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

I thank the honourable member for her question. Overnight it was confirmed that the economy of the 15 euro zone nations shrank by 0.2 per cent in the June quarter of 2008. It was the first quarter-on-quarter decline since the data series for the euro zone commenced being collated back in 1995. As the House would know, this comes off the back of negative or zero quarter growth among five of the world’s largest economies: Japan, a 0.6 decline; Germany, 0.5; France, 0.3; Italy, 0.3; and the UK, zero.

By contrast, what we had from the national accounts figures yesterday for Australia was solid growth of 0.3 per cent during the June quarter, 2.7 per cent year on year. As Chris Richardson, of Access Economics, said today, I think, or perhaps it was yesterday:

I think it will be a better balance for the economy; business spending up a storm is good news, …

That shows business is confident about the future and putting their money where their mouth is, and that is better for future growth.

I note what CommSec equities economist Savanth Sebastian has said:

Australia has delivered another fantastic economic report card given the economic conditions on the global front.

What I would say, rather than use those terms, is that Australia is not out of the woods yet. We have a lot of work to do. It is important to be upfront with the Australian people about how difficult the challenges are, particularly off the back of continuing global economic difficulties and off the back of the domestic economic circumstances which the government inherited at the end of last year.

Those circumstances, of course, were difficult. As the House has heard many times this week, if the economy has been buffeted by 10 interest rate rises in a row, it does have a cumulative effect on economic confidence and activity. That is just a fact. And if you translate that through, the impact of those 10 interest rate rises in a row for working families was a $400-a-month interest rate hike. That is what it represented—real money in the pocket. That is the cumulative impact of 10 interest rate rises in a row under the Liberals, delivering us, by the time the government changed at the end of last year, the second-highest interest rates in the developed world.

The question asked why responsible economic management was necessary, given the challenges which lie ahead. The global factors are those which we have addressed in the parliament during this week, and we are not out of the woods yet in terms of the roll-on impact of the global financial crisis. The local factors are those just described, but the impact which that continues to have on confidence in the economy, the confidence of business and the confidence of consumers is real. The key challenge, however, is to deliver a responsible program of action. And what we have done on that score is that we have embarked upon a strategy which, first and foremost, delivers responsible economic management of a $22 billion budget surplus, which is now under assault, by those opposite, in the Senate—$22 billion on which they are seeking to conduct a $6 billion to $7 billion raid in the Senate. That is the first plank of responsible economic management.

The second is to have a clear-cut national program of economic reform, and that is what the government has embarked upon in terms of the challenges of education, skills and training, to address the skills crisis and skills shortage delivered to this economy by those opposite, having ignored 20 consecutive Reserve Bank warnings. As a consequence of that, the government has embarked upon an education revolution. The Minister for Education, the Deputy Prime Minister, and I have been speaking to that and, most recently, announced the quality education reform agenda, which will be part and parcel of that, to boost the quality of our school education, to boost the quality of our teachers, and to produce an increase in the quality of our education, skills and training outcomes.

The third element of our response, of course, is a program of nation building—a $76 billion plan for nation building, which those opposite, again, seem to wish to undermine. And finally, part of our program of responsible economic management—to ensure that those opposite are fully mindful of it—is to ensure that, through the budget, through tax cuts and through what we have done by way of additional payments to pensioners and carers, we are assisting working families, pensioners and carers on the way through.

What I would say to those opposite as we come to the end of the sitting fortnight is to reflect carefully on the impact of their actions in the Senate on this overall economic strategy, because this $6 billion raid on the surplus in the Senate being waged by those opposite is the very definition of economic irresponsibility. We had volume 1½ last night and this morning—depending on who was counting the votes in the Senate last night and who showed up for the vote, and who might have showed up this morning. It is interesting that the Liberals were too busy at their fun-fest over here in the Great Hall of the people to actually make sure that people were going to roll up and vote in the Senate, so committed were they to their course of action.

But, on the luxury car tax, I think it is remarkable that, in the first defining vote of the new Senate on a major tax measure before the parliament and the nation, the Liberal Party stands up and says: ‘We the Liberal Party—this party with its eye fixed firmly on the past—are going to say that our first legislative action is to ensure that you can get a cheaper luxury car.’ That is what they have done: they have voted for a cheaper luxury car for Australia—saying everything, I believe, about the priorities of those opposite, and how they bleat.

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