In the following opinion piece in the Weekend Australian newspaper today, Senator Cory Bernardi announces that he will move to reintroduce the debt ceiling abolished by the Liberals, Nationals and Greens in the previous parliament.
Today is the anniversary of Kevin Rudd’s infamous $42 billion stimulus package. It was a dark day in Australia’s history when the economic surplus that the Howard government had prudently built up over 11 years was scandalously frittered away.
For the first time in more than a decade, Australia’s budget plunged into the red.
Before he was elected in 2007, Rudd badged himself “Mr Austerity”, saying at the time: “This reckless spending must stop.”
But it didn’t. The egregious examples of chronic waste under Labor’s stimulus package are staggering: from overpriced classrooms and school halls built only to see the schools close soon afterwards, to the tragic deaths that resulted from the ill-fated pink batts scheme.
And the interest on the government’s ballooning debt kept growing, which is why a legislated debt ceiling of $75bn was introduced in 2008. Undeterred, Labor’s addiction to profligate spending continued and that figure was lifted to $250bn in 2011 and raised again to $300bn in 2012.
The election of a Coalition government in 2013 was heralded as a watershed moment for Australia. At last we had a government that promised to fix the debt crisis. But treasurer Joe Hockey waited eight months to hand down a ham-fisted budget that cut in some areas and made unfunded and grandiose promises in others.
It did little to address the nation’s problems, was widely condemned for lack of consistency and, in the face of an obstructionist Labor, Greens and crossbench alliance in the Senate, Hockey abandoned all fiscal sensibility and abolished the debt ceiling.
The blowouts continued in a patchwork of reckless spending totalling tens of billions of dollars, including a wishlist of off-balance-sheet initiatives that crudely attempted to hide the true picture.
Now debt stands at more than $530bn. That’s in excess of 29 per cent of GDP, much worse than the legacy of Gough Whitlam’s financially illiterate Labor government at the time of the dismissal in 1975 (21.6 per cent of GDP).
With burgeoning Coalition government spending and its accompanying interest payments showing no signs of appreciably slowing down, it’s time to put the brakes on.
The long-term consequences of this cavalier approach to intergenerational debt is clear.
Look what happened to some of the poorer European countries that couldn’t keep their spending and debt under control — economic collapse and all of the accompanying social problems that result.
Looking past the forward estimates, the latest government figures show we are heading for a mind-boggling debt of $684bn in 10 years.
This is simply unsustainable.
It’s clear that the Coalition government has as little regard as Labor for the cost of our ballooning debt and the long-term consequences. Both want to kick the can down the road for future generations and future governments to deal with. We owe more to our children than this.
After 10 years of empty promises about a budget surplus being “just around the corner”, we need a serious reality check. It’s clear that fiscally responsible government starts with the Australian Conservatives. That’s why next week I’ll be introducing a private member’s bill to reinstate the federal government’s debt limit and to cap it at $600bn in an attempt to stop the cycle of Liberal and Labor debt and deficit that is now threatening to spiral out of control.
The plain fact of the matter is that we are witnessing intergenerational theft on a grand scale that will see our children, our grandchildren and their children struggling to pay back a debt that is growing faster than it can be repaid.
The Australian parliament is awash with red — red ink and red politics — even from some on the right of the political spectrum.
Few in Canberra know what a surplus looks like any more. There is never any serious talk now about paying back debt, and as one Liberal backbencher said recently: “Well, in 2021, if we deliver a surplus of $7bn 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 100-year plan to pay for a decade of spendthrift waste.
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 as soon as 2020 the country will be faced with interest costs amounting to about $20bn a year. That would build a lot of roads and hospitals, it could fund substantial tax cuts to strengthen our flagging economy.
Unfortunately, it’s all too easy for successive Australian governments, in their frenzy of addiction to excessive spending, to pass the problem on.
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 present political class.
The Australian Conservatives want to change that, because no one else will.
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