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

The International Monetary Agreements Amendment (Financial Assistance) Bill 2009rather a mouthful—extends the current arrangements that we have with the International Monetary Fund to include the World Bank and the Asian Development Bank. Under this bill the Treasurer will be permitted, as he is now in relation to International Monetary Fund programs, to lend money or enter into currency swaps with a country where at least one other country or organisation has provided or intends to provide assistance to that country in connection with a World Bank or an Asian Development Bank program. The amendments are therefore closely based on provisions already in the act that cover the IMF.

The primary purpose of this bill is to allow Australia to enter into a loan with Indonesia for $1 billion. This was announced by the Prime Minister on 10 December last year. This $1 billion loan will form part of the World Bank led package to assist Indonesia through the current global economic downturn for the calendar years of 2009 and 2010. My understanding is that the loan has not been activated yet; it is a standby facility. However, it can be activated if certain criteria are met. The coalition support this legislation because we undertook similar activities in the past when we were in government. During the Asian financial crisis it was entirely appropriate to provide emergency assistance and support to our Asian neighbours during very difficult times. We did that in 1998 when we amended the International Monetary Agreements Act in response to the Asian financial crisis.

Economic stability in our region helps with political stability. That is why we need to take a responsible approach as a good regional neighbour, particularly with our closest neighbours. Indonesia—a country I have been to on a number of occasions—is a very important strategic friend of Australia and it is important that we undertake this sort of support. Of course, we do it not alone but in conjunction with international financial institutions such as the IMF, the World Bank and the Asian Development Bank. It is part of a coordinated approach.

Australia obviously has the capacity to do this. As a nation we are in reasonably good economic shape today—certainly very good shape compared with other nations—because when we entered into the global financial crisis we had money in the bank, no net debt, surplus budgets and a low unemployment rate of around four per cent. It is easy to lend money to others in need when you yourself have a surplus of money. It is much harder if you are lending money and you need to borrow it yourself. I make the point that there is some irony in the fact that we are borrowing money to fund ourselves to lend money to other nations. Australians will understandably ask the question whether it is a good idea for us to be in the business of borrowing money to fund our day-to-day activities, which is what the Rudd government is doing, and at the same time lend money offshore—whether it be $1 billion through this initiative to Indonesia or $10 billion to the IMF potentially going to eastern Europe. Australians are rightfully entitled to ask the question: are we now in the business of borrowing money to lend money?

After all, didn’t the whole global financial crisis start with individuals borrowing too much money and with banks lending too much money? Isn’t that how it all started? Now it is simply the case that governments have become substitutes for the private sector in borrowing lots of money. Ultimately, whether it be the private sector or the public sector, if you are borrowing money someone has to pay it off. Let us be frank about it: it all comes down to the same person—the taxpayer. Whether it be a taxpayer repaying a debt to the bank or a taxpayer paying increased taxes for fewer services to the government, if money is being borrowed it has to be repaid. When we as a nation are in the position of borrowing money to lend to other countries, we would want to be absolutely sure that the money that is being lent is for prudent and responsible economic and even political reasons. We believe providing financial support by providing this facility to Indonesia is prudent.

I am going to take the opportunity in the debate on this bill to talk a little about debt. I do so because the Rudd government yesterday in declaring ‘mission accomplished’ on the economic downturn were effectively saying that there is no recession and there is no economic downturn of the massive scale that is going to take Australia into negative territory. What they are saying is that it was prudent to borrow money to hand out cash to people in the community. As we dig into the national accounts figures from yesterday, we start to peel the onion and discover what really is behind the spin of the Rudd government.

Obviously we have identified, as have many economists, the point that the underlying data is of great concern. A number of states in Australia, if you apply the broader definition of recession, are in recession. What we can identify is that the very significant collapse in imports in the last quarter and the marginal increase in exports delivered a massive boost to GDP of 2.2 per cent, which I might add is the largest contribution, as I understand it, quoting from market economists, of any export figure to GDP in a quarter.

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