Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

The President has received a letter from Senator Fifield proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:

The Gillard Government's continuing inability to balance the budget and wavering commitment to achieving a budget surplus in 2012-13.

Is that motion supported?

More than the number of senators required by the standing orders having risen in their places—

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

The Australian Labor Party does not know how to manage money. Even when the budget was bleeding with red ink back in May the Prime Minister, the Treasurer and the Minister for Finance and Deregulation were walking into television studio after television studio to talk about this surplus that we are going to have in 2012-13. The budget position has deteriorated dramatically since the mid-year economic and fiscal overview in November last year. The deficit, already one of the highest deficits on record, had deteriorated by another $8.5 billion in the couple of months between the mid-year economic and fiscal overview and the budget being delivered in May. The deficit had gone further down by $8½ billion. The deficit worsened by another $10 billion for the 2011-2012 financial year, to take us all the way up to $22.6 billion. So here was this government that wanted everyone to believe that 2012-13 was going to be the year that the Labor Party would finally achieve what they had not achieved since 1989-90, a surplus budget. But we have always been sceptical because this Australian Labor Party spends too much and borrows too much, and, of course, that is why they have to tax too much. This is a government which, in four out of four budgets, has delivered deficits. The last Labor Party surplus in government, here at the federal level, was, as I have mentioned, back in 1989-90.

The reason that this government ends up in this much of a mess is that they just do not know how to live within their means. When the minister for finance was under pressure because of this disastrous fiscal record under the Labor administration, she piped up and said, and this was in the lead-up to the last election, 'Hang on, we have made $83 billion worth of savings.'

Senator Wong interjecting—

Minister, I am happy to show you the transcript. You said it after the election and the Treasurer, Wayne Swan, said it just before the election and, of course, the Prime Minister has said it at various times as well. So '$83 billion worth of savings'—they were trying to make it look as if they had made some tough decisions. Given that '$83 billion worth of savings', everybody across Australia would think that the government had made some difficult decisions to cut spending. Guess what? Half of the money that was supposed to be in spending cuts was in fact new multibillion-dollar taxes or tax increases. This is a government that thinks that when they rack up a new tax they are actually saving money.

Let us take a step back. In the lead-up to the 2007 election the then Leader of the Opposition, Mr Rudd, said that he was going to be an economic and fiscal conservative; he was going to be a mini John Howard. He was saying to the people of Australia, 'Don't you worry. I am going to look after the public finances. I am going to look after the economy in the same way that John Howard and Peter Costello did.' Then, in the first budget, taxes went up by $20 billion and spending went up by $15 billion. In that first budget, the 2008-09 budget, they still delivered a $27 billion deficit, followed by a $55 billion deficit, followed by a $50 billion deficit—and now we are on track for a $22.6 billion deficit this year. That is if we believe the budget papers, but the budget had a very significant omission.

When the government knew that they were going to introduce a carbon tax, they delivered a budget without including any information in relation to the carbon tax, a carbon tax which we were promised would not happen, a carbon tax which the govern­ment now says will start on 1 July 2012, a carbon tax which will raise about $25 billion over the forward estimates, a carbon tax which starts on the same day as the mining tax, a carbon tax which Minister Wong said, in media interviews at the time of the budget, would be broadly budget neutral. When we said, 'This budget isn't worth the paper it is written on as the revenue figures are wrong, the expenditure figures are wrong, the growth figures are wrong, the CPI figures are wrong and the jobs figures are wrong,' the minister said, 'Well, the carbon tax is going to be broadly budget neutral, so don't you worry.' Now we know what 'broadly budget neutral' means. We now know that, even after they introduce a multibillion-dollar new tax, even after they introduce a tax which will take $25 billion out of the Australian economy, the government's budget is going to be at least $4.3 billion worse off. But there is more, because Treasury officials admitted during the Senate carbon tax inquiry that the money to buy back the so-called dirty, coal-fired power stations was hidden in the contingency reserve—not over the forward estimates, but beyond the current forward estimates. So here we have a multibillion-dollar new tax which is going to leave our budget worse off over the forward estimates to the tune of $4.3 billion and beyond. And there is more.

The mining tax, according to Treasury modelling, will raise about $38½ billion over the next decade but, true to the form of this wasteful, high-spending, high-taxing, high-debt government, before they have even passed the tax laws through the parliament, before they have even started to collect the tax, they have already spent it. Not only have they already spent it; they have spent more. So here they are wanting to collect $38.5 billion in mining tax revenue and they have made commitments which are conservatively estimated to cost about $57½ billion over the next decade. On its own the proposal by the government to increase compulsory superannuation to 12 per cent will cost $3.6 billion when it reaches that 12 per cent in 2019-20. That is a figure that was included in the government's own budget papers last year: $3.6 billion it will cost in 2019-20 and, of course, it is increasing from there. According to Treasury, in that same year the mining tax is expected to raise about $3 billion. Incidentally, 65 per cent of that mining tax revenue is to be collected in one single state, Western Australia. So here you have a government that comes in with one new ad hoc multibillion-dollar tax after the other and each one of them is leaving the budget in a worse position. You would think that, when you come in with a tax measure that increases the amount of revenue you collect, the purpose would be to get yourself out of the financial mess that you got yourself into by spending too much. But, no, instead of spending less and instead of taking advantage of all these taxes that they want to bring in to get themselves back into a surplus position, they actually end up in a worse position. In a paper they published in November last year, Treasury said that the budget was going to be in structural deficit until 2019-20. Since then, we have had the carbon tax, which is going to put the budget in a worse position, and we have had the mining tax, which is going to put the budget in a worse position. We also have this dodgy mining tax deal that the government negotiated exclusively and in secret with the three big mining companies, where, under pressure in the lead-up to the election, they promised them, without even having a conversation with state and territory governments about it, that they would credit all state and territory royalties. So now, every time state governments do what they are completely entitled to do under the Constitution—that is, make decisions about their royalty revenues, removing royalty concessions or increasing royalties as they see fit—it will be a hit on the federal budget, courtesy of a dodgy deal negotiated by this government.

The point of the argument here today is that this is a government that, very clearly, is already laying the foundations for preparing the Australian people for the fact that it will not be delivering a surplus budget in 2012-13. The government know that they have a bad track record when it comes to managing money. They know that the Australian people know that they have a bad track record when it comes to managing money. Labor keep talking about surpluses, but it is coalition governments that deliver surplus budgets. Ten out of 11 budgets under the last coalition government were surplus budgets. People across Australia know that after a couple of years of Labor in government it is time to get the coalition back into government to sort out the mess that Labor have created with their complete fiscal recklessness.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to also contribute to the matter of public importance before the Senate today. Contrary to what Senator Cormann would have Australians believe from his contribution—a contribution, I might add, that was full of factually incorrect statements—the Labor govern­ment has a strong track record of proven economic management.

We have delivered strong economic management by shielding Australia from the worst impacts of the global financial crisis. We have been prudent in implementing a cap on new expenditure in our budgets. Our policies are fully costed, with appropriate savings delivered to offset any new expenditure and, despite the difficult economic circumstances we have faced as a nation, we remain on track to bring the budget back into surplus in 2012-13. It is clear we remain committed to fiscal responsibility, which I must say is in stark contrast to what we get from those opposite. Those opposite, led by Mr Abbott and Mr Hockey, have made blunder after blunder in opposition costings, from the black hole in their election commitments to their latest economic debacle, which centres on their $70 billion budget black hole. Mr Abbott and Mr Hockey have been running around announcing policies without maintaining fiscal responsibility, and now they find themselves in a situation where they need to find $70 billion of savings. What will Mr Abbott and Mr Hockey cut? Well might you ask. Where will they deliver their savings? Will they cut age, disability and veteran pensions? Will they cut Medicare? Will they cut education funding? Will they claw back tax cuts? I challenge the Liberals to tell us where these savings are going to come from. It is time for Mr Abbott and Mr Hockey to come clean with the Australian people about what services they plan on cutting.

While both Mr Abbott and Mr Hockey are looking at cutting services and perhaps pensions, they are split on the size of the black hole, even though Mr Robb seems to be able to count and has indicated on ABC AM that the figure is $70 billion. Mr Hockey says that the coalition need to identify $50 billion, $60 billion, $70 billion of savings that they will make. He is happily going from $50 billion to $70 billion as if we were talking about hundreds of dollars. Then we have Mr Abbott, who refutes that the figure is $70 billion, but we know that it is. We know that Mr Abbott is not interested in economics; he is not interested in balancing the budget. We know that because of the comments that he has made publicly. He continues to have thought bubbles as he roams the country on a massive scare campaign against the government's carbon tax. He is not interested in backing up what he says with any facts or substance.

So, while those opposite continue to make countless economic blunders, we on this side have had to deal with continuous conjecture and negativity surrounding the Australian economy, which is neither helpful nor accurate, to say the least. Senators in this place are aware of the wild swings in international finance markets. This has no doubt made people anxious about the state of the global economy. As the Treasurer, Mr Swan, rightly pointed out, cautioning against reading too much into short-term movements in the share market:

Just as a big gain in trading over a day or a couple of days doesn't mean the challenges faced by Europe and the United States have been solved, a big fall doesn't mean they're insurmountable either.

As the government have highlighted, it will take time for the European and United States economies to get their houses in order. They will have to make tough decisions to reduce their debt and ensure their budgets are sustainable. This will have an impact on the global economic outlook for some time. However, we should remember that in Australia the fundamentals of our economy remains strong in comparison to the rest of the world. Recently, the International Monetary Fund highlighted the fact that in Australia we have very low public debt, low unemployment and a massive pipeline of investment, and we expect to bring the budget back to surplus—although, as the Treasurer has highlighted, this task has been made much tougher by current global events. This government has a strong track record of economic management of the Australian economy. We can also look to our record during the global financial crisis. In a period when advanced economies around the world have been suffering from the largest global recession in over 70 years, the Australian economy has performed remarkably well. This is no coincidence. The strong performance of the Australian economy can be put down to the early decisive action taken by the Labor government. We injected short-term cash stimulus as well as medium- and long-term infrastructure spending to keep the Australian economy in strong shape. What did those opposite want us to do in those times of global financial crisis? They advocated the sit-on-your-hands and the wait-and-see approaches. They wanted to send the Australian economy down the gurgler, essentially abrogating their responsibility to protect and support the Australian economy. But the Labor government's decisive action, stimulus measures and sound fiscal management helped to cushion the Australian economy from the worst impacts of the global recession.

Whilst our economy has remained relatively strong during the GFC, this sum­mer's natural disasters have also impacted on our economy. Recently the full effects of the natural disasters were felt with the release of the national accounts for the March quarter. GDP fell 1.2 per cent in the quarter to be one per cent higher throughout the year. As the Treasurer outlined after the release of the negative GDP result, a period of weak growth was broadly expected after the devastating natural disasters. He said:

This weakness is likely to be followed by a strong rebound in the June quarter as the economic impacts of the disasters ease and reconstruction picks up.

However, the Treasurer has outlined that we remain on track to restoring the budget to surplus in 2012-13. Treasury has estimated the floods and cyclones will cost the econ­omy about $12 billion, with lost commodity production likely to be around $9 billion and crop damage more than $2 billion.

The Treasurer has also said that we expect to create another 500,000 jobs in the next couple of years. This is on top of 750,000 jobs we have already created since coming to office in 2007, including 189,000 in the last year alone. Whilst there was a slight increase in July to 5.1 per cent, fundamentally the strength of our labour force participation rate remains strong, especially in comparison to the rest of the world. The unemployment rate is 9.1 per cent in the United States, 7.2 per cent in Canada, 7.7 per cent in the United Kingdom, 9.7 per cent in France and 20.9 per cent in Spain. When we entered the global financial crisis, Australia's unemployment rate was the same as that of the United States. If that were still the case and we had the same unemployment levels as the US, around 9 per cent, then an extra 486,000 Australians would be out of work. Our swift action during the GFC has ensured that Australians have remained in work and that our economy is the envy of the rest of the developed world.

Let us look at some figures. Official interest rates are two full percentage points lower than when the Liberals lost office, currently 4.75 per cent compared to 6.75 per cent in November 2007. Our national government debt is low, currently 7.2 per cent of GDP or 10 times less than the United Kingdom at 75 per cent of GDP and the United states at 72 per cent of GDP. Wages are rising faster— (Time expired)

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

Where do you start when you are talking about the Labor Party's track record on economic management? I think there is no better place than with Dr Kenneth Rogoff from Harvard University, who did an analysis of the increase in public sector debt since these luminaries attained government. The country that had the greatest increase in public sector debt was unsurprisingly Iceland. They have basically sunk into the North Atlantic. Ireland was No.2 and No.3 on the list of countries with the greatest proportional increases in public sector debt was Australia. Below us were other countries that we do not like to mention—Greece, Portugal, Spain and the United States. They were all below us on their proportional increase in public sector debt.

They tell us that they saved us from the recession. I will tell you why we did not go into recession. There are five main reasons. Let us go through them seriatim. There is a red rock called iron ore. We were getting an awful lot of money for it and selling a lot of it. Iron ore was the No.1 reason we did not go into recession. Then there is this black rock from our east coast called coal. We sold a lot that—record amount at a record price. That was the second reason we did not go into recession. Then there were the 31 March shipping figures for wheat. We do not like to talk about agriculture anymore, but the drought ended and record sales of wheat went through. There were two other reasons: a proportionally lower interest rate and a proportionally lower dollar. That is what saved Australia from recession.

Unless Mr Swan can convince the Australian people that buying a flat screen television somehow managed to dig up a tonne of iron ore and put it on a boat, or plant an acre of wheat, or export a tonne of coal, then their argument does not stand. What they did instead was burn down 194 houses with ceiling insulation. Maybe that was a slight stimulus to the building industry. They went on a manic spree of building school halls. I thought that after these school halls were built my daughters would come home speaking French or Latin—Je ne sais pas; pardon monsieur; je ne comprends pas—but they are still speaking the same language I sent them to school with. It did not really stimulate their thinking much; it just gave a whole range of people, such as Reed Constructions, a great ability to rip the Australian people off.

The Labor Party believe in catastrophic climate change, but they do not seem to take into account catastrophic economic change, which is far more predictable. In fact, we were talking about this before the first financial crisis. We had clarion calls from William White of the Bank for International Settlements saying, 'Watch out guys; we are starting to have a few problems with interbank liquidity.' He was saying that prior to the first so-called GFC. We had Dr Paul Woolley talking about financial market dysfunctionality because of the overexten­sion in derivatives. The luminaries of the time, the Tanners and the Swans, were just completely ignoring it. Then it is always a surprise and a wonder when something happens. If you want to understand Mr Swan, it is very simple: half of Wayne Maxwell Swan's life is a promise and the other half of Wayne Maxwell Swan's life is an excuse. You just have to work out which day it is: is it a promise or is it an excuse. It is always one of them.

Let us go through some of his promises. I remember back in the election campaign of 2010 when Mr Speers from Sky was talking to the Prime Minister about what happens if a surplus does not happen. This was what the Prime Minister said: 'Well, failure is not an option here and we won't fail.' The host said: 'But in the event it is not achieved, perhaps it is not achieved, what will you do?' The Prime Minister replied: 'Failure is not an option here. The budget will be in surplus in 2013.' Lately it has been turned into an objective. I wonder how I would say that to my children: 'I was going to feed you tonight—that was a promise, now it's an objective,' or 'I was going to go to work tomorrow—that was a promise, now it's a target as I'm thinking about going to work.' This is the sort of position we have. The Prime Minister, post the 2010 election, said:

I thank the shadow Treasurer for his question. I agree with him that Australians do deserve a Treasurer with a steady hand, and they have one. They have a Treasurer who has delivered a budget that will return the budget to surplus in 2012-13 exactly as promised.

Promises, promises, promises—don't you love it. And now we have excuses, excuses, excuses.

Now to give the backdown. Last Friday, Julia Gillard, the Prime Minister of Australia said:

It makes the challenge of bringing the budget back to surplus in 2012-13 more difficult. But it is certainly our objective to return the budget to surplus in 2012-13 and we expect to achieve that.

Mr Swan said:

Well, it's far too early to make any conclusions, but we will be affected—markets are affected, budgets are affected. But we're committed to bringing our budget back to surplus …

Now it is a 'commitment'. Even Minister Wong said:

There's really only one set of numbers I'm worried about, and that's making sure we get back into surplus by 2012-13 and that's what this budget will do.

She is here today, so it will be interesting to hear from her whether that was a categorical guarantee.

I live in wonder about some guarantees. Remember the war against obesity? What happened to that? Did we win that war? Have we now smote the fat people? Have they gone? No, we lost. We did not seem to win that war. Then the war on Fuelwatch. What happened to that voyeuristic episode? Did we deal with that problem? No, fuel still went up. Then there was the toolbox for the 21st century—remember Kevin Rudd saying, 'This is the toolbox for the 21st century. Every kiddie's got to have one'? What happened to that? Well, they did not get it. They are still waiting. We got half the toolboxes for twice the price. It just goes on and on. The Building the Education Revo­lution was just incredible. The takeover of the hospital system—did we take over the hospital system or is the hospital still winning? Who is winning that fight? Who has taken over the hospital system? And the latest one is: 'She has full confidence in Craig Thomson.' It is incredible. It is quite a mess and it relates exactly to your economic plan.

They had a temporary extension of their debt. We had a $75 billion gross debt. They always like to talk to you about net debt; they will never talk to you about the actual debt. They have this mystical number which they can never actually tell you how they get to. They can never actually give you the numbers. It is out there like the Yowie or the Abominable Snowman. It is one of those things that is out there but which you can never get a photo of. You can never quite get to it. It is not as definitive as Craig Thoms­on's signature. It is out there but it is going to come back some day.

What exactly do we have here? They had a temporary increase in their limit from $75 billion to $200 billion because China was going to go into recession. That is what they said. China did not go into recession, but our debt went from a temporary increase of $200 billion to a permanent increase in our overdraft of a quarter of a trillion dollars, because Australia does not want to feel left out. We want to start talking about out debt in portions of a trillion too. It is only fair and reasonable. That is the sort of thing that the Labor Party wants to do to you. They want to be there with the rest of the world. They want to catch up with them on climate change and catch up with them on debt. They want to make sure that we achieve that objective.

Even in the last speech from Senator Carol Brown she said that it was an issue of no confidence. She had to be corrected by Senator Polley, who walked over and said, 'Don't say the words "no confidence"; I don't think that's quite appropriate at this point in time.' Of course it should not be 'no confidence', it should be 'no competence'.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy President, I rise on a point of order. I would like to take exception to being verballed by the senator when in fact I did not have a conversation with Senator Brown.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Polley, that is not a point of order. You will have the opportunity to correct that when you give your speech. There is no point of order.

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

It should have been an issue of no competence. Australia has absolutely no confidence in your competence. That is the issue we are at at the moment. Every time I want to have a bit of a giggle I just go back to projections that you put forward in 2008-09. That was before the North Atlantic global financial crisis. China kept buying our stuff and so did India, so they kept it going on. They predicted that we would have a $21 billion surplus in 2008-09, but we actually ended up with a $27 billion deficit. Then the year after that they predicted a $19.7 billion surplus and we got $57.8 billion—the biggest deficit Australia has ever had in its history. Hooray, we got there, and it only took you a couple of years to do it. Then the year after that there was a $49.4 billion deficit, the second biggest, then a $22.6 billion deficit. They are incredible no matter what they do. They talk about 'return to surplus within the cycle', but the cycle for the Labor Party goes for centuries. It just never stops. The cycle starts getting bad and then it gets worse. Then there is always the promise out there in the sunny plateaus, the sunny outlands, where it will all get better. But now we are left with a resounding success that our finance minister, formerly the minister for climate change—and remember the greatest moral challenge of our time— (Time expired)

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

What an embarrassment! No wonder they got rid of you as the shadow spokesperson. It is very easy to come into the chamber and try and verbal people and make things up as you go. You are getting to be quite experienced at that. Let us look at this matter of public importance:

The Gillard Government's continuing inability to balance the budget and wavering commitment to achieving a budget surplus in 2012/2013.

Let us look at the people who have put up this matter of public importance. On 19 August 2010, in the Australian:

National Centre for Social and Economic Modelling identifying a $377 million hole in the Coalition's Education Tax Refund policy.

The rot had started. Once again, in the Australian, the newspaper that the coalition used to decide their MPIs about the carbon price:

Abbott's plan would use taxpayer dollars to pay for government to fund industry to lower its emissions. The Gillard scheme taxes industry to give it a price incentive to change its ways and, to the extent it can't or won't, funnels much of the revenue from the carbon tax back to the public (lower- and middle-income earners) through tax cuts to compensate for expected price rises.

The significance of achieving this target should not be underestimated for the clarity it brings to why the scheme of Labor is better than that of the coalition. I quote:

It is a two-horse race, and when it comes to doing something about climate change—

the coalition horse is lame. The Australian continued:

Abbott's response to Labor's package is a bundle of contradictions. He'll have significant tax cuts of his own we are told, just without the carbon tax which pays for them. He scoffs at the value of a 5 per cent emissions reduction target by 2020, even though the target is bipartisan and underpins Coalition climate change policy.

And yet we have this MPI. Then we had Joe Hockey at the Press Club with an extra­ordinary performance. The Sydney Morning Herald noted:

Mr Hockey repeatedly stumbled over claims he miscalculated spending savings simply respond­ing that 'they were right at some point in time'.

These are the people that bring this MPI into this place. The Sydney Morning Herald went on:

... the Opposition has said it would be able to return the Budget to a surplus early by imposing tougher cuts on spending, and has accused the Government of not being vigorous enough in the economic statement released last Tuesday.

There is more:

… part of the $52 billion the Coalition had said it would cut from spending included $1.7 billion from Labor's proposed company tax cuts, which were to be funded by a higher mining tax.

What was the problem with that? The coalition would not proceed with the mining tax. Give me a break. Then we have the Victorian Premier helping you out. He is someone who in 2008 said:

We support an emission capping and trading scheme as the least costly way of responding to global warming.

The modelling commissioned by Mr Baillieu deliberately phrases results in a negative way such as the 23,000 jobs being 'lost'. It is a pity the modelling did not include key assist­ance measures under the plan of the Gillard government for a clean energy future with assistance to nine out of 10 families and industries across Australia. Talk about political expediency being more important than economic honesty. The list of economic incompetence is endless, but there is a limit to my time so I will not mention the $70 billion black hole that needs to be corrected before the coalition can even get back to zero.

Mr Deputy President, when can you recall the Treasurer, Wayne Swan, saying the surplus was in doubt? I do not and I cannot recall any comment from Senator Penny Wong suggesting that there was anything other than a solid commitment to returning the economy to surplus. So where does the concern about wavering come from? Maybe it comes from the attitude of the coalition to coal seam gas exploration, mental health funding, the complete lack of counting skills that we have seen since the last election and which butcher to visit.

Numerous media outlets have reported on the favourable IMF outlook on the Australian economy. Even the Wall Street Journal helped out, noting:

During last year's election campaign, Labor promised to return the budget to surplus in 2012-13 in a push to underline its claim to conservative economic management. It has continued to insist the promise is iron-clad.

Yesterday, the Treasurer said the IMF had offered a "resounding endorsement" of Labor's economic policy, confirming that the nation's outlook remained strong, despite renewed fragility in the global economy.

The IMF commends the government's fiscal strategy to return the budget to surplus in 2012-13 despite the impact of natural disasters, highlight­ing that Australia's fiscal consolidation is 'faster than in many other advanced economies and is more ambitious than earlier envisaged' …

Other IMF comments include:

Australian economy forecasts

I note already around 750,000 jobs have been created since we have come to office, and nearly 190,000 jobs in the last year alone, with more than nine out of the 10 jobs created in the last 12 months being full-time jobs. The IMF suggests a strong position to adjust:

There is ample scope to cut the interest rates and provide liquidity support for banks in the event that global financial markets become severely disrupted.

The important thing is to recognise how much stronger our economy is. We have avoided recession, giving us very strong public finances and very low debt; low unemployment at around half the level of the US; a massive pipeline of investment, particularly in resources; strong financial institutions and world-class regulators; and a well-functioning government. Just taking the last comment of 'a well functioning govern­ment', who do we believe: the IMF or Malcolm Turnbull telling SBS that Australia is run by a 'dysfunctional and chaotic government'? I suspect Malcolm is getting confused with the party with whom he sometimes associates himself. Australia's net debt will peak at 7.2 per cent of GDP in 2011-12. If you look around the world, you see the USA with 86 per cent in 2016; Japan, 164 per cent in 2018; the UK, 80 per cent in 2013; Canada, 36 per cent in 2013; France, 82 per cent in 2013; Italy, 101 per cent in 2011; and Germany, 55 per cent in 2012. You only have to look at the powerhouses of Europe, Germany and France, to realise how well Australia is performing compared with the last Howard government, the highest taxing government in Australia's history. And what did they do for Australian families? They did nothing.

Labor has provided numerous new jobs, childcare assistance and paid maternity leave. We reformed health funding. We have provided education support. We have developed plans for aged care, disability support, mental health assistance—and the list goes on and on.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

Increased the age pension.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

And we increased the pension; that is right. And who is the biggest threat to the Australian pensioners? Those people on the other side, because they have a track record. When we talk about reform of the aged-care sector, who is the biggest threat to the aged-care sector in this country? Those opposite. When you were last in government you had 11½ very long years, as far as older Australians were concerned, to do something about the aged-care sector, and you did nothing. No, sorry; I correct the record. You did do something. You had six ministers, and each one of them failed the Australian people. Each one of those six ministers failed older Australians, and the people will not forget that. Your track record in terms of reforming the aged-care sector and disabilities is on your head. When you were in government you had 11½ years and did nothing.

But this government has been creative. We are a forward-thinking, progressive government. You just have to compare that with those on the other side, who are only about negatives: no, no, no. That is the mantra of Tony Abbott: no, no, no; oppose, oppose, oppose. I refute this MPI because it is a disgrace for those opposite to even come into this chamber and suggest it.

Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Link to this | Hansard source

Earlier this week, when I represented the Leader of the Opposition at the state funeral of the former member for Melbourne Ports, Clyde Holding, I had the opportunity to meet two former Labor prime ministers, Paul Keating and Bob Hawke. It is pretty appro­priate to remember that today. We on this side have always been quite generous about some of the things that the Hawke govern­ment did in the late 1980s, particularly around fiscal consolidation. We have been generous about that—a generosity of spirit that I note the Labor Party have never shown. But—their intellectual dishonesty put to one side—meeting those two former Labor prime ministers reminded me just how much of a pale shadow of the Labor Party these people are.

As opposed to the government that undertook fiscal consolidation after the banana republic comments of the then Treasurer, this is now the party of the inflation genie. After it came to office, we somehow had to tackle a screaming inflation genie that had got out of the bottle. It was the party that before the election said, 'This reckless spending must stop.' If only this government had lived up to those words. It has not. This government has demonstrated in four years that it is utterly incapable of managing this nation's finances.

I will not recount all the figures that have been outlined so effectively by my colleagues Senator Cormann and Senator Joyce. But there is the simple one, the $20 billion surplus that has turned into tens of billions of dollars of endless deficits. There is the myth that the government somehow saved or created some jobs. It is the Keynesian delusion that you can actually create jobs through simply pumping money into the economy, a delusion rooted in how you put the country into recession 20 years ago. You came out of that with the view that, when faced with a downturn, you should, as the Secretary to the Treasury famously said, 'Go early, go hard and go households.' But we know from evidence all around the world, particularly in the United States, as we are seeing now—Senator Polley, you quoted it at such length—that when the government pumps money into an economy it does not create jobs; it simply increases future taxation by driving the budget into deficit. It builds inflationary pressures in the economy because serious structural reform is not achieved by just pumping money into people's hands.

Even more importantly, there has never been an analysis of those alleged 200,000 jobs you saved or created—I get my terminology wrong because the numbers keep changing. There is some analysis around at the moment that shows it works out at nearly half a million dollars a job. How is it worth the taxpayers of Australia paying interest now and having higher taxation than they should in the future in order to save jobs at that cost—it is an assertion that we reject, but just using those numbers shows how ridiculous that claim is—rather than benefiting from what should have been done in order to address the global financial challenges, which was to cut taxes? Because we know now, from evidence all around the world, that when you give people a one-off payment, particularly when it drives a budget into deficit, you do not actually change their behaviour. We know that a lot of that money was used to save or to pay down debt. Some of it was even put into the pokies. But it was not actually used to do what the government claims it was.

Most importantly, this government did that because it wanted to direct the handouts and the projects, and that is the core of the problem: it wants to direct where the money goes. It wants to direct what people do with their money. It does not actually want to give people the choice to invest, to spend their own money as they see fit, absent of government control, because the desire for patronage is at the core of this government. We saw it in other programs it proposed. Does anyone hear of the Ruddbank anymore, a bank that was going to expose Australians to tens of billions of dollars of risk in order to prop up a commercial construction industry? Some might say that the govern­ment was blinkered by being held captive by the CFMEU and the various building unions. Do we hear of the billions of dollars that were poured into the car industry, another highly unionised industry?

This is the core of the problem. Labor has always been about patronage. People know, when the government drives the budget into deficit to send them a little cheque, that after it wastes all the other money, that bill is going to come due. That is what drives people's behaviour, particularly when we had the rhetoric saying that the sky was going to fall in on the Australian economy—because this current Treasurer is incapable of taking responsibility, and over there you know it as well as I do, senators on the government side. This Treasurer is incapable of taking responsibility for the government's decisions, because there is always an excuse. At the start it was the inflation genie. You threatened an incredible budget that was going to pull back all the reckless spending. Then, when you did not do that, you had to run around the country scaring the wits out of every household and small business in order to justify your tens of billions of dollars of wasteful spending.

Senator Polley interjecting—

Senator Polley calls me outrageous. The truth is outrageous here, Senator Polley, because that is what your government has done—it has forced up taxes for every future Australian taxpayer.

I want to turn to this myth, this issue they keep talking about, with respect to net debt. When this government counts the net debt, as it appropriately does in the budget, it does so in a table that talks about net financial worth. The $74 billion Future Fund was created and dedicated to fund the liabilities for Commonwealth public sector super­annuation. What the government wants to do is to take that and count it twice. It says, 'Let's look at the gross debt and subtract the Future Fund and a few other things to come up with the net debt figure.' But you are counting it twice because we still have the liability. It is not debt but it is a government liability and a taxpayer liability. You still have the $120-odd billion of superannuation liabilities and you are effectively trying to count the Future Fund twice. The other assets of the Commonwealth are not necessarily able to be liquidated, unless someone is proposing we liquidate the Commonwealth of Australia. You are trying to count the Future Fund twice in order to reduce the figure of the debt you have imposed on future Australians.

The cost of the debt this financial year is $12 billion in annual interest payments. Let us just put that in context. That $12 billion would remove their excuse for trying to strip private health insurance rebates from millions of Australians. Secondly, it would pay for a national disability insurance scheme. Those two measures alone would be funded if this government had not racked up such extraordinary levels of debt—and not only that but it also means higher taxes in the future.

This government falsely compares Australia to our neighbours and economic competitors, as if having a neighbour who owes more money than you is somehow a defence to the bank manager. The truth is, as we saw during the global financial crisis, we need a strong public sector to support the capital needs of this country. We have always been a serious and large importer of capital and our banks, which are substantial borrowers in wholesale funds markets overseas, need the strong public debt position of the Commonwealth in order to support those funding needs.

This government talks about savings. The problem is that two-thirds of its savings actually come from increased tax imposts. We have a mining tax based on taxing iron ore, of which a former Labor minister for finance himself wrote that 'there is rarely if ever any economic rent in iron ore.' That was Peter Walsh, another ghost of Labor's past who would hang his head in shame when he looks at this government. Real tax reform does not increase the size of the state. This government may claim it is a lower taxing government, but it does not count if you are not collecting the taxes. What counts is what you spend. Every dollar this government does not collect in tax to fund its voracious spending is money that has to be paid by future Australian taxpayers.

We also have the flawed analysis that it is okay because debt is only seven per cent of GDP, as if GDP, every domestic dollar earned by the private and public sectors in this country, is somehow available for the government. The idea that we should measure ourselves on the basis of what the government could theoretically tax—every single dollar in the economy—is flawed. We are seeing that now in the countries of Europe and North America, and particularly western Europe and the United States, who for so long have rested easy in the delusion that they can keep increasing their public sector debt and measure it against a growing GDP. For some of those countries it is mathematically impossible for them to pay back their debt. I have seen an analysis of Ireland that shows Ireland can almost never pay back its debt because it can barely service the interest upon the debt that it recently took on. This government does not understand what it means to balance the budget over the economic cycle, other than the political cycle. The political cycle is that the ALP runs deficits and the coalition runs surpluses.

We had a promise to run a surplus of one per cent of the Commonwealth budget, which has grown from $260 billion to $350 billion in four years. They promised, years out, a one per cent surplus. It suddenly became an aspiration, and very soon it will simply be another excuse. This party cannot manage our finances. Its contrived and confected empathy will be like a mythical surplus. (Time expired)

John Faulkner (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I would like to begin my contribution by acknowledging the courage of Senator Cormann in proposing a matter of public importance on budget surpluses. There he is, from the insecurity of a huge jerry-built glasshouse, daring to hurl some very small pebbles at the government. But, fortunately for Senator Cormann, he has a hide that really makes that of the average rhinoceros look wafer thin. Fortunately for him, he does not mind being accused of exaggeration, distortion and humbug. He likes being the fall guy for the opposition. He does not mind being a patsy for boldly going where no Liberal senator has been before and, I suspect, none are likely to go in the future.

Why did he do it? Why did he propose this matter of public importance? I do not know, but I would sincerely like to thank him for giving me the opportunity this afternoon to compare the economic credibil­ity of the government with that of the oppo­sition. After they have been exposed for their 2010 election costings black hole, which of course is a well-known debacle, this week we have a $70 billion black hole which threatens to swallow up an entire govern­ment department—the department of climate change—and 20,000 Commonwealth public servants along with it. The mantra of the opposition is that it will save more, spend less and deliver bigger budget surpluses. I think we know now that the opposition suffers from congenital innumeracy, so I think it is worth while having a closer look at this $70 billion black hole. Thirty seven billion dollars of it is in spending commit­ments the opposition announced in the 2010 election campaign, including $11 billion from the unwinding of the minerals resource rent tax. Then there is another $27 billion from the unwinding of the carbon tax. Finally, there is just a mere $7 billion or $8 billion to fund the income tax cuts that they promised. These are Mr Hockey and Mr Robb's figures; they are not mine. This is what Mr Hockey and Mr Robb have been telling their own colleagues they need to find in savings.

What will this $70 billion in savings actually mean? The Prime Minister and ministers in the government have been very clear: it will mean stopping Medicare pay­ments for four years; it will mean stopping the age pension for two years; it will mean stopping assistance to people with disa­bilities for three years; and it will mean stopping the family tax benefit payments for three years.

With the recent events in the global economy, it is obvious that Australia needs a steady hand on the tiller. The last thing we need are gigantic blank cheques and gigantic black holes from the opposition. The govern­ment's economic management has positioned Australia as one of the strongest, if not the strongest, economy in the developed world. Action taken by this government during the global financial crisis meant that we emerged from the global recession with strong growth, low unemploy­ment and solid public finances. Our economic stimulus package provided much-needed confidence at the time. It supported growth and protected jobs and it protected businesses as well. Because of this govern­ment's stimulus, Australia has emerged as virtually the only advanced economy to avoid recession and with a fiscal position that is the envy of the developed world. We have lower debt than other major developed economies, with the public net debt expected to peak at around one-tenth of that of other major developed economies.

The government has a clear path to bring the budget back to surplus well ahead of many comparable countries. Australia is one of only 14 major countries to have a AAA credit rating from the international rating agency Standard and Poor's. The government has been consistent and effective in imple­menting its fiscal strategy, constraining spending growth and putting in place responsible savings. That strategy has been endorsed by international rating agencies and the international community. In their article IV concluding statement released earlier this month, the IMF said this about the govern­ment's budget:

On fiscal policy, we commend the authorities for remaining committed to returning the Common­wealth budget to surplus by 2012/13 ... This consolidation is faster than in many other advanced economies and is more ambitious than earlier envisaged ...

The international credit rating agency Moody's on 11 May this year said:

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

Rating agency Standard and Poor's said that Australia has exceptionally strong public sector finances, underpinned by low public debt and strong fiscal discipline. But I always think in these matters of public importance the final word should go to the Liberal Party. A coalition MP was reported as saying after this year's budget reply:

We can’t keep agreeing with government spending measures opposing savings and revenue measures and keep our financial credibility intact.

Unfortunately, that was an anonymous Liberal Party MP, but Senator Cormann and the others who have spoken in the debate know who it is, as I know who it is—just check the Adelaide Advertiser of 28 May this year. Then Senator Minchin, whom I know you respect very much, Mr Deputy President, and who was quite a hero to so many opposition senators, in his own newsletter of July this year said, 'If you err on the side of populism that is ultimately self-defeating because you end up standing for nothing.' Both the anonymous Liberal MP and Senator Minchin of course were right. I think Senator Cormann, the other Liberal senators and Senator Joyce from the National Party should take note of what their colleagues have said. I think that, really, Senator Fifield, who submitted this matter of public interest, and Senator Cormann, who proposed it to the Senate, should stop wasting the Senate's time on these matters. I stand by the economic credibility of the government and I believe that the facts on this speak for themselves.