Senator FISHER (2:28 PM) —My question is to the Minister for Finance and Administration, Senator Minchin. Will the minister inform the Senate of the budget outcome for 2006-07 and is he aware of any reactions to this outcome? Will the minister further outline to the Senate the importance of running a strong budget surplus? Can the minister further inform the Senate of the latest figures relating to the budget positions of other levels of government in Australia?

Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Fisher for that good question. Just last month the Treasurer and I released the preliminary budget outcome for 2006-07. Those figures revealed that the underlying cash surplus for the year was $17.3 billion, which equates to 1.7 per cent of Australia’s GDP. It equals about four weeks worth of government spending, and I note that it is about the same as BHP’s latest profit. The improvement of some $3.7 billion in the budget surplus since the May budget estimate was a result of the continued strength of the Australian economy. Company tax receipts were higher by around $1 billion and spending on a range of welfare programs was lower because of the strong labour market, in which more and more Australians are finding work.

The strength of the surplus clearly illustrates the government is running a very responsible fiscal policy. Our policy is taking pressure off interest rates and contributing significantly to national savings. Of course, the strong surplus has allowed us to make a number of important investments in Australia’s future. As senators know, we have already eliminated the debt of $96 billion that we were left by the Labor Party. From the latest surplus, we have been able to deposit a further $7 billion into the Future Fund. So, in addition to the second instalment of the Telstra proceeds, that deposit will mean that the Future Fund needs no further deposits in order to meet its long-term goal of matching the unfunded super liability by 2020—a fantastic outcome. Of course, it can only achieve this aim—that is, the Future Fund—if it is free from arbitrary raids by future governments and is allowed to reinvest its earnings. Both of those preconditions are put at risk by Labor policy. The surplus from last year also allowed us to deposit a further $1 billion in our new Higher Education Endowment Fund, which will soon be established in law. Another $2.5 billion will be placed in a new Health and Medical Investment Fund, with future earnings to be invested in important health technology for the benefit of Australia’s hospital system and Australia’s patients. So, the strength of the surplus has been a great result for Australia’s present, and indeed future, citizens.

Given that we hear so much from the Labor Party that their fiscal policy is actually the same as ours, it was a little surprising to see several Labor figures criticise the government for running such a strong surplus. Tasmania’s Labor Treasurer said the surplus showed the federal government’s disregard for the needs of the Tasmanian community. And Queensland’s Labor government suggested that, instead of running surpluses, we ought to be spending more money on the states for them to waste on their projects. Of course, we are not surprised at all by criticism from these state Labor governments.

I draw to the Senate’s attention that, just two weeks ago, the Bureau of Statistics released its government financial estimates for the next financial year, 2007-08. They showed in their expectations that the federal government is on track to run a fiscal surplus of $11.9 billion in this financial year. The Labor states, according to the bureau, are on track to run a combined $5.8 billion deficit. So, the combined state Labor deficit is going to cut in half the federal government’s contribution to national savings. We know Labor’s position on government budgets—they run deficits when they are given the chance to govern, whether it is at the state or federal level. We run surpluses and then they criticise us for being too conservative and not spending all the money, then at election time they try to pretend they can be trusted with the finances of the nation. The Labor Party stands condemned, both by its rhetoric and its actions on the issue of financial management.