Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Hansard source

I thank the member for Flynn for his question. The OECD’s Economic Outlook released overnight is sobering reading. It is a sobering assessment of very difficult global conditions. The OECD says:

Many OECD economies are in, or are on the verge of, a protracted recession …

The US, the UK, Germany, Italy, Spain, France, Canada, Japan, New Zealand, Singapore, Taiwan and Hong Kong have all recorded at least one quarter of negative growth, and the OECD expects more countries will follow. All up, the OECD expects that 19 of the 30 OECD member countries will contract over the calendar year 2009. That is pretty sobering news to contemplate and, as the Prime Minister pointed out in his remarks before, there has been a marked change over the past month. The OECD does expect modest growth for the Australian economy, modest growth similar to that predicted three weeks ago in MYEFO. But as we said then, if global growth continues to deteriorate in the period ahead, we will see slower growth, and this of course is where the OECD report comes in again. The OECD has identified a further deterioration in the global economy, a further decline in our terms of trade and weaker growth in China as significant risks to growth in this country, and of course the OECD has joined the IMF in calling on governments to deploy all arms of policy, including fiscal policy, to strengthen growth.

Of course, we on this side of the House understand the importance of fiscal policy, and that is why we put forward our Economic Security Strategy. Those on the other side of the House deny the enormity of the international financial crisis. The Leader of the Opposition said it has all been overhyped. Well, what the OECD has identified, what the IMF has identified and what all international organisations have identified is the need for very strong action when it comes to fiscal policy. This government has reacted with the Economic Security Strategy, and of course we now have fiscal policy and monetary policy working in tandem, unlike what occurred under the member for Higgins. He was out there spending like a drunken sailor, forcing the Reserve Bank to put interest rates up. That is what was going on. We on this side of the House understand that when conditions change, when global growth turns down, governments must act. This government is acting and will continue to act in a responsible way. Those opposite can stick their heads in the sand and deny the enormity of the global financial crisis, but we on this side of the House will act and act decisively.

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