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Wednesday, 19 March 2008
Page: 1276


Senator POLLEY (2:16 PM) —Mr President, my question is to the Minister representing the Minister for Finance and Deregulation, Senator Sherry. Can the minister inform the Senate on any new trends in the use of discretionary grants by Commonwealth governments?


Senator SHERRY (Minister for Superannuation and Corporate Law) —Thank you, Senator Polley, for the question on this important aspect of economic and fiscal management. We should be very clear that there are three legacies that this new Rudd Labor government has to deal with as a consequence of the policy of the former Liberal government. The first, of course, is high inflation.


Senator Minchin interjecting—


Senator SHERRY —We will get to Senator Minchin’s performance soon. The second legacy is higher interest rates, and the third is government spending, which has been out of control for some years.

Let us just look at each of these. The underlying inflation rate in Australia, a legacy from the former Liberal government, has hit 3.6 per cent. That is the highest underlying inflation rate in 16 years. The highest inflation rate in 16 years! Of course, higher inflation equals higher interest rates. That is what we have seen in this country. On interest rates, hard-working families are being slugged as a consequence of this higher inflation—the legacy that the opposition left us when they were defeated. Australia has now had 12 interest rate increases in a row. That puts us amongst the highest in terms of home interest rates for advanced economies in the OECD.

Thirdly we have aspects of government spending. We all know that in the current financial year, according to the budget figures of the previous government—presided over by the former finance minister, now Liberal leader in the Senate, Senator Minchin—government spending was escalating at an increasing rate of 4½ per cent in real terms. That is totally unsustainable. Not only is it totally unsustainable, Senator Minchin—through you, Mr President—it was totally reckless and totally irresponsible. What was the former finance minister, Senator Minchin, doing over the last couple of years? Clearly he was not imposing any discipline whatsoever on any of his ministerial colleagues, particularly the Prime Minister.

The Rudd Labor government is committed to delivering a higher budget surplus. We are committed to increasing the surplus from one per cent of the gross domestic product to 1½ per cent of gross domestic product in the next financial year. We are especially committed to eliminating wasteful spending, to putting downward pressure on inflation and to putting downward pressure on interest rates.

As I have already said, this was under the previous finance minister, now Liberal leader—he has been rewarded for this reckless spending and failure to impose discipline—in the Senate. The Department of Finance and Deregulation have provided data—


Senator Ronaldson interjecting—


The PRESIDENT —Order! I cannot hear the minister’s answer. Order, Senator Ronaldson!


Senator SHERRY —I know that people do not like this—particularly the Leader of the Opposition in the Senate, Senator Minchin, who was the finance minister—but the Department of Finance and Deregulation have provided data on the use of discretionary grants under the former Liberal government. Let us have a look at some of the data and the blowouts this has led to, because this budget explosion in expenditure has put upward pressure on inflation and interest rates in this country. The figures are actually incredible. I do not know how Senator Minchin let this through to the keeper. We are looking not at an increase in discretionary expenditure of 50 per cent, 100 per cent or 200 per cent but at a staggering 547 per cent explosion in discretionary grants. Liberal and National Party ministers—those opposite—when they were in government approved more than $9.1 billion of discretionary grants between 2005 and— (Time expired)


Senator POLLEY —I have a supplementary question. Can the minister further inform the Senate of any new approaches to the management of Commonwealth government discretionary spending?


Senator Chris Evans interjecting—


The PRESIDENT —Order! Senator Evans, I cannot hear Senator Polley’s supplementary question when there is shouting across the chamber. I ask you to start again, Senator Polley.


Senator POLLEY —Can the minister further inform the Senate of any new approaches to the management of Commonwealth government discretionary spending?


Senator SHERRY (Minister for Superannuation and Corporate Law) —As I indicated, from 2005 through to 2007 there was $9.1 billion worth of discretionary ministerial grants. If we go back to 2002-04, it was $1.6 billion. So it went from $1.6 billion to $9.1 billion over that period.


Senator Chris Evans —Who was finance minister during that period?


Senator SHERRY —Yes, who was finance minister? It was Senator Minchin. The number of discretionary grants approved by Howard ministers—and presided over by Senator Minchin, then finance minister—increased from 12,006 in 2004 to 49,060 in 2007. As I have said before in this place, it is a pity Senator Minchin did not put as much energy into overseeing grants as he is now putting into his interjections in this place. The annual cost of discretionary grants grew from $729 million in 2004 to more than $4.5 billion in 2007. (Time expired)