Steve Gibbons (Bendigo, Australian Labor Party) Share this | Hansard source

First of all, I would like to congratulate the member for Goldstein on looking so well. I look forward to working against him, and sometimes with him, over the next three years. I would also like to take the opportunity to thank all of the people who worked on Labor’s election campaign in Bendigo, in particular our campaign director, Bill Murray; our dedicated and hardworking staff; the many hundreds of volunteers; and, of course, my ever supportive wife, who has been a constant source of strength to me for the past 33 years. Through their efforts we were able to record a modest swing in Labor’s favour—one that was against the trend across the country.

Elections are an important part of life in our democracy and they provide both politicians and voters alike with an opportunity to evaluate the past term of the government and the alternatives that are on offer for the term ahead. This was the first occasion during my time as the member for Bendigo that I was campaigning for the re-election of a Labor government, and I certainly took time to reflect on what had been achieved over the previous three years for the people of central Victoria. That local record needs to be seen in the context of a global financial crisis that threatened to bring down the world banking system, with dire consequences for millions of people. When the action taken to avoid a crisis proves to be effective, it is all too easy to forget how real the threat was at the time.

I am reminded of how, now and again, we hear commentators claiming that the Y2K bug was a huge beat-up or some worldwide conspiracy to spend hundreds of millions of dollars unnecessarily on upgrading computer systems. But those involved assure me that that was not the case. Without appropriate remedial action, many computer systems would have stopped working, building control systems would have failed, businesses and government would have been severely disrupted and many lives would have been put at risk. But, through some good planning, effective management and a lot of hard work by a lot of people—and a modicum of good luck—serious disruption was avoided.

Here in Australia we appear to be witnessing a similar loss of memory about the global financial crisis. It is all too easy to think that there was no crisis in the world financial markets in 2008 and that the threat to the world’s economy is now over. There is a great temptation to think that talk of the world’s worst global recession since the 1930s is just scaremongering by politicians or more sensationalism by the popular media. But you only have to read the international pages of the newspapers to realise that much of the world is still in deep economic trouble. Europe is in the midst of a sovereign debt crisis, with the problems spreading beyond those that surfaced in Greece earlier this year. Contagion remains a real risk across euro countries as weaker economies drag down stronger ones. Indeed, European Union President Herman Van Rompuy called it a ‘survival crisis’.

The bailout of Ireland’s banks may cost Irish taxpayers as much as €75 billion. The Irish government is reportedly in talks with European International Monetary Fund officials about emergency funding to avoid defaulting on repayments. Portugal and Spain are also in trouble, with significant budget deficits. Like their Irish counterparts, Portugal’s banks are being kept afloat by cheap credit from the European Central Bank and the Spanish banks are plagued by the highest level of distressed loans since 1996. Growth in the United States is expected to slacken, consumer spending is expected to remain weak and jobs growth is likely to remain slow. The Japanese economic outlook is also weak.

So there can be no doubt that the economic crisis outside Australia is very real and very much still a threat. Equally, there can be no doubt that it was the early and decisive action taken by the federal Labor government in 2008 that mitigated the worst effects of the crisis here. As the OECD said in its economic survey on Australia that was released just recently:

The fiscal stimulus was implemented rapidly and targeted to credit constrained households and public investment. It proved highly effective, with a sizable impact on output and confidence …

Of course, this is just the latest in a long line of endorsements of the actions taken by the Labor government.

During an economic downturn, the private sector reins in its spending, cuts costs, lays off workers and waits for the economy to pick up again. When people are thrown out of work, not only is there a lot of personal stress involved but those people do not have as much money to spend and so the economy slows down even more, going into a vicious downward spiral. It was the unwillingness of governments to take effective action that contributed to the severity of the Great Depression in the 1930s.

We now know that, by increasing investment in spending to fill the gap left by the private sector, governments can stimulate domestic economic activity, keeping firms in business and people in employment. This is exactly what the federal Labor government did and the results are clear to see: Australia has the lowest debt and deficit of all major advanced economies, we have the lowest unemployment rate of all major advanced economies and Australia was the only major advanced economy to avoid recession.

The impact on my electorate of Bendigo has been dramatic. Schools, from both the public and private sectors, have received much needed investment in classrooms, trade training centres and other facilities. There has been investment in local community assets and infrastructure that will be of benefit for many years to come. Local businesses have been kept busy with new work that has enabled them to retain staff and, in many cases, create new jobs. In the city of Greater Bendigo alone, independent economic modelling commissioned by the city council showed Bendigo’s economy has grown by 27 per cent in the three years since the election of the federal Labor government. Following more than a decade of drought, it is very pleasing to see the city doing so well as a result of the hard work and enterprise of local business, supported by the economic policies of the Labor government.

Labor’s economic stimulus has contributed much of the $390 million of federal government investment to the Bendigo electorate since 2007. The effects of this spending can be clearly seen in the local construction sector whose output grew more than 46 per cent between November 2007 and May 2010 to $1.2 billion. There were 600 more jobs in the sector than three years ago—an increase of more than one-third.

Some other key findings in the report are that output from property and business services grew by 23.3 per cent to $886 million and mining output grew by 54.3 per cent to $616 million. And, of course, keeping businesses working and employing staff means that more money is spent in local shops than would otherwise be the case. This has helped Bendigo’s retail sector to remain the biggest local employer with an 8.6 per cent increase in jobs—an impressive result given the economic conditions.

This is the story of the Labor government’s stimulus spending in just one electorate, and I am very sure that this has been repeated across the country. As a member representing a regional constituency, I am particularly pleased that regional Australia has not been forgotten by the government and will benefit from these significant investments in the future.

But, instead of celebrating the success of a stimulus package that the OECD says is ‘among the most effective in the OECD’, the parties opposite—and their public relations spokesmen and women in the Murdoch press —have run a scare campaign about the very few projects such as some in the Building the Education Revolution program that have experienced problems.

The objectives of the BER program are twofold: first, to provide economic stimulus through the rapid construction and refurbishment of school infrastructure; and, second, to build better learning environments for our children. In order for these measures to have the desired stimulus effect on the economy, they needed to be implemented expeditiously. This has been recognised by both the Australian National Audit Office and the OECD in separate reports. In an audit report of May this year, the ANAO concluded:

There are some positive early indicators that the program is making progress toward achieving its intended outcomes.

It recognised:

… many of the issues arising were a function of the compressed timetable for the establishment of the program, given the prevailing economic downturn.

Mr Brad Orgill, the chairman of the BER Implementation Taskforce, told a Senate hearing earlier this month that the program was effective as a stimulatory measure. He said:

There is no evidence to say that value for money has not been achieved.

So two independent reports have found the BER to be effective and to provide value for money, despite the accusations from the opposition that the government had been inefficient in managing the program.

Let us now turn back the clock to another ANAO audit report. This one is from November 2007 and concerns the former Howard government’s notorious Regional Partnerships program. Between 2003 and 2007, the former coalition government allocated more than $409 million through this program. The ANAO found that the Regional Partnerships Program:

… had fallen short of an acceptable standard of public administration, particularly in respect to the assessment of grant applications and the management of Funding Agreements.

Furthermore, it concluded that during the first three years of funding:

… departures from the published guidance were a feature of the Programme.

This:

… resulted in funding being approved for projects that have either not proceeded as planned or which did not result in—

any community benefits. The Regional Partnerships program was not conceived in haste or in response to a global financial crisis. It was not necessary for these grants to be made expeditiously to stimulate the economy. There was simply no excuse for this gross mismanagement of taxpayers’ funds by the Liberal and National parties. Yet they now have the audacity to accuse the present Labor government of mismanaging parts of its economic stimulus program—a program that, I remind the House, was just recently praised by the OECD as containing many timely, targeted and temporary measures to boost consumption and investment and help to avoid a recession. The hypocrisy from those opposite is once again astounding.

As we learn from the recent Mid-Year Economic and Fiscal Outlook, Labor’s sound economic management is continuing to deliver strong economic growth. Strong job creation and falling unemployment are expected to continue. As the remarkable economic performance of our major trading partners in Asia continues, our economy is expected to grow at an above-average rate over the next two years, with real GDP forecast to increase by 3¼ per cent in 2010-11 and 3¾ per cent in 2011-12. The unemployment rate is forecast to fall to 4.75 per cent by the June quarter of 2011 and 4.5 per cent by the June quarter of 2012, returning to levels that we last saw before the global financial crisis. Inflation is forecast to be 2.75 per cent in the year to June 2011 and three per cent through the year to June 2012. One of the highlights of the latest MYEFO is a forecast of an additional 380,000 jobs over the next 18 months or so. On top of the 650,000 jobs that have been created since Labor came to government, this means there will be about one million more Australians in work than when we were first elected in 2007. That is an extraordinary achievement when you consider what is going on in other major economies.

As the OECD commented recently, the Labor government’s economic stimulus package was ‘wisely accompanied by a well-designed fiscal exit strategy’. Under this strategy, the federal budget is expected to return to surplus in 2012-13. At this time, the major advanced economies are forecast to still be in deficit by an average of six per cent of gross domestic product. Of course, the members opposite continue their scaremongering about the level of Australia’s public debt, even though this is expected to peak at just 6.4 per cent of GDP in 2011-12. This will leave Australia in a substantially stronger fiscal position than any of the major advanced economies. According to the MYEFO, net debt in the major advanced economies is expected to reach an average of 90 per cent of GDP by 2015, some 14 times higher than the expected peak in Australia’s net debt. And, of course, the money borrowed by the federal government has been spent on renewing vital infrastructure and other stimulus measures.

The government was faced with a choice when the global financial crisis hit. It could borrow nothing and let hundreds of businesses go to the wall and thousands of people lose their jobs or it could borrow moderately and responsibly and support Australian businesses and workers by investing in long-term infrastructure. This Labor government chose to borrow and invest, and without this decisive action thousands of Australian jobs would have been lost. The opposition continues to make out that Australia has a runaway debt problem, but how much you can borrow responsibly depends on how much you earn and your ability to pay the interest and repay the loan, just like when you take out a mortgage to buy your own home. Australia has borrowed a very small amount compared to its annual income, currently about six per cent. That is equivalent to somebody earning, say, $50,000 a year going to the bank and taking out a loan of $3,000. No-one could suggest that they could not easily afford to pay the interest and repay the loan. Australia is in a similar situation. The federal government is borrowing affordable amounts of money to invest in long-term infrastructure and can easily afford to pay the interest from its current income. In comparison, some major economies such as the United States and the United Kingdom are borrowing 60 to 70 per cent of their annual incomes, and Japan is borrowing even more.

If there were any concern about Australia’s level of debt, our credit rating would have been downgraded like that of Greece. That has not happened, and Australia is still rated as a AAA credit risk. That is one reason why the Nobel-prize-winning economist Professor Joseph Stiglitz described the government’s economic stimulus package as ‘one of the best-designed of all the advanced industrial countries’.

As far as the opposition’s credibility on economic matters is concerned, we only have to take a look at their record. First, they voted against Labor’s stimulus package and would have sent our economy into a downward spiral of lower incomes, lost jobs and reduced services. Second, the Leader of the Opposition and his economic team have been forecasting doom and gloom for almost two years. In February 2009, the Leader of the Opposition, Mr Abbott, said: ‘I think what we’re going to get is a massive debt and deep recession.’ The following month, former shadow finance minister Senator Joyce said:

… we’re heading towards a recession …

And in April 2009 the member for Goldstein, the previous speaker, an aspiring deputy leader and shadow Treasurer, predicted:

The recession will be deeper and longer because of the [Government’s] misguided spending …

Of course, we all know that Australia was in fact the only advanced economy to avoid a recession. With a track record of forecasts like that, it is clear that no-one should take seriously anything the opposition say about economic matters.

But, as the Labor government is one of the few governments to have successfully navigated through the biggest economic crisis since the 1930s, Australians can justifiably have confidence in Labor’s economic management and ability. In the last few days, our plans for fiscal consolidation have received a big tick from the OECD. It recognised that our economy has been one of the most resilient among OECD members, that our future prospects remain very favourable and that our growth potential is among the strongest in the OECD. The OECD said Labor’s response to the global crisis proved highly effective in supporting confidence and activity in our economy, which helped keep Australia out of recession. In the same week that the government released the Mid-Year Economic and Fiscal Outlook, it endorsed Labor’s disciplined fiscal strategy, saying:

The prudent fiscal consolidation strategy reinforces Australia’s commitment to sound public finances, the maintenance of which is one of the major lessons from the international economic crisis.

It is clear that the Labor government’s economic management since coming to office has been among the best in the world. The policies it has pursued, including taking early and decisive action in the early days of the global financial crisis, have been endorsed by the OECD, the International Monetary Fund and many of the world’s leading economists.

As I have outlined, these policies have had a marked impact in my electorate. Economic activity has been increased, local businesses have been kept working, local jobs have been supported and there has been major investment in the region’s economic and community infrastructure. I now look forward to serving the people of central Victoria during the second term of the Labor government and building on what has been a commendable record of achievement during difficult economic circumstances.

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