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Wednesday, 23 February 2011
Page: 1259


Mr ROBB (10:00 AM) —I rise to consider the appropriation bills that are before us today. The main purpose of these bills, of course, is to propose appropriations from the Consolidated Revenue Fund for the ordinary annual services of the government in addition to those provided in the 2010-11 budget. The appropriation being sought in Appropriation Bill (No. 3) 2010-2011 is around $1.4 billion and the total appropriation in Appropriation Bill (No. 4) 2010-2011 is just over $1 billion. These are appropriations required for moneys that were not anticipated at the time of the framing of the budget, so they are overruns or expenses adding up to close to $2½ billion that were not anticipated some eight months ago. In the context of these bills, there are funds being appropriated to support what would appear to be bad management and poor process. In other words, these appropriation bills will become a symbol of the incompetence, the waste and the failure of due process that have come to characterise this administration.

For example, for the Department of Climate Change and Energy, there is an appropriation of $15 million to support functions that were simply transferred from the former Department of Environment, Water, Heritage and the Arts. Why do you need an extra $15 million for a new bunch of public servants to do exactly what a previous bunch of public servants had to do? Fifteen million dollars rolls easily off the tongue. It is not considered by those on the other side to be of any consequence. But it is a lot of money—a lot of money—and, at a time when households are pulling in their heads to try and make ends meet, to live within their means, we have a government that continues with this approach to public funding and the management of taxpayers’ funds which is unacceptable.

There is $45.6 million for the closure of the Home Insulation Program. Now, the government made provision for this in the last budget. They spent all last year and part of the year before with red faces, apologising, as community resentment built by the day over the total incompetence of the Home Insulation Program. Given the public outcry that occurred with this program, you would have thought that the government would have at least given every consideration to what it was going to cost to mop up the mess—how much it would take to close the damn thing down and how much it was going to cost for public servants and others to do their best to fix the situation and satisfy the literally hundreds of thousands of householders who were dudded under this pathetic and mismanaged program.

Six months later we find another $46 million, more or less, is required for the closure of this program. They still got that wrong. What can they get right in managing taxpayers’ money? This is another example of waste that just keeps on giving. The government seem incapable of taking full responsibility for this program: for the waste, the hurt and the deaths that have occurred. This program has so much against it, yet they are not capable of properly costing even the closure of the program.

In relation to Immigration and Citizenship, of the $2.5 billion nearly $300 million is supplementary funding for operational costs associated with the management of offshore asylum seekers. In the space of six months the government has underestimated the cost of border protection to the tune of $300 million. It shows how out of control this government is when it comes to managing our borders. We now have about 6,000 people on the mainland due to be processed. We have boats arriving almost weekly, even though it is the wrong season. Individuals are putting their lives at great risk, as we saw tragically a few weeks ago. This government provides absolutely no deterrent for people who risk breaking through our borders. It has no control over the borders, which means people have no confidence in the whole immigration program. Is it any wonder that people are concerned more generally about the way this country is being managed and its borders are being protected?

No country has even signed up to the East Timor proposition. The Prime Minister had a thought bubble before the election and put out there as the ultimate solution that there would be a processing centre set up in East Timor. After six months of the most assiduous representations by our departmental officials all over the region, not one country has shown a scintilla of interest in signing up for that program. Yet Nauru is still willing to sign the UN agreements. It is just pure politics that is stopping this government from doing what it has to do. It is letting politics interfere with the cost of running these programs and it is threatening human life because of this lack of deterrent for people who seek to break through our borders.

In the space of six months the government have underestimated the cost of spending on the border protection program to the tune of $300 million. We are now billions of dollars behind what was anticipated in the forward estimates some two or three years ago. This is a symbol of great waste and incompetence. The measures in these appropriation bills are endless symbols of the waste and incompetence by this government. This is a snapshot of some of the activities to be funded through these appropriations. These modest amounts add up to significant sums—in this case, $2.3 billion. The government would say these modest amounts are neither here nor there: ‘What is $15 million here or $300 million there?’

This is why we have a debt heading towards $90 billion. This is why we are aiming at a deficit this year of $40 billion and had one of $57 billion last year—the two worst deficit situations in our history. It has occurred because if you do not look after the pennies you do not look after the pounds. How can you justify a $40 billion deficit? How can you justify a $57 billion deficit and then stand there and say that you are managing this economy? How can you put up appropriations like this that demonstrate enormous incompetence? Overruns on so many programs should have been anticipated but have not been anticipated.

Last night I stood in the main chamber and debated the levy for flood reconstruction. This levy will raise nearly $2 billion. If the government had stuck with its budget of six months ago it would have paid for that levy and more. If the government had shown that it was able to manage this place without further waste, without further overspending—if it could live within its means like every Australian family is being required to do at this point in time, despite massive increases in prices—we would not have to have the levy. It is quite ironic. We have two debates going on almost in tandem that demonstrate that the money was there, is there, to pay for that levy. There was no need for the levy, but of course this is a government whose instinct is to tax, to spend and to borrow.

All the government have done since they arrived is to borrow, tax and spend. Where has there been one hard decision on the fiscal front? Even the measures towards flood reconstruction that they are paying for out of savings were basically all measures that we had identified at the time of the election. This government pilloried us in a political sense for putting up those savings. Now, after we went out and took the heat for those political decisions some months ago, they have taken those savings. Who has bleated about any of those savings? More or less one or two interest groups have, and they have caved in on those. They caved into the Greens. They bought off the Greens and Independents with hundreds of millions of dollars in order to enable their program to go forward. They cannot even make a tough decision and make it stick. They cave in to the political demands of the crossbenchers.

It must be remembered that this government, in the middle of all this, is borrowing $100 million a day. A lot of the interest rate increases are because this government is still borrowing $100 million a day. In other words, every 17 days this government borrows what it is going to collect on the levy. Every 17 days it has borrowed an amount equivalent to the levy. This government is being exposed almost daily for its incompetence and its lack of fiscal rectitude. There is a $45 billion interest bill to be paid over the next four years. This is incompetence in the extreme. There is no plan to address this funding and fiscal situation. The government claims that a surplus will be achieved in 2012-13. It may be manufactured, but what it is not telling you—the dead cat on the table—is the situation with the structural deficit. It is the issue that needs to be explained and it is the issue that the Treasurer has studiously avoided. The blow-out of the underlying structural deficit puts a lie to all the rhetoric we hear about the government having some plan to address our debt and deficit situation.

So what is a structural deficit? A structural deficit represents ongoing spending commitments that are relied on from revenue that will not persist—in this case, the mining boom. It is a bit like a situation where someone who has been achieving, say, $20,000 a year in overtime for the last couple of years then thinks: ‘I’ll take out a mortgage. I can now afford a $500,000 mortgage with my regular pay and overtime.’ The expectation is that the overtime will continue into the future. So the worker takes out a $500,000, 25-year mortgage and then finds out two years later that the overtime has stopped. The excess demand for the products that the company was producing has dried up. He is back on his normal pay. All of a sudden he realises—


Mr Champion —You’d fix up the penalty rates.


Mr ROBB —Here we are—the incompetence pouring out of those opposite. So you have a situation where this person finds that he now can only afford a mortgage of $300,000 to $350,000 and not $500,000. But he has got a 25-year commitment. He has got a problem. He has to sell the house and get a smaller mortgage. He has to take tough decisions to live within his means. He has a structural deficit. He has long-term commitments, but the income to pay for those long-term commitments has not persisted.

It is the same thing with this country. We have long-term commitments, nearly $100 billion of debt that this government is building up, and we have spending programs that will continue. They are recurrent expenditure. They will come year in, year out as annual commitments that this government is making that have no end, yet they are funding those commitments out of the proceeds of the mining boom. They are wasting the mining boom. There is an illusion about the state of the books of this country. They are going to use the mining boom money to meet current commitments, maybe in 2012-13. But what you find is that, when you allow for the mining boom and commodity prices going back to normal—and they will—there will be a supply response, and the demand will come off at some stage. There are 1,000 mines around the world that are now being put into production. There is infrastructure being built in Mongolia, in South America, in Africa, in Eastern Europe and in North America. There is port infrastructure to take the resources from thousands of mines to meet demand. So the supply response will increase. We think we are awash with gas, and we are, but we have still only got two per cent of the world’s gas reserves. So we will face competition. We will still do well, but the mining boom will come off, and it may come off sooner than we anticipate. It is all right to predict 10 years.

I was in agriculture for 18 years and there were always booms and busts. Every time there was a boom in grain, people would move out of sheep into grain and everyone would always predict a longer boom that what really occurred. Invariably, it was because no-one anticipated the supply response, not only the extra grain production within the country but the extra grain production around the world. Invariably, the price came back. It did not necessarily collapse; it came back to more normal levels because of the supply response. It invariably came back sooner than everyone predicted. There is a sort of boom mentality where people want to make assumptions about how long these things are going to last.

We have those on the other side feeding in 10- and 15-year assumptions about the mining boom. It is unrealistic. It demonstrates their lack of contact with the real world—with the commercial world. We now have a situation where, in the 2009-10 budget papers, the government featured this structural deficit. There had been a small structural deficit beginning at the end of our previous term in office, but it was about $2.5 billion. You know what it is today? It is $50 billion. There is an underlying structural budget deficit that has been identified by Treasury. It was first put in the budget papers of 2009-10. In 2010-11 there is no reference to it; it has disappeared. Six months after last year’s budget, Treasury quietly put out a paper that updated the structural deficit. It showed the structural deficit was growing astronomically—that, instead of coming out of it in 2015-16, we would come out of it in 2020. So we have a structural deficit of a large order.

The reality of the budget as identified by the Treasury, as agreed by the government but never talked about by the government, is that the government have an underlying budget deficit which is going to go through at least to 2020. This means we will not have paid off one cent of debt—you do not pay off debt until you are into a real surplus—until 2020. We will not have paid this debt off until 2030. We are talking 20 years until the debt is paid off.

What an absolute disgrace that this government would put us in such a vulnerable position. We are a small, open economy. If there is a double-dip recession or if there is a serious downturn in any way—instability coming from the Middle East with oil prices going up—then we are vulnerable. This government needs to restore the economic resilience that they inherited and subsequently trashed—that economic resilience that we need as a small country to work our way through things that are outside of our control, and the rest of the world’s control. But no, we go on blindly as though everything is fine. Spending, spending, spending; more commitments, bigger structural deficit, off into the future using all of the mining industry money. What a disgrace. What an absolutely irresponsible, inconsiderate, highly politicised approach to government. They are just looking to save their own jobs every three years. That is the total preoccupation of this government. That motivates all of their major decisions and it is has driven the spending, spending, spending approach of this government. They need to be held to account.

These appropriations are a huge symbol of the waste and incompetence and politicisation of this whole budget process. This is a government which needs to take stock. It needs to do what every family in Australia is doing—that is, seeking to live within its means. For at least 12 months now every family in Australia has delayed incurring expenses they were going to incur and delayed things they were going to purchase because they can no longer afford them; the electricity bills have gone up 35 per cent in three years and interest rates have gone up $6,000 on the average mortgage in the past 12 months. This government’s $100 million a day in the finance market is putting pressure on interest rates. At least half of the interest rate rise is due to the excessive spending of this government. So $3,000 a year is due to the incompetence and politicisation of this government and its spending programs. That is the contribution they have made to average families in Australia, and it is putting enormous pressure on them.

If this government exercised the same fiscal rectitude, if it exercised the same restraint that families who need to live within their means are exercising, then we would find that the economy would start to take some shape. But all we hear is spin and all we see is illusion. They have created the illusion of progress, and it is not there. Look at the structural deficit. Explain the structural deficit. Explain the worsening of the structural deficit. The government tried to say in 2009 it was due to the stimulus spending. What do they say now as it grows and grows and grows in the face of a mining boom of unprecedented proportions? It beggars belief that we are seeing this unfold. An opportunity to set Australia up for the future, to set Australia up to be resilient against any major events outside of our control has been squandered by this government.

We need some checks and balances here. We need a situation where these sorts of things can be exposed. At the present time the government hides behind the so-called independence of the Treasury. Of course it is not independent; it is there to work for the government of the day. Most of the material in the red books and the blue books that came out after the election is blacked out. You could not see what any of the figures were; you could not see the really tough advice that was given to this government. All we ever see from the public service is what the government wants us to see.

We have not got any group that is capable of providing some independent assessment. This is why we put up a proposal for a Parliamentary Budget Office at the last election. We were looking to have an independent and well-resourced statutory authority located in Parliament House, an authority tasked with providing objective and impartial advice and analysis on the Commonwealth budget and the budget cycle, on the medium- and long-term budget projections and on the cost of policy proposals. Look how politicised that was last time. We put up $50 billion of savings and the whole process was politicised by this government. I met with Ken Henry for 3½ hours and, on nearly all of the proposals for which the government subsequently pilloried us, the only difference was assumptions. Even when we put up a case, in most cases the head of the Treasury said, ‘We’ve made our decision.’ Sometimes it was a case of just two per cent—82 per cent versus 84 per cent—in terms of a take-up factor, but when you put that over four years, in a big program, it looks like a $900 million hole. They were simply assumptions and they were very close together. But Ken Henry said: ‘We’ve made our decision. That’s what we’ve put into our model. You can like it or lump it.’ That was the politicisation of this process.

We need to take the politics out of the budget and the campaign process. We need a Parliamentary Budget Office. The government fought this proposal all the way through and denigrated it when we put it forward during the last term, but they accepted it when the Greens and the crossbenchers insisted upon it. But what are we seeing? Nothing as yet. It is our expectation that this office will be three desks in the corner of the library; that is what we will get. It will be another political response to a very legitimate concern. If we were in government we would have to face this scrutiny and objective assessment as well. This is not something put up to advantage us on one side of politics. This is a genuine, legitimate and sensible proposal. We should have an independent body, stationed within Parliament House, that can respond to any member or senator in terms of individual issues, deal with the policy costings of both sides of politics well in advance of an election and find numbers that everyone accepts are the right numbers. We can then have a debate about policy in the election and not some orchestrated political process in a campaign which seeks to denigrate the opposition because the government has numbers and assumptions which may differ from other authorities. This is a really important proposal and it needs to be adequately financed so that we get the politics taken out of this process.

I have another example of the great hypocrisy associated with this government on many issues. If you look at the forward estimates you will find that, in the latter years, the appropriation for natural disasters is the lowest in 10 years. I talked about it being an illusion if we get to a surplus. The government is seeking to manufacture a surplus. The appropriation is $80 million. We have just had to agree to $5.6 billion of expenditure for natural disasters. The government has a provision of $80 million, which is the smallest amount in 10 years. When the Minister for Finance, Senator Wong, was the climate change minister, she warned that:

Climate change is expected to increase the frequency and intensity of extreme weather events, including cyclones, storms, droughts, heatwaves bushfires and floods.

The finance minister is on record saying we are going to experience far more natural disasters in the years ahead, because of this government’s belief in the consequences of climate change, yet she has reduced the appropriation for natural disasters to its lowest level in 10 years. What hypocrisy! It just shows that there is an attempt across this government to manufacture a surplus in 2012-13 and ignore the structural deficit. This is politics. This is another example of the hypocrisy of this government in the way in which it is constructing and running the finances of this country.

This government needs to tackle the cost of living. This was its big election pitch in 2007 but it has failed on all counts. There are families around this country who are facing deep financial pressures but living within their means. This government needs to take a leaf out of the book of Australian families and live within its means. (Time expired)