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

With all due respect to the honourable member, I am not sure that Dr Gruen would agree with that characterisation of his comments that he was calling for a massive winding back of the stimulus. In fact, I know that Dr Gruen would not agree with that characterisation of his comments and that, if he were able to be here, he would make that point very strongly. The fact of the matter is that the shadow Treasurer has made this case repeatedly, and he has repeatedly got it wrong. He repeatedly argues that for some reason Australian government debt, Australian government expenditure, is putting upward pressure on interest rates. Of course, there are circumstances where government spending can put upward pressure on interest rates. Indeed, the honourable member as a member of the previous government would be fully aware of that, because that is what they did. They were determined to spend their way out of the boom. They were determined, despite the terms of trade and the economic conditions at the time, to increase government expenditure very substantially.

We faced a very different set of circumstances. We faced the circumstances of a global financial crisis and a reduction in economic activity. Accordingly, we stimulated the economy but we did so in such a way that the stimulus was designed to wind down as economic growth picked up. This was a very deliberate design feature of the economic stimulus package. For example: the first home owner boost wound down at the end of last year; the improvements to depreciation, the upfront capital allowance, wound down and have now washed through the system. Indeed, if you look at the proportion of our stimulus spending, which was being spent upfront and early compared to that in many other nations, we have a very good story to tell. The honourable gentleman argues, and the opposition argued at the time, that, for example, the stimulus payments direct to households were inappropriate. We disagree. They were appropriate because they stimulated the economy quickly and early in the cycle, and that was when it was necessary to do that. It washed through the system very quickly. It stimulated the economy and it has now washed through. The stimulus is being wound down.

So I strongly disagree with the honourable gentleman’s characterisation of Dr Gruen’s statements. I strongly disagree with the central tenet of his economic argument that this government is somehow putting upward pressure on interest rates. I also strongly disagree that in any event, with Australian government bonds on issue being 0.001 per cent of bonds on issue throughout the world, the Australian government is putting upward pressure on interest rates. If I could take this opportunity to say to the member for North Sydney in further response to his previous question: I am advised that that information from the AOFM is on the website.

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