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Wednesday, 13 November 2013
Page: 211

Mr CIOBO (MoncrieffParliamentary Secretary to the Treasurer) (19:00): Thank you Madam Speaker, and may I like others in this debate take this opportunity to congratulate you on your elevation to the role of Speaker.

It has been an interesting debate. It has been fascinating to hear members of the Labor Party, now in opposition, lecturing the government about what should be happening with respect to the debt limit. I have to say that it must be a novel approach for a large number of the Labor Party members, because I suspect that many of them would have had to check their speaking notes before walking into the chamber to confirm that they were in fact going to be arguing for a lower debt limit rather than an increased debt limit, because it stands in stark contrast to the last six years of the Australian Labor Party's track record of their performance in government. We all know the narrative, which is that when the coalition lost office in 2007 we left no debt and actually left assets in the bank, so to speak. Over the next six years, the Australian Labor Party ran this down substantially.

We know that the Australian Labor Party has poor form when it comes to budgeting. We already know that the shadow Treasurer—who has just walked back into the chamber—clearly has trouble doing numbers and adding up. This is the shadow Treasurer who could not work out that the PEFO, the Pre-election Economic and Fiscal Outlook, was for $370 billion of gross debt. That is gross debt, not net debt, shadow Treasurer—he kept getting that number confused. Couple the $370 billion in gross debt with the fact that the Australian Office of Financial Management made it clear that you needed a $40 billion to $60 billion buffer, and you find that the $370 billion plus $60 billion puts you north of $400 billion to begin with.

Although the Labor Party's form is to come in and say, 'Well, we'll set the debt limit at X level and then we'll come back and ask for more if we need it,' that is not the approach of this government. We do not want to have to keep coming back and asking for more money. We already know—to pre-empt the amendment the shadow Treasurer has made clear he is going to introduce—that the Labor Party says, 'No, we think the limit should be $400 billion.' And, strangely, the Greens have also signed up to a $400 billion debt limit—but with that you would be flat out funding one of their policies, I suspect. That notwithstanding, the Greens and Labor have once again done a deal, and it is appropriate that a deal should be done on the first day of this new parliament, because it is entirely consistent with the deals that were done between the Greens and the Labor Party over the past six years.

What is it that we are actually talking about here? This bill seeks to amend the Commonwealth Inscribed Stock Act 1911 to increase the legislative debt limit from $300 billion to $500 billion. The legislative limit has been lifted three times since it was introduced in 2008. It was effectively increased from $75 billion to $200 billion in 2009, then increased to $250 billion in 2011 and then increased to $300 billion in 2012. The face value of Commonwealth government securities on issue that are subject to the limit has increased from around $50 billion when the limit was introduced in 2008, to over $285 billion today. Commonwealth government securities on issue are projected to increase further. We do not want a repeat of this situation—

Mr Bowen: This is a summing up for a half-trillion-dollar bill. Shouldn't the Treasurer be doing this himself?

The SPEAKER: There is no point of order. I call the parliamentary secretary.

Mr CIOBO: Entirely consistent with Labor's form today, they continue to abuse the standing orders and play games.

With respect to the bill at hand, we do not want a repeat of Labor's form. By setting a limit of $500 billion we signalled that it is not our intention to return to parliament seeking further increases to the limit. Did you hear that, Labor: it is not our intention to follow your track record. We will not be coming back here seeking a further increase in the limit.

Both the former government's economic statement in August and the 2013 Pre-election Economic and Fiscal Outlook reported that the face value of Commonwealth government securities on issue that were subject to the legislative limit were projected to reach $300 billion in December 2013. That is only weeks away. If Labor has their way we will break the $300 billion limit in only a matter of weeks. These budget documents also show that the face value of the Commonwealth government securities on issue is projected to continue to increase over the forward estimates and reach around $370 billion by 2015-16. In addition to the $370 billion, as I mentioned, the Australian Office of Financial Management has previously advised that it is prudent to maintain a buffer of $40 billion to $60 billion above peak debt projected in any year. This advice from the AOFM is not a new development. In fact, as the Treasurer mentioned in question time today, this advice was provided and tabled by Treasurer Swan, the member for Lilley, in this very House at this dispatch box on 10 May last year. It was based on the advice that the limit was last raised to $300 billion.

So, even on Labor's own numbers and advice a $400 billion limit would be inadequate. Let me repeat that point, and I hope the shadow Treasurer listens. Even on Labor's own numbers and advice, a $400 billion limit would be inadequate. The opposition has never understood this, and this has always been the case, because they treat the debt limit as a debt target. But as I and others have said clearly before, the budget has deteriorated since PEFO. I am advised that on current trends peak debt will now exceed $400 billion.

The debt limit needs to be increased to $500 billion to provide sufficient headroom to ensure that there is stability and certainty for financial markets. There must be confidence that the government has the capacity to finance its operations for the foreseeable future. The debt limit is a ceiling. It is not a debt target.

I also took note that the shadow Treasurer went to great lengths to make an issue of the fact that the explanatory memorandum that has been issued by the government was 11 pages in length. How extraordinary that once again we find hypocrisy! I heard one of the Labor members opposite talking about hypocrisy, but I had a look at the explanatory memorandum from 2009 and, unlike this hefty tome of 11 pages, Labor's was four pages in length. Once again, let the Australian public not be under any illusions about the fact that Labor walks into the chamber now with a very different set of expectations to those they had when they were in government. What Labor says should not be listened to. Any analysis of Labor should be based upon their performance.

The reality is that this is a Labor Party opposite that is now seeking to frustrate this government in the job that we have to do. Our job is clear. The task at hand is to start to pay down Labor's debt, get the budget back under control and to repair the damage that Labor left behind. But one of the most crucial aspects of doing that is to provide the financial markets with stability and certainty. We do not want to be like Labor and keep coming back to this table and to this chamber asking to increase the debt limit. We want to do it once. This is Labor Party debt that we are dealing with. We want it finalised. For that reason, I commend the bill to the House.

Question agreed to.

Bill read a second time.