I take this opportunity to associate myself with the comments of the previous debate and congratulate the member for Brisbane for bringing this important international issue to the attention of the House. I thank the speakers who contributed to the debate.
In my opening remarks, can I firstly say that for each of us as federal members there is an element of integrity that each of us try and uphold. Each of us has family members; each of us has those we try and protect to the best of our abilities in the course of our duties. I take this opportunity in the appropriations debate to condemn the Australian Labor Party for its attacks this week on the family of the Prime Minister. I suggest that they were repugnant. I suggest that they were uncalled for. I would suggest that as members of this House we do everything in our power to protect those people we love. In setting a benchmark, I would hope that in my political career, in whatever time is left available to me, I never fall to such a level where I find myself with such a lack of material that I am limited to attacking the family members of those who I oppose.
I was very fortunate to have a physical career playing contact sport. Whilst you are on the paddock, the intention is to play as hard as you can to achieve victory for your side. On occasion in contact sport your intent is to limit the movement of your opposition. But, nevertheless, the sporting field is a great place. You can go to the dressing shed of your opposition and share a cleansing ale in victory or loss. There are rules. So I take the opportunity to distance myself from the attack on the family of the Prime Minister and offer my sincere apologies. I hope that as ladies and gentlemen of this House we do not see a repeat performance of that.
Coming back closer to the appropriations bill, to properly and contextually discuss the budget you must start at the beginning. I will start with what we inherited—a mess that was left behind—and the challenges that we faced. We have been left with a situation where our economy is sluggish. We currently have an upward trend in our unemployment stats. The economy is transitioning from growth, led by investment in our resources projects, to economic activity driven from the services sector. This is underway at a time when the economy is growing below trend. More recently the Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, fell for a second month in a row in February. It was down 0.72 percentage points, taking us to minus 0.09 per cent, indicating below trend economic growth. Gross GDP remains sluggish at 2.7 per cent in 2014. Since October last year, a Washington based institute has downgraded its Australian growth forecast to 2.6 per cent in 2014 and 2.7 per cent in 2015. It had previously expected growth of 2.8 per cent and 2.9 per cent in those years respectively. The downgrading of Australia's expected growth is a nail in the coffin for our increasing unemployment rate. The unemployment rate has been rising—from 4.9 per cent in 2011 to around 5.6 per cent this year. The economy needs to grow by more than three per cent a year to keep unemployment in check.
It is paramount that when we do our forecasts these assumptions are calculated on accurate growth rates. We need an economy that tracks at around three per cent for us to maintain suitable growth in our forecasts. It is irresponsible for outlook years to forecast rates in excess of those—3.9 per cent is unsustainable. It distorts assumptions and the forecast. I will come later in the speech to Labor's track record on their capacity to forecast.
We were left with a snowballing economic outlook as a result of the falling terms of trade. Commodity prices peaked in 2011. However, as they declined, the speed of the decline was even more rapid than many expected. In the September quarter of 2011, the terms of trade peaked, hitting a level of some 105 per cent above those prevailing around 2001-02. We were left with an economic perfect storm. We were left with a budget that was out of control. We were left with tough decisions to make in order to get our nation's books back on track. We were left with a fiscal situation where, quite frankly, the government of the day was spending more than they earned. They were borrowing from future generations to try to win favour and hearts in the political arena. They were shamefully spending money that was supposed to be generated by taxes that never generated anywhere near the revenue they suspected they would.
Labor failed to make the tough decisions during their six years in charge. They chose to make unaffordable promises, spending like drunken sailors and ignoring significant economic warnings. Labor delivered five record deficits. Labor had a habit of overpromising and underdelivering when it came to the budget. In the 2011-12 budget, Labor promised a deficit of $22.6 billion for the budget year and they ended up delivering a budget deficit of $43.4 billion. It was not a bad effort but they missed it by about $20 billion. In the 2012-13 budget they promised a surplus of $1.5 billion. They promised a surplus but in reality delivered an $18.8 billion deficit. Again, they missed it by about $20 billion. This opposition could not hit the side of a barn with an economic forecast. In the 2013-14 budget, which I have been prompted to speak about, Labor promised a deficit of $18 billion for the year and they came in at around $50 billion.
We are comfortable in managing the books because most of us on this side of the House come from business backgrounds whilst those on the other side come predominantly from union backgrounds. For the very few people on the other side of the House who have had businesses, I say to them that, in the majority, we are as confident managing the book as those on the other side are at manning picket lines.
Howard adopted from Labor a 17.5 per cent interest rate, 9.3 per cent inflation and 11 per cent unemployment. Successive budget deficits exceeded $10 billion per annum and government debt was at $96 billion. As a testament to our ability to run a safe set of books, Rudd adopted from Howard a 6.75 per cent interest rate, three per cent inflation, 4.4 per cent unemployment and a record surplus, around $20 billion, plus $60 billion put aside in the Future Fund. That is all gone. Labor left us looking at a budget deficit of $123 billion in four years and debt rising to $667 billion. They will try to distance themselves from their poor economic management and skill sets, but the figures will not lie, and they do not. Rising debt and a generational sacrifice means that we are going to have to make tough decisions to pay back the debt. In the words of the Grattan Institute, persistent budget deficits 'incur interest payments and limit future borrowings … they can unfairly shift costs between generations, and reduce flexibility in a crisis.' In Europe, the global financial crisis morphed into a sovereign debt crisis and demonstrated the pain that comes from persistent budget deficits. This budget seeks to correct our nation's deficits so that we do not find ourselves in a situation similar to that of our Northern Hemisphere brothers and sisters.
Labor left us with no surplus in sight. They will claim that they had the budget back on track, but I can assure you that the history books tell us that their forecasts were continually $12 billion to $20 billion out. Labor claim that there was no budget emergency. Irrespective of how you look at it, whether or not you want to claim that there is no budget emergency, we are now servicing an interest payment of $1 billion each month and climbing. A lot of what Labor claim should not be taken at face value. They claim that this budget rips money from health.
The budget papers clearly show that there is no cut to hospital funding in this budget, quite the opposite. In 2015-16 it increases by nine per cent or $1.4 billion a year. In 2016-17 it increases by another nine per cent or $1.5 billion a year. In 2017-18 over the forward estimates it increases by another six per cent or $1.1 billion a year. In this budget hospital funding increases by over $5 billion or around 40 per cent over four years. Those on the other side of the House will go into the out years and into the never-never because that is where they find solitude; that is where they find sanctuary. The real numbers presented in the budget show a 40 per cent increase over four years. The government will provide total hospital funding to the states of almost $70 billion over the four years to 2017-18.
In typical fashion, Labor made big promises to increase hospital and schools funding out into the future, promises that could never be funded. They could never be funded because Labor's forecasts were based on growth rates well in excess of what the trends dictate. Labor claimed that they would increase hospital funding by over 10 per cent a year. That would have seen health funding skyrocket from $15 billion a year to around $40 billion a year within just a decade. The fact is that that was never sensible or affordable. It was a pipedream promised by a Labor government that never expected to have to deliver it.
Labor are claiming this budget rips money from education. The coalition is taking school funding to record highs. We are investing record recurrent funding of $64.5 billion in government and non-government schools over the next four years. This is $1.2 billion more than the previous government would have spent over the forward estimates to ensure that schools in all states and territories receive extra funding. From 2013-14 to 2017-18 total Commonwealth funding to all schools in Australia, as outlined in the 2014-15 budget papers, will have increased by 37 per cent or $4.6 billion.
Earlier today, the Leader of the Opposition came into the House and spoke about education, commenting that it was the right of every child to have a good education. Let us look at Labor's track record on education. Yes, while we have got some new tuckshops and some new school halls, when we measure our educational outputs against those of our international partners, since that capital investment—the education revolution, which was going to transform the Australian education economy—we have gone backwards by international standards. Can I suggest that throwing more money at the problem is not the answer. It is about spending the money that we have more wisely.
There are claims that this budget rips money from pensioners. The government promised before the election that there would be no cuts or changes to pensions during this term of government. This budget confirms this commitment. Current and future pensioners will not experience any decrease in their pension payments. I repeat: there will be no decrease in their pension payments. Pensions will continue to increase after the changes come in. The changes to payments represent forgone gains, not a reduction in dollar benefits—payments will still go up but will just be indexed differently.
Labor is now standing in the way of nearly $40 billion of budget savings. Labor has already stood in the way of nearly $20 billion of savings over the forward estimates period, including around $5 billion of savings Labor themselves proposed before the last election. A member opposite spoke in the press about the introduction of co-payments but will dare to stand and oppose co-payments. The savings Labor proposed but are now opposing or have opposed are: $1.1 billion of research and development tax changes, $2.3 billion of higher education savings, $1.5 billion from the cancellation of the 2015-16 tax cuts linked to the carbon tax, and a $106 million childcare rebate saving resulting from extending the pause of the indexation of the childcare rebate for a further three years.
In the time remaining to me I will say that the co-payment is not a new phenomenon. There is evidence, going back to the Hawke and Keating days, where Labor actually introduced a co-payment. So whether you voted for the coalition or for Labor, I assure you that this opposition has a track record. I have no doubt that whether we were voted in or whether they were voted in, co-payments would have been introduced somewhere in the budget. Dr Leigh, a member opposite, wrote in a newspaper:
But there's a better way of operating a health system, and the change should hardly hurt at all. As economists have shown, the ideal model involves a small co-payment—not enough to put a dent in your weekly budget, but enough to make you think twice before you call the doc. And the idea is hardly radical.