John Murphy (Lowe, Australian Labor Party) Share this | Hansard source

In speaking on Appropriation Bill (No. 5) 2008-2009 and Appropriation Bill (No. 6) 2008-2009, it is appropriate to address these bills in the context of the global financial crisis, which continues to confound even the most optimistic of economists and commentators. There is no doubt that the worst of the crisis is not over. There are many dangerous phases left to go, with inevitable consequences for the Australian economy.

We are now truly confronting the reality of a global economic recession. This is a crisis that has migrated from the financial system to infect the wider economy, with broad ramifications. The plummeting of values on balance sheets, portfolios and stock exchanges has resulted in a lower demand in consumption and, understandably, much lower investment. In an Australian Industry Group report entitled National CEO survey: a tough year ahead, Tom Imbesi, notes:

The global economic crisis will test business in 2009, as it starts to impact more fully on sales and earnings.

Expectations of weaker demand and earnings require a rapid and well targeted response. This means handling short-term easing of cash inflows through effective account management and deft management of costs.

He goes on to say:

While there is a natural tendency during a downturn to cut costs and reduce investment, this action often defers growth and causes opportunities to be overlooked.

Mr Imbesi’s observations highlight the need for strong, sustainable and responsible economic growth measures in the face of an insidious economic crisis. However, it would be unreasonable and unrealistic to expect an open economy like Australia to single-handedly resist the global economic tide. If anything, the crisis has demonstrated just how closely the world’s major economies are linked.

Our nation’s prosperity is built in no small measure on a strong international trade performance, particularly in agriculture and commodities. Yet six of our 10 largest trading partners are already in recession, significantly contributing to the $150 billion hole in Australia’s budget. Clearly, opening the door to global opportunities also means exposure to global risk, and Australia’s fate is now inextricably linked to that of other world economies. Our largest export market, Japan, has seen its GDP shrink to an annualised rate of 12.7 per cent in the December quarter—its worst result since 1974. The United States, the Euro zone and Britain are not far behind. Seventeen of the world’s advanced economies are in recession and 27 have had at least one negative quarter of economic growth. The cumulative effect of all these figures will be a likely fall in Australia’s export volumes, prices and revenues.

The global recession is not one the world had to have, but it is a recession that can no longer be avoided, as a result of the excesses of unbridled and unhindered capitalism. As the Prime Minister has previously mentioned, the financial crisis has proven that ‘it falls to social democracy to prevent liberal democracy from cannibalising itself’. Responsible governments around the world have recognised this. Responsible governments have intervened in these dangerous and uncertain times to secure industries, to secure jobs and to ensure that their respective countries are prepared to make the most of economic opportunities when they present themselves again.

There is still a great deal of value in the productive capacity of well-regulated, competitive markets coupled with appropriate government intervention. The Labor Party—the party of social democracy—has long stood for promoting the productive capacity of competitive markets, and rebuilding confidence in markets when necessary in order to save jobs. The current crisis is a global problem that requires a global solution.

For its part, however, the Rudd government has devoted all its resources to stimulating Australia’s economy and insulating it from the worst possible effects of global recession. Rather than stand idly by while the global recession wreaks havoc, the government has developed a broad range of initiatives to support families, to support small businesses, to assist first home buyers, to protect our financial sector, to improve the energy efficiency of Australian homes, to build social housing for the poorest Australians and to drive the biggest social modernisation plan in Australia’s history.

The common denominator in all these initiatives is that they are strong, sustainable and responsible economic growth measures designed to support Australian jobs. The Prime Minister has stated that he will move heaven and earth to support growth and employment in Australia, and no-one can doubt his conviction. The measures contained in these appropriation bills are a continuation of the government’s policy to manage the economy in order to achieve decent social outcomes—be they jobs, houses or schooling.

To support those people who have recently been retrenched and to secure the jobs of apprentices and adult workers who are vulnerable to redundancy in the current climate, Appropriation Bill (No 5) 2008-2009 will provide the Department of Education, Employment and Workplace Relations with funding for a range of measures—including an additional $43.7 million in financial support for employers and their apprentices, $38.9 million to assist apprentices and trainees to return to the workforce, $36.8 million to ensure that any worker made redundant receives immediate and personalised assistance to help them get back to work, $70 million to assist employees who have lost their entitlements due to the liquidation or bankruptcy of their employer and $11 million to community organisations which may face an increase in demand for emergency relief resulting from the deterioration in economic conditions.

While the government is doing all it can to limit job losses through the economic stimulus package and the Nation Building and Jobs Plan, it is also important to take action to help those who lose their jobs through no fault of their own. Immediately connecting Australians who have lost their jobs with employment services will make a big difference to their chances of finding work. Early intervention is the key to ensuring Australians remain ready for work and are well placed to find employment. In addition to one-on-one employment assistance, the Rudd government has committed to creating 66,000 new training places in 2008-2009 as part of the $2 billion Productivity Places Program.

Australia’s unemployment still remains low by international standards. However it is forecast to increase to seven per cent by 2010, representing 300,000 more Australians who could find themselves out of work than in December of last year. Unemployment has obvious economic implications for those that lose their jobs. However, the loss of one’s job transcends mere economics. Families could find themselves struggling to hold onto their homes, their possessions or, indeed, their aspirations.

That is why the government is investing record levels of funding into training, so that people can upskill in order to keep a job or get a job. It is also why we are investing billions of dollars to stimulate economic activity in every local community in every corner of our country. And, to that end, Appropriation Bill (No. 6) 2008-2009 will provide the Department of Infrastructure, Transport, Regional Development and Local Government with $1.189 billion in equity to the Australian Rail Track Corporation. The corporation is currently undertaking a significant infrastructure investment program, including improving the capacity, reliability and competitiveness of the nation’s rail freight network. By combining immediate cash payments with an investment in longer-term drivers of productivity, the government’s stimulus package strikes the right balance between immediate support for jobs now and delivering long-term investments for future economic growth.

Despite the crisis, now is the time to shape our future. No economist would doubt that the economic cycle will turn, and that Australia will be well positioned to benefit from the economic opportunities of tomorrow. The time is right for the Rudd government to focus on long-term nation building, to counter the likely reduction—as a result of the economic crisis—in business investment in training, research and development, and infrastructure.

As an export oriented country, the importance of free global trade as a driver of local economic growth—and a concomitant improvement in our international competitiveness—should not be in question. There has long been bipartisan support for the notion that world trade has been one of the drivers of global growth over the past six years. There has also long been bipartisan support for the view that trade is itself a stimulus because it has a multiplier effect on domestic activity. Yet, the former government could not understand that improving market access globally would be useless if Australian companies were not productive or competitive enough to take up global opportunities. The former government, in my view, did not understand that companies in Australia were continually hamstrung by capacity constraints because of its failure to invest in the drivers of economic growth, such as skills, innovation, information technology and infrastructure.

As the Australian Industry Group’s national CEO survey demonstrates, we cannot expect our exporters to carry a disproportionate amount of the weight in the current economic climate; and nor should we expect them to fight global competitors with one hand tied behind their back. Initiatives contained in this legislation alone will more than double the amount of coal that is capable of being transported to the Port of Newcastle from the Hunter Valley. This is the sort of nation building—capacity building—that will translate into job creation in the short, medium and long term.

So too is the government’s school modernisation program, which includes the building or upgrading of large-scale school infrastructure, the building of 500 new science laboratories and language learning centres, and the provision of up to $200,000 to every Australian school for maintenance and renewal of buildings. Schools are in every corner of our country and these works are an effective investment for creating construction jobs Australia-wide in the short to medium term. However, these works are also a long-term investment in our country’s future—an investment in our international competitiveness. Economists around the world are telling us that the 21st century will be about human capital—about knowledge, skill and innovation. So there can be no more important place to start our investment in human capital than in our children and in our schools.

The temporary costs of these initiatives are a very small price to pay for the security and the confidence that will be provided for Australian industries, Australian jobs, Australian families and Australia’s long-term economic performance. In my view it is outrageous that the opposition would rather risk plunging the economy into an even deeper downward spiral than offer its bipartisan support. Let us not lose sight of the central organising principle of each of the government’s stimulus packages: to do what is necessary to stimulate immediate growth, insulate our economy from the global recession and invest in the long-term drivers of economic growth. They are all important policy responses, not political fixes, to a global crisis that is not of Australia’s making.

The opposition need not rely on the Prime Minister’s or the Treasurer’s assurances; there is a veritable body of opinion from impartial observers. The Australian Industry Group has 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.

The Council of Small Business Organisations of Australia said:

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.

It does not stop there. Deutsche Bank Chief Economist, Tony Meer, said, inter alia:

… we cannot afford to make unforced errors, and not listening to Ken Henry would be one of those.

The opposition’s track record throughout the crisis in my view has left a lot to be desired, particularly the contempt it has previously shown to the Secretary to the Treasury and one of Australia’s pre-eminent public servants and celebrated economists, Dr Ken Henry. We have had 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 say the government’s packages, including measures contained in these bills, pass muster.

And it does not stop there. There are many neutral economists like Ross Gittins in the Sydney Morning Herald who write in support of the government’s package almost on a daily basis. If you examined Ross Gittins’ history, you would not say that he was a champion of the Labor Party. He is a very respected economist. Yet we find the opposition persists with providing a political response to a policy problem. This is serious. We can only hope that, with these bills, the opposition takes heed of the independent voices and organisations I have just cited, not the views of the Prime Minister, the Treasurer, the Minister for Finance and Deregulation or anyone else, and votes for these bills in the public interest, not the political interests.

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