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Thursday, 29 November 2012
Page: 10281

Senator MASON (Queensland) (16:57): Madam Acting Deputy President Pratt, I take this opportunity on the last Thursday of the parliamentary sittings of the year to wish you a Merry Christmas. Perhaps the Christmas spirit has made me more generous than I usually am.

Senator Marshall: What about me?

Senator MASON: And of course my colleagues in the Senate at the moment, in the government and indeed the crossbenchers.

Senator Kim Carr: What about your own team?

Senator MASON: I wish them all a Merry Christmas, thank you, Senator Carr. I am in a generous mood and that generosity is perhaps reflected in the fact that I will concede that the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 is not without all merit. The objectives of the legislation to prevent the erosion of small, lost or inactive account balances from fees and charges and to reunite unclaimed balances with their owners are not unworthy. There are some good policy aims. But the Senate knows that in fact this is a rather cunning plan by the Treasurer to sort of put his hand down the couch, to look under any hollow log for money to somehow pay off the budget deficit. He has to find a billion dollars. As my friend Senator Cormann said before, about half of that, $555 million alone, will come from lost super and, indeed, from the bill as a whole, about $760 million will be acquired, which is about three-quarters of that required to pay off the debt.

Sadly, this is not new. What the government is really doing is taking money that is supposed to be used by citizens for their future retirement and trying to balance the budget today. So the government is living for today and not saving for tomorrow. Sadly, this philosophy has a very long history in Western politics. You will be aware, Acting Deputy President Pratt, that after World War II, social democratic governments—indeed, even in the United States after about the 1960s, with President Johnson's 'Great Society'—made a habit of spending money they did not have. Social democratic governments got into a habit of spending money they did not have. In other words, they went into debt.

You have heard me many, many times in this place talk about Labor's record on debt since Federation. I always argue—and it is right—that every time Labor leaves office Australia is further in debt. There has never been an exception since 1901. Since this nation was founded, when Labor leaves office Australia is always further in debt. What is the government doing? It is borrowing from our children's future. That is what the Labor Party has done since 1901. I have said many times that it does not matter if it is peace, if it is war, if it is good times or if it is bad times, the Labor Party always leaves the citizens of this country further in debt. There has never been an exception in 110 years of this Federation.

The pea-and-thimble trick that Senator Carr and others like him tried to work out was that citizens, at least the middle-class ones—nudge, nudge, wink wink—would receive more in government benefits than they ever would pay in tax. That was the pea-and-thimble trick—that the middle class, at least, would receive more in government benefits and welfare and entitlements than they would ever have to pay in tax—that developed in Western countries, in the United States from about the 1960s and Western Europe post World War II. That was the assumption. That was the clever trick.

What developed in Western Europe was a giant pyramid scheme—or, perhaps more accurately, a game of pass the parcel. My friend Senator Cormann alluded to it before. You keep kicking the debt down the road. That is what you do. You keep kicking the debt down the years. You keep kicking the debt down the generations. That is what social democracy has done post World War II. And, I have to say, they have got away with it for a hell of a long time—kicking the debt down the street. It was successful electorally, particularly in Western Europe. Fortunately, it was not so successful here in Australia.

If the coalition had not won two out of every three elections since World War II we would have gone down the Western European path of systemic debt. Fortunately, the conservative parties in Australia won two out of three elections after World War II. But what was the story in Western Europe? It was the other way around. The social democratic parties won about two out of every three elections—and look where they are. The pea-and-thimble trick ain't that funny any more. The magic has well and truly gone.

The trick was that if people kept thinking that, if you keep kicking the debt down the road, well, it is magic, no-one ever really has to pay it off—abracadabra, really. We now know that this does not work. We now know that pass-the-parcel economics is exhausted, because in the end, as we have all discovered in recent years, those countries cannot even pay the interest on their debt. So they cannot pass the parcel any further because they cannot pay the interest on their debt. So much for the pea-and-thimble trick! So much for the social democratic magic. So much for debt.

The solution, as we now know, does not lie in Athens. Athens is not the answer. Social democratic governments must be very happy. And do you know why those governments are happy? Because they are spending money belonging to the young—those who are not old enough to vote and those who are yet unborn and cannot vote. They will spend the inheritance of young people who cannot yet vote and those yet to be born. That has been the crux of social democratic economics since World War II. That was the pea-and-thimble trick. That, of course, has become increasingly exhausted.

For years and year, for millennia, parents—as many of us are here in the chamber—have sought to pass down money or property to their children. That is what parents do. Parents pass down money or property in their wills and leave it to their kids. That is what people do. Now, what does our government leave our children and our grandchildren? It does not leave them money or property. It does not leave them something worthwhile having. It leaves debt. That is the present of the current government to future generations.

Mr Swan is not a Santa Claus. He has already taken the money and spent it. The gift from Mr Swan to future generations is an IOU. Can you imagine parents in this country leaving an IOU to their children in their wills? We laugh, because parents do not do that. But governments in this country and in the Western world are quite happy to leave debts to children and to generations yet to be born. Why do they do it? It is because they can get away with it, because those children cannot yet vote. All the rent seekers and all the interest groups are out there, taking money from their future, taking the kids' inheritance, taking their future from them. That is what they do.

Sadly, the coalition has not always been perfect—I know that. But this lot are even worse. They are spending the inheritance of our children and our grandchildren. Can you believe that this is the story, the legacy, of modern Western governments? There is huge debt to service a lifestyle that governments cannot afford. That is what this is all about. The Labor Party preach to the coalition about social justice. They talk about intergenerational equity.

Senator Chris Evans: Is there a bill in here somewhere?

Senator MASON: Yes, and I have mentioned the bill, Senator Evans. It reflects this underlying concern. The government talks about intergenerational fairness and social justice all the time. Well, tell me, what is so just about leaving an IOU to future generations and kicking that bucket down the road? Where is the intergenerational equity in leaving billions of dollars in debt for kids yet to be born? As Peter Costello famously said when he was reflecting on the Intergenerational reportone of the great landmark documents of the last coalition government: 'Intergenerational inequity, in the end, is intergenerational theft.' And everyone, every member of this parliament, should be aware of that. None of us should ever forget it.

There is a wonderful book based on the BBC Radio 4 Reith lectures of 2012, and I urge my colleagues in the Senate to read it. It is by Professor Niall Ferguson, who is an eminent British historian. In it he talks about the partnerships between generations, and he quotes Edmund Burke, the great conservative philosopher. Professor Ferguson writes:

In his Reflections on the Revolution in France (1790), Edmund Burke wrote that the real social contract is not Jean-Jacques Rousseau’s contract between the sovereign and the people or “general will”, but the “partnership” between the generations.

In Edmund Burke's words:

Society is indeed a contract … The state … is … a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.

That is what Edmund Burke said in 1790. Professor Ferguson goes on to say:

In the enormous intergenerational transfers implied by current fiscal policies we see a shocking and perhaps unparalleled breach of precisely that partnership …

He also goes on to say:

I want to suggest that the biggest challenge facing mature democracies is how to restore the social contract between the generations.

To summarise the book and summarise the problem confronting Western nations, it is that: 'The biggest challenge facing mature democracies,'—Australia being prominent among them—'is how to restore the social contract between the generations.'

As Professor Ferguson knows, with current policies in the West, we are stealing the future of our young people. That is the problem. The measures are reflected in this bill. Governments are unable to resist the rent seekers and the interest groups, so they have to take the retirement savings of citizens to balance today's budget. The challenge for this government—indeed, for all governments in the future—will be to resist the rent seekers, to resist interest groups, and to start representing future generations. I am not suggesting for a second that it is easy. It is difficult for this government and it will be difficult for any government.

The test should always be this: is any expenditure proposed by government justifiable to the young and to the yet-to-be-born? I phrase it like this: if you are going to spend money, could you, in a hypothetical sense, justify that expenditure to your yet-to-be-born grandson or granddaughter? Could you justify the expenditure of that money to your yet-to-be-born grandchildren? If you can, maybe you should spend it. But, if you cannot, if it is to satisfy interest groups, if it is to satisfy rent seekers, if it is to satisfy the particular urgings of groups, if it is simply to win an election and if, by doing that, you bankrupt the future of those children, it is not worth it.

There is a crisis in the Western world. The United States is facing a fiscal cliff. I have only had the time this afternoon to talk about public debt. If you add public debt to private debt, well, God help us all. But this is the issue that is going to confront this government. It will confront the next Abbott government if we get the opportunity to govern. When we spend money, the test for us as well should be—and I do not mind saying this on the record—whether we can justify this expenditure to our children and our grandchildren, not just so we can live a more luxurious lifestyle, not just so we can feel better about ourselves and not just so we can live in greater comfort. No, that will not cut it anymore in the West. Those days are finished. We have seen what has happened over the last 70 years since the end of World War II—and it is a disgrace. It is a disgrace because the politicians gave in to those rent seekers and those interest groups, and they bankrupted the future of their own children and their grandchildren. There is no money left to pay for social welfare in the social democratic Europe. How are they even going to service the debt? There is rising unemployment and rising social unrest, and they do not know how to get out of the spiral. I know that it is not quite that bad in Australia. I accept that and I think we all accept that.

What I am concerned about and what the coalition is concerned about is this: if we go the same way as western Europe, because it is very tempting, if we go the same way as the United States, if we start to give in to every interest group running around Australia, we too will start heading towards a cliff. Hopefully, someone will stop this nation before we hit the ground, before we hit the bottom of the fiscal cliff. We owe it not just to ourselves, not just to the nation at the moment, but to our children and our grandchildren, and their future. For whatever we do in this parliament in the future, what we cannot do is mortgage their future just so we can live a little more comfortably today.

I know the job of finance minister is extraordinarily difficult and the balances that have to be undertaken are always hard. But I make this plea: whoever is in government must not make the same mistakes as western Europe and the United States, and that someone in the end must stand up for and must talk for our children and our grandchildren and their future. It is not just about how we live today.