The Federal Labor Government's claim they saved Australia from the negative effects of the global financial crisis (GFC) is a myth, Federal Shadow Minister for Finance, Deregulation and Debt Reduction, Andrew Robb AO has told a CEDA audience in Melbourne.
He said both the Government's wasteful response to the GFC, and its failure to take Australia's rapidly accelerating public debt levels seriously, are creating real vulnerabilities which will have long term negative consequences for jobs and growth.
Federal Government debt has gone from zero, with $70 billion in net assets, to net debt of $168 billion with annual interest payments exceeding $7 billion, while gross debt now stands at $267 billion, Mr Robb said.
"Much of the $77 billion of stimulus money in 2009, 2010, 2011 and 2012 was an unnecessary over-reaction which saw debt and spending expand rapidly, putting strong upward pressure on interest rates," he said.
"Far from saving Australia from the GFC, the fiscal stimulus has proven to be the catalyst for unprecedented and continuing levels of government spending, financed in large part by rapidly growing debt.
"The size and growth of Australia's public debt is understood by Labor to be its greatest Achilles heel, and Australia's greatest vulnerability."
Mr Robb said Australia's total net public debt across state and federal governments is about 22 per cent of GDP, or well over $300 billion and growing rapidly, despite the resources boom and terms of trade reaching 150 year highs.
He said Labor also claims net debt will be paid off by 2020-21 despite it simultaneously forecasting it will still have a $138 billion debt in 2015-16.
"The problem with record levels of debt is that increasingly options are closed off. As anyone who has run a business will know, up to a point you control and make good use of debt…it is no different for a country," he said.
"$7 billion a year is already going on interest payments rather than being available to fund infrastructure, education, health and other government spending priorities."
He said Australia's AAA credit rating is dependent on the Federal Government keeping debt under control.
"Australia is being put in an increasingly vulnerable position by excessive and wasteful spending, and Labor's record of financial management," he said.
He said the Budget needs to provide an honest assessment of any structural increases in spending being built into Commonwealth outlays whose full fiscal impact may only become apparent beyond the forward estimates period.
"A dishonest budget would only further undermine investor and consumer confidence," he said.
If elected the Coalition plan to provide certainty and stability, and encourage an appetite for risk and investment, he said.
Wasteful government spending, over-regulation and growing government debt have made Australia vulnerable, he said.
The Government must stop taxing, borrowing, spending and regulating, and start living within its means, he said.
"The growth and role of big government must be displaced by fostering robust growth of our millions of small and large businesses, and by restoring consumer confidence to spend," he said.