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Monday, 24 May 2010
Page: 3674

Mr ROBB (1:32 PM) —I rise to comment on the budget brought down nearly two weeks ago in the Appropriation Bill (No. 1) 2010-2011 and related bills. The fact of the matter is that this government inherited perhaps the strongest economy in the Western World. It inherited an economy that had had 16 years of economic growth. It inherited an economy with zero government debt and close to $50 billion in reserve. It inherited an economy with unemployment at four per cent—almost a historic low. This provided the basis to deal with the unexpected global financial crisis. Every other country of any consequence—the developed countries, at least—went into the global financial crisis with significant government debt, no reserves and much higher unemployment. And we have seen the outcome. It is no different from the situation at a family level in the suburbs: if one individual and his family have no mortgage, $80,000 or $90,000 in the bank and a job, while their neighbour has a $450,000 mortgage and no money in the bank, who is going to get through a recession more satisfactorily, more effectively? It is common sense. The family that has no debt and has sufficient reserves will be able to position itself, with a prudent approach to budgeting and all the rest, to get comfortably through a downturn, while the neighbour may well end up selling their house at a fire-sale price and moving into rented accommodation and experiencing all the stress that goes with it.

It is exactly the same for the economy on a nationwide level. Our country was in exceptional shape to deal with what was a major recession, especially in the Northern Hemisphere. Yet this government, in the space of 2½ years, has fundamentally undermined the great resilience that characterised this economy. If there is a double-dip recession around the world, our economy will be far more vulnerable to what might happen in the weeks or months ahead. This budget has done absolutely nothing to correct this situation. There are no tough decisions in this budget. This is a coward’s budget. It is the budget of people who live by the politics of the day and have no long-term vision. Where will the Prime Minister take this economy over the next three to six years if given the opportunity? You cannot answer that question. You cannot answer it from what he has done. The only conclusion you can reach is that we will continue to go backwards as a country—in terms of the resilience of our economy, the great drivers of growth in our economy—because this Prime Minister, his Treasurer and other senior colleagues have taken no tough decisions. They have been all talk and no action. There have been hundreds of inquiries and there have been major expectations built up. This Prime Minister is no different from the handyman we all know who starts hundreds of jobs and finishes none of them. He has got no capacity to implement projects.

This government is characterised by some of the most wasteful and mismanaged projects in the country’s history. The pink batts program has wasted billions of dollars. The Building the Education Revolution, the school halls program, has wasted billions and billions of dollars. This government stands condemned for the way in which it has mishandled public moneys but more particularly for the way in which it has panicked and responded over the last 2½ years to the challenges that have been thrown up for this economy. It has overspent in a massive way and this budget does absolutely nothing to address that issue.

This third budget brought down by the Treasurer is a political document, make no mistake about that. It is a political document and is not a document designed to address the challenges and opportunities faced by this country. It is a budget which is not believable. It is a house of cards. It is based on a ‘trust me’ approach, heroic assumptions and great big new taxes. It makes no allowance for any eventuality that might occur overseas. It makes no allowance for the impact of some of these great big new taxes on the ability of some of our stronger sectors to respond, to keep growing and to contribute to the resilience that they have displayed over such a long period of time. Of course the thing that we do know about this budget, one of the few things of any certainty, is that the spending keeps going. It is reckless spending and an insatiable desire to keep spending money to solve problems. The only way in which this Prime Minister and his Treasurer feel that issues can be addressed is to throw more money at them. It is a tax-and-spend budget—tax, borrow and spend. That marks the sort of sorry history of this short-term government.

The government will give us four more years of deficit, all to combat one quarter of negative growth in 2008. The response to that one quarter of negative growth has been to borrow, borrow and borrow again and to spend, spend and spend; so much so that the economy now is not in balance. The reckless spending, which this budget continues, has been the reason we have now got the highest interest rates in the Western world. It is the reason so many families across this country are now finding it extraordinarily difficult to meet their cost of living expenses and are finding it difficult to pay their power bills. Power has gone up 18 to 22 per cent across the nation over the last 12 months, petrol prices have gone up over six per cent over the last 12 months, rates are going through the roof in many areas and fruit and vegetable costs have been above the CPI. Many, many areas of our everyday expenses have well exceeded the CPI, sometimes two, three and four times as high. Yet this government, which came to office making very strong and heartfelt promises about what they would do to the cost of living and how they would deal with the challenges people face every day to meet their budget so as to enable people to live within their means and have some peace of mind, have certainly not shown any of that sort of approach. By example, the government have not lived within their means and this budget does nothing to curtail the reckless spending to bring this government and their bureaucracy back onto course which would see our record debt paid off in due course.

The government will give us four years of deficit. The deficit this year of $57 billion will be the biggest deficit in Australia’s peacetime history. You heard very little mention of what had happened with the current year we are in. They did not want to refer to this $57 billion because it is the highest deficit in our history by a country mile. Also what they did not want to say was that much of that $57 billion, something well in excess of $7 billion, was spent and not programmed in last year’s budget. They have been spending like drunken sailors with the intent of burying that spending in the $57 billion deficit this year and taking some load off next year’s deficit. It is a political budget. They plan to spend and spend in some attempt to misrepresent the figures and their record of spending.

Next year, of course, we are told we will have the second biggest deficit in our history of $40.8 billion. We will believe that when we see it. It is in all likelihood, by the way in which this government are responding, to go higher and higher. We also have not only deficit record levels but a level of net debt of $93 billion, equal to that left by the Keating government. On top of that, of course, they have foreshadowed that they will be borrowing an extra $18 billion in the next four years to fund their national broadband project; the white elephant which will materialise in seven or eight years’ time and, at best, give a return of the bond rate. It is a white elephant that they then expect to sell to somebody with a return at the bond rate. This will be a case of nationalising telecommunications. No other country in the world is heading in the direction to renationalise telecommunications but, of course, this government will. It is something in the order of $110 billion in the next three or four years, then they will add another $8 billion to $15 billion of borrowing to complete that national broadband project.

This is a reckless government. This is a government that thinks you can borrow and spend and that someone else can fix up the problem. The government continues to borrow $100 million a day. It has done so for a year and it will do so for the next two years to meet the forecasts embodied within this budget. It will borrow $100 million a day for this reckless spending. That is every week. Every week, this government is borrowing the equivalent of a world-class new hospital. A world-class new hospital could be built each week with that borrowed money. This is what we are accumulating.

The improvement to the budget bottom line is entirely due to what the government term ‘parameter changes’: stronger economic growth in Australia, with predictions of very high sustained growth, and above-trend growth offshore. They are basing this budget over the next four years on the highest terms of trade in 60 years and they are basing it on $17 billion in new taxes. Of course, another of the accounting tricks is that they classify the revenue from new taxes as savings. It is all spin—it is a disingenuous way of presenting the nation’s books and accounts. It is based on unrealistic assumptions. People can have absolutely no confidence in the quality of the forecasts, in the nature of the outcome or in the suggestion that the government will at the end of three or four years produce a wafer-thin surplus.

This budget does not rely on responsible economic management. There is not a hard decision in this budget to cut the reckless and wasteful government spending. All the cuts in expenditure were targeted in specific areas such as pharmaceuticals, as opposed to broad based programs, with close to 80 per cent of the so-called savings being achieved between 2012-13 and 2013-14. All of this is back-ended and off to the never-never, with no prospect of this government demonstrating any discipline.

We might have expected a lower spending budget, as there is no longer a need for stimulus to counter the global financial crisis and because of the pick-up in commodity prices in China and other economies and the fact that countries are now in many cases streaming out of recession. But what do we find? Over and above what the government forecast last year in the budget for spending this coming year, the year after that and the year after that, we see $26 billion of excess spending. Indeed, there was no winding back of previously allocated stimulus spending despite the very different economic circumstances. Further delays will occur in the school halls program, which will mean that $500 million of stimulus will not be spent until 2011-12, at least three years after the global financial crisis.

This is where the increased spending is now starting to compete heavily with small business trying to access finance. It is starting to compete for all other forms of borrowing by big business, small business and mortgage holders. As a consequence, it is pushing up interest rates. We have now had six interest rate increases in a row. Some of the thousands of young couples who were encouraged last year to take out a mortgage, buy a home and get on with it are this year facing between $4,000 and $5,000 more in mortgage repayments than they expected last year. That is $5,000 they will have to find after tax—they will have to earn an extra $7,000 or $8,000 between them. Many of these young couples will be facing very severe financial problems at present.

This budget is full of accounting tricks. It is full of new taxes and more wasteful spending, including $1 billion to correct the policy failures with boat people, $1 billion to fix up the pink batts program and a $4 billion a year blow-out in government debt interest rates. The government has allocated $536 million, over half a billion dollars, for new health bureaucracies as part of its health reform. This government promised in its health reform not to have any increase in the bureaucracy, yet it has budgeted for an extra half a billion dollars for new health bureaucracies as part of its so-called reform.

At the last election the government promised 36 GP superclinics; of course, only two are fully operational. This is typical—all talk, no action. But, on top of that, this budget says the government will deliver another 23 superclinics, additional to the 36 of which only two have been delivered. How can anyone possibly have any confidence in the promises made by the government? The core beliefs and values of the government have evaporated over the last few months. Their support for things like the emissions trading scheme went out the window. This was a clever accounting trick to ensure that the $10 billion that would have gone to the expenditure line did not occur and therefore the ratio of expenditure to GDP was able to stay within the parameters that they had set. It is all artificially created. The government dumped the ETS so that they could create an artificial ratio of expenditure to GDP.

This is a political document; this is not a policy document. They are giving $10 million grants to the Trade Union Education Foundation. They are giving an additional $12 million to the Department of the Prime Minister and Cabinet—that is another 14 per cent increase. The government said they would take a meataxe to the Public Service and yet 20,000 new public servant positions have been created in the space of 2¾ years.

The budget surplus relies solely on a very big new tax on the growth engine of this economy. The sector that helped pull this country through the global financial crisis, the resources sector, will now face a massive retrospective tax which will see our resource sector with 58 per cent effective tax on its operations. By comparison, the nearest to Australia will be the United States at 40 per cent—an 18 per cent greater tax load. It will put in jeopardy, and it has already put in jeopardy and prevented, work to develop $310 billion of new projects. This budget is a political document. It is a confirmation of the tax-and-spend approach of this government. This government is not fit to govern. The only way to turn around our great debt and deficit is to change the government. (Time expired)