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

I thank the honourable gentleman for his question. On the question of responsibility for the economy, as I said before in answer to a question from the Leader of the Opposition, as Prime Minister of the country I accept responsibility for good news and bad news, and I will continue to do that. That is the first point. The second point to address is: what are the contributing factors to the state of the economy in this country and the state of confidence? Firstly, you have the global factors I have referred to on a number of occasions here at the despatch box and the fact that the global financial crisis continues to wash through the global financial system and the real economy. Secondly, here in Australia we have had some other factors, and they are those of a domestic nature—that is, the overhang due to the fact that, at the time we were elected, we had inflation running at 16-year highs. As a result of that, we had 10 interest rate rises in a row—delivering to the people of Australia the second highest interest rates in the developed world. That results in a second, separate Australian factor at work in the overall confidence equation.

Through responsible fiscal policy and through the budget that we announced in May, we have sought to do what we can responsibly through fiscal policy to put downward pressure on inflation and downward pressure on interest rates. Interest rates are a huge factor out there in the real economy and also have an impact on confidence. That is the responsible course of action to address the problem that the previous government left us. The irresponsible response to the problem which the previous government left us is to ignore it and to compound it. That is the strategy that has been recommended by those opposite—in other words, how do you add fuel to the fire? Instead of taking a fiscally conservative position through a robust budget surplus, their response is simply to say, ‘Let’s have a further spending spree.’

On the question of spending sprees, those opposite really should have a long, hard look at themselves. At the time we came into office, government spending was running at between four and five per cent growth on the part of those opposite. We have reduced that to just on one per cent. In fact, had we run spending—and this is a very interesting figure—at the same growth level that those opposite had it running at for the last several years, it would have cost taxpayers an extra $23 billion worth of outlays. If we exhibited the same indiscipline on spending that we inherited from those opposite and kept it running into the future—that is, running at four per cent real—it would have equated to a $23 billion extra bill for taxpayers.

Our response has been through the budget process to instead take a hard look at savings, which is what we did in generating $33 billion in savings, to ensure that our new spending initiatives of $24.7 billion were met by savings. I conclude by saying that, when it comes to the challenges which we face for the future—

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