Greens claim debt victory
The Greens have agreed to abolish the debt ceiling, but have extracted concessions from the government in return. Nine news.PT1M51S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2yqsj 620 349 December 4, 2013
- Australian politics: full coverage
- Politics Live: Judith Ireland from Parliament
- Tony Wright: Canberra's hall of mirrors reflects a disturbing reality
Federal Treasurer Joe Hockey has mocked Labor’s response to a deal he struck with the Australian Greens to end the row of the debt ceiling, calling it ‘‘absolutely bizarre’’.
Mr Hockey on Wednesday reached the extraordinary last-minute deal with the Greens - once dubbed ''economic fringe dwellers'' by the government - to scrap Australia's $300 billion borrowing limit.
Like minds: Joe Hockey. Photo: Alex Ellinghausen
The rare Coalition-Greens alliance, designed to circumvent Labor's opposition, means the Treasurer will no longer have to seek parliamentary approval to lift the maximum borrowing cap.
The deal requires further debt reporting in the budget and its updates.
Greens leader Christine Milne said the debt ceiling had been a ‘‘toxic political tool’’ that rendered the Australian debate around debt artificial.
Greens leader: Christine Milne. Photo: Penny Bradfield
The new agreement will allow for a ‘‘reasonable debate’’ to take place, she said.
But shadow treasurer Chris Bowen questioned how the new measures would improve the transparency over debt.
‘‘More transparency is always welcome but the ultimate transparency is seeking parliamentary approval and having to answer questions,’’ Mr Bowen told ABC radio.
To suggest that the new requirements would boost transparency ‘‘is a bit of a big call’’, he said.
He accused the Greens of an about-face on the debt issue, saying Senator Milne had originally opposed lifting the ceiling to $500 billion.
‘‘She’s gone from saying that the increase wasn’t justified to ‘why do we have this debt limit at all’,’’ Mr Bowen said.
Mr Hockey said that the reaction of Labor to the debt deal was ‘‘absolutely bizarre’’.
‘‘It’s like a husband being upset that their ex-wife went off and had a cup of coffee with some other man,’’ he said, in reference to the Greens support for the minority Gillard government.
Labor’s Kelvin Thomson joked that the Greens-Coalition alliance was ‘‘a bit more than a cup of coffee’’.
‘‘I think it’s the candlelit dinner and flowers,’’ he told reporters in Canberra on Thursday.
The Coalition, which railed against debt continually while in opposition, will have unrestricted access to credit, only having to issue a statement to both houses of Parliament every time it racks up another $50 billion in debt.
With just days to go before the existing legislated debt ceiling was reached on December 12, the Treasurer sealed the agreement late on Wednesday with Greens leader Christine Milne.
To do so, he has agreed to increased reporting requirements to Parliament on the nature of Commonwealth borrowings and the ongoing debt position of the government, but Parliament will have surrendered its capacity to veto government borrowings.
Mr Hockey praised the Greens for coming to the ‘‘sensible middle’’ on economic policy.
‘‘The Labor Party is stuck in the basement on economic policy and all of their own making,’’ Mr Hockey told Sky News.
Senator Milne was due to introduce the legislative repeal of the debt ceiling in the Senate on Wednesday evening with a view to the controversial bill being passed by the House of Representatives on Thursday.
The strange political marriage came after Coalition frustrations reached boiling point as Labor and the Greens used their combined numbers in the Senate to block an increase to a new limit of half a trillion dollars - a $200billion increase in one increment.
In a letter to Senator Milne on Wednesday, Mr Hockey wrote: "We have agreed to repeal the current legislative limit on the total face value of stock and securities on issue set out in the Commonwealth Inscribed Stock Act 1911.''
Earlier in the day, Labor had sought to head off the deal which it knew would render its opposition to the proposed $200 billion debt increase irrelevant.
In response to a question from Opposition Leader Bill Shorten, Prime Minister Tony Abbott said he agreed that the Greens were on the economic margins.
''I agree, Madam Speaker, that the Greens have been economic fringe-dwellers, and that just means that [Labor] members opposite are worse,'' he said.
Labor brandished a photo of Senator Milne in the lower house to taunt the government, suggesting it was taking its orders from the minor party.
It was the second day in a row that her photo had been used after Immigration Minister Scott Morrison made the same case against Labor on Tuesday when it sided with the Greens to block temporary protection visas.
Under the arrangement, Mr Hockey has agreed to ''comprehensive debt reporting'' in the annual budget papers as well as in other regular economic statements and forecasts.
There will also be additional debt statements tabled in Parliament within three sitting days of a $50billion increase in debt, setting out the reasons, the extent of the debt incurred as a result of falling revenue, higher spending, capital purchases, or payments to states and territories.
Other transparency measures have been agreed to but the statements will not set out specific borrowing purposes in all cases, despite a Greens request for that level of detail.
Shadow finance minister Tony Burke was furious, and slammed the Coalition for breaching its intentions to reduce debt and its statements opposed to dealing with the Greens.
He said Mr Hockey ''was no Peter Costello'' and had even suffered the humiliation of not getting to announce the move, which had been announced first by Senator Milne.
''In one stroke today, they cut a deal with the Greens, to make Australia's debt allowed to be unlimited,'' he said.
''The level of hypocrisy today from the government is way beyond where I thought they would be.''
Australian Industry Group chief executive Innes Willox strongly supported the removal of the debt ceiling, saying it was ‘‘good public policy’’.
He said the ceiling was an ‘‘artificial device’’ that imposes unnecessary inflexibility and creates unhelpful openings for political opportunism.
‘‘It is vital that we have transparency of, and clear accountabilities for, public finances but the debt ceiling is a poor substitute for these and, at best, gives a false assurance that appropriate restraint is being exercised,’’ he said in a statement.
The deal came at the end of a day in which a grim-faced Treasurer faced up to news he said showed the economy was "stuck in second gear".
The economy grew by just 0.6 per cent in the September quarter and grew 2.3 per cent over the year, well below the 3 per cent annual growth rate regarded as normal.
However Mr Hockey said the outlook was worse than the figures suggested.
So-called net exports accounted for 90 per cent of the growth over the past year.
They were unusually high because export volumes were climbing as imported machinery for mining collapsed.
''We have some challenges ahead as mining investment drops from around 8 per cent of gross domestic product to somewhere per cent over the next few years,'' Mr Hockey said.
That is going to create a growth hole in the economy.
On the positive side the exchange rate was coming down, interest rates were historically low and retail sales, consumer confidence and business confidence were lifting. But they weren’t yet lifting by enough.
The mid-year economic and fiscal outlook due within days would ''clearly illustrate the full state of the books we have inherited''. But it would not be used to unveil ''a massive round of spending cuts,” other than those needed to pay for the extra $1.2 billion of spending on schools announced on Monday.
Questions of spending would be left to the May budget which would be drawn up after considering the report of the Commission of Audit due in January.
Even in the budget there might be fewer cuts than some have been expecting.
''We are not obsessed with cuts,'' the treasurer said.
''We've got to fill the hole. We've got to find ways to stimulate the non-mining side of the economy. That means re-tooling the nation. So much of what Tony Abbott and Warren Truss and myself are focused on is about how we can stimulate productive infrastructure investment.'' With AAP