|Speaker||Cormann, Sen Mathias
Senator CORMANN (Western Australia) (16:31): At the request of Senator Fifield, I move:
That the Senate notes the 2012-13 Federal Budget does nothing to strengthen the Australian economy in the face of storm clouds on the global horizon, as it:
Â Â Â (a)Â Â Â fails to cut spending;
Â Â Â (b)Â Â Â increases taxes;
Â Â Â (c)Â Â Â lifts the debt ceiling to $300 billion; and
Â Â Â (d)Â Â Â imposes the world's largest carbon tax.
Before I move into the debate, may I associate myself with the remarks by senators around the chamber wishing Senator Sherry well for his future. I am sure that, given his expertise in the areas of superannuation and retirement planning, he would have planned well for what lies ahead. May I also congratulate him for the enormous contribution that he has made to the public policy areas of financial services and superannuation in particular.
Every single year, as the Treasurer, Mr Swan, has been about to deliver a budget, he has made commentary in the media about what a budget it would be. There is one word that he has used to describe itâthat word was word 'tough'. 'It will be a tough budget' he said of the 2008-09 budget, for 2009-10 and again for 2010-11âand he has said it now for 2012-13. Of course none of them, not a single Labor budget delivered by the current Treasurer, Mr Swan, has been a tough budget. They have all been typical Labor budgets, that is trueâwith excessive spending, massive new taxes and increased levels of debt and deficit. This is a government that inherited a very strong economic and fiscal position. This is a government that inherited a strong budget position: a budget with no government net debt, with a $22 billion surplus, with $60 billion in reserves in the Future Fund. And it is, of course, a government that, rather than having to pay interest to service the debt, was receiving interest payments. Not only was there no government net debt, the coalition had put successive surpluses into the Future Fund in order to make provision for the unfunded superannuation liability of the Public Service.
This budget really has been very disappointing, because we face significant economic storm clouds on the global horizon. The events in Europe this past weekend, which are likely to continue to develop in the weeks ahead, do raise a significant concern. Clearly, the global economy is in a pretty precarious situation right now and, because of the actions of the Labor government over the past 4Â½ years, Australia is in a weaker position to face those challenges than it should be. This government spends way too much money, way too quickly. Yes, we are in a stronger position compared with other parts of the worldâof course, because we started out in a much stronger position. This government says, 'Look, our government net debt is expected to peak at 9.6 per cent of GDP, which is much less than in most other parts of the world.' That is true, but we started with zero per cent of government net debt! And when you start from zero per cent going into a crisis you are not going to be at the same level as those countries that started with 60, 70 or 80 per cent of government net debt as a percentage of their GDPs.
In this budget we have more wasteful spending, more new taxes, more debtâthere has been a significant cooking of the booksâand, yet again, the government wants to lift the debt ceiling. We just have to remember: this is now the third time the government has asked to lift the debt ceiling. Not so long ago the debt ceiling was $75 billion. The government said, 'Well, because of the global financial crisis we have to increase it to $200 billion.' Then in last year's budget the government said that it wanted to increase it to $250 billion. Now we are being asked to lift the debt ceiling yet again, to $300 billion. You have to wonder why a government that is promising surplus after surplus over the current forward estimates would want the parliament to give it another blank cheque, to increase the amount of money that this government can put on the nation's credit card to $300 billion. In talking to this motion I also want to deal with a particular myth that the Treasurer, Mr Swan, has been perpetuating in recent times. This myth is that somehow the reason we have this massive deficit again this financial year, this $44.4 billion deficit this financial year, is that revenue has collapsed. Whenever the budget position deteriorates, rather than looking at what happened with excessive spending and rather than looking at how we can cut spending, show more restraint and live within our means, this government collectively throws its hands up in the air and says, 'Oh, revenue has collapsed.' That is not entirely true. I point you to the 2009-10 budget and what the government's expectations were then as to what would happen in 2011-12, because 2011-12 was at that time part of the budget forward estimates cycle. They thought the deficit this financial year would be $44.5 billion. Guess what! We were told in the budget on Tuesday that the deficit this financial year will be $44.4 billion. So, back in May 2009 the Treasurer was pretty close to the mark as to where we would end up.
The problem is that in the lead-up to the last election he wanted to create the illusion that somehow we were back on track on the path towards a surplus. He wanted people to believe that things were going to be better than he thought, back in May 2009, they would be. Of course, just before the election we were told in the updated economic and fiscal outlook and in the pre-election economic fiscal outlook that the deficit in 2011-12 would be $10.4 billion. So, instead of what we were told in May 2009, namely, that the deficit this financial year would be $44.5 billion, in order to make it look like significant progress had been made the Treasurer told the Australian people, 'Look at this; we are doing well. The deficit is not going to be $44.5 billion after all; it is going to be $10.4 billion, and in 2012-13 we are going to have a surplus.'
The important fact I want to point you to is the revenue and expense forecast given in the budget the Treasurer delivered in May 2009. In May 2009, Mr Swan, the Treasurer, told us that he expected revenue in 2011-12âthis financial yearâto be $310.2 billion. Guess how much the revenue actually is in 2011? I invite anyone to help the chamber out. I will tell you what it actually isâit is $330 billion. Revenue in this financial year is $20 billion higher than the Treasurer, Mr Swan, told the Australian people, back in May 2009, it would be. So, rather than have a deterioration in the revenue outlook, he has actually had a $20 billion windfall compared with what he thought just three years ago. He has actually had a significant improvement in the budget bottom line in terms of revenue estimates.
Revenue has gone up by $20 billion, but what happened to the expenses side? And remember, it was back in May 2009 that the Treasurer told us, 'Yes, the deficit in 2011-12'âthis financial yearâ'would be $44.5 billion.' Guess what? Expenses then were expected to be $351.9 billion. So what has happened to the expenses side? You guessed it. The expenses also went up by $20 billion. The expenses went from $351.9 billion to about $371.3 billion. That is an increase in expenses of $20 billion in that period. If the government had truly shown restraint, if the government had stuck to the spending that it expected for 2011-12, back in the 2009-10 budget, we would actually be $20 billion better off this financial year. But of course the government did not do that. More money was coming in because of all of Labor's new and increased ad hoc tax grabs. You remember them all: the mining tax, the carbon tax, the flood taxâactually they have not collected the mining tax and the carbon tax yet, but there have been 20 or 21 new or increased Labor Party taxes, starting with the alcopops tax, the condensate tax, the increase in the luxury car tax and a whole heap of other new taxes and revenue measures. But instead of using that money to balance the books to ensure they would get closer to a surplus more quickly, what did this Labor government do? They just spent it all.
This government has not only spent all of the additional revenue they did not expect back in 2009âthe $20 billion of revenue they did not expect us to have this financial year when they put the budget together in 2009âbut now, with the mining tax and the carbon tax, when they announced these additional multibillion dollar tax grabs, they actually spent more than those taxes were expected to raise. When the government announced the MRRT, the cost of the measures and the promises that were attached to the mining tax were billions and billions of dollars greater than the government's expected revenue from that same tax, which is of course why in this budget the government has had to scrap many of the promises that were previously attached to the mining tax. They have scrapped the cut in the company tax rate, they have scrapped the early cut in the tax rate for small companies, they have scrapped the standard deduction for individuals' work related expenses and they have scrapped the 50 per cent discount on interest income. You name it.
We always said that the mining tax was a fiscal train wreck in the making. We pointed to the fact that only the Labor Party can come up with a multibillion dollar new tax that actually leaves the budget worse off. Only the Labor Party can do that. The Treasurer has ended up with a massive black hole in what he has delivered. That black hole is the $174 billion worth of accumulated deficits over his first four budgets. That is the true black holeâthe actual black holeâthat is here on the table. The Labor Party likes talking about this fictitious non-existent $70 billion that the coalition supposedly has. There is no such black hole on the coalition side. But the Treasurer, the Prime Minister and the Minister for Finance, Senator Wong, would, I am sure, have read Vladimir Lenin's advice that 'a lie told often enough becomes the truth'. That is a direct quote from Vladimir Lenin. The Labor Party think that, if they keep repeating this absolute lie about a $70 billion black hole, somehow it will become the truth. Well, it is not the truth. The only truth is the truth that is there for all of us to see in the budget papers, and that is $174 billion worth of accumulated deficits. The truth that is there for all of us to see in the budget papers is that government net debt was zero dollars and it is now heading towards $145 billion. That is what it is heading for now. The real black hole is that $145 billion on which this government now have to pay interest. Of course the interest that this government have to pay on the debt that they have accumulated since they became the government totals nearly $30 billion over the forward estimatesânearly $30 billion in interest payments to service the debt that this government have accumulated since they came to power. How many good things could we do with $30 billion if we did not have to spend it on servicing the debt that this bad Labor government have accumulated over the 4Â½ years they have been in government?
The Treasurer wants us to believe that everything is going to be different next year. We had a deficit in 2008-09, we had a deficit in 2009-10, we had a deficit in 2010-11 and we have a deficit in 2011-12. The deficit this financial year is $34 billion worse than we were told just before the election, yet somehow the government wants us to believe that next year, miraculously, nothing is going to happen to this $1.5 billion surplus. How are they achieving this surplus? They assume that revenue is going to increase dramaticallyârevenue is going to go through the roof; we are going to have the largest increase in government revenue in the last 25 years. We are going to have an increase in government revenue of 11.8 per cent. According to Treasurer Swan, government revenue is going to go up by $39 billion. Instead of collecting $330 billion, as we are this year, somehow next year we are going to collect $369 billion. It is unbelievableâan 11.8 per cent increase in government revenue. Of course that is against a background of GDP growth, according to the government, of 3Â¼ per cent and a reduction in our terms of trade, according to the government, of 5.75 per cent.
The last time there was growth in revenue of more than 11 per cent was back in 1987-88. We will recall that the situation back in 1987-88 was that we had GDP growth of 5.6 per cent and we had an improvement in the terms of trade of about 8.7 per cent. That was the background against which we had a growth in revenue of more than 11 per cent. It is quite difficult to achieve a growth in revenue of 11 per cent. The Treasurer knows two things. He knows, firstly, that it is highly unlikely that he will ever have to be accountable for the delivery of the final budget outcome. After September 2013, given the current political trends, even he would accept that there is only a slim chance that he will have to defend the performance of the government against budget, so he is reasonably safe in putting wildly optimistic revenue assumptions into the budget. Secondly, even if the Treasurer is still the Treasurer in September 2013, do you know what he will do? He will bring out the trick that he comes out with every single time and say, 'Shock, horrorârevenue has collapsed, revenue has fallen away; we thought that revenue would increase by 11.8 per cent'âeven though that was based on completely unrealistic expectationsâ'and we thought that we were going to have a $39 billion increase in revenue from 2011-12 to 2012-13, but it did not happen. It is somebody else's fault: nothing to do with our massive increases in spending, nothing to do with our wasteful spending, nothing to do with the fact that we treat taxpayers' money with absolute contempt, nothing to do with the fact that we cannot wait to shuffle $500 million out the door before 30 June, in the next six weeks, by bringing spending forward from 2012-13 into this financial year.'
By the way, I make this point to the Treasurer: shifting expenditure from the next financial year into this financial year is not a spending cut next financial yearâit is cooking the books. It is trying to create the illusion of a surplus in 2012-13 where there is none. If people in corporate Australia used the accounting standards that this Treasurer and this government live by, they would be locked up. People in corporate Australia would not be allowed to fiddle the accounts the way this Treasurer has been fiddling them in recent weeks.
In the middle of all this we have the carbon tax. 'Carbon tax' is a term that the Treasurer dare not speak. In his whole 11-page speech bringing down the budget he never really engaged with the issue that supposedly is this big achievement and this big policy challenge that this government has confronted, and that is the government's approach to climate change. I was interested to read in the Financial Review today that former Labor leader Mark Latham was similarly surprised that a government that is supposedly so proud of its achievement of imposing a carbon tax on the Australian people did not have more to say in the budget speech on why it is doing what it is doing with the carbon taxâa carbon tax which will push up the cost of everything, which will make us less competitive internationally, which will make it even more expensive to do business in Australia, which will shift jobs and emissions overseas and which of course will do nothing for the environment although it will impose sacrifices on everyday Australians by pushing up their cost of electricity and their cost of living.
The reason the Treasurer did not say more about it is that increasingly people inside the Labor Party are embarrassed about what the government is doing; increasingly people inside the Labor Party understand that what they are doing is inappropriate, that they are going to hurt Australians through increased cost-of-living pressures without doing anything beneficial for the environment in return. Ministers in the Labor cabinet are briefing the media that they think they should scrap the carbon tax, we have had Kristina Keneally saying that we should scrap the carbon tax and we have backbenchers coming out and saying that too. When we are the government and we rescind the carbon tax, I am convinced that the Labor Party will sit side by side with us to make sure we get rid of this toxic tax.