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Tuesday, 10 February 2009
Page: 612


Senator BIRMINGHAM (2:21 PM) —As I was saying at the suspension of this debate earlier, it is little wonder, with the enormous cash surplus and outstanding fiscal position the government found itself in at the time of its election, that the Prime Minister and the government seem to have some notion of a money-for-nothing culture—that money comes so easily and can be spent so easily. However, as we all know, crisis struck in the form of the global financial crisis that hit first at banking sectors and mortgage sectors in the United States and spread from there to the economies throughout the world.

The government initially responded to concerns about the crisis with a $10.4 billion so-called Economic Security Strategy, with a $4.7 billion nation building package, with funding agreements with COAG, with a bank deposit guarantee, with the Ruddbank more recently and with other such initiatives that have all been put into place with great haste. They have also been put into place at great expense. And we are seeing that, despite that great haste and expense, the results have been fairly minimal. I note that Stephen Kirchner, writing in the Australian on 4 February, suggested:

When it comes to activist fiscal policy, it seems that nothing succeeds like failure.

He suggested that, after all of this spending and all of this activity, there is no evidence that any of it has necessarily made a direct impact on our economic standing for the future—and yet here we have a government proposing that another $42 billion be tossed at this crisis, that they spend $42 billion in a so-called Nation Building and Jobs Plan. He also notes that the government says they stand ‘ready to take further action’. They stand ready to take further action? Having spent in such enormous volumes as they have already, it beggars belief that the government are talking about further action from their already enormous spending packages.

This $42 billion package is seen as the next wave of ‘decisive action’. Those of us on this side have come to see that ‘decisive action’ seems to be the new catchphrase of the other side of the chamber—that ‘decisive action’, when it comes from the Prime Minister and the Treasurer, and in this place from Senator Evans and Senator Conroy, clearly indicates that the Labor Party’s focus groups have said that if you tell people you are taking decisive action they will think you are doing something that is thoughtful, that is important. ‘Decisive action’ are the new words that have replaced ‘working families’ and those other cliches that the government has drowned Australians in over the years. Thankfully, the Australian people are not that silly and are not that shallow or foolish. They know, and they will be able to see through the government’s ‘decisive action’.

Let us look at this random spendathon that the government has embarked upon. Firstly, look at the headline impacts of it. It takes what was forecast to be a surplus in the order of some $22 billion, just back in May last year—let’s remember it was less than a year ago when the Treasurer handed down his ‘inflation fighting’ budget with great fanfare and forecast a great big whopping budget surplus for the government—and turns it into a forecast for this financial year of $22 billion or thereabouts in debt and deficit. So there has been a $40-plus billion turnaround in the government’s books in the space of less than a year. This is the type of profligacy we see coming from the government benches. It is a remarkable turnaround.

If you look at the size of the government’s budgeted deficit, and you look at the packages and measures that they have put in place, the $10-odd billion late last year and the $42-odd billion that we are debating now, and if you look at the cash handout component of that, you see that it basically tallies up to the entire size of the government’s debt. So, all of the government’s deficit for this year can be attributed to random cash payments that have been sent out and scattered across the Australian community.

Over the next four years the Rudd government now expect to run up at least $118 billion in cumulative budget deficits. And they clearly expect to have to run up even bigger debts because, buried amidst this legislative package that we are debating, is an approval to take the Australian government into debt, into borrowings, of up to $200 billion. They are seeking approval for a blank cheque to take us at least up to $200 billion into debt. They will probably be back for more in the next couple of years, given their current form and the speed with which they are spending.

Now, you would hope that, for all of that, there might be some good news buried in all these packages and announcements. But, no, we expect to see economic growth slump to near zero levels. We expect to see unemployment rise to around seven per cent. We expect to see at least 300,000 more Australians thrown on the unemployment scrapheap. They talk of an eventual return to surplus, of returning to surplus in ‘the medium term’. How long is the ‘medium term’? We know it is not at least the next four years, which is as far as the budget forward estimates go, because over the next four years they forecast deficit after deficit after deficit after deficit. So we know that that forecast for a return to surplus is nowhere in sight as far as this government’s budgetary process goes.

Let me look briefly at some of the specifics of this latest package that is before us today. The government claimed in the statement that was released that it is about strengthening the future capacity of the economy. Quite clearly, it is nothing of the sort, because there is nothing strategic in this package, there is nothing productive in this package and there is nothing about investing in jobs, in the economy or in the future of Australia in this package. It is all about short-term, random, ad hoc spending.

Firstly, we have the latest round of cash payments, which I have already mentioned, being splashed all over the country. I thought it would be useful to reflect a little and see what the key members of the government thought of cash payments not so long ago. The Treasurer, Mr Swan, back on 13 May 2008, when delivering the current year’s budget, said:

The Government does not believe hard earned tax dollars are best spent on cash payments …

He went on to say:

It is simply not defensible.

So less than a year ago the Treasurer thought hard-earned taxpayer dollars were not best spent on cash payments, and yet he is now pumping out more than $20 billion of cash payments. Mr Tanner, the Minister for Finance and Deregulation, who in opinion piece after opinion piece through the life of the Howard government railed against this type of random spending, in talking about small one-off grants and cash payments back on 13 June 2006 told the House of Representatives:

I describe this approach as the political equivalent of ‘cash back on your trade-in’. it is a neat little tweak designed to keep everybody happy and feeling comfortable, nice and warm in getting the extra little bit of loot from the government, apparently for nothing.

So back then, in 2006, the finance minister thought of these types of payments as money for nothing, and yet he has now authorised more than $20 billion of them in the space of a few months. Australians see through this. Frankly, they saw through the cash payment approach of the previous government, which I believe went too far and instilled the wrong type of culture, one of expecting cash handouts, in some sectors of the community. But Australians came to see through it then and they are seeing through it now with this government trying to buy everybody off with these cash payments.

I will look at some of the letters I have had from constituents over the last couple of days as these issues have been being debated. Mr Darryl Richards, who wrote to me, owns a hospitality business. He recognises that his business saw a massive boost in profits when the last lot of government cheques went out. But he does not think this is a wise expenditure of government money. As a businessman, he compares this to going into debt himself: he might do it if it were for something productive, but not if it were to just give money away, which is effectively what is happening. He concludes his letter to me by saying:

If we do go into recession, we will get through it. If however we have a huge debt with an ongoing interest bill I fear for the pain and suffering that we all will have to go to pay it back, (in the way of tax increases and cuts to services).

Mr John Craig, who also wrote to me, indicated:

A large one-off handout may stave off recession for a few months, but in the post global financial crisis (GFC) world the federal government may well not be able to afford to continue with the level of transfer payments that the Howard Government encouraged the community to believe it was entitled to. Compounding the long term financing problem due to the structural consequences of the GFC with a one off spending spree may be what proves suicidal.

Suicidal fiscal activities is how that constituent saw the government’s approach. People can see through what this government is proposing, even when we go into issues such as schools infrastructure spending, which the government has highlighted.

There is no doubt in my mind that additional money being spent in schools around Australia is incredibly popular. The previous government used to do it through the Investing in Our Schools Program. It is worth noting again, in terms of the schizophrenic nature of this government, that just last year those in this government thought it was reasonable not to continue, to axe, the Investing in Our Schools Program, and yet now they are trying to reintroduce some sort of Investing in Our Schools Program on steroids by giving enormous payments to schools across the country. But these are payments for buildings, pure and simple—nothing more, nothing less. Buildings in schools are important, but the government pretends this is an education revolution. Well, a revolution in education is not made of bricks and mortar; a revolution in education is made of standards, quality and outcomes. That is where the real challenge lies, and Australia’s parents, teachers and children will not be fooled into believing that an education revolution is being delivered because they are getting an extra building everywhere they go.

Many other constituents have written to me talking about alternatives, and that is right—there are alternatives. The first alternative we should be looking at is spending less and borrowing less. We should not be plunging Australia as far into debt as this government is proposing. Secondly, where we are spending funds, there are so many other ways we could be better spending them. Certainly in my home state of South Australia you do not need to go far to find people who will tell you that spending on water infrastructure and water savings initiatives would be a far better way to go. Murray-Darling Basin reform and urban water reform would deliver better outcomes for Australians. I could go through a pile of constituents’ suggestions of alternative ways to invest this money more productively, and these are the types of things that Mr Turnbull and the coalition have been talking about so actively.

We do not know whether this money-for-nothing cash splash that the government is proposing will work. The government does not know whether this will work. The Secretary of the Treasury told the committee investigating this overnight that he does not know whether this will work. That is why these bills should be defeated and the government should go back to the drawing board on a smaller package—lest the Prime Minister takes the next line of Mark Knopfler’s Dire Straits song Money for Nothing and suddenly wants to give out the chicks for free as well.