Jim Turnour (Leichhardt, Australian Labor Party) Share this | Hansard source

I move:

That the House:

(1)

congratulates the Government on bringing down a budget that:

(a)

begins tackling Australia’s 16 year high inflation rate and puts downward pressure on interest rates so as to ease the pressure on family budgets;

(b)

delivers on the Government’s election commitments restoring confidence in an electorate cynical about political promises; and

(c)

sets out a plan to tackle the long term challenges facing the nation so as to secure our prosperity into the future.

The centrepiece of the first Rudd government budget is a commitment to fight inflation. These are difficult economic times, with inflation at 16-year highs. Interest rates have increased 12 times since 2001 and eight times since 2004 by the Reserve Bank as it endeavours to bring inflation under control. Rising interest rates, combined with increasing petrol and grocery prices, are putting family budgets under pressure in Cairns and the tropical north. More than 20 per cent of families in Leichhardt are in mortgage stress or paying more than 30 per cent of their income in repayments. For those who do not have mortgages, rents have been increasing, with more than 25 per cent of people in rental stress.

It has been critical to get the balance right in this budget. Last week when I was back at home in Leichhardt, I heard anecdotal evidence that shows that our economy is slowing. Last week I spoke to a plumber in Cairns who has had to lay off two workers as the construction industry slows. Developers in Cairns are feeling the pinch of the subprime mortgage fallout and generally the real estate market seems to be easing. A major club owner I spoke to said that takings across the bar were down while the bottle shop was up. The tourism industry, a major industry in Cairns, has been feeling the pinch, with a decline in visitors, and certainly the higher Australian dollar has been part of that.

While parts of the economy are growing strongly, there are signs that the economy in the tropical north—and I am sure in other parts—is entering some challenging times. It has therefore been critical to frame a budget that gets the balance right and ensures that we put some money into the pockets of families and individuals who have been doing it tough. We have put a $21.7 billion budget surplus in place, a mild tightening in fiscal policy that will ease pressure on inflation, and I know that businesses and families in Leichhardt want a government that can do all they can to tackle inflation. At the same time, there are people who are doing it tough, and the tax cuts, the increases in the child-care rebate, the lump sum payments of $500 to seniors and the thousand dollar payments to parents will put money in the pockets of people and families in my local community who are doing it tough.

Economic commentators are generally in agreement that the government has got the balance right. Shane Oliver, AMP Capital’s chief economist said:

I think the Budget strikes the appropriate balance between on the one hand cutting spending a bit to take some pressure off inflation but, on the other hand, not going too far such that it pushes growth down too much. I think the Government did face a really difficult balancing act here.

And Goldman Sachs remarked of the budget:

After two years of notable conflict, finally we have fiscal policy that is pushing in the same direction as monetary policy.

Goldman Sachs are saying that finally we have a government that is putting fiscal policy in the same direction as the Reserve Bank, which is also trying to bring down inflation and combat rising interest rates.

This is in stark contrast to the irresponsible budgets under the former Howard government, particularly in its last term. This is clearly demonstrated by the graphical details contained in the Budget Overview on pages 3 and 5, where it is clear that when John Howard was promising to keep interest rates at record lows in 2004 he was spending like a drunken sailor, putting upward pressure on inflation and interest rates. That is what Goldman Sachs was talking about: the fact that we have got a government now that is running a fiscal policy that matches monetary policy, not a government like the Howard government, which was spending like a drunken sailor when it was talking about keeping interest rates at record lows.

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