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Tuesday, 20 November 2012
Page: 9193

Senator FIFIELD (VictoriaManager of Opposition Business in the Senate) (16:17): What a tale of woe Labor's elusive search for a budget surplus has been! I think the story of Labor's efforts to repair the budget is a good encapsulation of this government. It tells you everything you need to know about this government. There are really two things that you need to know about this government: a lack of competence and consistent breaches of faith with the Australian people. That is what the budget bottom line represents.

Mr Acting Deputy President, I would ask you to cast your mind back to the very first budget of Treasurer Swan, the 2008-09 budget. Treasurer Swan said—and I am fond of quoting Treasurer Swan's 2008-09 budget speech—'We are budgeting for a surplus of $21.7 billion in 2008-09.' Let me just repeat that for you. Treasurer Swan said in his 2008-09 budget speech:

We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.

This honours and exceeds the 1.5 per cent target we said in January, without relying on revenue windfalls.

What Treasurer Swan was basically saying in that budget speech was that Treasurer Costello, with his nine budget surpluses, and the Howard government were basically a pack of easy beats—that their budget surpluses were pathetic; that he was going to go better; that he was going to show us what real fiscal manhood looks like; that he—

Senator Jacinta Collins: So that is why all the men stood up in support—fiscal manhood!

Senator FIFIELD: He was going to show us what real fiscal management looks like. He was going to demonstrate exactly what that looks like.

Honourable senators interjecting

The ACTING DEPUTY PRESIDENT ( Senator Ludlam ): Order!

Senator FIFIELD: He thought that a target of 1.5 per cent of GDP was really the measure of the individual as Treasurer. That is what he said. And here were we, a new opposition, thinking, 'How pathetic were we!' We did not know that you were not actually meant to work harder. In fact, Wayne Swan said it was actually pretty easy to get a bigger budget surplus than we had. So we thought that we would just have to sit back and learn from the master about how budgets really should be run.

I think all of Australia learnt as a result of the 2008-09 budget that what is in the budget speech and the budget papers when referencing a surplus—or a deficit, for that matter—is not actually an outcome; it is a forecast. The Australian people got into the habit of assuming that a forecast in the budget was as good as gold, because when the Howard-Costello government was in office those forecasts were met and often exceeded in terms of the size of the budget surplus. So Australians had got into the habit of being able to rely on the figures in the budget speech on budget night. The Australian people have learnt—

Government senators interjecting

The ACTING DEPUTY PRESIDENT: Order! Senator Fifield is entitled to be heard in silence.

Senator FIFIELD: Thank you, Mr Acting Deputy President. Australians have learnt through Swan budget after Swan budget after Swan budget that you cannot believe what Wayne Swan says on budget night. We hear from the government time and time again that they have been exceedingly unlucky. You used to refer to someone who was lucky as 'having a Kylie'—as in Kylie Minogue and her song, 'Lucky, lucky, lucky; I should be so lucky'. With these guys it is kind of like a reverse Kylie experience that these people have had. They have just been so, so unlucky.

Firstly it was the GFC—and, yes, we recognise that the GFC was a challenge—and then it was the European financial crisis that was the challenge.

We were meant to think—and the Australian people were meant to think—that just because there were external challenges there would be a crisis of confidence in the domestic economy and revenue write-downs in the budget and therefore it would be nigh on impossible for a government to achieve budget balance. That is the scenario which has been presented to us year after year by this government. If that were the case, when the Asian financial crisis took place during the period of the Howard-Costello government, there would have been a crisis of confidence—business confidence, consumer confidence and investor confidence—in Australia at that time. Revenues would have plummeted and the budget would have gone into deep, dark deficit and continued in deep, dark deficit for years to come. That is what you would have expected to happen if you followed the government's logic. And you would have expected it to happen then even more so, because we are much more enmeshed with our region, Asia, than we are with Europe or with the United States—which was the genesis of the global financial crisis. So whatever happened to us as a result of the GFC and the European debt crisis, you expect that it would have been many times worse during the Asian financial crisis. But it was not, and there are a couple of reasons for that.

The first reason is that the Australian people had confidence that Treasurer Costello would make the right calls. I think that is something we have underestimated: the extent to which confidence is underpinned by a government that looks like it knows what it is doing. With Wayne Swan, people quite rightly think, 'He's bound to get it wrong.' With Peter Costello, people thought, 'I'm not sure what the right answer is, but I have confidence that he'll know what to do; therefore I will just get back to running my business.' That was the mindset at the time and that is one of the reasons why Australia continued to perform well and the budget held up during the Asian financial crisis: people had confidence that Peter Costello knew what he was doing. The other reason why the budget bottom line held up well during the Asian financial crisis was because we did not embark upon reckless and irresponsible, massive fiscal stimulus. We did not do that. We relied on the Reserve Bank to adjust interest rates as required. We left room for monetary policy to do its job. We demonstrated that when you have an external shock to the economy it does not automatically follow that your revenues are going to plummet, confidence is going to plummet and the budget is going to go into deficit. Those are two very contrasting approaches to very contrasting outcomes.

This has been an incredibly unlucky government. I think you have got to reject the thesis that the current government are the hapless victims of global circumstance. They stumble around, things happen beyond their control, and they have always got an excuse for not being able to meet their budget forecasts and targets. That is why I say that the budget bottom line really does encapsulate two great truths about this government: their lack of competence and the breach of faith that they continually have with the Australian people. I say 'breach of faith' because Wayne Swan promised and predicted, in budget speech after budget speech, that the budget would whirr back into surplus. But it has been a diminishing surplus. In the 2011-12 budget, the surplus forecast for 2012-13 was $3.5 billion. That was revised down in the 2012-13 budget to $1.5 billion. As we know, it was revised down again in the MYEFO this year to $1.1 billion. The government will tell you that the overwhelming reason why the budget has been in deficit and there has been debt is because of revenue write-downs. I have to make this point: revenues are not falling. Revenues are continuing to grow. What is happening is that revenues are not growing as fast as forecast. But be in no doubt: revenues are still growing but expenditure is growing more. That is why the budget has been in deficit each and every year of this government. It has not been because of revenue write-downs. It has been because of spending decisions by this government, and the government's own budget papers will tell this story. The way to get the budget back into balance is not to hope, it is not to pray, it is not to promise. It is to actually manage responsibly, it is to live within your means, it is to stop the reckless spending. If the government do that, then they will be able to meet their commitment and they will go better. They will actually be providing opportunities for Australians. (Time expired)