Marise Payne (NSW, Liberal Party, Shadow Minister for COAG) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance and Deregulation (Senator Wong) to a question without notice asked by Senator Payne today, relating to the economy.

In that response the minister referred, amongst other things, to the recently released Mid-Year Economic and Fiscal Outlook, MYEFO, papers which were released last Tuesday. In fact, as the coalition has been at great pains to point out, what the MYEFO really showed was that Labor’s budget position has deteriorated even as the economy is actually projected to be stronger—quite a ‘stunning’ accomplishment, really, when you think about it. What they have managed to do is to deliver higher deficits, lower surpluses and higher net debt. So what actually should have been going on in this period of time is that so much more should have been done to cut spending and to reduce upward pressure on interest rates, which of course was the tenor of the question I asked the minister. What is clear to us from their actions in relation to these issues is that they simply cannot take the hard decisions. They make a lot of noise and they talk about it quite a lot but, when it comes to the reality, there is no capacity to make the hard decisions that this economy needs.

The fiscal deficit this year, for example, is projected to be $48½ billion. But for the month of September alone the government’s deficit was $13.8 billion, the highest on record. In the first three months of the financial year, Labor’s spending was $9.6 billion higher than for the same period last year, despite the fact that revenue was $1.9 billion lower. And who is paying the price? The price is being paid by Australian homeowners. They are paying the price for Labor’s extravagance through higher interest rates, and that is a pretty simple fact that the government seems incapable of accepting. The net debt relative to the pre-election fiscal outlook has increased by $4.9 billion and is now expected to peak at $94.4 billion in 2011-12.

When you look at government programs and what is actually being done at the moment, like the Building the Education Revolution debacle, they are quite simply inflationary. They are putting pressure on inflation and on interest rates. Just last week the Treasurer of Victoria, Mr Lenders, said that only 20 per cent of BER projects in Victoria were completed, and that means that 60 per cent of the funding has still to be rolled out. So, by their own admission, Labor are continuing to stimulate the economy even after the worst of the global financial crisis has passed. There is a further $6 billion to come in the construction of school halls in response to that quarter of negative growth back in 2008.

They do try and wave it away. They try and dismiss it with a wave of the hand and a waving around of the MYEFO documents. It is actually not quite that simple, though, because we then come to the September quarter CPI, and that shows that Labor’s excessive spending still continues to put pressure on inflation. We see steep rises in power, in water and in rents accounting for most of the increase in CPI. It is not rocket science to work out where that hurts the most: it hurts the most in the average Australian family.

In the September quarter, water and sewerage charges rose by 12.8 per cent, electricity by six per cent, property rates and charges by 6.2 per cent and rents by over one per cent. When you put that all together, though, since the end of 2007—since this government was elected—electricity prices have risen by 35 per cent, gas prices by 24 per cent, water prices by 29 per cent and rents by 15 per cent. Add to that the fact that there have now been seven interest rate rises on Labor’s watch since October 2009. And what do those interest rate rises do? They also increase the cost of building materials, they make badly needed new homes yet more expensive to build—and we are falling ever behind on new home construction—and renters suffer more as landlords, reasonably, try to pass on the higher costs of mortgage interest rates to tenants. Who hurts? The Australian people hurt. Australian families hurt. In November they have had an interest rate rise, and the commentators say that more are expected. So we look to December, to Christmas and to a new year. If the record of this government since the end of 2007 is anything to go by, there will be very little in the Christmas stocking for most Australian families.

Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

I am glad Senator Payne has chosen, of all the questions today, to focus on this particular matter, because there has at least been an attempt at some serious consideration of some of the fiscal issues confronting Australia. However, I need to take a short divergence back to the issue of interest rates, because I think Senator Payne has demonstrated—as indeed have some of the other comments today—a fairly selective consideration of some matters. Under those opposite, official interest rates rose to 6.75 per cent. That is two percentage points higher than rates are today, at 4.75 per cent. A family on a $300,000 mortgage is paying $156 less each month in repayments than when the Liberals were last in government. That is a saving of $1,872 a year.

But, after that one brief point, let me go back to the broader fiscal strategy, because I think that is critical and very important and we should not allow the opposition to try and cherry-pick and make trite points on our attempt to deal with the issues associated with the change in exchange rate and the impact of that on our economy. We have a strategy that will get the budget back to surplus in three years, well before any major advanced economy, and we still have such a strategy. It has been endorsed, again, by the IMF, the OECD, the RBA and international credit rating agencies. We are delivering the fastest positive budget turnaround in over 40 years: fiscal tightening by 4½ per cent of GDP over three years, including 1.3 per cent of GDP this year alone. This is faster than we saw in recoveries from previous downturns and faster than anything we have seen since records have been kept. This reflects—

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

You haven’t done it yet. And why is it so big? Because the starting point is so bad. You’re making a virtue of—

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! Senator Collins has the call.

Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

Thank you, Mr Deputy President. I was in fact finding it difficult, from this place in the chamber, to even hear myself think. This reflects the methodological adherence to our strict fiscal rules, and let me cover them. We are keeping real spending growth to two per cent or less a year; that is around half of what we saw in the last four years of the coalition, and it is around half the rate that spending has grown at in the past 40 years. That is exactly why the OECD has described our strategy as ‘bold’, ‘well designed’ and ‘effective’—some of those references in the OECD report that, of course, selective representation was not covering in question time. We have been offsetting every single dollar in new spending. We have delivered $83.6 billion in savings across three budgets.

I was feeling slightly sorry for Senator Joyce earlier today when I was considering the performance of Joe Hockey as current shadow Treasurer.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! Senator Collins, you must refer to members by their proper name.

Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

Sorry; you are right. I should not have said Joe Hockey or Sloppy Joe; I should have said Mr Hockey.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! You are only compounding the problem.

Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

I withdraw that comment. But, as the opposition have flip-flopped, for instance, over their view on the Greens bill with respect to banking regulations and when the serious issues arose around those policies, we have stayed the course on serious policy development in terms of how we will deal with banking regulation.

Unfortunately for Senator Joyce, he lost my sympathy today when he was suggesting that the government should respond to answers in question time by the approach of tossing a coin: ‘Pick an answer; you’ve at least got a 50 per cent chance of being right.’ This is someone who was shadow finance minister: ‘Pick—there’s a 50 per cent chance.’ Certainly he had difficulties in mixing up his billions and his millions, but to suggest in serious governance that we should toss a coin is really quite concerning.

But let me go back to some of the more serious matters about our fiscal strategy. At the same time as we have been quite methodical in our adherence to our fiscal rules, the fiscal stimulus is being withdrawn, contrary to the myths being projected from the other side. Far from fuelling growth, the withdrawal of the stimulus will subtract around one percentage point from growth this year, and the remaining investments are in the long-term infrastructure which is absolutely critical to building our productive economic capacity and maintaining our strong economy and economic growth. This, again, is the issue that the opposition forgets. The opposition forgets the economic circumstances we were left in after many years of underinvestment in nation building and infrastructure. But much of that strength has now been returned to the economy, and that is why we were able to ride through the global financial crisis, contrary to suggestions such as those from Senator Macdonald that it is all related to his friend Mr Costello.

We have a comprehensive strategy to build future capacity, which is the best way to contain inflationary pressures over the long term: investing in major rail and road upgrades and the NBN—yes, the NBN is about future capacity, skills and education—and, of course, cutting the company tax rate. Unlike the opposition’s policy about PPL, we are cutting the company tax rate to make businesses more competitive.

These are all the issues that, of course, Senator Payne in her comments did not go to: how critical they are and, certainly, how seriously the Gillard government takes the issues of our fiscal responsibilities and fiscal plans. As I said at the outset, we do have a strategy that will get the budget back to surplus in three years, well before any major advanced economy.

Nothing in MYEFO has changed that. Nothing that Senator Payne referred to has changed that. Nor, indeed, did she acknowledge that our plan has been endorsed once again by the IMF, the OECD, the RBA and the international credit rating agencies. Where on earth the scaremongering from the opposition—without any support or credible sustenance from serious commentators in terms of economic recovery—came from is beyond me. Whether they think that they can continue to just run these lines and say them often enough so that the punters out there will just accept them, it just will not work. (Time expired)

Judith Adams (WA, Liberal Party) Share this | Link to this | Hansard source

I too rise to speak on the answers given by Senator Wong at question time today. I will just quote the Treasurer; in July he said:

… we will do everything as we go forward to ensure we minimise those cost-of-living pressures …

In front of me today I have two news articles that have been published since the last rate rise on Melbourne Cup Day: ‘Rate rise compounds woes for cash strapped families’ and ‘Average families struggle to meet costs’.

The Treasurer has said that they will help these families. What evidence do we have? We keep being told that, yes, the budget will come back into surplus in three years time. But the evidence is just not there. Unfortunately, we have this looming dark shadow of the carbon tax as well—the tax that before the election the Prime Minister said would not happen. Now that is coming as well, and that carbon tax will actually compound on these poor families who are struggling to meet the above average costs.

As an indication of how much it costs, because of higher living costs a family on a single average income of $75,000 a year just cannot exist and meet their living costs for basic necessities. There is research that comes from the Weekend West showing that a family of four would need a full-time and a part-time average income to cover the weekly $1,175 cost of necessities. This includes payments for an average-size mortgage, insurances, food, medical cover, car costs, rates and utilities.

These families really are battling and, coming from a rural background—especially in Western Australia where we have a very limited grain harvest and people who are desperate to try to pay their interest rates—these sorts of costs are unfortunately absolutely out of their depth. The frightening part is that a number of people have to use their credit cards to pay for food. They have maxed out their credit card and they are paying for basic day-to-day things such as food, fuel and transport using their credit card, and are not able to clear the expenses they have already made.

Another indicator which applies particularly to contractors and tradespeople is having no financial contingency plan for when there is no income because of an illness or accident. Small businesses in these farming communities are really battling. They are not getting paid, they have to do a seven-day payment to the people they are buying things from and it is all becoming very difficult.

I return to the carbon tax: as far as electricity costs are concerned, where will all of this end? We hear stories about pensioners who are petrified to have their lights on and their heating on, and who are lying in bed covered in blankets trying to keep themselves warm. It really does worry me just how we are going to deal with that issue when it comes up. For the number of social groups who are trying to help these people, the unexpected rate rise last week has generated a huge surge in activity for financial counsellors and the people who supply families with groceries and also help with their repayments when they are not able to make those. Counsellors have a huge job trying to help with debt management arrangements. It is the last resort when people have to go to these people and say, ‘Look, I just can’t cope’. Unfortunately, often it is too late and their possessions are repossessed and their houses are as well.

We really have a problem and I do ask where this government are going and what they are showing to say that they have this in hand, because to date we have not seen any evidence whatsoever of this.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy President. It is great to see you here in good health. I have not seen your smiling face for a couple of weeks. Welcome back. I rise to take note of answers given to questions today too, but before I do, if I may, I just want to clarify that it is a very serious issue when we talk about families struggling and, more importantly, when pensioners do it hard. Trust me, we all know how hurtful and distressing that can be. I think it is important that we do clarify one thing for the record. Senator Adams touched on pensioners too scared to turn their heaters on, shivering through the freezing winter, with no help from the Barnett state Liberal government which increased the cost of power by some 47 per cent in Western Australia.

Michaelia Cash (WA, Liberal Party, Shadow Parliamentary Secretary for Immigration) Share this | Link to this | Hansard source

Your government’s failure.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I am sorry, Mr Deputy President, for talking while other senators are interjecting. I do take note that Senator Cash from Western Australia jumped to the defence of the Barnett state government’s increase in energy charges of 47 per cent. Senator Adams sat quietly and listened, but Senator Cash is all of a sudden a defendant for higher electricity charges in Western Australia. Senator Cash, well done! The West Australians must be so proud of your stance. Through you, Mr Deputy President, well done, Senator Cash!

It does give me pleasure to talk about the nation-building stimulus package in particular. It was very rewarding to be able to travel through the great state of Western Australia to open up a lot of these Building the Education Revolution projects. Mr Deputy President, as you would be aware $16.2 billion was set aside for Building the Education Revolution. I must say not only do I enjoy going to the openings but so do the Liberal members in Western Australia because they are always pushing their way to the front to get their photos taken even though—I think the record will correct me if I am wrong—I am sure they voted against every stimulus in this chamber when we were putting them through in 2009. When the government was pushing the legislation through not one of them on that side actually came over to this side and voted with the government. They voted against it, so why would they be pushing to get to the photographers to get their photos taken at every opening? That is interesting, but it is all nice; it is all good.

Last week I had the pleasure of attending some four Building the Education Revolution great stories in the federal seat of Hasluck. At Thornlie Primary School they also celebrated their 50th anniversary and I saw the early childhood learning centre that was opened there and the delight of the preschool kiddies that turned up sitting in their uniforms in the new undercover area next to the music and arts centre. It was a fantastic achievement and how thankful not only the P&C, but the teachers, the staff, the parents and the principals of these schools are that the federal government stimulated the economy and kept the employers employing contractors and employees and now they are seeing the reward in their school community with their new education centres. I also had the pleasure of visiting Lesmurdie Primary School. It was the same story. I also went along to Hillside where there was exactly the same story. I am talking about the great work that was done by a very responsible government through the greatest financial challenge that this country and the world faced since the 1930s.

Those on that side have obviously forgotten about it but, mind you, if I had a deputy leader like theirs at the time, the member for Curtin, saying we should just sit on our hands and wait or just look, I would be pretty quiet too. Mind you, I would not have the gall to be pushing my way to the front for a photo opportunity every time one of these buildings is opened, but still they love it, I love it, the parents love it.

The Nobel laureate in economics, Professor Stiglitz, was out here a few months back and he actually commended the Australian government. I think his words were along the lines that it was probably the best economic stimulus that he had seen and thank goodness that the government did move early to create employment opportunities and to put dollars in the pockets of ordinary Australians so that they would get out and stimulate the economy. In all fairness, with no disrespect to the opposition senators over there, I think a recommendation from Professor Stiglitz goes a lot further than pushing your way to the front for a photo opportunity at a school.

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy President, and may I join Senator Sterle in welcoming you back. In rising to take note of answers you have to hand it to those on the other side of this chamber who really abuse this chamber to try to rewrite history. I would like to remind Senator Sterle of the facts in relation to the stimulus packages of his government and remind him that we actually did support the first stimulus package. Our concern in supporting the second stimulus package was the fact that it was four times the size and introduced before we saw the effect of that first stimulus package and how it would filter through the system. But it does not ever stop Senator Sterle and those on the other side who want to rewrite history according to their own whims and fancies.

Minister Wong stood up and talked about the lack of fiscal responsibility of those on this side of the chamber. I would put to Minister Wong that it is what you do in government that counts. I will be very happy to stand up any day and hold up our record under the Howard-Costello government and demonstrate what fiscal responsibility is all about—unlike what we have seen on your side: this scandalous, extraordinary, flagrant waste of hard earned taxpayers’ money. You on that side have no idea what fiscal responsibility actually means. It is a definition that we are very happy to provide to you. Australians look to their governments for effective and strong management. Your answer to that, as Senator Adams has already raised, is to roll out programs like the BER, which has wasted billions of dollars. There were programs like the insulation pink batts scheme under Garrett. He was sidelined; he was not doing too well. But we still have not fixed it.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! Senator Kroger, you must refer to people in the other place by their proper names.

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

Minister Garrett. Thank you, Mr Deputy President. I was getting overwhelmed by the scandalous waste by particular ministers, so I lost my sense of etiquette at the time. My apologies. What needs to be pointed out is that this scandalous waste of money is the very thing that is increasingly putting inflationary pressure on the cost of living. The energy cost that Senator Adams has already raised is but one example. She is absolutely right in saying that the carbon tax that was totally ruled out before the last election and has now been ruled in will actually put upward pressure on electricity prices. All cost of living price rises are a threat.

Now the Prime Minister has formed—to put it in her words—a formal alliance with the Greens so that when they whistle we know that she will be beholden. First up, we have the carbon tax committee, the committee for believers, but there are many, many other policies that they are interested in bringing into this place that will dramatically affect the cost of living and have a significant impact. There are policies such as the introduction of congestion taxes and increasing the tariff on four-wheel drives by 10 per cent. We have already covered the resource super profits tax in this place many times, where they would like to see a 50 per cent tax rate. We have seen the slashing of education support and funding for Catholic and independent schools. There is the abolition of the private health insurance rebate. We are seeing the taxing of family trusts. There is also the review of the GST and the implementation of that. There are many, many policies that directly impact the cost of living, and it is these that we should be very much aware of. The government want to look at changing the taxation system from work based taxes to taxes on natural resources. (Time expired)

Question agreed to.