Page 528 - Week 02 - Tuesday, 10 February 2009
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it was a federal committee—
Treasury secretary Ken Henry said a temporary cut to the GST had not been considered nor had a voucher scheme.
That was in response to Retailers Association director Richard Evans, who suggested that vouchers rather than cash could be a more effective way of ensuring that the money was not spent on pokies, gambling, alcohol and cigarettes.
This is the dilemma that we have. In an all-or-nothing bid, the federal government, I think in some sense of desperation, have simply thrown a package onto the table and said, “Take it or leave it.” They cannot give any evidence to suggest it will do what they have claimed, which is to stimulate the economy and hold back the tide. So, King Canute-like, we have got the Prime Minister, Mr Rudd, standing there and saying, “We will throw the kitchen sink at this.” But is that the right strategy? The answer is that we do not know because neither government, either federal or at the territory level, can tell us what the impact will be. And we have a right to know what the impact will be as people around Australia, and particularly federal politicians, are being urged to pass this, and pass it urgently. Forty-two billion dollars in a week, $6 billion a day, is what they are being asked to pass, and a $200 million credit limit on the Australian credit card. Sorry, $2 billion; sorry, $200 billion—
Mr Seselja: They are big numbers.
MR SMYTH: They are big numbers to get your tongue around—a $200 billion credit limit. After the last decade of financial responsibility under the former Liberal government, which came to office with a $17 billion deficit and a $96 billion debt—it took a decade to pay that off—we are being asked, almost on a whim, with very little detail and no analysis, to trust Labor and their economic record with $200 billion, and that is unacceptable.
There is an article, for instance, in today’s Financial Review about how it will be repaid, how much needs to be repaid and who will repay it. The article in the Financial Review by David Crowe is headed “$7bn interest likely, says Treasury.” The article states:
The federal budget will be weighed down by at least $7 billion in annual interest payments, according to Treasury and financial market estimates of the cost of servicing the commonwealth’s swelling debt. If parliament this week authorises the $125 billion increase in commonwealth debt, the commonwealth will issue bonds to cover future budget deficits and the annual interest bill will climb steeply. But the government has insisted that the net cost of servicing the debt would amount to only $2.6 billion each year into 2012, after taking into account the earnings generated from commonwealth assets.
So Treasury and the government do not even agree on how much this is going to cost—$7 billion, $2.6 billion. A gap of $4 billion is not insignificant, and this is what we are dealing with. You can’t trust Labor on the numbers and you can’t trust Labor on economic policy. We have seen it time and again: the disastrous Whitlam government, which plunged this country into debt for decades; the legacy of the
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