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Thursday, 18 November 2010
Page: 1687

Senator CORMANN (6:22 PM) —I move:

That the Senate take note of the document

I rise to speak on the report by the Senate Select Committee on Fuel and Energy. The Senate Select Committee on Fuel and Energy was a fine committee. It did some great work over a period of two years across some areas where this government again, consistent with its usual modus operandi, was trying to keep things secret and covered up in order to avoid scrutiny, transparency and accountability. One of the first issues we looked at through this committee was the government’s failed proposal for a carbon pollution reduction scheme. In the lead-up to the 2007 election, the then Leader of the Opposition, Kevin Rudd, who became Prime Minister, said that we had to face up to the ‘greatest moral challenge of our time’. His prescription was to propose a carbon pollution reduction scheme. He wanted to make people believe that even in the absence of an appropriately comprehensive global agreement we would be able to reduce global greenhouse gases by placing additional costs on our economy, on jobs and on investment in Australia. But, of course, nothing could be further from the truth.

To reduce emissions in Australia in a way that increases them in other parts of the world does not make sense. It is dumb economics, it is bad policy and it was not going to contribute anything to the achievement of the objective that the Prime Minister was supposedly pursuing. The reason I go back over that ground is that, in order to substantiate the assertion that this was a sensible way to help reduce global greenhouse gas emissions, the Treasurer asked Treasury to conduct some modelling. This Treasury modelling had some very heroic assumptions, and one of them was that the US was going to have an emissions trading scheme in place by the end of 2010. Now we are at the end of 2010, and we know that there is neither an emissions trading scheme in the United States nor any prospect of there being one because President Obama and the Secretary of State, Hillary Clinton, have said: ‘No, it is not going to happen. In the US we now think it is a bad idea, but you in Australia should still do it.’ That is what we were told a couple of weeks ago.

The modelling results that Treasurer Wayne Swan sought to present to the Australian people completely underestimated the economic impact of that CPRS—the impact on jobs, the impact on the cost of living and the impact on our economy generally was completely underestimated. That is this Treasurer’s modus operandi, because it has happened again and again. He stuffed up the mining tax proposal, and Kevin Rudd had to go—the then Prime Minister was stabbed in the back. Yet Treasurer Wayne Swan, the guy who was actually responsible for putting it all together, has not been sacked; he has been promoted and is now one political execution away from being our next Prime Minister. How does that make sense?

I asked Treasury officials at the time about the CPRS assumptions, ‘How come you are using these strange assumptions?’ They said that they had used those assumptions ‘at the direction of the government’. A second time round, we asked Treasurer Wayne Swan about the assumptions around the mining tax, and he said, ‘No—I know I get myself into trouble when I talk about assumptions, so I am going to keep them secret; I am not going to tell you the assumptions that we have used to estimate the mining tax revenue.’ In the meantime, the figure started off at $12 billion. We were then told that it would have been $24 billion. Then, at a secret meeting in a dark little room somewhere with nobody watching, it went down to $10.5 billion. Finally, the exchange rate assumptions changed and it went down to $7.5 billion. So revenue estimates for a tax that has not even been introduced yet have fluctuated between $7.5 billion and $24 billion.

As the Chair of the Senate Standing Committee On Economics I am sure you would share my view, Madam Acting Deputy President Hurley, that these assumptions are crucially important when it comes to scrutinising the actual impact of this mining tax proposal on the budget, on the economy, on jobs and on investment. When there are fluctuations like those, which are caused by changes in assumptions, blind Freddy can see that the government should be transparent about the assumptions. But of course the government is ducking and weaving, bending over backwards and doing everything it can to avoid releasing the information, and that is true to form for the secretive Gillard-Swan government.

There is also the GST deal. It is a deal among federal and state Labor leaders that the states and territories will hand over, as we were told at the time, about one-third of the GST to the Commonwealth. However, that figure was subject to variation—at one stage it was to be 30 per cent, then it was to be about one-third—so it was not all that clear. The opposition then went to the 2010-11 budget papers to see what the overall GST revenue estimates were, and we came to the conclusion that, considering that the government is saying that it wants this deal to take effect from 1 July 2011, if 33 per cent of the GST revenue estimated over the forward estimates were to be handed over, it would amount to about $56.1 billion, and if 30 per cent were to be handed over it would amount to about $51 billion. So there is a guide—it was to be in the range of $51 billion to $56 billion. Have you ever heard the Treasurer mention either $51 billion or $56 billion as the amount of money that the federal Labor government wants to take off the states as part of the deal? No, of course not. The Treasurer gave a second reading speech in the House of Representatives two weeks ago, and the closest he got to mentioning the figure was to say, ‘It will be about a third’.

About a week ago the Treasurer released the Mid-Year Economic and Fiscal Outlook, and in it there was a breakdown which said that the revenue that will now go from the states to the Commonwealth if Wayne Swan gets his way is about $44.5 billion—not one-third and not 30 per cent but about 28 per cent is what we are told it will be. That is only about $8 billion dollars worth of difference, and what is $8 billion over the forward estimates among friends?

The important point here is that when John Brumby, Kristina Keneally, Anna Bligh and Jon Stanhope—all the Labor leaders—sat in a room with Kevin Rudd and Wayne Swan there was no way they could have known how much of their state’s revenue they were signing over to the Commonwealth. Nowhere in the legislation does it say how much revenue is going to go to the Commonwealth. In there there is a very obscure formula; it says that the Commonwealth wants to take Commonwealth spending up to a certain level.

Let me make the obvious point first. A GST grab by the Commonwealth at the expense of the states is not health reform. If the government were focused on health reform they would have agreed with Premier Colin Barnett, who said: ‘I am prepared to put the equivalent amount of WA’s state GST into a joint state-federal pool and we will be able to co-fund the health reforms that we all agreed to at COAG.’ But, no, that was not good enough. Kevin Rudd, and now Julia Gillard and Wayne Swan, do not think that is good enough. Every now and then they send Nicola Roxon out to make a few comments as part of the PR strategy, but she is not part of the deal. This is not about health. This is part of a federal Labor government always looking for more cash and taking more money at the expense of the states.

In the 1½ minutes I have left I want to reflect on the disastrous record of the Treasurer we have in Australia at the moment. He is a Treasurer who has given us record deficits. He is a Treasurer who has increased taxes by more than $40 billion over the last three budgets. He is a Treasurer who inherited a sound balance sheet, a sound budget, a strong fiscal position, with $45 billion in the bank and with a $20 billion surplus, yet we had a $54.8 billion deficit last year and a $41.8 billion or thereabouts deficit this year and have about $94 billion worth of net debt coming our way.

The $40 billion in taxes and the $94 billion in additional debt are not enough. This government needs more cash. So what does it do? It takes $50-odd billion off the states. It is going to take the states’ GST, rebrand it and make people believe that somehow it has invested more money in federal hospitals. Like the Australian recently put in their caricature, that is alchemy and magician illusions a la Wayne Swan. The government is trying to make people believe something that is not real. That is political spin and deception at their worst. It is time that this Treasurer was actually held to account for his deception of the Australian people. I have not even started talking about his attempt to sell $40 billion of tax increases and revenue measures as spending cuts. (Time expired)