Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The coalition will, of course, not oppose these bills. However, let me just make a number of observations on behalf of the opposition. Budget time is always the time to take stock of how the government has been performing. When it comes to the management of public finances, this government has performed very badly indeed. This government inherited a very strong budget position back in 2007 when Kevin Rudd first became Prime Minister. The budget was $22 billion in the positive and we had $70 billion worth of net government assets. But last year we had a budget that was $55 billion in the red and this year we have a budget that is $50 billion in the red—and it is going to be $22.3 billion in the red next year. We are now on track for $107 billion worth of net government debt—the highest ever.

You have got to remember that back in 1996 the then Howard government inherited $96 billion worth of Labor Party debt. Through hard work, good government and sound financial management the Howard government was able to pay off that debt, return the budget to surplus and deliver tax cuts. But what we have had under this government is wasteful spending, more taxes and record levels of debt and deficit. In fact, this year we will have the second-highest deficit on record, after we had the highest deficit on record last year.

The people of Australia have to pay the price for this bad financial management. The people of Australia have to pay the price through the proposals in this budget by the Labor Party to abolish the private health insurance rebate for hundreds of thousands of Australians and reduce the private health insurance rebate for hundreds of thousands of Australians through means testing. People across Australia will pay the price for this government's reckless spending and mismanagement of our public finances.

Under the appropriation bills that we are asked to support here tonight, this Labor government will pay $26 billion over the next four years just to pay the interest on the debt that they have accumulated over the last four years. It is just extraordinary. Back in 2007 the government was paying $0 in interest on net government debt. Today, the government is paying $26 billion just on the interest to service the debt that they have accumulated since they came into government in 2007.

We have had four Labor budgets and they have been four successive deficit budgets. This Labor government has not delivered a single surplus budget. In fact, Labor has not delivered a surplus budget since 1989-89. We have had nine successive deficit budgets from the Labor Party.

Minister Wong has made it into the chamber. She keeps lecturing us about what she perceives to be our record in relation to fiscal management. I say to Minster Wong that people across Australia well understand that it is always the coalition that has had to fix up the fiscal mess that Labor govern­ments have created in Australia again and again and again. That is what happened last time—we had to come in and fix up the mess—and that is what will happen next time. The longer Labor stay in government the greater the mess they are making—and the more people across Australia have to pay the price for Labor's fiscal mismanagement.

In relation to Appropriation Bill (No. 2) the government is seeking an increase in its gross debt ceiling from $200 billion to $250 billion. It is important to pause to reflect on this. It is just over two years ago that the government asked for the debt ceiling to be more than doubled—to $200 billion—and now the parliament is being asked to increase the gross debt ceiling by another $50 billion. And the parliament will have to agree with that because by the end of June, according to the budget papers, according to the face value indicated that is being used for this, gross debt will already be at $192 billion.

The day before the budget, Senator Wong went out into the media and said that this year's budget will be a typical Labor budget. And she was right. It was a typical Labor budget. It was a high-spending, high-taxing Labor budget with more debt and more deficit, and it was sprinkled with a whole series of ideological attacks on Australians who have aspirations to get ahead. This is what Labor governments do when they get the chance. They spend beyond their means and then have to find some targets and some people across Australia that can pay the bill. Invariably, the people whom Labor wants to pay the bill for their reckless spending and incapacity to manage public finances are those who are working hard to make a contribution and to get ahead, and are a key part of driving the economic prosperity of Australia. This government is currently borrowing $135 million a day just to fund its day-to-day expenses. In the week after the budget, the Minister for Finance and Deregulation tried to make a virtue of the fact that it had been able to keep spending growth, in real terms, below two per cent. What she did not mention—and what was excluded from the graphs in the budget papers—was that over the last two years spending in real terms had gone up by 17 per cent. It has been the highest increase in spending, in real terms, since the Whitlam government: 17 per cent. If you start off from an inflated base, of course it is easier to keep your spending growth limited to below two per cent.

What Labor has done in this budget is establish what was described as crisis level stimulus spending as the new base. We had two years where the government was dishing out the money—it was spending money on pink batts and school halls and sending out cheques to people—and that inflated level of spending, spending at record levels, has become the new base. The government somehow wants us to think that it is being disciplined and doing a great job just because it is able to bring spending growth from that inflated base to below two per cent. That is not an achievement. It would be extra­ordinary if the government were not able to keep it below two per cent.

Incidentally, I have been asking some questions on notice in relation to this and they have been on notice for nearly 100 days. For more than three months there has been a question on notice to the Treasurer asking him how much of the fiscal stimulus spending for this year and next year remains uncommitted. I have not had an answer. For more than three months the Treasurer has failed to answer a question about how much of the fiscal stimulus spending has not been either spent or committed.

This is the one-year anniversary of the ascension of Prime Minister Gillard to the prime ministership. It was today, a year ago, that we all watched the new Prime Minister, Julia Gillard, tell us that she was going to fix the mining tax, fix the climate change mess that she had inherited from her predecessor and fix the border protection fiasco she had inherited from her predecessor. It is a bit like groundhog day, because if you look at the debates we have been having today, last week and the week before that—in fact, if you look at the debates we have been having every single week over the last 12 months—there has been no moving forward at all. The Prime Minister was going to move forward, but I think we are just stepping on the same step every day. It is like every day we wake up and it starts again.

We talk about the broken promise on the carbon tax, because the Prime Minister promised not to have a carbon tax and now we are going to have one. We talk about the mining tax mess. The more scrutiny that is applied to it the more obvious it becomes that it is a complete mess. It is a mining tax which came out of a flawed process, an exclusive, secretive negotiation with the three biggest mining companies, which of course is not a sound foundation on which to develop a tax policy. Then we have the border protection fiasco. The Prime Minister told us about the East Timor solution 12 months ago. That was going to be the big fix. Remember the East Timor solution? What has happened to that? Now we are talking about the Malaysian solution. That is not going anywhere either.

This is a government that has completely lost control of all aspects of government. It is a government that has lost control of the financial management situation. It is a government that has lost control wherever you look. Look at live cattle exports. Why would you impose a blanket ban on live cattle exports if you were concerned about some rogue operators doing the wrong thing? Why wouldn't you target those rogue operators and allow all the other abattoirs in Indonesia and other places that are complying with appropriate standards to continue operating? This is a government that does not seem to care about the flow-on consequences for real people across Australia—real people across Australia who are getting hurt. This government, being driven by the Greens in this chamber into one corner after another, does not seem to care when real people across Australia are getting hurt by its reckless and ill-considered approach to government.

These bills include Appropriation Bill (No. 1) 2011-12, which is the primary budget bill to appropriate funds from the Consolidated Revenue Fund and for the ordinary annual services of government and related purposes. It includes a total appropriation of $72.85 billion. We also have Appropriation Bill (No. 2), which includes the request to parliament to increase the government's gross debt ceiling from $200 billion to $250 billion. It is intriguing. The government is also asking the parliament to remove the requirement for it to provide a statement of reasons as to why it has to further increase gross debt before it goes ahead with it.

I would like the minister, in her second reading reply, to explain why the government is not prepared to comply with the transparency and scrutiny requirements that are currently in the legislation. Why does the government want to remove the particular requirement to table a statement of reasons in both houses of parliament? This is a government led by a Prime Minister who promised us back in August 2010 that this was going to be a new era of openness and transparency—that the government was going to let the sunshine in. Wherever you look, you find that this is a secretive government which is trying to reduce the capacity of the parliament to scrutinise its activities. It is a government that, rather than letting the sunshine in, closes the curtains wherever it can. Of course, secretive govern­ment makes for bad government. It is our job in this chamber to ensure that people across Australia can benefit from the best government possible, and this government seems to be a lost cause when it comes to that.

We also have to remember that this budget does not include the carbon tax. Even though we are told the carbon tax is going to start on 1 July 2012, the carbon tax is not included in the budget. Why is that? The government says, 'Oh, well; we don't know yet what we're going to do.' But the mining tax, which is supposed to start on the same day, 1 July 2012, has been in the budget for 12 months. Why do you think that is—why do you think the mining tax has been in the budget for the last 12 months and the carbon tax has not been? The reason is that the mining tax, which was developed through a deeply flawed process with no consultation and no engagement with state and territory governments—even though the mining tax in its original iteration was supposed to replace state and territory royalties—is supposed to generate significant revenue to help the government create the illusion of an early surplus.

It talks about all the associated budget measures, which the government says will be part of its reform agenda. They do not start to come into effect until a bit later, and the cost of the related measures will only really play out during the years beyond the forward estimates. But, of course, the mining tax revenue is in this budget. The mining tax revenue is what is required to help the government make its claim of an early surplus. But the carbon tax would raise $11.5 billion worth of revenue if the government stuck to similar parameters as were on the table in the context of the Carbon Pollution Reduction Scheme.

Now the minister will say, 'We don't know yet; we haven't made decisions yet,' but we were told that the Carbon Pollution Reduction Scheme parameters were the benchmark from which they started their discussions. I suspect it will be very difficult for the Greens to vote in favour of a carbon tax which imposes a lower carbon price than the Carbon Pollution Reduction Scheme. Why did they not vote for the Carbon Pollution Reduction Scheme if they are now be prepared to vote for a price on carbon than is lower than what was in that legislation?

The point here is that this appropriations bill, this budget, is actually inaccurate; it is wrong. From 2012-13 onwards the information is wrong, because we have the wrong revenue figures, the wrong expenditure figures, the wrong employment data and the wrong economic growth forecasts, because all of that is going to change once we know what the government's plans are in relation to the carbon tax—the carbon tax the Prime Minister promised before the election would not be introduced.

This budget is essentially a lie, because the carbon tax is not included, and neither is the National Broadband Network expen­diture. The government said: 'Well, that's an investment; we are going to make a return on it. Trust us; we're a Labor government. We're going to put $50 billion of taxpayers' money on the table and we're going to make some money for government. We're going to be running things again. We have to get back into the telecommunications business and we're going to make some money for you, so we can take it off the budget. We don't have to be accountable for what we are doing with this; we're just going to hide it. We're not going to allow you to scrutinise it as part of the budget process. Trust us: we're going to make some money out of it.'

Labor plans to borrow $18.2 billion for the NBN over the forward estimates. The potential for waste here is frightening. But they say, 'Oh, no, we will manage it very wisely; we will manage it very carefully.' Remember the pink batts? Remember the school halls? As I said earlier, people across Australia know that it takes a coalition government to bring the public finances back in order. It seems that the Labor government knows that too, because when they wanted to put a package together toward the recon­struction effort in Queensland, what did they do? They went to John Fahey, a former coalition finance minister, to make sure that there was going to proper scrutiny and proper processes. Labor does not trust itself to manage public finances properly, so how can the Australian people trust them?

Obviously the coalition will not be opposing the appropriations bills, but we do have very severe concerns about where this government is taking the country, given the record levels of debt and deficit that they have accumulated in just four years.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

I rise tonight to speak with a sense of excitement. I cannot wait for tomorrow. It is like all your birthdays coming at once. It is 'Assassination Day' tomorrow, and I just cannot wait. My invitation obviously is still in the mail; I have not quite got it, but I think most Australians—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Madam Acting Deputy President, I rise on a point of order on relevance in terms of the previous content. I would like to know how it links to the appropriation bills.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

There is no point of order, Senator Moore. Senator Macdonald, we are debating the appropriation bills.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Of course, and thank you, Madam Acting Deputy President. Senator Moore, wait and see the connection, but you have been in the parliament long enough to know that on appropriations any subject is a matter for discussion. But I do want to confine my remarks to money matters, as you will see. I had spoken for a full 23 seconds before the Labor Party took a point of order. It shows that the Labor Party are certainly very sensitive about the great celebrations tomorrow of 'Assassination Day'. And why shouldn't they be? The most rueful political assassination in the history of this parliament occurred one year ago tomorrow.

The parties, I am sure, in the Labor Party particularly, will be interesting to be at. I suspect that 'Assassination Day' tomorrow will be a day to cement the plans for the next assassination, and we know with the Labor Party down at 27 per cent in the opinion polls that, being as ruthless as they are, being only interested in power for power's sake, that the Labor Party will be plotting now to get rid of Ms Gillard and install the next one on the revolving roundabout in the shades of New South Wales.

One of the problems with Ms Gillard, as it was with Mr Rudd, as it is with Labor anywhere, is the inability to manage money. I want to continue mentioning that, because some of my colleagues here were not around in 1996, when the government changed from the last Labor government to the Liberal government. We were told that there was to be a surplus in that year on the current account. When we got into government, of course, we found there was a $10 billion deficit. Not only did it show bad financial management, but it showed an inability to tell the truth and an action by the Labor government to do everything possible to keep the truth from the people of Australia—shades of, I might say, 'There shall be no carbon tax under a government I lead'. A promise to the Labor Party means absolutely nothing. Telling untruths when it comes to financial matters is part of their DNA.

Not only was that bad enough, but when the new government came in we found that in fact there was a $96 billion debt owed by the Australian people which it then took the next Howard-Costello government almost nine years to pay off—and we did pay it off. It took a lot of constraint. A lot of the programs we would have liked to have funded we could not fund, but we understood the importance of paying off debt and getting surpluses. Of course, in our last several budgets we had annual surpluses, and those surpluses were put aside in the moneybox, so to speak. When we were defeated at the election, we handed to the incoming government a surplus of $60 billion, set aside for a rainy day. That, of course, was spent in less than two years, and we now find ourselves in a situation where Common­wealth net debt levels will rise from $82 billion this year to $107 billion next year, largely to fund the budget deficit and helping to drive up the liabilities incurred for Australia under this Labor government from $200 billion to $227 billion.

While Labor Party people—or some of them—are out celebrating tonight, we are debating a bill that, at five minutes to midnight before the end of the financial year, has this provision in it to allow the debt liabilities to increase beyond what they are now to allow the Labor Party to continue borrowing. I am sure not many Australians would be aware of that. Our current debt, $227 billion, is going to increase. Under the rules and regulations for the governance of Australia there is a limit on what they can borrow, but this bill today will allow the Labor Party to increase the amount of their borrowing beyond what it is at the present time.

David Murray, the former Future Fund boss and former chief executive officer of the Commonwealth Bank, sounded a warning the other day about European and US governments and their sovereign debt crises. He urged governments to heed the lessons of Europe and the US as growing state and federal borrowing pushes their financial liabilities past half a trillion dollars in the new financial year. The net debt levels in the states—all of them Labor states until very recently and, of course, the financial mess that all of the states are in is a result of decades of Labor government—have risen from $102 billion this year to $135 billion next year. This will put their net financial liabilities at a record $285 billion. If you add to that the $227 billion that the Com­monwealth has then you understand why people like Mr Murray are sounding warnings. Mr Murray said that these huge debt levels could force private sector to compete for funds as the resource sector booms. Of course, we know what happens when there is competition for money.

The lesson from Europe and the US is that high public indebtedness can lead to significant structural difficulty. The debt crisis in Europe has forced governments to cut public services and pensions, while the US is struggling to raise the $14.3 trillion debt ceiling it has—they want to try and increase that; they are not having much success in Congress—to avoid the United States, would you believe, from defaulting on its debt. We are not quite to that stage, but leave a Labor government here for another few years and we will be. Labor Party people who are oh so concerned, so they say, about the poorer people and the working people should have a look at what is happening in Europe after years of socialist and left-wing governments. They are now cutting pensions in Greece. They are cutting services because the government simply cannot pay for it any longer. That is what is happening and what will happen in Australia if Labor continues to govern in this country.

We have already seen how taxes just keep coming. The carbon tax, the mining tax, the flood levy; on and on it goes. Labor is addicted to debt; it is in their DNA. But they have to understand that you just cannot keep borrowing. You cannot do it in your own household and the country is the same. Someone has to pay back the debt, someone has to pay the interest and someone has to keep borrowing the money to pay the interest so that Australia can keep up the basic services.

That is where I despair. The Labor government has been one continuous episode of mismanagement and waste. We know about the pink batts and we know about the school halls. How much have we spent on the climate change debate in the last term of government, ending up in that failed Copenhagen conference that became a laughing stock? The whole Copenhagen climate change thing was so mismanaged by Australia. Just the sheer money, as well as the carbon footprint that others have written about, of going through the routine under the last Labor government's failed approach to climate change. It goes on and on.

I am concerned at the increase in the liabilities from the federal government. Again, I am concerned that in typical form this Labor government is bringing in—sneaking in—at five minutes to midnight before the end of the financial year this bill to further increase the ability to borrow, at a time, as I say, when people are out celebrating the assassination a year ago.

I know the news media tomorrow will be all talk about 'Assassination Day'—the one a year ago. There will be a lot of commentary about the 'Assassination Day' coming up. We know from discussions with our Labor Party friends that the situation is getting to an extent where something will happen. When the next assassination happens I think even the Labor Party will have to go to an election, so Labor friends are telling us to look towards September or October: get a new leader, try to get the carbon tax off the agenda, try to get the illegal boat people off the agenda and try to get people to forget about the mining tax so that we can go to an election this year.

It is just becoming untenable. As you heard from the previous debate, the Greens are out there boasting about what they have done to increase taxes yet again, and saying to the Labor Party and the Taxation Office, 'You want more money? You want more taxes? We're here to help.' I cannot believe that, but I suppose those of us who have followed the Greens for a while at least appreciate their honesty, unlike the Labor Party. At least the Greens are open about it: 'We want to increase taxes, we want to make it more difficult for families in Australia to exist. We want to put more and more pressure on the cost of living.' That is something, of course, that we in the coalition do not want to do.

For the reasons Senator Cormann indicated, we will not be opposing this but we will continue to highlight the financial excesses of this government and their simple inability to deal with money.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Tonight I cannot help myself: I must speak on this issue. This is an issue that has disturbed me for quite some time with this current government. It has disturbed me to such an extent that I lost my finance portfolio. But at the time, I said the outrageous thing that our debt was starting to get out of control. I also made comments that the position of America with their debt was becoming untenable. I have received some sort of succour now that those same comments are reported and repeated by David Murray, Noel Ferguson and John Roskam. There have been articles written on it—too late for me, but not too late for Australia.

I think we should really flag exactly what is going on here. Debt does not lie. Debt is the absolute key performance indicator of how you are going financially. You can have all the beautiful stories you like—all the wondrous stories that I used to see as an accountant and in my five years in banking—about how things are actually going. But you just say to them, 'What do you owe the bank? Are you paying off your debts? Are you getting further into trouble?' Because debt does not lie: you cannot get around it. It is there, on your bank statement. You can give wonderful stories about net debt and this debt and that debt but it is your gross figure, easily pronounced on your bank statement.

The gross figure for our nation comes from a thing called the Commonwealth Inscribed Stock Act. That is where it comes from. Australian government securities outstanding: easily found at the Australian Office of Financial Management website. Currently it is $187 billion. Actually, in the last week they paid a little bit of it back, but that is just because it is the interim period between the roll of bills and it will blow right back out to where it was at $196 billion. The reason we are in here tonight, and the reason they sneaked in this extension of debt is because if we did not extend this debt the government would close down. It would all finish; the cheques would bounce and we would have no money. They said as much in Senate estimates, where they clearly said, 'Oh, that would be so irresponsible not to extend the debt limit,' because if you did not extend the debt limit the place would just come to a conclusion.

So we are extending the debt limit; we are extending the overdraft to try to keep the place running. But we are not paying the money back. There is always the promise of paying the money back but they never actually deliver on their promise of paying the money back. I remember reading back in 2009 that the Treasurer, Wayne Maxwell Swan, was going to give us a temporary increase in the limit—from $75 billion, up by $125 billion to $200 billion. It was temporary, he said, because China was going to fall backwards. It was basically going to go into recession, along with India. Neither China nor India missed a beat. They charged ahead. Not only did they charge ahead but our debt charged ahead and went from a temporary increase to a permanent increase. The premise of the Treasurer's wish for an extension was not there, but the debt certainly was. You could see where it was. If you could see a source and application of funds statement—'Where is the money?', that is what they always ask—you would see that it is in ceiling insulation for the rats and the mice to sleep on at night. It is in school halls. It was in that manic $22.8 billion they sent out in $900 cheques. I would like to remind the Senate that I voted against each one.

Where has this led us? We have a gun held to our head to basically take this debt ceiling out and, at the same time as that debt ceiling is going out, we have all the other fiascos around this nation—all caused by the Australian Labor Party. We have Queensland heading towards a net debt position of about $85 billion in 2014-15. We have New South Wales heading to a net debt position of $71 billion. We have Victoria heading towards a net debt position of $47 billion. With all these structural dislocations the debt adds up. Then we have this other fiasco: NBN, the next budget nightmare. We are going to borrow $27 billion and then another $10 billion on top of that and then, magically, we are going to make money. We will magically find the rest of the money to get us out to a $56 billion spend. I can tell you one thing: the Treasurer will not find the money; he will be borrowing that money as well—or shutting it down. That debt also gets added in, and on and on it goes.

David Murray clearly stated the other day in the paper that we have to really watch ourselves. I seem to remember saying something very similar myself a couple of years ago. He mentioned half a trillion. Isn't this marvellous? Under this crowd, we have got ourselves into the trillion club. We can actually start talking about our debt as a portion of a trillion.

What is happening to private enterprise? Money is being sucked out of the economy. On the news tonight we hear that the people in Sydney, the businesses, just do not have the cash. It is not there. We hear it in Brisbane. We even hear it in small regional towns, such as Dalby, that the money is not there—because he is sucking the money out of the economy. Is it just the view held here that the debt is out of control? No. I have got a paper from Dr Ken Rogoff, from the Harvard Centre for Economic Policy Research. He has got no barrow to push. I do not know him; I have never met him. What does Dr Ken Rogoff say? He talks about the cumulative increase in real public debt since 2007—surprise, surprise, that is when the Labor Party got voted in. Let us go through them. The worst was Iceland; that stands to reason. The next was Ireland, the next one—not Spain, not the US, not the UK, not Greece, not Portugal, not Chile, not Mexico—is Australia. Congratulations! You are No. 3. You have done an incredible job. Since you have been here, you have brought about the third-biggest cumulative increase in real public debt since 2007. Well done! He is a genius, our Treasurer. What an omnipotent light! What an orb of financial wonder! The debt has got to be paid back. There are real people who really want their money back. The Chinese really want their money back. The people we owe the most money to are the Chinese government. What a wonderful position we have got our nation into. They want their money back. The people in the Middle East and the super­annuation funds of Japan—they all want their money back. We have to roll this money. We have to reapply with our begging bowl and say, 'Please give us the money.'

We say, 'It's all right, because we have got a mineral based economy and it's bullish and we are sucking in funds because we are a commodity-based economy.' Well may that be the case, but I hope it stays that way, because if it does not you are going to be a beggar with a bowl in the international money market trying to prop up your budget. You did it to us. The Labor Party did this to us.

The Australian people have got to realise what happens when this comes unstuck. What happens when it comes unstuck? What happens to us is exactly what happens everywhere else. There is a complete constriction on the availability of funds for public expenditure. There is a complete restriction on the capacity to meet your Pharmaceutical Benefits Scheme require­ments. So the pensioner, when they go to the chemist and ask for the script, believing it will be subsidised by the government, will find out that, because of the stuff-up that the Labor Party has created, the money is just not there. So they will have to pay the full price, the actual price. Instead of the $4 script it will be the $400 script. Instead of the $200 cancer treatment it will be the $20,000 cancer treatment. You will have to pay the real price. Access to free and public hospitals: if the money is not there, you cannot afford them. Close them down or make people pay. That will certainly fix up the waiting queues in public hospitals, because they will not be public anymore, because you will have to pay, because we will not have the money. The Defence Force: you will be able to see your ships all the time. You will be able to get a marvellous sense of pride, because our fleet will always be in port, because it will not be able to afford to go to sea. Pensions: forget about pension rises; forget about pensions altogether. This is what happens when you get out of control.

As I have said to so many clients, when they start going out of control, when you see this course of action—this addiction to debt—and you ask them, 'Does your son or daughter have a caravan?' They ask, 'Why?' You say, 'Because that is where you are going to live, unless you get it under control.' The Labor Party can smirk, but I do not want you to smirk; I want you to show me how you can pay the money back. I want you to prove to the Australian people that you can pay debt back, because you have a commodity based economy and you have got debt in boom times. God help us when you have to pay it back when times are not so good. If you cannot make your two ends meet now, what hope have you got in the future? I would love to make the Labor Party sweat on this. I really would. I would really like to ring a bell for the Australian people about exactly what you are doing and where it is all going, so they could understand the sort of strife we are getting ourselves into. But apparently that is irresponsible—and I understand that. But the Australian people have to understand that under this crowd—with all their stories, like they are going to cool the planet; they are going to build a new, multibillion dollar telephone network; they are going to do this; they are going to do that—you always have to go to the article of truth. The key performance indicator for any government or organisation is whether your debt is going up or down. Do you have the capacity to pay your bills as and when they fall due? I might remind the Australian people that the way we pay out interest bill in this nation is that we just borrow more money. Capitalise your interests. In accounting terms it is called 'economic palliative care'. But we do it. We just naively stumble along, with this group of people who have no hope. There is no hope and no competence. We lay this at the feet of Wayne Maxwell Swan, of Julia Gillard, of Kevin Rudd and of whomever they pick next—Stephen Smith. But the unfortunate thing is that the people who end up paying all this back, the people who have to suffer for their stupidity, are the Australian people.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank all senators for their contributions to this debate. I will briefly—given the hour—respond to a few issues. Obviously, senators would be aware that these are the appropriation bills and they form the core of this, the fourth, Labor budget, a budget that builds a more produc­tive workforce, including a $3 billion training package. This budget delivers a plan for better schools, hospitals and health care, including a significant spend on mental health services and regional health services. It will also ensure that we remain on track to get in the black by 2012-13.

There have been a number of comments made about debt, and I just want to respond briefly to them. I would make the point that this is a budget that returns to surplus by 2012-13, with the budget growing both in size and as a share of GDP by 2014-15. This does represent the fastest fiscal consolidation since at least the 1960s, around 3.8 per cent over two years. This has been achieved despite significant revenue weakness from the legacy effects of the global financial crisis, an event which had an extraordinarily significant effect on the global economy and particularly on many developed economies but which the opposition appears to forget.

In terms of real spending growth, Senator Cormann made an assertion about two per cent. The two per cent cap is part of one of our fiscal rules. We have actually done better than that over the forward estimate periods. The average across the forward estimates averages one per cent per year, which is the lowest average real growth in expenditure over a similar period since the 1980s. And, of course, that is compared with real spending growth in excess of two per cent for most of the period the coalition were in government—an average growth of 3.7 per cent. The budget achieves savings of $22 billion in addition to the $83.6 billion identified in the last three Labor budgets. It delivers a net improvement to the bottom line of $5.2 billion across the forward estimates.

In many ways the following two facts are most important. Government spending as a share of the economy falls. So, for those on the other side who like to speak about the importance of small government, it is a Labor government that is actually delivering a reduction in government spending as a share of the economy to 23.5 per cent of GDP by 2014-15. And, in case people suggest that is just because it is at a higher level because of the GFC, I would make the point that that is actually less than the average of the 10 years preceding the global financial crisis.

A number of comments were made about net debt. Australia's net debt is forecast to peak at 7.2 per cent of GDP in 2011-12. This compares to an average net debt position of around 90 per cent of GDP in 2016 for most major advanced economies. Our peak net debt position is less than one-tenth that of comparable economies.

Senator Cormann made some comments about the government seeking to hide the debt cap. I think that is somewhat disingen­uous, given that it is in the legislation before the parliament and being debated. The senator also made some comments about the carbon price. We previously discussed that at length in estimates and in other fora. I would again make the point that the government have said very clearly: we will account for the carbon price in the usual way, after the package has been finalised—just as former Prime Minister Howard accounted for the GST well after he first announced it.

Senator Macdonald stated that someone has to pay back the debt. We agree, which is why we have put forward a budget with savings measures. I would make the point that in fact it is the coalition blocking a range of savings measures in this parliament that have an impact on the budget bottom line. If they are keen on a surplus, they need to demonstrate that by voting the right way.

I do welcome the comments that were made in the other place in recent times, including comments made by Mr Andrews yesterday:

We have said that, if we are going to oppose measures which the government puts forward and that opposition will lead to a cost to the budget, we will identify where the savings are going to be made in the budget in order to compensate for that loss to the budget.

If that is the new coalition position, I welcome it, because it is a new position and it is not the position that they have previously held. In fact, as I indicated prior to this debate, if the coalition's position in terms of their voting record and their $10.6 billion black hole were included, the coalition would in fact be in deficit in every year of the forward estimates—not the party of surpluses but the party of deficits.

Senator Joyce made some comments. I am not sure if they are able to be responded to. He did make a point about debt and I thought he might like to be reminded of what Moody's ratings agency said after the budget:

Moody's notes that Australia's government debt remains among the lowest of all Aaa-rated governments.

Goldman Sachs in their report state:

In order to avoid further interest rate rises it—

the government—

proposes a Budget that represents the biggest fiscal contraction since 1970 when comparable data commenced.

…   …   …

The Budget makes a genuine attempt to keep its commitment to return the Budget to surplus.

CBA Economics Update of 10 May 2011 states:

… the Budget is dominated by savings measures—new spending is limited and any significant revenue initiatives are largely deferred to the Tax Forum …

…   …   …

The Budget meets all the requirements of the government’s medium-term fiscal strategy and it adheres to the exit strategy from the GFC-stimulus period.

On that basis, I commend the bills to the chamber.

Question agreed to.

Bills read a second time.