Thursday, 5 December 2013
Commonwealth Inscribed Stock Amendment Bill 2013; In Committee
I move the following amendment to be added at the end of the motion, as has been read out:
But in its place the Senate agrees to the request for an amendment and amendments circulated in my name:
(1) Title, page 1 (lines 1 and 2), omit "amend the Commonwealth Inscribed Stock Act 1911, and for related purposes", substitute "remove the limit on stock and securities on issue, and for other purposes".
(2) Schedule 1, items 1 and 2, page 3 (lines 5 to 11), omit the items, substitute:
1 Section 5
Repeal the section.
2 Subsection 51JA(2)
Omit ", disregarding stock and securities of the kind mentioned in subsection 5(2),".
3 After subsection 51JA(2)
(2A) In working out the total face value of stock and securities for the purposes of subsection (2), disregard:
(a) stock and securities issued in relation to money borrowed under the Loan (Temporary Revenue Deficits) Act 1953; and
(b) stock and securities loaned by the Treasurer under a securities lending arrangement under section 5BA of the Loans Securities Act 1919, or held by or on behalf of the Treasurer for the purpose of such an arrangement; and
(d) stock and securities on issue as at the start of 13 July 2008, other than Treasury Fixed Coupon Bonds.
Note: The time referred to in paragraph (d) is when item 4 of Schedule 1 to the Commonwealth Securities and Investment Legislation Amendment Act 2008 commenced.
4 At the end of section 51JA
(5) For the purposes of this section:
(a) the face value of a Treasury Indexed Bond is taken to be its face value at the time it was issued; and
(b) the loan of stock or a security is taken to include an arrangement under which it is sold and repurchased.
(3) Page 3 (after line 11), at the end of the Bill, add:
Schedule 2—Amendment of the Charter of Budget Honesty Act 1998
1 At the end of clause 2 of Schedule 1
Additional statements about Commonwealth stock and securities
(7) In certain cases where the face value of Commonwealth stock and securities on issue has increased by $50 billion or more since a previous report or statement under the Charter of Budget Honesty, the Treasurer is to table a statement setting out reasons for the increase (see Part 9).
2 Subclause 3(1) of Schedule 1
Commonwealth stock and securities means stock and securities on issue under the Commonwealth Inscribed Stock Act 1911 (the CIS Act) or the Loans Securities Act 1919 (disregarding stock and securities of the kind mentioned in subsection 51JA(2A) of the CIS Act).
debt statement, for a report under Part 5 or 7, means a statement that includes:
(a) the following information about Commonwealth stock and securities on issue, at the time of the report and for the financial year to which the report relates and the following 3 financial years:
(i) the value of the stock and securities (including their market and face value, and their value as a proportion of gross domestic product);
(ii) the total expected interest expenses relating to the stock and securities; and
(b) a breakdown, by maturity and timing of interest payments, of Commonwealth stock and securities on issue at the time of the report.
3 At the end of subclause 12(1) of Schedule 1
; (f) a debt statement.
4 At the end of subclause 16(1) of Schedule 1
; and (c) contain a debt statement.
5 At the end of subclause 24(1) of Schedule 1
; (e) a debt statement.
6 At the end of paragraph 26(a) of Schedule 1
(v) the information required by paragraph 24(1)(e); and
7 At the end of Schedule 1
Part 9—Additional statements about Commonwealth stock and securities
33 Additional statements about Commonwealth stock and securities
(1) This clause applies when the actual face value of Commonwealth stock and securities on issue has increased by $50 billion or more since whichever of the following last occurred:
(a) a budget economic and fiscal outlook report, a mid-year economic and fiscal outlook report or a pre-election economic and fiscal outlook report was publicly released;
(b) a statement under this clause was tabled.
(2) The Treasurer is to table in each House of the Parliament, within 3 sittings days of that House after the increase referred to in subclause (1), a statement setting out the reasons for the increase, including the extent to which any of the following contributed to the increase:
(a) lower than expected revenue;
(b) higher than expected spending;
(c) capital purchases;
(d) grants to State and Territory governments for infrastructure.
8 Application—statements under clause 33 of the Charter of Budget Honesty
Clause 33 of Schedule 1 to the Charter of Budget Honesty Act 1998 applies in relation to a report referred to in paragraph (1)(a) of that clause that is publicly released on or after the commencement of this item.
I want to make a few remarks about the amendments and what they seek to achieve. There are two things that we are doing with regard to this. One is to end the debt ceiling and remove that. The second thing is to amend the Charter of Budget Honesty. I want to go into the background of this.
Up until 2008 there was a process that federal parliament had engaged in where, through the budget process, through the appropriations process, the debt was managed. In 2008 the then Assistant Treasurer, Mr Chris Bowen, introduced legislation which effectively introduced the debt cap. I have been back over all of the speeches, statements, explanatory memoranda and so on, and whilst all of them talk about why the debt was being increased, none of them go to any explanation of why they introduced the debt ceiling as such. One can only assume that it was a decision that was made by the then government to try to reassure the community that whilst debt was being incurred it would not keep increasing debt, because the Labor government had just been elected at the end of 2007 and no doubt they thought it was a good idea to reassure the community on that front. What they did not anticipate—and no-one could have—was the financial crisis that then set in and changed everything. The Labor government had to come back twice after that to increase the debt limit that they had put in place.
In the meantime in the United States, as we know, the Tea Party had managed to get up a head of steam and it employed the tactic of blocking increases to the debt ceiling in order to create a political crisis. In the United States it is a genuine political crisis, and the reason for that is the American political system, where the congress imposes debt ceilings because it wants to limit the borrowing capacity of the separately-elected executive arm of government. So it genuinely is a debt crisis in the United States, because it is a stand-off between congress and the executive. In the Australian context it is vastly different because, as everybody appreciates, the executive is part of the parliament. Not only is it an entirely different scenario but there is also a capacity for government to use other legislation in order to meet any shortfall. The Loan (Temporary Revenue Deficits) Act 1953 would allow you to cover any shortfall. So all that has happened is that a Tea Party tactic from the United States has effectively been inserted into the Australian political system, and the result of that has been what has become political brinkmanship.
I hold Minister Cormann to account in this regard. I am very aware that he went to the United States and caught up with half a dozen of his Tea Party colleagues, and it was only when he came back from—
Mr Chairman, on a point of order, I heard Senator Milne mislead the Australian people during a press conference earlier today, and she is persisting with misleading the Senate here today.
The CHAIRMAN: Order! There is no point of order, Senator Cormann.
Senator Milne seeks to make assertions out of context that are designed to mislead the—
The CHAIRMAN: Senator Cormann, that is not a point of order; that is a debating point, and there are other ways of rectifying that.
She should talk about my meetings with Obama administration officials in the same visit.
The CHAIRMAN: Order! Senator Cormann, you do not have the call.
I just make this point: between 2008 and 2011, 'debt ceiling' was mentioned only once in the Hansard. It was only after 2011 that it was confected into the amazing debate that it became. I can understand why members of the Senate who were in the former Labor government would feel so aggrieved at this, because it was used endlessly and mercilessly as a political tactic. But in reality it has served the people poorly, because it takes away from the appropriate economic management of the country. So when this issue came up again I had a look at all of the commentary around it. I went back to see the reason it had been introduced in the first place and, as I said, I could not find one. What people are recognising here is that governments need to be charged with the management of the economy in the interests of people and the environment. That is what the government needs to do. The parliament still has oversight of debt through the budget process and will continue to have oversight, but we will get rid of this phoney debt ceiling debate and instead we will be able to reframe the argument about debt so that it becomes a conversation on what the debt is being incurred and used for and there will be much clearer reporting.
So what these amendments do is remove the debt ceiling and, in its place, bring in a new requirement for government to justify the debt. That will be triggered every time a $50 billion threshold is crossed, and that will require the tabling in the parliament of a statement explaining why the debt has been incurred—whether it has been incurred because of shortfalls in revenue, because of increases in spending or because of capital spending. It will make that very specific so that the parliament can then have a look at the way the economy is being managed.
This means that the government will have no excuses. Next year in the budget, they have every tool available to them. They have increased revenue opportunities. They will be judged on their spending and also on debt. It means that there can be a clear focus on the coalition's economic management. The Greens will want to make sure that the deep cuts that are being talked about cannot or will not proceed, because if you are serious about investing in the infrastructure that the nation needs then education and health, for example, are fundamental parts of the infrastructure that you need for a 21st century economy that gets beyond digging it up, cutting it down and shipping it away.
The Treasurer, Mr Hockey, has written a letter to me which was tabled in the House of Representatives, and I would be happy to table it here if the government does not intend to do so. It basically sets out a range of transparency requirements which, as I said, will require the tabling in the parliament of a statement going into specific matters in relation to the debt. It will also require a new presentation in the budget documents of much greater clarity around the debt, and it will also go to having medium-term projections out to 10 years, with enhanced detail to encourage discussion and debate beyond the short term about the benefits of funding important investments, particularly, as I indicated, in infrastructure—both infrastructure as economic stimulus and infrastructure in the things that the country needs. The Treasurer has also undertaken to have further discussions about the level of reporting that can be gone into with regard to the public financial corporations sector, and I look forward to greater transparency in that regard. So I think we have now set up a scenario where there will be much greater clarity.
One of the other areas on which we are seeking specific reference in the budget papers and also in the Intergenerational report is the impact of climate policy on the economy and the budget. The reason for this is, of course, that the best way and the cheapest way of reducing the cost of abatement in Australia is through a market mechanism, and emissions trading is clearly the preference of the Greens in this regard. That is why we now have an emissions-trading scheme legislated in Australia.
If you take away that emissions-trading scheme then it is the budget that is going to have to do the heavy lifting. That is, the people of Australia are going to have to pay. We already have on the table a $3.2 billion emission reduction fund, but that is not going to be anywhere near enough. Take it out to 2020, and as Australia has to step up to meet its emission reduction targets, that is when it is going to hit the budget very hard—in those out years. What we have from the government is an agreement that there will be in the intergenerational reports the specific likely impact on the budget and on the economy in the longer term, plus details of the actual spending that has occurred through the budget papers.
I think that they are significant improvements in allowing the community, through its parliament, to be better able to access information about debt—about the sort of debt the government is incurring and why it is incurring that debt. It really goes to this issue of good debt and bad debt. The way that the debt is currently reported makes it nigh-on impossible for people to be able to track this and work it out. But everybody knows the difference between taking out a mortgage to pay for a property as opposed to running up a credit card. And that is exactly what we are talking about here. The Greens are saying that there is nothing wrong with debt if debt is being used for the right things—for investing in the long-term infrastructure that the nation needs.
And that infrastructure is not just things like high-speed rail, but infrastructure in terms of educational infrastructure for the future. The resource of this century is imagination and the investment needs to be in maximising those outcomes. Bad debt, however, occurs when a government does not raise enough revenue, keeps on spending and then has a gap which is covered by borrowing. That is the problem with the credit card mentality. What we have done means that now there will be no excuses; it will all be there, exposed. And more particularly, what will be exposed as a result of this will be the collapse in revenue. It will make no sense at all for the government to try to get rid of the mining tax revenues, for example, at the same time as it is saying the economy is slowing.
In fact, the economy is only ticking over at the moment because of public sector spending. If you look at that and at next year's budget, you would see that it would simply be totally irresponsible to make the deep cuts that are being talked about. This actually enables Australia to reframe the debate, and I am looking forward to being able to have a much more sensible debate about debt than what is just reflected in an argument about whether it is $300 billion, $400 billion or $500 billion, and when peak debt will occur. It is much better to have the debate about what the debt is being used for and if it is in the interests of the country, or if it is to cover up for a government's decision to let the big end of town off the hook by getting rid of the mining tax or cutting the taxes for big companies, for example—giving them excessive tax cuts—and taking away services.
I think all of that needs to be very clear to people, and that is what we have done here. I think that this move by the Greens to have a good look at the whole issue of the debt ceiling and actually to get rid of it is a good thing. It is certainly something that is supported by a range of economists out there—everyone from Ross Garnaut and Saul Eslake, for example, to a number of the financial commentators. They all recognise that this is a silly debate that Australia engages in. Each time we have the debate it is political theatre, essentially, around debt instead of the serious conversation that Australia needs to have.
So I would urge the Senate to support removing the debt ceiling and to support the new transparency measures that will be required as a result of this amendment to the Charter of Budget Honesty. It is legislated change and it will be reported to the highest standards, so it is not something that can be backed away from or run away from. It is agreed, it is legislated and it is to the standards that are specified. And so I urge the Senate to get behind what I think is a step forward in the community's understanding of government debt.
I seek leave to table the Treasurer's letter to me regarding the agreement on this matter.
The CHAIRMAN: Is it the wish of the committee that the statements of reasons accompanying the requests be incorporated in Hansard? There being no objection, it is so ordered.
The document read as follows—
Commonwealth Inscribed Stock Amendment Bill 2013
(Amendments and request for amendment to be moved by the Leader of the Australian Greens, Senator Milne, during consideration in committee of the whole of message no. 2 from the House of Representatives)
Statement pursuant to the order of the Senate of 26 June 2000
The amendment removes the limit on the total face value of stocks and securities that may be on issue under the Commonwealth Inscribed Stock Act 1911 and the Loans Securities Act 1919 at any time.
On the basis that the projected increase in debt will result in increased expenditure under the standing appropriations in sections 13AA, 13A and 13B of the Commonwealth Inscribed Stock Act 1911, amendment (2) should be moved as a request.
Commonwealth Inscribed Stock Amendment Bill 2013
(Amendments and request for amendment to be moved by the Leader of the Australian Greens, Senator Milne, during consideration in committee of the whole of message no. 2 from the House of Representatives)
Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000
The Senate has long followed the practice that it should treat as requests amendments which would clearly, necessarily and directly result in increased expenditure under a standing appropriation.
If, as stated, this amendment would result in increased expenditure under the standing appropriations in sections 13AA, 13A and 13B of the Commonwealth Inscribed Stock Act 1911, it is in accordance with the precedents of the Senate that this amendment be moved as a request.
If you ever wanted an example of this government not being the government they said they would be, have a look at the deal today. From a government that said in opposition that they were against debt, and from a government that said they were the party of no debt, we now have the government of no debt limit. No debt limit! The party of no debt becomes the party of no debt limit.
But even more extraordinary is the fact that they have done this with the support of the Australian Greens. You could not have written this in a sci-fi or fantasy novel a year ago if you had tried. You could not have written this in a fantasy novel if you had tried: that Joe Hockey would go into a room, negotiate with Senator Milne, the Leader of the Australian Greens, and come out with the no debt limit that he was going to get through the parliament with the support of the Australian Greens.
I do not think that we all need reminding of some of the things that those opposite have called the Greens. The Prime Minister has described them as 'economic fringe dwellers', but he is happy to do a deal on the economy with the economic fringe dwellers. The economic fringe dwellers are on the same side as the Liberal—
And look! Senator Cormann is gesticulating. He could not help himself: he had to get up and have a go at the leader of the Greens. He cannot bear the fact that they have done a deal with them.
You have done a deal with them to have no debt limit! It is quite an extraordinary proposition. From the party that described the Australian Greens as 'economic fringe dwellers', we have an economic partnership on how much Australia's debt should be. And guess what? Magically, they both agree: there is no limit. We have seen so much change since the last election and this government has come full circle.
I also remind the Senate of some of the other things that those opposite have called the Greens. I think they have been described as 'watermelons'—green on the outside, red on the inside—'economic vandals' and a whole range of things. These are the people with whom you have sat down, to determine Australia's debt position and the provisions which regulate that.
I think it would be useful for us to be reminded, in the context of this debate, of some of the things which were said by the coalition prior to the election. I make this point before I go into that fairly lengthy history of the things that were said. This government talks a lot about mandate. We get lectured about mandate, we get told to get out of the way and we get told we are not allowed to have scrutiny, inquiries or debate because it is all about mandate—all power to Mr Abbott.
I just wonder where, in the many things which were said before the election, anything was said around no debt limit. Was there any policy, any speech, any interview or any comment whatsoever that told the Australian people that, when you told them that you did not want to increase debt, what you were actually saying was, 'We want to have no limit on the debt'? It is the same thing as the statement made by the Prime Minister on the Andrew Bolt show or The Bolt Reportis that what it is called?—'It's the promise people thought they heard.' Everyone in Australia thought that they heard that this was a government that was going to reduce debt. That is what I think I heard. Over and over again, you were going to reduce debt: 'We will reduce debt; we will bring down the debt.' Was there a little footnote in any of the press releases or the transcripts of the interviews or in any of the statements that said: 'Except that we'll do a deal with the Australian Greens to provide no debt limit'? Did you see that? I did not see that anywhere. But that is what is happening today.
So when you come in here and have a go about mandate, maybe you should have a think about the extent to which you are moving away from the mandates you were given. Whether it is on debt or on the Better Schools Plan, the reality is that this is not the government that you said you would be and you are reneging on your promises to the Australian people.
No amount of debate, no amount of ex-post-facto footnoting and asterisks, and no amount of ex-post-facto conditionality can hide that fact. You are walking away from the commitments you gave Australians before the election and, worse, you are now lying about doing so. When it comes to the Better Schools Plan, one of the worst things that the Prime Minister did by saying, 'I'll keep the promise that I actually made, not the one you all heard,' was actually lie to people now. He is now telling people, 'Actually, I'm not breaking that promise,' when everyone knew he was, which is why we had the $1.2 billion backflip when it comes to the Better Schools Plan, money given away to the states without any conditions associated with it. That is quite an extraordinary act of irresponsibility to Australian students and parents, as well as being fiscally irresponsible. But I digress. Let us come back to what we were told before the election. Mr Hockey said:
… if debt is the problem more debt is not the answer.
Amazing, isn't it? Now, all of a sudden, more debt is the answer. In fact, unlimited debt is the answer. He went on:
From our perspective, there is no justification for increase in the credit card limit of the Commonwealth Government …
I love that quote. That is what Joe Hockey said to Australians before the election. He also said:
For the good of the country we need to stop increasing Government debt as quickly as possible.
Absolutely. That is an argument for increasing the debt cap. I suppose that is an argument for getting rid of it altogether in some bizarre universe. Mr Abbott went on and on:
… we do need to take a very, very seriously critical look at this question of the debt ceiling …
The government has to justify this …
But what we are getting instead of a government of the sort that those comments indicated is a government that wants to increase debt and does not want to justify it.
Let us recall what the Labor Party's position on this matter has been. We have said—and I moved in the Senate and it was carried at that time—that we were prepared, without seeing the budget update, to increase the debt cap. We said, 'We will give you an increase to $400 billion'—sight unseen! But, before we went to half a trillion dollars, we believed that it was appropriate that the government issue its budget update, its Mid-Year Economic and Fiscal Outlook. Given that the government were refusing to tell Australians what the budget position really was, what the new debt position really was and before the government sought to do something as significant and as serious as increasing the debt ceiling I think, at minimum, they should be required to provide that information.
But that was not enough for the Treasurer and it was not enough for the government. So, instead, they have come to an agreement with Senator Milne, in which they say, 'Instead of providing this justification, we're actually just going to abolish the debt ceiling.' You shake your head when you watch Mr Hockey. He is being pushed around, led by the Nationals when it comes to foreign investment decisions and led by Senator Christine Milne when it comes to Commonwealth debt decisions. What an extraordinary thing—Nationals on investment and the Greens on debt? And this guy calls himself a liberal Treasurer.
There are many things with which I disagree when it comes to Peter Costello, but this does say something about where this Treasurer and this government have moved. Senator Fifield's former boss, Peter Costello, was so public yesterday and the day before about the debt ceiling and he talked about the merits of a debt limit. He said:
A debt limit would also strengthen the hands of the economic Ministers inside the Cabinet … If there is a limit to borrowing, it will set a limit on the spending. A limit on the spending—that is fairly logical, isn't it? But Joe Hockey is not Peter Costello and the government are not the government they said they would be. The government campaigned on reducing debt and deficit. The government campaigned in part on the risk that the Australian Greens posed to the Australian economy. This is the position you, the government, put at the last election.
Now, less than 100 days since you were elected, we have a government that says: 'Actually, when we said we wanted less debt, what we actually meant was that we wanted no debt limit. When we said that the Greens were economic fringe dwellers, what we actually meant was that we will do a deal with them when it suits us. We're just criticising them now because that's what our constituency wants.' I do not think there has been a more substantive example of a U-turn, certainly in the short time this government has been in office, than this U-turn on debt. Probably vying for the privilege of first position in the list of U-turns and broken promises is the Better Schools Plan, but maybe they are equal first. You have a government that says one thing to people, gives them one impression and gives them a set of commitments and then does something that is completely antithetical, completely the opposite, after it has been elected.
I have some questions in this debate which I trust that the minister can answer. One thing that has been referred to in the press releases and press commentary since this deal was agreed is spending on infrastructure. In the course of this committee debate, given that the government has not released a mid-year budget update, it is incumbent upon the minister to tell the chamber what additional spending plans the government intends to fund through this abolition of the debt limit. What are they? Tell us about the infrastructure plans that the minister at the table, Senator Milne, Mr Briggs and others have talked about when they discussed increased infrastructure spending. If the government is essentially saying, 'We will increase the amount of debt taxpayers have to manage because we want to invest in more infrastructure,' after an election where you campaigned on reducing debt, I think the right thing to do is to tell Australians what those plans are. How much more debt are you planning to take on in order to make these investments? I do not believe that was discussed before the election. If you are suggesting that we want a higher or non-existent debt limit because we want to borrow more in order to fund more infrastructure, you should detail those plans.
I make this point finally. I thought it was really quite extraordinary, when looking at Mr Hockey's press release, the extent to which the Liberals have moved on the Australian Greens—after railing, as I said, that they were economic fringe dwellers. Our very own Senator Abetz is absent from the chamber. Obviously, it is not his legislation, but I suspect he feels extremely uncomfortable about the fact that the government has done a deal with the Australian Greens, whom he describes as watermelons and a risk to the Australian economy. Mr Hockey's press release was quite poignant. The first line was:
The Government has today agreed to the Australian Greens' proposal to repeal the statutory debt limit …
Isn't that wonderful! This is a Treasurer who, when it comes to debt, is being run by Senator Milne. That is the government you are running. It was a very interesting press release. In the first line we see congratulations from the coalition government of the Australian Greens' proposal to repeal the statutory debt limit.
I ask the Assistant Treasurer: given Senator Milne's public comments about increased financing—and do not get up and just say 'private sector financing', because it is in the context of the removal of the debt cap—and infrastructure, what are the government's plans to spend more money on infrastructure? How much additional debt is the government proposing to take on in order to fund infrastructure projects?
I will make some general remarks and then come to the questions raised by Senator Wong. The first point I want to make is to sincerely thank the Greens for the constructive spirit in which they have approached this matter. Let me give some background.
The reason we are in this situation is that the government made a decision to come to the parliament, in the context of the existing policy framework, and raise the debt limit to $500 billion to take into account the expected profile of spending and, therefore, increase in debt over the forward estimates. When we took advice from the Treasury it was clear we were peaking at $300 billion, the existing limit, sometime in December—12 December, from memory. We had a figure of $370 billion initially over the forward estimates. Then there was the issue of a buffer of $40 billion to $60 billion from the Australian Office of Financial Management. Then, during Senate estimates, the Office of Financial Management actually added a further buffer of $30 billion. That is where the $500 billion came from. The reason I mention that is simply to make the point that, when $500 billion was put to the parliament, this was not a game. This was based on advice and prudence.
But there is a second aspect to this and it goes to why I think the Greens' proposal is very constructive. The Treasurer recognised that he only wanted to do this once in this parliament, if possible, because of what had happened in the previous two parliaments, when there had been these debates every time the limit had to be raised. But let's take ourselves back: why was the limit being raised? It was because the government of the day was unable to stay within the limit, notwithstanding promises—commitments—that the deficit and debt coming out of the global financial crisis would be brought under control during that period, when we faced the highest terms of trade in our history and we should have been taking advantage of that to bring the budget back into the black sooner rather than later. I believe that the 2011-12 budget, in particular, was a missed opportunity to do that. It would have been the right budget in which to have taken more fiscal action.
The result of the previous government's efforts was that their credibility on economic policy was shattered, but not by the then opposition—we were merely drawing attention to what had happened, which was that the public no longer believed that the then government was capable of staying within a particular debt limit. And we took the opportunity each time the issue of raising the limit came before the parliament to remind people of those broken Labor promises to bring deficit and debt under control. That is why we are in this situation. And the Greens are right: we had to find a way through all of this. We could have agreed with the opposition on $500 billion, and that would have been it for this parliament. We could have continued in the existing policy paradigm.
Then what happened is that at Senate estimates there was an opportunity for the Greens, in particular, to question directly the secretary of the Treasury and senior officers of the Treasury. It was during that very interesting interchange—I was at the table at the time—that it became very clear that there was something of a meeting of minds here. The secretary of the Treasury at that stage had alluded to the fact that the Treasury had canvassed the option of not having a limit, for reasons that Senator Milne has referred to today. There are many eminent economists, Ross Garnaut and Saul Eslake among them, who have made the point for some time that the whole issue of the debt limit is separate to the debate about the stringency of fiscal policy—whether fiscal policy is appropriate or not. That is a matter of the budget decisions you make; that is a matter separate from the actual debate over the limit.
So the point is that interchange occurred during Senate estimates and it was clear there that the Greens were thinking, 'Well, maybe there is an opportunity now to shift to a different policy paradigm.' It was in that context that a dialogue occurred—a very fruitful dialogue—which led to the agreement we are talking about today. The government agrees to the proposed amendments by the Greens to repeal the statutory debt limit and to amend the Commonwealth Inscribed Stock Act and the Charter of Budget Honesty Act to improve transparency regarding government debt. And this is the point: we are actually increasing the transparency around government debt. There is a little detail in what the Greens have put forward, and it has a short-term, a medium-term and a longer term focus. That is appropriate, because for too often the economic debate in Australia, when it comes to the issue of debt, has been driven too much by short-term considerations. People will be aware from what the current Treasurer has said, in opposition and elsewhere, that he has been thinking for some time about this issue of how, in the context of budget deliberations, you make appropriate allowance for funding of longer term measures. How do you recognise those longer term measures in a way that does not fall foul of the budget rules? The reality is that you can cut off your nose to spite your face; you can get short-term budget savings but it can be at the expense of the longer term productive capacity of the country.
So what the Greens have done is raise this debate about the debt to a new level by removing the limit. And I remind everybody of one thing, and this is where I think the opposition fall into an old trap. They keep thinking of it as a limit, as something that has to be reached, that somehow it is a target. They seem to think that by raising it to $500 billion we were going to actually try to get to $500 billion. Yes, we were putting in a limit in order to provide certainty to the financial markets, but this is not a credit card limit whereby we say, 'You beauty; we're now headed to $500 billion, full-steam ahead,' et cetera. That was not what a limit was meant to be, and that is not how a limit should be treated. And by removing that issue from the table we can focus on the real issues: the content of the budgetary decisions to both spend and tax, how much debt you put on the table, and what that debt is used for.
I turn to Senator Wong's point. Before the election the now Prime Minister made it clear that he would be an infrastructure Prime Minister; he detailed a very large infrastructure plan.
I am not avoiding it. We talked about something like a $20 billion infrastructure plan before the election, and we will deliver on our promises on infrastructure in a responsible way. Both the Mid-Year Economic and Fiscal Outlook and the budget will lay out those plans, and I am not going to steal anybody's thunder by revealing them here today. I think you should see them in all their glory in the MYEFO and in the budget.
But it is important to understand that this agreement with the Greens also means that the Intergenerational Report will have different dimensions to it. One of the greatest achievements of Peter Costello was the Intergenerational Report, and the Greens have picked up on that. The whole idea was to look forward, to look at the intergenerational implications of the decisions we take today. And in that context the Greens have also asked for more information around climate change, because with such issues you have to take a longer term perspective. So we will also be doing that as part of this improved budget documentation.
I make it very clear that, as far as the now government are concerned, we will be judged by the content of our decisions. And for us there is no problem with the enhanced transparency that is going to be part of those discussions as a result of the amendments that are now being pushed by the Greens. It was Wayne Swan who at budget time, looking down the barrel of meeting that $300 billion limit in early to mid-December, essentially said, 'That'll be someone else's problem.' Well, we have inherited the problem, and we are going to fix it. So this is not a debate about whether we hit any particular debt limit; this is now a debate, in this context, about greater transparency.
The opposition had the opportunity to come to an agreement with the government, and it would have all been over and we would not have had the agreement with the Greens. But I think we have actually ended up in a better place as a result of the agreement with the Greens. There will be more rationality in this debate.
As to Senator Wong's point, may I point out: of course the Greens and we will not agree on everything. We are not in some sort of an alliance. We have seen in the last few days deep divisions between us and the Greens on other policy issues. So this is not about some marriage of convenience, alliance or whatever.
One of the marks of this Prime Minister, and one of the aspects of this Prime Minister that the opposition had better cotton on to very quickly, is that he grows in the job, whatever job he gets, and as Prime Minister he has shown that you can be pragmatic on the way to pursuing a principle. He has shown pragmatism by his willingness to deal with the Greens, or by allowing us to deal with the Greens, on these matters in order to get to a principle, and the principle is: the enhanced transparency around the presentation of the budget.
May I take this opportunity to say, on issues to do with infrastructure: contrary to what Senator Wong is saying, for us the infrastructure debate is about the public-private split. It is about: what role does public capital play in underpinning private financing of infrastructure? These are all important issues. The beauty of what we have agreed today is that we will now be able to do that in a fully informed way and in such a way that the electorate can actually participate in the process. If we want more honesty in politics, it starts with greater transparency. We have nothing to fear from that sort of transparency.
The budget rules laid down by the Greens in the press release issued by Senator Milne are actually quite stringent, because they talk about borrowing, about debt, for infrastructure—in other words, longer term capital improvement.
I will come to you, Senator Carr, in a moment. But the second aspect of that rule is: not to go into debt simply because there has been a reduction in revenue. That is actually quite a stringent rule—that operating revenue should cover operating costs of government. That is actually quite a stringent budget rule. So no-one should think that this is somehow a free lunch. The standards which have been set in terms of transparency are very high. But we will meet those standards because we are committed to reducing the deficit and debt we inherited. The Mid-Year Economic and Fiscal Outlook will outline the full extent of the problem, including the extent to which the former government postponed necessary capital and maintenance. And this goes to another point about the transparency that we are talking about today: within the Commonwealth sector, we have to get to a point where we make appropriate provision for capital and maintenance, because too often what has happened is that maintenance has been short-changed because it is a short-term budgetary hit and so we put it off until a problem escalates to the point where it has major consequences and that actually escalates the cost of dealing with it. So we need to have a balance sheet which properly recognises short- and long-term considerations, in terms of both our assets and our liabilities, and provides a framework for looking at this in the appropriate way.
The transparency involved in this process means that every time the debt increases by $50 billion or so the Treasurer will have cause to provide a report, within three days or so, outlining the reasons for that. So there is no escape from talking about growing debt—
Well, Senator Conroy, there is $30 billion or $40 billion of debt lying around somewhere with the NBN, which we are fixing.
Senator Conroy interjecting—
The CHAIRMAN: Order on my left!
We commend the Greens for coming to the table with a sensible set of proposals to enhance transparency around government debt over time and working with the government to provide the certainty to the financial markets that the opposition failed to provide as they should have in government. Of course, the other thing that happened is that the screechy nature of the debate that occurred over the last few years led to uncertainty in the financial markets. We are now parking all of that—
Senator McLucas, you may not have been here earlier, but my point was: the reason the debt limit became such a debate is that Labor kept exceeding the limit and coming back into this chamber to get it increased.
Senator Conroy interjecting—
We know the mess that we have inherited and we are taking responsibility for fixing it.
Opposition senators interjecting—
The CHAIRMAN: Order on my left! Order!
And the more they chortle on the other side, Senator Conroy and Senator Carr, both of whom were arch-villains of the Labor ERC—and Senator Wong knows this; the pained expression on her face betrays that; she knew what she had to go through with those villains of the ERC— (Time expired)
Senator Conroy interjecting—
The CHAIRMAN: Order on my left!
So Paul Kelly was wrong?
The CHAIRMAN: Order, Senator Conroy!
Senator Conroy interjecting—
The CHAIRMAN: Senator Conroy, your leader is on her feet.
I am sorry. My apologies to my leader.
I will start again. I would make this point: there is a great deal of reporting already in the budget papers and in the monthly financial statements which the finance minister issues. The AOFM has a website—which is updated, from memory, weekly—which shows the debt on issue, including the Treasury bonds, indexed bonds, notes, other securities, and those aspects which are subject to the CIS Act, and also has recent tender results. So—leaving aside the climate reporting, and I want to come to that—I am struggling, Minister, to see what additional reporting, other than a statement to the parliament, the Greens have actually got for this deal.
Mr Chairman, on a point of order: I am happy to elaborate in greater detail later. There will be much greater detail around the composition of the debt, as a start, but I am willing to finalise that later.
The CHAIRMAN: Thank you, Senator Sinodinos.