Mr ELFERINK - 2009-05-05
In 2001, the debt and liabilities to income ratio of 131% was described by Labor as being unsustainable and economic vandalism. What then do you have to say about the predicted debt and liabilities income ratio of 130% delivered in your budget?
ANSWER
Madam Speaker, I welcome the question from the member opposite.
Members interjecting.
Madam SPEAKER: Order! Order!
Ms LAWRIE: What they fail to get a grasp on is the severe and swift economic downturn that has gone across the globe and across our nation. This is my prediction: what we will see is Treasurer after Treasurer stand in their parliaments, handing down their budgets and taking their jurisdiction into increased debt. And why? Because now is not the time to cut government spending. With the contraction in private investments, jobs need to be saved by government spending, particularly in areas of infrastructure. Now is not the time to pull back.
In terms of the changes in liabilities, very clearly we have had a debate, and I am happy to have it as many times as they need, because they simply do not understand. We have had actuarial adjustments in superannuation liability which makes up a significant component of the liability increases sitting in those figures. The other thing we have impacting on us at the moment, and I have mentioned this, is the bond rating of those liabilities. It is as low as 4% at the moment. Normally, you look at your long-term bond rates around 5.7%. Those liabilities do not really come to fruition until about 2012, 2013 and 2014 in terms of when you start to see those liabilities peaking and they drop down the other side.
What those figures represent today will not be what they represent when those liabilities are coming to fruition and would be called upon, because those bond rates dramatically affect those liability figures. If you were to look at the bond rate and the long-term bond rate of 5.7%, I can tell you that those liabilities would be a lot healthier.
It is a nonsense debate being pursued by a shadow Treasurer who simply does not understand that the truest measure you can take of this, and the measure that all governments take, is your total financial liabilities and looking at what your nett debt to revenue ratio is: can you afford, in terms of your revenue coming in, to pay off your debt? Where is the Territory? Today we are predicting a 28% nett debt to revenue ratio in 2009-10. We are saying it will increase to 33% nett debt to revenue ratio over the period of the forward estimates, less than half of what the CLP left the Territory in with a nett debt to revenue ratio of 61%.
Under the CLP, their answer would be to slash jobs, to slash the budget, to stay in surplus - they never actually achieved surpluses in the last years of the CLP when the economy nationally was strong.
This economy is flat lining. Through spending, particularly in infrastructure, Territory Labor governments brought health back into the local economy through infrastructure, record upon record capital works expenditure. What do we have in this Budget 2009-10? $1.3bn in capital investment in housing, in schools, in roads, equating to about some 2500 jobs. What happens in harsh economic downturns is that unemployment increases.
Mr MILLS: A point of order, Madam Speaker! It is just balancing the equation. The Leader of Government Business is quite distressed about the length of my four sentence question. I would assume that is the same that you would apply to the length of the answers.
Madam SPEAKER: As you know there is no limit on answers. The Treasurer has the call.
Ms LAWRIE: We made a deliberate decision - I said it in the Budget Speech, and I will say it again - this government made a deliberate decision to go into deficit. We have seen collapsing GST revenues, but we have made a deliberate decision to go into deficit to protect Territory jobs. What we also have in the budget papers, through the forward estimates, articulated in the fiscal strategy, is a clear step out plan to return the budget to surplus in five years.
ANSWER
Madam Speaker, I welcome the question from the member opposite.
Members interjecting.
Madam SPEAKER: Order! Order!
Ms LAWRIE: What they fail to get a grasp on is the severe and swift economic downturn that has gone across the globe and across our nation. This is my prediction: what we will see is Treasurer after Treasurer stand in their parliaments, handing down their budgets and taking their jurisdiction into increased debt. And why? Because now is not the time to cut government spending. With the contraction in private investments, jobs need to be saved by government spending, particularly in areas of infrastructure. Now is not the time to pull back.
In terms of the changes in liabilities, very clearly we have had a debate, and I am happy to have it as many times as they need, because they simply do not understand. We have had actuarial adjustments in superannuation liability which makes up a significant component of the liability increases sitting in those figures. The other thing we have impacting on us at the moment, and I have mentioned this, is the bond rating of those liabilities. It is as low as 4% at the moment. Normally, you look at your long-term bond rates around 5.7%. Those liabilities do not really come to fruition until about 2012, 2013 and 2014 in terms of when you start to see those liabilities peaking and they drop down the other side.
What those figures represent today will not be what they represent when those liabilities are coming to fruition and would be called upon, because those bond rates dramatically affect those liability figures. If you were to look at the bond rate and the long-term bond rate of 5.7%, I can tell you that those liabilities would be a lot healthier.
It is a nonsense debate being pursued by a shadow Treasurer who simply does not understand that the truest measure you can take of this, and the measure that all governments take, is your total financial liabilities and looking at what your nett debt to revenue ratio is: can you afford, in terms of your revenue coming in, to pay off your debt? Where is the Territory? Today we are predicting a 28% nett debt to revenue ratio in 2009-10. We are saying it will increase to 33% nett debt to revenue ratio over the period of the forward estimates, less than half of what the CLP left the Territory in with a nett debt to revenue ratio of 61%.
Under the CLP, their answer would be to slash jobs, to slash the budget, to stay in surplus - they never actually achieved surpluses in the last years of the CLP when the economy nationally was strong.
This economy is flat lining. Through spending, particularly in infrastructure, Territory Labor governments brought health back into the local economy through infrastructure, record upon record capital works expenditure. What do we have in this Budget 2009-10? $1.3bn in capital investment in housing, in schools, in roads, equating to about some 2500 jobs. What happens in harsh economic downturns is that unemployment increases.
Mr MILLS: A point of order, Madam Speaker! It is just balancing the equation. The Leader of Government Business is quite distressed about the length of my four sentence question. I would assume that is the same that you would apply to the length of the answers.
Madam SPEAKER: As you know there is no limit on answers. The Treasurer has the call.
Ms LAWRIE: We made a deliberate decision - I said it in the Budget Speech, and I will say it again - this government made a deliberate decision to go into deficit. We have seen collapsing GST revenues, but we have made a deliberate decision to go into deficit to protect Territory jobs. What we also have in the budget papers, through the forward estimates, articulated in the fiscal strategy, is a clear step out plan to return the budget to surplus in five years.
Last updated: 09 Aug 2016