Extra $50bn of debt? Please explain

By Colin Brinsden

The federal government has been attacked from all sides over this month’s budget - even by one of its own members - on the resumption of parliament for a two-week sitting.

The opposition is calling for an explanation over the need for government to increase its debt ceiling by $50 billion.

Opposition finance spokesmen Andrew Robb is seeking to amend the bill that will allow the government to extend the debt ceiling from $200 billion to $250 billion.

 

Mr Robb argues that there needs to be an explanation of any special circumstances justifying such a significant increase, while he accused the government of being a "delusional management team".

"Again all the smell of a dodgy company before it hits the wall," Mr Robb told parliament on Monday.

"Heroic assumptions, never turned a profit, promises that the best years are ahead of us, yet a growing debt while pushing an extension of the credit limit on the sly."

Opposition treasury spokesman Joe Hockey described it as a failed Labor budget in a growing economy reinforced by a mining boom and the best terms of trade in 140 years.

"This government is asking everyday Australians to cut their own expenditure … to rein in the family budget, and yet it is this government that is failing to do so itself," he said.

While the government said it was getting the budget back to surplus, Mr Hockey said it had yet to actually do so, and was in fact forecasting deteriorating budget positions in 2010/11 and in 2011/12.

"So the bill the parliament is actually going to vote on … allows for a deterioration in the budget deficit, not an improvement in the cash bottom line," Mr Hockey said.

Treasurer Wayne Swan hit back during question time, saying Mr Hockey’s budget reply speech last week had no plan to keep the economy strong.

"There was no plan to return to surplus, despite the fact he had told everyone the week before that we could come back to surplus next year … and he couldn’t offer a single alternative saving," Mr Swan said.

Australian Greens MP Adam Bandt described it as a "quarry vision" budget for unelected miners, and while it contained some small steps - such as action on mental health and reform to the fringe benefits tax - it made no giant leaps.

The budget should have taken a "green razor" to spending like the fossil fuel subsidy, while creating a sovereign wealth fund and helping migrants and refugees be trained and find work, rather than rely on fly-in workers.

One of Labor’s own MPs, NSW backbencher Daryl Melham, spoke out against the public service efficiency dividend, that has been increased from 1.25 per cent to 1.5 per cent for 2011/12 and 2012/13.

Speaking on his 22nd federal budget, Mr Melham said the dividend would do great damage to important cultural institutions, and that there had to to be another way of extracting savings.

The efficiency dividend requires federal government departments and agencies to produce budget savings.

As well as big government departments, it also applies to cultural institutions such as the National Gallery, National Archives, National Museum and National Library.

"Those institutions should be handled in a sensitive way and given a level of flexibility and some assistance from the government," he said.

AAP


Rudd to discuss Aussie IMF candidate

Foreign Minister Kevin Rudd wants this week’s cabinet meeting to discuss the possibility of Australia putting up its own candidate to take over the leadership of the International Monetary Fund (IMF).

Like Treasurer Wayne Swan, Mr Rudd believes a successor to Dominique Strauss-Kahn should be based on merit rather than nationality.

The hunt is on for a new managing director after Strauss-Kahn resigned to fight sexual assault charges in New York.

 

Mr Rudd, on a visit to Norway on Friday, was quizzed by reporters on the issue and asked if Australia would be putting up its own candidate.

"I’ll be returning to Australia … I’ll work through this issue in cabinet in the early days of next week," he said.
Mr Rudd said there were many people who would fit the bill more broadly beyond Australia.

"I don’t think it is productive to nominate individuals myself, but we believe that having the right person must have the support of the global financial community, the principal financial institutions and the regions of the world," he said.

That may be someone from the Asia-Pacific, it may be someone from elsewhere, Mr Rudd said.

"But I think we all need to take a deep breath. Rather than turn this into some horse race, we should regard it as a serious question about appointing the best person based on merit," he said.

Mr Swan agreed, saying the legitimacy of the Washington-based institution would continue to be undermined if it appointed a successor based on nationality.

"It’s important the selection of a replacement be open and transparent," he said in a statement on Sunday.

"The tradition of automatically appointing a European to the role is one that’s long past its use-by-date given the shift of global economic weight to emerging economies, particularly in Asia, over the past few decades."

AAP