A black Swan event is looming
Treasurer Wayne Swan. Photo: Alex Ellinghausen
In the last month, your Commonwealth debt has increased by $10 billion. An average house in the region is worth $300,000, so you have borrowed enough to have purchased in excess of 33,300 houses. The Bureau of Statistics tells us that each house is, on average, home to 2.2 people, so you have purchased the residential stock of a city in excess of 73,000 people in just one month. At that rate, in less than half a year, you could buy the housing stock of a city the size of Canberra.
How long do you think that can go on for? I have been drawing attention to this debt trajectory for years, but I have to give Treasurer Wayne Swan credit for one attribute; he is a great salesman of garbage and at times he has had a willing market in the fourth estate.
The story of our debt has either been swept under the carpet or covered in a range of rather incredible excuses that change with time and audience. Canberra is the canary in the coal mine for debt and the safest way to maintain the self assurance of a happy canary is to keep the national debt under control. Swan has not done that, but he has given an insight into how Labor ultimately deals with the debt issue. When Labor finally loses the next election they will blame the cleaner for the desperate attempts to clean up the financial pigsty.
In Queensland, Labor left a $64 billion debt, lost Queensland's credit rating and there was no relief in sight as they headed towards $100 billion in debt by 2018-19. Federal Labor now asks for a miracle of amnesia to have the public not connect the dots of high debt and public service cuts.
Of equal concern, where on earth did the $10 billion of funds end up that are represented by this month's extension of Commonwealth debt? Are we at war with some country; a full scale battle that we are not yet aware of? Is there some new freeway recently built, a number of dams, an inland rail or a cluster of new public hospitals?
The debt is the report card, and the promise of a surplus is the next exam. Labor's promise of a $1.5 billion surplus, in light of the last month's blow out, shows just how absurd Labor economic management is.
The concern for Canberra is how is this debt going to be repaid, what will happen if this debt trajectory continues on for another three years? What Premier Campbell Newman is trying to achieve is a change in direction of the debt curve left by Labor, to avoid it would just make the financial pain, later on, much worse. The height of hypocrisy, or total financial naivety, is to believe that the responsibility for your profligate actions is not yours but the person who takes your job after you are sacked.
The next example par excellence of our Treasurer's incompetency is the recent information that there are many more bids for the purchase of Cubbie Station, many from Australian interests, that the Treasurer is either unaware of or has ignored, and for more money than currently offered for the property.
Under our corporations' law a receiver must, on behalf of the entity they represent, act in the best interests of the creditors, in this case the National Australia Bank and Suncorp Bank. The Senate has passed a motion supported by the Liberals, Nationals, DLP, Greens and Senator Xenophon that the Treasurer must explain himself.
So I imagine the barbs that have been cast at me as a xenophobe will now be recast stating that I am now a pedant. Whatever; it is the job of the Treasurer to show that he has a modicum of respect for the parliamentary process and follow the request made of him by our nation's Senate.
The final insult from the Treasurer is his confidence that we will believe that his recent frenetic announcements of new policies from child care, to dental care, to disability insurance can all be funded by a government that is currently $246 billion in gross debt and is miraculously promising a $1.5 billion current surplus. Where will the money come from? Every time we trust you we are made a fool because it seems to inevitably be that whatever you promise you never deliver.
Barnaby Joyce is the Nationals' Senate leader and the opposition spokesman on regional development, local government and water.