Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

and what they will see is a Prime Minister and a Treasurer completely out of touch and completely out of time. Of course, it was a unique event, wasn’t it, seeing the Prime Minister and the Treasurer together today doing a joint press conference? They have not been getting on terribly well lately. In fact, only a month ago the Treasurer said that the Australian people should not trust the Prime Minister when it comes to the economy. He went out and told those biographers of Mr Howard that the Prime Minister had engaged in reckless spending in the last two election campaigns and that that reckless spending had put upward pressure on inflation and upward pressure on interest rates. So, if Mr Howard’s Treasurer does not trust him to run the economy, why should the Australian people? Why should the Australian people trust the Prime Minister to put in place a range of policies that put maximum downward pressure on inflation and maximum downward pressure on interest rates? And they do not.

The government do not have an answer for this. That is why we are getting the blame game rhetoric from the Treasurer and the Prime Minister all the time: ‘Don’t blame the Howard government; blame the unions. Don’t blame the Howard government; blame the states.’ Don’t blame the Howard government for what they are actually responsible for—don’t blame them at all. So we have a dangerous combination here at the head of this government: we have a PM who wants to cling to power at any cost and a Treasurer who tells us he will spend any amount of money to do it. And haven’t we had the proof of that in recent weeks? But guess what else the Treasurer has told us? He has told us that he does not have the guts to stop the Prime Minister doing it. That is a very dangerous combination if you have a high inflationary environment. The IMF has warned about inflationary pressures in the Australian economy; so has the Secretary to the Treasury. Most reputable economists have warned about inflationary pressures in the Australian economy.

But are the Prime Minister and the Treasurer worried about inflationary pressures in the Australian economy? Of course they are not. They are worried about each other. Neither of them have had their eye on the main game, which must be a range of reforms and long-term policies that put downward pressure on inflation and downward pressure on interest rates. Of course, they do not have those policies. What they have is a strategy delivered to them by Crosby Textor, and that strategy simply says: ‘Blame everybody else.’ There is no other long-term solution. What we saw today in the parliament and at the press conference was an attempt to blame state governments, to blame the borrowing programs of public corporations at the state level for inflationary pressures in the Australian economy.

We are lectured all the time about how the government believe in the independence of the Reserve Bank and how they value its advice. What has the Reserve Bank had to say about the absurd and dishonest proposal they are putting about the states? On 21 February this is what Glenn Stevens had to say:

... infrastructure for investments of various kinds needs to be done.

…            …            …

Balance sheets of governments in this country by and large are in very good shape, they won’t have any trouble borrowing ... I don’t think it will feed directly into the consumer price index.

That just blows away the excuse the government has been making for not attending to inflationary pressures in the economy. They have been quoting former Reserve Bank Governor Macfarlane as if somehow he was supporting their proposal. On 18 August Ian Macfarlane said about this ridiculous and dishonest proposition from the Treasurer:

I think the states by and large have had very prudent fiscal policy over most of the period you are referring to ... I have no problem with the states spending money on infrastructure. I do not even have any problem with the general principle of borrowing for long-lived assets like infrastructure.

That is what Macfarlane had to say, but the government do not quote it.

The challenge today is for this Treasurer to get honest about all of these things and get serious about a long-term program to put downward pressure on inflation and interest rates. But we are not going to see any of that. We are not going to see this government attending to the productive needs of this economy through the necessary investments in education or through the necessary political leadership required to put infrastructure in place that will guarantee prosperity in this country beyond the mining boom, investment that will attend to the faltering productivity growth in this economy that is eroding our competitiveness and leading to capacity constraints. The capacity constraints in this economy are pushing inflationary pressures and interest rates upwards.

Who is responsible for that? The government is principally responsible for that. It has been ignoring warning after warning from the Reserve Bank about the need to attend to capacity constraints in the Australian economy. There have been some 20 warnings from the Reserve Bank over a period of time and they have been completely ignored by this government. It has had only one strategy in place: to cut wages and working conditions. That strategy has been delivered by the minister across there, the Minister for Employment and Workplace Relations, supported by the Treasurer. Their only solution is to cut wages, not to lift the productive capacity of the Australian economy.

And of course we have had this from the Secretary to the Treasury. The Secretary to the Treasury on numerous occasions, but most particularly in March this year, warned the Treasurer about the government’s addiction to short-term fixes and the need to involve the Treasury more broadly in lifting the productive capacity of this economy. The secretary talked about a serious risk to inflation from policy interventions by the government unless it turned its focus to lifting our nation’s productivity capacity. That was the damning judgement of the Secretary to the Treasury. He has little faith in this government. What he was saying is in some ways reflective of what the Treasurer said to the Prime Minister’s biographers: this government will say anything, do anything, and spend any amount of money to win an election.

Labor has been attending to the policy challenges of this country. We have got a plan for the next 10 years—not the next 10 weeks, Treasurer. It is a plan which goes to the core of lifting productivity in this economy, a plan which will deliver an education revolution to address the skills crisis and to take the heat out of inflation. On the government’s own estimates, Australia faces a shortage of more than 240,000 skilled workers over the next nine years. But it is not just a matter of the skills shortage going forward. These are skill shortages right now. This Howard government has underinvested in skills and education. Australia’s overall investment in education and skills lags behind 17 other OECD economies, including Poland, Hungary and New Zealand. If Australia aspires to be first in prosperity, we cannot continue to be 17th in education and skills. It is that simple. What we are debating today is the failure of the government to make those investments, which is putting upward pressure on inflation and interest rates and has been partly responsible for the fifth interest rate rise since the Prime Minister promised to keep interest rates at record lows.

Federal Labor will invest in an education revolution to lift the quality of the level of education from early childhood through to schools and trades and higher education. You could see just how sensitive the government was to our proposals in this area today when we saw Mr Robb, the responsible minister. The coalition are running behind Labor. Our investment in new trade facilities in schools has left this government completely for dead and there has been very significant public support for our policy. So stay tuned for the extreme makeover when it comes to skills. Stay tuned for some new initiative from the government just out from the election to try to make up the political ground that it has lost over the last 10 or 11 years.

It is the same when we get to infrastructure. The government has ignored persistent calls from business and industry groups for infrastructure planning and development to be nationally coordinated. The government’s own research has shown that Australia ranks 20 out of 25 OECD countries for its investment in public infrastructure as a proportion of GDP. While we support the role of private investment in infrastructure, there is an important role for governments.

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