you are going to hear many more of these cases. It is time that the Senate had a good look and an inquiry into why these sorts of tenders are being accepted and why money is simply being wasted, with people who tender at four times the value actually winning the tender. To me, that is disgraceful. As I said, you will not see the money going into useful things. Do you notice where this money is being spent?