Australian Conservatives leader, South Australian Senator Cory Bernardi this afternoon tabled his bill to implement a debt limit of $600 billion on the federal government. Here is the full speech he tabled in the senate outlining the reasons for tabling the bill – and why politicians should put aside self-interest and populist politics, and support reinstating the debt ceiling:
Commonwealth Inscribed Stock Amendment (Debt Ceiling) Bill 2018
"This week marks the 9th anniversary of Rudd Labor government’s infamous $42 billion stimulus package. The implementation of this package was a dark day in Australia’s history where the economic surplus that the Howard Government had prudently built up over 11 years was scandalously frittered away. For the first time in nearly a decade, Australia’s budget plunged into the red.
Before he was elected in 2007, Mr Rudd badged himself “Mr Austerity”, saying at the time that, “This reckless spending must stop.”
But it didn’t.
The egregious examples of chronic waste under Labor’s stimulus package are staggering. From over-priced classrooms and school halls – in some cases, built only to see the schools close soon afterwards - to the budget blowouts and tragic deaths resulting from the ill-fated Pink Batts scheme.
And the interest on the Rudd government’s ballooning debt kept growing. In this context, that government and this parliament - quite rightly –legislated a change to the Commonwealth Inscribed Stock Act in 2008 to impose a debt ceiling of $75 billion.
However, the Labor government – regardless of which leader was at its helm- maintained an unhealthy addiction to profligate spending. The parliament approved the government raising the legislated debt ceiling to $250 billion in 2011, and again to $300 billion in 2012.
The election of the Abbott Liberal/National Coalition government in 2013 was heralded as a watershed moment for Australia. The government had campaigned strongly on addressing the debt and deficit crisis.
Leaving aside some regrettable budgetary decisions and policy positions taken by that government, the Abbott government were also frustrated by the obstructive 44th senate dominated as it was then – and now in this 45th senate – by an ideologically fiscal left-wing bloc of Labor, Greens and crossbench senators.
As senators who were here at the time would recall, the original bill tabled by the Abbott government in the senate on 14 November 2013 sought to raise the debt limit to $500 billion. Labor moved to amend that figure to $400 billion instead – a point worth noting and comparing with what position they take on this bill. It was implicit from the Australian Labor Party’s behaviour in that debate, 4 years ago, that they had no problem with a debt limit then. Indeed, using their numbers the major parties agreed to raise the limit to that alternate $400 billion figure.
Then something odd happened – between the Houses, the Bill came back and there was a deal, with the Greens, to agree to an alternate amendment on 5 December 2013 – to repeal the ceiling altogether.
To quote the leader of the opposition in the senate, as she was then and remains today, Senator Wong told the Senate on 5 December 2013:
“If you ever wanted an example of this government not being the government they said they would be, have a look at the deal today. From a government that said in opposition that they were against debt, and from a government that said they were the party of no debt, we now have a government of no debt limit. No debt limit! The party of no debt becomes the party of no debt limit! But even more extraordinary than that is the fact they have done this with the support of the Australian Greens.”
On 9 December 2013, the matter returned to the senate and on divisions, the Australian Labor Party voted against repealing the debt ceiling.
On that fateful day, with the support of the Greens, the Abbott government raised the white flag on fiscal responsibility and the newly-amended Bill repealed the legislated debt ceiling altogether.
Unsurprisingly, the budgetary blow-outs continued in a patchwork of reckless spending totalling tens of billions of dollars including a wish list of off-balance-sheet initiatives which crudely attempted to hide the true picture.
The measure used to track a debt ceiling, gross debt, now stands at more than $530 billion, in excess of 29% of gross domestic product (GDP). This ratio is far worse than the then-lofty heights set by the financially illiterate former Whitlam Labor government. At the time Mr Whitlam was dismissed by the Governor-General in 1975, their debt-to-GDP level stood at 21.6%.
Thankfully, on 6 December 2017, this senate agreed to my motion acknowledging the condemning and comparative Whitlam era and Turnbull era levels and, I quote,
“expresses its in principle support for legislative measures that will help chart a pathway to budget surplus achieved by reducing spending and waste, not by increasing taxes.”
Naturally, on this subsequent sitting week I present the senate with the prime means to charting a pathway to surplus, namely capping debt. This should not be received as a radical proposition - at least, not by members of the government - since the limit I have set exceeds the levels in the forward estimates. This measure puts the whole senate on notice when considering legislation with budgetary impacts that it will have set itself a debt limit to work within.
Burgeoning Coalition Government spending and the accompanying interest payments show no signs of appreciably slowing down. It is time to put the brakes on – and fast – and this is how we do it.
A cavalier approach to intergenerational debt will have long-term consequences. Consider some of the European economies that could not restrain their spending and debt. To name just a few of the consequences, the EU saw economic collapse, urgent negotiations, the potential for other sovereign nations to foot the bill – and the domestic protest about the same. Not to mention the resultant intergenerational antagonism and other social problems.
Looking past the forward estimates, the latest government figures show we are heading for a mind-boggling debt of $684 billion in ten years.
This is simply unsustainable.
The Turnbull Liberal-National Coalition Government and those on the crossbench who might oppose this measure will – in doing so - be indicating they are on a unity ticket with Labor and the Greens, namely, disregard for the cost of our ballooning debt and the long term consequences. Senators opposing this reform will be telling the Australian voting public – and future generations – that they want to make hay while the sun shines on their own bank accounts. As their pay increases thanks to the beneficence of the Remuneration Tribunal, they are saddling current and future generations with the bill to pay for spending commitments they won’t be around to electorally answer for. Such members and senators want to kick the can down the road for future generations and future governments to deal with.
Our children and grandchildren deserve better.
Australia deserves better.
After ten years of empty promises about a budget surplus being “just around the corner” we need a serious reality check.
The plain fact of the matter is, we are witnessing intergenerational theft on a grand scale which will see our children, our grandchildren and their children struggling to pay back a debt which is growing faster than it can be repaid.
The Parliament of Australia is awash with red - red ink and red politics - even from some of those allegedly occupying the right of the political spectrum. Few in this place – or the other place - know what a surplus looks like anymore.
Now we hear talk of ‘pathways to surplus’ which are as warm and fuzzy as ‘roadmaps to peace’. They sound like you’re doing something, when you’re not – because you can’t secure the commitment of other parties to achieve the desired result.
There is never any serious debate or focussed effort on paying back debt – until today.
A Liberal backbencher observed recently:
‘Well, in 2021, if we deliver a surplus of $7 billion and we do that every year for the next 100 years, we’ll be able to pay back the debt that we’ve got by then.’ A hundred year plan to pay for a decade of spendthrift waste.
I’m sorry, but that’s as tricky as promising funding like ‘Gonski’ or anything else beyond forward estimates. The only promises that matter are those that you have to deliver upon within forward estimates. In other words, if you are not accountable for your promise at the next election, then it is, at best, hot air and, at worst, dishonesty with the voters.
There is one iron law of economics: all debt must be repaid at some point. This responsibility falls to us, not our children. We must stop the debt explosion now, before it does irreparable damage to our economy.
The Coalition Government prefers not to talk about the fact that by 2020 there is going to be about $20 billion a year of interest costs. That amount of money each year would build many roads and hospitals, fund substantial tax cuts and strengthen our flagging economy.
Unfortunately, it’s all too easy for successive Australian governments in their frenzied addiction to excessive spending, to pass the ticking problem down the line.
Instead of moving to fix the debt and deficit crisis once and for all, they are forcing us to impose a crushing tax burden on successive generations of workers to support the failure and irresponsibility of the current political class.
I urge the senate to return to its fiscal senses and support the measures it once upheld, and support this Bill."