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Thursday, 10 May 2012
Page: 3121

Budget

Senator CORMANN (Western Australia) (14:01): My question is to the minister representing the Treasurer, Senator Wong. Why does a government which is promising surpluses for each single year over the forward estimates have to pay $1.2 billion more in net interest payments to service its debts in 2015-16 than it does in 2012-13? Is the government expected government borrowings to go up over that period or interest rates or both?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:02): As I explained yesterday, both gross debt and net debt as a proportion of GDP peak in 2011-12. Obviously Treasury make certain assumptions about the size of the CGS as well as what the relevant interest rate will be in terms of estimating going forward. I would make this point when we talk about budget costings from those on the other side—

Opposition senators interjecting—

Senator WONG: You are very precious about this whenever anybody mentions the fact that you have no credibility when it comes to the budget, that your economic team keeps delivering mistake after mistake after mistake.

Senator Cormann interjecting—

Senator WONG: Senator Cormann clearly keeps betting. You always have to take a point of order because you do not want anybody to know. It is very, very precious, isn't it!

Senator Cormann: Mr President, on a point of order: I cannot see how the minister's abuse can in any way be directly relevant to the question. My question was why the government has to pay more interest on its debt in 2015-16 than in 2012-13 when they are telling us they will have surpluses over this period. I want to know very specifically, from the minister, whether the government expect government borrowings to go up or whether they expect interest rates to go up or whether they expect both to go up. That is the specific question, and none of the minister's answer so far were directly relevant to the question.

The PRESIDENT: Order! I believe the minister has been addressing the question. The minister has a minute and 15 seconds remaining.

Senator WONG: Thank you, Mr President. It is the case, if Senator Cormann considers the budget papers—and I assume he has—that there is an increase in 2015-16 in the net interest payment line. This is due to the maturing of a Treasury index bond line in that year. In that year all of the capitalised indexation of the principal is accounted for as interest and this adds to the net interest in that year over and above what normal interest on those bonds would be. This is explained in the budget papers at page 714.

We have laid out our path to surplus. We have demonstrated how we will grow the surplus over time every year of the forward estimates. We have ensured that we remain below the level of taxation that Treasurer Costello bequeathed to us. We have made sure we have constrained payments as a share of the economy to a level not seen over the forward estimates since the 1980s. I invite those on the other side who think that the Liberal Party should actually be a party that is fiscally responsible to demonstrate that they are, because at the moment their economic team is characterised— (Time expired)

Senator CORMANN (Western Australia) (14:05): Mr President, I have a supplementary question. How many schools, hospitals or roads could the government fund if it did not have to pay $29 billion in net interest payments to service the debt Labor has accumulated over the past 4½ years in government?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:05): I am asked about schools funding and hospitals funding. I remind those opposite that we have almost doubled schools funding. That is what this government has done. I remind those opposite of the increase in expenditure on hospitals, when they are led by a man who took $1 billion out of the public hospital system. But, if you want to talk to us about cuts, how many schools will you close to make your $70 billion black hole?

Government senators interjecting—

Opposition senators interjecting—

The PRESIDENT: Order! I will ask Senator Wong to resume when there is silence on both sides.

Senator WONG: Thank you, Mr President. Those opposite should tell the Australian people how many schools and hospitals they will close to fill their $70 billion black hole. They are now locked into a pledge for a surplus of one per cent of GDP this year. A $15 billion surplus is what they said. You would have to pay no Medicare next year. You would have to pay no Medicare to anyone in Australia for all of 2012-13 to make the promise you have made.

Senator CORMANN (Western Australia) (14:07): Mr President, I ask a further supplementary question. Is the minister aware that, once the coalition had paid off $96 billion of Hawke-Keating Labor debt, the government actually received net interest payments instead of having to pay $29 billion in net interest? Isn't this another stark demonstration that Labor does not know how to manage money and that it always comes down to the coalition to fix up Labor's fiscal mess?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:07): I am asked about former Treasurer Costello. Quite clearly the regard with which former Treasurer Costello holds the current economic team on that side of the chamber is demonstrated by his desire to return, his desire to ride again, his desire to get back into this place, because he knows those on the other side are incapable of putting a budget bottom line together.

Opposition senators interjecting—

Senator WONG: And here come the precious petals again.

The PRESIDENT: Order! Senator Wong, you need to come to the question.

Honourable senators interjecting—

The PRESIDENT: Order! On both sides. Senator Wong, you do need to come to the question. You have 35 seconds remaining.

Senator WONG: I was asked a very political question about Mr Peter Costello and I responded in kind. I regret that his former allies on that side are so silent when required to defend him.

Senator Brandis: Mr President, I raise a point of order on relevance and also on obedience to the chair. You asked the minister to come to the question. She is with contempt defying your ruling, and if the authority of the chair is to be defended you must insist that she obey your ruling.

Senator Jacinta Collins interjecting—

The PRESIDENT: Senator Collins, there is no point of order.

Senator Jacinta Collins: Yes, but you can't let him get away with that.

The PRESIDENT: Order! I have drawn the minister's attention to the question. The minister now has 17 seconds to address the question and I draw the minister's attention to the question.

Senator WONG: The reality is that I was asked to reflect on the coalition's record versus Labor's record. What I say is that this coalition has never yet done a budget bottom line which adds up, not once. They have never done it once. (Time expired)