Jennie George (Throsby, Australian Labor Party) Share this | Hansard source

In my introductory remarks on Appropriation Bill (No. 1) 2009-2010 and cognate bills, I want to say a few words about the very opportunistic campaign that is being run by the Leader of the Opposition and the members of the shadow ministry concerning the issue of deficit and debt without ever putting the reasons for our budget deficit and the reason for our borrowings in any kind of genuine context. The opposition must surely know—the Australian people know—that most of the deficit projected in this budget, the deficit of $57.6 billion, has been caused by an unprecedented global recession coming at the end of the mining boom. The previous government was not cognisant of the impact the end of the mining boom would have, hence we are now looking at debates about the issue of a structural deficit, the legacy of the Howard era. So the global recession and the end of the mining boom have naturally led to a huge loss of revenue both now and in the forward estimates, and it is in this context that the government has seen the need to borrow.

In the last couple of days and constantly in question time, we have seen exemplified this ongoing political opportunism that we first saw displayed in the rejection of the nation-building and jobs bill earlier this year. As we continue to point out, the most obvious demonstration of the insincerity and hypocrisy of members of the opposition is that they voted against our stimulus package but cannot wait to get out there and be photographed when the results of that package are being made known to their local constituents.

I looked back to see what I said in the debate about the legislation for the earlier stimulus package. I just want to quote a bit of what I said then, because I think it is highly relevant to the debate on this budget and these appropriation bills. I said that it was ‘an unprecedented package for unprecedented times’, and so it is with the bills before us. We are living through an unprecedented era, an unprecedented global meltdown—the worst since the Great Depression. If the opposition do not get that then I think the Australia population at large clearly does and is thankful that at least we have a hedge against the worst excesses of this downturn that are being experienced by many comparable nations. As I said back in February in the debate on the nation-building and jobs bill:

We cannot afford to turn a blind eye to the consequences of this crisis and its impact on Australia. We cannot afford—

as a government—

to sacrifice jobs and economic output, because to sit around and not take bold action—

which is where the opposition were heading with their rejection of the package—

or not give a clear and consistent commitment to solving the problems, would leave our economy and our nation even more exposed …

So it is as a result of these unprecedented global circumstances that, inevitably, we have had to revise projections on several occasions, and those revisions have been based on the best advice from competent, Treasury officials—and I find the consistent attacks on their integrity by members of the opposition really shameful and totally unwarranted. And what does the best advice tell us? As the budget indicates, we are looking at zero growth in 2008-09, with a contraction of 0.5 per cent in GDP in the subsequent financial year. It is precisely because we are in that kind of recession that our focus as a government has been on stimulatory packages and public demand—to offset the contraction in private demand within the economy so that we can minimise the overall negative impacts on households and jobs.

Our strategy all along has been to support the jobs of today by building the essential infrastructure we will need when we come out of this global recession. It has always been about a stimulus that provides some assistance in the form of disposable income for those who are feeling the pressures of the recession. And, as we know, a substantial proportion of allocations went in the first round to the Community Infrastructure Fund. Every council that I have heard from has welcomed that stimulus.

What else does the budget tell us? It tells us that unemployment is expected to peak at 8.5 per cent in the second half of 2010. Let us hope that prediction is right, because it is far lower than the unemployment rise that we saw in previous downturns. There is no doubt that if it were not for the stimulus packages the peak of unemployment would rise to around 10 per cent. That is what would happen if we did what the opposition urge us to do, which is to sit around and fail to act decisively. All we continue to get from the feeble opposition is politically opportunist attacks not just on our strategy but on the integrity of Treasury advice, with never any clear enunciation of the alternative strategy that they would put in place to deal with these unprecedented circumstances.

What really appals me about that is that this debate is about real people, real jobs, real households and real families. The budget tells us that without the stimulus there would possibly be some 200,000 additional Australians feeling the brunt of unemployment were it not for our nation-building investments. We have heard a lot about cash splash, but they never tell you, do they, that 70 per cent of our economic stimulus is for nation-building infrastructure. This budget provides the biggest school modernisation program in our nation’s history. It provides unprecedented levels of investment in roads, rail, ports, hospitals, broadband and major solar energy projects. Treasury estimates that the budgetary stimulus will see the real level of GDP some 2.7 per cent higher than otherwise would be the case in this financial year and 1.5 per cent higher in 2010-11. The whole purpose of our nation-building investments is to shield real people and real jobs from the negative consequences of the global situation.

As the budget also indicates, tax revenues will be $210 billion less over five years, with a budget deficit of $57.6 billion. It is patently dishonest to present this as some kind of reckless spending spree by a Labor government without understanding that, naturally, we have to borrow to cover the deficit which has been caused by a downturn in revenue—through no fault of the government. It is a consequence of the meltdown in global circumstances. The forecasts in the budget show gross debt reaching $300.8 billion in 2012-13 and net debt of $188 billion in the same period—or 13.8 per cent of GDP.

When the opposition are out running their terrible scare campaign about debt and deficits, they never tell you how Australia is faring by comparison with other countries. They hide that truth from the electorate. As our Prime Minister indicated yesterday in question time, Australia’s net debt performance is the lowest of all the major advanced economies. He indicated that, when net debt peaks for Australia at 13.8 per cent of GDP, the average for the major advanced economies will be 88.7 per cent of GDP. The figure for Australia will be 13.8 per cent at the peak and for major advanced economies it will be, on average, 88.7 per cent. The figures are: Japan, 131 per cent; the UK, 80 per cent; the US, 80 per cent; Italy, 125 per cent; Canada, 28 per cent; France, 79 per cent; and Germany, 84 per cent. Why don’t you tell the Australian people, when you are out there scaremongering about the level of debt and borrowings, what the true position of our nation is by comparison to all others? As the Prime Minister said yesterday in answer to a question, when our net debt peaks at 13.8 per cent of GDP, it will represent not just the lowest of the other major advanced economies; it will be something like seven times lower.

No-one wants to be in the situation of having large borrowings, so we have made a conscious commitment that we will put a cap of two per cent on future spending. With the expected bounce-back in economic growth, our plan is to return the budget to surplus in seven years time. Again, another debate rages about the forecasts that are made for economic growth. Treasury have told us that they are forecasting economic growth in the order of 4.25 per cent in 2011-12 and 2012-13 and four per cent a year thereafter. There has been ongoing debate about those figures. Some claim that they are overly optimistic. The Leader of the Opposition has said that those projections are ‘completely unbelievable’.

Let us look at the explanations for those figures. I think they are pretty compelling. I would like to hear an argument as to why those projections are not compelling. The projections do indicate a strong bounce. Why? Because after three years of below trend growth there will be an upswing, particularly due to the nature of this recession, which people have described as a U-shaped recession. We will expect a strong bounce-back when the economy turns. So there will be higher rates of growth because we will be coming off a low base of three years of below trend growth. Coupled with that, the slashing of interest rates has been stronger and stimulatory spending has occurred faster than in earlier downturns. We acted quickly and decisively early in the piece to shield our economy as much as possible. The earlier boom in mining investments should make a bigger contribution, together with public investment in infrastructure, to productivity growth in the upswing.

As I said earlier, the Leader of the Opposition just asserts that the projections are completely unbelievable but never gives us hard data on which he bases those misguided judgments. For example, he does not tell us that in the 1990s there were six years of growth above four per cent. So when we are talking about four per cent beyond 2012-13, that is not completely unbelievable. It is, in fact, comparable with six years of growth above four per cent in the 1990s. I like this little quote from one economist. He said, ‘The debate is a little surreal,’ because Australia’s position is so much stronger than other countries, and that ‘folks with mortgages five times their income need to understand that the government is taking on gross debt of less than 100 per cent of revenues’. So, again, what we have had is scare campaigns, scaremongering and talking down the economy. Ross Gittins, who always makes economic issues understandable to the lay person, said:

The budget’s forecasts are plausible. But plausible doesn’t mean omniscient.

I take his point. They are the best estimates, the best forecast, based on the professional advice and integrity of Treasury officials, who do not have a political agenda to run.

The budget, shaped in very difficult times, has generally been well received in my electorate of Throsby. I just want to refer to a couple of features of the budget. The long overdue increases for pensioners, especially for single age pensioners—whose plight did not touch the Howard government, in all the time it was in power, in terms of raising the level of the basic pension rather than just the supplements that were handed out—has been very well received. I also particularly want to mention and commend the Minister for Health and Ageing for what appears to be a small measure but which has a marked impact on families whose children who suffer from epidermolysis bullosa, commonly known as EB. Our budget provides a national $16.4 million program which will substantially improve affordability and access to specialised bandages and dressings. Two young children in my electorate, Jayden and Billy, were diagnosed with EB at birth. Their parents, on a single income, have up to now spent around $900 a month on bandages, pain relief and other medical needs, with no financial assistance. I know members of the opposition have also spoken on this issue—the member for Cook raised the matter in parliament, and I spoke in that debate. This commitment shows that, even in the most difficult times, Labor values can still shine through.

The budget announcement in relation to the raising of the qualifying age for the age pension, however, was not well received. That is not surprising in an electorate like mine where many workers are involved in difficult manual labouring jobs in a labour market compounded by ongoing and persistently high unemployment rates. But I have to point out there has been some confusion about what this change means. The change is about raising the qualifying age for the age pension from 65 to 67 by 2023. The change is not about raising the retirement age or the age at which workers can access their superannuation. Even so, as a government we will need to give a lot more compassionate consideration to the implementation of this measure or else it is inevitable that thousands more workers will end up on the disability pension or at the end of unemployment queues, with no job opportunities and no light at the end of the tunnel.

I take the liberty tonight of referring to the comments in today’s media by my longstanding friend and former Secretary of the ACTU, Bill Kelty, and former Prime Minister Paul Keating, the architects of Australia’s wonderful superannuation system. Bill Kelty rightly argues that, in the negotiations between the then Labor government and the unions, it was agreed that ‘superannuation wasn’t simply a substitute for the old age pension’. He went on to say that raising the preservation age would be ‘an abrogation of the fundamentals’ on which the retirement system was built. Well said, Bill. I have no doubt this debate will continue. On our side of the House we must surely remain committed to maintaining one of Labor’s proudest social achievements.

I welcome also the provision in the budget to our local university. The budget provided $43.8 million to the University of Wollongong for a new Institute for Innovative Materials—Processing and Devices. That comes on top of the $35 million injection of capital funding into the SMART Infrastructure Facility. Our university is a wonderful one, and it is through the university that we are able to diversify our local economic base, which has always been heavily reliant on coal, steelmaking and other manufacturing jobs. So, well done to Gerard Sutton, the vice-chancellor, and his staff for presenting an excellent submission to government. In all, the university has benefited from more than $100 million in capital funding from the Rudd Labor government, on top of the wonderful investment we are getting from Building the Education Revolution. That is a wonderful investment that the opportunists on the other side of the House voted against, but of course they are out there wanting to be photographed when the announcements are being made.

Let me end on a positive note which I hope highlights why I am so pleased with the budget. In March this year the unemployment rate in the Illawarra region was 8.3 per cent. In April it had fallen to 7.4 per cent. For the Wollongong statistical region, the trend was down as well, falling from 9.1 per cent to 7.4 per cent. Let us hope this trend—a one-month trend, but at least it is heading in the right direction—is sustainable in the months ahead. I believe that, if not for the stimulus packages and the infrastructure investment that is continued in our budget, this decline in the unemployment rate would not have occurred and the trajectory would have continued to rise. This, in my view, is the best advertisement for the government’s economic strategies, the strategies that underpin the decisions made in the budget. And of course, as always, if the truth is told, those strategies are based on contending with global circumstances of an unprecedented nature that every country in the world is living through. On that, I rest my case.

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