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

The Liberals say that a $42 billion stimulus package is too big. I have just contrasted the size of that package as a percentage of GDP with that of all of the stimulus packages of those major economies that I have just referred to. How does the quantum of this package therefore sit with what is being said by responsible economic organisations in Australia? The Liberal Party say it is too much, but the International Monetary Fund, the Reserve Bank of Australia, the Treasury of Australia, the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Council of Small Business Organisations of Australia all disagree. They all disagree with the Liberal Party’s position. The International Monetary Fund, the Reserve Bank of Australia, the Commonwealth Treasury, ACCI, the AiG and the council of small business are not units of the Labor Party. They are independent organisations which speak with an independent voice, and they say as one that an economic stimulus package of this size is right. So let us be clear: those organisations, led by the International Monetary Fund, the Reserve Bank, the Treasury and the peak industry bodies, say that this quantum of stimulus is right and the Liberal Party alone says it is wrong. The International Monetary Fund has said:

What we need is more than 1 percent—

of GDP—

we certainly need at least 2 percent …

The Reserve Bank of Australia confirmed a 100-basis-point cut in interest rates on the very day and following the government’s announcement of its fiscal stimulus package, because the Reserve Bank noted the importance of aggressive, simultaneous action of fiscal and monetary policy. The Secretary to the Treasury said in Senate testimony:

These are highly unusual circumstances, and we have advised … that there was a need for fiscal policy action and that it was quite urgent.

He went on to say that with a smaller package:

… there would be some point at which GDP growth in 2009-10 in particular might well have been negative.

Let us turn to the remarks of the Australian Chamber of Commerce and Industry. Mr Evans said:

Such is the scope of our current economic difficulties that this package, combined with monetary easing, is absolutely essential.

He said it was ‘absolutely essential’. He continued:

The size of the package at two per cent of GDP in 2009 is appropriate and in line with our own estimate—

referring to ACCI’s estimate—

of what is required. We recognise and accept that a temporary deficit is required to fund the program.

The Australian Chamber of Commerce and Industry continued:

… we consider it is in the national interest for those measures to be passed, and passed quickly, to avoid uncertainty and to promote confidence.

The Australian Industry Group said:

The nation building and jobs plan announced by the Federal Government today is simple and substantial, and will provide a big stimulus to help keep the economy moving.

Further:

The package targets consumer spending, which is absolutely critical—

I repeat: ‘absolutely critical’—

to our near-term economic prospects, and boosts capital expenditure—looming as one of the real casualties of the downturn.

The Council of Small Business Organisations of Australia said the following:

The worst thing we can do is not to do anything. I think half-hearted action is not required as well. We want someone to get out there and do something big, and this is big.

So says the voice of small business. Then we come to that well-known other front of the Australian Labor Party, the Liberal government of Western Australia, who through its Treasurer Buswell said:

That type of stimulus—whether it impacts on consumption, expenditure or investment—is something that the state government of Western Australia welcomes.

There you have the IMF, the Treasury, ACCI, AiG, the WA Liberal government—not exactly left-wing radicals. What they see is the unfolding impact of a global economic recession, and they see the need to act.

The Liberals today and in recent days have claimed they have not been consulted. I would say to the Leader of the Opposition as follows. The Leader of the Opposition less than 24 hours after the release of the government’s Nation Building and Jobs Plan, before he had seen the legislation, before the Senate committee had even begun, said on 4 February:

The opposition will vote against this package in the House and in the Senate.

How is it logically sustainable to argue that you should be consulted when on day one you say to the parliament and the nation that in the Senate you will vote against this plan? This is absolute disingenuousness. Furthermore, the Liberals have fundamentally attacked the quantum of the package, against the advice that I have just referred to about the necessity of such a quantum. Furthermore, the Liberal Party have attacked every element of the package as well. On the question, for example, of the tax bonuses proposed: the Leader of the Opposition ruled out supporting these on day one, saying, ‘We do not support a further round of cash handouts,’ even though such measures in support of consumption have been directly supported by the IMF. On the schools question, the Liberals have opposed the $14.7 billion school measures. The Leader of the Opposition rejected the government’s proposal on day one. He said:

… what we’ve said—

referring to the Liberal Party—

is that the $14 billion is a very large amount of money to be focused largely on, as you know, primary school assembly halls and libraries.

Furthermore, the Leader of the Liberal Party and the Liberal Party more broadly challenged whether schools and education were in fact a top infrastructure priority. Let them eat their words as each of the members who have voted against this measure in the House of Representatives speak in the days ahead to each of their P&Cs, each of their P&Fs and each of their primary school principals and secondary school principals and say to them that their schools do not need this investment, that their primary schools do not need any further investment in either modern libraries or school assembly halls, that their secondary schools have no need for a modern science block or a language centre or that their P&Cs and P&Fs do not need an extra injection of funds to help with much-needed maintenance and repairs.

Then, on the question of small business, the Leader of the Opposition rejected the government’s proposal, saying it would not help small business. He said:

What he—

that is, the Prime Minister—

has proposed is a 30 per cent depreciation upfront, depreciation for purchases of new equipment by small business. Now, if you are a small business which has seen your cash flow decline, or if you don’t need any new equipment, that’s of no benefit to you at all.

The small businesses of Australia, through their peak bodies, have welcomed this measure. Again, we find the Liberal Party out of touch with schools, out of touch with school communities and out of touch with small business.

On insulation, the Leader of the Opposition rejected the government’s proposal on day one by saying:

We would support an insulation subsidy of a lower amount, and I would suggest for the government’s consideration one that is, for example, $500 for all houses, increasing to $1,000 subject to a means test.

Again, on each of the individual measures, quite apart from the quantum, quite apart from the overall rationale for the stimulus package, the Liberal Party ask why they have not been consulted. They ruled out any support for this package from day one. They have undermined the need for the quantum of the stimulus from day one. And they have attacked every measure contained within it from day one. These facts speak for themselves in terms of the position that has been adopted by the Liberal Party.

Let us go, therefore, to all these Liberal claims in their aggregation. The Liberal Party say that unemployment is not a problem. We say it is. The Liberal Party say we should wait and see. We say we must act now and act decisively. The Liberal Party say the government’s plan is too big, when the IMF, the Reserve Bank, Treasury and all peak business organisations say the size is right for our current economic challenges. The Liberal Party say that we will borrow too much. With this plan our net public debt will be about one-tenth of the OECD average. They say they have been willing to negotiate, yet how can you negotiate when their leader says from day one that they will vote against the package? This, therefore, represents in aggregate the bona fides of those opposite on the question of this overall nation-building plan.

So we are left to ponder what the operational strategy of the Liberal Party actually is in this entire debate. The Liberal Party’s is not an economic strategy; it is a political strategy. It is a political strategy in three steps. Step 1 from the Liberal Party is to do nothing or to do as little as possible. Step 2 is to hope like hell that the global economic recession hits the Australian economy amidships, and therefore that it overwhelms the Australian economy in the course of the year ahead. Step 3 is to turn around later and simply say this: ‘I told you so.’ That is what this political strategy is all about. That is what the member for Wentworth, the Leader of the Opposition, knows full well. That is what those who have advised within their party room know full well. This is a strategy driven by the politics of that as well the internal politics of the Liberal Party itself.

We know something of the debate that occurred within the Liberal Party when these matters were deliberated on. We know something of the intervention from the former Treasurer, the member for Higgins, whose passionate engagement on matters of national economic policy warrants his participation in this debate tonight—

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