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Thursday, 9 December 2004
Page: 71

Senator WATSON (2:21 PM) —My question is directed to Senator Minchin, the Minister for Finance and Administration. Will the minister inform the Senate of how the Howard government continues to deliver sound economic management? Is the minister aware of any proposals to substantially increase government spending?

Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Watson for his question and acknowledge his very strong interest in sound financial management—like all of us on this side. In the course of the recent election campaign the government released the final budget outcome for the last financial year, 2003-04, which showed a surplus of $8 billion. That was the sixth surplus run by our government and has resulted in a fall in net debt to just $23.5 billion, down from the $96 billion of debt that we inherited from Labor. Of course, these surpluses have come about because our government, unlike our predecessors, does live within its means and will continue to do so. In the course of the last election campaign, for example, we made promises worth around $8.4 billion in new spending over the next four years. These promises, unlike Labor's, were submitted in full for costing to Treasury and the Department of Finance and Administration during the campaign. They are clearly affordable. They will be delivered in full and they will leave the budget well in the black.

Of course, as with so many issues, the Labor Party have been just a touch hypocritical on this issue of the cost of election promises. Last year they criticised us for running a surplus of $7.5 billion, which they then claimed was far too big. Following this year's budget they attacked us for running down the surplus. Of course, in the election campaign they accused us, hypocritically, of promising far too much in the way of spending and tax cuts. They attacked our relatively modest $8.4 billion in promises and at the same time they promised new spending in total worth $39.6 billion over four years—nearly five times as much as we promised. It really is the greatest spending spree ever promised by any party in the history of Australian politics. They did claim that this spending was partially offset by some savings, which we have no doubt would have failed to materialise, just like the mythical savings promised by Mayor Latham to fund the Liverpool Council spending spree. In the unlikely event that they did achieve all these savings, Labor's net spend in the campaign would have amounted to $9.5 billion over four years—13 per cent more than we promised to spend—and that is if you assume they met all their savings.

The worst thing about their program was that the spending blow-out occurred over the forward estimates, while a lot of their savings disappeared altogether. The infamous Medicare Gold is a classic example of that phenomenon. That particular policy had a price tag of $5.8 billion per annum and was estimated by Finance to grow at 10 per cent per year—an additional $500 million every year to pay for it. It is no wonder Mr Tanner called it a grossly irresponsible policy. Labor did not submit any policies in full to Treasury or Finance for full costing by the deadline. A lot of their policies were not submitted for costing at all. So, indeed, the cost of their promises could well have exceeded the massive $39.5 billion which was estimated.

It is clear that on 9 October the Australian people made a judgment that the coalition was best able to keep the economy strong, the budget in the black and interest rates low, and of course they were right. Today's unemployment figures confirm the wisdom of their judgment. The unemployment rate for November was only 5.2 per cent, the lowest in nearly 30 years.