Wednesday, 24 June 2009
Matters of Public Importance
You deny it now, but go back and look at the comments made in this place during question time all through last year up until October. Look at what Senator Conroy was saying. Look at what was said in the other place about the economy and inflation, and how it was overheating and how we needed to talk it down and how we need interest rates to go up to dampen the economy. What effect has that had? In estimates it became clear. In February last year, the severity of this downturn was made clear. There was a meeting with Dr Henry and the Treasury at which they discussed what they might need to do. In fact, from memory they were talking about stimulus packages. That is what is on the Hansard. That was in February last year, yet for the following seven or eight months they continued to talk down the economy and talk up inflation. They continued to talk about how we needed to deal with the inflationary mess and put the inflation genie back in the bottle, as a result of the Howard years.
What effect did that have on Australia’s economy—that 10 months of talking the economy down? There was 10 months of talking about inflation and interest rate hikes to try and dampen the economy. What effect has that had on government revenues? What effect has that had on jobs? Where would we be today if the government had not spent so much time last year on a political ruse trying to talk down the economy just so it could stick something to the previous government? We are so much worse off now than we would have been if the government had taken a responsible attitude when it first got into power and tried to talk things up and pat us on the back for the good things we had done.
But where are we going now? A simple calculation on a bank debt calculator shows that, over a 20-year loan life, a debt of $300 billion would require repayment of principal and interest of about $25 billion, assuming an interest rate of 4.5 per cent. Let me restate that: over 20 years, with a debt of $300 billion and an interest rate of 4.5 per cent, you would need to pay at least $25 billion a year. So, every year, $25 billion of taxpayers’ money has to be found to repay that debt, assuming you are going to pay it off over 20 years. But the government is not claiming it can pay it off in 20 years. No, the government says it can pay it off in less than 15 years. Even more unbelievable, it says it can achieve this outstanding result without starting to make repayments for a number of years.
The Australian people are expected to believe that a debt of more than $300 billion can be repaid in around 10 years, which would require an annual repayment of over $40 million a year once repayments start. Even if this were believable, it all rests on future growth projections that are just as fanciful. I ask the government: what if those projections do not eventuate? What if Australia does not get the predicted 4.5 growth for year after year—an unprecedented period? What impact will this have on the government’s ability to repay the $10,000 debt that Labor has racked up against every man, woman and child in Australia? What impact will it have on projected revenues that are earmarked to repay the debt? Even more importantly, what impact will it have on the government’s ability to continue its reckless spending?
As mentioned, Labor governments in this country do not have a great record on fiscal discipline. If these projections do not eventuate, the reality is that they will be borrowing far more than the $315 billion gross debt that has already been disclosed. We have a Prime Minister who believes that spending, debt and deficit are the answer to the global financial crisis. We have a Prime Minister who would send us into debt, the likes of which has not been seen in this great country’s history. When did Keynesian economics become fashionable again?