Speech – Motions – Gillard Government’s $120bn Budget Black Hole – 13 September 2012

Senator FIFIELD (Victoria-Manager of Opposition Business in the Senate) (15:49): I move:

That the Senate notes the Gillard Government’s $120 billion budget black hole.

As I rise to my feet, it occurs to me that I have spent my entire professional life either talking about Labor debt and deficit or helping to repay it. Essentially, my entire professional life has been spent cleaning up after the Australian Labor Party. I was working with the Greiner government, which inherited from Labor debt and deficit, and I should note in passing that the opposition leader for that entire period was none other than current Senator Bob Carr, who opposed each and every measure put forward to repay debt and get the budget back into balance. I worked for the Kennett government, which inherited debt and deficit, and the job was, again, to seek to repay that debt and get the budget back into balance-again without any assistance at any time from the Australian Labor Party. So, in 1996, when I found myself working for the then Treasurer, Peter Costello, it was, as Yogi Berra would say, ‘Déjà vu all over again’. There was a $96 billion debt and a budget which was $12 billion in deficit, and we set about repaying the debt. Again, it was done without any assistance from the Australian Labor Party. In fact, the Labor Party opposed each and every measure put forward to get the budget back into surplus. It took us the best part of a decade to completely eliminate that $96 billion of Labor debt-the best part of a decade. It is easy to rack up these bills; it is much harder to pay them down. So successful were we in doing so and establishing what was widely accepted as a new and better fiscal paradigm that then opposition leader Mr Rudd was at pains to ape the Howard government-to present himself as a slightly younger, slightly funkier version of John Howard. He was essentially putting forward the proposition to the Australian people that it was safe to vote for the Australian Labor Party because it would be a status quo situation-that there was essentially no difference. Mr Rudd went to the extent of appearing in those television ads, which I am sure we all remember, where he put his hand on his heart and said, ‘I’m often accused of being an economic conservative. It’s a badge I wear with pride.’ I see Senator Wong smiling.

Senator Wong: No, it was your tone!

Senator FIFIELD: You are with me and that is the main thing, Senator Wong. But it now seems so farcical to remember him saying, ‘I’m often accused of being an economic conservative. It’s a badge I wear with pride.’

Senator Wong interjecting-

Senator FIFIELD: See, she likes it. The very sad thing is that too many people believed Mr Rudd. Too many people believed that the Australian Labor Party had learnt the lessons of the past-that it was a bipartisan commitment to balanced budgets, to living within your means, to economic conservatism. That is what the Australian public believed. Mr Rudd was guilty of misleading and deceptive conduct. He was elected in effect on the back of a lie. We know Ms Gillard was elected on the back of a lie-that she would not introduce a carbon tax-but the lie that Mr Rudd put forward was no less significant: that he would be an economic conservative, that he would preside over balanced budgets, that he would not rack up massive debt as previous Labor governments had.

So the election came and went, Mr Rudd became Prime Minister and Mr Swan became Treasurer. They were talking a good game, you have got to say. In his very first budget Mr Swan said, ‘We’re 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.’ No. It did not come to pass. It reminds us, as if we needed reminding, that what is in a budget speech, what is in a budget paper when it forecasts a surplus, when it forecasts a lessening of debt, or when it forecasts a smaller budget deficit than the year before, is a forecast-it is nothing more than that.

The global financial crisis came along. It is such an unlucky government, this one: if it is not one thing, it is another! So we had the global financial crisis. If you believe the Australian Labor Party it was the first time in human history that there had ever been economic uncertainty; it was the first time in human history that a government had ever faced significant external shocks and it was of such magnitude that it would not matter what happened-

Senator Wong: Oh, come on. You’d be laughed out of town if you went to Washington and said that. Go to Washington and say that-go on.

The ACTING DEPUTY PRESIDENT (Senator McKenzie): Order!

Senator FIFIELD: I am noting, in effect, the tone and the language that the government used at the time-that this was something that was completely unprecedented, that they had no option but to go into deficit, that they had no option but to spend massively, to waste massively.

But I do contrast that with the Asian financial crisis. We are much more enmeshed in the Asian region than we are enmeshed with Europe or the United States. In the Asian financial crisis-our region, where we are-our major trading partners were in recession. Despite that and without massive fiscal stimulus, without massive waste, we still continued to grow. It is not automatic that recessions elsewhere lead to recession in your own country.

The global financial crisis, yes, was a real event, but Europe and the United States were the genesis and the epicentre of that. It was not automatic that we would go into recession. What saved us from recession was not the economic stimulus. It was the fact that we have a floating exchange rate; it was the fact that we had strong demand from China; it was the fact that we had the world’s best prudential regulatory arrangements, courtesy of Mr Costello; it was the fact that the Reserve Bank cut official interest rates. It was the combination of those factors which led to Australia coming through the global financial crisis in good condition. It was not because of this massive fiscal stimulus. It is important to have a look at the contrast between how we fared during the Asian financial crisis and how he fared during the global financial crisis and what the Howard government did at the time of the Asian financial crisis and what the Rudd government did at the time of the global financial crisis.

But it seems that this government just cannot take a break; luck just never goes their way! Even if you accept the thesis of the other side in relation to the global financial crisis and the budgetary situation in the year or two after that, it in no way explains the fiscal situation since then. We have heard time and again those opposite say that the reason that the budget is in deficit year after year after year is because of revenue write-downs. There have been revenue write-downs-I acknowledge that-but, if you look at the budget papers year by year by year under this government, the overwhelming reason that the budget is in deficit year after year after year is not revenue write-downs; it is because of policy decisions. What ‘policy decisions’ means is spending decisions by the government. That is the overwhelming reason that the budget is in deficit year after year after year. It is because of spending decisions.

Honourable senators interjecting-

The ACTING DEPUTY PRESIDENT: Excuse me, senators will not debate across the chamber. Senator Fifield has the call.

Senator FIFIELD: Thank you, Madam Acting Deputy President, and we are seeing here that very debate. It is not revenue write-downs that account for the Australian government being in deficit year after year after year, and assertions to the contrary do not make that proposition true. It is because of policy decisions of this government. It is because of spending decisions by this government.

As if it is not bad enough that this government have failed to live up to the promise that they presented leading into the 2007 election, to be good and conservative economic managers, and as if it is not bad enough that each and every budget forecast for deficit has been well and truly exceeded at the time of the final budget outcome, the government have embarked on a new path of fiscal recklessness. That comes in the form of the new $120 billion budget black hole. The genesis of that is a series of unfunded, grandiose commitments, some of them worthy in their aspiration and some of them not.

That which is worthy in its aspiration is the National Disability Insurance Scheme, a scheme-according to Productivity Commission figuring as amended by the Australian Government Actuary-which would cost in a full year about $7½ billion to $8 billion a year. The reason for that figure is it is simply a product of the unmet need for Australians with disability who need aids and equipment, who need supported accommodation and who need respite. That is a worthy aim. But, in the case of the National Disability Insurance Scheme, the government have only allocated over the forward estimates $1 billion of the $3.9 billion that the Productivity Commission said was necessary for that first phase. So it has been massively underfunded and the government have given no indication as to how a full national rollout of the NDIS would be funded.

Then we have the dental scheme which Minister Plibersek announced the other week and, depending on who you listen to, it is either funded or underfunded. Ms Plibersek said, when asked how it would be funded, that it was all new money and that decisions would have to be taken as to how to fund that. So she said it was all new money but the Prime Minister, on the other hand, said, ‘No, no, no, no, it’s not all new money but this is essentially a savings measure.’ When you have a Prime Minister and a substantive minister on a multibillion dollar announcement being unable to agree whether something is a savings measure or requires new money, you know that there is absolutely no fiscal rigour left in the outfit.

We then have Gonski. There are some elements of Gonski which are fine and worthy in their aspiration but it is a pipedream, with not a dollar put towards it. We are seeing the emergence under this government of a pattern where a grand announcement is made. In the case of the NDIS, you may have a little bit of money put towards it but there is none in the case of Gonski. You may have a little bit of detail provided-as is the case with the NDIS or none, as in the case of Gonski-just enough to give the illusion of activity and just enough to give the illusion of substance. You will then have the Prime Minister picking fights with the states, demanding things of them through the airwaves-things which are news to them. Then, when the states say, ‘Look, we’d like to have a chat about this as this is meant to be a nation where cooperative federalism is the order of the day; could you give us a little bit of detail?’ the Prime Minister then seeks to excoriate the states-well, certain states, Liberal states-for being against proper support for people with disability or for being against every kid in Australia having a decent education. We have these fabricated confected fights to convey the illusion that only the Labor Party cares about people with disability or that only the Labor Party cares about quality education.

The final element of this new pattern that we see is that the government will seek to introduce a token piece of legislation. I think we are going to see by the end of this year some legislation with the brand of Gonski. I suspect all that legislation will do will be to essentially say that it is a good thing that kids get a good education. I think that is all it will do, I have got to say. I would suspect, although we have not seen it, that the legislation that the government puts forward for the NDIS may technically formally establish a national disability insurance agency, but we will not have details of eligibility criteria, we will not have details of scheme design, we will not have details of how the scheme will be funded and we will not have a commitment to a full national rollout by 2018-19. What we are seeing is an attempt to deceive the public. We are seeing a systematic, deliberate attempt to deceive the public; that these are sorts of announcements-Gonski, dental and NDIS-constitute a comprehensive policy by this government which will be legislated, funded and introduced. It is nothing of the sort. There are two possible explanations for this scenario. One is that the government have been complete frauds, that they have no intention of introducing the Gonski arrangements, no intention of properly implementing an NDIS and no intention of doing what they want to do on dental-disagree with it though we do; they just want to provide enough evidence of activity to convince people that they are serious.

The other explanation for the situation is that the government really want to do these three things but they are just so absolutely and hopelessly incompetent that they cannot bring forward detail, they cannot bring forward implementation plans and they cannot find the money. They are the two explanations-that they are serious and genuine, but they are also genuinely hopeless; or they are deliberately and systematically deceiving the Australian public. I would be interested if you could hazard a third explanation, Mr Acting Deputy President Furner. But they are the two explanations before us.

The cumulative effect is $120 billion of unfunded commitments. And you can throw into that the amount of money which is required to support the situation with asylum seekers. I think the government are actually pursuing a con, that they are gearing up for opposition, that they have no intention of finding the money for these programs and that they have no intention of actually delivering them. That would be appalling, that would be deceitful and that should be condemned. I hope that the government prove me wrong. I would love that. I would love to see the National Disability Insurance Scheme, but I seriously doubt the government’s bona fides.