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

I do welcome this debate today. It is an important debate. My message is very clear: the economy is strong, the nation is prosperous and the Commonwealth government is very, very optimistic about our future. And I have said that repeatedly in this House, but what I have also said is that this country faces two very big challenges. It is true we face the challenge of international market volatility—there is no doubt about that—and that has ramifications here and it has ramifications around the world. Everybody is aware of that. And everybody is aware that, as a consequence of that, there is slowing world growth, principally emanating from the US. But one of the things I am very optimistic about is that this may not necessarily have an impact on this country because of strong growth in the developing world. But it is a very big challenge.

The second big challenge that we face is the challenge of inflation. It is a very significant challenge for this country and it is one that we take very seriously. We do take very seriously the fact that we have the highest underlying rate of inflation in 16 years, precisely at the time that we have already had seven interest rate rises in three years. Now we face the highest underlying inflation in 16 years and, according to the Reserve Bank only a week or so ago, that underlying inflation will be at or above the target band for another two years.

This is a very big challenge for our country. We have not faced a challenge like this for a long period of time. But we do believe that by pulling together, by displaying foresight and patience and by seeking long-term solutions, not short-term solutions, we can achieve our objectives to pull that inflation down. It is absolutely critical for working families, who are under tremendous financial pressure, that we succeed in doing this.

Therefore, it is very important that all of our political leaders understand the magnitude of the problem. Unfortunately, the Leader of the Opposition and the shadow Treasurer do not understand the magnitude of the problem. We have even had the shadow Treasurer disputing the fact that underlying inflation is 3.6 per cent—denying that it is on the Reserve Bank website and going into some great hairsplitting exercise to try and deny the figure. The Leader of the Opposition has done a number of doorstops as well. He did a spectacular doorstop on 5 February. This is what he had to say, according to the Liberal Party website:

It’s very important that Mr Rudd and Mr Swan don’t engage in what they describe as the blame-game [inaudible].

Unfortunately for the Leader of the Opposition, there is actually a transcript of what he really said. What he really said was:

It’s very important that Mr Rudd and Mr Swan don’t engage in what they describe as the blame game, saying that it’s all the fault of inflation.

What else is driving interest rates if it is not inflation? This is extraordinary. He thinks that interest rate rises have nothing to do with inflation. That is like saying sunburn has got nothing to do with the sun. Do not come into this House and lecture people about economic literacy. This is one of the clangers of all time.

What is the Leader of the Opposition’s policy to fight inflation? Have we heard anything in this House in recent times from him that could in some way be a policy to fight inflation? If he puts out a document, I know what it will be: inaudible. We have not heard a squeak from the opposition of any plan which will cope with the inheritance they have left the Australian people. The highest elevated inflation in 16 years has been their parting gift to the people of Australia.

The opposition came into this House today and yesterday and somehow pretended that decisions of the Reserve Bank are not decisions taken by an independent body. Why is the Reserve Bank in the position that it is in at the moment? It is in the position it is in at the moment because of the opposition’s lax fiscal policy. They pushed all the weight over to the Reserve Bank and put all of the weight on the monetary policy. In the last four years, the former government had the highest increase in spending over any four-year period in the last 15 years. That is why Australia is in the position it is in at the moment. The Reserve Bank has been backed into a corner by lax fiscal policy and by the fact the previous government ignored 20 warnings from the Reserve Bank about the effect on the inflation rate of capacity constraints in the Australian economy.

What are those capacity constraints? They are the skills shortages. The former government left this country a huge skills crisis. At precisely the time the rest of the world was investing in skills and education, they took our investment down. The most damning thing that can be said about the Leader of the Opposition is that he was the education minister responsible for that. That shows you how little he understands about the key policy areas that drive the economy.

I will tell the Leader of the Opposition another thing: you cannot aspire to be first in prosperity, you cannot aspire to have continually improving living standards, if you are coming 16th or 25th in education. His legacy is a situation where we have not invested in skills and have not provided political leadership when it comes to infrastructure. That is why we have the highest elevated inflation in 16 years, something that the Leader of the Opposition wants to continually deny.

That brings us to the shadow Treasurer. The shadow Treasurer actually did have a few things to say about inflation. Contrary to his denial in the House today, he did say inflation was a fairy story. If we have got a shadow treasurer who cannot understand and does not even grasp the most basic fact that we have got elevated inflation, God help the opposition. I can understand that he might not have a great appreciation of what life is like around the kitchen table for most Australians. He is so far out of touch that he makes Peter Costello look like he is in touch. The shadow Treasurer is so out of touch he can go out and describe inflation as a fairy story.

The former government were out of touch. At precisely the time they should have been using the fruits of the mining boom to reinvest in the future, to invest in education, to invest in skills, to provide political leadership so we could have some First World infrastructure, they were having a party—and what a party it was. There it was the other night on Four Corners. The member for North Sydney was forced into the most humiliating admission that he was not told that Work Choices was going to make working families worse off.

The coalition have a hide to come in here and complain about whether people know a technical definition when the member for North Sydney sat in the cabinet room and passed a bill that ripped away the wages and working conditions from average working families. He then went on TV and said: ‘Oh, nobody told me. I’m only a minister.’ If you really want to see what went wrong in this country over the last three years, it is all there on Four Corners. The shadow Treasurer was there too, down at Quay Grand, wandering into the room when they were all having the meeting about the future of the Prime Minister, with a briefcase full of knives.

See this speech in context