Mr Speaker: Australians are now paying the price for Labor’s reckless spending.
The enterprise and the energy of Australians coupled with the richness of our resources mean that with the right leadership our greatest days, our most prosperous days, should be in front of us.
But opportunities can be seized or they can be squandered.
On Tuesday night we should have had a Budget that laid out a foundation for recovery and growth.
We should have had a Budget that marked a path out of this downturn, offering confidence and hope for a better future.
Instead, what we were offered was a counsel of despair setting out no credible or convincing plan for economic recovery.
A Budget that just doesn’t add up.
A Budget so unbelievable that the Prime Minister is already running away from it – racing to an early election so that he can get to the polls before the full consequences of his mismanagement are felt by the Australian people.
Last year the Treasurer was filled with pride as he proclaimed a surplus built by others.
This year, he was so ashamed he could not bring himself, in a speech of 30 minutes, to even mention the $58 billion deficit he had created himself.
And he could not utter the words “$188 billion of net debt – the highest in our history – double the record under Paul Keating”.
That’s $9,000 for every man, woman and child in Australia.
The Prime Minister will run up more than twice as much debt in less than half the time as Paul Keating.
He says that this colossal figure of $188 billion is peak debt.
Mr Speaker, it is only a foothill at the base of what will be the Prime Minister’s towering summit of debt.
His Budget Papers boast for page after page of his national broadband network – $43 billion worth he says.
But the massive borrowings it will demand are not taken into account.
And who is to say it will be $43 billion?
The Prime Minister went on television to say it would be commercially viable and called on mums and dads to invest.
He did so without any business plan, any financial analysis – any responsible or reasonable basis to support what he was saying.
So what price the Prime Minister’s broadband dream?
Nobody knows – least of all the Prime Minister.
But we do know this – we will all pay for it and it will build that Labor mountain of debt.
And what about Rudd Bank – it will require $28 billion of Government borrowings – that isn’t to be found in the debt calculations.
And if all that is not enough – consider this: the Prime Minister is asking us to believe that between now and his $188 billion of “peak debt” there will be no new spending initiatives from his spendthrift Government.
Mr Speaker, there will come a time when Australians will look wistfully at $188 billion of debt and ask not when our debt will rise to that peak, but when it will descend to it.
And every single Australian will pay the price – it took the Coalition together with the Australian people ten years to pay off $96 billion of Keating Labor debt.
How many years, how many decades will it take us to pay off hundreds of billions of dollars of Rudd Labor debt?
The Prime Minister’s reckless borrowing and spending today is guaranteed to deliver higher interest rates and higher taxes in the future.
Because as we all know, debt has to be repaid with interest – whether it is a family’s credit card, or the credit card of the nation.
Already, self-reliant Australians who take out private health insurance are being asked to pay more in order to offset Labor’s reckless spending.
While the Coalition welcomes the Government adopting our proposal for an increase to the single age pension, the news was not good for all seniors, particularly those self-reliant Australians who seek to put money away for their retirement.
But that is the Labor way – making prudent and thrifty Australians pay for reckless and spendthrift Governments.
Labor blames this ocean of red ink entirely on the global financial crisis.
We can not forget that in November 2007 this Prime Minister was dealt the best hand of economic cards of any Prime Minister in our history.
All of Labor’s debt had been repaid – there was $45 billion of cash in the bank!
The Budget was strongly in surplus.
Unemployment was at historic lows and growth was strong.
Since November 2007 the Labor Government has chosen to increase spending by $124 billion – that is two thirds of the $188 billion debt we will accumulate in just four years.
And what we have got for it?
The same old Labor cocktail of higher debt, higher unemployment and higher deficits.
As the global downturn worsened late last year.
As it became more and more obvious that tax revenues were declining.
The Rudd Government embarked on the most profligate spending spree in our nation’s history.
The idea that a Government faced with a worsening financial climate would borrow $23 billion and give it away defies common sense.
They did not spend it on roads, or railways or bridges or ports.
They gave it away.
Most of it, naturally, was not spent, it was saved.
And so its impact on the economy was modest and short-lived.
In February when Labor presented its $42 billion economic stimulus package – so-called – we took the unpopular decision to oppose it and to offer a smaller and better targeted package, that would have more effectively protected Australian jobs.
Our advice was dismissed scornfully by a Prime Minister who always knows best. Who claims, repeatedly and untruthfully, that it’s his way or nothing.
The truth is that it didn’t have to be this way. Australian didn’t have to embark on this irresponsible, dangerous course of high deficits, high debt, and high unemployment. There was a better way forward, involving less debt, and less risk.
Our Plan for Recovery will be based on four key principles:
- The protection and creation of jobs for all Australians.
- Government should not incur one dollar more in debt than necessary.
- Spending should be targeted at creating jobs and building economic infrastructure.
- Private enterprise and small business must be supported as the drivers of economic growth.
As we develop and expand this Plan we have been meeting with small business people around the nation at nearly 50 Jobs for Australia Forums.
These enterprising men and women are the engine room of our economy.
We have listened to the challenges faced by small business in these difficult times and we have developed and will develop policies that will meet their concerns and respond to their suggestions.
At every forum whether it was in Darwin or Terrigal, Coffs Harbour or Burnie we heard concerns about the need for more effective incentives to take on and keep apprentices during these tough times.
Right around the country we heard complaints about the incredible burden of red tape – at Cleveland a young woman managing a small business told us of the elaborate five hour accounting exercise she was legally obliged to go through to calculate a diesel rebate – worth $27.
Or at Coffs Harbour, in the vital tourism industry, another woman told us of the incredible rigmarole she had gone through to establish a bed and breakfast and hire one part-time housekeeper.
And at every meeting there were concerns about cash flow – the Government’s 30 per cent depreciation allowance for equipment purchases was noted – but many said it was not much good to you if you were short of cash or didn’t need any new equipment.
Tonight, drawing on what we have learned from thousands of small business people around Australia, we propose a number of practical measures to support jobs and businesses, especially small businesses.
All of them have a modest cost – proving you don’t need to borrow recklessly to do the right thing by small business.
Tax loss carryback for business
If businesses make operating losses this year or next year, they should be able to carry them ‘back’ against previous year’s profits and recover, as a refund, up to $100,000 of taxes paid over the past three years.
This tax refund would bolster cash flows in difficult times. Because the tax loss carried back could not be carried forward the budgetary expense should be relatively neutral over the business cycle.
Fairer rules to deal with troubled businesses
Australia’s insolvency laws do not encourage the reconstruction and rehabilitation of businesses that hit hard times. Too many jobs, and too much value is lost when viable businesses are wound up or their assets sold in fire sales.
We support a change to our laws which will emphasise reconstruction of these businesses. Reform in this area, in these times, could save thousands of jobs that would otherwise be lost.
Cutting red tape and making it easier to do business with Government
The most consistent complaint we have heard from small businesses is excessive regulation and compliance.
The Coalition would reduce this burden to the lowest in the OECD, and join state and local governments to deliver a one-stop online portal for filings.
Many small businesses find the paperwork for Government tendering overly complex and inconsistent between departments and governments. Part of our reform will be to standardise and streamline procurement contracts and other processes.
Helping employers provide training for the recovery
We are taking up a suggestion we heard from many employers of apprentices in traditional trades who came to our Jobs For Australia Forums. They told us that two of the biggest barriers to apprenticeships are small business cash flow and wage costs. So we would direct a greater proportion of the incentives for those who take on an apprentice to the first two years of a traditional trade apprenticeship meaning employers will receive this support when they need it the most.
All of these measures are practical, pragmatic and job-focused measures that would greatly assist the economy in this difficult period.
They have been drawn from our first hand and ongoing engagement with small business – whether it is meeting in community halls around the country or on our www.jobsforaustralia.com website.
The sheer magnitude of the deterioration in our nation’s finances revealed by the Treasurer on Tuesday night raises a more serious and unsettling set of issues.
Labor has no strategy to return the Budget to surplus other than hoping that “something will turn up” – the something in this case being an incredible six successive years of above-trend growth of 4.5 per cent of GDP from 2011-12 – a scarcely believable boom.
Contrast it to the IMF’s more sober growth forecast for Australia in 2010 of 1.1 per cent.
Nobody believes this “best of all possible worlds” scenario is credible.
The recovery from this recession will not come in a rush – the days of cheap and easy credit that helped fuel the last boom are over, if not forever, for many, many years.
Australians deserve, and are entitled to expect an honest, objective and upfront appraisal of the nation’s circumstances – not to be buried beneath a daily avalanche of spin and media manipulation.
Commission for Sustainable Finances
We will appoint an independent Commission for Sustainable Finances to undertake a top-to-toe review of Commonwealth spending after the next election, to determine what levels of expenditure are sustainable and consistent with the need to address intergenerational equity.
The alarming expansion of spending under Labor makes this vitally important. Annual spending is projected to rise from $272 billion in 2007-08 to $342 billion in 2010-11 – the largest three year increase since the mid-1970s. The Commission’s task will be to help the next Coalition Government to identify and cut the waste in that spending.
Parliamentary Budget Office
The Coalition believes that honesty in fiscal policy would be served by the creation of an Australian version of America’s Congressional Budget Office which has for many years provided the Congress with objective and impartial advice and analysis on fiscal policy and the effects of new policies.
We would establish a Parliamentary Budget Office which would be:
- Chartered to provide Parliament with independent, objective analysis of fiscal policy, including long-term projections of the impact of various measures on the economy, employment, real interest rates and debt levels.
- Responsible to the Parliament rather than the Executive, much like the Auditor-General or Commonwealth Ombudsman.
- Staffed with economic, accounting and actuarial experts, and overseen by a director with an independent tenure.
Governments never welcome greater scrutiny, and so I’m under no illusion that this proposal will be greeted with any great enthusiasm by the Prime Minister and the Treasurer. But such a body would contribute greatly to a better-informed debate about fiscal policy alternatives and the consequences of different choices and trade-offs.
The Parliamentary Budget Office will be an invaluable mechanism in seeking to ensure that the damage done to this economy in just 18 months by this inexperienced and incompetent government never happens again.
2009 Budget measures
Turning to the Budget measures themselves, the Prime Minister, in his desperate rush to find an excuse to go to an early election, has called on the Coalition to indicate how it will respond to the major savings measures in his Budget – the decisions that increase Government revenues or reduce Government expenditures.
Given the magnitude of the deficit, these so-called major savings measures are hardly heroic – in 2009-10 they amount to $ 1.5 billion, compared to a $57.6 billion deficit.
We in the Coalition showed our commitment to fiscal discipline in February by proposing a much smaller stimulus package and when that was rejected out of hand, by voting against the $42 billion package and its $14 billion cash splash.
Only this side of the House has had the courage to take a tough decision to restrain this debt and deficit blow out.
None of the savings measures in this Budget will make, by themselves, a material difference to the deficit.
We will consider them carefully and respond to them reasonably.
This deficit is already too big – we do not want to make it bigger.
But there is one savings measure in this Budget which we will oppose.
The changes to the private health insurance rebate are just the latest phase in Labor’s unrelenting war against private health insurance.
Labor hates private health insurance.
Labor hates it because it encourages self-reliance and because it offers choice.
Australians know that and that is why in the lead up to the last election the Prime Minister was asked time and time again whether he would change the private health insurance rebate.
Again and again he and his shadow health minister said they would not.
Never was an election promise given more emphatically and then broken so brazenly.
Every Australian knows that the cost of public health is growing as are the waiting lists for public hospitals.
Every Australian knows that as our population ages the need for more self reliance in the provision of health services becomes greater.
This broken promise will be a direct hit on the family budget of at least 1.7 million Australians and indirectly will result in higher premiums for all Australians – including those on very low incomes.
And it is just the beginning – the thin edge of the wedge.
And as private health insurance costs go up, more pressure is put on public hospitals.
The Prime Minister claims to be concerned about public hospitals and yet I see in his Budget’s Infrastructure document spending on health and hospital infrastructure receives less than ten per cent the amount allocated to his broadband network.
So much for priorities.
The private health insurance broken promise contributes $1.9 billion of savings over four years – when total revenues will exceed $1200 billion. That fact underlines the point that the Prime Minister’s attack on private health insurance is based in ideology, not economics.
There are plainly hundreds of opportunities for the Prime Minister to offset that saving if the measure is defeated – he could do worse than starting with his own foreign affairs spendathon in support of his UN ambitions.
But tonight I will make one suggestion of a suitable offset for the Prime Minister’s consideration.
One that would make for a healthier Australia and lessen the burden on public hospitals rather than increase it.
The Government could comfortably afford to retain the current private health insurance rebate without any cost to the published Budget outcome by increasing the amount of excise collected on tobacco by 12.5 per cent (or about three cents extra per cigarette).
Tobacco is the single most preventible cause of ill health and death in Australia.
So there’s a tough choice for a weak Prime Minister.
Raise $1.9 billion by making health more expensive and putting more pressure on the public hospital system or by adding about 3 cents more to the price of a cigarette and taking pressure of the public health system.
You see, Mr Speaker, budgets are indeed about priorities.
History tells us that an addiction to debt and excess spending is in the DNA of the Labor Party.
Too many times, Labor governments both here in Canberra and in the states have taken us down this dead-end street.
This time, we were told, it was all going to be different.
Australians took on trust this Prime Minister and this Treasurer.
When they swore hand on heart at the last election that they were economic conservatives, Australians took them at their word.
They hoped this government would govern wisely and prudently.
And they genuinely wanted this Prime Minister to succeed.
They were prepared to give him every chance.
Yet, today, Australians see our national balance sheet drowning in red ink.
They see our nation’s future mortgaged for as far as the eye can see.
To repay the principal and interest on Labor’s $188 billion debt over the next 10 years will cost taxpayers $25 billion a year – our largest ever surplus, the Coalition’s last, was $20 billion.
And if the debt turns out to be higher – say $250 billion – then the repayments would be $33 billion a year.
Australians wonder how it could have come to this, in only 18 months?
Now, you might have expected a bit of humility, a bit of contrition, from a Prime Minister and a Treasurer who have failed this nation.
Instead, all we get are sanctimonious lectures about how the Opposition should either lock in behind this Government’s failed strategies.
Or provide Labor with the policy alternatives, with the map and compass, that will get them out of the mess in which they find themselves.
Tonight, our job as political leaders is to build hope for the future.
For at least 60 years our proudest boast as a nation is that no generation of Australians has been left worse off than their parents.
That optimism, that confidence and certainty in what the future promises, is central to the success of modern Australia as a safe and prosperous place to bring up a family – the anchor of our society.
It is our responsibility, the members of this Parliament, to ensure that, whatever challenges we may confront, we will do all we can to ensure our children will have the opportunity to build an even better Australia than the one we know today.
Enterprise, opportunity and optimism – these are core Australian values.
They are core values of mine and of the Coalition.
They are essential building-blocks if Australia is to continue to fulfil its destiny as a strong, vibrant and prosperous nation.
Yet, tonight, we cannot avoid the hard questions:
Will we be the first generation of Australians to bequeath to our children a lower standard of living?
To what extent are our actions today consigning the next generation of working Australians to higher taxes, higher interest rates and higher debt – a lesser opportunity to give their families what we ourselves enjoy in life?
And, when the time comes to answer to the Australian people for these failings, who will be judged the Guilty Party?
That day of reckoning is approaching for the Rudd Labor Government.
Its gross policy miscalculations have made much worse the impact of difficult global economic conditions.
The Treasurer admits it will be many years before Australians are as well off as they were before this Government came to power.
The Prime Minister has no idea how to fix the mess he has made.
He cannot even summon the courage to try.
The Prime Minister’s threat of a double dissolution and an early election proves to all of us what this Budget is really about.
It isn’t about protecting the jobs of Australians.
Least of all the one million Australians it says will soon be out of work.
It is about the job security of one man and one man only.
A Prime Minister frightened of the consequences of his mismanagement, now wants to cut and run before he is found out.
Mr Speaker, history tells us it always the job of the Liberal and National Party Coalition to repair the damage done by Labor governments; to rescue Australia from Labor debt.
It will not be easy.
But on this side of the House we are ready to take up that challenge – and to do so with the confidence and determination that comes from knowing that the Coalition has the experience and the expertise to get the job done.
Mr Speaker, it is only a Coalition Government that can and will restore this great nation to prosperity.