Appropriation Bill (No. 1) 2025-2026, Appropriation Bill (No. 2) 2025-2026, Appropriation (Parliamentary Departments) Bill (No. 1) 2025-2026

Senator PATERSON (Victoria) (18:46): I rise to make a contribution on behalf of the opposition on Appropriation Bill (No. 1) 2025-2026, Appropriation Bill (No. 2) 2025-2026 and Appropriation (Parliamentary Departments) Bill (No. 1) 2025-2026. Of course the opposition will not be opposing the passage of these bills, just to put minds at ease on the other side of the chamber.

As is normal practice, we'll be facilitating this because it is important to ensure the ongoing usual operations of government. But I want to take the opportunity to speak on these bills to set out where we do disagree with the government when it comes to fiscal policy. Our support for this legislation does not imply agreement with the government's approach to economic or budget management, and especially that of the Treasurer, Dr Chalmers.

We are deeply concerned about the direction of fiscal policy under this government, and I think these are concerns which are increasingly being shared by the Australian people. Our concerns were especially highlighted during Senate estimates recently when officials from the departments of finance and treasury gave significant evidence about the government's mismanagement of our budget in recent times.

In the 2024-25 financial year, the Commonwealth raised $717 billion in receipts, which is equal to 25.9 per cent of GDP. That is the highest level of revenue collected as a proportion of our economy in 25 years. The last time the federal government collected that much revenue as a proportion of GDP was in 2000-01 financial year under the Howard government.

But the difference was that, under the Howard government in 2000-01, the budget was in surplus, not in deficit, to the tune of $3.25 billion, and it remained in surplus thereafter for the rest of the Howard government's term. This is in stark contrast to this year's budget which produced a deficit of $10 billion, even with that 25-year record-high revenue. Thanks to Senate estimates, we also know that this was a deficit of choice.

In the last financial year, the government made $22 billion of net spending decisions, as Finance officials admitted. In effect, the government chose to spend $22 billion more than it offset in savings, and, had they instead fully offset that new spending, they could have delivered a surplus of $12 billion. As officials from the treasury department later admitted, this is a breach of the government's own already very rubbery fiscal rules—in particular, their commitment to bank most of the revenue upgrades they've received, and their commitment to keep spending low until debt as a proportion of GDP is falling.

Dr Chalmers is the luckiest Treasurer in generations. He has benefited from $370 billion of higher revenue than was forecast when Labor came to office in 2022, and yet the 2025-26 budget projects an eye-watering deficit of $42 billion, with large deficits projected not just across the forward estimates but as far as the eye can see in the medium term as well.

The causes of these increasing deficits are not complicated. They are not due to a lack of revenue. Spending under this government is out of control.

Payments now total 26.2 per cent of GDP and, outside the pandemic or an international financial crisis, you have to go back nearly 40 years to 1986-87 to find an Australian government spending at such a rate. Spending is at a 40-year high; therefore, revenue, at even a 25-year high, is not enough to cover the difference, and the budget is now back in deficit.

Those opposite sometimes like to say that the Howard government had high levels of revenue, and that's true. But what the Howard government did differently, particularly under then treasurer Peter Costello, was use those economic good times to reduce taxes, deliver services and pay off debt. They created the Future Fund and left office in 2007 with net assets, not debt.

In contrast, the Prime Minister and Dr Chalmers are running up larger and larger deficits in the good times, meaning Australia will be ill prepared for future economic shocks. We know that debt is forecast to rise to more than $1 trillion this financial year for the first time ever. The government projects that it will reach $1.2 trillion of debt by the end of this term.

That would have been absolutely unthinkable a decade ago. We in the opposition are not the only ones making this point. When the Reserve Bank governor, Michele Bullock, says that Australia needs to 'make hay while the sun shines', she is sounding the same alarm.

Her warning that government spending is 'growing very quickly and revenue's not as strongly' comes as the economic weather begins to turn. The spending numbers do not lie. In the last financial year, real spending growth was 5.5 per cent, about four times faster than the economy.

These are numbers which would make even former treasurer Mr Swan blush. His budgets managed an average spending growth of just two per cent. The Treasurer can stand up at press conferences and talk about restraint all he likes, but, on his watch, spending is increasingly unrestrained and deficits are getting larger, not smaller.

Dr Chalmers has made no secret of the fact that he idolises Paul Keating and seeks to emulate him, and, indeed, his budget strategy appears to have emulated that of Mr Keating, delivering what John Howard once described as 'five minutes of economic sunshine'. We've already seen the best finances that this government can produce in their first term, and those weren't particularly good.

It appears it will be all downhill from here. These budget failures have real consequences for everyday Australians. Spending is now $160 billion, or $16,000 for every Australian household, higher than when this government came to power.

The cost of living is only getting worse, and the consumer price index results for the June quarter have told this story. Electricity rose 8.1 per cent in that quarter, following a 16.3 per cent rise in the March quarter. Rental prices rose 4.5 per cent over the 12 months to the June quarter.

Fruit and vegetables are up 4.3 per cent. Garments rose 3.5 per cent, and footwear rose 5.7 per cent. As much as the government crows about the headline inflation figures, when you drill down, this has not been the experience for most Australian households, who are struggling to cope on an ongoing basis with price rises to basic family necessities.

It's no wonder, then, that, in the face of these numbers and Dr Chalmers's out-of-control spending, the Reserve Bank has reduced interest rates far more slowly than expected a year ago and far less than many other countries around the world. Another concern for our economy on this government's watch is the unemployment rate. The seasonally adjusted rate in September rose to 4.5 per cent, about a point higher than when Labor first took office.

The trend is now clear. After the coalition government brought unemployment down following the pandemic, under Labor it is creeping up, slowly but surely. It's extraordinary that, despite all of this uncontrolled spending, the government still can't reduce the pressure of the cost of living and is seeing unemployment increase.

At the same time, we're seeing the biggest drop in solvent businesses in our history. Private enterprise is shrinking while the public sector swells—a seriously dangerous imbalance for any economy. As the Australian Industry Group has been warning for some time, what growth there is in the Australian economy has been almost entirely driven by the nonmarket sector.

A year ago AiG warned that 85 per cent of jobs created in Australia in the previous quarter had been from the health, education and public administration sectors. In 2025 it has been no better. This government is being propped up by a growing public sector as local private enterprise continues to struggle.

This is clearly unsustainable. Just as concerning is the growing evidence that the basic expectations of government are not being met. For example, defence, our most sacred duty, is being asked to do more with less.

Just last week the Australian newspaper reported: The Chief of the Air Force, Stephen Chappell, has initiated reviews of capability and sustainment costs as part of a service-wide push to "mitigate overspending" and "address budget challenges". The same article noted: … Chief of the Defence Force David Johnston has capped the number of days ADF reservists can work at 150 a year, down from 200.

In a world that's growing more dangerous, Australia cannot afford a government that weakens its own shield. The first duty of any nation's budget is to keep Australians safe. Yet, in a period of out-of-control spending more broadly, the Defence Force is making cuts on the frontline, and over the last three years we've seen a weakening of our borders.

To ensure the normal operations of government services, the opposition will, of course, allow these appropriation bills to pass the Senate. But let there be no doubt that we will continue to hold this government to account for their increasingly poor economic record, which has resulted in record spending, higher power prices, increased food costs, interest rates coming down slower than anyone would wish and slower than the rest of the world, and unemployment growing higher.