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Thursday, 10 May 2012
Page: 3131

Economy

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (14:43): My question is to the Minister representing the Treasurer, Senator Wong. I refer the minister to her comments made on CNBC Asia yesterday in relation to the government's decision to lift Australia's debt limit to a record $300 billion. I quote:

In terms of the debt cap … we in the Budget are anticipating that we will stay below the current legislative debt cap at the end of each of the financial years. There is, however, potential for significant variability, significant variation and fluctuation within the year. That means there’s temporary spikes and dips above and below that debt cap …

If the government is confident that its gross debt will be below $250 billion at the end of each financial year, what is the government's estimate of the outstanding face value of its bonds on 30 June 2014?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:43): First, I stand by my comments to CNBC. It is the same explanation that, I think, I gave in this place and which is in the budget papers and which we have made clear. In terms of the issue that the senator raises, he would be aware that the borrowing limit—and I think he is aware of this because of the way he phrased the question—applies to the face value of bonds on issue. Obviously accounting standards require that the government reflect the current market value. The borrowing limit applies to the face value of bonds on issue.

Honourable senators interjecting—

The PRESIDENT: Order! Senators having a conversation across the chamber does not assist question time at all. The minister has the call.

Senator WONG: The accounting standards applicable on the budget papers require us to reflect the current market value of bonds on issue. Obviously, the market value reflects current bond prices in the secondary markets. Currently, the yields on our bonds are at 60-year lows because global investors obviously have an appetite to invest in bonds as a safe haven instrument.

Senator Joyce: Mr President, my point of order goes to relevance. I appreciate the lecture in accountancy standards—but I am kind of across them. We want to know what the outstanding face value of bonds will be on 30 June 2014.

The PRESIDENT: There is no point of order. The minister is answering the question. The minister has the call.

Senator WONG: Very simply, the government budget discloses the market value of the bonds.

Senator Joyce: Mr President, is that her answer? There is an actual answer.

The PRESIDENT: Senator Joyce, this is not a debating time. The minister has given the answer and it is your chance now to ask a supplementary. Reset the clock, please, Clerk.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (14:46): Thank you very much, Mr President. It is about 249, but she does not seem to know the answer. I ask a supplementary question. I refer the minister to the amendment that her government made in 2008 to section 5 of the Commonwealth Inscribed Stock Act, which allowed the government to borrow to finance within-year deficits outside the legislative debt limit.

Senator Conroy: You're a genius.

Senator JOYCE: If the government will only breach the current $250 billion debt limit for temporary periods within a year, why doesn't the government rely on existing provisions which it introduced—

Senator Conroy interjecting—

The PRESIDENT: Order! Senator Conroy, I need to hear the question.

Senator Conroy: You don't really!

The PRESIDENT: I do.

Senator Conroy interjecting—

The PRESIDENT: Order, Senator Conroy!

Senator JOYCE: Do I start again?

The PRESIDENT: No. Continue.

Senator JOYCE: existing provisions which it introduced to make these borrowings instead of increasing Australia's debt limit to a record $300 billion?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:47): Here we have Senator Joyce coming into this chamber saying he knows better than the Australian Office of Financial Management. He has this tricky little thing he wants us to do and the government of Australia should accept his accounting advice and his advice about how to handle the Commonwealth bond market rather than the advice of the Australian Office of Financial Management. It is not surprising they got you to ask the question!

Senator Ian Macdonald interjecting—

The PRESIDENT: No, Senator Joyce was on his feet before you, Senator Macdonald.

Honourable senators interjecting—

Senator Joyce: The next budget nightmare: NBN.

The PRESIDENT: Wait a minute, Senator Joyce, you have not been given the call. When the chamber is quiet; Senator Joyce now has the call.

Senator Joyce: Mr President, my point of order is on relevance. We are asking a question about section 5 of the Commonwealth Inscribed Stock Act. She is either aware of how it works or unaware of how it works. If she is unaware, she just sits down. If she is aware of how it works, she would realise—

The PRESIDENT: Order! You need to refer to people by their correct title.

Senator Joyce: Minister Wong.

The PRESIDENT: Yes. Keep going. Is that it?

Senator Joyce interjecting—

The PRESIDENT: There is no point of order. The minister has the call.

Senator WONG: What is being asserted and it is—

Senator Cameron: Did you get an explanation why Tony sacked you?

The PRESIDENT: Order, Senator Cameron!

Senator Heffernan interjecting—

The PRESIDENT: Order, Senator Heffernan! Senator Wong has the call.

Senator WONG: Insofar as I can understand what Senator Joyce is saying, I believe he is asserting that the government should do something other than what has been advised by the Australian Office of Financial Management when it comes to the government securities market. I think that is what he is suggesting. My answer to him remains that if it comes to a choice between taking his advice about how to handle the government bond market and the advice of the Australian Office of Financial Management, it is unsurprising who the government would choose.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (14:49): The minister has been unable to answer question 1 of—

The PRESIDENT: It is not a debating time; it is time to ask the question.

Senator JOYCE: It is not even a question time when she cannot answer them.

The PRESIDENT: Senator, you have the chance to ask the question. If you want to ask the question, ask the question. It is not debating time.

Honourable senators interjecting—

The PRESIDENT: Order, on both sides!

Senator JOYCE: She says more sitting down than standing up. You are just incompetent. That is the problem.

The PRESIDENT: When there is silence, Senator Joyce, you will get the call. Senator Joyce.

Senator JOYCE: I ask a further supplementary question. Why does the government need a $50 billion buffer zone if it only expects debt to go above $250 billion for temporary periods and you have the temporary revenue deficits act to deal with it in those periods?

Honourable senators interjecting—

The PRESIDENT: When there is silence on both sides, we will proceed. I remind honourable senators that the time to debate these issues is after question time. The minister has call.

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:50): The Australian Office of Financial Management has given the government clear advice about what is the prudent option and the government has taken that advice and acted on it.

Opposition senators interjecting—

The PRESIDENT: Order! I am waiting to call Senator Xenophon. He is entitled to be heard in silence. Senator Xenophon has the call.