Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I welcome the introduction of the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and cognate bills, which put into place some of the Rudd government’s key measures. If time permits, I will respond to some of the nonsense I have just heard from the member for Moncrieff, but quite frankly I want to put my own case first and then I will see how my time goes. In summary, these measures will deliver $4.8 billion for an immediate down payment on long-term pension reform, $3.9 billion in support payments for low- and middle-income families, $1.5 billion to assist first home buyers and $187 million to create 56,000 new training places in the year 2008-09. The package also brings forward the commencement of investments in nation-building projects to 2009. For pensioners, including age pensioners, veterans, disability support pensioners and carers, the $4.8 billion will from 8 December provide a payment of $1,400 for single pensioners and $2,100 for couples. For people receiving the carer allowance, it means a payment of $1,000. The $3.9 billion family payment package will provide financial support to around two million Australian families, with a one-off payment of $1,000 for each eligible child of families who receive family tax benefit A. The package also includes payment to families of another 220,000 dependent children who received youth allowance, Abstudy or a benefit from the Veterans’ Children Education Scheme.

In my electorate of Makin, the Rudd government’s Economic Security Strategy will benefit over 14,000 age pensioners, around 5,000 disability support pensioners, around 900 self-funded retirees who hold a Commonwealth seniors health card, around 2,000 service pensioners and war widows, almost 3,000 carer allowance recipients, around 800 carer payment recipients and almost 13,000 families who receive family tax benefit A. Contrast this with the proposal that had been put up by the Turnbull led opposition, in which some 2.2 million pensioners would have received nothing. Furthermore, in my electorate, which has a very high proportion of young people, raising the first home assistance grant from $7,000 to $14,000 and to $21,000 for newly constructed homes will bring welcome relief to many young people and to their concerned parents. Not surprisingly, the Rudd government’s Economic Security Strategy has been enthusiastically received by the majority of people I have spoken with.

The financial turmoil we are seeing throughout the world is likely to be a once in a lifetime experience for most of us. As some have already observed, it is a crisis largely brought about by greed—not only the greed of individuals but equally the voracious appetites of corporations to increase their market share by whatever means they could, to the point that many of them acted recklessly and callously. In doing so, they drove the economy to an unsustainable level, which many economists predicted would reach breaking point. Sadly, they were proved right. Consumers and businesses were taking on debt that they could never repay, creating a domino effect which has resulted in the financial shake-out that we may still have not seen the last of.

I want to make two points about the global financial turmoil. The corporate greed and the obscene payments being made to corporate CEOs in recent decades is a matter I briefly referred to in my first speech in this place and a matter which should have been more publicly exposed and on which action should have been taken years ago. I say that because the performance of those CEOs never justified the payments they were receiving. That point has been exposed in recent months. Many of the financial institutions that have crashed in recent times were some of the very corporates that were paying their CEOs and board members more than generous remuneration. It was a combination of negligence, incompetence and recklessness and those responsible were in turn generously remunerated for it. If they had been competent and worth the remuneration they received they would not have allowed their organisations to become vulnerable. In any other situation those same people would have been dismissed or even prosecuted.

The question of prosecution is the second point I wish to make about the global financial turmoil. Many of the actions of these corporations were taken by board members and senior executives who knew they were passing on bad debts to others, who knew they were giving loans to consumers who could not repay them and who knew, or at least should have known, that the nature of their business operations was unsustainable. At best it was moral fraud and at worst it was criminal fraud. Many of the victims have been left shattered, have lost their life savings and have been left emotionally and financially bankrupt. Yet many of the executives responsible have walked away with golden handshakes when they should instead be facing criminal charges.

On that matter I want to quote from an article which appeared in the Australian on Wednesday, 8 October. It is written by Susanne Craig from Washington, and I suspect the article was a take-out from the Wall Street Journal. I quote on the matters of the corporate payments that were being made and on the issue of prosecution. The article says:

Lehman Brothers agreed to pay a total of more than US$23 million … to three executives leaving the securities firm just days before it collapsed.

…            …            …

The disclosure came as a House committee grilled Lehman chief executive Richard Fuld Jr and painted a picture of a financial firm that operated like a casino run by greedy executives.

The article goes on to say:

Meanwhile, lawmakers estimated that Mr Fuld pocketed roughly US$480 million in pay since 2000.

He in turn suggested that it was only US$350 million. That is just one of many examples I could quote where senior executives have been paid ridiculous amounts by the organisations for whom they work when, in fact, the organisations did not perform to the standards expected by their shareholders or by the broader community.

I now turn to another article in the same paper of the same day, written by Amir Efrati and Susan Pulliam, relating to the question of criminal charges. The article says:

At least three US attorney offices are probing whether Lehman Brothers misled investors before its bankruptcy filing, as pressure grows to hold individuals accountable for the financial crisis.

It goes on to say:

… was Lehman saying publicly that its financial condition was sound while acknowledging behind the scenes that its situation was dire?

The article goes on further to say:

The US attorney’s office for New York’s Southern District, in Manhattan, is investigating whether Lehman valued its assets at artificially high levels …

The last quote I will read from the same article is:

The US attorney’s office in New Jersey is investigating whether Lehman misled New Jersey’s pension fund when it provided information about its financial health in connection with a US$6 billion stock offering in June. New Jersey invested US$180 million in the offering. Its loss on the investment is about US$116 million …

In other words, about two-thirds of the money was lost. I quote those articles because I believe they reflect a much wider problem that exists in the corporate world. I am sure that many of those same accusations could be levelled against many of the other firms that have since also crashed. For those reasons I believe the executives and the boards that, through their recklessness, are responsible for those kinds of outcomes which cause hardship, suffering and misery for others should face criminal charges. That would be one of the regulatory responses that world governments should consider in the wake of what has happened because that would be in my view one of the best forms of regulation—to make people accountable for their actions.

Thankfully Australia’s regulatory system, overseen by the Australian Prudential Regulation Authority, has ensured that Australian financial institutions have operated much more responsibly than many of their overseas counterparts. The strength of our key financial institutions, combined with Australia’s strong economy and the Rudd government’s responsible economic strategy and good fiscal policy, has meant that Australia is in a much better position to weather the financial turmoil than many other countries. But when you operate in a global economy, as Australia does, you cannot make your country entirely immune from the overseas financial turmoil. The recently released Mid-Year Economic and Fiscal Outlook confirms that. But what the Rudd government can do and has done is to act decisively with a package of measures directed at stimulating the Australian economy.

The Rudd government has acted decisively to guarantee all deposits held in Australian owned banks, Australian subsidiaries of foreign owned banks, building societies and credit unions. The Rudd government has acted decisively to make available to Australian owned banks, Australian subsidiaries of foreign owned banks, building societies and credit unions a guarantee on eligible wholesale borrowings. The Rudd government has acted decisively and announced the direction to the Australian Office of Financial Management to purchase residential mortgage backed securities from a wide range of Australian lenders in initial tranches totalling $4 billion. The Rudd government has, furthermore, determined that an additional $4 billion of funding is required for the purchase of residential mortgage backed securities from Australian lenders who are not banks, building societies or credit unions. And the Rudd government has acted decisively by providing the $10.4 billion Economic Security Strategy contained in these bills.

At a time of financial turmoil and economic uncertainty right across the world, the response from the Rudd government to calm the nation, to restore confidence in Australia’s financial institutions, to ensure Australia’s economy remains sound and to ensure that Australians can continue to look to the future with optimism should be commended. Not surprisingly, it has been, by most objective commentators and by the majority of the Australian people. This is a response which demonstrates the Rudd government’s sound economic judgement, financial competence, foresight and leadership. It also demonstrates the Rudd government’s understanding of and concern for the needs of all Australians.

It was the Rudd government that framed the May budget and it was the Rudd government that responsibly set funds aside for contingencies. It was the Rudd government that set aside $40 billion into future funds for education, health and infrastructure, and it was the Rudd government that brought in a responsible level of tax cuts for Australian taxpayers. It was the Rudd government that had the foresight to frame a budget which enabled it to release the financial package we are now debating. Had the Rudd government been reckless with its first budget, these measures would now not be possible. It was not luck, as the Deputy Leader of the Opposition implied in an address on an earlier bill; it was good fiscal management by the Rudd government—and the money needed to fund this package would not be there if the opposition members had had their way, because they opposed a number of the tax-raising measures that were proposed in the budget. Had they had their way, they would in fact have wrecked our budget surplus, at a time of great economic difficulty. But, thanks to the Independent senators, the opposition have not been able to totally obstruct the first Rudd government budget.

Governments are elected to deliver the best possible outcomes for the people they were elected to serve. The test of good governments is how they manage that responsibility when times are tough and difficult decisions need to be made. The Rudd government has, through its series of responses to the global economic challenges facing Australia, demonstrated that it has the leadership, the competence and the resolve to steer Australia through these tough times and that it will not be sidetracked by the political stunts of the opposition. In the time I have left, I want to talk briefly about some of those political stunts.

It seems that the opposition, on the one hand, support this economic package but, on the other hand—from listening to the speakers that have debated this matter so far—oppose most of what is in it for one reason or another. They offer support for it in one breath and then criticise it in the next. They offer support for measures one day and then criticise those same measures in the parliament the next day. As the member for Solomon quite rightly pointed out, the Leader of the Opposition, the member for Wentworth, comes into this place and talks about bipartisanship and support for a number of these measures and then sends members of his own party out to do media interviews criticising the package and the people who were behind putting the package together. You cannot have it both ways. I understand why they do that. They do that because they know full well that this is a responsible package. They know full well that it is a package that has been embraced by the Australian people at large. They know full well that it is the kind of package that is required in these very difficult times—and they want to take some credit for it in one way or another. The truth of the matter is that they cannot take credit for it if they are going to criticise it, as they continuously do, and they cannot take credit for it when the fact is that it is a package that was put together under the good economic management of the Rudd Labor government.

I want to talk briefly about that very point, because speaker after speaker from the opposition has come into this place and talked about how this is only possible because of the strong economy that was left to the Rudd government by the previous, coalition government. If the economy that they left to this government was so strong, why did they leave a housing market in crisis? It was in crisis when the Rudd Labor government came to office. Why did they leave a health system in crisis around Australia, why did they leave an education system that was shameful when compared with education systems around the world and why did they leave the infrastructure bottlenecks that this government is now having to fix? If the economy was so strong, why did we have all of those problems? And, if the economy was so strong, why did the Australian people turf out the coalition government in the last election? It is because they understood that those problems were out there in the community and they understood that the previous, coalition government could have done something about them but did not. That is the first point.

The second point is that the opposition come into this place week after week and blame this government for all of those same woes. They talk about the health system, they talk about housing, they talk about education and they talk about infrastructure. If it is good enough for them to accuse the Rudd government of being responsible for all those things after only a few months in office, then they have to be consistent and at least give the Rudd government credit for the budget it set in May. You cannot have it both ways. You cannot criticise the government for the things you want to and then not give the government credit for other things they are also accountable for and responsible for during their term in government.

The truth of the matter is that the Rudd government could have put together a budget in May that would not have allowed any of this funding. We could have spent all of the money that was available to the government and not held back a surplus. The government did not have to put money into infrastructure, education and health funding for the future, but it did. It did so because it is a responsible government, with the full knowledge that it had to act responsibly in ensuring the security of the future for all Australians—and that is what it did.

The other comment that I want to respond to is one that is consistently raised—and it was raised again by the member for Moncrieff just a moment ago—about how this package does little for the businesspeople of Australia and in particular the small business people of Australia. I was a small business person before I came into this parliament. Like most of the other small business people around Australia, I have a family and children. There are children of families in small business who will benefit directly from this package. But, just as importantly, this package is about stimulating the economy. If the economy remains strong then the opportunities for businesses will remain strong. So for members opposite to come in and say that this does nothing for small business is absolute nonsense and shows how little understanding they have when it comes to managing an economy.

I will finish by talking about a couple of other comments. Just before I do, I want to respond to something else that the member for Moncrieff said in comments about bank guarantees and finances under state Labor governments. In terms of the bank guarantees, had the Liberal Party had their way, 40 per cent of deposits in funds would not be guaranteed, and that includes funds owned by those self-funded retirees that the member for Moncrieff was alluding to. I can assure him from my discussions with people in my community that people out there were not happy about having the limit at $100,000 only.

Secondly, he talked about the financial woes of the states. Perhaps the member for Moncrieff is not familiar with South Australia. When the Labor government in South Australia came to office in 2002, the financial situation of our state was not terribly good. It took a Labor government to bring the finances back to a level where the government now has a AAA rating. (Time expired)

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