Thursday, 23 June 2011
Questions without Notice
Square Kilometre Array
Tonight I cannot help myself: I must speak on this issue. This is an issue that has disturbed me for quite some time with this current government. It has disturbed me to such an extent that I lost my finance portfolio. But at the time, I said the outrageous thing that our debt was starting to get out of control. I also made comments that the position of America with their debt was becoming untenable. I have received some sort of succour now that those same comments are reported and repeated by David Murray, Noel Ferguson and John Roskam. There have been articles written on it—too late for me, but not too late for Australia.
I think we should really flag exactly what is going on here. Debt does not lie. Debt is the absolute key performance indicator of how you are going financially. You can have all the beautiful stories you like—all the wondrous stories that I used to see as an accountant and in my five years in banking—about how things are actually going. But you just say to them, 'What do you owe the bank? Are you paying off your debts? Are you getting further into trouble?' Because debt does not lie: you cannot get around it. It is there, on your bank statement. You can give wonderful stories about net debt and this debt and that debt but it is your gross figure, easily pronounced on your bank statement.
The gross figure for our nation comes from a thing called the Commonwealth Inscribed Stock Act. That is where it comes from. Australian government securities outstanding: easily found at the Australian Office of Financial Management website. Currently it is $187 billion. Actually, in the last week they paid a little bit of it back, but that is just because it is the interim period between the roll of bills and it will blow right back out to where it was at $196 billion. The reason we are in here tonight, and the reason they sneaked in this extension of debt is because if we did not extend this debt the government would close down. It would all finish; the cheques would bounce and we would have no money. They said as much in Senate estimates, where they clearly said, 'Oh, that would be so irresponsible not to extend the debt limit,' because if you did not extend the debt limit the place would just come to a conclusion.
So we are extending the debt limit; we are extending the overdraft to try to keep the place running. But we are not paying the money back. There is always the promise of paying the money back but they never actually deliver on their promise of paying the money back. I remember reading back in 2009 that the Treasurer, Wayne Maxwell Swan, was going to give us a temporary increase in the limit—from $75 billion, up by $125 billion to $200 billion. It was temporary, he said, because China was going to fall backwards. It was basically going to go into recession, along with India. Neither China nor India missed a beat. They charged ahead. Not only did they charge ahead but our debt charged ahead and went from a temporary increase to a permanent increase. The premise of the Treasurer's wish for an extension was not there, but the debt certainly was. You could see where it was. If you could see a source and application of funds statement—'Where is the money?', that is what they always ask—you would see that it is in ceiling insulation for the rats and the mice to sleep on at night. It is in school halls. It was in that manic $22.8 billion they sent out in $900 cheques. I would like to remind the Senate that I voted against each one.
Where has this led us? We have a gun held to our head to basically take this debt ceiling out and, at the same time as that debt ceiling is going out, we have all the other fiascos around this nation—all caused by the Australian Labor Party. We have Queensland heading towards a net debt position of about $85 billion in 2014-15. We have New South Wales heading to a net debt position of $71 billion. We have Victoria heading towards a net debt position of $47 billion. With all these structural dislocations the debt adds up. Then we have this other fiasco: NBN, the next budget nightmare. We are going to borrow $27 billion and then another $10 billion on top of that and then, magically, we are going to make money. We will magically find the rest of the money to get us out to a $56 billion spend. I can tell you one thing: the Treasurer will not find the money; he will be borrowing that money as well—or shutting it down. That debt also gets added in, and on and on it goes.
David Murray clearly stated the other day in the paper that we have to really watch ourselves. I seem to remember saying something very similar myself a couple of years ago. He mentioned half a trillion. Isn't this marvellous? Under this crowd, we have got ourselves into the trillion club. We can actually start talking about our debt as a portion of a trillion.
What is happening to private enterprise? Money is being sucked out of the economy. On the news tonight we hear that the people in Sydney, the businesses, just do not have the cash. It is not there. We hear it in Brisbane. We even hear it in small regional towns, such as Dalby, that the money is not there—because he is sucking the money out of the economy. Is it just the view held here that the debt is out of control? No. I have got a paper from Dr Ken Rogoff, from the Harvard Centre for Economic Policy Research. He has got no barrow to push. I do not know him; I have never met him. What does Dr Ken Rogoff say? He talks about the cumulative increase in real public debt since 2007—surprise, surprise, that is when the Labor Party got voted in. Let us go through them. The worst was Iceland; that stands to reason. The next was Ireland, the next one—not Spain, not the US, not the UK, not Greece, not Portugal, not Chile, not Mexico—is Australia. Congratulations! You are No. 3. You have done an incredible job. Since you have been here, you have brought about the third-biggest cumulative increase in real public debt since 2007. Well done! He is a genius, our Treasurer. What an omnipotent light! What an orb of financial wonder! The debt has got to be paid back. There are real people who really want their money back. The Chinese really want their money back. The people we owe the most money to are the Chinese government. What a wonderful position we have got our nation into. They want their money back. The people in the Middle East and the superannuation funds of Japan—they all want their money back. We have to roll this money. We have to reapply with our begging bowl and say, 'Please give us the money.'
We say, 'It's all right, because we have got a mineral based economy and it's bullish and we are sucking in funds because we are a commodity-based economy.' Well may that be the case, but I hope it stays that way, because if it does not you are going to be a beggar with a bowl in the international money market trying to prop up your budget. You did it to us. The Labor Party did this to us.
The Australian people have got to realise what happens when this comes unstuck. What happens when it comes unstuck? What happens to us is exactly what happens everywhere else. There is a complete constriction on the availability of funds for public expenditure. There is a complete restriction on the capacity to meet your Pharmaceutical Benefits Scheme requirements. So the pensioner, when they go to the chemist and ask for the script, believing it will be subsidised by the government, will find out that, because of the stuff-up that the Labor Party has created, the money is just not there. So they will have to pay the full price, the actual price. Instead of the $4 script it will be the $400 script. Instead of the $200 cancer treatment it will be the $20,000 cancer treatment. You will have to pay the real price. Access to free and public hospitals: if the money is not there, you cannot afford them. Close them down or make people pay. That will certainly fix up the waiting queues in public hospitals, because they will not be public anymore, because you will have to pay, because we will not have the money. The Defence Force: you will be able to see your ships all the time. You will be able to get a marvellous sense of pride, because our fleet will always be in port, because it will not be able to afford to go to sea. Pensions: forget about pension rises; forget about pensions altogether. This is what happens when you get out of control.
As I have said to so many clients, when they start going out of control, when you see this course of action—this addiction to debt—and you ask them, 'Does your son or daughter have a caravan?' They ask, 'Why?' You say, 'Because that is where you are going to live, unless you get it under control.' The Labor Party can smirk, but I do not want you to smirk; I want you to show me how you can pay the money back. I want you to prove to the Australian people that you can pay debt back, because you have a commodity based economy and you have got debt in boom times. God help us when you have to pay it back when times are not so good. If you cannot make your two ends meet now, what hope have you got in the future? I would love to make the Labor Party sweat on this. I really would. I would really like to ring a bell for the Australian people about exactly what you are doing and where it is all going, so they could understand the sort of strife we are getting ourselves into. But apparently that is irresponsible—and I understand that. But the Australian people have to understand that under this crowd—with all their stories, like they are going to cool the planet; they are going to build a new, multibillion dollar telephone network; they are going to do this; they are going to do that—you always have to go to the article of truth. The key performance indicator for any government or organisation is whether your debt is going up or down. Do you have the capacity to pay your bills as and when they fall due? I might remind the Australian people that the way we pay out interest bill in this nation is that we just borrow more money. Capitalise your interests. In accounting terms it is called 'economic palliative care'. But we do it. We just naively stumble along, with this group of people who have no hope. There is no hope and no competence. We lay this at the feet of Wayne Maxwell Swan, of Julia Gillard, of Kevin Rudd and of whomever they pick next—Stephen Smith. But the unfortunate thing is that the people who end up paying all this back, the people who have to suffer for their stupidity, are the Australian people.