George Brandis (Queensland, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Administration, Senator Minchin. Will the minister inform the Senate of the importance of maintaining sound financial management?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I thank Senator Brandis for that question. Before responding directly to his question, I would like to say that we on this side—and I am sure those on all sides of the chamber—are relieved and delighted with the final rescue of Todd Russell and Brant Webb from the Beaconsfield Mine early this morning. It is a tremendous testament to the resilience of those two remarkable individuals, their families, the Beaconsfield community and the wishes and prayers of Australians all over the nation. Our thoughts go particularly at this moment to the family of Larry Knight, who lost his life in that mine. I think his funeral service is being held right now.

Tonight the Treasurer will bring down the coalition government’s 11th budget. Ten years ago, when we came into office, the budget was $10 billion in deficit. We had inherited a $96 billion overall government debt and we were paying no less than $8½ billion every year just in interest payments on Labor’s debt. There was no scope then for tax cuts and no ability to make additional investments in important areas like health, education, infrastructure or national security. Labor’s loose fiscal policy had put a lot of pressure on interest rates, as I said in my previous answer, and when we came into government mortgage rates were at 10½ per cent.

Today, after 10 years of coalition government, the budget is strongly in surplus. Last month the government repaid the last dollar of the $96 billion in net debt we inherited from those opposite. We are now debt free for the first time in some 30 years. In the last few years we have been able to make unprecedented investments in our national security, our defence capability, our health system and our education system. We have been able to invest heavily in road and rail infrastructure and the preservation of our important natural environment. We have been able to deliver significant tax cuts in the last three budgets, with a further tax cut already legislated from 1 July this year. That has all been done in the context of continuing strong budget surpluses.

Of course, it has only been made possible because of the strong economy and because of our responsible management of public finances. For the last three years we have run surpluses of around one per cent of GDP—surpluses which some opposite claim are far too big, surprisingly. But it is our record on economic management—those surpluses and that reduction in debt—that has taken the pressure off interest rates. Even after the RBA’s most recent upward adjustment to the official cash rate, mortgage interest rates are 7½ per cent, whereas during the 13 years of Labor government they averaged 12.75 per cent.

Families are substantially better off today than they were under the previous Labor administration, because we have reduced unemployment to just five per cent and real wages have grown by an amazing 15 per cent. We have consistently cut personal income taxes, we have significantly increased assistance to families and children, and mortgage interest rates have been lower and more stable than they were under the previous administration. Tonight’s budget will see a continuation of that very good record of economic management, the continuing benefits of a strong national economy, a continuation of substantial surpluses and a renewed commitment to Australian families and our nation’s future.