Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Hansard source

I rise to speak on Appropriation Bill (No. 3) 2008-2009 and Appropriation Bill (No. 4) 2008-2009. Unlike some opposite, we do not have a zealot’s faith in the invisible hand of the market or the unblemished wisdom of overpaid merchant bankers in the financial capitals of the world. Thanks to the good sense and ability of Independent senators to negotiate in good faith with the government, rather than indulging in pointless political pointscoring, we have managed to pass our stimulus package through the Senate. However, I believe it is worth reminding the House of the reckless and a tad unprincipled opposition that our measures received from some opposite who appear to prefer us to sit back and destroy the jobs that thousands of Australian families depend on. The government, unlike the opposition, accept that there is a role for government in helping the economy and realise that the Australian public expects us to react responsibly to the economic crisis that is engulfing the world.

We know that the Rudd government’s October stimulus package had a positive effect on the Australian economy in the December quarter. Australia avoided the collapse in retail demand that hit other economies across the world over Christmas. Consumer spending in December last year was up two per cent on the year before thanks to the government’s package. AMP Capital Investors chief economist Shane Oliver was quoted in the Australian newspaper as saying the stimulus package announced last year had ‘done the trick’ in lifting consumer spending. Our stimulus package also got positive reviews from many economic experts. ANZ senior economist Katie Dean has said that without the package the economic outlook would be much worse, but warned that the boost to the economy will only be short term. Ms Dean said:

It actually may help Australia avoid a technical recession which is two quarters of consecutive negative GDP growth over the longer term.

If some in this place do not understand the virtue of trying to keep Australia out of a recession then heaven help us all. We know that the October package worked, but more was needed. That is why the Rudd government announced its second rescue package. Stimulus packages act like a defibrillator, jolting life back into the economy. Some opposite, unfortunately, are like a doctor who would rather watch their patient expire gently on the operating table than give them the treatment they require.

Serious economists across the world support the concept of governments stepping in so as to soften the impact of the crisis through spending packages. When the effectiveness of monetary policy is impaired, governments have a responsibility to step up, step in and unblock the economy. Chris Richardson from Access Economics also praised the second stimulus plan as a response to what he sees as a ‘diabolical international situation’. Commonwealth Bank of Australia senior economist Michael Workman said the payments to households would boost consumption in the short term. Mr Workman also said that the construction and mining sector workers, hard hit by the economic downturn, would benefit from the infrastructure programs and that construction workers at risk of losing their jobs could find work in government funded infrastructure projects.

When private spending falls away, government spending should step up so as to smooth out the economic cycle and reduce the devastating impact of unemployment on Australians. American economist Mark Zandi, a supporter of the stimulus package of US President, Barack Obama, has calculated that, for every dollar spent on infrastructure projects, we see a boost of $1.59 to a nation’s gross domestic product. This multiplier effect occurs as the dollars the government put aside for infrastructure spending flow through the economy. In this regard, at this particular point in time, tax cuts are not as effective as a well-designed and targeted stimulus package, despite what some in the opposition seem to think.

Some in the opposition are clinging to the discredited idea that simply cutting taxes for the highest earners in the community is the special economic tool that a government needs. Unfortunately, some of the Liberals have demonstrated their lack of economic understanding by referring to the payments to low-income families as a ‘cash handout’. Leaving aside their distaste at the thought of money going to families who are doing it tough, I believe that these comments show that the opposition does not understand how these payments assist the whole economic cycle. They are a payment that will flow through the economy and benefit small businesses, tradespeople and workers across Australia and their families. In this regard, tax cuts are not as effective as a well-designed and targeted stimulus package.

With regard to tax cuts, Australians will get income tax cuts, as scheduled, this July and in July of next year. However, tax cuts, which give a little bit of extra money each week, are simply not as effective as one-off payments in sparking consumer spending. The cash payments will go to low- and middle-income families and singles, with a back-to-school bonus for families with little children. These are the families who have the most pressing expenses and who will put money back into the Australian economy, continuing growth and keeping jobs.

The package, of course, is more than just one-off payments, as important as they are. For this government it is possible to walk and chew gum at the same time. We can offer a stimulus package that will deliver a short-term boost to the Australian economy while keeping our eye on the long-term game. This economic slump will be tough and it will get tougher, but it will pass. When that happens we will need a skilled, well-educated workforce to consolidate our productivity and our prosperity. That is why in this package for every dollar that goes in payments to low- and middle-income families two dollars goes to spending on vital long-term infrastructure.

Anyone who has ever driven across the Sydney Harbour Bridge or along the Great Ocean Road, both public works projects funded during the very tough economic circumstances of the thirties, will know that tough economic times are not incompatible with public works of lasting value. The Hoover Dam in the USA is another example of a national infrastructure icon which was completed during the Great Depression of the 1930s.

Spending on schools, ensuring that young Australians get the best possible facilities, the best libraries, science labs and language labs that are available, will ensure that they are prepared to join a global economy which will be even more competitive in the future. The bulk of the package is taken up with $28 billion in spending on crucial infrastructure: social housing, schools and making our housing stock more environmentally friendly. The bulk of the social housing will also have greater access for people with disabilities, a particular interest of mine.

This spending has two purposes: first, to boost the economy and to keep jobs in the short term; second, to provide infrastructure to support our economic growth in the medium to long term. This is direct spending. This will be spent in Australia and provide jobs for Australians. It is labour intensive spending, and it will preserve the jobs of thousands of bricklayers, carpenters, labourers, trades assistants and builders, who are beginning to struggle to find work as the economy slows.

There is the usual objection which is raised when governments decide to increase infrastructure benefits in response to an economic slowdown, which is that, by the time the infrastructure projects come on stream, the downturn is already over and the effect of the spending is to increase inflation as the economy is picking up. No-one can forecast how long the current downturn will last or how serious it will be, but what is particularly clever about this infrastructure stimulus package is that the spending announced by the government focuses on projects that can be started quickly and where the bulk of the money can be spent quickly, thus avoiding that problem I alluded to briefly earlier. Further, it focuses on small-scale projects which are a lot more likely to be started straight away without some of the cumbersome start-up lags which can afflict larger projects.

Anyone familiar with the previous government’s neglect of, disdain for and disinterest in public housing will know that social housing is in high demand across Australia, and that any units built will be used immediately. That is why the 20,000 units of social and defence housing will, we hope, all be built by the end of next year, providing a valuable boost to the construction industry and relief for people battling in a tough rental market.

Anyone who visits public schools and talks to teachers will know that they do have urgent maintenance needs that do need to be fixed as soon as possible. This package will provide crucial, immediate funding that they are crying out for. It will encourage investment in infrastructure projects designed by the people who know exactly what needs to be done.

All of the measures in the package will act as immediate stimulators, giving the economy the jolt it requires to compensate for the sudden and unprecedented drop in private investment. The reason behind this package is simple. We shall not give up on Australian jobs without a fight. The main cost of a recession is not economic; it is human. It is the family struggling to pay off their home once the breadwinner is made redundant. It is the young person being knocked back at hundreds of job interviews simply because no-one is hiring. There can be little so demeaning, so corrosive to self-esteem and so damaging to a person’s confidence as being willing and able to work but being unable to find a job.

Our package is unashamedly about preserving jobs. We want to ensure that as many people as possible stay in the workforce. As well as being a social good, this will also be an economic good in the long term. Working Australians will be able to retain links to the workforce and not have their skills wither and their identities diminish during a period of unemployment. We have already seen employers making efforts to retain as many staff as possible, and they should be congratulated. They do this because they know that the cost of losing good workers and then having to rehire when the economy picks up will damage their business in the long term. Preserving jobs is the No. 1 concern of the government during this recession, unlike, unfortunately, some of those opposite who would wish to put thousands of jobs at risk by not supporting this package.

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