Dean Smith (WA, Liberal Party) Share this | Hansard source

2010-11. It might be a year you would like to erase from your memory, Senator Gallacher. The next year, 2011-12, under Julia Gillard, the Treasurer's speech claimed, 'We'll be back in the black by 2012-13, as promised,' while delivering a $43.4 billion deficit. The next year was 2012-13, and the budget speech was the most fundamentally dishonest of all Wayne Swan's six performances. In it, he claimed:

This Budget delivers a surplus this coming year … and surpluses each year after that …

What it actually delivered was a deficit of $18.8 billion. Last year, in Mr. Swan's final budget, we heard a familiar promise: 'This budget sets a sensible pathway to surplus.' Naturally, when the coalition came to office late last year, what we actually found was that Australia was on course for a deficit of $47 billion.

Six Labor budgets, six years of promised surpluses, six years of deception, six budget deficits—that is what Labor delivered to the people of Australia. Yet today the same Labor Party have the gall to come into this parliament and talk about broken promises. Not only do they revel in the hypocrisy of that action but they also seem to exist in an alternative economic universe. If you have listened to the comments of those opposite in the two months since the budget was delivered, the constant refrain you will have heard is that there is no budget problem, that the debt and deficit crisis that Australia faces and which this government is determined to address has somehow been confected or invented. No sensible Australian would believe that to be the case. Labor's financial management record is there for all to see in black and white—or, more accurately, in red and white. The trouble for Labor is that every time they repeat this claim they seem increasingly shrill, desperate and isolated.

But do not take the coalition's word for it. Do not take my word for it. Let us look at the views of some respected, independent experts, including people that Labor worked closely with when they were in government. Let us start with the secretary of the Treasury, Dr Martin Parkinson. At the beginning of this month, Dr Parkinson had this to say of critics of this government's action plan to tackle the debt and deficit challenge:

It is one thing to argue that reform proposals should be designed with fairness in mind … It is quite another to invoke vague notions of fairness to oppose all reform.

Using this kind of concept to defend what is clearly an unsustainable status quo means consigning Australia to a deteriorating future.

Consigning Australia to a deteriorating future—that is what we will be doing if we fail to act on reducing our budget deficit and the nation's debt. Yet those opposite seem quite comfortable with that notion, if their comments and behaviour on the budget thus far are anything to guide our considerations.

Dr Parkinson summed up Labor's denial of economic reality very well during the recent budget estimates, when he said, in relation to Australia's levels of government debt:

I have been saying this. The Governor of the Reserve Bank has been saying this. The head of the independent Parliamentary Budget Office has said this, most recently last week. If the two most senior economic bureaucrats in the country are saying, 'People, we have a challenge, and it's about time we had a serious community discussion' and the independent head of the Parliamentary Budget Office says the same thing, it is actually in the hands of the political class.

He is quite right. The challenge of dealing with these issues is in the hands of the political class. And one side of politics is failing that test, and failing the Australian electorate, dismally.

So, as Dr Parkinson points out, we should also turn to the head of the Parliamentary Budget Office, a body that was established during the years of Labor government to provide this parliament with independent budget advice. Again, during budget estimates hearings recently, the Parliamentary Budget Officer, Mr Bowen, confirmed that the debt and deficit challenge Australia is facing is not 'confected', as those opposite would want you to believe. Instead, it is very, very real. Indeed, when the proposition that the budget crisis is 'manufactured' was put to Mr Bowen, he said, as reported in The Australian Financial Review on 27 May:

"I don't agree with that."

"If you just continued on the trajectory of payments and revenues prior to the budget, net debt is forecast to grow rapidly, I think, at the highest rate in the OECD …

Mr Bowen went on to say why it is imperative that we deal with the situation now:

… frankly we don't want to find ourselves where the rest of the world is … You've got to have a buffer. One of the reasons we came through the global financial crisis so well was because we started with assets.

The 'assets' being referred to, of course, were the strong budget surplus and debt-free position inherited by Labor when they won office in 2007.

Again, I make the point that these quotes do not come from the government. They come from independent experts who worked closely with the former Labor government when it was in office. They agree there is a problem. They agree that we must act. They agree that this government's budget is what is needed. Yet those opposite put their fingers in their ears and refuse to listen.

These warnings were echoed by respected economic commentator Henry Ergas, in The Weekend Australian Magazine just last weekend. He said: 'As well as shifting onto tomorrow's taxpayers the burden of paying for today's benefits, greater debt will limit the borrowing capacity of future governments, reducing their scope to use fiscal policy to cushion the impact of adverse shocks. As a result, when an adverse shock comes'—and this is important—'the cuts will have to be deeper and the hardship more widespread and prolonged. And such shocks are not merely possible; they are probable.' In the same newspaper on the same day, the Governor of the Reserve Bank, Glenn Stevens, warned that we are living in uncertain international economic times. He said:

… it would be foolish, I think, to pretend that one can precisely forecast in that effect of all those forces …

“I don’t think we can, and nor do I think that it’s within our capacity to guarantee some kind of finetuned, very smooth outcome.

Labor almost seem to think these independent experts are part of a conspiracy to make them look bad. Well, if there is a conspiracy, then it must be an international one, because agreement about the need for Australia to deal decisively with its debt and deficit problem has gone global.

There is paranoia from those on the opposite side, yet they also seem to be unconvinced by the expert opinions of both the International Monetary Fund and the OECD. In February of this year, as the government was preparing the budget, the IMF issued its economic report card for Australia. The IMF Country Report, No. 14/51, found that Australia had the fastest growth in spending of the 17 major economies surveyed, and, equally worrying, the third highest growth in net debt. These are areas where being at the top of the table is not a good thing. Yet, only one side of politics in this country has actually produced a plan to deal with the situation.

Just last month, the government's budget measures, which are designed to deal with the debt and deficit crisis in a methodical and comprehensive fashion, won the endorsement of the OECD. Again, this is something that those opposite want to overlook, and that they do not want to hear. But the OECD's Secretary-General, Angel Gurria, was reported by the ABC on 10 June this year as saying that the Abbott government's budget strategy is 'dealing very directly and decisively with the budget deficit.' He went on to further endorse the Abbott government's efforts to get spending back under control. He said:

You [Australia] went for 80 per cent cuts, one-fifth tax increase. We're always saying you should at least keep it balanced, this is a more sustainable, more durable type of solution. Once you cut the expenses it stays low, with taxes there are certain temptations …

So, to summarise the state of the economic debate in Australia today: on one hand, there is the Abbott coalition government that is determined to deal with the economic mess left to us by our Labor predecessors. We are prepared to act, because we recognise that Labor's legacy of $123 billion in projected deficits—

Senator Sterle interjecting—

Senator Polley interjecting—

Your legacy, Senator Sterle; your legacy, Senator Polley.