Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Hansard source

Labor have been so desperate to reclaim some ground on their major weakness—economic management—that they have tried to find something, anything, upon which they can criticise the previous government. They have again and again misrepresented the economic history of this country. We have had the Treasurer saying inflation has been on the march for two years, when we know that in the middle of last year the Reserve Bank itself said that inflation was coming down, far from being on the march. We have had the absurdity of the Minister for Infrastructure, Transport, Regional Development and Local Government, the member for Grayndler, saying that the Reserve Bank had given 20 warnings that there should be a coordinating authority for national infrastructure. Where were they to be found? He has just made that up.

The 20 warnings spoken about by the government are nothing of the sort. They do not mention a skills crisis, let alone a chronic skills crisis. They do not say infrastructure bottlenecks are driving up inflation. In fact, one of the so-called Reserve Bank warnings that the government have misrepresented, from June last year, sees the Governor of the Reserve Bank saying that the way in which the labour market is operating to allow those areas with highest demand to see higher wages and other parts of the economy to pick up without causing overall wage inflation is, and I quote, ‘a textbook case of adjustment’.

The government have talked down this economy again and again and attributed all of our economic prosperity to good luck, not good management. Let me say that, when it comes to economic management, appealing to luck only gets you so far. That lesson was learnt the last time Labor was in office. Paul Keating’s ‘recession we had to have’ did not occur as a result of bad luck. We did not have 17-plus per cent interest rates as a result of bad luck. We did not have double digit unemployment rates as a result of bad luck. We did not destroy the job prospects of an entire generation of young Australians as a result of bad luck. We did not have real wage stagnation as a result of bad luck. And we did not have $96 billion in government debt as a result of bad luck. All of those horrors occurred as a result of deliberate policy choices of poor economic management. A party that cannot recognise good economic management when it sees it is doomed to repeat the mistakes of the past, and that is what Labor now risks doing.

In December last year the Treasurer said he ‘didn’t intend to be one of those first-term Treasurers who only ever talks about the evils of his predecessors’. Well, he has blamed the previous government—and we stopped counting a month ago—more than 110 times. For almost four months now the coalition has been urging the Treasurer to stop talking down the economy. Ever since he has taken on that job, he has been more concerned with trashing the economic legacy of the previous government than focusing on his job to keep the economy strong. The Australian summed it up very succinctly in an editorial only a week ago, when it said we are paying the price for Labor’s attempts to blacken the reputation of the Howard government, because, in doing so, they are fuelling inflationary expectations.

Expectations are everything when it comes to the economy, when it comes to business, when it comes to consumer confidence. That is why I have said to the Treasurer that we are operating in a very volatile global economic environment—unpredictably volatile. So be cautious. Be accurate. Be moderate. Be objective. Speak like a Treasurer should—like the previous Treasurer did—not like somebody who thinks he is still in opposition, trying to bring down a government. The election is over. The Treasurer has to start doing his job, not the job he had a year ago. A Treasurer’s comments can enormously influence economic expectations and confidence. We all remember the effect Paul Keating’s infamous ‘banana republic’ remark had—probably the only remark by a Treasurer on the same level of imprudence as the remark by this Treasurer that ‘the inflation genie’ was ‘out of the bottle’ in Australia, said the day before the Reserve Bank met to consider a change in monetary policy.

The Reserve Bank says again and again, as I quoted in question time earlier, that the key to managing inflation is managing expectations. If people think inflation is going to go up, it will go up. You have to be careful what you wish for. So we have had a Treasurer who hit the headlines all around the world, as he hit the economic future of Australia, when he said, ‘The inflation genie is out of the bottle.’ That was a signal to the world that, in his view—in the view of the Treasurer, the man responsible for managing our $1.1 trillion economy—inflation was out of control. It was a message to the Reserve Bank: ‘Put those interest rates up.’ So, instead of having a Treasurer who urged caution and moderation, we had a Treasurer who was urging the Reserve Bank to put interest rates up.

And we have had this confusion among the economic ministers. We have had, as I said, the Treasurer who says inflation has been on the march for two years—completely and utterly false, self-evidently false, because inflation was perceived, not just by the Reserve Bank but by the Treasury, to be coming down. Indeed, in the middle of last year the Reserve Bank Governor was telling the whole world that inflation was moderating, the interest rate rises of 2006 were doing their job, inflation was coming down—all would be well. And then it picked up later in the year. So the central bank has been responding to that.

We had the Minister for Finance and Deregulation on ABC Radio in Melbourne on 5 February saying the evidence of a serious inflation problem has only begun to mount over the last six months or so. He was right. That is why he is chairing the ERC—because he is competent and the Treasurer is incompetent.

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