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Monday, 17 August 2009
Page: 7978


Mrs IRWIN (3:13 PM) —My question is to the Minister for Finance and Deregulation. Will the minister update the House on recent positions that have been expressed about Australia’s responsible borrowing practices?


Mr TANNER (Minister for Finance and Deregulation) —I thank the member for Fowler for her question. As members would be aware, the global recession has knocked a giant hole in projected government revenues in the vicinity of $200 billion over a period of four years. As a result, the government has been obliged to undertake a period of borrowing in order to cover the ensuing deficits, because the alternative would be to crunch the economy into the ground, to devastate the Australian economy, to cause hundreds of thousands of people to lose their jobs and thousands of businesses to close.

In the face of that unprecedented challenge, it is good to see that monetary policy and fiscal policy have been working in tandem to stimulate economic activity, to sustain jobs and to sustain business in the Australian economy in this time of extraordinary challenge. As part of that process, the government is engaging in a modest and responsible borrowing program. It is significant that tonight this has been confirmed by very important players in this process. I would like to quote first the statement by the Governor of the Reserve Bank of Australia, Mr Stephens. In evidence to a parliamentary committee on Friday he stated:

… 15 per cent of GDP is a low number by virtually any other standard. So I do not feel that that debt burden, if that is what happens, is going to seriously impair the country’s economy.

I would like to add to that statements made by the Secretary to the Treasury at a business function earlier today, where he stated:

It does seem clear that the measures taken to date, both the monetary policy response and the fiscal policy response, have had quite an impact in supporting aggregate demand.

In passing, I add the statement of Standard and Poor’s when they were reconfirming Australia’s AAA rating. They stated:

… the deficits and associated borrowings do not alter the sound profile of the country’s public finances.

What you are seeing here is the government standing shoulder to shoulder with the Reserve Bank of Australia and with the Australian Treasury to fight the impact of the global recession and to sustain jobs and business activity under enormous pressure.

There are other positions being adopted on the issue of debt and on the issue of the deficits projected. Although the Reserve Bank’s assessment of the likely impact of the debt on the Australian economy is not shared by the opposition in their rhetoric—and we have all heard the scare stories about debt, deficit and future generations—when it comes to their specific position on issues it is quite a different story. When it comes to actually presenting any savings measures to ameliorate the impact of future deficits—when it comes to their own promises about what they might do in the future—then it is very different story. We note, for example, that the report that Frontier Economics produced with respect to climate change last week, which the opposition sort of endorsed and sort of did not, if it were applied, would lead to a very substantial blow-out in the budget deficit over time because of increased reliance on the purchase of international permits for carbon emissions in order to support the electricity industry—a very substantial blow-out beyond $1 billion a year by 2020. I note also that they are still engaged in blocking important government savings measures, important budget initiatives such as reform of the private health insurance rebate and reform of government assistance to dental programs, in the Senate while at the same time proclaiming the great virtues of lower deficits and of lower debt.

In addition to this I note that we now have some of the would-be leadership contenders in the Liberal Party out there parading their virtues in public. Most significant is the member for Warringah, who put out a book last week, which I applaud—good on him.


Dr Emerson —He joined the book club!


Mr TANNER —He joined the book club. It is a bit belated, but I welcome him to the club! In that book he proposed a specific initiative. I could not find any savings initiatives. I could not find any tough, rigorous decisions that would help to get the budget back into surplus. But what he did propose was that the means test on family tax benefits should be abolished and that people who have children under five should get assistance from the government for that, irrespective of their income. I am a bit conflicted on this proposition because I have a daughter who is three years old and I would be one of the people benefiting from the member for Warringah’s proposal. Unfortunately, in my role as Minister for Finance and Deregulation I have a different position, which is that this would be a grotesque waste of taxpayers’ money. Hardworking low- and middle-income earners paying the taxes for high-income earners like me to get a free kick is not my idea of good public policy.

I am waiting for some more books from some of the other would-be contenders on the Liberal Party benches. I am waiting for them, but they are not yet here. Maybe there will be one from the member for North Sydney, but he would probably struggle to get out of bed to write one; maybe from the member for Curtin, but she would have to find somebody else to do it for her; and possibly from the member for Goldstein, but he would struggle to find a publisher who thought his works were interesting. So I am not quite sure who is going to step up to the plate to assist the member for Warringah, but I do know one thing: there is a day of reckoning coming for the opposition, and the interesting thing is that it is a trap that they themselves set with things called the Pre-Election Economic and Fiscal Outlook and the Charter of Budget Honesty, which they implemented in government and which are still in place. What that means is that when we get to an election campaign they have to stand up and say just how they are going to produce a lower deficit and a lower debt and make lots of nice election promises at the same time. We will be watching with great interest as that day of reckoning emerges. You can bet your life the rhetoric will dissolve into the sands faster than you can say boo, because that is what it is: just pure rhetoric.