Wednesday, 24 June 2009
Matters of Public Importance
The President has received a letter from Senator Williams proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:
The inability of the Rudd Government to control spending and manage bad debt
I call upon those senators who approve of the proposed discussion to rise in their places.
More than the number of senators required by the standing orders having risen in their places—
I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
It is with pleasure that I rise to speak about the debt that this nation is being plunged into. I spoke some months back about Labor’s traditional management of money. I look back on the history at a federal level; when have the Labor Party in government ever reduced a debt before they were thrown out of government? I look back at the Whitlam era and I see the outrageous borrowing and spending back in the seventies. Of course the Whitlam government was thrown out by a huge majority. Then I look at the Hawke-Keating government. Mr Keating was the so-called world’s greatest Treasurer at the time, the very same time when I was paying 25.25 per cent interest rates along with my brother and our families on the land. I believe the debt was around $36 billion in 1983, when the Hawke government was elected, and by the time it was thrown out 13 years later that debt had grown to a massive $96 billion, growing at a rate of $10 billion a year.
I referred to this growing of debt, mortgaging our children’s futures away, in my maiden speech to the Senate on 15 September last year. I drew an analogy between running the family farm and running our country. I said that if a family farm carries too much debt then when the tough times come it cannot survive financially. That is what is happening now. We have seen this government in this current financial year budget for a surplus of $22.5 billion, but the reality is that when this financial year concludes in only a few days time there is going to be around $30 billion of debt—a turnaround of more than $52 billion in the 12 months of this current financial year.
In the following financial year the budget forecast is for a deficit of $58 billion, so we are going to see $112 billion or $113 billion in government debt within 12 months. It took the previous government 10 years to pay off the $96 billion debt, and the forecasts are that the gross debt of this government will rise to a massive $315 billion. Let’s look at an interest rate of just six per cent. Six per cent interest on $300 billion is $18 billion a year, and we will be looking at another $900 million for the extra $15 billion, so we are going to be looking at about $19 billion a year if this is allowed to proceed—to pay interest only. The point I make is that, in the future, when a government sets a budget it will have to take out almost $19 billion—assuming interest rates are not above six per cent—before they pay one nurse in an aged-care facility, before they put one bullet in the rifle of one of our soldiers. Before they pay anything at all, they have to find $19 billion, and that is without paying even one cent of principal off the debt. These are frightening figures.
The alarming thing about all this is that, when the whole economy turns around—and hopefully that will be soon—the recovery is going to be very slow. Because we will have such a huge debt, no doubt taxes will have to rise. Because the government is borrowing up to $3 billion a week, that in itself is putting enormous upward pressure on interest rates. Money is like any other commodity: when demand exceeds supply, its price rises. We have seen the government causing huge demand for money through its outrageous spending. But you can see that is nothing new if you look back to state governments in the eighties and nineties. I remember well when Victoria basically went bankrupt with a $60 billion debt. South Australia was the same, Western Australia was the same and Tasmania is also included—of course, all under the careful financial management of the Labor Party. As the debt continues to build, the big question is: who is going to pay it off?
I want to make a point about where this money is being spent. There have been questions during question time about Building the Education Revolution and where the money is going. I am not going to name anyone, but I am going to give an example of how Building the Education Revolution is a farce. We have all read and heard about schools getting facilities they do not need because there is nothing wrong with the existing ones. What about the inflated prices being tendered and accepted? I can give one instance in north-west New South Wales where a reputable licensed builder tendered for a covered outdoor learning area, a COLA, at a particular school. His tender for this COLA, with walkways included, was $60,000. But his quote was not in the ballpark of the accepted tender.
A Sydney firm came in with a price of $228,000, and that did not include the walkways. Guess who won the tender? It was not the local builder in north-west New South Wales, with a tender of $60,000 to build the COLA, including the walkways. It was a Sydney firm, whose tender excluded the construction of walkways, with a tender of $228,000—four times the price. The small builder was a reputable licensed builder who I believe had done substantial work for the public sector prior to applying for this tender. This scenario has been played out in many schools in north-west New South Wales. This Sydney firm is getting many of the school contracts, so how is the Australian taxpayer getting value for money? This Sydney firm is winning these contracts with hugely expensive quotes, far above local builders’ quotes. That, to me, is a blatant waste of not only taxpayers’ money but borrowed money as well.
Surely, if the government were going to plunge our future generations into debt, they would spend the money wisely. They would put it into infrastructure—rail, road, ports and all the things we need to give us a more efficient economy—so we can earn more later and have some hope of paying the interest and principal on this debt. But, no, it is being wasted on things like school buildings, where builders tender $60,000 to build a project, including walkways, and the company that gets the tender charges $228,000. That is a disgrace, and I can assure you, Madam Acting Deputy President, that when we return in August you are going to hear many more of these cases. It is time that the Senate had a good look and an inquiry into why these sorts of tenders are being accepted and why money is simply being wasted, with people who tender at four times the value actually winning the tender. To me, that is disgraceful. As I said, you will not see the money going into useful things. Do you notice where this money is being spent?
I have no doubt, Senator Bernardi, that with the cash splashes much of it went into poker machines at the Inverell RSM Club—an extra $47,000, I think, over a fortnight. Of course it went in there, but that is what they call ‘stimulating the economy’. When we are spending and borrowing this amount of money and not spending it wisely, I ask: what are we doing to our children’s future? It is our children who will have to pay for this. What legacy are we going to leave them? We have school constructions that cost four times the price that they could have been built at. That is why I find this so wrong. No doubt when we return in August more will be said about this as we get more details feeding in to us, and we will highlight how good the government are at wasting money.
I thought the National Party would be the last party to come in here about the need to spend and invest to save an asset. The asset that Labor is prepared to invest in and spend on is the Australian people. A farmer with dying sheep because of a lack of fodder in a drought borrows money to feed them. It might be that they are imposing debt on those who come behind, but Senator Williams would tell me—
Let me say this: Senator Williams would be the first to defend those farmers who have borrowed against the equity of their property to keep their heads above water. The Australian government is borrowing money at the moment because we are in an income drought caused by the global financial crisis. A $210 billion fall in income—that is the sort of income drought that this government is facing. This government is prepared to invest in the Australian people to make sure that hundreds of thousands of people do not end up on the unemployment scrapheap, that families are able to pay their mortgages, that families are able to keep food on the table, that people are kept in jobs and that there is investment in our schools, which apparently Senator Williams does not support.
At least he is being honest in here, saying he does not support the investment in Australia’s schools. But, for the photo opportunities, his colleagues are going to school after school where projects are opening because of these investments. They voted against the measures in this place and the other place, but they want to be associated with them when they are being given effect out there in the community because they know that the Australian community support them.
I said that this government faces lost income of $210 billion. This is unprecedented. If we were to do what those opposite suggest and not borrow, then what would we do? Would we cut our defence budget? Would we cut our education budget? Would we cut our health budget? Would we do all of those things? Is that what those opposite are really suggesting? Are they suggesting that we should stop the services to the country? Are they suggesting that we should stop those incomes? We would have to put a lot of people out of work. We could stop those incomes going out to those communities that Senator Williams represents. Would those people stop spending at the businesses that support those communities? Would those businesses then close? Well, of course they would! But those opposite do not give a toss about the outcome of such a very callous approach to the Australian economy.
Frankly, when Senator Williams stood up and said, ‘It is with pleasure that I rise to speak about the debt Australia is experiencing,’ I thought, ‘That says it all.’ This is political opportunism by those opposite. They see this as an opportunity to talk about the debt but not about the reasons why it has to be incurred and not about the impact on Australians if we do not incur it. That is the dishonesty of the position of those opposite. They want to tell the Australians, ‘Oh yes, you’re experiencing some debt, and this is profligate; this is terrible.’ They are not prepared to say that the cost of not going into debt would be thousands upon thousands of people being out of work, people losing their houses and businesses closing down right across the country, particularly in regional Australia.
There has been some talk about the impact of the stimulus measures. We have seen the figures on retail spending around the country and there are all sorts of apocryphal tales about money going into poker machines. I am sure some people spent the money that way—I am sure some people will always spend money that way—but the facts show that all comparable economies experienced a fall in retail spending late last year and early this year, while Australia saw an increase. There are hundreds and thousands of shop assistants who depend on retail spending for their jobs. Those opposite are content to see them out of work. Those opposite are content for people in the retail sector to lose their jobs because it suits their political argument. What they would like to say is: ‘Let’s forget about what is happening around the world. Let’s forget about the millions of people who’ve lost their jobs because of the global financial crisis. It’s all Labor’s fault.’
According to those opposite, there is no global financial crisis. Let us be frank: they live in their own thought bubble. All they are thinking about is the interests of the coalition and how they can position themselves for the next election—nothing to do with the good of the people they purport to represent, nothing to do with the farmers who, frankly, are getting the benefit of the investment allowances. People out there are spending and they are prepared to borrow because they can see this will end. They can see the advantages that are going to come. And who is benefiting from that? Of course, there are all the dealers in rural Australia and all the people they employ. They are getting the benefit as well. There are more people staying in jobs because of this stimulus. And then, for heaven’s sake, we are spending on schools—which, of course, Senator Williams says he does not support.
Frankly, millions of dollars of spending on schools is needed because Senator Williams’s side of politics, when in government, refused to do it. Millions and millions of dollars need to be spent in these areas. We will come back to your proposition about waste, Senator Williams. We have heard a lot of things being said in here and we have heard allegations that certain prices have been quoted that are somehow better than the quotes that have been accepted. Well, watch this space, because I can say that there is going to be an awful lot of egg on Senator Williams’s face when all the facts come out.
In terms of the proposition that Australia has unmanageable debt, we have a deficit of just 4.9 per cent of GDP, the lowest among the economies we are being compared to. The United States is at 13.6 per cent of GDP, Japan is at 9.9 per cent and the UK is at 9.8 per cent. If we are doing a bad thing then the rest of the world is about to go under, according to Senator Williams. We are talking about a government in this country which has a clear fiscal strategy to return the budget to surplus once the economy begins to recover. It allows for revenues to recover naturally. One of the main problems, as I said earlier, is that we face lost income of $210 billion. As the revenues recover, the ability of the economy to return to surplus is great. If we hold spending growth at two per cent per year until the budget returns to surplus, we will do it even quicker.
Let us forget about the doomsayers over there, because all they are about is a political argument which is seeking to position them for the next election. As I said, they have no regard for the mothers and fathers of Australia, the kids, their schools, the businesses right across the country and regional economies—none of that. They would be very content if we were prepared to do what they espouse, which is to sit on our hands and do nothing. Let us admit it: Treasury’s forecast is that, if we did not spend the stimulus package, the equivalent of two MCGs full of people—or even more—would be unemployed. In effect, two MCGs full of people would be added to the unemployment queue. That is what they want, and the reason they want it is so they can go to the next election claiming that unemployment has gone up and say that it is all Labor’s fault.
Senator Williams wants us to put blinkers on. I have got horses. They wear blinkers, but they are not as big as the ones that Senator Williams wants us to wear. He wants us to put a blindfold on. He wants us to say, ‘There is nothing happening outside Australian shores, there is no reason for income to have fallen and there is no reason for people to be concerned about the money that they are spending.’ All we need to do is blame it on Labor—that is the proposition that lies behind this ridiculous matter of public importance. The fact of the matter is that the coalition should be ashamed—and, every time they turn up to a photo opportunity, we will remind them.
May I start my contribution by offering my congratulations to you, Madam Acting Deputy President Brown, for staying awake during what was a less than spirited defence of this government’s terrible, terrible spending pattern. The matter of public importance we are discussing is:
The inability of the Rudd Government to control spending and manage debt.
When I read that, I wondered if it was worthy of debate, because it is so obvious to the Australian people—the men and women, the parents and the children—that this country is being mismanaged and is sinking into a quagmire of debt. But then it occurred to me that there is no need to reinforce the message, because the message is already resonating with the good people of Australia; it is already sinking in. However, we do need to awaken the slumbering, former economic conservatives on the other side of the chamber who refuse to see the peril into which they are placing this country. The peril is stark. We cannot dismiss the facts. The government are already getting into debt of $315 billion. At least they acknowledge that. We also know that they are all about smokescreens. We know they are full of hyperbole, and so we suspect the ultimate debt will be much larger than that, but we will have to leave that to posterity.
Our nation is facing a record deficit of $58 billion. The Rudd Labor government are spending $58 billion more than they take from the people. What do they have to show for it? Not much thus far, let me tell you. They have sent out $900 cheques right across Australia to people who are alive or dead, to pets, to people who are in Australia or have departed Australia. That is a shameful act. Senator O’Brien was earlier boasting about his horses. I suspect they might have got a $900 cheque if other pets have been getting them. They would probably earn you more money that way than if you had a bet on them. But that is another thing altogether.
What we have here is a government that is plunging Australia into record levels of debt. Frankly, I was quite happy to oppose the $42 billion cash splash because it is misspent money. It is misallocated money. Fourteen million dollars went to 15,934 deceased people and their pets. Nearly 16,000 people who are no longer alive, or their pets, got $900 from the Rudd government. That does not seem a very good way to spend money to me. But what about the $25 million of taxpayers’ money—dollars that children and their parents such as those in the gallery are going to have to pay back—that went to 27,000 people who live overseas? Hardly stimulating the Australian economy, is it? There is not much defence of that. The lukewarm contribution from Senator O’Brien was less than spectacular, less than inspiring. We can only hope that the great firecrackers, the firebrands of the Senate—Senator Sterle and Senator Cameron—will not disappoint us. But I suspect, once again, there will be more fire and very little cracker when we hear from them.
The Rudd government are accumulating $300 billion-plus in debt—and they tried to average it away by saying it is net debt. All these technical things aside, let me put some facts on the table. The 10-year bond rate is 5.7 per cent or thereabouts. If the government can be believed—and it is a big if—they are going to have all this debt repaid by 2022. At a rate of 5.7 per cent, principal and interest repayments will result in an interest bill of $83.6 billion over the next 13 years—$83.6 billion will be taken from the taxpayer just so the government can try and guarantee their re-election. I hope that does not work, because the Australian people are actually waking up to the sham that is the government’s economic management.
To pay back this debt, every single Australian taxpayer will have to pay $1,569 every year for the next 13 years because of this government’s spendthrift ways. Yet the government is trumpeting that it has taken some principled action. Let me tell you this: anyone can borrow more money than they can afford to repay if they are not prepared to accept the consequences. Every man, woman and child in this country, whether or not they are a taxpayer—such as the children in the gallery—are going to have to pay $1,000 a year over the next 13 years to pay back the government’s debt. By the time those children finish university, they will still be paying back the government’s debt. It is that debt that will keep them paying into the government’s coffers. It is the wrong move. The government has sacrificed the future of the Australian economy for immediate gratification. Anyone with an ounce of common sense, anyone who has an understanding of economics or household budgeting, knows that you have to delay gratification in order to build a solid base and provide for the future. Unfortunately, the government is not prepared to do that.
What else are the government doing? Not only are they throwing money around that they do not have to people who will have to repay it three or fourfold—
Yes, to people who live overseas and who cannot spend it here. The government are also cutting the opportunities for young people. They are cutting opportunities with the youth allowance changes. They are making it much more difficult for people to pursue their education or to enjoy a gap year. Why is it that the government are happy to send money to people who do not even live in this country, but those who take a gap year and want to work in this country before they go to university are no longer worthy of receiving the government largess? My goodness, the government’s priorities are all wrong. Their priorities are all wrong, and they know it. I can see those on the other side skulking and squirming. Senator Sterle, you put on a brave face but we know you are not happy about disadvantaging country people.
The government are also spending millions of dollars to boost Mr Rudd’s ego by sending envoys around the world to try and obtain him a seat on the United Nations Security Council. He is obviously planning his departure—as are some others in the Labor Party, I might add. The Gillard forces are also planning Mr Rudd’s departure. The government are wasting millions of Australian dollars on fuelling one man’s ego so that he can travel around the world, complaining about meals, complaining that his hair dryer is not ready and talking about how he is the most important person.
Government senators interjecting—
Madam Acting Deputy President, I know that you, like me, must be disappointed by the quality of the interjections—because they have not really got much substance to them. We are going to hear enormous rhetoric, we are going to hear confected outrage, but the facts are absolutely clear: this government is all about spin. It is a government that is not concerned with the balance sheet of the Australian people. It is concerned about its own balance sheet: how many it has on the front bench and how many can take on ministerial office. Let me tell you, the Australian people are not concerned about that. They are concerned about what the government is doing to unemployment in this country. They are concerned about the fact that they are going to be fuelling inflation. They are concerned that, after 18 months, this government is so arrogant, so conceited and so formulaic in its self-defence that it has completely lost touch with reality. It is a very disappointing thing for the Australian people.
One of the great challenges, of course, will be for the government to detail to the Australian people what will happen when the immediate stimulus has worn off, the government and the Australian people are mired in debt and the government have run out of options. It will not have any more triggers to pull, because the Australian economy will be bubbling along the bottom. Do not take my word for it; I am referring to a number of prominent economists who recognise and identify that the Treasury growth forecasts are based on some mythological nirvana and on unprecedented recovery that is unlikely to happen. We know that because eminent people talk about it. When there is a problem in the future and there is no option for this government—nowhere to go—we will be left with its poisonous legacy for decades to come. It took us 10 years of good financial management to pay back only $96 billion of Labor’s terrible debt. There was a $10 billion black hole. And what have we got now? We are sentenced to another ‘intergenerational debt’. The government has sentenced every man, woman and child in this country to a debt burden they do not deserve. It has placed a yoke around their necks and asked them to pull a plough behind them for decades—to salvage its own conscience and to fuel one man’s ego and desire to be an international statesman. It is a fraud. It is a sham and members of the government should be ashamed. (Time expired)
I am happy to get up, because one of the last words I think I heard come out of Senator Bernardi’s mouth was ‘fraud’. That is a very strong word for you lot on that side of the chamber to throw around. On a more serious note, I am happy to stand up and contribute to this debate. Before I do, I note that it is quite frustrating and annoying that those on the opposite side of this chamber and the other chamber are doing absolutely everything they can—crossing their fingers—in the hope that Australia does not come out of this global financial crisis, the worst financial crisis the world has seen since the 1930s. They are in absolute denial. The global financial crisis is all over every newspaper and every television station. It is not something you can hide, yet they have their heads in the sand.
The most important thing about the Rudd government’s stimulus packages and their spending was to save jobs. I know ‘jobs’ is a four-letter word that that lot over there have a problem with, but I am proud to be part of a government that will do whatever it can to save any amount of jobs it can for working men and women in this country. I really welcome the opportunity for one of that lot on the other side to interject on me now when I start talking about jobs—
because in my past life I was proudly not only a truck driver delivering freight around this fantastic country for 11 years as an owner-driver and for four years as a company driver before that; I was organising with the Transport Workers Union. But it was not only me; it was also other great representatives of working people such as Senator Cameron, Senator Evans and, of course, Senator McEwen. There are wonderful things to be said for the opportunity to represent workers, but I have to tell you there is a damn downside. It is when a man or a woman comes up to a union organiser and says, ‘I have just lost my job.’
To the children up there in the galleries: there is no greater pain than to see a parent—a grown man—cry because he has lost his job through absolutely no fault of his own. I use the word ‘he’ a lot because the trucking industry is predominantly male, but I have had it from females as well. To have a grown man come into my office and break down in tears because he has lost his job through absolutely no fault of his own is demoralising, Senator Bernardi. Those of you who are born with silver spoons in your mouths have never had to sit there and watch a grown man cry because his job is gone. This is what the whole thing is about. You lot over there have no conscience. You are quite happy to see jobs go. As Senator O’Brien has made very clear, two MCGs full—200,000 workers—have had their jobs saved. Do not make me feel any sicker than I feel listening to the rhetoric and the rubbish that come out of you lot over on that side when we start talking about jobs and employment. You are an absolute disgrace. You are a disgrace to the people of South Australia, Bernardi, and you, Senator Williams, should hang your head in shame. I am waiting for your contribution from that great state of Tasmania, Senator Bushby; that will be very interesting. You won’t say a word, will you?
Opposition senators interjecting—
Get out there and tell people that you voted against every chance for Australian jobs to be saved. To have to listen to that rubbish—you sicken me.
I want to talk about the spending. As Senator O’Brien said, half of the spending is going into schools. That lot on the other side do not want to see one single cent spent in a school, but they have their boofheads in every photo they can. They cannot wait for the opportunities to get to the ribbon cuttings. I can just imagine the ‘Bernardi Bugle’ or the ‘Wacky Williams Weekly’. If we see some photos of you anywhere near a school, look out. And do not take that lightly; it will be in this chamber that quick. It is absolutely shocking opportunism.
What you should be out there doing is going to all those schools in that fine state of South Australia, Senator Bernardi, or New South Wales, Senator Williams, and saying, ‘Ladies and gentlemen, boys and girls, I voted against you having this gymnasium. I voted against you having this library. I voted against you having this undercover area.’ You wouldn’t do that would you? You would not go to one school and own up to that. You are all heroes in here. Take 30 steps out to your right and make those statements. They are disgraceful, that is what they are. I want also to touch on some of the figures that have been bandied around, apart from the 200,000 jobs that have been saved so far—and I hope there will be a heck of a lot more. We are talking about $14.7 million—and if that saves jobs we should be crucified! We should be embarrassed because we have saved jobs!
Another wonderful initiative I want to talk about that is part of the stimulus is the $22 billion national building infrastructure plan.
Senator Williams, pull your fingers out of your ears and listen very carefully. If you miss a bit, I will send you an email. But mine you can show. Feel free to flash it around. And I will write it myself; I do not need any moles to write it or flash it around for me. I will actually write it and send it to you, Senator Williams. Part of our national building infrastructure plan goes out to rural and regional Australia. This is where I also have a lot of frustration because in this chamber there is a little war that goes on all the time. You get the doormats in that corner there who stand up and say, ‘We are the ones that represent regional Australia.’ Then you get the other side, their coalition partners, who have been tickling their tummies every time they need something, saying, ‘Don’t worry about the doormats. We represent regional Australia.’ So you can come in here and listen to the rubbish that gets put out, but I want to talk about what a wonderful opportunity this nation building infrastructure package will be to save jobs in rural and regional Australia.
This government knows only too well the fine contribution rural and regional Australia make to Australia’s economy and I am happy to say that, despite all the gloom and doom in the last 12 months, the agricultural industry is heading upwards. The National Farmers Federation told me the other night in Brisbane just how happy they are that agriculture is on the rise. They are making a wonderful contribution. We are helping them too, because $26 billion will be spent over six years in rural and regional Australia. It is going to be spent on some really worthwhile projects that, lo and behold, will even save jobs—projects like the interstate transport network. For 11 long years that lot on that side did everything they could to ignore the valuable infrastructure of ports, hospitals, roads and railways. What did they do? They did one railway line, and unfortunately it is losing a lot of money. They did nothing else. They sat on the greatest commodity boom in history, with billions and billions of dollars coming from those mines and commodities, and they did nothing with it. They did absolutely not a thing. They call themselves fiscal conservatives, and they are very happy to come in here and lecture us, because we are doing our best to save Australian jobs. We should be applauded for it—not like you lot. Put your head back in the sand; that is the best place for it.
In 2008-09 and 2009-10, $800 million will be going into the Community Infrastructure Program. This will provide critical local infrastructure such as community centres, town halls, parks, playgrounds, pools and sports facilities, and a lot of them will be in rural and regional Australia. That lot over there, the tummy ticklers and the doormats, between them pretend to represent rural and regional Australia. What an absolute joke. In fact, it is not a joke; jokes are normally funny. This is not funny. This is disgraceful.
There is $650 million in the Jobs Fund. There is that four letter word again that I keep repeating: jobs. I am sorry, but that is what it is all about: jobs. It is about keeping Australians employed. Not only that, but there is broadband—$43 billion over eight years. How many jobs will that create in rural and regional Australia? How many small businesses in rural and regional Australia will still be able to keep their doors open?
Come on, Senator Williams. You tell us you come from a small country town. I know from when I was truck driving that if the grader driver who had four kids left town—and this happened once—the school closed down. What did the baker do when the school closed down? The baker struggled and the roadhouse struggled. So don’t come in here, Senator Williams, with you and your lot pretending to be the saviours of the bush. Don’t come in here and condemn us for saving jobs— (Time expired)
Senator O’Brien earlier adverted to the fact that he believed that our whole approach over on this side is related to politicking and that we are all about winning the next election. But I can tell you that our approach to this is the responsible approach. If any one party is approaching the issue of addressing the global financial crisis with a view to the next election it is the government. It is the Labor Party, and that is absolutely clear. By borrowing from the future to try and prop up the figures that we see now—to try to keep things looking as good as they possibly can till the next election—they are the only party that is actually making decisions with a view to trying to win the next election. And at what cost to future Australians?
Let us have a bit of a look at that. Treasurer Wayne Swan has told us that he will have balanced the budget in just seven years. This is unlikely to happen. It is about as likely as him bringing about the enormous surpluses that will be required to pay the $315 billion of gross debt that we will have accumulated and paying that off by the early 2020s. The unprecedented spending cuts that would be required to achieve this fantastical and utterly impossible result would be a standout first for any Labor government in Australia’s history. When Labor is in government, government spends up big, and that is a proven fact. Under Whitlam, spending increased to such an extent that the Commonwealth’s share of GDP went from 19 per cent to 24 per cent. The Commonwealth’s share of the gross domestic product of the whole nation went up by 5 per cent. Thirteen years of Hawke and Keating saw that figure increased to 26 per cent, a figure that was much reduced in subsequent years under the Howard coalition government.
The Howard years saw the rolling back of the Commonwealth’s share of GDP as Costello fought to balance the budget, after Labor left a massive $96 billion worth of debt, and then brought us back into surplus and paid that debt off over the ensuing eight or nine years. We paid it off a couple of years before we lost government. When I arrived in this place in August 2007, in my first speech I said how proud I was to be part of a government that had achieved that. I made mention of the fact that, in 1996, left-wing commentators were saying that it was not so bad to be considered a Third World country—and I think an ex-parliamentary secretary in the Hawke-Keating years compared our economy favourably to the economies of Malawi and Burundi. This was before we were re-elected in 1996; it was before the Howard Liberal years. Over the next 11 years we took Australia from a position where commentators were saying our economy compared well with Third World countries like Malawi and Burundi to a position where we are world leaders.
Burundi is a fine country but, unfortunately, they do not enjoy the same standard of living as Australians enjoyed under the Howard years. If you want to take our economy back to that state, that is fine, but we will be fighting against it. Here we are, in 2009, under a Rudd Labor government, and all the work that was done under the Howard coalition years has been undone. Commonwealth spending is sitting at a phenomenal 28 per cent of GDP. At $56 billion, or almost five per cent of GDP, next year’s budget is forecast to be our biggest since World War II. But remember that new spending accounts for two-thirds of the projected net debt. Two-thirds of the projected new debt is accounted for by discretionary new spending. More than $124 billion of spending has been added to the bottom line by decisions this government has made which it did not have to make. That needs to be remembered whenever these interjectors raise the points they have raised today.
The thing to remember in terms of where we are currently at and how different it would be if the Labor Party had not won the last election is the conduct of the government during the first 10 months of their term. What was the first thing they did when they got in? Basically they said: ‘Okay, we’ve inherited a great economy. What do we do to label the coalition as poor economic managers? What can we find? Where’s the hole?’ They found one little thing, and that was that there was inflationary pressure—because we had an economy that was going so well. There were small inflationary pressures, but they had found something that they could use. What did they do as a result of that? They spent the next 10 months talking the economy down.
You deny it now, but go back and look at the comments made in this place during question time all through last year up until October. Look at what Senator Conroy was saying. Look at what was said in the other place about the economy and inflation, and how it was overheating and how we needed to talk it down and how we need interest rates to go up to dampen the economy. What effect has that had? In estimates it became clear. In February last year, the severity of this downturn was made clear. There was a meeting with Dr Henry and the Treasury at which they discussed what they might need to do. In fact, from memory they were talking about stimulus packages. That is what is on the Hansard. That was in February last year, yet for the following seven or eight months they continued to talk down the economy and talk up inflation. They continued to talk about how we needed to deal with the inflationary mess and put the inflation genie back in the bottle, as a result of the Howard years.
What effect did that have on Australia’s economy—that 10 months of talking the economy down? There was 10 months of talking about inflation and interest rate hikes to try and dampen the economy. What effect has that had on government revenues? What effect has that had on jobs? Where would we be today if the government had not spent so much time last year on a political ruse trying to talk down the economy just so it could stick something to the previous government? We are so much worse off now than we would have been if the government had taken a responsible attitude when it first got into power and tried to talk things up and pat us on the back for the good things we had done.
But where are we going now? A simple calculation on a bank debt calculator shows that, over a 20-year loan life, a debt of $300 billion would require repayment of principal and interest of about $25 billion, assuming an interest rate of 4.5 per cent. Let me restate that: over 20 years, with a debt of $300 billion and an interest rate of 4.5 per cent, you would need to pay at least $25 billion a year. So, every year, $25 billion of taxpayers’ money has to be found to repay that debt, assuming you are going to pay it off over 20 years. But the government is not claiming it can pay it off in 20 years. No, the government says it can pay it off in less than 15 years. Even more unbelievable, it says it can achieve this outstanding result without starting to make repayments for a number of years.
The Australian people are expected to believe that a debt of more than $300 billion can be repaid in around 10 years, which would require an annual repayment of over $40 million a year once repayments start. Even if this were believable, it all rests on future growth projections that are just as fanciful. I ask the government: what if those projections do not eventuate? What if Australia does not get the predicted 4.5 growth for year after year—an unprecedented period? What impact will this have on the government’s ability to repay the $10,000 debt that Labor has racked up against every man, woman and child in Australia? What impact will it have on projected revenues that are earmarked to repay the debt? Even more importantly, what impact will it have on the government’s ability to continue its reckless spending?
As mentioned, Labor governments in this country do not have a great record on fiscal discipline. If these projections do not eventuate, the reality is that they will be borrowing far more than the $315 billion gross debt that has already been disclosed. We have a Prime Minister who believes that spending, debt and deficit are the answer to the global financial crisis. We have a Prime Minister who would send us into debt, the likes of which has not been seen in this great country’s history. When did Keynesian economics become fashionable again?
I know it has been fashionable with Senator Cameron since he was a little boy—when Keynes was around—but when did it become fashionable again? Where is the proof that it works? Which countries has it lifted out of recession? The accelerator theory demand injection approach to fixing the economic slowdown, in the epic proportions that it is being carried out by the Labor government in Australia, is going to leave us with a crippling debt that will dramatically reduce the productive capacity of the economy in the long run and leave us far more vulnerable to any aftershocks that the global financial crisis may introduce down the track.
There are two ways of creating demand: either you can print money or you can borrow it. If you print it, you will end up with inflation—something we will end up with eventually anyway—and if you borrow it then you severely reduce the availability of, and severely increase the cost of, funds for private investment. In the first week of June, 21 economists endorsed the government’s spending program. Some 364 economists gave Margaret Thatcher the same sort of advice in 1981. Fortunately she disregarded all 364 of them and the British economic downturn was subsequently reversed. It is a great shame that Kevin Rudd has not disregarded this advice, as then we would see a reversal on the way. (Time expired)
We have just had half an hour of the coalition economic A-team—Senator Williams, Senator Bernardi and Senator Bushby. And what have we heard from them? Nothing of any intellectual substance. Nothing on any economic position that will take this country forward—absolutely nothing. I will turn first to the contribution by Senator Williams. I see that he has now gone. No wonder he left the chamber after that performance he put in. You know it is typical of the coalition. They do not want to talk about jobs for these kids up here in the gallery. They do not want to talk about the future; they want to talk about the past and they want to talk about scare campaigns. They just want to go back to where they were when they were in government—a bunch of no-hopers with no vision and no plan for this country. When they are in trouble, they always go back to the scare campaigns. Remember children overboard? That is where they go: children overboard. They go back to terrorism when they are in trouble. They go back to refugees when they are in trouble. Recently they went to emails when they were in trouble. But those emails were fakes and forgeries and they have been caught out in the same way they were caught out with children overboard.
Senator Williams came in here and tried to give us a lecture on rural economics—an economic lecture from the National Party. Senator O’Brien spoke about Senator Williams having blinkers, and we had the horse analogy. Well, let me tell you, when Senator Williams goes back to Inverell, goes back to Armidale, goes back to Wee Waa, or goes back to Tamworth and tells people that he does not want any money spent on the schools in those regional areas, then he will come back not as a horse with blinkers but as a gelding. He will be an absolute gelding. Senator Williams has got an absolute hide coming in here and talking about economics.
I went onto the National Party website. I thought, ‘Let’s have a look at the National Party’s achievements.’ You know what I got? A list of the National Party’s economic achievements which could not even make three A4 pages—it went for 2½ pages.
No, it was not just for the past 11 years—it went from January 22, 1920. In all that time the National Party can only list 2½ pages of achievements. Let me tell you what their big achievements were. Their big achievement is that the National Party has ‘been a stunning success’. We will not need any renovations or any extensions to the parliamentary chambers for their ‘stunning success’, as their numbers diminish week by week out in the bush. They list one of their stunning successes as being that Earle Page remained the second longest serving member of the House of Representatives for the 42 years he was here. That is their economic success: they had somebody here for 42 years. They had Black Jack McEwen here for 36 years and five months. If you want to go and look for their successes, it is about how long their backsides were in parliament. That is their success. Ian Sinclair was here for 34 years and nine months. He is the eighth longest serving member. So those are the economic successes of the National Party. Give us a break! And you come in here and lecture us about economics—lecturing the Labor Party which is doing everything we can to save jobs and to keep this economy strong for the future. Don’t come and lecture us when you have got no record of success yourself.
To be honest, I am not one who follows the argument that we should be nice to Peter Costello because this is the week that he has announced he is going. Peter Costello was a stunning failure. Peter Costello was the worst treasurer this country has ever had, because, in a period when this country should have been building the skills of the future, should have been building the infrastructure of the future, and should have been building the roads and railways of the future, what did Peter Costello do? He looked over at Western Australia and Queensland at the resources boom, jumped into his hammock and swung in the breeze for 11½ years doing absolutely nothing. And in that period what did we have? We had a failure of investment in this country. Less than two thirds of the massive profits that were made in this country during that boom were reinvested for the future. Peter Costello just stood back and said: ‘Everything’s going okay. We’re balancing the budget. You don’t have to invest.’ We had a failure of innovation in this country. We were the fourth lowest country of the OECD in terms of innovation—the fourth lowest of modern countries. That was Peter Costello and the coalition at work.
We had a failure of productivity, even with Work Choices. This lot are so incompetent they could have put slavery in and productivity would not have increased. After Work Choices—after simply trying to force workers to work harder and work longer hours—we still could not increase productivity under this useless mob that is called the coalition. We were amongst the lowest in the OECD in productivity under the Costello leadership. We had a failure of development. Our manufacturing industry was starved of support. Our manufacturing industry went from a position under Labor where we exported 23½ per cent of our elaborately transformed manufactures down to 17½ per cent. The coalition in government were an absolute failure at economics. Do not come here lecturing the Labor Party about economics. You are absolute economic incompetents.
We had a failure of competitiveness, a failure of balance and a huge move of wages to big business, their mates at the big end of town. Take money from workers and give it to the big end of town, who do not invest—that is Peter Costello. And we had a failure of sustainability when we never took the opportunity, when we should have, to do something about our position on greenhouse gases. We talked about it and did nothing. So nobody from the coalition should come here and try to lecture the Labor Party about economics. You are economic incompetents. You were a failure and you delivered nothing for this country when you had the opportunity to build this country for those kids’ future. You stood back and did absolutely nothing.
What do we do? We reject the neoliberal approach that says you simply have to balance the books, because we understand that you have to invest now and again for the future of the country. We do not make an apology for one cent that we are spending in the schools of Australia. We do not make an apology for one cent that we are spending on the roads of Australia. We do not apologise for one cent that we are spending in our hospitals. We do not apologise for those things, because this is the future of our country. What would you do? You would shut the door, turn the lights off and do nothing. You would do the same as you did for 11½ years: demonstrate your economic incompetence. It was economic incompetence of the highest level that left this country ill-prepared for the global financial crisis. It has been left to Labor to pick up the pieces and build a plan and a strategy for jobs, infrastructure and education. Do not come here whingeing and moaning with your scare campaigns against this government, because we are a good government and we will deliver.