Budget Breakfast Address - Conservative Club - Brisbane
17th May, 2013
Thank you very much Vicki for that welcome. It's great to be back in Brisbane Town Hall, I haven't been back since the renovations and I know that everyone who looks around the place is very proud of what the city has been able to achieve.Minister Scott Emerson, my state colleagues, councillors, distinguished guests ladies and gentlemen.
This post-Budget address to the Conservative Club Breakfast has become a bit of a tradition.
It's always a pleasure to be here, but sadly over recent years l haven't had much in the way of good news.
What we got on Tuesday night was more debt, more deficit and more deceit.
The Prime Minister's "we will all share in the gain" mantra has now become "we will all share in the pain".
Three years ago, in his 2010 Budget night address, the Treasurer announced: "A strategy that will see the budget return to surplus in three years' time, three years ahead of schedule".
Two years ago, his Budget speech insisted: "We'll be back in the black by 2012/13, on time, as promised. The alternative - meandering back to surplus - would compound the pressures in our economy and push up the cost of living for pensioners and working people".
A year ago in his Budget address he announced: "The four years of surpluses I announce tonight are a powerful endorsement of the strength of our economy".
On Tuesday night he said: "we have taken the responsible course to delay the return to surplus".
The reality is Labor will never deliver a surplus.
Over 500 times, going back as far as 2010, the government promised there would be a surplus in 2012/13.
The Prime Minister herself made that promise 165 times. But it is yet another broken promise.
For the sixth consecutive time the budget handed down this week has a deficit - a whopping $19.4 billion.
The original promise was a surplus of $1.5 billion.
How painful was the path to this announcement about the deficit on Tuesday night.
Three weeks ago, the Treasurer said the Budget would miss its revenue forecast by $7 billion.
Two weeks ago, it was $12 billion.
One week ago, it was $17 billion.
On the night, it was $19.4 billion.
Who knows where it will be by the end of June.
With this years' forecast deficit, it brings Wayne Swan's record to $192 billion in cumulative budget deficits - the six biggest budget deficits in our nation's history.
When they first brought down a deficit budget it was supposed to be "temporary".
Six budgets on, it's still in deficit and this budget forecasts at least another two deficits before they eventually break even.
But since they can't get their estimates right for even one week, who could believe they would be right three years hence.
The budget confirms that gross government debt will exceed $370 billion at its peak - way beyond anything we've ever known before in our country.
When the credit card limit is next raised - and it will be the fourth time - it will have to be to a number around $400 billion. And is there any end in sight?
That's the debt Australians have to pay back. Government debt is no different to that of a household or a business, the banks expect their interest and they expect to be paid back.
If you ever want to be able to borrow anything again, clearly you have to be able to demonstrate a good record when dealing with previous debts. This government does not have that kind of record.
Labor's collapse into debt and abrogation of responsibility is even worse when you think that this government's starting point was $70 billion in the bank and a $20 billion budget surplus.
That inheritance was built up by the previous government in the knowledge that in an ageing society the demands on healthcare and the needs of people are going to continue to grow.
We need to be putting aside for those needs, because the core needs of society are going to be substantially higher in the future.
Labor's has spent all of that, and so much more as well.
When we came to office after the Paul Keating era, we were faced with net government debt of $96 billion that had to be paid back.
Paying it back took a decade.
It required prudent, responsible economic management by the Howard government and patience and understanding from the Australian people.
There are 16 of us in the Coalition who were Ministers during that period. And we know the discipline that's required.
If we're elected on September 14, and if we remain in office for 12 years, we will need to produce a surplus of $30 billion a year or more to pay off that debt.
No deficits, just surpluses - and no modest surpluses... at least $30 billion every year.
And there's no Telstra to sell again, there are no assets on the market. If we tried to flog off the NBN we'd likely get a bill.
So it's all going to have to be done the hard way.
We will need to set aside many of things that we need to do, that our country wants but we'll be unable to afford because the first call on every budget is going to be billions paid in interest and redemption on our debt.
Now that is the whole of Gonski, it's the whole of the NDIS, it's a four-lane highway to Cairns, it's so many of the thing we want to do but, instead, will be paying off the debts of this government.
Australian families in this Budget are going to be slugged with $25 billion in higher taxes over the next four years - that's more tax on super; a higher Medicare levy; cuts to promised family benefits, the HECS upfront discounts are to be abolished, there's a cap on self-education deductions, and another 10 or more.
Wayne Swan laments how unlucky the government has been. Everything has just gone wrong. Everything has been outside of the government's control.
You've heard the stories - the resources boom has slowed, the GFC, the revenue has collapsed - they are simply lame excuses.
Revenue in last year's budget did not collapse. It was up 6%. And in this Budget it's up another 7%. Now, most businesses would be happy to settle for 6 or 7 per cent growth in revenue.
That's what this government has had over the last two years when they talk about collapsing revenue.
It's more money than any Australian government has collected in history.
The government has raised $80 billion more in revenue in this budget than in the last year of the Howard government. The government does not have a revenue problem, they have a spending crisis.
They are spending $120 billion more than in the last year of the Howard government.
That's why the Howard government had $20 billion surpluses and this government has $20 billion deficits.
It's all about spending - and out of control spending.
Wayne Swan keeps saying the budget problem is the result of the high exchange rate. While practically every prediction in the Budget was wrong, they actually got this one right.
In the last budget the government estimated that the value of the Australian dollar would be $1.03 US on average for the year. Guess what it was? $1.03.
It was precisely the amount forecast in the last budget, yet Mr Swan is blaming the exchange rate for his Budget failures.
Or he says our terms of trade are working against us. He predicted the trade weighted index would be 77, and it ended up 78. There was no significant difference in the trade weighted index.
In fact, the trade weighted index was 15% higher than it was in any year of the Howard government.
We managed to deliver surpluses but Labor cannot, despite Labor having better terms of trade throughout its period in government.
Labor also says that if they taxed at the same rate of GDP as the Howard government, then they would have more tax revenue. It is also true that had they spent at the same rate of GDP as the Howard government they would have had a budget surplus.
This is a spending problem, not a revenue problem.
Taxpayers are paying for mismanagement, not for good investments.
Labor has spent at a higher percentage of the GDP in every one of its budgets than was spent in any year of the Howard government.
That alone demonstrates a different approach and a difference attitude to the nation's finances.
The Treasurer is also saying that, no matter who is in government, the same challenge of falling tax receipts would have to be confronted with a tough budget.
This basic premise that receipts would have fallen even under a Coalition government is simply wrong.
I like to think we would have been conscious of how important it is to deliver balanced budgets to provide incentive and confidence that the economy so badly needs.
This Prime Minister, this Treasurer, this government inspire a lack of confidence.
The central theme of this budget now the government has lost all interest in surpluses, was to 'grow jobs and grow the economy'.
But this budget predicts higher unemployment at 5.75% and lower growth at 2.75%.
So for a budget that is supposed to be driven by lower unemployment and higher growth, it has already failed its first test on their own predictions.
Labor's plan to return to surplus in three years is simply not credible.
The potential for a black hole in future budgets is enormous.
There are so many time-bombs in this budget, commitments that are unfunded.
Gonski... the money isn't there. The classic is the NDIS, something all Australians support, we support, and this budget includes a 0.5 cent in the dollar increase in the Medicare Tax Levy - but that only funds 40% of the NDIS.
The other 60% remains unfunded.
The government has promised it, it has legislated it, but it hasn't funded it.
When you hear of some of their big infrastructure announcements, most are simply not funded. For example, for the Metro Link rail project in Melbourne they announced $3 billion, but in the four years of the forward estimates only allocate $75 million.
WestConnex is Sydney is a $1.8 billion commitment for Labor, but with so many strings attached it will never go ahead. Of that $1.8 billion in the first four year only $200 million is allocated.
It's a similar story with the Cross River tunnel in Brisbane. Despite the $4 to $8 billion required for the project, only a few hundred million allocated and with conditions they know the state government can never meet.
Its irresponsible budgeting and its dishonest. It's about rhetoric and spin, but when it comes to it, it's not funded.
So a future government is going to have to face up to those announced commitments, which are in fact, not funded.
When you look at why the government's budget has collapsed, look at the mining tax.
The revenue from the mining tax that was personally and secretly negotiated by Julia Gillard has collapsed from an estimate $22.5 billion to just $3.3 billion over the next four years.
The actual collection this year is 95% below estimates. Instead of delivering $4 billion as originally promised, then downgraded to $3 billion, and then changing again to $2.2 billion... they actually raised just $200 million.
This was the boom Labor promised they were going to share. The boom has gone bust, Labor destroyed it with their taxes, bad management and disincentives to industry to grow and expand.
The words 'spreading the benefits of the boom', the theme of the last two budgets, did not appear anywhere in this budget.
They killed the boom with their taxes; IR changes; red, green and black tape; and sending a message to the world that Australia is closed for business.
As a result of the collapse of the mining tax, the Regional Infrastructure Fund has to be abandoned. The budget stripped $2 billion from projects supposed to go to regional Australia.
Remember the independents in northern NSW agreed to back the mining tax because it was going to do great things for regional Australia. Well, that's gone. The mining tax didn't collect enough money.
Another area where the budget collapsed was the carbon tax. The price of carbon was set at $23 this year, $24 next year and $27 the following year.
But the carbon price has collapsed. The European scheme, upon which our is supposed to be modelled is trading at around $5 a tonne - not the $38 they are still predicting our carbon tax will be in 2016/17.
That revenue is not there. So they've had to cut their environmental programs... including the global carbon capture and storage program and their clean coal package.
The government talks about making $43 billion in savings in this budget. They use the word savings a lot. Of the $43 billion, $25 billion is, in fact, new or higher taxes.
Those taxes include items like the new superannuation taxes, the cap on self-education deductions, higher - in fact, doubled - 457 visa fees, Medicare offset changes, cuts to R&D concessions, the end of the HECS discount scheme, the increased Medicare Levy, major increases in company charges and a new way of calculating the tobacco tax which generates more money for the government.
And, as an aside, they are introducing paid parking at Parliament House, so that will probably get the bureaucrats offside. Again, it won't save any money because they'll have to put up their salaries to compensate.
In my own portfolio of infrastructure, the government was briefing the media the day before the budget that there would be a $100 billion centrepiece for a major infrastructure package.
On the night, it fell short... the package is $24 billion over 5 years. That compares with $36 billion over 6 years in the previous package. So they have significantly cut road and rail funding.
And, as I mentioned before, many of the projects announced are not funded at all.
There is actually no new money for the Bruce Highway beyond what has already been announced.
They've announced further work on the Ipswich Motorway which is a long way off, but they are only prepared to pay half the cost, despite Kevin Rudd's promise that the federal government would meet 100% of the project cost.
The road package is a real disappointment and will present real funding problems for us. If we're elected. We have real ambitions to make genuine progress in this arena, but the funding cuts make our task so much more challenging.
Finally, a couple of comments about Tony Abbott's Budget Reply last night.
It was the most substantive Budget Reply I have ever seen. It contained major commitments and provided a clear direction of what we propose to do if given the opportunity to be in government.
We have a Real Solutions plan which will build a strong and prosperous economy and a safe and more secure Australia.
Our objectives are to take pressure off Australian households and strengthen the economy so there is more to go around for everyone.
We've made the commitment to abolish the carbon tax, but we will keep the income tax concessions and pension rises funded by that tax. We'll fund them in a different way.
The carbon tax will go but no-one's personal tax will go up and no-one's pension will go down.
That means household budgets will be under less pressure and the cost of living will go down.
We will also reduce emissions with targeted incentives. We won't be clobbering business with the world's biggest carbon tax.
We will abolish the mining tax and reduce red tape by $1 billion a year to give small business more money in the bank.
By cutting tax and regulations we will boost productivity and give Australian manufacturers the opportunity to compete on a level playing field.
We will set up a root and branch review of competition policy so small business can be given a fair go.
There will be an affordable, responsible Paid Parental Leave scheme.
We will revitalise the work for the dole program, because we believe that people who can work, should work.
And within three years the Coalition will deliver broadband speeds at least 5 times the current rate, for $60 billion less than Labor is spending.
Everyone will have access to 25mbps by 2016. That's everyone, even those living in the most remote parts of our continent.
Labor will be lucky to get there by 2021.
So we'll be delivering NBN faster and cheaper than Labor.
We're determined to deliver a faster one-stop shop for environmental approvals and we'll re-establish the Building Construction Commission to deliver productivity gains in the building sector.
And we will return the workplace relations pendulum to a sensible centre.
Now all of these commitments are affordable and deliverable.
We will reduce the size of the Commonwealth public service by 12,000. There will still be 8,000 more than when the Howard government left office.
Specific savings will also make a real difference to the budget balance.
We will scrap Labor's Green Loans Scheme, a fund designed to lend money to projects no-one else will touch.
We won't be continuing a twice the year supplementary allowance for people on benefits because it was supposed to be funded by the mining tax.
We'll be delaying by two years the ramp up of compulsory superannuation because that cost comes mainly on business, not government, and business cannot afford it under the current circumstances.
So these are some of the tough decision we have to make.
We recognise the task of rebuilding our economy will be a substantial one. A lot of work to do and a lot of pain associated with it.
But if we don't start soon, the task will be insurmountable.
That's why the election on September 14 is so important.
So we're asking you to support us over the next couple of months. They will be critical months to ensure we can begin the task to restore our national economy and get the nation moving in the right direction again.
Thank you for the privilege of talking to you today and outlining some of our plans for the future.
[ENDS]
