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Wednesday, 2 March 2016
Page: 1632


Senator FAWCETT (South AustraliaDeputy Government Whip in the Senate) (16:02): I rise to speak on the motion to take note of the answer to the question to the effect: do we have a revenue problem or a spending problem? I just heard Senator Gallacher's contribution to this debate. One of the things that strike me about the comments coming from the opposite side is that people frequently confuse public announcements or the lack thereof with a lack of activity in policy development. One of the first steps the coalition government took in 2013 was to instigate a significant review of taxation so that we would understand the consequences of various actions. Part of that commitment was to work through what those consequences were. We felt that was important because when we came into government we inherited commitments made by the Labor government that locked in structural spending, and the revenue was not there to support that structural spending.

In actual fact, in 2013 spending increases were some $7½ billion more than revenue over the forward estimates. The minerals rent resource tax, which my colleague Senator Edwards mentioned just before, is the typical case of policy which was made on the run by the Labor Party so that they could rush something out. At the moment they are encouraging us to rush stuff out, like they did with the MRRT. That tax was forecast to raise billions of dollars, because it was based on the returns Labor felt the mining industry was achieving at the time. The problem is that, as we all know, world circumstances have changed, so those returns are lower. But even at the time, 2013 into 2014, that tax was delivering significantly less than Labor planned. The problem was that they had already locked in structural spending commitments based on revenue that they did not have. Part of the reason that Australia now has such a high debt that we are borrowing money to pay the interest on that debt is that those spending measures have been locked in.

Part of this coalition government's election commitment was to get rid of some of those spending commitments, because the revenue that was supposed to support them did not eventuate. We did manage to get rid of some, but many of those measures and much of the savings—in fact even some of the savings measures that Labor themselves had proposed at the 2013 election—Labor subsequently refused to support here in the Senate. It is a bit like saying you don't like the direction the Titanic is on, yet you are chaining the steering wheel or the helm so that the government has limited ability to change its direction. If you want us to reduce the structural spending that the Labor Party put in place then you need to allow the government freedom of action to implement its policies. There is no point claiming that the government has a spending problem of our making when we inherited it from the now opposition and the now opposition has consistently blocked attempts by this government to make the savings measures that it promised to make during the election.

So the reality is that there is a spending problem in Australia that has a significantly greater impact than the revenue problem. Revenue is an issue. We are seeing declining revenue because of the decline in the mining sector, but even before this most recent decline occurred, as highlighted back in 2013 at the time of the election, we had already seen that the former government committed to spending that was not matched by revenue, and that has to be undone if Australia is going to be on a sustainable footing. Just as any household knows that they cannot commit to more spending than income being earned, this Senate needs to recognise that the government has a mandate to get spending under control. This Senate needs to be prepared to work with the government to allow us to pass the very savings measures that we have put forward so that we can put Australia's economy onto a sustainable basis into the future.