Julia Gillard (Lalor, Australian Labor Party, Deputy Prime Minister) Share this | Hansard source

I thank the Deputy Leader of the Opposition for her questions. The budget does contain forecasts of macroeconomic conditions. Of course, that happens with every budget, and this budget contains such forecasts. In relation to the forecasts in this budget, we say that the government inherited a high-inflation environment from the previous government. The upwards pressure on inflation has led to upwards pressure on interest rates. The track record of the previous government was to see interest rates rise time after time after time. We inherited the worst inflation rate in 16 years. When you inherit macroeconomic conditions like that, they have implications for the economy overall, and the budget tracks those implications. What the Deputy Leader of the Opposition is pointing to is the way in which the Howard government failed in terms of managing the macroeconomy, because we inherited from it a high-inflation environment and one which puts upwards pressure on interest rates.

What does the budget do to deal with those matters? Of course, the budget has been calibrated to be part of the government’s fight against inflation. In making that calibration to fight inflation, the government has delivered an economically responsible budget, where new expenditure items are matched by savings. As people would be aware from the debate that is conducted in the main chamber of the House of Representatives and in other places, this stands in stark contrast to the track record of failure of the Howard government in not pursuing budget savings in past budgets. In addition, to make sure this budget is a prudent and fiscally responsible budget, the government has calibrated this budget to put downwards pressure on inflation and interest rates by addressing a number of the supply-side constraints in the economy. In particular, the budget makes new and major investments into education and training, including major investments in skills formation, with 630,000 training places to be delivered by the government over the next five years.

Beyond that, the budget also deals with constraints in the economy in the form of infrastructure constraints. The Deputy Leader of the Opposition would note that the budget has led to the creation of the new Building Australia Fund, which is a substantial fund to enable the government, in partnership with the private sector and stakeholders, to address the infrastructure bottlenecks around the nation. All of these things working together are about putting downwards pressure on inflation and interest rates. That is obviously good for the economy and good for all settings in the macroeconomy and is a course that the government intends to pursue.

On the question of the new employment services model, the government has been consulting and intends to deliver a new employment services model with the Job Network tender round. Job Network is coming up for re-tendering, with the new round to commence on 1 July 2009. Given what a big project the Job Network re-tender round is, the government has already started the task of preparing for that re-tender round. There has been a consultative process, led by my ministerial colleague Brendan O’Connor.

The emphasis of the new employment services model is to provide more assistance to the most disadvantaged job seekers. As people would see from the budget papers, unemployment by historic standards in this country will continue to be at relatively low rates. We believe in investing employment services money in people who are most disadvantaged. The new employment services model has been designed to do that. It has also been designed to reduce the contractual red tape and funds that are wasted in the current complex model that is available for the Job Network. The new model is a streamlined model, with a focus on assistance for most disadvantaged job seekers. Of course, we do not want to see people locked out of the labour market and we do not want to see children grow up in jobless households. With our new employment services model, we believe that focus on the most disadvantaged will make a difference. (Time expired)

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