Mr HOCKEY (North Sydney) (15:22): At 7.30 last night the Treasurer rose to his feet to deliver his budget speech. His opening words were, 'This is a Labor budget.' Well, most Australians turned off at 7.31, as soon as he said that. Why? Because being a true Labor budget it delivered bigger debt, bigger deficits and bigger spin. The deficits in this budget, the stuff that really matters to Australians today, are growing. The budget deficit this year has grown in the last six months from $42 billion to nearly $50 billion. That means the government is borrowing $135 million every day just to fund the deficit. The budget deficit for next year, which is the appropriation bill that this House is going to vote on, is actually growing from $12 billion to $22.6 billion. The Treasurer expects us to believe the fairytale story and for the Australian people to accept—with this year's budget deficit situation deteriorating because of external circumstances and the government's increase in its own expenditure, and next year's budget deficit increasing, including increased government expenditure—the only budget narrative the government had today, and that is that in two years time they will bring the budget back into surplus. That is the only narrative they had in this place today—to promise something that they promised last year, to promise something that they promised the year before. But the difference is that with the Labor Party it is 50 per cent promise, 50 per cent excuse. The debt of Australia, the net debt of the government, is now $106.6 billion—in dollar terms, the highest of all time. It is a deterioration in the net debt figure from $94 billion. Buried deep in the budget papers we have now discovered that the government is going to ask the parliament to increase the amount of debt issuance to $250 billion in gross terms. Of course, they are going to use the excuse of Basel III to maintain what will be since World War II the largest debt issuance in our modern history. What does this all mean? For everyday Australians it means that the interest on the Labor Party debt will increase to $18 million a day every day for the next four years. It means that by the fourth year of this budget, interest will rise to $7½ billion. And the government expect us to believe the fairytale story that somehow they are going to bring the budget back to surplus with fiscal discipline. They sold and spun in the budget speech last night $22 billion of so-called savings. Ignore the fact that a third of that was tax increases. Even so, $22 billion, and now people are becoming more aware that the government is spending $19 billion of that $22 billion. But most intriguingly, and this is where the rubber hits the road, next year—in the year when we have stronger economic growth, where we have unemployment dropping to 4.5 per cent, where the government is running a bigger budget deficit—in that year the government is going to spend $2.2 billion more than it is saving. These much lauded savings that are going to bring the budget whirring back to surplus, in the budget where the rubber hits the road they are spending $2.2 billion more, and it is not even an election year. Growth is going up to four per cent but employment growth is actually slowing. If we cut through the spin of this incompetent Treasurer, what we can recognise is that he is desperate to get adulation. He talks about the emotion of putting together a budget, how he is sleepless at night about the difficulty and challenges associated with the Australian economy, an Australian economy that he lauds as the best in the world. Yet he is so sleepless, he is so lost, he is suffering such insomnia. Employment growth is slowing even though this government is desperate to spin half a million jobs being created over the next two years. That is an employment growth rate of just 2.2 per cent. It is less than the last three years of the Howard government at three per cent and, what is more, it is less than the last 12 months of this government itself, which had employment growth of three per cent, with 320,000 jobs created in the last calendar year. And somehow they think that it is a momentous achievement for them to be in the business of overseeing an economy creating half a million jobs in two years when the same economy created 320,000 jobs in the last 12 months. On inflation, what I think was quite alarming was that last night, when you dig deep into the budget, the core inflation figures indicate that inflation is going up to three per cent, the top of the Reserve Bank band, by June 2013. Currently it is 2.25 per cent. We are in an environment where the Reserve Bank has clearly indicated it is going to take action. I want to make it perfectly clear to the Australian people and this parliament that Wayne Swan and Julia Gillard are going to own every interest rate increase from here on. They are going to be responsible for making life harder for everyday Australians and not easier. They had the chance in this budget. They had the opportunity to make the hard yards, and they failed that test because they lack courage. They talk courage but they display no courage. They talk surplus but they deliver deficit. They talk net debt as a negative and now they are going to deliver a significant increase in net debt. This is a government that has never met its budget targets. I say to you why, Mr Deputy Speaker. It is because this government does not have internal discipline. They lack the processes for actually making hard decisions, as illustrated by the fact that they leaked $400 million in cuts in medical research and did not proceed with it. They leaked that they were going to cut childcare benefits and then did not proceed with it. What did they do? They cut families by $2 billion. It is something I said to the Leader of the Opposition in the lock-up: I cannot believe this government is reducing the real increases in the family tax benefit for families on $45,000 a year. Why would they do it? Mr Bradbury: It is a supplement. Mr HOCKEY: He says it is a supplement. It is not real money: is that it, sunshine? It is not real money. Two billion dollars is not real money. Somehow it is in your budget, so either it is real money and it is really going to affect Australians or, as the member for Lindsay would say, it is not real money. I say to you, sir, that Australian families are struggling, and particularly in your electorate of Lindsay. Your budget is indifferent to the plight of your people. Your budget is ignorant of the fact that everyday Australians are struggling: they are finding it harder to pay for higher electricity bills, for higher mortgage repayments, for higher fruit and vegetable prices, for higher petrol prices. This is a government that is overseeing a deterioration in the living standards of middle Australia. And why? Because of their own fiscal recklessness. There is one figure set that illustrates this more graphically than any other. It is the fact that since Labor was elected the Public Service in Canberra has increased by 20,000 employees. Last night in the so-called tough budget the government increased the size of the Public Service by a further 1,100 employees, including 200 in the Department of Prime Minister and Cabinet alone and 55 in the Department of the Treasury. So at that time, when they are talking tough and expecting Australians to cut their cloth, this is a government that is going on a binge, a binge that is based on politics and not policy. Of course, in the budget there are reflections of their policy failures, which Australian families are now paying for. The $1.2 billion blow-out in the computers in schools program grew a further $200 million in last night's budget to $1.4 billion. The government's failed border protection policy has grown out by an additional $1.75 billion, and I suspect we will hear more about the growing bill for their failed border protection policies. What about the $111 million that is going to have to be spent mopping up the failed pink batts policy? How about that one, Mr Deputy Speaker? Of course this all reflects the fact that the Labor Party cannot rein in its spending. The Treasurer keeps talking about spending growth. He is working off a very high base because of course the government went for the credit card during the financial crisis, handing out $900 cheques, building school halls, installing pink batts, putting solar panels on roofs—they did it all. They smoked the credit card at the moment when Australia could not afford to have an excessive fiscal stimulus. It turns out that Australia gets a silver medal, or maybe even a bronze medal, for the biggest fiscal stimulus in the world as a percentage of GDP, and now we are paying a heavy price for it. At no time in the forward estimates—and wasn't the Treasurer caught out by this today!—or at any time has the government's expenditure as a percentage of GDP been as low as it was in the last year of the Howard government. The Treasurer says that we were a profligate government— Mr Shorten: You were. Mr HOCKEY: yet nowhere in all of the budget figures at any time does the Labor Party ever get to the 22.9 per cent of GDP of the coalition in its last year. Then, belatedly, in a defensive mood, the Treasurer comes into this place and says, 'Oh, well, look at the average of the coalition. We are less than that.' So I looked at the average of the Labor Party so that we can compare apples with apples. Under the coalition on average over all of that period, including the very difficult period when we had negative growth during the Asian financial crisis, the coalition's percentage increased significantly, as it does when the economy comes down—the percentage of government expenditure rises as a percentage of GDP—but on average the Labor Party has been spending 24.6 per cent of GDP and the coalition just 24.03 per cent. When you add in the revenue and expenditure associated with the carbon tax at $26 a tonne—boom, boom! It all goes. Do you know what, Mr Deputy Speaker? This is the challenge for the government: assuming there are no major new policy initiatives over the next two years, assuming the carbon tax is not going to have any impact on the budget, assuming there are no other challenges ahead, assuming that the terms of trade will remain at the highest level in 150 years, assuming that old Penny Wong can control the Prime Minister as she claimed to do. My goodness, what a mud wrestle! Senator Penny Wong claimed that she was going to control the Prime Minister's excessive demands for spending. I say to you: this mob will never deliver a budget surplus. This mob will never have the courage to deliver a budget surplus and, as the member for Longman said so vividly earlier, in question time, in his entire lifetime Labor have never delivered a budget surplus. Even though he was conceived in a surplus he was delivered in a deficit. It just goes to show what a celebration it was when Labor last delivered a budget surplus, and when Labor delivers a surplus again we will all give a good cheer and have a great party.