Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Parliamentary Secretary for Immigration and Shadow Parliamentary Secretary Assisting the Leader in the Senate) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Given that the government has admitted that it would need to borrow $118 billion over four years to finance its latest cash splash, why is the government seeking authority from the parliament to borrow some $200 billion, $82 billion more than is required?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

The temporary deficit has been imposed on us by the rest of the world. The global recession and an unwinding commodities boom has collapsed revenues and pushed the budget into deficit. Borrowings are also needed to fund the Nation Building and Jobs Plan to support the economy and jobs. Let us be clear: the figure that those opposite are identifying is needed for these reasons that I am outlining.

The government has introduced legislation to increase Commonwealth government securities broadly equivalent to the deficits over the forward estimates. The overwhelming majority of the increased borrowing requirement is due to the collapse in revenues and higher payments associated with the global recession. These account for around two-thirds of the increase in the borrowing requirement. The government’s balance sheet remains sound and net debt remains low by international standards. Average net debt across the OECD is currently nine times the level of Australia’s. If the choice is between borrowing to finance the temporary deficit and higher unemployment, we make no apologies at all for choosing Australian jobs and supporting Australian families. If those opposite want to play these short-term political games, the Australian public will judge them on that. This government stands ready to do whatever is necessary to protect Australian jobs and Australian families. (Time expired)

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Parliamentary Secretary for Immigration and Shadow Parliamentary Secretary Assisting the Leader in the Senate) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question—perhaps I might ask the question in another way. Why is the government supplementing its borrowing limit by a staggering 70 per cent, from $75 billion to $200 billion, and requiring an $82 billion blank cheque from Australian taxpayers?

Opposition Senators:

Opposition senators interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

They keep asking the question why and I am happy to keep explaining it to them. As I have been saying, increased borrowing to fund the temporary deficit will impose a short-term cost on the budget. On current projections net interest payments are forecast to rise to $2.6 billion. That is 0.2 per cent of GDP in 2011-12. As the IMF has said, the consequences of inaction will be devastating. While the fiscal cost to some countries will be large in the short run, the alternative of providing no fiscal stimulus or financial sector support would be extremely costly in terms of lost output. The human cost of the opposition’s plan—their inaction—is too bad to contemplate. (Time expired)

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Parliamentary Secretary for Immigration and Shadow Parliamentary Secretary Assisting the Leader in the Senate) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Having admitted that the government will borrow $118 billion and $82 billion extra by way of a blank cheque, will the minister guarantee that the government will seek explicit approval from the parliament for any new spending measures over and above the $200 billion?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

The government will legislate to increase Commonwealth government securities broadly equivalent to the deficits over the forward estimates. The Australian government has a AAA credit rating and our treasury bonds are of high quality and attractive to investors. The advice we have from Treasury is that we will be able to raise sufficient funds to finance the deficits as conditions stand. The government will need to borrow around $125 billion over the forward estimates. This comprises borrowings to finance deficits of around $118 billion and with the remaining amount required to meet the remaining financial requirements such as the commercial property and SPV. Let me be clear. Those opposite who want to keep playing this game can look Australians in the face and explain why they put those— (Time expired)