Senate debates

Friday, 22 June 2012


Financial Framework Legislation Amendment Bill (No. 2) 2012; Second Reading

2:11 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Hansard source

Yes, there might be a couple of blankets that have to go out the door with them! This is the absurdity of where we are.

It is going to be so hard to try and get the finances of this nation back on an even keel. It is not going to be even. As an accountant, I have seen this client before. The first thing this client always has is denial: 'There's not a problem. It's all under control.' You find they keep on going back to the bank. It is such a problem, they just keep going back to the bank. You always ask them: what do you think is going to keep happening if you keep going back to the bank? Do you think this goes on forever? You explain it to them. It is simple. What happens is that one day the bank says, 'Yes'; then it says, 'Okay'; and then it says, 'I'm concerned.' Then, one day, it gets to a point where it says: 'No, that'll do. That's it'.

Nobody has ever got to a really bad problem that they cannot fix without going through a problem that they could have fixed but chose not to. In the end the number becomes an irrelevance; it becomes a mathematical wonder because it is something you cannot possibly fix. One of the key signs that a person is going out the back door is when they start capitalising their interest—they cannot meet their interest payments so they borrow the money for the interest. Once they start doing that, it becomes kind of economic palliative care. Then you start making sure, as an accountant, that they pay you before they see you. Otherwise, you become another one of the debts that they cannot fix up.

The Australian Labor Party has lost control of the nation's books. Whatever they have to do until, basically, they lose an election, they have to do. It is a time where our major exports have been at the highest prices that they have ever been, a time that we should not be going out the back door—we should be absolutely up to the gunwales with cash. We should have huge reserves put aside. But we do not. They break every rule in the book. In their budgetary papers they have the expectation of a peak price, and the reality is that that is not going to happen, and therefore they are financing future debts with an income stream which is completely improbable.

How do we fix it up? If they are getting themselves into this much debt whilst we have a boom in mining resources, how on earth are we going to pay it back when it naturally peels back off to where it was? How will we fix it up then? Where is the money going to come from? Do you think that the world will just kindly look at us and say, 'Oh, we'll just keep lending you the money; we don't care'? Look at what is happening in Europe. In Europe, as I stated at the start of the year, they are going to split the economic sheets. The southern European economy is going to go in one direction and the northern European economy is going to go in the other. The reality for us is that the whole thing is going to peel off. The biggest market for China is Europe, not America. If that market goes into the doldrums, Chinese sales go down and therefore their demand for our commodities peels off. Prices then peel off—and we are getting the peel-off in prices now. Therefore, the capacity to pay our debt falls over. Obviously, our taxation revenues peel off and we are stuck with this massive debt. So, where do we go?

You have to cut the cloth to fit the wearer. People who rely on government services, or who are the beneficiaries of government services, who live on the providence of the taxpayers' dollar, are the ones who will get hurt. Whether it is pensioners, whether it is those using the Pharmaceutical Benefits Scheme, whether it is public servants—they are the ones who get hurt because of the complete inadequacies and absolute hopelessness, total and utter incompetence, of a person to understand the basic business principles of being cautious, prudent, of banking the best and planning for the worst, of having provisions, of having money aside. But we have not done that. It all went, no matter what they say.

We have to look at what happened in the past. It is not going to be easy to pay back debt. The last debt the Labor Party left us was $105 billion in gross debt and $96 billion in net debt. I say those two figures to show you how close one was to the other. Sometimes we are led down this path. I can show you right now on the Australian Office of Financial Management web site—and for those listening to us, just type AOFM into Google and you will see your overdraft come up. It is in a box. You will note it is 233.4 as we speak. That is the gross. When they talk to you about net they can never actually explain how they get that number. They just tell you and they accept it. It is an acute number for them because they do not have to update it every week when they borrow more money. With that number, if you own $139 billion in superannuation, they say, 'We will take the money out of the Future Fund and basically pay off our debt with it'. That means your unfunded liability for superannuation just blows through the roof. It is absurd.


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