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Wednesday, 13 November 2013
Page: 196


Mr HOCKEY (North SydneyThe Treasurer) (17:50): I move:

That this bill be now read a second time.

Mr HOCKEY: It is with regret that I stand here today to give the second reading speech in relation to a bill that has to increase the debt limit of the Commonwealth of Australia. It is with regret that I am doing it, but I am not surprised that I have to, because the previous government recognised that ultimately whoever was elected after the election would have to deal with this issue. The proposal before the House increases the legislative debt limit from $300 billion to $500 billion. The legislative limit has been lifted three times since it was introduced by Labor in 2008. Of course, we never had to have a debt limit, because we paid off the debt that we inherited previously from Labor. And, what's more, we left the previous Labor government with more than $50 billion in the bank. So, we did not need to have a debt limit, because what we did was wipe out all of the net debt and left money in the bank.

But the member for Lilley, previously the Treasurer, thought it was a terrific idea to put a speed-limiter on his own colleagues and have a debt limit of $75 billion in 2008. The problem was that the Labor Party could not keep to that debt limit and it was increased in 2009 to $200 billion. That was part of a package of measures designed to stimulate the economy in the wake of the GFC. We said the stimulus was way too much. Labor pledged never to get near the $200 billion. In the interim, they kept spending and spending. Then they came back to the parliament in 2011 and said, 'Hang on, we just need an extra $50 billion—but, don't worry, we're not going to get to $250 billion'. We were sceptical; we argued the case against it. But we did not vote against it, because we knew that it would be irresponsible, in those circumstances, to create the uncertainty associated with blocking the appropriations and the associated increase in the debt limit.

And of course, in this place, the member for Lilley, well after the GFC had finished, then said, in the 2012 budget, 'We need to increase it to $300 billion'. He said that was only necessary because they needed to have a buffer of between $40 billion and $60 billion so that the Australian Office of Financial Management, the AOFM, could properly deal with the refinancing lumpiness. We had extensive debates in this place about whether that buffer was needed, and the member for Lilley tabled, in an unprecedented way, the advice, the minute, from the Australian Office of Financial Management, warning that they needed to have a buffer of between $40 billion and $60 billion above what they expected peak debt to be so that there could be a proper refinancing regime that would not in any way disarm the markets. And we did not oppose that bill. We accepted the advice of the AOFM, in opposition, and we accepted the government's statement that the debt would not go above $250 billion—in fact, because he was going to a $300 billion debt limit, the then Treasurer pledged that the Labor Party would never need to take the budget beyond $250 billion. We were sceptical, and we were right to be.

The member for McMahon, in an economic statement literally just weeks ago, said the debt is going to get to $370 billion. But the debt limit is $300 billion. The debt limit is $300 billion and he said, 'We're going to have to go to $370 billion'. Did he raise this during the election campaign and accept that they were fully responsible for this mess, that the debt was going to $370 billion and they were going to have to deal with it? No: it was just buried in the papers. But I want the member for McMahon to explain how he can now be so wedded to $400 billion when he delivered a number of $370 billion and he had received written advice that you need a buffer of between $40 billion and $60 billion. As I said in question time: it doesn't add up. A peak debt of $370 billion, plus $40 billion to $60 billion for refinancing, means that the $400 billion does not add up. What a surprise: the Labor Party couldn't add up when they were in government; how would you expect them to add up when they are in opposition!

Mr Bowen interjecting

Mr HOCKEY: I'm going to send you a calculator for Christmas—that's what I'm going to do! The old abacus has gone a little wobbly, old son! I'm sending you a calculator. And I'm going to make sure it's not a scientific one—I'm going to keep it simple, with nice big digits! That is what we are going to do.

So the member for McMahon—this is a cracker—walks into caucus and says, 'Hey guys, I've got a great idea: let's lock 'em into $400 billion; they'll need to explain themselves when they get to $400 billion'. But he failed to tell the caucus that in fact he was taking it to $430 billion. How did that happen? My Lord, what a surprise!

And of course the Greens were roped in. There is the Leader of the Greens, Senator Christine Milne, thinking, 'It's a terrific idea to have a limit of $400 billion'—but, only weeks ago, she put out a press release saying you shouldn't have a debt limit at all! There is no problem with debt! Go your hardest on debt, she said, a few weeks ago. But now, all of a sudden, this is a very serious issue. The Labor Party, in partnership with the Greens, caused the debt and they are now trying to stop us from dealing with it.

It is not just the $430 billion, though—that was the last published number from the Labor Party. We have introduced bills today that seek to reduce the debt by $20 billion. We are getting rid of the mining tax and the associated expenditure. That saves over $13 billion. We are getting rid of the Clean Energy Finance Corporation, the CEFC. That saves over $7 billion. It was $10 billion of borrowed money, but we cannot stop what has gone out the door from going out the door—it already has, and we are meeting our contractual commitments—but I tell you what: we don't want to have to borrow another dollar to put into the CEFC.

So, hang on, let me get this right. Labor say the debt should not go past $400 billion but, even on their own advice, it was going to $430 billion. Then they want to stop us from paying down $20 billion. So that would take us closer to $450 billion, I would suggest. But there is more. And why is there more? I will tell you why there is more: because the Reserve Bank—

Mr Bowen interjecting

Mr HOCKEY: The member for McMahon came before this place today—

Mr Bowen interjecting

Mr HOCKEY: Hey, listen mate: you're not Treasurer anymore; you haven't seen the details. I would urge the member for McMahon—

Mr Bowen: Release the documents; you know you have to!

Mr HOCKEY: Oh, you don't want me to release those documents, mate! I tell ya: there won't be a rock that is big enough for you to hide under!

You don't want me to release those documents. I don't want to do what Labor does and use the Treasury and the RBA and others as a shield and a sword. But I’ll tell you what: the Secretary of the Treasury is going to appear before estimates next week and the Governor of the Reserve Bank can appear before the Economics Committee in this place—with Labor Party members on it—and go your hardest! Go your hardest about the Reserve Bank's $8.8 billion and go your hardest about the debt limit, because it is Labor's debt. There is no excuse.

The world did not stop on election day—it is just that the sun came out. That is the only thing. The world did not stop turning and we cannot turn back the ship of Labor's debt immediately. We cannot do that. Do you know why we cannot do it? It is because we would need to close down—immediately—payments for the payment system and payments in relation to welfare. We would need to close Medicare straight away. We would need to start closing the government. Why? Because the debt limit is being hit. We are going to reach the debt limit on around 12 December.

So if the Labor Party wants to oppose this bill, let me be very blunt: we will stare you down on this. Why? It is because the debt limit is being hit on 12 December. And I want to know if the Labor Party thinks it is so heroic to go down the path of closing down government services, because we may need to exceed that debt limit. I want to know if that is what they really believe.

Madam Speaker, this is a game they are going to lose. They are going to lose because they are responsible for it. The difference between the Tea Party and the Labor Party on opposing debt-limit increases is that the Tea Party did not create it, the Labor Party did—the debt. They are the ones responsible. It is quite telling. This does not come as a surprise.

Neil Mitchell, on 3AW, asked the former Treasurer Wayne Swan on Wednesday, 15 May 2013: 'Will whoever wins the next election need to raise the debt level?' Wayne Swan said: 'That will be a matter for them.' Everyone look around you. We are surrounded by 'them'. We have to deal with this.

You had a Treasurer who did not have the guts to front it up, who was delivering a budget that actually increased the debt beyond the debt limit and he did not have the ticker to come into this place and deal with it. Now we have another former Labor Treasurer—who never had the ticker to own up to it—who delivered an economic statement that took the debt to $370 billion and with an increase in the capacity needed for the AOFM took it to $430 billion. He never had the ticker to come up and deal with it. We will, because we have to clean up the Labor Party mess. You people have no shame. There is no sense of embarrassment about dealing with this mess, but we will deal with it in the national interest—because we must.

I know whenever the Labor Party see a figure, they feel the need to have it. Here's a tip: the debt limit is not a debt target. You do not have to do your best to get there. The Labor Party think that a limit is about spending it all and more. I would not want to be your bankers.

Mr Keenan: Yes, you would!

Mr HOCKEY: As long as they vetted the interest repayments, I suppose you would! But I would want to make sure I had a lot of security. I would want to go out and inspect the homes, have a look at the cars and check out the health of the first born! I would want to be absolutely sure. If I were leaving money to someone in the Labor Party I would want to make sure I had a lot of security—because Labor has broken every debt limit it has had. They see it as a debt target, not a debt limit. That is the thing. We do not want to have to come back to this place and increase the debt limit. We want to deal with it now, get it out of the way and get on with the job of starting to pay down the debt, get on with the job of paying off the mortgage, ensuring that no future generation has to cop the economic incompetency of Labor.

To be frank, who knows what lies ahead? We do not know. I hope that the economy continues to get better. I hope that the world economy continues to get better. We do not know, but we are being responsible. What we do know is that every cupboard we open has spiders in it. What we know is that Labor trashed the joint when they were in government and now they are trying to stop us from fixing it. How do we know? As we go through individual agencies we are starting to discover that the agencies were significantly underfunded. The former Treasurer says that it is okay to run at a loss. It is okay to run at a loss until you run out of money that is actually covering the loss.

That is exactly where the ACCC is, for example. They were instructed to run down their reserves, until the point where they had no reserves left, but they were still making a loss. It is inconceivable, from my perspective, and it is unacceptable, from my perspective, that you should ever allow any entity—whether it be a taxpayer entity or a private-sector entity—to continue to run at an unsustainable loss, because sooner or later it ends up in tears. I would say to the member for McMahon and his colleagues in the Labor Party: you are fully responsible for this, whether it be the ACCC or a range of other institutions that we are going through now, and we will identify where those problems are.

It is also patently clear that the economic growth forecasts have been revised down into the future. Why? It is because the Labor Party was not fair dinkum about the terms of trade coming off. The Labor Party was not fair dinkum about the growth forecast. The Labor Party was not fair dinkum about the unemployment rate.

The Reserve Bank recently published a downgrade in its forward estimates, in its forecasts for economic growth. As the former Treasurer knows, they are not significantly different to where the government will go. Therefore, it is going to have an impact. It will obviously have an impact on the budget bottom line. But they knew this was coming. We were warning about it after the budget was delivered. And, in the 11 weeks between the budget being delivered and this man, the member for McMahon, delivering an economic statement, the budget deteriorated by $33 billion—in 11 weeks. That is quite the record—$33 billion! The only person that has surpassed that record is his predecessor. The member for Lilley has a record I hope no-one will ever beat—a deterioration in budget numbers.

It comes back to basic incompetence, like with the mining tax. They originally forecast that tax would raise nearly $50 billion over five years. It ended up raising less than $5 billion. In fact, it raised $400 million—a tax that originally, as an RSPT, was going to raise $50 billion. The problem was that they committed the expenditure against it. That is why we have to get rid of the mining tax and the expenditure against it—because the expenditure against it is costing the budget over $13 billion. If we do not do that, the debt will go up. This is what we have inherited. We have inherited a legacy of debt and deficit. Our predecessors trashed the house, they were terrible tenants, and now they will not let us go to the bond to try and recover just a fraction of the challenges associated with the costs of clean-up.

The Labor Party are now playing a game of Russian roulette, but what they do not understand in relation to debt limits is that the barrel is fully loaded. If they choose to pull the trigger, there can only be one outcome for them. The problem is that there will be ancillary pain for the Australian people. We will not let Australia in any way reach a point where we have to breach the debt limit. I will not do it; the coalition will not do it. We will put in place a responsible approach to this issue. When they pick up a paper or when they listen to the TV or the radio, they need look no further than the diabolical position in the United States, which will deteriorate again in January and beyond.

Mr Bowen interjecting

Mr HOCKEY: What the member for McMahon just cannot get into his head is that, if you do not reduce expenditure, if you have a lower debt limit, you actually have to have more severe cuts. And the Labor Party will own those cuts. Let me be sure.

Mr Bowen: You are a disgrace.

Mr HOCKEY: You will own these cuts. You will own every single cut, and why? Because the Labor Party likes to spend other people's money, but sooner or later other people's money runs out. That is the thing about the Labor Party: they are very good at spending everything that they do not own. They are very good at placing obligations on people who do not have a voice in the Labor ranks.

So I say to the Labor Party: stop the games. This is your debt limit. It is your debt. You have to at some point accept personal responsibility for your actions in government. If you do not, you will wear this like a crown of thorns and we will ensure that the Australian people know at every single point that you are incompetent managers, not just in government but also in opposition.