Senator RYAN (Victoria) (18:41): We have constant promises, streams of words and verbiage from this government and, indeed, from the Labor Party at state and federal level, as my colleagues Senator Bernardi and Senator Macdonald have outlined. But when it comes to balancing the nation’s books, when it comes to delivering the long-promised surplus, Labor’s promise that they will deliver a budget surplus is up there with ‘I’ll call in the morning’—and, I might say, it is also up there with ‘I’ll only be 10 minutes’ in Senate estimates committees.
There is a moral issue to running up constant budget deficits. There is an equity issue to running up constant budget deficits. That equity issue is that every dollar borrowed today is merely a dollar of deferred taxation. As well as the interest cost, it is something to be paid back by future taxpayers. So for all the purposes of indulgence today and achieving whatever the government wants in the short term rather than investing for the long term, the truth is that that is merely deferring the cost to future taxpayers.
That is something I take seriously and it is something that the coalition take seriously, because government debt is a bad thing. We have heard arguments from ministers of this government for months, even years, about how they apparently saved all these jobs during the global financial crisis—which we now know was mainly a North Atlantic and European banking crisis. There is no evidence that those jobs were saved, particularly with the second stimulus package. We saw the Auditor-General’s report yesterday into the bike paths, that pointed out that there could not be a quantification of the number of jobs produced.
Shovelling money out the door and sending cheques of $900 – including to dead people and prisoners, I might add – does not protect an economy. What protects an economy is economic reform, productivity-driving reform and a government that is balancing its books in order to take pressure off interest rates and, in this case in particular, to take pressure off the dollar, because 80 per cent of the Commonwealth borrowings are coming from overseas. On top of the massive borrowings being racked up by state Labor governments over the last 10 years, that actually does put Australia in a precarious debt situation.
In order for every company in Australia to be able to borrow money, either through their bank or through their financial markets or through bond holders, we need a situation where the government is not in that market constantly putting pressure on demands for money.
Our banks are very dependent upon overseas funding, although that has taken a slight change lately with the increase in savings – which I might say is a good thing, yet the government seems to try to say that it is the reason why retail spending is weak.
People saving is something that we spent the 1980s and 1990s trying to encourage. So that in itself is a positive: people investing for their own future. What is a negative about it is why people are doing it. People are doing it because they are scared. People are doing it because at the same time the government is borrowing tens of billions of dollars a year and trumpeting about how strong the economy is, people in the most populous areas of Australia are feeling the pinch. The small business community in particular is feeling the pinch. Retail spending is low. It is all because of a lack of confidence.
What we hear from this government and have heard through the last several budgets delivered by the Deputy Prime Minister is a message that is being delivered with a forked tongue. When we first started back in 2008, the first budget was all about the inflation genie. It had escaped the bottle. The problem was the economy was running too fast – not fast enough for Labor to drive the budget into deficit, mind you – and we had to pull back spending.
As the shadow Treasurer has said, we have heard Wayne Swan talk the talk a great deal on tough budgets and tough decisions, but we have never actually seen any action. After that we had the great crisis that fulfilled the dreams of every member of the Labor Party and the Greens of implementing a statist economic policy that led to massive new taxes, a massive amount of regulation and the fatal conceit that somehow the government could save the economy.
In a small, traded economy with a floating exchange rate, the old notion of Keynesian stimulus is not something that has a consensus that it works. The government can quote economists that say it does; there are many who say it does not. But sending out $900 cheques, which we know led to booms in poker machines – and Jerry Harvey said was fantastic for the sale of flatscreen TVs – the whole idea of sending out money like that, when we know a lot of it was saved as well, to somehow save the economy is based on a 30- or 40-year-old notion of an economy.
It surprises me that the present Labor Party is naught but a shadow of the Labor Party that existed in the eighties and which the coalition has previously given credit to. That Labor Party did support policies that opened the economy; it did support policies on competition and did drive difficult but necessary economic reform.
Those very changes – the floating of the exchange rate, the removal of tariff barriers and the opening of our economy to much more international trade – actually made the whole notion of Keynesian stimulus, like it was the 1960s and a closed economy, completely superfluous.
The government is wrong on that, and that little report yesterday about the bike path in Byron Bay illustrates it in a micro sense. The more we go on, the more we know that the notion of stimulating the economy through simply borrowing money and shovelling it out the door has no place in a modern, liberalised market economy. But I am not actually sure that that is what the government wants. What we have seen and what these appropriation bills represent is yet another step in the statist approach that this government entails. We have had new taxes; the two big ones which have been debated in recent months are the carbon tax and the mining tax.
We have had the attacks on private health insurance. Apparently the Medicare levy should be universal but the rebate should not. I state again that the very reason the rebate was structured as a rebate was to ensure that it was worth more to lower-income earners than high-income earners. If a person on the lowest tax bracket had a tax deduction for private health insurance, they did not get as much benefit as a person on the highest tax bracket. The Howard government intentionally structured the private health insurance rebate as a flat rebate to ensure it meant more to lower income earners.
The millions of Australians earning under $50,000 are going to face higher increases in their private health insurance than they otherwise would because of the policies of those opposite. There is no other way to put it. We know it is going to lead to people dropping out of private health insurance. We know that is going to lead to a reduction in the size of the pool. We know it is also going to impact upon the type of people who purchase private health insurance. But the government does not care, because it wants to continue its war against the private health sector even though more than half of all the surgical procedures in this country are performed in private hospitals and even though the Productivity Commission in its substantial report several years ago outlined that in many cases the private sector is cheaper. The dream of Labor and the Greens of a national health service for Australia is going to take precedence over the welfare of Australians
We have seen it in education, where the Gonski review is nothing but a charade and a bail to continue Labor’s war on nongovernment and independent schools. When you have in there terms like ‘capacity to pay’
Senator McLucas: You haven’t read it, have you?
Senator RYAN: I will take that interjection, Senator McLucas. Labor has just got better at hiding its intention. You do not use the term ‘hit list’ anymore; you use a term like ‘capacity to pay’ hidden amongst pages and pages. The point is that the term ‘capacity to pay’ apparently only matters when we are talking about people at nongovernment schools. That means that those in nongovernment primary schools in particular could face massive increases in their fees. This is because nongovernment primary schools, particularly the Catholic sector, are often at a much lower fee level. So if we are going to start looking at the capacity of parents to pay regardless of what the fees are at the moment, that can only be a vehicle for Labor to force the parents of people sending their children to nongovernment schools – in this case, Catholic primary schools – to pay higher fees. Again it is continuing its statist approach because there is nothing better than a state-run monopoly.
They have done it with tax. The carbon tax is nothing but an internal tariff on our economy. I was interested in the first speech of the foreign minister, Senator Carr, earlier today. He talked about George Reid being a Free Trader. I think he slurred the great Alfred Deakin a bit much. I would like to point out that both of them were implacable opponents of the Labor Party. Both of them might have fought over the Federation of Australia, but it was the Labor Party that opposed the Federation of Australia. It was Liberals, Free Traders and Protectionists who fought for the Federation of Australia. Labor has always had a chip on its shoulder about that. But the foreign minister lauded Mr Reid for his opposition to customs duties and tariffs because they impact on the poorest. We know they are regressive in their effect. We know that tariffs on everything from textiles, clothing and footwear to everything else that Australia had built up by the mid-1980s were highly regressive in their impact. We know, as Senator Carr outlined, that they made the cost of living higher than it needed to be.
What is the carbon tax? The carbon tax is nothing but an internal tariff. If I purchase a television made overseas, there is no carbon tax on that regardless of the myths propagated by those opposite. This is the highest and broadest based carbon tax in the world. If I buy a television from overseas, there is no carbon tax component of that. If I bought one in Australia – if there were to be one made in Australia – then, quite frankly, there would be.
You might say, ‘There are no TVs made in Australia,’ Senator McLucas. Let’s go to cars, where the cost of building a car in Australia will be $500 more expensive because of the carbon tax. How on earth are we to take seriously the government’s complaint about wanting to maintain a car industry in Australia when they increase the cost of production here that is not faced by all the Mazdas and Volkswagens rolling off the ships in the Port of Melbourne?
It is nothing short of ludicrous, but it does go to the core of the ideal Labor and Greens economy. We see that in this budget, because what they want is patronage and the ability to tax and to hand out favours.
I will go through a few of the things that are off budget which have a substantial impact on the financial state of the Commonwealth, even though they are not technically in the budget papers. We have $50 billion for the NBN, which I have no doubt will in decades to come be still quoted in this place as one of the greatest misconceived ideas. I have little doubt that in the coming years it will be seen, a bit like the Victorian desalination plant, as a great boondoggle for Labor’s favoured mates and particular trade unions.
We have the $10 billion clean energy fund. The price of the Greens to get the carbon tax was $10 billion. The clean energy fund precludes certain technology regardless of whether it is clean. It cannot do anything about coal because coal is inherently evil. It cannot be touched even if someone did make it clean in a way that would satisfy the Greens. Coal is the problem. This is a $10 billion fund that is basically picking losers, because this is for commercial proposals that cannot get private sector funding and that are not viable under the mandatory renewable energy target or many of the other programs that are in place.
So we are going to hand over $10 billion for these projects, even though they fail those first two hurdles. I come from Victoria. My generation is still scarred from Tricontinental and the Victorian Economic Development Corporation of John Cain and Rob Jolly and, subsequently, the Kirner government. It is nothing more than picking losers, but the government has hidden it off the budget.
The government has not committed to any of the funding requirements in the Gonski review, which parents should rightly be afraid about. The government are now talking about how apparently the mining tax – which this place debated late last week and early this week – is going to somehow deliver increased superannuation.
I turn to the area of small business because there is a great myth – and the government has tried to conflate the two topics intentionally – that somehow the mining tax will pay for superannuation. Every employer in this country, small and large, knows that the mining tax does not pay a cent of superannuation. That is going to come out of workers’ pockets and in the short term it is going to come out of employers’ pockets.
Mind you, these are employers, particularly in small business, who are already facing the highest costs of doing business in a decade. Today we saw the report, based on more recent data than the government likes to admit, that Australia is one of the most expensive places in the world for electricity.
I note that my home state of Victoria is the fifth most expensive place in the world for electricity out of the 70-odd markets surveyed. This is a state where Sir John Monash built the State Electricity Commission, based on technology from Europe, with our massive deposits of brown coal. I heard my friend the Minister for Energy and Resources in Victoria say today on AM that Victoria has more energy stored in its brown coal reserves than the entire North West Shelf. That is how much brown coal we have – enough for hundreds of years. It used to be cheap to have electricity in Victoria. It was something we aspired to. I think it is something we still should aspire to. But the government seeks to use a carbon tax to force up the cost even higher.
The Minister for Finance and Deregulation, Senator Wong, in answering questions always tries to dodge this key point. The carbon tax is intended to force up the cost of electricity. I do not know about you, Mr Acting Deputy President, but I do not want my grandmother and other people’s grandmothers who grew up in a different generation and who value a dollar because of their life experiences – we all know stories of people not turning the heat on in winter and not turning the air conditioner on in summer because they do not want to worry about the power bill – thinking that they should skimp on turning on the air conditioner on a 42-degree Melbourne February day or turning on the heater on a four-degree Melbourne July night.
Whether it was Sir John Monash or Henry Bolte or people previously – and I dare say even the Labor Party previously – cheap energy was considered to be something this country should be proud of. It was a competitive advantage, but now we have this delusion that somehow by making energy more expensive we are going to transform our economy.
Economics 101: if you make an input cost like energy more expensive, you are going to suffer an economic welfare loss. There is no other way about it. The delusional Greens in the corner somehow think that simply forcing up the price of electricity that you and I and our parents, friends and relatives pay in our houses to turn on a light will miraculously bring about a new technology. That is flawed logic. There is an old economist saying: the Stone Age did not end because they ran out of stones. I hasten to add that it did not end because they introduced a stone tax either. The Stone Age ended because someone invented bronze.
There is no lack of incentive for anyone around the world at the moment to be exploring new technologies. It is the story of humanity. Only a Labor-Greens government suffers from the conceit that somehow a new tax will lead to a new technology – somewhere someone is coming up with a way to make the windmill and the solar panel work better because of a new tax. Does anyone here seriously think that those efforts will be stronger on 2 July this year than they are on 29 June? That is absolutely untrue.
The government says the economy is still going to grow. Of course, it is going to grow, but the truth that this government will not admit is that it will grow by a lot less if only we did not have a carbon tax. The true cost is in the difference between the growth curves, but this government and their Greens allies like to pretend that by forcing up the cost of energy we are miraculously going to transform ourselves into a new economy.
We may transform ourselves into a new economy because no-one in the world is doing what we do. We may transform ourselves from what was once a shining beacon of the world with low government debt, high productivity growth and high economic growth to be something like Europe. Labor and the Greens through budgets like this are doing nothing less than seeking to Europeanise Australia. I notice Senator Ludlam smiling. They are trying to create a highly regulated state, where the government determines how people go about their business by forcing up energy costs and increasing regulation everywhere from the workplace to occupational health and safety.
I am reminded of the story about Napoleon dismissing the English before the Battle of Waterloo as nothing but a nation of shopkeepers. What he did not understand was that it was because they were shopkeepers that they won. It was the free market economy of post-Scottish enlightenment Britain, the start of the Industrial Revolution. It was the high-street shops and businesses that drove innovation. It was that market that was so important.
What we are seeing in budgets like this is nothing less than an attempt to reregulate our economy in a way that we have not seen since the 1960s. It is going to lead to an economic welfare loss for every Australian as their costs go up. We are seeing GDP growth per capita of less than one per cent. That is why people are feeling the pinch. It makes no sense to force up the cost of doing business, to force up the cost of buying everyday household goods and –
The ACTING DEPUTY PRESIDENT (Senator Back): Order! The time allocated for the consideration of these bills has expired. The question is that the bills now be read a second time.
Question agreed to.
Bills read a second time.