Mr TANNER (Minister for Finance and Deregulation) (3:59 PM) —I am pleased to be able to engage in debate with my fifth shadow finance minister in 2½ years. I am claiming an Australian record. I do not think there has been any previous instance of a senior portfolio having so many shadow ministers in one parliamentary term. In fact, a relatively representative group—three states, both genders, both houses and both parties in the coalition—has been represented. There was Senator Joyce and before him the member for North Sydney, the member for Dickson and Senator Coonan. Now there is the member for Goldstein, and he, like all his predecessors, is trotting out yet another dog-ate-my-homework smokescreen which is designed to pour out the rhetoric and to put forward some nice little slogans and a few grabs while avoiding one fundamental question: ‘What do the opposition propose to do with respect to government spending, taxation, the budget, fiscal policy and the future of the nation should it be elected in the election that is due within a matter of months?’ Eventually, they will be forced to reveal their plans and to give the Australian people some indication of what they are proposing to do. Maybe it will be this evening. We will find out in due course. But thus far all we have had has been rhetoric and empty slogans.

On the matter of shadow finance ministers, the member for Goldstein’s immediate predecessor must be feeling rather miffed today. He lost the portfolio because he tended to get a bit confused with figures, but one of his predecessors—the member for Sydney—got promoted to shadow Treasurer, and yesterday the member for North Sydney managed to say that 12 minus 9.8 equals 3.2. So while Senator Joyce got very big figures—billions and trillions—confused, the new shadow Treasurer cannot even work out what 9.8 taken from 12 equals. It was not a slip of the tongue; he was reading his own question. We all make slips of the tongue occasionally, but a shadow Treasurer’s reading out his own question and being unable to make a simple subtraction does give you cause to ponder the prospects for the nation and for fiscal management should he actually become Treasurer.

Given the record of the coalition in government on the issues that are the ostensible subject matter of this MPI debate, perhaps we should not be surprised that they cannot find a shadow finance minister who can stay in the portfolio longer than a matter of months. We remember—as the Minister for Infrastructure, Transport, Regional Development and Local Government pointed out today—the infamous Regional Partnerships program, the Beaudesert rail project where no trains ever ran, the cheese factory that got money after it closed down, the ethanol factory that never existed and so the list goes on. We remember the government advertising spending in the 2007 calendar year of $254 million. For the purposes of comparison, what has the Rudd government’s record been? We spent $86 million in 2008 and $115 million in 2009.

I note that as a central part of his attack the member for Goldstein made a claim about spending on consultants, so let us have a look at the record of spending on consultants. In the last full financial year of the Howard government, total spending on consultants was $535 million, in 2007-08 it was $454 million and in 2008-09 it was $475 million. It was $60 million lower in the first full year of the Rudd government than in the last full year of the Howard government not accounting for inflation, because by definition the fees of consultants, like the rest of the economy, would have been a little bit more expensive given the two years that had passed in that time.

We all recall the famous water plan drawn up on the back of a serviette after a long lunch by the former Prime Minister, Mr Howard, and how, when my predecessor as finance minister, Senator Minchin, was asked on the Meet the Press program a couple of days after it was announced, ‘Was this costed by the department of finance?’ he said that it would be ‘costed in due course’. The normal pattern with these things is that the department of finance costs significant government spending proposals before they are decided and before they are announced, not after they are announced unilaterally by the Prime Minister without consulting his Department of the Treasury or department of finance.

We all remember the record of the coalition on discretionary grants, which blew out from $450 million in 2002 to $4.5 billion in 2007. So within about five or six years, the Howard government went from spending $450 million to spending $4.5 billion on discretionary grants. You would be interested to know that the record of the Rudd government on this point, Madam Deputy Speaker, is that in the following year the amount spent on discretionary grants by this government fell 27 per cent from the figure that we inherited from the Howard government.

We all remember the blow-out in the number of public servants under the Howard government. From around 2002 until 2007, the total numbers went from 212,000 to 247,000. In the three years covered by the relevant budgets of the Rudd government since it has been in office, the total increase in the Public Service will be about three per cent—that is, roughly one per cent a year—which is lower than the population increase in Australia over that period, while in the last three years of the Howard government, Public Service numbers increased by 9.3 per cent. So the members of the opposition do not come to this debate with a great deal of recent credibility.

I now turn to the government’s record on issues of efficiency, accountability and spending generally. First, on coming to office we imposed a one-off, two per cent efficiency dividend across virtually all of government. There were one or two exceptions; much of defence operational activity was one of them. That one-off, two per cent efficiency dividend meant that the ordinary operating costs of government shrank significantly as a result and that squeezed better performance and better productivity out of the public sector.

We have put forward a dramatic change in the structure of procurement in the processes of government, working through product category by product category and delivering very substantial savings. There are half a billion dollars worth of savings already projected from IT courtesy of the Gershon inquiry and significant savings from coordinated approaches to property procurement, telecommunications, Microsoft product, office machines and most recently—this was announced just prior to the budget and included in the budget—$160 million over four years through coordinating approaches to the purchase of aviation and travel services. These are all things that the Howard government could have and should have done but refused to do because of its obsession with mimicking the private sector.

We have been in the process, which will peak in the parliament in the next sitting week, of reforming the structure of administration of government superannuation. This will not only deliver significant benefits as to the costs of government—enabling us to modernise the IT systems used in administering government superannuation that desperately need reinvestment on a cost-neutral basis—but also deliver very substantial improvements in the outcomes for the investment component of the superannuation that applies to both public servants and military personnel in the relevant schemes.

We have put in place very substantial reforms to the management of discretionary grants and accountability for dealing with discretionary grants so that never again will we see some of the absolute administrative outrages that characterised the infamous Regional Partnerships program. We have put in place strict guidelines with respect to political advertising to ensure that all substantial advertising proposals—any things that cost above $250,000—have to go through an arms-length process of scrutiny that determines whether or not they are genuine government advertising or political advertising.

Mr Perrett —No more Work Choices ads!

Mr TANNER —No more Work Choices ads and no more ‘Unchain my heart’ ads or any of those complete outrages that we all remember so well.

I will turn now to the budget processes and the wider picture of government efficiencies that I have been directly responsible for. In our first budget we had $33 billion of savings over four years; in the second budget, $22 billion of savings over four years; in the third budget, $28 billion of savings over four years. These have included major tough decisions such as extending the age of pension eligibility from 65 to 67. This year we have made very substantial savings as a result of very tough negotiations with the pharmaceuticals manufacturing sector and the pharmacy sector in order to get better value for money from that very large spend that the government undertakes through the Pharmaceutical Benefits Scheme and the delivery of pharmaceuticals. In contrast to this very substantial track record of the Rudd government, in the last four coalition budgets there were virtually no substantial savings. In earlier budgets the Howard government did have very substantial savings, some of which we disagreed with and some of which involved broken election promises—we all remember the distinction between core and non-core election promises—but in the last four budgets, with the money rolling in, there were virtually no savings.

This government, whether it has been during a mining boom, in a global financial crisis or in a resurgent economy post the direct impact of the global financial crisis, has found substantial savings, including very substantial spending cuts in all three of its budgets. The overall position is that the budget, in spite of the impact of the global financial crisis, will return to surplus by 2012-13, debt as a proportion of GDP will peak at just over six per cent and, as a result of the budget two days ago, we have finally seen the inevitable demise of the laughable ‘debt and deficit’ campaign—the hysterical rhetoric and grossly inflated exaggerations of the opposition. We have put in place strict budget rules to impose real discipline on the government, on its ministers and on its public servants, in particular a cap on spending increases of two per cent per annum in real terms, which is lower than the projected increase in the economy over that time. In this budget we extended that cap to go to the point where the budget will be in surplus of one per cent of GDP. We remain committed to keeping the tax ratio as a proportion of our economy on average at or below the level we inherited from our predecessors and we are adhering to that commitment. In fact, it continues to be substantially lower and will be significantly lower right across the forward estimates. In the second year of the four years of the forward estimates in this budget, spending will return to roughly the level it was for much of the Howard years as a proportion of the economy, and for the third and fourth years of the budget estimates it will be lower than the typical level of spending as a proportion of the economy under John Howard.

It is crunch night tonight for the opposition. They have kept putting off the difficult stuff. They are very good at rhetoric; they are very good at slogans; they are very good at colourful one-line grabs—but they keep putting off the hard choices. They keep putting off the difficult point where they actually have to stand up and say, ‘Here is where the money is coming from.’ We first had, ‘Not until the new year.’ Then it was, ‘Wait until parliament resumes.’ Now it is, ‘Wait until the budget reply.’ I am banking on the fact that you will not get much of that in the budget reply tonight, Madam Deputy Speaker. The moment of truth is here, but I can guarantee you that you will not see the Leader of the Opposition indicate where the $15.7 billion of unfunded spending he has already committed to is going to come from. You will not hear him indicate how he is going to maintain the projected surpluses that the government has put in place in the forward estimates. All you will hear is further hairy-chested rhetoric with nothing behind it.

In the chart and table that I released today is a very conservative estimate of the commitments that have been made by the opposition. It only includes commitments that have been explicit and that are clear—an indication that a coalition government, if it were elected to office, will do the following things. For example, the coalition has committed to removing the means testing of family tax benefits and the baby bonus that the government put in place and removing some of the tightening of middle-class welfare that the government put in place. It has committed to those things at very substantial cost, well over $1 billion, and there has been no indication yet of how they are going to be paid for. That is just one component of that $15.7 billion black hole in the coalition’s costings.

We will see tonight whether the Leader of the Opposition can meet the four tests I set for him earlier today: first, whether he can explain how he is going to pay for this $15.7 billion that he has already promised; second, if he is going to continue to oppose the Resource Super Profits Tax, whether he is also going to oppose the cut in company tax, the small business tax benefits, the improvements in superannuation and the improvements in infrastructure that are all being financed by the proceeds from this tax and, if he is not going to oppose those things, how he is proposing to finance them; third, whether he is prepared to match the government’s fiscal rules and to commit to extending the two per cent real cap on spending to the point where the budget gets into surplus of one per cent of GDP; and, finally, whether or not he is committed to ensuring that those surpluses that are now projected for 2012-13 and 2013-14 are protected—whether he can set out exactly what he is going to spend, what he is going to save, how it all adds up and how those surpluses will be maintained. We might also like to hear from him whether he understands the capital side of the budget, investments in financial assets, which do not count as spending, and whether it is the proceeds of the sale of an asset or cancelling an investment that delivers a return. That does not become transferable into spending capacity. If he spends on that basis, all he will do is further push the budget into deficit.

There is a very big challenge for the Leader of the Opposition tonight. He has to switch from the rhetorical windbag, the bloviating buffoon, to somebody who can tell us where the money is coming from. (Time expired)