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Tuesday, 10 February 2009
Page: 600


Senator BARNETT (1:34 PM) —Before speaking to the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and related bills before the Senate, as this is the first opportunity to do so I wish to respond to the worst natural disaster in Australia’s history. Words cannot express the depth of sadness and grief at the loss of life and the pain and suffering experienced by so many. Our hearts go out to the families and others affected. I have been overwhelmed in the last day or two by the donations of clothes and other items for those in need to my office in Launceston and I thank the generosity of those in northern Tasmania for those donations. I want to say thank you to the fire service professionals and volunteers, the police, the ambulance and other emergency service personnel and all volunteers involved in alleviating, at least to some degree, the stress, the grief and the pain of those affected by the Victorian bushfires.

With respect to the six bills before us, I would like to make a number of observations. Firstly, Labor’s economic spending spree will increase Australia’s debt levels to $200 billion or nearly $10,000 for every man, woman and child in this country. This debt will be a millstone around each Australian’s neck for years to come. The Prime Minister, Mr Rudd, has grabbed the taxpayers’ credit card and in a giant cash splash is running it up to the hilt. Mr Rudd wants to be the sideshow alley king where every player wins a prize. But credit card debt, like all debt, has to be repaid. We do not know what is ahead; we live in uncertain times. We need an economic stimulus package, but Labor’s spending initiative is too big, poorly targeted and irresponsible. Federal Labor is lassoing every Australian with a record debt and a record deficit.

The Australian Financial Review says today, at page 4, under the heading ‘$7bn interest likely, says Treasury’:

The federal budget will be weighed down by at least $7 billion in annual interest payments, according to Treasury and financial market estimates of the cost of servicing the commonwealth’s swelling debt.

If parliament this week authorises a $125 billion increase in commonwealth debt, the commonwealth will issue bonds to cover future budget deficits - and the annual interest bill will climb steeply.

That is what the Financial Review reports.

The government is throwing money around like confetti. Yes, it is true that getting between anybody and a bucket of money is problematic, but I ask those people, organisations and communities targeted to benefit from Labor’s plans to think of the future. The cash handouts of today will have to be repaid. I have three children and I want them to have the best possible start in life. Is it right for us to saddle each of our children with a $10,000 debt? The only way to repay the debt is via higher taxes or fewer services. This approach would give our children fewer opportunities and a very heavy burden to bear. We are placing a giant mortgage on their future. Going forward, which services must we cut? Will there be funding for our hospitals, Medicare, schools, roads or police?

We all know it is easy to spend and hard to save, and yet Mr Rudd’s mantra is ‘spend, spend, spend’. That is exactly what he said when he announced the pre-Christmas $10 billion spending package and promised it would create 75,000 new jobs. He promised that. He said it publicly; it is on the public record. But it has failed. In fact, unemployment rose in December and it continues to rise. By the government’s own forecasts, unemployment will rise to seven per cent by June 2010, with 300,000 more Australians out of work.

Amazingly, Kevin Rudd’s pre-Christmas cash splash included an estimated $80 million for over 69,000 Australian pensioners living overseas. The package was designed to strengthen Australia’s economy, not overseas economies. The government has its priorities wrong. Instead, Australian dollars were sent off overseas. The Italian economy, for example, received the biggest boost, with over 18,600 pensioners receiving in excess of $25 million. Greece and New Zealand have also received significant windfalls courtesy of Mr Rudd: approximately 5,700 pensioners in Greece received a total of $7.5 million and just over $6 million was hauled into New Zealand by over 4,500 Australian pensioners. The other big winners included the Netherlands, Spain, Malta and the United Kingdom, each receiving millions of dollars in cash bonuses. Even Croatia and Germany received in excess of $1 million from Australia.

I raised these concerns in the Senate last week, but they fell on deaf ears, as the government will not listen. It is not right to spend this sort of money in foreign countries, albeit on Australians, when it is our economy and Australian jobs that we are trying to protect. Mr Rudd’s pre-Christmas package was a one-off and was clearly designed to benefit the Australian economy. It was not designed to prop up overseas economies. So the Rudd Labor government needs to fully explain why such expenditure was necessary. I am aware that Australia has agreements with other countries whereby we are required to reciprocate payments, but this was clearly a one-off package designed to support the Australian economy, not to be sent overseas. Mr Rudd has clearly gone on a spending spree—is in a spending frenzy—and needs to be pulled into line.

Labor has put Australia on course for four consecutive record budget deficits totalling almost $120 billion. The debt legacy for future generations is humungous. It is in fact Whitlamesque in scope. According to the figures set out in the Economist magazine, this spending is in the order of 6.4 per cent of GDP, which is around double the average of the OECD countries. So why is it that we are spending at that level and going into that level of debt and deficit?

Interestingly, the United States President, Barack Obama, last week amended his economic stimulus plan to include tax cuts and tax credits, a proposal put up by his political opponents. President Obama met with his political opponents to discuss and negotiate the package. Of course, the Leader of the Opposition, Mr Turnbull, and the Liberals have been recommending tax cuts that will help deliver a longer term rather than just a short-term benefit. And, interestingly, I am advised that nearly every other OECD country that has put forward an economic stimulus package has one that includes tax cuts. It includes tax cuts. But Mr Rudd, with his arrogant, take-it-or-leave-it approach, will not even consider the Liberals’ suggestion. President Obama’s package was reviewed and scrutinised in the United States congress for weeks, but Mr Rudd demanded his $42 billion spending spree be passed, without scrutiny, within 48 hours. That is almost $1 billion per hour of debating time. It is outrageous—and Mr Rudd and the Deputy Prime Minister, Ms Gillard, were not even present for the vote. Proper debate and scrutiny by the Senate was opposed by Labor. We are certainly looking forward to the reports of the Senate Standing Committee on Finance and Public Administration and the Senate Standing Committee on Community Affairs on the package, and they will be delivered later tonight.

I also wanted to refer to the independent assessment of the package released by the US Congressional Budget Office. It showed the package would have some short-term positive effects, as well as an increase in public debt and a reduction in welfare services. What this means is that life is full of choices, and from choices flow actions and consequences. There are trade-offs depending on the choices we make.

In short, Mr Rudd, known by some as King Kevin, believes that government knows best. He says this spending is patriotic, that it is the Australian way, and any criticism or opposition should be condemned. Mr Rudd says that his $42 billion cash splash will support more than 90,000 jobs, but he has no evidence to back this up, and Labor are not willing to even sit down and talk about it. The Prime Minister wants more government intervention so long as he is handing out the spondoolies. Rudd Labor has a proclivity to that old-fashioned, big-government prejudice.

What is so special about the number ‘42 billion’? There is no modelling available to support it, other than the government’s assurance that it will support—not create; support—90,000 jobs. As my personal assistant said just a day or so ago, the number 42 could be Mr Rudd’s favourite keno number; alternatively, it could be the answer to the meaning of the universe, if one reads The Hitchhiker’s Guide to the Galaxy! So there you are. Why is it so special?


Senator Birmingham —It’s the lotto number.


Senator BARNETT —That is right, Senator Birmingham, it’s the lotto number. In fact, Mr Rudd recently tried to rewrite history in his attack on the neoliberals and the merits of an open market and a deregulated environment. But it is hard to argue against the facts, especially when his own Deputy Prime Minister said simultaneously in a keynote speech in Davos that Australia had a ‘better than world-class regulatory regime’. Mr Rudd has argued against the facts because he is arguing against former Labor prime ministers Bob Hawke and Paul Keating, who each played a role in opening up the market and deregulating the exchange rate.

Market activity and freedom to choose to trade and do business have led to more jobs, higher wages and increased wealth. There is no doubt about that, and we should especially thank the Howard and Costello coalition government, which left the Rudd Labor government the best economic legacy in Australian political history. Tony Abbott said in last Saturday’s Australian that the best way to combat the slowdown in business activity is by decreasing the costs of doing business and reducing the impediments to doing business. You reduce taxes, interest rates, red tape and regulation. But Rudd Labor are doing the opposite by allowing unions to interfere in the workplace, particularly in small businesses.

Reserve Bank board member Professor Warwick McKibbin said this about the package: ‘It risked turning what isn’t a crisis into a crisis.’ And what did well-known and respected economist Henry Ergas say in yesterday’s Australian about the Labor package? He said:

Australia entered the global economic crisis well placed but our fiscal position is deteriorating more rapidly than in comparable economies. This is due to policy decisions since the May budget, which will erode the projected bottom line by $29 billion in 2008-09.

The international comparisons are telling. According to the International Monetary Fund, average fiscal balances in advanced economies are set to deteriorate by 2.1 per cent of gross domestic product. In contrast, Australia’s fiscal balance will deteriorate by 3.6 per cent of GDP.

Moreover, expenditure on the Rudd-Bank and disbursements from the Building Australia Fund seem to have been excluded from the updated budget estimates, so the actual deterioration will be even greater, easily exceeding any previous peacetime fiscal expansion in Australia’s history.

Mr Turnbull and the Liberals admit that our opposition to Labor’s plans will be unpopular in the short term, but we believe it is the right thing to do. Mr Turnbull has put forward an alternative approach which is better targeted, more affordable and responsible. The objective of any package must be to protect and create jobs, support small business and strengthen our economy. Labor’s plan has failed on each test.

Spending on health and hospitals is omitted entirely from Labor’s plan. What about Tasmania’s health system? What about the Launceston General Hospital? In Tasmania the health system is in a state of disrepair. What about the desperate needs of the Launceston General Hospital, which is at 115 per cent capacity, as you would know, Madam Acting Deputy President Brown? The delays to the redevelopment of the emergency department are hurting the community. We need better and upgraded facilities at the Launceston General Hospital—especially intensive care, coronary care, a day care procedure unit and better car-parking services, just to name a few. But there is not one dollar in this package for health, which is a great disappointment. Mr Rudd and Labor should sit down and negotiate a smaller and better targeted package rather than have the arrogant view that his government is infallible.

Mr Turnbull recommended bringing forward the 2009-10 tax cuts and also supporting small business through the payment of part of their superannuation guarantee levy. Small business is the backbone of our community. It is the productive industry and the jobs generator in rural and regional parts of Australia—particularly in rural and regional parts of Tasmania—and it should be supported. It appears that much of the stimulus package of federal funding is merely replacing state government funding requirements. Tasmanian Premier David Bartlett, as was noted in this chamber just a few days ago, said last week on ABC Radio:

We have projects in housing and in schools that are ready to roll, ready and waiting for this sort of injection of funding.

It seems the federal government is paying for already planned state government spending. Why shouldn’t the state government pay at least a portion—at least 50 per cent—of the development costs? The government is missing the point and is missing an opportunity. Future generations of Australians will have to pay for this decision. It took nearly 10 years to pay back the previous Labor government’s $96 billion debt. How long will it take to pay back Labor’s $200 billion debt? They do not even have a plan.

All this is on the back of a government who provided an unlimited bank guarantee, forcing 250,000 Australians with investment funds to have their investments frozen. I had constituents call my office and say that, because of a government decision: ‘We can’t get our money. We can’t get our capital. We can’t get our interest.’ That was very distressing for them and for those many thousands of Australians who could not access their funds. It is their money and they cannot access it because of the government decision.

Then on 24 January the government announced the establishment of the Ruddbank—in fact known as the Australian Business Investment Partnership—initially with $4 billion in equity; $2 billion from the Rudd government and $2 billion from the big four banks. It is designed to support the major commercial property developers and the big four banks. But I say it is a shonky, dodgy Labor government socialist experiment with taxpayers’ money.

Firstly, this policy on the run was announced by way of a 1½-page media release. I have it here in front of me; it is 1½ pages. There is no government legislation to back this up, no discussion paper and no other papers or information, yet we are talking about guaranteeing up to $30 billion of taxpayers’ money that could be at risk here. The banks have recently and publicly denied any offer of equity. The media release says:

The Government and the major banks have committed capital to this fund in equal partnership …

That is what it says, and this is from the Prime Minister. It goes on to say:

This Partnership will be initially capitalised at $4 billion, with the Government contribution of $2 billion matched by an equal contribution by Australia’s four major banks. The initial $4 billion capitalisation could be extended via the issuance of government guaranteed debt to create up to $30 billion of loanable capital.

Well, the banks have denied any opportunity of providing equity. They have said they were interested in providing a loan. So the government have already been found wanting. They have got it wrong, and it is a failure from the start; the Ruddbank is a dodgy deal.

Secondly, can the government please explain to the public and to the Australian Competition and Consumer Commission how this deal is not anticompetitive? It is an exclusive deal with the big four banks. What about the other banks and the other financial institutions? Why is it exclusive to the big four?

Finally, I ask this question: what if this Rudd experiment does not work? What about the government’s next spending spree? Will we have any money left in the kitty or is it solely up to the next generation to pay for the problems and mistakes of this generation? This is not a good principle to follow. Remember that there is not a spending initiative that Labor will not support. What we need to do is question which spending initiatives are the right ones for this time and our circumstances. In conclusion, I am vehemently opposed to this legislation. I think it is in the worst interests of the Australian community. It will saddle us with debt and it will mortgage our children’s future.