Janelle Saffin (Page, Australian Labor Party) Share this | Hansard source

I speak in strong support of the Prime Minister’s ministerial statement of 26 November on the global financial crisis that began out of the US subprime crisis 12 months ago and has spread from a small number of cases to a crisis of epidemic proportions. I speak in strong support of the Rudd government’s actions, including Treasurer Swan’s particular actions, which are decisive, timely and needed in this challenge that we face. And correct action it is, in not just responding but also pre-empting the situation as it develops—in the much heard but correct phrase, ‘to keep us ahead of the curve’. That is what decisive action is about. It is not just responding; it is pre-empting and it is staying ahead of the curve so that we can continue to come out of the global financial crisis with our economy, which is strong, more intact.

I speak in strong support of the particular actions that form the nucleus of the government’s Economic Security Strategy, a strategy designed to stimulate the economy and one that is acting in partnership with monetary policy. The budget framed by the Rudd Labor government and shaped and delivered by the Treasurer provided and provides the backdrop for the government’s ability to act now, as the global financial crisis impacts on us here. The $9 billion tax cuts, as one example, which were introduced in the budget to help ease the cost-of-living pressures, have certainly positioned us well for the things that are now starting to affect us.

One key plank of the Economic Security Strategy is the $10.4 billion package that was delivered in October. There are a few items in that, obviously. There is assistance to pensioners of over $4 billion in cash payments nationally. Also, there are about two million families eligible for the family tax payment A who will benefit from the package. There are also the first home buyers, whose grant is going up from $7,000 to $14,000, and if you are building it goes up to $21,000. All of this package is part of what is designed as the economic stimulus.

In fact, it is welcomed by all, including the opposition. The honourable member for Cowper, who also comes from the Northern Rivers and North Coast area, like me writes a column in a local newspaper. He welcomed the Rudd Labor government’s $10.4 billion economic stimulus package and was happy to showcase that in his writings for the local electors. There are other components of it which came after. Last weekend we had the $11 billion for critical government services, notably health and education, come out of the COAG agreement. There is also $6.2 billion for the auto industry that will kick in by 2010.

To put it in context, I will just give a brief snapshot of the global conditions resulting from the crisis. There are at least 30 bank bailouts. The share markets are down 50 per cent—and counting. It has come to that in Australia as well. As of November, the governments of at least 15 countries that we know of have put together rescue packages, and more are doing so now. Recently we heard the President of the EC, His Excellency Jose Manuel Barroso, talking about the bailout package for the 27 EU countries. Major economies are falling into recession. Germany was the first cab off the rank, followed by Japan and Italy. Others have already experienced negative growth: the UK, the US, Canada, France and others. The projections for the US and others are bleak, and we know that projections globally are not good. There is no use gilding the lily. Some people ask, ‘Why are we talking about it?’ We have an obligation to be open and frank with the Australian people, just as I do toward the people of Page, who I represent. They need to know exactly what is happening and, equally, what action the government has taken to cushion us from some of the shocks.

These economies I have referred to are generally strong economies, as, indeed, is ours—a little bit sounder than others, I might add. But our economy is now being bombarded by some forces out of our control. What is under our control is our competence and leadership. Leadership is important in these times, and the decisive action that has been taken by the Rudd government with the economic stimulus packages will help. I say ‘help’ because it helps to insulate us somewhat from the shocks to our system. It is a bit like being buffeted with a grenade. Some of the other economies are being buffeted by a rocket. There is a comparative difference. That is the way I think about what is happening to our economy and to other strong OECD economies at the moment. We are starting to read about what is happening to developing economies, a lot of which are right here in our own backyard in this region. That cannot help but impact on us.

There is a global financial trend downwards. We are the world’s 14th largest economy, and we experience the good and the bad of globalisation. Globalisation is a fact of life. We experienced good out of it, particularly over the past 17 years of sustained economic growth, but the tide has turned globally and it is dumping on our shores. I want to talk a little bit about trade, because the countries to which we send over half our exports have economies that are slowing or in recession. That, coupled with falling commodity prices, gives us a bleaker outlook for our terms of trade. The official forecasts are for an 8.5 per cent downturn. It makes it even more important that we give attention to completing the Doha negotiations. I note that one of the things to come out of the G20 meeting was a renewed vigour to complete some of the agreements in the Doha Round. All of the respective ministers have been instructed to be in Geneva, and I wish our Minister for Trade well in his deliberations there.

I have a few comments that are relevant both on the national scene and locally in Page—and, indeed, in all of our electorates. The Australian share market has fallen by up to 50 per cent. Some local independent retirees and others tell me their incomes have fallen 40 to 50 per cent. Some are able to adjust and withstand that; for others it creates a lot of difficulties. There are falling house prices. We know that in the last two quarters consumer confidence has been at levels unparalleled since the early nineties. The November figures tell us that retail sales grew marginally after falling for two previous quarters. I note the retail sector got some degree of comfort that sales were actually up, because a big part of the objective of the economic stimulus package is aimed at spending. Building approvals are down. Car sales are down by about eight per cent nationally—I know my local car dealers are affected by that—and that flows on to all of us. Credit conditions are tough. It is difficult for businesses to obtain finance; that difficulty is at a 26-year high.

Here is another issue, both nationally and also in Page. I had three local mortgage investment companies with about 10,000 local investors. Some of those were pensioners, some were short-term investors and some were charities and other groups, and all of them had been impacted by the global financial crisis. Another example of the government, particularly the Treasurer, taking action is when they worked with ASIC through the time when there were freezes on redemptions. ASIC worked out with the government a system whereby those investors could apply under hardship conditions. They did it through their mortgage investment companies. They could access up to $20,000 plus half of the balance of what they had left in there. That seems to be working quite well and things have now settled down in that area.

In these times, we face a scenario described by the Prime Minister—though he was clear in stating that we have not reached this scenario yet—in his statement:

If global growth continues to deteriorate in the period ahead, consistent with the economic data that is emerging during November, then there will be a further slowing of growth in the Australian economy—as surely as night follows day.

If Australian economic growth slows further because of a further deepening of the global financial crisis, then it follows that the Australian government revenues will reduce further.

We have heard that they could be down by as much as $40 billion, which certainly impacts on the ability to deliver new programs. The Prime Minister said that we have not reached that yet, but he was flagging that, if we do get to that situation, that situation would be the trigger for a temporary deficit. It was just putting the cards on the table for the Australian people, saying to them, ‘If we get to this, then we’ll need to do that, and we’ll need to do it because it will trigger a further economic stimulus that will be needed to help that situation.’ With those comments, I give my strong support to the Prime Minister’s statement of 26 November.

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