Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I thank the Leader of the Opposition for his question. This budget is anchored in economic responsibility. This government believes that the first responsibility of government is to ensure macroeconomic stability. In our current economic environment, that means producing a fiscal policy which delivers effective downward pressure on inflation, which in turn flows onto downward pressure on interest rates. The reason we have had to do that is that we have had 12 successive interest rate rises in a row, and we have had this on the back of not just a lax fiscal policy on the part of those opposite but a failure to act on the other fires which fuel inflation; that is, the supply-side constraints in the economy—namely, a skills shortage and infrastructure bottlenecks. These have been the subject of 20 consecutive warnings by the Reserve Bank of Australia to the previous government which resulted in no action.

So what we have done, given the circumstances we have inherited, is to produce a responsible budget with a surplus of $21.7 billion—the biggest surplus in nearly a decade; the second largest surplus as a percentage of GDP in 35 years—to assist in the overall policy settings which are brought to bear on interest rates policy. That is the responsible course of action.

The second thing that we have done through this budget is to ensure that, for working families who are under financial pressure—and they are, whether it is through rents, increased mortgage prices or the impact of groceries or fuel—we deliver a series of tax undertakings, a series of measures on childcare tax rebates, a new education tax refund and further measures on housing affordability. When you put them together, these add to a significant additional benefit for many working families across the country. It is the aggregation of these price pressures on working families on which the government has been keen to act.

This has been an absolutely essential focus of what the government has sought to do, but there is a third focus in the government’s overall strategy, and it is this: we also see, through this budget, an important opportunity for nation building which also dovetails with the important fight against inflation and further upward pressure on interest rates. That means dealing effectively with the long-term challenges we face with the skills shortage and infrastructure bottlenecks. The previous government had 12 years in office to act on these constraints and did nothing. They were warned on 20 separate occasions by the Reserve Bank of Australia to act; otherwise, there would be consequences for the overall inflation equation. They failed to act. This government, by contrast, within its first five months in office has decided to act. We have done so by establishing three investment funds for the future—on infrastructure, on skills and also in the critical area of building a better hospital system.

This government is proud of the budget, which is framed in terms of economic responsibility; of assisting working families under pressure who are dealing with cost rises from groceries, fuel and elsewhere; and, importantly, of investing in the future. This stands in stark contrast to the budgets we have inherited from the previous 12 years.

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