Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Hansard source

We know that the Prime Minister makes comments that it is not his fault. We know now it has suddenly all become the responsibility of the global financial crisis. So much for the end of the blame game. You can take that notion and throw it out the back door, as the Prime Minister is so fond of saying. That notion that the buck stops at the Prime Minister or that the Australian government is in charge of the Australian economy can go straight out of the back door because if there is one thing we hear time and time again from the Prime Minister and from the Treasurer it is that it is all the result of the global financial crisis.

Let me take this opportunity to highlight that it is not all a result of the global financial crisis. The package of measures that we are talking about today incorporates a number of payments—half the budget surplus—that the Australian government is about to spend across the Australian economy. Certainly, the coalition welcome some economic stimulus. Not for one moment does the coalition not believe that there needs to be an economic stimulus. What we are saying and our charge against Kevin Rudd, the Prime Minister, and the Treasurer, Wayne Swan, is that they are taking a bad problem and they are making it so very much worse. In the past when Australia faced, for example, the Asian financial crisis, do you know what happened? Australia actually fared very much better than all of our regional counterparts. But in this circumstance we see the slow massaging of Australian public opinion by the Treasurer, who then turns round and says, ‘Look, the global financial crisis is very bad and it is likely to get a lot worse.’

Let us look at one of the key measures that the government took, which, of course, was the unlimited bank guarantee that the Prime Minister announced. What we know is that the Labor government initially came out and said that they would be seeking to guarantee bank deposits to the amount of $20,000. That was Labor’s policy position in the middle of this year—a $20,000 cap on guaranteed bank deposits. The coalition came out on 10 October and asked for that cap to be $100,000 because that, based on experience of the member for Wentworth, the Leader of the Opposition, seemed to be the appropriate amount consistent with the information coming from the financial markets and with past comments made by our financial regulators. Not to be outdone, the Prime Minister said: ‘Oh no, we won’t have a $100,000 cap; the Labor Party will have an unlimited cap. That’s the Labor Party’s cap—an unlimited guarantee.’ It was important to the Prime Minister and the Treasurer, Wayne Swan, to be seen politically to be outdoing the Leader of the Opposition. So they went out there and said: ‘You know what? We’re going to have an unlimited guarantee. That’s the best course of action for this country.’

What transpired after Labor adopted this position? We saw what was a bad problem in this country get so much worse. That is what we saw transpire. In their recklessness and in their bungled attempt to fix this problem, we saw this bungling Labor government, with very little economic experience, take a bad problem and make it so much worse. What we saw was a rush of funds from those previous market linked investments back into the safe haven of the banks. Because the same risk rating is now in place for building societies and credit unions, they are out there in the marketplace providing very high deposit rates because they can take a riskier profile now that they are government backed. Those are two immediate examples of what we have seen.

The impacts of this government’s bungling are still only just beginning to be felt. Following the decision of GE Money and GMAC to pull out of car financing, as a direct result of this government’s bungled attempt with their unlimited guarantee, the Motor Trades Association of New South Wales has said it anticipates that 40 per cent of all New South Wales car retailers will go to the wall by Christmas. It forecasts that 30,000 jobs will be lost in New South Wales as a result of this government’s bungling of the bank guarantee. The government have the audacity to come into this chamber and claim that they are concerned with economic security. What about job security? Is there any bigger and more important guarantee of economic stability than having a job? That surely has got to be the most significant guarantee that exists.

Under the Labor Party, we know that the forecast for unemployment—in stark contrast to the coalition’s track record of performance—is not for a decrease in unemployment but for an increase in unemployment. That will be the track record of this Labor Party. We know already that the forecasts for unemployment continue to creep higher and higher. The Deputy Prime Minister will not even utter what the forecast is. The words cannot pass her lips. What we know from the forecasts—and there are a range of forecasts—is that unemployment is anticipated to reach six per cent on some forecasts, seven per cent on other forecasts and eight per cent on other forecasts that I have seen in the media—right through to, for example, JP Morgan’s forecast, which is that unemployment in this country will hit 10 per cent. I sincerely hope that that is not the case. But let it be said that there are economists out there forecasting that Australia’s unemployment rate could, sadly, once again, hit 10 per cent—and it is little wonder when we see 30,000 jobs in one industry in one state alone being directly threatened as a result of this government’s bungling of the unlimited guarantee.

Westpac is on board. The CEO, Gail Kelly, came out and said that she supported the Leader of the Opposition’s call for a $100,000 cap on bank guarantees. Had that $100,000 cap been put in place, none of these ramifications that we are now seeing would have taken place. There would not have been the rush of money from the market linked investments into the banks. There would not have been the closure of GE Money and GMAC. These occurrences have all been the result of this government’s bungled introduction of the unlimited guarantee, and that would not have happened if the $100,000 cap had been in place.

As shadow minister for small business can I say that the impacts of this are wide reaching among the small business community as well. Some of the principal drivers and funders of small business credit are market linked investments. Market linked investments provide much of the money that the small business sector use to finance their cash flow. As a consequence of this government’s bungling of the guarantee, we are now seeing that the small business sector do not have anywhere near the same access that they had to small business credit that was provided from those market linked funds. The impact of that is yet to be felt. The beginning of that impact is now emerging, but the true and full extent of that impact is yet to be felt. What we know is that Australia’s 2.2 million small businesses employ around four million Australians. As that credit dries up and as businesses in this country struggle, let me assure you that the unemployment rate will continue to go up. It will not be 400 people in a factory, which seems to be the only pressure that Labor responds to. It will, unfortunately, be one or two people in each of several thousand small businesses across this country, which will drive our unemployment rate up by thousands, if not tens of thousands. That will be Labor’s legacy as a result of their bungling of the government guarantee.

I would like to touch on some other measures as well. This government likes to claim that as a result of its economic stimulus package we will see funding of about $4.8 billion for pensioners, carers, senior health care card holders and veterans; $3.9 billion for families; $1½ billion for first home buyers; and $187 million for training. That might be good for some, but what compassion do we hear from this government, for example, for the many self-funded retirees and partial pensioners who live in my electorate of Moncrieff? These people are relying on their investment income. These are people who are not beneficiaries of this stimulus package that the government is putting forward but people who rely on the interest that has accrued on their investments, which, in the main, are invested in market linked funds. What have we seen? We have seen a record number of these market linked funds frozen as a result of this government’s bungling of the bank guarantee. All of a sudden, partial pensioners and self-funded retirees are having their income and their ability to redeem their cash frozen as a result of this government’s bungled attempt with their bank guarantee.

What did we expect to see from the government? Rightly, we expected to see some compassion, we expected to see some leadership and we expected to see some ‘decisive decision making’—as they are so fond of saying over there. But what did we see? We had the spectacle of the Treasurer of Australia saying to self-funded retirees and partial pensioners, ‘If you can’t access your cash, go to Centrelink.’ That was the response. Labor only made that comment after I questioned the minister in question time in the House. Prior to that they were blissfully unaware there was even a problem. We had market funds left, right and centre freezing redemptions—freezing investment income. The Labor government was completely, blissfully unaware of all this. I raised it in question time. The minister gave absolutely no response at all. Then, two days later, we saw the Treasurer go out and say, ‘Look, if you are doing it tough, go to Centrelink.’ If that is the kind of economic leadership that the Australian people can expect from the Australian Labor Party then our problems are very serious indeed.

But there is more than that. I know the member for Solomon made some comments earlier about this problem all being started by merchant bankers, so I would like to take this opportunity, given that the member for Solomon is still in the chamber, to educate him a little bit about what actually caused this problem. Far from being the Wall Street crowd, it was in fact interventionist, left-of-centre governments that created this whole problem. The proof is very clear.

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