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Tuesday, 7 October 2003
Page: 20624


Mr SOMLYAY (2:37 PM) —My question is also to the Treasurer. Would the Treasurer advise the House of the results of the final budget outcome for 2002-03? What is the government's approach to fiscal policy? Are there any alternative approaches?


Mr COSTELLO (Treasurer) —The government reported last week the final budget outcome for the budget ended 30 June 2003. After seven budgets for which we now have a final budget outcome under the Howard government, this was the fifth budget surplus. It was a surplus of $7½ billion or one per cent of GDP. That will reduce Commonwealth net debt. Since this government has been in office, Commonwealth net debt has now been reduced by a record $66 billion.

The budget outcomes prior to the election of this government—and one will bear in mind that the member for Werriwa has just announced that Labor is the party of the surplus rather than the deficit, so it may well be worth reminding the House of this fact—were that, in the last Labor budget, the budget deficit was $10 billion or two per cent of GDP. In the budget before that, the deficit was $13 billion or 2.8 per cent of GDP. In the budget before that, the budget deficit was $17 billion or 3.8 per cent of GDP. In the budget before that, Labor's fourth last budget, it was $17 billion or four per cent of GDP. In the budget before that, it was $11½ billion or 2.9 per cent of GDP.



The SPEAKER —If the member for Rankin persists with audible conversation, I will deal with him.


Mr COSTELLO —The Commonwealth net debt under those five budgets of Labor—and I think the member for Werriwa was in the parliament for all of those budgets—


Mr Latham —No, that's not right.


Mr COSTELLO —What? He was only here for four of those budget deficits? He is absolved; he was only here for four of those budget deficits. The Commonwealth net debt under those budget deficits rocketed to $96 billion. Since the election of this government, we have now reduced that by $66 billion. As I said in the 1996 budget, the coalition had not created the problem of government debt, but the coalition would fix it.



The SPEAKER —I warn the member for Rankin!


Mr COSTELLO —As a consequence of that—and this is the figure I would ask the House to bear in mind—when this government was elected, the servicing of Commonwealth debt required $8.5 billion of taxes. Because that debt has now been reduced by $66 billion, the servicing of Commonwealth debt now requires $3.6 billion. That is a built-in saving to the budget of $5 billion year after year. Because we have reduced debt, we have a recurrent annual saving of $5 billion to the budget.



The SPEAKER —Member for Melbourne!


Mr COSTELLO —If Labor's position were still in place, we would have to raise another $5 billion of taxes to service the Labor debt.



The SPEAKER —For the second time, member for Melbourne!


Mr COSTELLO —But by getting the Labor debt down by that $66 billion, we now have a built-in saving to the Commonwealth budget of $5 billion a year. I say to the taxpayers of Australia: we can therefore have the same outcome on $5 billion of better expenditure or $5 billion of less tax.

I described the member for Werriwa earlier as an Aladdin's cave of conflicting and confused economic analysis. As recently as August, he was complaining that the budget surplus was running on empty. We had a budget outcome of $7½ billion, one per cent of GDP, and the member for Werriwa had this to say on 6 August 2003:

With the budget surplus running on empty, Mr Costello has abandoned responsible fiscal policy ...

Apparently it is not responsible fiscal policy to have a one per cent surplus. Apparently the member for Werriwa—who is now claiming to be the man of fiscal rigour—believes that the one per cent was not enough. What did the member for Lilley say of the member for Werriwa? `Men in tights jumping across the stage yelling slogans'.

The member for Werriwa is trading on the fact that the press will not hold him responsible for his statements. At 11 o'clock at night he is against negative gearing; by 11 o'clock the next day he is in favour of it. In August he thought we were not running a strong enough fiscal policy; today they think it is too great. We will hold the Labor Party accountable. We will make sure that the member for Werriwa is accountable for his statements because the people of Australia need good economic policy, and there is only one side of Australian politics that can deliver good economic policy. It is and always has been the coalition.