Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

The honourable member is correct to point out that this government needed to make some spending decisions which resulted in the figures to which he refers. We needed to make those spending decisions based on the impact of the global financial crisis on this nation, and that meant that we needed to stimulate the economy. I know the honourable member and his party opposed that stimulus but we feel that it was necessary. We feel it was necessary not just because it would have increased the unemployment rate if we had not done do so—and put a lot of people on the unemployment scrapheap, with all the intergenerational impacts that that would have had—and not just because it would have driven many businesses, including predominantly many small businesses, out of operation if we had not done so. It was necessary and desirable to do it for the long-term fiscal strategy of the government, because, if as a nation you go into recession, you have a long-term debilitating impact on government revenue and government expenditure. It has an impact on government revenue because personal income tax and corporate income tax takes are down because economic activity is less, and it has an impact on government expenditure because welfare payments, predominantly through the Newstart allowance, are greater because the unemployment rate is greater.

So it is disingenuous to say, ‘Let’s not stimulate the economy now so we can keep the budget in surplus.’ I think the shadow Treasurer himself has recognised that that was impossible. There is no way the budget could have been kept in surplus during the global financial crisis, even without any stimulus. A stimulus was necessary and desirable to reduce the deficit going forward and to maximise the chances of returning to surplus, as I think the indication is that we have done by returning to surplus three years ahead of time.

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