Tuesday, 20 November 2012
Matters of Public Importance
A letter has been received from Senator Fifield:
Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:
The Gillard Government's weakening commitment to a budget surplus in 2012-13.
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
What a tale of woe Labor's elusive search for a budget surplus has been! I think the story of Labor's efforts to repair the budget is a good encapsulation of this government. It tells you everything you need to know about this government. There are really two things that you need to know about this government: a lack of competence and consistent breaches of faith with the Australian people. That is what the budget bottom line represents.
Mr Acting Deputy President, I would ask you to cast your mind back to the very first budget of Treasurer Swan, the 2008-09 budget. Treasurer Swan said—and I am fond of quoting Treasurer Swan's 2008-09 budget speech—'We are budgeting for a surplus of $21.7 billion in 2008-09.' Let me just repeat that for you. Treasurer Swan said in his 2008-09 budget speech:
We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.
This honours and exceeds the 1.5 per cent target we said in January, without relying on revenue windfalls.
What Treasurer Swan was basically saying in that budget speech was that Treasurer Costello, with his nine budget surpluses, and the Howard government were basically a pack of easy beats—that their budget surpluses were pathetic; that he was going to go better; that he was going to show us what real fiscal manhood looks like; that he—
He thought that a target of 1.5 per cent of GDP was really the measure of the individual as Treasurer. That is what he said. And here were we, a new opposition, thinking, 'How pathetic were we!' We did not know that you were not actually meant to work harder. In fact, Wayne Swan said it was actually pretty easy to get a bigger budget surplus than we had. So we thought that we would just have to sit back and learn from the master about how budgets really should be run.
I think all of Australia learnt as a result of the 2008-09 budget that what is in the budget speech and the budget papers when referencing a surplus—or a deficit, for that matter—is not actually an outcome; it is a forecast. The Australian people got into the habit of assuming that a forecast in the budget was as good as gold, because when the Howard-Costello government was in office those forecasts were met and often exceeded in terms of the size of the budget surplus. So Australians had got into the habit of being able to rely on the figures in the budget speech on budget night. The Australian people have learnt—
Government senators interjecting—
Thank you, Mr Acting Deputy President. Australians have learnt through Swan budget after Swan budget after Swan budget that you cannot believe what Wayne Swan says on budget night. We hear from the government time and time again that they have been exceedingly unlucky. You used to refer to someone who was lucky as 'having a Kylie'—as in Kylie Minogue and her song, 'Lucky, lucky, lucky; I should be so lucky'. With these guys it is kind of like a reverse Kylie experience that these people have had. They have just been so, so unlucky.
Firstly it was the GFC—and, yes, we recognise that the GFC was a challenge—and then it was the European financial crisis that was the challenge.
We were meant to think—and the Australian people were meant to think—that just because there were external challenges there would be a crisis of confidence in the domestic economy and revenue write-downs in the budget and therefore it would be nigh on impossible for a government to achieve budget balance. That is the scenario which has been presented to us year after year by this government. If that were the case, when the Asian financial crisis took place during the period of the Howard-Costello government, there would have been a crisis of confidence—business confidence, consumer confidence and investor confidence—in Australia at that time. Revenues would have plummeted and the budget would have gone into deep, dark deficit and continued in deep, dark deficit for years to come. That is what you would have expected to happen if you followed the government's logic. And you would have expected it to happen then even more so, because we are much more enmeshed with our region, Asia, than we are with Europe or with the United States—which was the genesis of the global financial crisis. So whatever happened to us as a result of the GFC and the European debt crisis, you expect that it would have been many times worse during the Asian financial crisis. But it was not, and there are a couple of reasons for that.
The first reason is that the Australian people had confidence that Treasurer Costello would make the right calls. I think that is something we have underestimated: the extent to which confidence is underpinned by a government that looks like it knows what it is doing. With Wayne Swan, people quite rightly think, 'He's bound to get it wrong.' With Peter Costello, people thought, 'I'm not sure what the right answer is, but I have confidence that he'll know what to do; therefore I will just get back to running my business.' That was the mindset at the time and that is one of the reasons why Australia continued to perform well and the budget held up during the Asian financial crisis: people had confidence that Peter Costello knew what he was doing. The other reason why the budget bottom line held up well during the Asian financial crisis was because we did not embark upon reckless and irresponsible, massive fiscal stimulus. We did not do that. We relied on the Reserve Bank to adjust interest rates as required. We left room for monetary policy to do its job. We demonstrated that when you have an external shock to the economy it does not automatically follow that your revenues are going to plummet, confidence is going to plummet and the budget is going to go into deficit. Those are two very contrasting approaches to very contrasting outcomes.
This has been an incredibly unlucky government. I think you have got to reject the thesis that the current government are the hapless victims of global circumstance. They stumble around, things happen beyond their control, and they have always got an excuse for not being able to meet their budget forecasts and targets. That is why I say that the budget bottom line really does encapsulate two great truths about this government: their lack of competence and the breach of faith that they continually have with the Australian people. I say 'breach of faith' because Wayne Swan promised and predicted, in budget speech after budget speech, that the budget would whirr back into surplus. But it has been a diminishing surplus. In the 2011-12 budget, the surplus forecast for 2012-13 was $3.5 billion. That was revised down in the 2012-13 budget to $1.5 billion. As we know, it was revised down again in the MYEFO this year to $1.1 billion. The government will tell you that the overwhelming reason why the budget has been in deficit and there has been debt is because of revenue write-downs. I have to make this point: revenues are not falling. Revenues are continuing to grow. What is happening is that revenues are not growing as fast as forecast. But be in no doubt: revenues are still growing but expenditure is growing more. That is why the budget has been in deficit each and every year of this government. It has not been because of revenue write-downs. It has been because of spending decisions by this government, and the government's own budget papers will tell this story. The way to get the budget back into balance is not to hope, it is not to pray, it is not to promise. It is to actually manage responsibly, it is to live within your means, it is to stop the reckless spending. If the government do that, then they will be able to meet their commitment and they will go better. They will actually be providing opportunities for Australians. (Time expired)
I rise today to speak on the matter of public importance put forward by the opposition. I would like to start by thanking the opposition for bringing this matter to attention of the Senate today. Why do I say that? I say that because I always find the attempts by the opposition to rewrite history entertaining. We just heard from Senator Fifield not a mention of global financial crisis, just a rewriting of history, airbrushing it out—
Mr Acting Deputy President, I rise on a point of order. Senator Bilyk is coming perilously close to misleading the Senate. I spent quite a bit of time in the debate talking about the global financial crisis.
As I was saying, I find the attempts by the opposition at rewriting history and crystal ball gazing into the future always to be entertaining. We can always count on them to be entertaining.
The recent mid-year review shows that the Gillard government is on track to return the budget to surplus and it shows that the fundamentals of the Australian economy are strong despite global turmoil. We have just delivered a Mid-Year Economic and Fiscal Outlook with billions of dollars in savings to return the budget to surplus, and we are on track to deliver it. Unlike the doom merchants on the other side of the chamber who constantly talk down the Australian economy, we should all take pride in what the country has achieved in the face of very challenging global financial conditions and structural change here at home. We have completed a remarkable 21 years of economic growth—a stunning achievement unmatched by any other advanced economy to date. We have got an enviable combination of solid growth, low unemployment, contained inflation, strong public finances, solid consumption and an investment outlook that is still strong. At 3.25 per cent, we have got lower official interest rates than at any time during the last coalition government. That is helping millions of families and small businesses.
And while we have only the 51st largest population, Australia has overtaken Spain to be the 12th largest economy in the world, after overtaking Mexico and South Korea since the government came to office.
The Australian economy is the envy of the developed world. The exaggeration and spin of the opposition should be tempered by these hard facts. This government is committed to strong economic discipline. Our strict fiscal discipline has already helped give the RBA room to deliver the equivalent of six interest rate cuts over the last year. Australians will not ever forget that interest rates went up 10 times under the last Liberal government because inflation was not contained. Because of these interest rate cuts, Australians on a $300,000 mortgage are now paying around $4,500 less interest per year than they were when the Howard government left office. This is obviously a significant saving to the family budget.
The opposition distrust the numbers in MYEFO. Of course they do because the opposition only trust numbers that confirm their pre-conceived bias, or that they have made up themselves. These numbers were produced by Treasury—the same Treasury that produced the forecasts for the entire period of the Howard government and the same Treasury that forecast the effects of the GST when those opposite introduced it. On this side of the chamber, we have full confidence in Treasury's forecasts, which are broadly consistent with many major forecasters, including many private sector economists.
It is really disappointing that the opposition wish to impugn the abilities of an organisation of highly skilled individuals who work solely for the public benefit. But, what would we expect? In fact, many economists in the private sector have explicitly made the point that the growth outlook contained in MYEFO is reasonable and in line with their own forecasts. Westpac's Chief Economist Bill Evans said on 22 October:
They've cut their growth forecasts by a quarter of a per cent. That's now in line with our own forecast and we of course support that view.
UBS Chief Economist Scott Haslem also stated on 22 October:
The government's growth forecasts seem reasonable.
Finally, HSBC Chief Economist Paul Bloxham also stated:
I think these numbers look fairly sensible in the scheme of things.
The government has been upfront about the weaker global outlook, which has weighed more heavily on parts of our economy, including some resource projects. This has contributed to a downgrade of our GDP forecast for 2012-13, although, like many major forecasters, we are still expecting growth around trend. Like most private sector forecasters, we have significantly downgraded our terms of trade forecast for 2012-13, given the unexpected sharp decline in non-rural commodity prices that occurred recently.
The fact is we are still expecting growth around trend, low unemployment and contained inflation—an enviable combination that continues to put the Australian economy in a league of its own. Australia holds a AAA credit rating with a stable outlook from all three rating agencies, one of only seven countries that does so. This is a feat that was never achieved under the coalition.
The Australian economy is fundamentally strong. Mining capital expenditure is expected to increase by a staggering 45 per cent in 2012-13, following growth of 75 per cent in 2011-12. This is underpinned by a substantial pipeline of investment, with $260 billion at an advanced stage, so it is largely locked in. New business investment is expected to reach 50-year record highs at the end of the forecast period, supported by a still strong outlook for resource investment. As the investment phase passes its peak, this should coincide with a ramp up in the production phase, so the resources sector will still be making a positive contribution to growth overall. We expect non-rural commodity export volumes to grow by 15 per cent over the forecast period alone. We also expect that lower interest rates and rising incomes will support modest growth in dwelling investment and non-mining investment towards the end of the forecast period. We have a proven track record of putting in place the fiscal settings appropriate for the economy and for jobs.
In the face of the worst global recession in 80 years, we stepped in to support the economy and jobs. This government did that. This ensured that we avoided recession and avoided having hundreds of thousands of Australian jobs hit the wall. The Australian people will never forget that those opposite came into this place and voted against Australian jobs and the economy. They will not forget that. As we stepped in to support our economy, we put in place the strict fiscal rules that have us returning to surplus faster than every major advanced economy. We have put in place over $150 billion in savings to ensure our budget is on track to return to surplus.
It is cute that those opposite talk about surplus but then fail to come into this place and support the savings to return us to surplus. They puff out their chests and rage over a so-called 'age of entitlement' but then fail to come into this place and to support the savings that make our budget sustainable. It is no wonder that those opposite have a $70 billion crater in their budget bottom line, as announced by Mr Joe Hockey.
It is disappointing to be lectured about a surplus by those opposite when their shadow Treasurer does not appear to understand MYEFO. For example, Mr Hockey claimed the Murray-Darling Basin plan was not in MYEFO. Mr Hockey said: 'Well, the Prime Minister announced $1.7 billion for the Murray-Darling Basin. Not a single dollar of that was contained in a statement just made a few days earlier.' But, as the Prime Minister and Minister Burke had previously announced, it was in MYEFO. Mr Hockey also claimed that our economy was 'flatlining', saying: 'In a week when the budget has collapsed, the mining tax has collapsed and the economy is flatlining, I just don't think these are the most significant issues.'
In fact, Australia's economy has been growing for 21 consecutive years, as I said previously, and the most recent figures show us growing at 3.7 per cent through the year. On top of this, the International Monetary Fund forecasts Australia will be the fastest growing advanced economy this year and next. Another thing Mr Hockey claimed was that there was no lost revenue. He said Wayne Swan kept talking about lost revenue when there was no lost revenue. This is despite undisputed evidence that the global financial crisis wiped $160 billion from government revenue.
It is disappointing that the opposition continues to seek to talk down the Australian economy. It is disappointing that they cry crocodile tears about a surplus, yet will not commit to savings measures. I also find it disappointing that they come into this place and question the competence of an organisation—that being Treasury—whose expertise they relied upon without question while in government. Finally, it is really disappointing the hypocrisy those opposite show when their shadow Treasurer and their economic team do not understand the MYEFO, do not understand the budget and do not understand the $70 billion black hole that their own shadow Treasurer admits they have.
Here we are, talking about an extremely slim budget surplus, a budget surplus that is being delivered at the expense of some of the most disadvantaged in our community. An issue that I was addressing earlier this afternoon in this place is the cuts to single parents' incomes by moving single parents from single parent payment to Newstart, a so-called saving of around $700 million—at the expense of the most vulnerable in our community: single parents who are trying to raise our next generation. Between 100,000 and 150,000 single parents and their children are being moved onto Newstart, thereby dropping their incomes by a significant amount of money. In fact, the government has not even modelled the impact on some of those single parents. I was talking about that earlier this afternoon.
In answer to my question earlier this afternoon, the minister said he was unaware of any modelling that has been undertaken, for example, on the 10,000 single parents who look as if they will lose all their income support, their access to a concession card and their access to rent assistance. The government actually has no idea what impact that is going to have on single parents in terms of an actual dollar value. We do know that it will lower their incomes. We do know that the incomes of those single parents will drop and they are already struggling and many of them are already living in poverty. We do know that their income is going to drop. My question then is: what impact does that have on the government's budget line? How does it look in this country, when the government claims it made a surplus, yet the most vulnerable in our community are living in poverty?
You just have to look at the Australian Council of Social Service poverty report that they put out at the beginning of Anti-Poverty Week in October. It shows that there is a growing body of evidence about the extent to which people in Australia are facing multiple deprivations, such as the inability to heat their homes or to afford school things. Thirty five per cent of people on social security payments are unable to raise $200 in an emergency. Alarmingly, more than half of the households with Newstart as the main source of income are living in poverty, as are one-quarter of the people in sole parent families. The ACOSS poverty report demonstrated that 48 per cent of these households have experienced three or more financial stresses like these in the last year.
I also launched Anglicare's report, When there's not enough to eat, in Anti-Poverty Week in October. It demonstrated what many other emergency relief services are reporting—that is, that a significant proportion of the people accessing their services are single parents. Anglicare also found that 45,000 of the households using their emergency relief services were unable to feed their families properly. In other words, families are going hungry. Those most vulnerable in our country are going hungry, yet the government think that they can manage a surplus by dropping these people further into and condemning them and their families to poverty. How can we say in this country that we have adequate support for these people when they are living in poverty? If you are living on Newstart, you are living on more than $130 below the poverty line.
How can we say we have a surplus? How can we say we are a caring society when we are condemning not only the current generation but future generations to poverty, intergenerational poverty and the poverty cycle? It is time that we made sure that we looked at our economy and our budget surplus in terms of needing to address the most basic human needs and ensuring that we are caring for the most vulnerable in our community. We need to ensure that our economy is planning for and able to provide a secure future for all of our community, and we need to also make sure that we are protecting our natural world, which is absolutely vital to sustain us. We need to be addressing issues around poverty, food and security, and barriers to employment for our most vulnerable Australians, instead of taking the simplistic approach of saying, 'Well, single parents, we'll drop you onto Newstart and that will encourage you into work.'
This forgets about or ignores the fact that 45 per cent of single parents are in fact already working. Single parents have the highest work participation rate of all of the groups on income support. In other words, the policy justification just does not exist. It is about trying to save $700 million that can go to the $1.5 billion so-called surplus. But I do not even think that the government actually have their figures right. For a start, just last week, they downgraded the estimate from 17,000 to 10,000 single parent families that are going to be without income support. The government could not tell us what impact that will have on those families and my question is: if you have done the budget calculations based on successfully managing to get 17,000 people off income support by dropping them further into poverty, what does that do to the bottom line?
The other issue that I started canvassing earlier is that for those 10,000 families who are supposedly being encouraged into work—although by definition those 10,000 families that are not going to get any income support are already working families, already working single parents—there is in fact a perverse incentive happening. They are going to have a drop in their income by working. The natural conclusion there is that, if I am dropping my income by working, maybe I am better off reducing my working hours so that I can still maintain some link to the income support system and get access to concessions and rent assistance. So the very policy objective is null and void. Not only that, but by going onto income support I am then going back into the system and I am costing the government money.
In other words, the surplus calculations are reduced. Not only have they mucked up their sums; their policy is actually counterproductive. The rhetoric you hear from the government is any job is a good job and that children need to be growing up in families that have jobs. Yet, here are these children who will see their parents forced into reducing their working hours because of a stupid government policy. It is counterproductive, all based on the fact that we are trying to get the most marginal surplus off the backs of the most vulnerable families in Australia. Those people are going to be forced into accessing emergency relief.
The minister could not answer a question about this when I asked him in the chamber today. In a media comment previously, the Minister for Employment and Workplace Relations, Minister Shorten, said that when families drop onto Newstart on 1 January, one of the hardest, most expensive periods of the year for families—Christmas time, school holiday time and going back to school time—they will be able to access the once-off crisis payment. Not only is it very difficult to access that; these people are facing a crisis situation. The government could not tell me how they have budgeted to make sure that that money is available. I wonder if that was calculated into the budget bottom line. I wonder if that was calculated into the razor thin surplus that the government has. These families are going to need support somehow, other than that they are going to emergency relief centres.
Earlier in the year when I asked whether the government was going to make extra funding available to emergency relief, they said no. What will happen to these emergency relief services that already have to turn people away, that are already supporting many people on Newstart and supporting single parents who have been already been dumped onto Newstart under the welfare to work regime? How do we support these people? How can we say that we have a caring society and that we have a surplus when it is off the backs of the most vulnerable in this country? People are living in poverty and we are condemning them to intergenerational poverty. We are condemning them to the poverty cycle unless we re-evaluate the way that we see the economy supporting our community and start putting people first, and not seeing the economy as an end in itself. (Time expired)
Some people do ask, such as Senator Siewert, why it is so important to have a budget surplus. Why not just spend? Let me explain very briefly why a surplus is important. After World War II, Social Democratic parties in Western countries came up with a pea and thimble trick, and it was this: the state could offer more to its citizens than those citizens would ever pay in tax. That was the Social Democratic compact—principally in western Europe and more recently in the United States of America. Largely, of course, those countries got away with it. They got away with it for two reasons. Firstly, after World War II, the West had an enormous technological, manufacturing, industrial and educational advantage—far ahead of the rest of the world by a mile. Secondly, our population was young and it was growing, and it was buttressed by immigration in the United States, Canada, New Zealand and Australia. So we had both the economy on our side and demography on our side. After World War II, there were far more citizens paying tax than citizens receiving state support. The system more or less worked.
Fast forward to 2012. Where are we right now? Firstly, we no longer enjoy a huge technological, industrial and educational advantage. The rest of the world has caught up with the West. The rest has caught the West, especially China, India and East Asia. It has happened well within my lifetime. Within the last 30 years, we have seen the greatest economic transformation in human history, where billions of people have come out of poverty and into relative comfort. Secondly, our population is now ageing. We no longer enjoy a healthy ratio between those paying tax and those receiving benefits. That healthy ratio has evaporated. Our economic comparative advantage and our demographic advantage no longer apply.
In the Western world, too many people now work for the government, receive benefits from the government or are organised rent-seekers for government assistance. That is where the Western world is in 2012. Where are we today? Today the West is drowning in debt and it is getting worse. I accept the National Disability Insurance Scheme is a great idea, at about $10½ billion a year; the national dental scheme is a great idea, at about $4 billion over six years; the Gonski funding proposals for schools are a great idea too, at about $6½ billion per year—let alone the dodgy accounting that allows the NBN to be put off budget. All of them are great ideas—I do not dispute that. Let me ask this question, Acting Deputy President Ludlam, and you know the question I am going to ask: who will end up paying for it? I will tell you who is going to pay for it: our children and our grandchildren, as they are paying for similar schemes in western Europe and the United States, and it will not change.
The great British historian, Professor Niall Ferguson, wrote recently in his Reith Lectures and said:
The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.
Yes, we are living at the expense of our children and our grandchildren. That is a fact.
The Labor Party and the Greens always like to talk about social justice, equity and fairness. Let me ask this: is it fair, is it just, is it appropriate to dump IOUs from our generation onto our children's and our grandchildren's generations because we are unable to live within our means? Is that fair? Is that social justice? I think not.
This is a Left mantra. It has been in Western Europe since World War II and in the United States from the 1960s. It is a disgraceful breach of the social contract between one generation and the next; between our generation and our children's generation and our grandchildren's generation. Governments, communities and societies are not just about eligible voters; they are about those kids who were watching us before, their children and those to come after. That is what this is about. It is about their future.
That is why we have to ensure that Labor balances its budget. We know that since Federation every time Labor leaves government we are further in debt as a nation. That has been, as I have said so often in this chamber, the Labor Party's story since their first Prime Minister, John Christian Watson, in 1904. That is why we do not trust this mob; they have had the same form for more than a century. It is always the same story: in peace and in war, in good times and bad times, it does not matter. Australia is always further in debt when this lot leaves government. There has never been an exception. That is why we in the opposition are worried as hell.
If this lot is re-elected, sure they have great schemes—Gonski, NDIS, the dental scheme and others—but who will pay for them? We all know who will pay for them in the end: it will be our kids and our grandkids, and we will mortgage their future. That is what we in the opposition are all petrified about. To paraphrase the great British Prime Minister Margaret Thatcher, the problem with Labor is that sooner or later they run out of other people's money. That has been the problem since 1904 and the first Labor Prime Minister, and nothing has changed—no lessons are ever learned. Why don't they get that every generation has to pay for itself? Is it not a good principle of social justice and equity that, largely, more or less, within an arc, every generation pays for itself? That is all I am asking: that generations do that.
In the end, no-one in the Labor Party ever wants to pay the piper. They would rather spend our children's future and our grandchildren's inheritance. We, the opposition, will not allow that to happen. Let us just hope that we win the next election.
Perhaps you do, but as I look around me it seems very few are supportive of Senator Mason's hope. However, I thank Senator Mason and the opposition for providing yet another opportunity for the government to speak about its economic record. It is very much appreciated that we have this opportunity in today's matter of public importance.
The Labor government has guided this country through the worst global economic circumstances since the Great Depression. It put in place the necessary fiscal settings to insulate our economy and protect jobs from the global financial meltdown. It introduced measures that stimulated our economy and prevented hundreds of thousands of jobs of Australians just hitting the wall.
The opposition has had the opportunity to support Australian jobs and our economy during the global financial crisis but it has squibbed it; it has walked away from that opportunity. Despite the misfortune that we suffer with such an inept and relentlessly negative opposition, the government has kept making the hard decisions in the national interest and getting those decisions right.
Since the worst of the global financial crisis the government has put in place strict financial rules that have had Australia's budget returning to surplus faster than every major advanced economy in the world, but you will not hear that from Senator Mason and the opposition. The government has made over $150 billion in savings to ensure that our budget is on track for a surplus; you will not hear that from the opposition. The opposition can bluster and waste time about the budget surplus, but they fail each and every time to support the savings measures necessary to see a budget surplus become a reality.
In fact, we had Mr Hockey over in London in April this year huffing and puffing about the age of entitlement, and blustering about Western democracy's reluctance to wind back universal access to payments and entitlements from the state. But, when he gets back home he does not support a single government saving. Of course, what he does do—along with Mr Robb—is he cooks up the opposition's ludicrous $70 billion black hole. That was an unforgettable and infamous Liberal Party botch job. I do not think that Mr Hockey and Mr Robb are ever going to be able to live it down.
It is true that the government has a very strong economic report card. Australia has an enviable combination of solid growth, low unemployment, contained inflation, strong public finances, solid consumption and a strong investment outlook. Since the government came into office in 2007, the Australian economy has grown by 11 per cent, despite the worst global economic conditions in 80 years. Our economy is growing faster than every major advanced economy it can be compared with. We have low unemployment: the unemployment rate in Australia is currently 5.4 per cent. Compare that to Europe's; it is less than half the rate: 11.6 per cent. It is also significantly lower than in other advanced economies. Almost 800,000 jobs have been created since the government came to office in 2007. Inflation is contained: currently at 2.5 per cent, which is in the middle of the RBA's target band. Our cash rate is low: 3.25 per cent, which is lower than at any time during the life of the previous government. And who could forget all those claims made day in day out, month in month out, year in year out about the Liberals being the party of lower interest rates? It is not true, is it? We have a strong investment outlook with a record $260 billion of investment at an advanced stage. Of course—and this is critically important—debt is low. Net debt as a percentage of GDP is peaking at around a tenth of that of comparable advanced economies.
I think that any objective and fair observer would agree that the Australian economy is in good shape. Of course, the opposition do actually know that is the case. They are not noted for their economic expertise. However, on this particular matter, they would be well advised to be generous to the government that has done such a good job as economic managers in this country. Just admit it. Front up and say it; perhaps just drop some of that relentless negativity and petty scaremongering, and tell the truth. I think it is time we saw the opposition start talking up our economy.
The government has been honest about the weaker global outlook which has weighed heavily on parts of our economy, including on some resource projects. We have seen a significant deterioration in the global growth and global economic outlook since last year's budget. We have witnessed a sharp decline in parts of Europe, only a moderate recovery in the US and slowing growth in our region, including China. This has contributed to a downgrade in the GDP forecasts for 2012-13, although on trend growth is still expected. Many forecasters have made the point that the growth outlook contained in the MYEFO is reasonable and in line with their own independent forecasts. I would like to conclude my remarks by again thanking the opposition for the opportunity that this has given to the government to present the government's AAA-rated economic report card—it is sound economic management which I believe will continue to be in place as those measures introduced by the government bring our budget back to surplus by 2012-13.
Labor Senator Doug Cameron from New South Wales was spot on the money in media reports today when he said the people of western Sydney do not trust the government. That is being very honest, because I think the people of Australia do not trust this government. They do not trust the government to keep its word on carbon taxes. They do not trust the government to manage money. I noticed an earlier interjection from Senator Thistlethwaite about the extra billion dollars in the New South Wales budget. We know what sort of mess New South Wales inherited from then Treasurer Mr Roozendaal, who does not even know how to register a car. He did not know whether to put the car in his wife's name or his name, yet he was in charge of the RTA—how ironic.
In the budget of May 2009, this government forecast a deficit of $12 billion for the financial year that finished on 30 June this year, the 2010-11 year.
But in the May budget of 2010 that deficit blew out to $22 billion. Then in the midyear economic and fiscal outlook, MYEFO, in around November 2010 that blew out to over $30 billion. In September just past we got the actual facts of the 2011-12 budget: $43.7 billion debt. That is how much this government borrowed in 12 months. But two years earlier they forecast borrowing just $12 billion. To end up borrowing $43.7 billion when your forecast is $12 billion two years earlier is not even a good guess. That is such bad fiscal management it is not even a good guess.
We hear so much about the global financial crisis. This is the most laughable thing of all about this government. Here was a government in 2009, 2010 and 2011 stimulating the economy, borrowing billions and billions, up to a gross debt now of just on $250 billion.
I will take the interjection from Senator Thistlethwaite. He is not concerned. David Murray, former boss of the Commonwealth Bank, former Future Fund manager, said that between the federal government and the states we are heading to a debt of half a trillion. Does half a trillion worry you, Senator Thistlethwaite? You left Queensland stone motherless broke, with its credit rating downgraded. Now South Australia's credit rating has been downgraded—broke again. You left New South Wales broke. As I said, Senator Cameron has it right: that people cannot trust you; they cannot trust you to manage money.
The funny thing is that while stimulating the economy on 7 October 2009 the Reserve Bank raised interest rates—and in November and in December. We had seven interest rate rises in a row while the government was borrowing money to stimulate the economy. Tell me this, those listening out in radio land: if you are driving your car, do you have your foot on the accelerator and pull the handbrake on at the same time? That is how stupid this fiscal policy was. You are borrowing money to stimulate the economy while the Reserve Bank is putting the brakes on. We had seven interest rate rises in a row, forcing our exchange rate up, causing enormous financial damage to rural Australia, where our exports are put together, put on the boats—where food is grown and mining carried out.
If Senator Thistlethwaite can find me one economist in the world who says it is good government policy to stimulate your economy while the Reserve Bank is raising interest rates, tell me who it is. Tell me one economy in the world where the reserve bank is raising interest rates and they are stimulating the economy, borrowing money, mortgaging our children's future away to stimulate the economy. That is just an oxymoron. That is crazy. You would not find one economist in the world who would agree with what you have done. Now you have left us in such a financial mess, mortgaging our children's future away. Your history is a disgrace of financial management. You have never delivered a budget surplus in 21 years, and we will highlight this to the Australian people every day of the week until the next election, which will be August next year. It will not be in September, because in September next year Treasury delivers the actual facts of the budget we are in now—this year's financial year, in which we have been promised a surplus. There will be no surplus. The Australian Labor Party does not understand what the word 'surplus' means. It is a word from outer space, something they cannot deliver. All my life, whether it be state government or federal government, it is the Australian Labor Party that sends us broke. And who has to clean up the financial mess? The coalition does—just like the magnificent job former Treasurer Peter Costello did when he inherited a budget of borrowing $10 billion every year, $96 billion worth of debt.
This says it all: when this government came to power in 2007 the credit cap for this government to borrow was $75 billion. They then raised it to $200 billion and wasted so much money on school buildings and pink batts schemes—what a waste of money. It was not infrastructure to help our nation produce more; they wasted it. They go on their money wasting schemes, and here we are now with the debt.
Go to Inverell, where they pulled down four perfectly good school classrooms. And what did they replace them with? Four new classrooms. The teachers did not want them gone but of course you would not listen. Then your New South Wales government goes and brings in Reed Constructions, who then go broke and we have so many builders not even getting paid. What a financial mess. That is your history in the Australian Labor Party. You must hang your head in shame because your history is sending our nation broke. That is your legacy. (Time expired)
Australia is well placed to deliver a budget surplus in 2013. But don't believe me; ask the independent organisations that regularly assess our economic performance. The International Monetary Fund last week gave our budget position a big tick. The OECD recently gave our budget a big tick. All three rating agencies deem us a triple-A rated economy. The opposition always talk about their economic credentials and the fact that they are better at delivering a surplus. So I thought to myself: 'How are they going to do this? How do the opposition claim that they are going to deliver a budget surplus? I'll do a bit of research. I'll go to the Liberal Party's website and look up their economic policy.' If you go to the Liberal Party's website and look up their economic policy, what do you find? You see the 2010 election policy on economics. It is still there. That is their policy: the 2010 election policy. Talk about living in the past. It makes for good reading. The first page says: 'The coalition's superior financial management will deliver an improved budget position over the forward estimates of $11.5 billion.' What actually happened? It was not an $11.5 billion budget surplus, it was an $11 billion budget deficit that they were going to deliver. Their costings came up many billions short.
There is an interesting little letter at the front of their budget costings from WHK Horwath. They are auditors. They state in that letter:
WHK Horwath has reviewed the complete set of recurrent and non-recurrent policy commitments and savings, and is satisfied that based on the assumptions provided, costed commitments and savings have been accurately prepared in all material respects.
What happened to these individuals, Messrs Patell and Kidd? They were hauled before the accounting and auditing standards body and asked to explain how they could sign off on these shoddy accounts. I take the point that Senator Mason raised earlier about shoddy accounting. The Liberal Party wrote the book on shoddy accounting. Do not believe me; it is there in writing, because their auditors were fined for professional standards breaches for signing off on these accounts. And they come in here and talk about their superior economic record.
Shoddy accounting must be a Liberal Party trait, because it has spread to New South Wales, where the current Liberal government have made a mockery of the New South Wales budget. They lost $1 billion—they lost $1,000 million in their budget. Instead of delivering a $337 million deficit, they are now delivering a $680 million surplus because they failed to account properly for this money. It has been described by the independent Auditor-General in New South Wales as 'totally unacceptable'. That is what an independent body said about Liberal Party economic management. They are cutting $1.7 billion from the education budget. Parents have been saying, 'Finally, some relief—maybe they could put that extra $1 billion that they lost back into education.' But no, no, no: the Liberal Party will not be putting that money back into education; they will be keeping it. It says everything about their approach to economic management.
Given the Liberal Party's approach to accounting in New South Wales and at a national level, given that we are going into the silly season of Christmas and given next year is an election year I thought I would give the people of Australia some advice, particularly those who live in Liberal Party electorates. For the public who are thinking about what they can get their local Liberal Party MP for Christmas, what would be a good gift to give to them? Can I suggest that the people of Australia give their Liberal Party MPs a calculator—send one in the Christmas mail, because it is quite evident that Liberal Party MPs do not know how to add up.
New South Wales Treasurer, Mike Baird, decided he would calculate the budget using his fingers and toes, and look what occurred there. So maybe the people of New South Wales who live in Liberal Party seats could buy a calculator as a Christmas present for their Liberal Party MPs. Hopefully, they will be able to calculate in an election year their election costings. (Time expired)