Monday, 25 June 2012
Appropriation (Parliamentary Departments) Bill (No. 1) 2012-2013, Appropriation Bill (No. 1) 2012-2013, Appropriation Bill (No. 2) 2012-2013; Second Reading
This year's budget was yet another bad, old-fashioned Labor budget. There was more spending; there were more taxes, yet again; there was another increase in the debt ceiling; there was the imposition of the world's biggest carbon tax; and of course this Labor budget did nothing to strengthen the economy at a time when we are facing some significant storm clouds on the global economic horizon. It was a budget in which the government promised—and I stress 'promised'—to deliver a $1.5 billion surplus in 2012-13. That is a promise which, in the eyes of the Assistant Treasurer, Mr Bradbury, has already been delivered. He goes into his electorate in Western Sydney, the electorate of Lindsay, and tells his constituents that Labor has delivered a $1.5 billion surplus in this budget. Let me stress here for a moment that, if you look at Labor's past track record, if you look at Labor's past performance when it comes to delivering on budget promises, nobody can take seriously a promise by this Labor government to deliver a budget surplus of $1.5 billion in 2012-13.
This time last year we were debating Labor's promise that the budget deficit for 2011-12 would be just $22.6 billion. We were promised this time last year that the deficit in this financial year would be $22.6 billion, and we now know that the budget deficit in this financial year will be a staggering $44.4 billion. Of course, we have to remind ourselves that this Labor government promised before the 2010 election, when the Treasurer released his economic update, that the deficit this financial year would be $10 billion. That was when the Treasurer and the Prime Minister, Ms Gillard, were trying to sell a story to the Australian people that after the global financial crisis we were back on track on our way to an early surplus by 2012-13—that, instead of the $44.4 billion deficit predicted for this financial year in the 2009-10 budget, we were back on track towards an early surplus and that the deficit was going to be a mere $10 billion. That was the promise before the last election.
From a $10 billion deficit for this financial year to a $12.3 billion deficit by the time of the Mid-Year Economic and Fiscal Outlook in December 2010, to a $22.6 billion deficit by the time of the budget in May last year, to a $37.1 billion deficit in the Mid-Year Economic and Fiscal Outlook in December 2011, to a $44.4 billion deficit now, we are back to where we started when Mr Swan delivered his second budget in 2009-10, when he predicted that the deficit this financial year would be $44.5 billion. The $44.5 billion deficit for this financial year which Treasurer Swan predicted back in 2009-10 is eerily close to where we have ended up. In fact, back in 2009-10, I guess when the election was still a little while away, the Treasurer actually got very close to where ultimately we ended up.
The government will say that the reason the deficit has deteriorated, the reason the deficit this financial year has more than quadrupled from what we were promised before the last election, is that, supposedly, revenue has collapsed. I am sure that senators around this chamber would have heard the Treasurer, Mr Swan, and the Minister for Finance and Deregulation, Senator Wong, claim that the reason the public finances are in a mess, the reason that the Labor Party has made a complete mess of the government's budget this year, is that the revenue has collapsed.
What I would encourage senators to do, and what I would encourage people across Australia to do, is to have a very close look at Mr Swan's second budget, because in Mr Swan's second budget you will see that the revenue expectations for 2011-12 in the 2009-10 budget were that revenue this financial year would be $310 billion. In Mr Swan's second budget, we were told that there would be $310 billion of revenue this financial year. Guess what the revenue in fact has been this financial year? Guess what has happened to revenue this financial year? It is actually $330 billion. So revenue this year has increased by $20 billion compared to what the government thought back in 2009-10 that the situation would be, yet this government dishonestly wants to make people believe that somehow the reason we are in the fiscal mess that the Labor Party has delivered for us is that the revenue has collapsed. Nothing could be further from the truth. The problem is that spending under this government has accelerated as rapidly as, and more rapidly than, the revenue from various taxes has been able to keep up, and this is of course the real issue with this budget.
This is a budget where the government promised to deliver a wafer-thin surplus of $1.5 billion. How are they proposing to achieve that wafer-thin surplus? Firstly, they are shifting expenditure from next financial year to this financial year and they are shifting expenditure from next financial year to the year after. I have some news for the government, in case they did not understand: if you shift spending from next year to this year, that is not a spending cut next year; that is cooking the books. If somebody in corporate Australia were to do this sort of shifting of expenditure backwards and forwards in order to create an impression that was not a true reflection of the actual situation of the accounts, guess what? They would get themselves into all sorts of trouble with the corporate regulator. If Wayne Swan were running a corporation, a publicly listed company, he would have had a 'please explain' from ASIC on his doorstep after he delivered that budget.
Not only are the government basing this unbelievable promise of a surplus next financial year on shifting expenditure from next year to this year; they also want us to believe that revenue from this year to next year will increase by a staggering 11.8 per cent. We are meant to believe that revenue will increase from $330 billion to $369 billion.
We all know that this is a high-taxing government. We all know that this is a government which, whenever it is in trouble, comes up with another ad hoc tax grab. But, even by this government's track record, it is hard to see how it can possibly achieve an 11.8 per cent increase in revenue. The last time any government achieved an 11.8 per cent increase in revenue from one year to the next was back in 1987-88. I do not think that many people in this chamber would have been in the Senate at that time. Senator Boswell was. Senator Boswell is a very long serving, distinguished senator from the great state of Queensland. He would have been here when the government in those days was able to benefit from an 11.8 per cent increase in government revenue. But do you know what? The context at the time was that the economy grew by 5.6 per cent and our terms of trade increased by 8.7 per cent. The government is telling us in this budget that the economy will grow by much less, by 3.25 per cent, and that the terms of trade are actually going to fall by 5.75 per cent, yet the government wants us to believe that, despite that, revenue is going to increase by 11.8 per cent.
The next thing the government wants us to believe, which is completely unbelievable, is that somehow between this year and next year it will cut spending in real terms by 4.3 per cent. Mr Acting Deputy President, I would encourage you and other senators in the chamber to have a very good look at those historical tables at the back of the budget papers. Those historical tables at the back of the budget papers actually give you a very good indication as to what has been happening from a fiscal performance point of view all the way back to 1970-71. I am not sure that even Senator Boswell would have been here back in 1970-71. Going all the way back to 1970-71, not a single government ever has cut spending in real terms by 4.3 per cent. Not a single government has achieved that. And, given the track record of this high-spending, wasteful government that we currently have here in Canberra, nobody believes that this government will set a record in spending cuts that has not been delivered for the last 40-plus years. What is wrong with this government is that it spends too much, it taxes too much, it chokes business with excessive red tape and it is a government that hates success. Whenever somebody is successful, the Treasurer gets stuck into them. Whenever somebody sees an opportunity and makes a success of it, the Treasurer thinks that is a bad thing. Of course, that is not the right way to approach our economy.
We need a government that spends less so that we can tax less. We need a government that is seriously and generally committed to cutting red tape so that we can increase productivity more rapidly. And we need a government that is committed to maximising our international competitiveness so that we can grow our economy more strongly. We need a government that encourages and celebrates success. When somebody sees an opportunity, takes risks, deploys his or her skills and expertise to make a success of a business venture, the Treasurer of Australia should encourage and celebrate their success because that is what makes the Australian economy grow and prosper. If we were to achieve an economy that grows more strongly, we would be able to not only deliver increased prosperity for everyone but also be able to collect more government revenue without the need for all these new and ad hoc Labor Party taxes.
This budget is a typical Labor budget. As I have mentioned, it increases spending again; it increases taxes again; it increases the debt ceiling again; and it imposes the world's largest carbon tax. It is based on a whole lot of very questionable assumptions—some very heroic assumptions—of revenue forecasts, and I have mentioned some of them.
Let me go back to two in particular: we have the mining tax revenue estimates, which the government has had to downgrade repeatedly. Senators on this side have exposed the many flaws in the government's mining tax The mining tax was supposed to be part of an agenda to simplify our tax system. It was supposed to be about making our tax system simpler and fairer and more efficient and less distorted. We have ended up with a massive new tax on an important industry, more complex and more distorting and with a questionable, highly volatile downward trending revenue which we believe is much lower than what the government has suggested it would be in the budget papers. Nobody can properly scrutinise it because this secretive, arrogant government, unlike state governments that rely on mining industry related revenue, refuses to release the mining tax revenue assumptions it has used to estimate the revenue from the mining tax.
State governments in Western Australia—whether they are Labor or Liberal does not matter—transparently publish in their budget papers their assumptions related to revenue from the mining industry. The state government in Western Australia, Labor or coalition, publishes commodity price assumptions and production volume assumptions so that people can look in the budget papers at the assumptions used by the government. They can make an informed judgment as to whether those assumptions are credible and, if some of those variables change, how that will impact on the budget bottom line. Not this government that promises a new era of openness and transparency. Not this government, led by a Prime Minister who supposedly was going to let the sun shine in. Not this government, supported by the Greens, who supposedly were going to enforce on the government, through various agreements they signed, this new era of openness and transparency.
Mr Acting Deputy President Ludlam, I know you have a particular interest in this: I wonder whatever happened to the government's commitment that the Information Commissioner would arbitrate on disputes between the parliament and the executive government about the release of information that the government was desperately trying to hide. Whatever happened to that? It is now two years since the last election. To this day, that part of the agreement has not been given effect. Shame on this Labor-Greens government. They promised a lot when it came to openness and transparency and they delivered very little.
Then we have the carbon tax. The appropriation bills in front of us are based on an assumption that in 2015-16, when supposedly the carbon price would go from a floating scheme to an emissions trading scheme, the carbon price will be $29 a tonne. No credible expert anywhere in the world will agree with the prediction that the carbon price in 2015-16 will be $29 a tonne. Right now, in Europe it is about €7 a tonne. Ninety-seven per cent of the global carbon trading market happens in Europe. Seven euros is about A$9 per tonne. People who look at Europe and look at what is happening to the economy in Europe will tell you that, if anything, that price is going to come down.
Quite frankly, looking at the experiences in Europe, the fact that Europe has gone down the path of an emissions trading scheme should really be a bit of a warning to us. Why would we want to copy what the Europeans have done? They have got themselves into a fine old mess. We have our Prime Minister over in Rio de Janeiro, or Mexico or wherever she was wagging the finger at the Europeans, trying to give them lectures about not doing what she is actually doing over here. 'Don't spend too much,' she says. 'Tax less'—it would be funny if it was not so serious, Senator Scullion. This is what we are dealing with here with this government.
It is a very serious issue. We have some very serious economic storm clouds on the global horizon. We should be making sure right now that we are in the strongest possible position. The truth of the matter is that when we ran into the last global financial crisis we were in a strong position, because this government inherited a very strong budget position. They inherited a position with no government net debt. They inherited a position with a $22 billion surplus. They inherited a position with $70 billion from past surpluses invested in the Future Fund. They inherited a position where there had been significant economic reform throughout the Hawke, Keating, Howard government period. And, there was increased flexibility in the labour market. There were all sorts of strengths that we had in the system at the time that meant that Australia was in a very good position to face the storm clouds that came our way then. If there is another global economic downturn out of Europe or elsewhere, Australia will be in a weaker position today as a direct result of the actions, or the inactions, of this government. Instead of making us as internationally competitive as possible, this government are whacking on a carbon tax. Instead of looking at ways to make sure that manufacturing can get through this difficult period as they face a high Australian dollar and various other global economic issues, they are going to make it harder for them for them to compete internationally. This government are taking Australia in exactly the wrong direction. What we need is a government that actually focuses on increasing our productivity growth, making us more productive and more competitive internationally. The first thing we should do is scrap this bad carbon tax, which of course will do nothing for the environment but will push up the cost of living, push up the cost of doing business in Australia, make us less competitive internationally, shift jobs overseas and shift emissions overseas into areas where those emissions arguably will be higher than they would have been in Australia.
There is an amendment to this appropriation bill in my name on behalf of the opposition which would remove the proposal to increase the debt ceiling from this bill. The government have wanted to avoid proper debate on this proposal to increase the debt ceiling yet again. It is the view of the coalition that this proposal to increase the debt ceiling should not be buried within an appropriation bill as part of a restricted cognate debate. The government have engineered this debate in such a way that there is not a specific standalone debate on the debt ceiling proposal or a vote on it by the parliament. The government have very deliberately tried to hide this proposal from the full view of public scrutiny.
The need to increase the debt ceiling yet again is confirmation of the government's continued reckless spending and continued heavy reliance on borrowing. On the one hand this government tell us that they are tightening the belt and on the other hand they seek to again raise the debt ceiling. If the government are delivering surplus budgets each year over the forward estimates, why do they need to increase the debt ceiling again? In the last budget, they lifted the debt ceiling from $200 billion to $250 billion—unprecedented levels in this country. In September 2009, they lifted it from $75 billion to $200 billion, post GFC. At the time that was supposed to be a special circumstance. This is a government which in true Labor fashion have made a mess of our finances. It will come down to the coalition government yet again to fix up Labor's fiscal mess, as we have to do every time Labor have been in government for a while. (Time expired)
Isn't it wonderful to follow Senator Cormann giving us lectures about the great fiscal and economic record of the coalition. We can look back many years in this country to the time under Menzies when Menzies just kept plodding along doing nothing to expose this country to any international competition or any global capacity to build our economy or our industry. So do not come lecturing us about the great conservative economic legacy. The economic legacy is a legacy of neglect. The economic legacy is a legacy of ensuring that we do not open up the economy to the international global economy. Who did it? It was Labor who opened up the economy. It was Labor who took the hard decisions to bring the economy into the modern global trading environment that we are now experiencing. The coalition had absolutely no capacity to do it. They were absolute failures.
We can look back at the situation in more recent times with the great former Treasurer Peter Costello, who is lauded by the conservatives in this country as the guy who was such a master of the Treasury. Well, nothing could be further from the truth. We know that he was continually stood over by John Howard. We know that he did not have the intestinal fortitude to stand up and say, 'We need some discipline in how this government deals with expenditure.' We know that Costello reigned over a structural deficit—massive tax cuts and massive expenditure blow-outs. That is the legacy of the coalition.
We hear all this rambling nonsense from Senator Cormann that may be backed up by Senator Joyce, who had the shortest reign ever of any shadow finance minister in this country. It is no wonder—
Senator Joyce interjecting—
Senator Boswell interjecting—
Thank you very much, Acting Deputy President, but I don't think I need too much protection from this rabble. The situation is that they had Senator Joyce, the failed shadow finance minister—the Liberals got you, mate. They understood how bad you were. They sacked you fairly quickly. They knew that any semblance of economic credibility they may have would go down the tube if you continued as the shadow finance spokesperson.
The situation with the coalition was simple—tax cut and spend, tax cut and spend, and massive structural deficit. We have to deal with that, and we will produce the biggest single fiscal turnaround in living memory of government. We will return the budget to surplus on time and as promised. We will spread the benefits of the boom: a $1.8 billion increase in the family tax benefit part A for eligible families, commencing 1 July 2013; a $1.1 billion new supplementary allowance for the unemployed, students and parents with young children on income support, with the first payment commencing March 2013; an extra $2.1 billion over five years on a new schoolkids bonus paid directly to eligible recipients; and from 1 July 2012, more than a tripling of the tax-free threshold, from $6,000 to $18,200, freeing up one million Australians from the need to lodge a tax return. This is how you spread the benefits of the boom—something that the coalition could never contemplate and could never understand when they were in government. There were 11½ years of tax cut and spend, 11½ years of fiscal profligacy and 11½ years of John Howard standing over Peter Costello and forcing him into ignominious retreat on anything that was like a proper fiscal strategy for this country. The coalition have got a history of bad economic management in this country. We can go back to John Howard as Treasurer, which was an absolute disaster. Then we moved from John Howard to Peter Costello—absolutely hopeless.
Mr Acting Deputy President, on a point of order, it would be appropriate to direct the senator to using proper titles and providing courtesy to former prime ministers and treasurers, as he would expect for those in the Labor government. At the very least he should refer to them by titles.
I am happy to provide that courtesy. John Howard was one of the worst prime ministers this country has ever had. Peter Costello, a jelly-back, had absolutely no capacity to stand up to John Howard, who had no economic credentials. Peter Costello is still out there trying to pretend that he has got some economic credentials. What an absolute joke! You have got to have some backbone to be in finance or to be a treasurer. You have got to be able to stand up to the Prime Minister and to the ministers who want to spend, spend, spend. What did former Treasurer Peter Costello—jelly-back for short—do? He just capitulated; he just caved in. He caved in on every issue. When former Prime Minister John Howard and former Treasurer Peter Costello were there, it was like winning the pools—the money was just flowing in. But what were they doing when the money was flowing in? They were cutting taxes and they were spending.
Do not take it just from me that that is the position. Let us look at George Megalogenis, a very well-respected economic commentator in this country. He has just written a book. What does he say? Let us go back to Costello's first budget. You want to talk about economic nonsense. He says: 'Costello's first budget involved no lasting sacrifice. Labor had reduced the size of national government from 27.3 per cent of GDP in 1984-85 to 22.7 per cent at the top of the previous boom.'
I must say it would be pretty hard to be accusing me of reading anything in this speech. Let us go back to the economic nonsense that you hear from the coalition, and I will continue that quote. It was 27.3 per cent of GDP in 1984-85, but Labor brought that down to 22.7 per cent at the top of the previous boom in 1989-90. Megalogenis wrote: 'Half those gains were lost in the recession in jobless recovery and federal spending was at 25.5 per cent of GDP by 1995-96. The coalition returned the benchmark to 23.1 per cent of GDP by 1999-2000.' The coalition have got no capacity to come here and lecture the Labor Party on any of these issues. He goes on to say that former Prime Minister John Howard 'switched between purity and pragmatism, attacking the profligacy of his predecessor, while building a middle-class welfare system that would become more generous than anything Gough Whitlam had advocated.' That is your record. It is not the Labor Party that is saying that—that is a respected economic analyst who is out there having a look at what was done. I have to say to you that it does not get any better than this book. I would say, 'Have a read of this book.' It will show you exactly what the problems were. I say to you that it is nice that we have at last got Senator Cormann saying are some storm clouds on the horizon. He has actually seen storm clouds on the horizon. Senator Cormann, the storm clouds have been battering the world economy and battering governments all over the world since 2008. But I am glad that, four years later, you have discovered there is a problem.
It is now 2012 and we have gone through the global financial crisis. The Labor government took us through that global financial crisis in a better condition than any other country in the world—absolutely better than any country in the world. And 210,000 jobs were underpinned by the policies of the Labor Party—a bit of Keynesian policy in there, ensuring that the government took up the slack. At the same time we had the Deputy Leader of the Opposition saying: 'Don't go down Keynesian lines. Let's go back to Hayek. Let's wait and see what happens. Just let the market rip and everything will be okay.' Not another government in the world was looking at that position. We had banks failing all over the world. Our capacity to keep our industrial wheels moving were being jammed by the global financial crisis. We had to underwrite the banks' lending. Yet the coalition were saying, 'There is not a problem.' They have never recognised that the global financial crisis ravaged people's jobs, economies and governments all over the world. Yet you pretend that there is nothing happening. But there are now storm clouds on the horizon. Whoopee, Senator Cormann, you are four years too late for that analysis and if that is the level of your economic precedent, then we are in a bit of trouble.
It is not only George Megalogenis who has got an analysis of the coalition's economic capacity—our budget is a good budget; the coalition budgets were about introducing structural deficits—what did Peter Hartcher say, back in 2009, in his book To the Bitter End? He said:
At the heart of the Howard government's management of the economy was a raging, unending argument.
Peter Costello was arguing with the boss and the boss was telling him: 'Go away. You're not going to get your way on economic policy, you're not going to get your way on fiscal policy and you won't be taking my job, because you don't have the backbone or the capacity to take me on.' That was the analysis of John Howard and that is why we had such a weak position from the coalition on economic management, because former Treasurer Peter Costello was not up to it. That is the problem for the coalition. The history of the coalition is not being written by the Labor Party; it is being written by independent analysts. The coalition were economic incompetents. That is the bottom line: you were economic incompetents. The drunk down the bottom of the garden could have had a surplus under the provisions you ended up having. He could have spent as much money on booze as he wanted and he would still have had money in his pocket. That is what you had. You had money flowing in, but what you wanted to do was to ensure you spent it as quickly as possible.
We have another interesting quote from Peter Hartcher. We have Senator Sinodinos being put forward as a great economic guru. He will probably take Senator Cormann's job. What did Peter Hartcher say about Senator Sinodinos:
Howard's former chief of staff, Arthur Sinodinos, was also a former Treasury official. He said the boom gave the budget process "a lucky dip feel" …
So what was your budget process? It was a lucky dip. Do not take my word for it; listen to Senator Sinodinos. Senator Cormann, through the chair, can ask for some advice on that position from Senator Sinodinos, that under the coalition it was an absolute lucky dip approach. And further:
… officials and ministers scrambled to formalise tax cut options and decide which ones would get the go-ahead.
He went on:
As the tax cuts grew, however, so did the spending. Overall, of the combined total of government spending increases and tax cuts that the Howard government disbursed between 2002-03 and 2007-08, 58 per cent of the total went to government spending and 42 per cent was distributed in tax cuts, according to the ANZ Bank's chief economist, Saul Eslake.
The result was four successive years of tax cuts, six successive years with a budget surplus of between 1 and 1.6 per cent of GDP, and 11 successive years of real spending growth averaging 3.6 per cent.
You did not have the wherewithal or the economic understanding to build for the future of this country. What you did was throw out money in tax cuts; spend more than you should have spent on the wrong issues not build the infrastructure needs of this country; not build the education system; and not build a national broadband network that we have had to build after 11½ years of absolute incompetence of the Howard government. You also had an incapacity to look after pensioners. Pensioners were on the streets, screaming and yelling to get more money but the Howard government did nothing about it. You were an absolute rabble when it came to understanding what you need to do to build for the future of this country.
And to you, Senator Cormann and Senator Joyce, who have the hide to lecture the Labor Party about economic competence, I say: look at the historic facts. You were incompetent to the maximum. We had an opportunity in this country to build for the future. We had an opportunity to take action, to support the economic base of this country. When we were taking the opportunity to build the trades base of this country, you were throwing money out to kids and McDonald's as your training agenda. That was your training agenda. You were an absolute disgrace. The only way that you saw to increase productivity was to introduce Work Choices and rip penalty rates and everything else from workers in this country. We know that if you get the chance you will rip penalty rates and every other benefit from workers in this country. You are a disgrace.