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Budget 2009: Matter of public importance: The Rudd Labor Government's record level of debt.

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Matter of Public Importance: The Rudd Labor Government’s Record Level Of Debt Email this page Back

Wednesday, May 13, 2009 Printer Friendly Version

Source: Senator Barnaby Joyce

Well, this is going to go down as one of the greatest horror movies of all time. When the financial situation started to turn around, I remember the Labor Party saying that they were going to do something about it, and they came out with, ‘Go hard, go early, go household’—like some kind of B grade movie of dubious nature: ‘Go hard, go early, go household’—and now that has stuck with us. After all that, they now come out with: ‘Well, what would you do if you were as silly as us?’ That is how they are trying to explain themselves: ‘What would you do now if you were as silly as us? What would you do if you turned up to a wedding without your strides on?’ I do not know; I would not get myself into that situation. That is the issue before us in this chamber.

Financially, the Labor Party have been caught with their strides down, and that is the whole problem. Mr Hyden, the CEO of the Australian Office of Financial Management, said when we started this that the $200 billion facility had alarm bells ringing everywhere. We said, ‘When will this debt be drawn down?’ He said, ‘It’ll be drawn down in 2012-13.’ That is what he said at Senate estimates not last year but in February. Well, it is quite apparent that it is going to be drawn down right now. So we are out by 2½ years—but what’s that between friends when the Labor Party is in power—and we are heading towards $300 billion in debt.

In fact, I was looking at the report on the government’s net financial worth. It shows that total liabilities are $283 billion this year, then $343 billion, then $402 billion, then $461 billion and then half a trillion dollars by 2012-13. This is what Australians now have before them. These geniuses are now running the country, and this is the result. As a little old bush accountant, I always see these clients turning up. They never have a clue and they can’t work it out. They have been on a bender for about two years. Then they turn up with the plans for the house and they can’t work out why they haven’t got any money. It is so simple. You just have to say to them, ‘Lock up your chequebook.’ But they can’t do it. We now have a position where the whole nation is really in a pickle. We have really got ourselves into trouble.

When I heard the deficit last night, I thought back about the troubles they had in California. When they had a deficit of $42 billion the place was bankrupt. They couldn’t pay the public servants. The whole place went into meltdown. I was interested in it so I went and found what Governor Schwarzenegger said. He said, ‘The deficit is a rock upon our chest and we cannot breathe until we get it off.’ That was the sort of decision they had to make to try and get themselves out of that situation. Debt is your biggest problem. You must go forward with a plan, an exit strategy. Anytime you go to see a bank, the most obvious thing the bank manager will say to you—and I know this from my time in banking—is: ‘What is your exit strategy? How are you going to get out of this? If things go bad, how are you going to pay this debt back?’

Mao had his little red book, and Wayne Swan had his little yellow book with the stimulus package back in February. It had two bullet points—on pages 6 and 7 or pages 7 and 8—that basically said, ‘When things get better, we’ll pay the money back.’ What an epiphany: when things get better, you pay the money back! So I thought: I’ll have to try that out on some of the bank managers back

home. I will say, ‘Mrs Smith wants to borrow $2 million.’ They will say, ‘That sounds brilliant. How is she going to pay it back?’ I will say, ‘When things get better, she’ll pay the money back.’ It is so ludicrous, it is so financially naive. We have this immense financial naivete just oozing from the other side. They grab onto anything. They say, ‘If you understand John Maynard Keynes you will understand that, within the cycle, you have to go into deficit.’ Well, the deficit cycle starts as soon as the Labor Party gets into power, and we go out of the deficit cycle about three, four or five years after the coalition starts paying off the debt. This is exactly what is happening here.

And then we have to look at your cost of funds. I have been fascinated by your cost of funds. You are looking at around five per cent on your cost of funds, yet you are saying at the same time that you believe there is going to be 4½ per cent growth. This is remarkable. The whole world economy boots up and drags the resource sector out. The whole world is out there demanding money but you are managing to get it cheap. This is clever, this is brilliant. How are you going to do that? At the same time, you will have an absolutely diluvial debt that will drown out the opportunities for all Australians, wherever they are.

Where we start getting out of the global financial recession, interest rates will go through the roof because of what you have done in the last 18 months or so. You are responsible for this. I remember when there was a premium on debt. I always used to judge management by the difference in premium between the United States benchmark price of money and the Australian benchmark price of money. Our coalition colleagues, the Libs, did an extremely good job. Under their management, they got it down to about 1½ per cent at one point. It was extremely good management. Congratulations. Under Keating it blew out to about 8½ per cent. I have always called that ‘the management factor’, because it shows whether you know what you are doing.

The other point I would like to pick up on is the statement that everybody in the National Party agreed to the first stimulus package. We did not. If you look at the vote you will see that we did not vote in support of the first stimulus package. In fact, I stated that the stimulus would be spread across the carpet on Christmas Day with ‘Made in China’ written on the back of it and that it was a complete and utter waste of money. Time has proven us correct. So this is what we have got.

In closing, I want to go to where you have spent the money. It is wonderful to be able to drive around on new motorways in the family

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car but it is not what you invest in if you want to pay money back. What you should be investing in is things that move the coal and iron ore around our nation. What happened to the inland rail? You leaked it to the Australian but then withdrew it. We need things that increase the aggregate capacity of our nation. You have gone away from things that increase the aggregate capacity of the nation.

You have gone to sugar-coating certain seats with things that will make people feel good. But you have not been prepared to make the brave decisions, the hard decisions, to invest in things that increase the aggregate capacity of our economy. You have failed to grasp the nettle. You have run away from the hard decisions. You have not done anything that seriously shows that you understand our plight with this debt.

Let us look at the cost of funds. We have Matt Johnson and Lindsay Tanner basically agreeing that you are going to have to increase debt to $300 billion in the short term. What is the cost of funds for that, and who is going to pay the Australian people?


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