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Thursday, 24 May 2012
Page: 5600


Mr TONY SMITH (Casey) (11:02): It is my pleasure to speak on these appropriation bills and the budget itself. In doing so, I want to raise a number of issues with the government's economic approach, which is embodied in their budget. At the outset, let me say that this budget should be judged against the backdrop of the government's believability, against the government's capacity in the past and against the government's performance. Indeed, as the shadow Treasurer said just last week at the National Press Club, a budget is a measure of so many things: a government’s honesty and honour, a government’s competence and capacity. This budget, unfortunately, as so many Australians now know, is a budget that fails all of those critical tests.

Across Australia at the moment, there are various indicators of falling confidence. Just recently the Sydney Morning Herald had the headline 'Consumer confidence wilts'. 'Lack of faith puts Australian economy at risk,' warned Dennis Shanahan in the Australian. 'Small business pessimistic,' pronounced the Australian Chamber of Commerce and Industry. Just this week the AustralianFinancial Review proclaimed 'Labor’s image is bad for business.' It is the case that as this is happening the shadow of what is happening overseas, particularly in Europe, is critical. We see Greece threatening to drag the entire eurozone over the brink. We observe America grappling with huge economic difficulties and massive deficits that have driven the US federal government debt to 100 per cent of GDP. We hear the Chinese economy may also be slowing. Indeed, in question time this week the Treasurer spoke of events in Europe that he said 'cast a very dark shadow over the global economy'. He went on to concede that Australia was 'not immune from the global instability'. The Treasurer has a real talent for stating the obvious.

The critical point as we debate this package of bills and the budget is how, in the midst of this global turmoil and turbulence, the government is affecting Australia's ability to withstand these challenges. Has the Treasurer strengthened or weakened Australia's economic position? Is his approach and that of the Prime Minister making the Australian economy more or less robust? Has Australia's economic resilience been buttressed or buffeted by the policies of this government? The answer to these questions is clear: despite Labor's best efforts to obscure and obfuscate the facts, the fact is that unfortunately this government's crisis of competence has spawned a crisis of confidence throughout the Australian economy.

We emerged from the global financial crisis in good shape. The primary reason we emerged from the global financial crisis in good shape is that we entered it in great shape. We have so far weathered the worst of the storm, because Australia was in a very solid fiscal position back in 2008. As we debate these budget bills we should look back to the days of surplus budgets. We should look back to the days of paying off Labor's $96 billion of net government debt. We should look back to the days when not only $96 billion of net government debt was paid off but also $45 billion was left as a nest egg in the budget tables for all to see to buffer against future crises and challenges, just as it did.

Without the policies of the Howard government we would not have been able to emerge from the global financial crisis in the shape that we did. Without the responsible budgeting of Treasurer Costello between 1996 and 2007 we would not have been in a markedly different position on the debt front from many other countries. In fact, if we had kept accumulating debt at the rate that we were in the last five years of the Keating government we would have entered that crisis with much more lead in our saddlebags.

Over the last 4½ years, first with the member for Griffith as Prime Minister and now with the member for Lalor as Prime Minister, we have seen a frenzy of ill-conceived and ill-executed spending. The government have not only burnt through that $45 billion cash nest egg that was left after paying off the $96 million of net government debt but plunged on the forecast to $145 billion of net debt, nearly $200 billion of deterioration over their period of office. The Treasurer likes to claim that it was the government stimulus spending that saw Australia through the global financial crisis. The Treasurer does not like to talk about the waste. The Treasurer does not like to talk about the fact that he has been unable to deliver a surplus budget.

The Australian public have seen the record of this government on so many things—from the carbon tax which they were told would never happen, to the Treasurer's constant pronouncements about what his budget will do each year. It is worth looking at how he has put this budget together and what that means for the future. Sometimes what he does not mention is more important than what he does mention. In trying to conjure together the projection, the forecast, of a small $1.5 billion surplus, the Treasurer has fiddled with as many programs as possible to shuffle money from one financial year to the next—all so that he can project, as of now, a surplus. The truth, which he did not mention in his budget speech, is that he is seeking to increase the Commonwealth debt limit from $250 billion to $300 billion, in other words increasing the national credit card limit. Instead of stating this in his budget speech, of course, it is buried deeper than the wreck of the Titanic in a vain attempt to escape the blatant contradiction between his record and his rhetoric. Despite his talk of fiscal restraint, this Treasurer will continue to borrow $100 million every day.

If we look back at the current financial year—that is, the financial year that the Treasurer talked about and predicated his last budget on, just over a year and a couple of weeks ago when he stood in the House of Representatives—and when you look at his deficit estimates, it really does provide a window into both his capacity and the extent to which the Australian people should believe his pledge of a $1.5 billion surplus. Just 18 months ago, in the mid-year economic update, the Treasurer said that the deficit for the current financial year—which ends in five weeks or so—would be about $12 billion. By budget night last May, he said that the $12 billion had almost doubled to $22 billion for this financial year. By December last year, in the six-monthly official update, it has risen again, from $22 billion to $37 billion. Then on budget night he estimated that the final outcome would be $44 billion. That is, over 18 months, $12 billion to $44 billion. We will not get the final figure until September—and we ain't finished yet. There are still a few weeks left in this financial year.

But this Treasurer who—and let me be generous and just take the one-year blow-out—forecasts a $22 billion deficit and says it will come in at 44 billion, missed by that much and yet he expects us to believe that he will deliver the small surplus. Even to get those figures into the budget, it meant money-shuffling throughout programs on the most ridiculous level. And this is before he has introduced a carbon tax and all the other taxes that I do not have time to speak about.

It is no wonder that when small business owners and families across Australia look at the economic challenges coming down the pipeline, and then look at the capacity of this Treasurer to deal with them, they lack confidence. They lack confidence because the only thing they can trust with this Treasurer is that his word will not be kept. The only thing they can trust with this Treasurer is that his forecast will not be met. That is the only thing small business owners and families across Australia can trust with this Treasurer.

Small businesses are critical. There are 2.7 million of them. If they lack confidence, that has a huge impact on our economy. It is little wonder that the Dun and Bradstreet business failures and start-up analysis for the December 2011 quarter found that small business start-ups had fallen a staggering 95 per cent. These figures show that small businesses, and the small-business leaders of tomorrow, are looking at this Treasurer and looking at this government's lack of competence and these figures show they do not have the confidence to begin a small business—and that is before we talk about what is going on in the small business sector itself. I make this prediction: when we speak on these bills next year, we will be talking about how, once again, the Treasurer has missed his forecasts and misled the Australian people.

The DEPUTY SPEAKER ( Mr Windsor ): I call the member for Shortland.