Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Monday, 24 May 2010
Page: 3664

Mr TRUSS (Leader of the Nationals) (12:51 PM) —Today, in this debate on Appropriation Bill (No. 1) 2010-2011 and cognate budget appropriation bills, Appropriation Bill (No. 2) 2010-2011 and Appropriation (Parliamentary Departments) Bill (No. 1) 2010-2011, I want to talk about the third Swan budget—the budget for the 2010-11 financial year. I make that seemingly obvious point because, to date, the vast amount of commentary out of the Labor Party about this budget has been about what it thinks the budget will be in 2012-13. The government’s spin has all been about the possibility of a surplus two years hence rather than the outcome of this budget, which will of course be the second highest peacetime deficit this nation has ever seen, at $40.8 billion. That deficit will come straight after the highest peacetime deficit we have ever seen, $57.1 billion, which is expected this financial year. That will follow a deficit in the first Swan budget double any number our country has previously seen.

The DEPUTY SPEAKER (Ms AE Burke)—The Leader of the Nationals is aware he should use people’s appropriate titles.

Mr TRUSS —Given that none of the major forecasts from any of the first two of this Treasurer’s budgets has turned out to be correct, it is a very brave Australian who would bet on Labor expectations about his third budget. Who would believe that they are likely to be accurate? Heaven forbid he gets a fifth attempt at putting down a budget! For example, in his first budget, we were told Labor would run a $21.7 billion surplus, not due to any hard work by the Rudd government; that surplus was built on the back of the coalition’s strong economic management. Just 12 months later, in May last year, the Treasurer had cocked up things so badly that the surplus had turned into a severe deficit. Not that you would know—in his budget speech the cowardly Treasurer refused to even use the words ‘debt’ or ‘deficit’. Indeed, it took a week to get the Prime Minister or the Treasurer to use the words ‘debt’, ‘315’ and ‘dollars’ in the same sentence.

The same trick was used for budget speech No. 3. Rather than hearing about the $40.8 billion deficit, we heard promises of the budget returning to surplus three years early. Earlier than what, and on whose calculations? On, of course, the Labor Party’s calculations—on last year’s forecasts, which all turned out to be embarrassingly wrong. Why should you believe them this time—particularly when you look at the parameters of these forecasts? They rely on the best terms of trade that Australia has experienced for 60 years. The next three years are going to be better than our country has experienced for 60 years—once more, there is going to be above-trend growth offshore and low inflation in Australia! The reality is that this budget is a giant pea and thimble trick and the people being gulled are the Australian taxpayers.

The entire credibility of the Treasurer’s third budget hangs on numbers which, conveniently for the government, will not become clear or tested until after the next election. Those numbers rely on the national economy, and indeed the international economy, following a linear path. In just a fortnight since the Treasurer handed down his budget, share markets have fallen heavily and the Australian dollar has plummeted by more than 10 per cent against the US dollar. That is because of the government’s proposed great big new tax on the mining sector. Mining shares in particular have been pummelled by fear over Labor’s proposed profits tax on resources. The Australian share market fell $95 billion last week. In the first week, something like $15 billion was wiped off the savings of Australian superannuation funds and mum-and-dad Australians. And yet these are the parameters upon which the government are now asking us to believe that they could return the budget to surplus in three years time.

As a regional Australian, I guess I am used to being at the mercy of changing economic fortunes. For the seven million Australians who create much of our exports and our resulting prosperity, the ups and downs of the economy are very much a part of life. When the city feels higher interest rates, the country feels them much more. When jobs go, they often come from the regions first. Drought and natural disasters hit us harder too. The approach of the Nationals in coalition has always been to try and make life easier for those living in regional Australia—to reward them for their hard work and to give them a helping hand when times are tough—and to make sure that all Australians are able to share in our nation’s growth and prosperity. The federal budget has historically been a large part of that approach, but regional Australia have just seen the sort of budget that fails that very important test. The Treasurer used the word ‘regional’ only once in his budget-night address, and the word ‘agriculture’ did not appear at all. That says something about Labor’s priorities.

The massive debt, nearing $100 billion—and above $220 billion on gross levels—will overhang us all for years to come. The interest bill alone will rise from $4.6 billion this year, through $6.5 billion the following year, to $8 billion. That is enough to complete the Pacific Highway in one year. It is enough to build the hospitals we need. It is enough to build the inland rail twice every year. We will not have the money we want to spend on hospitals, roads and infrastructure because future generations will be paying off this Labor government’s debt—just as 12 years ago, when the coalition came to office, it had to spend the first half of its time, or probably more, paying off the debt of the previous Labor government.

This debt will have a significant impact on all Australians. The government will be out there borrowing $100 million every day to pay for the reckless spending that is being authorised in this budget—$100 million a day. The government will be out there competing with homeowners wanting to borrow for their first home and small business people who need some assistance to carry on their businesses. They will have to compete with a government that is out in the market for $100 million every day to pay for the expenditure in a budget which is clearly out of control.

The Treasurer’s third budget increased taxes and charges by $26 billion. But what is at the centrepiece of this budget? Why do we need to spend another $26 billion? The first part of the centrepiece of this budget is to spend $1 billion to undo Labor’s roof insulation debacle. There is another billion to manage the asylum seekers, who are coming into Australia as a result of Labor’s weakened border protection. There is another billion dollars on the school computer cost overruns. There is another $530 million in extra spending to build a new health bureaucracy, after the federal government backed down to the states on hospital reform and in reality decided to build a bureaucracy rather than to provide better services to the people of Australia. And, of course, there is additional expenditure in a whole range of other areas to patch up the broken promises, to patch up the failed programs of the government.

The budget provides no new money for road funding or regional development. Local government will actually get $1.21 billion less in 2010-11 because of the clawback of an advance payment and the termination of the Community Infrastructure Program. The clawback of the advance payment is because the government is trying to doctor the books to make it look as though they are actually moving towards a surplus when in fact all they have done is transferred expenditure from one year to another.

The budget cuts another $81 million from Caring for Our Country, including $10.9 million from Landcare, as Labor continues its assault on this iconic community based program. In every budget Labor has cut expenditure on Landcare. A party that claims it is interested in the environment, on coming to office abolished the National Heritage Trust and the National Action Plan for Salinity and Water Quality and replaced them with Caring for our Country, but provided $1 billion less in funding. And it continues to take funding away from vital environmental programs.

The regional food producers program is being cut by $5.5 million. Once again, there is no new funding for quarantine—and 250 Customs staff are to be sacked. This is another example of Labor’s soft borders approach, which places the clean and green, disease-free status of our country at risk. Not only is Labor soft on our borders when it comes to defence and immigration; it is also soft on quarantine and soft on Customs.

The budget provides no new funding for the Export Market Development Grants scheme, leaving the fund at least $30 million short in 2009-10 and $80 million short in 2010-11. Once more, the government has halved the funding for TradeStart, the network of offices which are there to assist particularly new exporters to get established in difficult export markets. The government has decided that, in spite of its mounting trade deficit, we no longer need to support our exports, so the assistance they have been relying upon to open up new markets and to get some advice locally has been viciously slashed in this budget.

But, of course, that is not the end of it. The government has decided to spend another $10 billion on the bureaucracy. The Prime Minister’s own department is going to be increased by 32 per cent. But there is a 20 per cent increase in staff for the Australian Public Service Commission to assist agencies with downsizing. So the Public Service Commission needs more staff to tell other offices how to get smaller! In reality, the size of the bureaucracy is growing anyway. The facts are that this is a government that has no control over its expenditure and has been unable to deliver programs on time and within budget.

One of the other astonishing moments in the delivery of the budget was the realisation that the Treasurer had slapped a $1 billion new tax on LPG, hitting something like half a million motorists who have converted their vehicles to LPG. We discovered this fact on the night the budget was delivered, but it seems as though it was not until a day later that the Treasurer knew that he had actually imposed this new tax and was able to confirm to the LPG industry that they would now be a part of the excise regime. So the Treasurer comes into this place, delivers a budget but does not even know what is in the documents himself!

The big, other issue that overhangs this budget is the great big new tax on mining profits. Only a little while ago the government put on the couch in the back room its great big new tax—the Carbon Pollution Reduction Scheme. That was a tax that would have destroyed Australian jobs, encouraged industry to locate offshore and increased the cost of living for all Australians. Now that scheme is dozing, Labor has invented another great big new tax on Australians. This is a tax that will also destroy Australian jobs, encourage industry to invest offshore and increase the cost of living for every Australian. This 40 per cent tax on mining profits will force the tax rate for the sector up to 57 per cent—yet the government claims that this big new super tax will actually increase investment in the mining sector! I have never heard of a tax yet that actually increased investment. The government is in fact putting a significant tax on cigarettes in this budget. They claim the reason for that is to reduce smoking. But when they put an increased tax on the mining sector, that is supposed to make them bigger and stronger. That is clearly a nonsense. It is all about Labor’s approach: spend big and tax even bigger. That is not a satisfactory way to run a country.

The government’s proposed mining tax is not fair. It not only penalises great big mining companies, as the government would lead you to believe, but small, battling mining operations as well. It is not a tax on super profits; it cuts in at the bond rate, five or six per cent—just over breakeven—and the government thinks that is a ‘super’ profit. It is a super tax, but not just on super profits. The reality is that it affects not just big mine operators but small operators as well. And, of course it affects the quarrying industry—the industry that delivers the gravel for your roads, the stones for the landscaping in your front yard, the clay for the bricks in your house. All of these operations are to be caught up in Labor’s great big new tax on the mining sector. They are also proposing, we are told, to justify this tax on the grounds that it will fund a $700 million Infrastructure Fund. That says a lot about the Labor government, which has actually drained dry the Infrastructure Fund that was left to them by the previous government. There is only $700 million left out of the $11 billion that was in place and heading to $40 billion. Labor did not just spend the interest, as was intended for those funds; it actually spent all the capital. So it spent all that money, with little to show for it, and now it wants a $700 million new Infrastructure Fund.

This is a tax on the mining sector. We are told the mining sector needs to deliver more to regional communities, but there is no commitment by the government that this $700 million will be spent in regional communities. There is no guarantee that any of it will go back to the communities that are directly affected by mining. It looks to me like yet another great big Labor slush fund that is likely to appear in marginal electorate promise sheets and that the funding will in fact be directed away from mining communities—the country towns and regional communities that are contributing to our nation’s growth and prosperity through the mining and the resource boom—and spent in capital city electorates where Labor is hanging on to a narrow margin. This is not an infrastructure fund at all. It is a Labor Party election slush fund, and you can count on it appearing regularly during the run-up to the election as Labor tries to hand out goodies to save its bacon in areas where it has clearly neglected the people. The Labor approach is to milk the cash cow until it is dry or burden the cow’s owner so much that he ships his cow overseas to a greener pasture, and it is only the Australian Labor Party that cannot see the folly of this policy.

Relative mining minor minnows like Papua New Guinea, Zambia and Mongolia have seen the error of their ways and dumped similar mining taxes. The Zambian tax lasted all of a year before President Rupiah Banda consigned it to history. He was blunt last year about the effect that the tax had upon his country: ‘We must ensure that we do not kill the goose that lays the golden egg. There is little point in taking a few million in tax if thousands of jobs are lost.’ What is obvious to the Zambian President is apparently not obvious to our Treasurer and the Labor government—or does the government think that the tax is going to work differently in Australia from how it worked in New Guinea, Zambia or Mongolia? Does the government still hold onto this quite ridiculous notion that somehow or other higher taxes mean more investment and a more prosperous country? The reality is that countries like the United States, Canada, Brazil and China are all looking forward to this tax because they know that it will result in industries being transferred to their country, to jobs being created there. Countries that have much lower tax regimes than Australia are certain to be the big winners from this foolishness on the Labor Party’s side.

In government, let me make it clear, we will be adopting a different approach. We will rein in Labor’s reckless spending, getting Australia back into surplus far quicker than Labor ever could. There is a question of trust and form. We have the form. We paid back Labor’s debt of $96 billion left to us in 1996. Labor has form too. It has never got out of debt once it started down that track—never in history. It took the Hawke-Keating governments just 13 years to rack up a $96 billion debt. It has taken the Rudd-Swan government just three years—three years for the same amount of debt. Under the coalition’s approach, we will take pressure off increased interest rates and the cost of living with savings of $46.7 billion that have already been identified. That is made up of $24.7 billion from recurrent spending and $22 billion in one-off capital savings. Our plan is there. It is in print and it is costed. In contrast, Labor in opposition could announce only $3 billion worth of savings ahead of the 2007 election, and then another $7 billion on the eve of election day.

A predecessor of the Treasurer once boasted the title ‘The world’s best Treasurer’—the unlamented Paul Keating. This current Treasurer, Wayne Swan, is the world’s worst Treasurer. He has been able to turn a record surplus into a record deficit in just a few months. He has been able to chalk up unprecedented debt at unprecedented speed, and he has been able to turn a prosperous country that pays its own way into a debtor nation that will be mortgaging the future of generations. That is his legacy. That is the legacy of this budget. He cannot be trusted with another one.