Senator FIFIELD (Victoria) (3.14 pm)-We are in difficult economic times. That Australia would face an economic challenge in the wake of the US subprime crisis was inevitable. It was also inevitable that Australia would be better placed than any other nation to handle this economic challenge.
Why? Because in November 2007, thanks to the coalition, we had a budget in surplus. We had no government debt. We had world class financial institutions and world-class prudential regulation. We had a booming economy, and strong business and consumer confidence.
But what was not inevitable was the undermining of these very strengths by this government. There is no doubt that the economic downturn will be deeper and longer than it need have been as a direct result of decisions by this government. Consumer and business confidence were slammed into the wall by a government talking up inflationary expectations.
Interest rates rose in response to government jawboning. These two points were part of a deliberate political strategy which was motivated by an attempt to undermine the record of the previous government. The resulting slowing of growth? Well, for this government, that was just collateral damage. Non-bank institutions were undermined by the bank deposit guarantee, which was bungled, and we have a situation where a budget has been completely undermined.
It is here, in the Commonwealth budget position, where we see the con in the stimulus sham. I think we all remember Mr Swan’s budget speech, where he gleefully declared, ‘We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.’ Fast-forward to last Sunday when Mr Swan declared to
Mr Oakes that ‘one consequence of the global recession, the unwinding of the mining boom, will be a temporary budget deficit’. That is just not true. The Commonwealth budget is not going into deficit this year as a result of falling revenues; the budget is going into deficit because of policy decisions by this government.
I put this to Senator Arbib on Sky on Monday, before the UEFO came out, and Senator Arbib scoffed-but just look at the second paragraph on page 42 of the UEFO. It is there in black and white. For 2008-09, there will be a decrease of revenue of $9.3 billion. Now, my maths might not be that good, but that does not equate to a $22 billion surplus. This government is fibbing about the genesis of the budget hole. This fiscal stimulus is predicated on inverting the political and fiscal debate. The measure of economic virtue is now the size of your deficit-bigger is now better. Labor has the view that there is such a thing as cost-free borrowing, but every dollar that is borrowed must be repaid, and it must be repaid with interest and it must be repaid by the taxpayer. Every dollar that is paid in interest becomes a dollar that cannot be spent on schools, hospitals or pensioners. I found it quite amusing when Senator Conroy said before that they were going to return the budget to surplus.
You cannot return a budget to a place you have never had it. This government has never delivered a surplus and is unlikely to. On this side, we are really careful because we know this is taxpayer money we are talking about. There is, of course, a need for some measure of government action in the current environment. Indeed, there is more of a need because of this government’s handling of the economy in 2007 and 2008.
But there is no justification other than the political for a spend of such poor quality. A lot of this package is, it must be said, junk spending. As an opposition, how can we be complicit in taking the budget further into deficit for spending of such dubious economic benefit? On this side of the chamber, we quibble with the motive, the magnitude and the make-up of this package. The easy path, the opportunistic path, for the opposition would have been for us to wave through the $42 billion package. But, on this side of the chamber, we choose to do what is right. We know it will not necessarily be popular, but we know it is the right thing for Australian taxpayers and it is the right thing for the Australian economy. We will propose our own alternative.