Ms O’DWYER (10:42 AM) —Even the greatest spin merchants from the New South Wales Labor Party cannot spin this: the latest MYEFO released by the Treasurer, Wayne Swan, last week confirmed what Treasury and the Reserve Bank have been saying for a long time—that this Greens-Labor coalition government has neglected to take the tough decisions to rein in spending and is now threatening the long-run growth of the economy. Wayne Swan claims that spending growth is being constrained at two per cent, but this is after real spending increased by a massive 17 per cent over two years. You would have to go back two Labor governments, to the Hawke government in the 1980s, before you would see anything like that. There are two ways that the government can bridge this gap: the responsible way, to reduce spending, or what it has chosen to do, which is to increase taxes. Almost half of the $83 billion that the government has claimed to represent savings is merely due to increases in taxes. This of course is the big con—that the new mining tax will save the government $7.4 billion and that increases in tobacco excise will save the government $4.98 billion. This is Labor’s idea of saving, not cutting waste and rolling back a stimulus package that is no longer required but continuing to spend at exorbitant levels and increasing taxes. Higher taxes on mining, cars, crude oil, ethanol, alcopops and employees’ shares are all being used to prop up the budget.

The Reserve Bank has raised interest rates seven times in just over 12 months. According to the RBA governor’s own monetary statements, these increases are due in part to the continued reckless fiscal policy of this Labor-Greens government. Every interest rate rise directly hits the household budgets of Australian families, making it more difficult for families who are continuing to struggle with the cost of living. The Treasury have warned that the Australian economy is expected to grow above trend over the forecast horizon and, with an already tight labour market, reach capacity within the next year or two.

Treasury have also said that the Australian economy is growing solidly as a self-sustaining, private sector recovery takes hold. If the economy is so close to capacity and if the private sector has taken over, why does the government continue to roll out its stimulus? Why does it persist with expensive, ineffective and unpopular programs such as the cash-for-clunkers scheme? The government needs to provide a buffer against uncertain times. It cannot simply hope for the best or simply bet on China and the growth of commodity prices forever. In the MYEFO document Treasury says that as the global supply of iron ore and coal increases, the medium-term outlook is for Australia’s terms of trade to decline.

The coalition proved it could manage the economy responsibly by ensuring strong surpluses— (Time expired)