Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

What we have seen today is basically a government taking all the credit they can for every tiny bit of good news they can eke out of the economy. But let us just take them through a history lesson. Eight to 10 months ago the great leaders of the world came together at the G20 and were looking for solutions to the crisis that faced them. What Mr Rudd took to those meetings was an economy in fantastic shape, an economy with a wonderful banking and financial sector and an economy gifted with the commodities that could see it through a crisis. Most importantly of all, Australia could look to those commodities and look to the balance sheet to stimulate its economy if it needed to.

We do not need to reinvent the economic history here, but we are looking for a government that realistically places credit where credit is due. Today we have a government that is quite adept at spending—it has done it exceptionally well, as has been pointed out already by the speaker before me. What this government has not yet shown is any strategy, any map, to take us out of the abyss of debt. We have a government that has taken easy decisions. We have a government that has failed to show how it can raise any revenue at all. I think the speaker before me on this side of the chamber referred to the range of tiny taxes attacking the vulnerable and the small groups in society, but there is no willingness to allow the buck to stop where it really counts on tax reform—and that reform remains months and months away. So Australians at home and around the dinner table, Australian families who balance the books in their own family every week of the year, are right to be concerned, and it is because of that concern that this MPI has been proposed.

Let us look at Australia in the context of it being an economy that had a reformed and regulated financial and banking sector the envy of the world. When a new Australian Prime Minister went to the G20, we can understand that he was caught up very much in the excitement. He was after the pic facs, standing next to Mr Obama, his idol. Of course, he was hearing, rightly, the concerns of countries that did not have our enviable financial sector—our regulations around banking, our net interest margins, the protections that our banks can offer and our cost-to-service ratios, which only one other country can boast, and that is Canada.

As we watched those countries that were and were not in banking crisis, we saw one cohort heading south and another cohort performing well. Let us go through the countries. Norway, Canada, Australia, Finland, a range of countries that did not have a banking crisis, were able to actually generate activity through the last eight to 10 months. Do not take my word for it; let us look at all the OECD economies and see how they performed. The great challenge for the government is that they are looking for comparable economies, and there are none. There is no comparable economy to Australia. We need to look at all of them and identify exactly what determined our rather charmed path over the last 12 months.

The answer is this: we had a great and well-regulated financial sector. That is the first thing. Let us look at all those countries that were well regulated. They have travelled very well. Let us look at their unemployment. They started with the same unemployment rate 12 months ago—5.3 per cent, or 5.5 per cent for those that went into banking crisis. What have we seen in the last quarter? We have seen unemployment rising three times faster in economies that are in banking crisis—3.3 per cent in the first quarter versus 1.1 per cent for those that were not in banking crisis. Australia is in a fundamentally better position because of that.

Second, we have an economy based on commodities: food, resources, natural gas—all of the vital antecedents that are required for growing economies like India and China. Australia was able to provide those things right through this year. What we saw was a slight weakening of the terms of trade. But if you just take the economies—and I have made my first point about the banking crisis—that were not in crisis and you look at those that had commodities to call upon over the last 12 months and those that could not, economies like Canada, Norway and Australia contracted by about 0.8 per cent. Those that did not have the commodities contracted by 4.3 per cent.

We are a gifted nation, it has been said before. Many have criticised Australia for not being adequately diversified, but let us remember that over the last 12 months it was those terms of trade that pulled us through and out the other side. Just look at those figures, the exports that dominated our GDP figures. It is a very difficult case to mount that splurging $21 billion in cash payments did anything more than pay off pensioners who desperately needed those payments, and the rest of it, the great majority of it, was saved. Let us have a look at those payments in March and April. It is right to point to the five per cent increase in retail sales. It is right to point to a two per cent increase corrected over the last 12 months. But between $23 billion and $25 billion is an extraordinary price to pay to prop up retail sales. Jobs were certainly created, but many of them would have been created anyway through the commodity boom and the confidence that flooded through Australia with a stable residential housing sector. We never lost a beat.

Let us look at some comparators. In this country we stimulated roughly the same as America when you allow for the fiscal expansion, due to some of their pre-announcements of tax cuts. Australia stimulated like America. Did we ever have the concerns America had? Did we have the financial meltdown that America had? Did we have the housing overbuild that America had? So why did we stimulate?

Let us go and look at the lessons from the OECD, who were encouraging economies to stimulate at between two and three per cent of GDP. If everyone put their shoulder to the wheel and did their part, we were confident that we could minimise the damage, the human toll that was referred to by the minister earlier. Did Australia do that? No, they did not. Our Prime Minister was effectively a young child who rolled over one day, tickled the cat on the tummy and saw that there was a fully paid off credit card when it jumped up. He could not wait to spend it. This is a government that never, ever paid into the credit card in the first place, so we can understand they are not terribly attached to the notion of how to pay debt back. As has been explained by a former leader, it is easy to go down on the escalator into debt but it is very hard to go up because the only way out is up the stairwell. We are yet to see the government’s strategy. There are only steps out of here and none of those steps are easy for the Australian people, for Australian families or for you in government. You have to map out some kind of strategy between now and the next budget.

So what are those three wonderful attributes that Australia was able to boast long before we even encountered this crisis? We had a robust banking system, a commodity based economy and a relatively small high- to medium-tech manufacturing sector, less than four per cent. That was the sector that truly crashed in the global meltdown. Reference those Asian tiger economies that crashed at near double-figure GDP falls, that registered those kinds of GDP falls. Lastly, we had the fully paid off government debt. Let us be frank about it: if we look at all nations that were in debt, we know that for every eight per cent of government debt there was a one per cent fall in GDP in this crash. Very handy to have no debt whatsoever, but something that was not terribly treasured or respected by the other side of the House. There is a simple reason for that. I cannot remember whether the group over there ever had any role to play whatsoever in paying off the debt that they left behind in 1996.

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