Doug Cameron (NSW, Australian Labor Party) Share this | Hansard source

I thought I had better have a look at what Senator Joyce was saying, because I am not an economist. I know Senator Joyce says he is an accountant—I would not trust him with the limited accounts I have!—while I am only a humble fitter and machinist. So I went back and had a look at this debt issue. The best advice I could get was from the Budget Policy Division of the Australian Treasury—not a bad place to go, Senator Sinodinos; what do you reckon? That is where you should go to get some advice. I know you were there during your time. I know John Howard went there. I do not think Peter Costello went there very often, because he was not very successful. They had an internal paper for discussion within the Treasury, and it says:

Understanding debt and its historical trends is important, as the level of debt provides one measure of the strength of public finances. Levels of public sector borrowing fluctuate in line with the economic cycle and the budget position. This paper briefly describes the various measures of debt and trends in government borrowing.

That is from the experts. This is the experts in Treasury talking about government debt. And what do we hear from Senator Joyce, the shortest lived shadow finance spokesman in the history of the coalition? He keeps talking about gross debt. So what do the experts say about gross debt? They say:

Gross debt represents a portion of the total liability a government owes to creditors.

It tells you what the main component is and says:

While the gross debt measure provides information on government finances, it is only a partial indicator.

You would agree, Senator Sinodinos, those are the facts—it is only a partial indicator. You could not argue against that. It goes on:

Gross debt does not incorporate amounts that are owed to government by other parties. Also governments, like an individual or businesses, hold assets which can be sold to meet their financial obligations. To capture the asset side of the equation, net debt needs to be considered.

It goes on:

Net debt is the most commonly quoted and well-known measure of a government’s financial strength.

I never heard even Peter Costello, with all his failings, foibles and weakness, talk about gross debt. I never heard John Howard talk about gross debt. I heard them talk about net debt and net debt is what all economists look at; it is what governments around the world look at; it is what the IMF looks at; it is what the OECD looks at. And the Treasury officials say:

Compared with gross debt, net debt is a better measure of a government’s overall indebtedness as it also captures the amount of debt owed to the government.

So when you see Senator Joyce stand up, you have to understand that he is an accountant—my view would be he is not a very good one. He is not an economist. You should rely on the experts. Then in the Treasury paper A history of public debt in Australia, by Katrina Di Marco, Mitchell Pirie and Wilson Au-Yeung—they are the ones who know what they are talking about, not Senator Joyce—they say:

The case of Japan most clearly illustrates how only considering gross debt can result in a skewed interpretation of government finances.

Skewed interpretations is what the coalition want the public to look at—not honesty but a skewed interpretation. They say that, if you looked at that, the gross debt measure for Japan is 173 per cent. They go on to say:

Canada, which has a comparable amount of gross debt to France, Germany and the US, has a significantly lower level of net debt—

So you cannot look at gross debt and Senator Joyce needs to understand this. We get told we should run the government like a business. We had better not run it like Fortescue Metals, like Twiggy Forrest, with a total debt of $5.997 billion and a total equity of $3.141 billion. What is the debt to equity ratio for Twiggy? It is 190 per cent. I know Senator Cormann is very close to Twiggy. I know Senator Cormann would do anything the mining industry tells him to do, but when he comes in here and lectures us about debt he should understand that the people he is arguing for have debt to equity ratios of 190-plus per cent. So do not lecture us about this.

Senator Sinodinos was a key government adviser. What did we end with after the period of the Howard government? We had a failure of investment in this country, with less than two-thirds of profits reinvested. We had a failure of innovation, with among the lowest R&D innovation in the world. We had productivity declining, at the bottom of the OECD. We had a failure of development. We had elaborately transformed manufactures diving. We had a failure of balance. The balance was all about putting in Work Choices to try to crash workers down to increase productivity through lower wages; it does not work, Senator Sinodinos, and you were up there. And we had a failure of sustainability. Even though you were advising, and former Prime Minister John Howard was advised to do something about climate change, it never happened. The best we got was a $10 billion investment in the Murray and that was done without even going to cabinet—the ministers did not know anything about it. So do not lecture us about credibility. You have none.