Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I am a tad disappointed today that the Treasurer sent a boy in to do a man’s job. I am quite sad that the Treasurer chooses to debate me on a TV program but not in this place, the house of the people. One of the reasons that it must be a little bit embarrassing for the Treasurer is that when he stated, just before Christmas, that he was in the business of creating jobs by spending money, I thought to myself at the time, ‘This man has form.’ It has been only in the last few days that I have had the opportunity to read the Treasurer’s speech in 2004, when he was the new shadow Treasurer, and he said:

We’ve had a wonderful run of prosperity. Average incomes are up half as much again. Household wealth has doubled. We’ve created two million jobs in the last fourteen years.

So not only is the Treasurer claiming that he is going to create 75,000 jobs; he is trying to claim credit for the two million jobs created during the 10 years of the Liberal-National government. I say to the Treasurer that his hide is no smaller than and no more sensitive than that of a rhinoceros. The Treasurer’s hide is like that of a rhinoceros. He claims to have created 75,000 jobs out of a $10 billion spend before Christmas. Ironically, the Prime Minister got himself befuddled in question time today. He claimed that that money had helped to stimulate retail sales, unlike in the United Kingdom, where, he claimed, retail sales had fallen. Little did he know that, in fact, retail sales in the United Kingdom had risen—and they did not have to have a ₤10 billion cash splash immediately before Christmas.

I want to take this opportunity to lay down the foundations for the narrative of the Rudd government’s economic mismanagement of Australia. I want to go to the starting point, which is the legacy that was left by the previous coalition government. The coalition government left the Rudd Labor government with a record of real job creation. Two million new jobs were created in Australia between 1996 and 2007. The Prime Minister calls us neoliberals. Well, if creating two million new jobs in Australia is the work of a neoliberal then I plead guilty to being a neoliberal. If increasing the real wages of Australian workers by more than 22 per cent over 11 years is the work of a neoliberal then we are all neoliberals. The real wages of Australians have increased under the coalition government, yet they seem to be perilously close to decreasing under a modern Labor government.

Of course, the Labor government has form in government. It was the Hawke-Keating government that took great pride in deliberately reducing the real wages of Australian workers. When we come to the budget, the inheritance received by the Rudd Labor government was a budget that was in a strong, sustainable surplus. Even when it was identified by the then Treasurer, the member for Higgins, in the Intergenerational Reports that Australia was facing structural deficits into the future, the coalition government took the hard decisions to put in place the basis for ongoing surplus budgets. And what happened? Labor came into government, and when Labor comes into government they cannot help themselves; they are very good spenders.

Why do I say that? There is no better evidence of the capacity of the Labor Party to spend than in the last few months. Since the last budget, the first Labor budget, the Rudd Labor government has committed to $80 billion of new spending above the budget. They say that that is necessary to address the global financial crisis. But you cannot look at the extraordinary fiscal stimulus package in Australia in isolation. You need to look at two other factors. The first factor is the foundations upon which that stimulus package was necessary. When you compare Australia with the United Kingdom and the United States and every other OECD country, you can identify that the foundations upon which Australia has entered into difficult economic times have been far better than those inherited by every other country

In a recent report, the assistant governor of the Reserve Bank identified that a comparison of the discretionary fiscal easing in certain countries illustrated that Australia was at the higher end—meaning that the Rudd government spent more by comparison with other countries in greater financial distress. Discretionary fiscal easing in the United States was over two per cent of GDP, in the United Kingdom it was over one per cent, in Germany it was 1½ per cent, in Japan it was 1½ per cent, in China it was over two per cent, in South Korea it was over two per cent, in Taiwan it was over two per cent and in Australia it was over 2½ per cent. So the Rudd Labor government has spent more than most other comparable countries at a time when Australia’s foundations are better than any of those other countries.

On top of that, at the same time you cannot ignore the relationship between a fiscal stimulus and a monetary stimulus. The easing of monetary policy by the Reserve Bank is at extraordinary levels, even by the admission of the Governor of the Reserve Bank before the House of Representatives Standing Committee on Economics last week. The significant easing in monetary policy by the Reserve Bank had to work in partnership with a fiscal stimulus. There has been a four per cent drop in interest rates in Australia—from 7¼ per cent to 3¼ per cent today—and they still have the capacity to go down further. But even the Reserve is now sending a message that it is time to wait and see. The significant easing in monetary policy, combined with the massive fiscal stimulus by this mob over the last three months, means that Australia has gone faster and further than any other comparable country. I say this to the government and to the Treasurer: you would want to hope that this is a 100-metre sprint because, if it is a marathon—and every economic indicator is saying that it will be—there will not be any fuel left in the tank when it is most needed. That is my concern and that is the concern of the coalition.

Let me take you back, Madam Deputy Speaker, to the election of the Rudd government. The Rudd government’s immediate task was to try and rubbish the economic inheritance that bequeathed to them a very strong economy with strong economic growth, very low unemployment, a significant budget surplus and no government debt. In fact, we left money in the kitty. More than $60 billion was left in the kitty. So the government was not only free of debt but actually had significant net assets.

How that changed. The first thing the Prime Minister did was declare the first of many wars. We had wars on obesity; we had wars on binge drinking; we had wars on pokies—we have had wars on everything—and we had a war on inflation. The war on inflation that the Prime Minister declared was the war that actually cost Australians significant amounts of money because that was effectively egging on the Reserve Bank to increase interest rates. I have taken the opportunity to have a look at the statements of the Reserve Bank on 7 November 2007, 5 December 2007, 5 February 2008 and 4 March 2008. On all occasions the Reserve Bank put the words of concern about inflation ahead of the concern about the looming global financial crisis, and this is even after it became perfectly obvious that the global financial crisis emerging in United States credit markets—in fact in global credit markets—would have a profound effect here.

By egging on the Reserve Bank, by declaring a war on inflation, the Labor Party deliberately slowed the Australian economy at exactly the wrong time. At a time when everyone else in the world was running away from the beach because there had been an earthquake out to sea, Kevin Rudd and Wayne Swan were deliberately encouraging people to run down to the beach to observe the looming tidal wave.

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