Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Hansard source

Experience and history tell us that Labor deficits are never temporary. The last Labor deficit lasted for six years. It was not temporary. It went on for six long years, destroying jobs, and it only came to an end with the election of a coalition government determined to do the hard work to clean up the mess that Labor committed.

The Prime Minister has today in his 22-minute address—which he was kind enough to give us a copy of 45 minutes before he started—sought a leave pass to abandon fiscal discipline. Only two days ago on 24 November the Prime Minister was asked whether he was prepared to push the budget into deficit and he said twice, ‘We do not see the need to borrow.’ On the same day his finance minister was asked the same question and he said, ‘We’re committed to keeping the budget in surplus.’ Forty-eight hours on and that has been completely abandoned.

The key to managing difficult times is discipline and the willingness, the guts to take tough decisions. All through this year the Prime Minister has made no hard decisions. The Prime Minister has mismanaged our response to the global financial crisis. Right at the beginning of the year when the rest of the world was focused on the looming threat of the credit crisis coming out of the subprime crisis in the United States and fuelled by a collapse in housing prices, when the rest of the world was focused on that, our government in Australia declared a war on inflation, which it continued in its rhetoric right up until September and the collapse of Lehman Brothers.

The reality of the global financial crisis only dawned on the Prime Minister in mid-September. Until then he was still waging war on inflation. If honourable members on the government benches doubt me, let us look at what the Prime Minister said about the budget. Remember, the government is now claiming that the budget was designed to ward off the damage from the global financial crisis and they put it together with the global financial crisis in mind. There is no doubt that the opposition had the global financial crisis in mind. We said again and again that we should not be rushing into measures, be they monetary or fiscal, that could overdo the downward pressure on economic activity that is coming in from the rest of the world. That is what we were saying consistently from the very beginning of the year. The Prime Minister on 13 May said:

That is why as we embark upon this budget our first responsibility is to fight the fight against inflation…

And on 2 May the Prime Minister said:

… our job is to produce a responsible budget for the overall economy and that means fighting the fight against inflation. We are waging a war against inflation at present…

Of course, from the beginning of the year when inflation was three per cent and had moved outside of the target band of the Reserve Bank, it was the Treasurer who said inflation was out of control. He said the inflation genie was out of the bottle. He egged on the Reserve Bank to put up rates, and rates went up twice at the beginning of this year. As honourable members are aware, monetary policy has very long lags. It is not a quick fix. When you put interest rates up or down, it takes a long time for that to take effect. The government was the only government in the developed world that was ignoring the global financial crisis, ignoring the global impact of that crisis and declaring its own war on inflation, when much darker storm clouds were on the economic horizon. The impact of those rate rises is being felt in the economy right now, just when we need it least. That is the consequence of the government’s failure to take account of the reality of the global financial crisis—a terrible error of judgement.

Why did they make it? They made it because, throughout this whole year, the Prime Minister has not had an economic strategy; he has had a political strategy. His aim was to blacken the economic reputation of the Howard government. When he looked at the economic metrics, the numbers that he inherited—be it the money in the bank at the Treasury; be it the fact that all of Labor’s debt was paid off; be it the fact that the former Treasurer, the member for Higgins, had put aside money in the Future Fund to take care of the previously unfunded pension obligations to public servants and defence personnel—including record lows in unemployment and strong economic growth, he could only find one which was not ideal, and that was inflation, so he said, ‘This is what I will use to blacken the reputation of the Howard government.’ He went after that with a purely political strategy and, as a consequence, talked up inflation and interest rates and did so at precisely the wrong time.

Is there anybody in this House or in this country who believes it was in the national interest for us to feel the consequences of monetary tightening today? Of course not. Everybody should be focused on the three most important priorities of the government, this House and every member of the parliament: jobs, jobs, jobs. That is the focus. That is what the government should be focused on, and yet they put pressure on the economy, downward pressure on economic growth at the beginning of this year, and they did it purely for political purposes. Always politics, always spin.

If the government want to claim that they have had a coherent economic strategy, let me ask this: how could they claim to be coherent if waging war on inflation was the No. 1 priority—if the overwhelming and overriding mission was the war on inflation because it was out of control at a little over three per cent? Now that it is five per cent, that war seems to have been abandoned. Obviously the campaign was not going very well, so new wars have been declared across the board.

We now come to the question of how we should address the global financial crisis. In the here and now, from the time Lehman Brothers collapsed and the crisis reached a new level of intensity in September, we have made the offer to work with the government on a bipartisan basis. We have invited the government to sit down with us; we have invited them to collaborate. We have not had the courtesy of any response to that other than contempt.

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