Page 899 - Week 03 - Tuesday, 24 February 2009
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That is the commitment: “We have crafted our policies; they will maintain surpluses.” And the Treasurer asserts that nobody knew what was going on around them. They clearly were not reading the papers at that time.
Ms Gallagher: So you were, Brendan, and you modified yours!
MR SMYTH: I was. It was on the front page of the Canberra Times. Three days before that promise was made—three days—Lehman Brothers filed for chapter 11 bankruptcy protection in the US. You only have to look at September in the US to find out what was going on with the world economic situation, particularly the bankers. September—mortgage lenders Fannie Mae and Freddie Mac rescued by the US government, a bailout; Lehman Brothers files for bankruptcy; Merrill Lynch agrees to be taken over by the Bank of America for $50 billion; a US$85 billion rescue package for insurer AIG; and Citigroup buys Wachovia.
The problem for the government is that they made their promises in the light of what was going on in the world. The rest of the world seemed to know. We promised stronger surpluses; we promised bigger surpluses; and we identified things that we thought were wasteful spending that could be redirected. We were doing what a responsible government should have been doing.
We need to go back to their history in government and this government’s view on deficits. The Treasurer very kindly quoted me on deficits. I will tell you what I think of deficits: deficits may be appropriate as the economy slows down or as things change and the automatic adjusters that are built into budgets kick in to protect the economy and to protect citizens. A deficit does not necessarily have to be a bad thing. Now might be one time where a deficit is not a bad thing. But the important thing is: how do you emerge from the deficit? You have got to have a plan to get out of it. What we had from the government was that they have no plan. They are bereft of ideas.
This is not new. You only have to go back to the 2003-04 budget, in which—for the information of some members who were not here then—the government, at the height of the economic boom, planned for a deficit. Indeed there is a sequence of deficits in this government’s economic planning over the years. That is why we are in the state that we are in. That is why we are in the problem that we are in at the moment.
This government did not manage the good times at all. In fact, on many occasions their budgets were bailed out by unexpected revenue—even though, in the estimates, groups like the Property Council and indeed the Liberal Party were saying to the government, “Your estimates are wrong.” This is the government after seven years of reckless spending; this is a government that, at the height of the economic cycle, was spending more than it was earning. This is the government that did not make the attempt to drought-proof the ACT economy—and, indeed, left it with paper-thin surpluses that dissolved almost immediately the corner was turned from the good times to the situation that we now face. The problem is that it should never have occurred.
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