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Monday, 27 May 2013
Page: 3671


Mr ROBB (Goldstein) (12:48): This budget again confirms that the government has a spending problem and a forecasting problem, not a revenue problem. Under this Treasurer and the Minister for Finance and Deregulation, Penny Wong, this government spent $192 billion more than it raised in the past five years. Expenditure as a percentage of GDP has remained higher under every year of Labor than it was under the last two years of the Howard government. Revenue for 2013-14 is projected to be $80 billion higher than it was at the end of the Howard government, yet spending this year will be $120 billion higher. The most up-to-date figures, released last Friday, show that $304 billion in revenue was raised through to April. This compares to $284 billion at the same time last year—an increase of more than seven per cent. Not many households, businesses or workers would be bemoaning this type of increase.

The hits to revenue the government constantly blames for its mismanagement are in fact hits to pollyanna forecasts. The government have consistently treated their most inconsistent forecasts about revenue growth as gospel. They lock in spending at those levels and then cry, 'Woe is me!' when the forecasts are never realised despite revenue continuing to steadily grow.

It must be highlighted that the terms of trade remain extraordinarily high—15 per cent higher than at any other time during the Howard government. Labor has wasted this mining boom. In fact, what you see this morning in today's paper is evidence that Labor is prematurely killing off the mining boom. We see a front-page article: 'Gas boom at risk from rising costs.' It says:

AUSTRALIA is missing out on a $100 billion surge in the resources boom as exorbitant costs … force global companies to reconsider their investment plans.

Workplace disputes and overlapping "green-tape" regimes are being blamed for driving up costs at major gas export facilities, as new research from McKinsey & Company shows the nation has lost a crucial pricing advantage when shipping gas to Asia.

Company executives are … warning that Australia faces a narrow "window of opportunity"—

and are calling for—

"significant national leadership" to lift productivity and improve industrial relations.

You will not get this leadership from this government and this budget. You see in this budget, despite the developments I have just referred to, despite the evidence on the ground, claims that the mining tax will raise just $200 million this year and will somehow miraculously raise $2.2 billion in 2016-17. It simply cannot be believed.

The ultimate symbol of budget chaos occurred in the weeks preceding the budget. On 21 April, the Treasurer whined about a supposed sledgehammer hit to revenue of $7.5 billion. A week later, the Prime Minister bemoaned a $12 billion hit to revenue. Then a week after that Senator Wong complained that it was a $17 billion hit. What perception does this leave with the business sector, with investors? What does it leave with households when you have this chaos, this weekly change of massive amounts from $7.5 billion up to $17 billion in the space of two weeks, rewriting the revenue downgrade?

Labor will have delivered 12 deficits from its last 12 budgets. The last Labor surplus was in 1989. As the business community has observed, Labor has lost control of the nation's finances. Despite all the talk about belt tightening and fiscal consolidation, the budget papers shows that spending continues to increase not decrease. Table 2 on page 75 of budget paper No. 2 shows that government spending over 2012-13 and 2013-14 actually increases by $2.2 billion. So much for belt tightening. The same table also reveals $464 million of spending in the category of 'Decisions taken but not yet announced' for 2012-13. Without doubt, this will form part of Labor's election slush fund—hundreds of millions of dollars hidden in the budget papers for later announcement in the run-down to an election.

This is the government that says it is being prudent with the nation's finances. These problems should have been anticipated. For more than three years we have called for the budget papers to include an update on the structural state of the budget. In the 2009-10 budget there was such an update. It showed a structural deficit at that time of around four per cent of GDP, about $50 billion. This was an embarrassment to the Treasurer and the Prime Minister. As a consequence, we have not since seen any structural deficits produced in budget papers. That piece of work back in 2009-10 showed that the budget would return to structural balance in 2015-16. It showed that the budget would be restored to a position of structural surplus of two per cent of GDP by 2020.

In other words, it showed that the government would stop spending more than it was raising. Up until now, our calls for an update have been ignored—obviously for crass political purposes. This has been a continuing embarrassment. But if the government had put this in the public arena, it would have imposed some pressure on this government to do what it should have done over the last few years—that is, live within its means, not spend revenue that it has not received.

It took the establishment of the Parliamentary Budget Office, under the leadership of Phil Bowen, to bring some added transparency to the budget. To its credit it heeded the call, and last week produced the structural analysis that has been so lacking under this Treasurer. The analysis shows that in the period between 2006 and 2008 the budget was in structural balance. It then plunged to a structural deficit of up to 4.25 per cent of GDP by 2011-12. This followed the unnecessarily high levels of stimulus spending that, in so many respects, has caused the problems that we now confront. It shows that in 2016-17 the budget will remain in structural deficit by up to 1.5 per cent of GDP.

This is a far cry from the earlier assessment by the Treasurer in 2009-10. What has happened to the 2015-16 structural surplus that that budget paper laid out some years ago? What has happened is that this government has lost control of the finances. This government has not been able to manage the spending requirements to fit within the revenue that has come into this country.

In his Treasury note on Friday, the Treasurer said that some months ago he asked his department to finally update the structural position. By pure coincidence, we are told, it was released on the same day as the Parliamentary Budget Office's analysis. It begs the question: why wasn't it included in the Treasurer's 2013-14 budget papers a week earlier? Is it because it estimates that under current policy settings the budget will possibly remain in structural deficit through to perhaps 2021-22? Unbelievable! Treasury says that even in 2012-13 the budget was in structural deficit by up to four per cent of GDP.

It is worth noting that both the PBO and Treasury assume that the structural balance will improve in the future, but all of this analysis depends on very heroic assumptions—heroic budget assumptions that the terms of trade are basically going to flat-line for several years at a level 15 per cent higher than the peak in the Howard government years. I have been involved in commodities for half my professional life and I know that what goes up comes down, and for this budget to assume flat-lining of the terms of trade at still record levels for many years to come is simply irresponsible in the extreme. To budget and plan on that basis is going to put the country in a very vulnerable position. And that is what this government has done and is doing.

So you can never assume that things will get better under this government. They always promise that things will get better in the future. They promised budget surpluses this year and in coming years; instead we get a $19.4 billion deficit—the fifth biggest in our history—and an $18 billion deficit for 2013-14. The budget papers reveal that the government will breach its $300 billion debt ceiling within the forward estimates. In fact, gross debt is expected to approach $400 billion during the forward estimates. Despite this, the government lacked the courage to increase the $300 billion debt limit in these bills, as it has done in previous budgets. It is too ashamed to have a debate in this place about debt. It would prefer to leave its mess for others to clean up. That is the Labor way. It was what Paul Keating did in 1976. At the last election Julia Gillard promised that net debt would peak at less than $90 billion. The budget reveals that net debt will now peak at over $191 billion—a blow-out of more than 110 per cent.

Australia is facing a sea of red ink as far as the eye can see, with unrelenting deficits, and a debt ceiling about to be breached. What Labor has created is a budget emergency. It is time Australia had a government that lives within its means. We need real solutions to take pressure off households and strengthen our economy so that over time there is more to go around for everyone. To this end, if the coalition gets the privilege of government on 14 September, we will build a stronger, more productive and diverse economy, with lower taxes, more efficient government and more productive businesses that will deliver more jobs, higher real income and better services. We will get the budget back under control, cut waste and start reducing debt. We will help families get ahead by freeing them from the burdens of the carbon tax to protect Australian jobs and reduce cost-of-living pressures, especially rising electricity and gas prices.

We will help small businesses grow and create more jobs by reducing business costs, cutting taxes and cutting red- and green-tape costs by more than a billion dollars every year. We will create stronger jobs growth by building a diverse, world-class, five-pillar economy by building on our strengths in manufacturing, innovation, advanced services, agricultural exports, world-class education and medical research as well as boosting mining exports. We will build more infrastructure to get things moving, with an emphasis on reducing the bottlenecks on our gridlocked roads and highways.

We will deliver services, including health services—much better health services—by putting local communities in charge of hospitals and improving cooperation with the states and territories. We will deliver better education by putting local communities in charge of improving the performance of local schools. We will deliver stronger borders, where the boats are stopped with tough and proven measures. And we will take direct action to reduce carbon emissions inside Australia—not overseas. We will deliver strong and stable government that restores accountability to deliver a better future for all Australians.

Sadly, those measures are not happening at the moment. There is no hope in this budget. There is no coherent strategy to create jobs and growth and to restore an appetite for risk and investment. The forecast surpluses are a mirage, because there is level of fundamental dishonesty pervading key elements of this budget. The revenue forecasts are blatantly overoptimistic. Claims of revenue write-downs are a nonsense, with revenue up 7.2 per cent, and the budget greatly underestimates, by many billions of dollars, the real cost of illegal boat arrivals, the collapse of the carbon price and the collapse of the mining tax revenue. The budget has embedded within it a $370 billion debt landmine with a continued record rate of growth of debt threatening our AAA credit rating.

As the architects of all these problems, the Treasurer and the Prime Minister are not the people to fix it. There is another way. The government must stop taxing, borrowing, spending and regulating and start living within its means. The growth and role of big government must be displaced by fostering robust growth of our millions of small and large businesses and restoring consumer confidence to spend. Government must once again provide a measure of certainty and stability and encourage an appetite for risk and investment. The coalition's plan for government is designed to deliver such a change.