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Monday, 27 May 2013
Page: 3660


Mr HOCKEY (North Sydney) (12:02): The Labor government has introduced its sixth budget. As we say, we have grave concerns about that budget. It has betrayed the trust of the Australian people because on more than 500 occasions the Prime Minister, the Treasurer and a range of others in the government promised a surplus. This year that promise has been broken. There will be no surplus this year. There will be no surplus next year. There will be no surplus the year after. A balance will be delivered in 2016. If anyone is around four years time, that will be when Labor delivers its first budget surplus—after what was previously described as a 'temporary' deficit in 2008. If a temporary deficit in 2008 looks like being seven deficits in a row, that would have made World War II very temporary. It went for six years—less than the deficit period of the Labor Party. But still their bravado, their chutzpah shows no limit.

I could not believe this. I had to reread it and then I sourced the document. The Treasurer on 22 May last week at a doorstop in Melbourne said:

No other government in our history has done what we have done in this recent Budget, …

He is right. I do not dispute that. No-one has done what this Treasurer has done in the recent budget! He is absolutely right. But then it gets better. He continued:

… which is bring the Budget back to surplus—

Mr Hartsuyker: Well, he hasn't done that yet!

Mr HOCKEY: No, that has not happened. But then, to be fair to him, he says, 'over time'. I am glad he put that condition on it. The member for Batman would welcome that. It just goes to prove that, even after deliberately misleading the Australian people on hundreds of occasions, the Treasurer still has the gall on 22 May—yes, this year, 2013—to say emphatically:

No other government in our history—

in the history of the world, ever, throughout time—

has done what we have done in this recent Budget, which is bring the Budget back to surplus over time …

Fair dinkum. That is what he said.

Labor have never delivered a surplus and never will. It is not in their DNA. That was best illustrated by the carbon tax package, when they raised the tax and then spent all of the money and more, and the mining tax package, where they raised the tax and then spent money against it, and more. If, on individual taxes like that, the government not only go to spend it but actually go to spend more, then that would say to you this is not a government that is capable of living within its means.

So there is a clear sign that the Treasurer is delusional, and I think I have some basis for saying so. Last week, he was asked about the Parliamentary Budget Office report into the structural position of the budget. There were two reports released last week on the structural position of the budget. They happened to come out on the same day that I was giving a response to the budget at the Press Club—but I will give the Parliamentary Budget Office the benefit of the doubt in that. And then there was this working paper from the Treasury that was released that day. That was a pretty rapid turnaround, as the Treasurer announced that he had asked Treasury to do that just a few days before and had to backfill, and then said he had asked them some months before. We have been asking for it for two years, but that was lost. So we welcome the structural papers. But this is what the Treasurer said about the structural balance report from the Parliamentary Budget Office:

I've had a brief look at that material from the Parliamentary Budget Office and what it shows is that the structural deficit started as far back as 2001-02 and really accelerated under the final years of the Howard Costello Government …

This guy is a comedian. Wayne Swan should be a stand-up comedian. He is wasted in politics! He is the Jerry Seinfeld of modern-day Australian politics. He is in his own league. Where he gets this figure from, that 'the structural deficit started as far back as 2001-02', is just beyond me. I was looking carefully at the chart on page 2, and it actually shows structural surpluses all the way throughout the coalition government. So now, not only is the Treasurer content to say he is delivering the best budget in history, not only has he spent years claiming that deficits were surpluses, but he is now trying to claim that surpluses were deficits—because, under Labor, deficits have magically become surpluses over the years and, under the coalition, in his view, a surplus really is a deficit. What logic. Everything is roundabout. Everything is the other way around. Maybe he could compete with Mem Fox, writing children's literature, fanciful stories—a book titled When the Deficit Became a Surplus and the Surplus Became a Deficit, by Wayne Swan. How absurd.

This report shows that every year under the coalition there was a structural surplus and every year under Labor there is a structural deficit. It also happens to be the case under this report that it is quite clear we got the budget back into good shape. No-one in Australia in May 2007, our final year, when Peter Costello delivered the last coalition budget, for a moment suggested the surplus should have been bigger. No-one held up their hand and said: 'Hang on, don't give us tax cuts! Really, you should be hoarding that cash and having larger surpluses.' Wayne Swan was so opposed to that so-called looming structural deficit that he embraced the tax cuts at the 2007 election and then delivered them. Of course, he was wise beyond his days. The Treasurer had the view that somehow he foresaw the huge surge in the terms of trade.

There is a terrific graph on page 8 of the Parliamentary Budget Office document that shows the massive surge in the terms of trade, which then benefited the government because it created a cyclical variation, which in turn illustrated that it would have a deficit on top of the tax cuts, a structural deficit. That graph shows you how lucky Labor has been. The terms of trade just keep going up. In fact, in June 2012—and from the budget papers in the years beyond—you can see the terms of trade way beyond anything the coalition had.

This revisionism, this new way of approaching the history not just as it occurred but the history as it is written, from the Treasurer is quite amazing. But it does not stop with his interpretation of events. It is even better, as evidenced in this budget itself. The Treasurer said, 'I am proud of this budget; I am proud of all the numbers.' And so on.

I said on budget night that we will unpeel this onion. We are going to do it piece by piece. Another piece came off today. We were questioning how on earth it is possible that you can have revenue forecasts for traded carbon permits out of Europe at around $6 to $7 a tonne and yet the government is forecasting revenue at over $12 a tonne going up to $28 a tonne. How is it that the government in the Treasury papers completely ignores the market pricing of carbon permits in Europe but manages still to say that it is going to proceed with it and, in fact, it is going to end up with $38 a tonne by the end of the decade? How do they do that?

We had climate change officials appear before Senate estimates today. A report says that the department's deputy secretary, Steven Kennedy, told a Senate hearing in Canberra this morning: 'The projection method, as I understand it, is a straight-line method.' This is an extraordinarily new development in economic modelling—the straight-line method, where there is a market. Let us get this right. Dr Kennedy said: 'Although it was common for budget forecasts to be based on market trends'—no, you don't want to do that! Don't think about the market for a moment. We consider the market when it comes to the Australian dollar and we consider the market on commodity prices, but when it comes to carbon trading—'No, leave the market behind.' Dr Kennedy said:

… although it was common for budget forecasts to be based on market trends, Treasury officials—

that is a buck pass in the great Yes Minister tradition; it does not talk about department of climate change but Treasury officials—

had opted to draw a line between market prices in 2014-15—about $5.60—to the $38 projection in 2019-20 contained in the Gillard government's initial carbon scheme.

But he said questions about "the pros and cons" of the modelling needed to be directed to Treasury.

Mr Hartsuyker: Aha!

Mr HOCKEY: Aha! That is where it is at. I see—the department of climate change has nothing to do with the forecast revenue about climate change. No, that is Treasury. Treasury has come up with this figure of $12.10. That is quite interesting. It is interesting because you saw the hot potato travel faster than a speeding bullet from Senate estimates across to the Treasury building, so when Treasury appear they can explain it. But what is more revealing is that we now have a new economic model in Australia called the straight line. The straight line comes about like this. You lick your finger and then you draw a line upwards. That is how you do it. A fantastic new form of economic modelling: the straight-line model! It is pretty simple. You can use a ruler, you can wet your finger, and have rising revenue. Rarely do you wet your finger and have falling revenue—no, that does not suit the government's case. This is a new economic model that only goes in one direction.

This is a classic example of why this budget just does not stand up. They knew we were looking at this. They knew we had been looking at the modelling in relation to the mining tax. We got it right on the mining tax. We will get it right on the carbon tax. At some point someone has to tell the truth about the state of the budget. But, whilst Labor is in office, you will never get the truth, whether it be the historical truth or the truth about what is real today.