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Tuesday, 28 May 2013
Page: 4168

Mr HUNT (Flinders) (18:07): The 2013-14 budget is the one that broke a nation's faith. This is the budget that was framed against the background of the Treasurer's opening statement a year ago. That opening statement was to the effect of 'Tonight I deliver a budget which will deliver four successive surpluses.' A year later, there are no four surpluses in evidence. The year that was to have been the first of those years had a $19 billion deficit. The second of those years had an $18 billion deficit, and then an over-$10 billion deficit. Then, in the final year, we have an $800 million notional surplus—which is an entirely fictional figure.

Why does all of this matter? It matters for two reasons, because somebody has to pay back the debt. Somebody always has to pay back the debt. Every family knows this. Every small-business owner knows this. Every farmer knows this. And every responsible government knows that somebody always has to pay back the debt. Since the election of the ALP in 2007 the actual budget that they have delivered—not what they promised; not what they pledged—has been a $27 billion deficit, a $54 billion deficit, a $47 billion deficit, a $43 billion deficit and a $19 billion deficit. And now we have projections of an $18 billion deficit, for the sixth budget, and a $10 billion deficit for the seventh budget.

That is a history of failure. That is not about returning the budget to surplus on average over the cycle; that is a cycle of deficit. And it comes after a similar period of deficit under the previous ALP government. So what we see here are 12 major successive deficits on either side of a coalition which, through 12 budgets, delivered 10 surpluses.

So, at its heart—at its core—this shows that there is a fundamental difference between two sides. The ALP answer is that the Liberals are just terribly lucky and the ALP are terribly unlucky. The say, 'For some reason they always govern in good times and we always govern in bad times.' The Labor Party inherited a more than $20 billion surplus. They inherited a more than $50 billion bank account in the black and they have sent our deficit to the bottom. They have created a national debt which will now head towards $190 billion in net terms alone. Gross debt is inevitably likely to exceed the $300 billion figure.

These figures have consequences, because there is interest and repayment, and there is opportunity foregone. And who can say that there have been fabulous infrastructure programs which have delivered long-term permanent reductions in national bottlenecks? The money has just gone. I lived through the pink batts program and the green loans program. I saw the cash for clunkers announced and abolished. I saw the citizens' assembly announced and abolished. I saw nine consecutive changes in the carbon tax in its structural performance in just under a year.

All of this money that has gone has not produced anything of great national significant. If it had been spent with a purpose—if it had achieved an outcome—it would have been irresponsible to have done this to the national balance sheet but at least we would have had something. Sadly, we have an absence of infrastructure and an absence of outcomes for this massive process of consecutive budget deficits on a grand scale, the likes of which we have never seen in Australia.

These dollar deficits are the five highest deficits in Australian history. So, against that background we have this fiction of a surplus in 2015-16 at $0.8 billion—or $800 million—and then roughly $6 billion in 2016-17. Both of those figures are also deeply susceptible to any analysis. On the first grounds we have seen that the mining tax revenue is projected to soar one thousand per cent. Those figures cannot be trusted. Secondly, the arrival of boats are benchmarked against the Howard era rather than against the Rudd and Gillard era. We have gone from barely a couple of boats a year to 40,000 arrivals in four years.

Those are two fundamental flaws, where the figures cannot be believed. But in my particular area we have seen a $6 billion black hole on the basis of a $2 billion revenue gap against projections in 2015-16, which would wipe away the surplus, and a $4 billion gap in 2016-17 which, on its own, would almost wipe away the surplus.

What is the basis of this? The basis is very simple. The carbon tax revenue projections cannot be believed. The government knows it. The bureaucracy knows it. In the bureaucracy's defence, they have actually made it clear that these are not their real projections; these are what they were required, as policy statements, to put into budget paper no. 1. And the public knows that the government's carbon tax revenue projections cannot be believed.

How can this be?

Already in this year's budget for the year just passing, 2012-13, we have a $5 billion write-down. That is because the budget had relied on a $29 price for carbon in 2015-16. It now turns out that the European price for that period is just under $6 rather than the $29 that was projected. The EUAs, European Union forward allowances for 2015-16 for tendering on 30 June 2016, are currently trading at a figure well under A$6, in the mid-$5.50. That means that we have already seen a write-down in revenue of $5 million. But the government has only written it down to a projected price of $12.10 in 2015-16 and $18.60 in 2016-17. Then you ask how could they have a figure which is more than double what the market is projecting as the basis for the revenue they have calculated in the budget? How can you have a figure which is more than triple what the market is projecting for the second of those years, 2016-17? The answer is very simple. It is helpfully set out at page 2-48 of Budget Paper No. 1. In terms of the explanation under box 9 of updated carbon price estimates, what we see is that the bureaucracy has made it absolutely clear that these are not their figures; these are not their projections; these are what they were required to put in place.

These advance auctions in the Budget forecast years are based upon average EU-ETS market futures prices for 2013-14 and 2014-15. However, carbon prices in the Budget projection years are not forecasts of carbon prices.

It goes on to say:

Projections for carbon prices for emissions liabilities for 2015-16 and 2016-17 incorporate the straightforward approach of a linear transition from market prices in 2014-15 to the modelled price of $38 in 2019-20 …

It goes on:

The longer-term modelled carbon prices from SGLP reflect the price levels required to meet long-term global environmental goals as well as the international commitment pledges for 2020 …

In other words, these are not market projections of what the market price will be. These are working back from what the government requires in order to meet its emissions targets using the carbon tax.

My point and our point is very clear: the budget is fundamentally broken. We said this last year and we were right. The revenue forecasts were wildly over inflated for the budget. There was not a collapse in revenue. Revenue came in at what people would reasonably have expected. The only failing was that the government, the ALP, predicted that they would win TattsLotto. They spent as if they would win TattsLotto and when they did not win TattsLotto they suddenly claimed that revenue had collapsed. It did not. They had six per cent growth in government receipts last year. They are projecting seven per cent growth in government receipts this year. Any business which had six and seven per cent growth year-on-year in gross revenue would see itself in a very good position.

That then leads me to the final conclusion that not only have they failed in past projections but this year the government has failed to learn from their past failures. So the fact that we see a carbon price estimate in revenue, which is twice what the market had projects in 20 2015-16 and triple what the market projects in 2016-17, shows that there is no connection to reality. That means a $2-billion black hole in 2015-16 and $4-billion black hole in 2016-17. The figures cannot be believed. They were wrong last year. They are wrong this year. In the meantime, we have the highest electricity taxes in the world. The Australian government is driving up electricity prices with enormous damage to abattoirs. I met with the meat and livestock council today. These taxes are driving up the cost to aluminium smelters. They are driving up the cost to manufacturers and to car makers—to everybody involved in fabrication and manufacturing in this country. There is a massively high impact on them because of the electricity price rises—14½ per cent on average, according to the Australian Industry Group.

After 1 July 2015, if you believe this government, one of two things will happen: either electricity prices will continue to skyrocket or there will be a massive budget black hole. This all comes about from the folly of tying our national revenue and our national electricity prices to decisions taken in Brussels. I have no issue with the European Union, but I do have an issue with abandoning our sovereignty over our electricity prices and our national budget. For those reasons, whilst we will not stand in the way of supply because we do not wish the country to suffer from instability, we think this budget should be condemned on the basis that it is established and founded on forecasts which cannot be believed. We will repeal the carbon tax beginning on day one because, above all else, not only is it poor economics and poor for our competitiveness but it fails utterly to achieve the task of reducing emissions. It does not do the job economically; it does not do the job environmentally. Ultimately, we can reduce our emissions, achieve our outcomes, without a carbon tax by doing direct things which actually clean up the environment on a lowest cost basis rather than having the highest carbon tax in the world today and a collapse in budget revenue in 2015-16.