Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Hansard source

I thank the Treasurer for what is not so much an economic statement as a confession of incompetence. It is welcome nonetheless, although the Treasurer should recall what Mark Twain said, ‘A confession is good for the soul and bad for the reputation.’ We have seen today a new approach from the Treasurer—a first. He has spoken well of the Australian economy. He has been right to speak well of our economy. As I have been saying all year—whereas he has not—our economy is stronger than those of comparable developed economies, our financial system is more secure, our mortgage lending practices are more prudent and our rates of default are relatively low.

The Treasurer should have been shouting that from the rooftops all year, but he was not. He says that he identified the magnitude of the inflation challenge shortly after the election and he implies that the remarks that he made about inflation were made with the advice of the Reserve Bank and the Treasury. I cannot accept that either the Reserve Bank or the Treasury advised him to say ‘the inflation genie is out of the bottle’.

The Treasurer and the Prime Minister have been an economic tag team—recklessness leaning on the shoulder of irresponsibility, the Treasurer talking about an inflation genie out of the bottle and the Prime Minister talking about an inflation monster stalking the land, wreaking havoc on working families.

Debate interrupted; adjournment proposed and negatived.

At the House of Representatives Standing Committee on Economics hearing in April, the member for Aston put the Treasurer’s remarks—those disgraceful remarks about the inflation genie being out of the bottle—to the Governor of the Reserve Bank, Mr Glenn Stevens. Remember that it was on the day before the Reserve Bank met in February that the Treasurer chose to say that the inflation genie was out of the bottle. It was the day before the Reserve Bank met to consider how it should respond to inflationary pressures in Australia that the Treasurer said inflation was out of control. Mr Stevens gave his commentary on the Treasurer in April. He replied to the member for Aston with every syllable dripping with distaste for the Treasurer’s recklessness. The governor said:

I do not want to comment on colourful things that are said in public debate, but what we have said is inflation has risen and that is a problem. It has to be dealt with and we are dealing with it. We will contain it and it will come down. Is it out of control? No, I have never said that. I have tried, if you like, to make balanced comments that one cannot say that there is not a problem. There is a problem, but I do not think it is out of control. I think it will be controlled, and that is why we are doing what we are doing. So, there is a problem, a response is needed, it is being made and it will work.

That was the Governor of the Reserve Bank. Consider the measured language from the Governor of the Reserve Bank compared to what we had from the Treasurer. We have had a Treasurer all year who in pursuit of a simple political objective—to blacken the economic reputation of the Howard government—has talked up inflation and talked down our economy. And we have paid a very heavy price for it.

The Treasurer has talked today about a number of other developed countries in which economic activity is slower and which either have zero growth or are going backwards. He has pointed out that our economy is stronger than those other developed countries, and he is right to do so. He should have been doing so all year. But that begs the question: if our economy is stronger than those of other developed countries, why is it that confidence is so low? Since the election of the Rudd government, Australia has experienced the largest drop in consumer confidence in the OECD, according to the OECD’s standardised consumer confidence indicator. That indicator for Australia has dropped 13.7 per cent since November, whereas the overall indicator for the OECD has dropped by only 4.6 per cent. The drop in Australia was by far the largest in the entire OECD. As I pointed out in a question that the Prime Minister chose not to answer—he does not answer any questions in this House anymore—Australia currently has the second lowest level of consumer confidence in the OECD after Spain.

So what has made the difference? Why can an economy that is so relatively strong have a business community and consumers that are so relatively lacking in confidence?

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