20-June-2011
Andrew's Blog
The contrast between the open and fierce political debate in the United States about raising the federal debt limit and the way the Gillard government has buried it here could not be starker.
On any given day you can find dozens of articles in American newspapers dedicated to the debt ceiling issue.
The Congress voted on the debt raising proposal in June and it was resoundingly defeated.
There are now tense negotiations underway which could lead to the debt limit being extended on the proviso that the Obama administration agrees to substantial spending cuts.
Compare this to the cynical and underhand way the Gillard government has sought to lift our debt limit without any public debate or proper parliamentary scrutiny.
Labor has ‘gamed’ the parliamentary system so it can raise the Commonwealth debt ceiling by 25 per cent to a record $250 billion without it being put to a vote on the floor of the parliament.
It buried the proposed $50 billion increase in a secondary budget appropriation bill, linked to the primary supply bill.
The terms of the debate set by the government do not allow for a separate, substantive debate on the government’s plan to burden taxpayers with yet more debt.
As it stands there is no opportunity for the parliament to scrutinise the proposal, seek to amend it, support it or oppose it; so much for the “new paradigm”.
You only have to go back two years to see why this undemocratic act needs to be both fully exposed and roundly condemned.
In 2009 Labor put a standalone legislative proposal to the parliament to increase the debt limit from $75 billion to $200 billion. It also inserted a "special circumstances" clause to help justify its decision.
The government argued that hits to revenue post-GFC and the need to continue stimulating the economy meant there was a "special" need to keep borrowing. The Coalition opposed this move, but Labor used its numbers to get the legislation through.
While we lost the day, at least the parliament was given the opportunity to expose the proposal to proper scrutiny and the government was made to explain and justify its case. That's how it should be.
But now, with the parliament so delicately balanced and with a government lacking direction and a prime minister lacking authority, Labor wants to ram through another $50 billion increase and hopes nobody will notice.
Not only that, it also wants to repeal the "special circumstances" clause which was so important just two years ago. Why? Because it knows there aren't any “special circumstances”.
The only reason the government needs to lift the debt ceiling again is because of its own incompetence. It has wasted billions, yet incredibly continues to borrow $135 million each and every day to fund its loose and reckless spending.
It makes a mockery of all the rhetoric we hear about tightening the belt and rapid fiscal consolidation.
Labor's mismanagement is underlined in the budget papers, which show that the face value of gross government debt at 30 June is estimated to be $192 billion.
They are literally running out of money, hence the need to lift the bar to $250 billion.
It must be remembered that when this government was elected in 2007 it inherited zero debt, with $70 billion in reserves from the Howard Government.
Net debt is currently set to peak at $107 billion, but in all likelihood it will go higher.
The cumulative interest on Labor's debt over just the next four years alone is more than $26 billion.
Think of the hospitals, the roads, the rail and the ports and lost opportunities for tax relief and for better education.
In many respects this is a government afraid of its own shadow. A government that fears putting its borrowing plan to the test on the floor of the parliament.
Labor knows that opposition to their debt plan in the parliament would be tantamount to a vote of no confidence.
For a government clinging to power by a thread such a prospect presents too big a risk.
When it's a choice between the national interest and self interest, the Gillard government will choose the latter every time.