16 May 2009

Brett Mason on the golden rule of Australian politics

Brett Mason has delivered a couple of excellent speeches recounting the Australian Labor Party's history with public finance. The Senator for Queensland is not well known outside politics but he is fairly compelling to listen to with the conviction that he displays in his speeches.

Speech 1

Title:
APPROPRIATION (NATION BUILDING AND JOBS) BILL (NO. 1) 2008-2009
APPROPRIATION (NATION BUILDING AND JOBS) BILL (NO. 2) 2008-2009
HOUSEHOLD STIMULUS PACKAGE BILL 2009
TAX BONUS FOR WORKING AUSTRALIANS BILL 2009
TAX BONUS FOR WORKING AUSTRALIANS (CONSEQUENTIAL AMENDMENTS) BILL 2009
COMMONWEALTH INSCRIBED STOCK AMENDMENT BILL 2009
Second Reading

Date:
Thursday, 5 February 2009


Senator MASON (Queensland) (5:37 PM) —I rise to speak on the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and cognate bills. The blinding obscenity about this package is not that it will not actually work. That is obscene but that is not the blinding obscenity. It is not even the fact that future generations will be placed in debt for who knows how long. That is obscene but that is not the blinding obscenity. Even Labor’s financial incompetence is no longer obscene because that is part of Australia’s political folklore—we know the history of Labor governments, particularly federal Labor governments, and we are used to it. The blinding obscenity is that this government and Mr Rudd propose to push through the largest expenditure package, outside of budgets, in Australia’s history without parliamentary oversight. That is what he proposes to do and that is the blinding obscenity of this government.

If you want to know how significant that is—I am not very good with numbers but I did a quick calculation upstairs—we are talking about 42 thousand million dollars. There are, I think, 21 million Australians, so for every man, woman and child in this nation the debt immediately will be $2,000. And for every taxpayer—there are around 9,200,000 taxpayers—the contribution will be $4,565.22. The obscenity is that that debt was going to be placed on every man, woman and child and every taxpayer without proper parliamentary oversight. That is the blinding obscenity of this government. They have been in power for 15 months and already they are pushing through $42 billion without proper parliamentary oversight. That is a disgrace.

But politics is funny—it is an interesting profession. There are those who know the Labor Party well and know how they operate. Mr Latham, a former Labor leader, wrote today in the Australian Financial Review that Mr Rudd and Mr Swan:

… have jumped all over the financial crisis, not with a clear economic strategy in mind but with an urgent sense of the political opportunity it presents.

The stimulus package is about politics, much more than being about economics. Mr Latham knows that, the opposition knows that and Mr Rudd knows that, and that is a disgrace.

The problem—and my colleagues have touched on this eloquently throughout the day—is this: we now have a government that does not believe in anything. One of my favourite topics—and I will get onto this later—is this embarrassing essay from Mr Rudd. The problem is this: the Labor Party now no longer has any coherent ideology or framework.


Senator Boyce —They have Ruddbank.


Senator MASON —Yes, they have Ruddbank. They used to believe in socialism. That failed universally—it has been dropped. Then they developed the Third Way. Remember the Third Way? Mr Blair developed it—and Mr Hawke and Mr Keating. Mr Rudd has just dumped it. And what does he propose to replace it with? Nothing at all. I have read the essay twice. It is pathetic in its sparseness. It is funny when I think of it; in my lifetime the Labor Party used to be a grand party of ideas. I always opposed them. When the Maoists used to run around at university I opposed them. Now of course all they believe in is opportunism and ‘me-too-ism’. So in my lifetime they have gone from Maoism to ‘me-too-ism’. And what a pathetic downhill ride it has been.

I think it was Dostoyevsky who said that the problem is that someone who believes in nothing in the end will do anything. That is the problem with the stimulus package. It is all about politics and very little to do with economics.

My colleagues have all said eloquently that the cardinal rule of stimulus packages is this: make sure they are properly targeted and that you get bang for your buck. It is all about bang for your buck with stimulus packages. Unfortunately, this $42 billion extravaganza fails that test.

One of the centrepieces of the package is the handouts to many Australians. Sure, it is attractive superficially—we all accept that. Many people will think it is terrific. But will it actually make a difference on the ground? Every poll I have seen published says this: most of that money will be used to pay off mortgages and credit cards—to retire debt—and the other part of it will be used for savings and will not be used to spend and to stimulate. That is the problem. Again, there is no bang for your buck. In short, this is a package directed towards social infrastructure rather than economic infrastructure, and that at the nub is the failing of this package.

I accept that building libraries and sports halls might be laudable. Even if you put aside the fact, as my friend Senator Nash said, that that is of course a state responsibility—but I am a generous man so let’s put that aside—what sort of bang do you get for your buck and what return do you get from the stimulus package? The same could be asked of community housing, ceiling insulation or indeed all of the financial handouts to taxpayers: what sort of bang do you get for your buck? What return do you get on the money you spend?

It is estimated that parts of President Obama’s proposed stimulus package in the United States will generate a multiplier as high as about 1.7 to one—that is, every dollar that the US congress votes to spend will generate about $1.70 in the next 12 months. As my colleagues have said, eloquently, that is because the money is being spent on physical infrastructure projects like highways, railways and bridges, which generate jobs during construction and then produce benefits to the economy through reduced transportation costs. In other words, when the orgy is over something still remains. When the orgy is over, there is something for the morning after.

There were a couple of good articles today in the Australian Financial Review. Michael Knox, an analyst from ABN AMRO Morgans, analysed Kevin Rudd’s package. ‘What sort of return,’ he asked, ‘will this country get?’ What return will Australia get from Mr Rudd’s stimulus package? Michael Knox said:

The economic impact of the plan is that GDP growth is expected to be around half a per cent higher than in 2008-09 and about 0.75 to 1 per cent higher in 2009-10.

In 2008-09 we are spending 1.7 per cent of GDP in stimulus to get an increase in GDP of 0.5 per cent. This means we are spending $1 in stimulus to get only 30c in GDP. This is a multiplier of just 0.3—very low by international comparison.

He concluded by saying:

By emphasising social over economic infrastructure, the bang for the buck is so soft it might better be described as a dull thud.

So even within the terms of the government’s own reference this is a very poor package—no bang for the buck.

What about the other objectives? My friend Senator Boyce has raised the issue of jobs. Clearly, the opposition is all about jobs, jobs, jobs. Mr Turnbull has spoken about it relentlessly over the last few days.


Senator Boyce —And eloquently.


Senator MASON —And eloquently! After the debacle of last year’s $10 billion package, where it would seem very few of the promised 75,000 jobs have materialised, the government is now rather more modestly promising that the $42 billion will ‘support’ up to 90,000 jobs. We do not know what ‘support’ means. I am like Senator Boyce; I do not know what ‘support’ means, but presumably it does not mean to create or to maintain.

I go to a quick bit of arithmetic, Mr Acting Deputy President Hutchins, and I am not good at this so you may have to help me. That is 90,000 jobs at the cost of $42 billion, which comes out at $400,000 per job. And those are not new jobs, those are the supported jobs. At $400,000 a job, what a wonderful package! As Mr Costello said in the House yesterday about the government’s new policy to borrow and to splurge, we are reversing 10 years of hard work and we are doing it to support 90,000 jobs at more than $400,000 per job. What a fiasco! That is the Labor arithmetic, and it is not very pretty.

Rather than trying to remake capitalism, which Mr Rudd has tried to do with his sad little essay, he should perhaps do something to ameliorate the pain that ordinary Australians are feeling. I thought it was the job of governments in recessions to help those in pain, rather than to try to remake the economic system, which is Mr Rudd’s preoccupation.

Who are the principal people who should be benefiting from Mr Rudd’s concerns? The unemployed. They are the people at the bottom of the social heap. And what is Mr Rudd doing for the unemployed in this package? This is from a party that supposedly believes in social justice! The government is doing absolutely nothing for the unemployed. Do you know what? Within the next year there are going to be a lot more people who are unemployed. So perhaps the new social democracy that Mr Rudd talks about in this frightful little essay has nothing to do with social justice. The new social democracy is not about social justice at all. There is no concern for the unemployed at all. It is increasingly obscene.

Tim Colebatch wrote in today’s Age:

Those who need it are the poor people who bear the cost of the recession on behalf of the rest of us: workers who lose their jobs, apprentices laid off, youngsters who can’t even get into the labour market, and businesses and self-employed people who go broke. There is nothing in this package for them.

So much for new Labor! So much for a party trying to rediscover a new direction! So much for a sad, new social democrat who does not believe in social justice!

The worst thing, however—and my colleagues have spoken about this forcefully and with passion—is the tremendous cost to the economy for future generations. It is about sizing up debt for years and years to come, for our children and potentially our grandchildren. Others have spoken at length today about the government’s reckless policies that in just over a year have managed to turn a $22 billion surplus into a $20 billion budget deficit and have sent Australia back on the road to government debt. That is the problem. What is worse, judging by the legislation introduced by the government, is that we can expect it to get even worse.

What has the government done? It has given itself plenty of wriggle room. It is going to allow itself to borrow up to—


Senator Fierravanti-Wells —$200 billion.


Senator Fisher —$200 billion.


Senator MASON —‘$200 billion,’ is the chorus from the opposition. What worries me—what worries the opposition—is this: when we came into government in 1996 the budget deficit was about half that; it was about $96 billion. It took us about a decade to pay that off. I hate to think how long it will take to pay off if it is $200 billion. It could take an entire generation to pay off a debt like that. It would become in a sense systemic—as it has become in the United States and in western Europe. In fact, 10 per cent of the budget could be paying for budget deficits of previous years. Government debt can so overburden budgets that governments are crippled. And who pays the debt? Taxpayers in future generations. The worst thing that could happen to this country, sir, is this: like the United States and like western Europe we get used to living with—


Senator Brandis —Structural.


Senator MASON —structural debt that gets written into the budget each year and cripples us. That is the long-term problem.

You will recall that Mr Costello years ago commissioned the Intergenerational Report. You will recall his concern about intergenerational equity. This is another matter of social justice, I might add. The opposition is raising another matter of social justice. Who will bear the burden of today’s splurge? The point of intergenerational equity is, as Mr Costello pointed out, this: the changing demography of Australia means that with an ageing population there will be fewer taxpayers over the next generation to foot the bill. That is the problem. So the systemic, structural debt that Senator Brandis mentioned in his excellent address today is not just some sort of myth; it is highly likely. That is what petrifies the opposition.


Senator Brandis —And no Labor government will even start paying off.


Senator MASON —That is right. In the end, as always, it will be the coalition that has to pay the debt off. Some might think that I have a boring life. Perhaps I do. But I read with morbid curiosity Mr Rudd’s essay, ‘The global financial crisis’. To those people in the gallery: I suggest that you do not bother.


The ACTING DEPUTY PRESIDENT (Senator Forshaw)—Senator Mason, I suggest that you direct your remarks through the chair.


Senator MASON —Thank you. I suggest to you, Mr Acting Deputy President Forshaw, that you do not read it either. Let me point out the salient parts. Right towards the end of this embarrassing essay, Mr Rudd quotes President Sarkozy of France saying ‘laissez faire, c’est finis’; it is the end of laissez faire and the end of liberalism. For a start, as my colleagues know, France never adopted free market economics. That is why they have had 10 per cent unemployment for the last 20 years. Even worse, the irony is perhaps lost on Mr Rudd of something that I read in Monday’s edition of the International Herald Tribune. It was:

Prime Minister Fran├žois Fillon on Monday rejected demands that the French government seek to stimulate consumer spending, rather than follow his plan to stimulate corporate and infrastructure investment, to lift France out of its economic slump.

He rejected demands; France rejected it. The article went on:

‘It would be irresponsible to chose another policy, which would increase our country’s indebtedness without having more infrastructure and increased competitiveness in the end,’ Fillon said in a speech in Lyon.

If the French can get it right, why can’t this government? Even Mr Rudd’s continental idols do not agree with him. Even the French are spending their money on roads, buildings, ports and railways and renovating infrastructure.

I suppose it comes down to this in the end with this embarrassing little essay: there are three policy prescriptions in this essay. They are: spend, spend and spend. There are no other ideas in it at all. And that is the problem with the Labor Party today, you see: they actually do not believe in anything except opportunism. That is at the heart of the problem in the debate in this parliament and the problem with Mr Rudd. Dostoyevsky was right: if you believe in nothing, you will do anything to survive politically, even if you have to mortgage the country in so doing and even if you have to mortgage future generations. That will be on Mr Rudd’s head and on the head of this government. (Time expired)


Speech 2


Title:
ADJOURNMENT
Australian Labor Party

Date:
Thursday, 19 March 2009


Senator MASON (Queensland) (5:52 PM) —Mr President, I seek leave to speak for up to 20 minutes on the adjournment.

Leave granted.


Senator MASON —I thank the Senate for its indulgence. There is a new dichotomy in Australian politics. We have today in the opposition economic conservatives. We have in the government former economic conservatives. But they are much happier today because no longer do people in the government have to live a lie. Friends like Senator Carr can tax, they can spend and they can send the nation into debt as much as they like, and they are much happier about that. Senator Carr’s old boss, former Premier Joan Kirner, said the other day that she was so happy that debt was no longer out of fashion. Debt in effect for Ms Kirner is the new black; debt is again fashionable.

The former economic conservatives, the government, have a very interesting solution to the current economic crisis. All of us in this chamber know this: the current economic crisis was caused by individuals and indeed by companies borrowing and spending far too much. In the United States, and indeed elsewhere, far too much money was borrowed and far too much money was spent by individuals and companies. What is the solution offered by the government? It is for governments to borrow and spend even more. That is the solution of the government. After companies and individuals have spent too much and borrowed too much, the nation, the government, should borrow and spend even more. That is the solution. It is a bit like drinking to cure a hangover. That is the analogy. That is the idea the government has: to keep on spending and borrowing even more and more and more.

There has been a lot of talk over the last two weeks about political DNA, about what makes political parties and political leaders tick. A quick look at history will tell us about every single Labor government since Federation. What does it tell us? It tells us this: every single federal Labor government puts our nation further into debt—every time. There have been 10 Labor prime ministers and they have put this nation into further debt every time. There is not one exception. Every time you have a Labor government they put the country further into debt. Debt is always higher when Labor governments leave than when they arrive—every single time. The farewell gift of Australia’s previous nine Labor prime ministers is more debt. That is the iron rule of Australian federal politics: every Labor government, more debt.

Go right back to the first one: Chris Watson. He was only there for a short time, but there was more debt. Andrew Fisher—he spent a lot; he created a lot more debt. Billy Hughes—again, he created a lot more debt. James Scullin—there was much, much more debt. John Curtin and Ben Chifley—again, they left far, far more debt than there was when they turned up as prime ministers. Then, of course, there was Mr Whitlam. We know what he did. What did he do? He borrowed and borrowed, and there was more debt. At least it is consistent. There is always more debt.

The one thing that is in Labor DNA is debt—every single time. Then, of course, there were Mr Hawke and Mr Keating. It is funny, you know. They did not start off so badly, but in the end the DNA came out. Mr Hawke and Mr Keating left this country in debt—$96 billion. Then, finally, there was Mr Rudd. Mr Rudd also, after six months, spent $50 billion and put the country into debt again. That is 10 Labor prime ministers: Watson, Fisher, Hughes, Scullin, Curtin, Chifley, Whitlam, Hawke, Keating and Rudd—10 out of 10, more debt. There is not one exception. Every Labor Prime Minister creates further debt for this country. It is a disgraceful record. In war and peace, in good times and bad, there is always debt. Debt is in the Labor Party’s DNA—not jobs; but debt. The excuses change, but it is always the same rationale—debt, debt, debt and debt, from every one of the last 10 Labor prime ministers.

There are some who doubted Mr Rudd’s commitment when he first came into parliament. They doubted whether he would be a good Labor prime minister, because he did not come from a union background—he was a former diplomat. They were concerned that he might not know the Labor Party’s ways. But the Labor Party need not have worried, because he has the DNA. He has the debt gene. He has it; the Australian Labor Party need not have worried. Mr Rudd knows how to spend and he knows how to put the nation into debt. He has never forgotten that. Mr Rudd fits in perfectly with the other nine former Labor prime ministers in creating further and further debt. This country must never forget that when Labor left office they left this country and its people with $96 billion of debt—paying about $8 billion of interest each year to service that debt. That is what Mr Hawke and Mr Keating left this country, just like all the other Labor prime ministers did: debt. And they left it.

It has taken just six months for the Labor Party to spend over $50 billion and, of course, to extend a credit line of $200 billion. If it ever happens—and it will—that Labor spends the $200 billion, we will start to have the problem of structural debt. That is where, every year, the budget gets consumed by interest on debt—just like in western Europe. It becomes part of the political culture, the fabric and the way of life of, let us say, France. And 10 per cent of the budget is taken up on interest payments on debt. That is the problem. This credit line of $200 billion signifies the fact that the Labor Party will do it if they feel it is necessary.


Senator O’Brien interjecting—


Senator MASON —Well, it’s funny. What worries me is that Mr Rudd talks about turbocharging social democracy; what he has done is turbocharge debt. Perhaps that is the same thing. That is the problem. The debt has gone up $50 billion in six months. Only twice in this nation’s history—during the McMahon government and under the Howard-Costello government—has there been no net government debt. What did Mr Whitlam do as soon as he got in? He fixed that problem. He put the country back into debt. What happened when Mr Rudd got in? He put us back into debt, just like the other nine Labor prime ministers did. The one consistent fact of Australian political history, the one consistent political fact about Australian Labor governments, is debt—and there are no exceptions. What a coincidence! We know what is in Labor DNA. It is debt. There have been no exceptions. It is always the same. The Labor Party will bugger up the economy and they will expect the coalition to fix it up. It happens every time. With 10 Labor prime ministers, the coalition government to take over has been expected to fix and pay off the debt.

This is a moral question. What about the intergenerational equity? Mr Costello has spoken often about this. This is a moral issue. The Labor Party love to talk about equity, but they do not mind bankrupting our children or grandchildren to pay off the debt. It is all very well to spend on behalf of today’s voters, but who is going to pay off the debt? Our children and our grandchildren will be saddled with the debt that these people create, just like all the other Labor governments do. There are no exceptions. It is the one ironclad rule of Australian politics. They always say that the great dictators love children and hate their parents. You could never accuse Mr Rudd of that. He loves the parents; we are just not too sure if he loves the children who will be saddled with the debt that he is creating today, just as the other nine Labor prime ministers have created debt in the past. Every Labor Prime Minister puts this nation further into debt. It is the ironclad rule of Australian politics. It is absolutely disgraceful, if not scary.

Let us not forget how Labor spent their first year in office. How I remember Mr Swan, Mr Rudd and even Senator Conroy saying: ‘The economy’s overheated. The inflation genie is out of the bottle.’ They talked it down: the economy was overheated, interest rates were going up and the economy was out of control. We said, ‘Go for growth.’ They talked the economy down just at the time when it needed to be talked up, making the recession even worse. I will never forget how ‘the inflation genie was out of the bottle’—at four per cent—and things were so terrible, weren’t they! Now, a few months later, we know what economic terror is, their having talked down the economy. If they had gone for growth, they would not have had the problem. Instead, they kept talking down the economy and they failed to build up business and consumer confidence. So well done! Mr Rudd even got that wrong—first year in office: wrong.

What is the intellectual edifice behind this change from being an economic conservative? What is it based on? It is political opportunism, but this voodoo economics is based on the famous essay of Mr Rudd’s in the Monthly, which of course I have read. The philosophy, if you call it that, is unusual because it reflects an unusual state of mind. Mr Rudd’s political and economic philosophy changes at every opportunity. He was a Christian socialist. Dietrich Bonhoeffer, the great German pastor, was his spiritual, economic and social mentor, but he abandoned that and decided he was a neoliberal when he was after the shadow Treasurership before the 2004 election, under Mr Latham. He was trailing Mr Latham’s coat-tails through Labor caucus, saying he was a neoliberal. So he went from the German Dietrich Bonhoeffer to the Austrian Friedrich Hayek in a very short amount of time.

Then, upon becoming opposition leader, Mr Rudd called himself a self-styled economic conservative, and he was proud of it—very, very proud of it. Mr Rudd was so proud of styling himself as an economic conservative. He was out and proud about being an economic conservative. There was no difference between him and Mr Howard at all, really; he was ‘Howard lite’. He was an economic conservative and he loved every minute of it.

The first whiff of economic grapeshot, the first bit of real tension, the first downturn, and what happens? He drops all that. He drops Bonhoeffer, drops Hayek, drops economic conservatism and becomes a reborn social democrat all of a sudden. So he has changed four times in just a couple of years. Mr Rudd is, in a sense, Australia’s first post-modern Prime Minister, because he does not actually believe in anything. No-one I know has changes of hearts like that, except Mr Rudd—no-one at all. My old friend Senator Carr—I always have a go at him, I know—is wrong about everything, but at least he believes in something. Mr Rudd does not believe in anything. He changes his mind every second week. He is like a schizophrenic Harry Potter figure, baring his latest philosophy to some sort of focus group in Labor headquarters in Sussex Street over a Chinese meal, with dim sims. That is where he has got this philosophy from; it is pathetic. It is this sort of groupthink.

The essay in the Monthly is wrong. Not only is it based on hypocrisy; it is intellectually lazy, ignorant and wrong. Mr Rudd of course does not like talking about the fact that Mr Blair was one of the great neoliberals of the latter half of the 20th century; a Labour Prime Minister was one of the most significant neoliberals of the 20th century—as well as Mr Hawke and Mr Keating, of course, to their partial credit; I will give them that.

But perhaps even more disturbing than the shocking hypocrisy of the Labor Party adopting neoliberalism as well—even forgetting the hypocrisy—is the moral argument here. More people have been moved out of poverty in the last 20 years than were moved out of poverty in previous recorded history. More people have moved out of poverty in the last 20 years than ever before in human history. It is not because of communism or socialism or social democracy but because of free trade—yes, free trade. Free trade and neoliberalism created more wealth for the Chinese than for anyone else. The Chinese do not go on like Mr Rudd does. Mr Rudd takes advantage not only of the hypocrisy but of ignoring great moral arguments.

What the Labor Party does not seem to understand is that this is about good regulation. The fact is that the reason why Australian banks are among the best in the world is that the regulation is very good. This same system that Mr Rudd decries in Australia—the neoliberalism he criticises—is the same system that gave us the best banks in the world. So not only is this article in the Monthly pathetic, lazy and ignorant; it is just plain wrong.

And now it is worse. I understand that our high commissioners and our ambassadors are having to run around and hawk this line to world leaders. When Australia’s High Commissioner to the United Kingdom meets Her Majesty the Queen, I suppose he says, ‘Here, have a look at this article from the Australian Prime Minister.’ In Ulan Bator they probably take a translation of this article and give it to the local president, prime minister, doge or whoever it happens to be.

Our diplomats are expected to run around the world with this embarrassing little essay, which is ignorant and hypocritical. Our embassies have been changed into publishing houses these days. It is a pathetic, intellectually lazy and ignorant piece of work. To have the hide to have our diplomats running around with this! I wish they would peddle something I wrote, rather than this rubbish. Can you imagine asking our diplomats—our high commissioners and our ambassadors—to run around with this stuff? It is absolutely embarrassing. I feel sorry for them.

Who are the political legatees of this appalling ideology? Who are the people who love debt—debt being the new black to the Labor Party? Of course, in Queensland it is Ms Bligh, with $74 billion in debt. And she racked up that $74 billion of debt—guess what—in boom times. She has just had record mining receipts of billions of dollars. She has received billions of dollars in property taxes and hundreds of millions in GST. And do you know what she has done, Mr President? She has still racked up $74 billion of debt. I thought the $96 billion of debt federally in 1996 was bad. That was spread among about 20 million people. This is $74 billion spread among 4½ million people. Talk about structural debt. When will this debt ever be paid off, Mr President?

Of course, the Labor Party do not worry about that. They are not concerned about paying off the debt at all, because there is one golden rule of Australian politics: every Labor Prime Minister—from Chris Watson through to Kevin Rudd—spends more money than they raise. They leave this country with more debt. That is an iron rule of Australian politics. And this diseased DNA is now spreading to the Labor states. We have got Ms Bligh with $74 billion in debt and she does not seem to give a damn. It costs $10 million a day in interest alone to service that debt, and Ms Bligh does not care at all. (Time expired)

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