Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

The member for Boothby says I am not serious. The member for North Sydney cannot be serious. He absolutely put those arguments in a public debate. They say Weimar levels would get their attention when it comes to tackling inflation.

The essential point is this: the RBA have made the point time and time again that they have needed to put upward pressure on interest rates to put downward pressure on inflation. And yet the mob opposite say inflation is not a problem. They refuse to help the Reserve Bank in their efforts. We know that by their words and we know it by their actions. We know it because under them public spending was increasing at 4½ per cent a year and we have had to reduce it to 1.1 per cent a year. We know it by their continuing actions, because they still do not get it. They still have not got the message. They are still insisting on being economic vandals in the other house. They still stand in the way of the government’s fiscal strategy. They still insist on blowing a hole in the budget surplus to assist the Reserve Bank. They want to leave all the heavy lifting to interest rates.

The shadow Treasurer thinks that a 25 basis point increase in interest rates is overdramatised. Perhaps that is why he does not want to lift a finger to help the Reserve Bank, to create some room for the Reserve Bank to move, to give the Reserve Bank a bit of leeway to reduce interest rates, as they have done today. Those opposite do not seem to care about the increased cost-of-living pressures on the Australian people. They say it is all a charade, a fantasy. They say it is mission accomplished when it comes to inflation or that inflation is right where they want it. The Australian people respectfully disagree. The Australian people think that the increased cost-of-living pressures need to be dealt with. But they also think that the Reserve Bank need to be given a bit of a hand, that the budget needs to be brought back under control so that the Reserve Bank do not feel the need to continue to increase interest rates but can actually reduce interest rates.

We know that those opposite do not care. They think the work of budgetary policy should be to simply increase spending year after year and not to help the Reserve Bank in their task. They think that they can continue to spend their way out of the boom, as they did. Let us have a look at what Stephen Anthony, a former senior official of the Treasury and the Department of Finance and Deregulation, said about the former government’s spending policies:

The huge spending injection coincided with the further upturn in the business cycle. Blind Freddy knew that inflation would be the result.

So the opposition actually added to the inflationary pressures. They actually added to the pressures on interest rates.

We have taken a different view. It involved some tough decisions. It involved some unpopular decisions. It involved sitting around the cabinet table talking about how you could get the budget surplus up and government spending back under control. It was not easy, but they did not have the wit to do it. It fell to the Rudd government to do it. The former government did not have the wit to increase the budget surplus to 1.8 per cent of the GDP. They did not have the wit to reduce public expenditure to the lowest level since 1989-90, a level they never reached. They could never get government spending down to 1989-90 levels because they did not try.

The former Treasurer, the member for Higgins, said, ‘I’m worried about the sustainability of government expenditure,’ and he did not do anything about it. There were no efforts to rein in government expenditure to put downward pressure on inflation and interest rates. We saw him leave all the heavy lifting, all the work, to the Reserve Bank, and the Australian mortgage payers paid the price of 10 interest rate increases on the Howard government’s watch. There were 10 interest rate increases in a row, which added $400 to the average mortgage repayments of Australian families.

What a disgrace. And they have the temerity to come in here today, the day that a modest amount of relief is given to Australian mortgage payers, and complain about the heavy cost of the interest rate reduction—to say that the interest rate reduction is being paid for at too high a cost. I think Australian families, many of whom are on the edge of losing their homes, would beg to differ with the member for Wentworth. I think those Australian families in Western Sydney, western Melbourne and elsewhere who have been hoping and praying for an interest rate reduction would beg to differ with the member for Wentworth. They would disagree. They would respectfully say: ‘We think we know what the priority for the Australian government should be, and the priority for the Australian government should be to put downward pressure on interest rates. The priority for the Australian government should be to put downward pressure on inflation, not to let government expenditure run out of control, and, importantly, to invest in the future so we can increase— (Time expired)

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