Budget Response by Senator Barnaby Joyce

Leader of the Nationals in the Senate

May 14 2009

 

The budget has failed to show the path to the reduction of debt and with the forward projection of total liabilities of the net financial worth in excess of half a trillion dollars in 2012-2013 Mr Rudd and Mr Swan are sleepwalking. 

 

Without a determined path to debt reduction Australia is on a path to destitution. The previous prediction of a forward budget surplus in 2008 of $21.7 billion has vanished and now there is a deficit of $57.6 billion and also little belief that can be left in the capacity of  Labor to stay to budget. Even in November Mr Swan was predicting a surplus and six months later we are on the abyss.

 

In more recent predictions Dr Neil Hyden in February from the Australian Office of Financial Management said that the $200 billion facility would be fully drawn in 2012-2013 and now three months later we are being asked to consider that the limit will have to be extended to $300 billion. The cost of funds on this appears to be less than 5% which is just not possible if, in the same breath, the government believes there will be growth of 4.5% which would signal a return globally to a substantial increase in economic conditions. The economic turnaround would be contemporaneous with an increase in demand for funds and an increase in the cost of funds.

 

There is somewhere between $450 billion to $500 billion owed by governments within the sovereignty of Australia which the Federal Government has promised to repay and that means that somewhere within our Nation in the near future, at a conservative cost of funds of say 6% considering we’re at historic lows at the moment, we will have to find at least $27 billion a year just to pay the interest. Now they won’t find it so you know what they will do, they will just borrow more money to pay the interest. The demise will be uncomfortable.

 

In the budget regional Australia has been decimated in some areas such as funding for the Department of Agriculture Forestry and Fishing which has lost close to a third of its funding. Yet it is such industries as Agriculture that we will be relying on to refinance our Nation. Likewise leaks to The Australian newspaper about the allocation of funding to the Inland Rail have turned out to be not the case. Infrastructure on reducing port interconnectivity and bottle necks and traversing the coal, wheat, cotton, cattle industrial belt between Brisbane and Melbourne would be more conducive to economic growth that will allow us to repay our debts than new motorways on the coast for the family car.

 

Australia has compromised its future with Labor’s management and insistence on the perverse logic that retail expenditure on imported goods from an arrival in the mail of a $900 cheque will turn around a global recession in a service-based economy. 

There is no evidence that this gift to Chinese manufacturing has helped Australia. 

 

Instead of learning from their mistakes, the Rudd Labor Government pushes ahead with its plans to introduce a new tax. The foreshadowed Emissions Trading Scheme is completely counterintuitive to economic growth to pay our debts and keep Australian Working Families in work. It will be a boon for the carbon permit market but there will be nothing in it but debt for the producers of our nation’s vital food supplies.

 

Rural health only gets an extension of $9 million which means the Labor Government’s belief in ceiling insulation is 400 times greater than their belief in the delivery of basic health services to people away from metropolitan Australia.

 

Off the coast there is very little in the way of major road infrastructure however, it is inland Australia that produces the export wealth for our Nation.

 

Pensioners have been given an increase and this is something that the National Party has been calling for, for quite some time. 

 

The Nationals have foreshadowed major cost reductions, such as a tier of the removal of a major layer of government, and while this does obviously become a galling point for so many it may become essential with the sale of major public assets to start reigning in the current debt which if it proceeds on its current trajectory will be terminal for Australia’s financial capacity.

 

We should not forget the position both Ireland and Iceland, and the trouble the Eastern European states have got themselves into. We should never gain any comfort from saying our position is not as bad as the United States as their position is extremely dire, however, as a nation their capacity to turn their financial position around is immensely more dynamic than Australia’s.

 

The budget is in essence a reflection of Mr Rudd’s attention with matters overseas whilst the finances at home have gone into freefall. His continual distraction with issues secondary are now seen in the state of the nation’s finances and the tokenistic nature of such things as the 2020 summit have come into absolute focus in that far from being able to predict what would happen in 2020 they could not predict what would happen 12 months ahead.

        

It is absolutely fundamentally important for the long-term stability of our Nation that the Labor Government and any that follows them grasps the nettle and makes decisive structural moves to reign in the debt. This has not been done in this budget so the task is still in front of us.