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Wednesday, 4 February 2009
Page: 418

Mr RAMSEY (4:05 AM) —I rise to address Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and cognate bills. I point out to the member for Oxley that there is no doubt that governments do have a choice about these issues, and this is a very real choice that your government is making now. It is the responsibility of those in opposition to place checks on government spending to ensure taxpayers’ money is spent wisely. It is the responsibility of oppositions to hold governments accountable. That is what we were elected to do, and that is what this opposition is doing at the moment.

The government calls for bipartisanship, but it has shown absolute contempt for the parliamentary system by demanding the opposition pass its legislation through two houses of parliament in 48 hours. Can you believe that, Madam Deputy Speaker? A $42 billion package, Treasury forecasts predicting a government debt of $118 billion by 2012, asking for permission to nearly triple our borrowing limits to $200 billion, putting a married taxpayer with three children $29½ thousand in debt, and this government, with no prior consultation, demands that we pass these bills, unamended, within 48 hours. The government calls for bipartisanship, but is not even prepared to allow us to look at the legislation before tabling it in this place and demanding it be passed. It is ridiculous to think the government is spending $42 billion of taxpayers’ money while believing that its package is perfect and cannot be improved upon, and that we in opposition have not one suggestion worth considering. So much for bipartisanship! It is reckless, rushed and ill-considered.

After all, just what could anyone do with $42 billion? What truly productive assets could we build for this nation? Perhaps we could build some ports, fix some roads, fix our health system or train some Australian doctors. Perhaps we could provide extra incentives to develop some new green electricity sources or even do something about our water infrastructure instead of just buying up and reallocating licences. But, no—the government do not wish to discuss any of these things with us. They are the holders of all knowledge. Only they have the answers. Is it because they know the situation is far worse than they are telling us that they are panicked into doing something, anything, just so that they can be seen to be doing something? At least they should level with the public and tell them the truth. The coalition believe both the size and some of the priorities of the $42 billion stimulus package announced by the government are ill-considered and leave little flexibility to respond to further challenges.

It will not be a popular move for us to oppose the cash handouts, but it is right for the country and it is right for our children, and sometimes you have to do what you know is right even when you know it will not be not popular. It is, after all, the role of opposition to hold the government accountable to the people of this great nation, and that is just what we shall do. Perhaps the government should ask itself why we would do such a thing if we perceive it as being so unpopular. It is because we know the actions of the government will be a long-term handbrake on the economy. You will remember the former Treasurer Peter Costello’s response to the Intergenerational report: to establish the Future Fund to take some of the liabilities of the baby boomers off the shoulders of future generations, who are declining as a proportion of the population, so that, as we age and inevitably live longer, we will not be condemning our children to a life of comparative poverty, paying for our upkeep. That is why the previous government made the dramatic changes to the Superannuation Act to encourage my generation to save for their own retirement. That is why the government established the Future Fund. This scurry to drive Australia back into debt as fast as we can go undoes much of that. It loads our commitments onto future generations. If we allow this ill-considered package to pass, we bequeath our debt to our children.

Treasury estimates show that within three years the government will have borrowed on behalf of every Australian man, woman and child $5,900. If you have a family of three, by July 2012 the government will owe on your behalf $29,500—either you or your children will have to pay that debt and interest. Retirees will owe the same amount and someone else will have to pay that as well. If you are under the age of 40 you may well remain in the workforce long enough to pay off the debts the government has incurred on your behalf; if you are older than that, almost certainly part or all of that debt will be paid for by your children and grandchildren.

It seems we have economists crawling out from under every bush telling us it is not only acceptable but highly desirable that Australian governments take the taxpayer into debt to prime the stalled economy. By all accounts, if anyone does not accept the necessity of this course of action they have no understanding of a modern economy. It is well worth remembering, though, that all these voices now calling for governments to go back heavily into debt are the very same economists who 12 to 18 months ago could not see the freight train that was the subprime market coming towards them. The same economists who, firstly, could not see the end of the economic boom, who then believed it was just an American problem and who then believed that Australia would be immune because the Chinese economy would not be severely affected now want us to hock up our children’s future and spend our way out of trouble. As my colleague the member for North Sydney said so eloquently yesterday in this place: they will be the same economists who in 10 years tell us to cut the pension by $100, to cut health and defence budgets, to cut the employment programs because Australia is being suffocated by debt.

It is always very easy to give advice when there is no responsibility, but we, the members of the Parliament of Australia, do have responsibilities and we will be held responsible for the debts we authorise the government to run up now, and I am happy to say that this package will not have my approval unless I have much better information than I am currently provided with by the government—and unless they are prepared to negotiate a position with us.

How many times have we been told that running a country is just like running a household budget or a small business? Why is it then that every business manager worth his or her salt is cutting every bit of expenditure not absolutely essential for the day-to-day running of their company and we as a nation are going flat out to build up debt as quickly as we can? I have some experience with running a business long term and the energy it takes to pay off debts. Debt can be well worth it; in fact, it is often instrumental in building a business. But you want to make sure that you are getting something productive for your debt. Debt incurred for consumption is rarely one of the investments you look back on as having given you a return. The $10.4 billion cash splash in December and now the $12.2 billion splurge in this package are all aimed at consumption. They deliver not one income-earning asset for the nation. In total, last December’s package plus the cash in this package—$22.6 billion—almost double the amount of money allocated to saving the Murray. That puts it into context. We should make no mistake: government debt is a debt against the future and either we or our children will have to pay off the debt. When the recovery comes, the more debt we have the slower the recovery will be.

Even more disturbing is that in this group of bills that the government proposes there is a bill enabling unauthorised borrowings to be lifted from $70 billion to $200 billion—alarm bells should be going off everywhere. What do they need the money for? According to the UEFO, they do not need an amount greater than $70 billion for another 18 months or more. Why the urgency to have it passed this week? What is the government hiding? What do they know that they are not telling the Australian people?

It took 10 years to pay back the $96 billion debt left by the last Labor government. The interest on that debt was accumulating at around $10 billion per year. The potential obligations of this headlong rush into debt offer to become a suffocating burden on at least a generation. Is the government calculating the impact of $118 billion debt on the 2012-13 budget? How on earth do they calculate the interest costs on that kind of debt? What if that debt is $200 billion? Having committed to this astronomical debt, what capacity does the government have to respond to further challenges, or have they shot off their whole magazine in the first skirmish?

The world economic crisis is in fact a Labor Party godsend. How else could they have ever justified the enormous spend to meet the high expectations they raised in the community at the time of the last election? Even the significant surpluses of the previous government could not have covered this enormous cash splash. How wonderful for the government! Spend whatever you want and blame the global crisis! How convenient to actually proudly claim political sanctity for their actions. Remember during the election how the now Prime Minister described John Howard as spending money like a ‘drunken sailor’? Excuse me! There are words to describe just how metaphorically inebriated the Prime Minister must now be by comparison, but they are extremely unparliamentary and I cannot use them in this House.

This follows a familiar pattern: Labor governments drive us into debt and blame someone else. The Rudd government have not made one difficult decision since the day they got into office. They just spend, spend and then spend. They spent the Costello surplus, seized the Telecommunications Fund, grabbed the Higher Education Endowment Fund and then spent their own projected surplus. This government of the 42nd Parliament will never deliver a surplus despite the election hypocrisy of the Prime Minister. Now having exhausted every available bit of cash not superglued to the footpath they set about spending our kids’ lunch money. They are spending the tax dollars of a generation of children not in the workforce yet. Many of them are at primary school. The decisions we make here have the probability of affecting the taxpayers of Australia long after we have seen the back of the recession. History will remember this government for a very long time.

Just 15 months ago the Prime Minister with his hand on his heart told the Australian people that he was an economic conservative. Well, we are telling him what a truly conservative party would do in this situation, and he ignores our advice. He refuses to negotiate anything because the only people in his opinion with any wisdom on managing the Australian economy are in the Labor Party cabinet. This is clearly a preposterous proposal. Australia’s most experienced Treasurer of all time sits on this side of the House. We have a wealth of experience and knowledge but the Prime Minister refuses to even talk to us. The Prime Minister committed to delivering surpluses on average through the economic cycle. It is now obvious what that economic cycle is: when Labor are in power they run up debt; when the coalition are in power we have to pay it off and wear the odium of being the financial misers. That is the Prime Minister’s version of an economic cycle.

Every day in this House someone from the Labor Party asks us why the previous government did not spend more on national infrastructure while in power. It is because they were paying off the mismanagement, the wastefulness, the profligacy of the previous Labor regime—the $96 billion debt. And now we are heading back to exactly the same position and worse.

Parts of this package do have merit and the coalition would have welcomed the chance to work with the government on it. The coalition is in favour of a more modest package of between $15 billion and $20 billion and a reintroduction of the Investing in Our Schools Program to the tune of around $3 billion. Schools know how good this program was and would welcome its return at a higher level. True, it is not the $14.5 billion that the government is proposing but it is also true that we are not expecting the students at school now to pay for their own libraries and recreation halls, which is what this bill is proposing to do. We would bring forward the tax cuts program for July. This would provide a targeted package to low- and middle-income earners. It would have a temporary impact on the budget but would provide a long-term benefit because those tax cuts are due to be implemented in August anyhow.

We will back a house insulation scheme, but it should be means tested and have joint funding commitment from the owner and the government. I have serious doubts about the industry’s ability to supply the huge amount of material needed for the job proposed, and it is highly likely that much of it will be imported—thus exporting Australian tax to support jobs overseas. The no-contribution installation proposed by this bill will lead to a huge and rapid expansion of contractors chasing the government dollar, with the accompanying substandard work which happens when we have over-rapid expansion in any industry. Then, what next? When the money runs out or the program is completed, we will see the industry collapse and they will all be competing for insulation in the new-house-only market. By contrast, a more modest scheme, partially funded by the consumer, will provide a stimulus while ensuring the industry can at first cope and then cope when the program inevitably comes to an end.

The government, even after this package, expects unemployment to rise to seven per cent in the next 17 months. There are no incentives to business to keep their staff employed. The coalition proposes temporary government assistance to help pay the superannuation guarantee. This would help all employers keep staff employed and provide help to exporters and the tourism, aged care, technology and education industries—not just to the insulation industry.

There is absolutely nothing in this package for exporters. For those who have a limited understanding of economics, the recirculation of money is governed by the laws of diminishing returns. A portion of it, often the largest portion of it, is lost overseas every time the money goes around the merry-go-round. The only way this money can be replaced is with exports. Without exports, our economy is dead. But there is no recognition of that in this package; there is no realisation that the export dollar ultimately determines our standard of living.

Remember when all the pundits said only a few months ago that China would not be affected by deteriorating markets—that they had an ample domestic demand to sustain their growth? Where are those economic geniuses now? Many of them are the same economic geniuses sooling on the government to go into extravagant levels of debt. There is no recognition of the importance of exporters to the Australian economy. Instead, the government is looking to a consumer-led recovery: exhorting Australians to spend their cash handouts on widescreen TVs, poker machines, coffee shops, computer games and movies, and telling us that this will save the economy. I am very pleased that the Treasurer has come into the chamber to hear this. Pardon my scepticism—and that is not to particularly denigrate any one of those particular products—but none of them earn those irreplaceable export dollars.

Cash handouts are undoubtedly popular, but do they do the job? There is no evidence that the $10.4 billion cash splash before Christmas has provided the 75,000 jobs Mr Rudd said it would. Before we even know what the Christmas fistful of cash did for the economy, the government is going to throw another $12.2 billion in cash—our children’s money—out in the same manner. It is other people’s money to be paid back long after this government is gone. There is no regard at all for the parliamentary process. This is the highest level of debt as a percentage of GDP seen in this country in the last 40 years and there is no plan on how to repay that debt. It is dangerous and not publicly justified in a quantitative sense, and it is a wasteful package This legislation should not be supported.