Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My question is to Senator Cormann, the Minister for Finance, representing the Treasurer. Minister, projections in last year's MYEFO show the budget returning to surplus in 2020 and 2021 and remaining in surplus for the out years. However, Parliamentary Library modelling done for my office, based on MYEFO projections, shows that the budget will now fall back into deficit by 2024 as a result of the extra $30 billion announced in the defence white paper. Minister, do you confirm these numbers, and where has the government's credible path to surplus gone?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Firstly, the government stands by the forecast published in the Mid-Year Economic and Fiscal Outlook; and, in the ordinary course of events, as always happens, there will be a further update in the budget. Secondly, I would have to review the assumptions that were used.

Certainly, the government, in the 2014-15 budget, reflected the commitment that we took to the last election of a return to defence funding of two per cent as a share of GDP by 2023-24 in our medium- to long-term forecast, so that might be an assumption that the Parliamentary Library might not have been aware of. The point is that the cost in the defence white paper has been reflected in the medium- to long-term fiscal outlook of the budget for some time. As such, it was also reflected in the Mid-Year Economic and Fiscal Outlook delivered just before Christmas in 2015.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. The extra $30 billion was totally unexpected by just about everyone. Every extra dollar spent on the military-industrial complex is a dollar that needs to be funded. The Treasurer has previously stated that his budget rule is that any new spending must be fully offset with savings. What programs is this government going to cut to make up for the $30 billion in defence? Will it be more cuts to health or education? Will it be more cuts to crucial environment and climate programs?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I do not believe that Senator Whish-Wilson actually listened to the answer to the primary question. The defence white paper is fully funded, fully costed. The medium- to long-term fiscal impact of the funding allocated through the defence white paper was already reflected in our medium- to long-term forecasts in the Mid-Year Economic and Fiscal Outlook before Christmas.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. I reiterate that the $30 billion was totally unexpected. Minister, every extra dollar you spend on weapons companies and military hardware is a dollar that could be spent somewhere else. The government has talked up the industry benefits. Just two weeks ago, Infrastructure Australia detailed the massive shortfall in public funding in infrastructure and then outlined the productivity benefits to our nation. Has the government modelled what the economic and productivity benefits would be from funding the infrastructure gap rather than warships and weapons?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

It is obviously very difficult for me to comment on what Senator Whish-Wilson did or did not expect about the level of investment in defence and national security. What I can say, though, is that this government went to the last election very transparently declaring what our commitment was. Our commitment was to bring defence funding from the disastrously low levels that they went to under the Labor government back up to two per cent of the share of GDP within a certain time frame. We reflected that, and we are implementing that commitment.

Stephen Parry (President) Share this | Link to this | Hansard source

Order! Pause the clock. On a point of order, Senator Whish-Wilson?

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, on relevance: I asked whether the government had considered whether that money would be better spent elsewhere. The minister has not answered the question.

Stephen Parry (President) Share this | Link to this | Hansard source

I remind the minister of the question.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government did a lot of work considering all of the necessary priorities to ensure that Australia was safe and secure and that we could have a strong and prosperous economy. Of course, our national security is an important part of underwriting our economic strength and prosperity into the future. These are all matters that were well ventilated and debated in the lead-up to the last election. We are implementing a commitment that we took to the last election.