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Tuesday, 26 May 2009
Page: 4268


Mr HOCKEY (2:54 PM) —My question is addressed to the Treasurer. I refer the Treasurer to his own budget papers and particularly Budget Paper No. 1, 10-6, the table relating to the underlying cash balance. I note that since 1970 on only three occasions has the government delivered a surplus of two per cent or more: 1970, 1971, some time ago obviously, and two per cent in 2000. Does the Treasurer seriously believe that Australians will believe him when he says that to pay off the Rudd government debt this government will deliver eight years straight of two per cent surpluses?


Mr SWAN (Treasurer) —The very first point that needs to be made is that I do not accept necessarily the premise of the question. I do not accept the assertions about the levels of surplus whatsoever. I do not accept them at all. What I do know—and this is something the previous government did not do—is that we have published more information on our medium-term fiscal strategy than any government prior to now. We have done that for a very serious purpose. We are in the middle of a once-in-75-years event, which has had a dramatic impact on this country.


Mr Hockey —On a point of order, Mr Speaker, on relevance: I would ask the Treasurer to answer a simple question about his Prime Minister’s own numbers.


The SPEAKER —The member for North Sydney will resume his seat. The Treasurer will respond to the question.


Mr SWAN —I am responding to the question, Mr Speaker, because what has occurred in this budget year is that taxation collections have dramatically fallen, by $210 billion over the forward estimates. There has been a dramatic collapse in taxation revenues, and the responsible course of action for a government in those circumstances is to borrow to support the economy—to support jobs and to support small business. That is precisely what we are doing. The responsible course of action in the circumstances is to chart a course back to surplus, to bring the budget back to surplus as soon as we possibly can—in 2015-16—and to pay down those borrowings. That is the course that we have set out in the budget papers.

In addition to that, we have put in place some tight fiscal rules. We have said—we said this in UEFO; we said it in February of this year but it was not the subject of any questioning in this House at that time—that there would be a two per cent, real, cap on spending. We said that because we have been prepared to take the courageous and decisive steps to support employment in our economy, to support business, and we have had the support of the business community in doing that. They recognise how important it is to borrow to build infrastructure—the jobs for today and the jobs for tomorrow. They do understand the importance of investing in our educational facilities and the need to borrow to do that to bring a lasting benefit to our nation and our children. They all understand that. The only people in the country who do not understand it are those opposite. We do have the support of the business community and we have the support of most responsible economists because they all understand that when revenues collapse governments borrow to support their economy. That is precisely what we are doing.

The levels of net debt here are low by world standards—very, very low by world standards. We can afford to support our people and we are doing that and we are proud of it. But we also understand our responsibility to pay down those borrowings. We understand that totally, which is why the budget papers contain so much information on our medium-term fiscal strategy. Our strategy is very simple—to bring the budget back to surplus in 2015-16 and reduce the levels of net debt to 3.7 per cent of GDP by 2019-20. That is a reasonable thing to do. It is a responsible course of action and the only irresponsible course of action is the one being taken by those opposite in this House today.