Tuesday, 22 November 2011
Matters of Public Importance
Mid-Year Economic and Fiscal Outlook
When I was in year 8 at school, Father Lake Smith used to come into religion classes and say, 'Okay boys, we want you to read the acts of the apostles.' I remember reading about this fellow called Saul—or Paul the Apostle—who travelled to Damascus in order to try to capture, imprison and potentially execute people who were following Jesus. And, of course, on the way he had a conversion.
My father, who was born in Bethlehem, told me: 'You usually get quite a few people walking that great road to Damascus as Christmas approaches.' And as Christmas approaches I hear Wayne Swan talking about a surplus. I hear the Treasurer talking about savings. I hear the Treasurer talking about reducing expenditure. On that well-travelled road to Damascus we now have a new trekker who has come down from the mountain and found in his heart that, yes indeed, if you reduce government expenditure you can take upward pressure off interest rates, you can ease the upward pressure on the Australian dollar, you can take some pressure off inflation from imports and, goodness me, do you know what? When the world is in trouble with too much debt the solution might just be to start reducing government debt.
An opposition member: Epiphany!
It is. The light shines. The path to Damascus is well trodden. Now we have a Treasurer who has found religion, except he won't tell us exactly what it is. He won't explain exactly what it is because he briefed Laura Tingle—someone who obviously is not very fond of our side of politics—that this was going to be a major economic statement dealing with a crisis. In fact, it would be mini budget.
Yes, he did. He effectively said that. I am sure he did. Out of all of that, he is now running a hundred miles away. I want to remind the people of Australia what the Treasurer said just a few months ago about getting the budget back to black—this was in the budget speech. He said: 'We'll be back in the black by 2012-13, on time, as promised. The alternative—meandering back to surplus—would compound the pressures in our economy and push up the cost of living for pensioners and working people.' I am sorry that the Assistant Treasurer is not here. He is the one who said, 'Well, that wasn't really a commitment, that was a guiding principle.' It was the Prime Minister who said that that is 'an objective'. It was the Treasurer who said, almost, that it is a wish and a hope and a prayer.
Now they have found religion. This is after Labor inherited a $20 billion surplus, more than $45 billion in the bank. They inherited an economy with no net debt, and over just four years this government has accrued $150 billion of deficits, or more than $200 billion of gross debt, and the government expects us to believe that they are going to serve up a sustainable surplus on the back of real budget cuts. Let us be very clear. The coalition will hold the government to account on the issue that matters: government spending. They used to talk about the last year of the Howard government as being a big-spending government. They said we spent so much of that mining revenue that there was nothing left. There was: a Future Fund, a surplus in the bank and no net debt. But they said we were a big-spending government. We were at 22.9 per cent of GDP. That is what the federal government under John Howard had in its last year: 22.9 per cent of GDP.
The next year, under Labor, it went from 22.9 to 25.2 per cent. The next year it was 26.2. The next year it was 25.2 and then 24.5 and then 23.9. Nowhere in the forward estimates does it at anytime show that the Labor Party spends less than the last year of the Howard government, which the Labor Party claims was profligate. And that does not include the carbon tax. It does not include the $31 billion of expenditure on the carbon tax, which, mind you, is only going to raise $27 billion.
How can the Labor Party introduce a new tax and leave the budget worse off? Only the Labor Party can do that! They are introducing a carbon tax that leaves the budget $4 billion worse off and they are introducing a mining tax that is leaving the budget more than $6 billion worse off.
When it comes to the mining tax—I am sorry our friends in the media are not here to follow this up because I think it is a pretty important point—not only has the Treasurer claimed that the royalty increases in New South Wales and Western Australia do not exist, but specifically in relation to New South Wales he said that the New South Wales budget papers say that the increase in royalties will be paid by those companies that are not liable to pay the mining tax. In fact, the budget papers say that the royalty increases will be paid by those that are liable to pay the mining tax. So he does not even understand the issue.
In terms of the $8 billion net of the $11.1 billion that is expected to be raised by this mining tax, one of the biggest miners of iron ore in Australia says that they are not going to pay a dollar. What's more, they took out full-page ads saying that the Prime Minister's mining tax does not add up. They have advised their shareholders—with significant legal ramifications under the Corporations Act and the listing rules of the Australian Stock Exchange, including the risk of significant fines for the company and disqualifications for directors that deliberately mislead their shareholders—and Fortescue Mining has taken out nation-wide ads to say that they expect to pay between zero and $20 million in total mining tax over the next three years.
Where is the money coming from to pay for $14 billion of expenditure? Labor introduce a tax and then go and spend it all. But they do not just spend it all; they spend a whole lot more on things such as the GP superclinic that failed in Redcliffe. You must be proud of that, sister!
Ms Roxon interjecting—
You must have had your hands all over that Redcliffe GP Super Clinic. But it gets better! The Labor Party always promise but never deliver. In 2010-11 they said they would have a budget deficit of $40 billion and it turned out to be nearly $50 billion. In 2011-12 they said they would have a budget deficit of $13 billion; it turned out to be $22.5 billion. This does not surprise because the government keep using enhanced figures. I refer to an interview I had with Laurie Oakes on 12 May 2009 in which I said:
No, no one’s treating that seriously, Laurie. Both the International Monetary Fund, which the Government is fond of quoting, and the Reserve Bank, which the Government is fond of quoting, both said it will be a slow recovery and yet in the budget papers they are projecting not only a trend growth but above trend growth and not just for two years but their assumptions of getting out of deficit and debt is based on seven years, an unprecedented growth period in Australia’s history.
Laurie Oakes replied:
But it’s Treasury that produces the figures saying that we’ll be growing at the 4.5 per cent again within a couple of years. Are you saying Treasury is wrong or have they been leaned on?
Well we’ll be very interested. We’ll ask a lot of questions about this because Treasury’s assumptions are not in accordance with what the Reserve Bank or the IMF are saying.
In financial crises, as the IMF and the Reserve Bank said, the recovery is almost always slower. But this mob, with a desperation to get to surplus that their bodies cannot match, turn around and expect—they set it in the budget forecast—4½ per cent growth. That is well above the trend of three per cent. They said that that is how they are going to surf back—on the basis of higher revenues.
Now we have the Treasurer saying, 'Hey, guys, sorry. Revenues are not quite what we forecast.' What a surprise! Growth is not what they forecast. Do you know what this government is doing? This government, as usual, is playing games with the truth. This government, as usual, is not telling the truth when it comes to the real impact on the Australian economy of the events in Europe and the continuing uncertainty that it is going to have on capital markets. At the same time, this government is not telling the truth about the state of the budget. We have now had a series of reminders that this is a government that gets the numbers wrong. On the BER there was a $1.7 billion blow-out—up to $8 million wasted. On pink batts there was $2.4 billion wasted. There were $900 cheques going to people who were dead or living overseas. How did that stimulate the Australian economy?
There was the laptops in schools program, which the minister for education was just boasting about. How good is that program? It wasted $1.4 billion. In the solar homes program there was an $850 million blow-out and the program was cancelled. For the green loans program there was $300 million wasted and the program was cancelled. There was the $4 billion broadband network—$36 billion and growing.
The fundamental point—Labor has found religion!—was given to us by the Minister for Finance and Deregulation last week. I felt as though I was listening to myself, apart from the fact that she is female and in the Labor Party! She said:
... when you have a sensible, credible fiscal strategy, you give the Reserve Bank the room to move on interest rates.
That is what we have been saying.
All these promises that Labor has been making over the last few months involve more spending. This is what we are going to look for when MYEFO comes out. We know that there is at least a $2½ billion to $4 billion hole in the mining tax revenue and associated expenditure. We know that not only are people claiming that they are not going to pay the mining tax, but the government have to rebate royalties of $3 billion from New South Wales and Western Australia.
We also now know that the National Disability Insurance Scheme which the government has promised to introduce will cost $1.5 billion over the forward estimates. That has been announced since the budget in May. Net costs over time will increase to $6½ billion a year. We will be looking for that money when MYEFO comes out.
The government has now confirmed, in answer to a question from my colleague and friend the member for Cook, that they no longer consider, for budget purposes, the Malaysia solution to be in place. Therefore, they now have to account properly for asylum-seeker blow-out costs. In the May budget this year there was a $1.75 billion blow-out. That was for one year. Now the boats are coming and they have to account in the forward estimates for the failure of the Malaysia solution.
The government has also said that there is going to be a $2 billion increase in pay over six years for 150,000 community sector workers. But they have neglected to add that the states have to match that and that the states have now refused to do so. In foreign aid, the government has said that it maintains its commitment to the 0.5 per cent of GNI increase in foreign aid. This will increase foreign aid significantly over the next few years and may well cost $6.7 billion.
All these additional government spending commitments need to be funded. Of course, Labor always play games. We know that they have already moved funding into this year. They moved funding into this year from next year so that they could get it out the door, make the deficit worse this year, claim that it is the European financial crisis and so reduce their expenditure for just one year.
The bottom line is that Labor does not have the ticker to take the hard yards, Labor does not have the ticker to reduce government expenditure and Labor does not have the ticker to tell Australians that we have to live within our means and then to live within their means as a government. The bottom line is that we are going to hear lots of words about deferral of projects, delay of projects and urgently needed projects being brought forward, but we know about Labor that all you can be sure of is that there will be more regulation and more tax—and there is not a country in the world which has become more prosperous with more tax. (Time expired)
The shadow Treasurer in his opening remarks referred fondly to his time in the eighth grade, and he has just demonstrated why his time in the eighth grade was the best three years of his life! The fact is that the Mid-Year Economic and Fiscal Outlook is a standard document. The opposition must have short memories—the previous government brought down 12 MYEFOs. This year will be no different. The government will build on the $80 billion of savings that it has already achieved, and of course the government will take the responsible pathway back to surplus.
We have seen here today and in the Leader of the Opposition's address last night to the Sydney Institute an attempt by the opposition to manoeuvre and pivot away from being seen to be negative all the time—always saying no—and towards being seen as a government in waiting with, as the opposition leader would like to present himself, a leader in waiting. The reason they are seeking to pivot away from their relentless negativity is that the voters have come to understand that the opposition leader is a 'one-trick Tony' who says no, no, no, no and no. His relentless negativity is precisely why, in any opinion poll, you will see the verdict of the Australian people being delivered on the opposition leader. He is a one-trick Tony who says who says no, no, no, no and no.
If you think of both the address that has just been given and the address given by the opposition leader last night, it is clear that this new strategy—this new manoeuvre; this pivot—is designed to instil in people a perception that there is some sort of crisis in the Australian economy by talking the Australian economy down. This opposition would rather see Australia fail than see the Labor government succeed, so its latest manoeuvre is to talk the economy down. But we know that the opposition itself lacks all fiscal credibility, and I will explain why in a moment.
The opposition has run its course on carbon pricing. We know that the oxygen has been exhausted from that campaign, and we are witnesses to the fact that, even at the time when the opposition leader should have been here, he scurried off to Europe to join a Conservative conference. So now, when those opposite have run out of oxygen—run out of thoughts other than saying no, no, no, no and no—they think, 'It's time for a new scare campaign; we'll generate a sense of economic crisis by drawing linkages with the Eurozone crisis.' This, of course, comes from the same opposition leader who, when he is overseas, describes the Australian economy as the envy of the world. Here are the terms in which the opposition leader is seeking to generate a sense of crisis. Last night in his speech to the Sydney Institute he said:
The turmoil in Europe is largely a function of governments consistently living beyond their means …
Australia now faces a crisis mini-budget because the government has ignored these disciplines.
… Australia’s recent fiscal performance has been scarcely better than that of others facing much worse circumstances.
The opposition may seek to talk the Australian economy down in order to create a sense of crisis, but let us look at the facts. Australia's net debt will peak at 7.2 per cent of GDP, which is one-tenth of the net debt peak of the advanced countries as a whole. US net debt will hit 89 per cent of GDP, UK net debt will hit 78 per cent of GDP, Japanese net debt will hit 167 per cent of GDP while Australian net debt will hit 7.2 per cent of GDP—so much for the asserted crisis! We have a AAA rating, which, again, is the envy of the world. Standard and Poor's says that Australia has 'exceptionally strong public sector finances' underpinned by 'low public debt and strong fiscal discipline'. Standard and Poor's noted 'the sound profile of Australia’s public finances, which remain among the strongest of its peer group'. Moody's said that our government debt remains among the lowest of all AAA rated governments. The International Monetary Fund said that it:
commended the authorities’ commitment to consolidation to increase fiscal space and support monetary policy. The planned consolidation is faster than in many other advanced economies and is more ambitious than earlier envisaged …
So there you have it—glowing references from the rating agencies and the International Monetary Fund. Yet, back here at home, the opposition leader is trying to create a sense of crisis because he thinks he may profit politically from doing so. Later in his speech last night, the opposition leader said:
The situation in the various economies of Europe vindicates the Coalition’s consistent critique of the Rudd/Gillard government’s polices.
Let us look at the effect of the Rudd-Gillard governments' policies: 750,000 jobs have been created since Labor came to office, proving once and for all that we are the party of the working men and women of this country. We support jobs. It is our top priority and three-quarters of a million jobs have been created under this government. The unemployment rate, at 5.2 per cent, is about half that of Europe and the United States: the UK unemployment rate is 8.3 per cent, the US rate is nine per cent and France's rate is 9.6 per cent. And, of course, there is more to come, because there is a pipeline of $430 billion of job-creating investment in this country, and we have an underlying inflation rate which has caused the Reserve Bank to be comfortable about lowering the cash rate because it is at the lower end of the Reserve Bank's band of acceptability.
So, when we talk about economic performance, look at the facts. Do not listen to an opposition leader who thinks he can profit politically by seeking to create a sense of crisis. Of course, when he goes overseas, he says:
On the face of this comparative performance, Australia has serious bragging rights. Compared to most developed countries, our economic circumstances are enviable.
So we have the opposition leader, when he is overseas, saying that Australia's economic performance is the envy of the world and, when he is back here, seeking to fabricate a sense of economic crisis and saying that there is some sort of crisis mini-budget in a MYEFO that has been brought down since virtually time immemorial. The government has a sound, responsible record on the economy and will be returning the budget to surplus. But it is time that the opposition were held to the same standards.
As we know, when the coalition costings were finally—after the election—subjected to costings by Treasury and finance, what did they find? They found an $11 billion black hole. It is little wonder that the coalition refused to submit its promises to the Treasury and finance under the Charter of Budget Honesty, which was created by the previous Treasurer, Mr Costello. They would not abide by their own disciplines. Then, of course, we found that the opposition had admitted that it has a $70 billion black hole—not $11 billion but $70 billion.
During question time, when it was asserted on our side that the shadow Treasurer had accepted there was a $70 billion black hole, he denied it. He shook his head and denied it. Who said, 'Finding $50, $60 or $70 billion is about identifying waste, identifying areas where you do not need to proceed with programs'? It was not anyone on our side of politics. It was the shadow Treasurer. And he was backed up by the shadow finance minister, who at least had the integrity to admit they have a $70 billion black hole when he said:
The $70 billion is an estimate of the sort of challenge that we will have.
That is what the shadow finance minister said, but of course this is very worrying to the opposition leader because he is terrified that this information got out. So what did he do? He said:
Well this $70 billion figure is a fanciful figure. It’s plucked from the air by government ministers.
Really? You have the shadow finance minister saying it was there and then in response to that—because that statement by the opposition leader was made on 25 August—on 4 September the shadow finance minister repudiated his leader when he said:
No, it's not a furphy. We came out with the figure, right?
Right! You are right, because you do have a $70 billion black hole and it keeps getting bigger. When you have a $70 billion black hole, the first thing you should do is stop digging, but they have kept digging—and the man who was not in the telephone conversation will be the next speaker in this MPI. The coalition, in a telephone link-up, deliberately omitted the shadow finance minister when they said that they would actually back the superannuation increase from nine per cent to 12 per cent. Knowing full well that that would add to the $70 billion black hole and knowing full well that the shadow finance minister would have said no—and this time that would have been the right answer—they kept him out of the loop. 'Sources close to the shadow finance minister'—read 'the shadow finance minister'—said he was 'ropeable'. And why wouldn't you be ropeable? You have the opposition leader spending like a drunken sailor, adding to the $70 billion black hole, and then they come in here and bring on an MPI saying, that the government needs to find some savings.
We are finding savings, but the $70 billion hole is getting bigger and bigger as they keep digging deeper and deeper. It means huge cuts to health and huge cuts to education, and that is why the health minister outlined some of the programs that would be cut by the opposition if they were even to start filling that $70 billion black hole. That is why the minister with responsibilities for schools said, 'Of course they are going to cut the guts out of education.' It is because that is what the coalition always do. They do not like the idea of education for working people. They do not like the idea of education for the underprivileged. No, it will go back to the top, where the fact that you are born into wealth means you have a chance in life. But if you are born into poverty you have got no chance. That is the philosophy of the coalition.
Then, of course, they went on to extend their fiscal recklessness to broader economic recklessness and irresponsibility. We were here and we watched the frontbench on the other side criticise the government for saying it would support an International Monetary Fund request for extra loan funds. Then, when there was a huge backlash from the business community, they said, 'Oh no, we are not against that.' We had this same shadow Treasurer saying that Australians will be asking what the Prime Minister's priorities are, when she is prepared to give Australian taxpayers' money to the IMF to help the eurozone. This is economic vandalism writ large.
We then had the shadow Treasurer talking about the mining tax. He said the problem with the mining tax is that Fortescue will not pay any tax, the problem with the mining tax is that there will not be enough revenue. What did the opposition leader say about the mining tax? He said that it is 'almost guaranteed to kill the mining boom stone-dead'. So a tax that does not collect any revenue is going to kill the mining boom stone-dead, when we have $430 billion of investment in the pipeline? I would not call that stone-dead. I would call that a boom—an investment boom.
They say it won't collect any revenue but will kill the mining boom stone-dead! This is the only person in Australia, bar two other miners—who are not the large companies—who actually believes that the mining industry is paying too much tax. What he wants to do is take that money off small businesses and give it back to the large mining companies that would pay the taxes. They say, 'It's all right, we don't want it.' 'No, you've got to have it, because we want to shaft small business, we want to shaft working people in this country.' Is it any wonder that some of the up-and-coming members of the coalition who have a view, who have an economic framework, who actually believe in markets, who believe in competition are in despair? The member for Higgins, who is sometimes even referred to as a future leader, is here in the chamber—and I thank her for coming and listening to an incredibly eloquent speech! Well, you have got no future with this lot, because they are going to block any progress. You and the member for Mayo and the member for Kooyong—all of those people who actually believe in something, believe in markets—are going to get nowhere under an opposition leader who said that he worshipped the water that Bob Santamaria walked on. I will leave the last word to the former Treasurer, Mr Costello, who said of the opposition leader:
He used to tell me proudly he learned all his economics at the feet of Bob Santamaria. I was horrified.
Well, guess what? We are too. We are horrified at the fiscal recklessness and the economic stupidity of the opposition and the opposition leader of this country.
The shadow Treasurer, with his reference to Saul, reminded me of my childhood and the nuns in year 7 telling me about the prodigal son. The prodigal son was given charge of much of the family's wealth. But over several years he went on a spending spree—reckless spending, endless waste. That was the prodigal son. We have a Treasurer who was given charge of all the country's wealth. He is Australia's prodigal son. The Treasurer is Australia's prodigal son and he has gone on a spending spree. Despite endless denials and despite endlessly talking about fiscal discipline, a spending spree continues.
That is why there is a need for a crisis mini-budget. They leave you with the impression that they have fiscal consolidation. It is called statistical gymnastics. If you bother to have a look at the facts, as the Prime Minister is often reminding us—although she doesn't follow her own advice—this government brought down its first budget with a four per cent real growth in spending. That was pretty hefty. But let us say that is the reference point—$272 billion was the first budget of Australia's prodigal son. The next year we saw 12.7 per cent real growth—12.7 per cent is unprecedented—to $316 billion. The next year we saw another 4.2 per cent real growth to $337 billion. Then we had 0.7 per cent real growth, less than one per cent. But of course it is on top of this mountain that they have spent the two years before. So they have $349 billion and the following year another one per cent, $362 billion. We keep hearing about them being fiscally responsible. Yet they have not taken one dollar off the mountain of expenditure that they spent in 2008-09 and 2009-10. At least $90 billion in four years. It is not a one-off; every year now forever they will have built in an extra $90 billion.
He's scurrying off now! He doesn't want to hear the facts.
This is a situation not unlike a family that was spending $1,000 a month living within its means on groceries and then they have a brain snap and for two months they increase their spending on groceries by 20 per cent to $1,200. Then they increase by only one per cent for the next two months. They are still well over $1,200 and still over $200 a month more than they can afford. This is what we have got with our prodigal son, the Treasurer. The prodigal son has spent all the money. He has gone on a spending spree—and the waste!—and we are still left with the bill. He is still spending at that rate. This is the only difference between the real prodigal son and the Treasurer: the Treasurer is still spending at the rate he was when he was out on the town, when he was spreading his largesse around cities, when he was acting in an irresponsible and wanton fashion, when he was giving in to all sorts of inducements.
This is why the government needs to release its crisis mini-budget—its Mid-Year Economic and Fiscal Outlook—and why it needs to be done in this chamber. We need to have this level of scrutiny, not a few one-liners in the media that night about fiscal consolidation and fiscal discipline. We need to be able to expose the real facts about this government's spending patterns. These are the things that have spooked households all over the country. This is why savings amongst households is above 13½ per cent. They are fearful of what is lying ahead. They can see dark clouds outside of Australia. They are dark clouds we have got no control of—I acknowledge that.
But when you see dark clouds—when you see threats—you take action to mitigate the dangers. If you see threats you do what you can to mitigate and to lessen the dangers.
Not this government. We have the prodigal son, who has gone off and spent and spent, and is still spending at the rate that he was when he was off on his wanton ways. This has led to the crisis of confidence not only in households, which are saving like there is no tomorrow, but it has also led to the lack of investment. There is a lot of money in companies' balance sheets—they are not spending. Outside of mining, they are not spending. Manufacturing has lost 135,000 jobs and small business has lost 300,000 jobs.
What do you think about jobs? What do you think about jobs for working families? Where are the working families in manufacturing and in small business? You cannot stand up here and say that you believe in and support working families when you have lost 435,000 jobs in manufacturing and small business in your term of office. You hypocrites! That is what you are. You stand up there and say one thing and do the other.
We have seen it endlessly. We saw it again today in the House. The government tell us that they have everything in good shape: 'Don't worry about what's going on in the rest of the world—we're better off than the rest. We don't have any threats to us.' Then you look at the structural deficit—I bet that half of them would not even know what a structural deficit is. It happens to be the level of spending commitments that will go on regardless of the revenue. A structural deficit is one where you have expenditure which goes on and on. It is a long-term commitment. The trouble is that the structural deficit in this country has relied on 140-year high levels in—
Terms of trade—thanks, Bill. You are really on the mark. He is very quick witted. We have 140-year highs. The trouble is that if those highs come off or even go back to normal levels—we do not have to have a collapse in commodity prices—we are looking at another $50 billion deficit going on and on and on. We could have a $250 billion net debt within three years if commodity prices come off because of a collapse in Europe or because China went back to six or seven per cent growth. That is still high growth and there is still demand for the product, but at much lower prices. Of course, in the Financial Review today the forecast for coking coal is for a decline by $100 a tonne through the calendar year 2012.
That is why we sought a sensitivity analysis. I was ridiculed by the Treasurer today—the prodigal son. He ridiculed me for any suggestion of a sensitivity analysis. If coking prices do fall by $100, we, the community and the business community would like to know what the implications are for the budget. That is good economic management. And yet we will see none of it. We will see a few forecasts, but we will see no sensitivity in case the prices of exports collapse or even fall. They do not have to collapse; they only have to go back to long-term levels.
What we see from this government is an attempt to create a budget surplus next year which is manufactured—a manufactured budget surplus. We will have fiscal gymnastics next week and we will have them all through the next six months and the six years that they are in power. (Time expired)
First of all, whilst I listened carefully to what the member for Goldstein had to say—which unfortunately is not something his leadership team does very often—I waited for the evidence of the crisis which proves that in fact the opposition's contentions are right.
Let me be clear here today: this government takes very seriously what is happening in Europe. There is no question that what is happening in Europe is important. It is important for no other reason than that the banks' funding is quite often sourced from overseas—a large portion of it. But having said that there are three submissions I would like to make to the House today as to why the opposition are simply scaremongering. The first one is that I think they are guilty of not having one of those side mirrors which say 'Objects in the mirror may appear closer than they actually are'. The reality is that the problems in Europe are not necessarily quite as close to infecting Australia in the serious way in which those catastrophisers opposite would say. In fact, it is just plain ridiculous. The opposition's suggestion that Europe's problems are closer than we think is plain ridiculous. There are three points behind this. First of all, we have a 25-year proven record since the mid-1980s of fiscal prudence and responsibility under both Labor and, indeed, conservative governments. Let us compare the last 25 years of Australian public administration to the imprudence of many European states in the same time period.
A second reason why Europe cannot be used to simply say, foursquare, what will happen in Australia is that Australia is not tied together in a monetary union without a fiscal union. We are economically self-dependent, and the budget has been repeatedly returned to surplus as soon as difficult times are over during the time that the European economic community has been in place.
There is a third proposition which I say shows that the European crisis is not the immediate crisis in Australia that the opposition would have us believe. To do that I say to you that the proposition subtly being put forward by the opposition about Europe's problems coming to Australia is as absurd as Tony Abbott saying that he is Napoleon. As the Nobel prize-winning economist, Robert Solow, said in 1984:
Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon Bonaparte.
Members of the House, the person sitting opposite is not Napoleon Bonaparte, nor are we fighting the battle of Europe here.
The opposition calmly—or not so calmly—neglects features that show why there are more reasons to be optimistic about the Australian economy than not. At this point I do acknowledge that plenty of parts of the economy are doing it hard in Australia. But let us have a look at the stability of our banks. Whilst there is still a gap between deposits and loans in Australian banks, that gap has been narrowed since 2008. Let us have a look at the general structure of our nation. Look at the government debt: Commonwealth government debt is at seven per cent. That is the equivalent of $7,000 out of a GDP of $100,000. Our friends in America are at 72 per cent; in the United Kingdom, 75 per cent; and in France, 79 per cent. Put another way, Australia is the only one of 14 OECD nations to have a AAA rating. Have a look at the savings in Australia in contrast to those in other parts of the modern world. We have savings at 114 per cent of the GDP.
A lot of what the opposition say reflects their poor judgment. One of the largest pieces of evidence for their poor judgment is their opposition to increasing superannuation from nine to 12 per cent. That is because those opposite simply lack judgment. They would argue against increasing the national savings pool, yet they catastrophise that Australia is immediately going to go down the Athens or Rome path. Furthermore, have a look at the popularity of our own dollar. Have a look at the spending cuts which this Australian government has made since 2007. It is a matter of record, not a matter of argument, that we have had the fastest fiscal consolidation in a very long time. In 2011 we identified $22 billion worth of structural saves and in the last four budgets we have cut $100 billion off. Indeed, look at our terms of trade: they are very strong. Have a look at the investment we are making in people. Have a look at the growth in productivity in our services sector. There is no way that anyone can seriously mount an argument that Europe is identical to Australia and that this is the cause of some crisis.
We do understand, of course, that it is important how the Australian economy performs in the optics of the international community. It is important how we look in the international marketplace. That is why when we return to surplus it will be superb optics in the international marketplace. The other leading nations of the world would love to be returning to surplus with the speed and direction with which we are. I know one thing is for sure: our Prime Minister and Treasurer are not going to let the member for North Sydney and his economic F Troop decide our image to the rest of this world. We did well in October 2008, no thanks to the opposition. We shall do well again—again no thanks to the opposition.
The opposition have said that there is a case for an urgent mini-budget, but they have failed to make one. If we had to have a mini-budget it would be because we needed to fundamentally change our fiscal policy, but our fundamental fiscal policy is not wrong. Have a look at our monetary policy for illustration. Our cash rate is at 4½ per cent—we have 450 basis points of opportunity. If we need to dial up activity in the economy we have an independent Reserve Bank capable of making that decision. In addition, we have the prospect of fiscal surplus on top of this.
I found it funny when the opposition said that we needed to have an urgent budget. So, as I am wont to do, I will have a look at a bit of history—the history of when the Howard government would release its Mid-Year Economic and Fiscal Outlook. When the opposition suggested today that we urgently needed to release our MYEFO, I thought, 'Clearly, the opposition wouldn't dare give advice to the government which it didn't follow itself.'
Surely not—but brace yourselves and adopt the emotional crash position because you are in for some disappointment. Seven out of the Howard government's last 10 MYEFOs were released after today's date. In fact, the tardy Howard government released three within a week of Christmas. In 2004 they released the MYEFO on 21 December. That really allows for a bit of parliamentary scrutiny! The only ones that would read that would be the elves and Santa. If that was timekeeping under Work Choices you probably would have lost your job.
Since Labor were elected in 2007, you will find if you study the MYEFO dates that we have so far released all of our MYEFO statements in November. So this is a government that, no matter what the circumstances, has been determined to release MYEFO at the earliest possible date. Yet we have the opposition saying that, because of the contagion in Europe and its inevitable spread to Australia, we need to release it now. That is not advice that the opposition when they were in government ever set for themselves.
When we look at what is being talked about here in relation to a mini-budget and the MYEFO and also some of the comments the opposition have been running off to the media with, it is interesting to note what we have consistently said, and that is that we update the forecasts in the usual way in the Mid-Year Economic and Fiscal Outlook before the end of the year. Our approach is entirely consistent with the requirements of the Charter of Budget Honesty Act and our record is certainly better than that of those sitting opposite. Division 2 of part 5 of the charter confirms exactly what I have just reported to the House.
When I listened carefully to the opposition call for the urgent MYEFO in light of the impending European crisis, what I realised was that, firstly, they do not practise what they preach. Secondly, any fair examination of the comparison of Europe with Australia would show that, whilst what happens in Europe is certainly very important for some of the reasons I outlined and it does go to the matter of confidence, the Australian story is a far more optimistic and hopeful story than those naysayers opposite would have it. What I love about those opposite, and I have to pause as I say that—what I recognise about those opposite is that they have never seen an aeroplane overseas that they would not catch and then start trashing Australia from overseas. What I also know about this country is we are the party—
Opposition members interjecting—
That arrow struck home! We are the party who have taken us through the global financial crisis. We are the party who want to increase compulsory savings. We have done it before and we will do it again. (Time expired)
I rise today to join my colleagues the shadow Treasurer and the shadow finance minister to speak on this urgent matter of public importance: the urgent need for the government to release the Mid-Year Economic and Fiscal Outlook for parliamentary scrutiny. Why do they need to release it? Because they need to hold themselves to the high standards that they say they have set. Who can forget that it was this Prime Minister who said she would lead an open and transparent government. She reiterated the words of the member for Lyne, who said that this was going to be a government that would 'open the curtains and let the sun shine in'. This is supposed to be an open and transparent government. You would think that the government would be rushing to provide, for parliamentary scrutiny, the Mid-Year Economic and Fiscal Outlook, yet we hear from the other side a reluctance to do this—a reluctance to release their mini-budget, their crisis update.
You have to think about why it would be reluctant. You only need to look at the fact that this government has been guilty of reckless spending. Julia Gillard promised, when she made her statement on 28 July, that she would always examine expenditure proposals. She said she would 'examine them rigorously, hold them up to the light, ask every question and require every answer to get to the bottom of what we need to know, the central thing—whether they are affordable'.
This is a reckless-spending government. Australia used to be ranked as a fast-growing economy with large surpluses and no net debt. It was ranked at the top of G20 economies. Yet, since 2007, Australia has had the third highest increase in real public debt. We have increased debt by more than 150 per cent. The only countries that have had a larger increase are Iceland and Ireland. We rank worse than Spain, Greece and Portugal. If this government were a pack of cards, then Wayne Swan would be the joker of deficits. Unlike Peter Costello, who is the king of surpluses, he would be the joker of deficits. In each of the budgets, and there have been four, he has delivered four deficits. He is nought for four. There is not one surplus in all of those budgets. When you add up each of those deficits there is a combined deficit of over $150 billion.
This is not the position that this government started in. This government had the great benefit of inheriting a very strong financial position. The former Treasurer had paid off the previous, Labor government's $96 billion of net debt. The former Treasurer had delivered a $20 billion surplus. Well, the last two budgets have delivered a $49 billion deficit and a $23 billion deficit. Of course, this government is addicted to reckless spending, so much so that it has had to increase the gross debt ceiling from $75 billion to $200 billion, and then up again from $200 billion to $250 billion. If Wayne Swan were in a business, he would probably be sacked at this point. We are also experiencing, right now, the highest terms of trade in our nation's history. We are getting our highest levels of revenue and, if you make it analogous to a business, we are still not posting a profit. He would be sacked. It is lucky, of course, that he works for the Labor Party, and his job is absolutely secure as long as he keeps the Assistant Treasurer onside, because we all know that when you get the Assistant Treasurer offside you can in fact lose your job, as the former Prime Minister Kevin Rudd found out all too harshly.
We know that the Treasurer has a problem with deficits and we know that he has a problem, sometimes, remembering when the Labor Party last delivered a surplus. He very famously earlier this year could not remember the time that the Labor Party last delivered a surplus and he went on to break a glass in the intense thinking as to when that was. It was in 1989-90 under the Hawke-Keating government, before the current member for Longman was even born. I believe at that particular point in time the Treasurer was a member of the AWU when he joined as, I understand, a sewerage worker. Well, when he was a sewerage worker, he was no doubt knee-deep in it, and he is knee-deep in it now.
It would take nearly 50 years of Labor's long awaited, much anticipated, much promised 2012-13 forecasted surplus just to pay off the past four years of Labor's deficits. By contrast, the coalition does not have a problem with deficits. In fact we have a pretty good record of delivering surpluses, which we did in government, delivering 10 out of 12 surpluses over our 12 years in government. This government is going to continue to spend and, as a result of that, it will continue to tax.
You need to look back at the record of the current government. In 2008-08 the Labor government increased expenditure by a record 12.7 per cent. Just to give that some context, the coalition, over its term in government, averaged a 3.3 per cent increase in nominal terms in expenditure per annum. Wayne Swan as Treasurer spent four years worth of average coalition expenditure in just one year. Is it any wonder that they need to introduce a record number of new and increased taxes? It is no wonder that the government have the very unenviable record of introducing or increasing 19 new taxes. That is what we see with the introduction of the mining tax, which will probably be passed this week. We also see it with the carbon tax. The government were in such a poor fiscal position that they said they needed to introduce a flood tax to deal with the terrible floods in Queensland, which would normally be dealt with in the ordinary course of events, which would not require a prudent government to impose any tax.
We hear from the Treasurer that he promises that he will deliver a surplus, although he has been promising this now for the past four years. He said, 'We can bank on it, we can lock it in.' He said, 'It is absolutely guaranteed.' But, since his original statements, we have heard the weasel words creep in. We have heard that he is now simply 'committed' to delivering a surplus, he is 'working towards' delivering a surplus. And thinking back to President Obama's visit just last week, we can hear the little plaintive cry of 'Yes, we can. Yes, we can. Yes, we can deliver a surplus. I promise we can. We can'. That is what he says to himself late at night, but today in the House we hear the latest in his litany of excuses, which are well-worn over four deficits.
I regret to say—in fact in the words of President Obama—'This is unfortunately not change that we can believe in.' We cannot believe in this change. It is something this government has promised, it is something this government has failed to deliver. We, by contrast, will be a government that can live within its means, because we have done it in the past and we can do it again. When we talk about economic reform, we mean it. We do not simply mean economic reform, read new taxes. This government is a reckless spender. This government believes in tax grabs. This government is fiscally incompetent.
If I were sitting on the opposition's tactics committee, choosing an MPI for today, it certainly would not be the topic of economics. I would be thinking about dog whistles, about some sort of safe ground to talk about, but surely not the topic of economics, because those opposite have lost all credibility when it comes to economic reform. On economics, ours is the party of Hawke and Keating, theirs the party of McMahon and Fraser.
In its fundamentals, the Australian economy today is the product of economic reforms that were put in place by Labor governments and opposed by those opposite. Under the Rudd and Gillard governments, we have seen very clear contrasts. When the global financial crisis hit, it was our side of politics that put in place timely, targeted and temporary fiscal stimulus that 200,000 saved jobs. Their side of politics would have let tens of thousands of small businesses go to the wall.
When we had to deal with climate change, we listened to economists and we put in place a carbon price, a price on the negative externality that is carbon pollution. They went for command and control, a scheme which they could not find a single economist to back. With minerals prices at 140-year highs—BHP posting a record $23 billion profit and Fortescue telling the House economics committee they have never paid a cent of company tax—we on this side of the House think it might be fair to ask the mining companies to pay a bit more tax. Those on that side of the House think that mining companies are paying too much tax.
At the last election we on this side of the House went to the Australian people with costings that added up. Those on the other side of the House went with costings that were $11 billion short, done by a private accounting firm. When Treasury had the temerity to say, 'You're out by $11 billion or so', they immediately came into this place and started attacking Treasury officials. They even walked into this place and started attacking Ken Henry, the man that Peter Costello appointed in 2001 to head the Department of Treasury. As soon as they did not like what Treasury had to say, they were out there shooting the messenger.
When the member for Lyne proposed a Parliamentary Budget Office, we accepted it. We put in place a parliamentary inquiry, which reported back unanimously—including the member for Higgins—with a model for a Parliamentary Budget Office. But as soon as those opposite realised that that would mean the Australian people could actually see their costings, they moved to gut it. They walked away from the report that the member for Higgins had signed on to. At the next election those opposite will again be going to the Australian people with numbers produced by a private accounting firm.
When it came to the fuel tax reforms that Peter Costello introduced into this parliament as Treasurer in 2003, after an eight-year lead time—an implementation period unprecedented in modern policy making—those opposite said they would not support them. They were willing to back away from these reforms at the last minute. We on this side of the House believe in economic reform. In this case we believed in a Peter Costello economic reform, while those on that side of the House decided that cheap political opportunism beats consistency any day.
Recently, we have been moving to close a tax loophole on the petroleum resource rent tax, a tax loophole that the Howard government had fought against in the courts, as did we when we came to power. But those opposite have decided that they want to keep the loophole open—to the benefit of Esso and the detriment of the Australian taxpayer.
In the world of international trade, we are pursuing free trade. It is good to see the Minister for Trade here in the chamber—a passionate advocate of boosting free trade—because he knows, as do we on this side, that it is free trade that benefits Australian families. Those on that side of the House would start a trade war with New Zealand. They would support anti-dumping rules that are not World Trade Organisation compliant, anti-dumping rules that would see retaliatory tariffs hurting Australian companies.
The old party of Hewson and Costello is dead, buried and cremated. What we have instead is the Tea Party of Australian politics. You do not have to believe me on this; let us hear from some prominent Liberals about the economic policy nous of the Leader of the Opposition.
In the Costello Memoirs, the former Treasurer wrote about the Leader of the Opposition:
Never one to be held back by the financial consequences of decisions, he had grandiose plans for public expenditure. At one point when we were in government he asked for funding to pay for telephone and electricity wires to be put underground throughout the whole of his Northern Sydney electorate to improve the amenity of the area. He also wanted the Commonwealth to take over the building of local roads and bridges in his electorate.
That is the economic policymaking giant who is leading the current opposition. We can also hear from John Hewson, a former Leader of the Opposition, writing in the AustralianFinancial Review on 24 May 2010:
Tony is genuinely innumerate. He has no interest in economics and he has no feeling for it.
We on this side of the House commissioned the Henry tax review, the biggest tax review in a generation. We have set about implementing recommendations flowing out of that review, as you would expect. We are cutting the company tax rate. We are abolishing the inefficient dependent spouse tax offset with its old-fashioned notion that the bloke works and the woman stays at home. We are scrapping the environmentally disastrous fringe benefits tax rules for cars. We are getting rid of the inefficient entrepreneurs tax offset and replacing it with a more appropriate instant asset write-off for small businesses. We are introducing a minerals resource rent tax that is both efficient and fair.
This country's economic position is strong. You do not have to take just the Gillard government's word for this; let me quote a few overseas sources. One source said:
Australia's economy is one of the strongest in the developed world.
That was the Financial Times on 1 November 2011. Another source said:
Australia's economy is booming … Even during the GFC, Australia, unlike many Western economies, registered modest growth.
That was the International Herald Tribune on 31 May 2011. Another overseas source said:
On the face of this comparative performance, Australia has serious bragging rights. Compared to most developed countries, our economic circumstances are enviable.
That was a London source—here we go: the Leader of the Opposition was in London on 11 November 2011. That goes to show that you have to take the Leader of the Opposition to London before you get some economic sense out of him.
The Leader of the Opposition now promises repeal. He wants to repeal the carbon price; that means cutting pensions and raising taxes. He wants to repeal the mining tax; that will involve reversing the instant asset write-off. He wants to stop superfast broadband in its tracks. After a bit of flip-flopping, he has decided that he will not repeal this government's superannuation increase in the event he were to come into office. That superannuation increase, as members are aware, is from nine to 12 per cent, but gradually, from 2013-14 to 2019-20. At the time of the next election, superannuation will have gone up from nine to 9.25 per cent.
The Leader of the Opposition will repeal a carbon price for which future permits have been purchased and a mining tax that will have far-reaching consequences on investments, but he will let go the superannuation increase that will have only gone one-twelfth of its way. He will let it run until 2020. I think it is a good decision by the Leader of the Opposition, but it is frankly bizarre given his position on other policies. He said he is doing that because that is what the Howard government did in 1996, but it is not. They actually froze the Keating government's superannuation increases; they did not increase them as planned. Is it because the Leader of the Opposition believes in superannuation? Probably not, given that he told this place on 25 September 1995:
Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.
The fact is that those opposite are against taxes and they are in favour of revenue measures. What they do not realise is that the budget has to balance. If they are repealing a law, that law should be the law of mathematics—that is the law they really need to abolish. If you are a polluter, a tobacco company, a big miner or someone who thinks they have found a loophole, the coalition will give you a hearing. Their policy is no special interest left behind.