Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I would say in response to the honourable member for Riverina’s question the following: if you look at the global financial crisis which began in credit markets in the United States, which flowed through to equity markets in the United States, which flowed through to property markets in the United States, which then flowed through to the financial institutions throughout the world through the agency of credit default swaps and securitisation of the various loans made with highly liquid money against bad assets in the real estate sector, that is the cancer that has spread across the entire global financial system. That is the real cause of what has happened. Why you are therefore seeing a consequential impact on confidence, both consumer confidence and business confidence, is because that has worked out to the real economy. When consumers are confronted by the nonavailability of credit or the other challenges which now present themselves in terms of employment, it has an effect on consumer confidence, as night follows day. Similarly, with business confidence, if there is a crunch in terms of the availability of credit for business and its normal lending arrangements, business as a consequence begins to evidence a lack of confidence. That also follows through a contraction of demand in the overall economy.

These are the facts. They might be uncomfortable facts; they might be politically inconvenient facts for those opposite, but that is actually what is occurring. It is what is occurring in this country. It is what is occurring in the United Kingdom. It is what is occurring in the United States, in France, in Germany, in every other economy around the world. The question is—and I say this to the honourable member for the Riverina, whom I regard to be a decent person—what are we as a nation going to do about this?

We have a course of action for dealing with this and it hangs off the whole proposition of providing economic stimulus through the fiscal policy measures that we have outlined so far, acting in tandem with monetary policy. Our course of action is clear: together with the range of task forces we currently have at work with elements of the financial sector that are dealing with the rollout consequences of the global financial crisis, we are doing detailed work, practical work, sector by sector, subsector by subsector, then across what we do in one stage after the other. We have a fiscal policy in coordination with what the Reserve Bank is doing with monetary policy. This is a strategy, a plan of action for the future. I would say to those opposite that the alternative which they offer the people and the economy and the nation is as follows: do nothing and take political advantage of the crisis. That is your strategy in a nutshell and, frankly, the Australian people condemn you for it.

See this speech in context