The Hon. Joe Hockey
Shadow Treasurer
This Budget again confirms that Julia Gillard and Wayne Swan have no plan to build a stronger economy, repay debt or create secure jobs.
This is a confused Budget with no coherent economic strategy to deliver stronger growth and higher productivity.
Julia Gillard and Wayne Swan only have a plan for more borrowing, more taxes and record debt.
Budget 2012 delivers:
– the world’s biggest carbon tax;
– record net debt of $145 billion;
– a record new debt ceiling of $300 billion;
– a $26 billion deterioration in the Budget over the past year;
– Labor’s fourth massive deficit in four years; and
– higher unemployment.
This is a deceitful Budget – spending this financial year is around $100 billion more than it was just four years ago.
It is a “cook the books” Budget – the forecast surplus in 2012-13 is based on fiddled figures and money shuffles.
And the Budget provides no buffer against future economic shocks as the economic storm clouds gather in Europe.
Carbon tax
Despite Julia Gillard saying 5 days before the last election, “there will be no carbon tax under the government I lead”, Budget 2012 is Australia’s first carbon tax Budget.
The world’s biggest carbon tax is about to hit families, jobs and investment at the world’s worst time.
The Budget papers confirm that despite falling international prices, Labor’s toxic tax will go up to $29 a tonne in just three years and an additional $36 million will be spent on taxpayer-funded carbon tax advertising over the next two years.
Four deficits in four years
Overall, Budget 2012 delivers a deterioration of $26 billion in the cumulative Commonwealth Budget position over the forward estimates since last year’s Budget.
The blow-out in this year’s deficit from $23 billion to $44 billion means more borrowing and more debt which future generations will have to repay.
And all of this is despite the fact that, in real terms, the government is experiencing the fastest growth in revenue since the mid 1980s.
This is the fourth Labor deficit in four years, which together total $174 billion.
Wayne Swan has never managed to get his figures right. The 2011-12 Budget deficit has now blown out three times – from $12 billion, to $23 billion, to $37 billion, to $44 billion and the year has not yet finished.
Cooking the books
In headline cash terms, the Gillard government will spend $8.7 billion more than it earns in 2012-13 because the government continues to spend on projects such as the NBN which have been taken “off Budget”.
If the government was honest, and included NBN expenditure, the Budget would show deficits over the next three years.
To put it simply, there would be no surplus if the NBN was on the books.
In fact, by bringing forward just two programmes – the ‘back to school’ payment and Commonwealth grants to local government – the government artificially saves more than $1.5 billion in 2012-13. Honest Budget treatment of these two programmes alone would wipe out Wayne Swan’s wafer-thin surplus.
Record debt
Tonight the government will seek to increase Australia’s debt ceiling to a record $300 billion – four times higher than it was in 2008.
Australians are right to be concerned about handing Wayne Swan yet another increase in our nation’s credit card limit.
Net government debt will climb to a record $144.9 billion in 2013-14. That is an increase of almost $40 billion since last year’s Budget.
And by 2015-16, the government will be spending over $8 billion a year or around $22 million a day on interest payments alone.
This is the price tag of Labor’s legacy of waste and reckless spending.
Higher unemployment
Last year’s Budget promised 500,000 new jobs over two years, but the Government now expects to miss its target by 300,000 jobs. Meanwhile the unemployment rate is forecast to increase to 5.5% while the Government is cutting $200 million out of jobs services programmes.
Higher taxes
The Budget includes another six new tax hikes including increases to heavy vehicle road user charges and reduced tax offsets for families with high medical bills.
This brings to 26 the number of new or increased taxes the Rudd-Gillard government has delivered since 2007.
Broken promises
Julia Gillard has dumped her promised company tax cuts. Less than two months ago she said: “If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.” (House of Representatives, 14 March 2012)
Julia Gillard has also broken her solemn promise set out in the 2009 Defence White Paper to increase Defence spending by 3% in real terms until 2017-18.
In this Budget Julia Gillard and Wayne Swan cut a further $5.5 billion out of Australia’s defence on top of the $2.5 billion they cut out of Defence last year. As a percentage of GDP, Defence spending is now at historically low levels.
While Defence continues to be cut, Julia Gillard’s broken border protection and onshore processing policy has delivered another $1.4 billion blowout in asylum seeker management.
Despite Julia Gillard’s big talk, the $1 billion committed over the forward estimates to the National Disability Insurance Scheme is almost $3 billion less than the Productivity Commission recommended. Australians with disabilities would be forgiven for feeling short-changed by tonight’s Budget.
The Budget also sets aside just $5 million towards the Gonski review’s $5 billion a year price tag – meaning Labor’s independent schools hit list is not far away.
Australians want a government which can deliver an economic strategy to build a stronger Australia, reduce cost of living pressures and create secure jobs.
Instead they have a government mired in chaos and a Prime Minister with no judgment. Tonight Australians will be asking themselves: how long will this one last?