Richard Marles (Corio, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Reserve Bank Amendment (Enhanced Independence) Bill 2008, which is a bill to amend the Reserve Bank Act 1959. It gives expression to a commitment that Rudd Labor made in the lead-up to the election last year, in November 2007. One would think that giving an enhanced independence to our central bank is a pretty uncontroversial proposition. Indeed, I think if you were to speak in the abstract to any member of this parliament about whether or not they agreed with the idea of our central bank being independent you would have an almost unanimity of view that we should have an independent central bank, and yet the state of the Liberals in 2008 is such that they even managed to find themselves in opposition to a bill which seeks to enhance the independence of the Reserve Bank. It speaks volumes about where the Liberals are at this moment in time. They have let go of any guiding philosophy. They are rudderless and aimless. And what defines them is being an opponent of us. The truth is that the reason they oppose this bill is that it formed part of a commitment that Labor made in the last election and it is now a bill being sponsored by Labor through this parliament. Because of that, not because of its content, we see the opposition in the extraordinary position of opposing a bill which is aimed at enhancing the independence of our central bank. We saw the complete absence of any guiding philosophy on the part of the Liberal Party in 2008 in their reaction to the government’s budget on Tuesday night.

We have seen it particularly in the comments of the member for Wentworth. Just last Sunday, on the Insiders program on the ABC, we saw Mr Turnbull, the member for Wentworth, engage in the most extraordinary mental acrobatics as he did a triple somersault and seemed to go from one position to the next and back to the same position, all within the space of moments. The issue was whether or not the government should engage in expenditure cuts. Of course, this is against the backdrop of whether or not the opposition believes that inflation exists or is a problem in Australia in 2008. Of course, we have had the member for Wentworth describing the whole issue of inflation and whether or not we have an inflation problem as only being a fairy story. Against that backdrop, the member for Wentworth, at the start of his interview with Barrie Cassidy on the Insiders program, said:

The only point that I’ve made about spending, Barrie, is this: that we are in a very tough international economic environment. Wayne Swan has said that in order to reduce demand, slow the economy, put downward pressure on inflation, he is going to make huge cuts in net spending.

Now, that doesn’t mean cutting Howard Government spending and replacing it with Rudd Government spending; it means pulling many billions of dollars out of the net spending Budget of the Government. Now that would slow the economy if its big enough to do that, I think it would be unwise because we are going into tougher times.

I suppose we are to take from that comment that the member for Wentworth is asking the government to not engage in expenditure cuts in this budget, and yet, only a few moments later, in the very same interview, Barrie Cassidy asked:

But aren’t you having it both ways? To have a real impact on inflation you’ve got to cut by how much, five, six billion dollars?

To that the member for Wentworth said:

I would think at least. I mean, in the US, where they are trying to reflate their economy, Hank Paulson, the Treasury Secretary, has described their $150 billion stimulus which is one per cent of GDP as being enough to make a difference. Now, a one per cent of GDP cut here would be $10 billion, so most people say half a per cent, five of six billion dollars, would make an impression. Anything less than that is not going to make an impact.

From that statement, made literally moments later, I suppose we are to take it that the member for Wentworth wanted the government to engage in extensive expenditure cuts in the budget. Then, only a few moments later, in the very same interview, we see the backflip again when he says:

Well, I think there should be cuts which are based on efficiency, they should always be running, any time and any season. But when you are talking about taking a big cut to lower inflationary pressures, what you’re talking about doing is slashing programs which might be quite good and saying, “OK, we’re not going to build that school this year, we’re not going to build that road this year, we’re going to cut these programs in order to ruthlessly lower overall demand.

I think what we are to take from that is that the member for Wentworth, within the space of just a few minutes, did not want expenditure cuts. First he did not want the cuts, then he did want the cuts, then he did not want the cuts, and all that occurred in just a five-minute interview with Barrie Cassidy last Sunday.

Since the budget on Tuesday night we have this comment in today’s Australian, on page 9, from the member for Wentworth:

Wayne Swan was telling you and me and everybody else for months that it was going to be a tough budget which would put downward pressure on inflation ...  He’s a complete wimp, he’s done nothing to tackle inflation.

I take it from that that the member for Wentworth was unhappy that there were not enough cuts in the budget. Now we are left to wonder: is there an inflationary problem or is there not an inflationary problem from the point of view of the Liberal Party in 2008? The truth is that they have no idea. The truth is that the Liberals in 2008 are flipping and flopping all over the place. Their mental acrobatics is astonishing. The only thing that defines them is a desperate attempt to oppose us. That is a bad thing for Australia. It is a bad thing because it means that in this House there is actually only one side on duty. There is only one side that is giving any kind of intellectual engagement about what the philosophy for this country should be going forward. There is only one side that is actually giving a view and there is another side that is just trying to work out how to oppose it no matter what the cost.

The Rudd government is absolutely committed to relieving financial pressure on working families, and the bill we have today is just one measure in a suite of measures which are aimed at modernising our economy and reducing the financial pressure on working families. We understand the importance of modernising the economy so that we can have sustained, long-term growth which creates real jobs and keeps inflation in check so that all of that can give us rising living standards. We have demonstrated that in the budget that was delivered on Tuesday night with the Working Families Support Package, a $55 billion package for working families, and through placing an emphasis on building this nation through the creation of a $40 billion series of funds which will look at infrastructure, education and health to ease inflation. Of course, these go directly to the issues which have been highlighted by the Reserve Bank board as being the capacity constraints on our economy.

Labor does have a guiding philosophy. Labor actually has a long tradition, which over the decades has been modernised to account for contemporary circumstances, which has, over the more than a century of the party’s existence, always been about improving the lot of working families. You see that tradition even in relation to an institution like our country’s central bank. This bill is very much in the tradition that Labor has had in building, enhancing and giving independence to our nation’s central bank. It was the Fisher government which, in 1911, created the Commonwealth Bank, which became the body corporate that was later used to create the Reserve Bank of Australia. It was the Chifley government which, in 1945, gave rise to the Commonwealth Banks Act and the Banking Act, which formalised bank powers in monetary and banking policy and exchange control. It was the Hawke government which, in 1983, floated the dollar and so defined the Reserve Bank’s role as no longer regulating the Australian dollar but instead intervening to sustain its stability. It was actually the Labor government of Paul Keating which established the current tradition of the two to three per cent inflationary target, which was first articulated by the Reserve Bank governor, Bernie Fraser, in 1993 but which was then endorsed by the Keating government—by the then Treasurer, Ralph Willis—in 1995. And so in that, leading to this bill now, you have a longstanding tradition, a guiding philosophy and a theme of how we see that the country ought to be governed even in relation to an example such as this.

That stands in stark contrast to the Liberals and to the Howard government. The way in which they have been characterised, in terms of governing this country, has actually been as economically lazy. During the term of the Howard government, we saw 15 interest rate rises, including 10 successive interest rate rises from 2002 through to the end of the Howard government. It can rightly be said that inflation was the parting gift of the Howard government to this country, and it was caused by laziness, neglect and a lack of reform. The Liberal Party ignored 20 separate Reserve Bank warnings on skills shortages and capacity constraints in the economy—

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