Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

I am glad the member for Batman understood what I was saying. He is really on top of his game today. There are some union officials that are really quick. Today the International Monetary Fund released its annual assessment of the Australian economy. The IMF does a report on every one of the members of the IMF—some 150 to 160 nations around the world—on an annual basis. This is done by the independent IMF, which is Washington based and is the premier economic institution of the world.

The report which was released in relation to Australia notes that we are now in our 15th year of continuous economic growth, this government having presided over nearly 12 of those years. That growth is strong at about four per cent and inflation is low at about 2½ per cent. This is what the IMF said in its report today. I ask the House to listen to this quote of the IMF:

[Executive directors] commended Australian authorities for their “exemplary” macroeconomic management, which is widely recognised as being at the forefront of international best practice.

That is not me, that is not the Prime Minister, that is not the Liberal Party—that is the IMF, which describes Australia’s economic management as ‘at the forefront of international best practice’. The IMF noted that we have improved our fiscal sustainability by accumulating surpluses, eliminating net debt and establishing the Future Fund to provide for future liabilities. If Labor had had its way we would never have been able to do that. Labor opposed balancing the budget; Labor opposed paying off debt; Labor opposed making sure that the Future Fund was locked up for future generations of Australians.

There is only one area that the IMF raised for concern in relation to the fiscal situation in Australia. Bear in mind that this is not me and it is not the Australian Treasury. It is the Washington based IMF. The IMF sounded a note of caution in this international report on Australia in relation to spending by state governments. This is what the IMF said:

Another stimulus that raises concern comes from the States. The States are collectively forecasting a fiscal deficit of around ½ percent of GDP in 2007/08. This constitutes a reversal of the surplus position that the States have been in until 2005/06. 

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The catch up in infrastructure spending comes at a time when there is already strong competition for human and capital resources from the private sector. As a result, this is putting more pressure on resources and could begin to bid up prices.

That is what the IMF said. The point that the IMF is making is that when you have a huge investment surge going on in this country—an investment surge that is being led by the private sector—for a level of government to come in, to run a deficit and to put pressure on that capacity could have an effect on prices.

As I have said in this House before, there is nothing wrong with building infrastructure. The Australian government is engaged in the biggest infrastructure program in Australian history. What we do is fund our infrastructure program and add to savings with a surplus. What the states do is they do not fund their infrastructure program and they borrow savings, running deficits.

If the Australian Labor Party were courageous and really wanted to show that it understood economic policy, it would take the opportunity to condemn those Labor state governments, who have moved their budgets from surpluses into deficits. If Mr Rudd, the Leader of the Opposition, wanted to show that he had the bottle to stand up to a state premier, he would come right out and make it entirely clear—

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