Jennie George (Throsby, Australian Labor Party) Share this | Hansard source

As I was saying, the lack of investment in the nation’s infrastructure and the skills of our people is contributing to the current predicament of inflationary pressure in the economy. While government spending was growing very rapidly, particularly always in the lead-up to elections, the spending was not adequately directed to addressing the supply-side constraints on our economy. In fact, what we did was leave to the Reserve Bank the heavy lifting on the challenge of tackling inflation.

But, as all we know, monetary policy is a very blunt instrument. Its impacts are most acutely felt by those already burdened by substantial financial pressure. Despite the promises that we had from the Howard government about keeping interest rates at record lows, the fact is that there have been 12 increases in interest rates, which have risen by three per cent since 2002 and by one per cent in the past six months. So it is no wonder that people I represent are constantly telling me about the financial pressures they face on a daily basis.

That is why the Prime Minister has made it very clear that we have a responsibility as a government to tackle inflation and apply downward pressure to the extent that we can through the budget decisions that we make and, in that way, complement the efforts of the Reserve Bank through the blunt instrument of monetary policy. We also believe that our future prosperity will require sustained productivity growth. The more we can increase productivity, the more our economy can grow into the future without fuelling inflation and without the risk that it poses to increased interest rates. There is no short-term fix to these challenges, but we are committed—and I think we have the vision and the wherewithal to ensure that we do better than the former government in investing in the key supply inputs of economic growth, in particular in our workforce, in our infrastructure and in skilling the Australian people.

Despite comments made by opposition speakers in the House since parliament resumed, we cannot ignore the fact that we have indeed inherited the highest level of inflation in 16 years. That is a legacy that was bequeathed to us, and we cannot run away from that fact. But we have taken the responsibility for tackling this inflation legacy. We are not just saying, ‘Oh, well, it’s a problem we inherited. Let us just blame the former government for that.’ The Prime Minister and the Treasurer have made it very clear that it is now the responsibility of the federal Labor government to tackle that inflation legacy.

We have a number of prongs to our strategy to fight inflation. The first is the importance in this coming budget of exercising fiscal discipline and reining in the kind of profligate spending that we saw, particularly in the lead-up to the last election. If you do not want to take my characterisation of the previous government’s measures as profligate spending at face value, you only have to refer to comments made by the former Treasurer, the member for Higgins, when he on several occasions expressed his public concern at the ‘sustainability’ of the former government’s pre-election spending. So I think the member for Higgins was already sounding the alarm bells, and we certainly will heed that message. As the Minister for Finance and Deregulation has made very clear in the House, the days of reckless, politically driven spending and programs that were nothing more than rorts are over. After 12 increases in interest rates and with inflation at a 16-year high, families and businesses—the people we represent—will suffer if the inflation genie is not reined in. To that end, it has been made very clear by both the Treasurer and the minister for finance that we expect to run a strong budget surplus of at least 1½ per cent of GDP.

In that regard we also have a responsibility to do more about encouraging private saving. In a couple of articles I have read in the last couple of weeks the emphasis has been very much on the inflation issue, but people are also alerting us to the very high levels of private debt in our economy. I think it is a growing case of serious concern that we will need to address when you consider that debt has been growing faster than GDP for the past 44 years. There are estimates that the level of debt is now higher than it was in the era leading up to the events of the Great Depression.

We must maintain our focus on encouraging private savings, and in that regard the announcement about the first home savers account and the incentive to save through superannuation show that Labor understands and is committed to the further encouraging of private savings. We have heard a lot from the Deputy Prime Minister about Labor’s agenda with the education revolution and our solid commitments to investing in the training and education of our people. This is important not only in terms of raising human capital but also, as we all know, in addressing the skills crisis that has been on the agenda for the last decade and about which the former government did very little.

I want to commend the government for the early introduction of the bills relating to our skilling agenda. I also want to compliment the Minister for Infrastructure, Transport, Regional Development and Local Government for the speedy legislative decisions that we are now debating about establishing Infrastructure Australia so that we can provide long-term planning and coordination of vital economic infrastructure to relieve all those bottlenecks that we are so conversant with. These are bottlenecks that are constraining output, pushing up business costs and further fuelling inflationary pressures.

The last arm of our fighting inflation strategy is to do more to encourage workforce participation. While there has been debate about the tax cuts, they will be phased in. They will deal with the effective marginal tax rate dilemma which we have, on our side, talked about for a considerable period of time—that is, the disincentive to participate in the workforce, particularly for the second income earner. We do want to provide incentives for people, particularly women, to rejoin the workforce. We hope the labour supply will rise by around 65,000 with the tax reforms that we have outlined and the economic modelling that underpins them. Together with other changes, we estimate that not too far down the track we will be seeing an additional 2½ million hours of work on a weekly basis. So you do not take the tax cut issue alone but link it into our agenda for encouraging workforce participation to see, hopefully, the benefits on the labour supply side that will come with those changes.

Similarly, I welcome the commitment that has been made by federal Labor to the childcare tax rebate. As we know, the out-of-pocket expenses in many areas are causing huge constraints on household budgets. The education tax refund will also ease the pressure on household budgets. I believe Labor’s announced strategy to tackle the inflation problem will help keep downward pressure on interest rates, although we recognise there is no magic bullet. But through our budgetary policies we can lend a helping hand to the Reserve Bank’s efforts to keep inflation within the target range. Certainly, the cost of living pressures are major issues that are identified by constituents in their representations to me.

Prior to the election I did a local survey asking constituents to identify the issues that were causing them most financial grief. Of the five that stood out, the first was rising petrol prices—and more recently the rise in the cost of LPG. I commend the early intervention in these issues with the appointment of a petrol commissioner whose brief will also look at diesel and LPG costs.

The second issue that was identified was increasing health costs. While it is regrettable that we have had another round of increases in private health insurance, I think our minister did a sterling job in making the private health insurers account for and provide the rationale for the increases they were seeking. So, unlike previous years, it seemed to me that it was not just the regular tick-off that had occurred.

The third issue was increases in interest rates—and I have touched on that—and that is an ongoing issue that must concern all of us on both sides of the chamber. The fourth issue was rising grocery bills, and that issue was explained very well by the task force that Labor had in the lead-up to the federal election. My colleague the member for Ballarat chaired that task force. Rising grocery bills is still an issue of concern and I welcome the commitment that Labor has made for the ACCC to undertake a range of measures relating to that very important issue. The fifth issue identified was the impact of Work Choices. I am delighted that before we rise this week we will have, I hope, the transition bill in place that consigns Work Choices and the insidious statutory AWAs to the dustbin of history.

In the concluding time that I have I want to also commend Labor’s announced policies to deal with the issues of housing and rental affordability. Those are major issues in my electorate. The 2006 census identified 11,000 households in the Illawarra that were facing mortgage stress, and that is a severe underestimation because we have had further interest rate rises beyond the data gathered in that census. What I found really alarming was that, in the time between the earlier census data, between 2001 and 2006, there had been a 100 per cent increase in the number of households in the Illawarra suffering from mortgage stress. In my electorate alone, 43 per cent of people who rent privately are now in rental stress, according to the 2006 data. Both rental and housing affordability are key issues of concern in my electorate.

I am delighted that we are now debating the outline of the First Home Saver Accounts, which is going to make a difference. It will help young people in my electorate save for their first home through a special low-tax superannuation style savings account. I hope our Housing Affordability Fund will be an important mechanism to leverage federal funding for infrastructure so that when land is released we can assist in that land release, providing there are complementary savings provided by state and local government to lower the development charges. Our National Rental Affordability Scheme, which aims to provide properties at 20 per cent below market rental values, will help because there is a huge backlog of people waiting for public housing, and our better approach to land release will also free up housing, development and community infrastructure land. So I am very excited about being the member for Throsby under a federal Labor government and I look forward to delivering to my constituents the benefits, the promises and the policies that Labor took to the last election.

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