Michael Sukkar MP

Federal Member for Deakin
Assistant Treasurer
Minister for Housing
Minister for Homelessness, Social and Community Housing
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Labor’s Debt and Deficit Legacy



It goes without saying that there is a great deal at stake in the debate we are having in this place. What is at stake is the future of our country, the future of our children and the future of our children’s children. That is why I rise to add my comments to the debate because I believe sincerely that the decisions the government have made in this budget are decisions made to preserve the future of our children and our children’s children. There are clearly difficult decisions that have been made in this budget, but they are absolutely the right decisions. We have not taken any difficult decisions lightly, but we have taken them responsibly. We know that if we do not stop the reckless spending and if we do not cut the Labor waste then the future is looking very grim for all Australians.

You cannot speak about this budget without putting into proper context the position that Australia finds itself in after six years of Labor. As much as members opposite would like everybody to have a significant case of amnesia and forget about the absolute waste, reckless spending and complete mismanagement of the economy, we do not have that sense of amnesia that the Labor Party would like. I do not think that members opposite, when they formed government six years ago, consciously decided to take a budget surplus of $20 billion and a $60 billion Future Fund and to turn that into $50 billion deficits and over $300 billion of debt rising to $667 billion. I would not suggest that they were that callous that they deliberately sought to do that. But their complete and utter incompetence is something that they should hang their heads in shame over. The fact that we have members opposite now getting up and criticising the remedial measures that are only required because of that incompetence is actually breathtaking for me. In any other form of society, in any other organisation, if you had the arsonists criticising those who were there to fix the problem, there would be absolute condemnation and there will be absolute condemnation for this approach.

So putting into context where we were at when we inherited the budget from the former government, let us consider some statistics. Labor delivered $191 billion in deficits plus $123 billion in deficits over the next four years. Indeed, today, because of Labor’s record, we pay a billion dollars of interest every month. And without remedial action, that will rise to $3 billion of interest every month. So, in effect, Australia, if it were a household, or the Australian government, if it were a household, is paying the interest on its mortgage with its credit card. That is what members opposite are advocating for every time they criticise the remedial measures taken in this budget.

Members opposite have not offered a mea culpa for the absolutely outrageous state in which they left our budget. Members opposite do not even admit that there is a problem with the budget. I suppose that is how they can justify blocking $40 billion in savings measures in public pronouncements and in the Senate. Crucially, of those $40 billion of savings that are being blocked, $5 billion of savings were those identified by the Labor Party and taken to the previous election by them as policy. Clearly, if you cannot admit there is a problem then you cannot be a part of the solution and that is the message to the Australian people. The Labor Party have vacated the space or repairing the budget and, every time they criticise remedial measures undertaken in this budget without offering solutions, without offering counter savings, that is what they are saying to the Australian people.

Yesterday or two days ago, the Deputy Leader of the Opposition came out, in effect, promising $16 billion of additional spending in the foreign aid budget. It is outrageous. The Labor Party have now adopted an approach where talking about tens of billions of dollars is just a throw-away line saying ‘we will just work out the numbers later on’. That was the approach of the last six years; that is not the approach of this government. The days of the Wayne Swanesque approach to the budget, which is to promise surpluses until you are blue in the face and then deliver deficits are over.

This is the first honest budget that Australians have seen in six years and that is why I was elected in my great seat of Deakin. People spoke to me ad nauseam prior to the election about the worrying trajectory of debt that this country was taking on. And when we talk about the future of our children, what generation wants to be responsible for gifting to the next generation an inheritance of debt? How dare members opposite lecture us for taking the necessary decisions to fix their budget messes while completely ignoring that simple fact. We did not make the mess. We are not the arsonists. We did not start the fire but we will put it out and we will fix it because that is what we have been elected to do.

Our budget, a part of the government’s economic action strategy, will ensure that debt, which was projected—if no remedial action was taken—to rise to $667 billion, will be nearly $300 billion less. This is the prescription that the Australian people voted for in September last year. And, unlike the Labor Party, we will not squib the challenge. We are repairing the budget to protect our living standards, to prepare for an ageing population, to ensure that we can respond to the unexpected events in the future and to provide for future tax relief. We are not making these changes so we can squirrel more money away; we are making these changes for the future prosperity of our nation. Australia has had an enviable economic record in the last 15 years. In the late 90s we were able to successfully deal with the Asian financial crisis. In 2007-08 we were able to successfully deal with the GFC, not withstanding a lot of waste.

Why were we able to weather those two storms? It was because we had put money away for a rainy day. Like any household or business, you have to have some money set aside for a rainy day, and, at the moment, I hate to say to Australians that we do not have that. If there were to be extraordinarily unexpected economic headwinds, Australia is not ideally placed. It is certainly not placed, as it was in 2007, to address those.

We are not just on an economic frolic to stash money aside for grandiose plans like the Labor Party. We are doing what is fundamentally right for the country and fundamentally right for the prosperity of our children. Alternatively, Labor would have the government spend our country to ruin. I have spoken about the $40 billion of savings that the Labor Party have pronounced they will be blocking. There were significant black holes and time bombs in the forward estimates. The Labor Party, in their utter dishonesty, went to the former election claiming that there would be a surplus in 2016-17, and then we find out that, if remedial action was not taken, Australia would suffer another 10 years of budget deficits—16 years of budget deficits.

There is no household or business in this country that could spend more than it earns for 16 consecutive years and still be viable, but members opposite do not care about that; they do not understand it. So what are we doing? We are fundamentally ensuring that the long-term spending trajectory of the budget is improved. To talk about cuts is wrong. The reality of this budget is that it sets the medium- to long-term spending trajectory of the budget and makes it more sustainable.

When we talk about health reforms, the government are delivering record funding for hospitals. In health, we are increasing overall spending by more than $10 billion, or 16 per cent, to 2017-18. In Victoria, importantly, hospital funding will increase each year from $3.6 billion to $4.7 billion. It just does not grow at more than 10 per cent a year, which Labor put in as a line item in the budget. If that trajectory were followed, health spending would skyrocket from $15 billion to $40 billion. We know members opposite were not necessarily expecting to win the last election, so they did not feel too concerned about having these very grandiose and undeliverable promises in the forward estimates. If they did unexpectedly get elected, I am sure what was going through their mind was, ‘We’ll just deal with that at the time.’

At the same time as increasing this funding, we are asking Australians to make a modest contribution to their own health care with a GP co-payment. I get very angry when I see the indignation of members opposite when they talk about the co-payment. For the most vulnerable people, the highest possible liability per annum that they will be subject to is $70 for 10 visits. Those same people right now are spending an additional $550 each year per household because of the carbon tax. So where is the consistency? A carbon tax of $550 is completely justifiable in the minds of the Labor Party, but a $70 contribution per annum to your health care is not.

One of the proudest things—and I will not walk away from this—for me in the budget is the establishment of the Medical Research Future Fund to which the GP co-payments will contribute for the next six years to build up the corpus of the fund to $20 billion, which will then provide an everlasting dividend to medical research in this country. The absolute short sightedness of the opposition in this respect is very disappointing. Why are people living longer today? They are living longer today because of the work of medical researchers in times gone by. Why is the mitigation of health problems occurring? Because of the medical research of yesteryear. So the least we can do in this generation is to ensure that we give our medical researchers—where we have a competitive advantage; we have the best researchers in the world—the resources to find the cures of the future to improve the life expectancy of our population, the liveability of all Australians and, ultimately, reductions in health costs into the future.

In education reform, funding will increase every year under this budget. None of that changes. Forget the scaremongering of the opposition. Education spending is increasing. Not only that; reforms to higher education will ensure that more people, people from less advantaged backgrounds, will have better access to higher education.

I want to finish by talking about some statistics. When I started speaking, I said that in order to grasp this budget you have to understand the context in which it is being delivered. As much as members opposite would like to forget the last six years, forget the waste and profligacy, we need to appreciate that context. There is another context that we need to understand about our entire system. In 1964, when an average income for an Australian was $26,000, in today’s terms, government spent three per cent of gross domestic product on welfare payments. In 2014, average incomes have increased to $66,000. You would expect welfare spending to have declined—no. It now consumes nine per cent of GDP. Nearly half, 48 per cent, of all Australian households make no net contribution through their taxes. Clearly, generous spending on welfare, health and other programs is something that Australia should and does aspire to. But a country, no matter how rich, that continues to run deficits while spending ever increasing amounts on entitlements is headed for certain disaster. So some changes to our society will be made. I believe these changes protect the most vulnerable and, most importantly, put our country onto a sustainable footing—something which the Labor Party are not interested in. They have vacated the space in that respect.