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Wednesday, 4 February 2009
Page: 299


Mr ROBERT (6:58 PM) — I rise to speak on the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and cognate bills. There is an ugly fellowship, a not-so-secret society that exists today. It is called the fellowship of the deficit. It remains unique. It knows no bounds. It has no restraints. It is confined to no faction. It imposes no intellectual requirement nor geographic location. In the words of the mantra, union membership is required and blind adherence to collectivism is needed. No other circumstance or condition whatsoever save the merit of lazy spending shall entitle a Labor leader to membership of the fellowship of the deficit—as all postwar Labor leaders have become members.

So today the coalition draws a line in the sand—a line that divides the experienced, prudent economic management of the coalition from a panicked, deficit-ready government; a line that divides a coalition that paid off the last Labor government’s exorbitant $96 billion debt from this Labor government that presented a bill of one page to thrust this country into up to $200 billion worth of debt. Today we draw a line in the sand that divides the coalition, as being those clearly able to manage money, from a Labor government with a long line of deficits from Whitlam, Hawke, Keating and now the current Prime Minister.

This Prime Minister has demanded that the parliament approve his plans for $42 billion in expenditure, with every cent borrowed, and has given us 48 hours in which to consider this package. That is a billion dollars an hour. He has refused to discuss, let alone negotiate, the package with the coalition. Almost all economists agree that the recession has a long way to go. This will not be a V recession. We pray that it will not be an L recession. It may likely be a U recession. Yet the Rudd Labor government is panicking. It has loaded its magazine and fired off all the rounds in one burst rather than a few highly targeted rounds with enough left in the magazine to see through the action.

Even with this reckless handout of cash and massive, debt-fuelled spending, the Prime Minister’s package still predicts unemployment topping seven per cent in just over a year—a third of a million Australians out of work. In 1996 the previous Labor government left a legacy of a $96 billion debt, of unpaid and unaccounted for super liabilities approaching $60 billion, of interest payments and a debt of $8 billion a year. When you add it all together about $200 billion of debt remained unfunded, with unpaid super liabilities and interest payments. It took 11 years to pay off that $200 billion, and now, with the stroke of a pen, within 12 months, this government is seeking to put the nation back into the same parlous economic position that we dragged the country out of over 11½ years.

The question is: what has caused this panic? What has caused this economic conservative, or should I say social democrat, or was it Christian democrat—I can’t keep up—to panic? History going back to October 2008 will illuminate this a little more. On 10 October the Leader of the Opposition and the shadow Treasurer called on the Rudd government to take three immediate decisions to strengthen the Australian economy: increase the proposed government backed deposit guarantee to $100,000; increase the investment in AAA rated residential mortgage backed securities through the Australian Office of Financial Management; and announce it would defer the implementation of an emissions trading scheme. Yet, not to be outdone, two days later on 12 October, the Prime Minister announced an unlimited deposit guarantee—heaven forbid if he were to agree with the opposition leader—to operate for a period of three years and a guarantee of wholesale term funding by authorised deposit-taking institutions in return for a fee. The Prime Minister told Australians he was acting on the best advice of the regulators. On 12 October he said in a press release:

My officials have done considerable work on the design of these arrangements and, in developing these measures, I have received advice from the Governor of the Reserve Bank of Australia …

You can imagine our shock, surprise and indeed horror when on 21 October it was confirmed that the Prime Minister had not directly consulted with the Governor of the Reserve Bank prior to announcing the unlimited guarantee.

On 22 October, during the Senate estimates process, we learnt that the decision to increase the deposit guarantee was an entirely political decision in response to the Leader of the Opposition calling for a $100,000 scheme. The government had initially claimed that it had been working on the detail of its bank guarantee policy for over a week and that the weekend meeting was merely to finalise details. With the savings of thousands of Australians frozen due to the unlimited guarantee, the Treasurer said to go to Centrelink. On 23 October he said in a press conference—and I will quote him, just so you do not get confused:

So I say to the people who are adversely affected by some of these decisions that have been taken in these managed investment funds, do fully investigate your eligibility for income support through Centrelink, that’s what I say to them.

On 25 November the Treasurer denied ever having made his callous and disrespectful remarks. On 25 November, he said:

I did not say that all people in managed investment funds who were experiencing problems should go to Centrelink.

Clearly there is a problem there, isn’t there, Mr Treasurer? On 24 October the Treasurer announced that a $1 million cap would now apply. The exclusion of foreign bank branches from the guarantee clearly resulted in a rush of transfers from foreign bank branches to banks covered by the guarantee. On 28 October the government finally sorted out the anomaly of foreign bank branches being excluded from the guarantee while foreign subsidiary banks had been included. Clearly this caused considerable problems.

We have had panic after panic after panic. But the panic continued, like the running of the bulls at Pamplona. The Labor government then spent $10.4 billion, with no economic analysis from Treasury. There was no modelling. There was no analysis that could be considered as to the impact of the stimulus. That was half their fallacious forecasted budget surplus, with no modelling. They stated it would create 75,000 jobs, yet every indication is that jobs have disappeared since that time.

Now, after all that panic from 10 October right the way through—not a sound decision throughout—we move up to the latest curtain-raiser, with the Prime Minister planning to plunge Australia into debt with a poorly considered, for the most part non-productive and ineffective, $42 billion fiscal stimulus package, with every cent borrowed, with every cent to be paid off by the next generation, by your and my children. Furthermore, the government is looking to increase bond issuance by a further $125 billion to $200 billion to finance the debt. This, combined with the state Labor debt of almost $100 billion, means that Labor governments across the country are looking to rack up public debt of almost a third of a trillion dollars—three thousand million dollars. That must be paid off with interest. That must be paid off by future generations.

It look 11½ years of the magic of the Howard-Costello government to pay off the last $200 billion left by a Labor government. Likewise, the excesses of the Whitlam years were paid off by the coalition government that followed. The Howard government paid off the recklessness of the debt left by the Hawke-Keating years. I can see it now—the $200 billion recklessness of the Prime Minister Rudd years will again have to be paid off by the real economic conservatives in this country, the coalition. The federal debt of $200 billion is 9½ thousand dollars for every man, woman and child.

The Treasurer has learnt from saying that the last stimulus would create 75,000 jobs. This one is only going to support 90,000 jobs. That is $470,000 per job. Great mathematics, Mr Treasurer. You ask: why does the coalition steadfastly refuse to back this ludicrous plan? We have drawn a line in the sand.

And what is the plan to pay it back? Yesterday and today in question time the Treasurer stated that as soon as the economy starts to grow above the trend they will start to think to pay it back. ‘As soon as the economy automatically recovers’, as if we were praying to the automatic gods for the economy to recover by itself, when it moves above the trend. What does ‘above the trend’ actually mean? There is zero plan to pay back a fifth of a trillion dollars of debt, and that is reprehensible.

On the other side of the ledger, the real economic managers, the real economic conservatives, have proposed permanent tax cuts currently scheduled for 1 July 2009 and 1 July 2010 to be brought forward and backdated to 1 January this year. The opposition leader has stated that by the middle of 2010 this would leave a two-income household earning $80,000 approximately $1,700 better off. Perhaps the largest gap in the government package is the lack of measures that directly and broadly support employment, particularly employment in the small to medium business sector which, as the minister across the table would know, accounts for almost 50 per cent of employment in the country.

Whilst accelerated depreciation, which is less than eight per cent of what the government is proposing, has some merit, the coalition believes measures that more directly and immediately improve the cash-flow position of small firms and help them protect and create jobs are preferable. One proposal the coalition is seeking to discuss with the government is the Commonwealth paying a portion of the superannuation guarantee levy on behalf of small employers for the next two years. This measure will directly improve the cash position of small firms, directly reduce the costs of employment and directly contribute to preserving jobs. These measures are fairer, they represent a better targeted and more effective stimulus for the economy and they protect jobs better.

The coalition has invited the government to sit down and discuss alternative stimulus measures which would be responsible and would allow sufficient capacity in public finances to meet emerging challenges. The silence has been somewhat deafening. The coalition is committed to sound economic management and to ensuring that government spending is of high quality and reduces the burden on Australian taxpayers and their children, which is why the current package cannot and will not be supported. A line has been drawn in the sand and the real economic managers will indeed stand up.