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

What we have had from the Liberal Party is simply head-in-the-sand politics, and what we have had from this side of the House is a sober acknowledgement of the problem followed up with a plan for how we intend to deal with it. That actually does not talk inflation up. If anything, that gives inflationary expectations that inflation will go down, because the market knows that it has a government in place which is actually acknowledging that there is a problem and is going to do something about it.

The Governor of the Reserve Bank, in his address to the House Standing Committee on Economics on 4 April this year, described inflation as uncomfortably high. That is the truth of the matter. The Governor of the Reserve Bank described it as uncomfortably high. That fact is obvious to every Australian out there who feels the pressure of rising inflation and interest rates in their everyday life—in grocery prices, in petrol prices and, in particular, in housing prices. So you have the Housing Industry Association saying in April of this year that:

Recent interest rate increases are hitting housing hard with the value of housing loans decreasing 7.1 per cent in February and the number of loans falling by 5.9 per cent.

Inflation is hitting particularly hard in my seat of Corio, in the city of Geelong. According to the census figures in 2006, the median household income in Geelong is $840 per week, almost $200 less than the national average. In 2006 the median house price in Geelong was $257,500. If you take a standard loan of that kind of amount—with, say, 8.5 per cent at the current market rate, over a 25-year period—that means that the average repayments for a family in Geelong are around $478. That is more than half their median income, and that is a description of mortgage stress. That is what people in Geelong are feeling as a result of the inflation gift that has been given to them by the Howard government.

The Rudd government is aware of this and so there is a $2.2 billion package in the budget, announced on Tuesday night, which is aimed at dealing with housing affordability. Inflation has taken a long time to build and it will take a long time to dismantle, but the Rudd government is absolutely committed to doing that because it understands that prolonged high inflation will compromise long-term economic growth, compromise our standing of living and ultimately give rise to higher unemployment. So, in tackling inflation, we are going to look at the Reserve Bank warnings. We are going to address the issues of skill shortages and infrastructure capacity constraints within the economy.

That is why we have put enormous emphasis on building our nation and on building infrastructure in Australia. In the budget, we have a $20 million commitment to establishing Infrastructure Australia, which will provide a coordinated approach to building infrastructure in this country, as well as the establishment of three funds totalling $40 billion: the $20 billion Building Australia Fund, the $11 billion Education Investment Fund and the $10 billion Health and Hospitals Fund. All of that will go a long way to building the productive capacity of our nation.

There is no better example of how we can improve the productive capacity of our country through infrastructure than in my home town of Geelong. We have been building a ring-road around Geelong, which will be an enormous boost to the local economy. Make no mistake: it is, at the end of the day, a Labor initiative. It was announced jointly by the state and federal governments in May 2005, principally at the behest of the then Bracks state Labor government. The Howard government came to this project kicking and screaming only after it was concerned that it would lose the seat of Corangamite in the 2004 election, which it ultimately did, of course, in the 2007 election. The initial funding was provided mostly by the state Labor government. There was an announcement of further funding from the state Labor government in 2006 for the final stage of it. But, when the Howard government came to look at this project in the lead-up to the last election, it completely ignored giving any funding to it. One week later, the Rudd Labor government did commit to the project, and we saw the down payment of that commitment in the budget on Tuesday night.

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