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Wednesday, 15 May 2013
Page: 3293


Mr ROBB (Goldstein) (15:41): That was another very cerebral contribution by the Assistant Treasurer, I do not think. There is an old rule: when you are incapable of defending your position, go the man. We just had 15 minutes of that. You would think, after the presentation of the budget, you would get something more substantive than what we have just heard from the Assistant Treasurer, but you cannot blame him. The Treasurer never fronts to these debates. He is incapable of defending himself so we have just had that contribution.

This budget is a sea of red ink. For this reason it carries no hope—a failing compounded by the thread of fundamental dishonesty running through this budget document. This budget is built on shifting sands because it continues the practice of recent years of being blatantly overoptimistic about revenue forecasts. For several years now we have seen the government basically assuming that the terms of trade would stay at these 150-year historic levels. They have consistently created estimates which are unrealistic and overstated. Then they spend that money and, when that revenue is not realised, they say they have to fix the books—that they have been whacked in their revenue forecasts; they have had a hit to revenue.

The surpluses are a mirage—simply not believable—because once again they have blatantly overestimated the revenue forecast. The budget assumes that the terms of trade are basically going to flatline. The terms of trade are still at very historically-high levels. They are still 15 percentage points above their highest point under the Howard government—the golden years, as we are often told by those opposite. But the terms of trade are still 15 per cent higher. I have spent half my life in the commodity markets and I know what goes up, comes down. What this government has assumed for years now is what goes up does not come down—and yet commodity prices will not collapse but will start to head back to more normal levels. This budget ignores that fundamental reality of the market, that commodity prices will start to head back to more normal levels. As a consequence, those surpluses are meaningless and are, once again, built on quite false and overoptimistic forecasts.

This budget is built on shifting sands, because it grossly misrepresents the cause of the budget blow-outs. All through the budget papers the Treasurer blames the high Australian dollar and low commodity prices for the budget blow-out and for the so-called 'hit to revenue'. We hear it again on the radio, we see it in the papers, we hear it on the television—the high dollar taking a sledgehammer to their revenues. We hear the endless rhetoric about how their revenues have been hit to leg by a high dollar and commodity prices coming off.

As the shadow Treasurer mentioned in his remarks, the fact of the matter is that about the only thing that the budget last year accurately forecast was that the dollar would stay high, at around $1.03, and that the trade-weighted index would be around 77. In other words, quite clearly, the government anticipated 12 months ago what would be the exchange rate all year and what would be the trade-weighted index all year. Those numbers were exactly what the Treasurer and the Treasury thought they would be. So how can you now claim that the dollar and commodity prices have hit their revenue to leg?

Mr Ewen Jones interjecting

Mr ROBB: It is the spin—it is the disingenuous way in which this budget presents its numbers and its arguments. So all the breast-beating by the Treasurer about the 'huge revenue whacks out of the blue' and about the 'doggedly high dollar taking a sledgehammer to revenue' is all a fabrication, designed to avoid blame for Labor's real problem, namely, the profligate spending of this government. The revenue this year is $80 billion greater than that of the last year of the Howard government, yet spending this year is $120 billion greater than that of the last year of the Howard government. That says it all! This government does not have a revenue problem—revenue is going up seven per cent—it has a spending problem. I would like to see any household that would not be happy with a seven per cent year-on-year increase in revenue. I would like to see any business that would not be happy with a seven per cent year-on-year increase in revenue.

The budget is built on shifting sands, because it has embedded within it a debt landmine—a rate of growth of debt that will threaten our AAA credit rating, a rating that was so hard won by the Howard government and a rating and an economy that got this country through the global financial crisis in good order. That is what got us through the global financial crisis: an economy that was inherited by those opposite, an economy which had no debt and which had money in the bank, an economy which had unemployment with a four in front of it, and an economy which had people who had had a 22 per cent increase in real wages over the previous 11 years. The economy was in an unprecedented position. That is what got you through the global financial crisis, along with the automatic stabilisers.

Now we have a debt landmine, five years later, buried inside the budget. We have a rate of growth that will threaten our AAA credit rating, a rating threatened by the sea of red ink represented in this budget, which will push gross debt through the $300 billion debt ceiling, as confirmed by the Treasurer this afternoon. This budget is built on shifting sands, because it is a budget which greatly underestimates, by many billions, the real loss of revenue of various measures, such as the cost of dealing with illegal boat arrivals under Labor's policies and the loss of revenue through the collapse of the carbon price and the mining tax revenue.

Labor claim that their asylum budget costs will fall by 50 per cent over the forward estimates to less than $1.5 billion under their failed policies. That is clearly absurd. If Labor simply spend what they budgeted for next year over the forward estimates there would be an additional blow-out of $4 billion. Once again, they are just making it up. The numbers of boat arrivals grow every week and every month. What Labor have allowed for in the current budget is inadequate, given a blow-out of $4 billion this year with respect to boat arrivals. They have consistently underestimated, and again in this budget, so many of the costs in so many areas. This budget is built on shifting sands and it houses fundamental dishonesty about so many things. It is why the business sector sees it as a budget which embodies no coherent strategy to create jobs and growth or to provide certainty, nothing to restore an appetite for risk and investment and nothing to restore consumer and investor confidence.

Consumers and business people alike know that continuing on with our fragile budgetary and debt position exposes Australia to any hard landing in China, which could feed quickly through to export earnings, unemployment, defaults and difficulties with bank financing, foreign investor confidence and Australia's debt levels. It is why this debt, this constant sea of red ink, is undermining confidence. It is why people are not spending and why investors are not investing. It is why there is great nervousness about unemployment and the future.

There is another way: the government must stop taxing, borrowing, spending and regulating and start living within its means. The growth and the role of big government that we saw in this budget last night must be displaced by fostering robust growth of our millions of small and large businesses and by restoring consumer confidence to spend. Government must, once again, provide a measure of certainty and stability.