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Wednesday, 4 February 2009
Page: 238


Ms JULIE BISHOP (2:20 PM) —My question is to the Treasurer. Treasurer, the government is forecasting economic growth of three per cent in 2011-12 and is also forecasting to run a deficit of $25.7 billon in that year. Can the Treasurer explain to the House how the government intends to maintain a budget surplus over the economic cycle while it has plans to run a huge deficit in a year of average growth?


Mr SWAN (Treasurer) —The Deputy Leader of the Opposition just cannot get it right. We project trend growth in that year; we do not forecast it in that year. Let us be very clear about that.

An opposition member—What’s the difference?


Mr SWAN —There is a very big difference. This is a very important time in the history of this nation.


Mr Hockey —What is the projection?


Mr SWAN —One is a projection; the other has been modelled, of course. The economic illiteracy of those opposite is truly stunning. For the first time in the history of this country we have had a major political party and its leader come into this House and say that they intend to deliberately vote for higher unemployment. That is exactly what they have said.


Ms Julie Bishop —Mr Speaker—apart from the offensive nature of that allegation—on a point of relevance, I ask the Treasurer to come back to the point about how they will maintain a budget surplus over the economic cycle when they are forecasting a year of assumed average growth?


The SPEAKER —The Treasurer will respond to the question.


Mr SWAN —The opposition do not believe that we need an economic stimulus, despite the fact that there has been such a substantial contraction in demand. They do not think, for example, that we need bonus payments targeted at lower income earners to boost consumption precisely at the time when this country needs it, when the world is throwing the worst that it can possibly throw at us. What this government is going to do is act to support jobs, and to do that we do need to have a temporary deficit, and that is provided for in the forward estimates. Our commitment to fiscal rigour over the long term remains. We have made it very clear in the UEFO that we intend to return to surplus as soon as we possibly can, consistent—

Opposition members interjecting—


Mr SWAN —It sounds like all those opposite know the date when world global conditions are going to normalise. Do you know that date? Of course you don’t. So when growth returns to trend terms we will begin to move back to surplus. That is the responsible thing to do. Of course, moving back to surplus would not be helped by the approach of those opposite. We have had the Deputy Leader of the Opposition suggest that the way to get future growth and future tax revenue is to give even bigger tax cuts. She said that bigger, permanent tax cuts would increase revenue. We would suggest that is a recipe for higher and higher deficits and for higher and higher borrowings. That is exactly what it is. It is interesting to look at what the Leader of the Opposition has had to say about her position on this. This is what he had to say this morning on ABC Radio. Interviewer: ‘Can you explain Julie Bishop’s suggestion on the weekend that you can increase your tax revenue by cutting your tax take?’ Mr Turnbull: ‘Well, this is um, this is um, um, a point. It’s like a lot of economic, um, points. It has merit, but it isn’t right, you know, in an extreme fall.’


Mr Hockey —Mr Speaker, I rise on a point of order. I am trying to save the Treasurer from himself here. He was asked a question. If he believes he is keeping to his own formula, why is the government projecting three per cent growth and yet running a $25.7 billion deficit?


The SPEAKER —The Treasurer will respond to the question. I will be listening very closely to the Treasurer.


Mr SWAN —The interviewer went on: ‘Do you agree with Julie Bishop?’ Mr Turnbull: ‘Well, it, it, it, I simply, rather than, I’m not going to, to’—


Mr Tuckey —Mr Speaker, I rise on a point of order. Whilst recognising the limitations upon you in terms of the answering of a question, it is still required that it be relevant, and a question asked about the government’s business and the government’s budget hardly requires reading to this parliament some interview that was conducted on the radio.


Mr Albanese —It was your leader.


Mr Tuckey —I do not care who it was. I am telling you: let him answer the question, even if it is with his escape clause.

Government members interjecting—


The SPEAKER —Order! The interjectors will stop interjecting. The member for O’Connor will ignore the interjections.


Mr Tuckey —Don’t ruin my day!


The SPEAKER —There is a character who has a name in common with mine who has a saying, ‘Make my day,’ but I am not going to. I will be listening very carefully to the Treasurer’s response. There are difficulties, as I said yesterday, regarding the way in which the House has allowed this type of material to be used in answers, which I have a problem with, because it is bordering on debate, which is not allowed in the formulation of a question, but the traditions of the House have allowed it. I will listen carefully to the Treasurer’s response.


Mr SWAN —I was merely making the point that the opposition has a policy to send the budget into deeper deficit permanently. What we are doing, with a targeted stimulus, is to support jobs right now when they are needed. And we have made the point and we have made it publicly in the documentation that we published yesterday that, as soon as the economy recovers, as soon as the economy grows above trend, the government will take action to return the budget to surplus. That is as it should be.