Senator RYAN (Victoria) (16:09): Earlier this week, when I represented the Leader of the Opposition at the state funeral of the former member for Melbourne Ports, Clyde Holding, I had the opportunity to meet two former Labor prime ministers, Paul Keating and Bob Hawke. It is pretty appropriate to remember that today. We on this side have always been quite generous about some of the things that the Hawke government did in the late 1980s, particularly around fiscal consolidation. We have been generous about that—a generosity of spirit that I note the Labor Party have never shown. But—their intellectual dishonesty put to one side—meeting those two former Labor prime ministers reminded me just how much of a pale shadow of the Labor Party these people are.
As opposed to the government that undertook fiscal consolidation after the banana republic comments of the then Treasurer, this is now the party of the inflation genie. After it came to office, we somehow had to tackle a screaming inflation genie that had got out of the bottle. It was the party that before the election said, ‘This reckless spending must stop.’ If only this government had lived up to those words. It has not. This government has demonstrated in four years that it is utterly incapable of managing this nation’s finances.
I will not recount all the figures that have been outlined so effectively by my colleagues Senator Cormann and Senator Joyce. But there is the simple one, the $20 billion surplus that has turned into tens of billions of dollars of endless deficits. There is the myth that the government somehow saved or created some jobs. It is the Keynesian delusion that you can actually create jobs through simply pumping money into the economy, a delusion rooted in how you put the country into recession 20 years ago. You came out of that with the view that, when faced with a downturn, you should, as the Secretary to the Treasury famously said, ‘Go early, go hard and go households.’ But we know from evidence all around the world, particularly in the United States, as we are seeing now—Senator Polley, you quoted it at such length—that when the government pumps money into an economy it does not create jobs; it simply increases future taxation by driving the budget into deficit. It builds inflationary pressures in the economy because serious structural reform is not achieved by just pumping money into people’s hands.
Even more importantly, there has never been an analysis of those alleged 200,000 jobs you saved or created—I get my terminology wrong because the numbers keep changing. There is some analysis around at the moment that shows it works out at nearly half a million dollars a job. How is it worth the taxpayers of Australia paying interest now and having higher taxation than they should in the future in order to save jobs at that cost—it is an assertion that we reject, but just using those numbers shows how ridiculous that claim is—rather than benefitting from what should have been done in order to address the global financial challenges, which was to cut taxes? Because we know now, from evidence all around the world, that when you give people a one-off payment, particularly when it drives a budget into deficit, you do not actually change their behaviour. We know that a lot of that money was used to save or to pay down debt. Some of it was even put into the pokies. But it was not actually used to do what the government claims it was.
Most importantly, this government did that because it wanted to direct the handouts and the projects, and that is the core of the problem: it wants to direct where the money goes. It wants to direct what people do with their money. It does not actually want to give people the choice to invest, to spend their own money as they see fit, absent of government control, because the desire for patronage is at the core of this government. We saw it in other programs it proposed. Does anyone hear of the Ruddbank anymore, a bank that was going to expose Australians to tens of billions of dollars of risk in order to prop up a commercial construction industry? Some might say that the government was blinkered by being held captive by the CFMEU and the various building unions. Do we hear of the billions of dollars that were poured into the car industry, another highly unionised industry?
This is the core of the problem. Labor has always been about patronage. People know, when the government drives the budget into deficit to send them a little cheque, that after it wastes all the other money, that bill is going to come due. That is what drives people’s behaviour, particularly when we had the rhetoric saying that the sky was going to fall in on the Australian economy—because this current Treasurer is incapable of taking responsibility, and over there you know it as well as I do, senators on the government side. This Treasurer is incapable of taking responsibility for the government’s decisions, because there is always an excuse. At the start it was the inflation genie. You threatened an incredible budget that was going to pull back all the reckless spending. Then, when you did not do that, you had to run around the country scaring the wits out of every household and small business in order to justify your tens of billions of dollars of wasteful spending.
Senator Polley interjecting—
Senator RYAN: Senator Polley calls me outrageous. The truth is outrageous here, Senator Polley, because that is what your government has done—it has forced up taxes for every future Australian taxpayer.
I want to turn to this myth, this issue they keep talking about, with respect to net debt. When this government counts the net debt, as it appropriately does in the budget, it does so in a table that talks about net financial worth. The $74 billion Future Fund was created and dedicated to fund the liabilities for Commonwealth public sector superannuation. What the government wants to do is to take that and count it twice. It says, ‘Let’s look at the gross debt and subtract the Future Fund and a few other things to come up with the net debt figure.’ But you are counting it twice because we still have the liability. It is not debt but it is a government liability and a taxpayer liability. You still have the $120-odd billion of superannuation liabilities and you are effectively trying to count the Future Fund twice. The other assets of the Commonwealth are not necessarily able to be liquidated, unless someone is proposing we liquidate the Commonwealth of Australia. You are trying to count the Future Fund twice in order to reduce the figure of the debt you have imposed on future Australians.
The cost of the debt this financial year is $12 billion in annual interest payments. Let us just put that in context. That $12 billion would remove their excuse for trying to strip private health insurance rebates from millions of Australians. Secondly, it would pay for a national disability insurance scheme. Those two measures alone would be funded if this government had not racked up such extraordinary levels of debt—and not only that but it also means higher taxes in the future.
This government falsely compares Australia to our neighbours and economic competitors, as if having a neighbour who owes more money than you is somehow a defence to the bank manager. The truth is, as we saw during the global financial crisis, we need a strong public sector to support the capital needs of this country. We have always been a serious and large importer of capital and our banks, which are substantial borrowers in wholesale funds markets overseas, need the strong public debt position of the Commonwealth in order to support those funding needs.
This government talks about savings. The problem is that two-thirds of its savings actually come from increased tax imposts. We have a mining tax based on taxing iron ore, of which a former Labor minister for finance himself wrote that ‘there is rarely if ever any economic rent in iron ore.’ That was Peter Walsh, another ghost of Labor’s past who would hang his head in shame when he looks at this government. Real tax reform does not increase the size of the state. This government may claim it is a lower taxing government, but it does not count if you are not collecting the taxes. What counts is what you spend. Every dollar this government does not collect in tax to fund its voracious spending is money that has to be paid by future Australian taxpayers.
We also have the flawed analysis that it is okay because debt is only seven per cent of GDP, as if GDP, every domestic dollar earned by the private and public sectors in this country, is somehow available for the government. The idea that we should measure ourselves on the basis of what the government could theoretically tax—every single dollar in the economy—is flawed. We are seeing that now in the countries of Europe and North America, and particularly western Europe and the United States, who for so long have rested easy in the delusion that they can keep increasing their public sector debt and measure it against a growing GDP. For some of those countries it is mathematically impossible for them to pay back their debt. I have seen an analysis of Ireland that shows Ireland can almost never pay back its debt because it can barely service the interest upon the debt that it recently took on. This government does not understand what it means to balance the budget over the economic cycle, other than the political cycle. The political cycle is that the ALP runs deficits and the coalition runs surpluses.
We had a promise to run a surplus of one per cent of the Commonwealth budget, which has grown from $260 billion to $350 billion in four years. They promised, years out, a one per cent surplus. It suddenly became an aspiration, and very soon it will simply be another excuse. This party cannot manage our finances. Its contrived and confected empathy will be like a mythical surplus. (Time expired)