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

Thank you, Mr Deputy Speaker. We have been told that the government is proud that it is levying a lower percentage of GDP in tax revenues this current year than in the last year of the Howard government. That is true, but it is true for one reason only: the Rudd government has implemented almost all of the tax cuts proposed by the Howard government which were set out in the pre-election financial outlook. When you look at the Treasurer’s own Budget Paper No. 1, you see over the forward estimates that there is $19.7 billion of additional taxes. In other words, were it not for the policy changes of the Rudd government, tax as a percentage of GDP would be lower over the forward estimates than is set out in the Rudd government’s first budget papers. So that claim to some sort of fiscal rectitude is completely bogus. It is no wonder that when that was raised with the Prime Minister today he was unable or unwilling to answer the question.

We have been told that if the $6 billion worth of unmandated, unwarranted and unnecessary tax increases are blocked by the Senate—if the Senate does not pass them—that will cause interest rates to rise. We have been told that this $6 billion will punch a hole in the $22 billion surplus. The $22 billion surplus is for one year only and the $6 billion is over four years, so that statement too is completely false. The $1.5 billion, approximately, of Commonwealth revenues that would be reduced by reason of those tax bills not being passed by the Senate could not have any conceivable impact on inflation whatsoever other than to put a slight upward pressure on prices, because all of those taxes would increase prices—be it for cars, alcohol or gas. But $1.5 billion a year in a $1.1-plus trillion economy obviously can have no material effect on aggregate demand and, hence, no material effect on inflation—again, another economic proposition that is nonsense.

And then we have the extraordinary falsehood told to us about Fuelwatch. We are told that Fuelwatch is there to protect independent retailers, to protect competition and to bring down fuel prices. Yet we know that every expert department in this city told the government that it would put prices up. And we know from Michael Luscombe, the Chief Executive of Woolworths—a big oil retailer—that, based on his experience with Fuelwatch in Western Australia, it delivers his giant corporation its best margins. So much for the question of who is on the side of big oil. Fuelwatch is on the side of big oil.

Then we come to another great economic issue that the government made so much of, and where it has again shown its complete incompetence, its complete impotence, and that is grocery prices. For all of last year the Prime Minister was going around supermarkets feeling sorry for shoppers—sharing their pain, so he said—and then he comes up with a website called GROCERYchoice. It provides averages of the cost of shopping baskets a month ago, averaged over a very large number of stores, in some cases over gigantic geographic areas, and sets them out as ‘Coles’, ‘Woolworths’, ‘Aldi’—if Aldi is present—and then ‘independents’. Because ‘independents’ includes everything from 24-hour grocery stores, which quite reasonably charge higher prices for greater convenience, and larger stores that are competing on price with Woolworths and Coles, it makes the independents appear more expensive than they are. It defames and misrepresents the independent grocery sector. It is nothing more than an advertisement for Coles and Woolies. It is as though the government wants to look after Michael Luscombe—not just big oil, but big retailers as well. So $14 million for GROCERYchoice and no useful information other than an advertisement for Coles and Woolies.

We were told in the Treasurer’s address that capacity constraints in Australia are tighter because of the neglect by the previous government. Really? Almost all productive capacity in Australia is in the hands of the private sector. When growth is strong, capacity utilisation is high. When capacity limits are beginning to be stretched, business invests in new capacity—new premises are required, new equipment is ordered, more staff is hired. High levels of capacity utilisation are signs of a strong economy. High levels of spare capacity and low levels of capacity utilisation are signs of a weak economy. Empty factories and equipment that is not running are signs of a weak economy. When everything is working at full tilt, that is the sign of a strong economy. But high levels of capacity utilisation are not enough in themselves to promote investment. That is the ideal. As capacity is getting close to full utilisation, owners of businesses invest in more capacity. That is what we want to see, and we were seeing that under the previous government. But that requires confidence as well. So it is not just high utilisation of your capacity; you have got to have confidence and faith that better times are ahead, that the nation’s economic destiny is being steered by people who know what they are doing.

That is why this collapse in confidence in Australia has been so dangerous. Without that confidence, there will be no improvement in capacity, because there will be no confidence to invest. Confidence is at the core of everything in our economy. We talk about a global credit squeeze, a global credit crisis. It is a crisis in confidence. And the melancholy fact is that the international financial markets appear to have no more confidence in our economy than they do in those that are travelling much worse than ours. Why is that? It is because for all of this year the Treasurer and his colleague the Prime Minister—irresponsibility and recklessness together—have been talking down the economy and talking up inflation. They have done that for a political purpose and we have all paid a price.

There was a clear difference between the Treasurer and me at the beginning of this year. He was egging on the Reserve Bank to raise interest rates, saying that inflation was out of control—not the moderate language he uses today, where he says that it is a problem, with which we can all agree; not the moderate language of Glenn Stevens. When he was using that dramatic language, talking up inflation, I urged the Reserve Bank to stay its hand. I expressed the view that the global credit squeeze would be very tough on Australia, that we would get more than enough monetary tightening from the international financial markets, that the global credit squeeze would achieve all of the interest rate pressure that the Reserve Bank could want without it having to raise rates. These are all questions of judgement, and it is hard to say who was right and who was wrong. But I staked my position on the side of prudence, of caution, of looking after the Australian economy, of speaking of its strengths and seeking to protect it against a global credit crisis. The Treasurer exposed us to the credit crisis. He did nothing to speak of the strength of Australia. He did everything to make us appear worse.

He said that there have been abrupt changes in the government’s economic policy since the election. Well, there have been abrupt changes. We have had a government who have talked the economy down. We had a Treasurer who, in the lead-up to the budget, said that it would be a harsh one—cutting spending, inflicting pain. An anxious nation awaited the axe, and what did we get? We got a budget whose impact was at best neutral; in truth, slightly inflationary. They had the audacity to stand up in the House and quote from an economic report from Goldman Sachs JBWere, my old firm, but they did not even have the time to read through it, because what it said—in the faintest of faint praise—was that the best thing that could be said about the budget was that it did not make inflation any worse.

We do have a strong economy. We do have a resilient economy. We do have a prudent and well-managed financial sector. But what we do not have is leadership with vision, with courage and with the preparedness to stand up for this nation. (Time expired)

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