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Thursday, 15 September 2011
Page: 6261

Senator THISTLETHWAITE (New South Wales) (16:53): I do not know what planet those opposite were on when they cooked up this notice of motion this afternoon, but it certainly was not Mother Earth. This motion seeks to criticise the Gillard government's fiscal strategy. This is completely at variance with the fact that the International Monetary Fund, the ratings agencies and the OECD have all given a resounding tick of approval to this government's fiscal strategy. It is completely at variance with the fact that a recent Stanford University study of 38 leading economies in the world found that Australia ranked No. 1 on sovereign fiscal responsibility. It is completely at variance with the fact that because of our stimulus strategy during the global financial crisis we kept Australians in work and now we have an unemployment rate which is the envy of nations throughout the world—it is half that of the United States and half that of the United Kingdom. The Leader of the Opposition is going around making irresponsible commitments to policies that cannot be funded and that will lead to a severe budget black hole. He is completely out of touch on economic management.

We on this side understand the importance of a strong, credible fiscal strategy. We understand the importance of acting as the government did during the global financial crisis, when it put stimulus into the economy and protected the jobs of 200,000 Australian workers. That policy is still being opposed by those opposite. But 200,000 Australians and their families do not oppose the stimulus package, and they do not oppose the actions of a government that since 2007 has created 750,000 jobs in our economy.

We have also acted responsibly and within our means, because we know that the global financial crisis ripped a hole in government revenues to the tune of some $130 billion over five years. This is papered over by the opposition—they want to pretend that it did not occur. But this government has put in place a clear strategy to return our budget to surplus. Firstly we said that we would exercise restraint in spending, and we did. Secondly we said that we would keep taxes below those that we inherited from those opposite, and we are. Finally we have said that will make responsible decisions to reprioritise expenditure and so deliver net savings to the budget.

We have one of the strongest fiscal positions in the developed world. This was recently confirmed in a study by Stanford University's Institute for Economic Policy Research published in April 2011. It said:

In the wake of the recent financial crisis, and in light of escalating deficits and mounting debt burdens in a number of major industrialized nations, the issue of fiscal responsibility and sustainability has moved to the forefront of global discussions and political debates.

   …    …

This prompted Stanford University and the Comeback America Initiative to try to develop a s overeign f iscal r esponsibility i ndex. Our SFRI needed to incorporate both quantitative and qualitative metrics that allow ed one to extensively define ' fiscal responsibility ' as well as carry out cross-country comparisons. This study by Stanford University was commissioned by the United States government to look at exactly where America sat when it came to fiscal responsibility throughout the world. The study looked at the 34 nations that belong to the OECD. It also looked at some of the emerging nations: Brazil, Russia, India and China. In total, it looked at 38 leading economies throughout the world. It looked at a definition of fiscal responsibility and said that it involved three factors:

… a government’s current level of debt, the sustainability of government debt levels over time, and the degree to which governments act transparently and are accountable for their fiscal decisions.

The study continued:

This implies that responsibility is more than managing one’s annual deficits. Creating sound institutions, rules, and procedures that regulate the budget process are essential.

When the study was done—when all these factors and these issues were taken into consideration—a league table was produced. The results of that study are very interesting. Unsurprisingly, Greece came in last among the 34 nations that were studied. The United States was 28th on the league table when it came to fiscal responsibility. Germany was 25th on the league table. The United Kingdom was ninth. China—a very strong economy in our region with massive levels of foreign reserves, a booming economy and growing employment—came in fifth. But what was interesting was the nation that came in first, none other than Australia. Australia was the No.1 country. In 2011 Australia was the No. 1 country when it came to sovereign fiscal responsibility, yet those opposite seek to criticise this government for our record of fiscal responsibility, demonstrating just how completely out of touch they are when it comes to economic management. According to this study, we cannot do any better: we are No. 1 in the world when it comes to fiscal responsibility. Yet those opposite seek to come into the Senate this afternoon and criticise the government and, indeed, waste the Senate's time with a motion about the government's record on fiscal responsibility.

What this motion is really about is the politics of economic envy, because those opposite cannot stand to acknowledge what the Stanford study acknowledges. They cannot stand to acknowledge what the International Monetary Fund, the OECD and, indeed, the leaders of many other nations—all credible economists—recognise and indeed what the Australian people recognise: that this government has done a first-class job and will continue to do so when it comes to managing our nation's finances and growing our economy. In fact, we managed one of the most severe economic downturns since the Great Depression. We did so by protecting jobs, so 200,000 Australian workers are still in employment because of our actions. We did so whilst maintaining growth. Despite some hiccups along the way, we did so whilst maintaining growth. We have done so with a great pipeline of investment in business in this country. We have done so with record profits in a number of sectors of the economy. Also, we have a credible, detailed, transparent and costed plan to return our budget to surplus in 2012-13. I might add that the ratings agencies have recently given the tick of approval to that plan, because once again they have seen that the Australian economy is rated AAA when it comes to these issues.

The real issue behind this motion is that those opposite cannot get over the fact that when it comes to great nation-building economic reforms it always falls to Labor in government to deliver them for the Australian people, whether it be Medicare or superannuation in this country—opposed by those opposite and now providing $3 trillion worth of investment funds and growth in our economy. When it came to liberalising our economy, reducing tariffs, opening up the economy, floating the dollar and creating an efficient market based economy for trading within the international community, it fell to Labor to deliver these economic reforms. It is about the politics of economic envy.

When the coalition were in government for the 11 years of the Howard government, what were the two big economic reforms that they delivered for the people of Australia? What was their economic record? There were two things: the goods and services tax, and Work Choices. They were the two big economic reforms that those opposite delivered, yet they come in here and seek to criticise the government for its record on fiscal responsibility. The government stands on its record of fiscal responsibility and does so proudly, in sharp contrast to those opposite.

I mentioned fiscal responsibility and fiscal transparency as one of the issues that the Stanford study took into account in assessing and ranking nations when it came to sovereign fiscal responsibility. Yet those opposite refused, during the last election campaign, to have their policy costings analysed by the Treasury.

Senator Brandis: We had them analysed independently.

Senator THISTLETHWAITE: Yes, you are right, Senator Brandis; you did have them analysed.

Senator Brandis: Independently.

Senator THISTLETHWAITE: You did. And we saw why, when they were analysed independently, because your auditors refused to give an unqualified audit of those figures. The reason they refused to give an unqualified audit was that the costings came up $11 billion short when it came to the crunch. Post the election we found that an $11 billion black hole existed in the costings. Imagine what it would have done to our rank under the sovereign fiscal responsibility index as judged by Stanford university if those opposite had been in government with an $11 billion black hole! They do not seem to have learnt any lessons from this foolish approach to the last election campaign because they are continuing to announce irresponsible, unfunded election commitments. Far be it from me to be critical of this, because finally others in our nation are beginning to wake up to this game of those opposite. I draw to the Senate's attention a quote from the editorial of the Daily Telegraph of 13 August 2011 when the Daily Telegraph editorialised:



hairy-chested approach would be more convincing ... if Hockey and his mates had the gumption to wield their razors against wasteful and irresponsible promises made by their leader.

But, then again, there are many in the Liberal Party who know that their leader has no idea of fiscal responsibility and economic management. I again draw the Senate's attention to a quote from none other than a former Leader of the Liberal Party, John Hewson, who, on 24 May 2010, when speaking of the Leader of the Opposition, said:

Tony is genuinely innumerate. He has no interest in economics and no feeling for it.

And those opposite seek to criticise us for our economic management. They cannot go on like this forever, with these announcements of irresponsible spending commitments and the claim that they will return the budget to surplus, because eventually they will have to say how they will do it. To date they have not. They just go around making these irresponsible spending commitments, but they will not come clean with the Australian public about how they will do it. However, some months ago we did find out from a leaked shadow cabinet minute how they were going to balance the budget, despite the fact that they do not have and will not have the revenue from the minerals resource rent tax and despite the fact that they will have no revenue from carbon pricing. They will do it by cutting $70 billion worth of government outlays and services. There is a $70 billion black hole in the opposition's spending commitments—$70 billion! Senator Brandis said earlier that this was a misstatement; this was a lie.

Senator Brandis: A falsehood

Senator THISTLETHWAITE: A falsehood, Senator Brandis. I draw your attention to the comments of Andrew Robb on Meet the Press on 4 September 2011, when he was asked a question by the interviewer, Fran Kelly, about that figure of $70 billion. The interview reads:

FRAN KELLY: It's not like a furphy, then?

ANDREW ROBB: No, it's not a furphy. We came out with the figure, right? So it is a furphy to call it a 'black hole'. That is just—it's just Labor's spin again to avoid any discussion about why we are looking at $70 billion as the sort of out-marker.

There is an admission there from Andrew Robb that a $70 billion black hole exists in the opposition's costings, because of $70 billion worth of reckless unfunded election commitments.

What does this mean for the Australian public? It means that they face the prospect of $70 billion worth of cuts to services. Yet, the opposition will not come clean with the Australian public. I have asked several of their representatives in public forums: 'What programs do you intend to cut to achieve a budget surplus? Is Medicare on the line? Is the childcare rebate on the line? Are the increases to pensions on the line? Indeed, is the reduction in the company tax rate that Labor has promised to deliver to businesses throughout this country on the line?' And they seek to criticise us for our fiscal strategy.

I mentioned earlier the importance of fiscal transparency. This government is acting on the advice of a unanimous report of the Joint Select Committee on the Parliamentary Budget Office on the establishment of a parliamentary budget office. This important reform will provide greater transparency in policymaking and ensure that the Australian people are better informed and have confidence in the commitments that are made by political parties in the lead-up to an election. These commitments will be independently assessed by a body to ensure that the Australian people can have confidence in them.

Bear in mind what I said about the importance of transparency, because only yesterday the shadow Treasurer, Joe Hockey, said in the parliament:

... the coalition will not submit its policy costings to either the Treasury or the PBO prior to the election.

And the opposition come in here and seek to criticise the government for its record on fiscal management—this from those who refuse to acknowledge the strong performance of our economy over recent years; this from those who continue to make irresponsible spending commitments that are underfunded; this from those who refuse to tell the Australian people how they will return the budget to surplus and what programs they will cut.

The Gillard government has a sound fiscal strategy and a plan to return our economy to surplus in 2012-13. It is a plan that has delivered protection for workers during the global financial crisis—the protection of 200,000 jobs—continued growth in our economy, a wonderful pipeline of investment in business and a process for transitioning our economy into a clean energy future. It is a plan based on transparency and openness that will provide confidence to the Australian people.