Kelly O'Dwyer (Higgins, Liberal Party) Share this | Hansard source

I always love listening to the contributions from the member for Fraser. I think it is terrible what they do to him as he tries to defend the government's economic record, but he does try valiantly, and I am going to make a couple of comments on it tonight.

I rise to speak on the review of the Reserve Bank of Australia's annual report for 2010 and the House of Representatives Standing Committee on Economics hearing with senior members of the Reserve Bank, including the Reserve Bank Governor, Glenn Stevens, in February of this year. The House of Representatives Standing Committee on Economics is in fact the only committee that has oversight on monetary policy settings, which of course is why it is so significant. Also, it is the only committee that has the opportunity to question the Reserve Bank on monetary policy settings, and that happens twice a year. When speaking about monetary policy and the management of the Australian economy we cannot ignore the government's fiscal policy settings. This was also a feature of the report and has been a feature of much economic analysis subsequent to the report.

Tonight I just want to touch on a couple of overarching points. The government has cherry-picked aspects of the RBA's report and testimony to congratulate itself on its economic management of the Australian economy, for its handling of the GFC, its stimulus spending and the forecast surplus yet to be delivered. It blames events like Cyclone Yasi and the floods for having a negative impact on GDP growth, and its need to both tax more and borrow more at unprecedented levels.

Of course, there are other very important structural reasons why Australia came through the GFC. Give credit where it is due. It was the Hawke-Keating government that floated the dollar, allowing our exchange rate to dive at the end of 2008 to support our export industries. And there was bipartisan support for a wholesale funding guarantee for our banking system and for retail deposits in the dark days after the Lehman collapse. But it was the hard work of the Howard-Costello government in paying off Labor's $96 billion of debt and investing in the Future Fund that meant the national balance sheet was strong—strong enough to support those contingent liabilities. It was the coalition's regulatory reform agenda that struck the right balance between regulation and flexible markets. We introduced a dedicated prudential regulator in APRA, which conducted regular stress tests on the banks. We reformed the Corporations Act to facilitate faster and more efficient capital raisings. Our financial services reforms, while not perfect, stood in the way of a US-style subprime mortgage market emerging. A long history of stable coalition government and mature policymaking gave international investors confidence and reduced foreign capital outflows.

Our tax reforms improved budgetary stability during a volatile period. We left the country with a $20 billion surplus. It was the Howard-Costello government that enshrined the Reserve Bank's independence, with the RBA ensuring that our economy did not overheat, pre-GFC. What is more, our RBA was able to deliver a huge stimulus directly into the economy, because most Australian mortgages are floating rate.

Finally, the coalition ensured that we maintained and nurtured diversified trading relationships, including with China, because it has been China's massive stimulus spending that has underpinned the Australian budget. In contrast, the government would have you believe that we have seen off the GFC due to pink batts, BER blow-outs and $900 cheques. This is not sustained by a proper analysis of the evidence. We need a government that can set aside the spin and understand what drove Australian exceptionalism compared to the rest of the developed world during the GFC. Without that understanding, the government will invariably continue to make mistakes. It will continue to introduce regulation where regulation is not required. It will spend where it is unnecessary and counterproductive. And it will play political games with our international reputation, just as the government did with their first attempt at their mining tax. The latest budget is, of course, more of the same. From the latest budget papers we see that the budget deficit has soared to $49.4 billion and the forecast deficit in 2011-12 has blown out by $9.6 billion to $22.6 billion. We also have $107 billion in net debt. Something that the government also tried to do the other week and continued to try to do this week and also going into next week is lift our gross debt ceiling. This was already expanded in 2009 from $75 billion to $200 billion, and the government is trying to increase this further. These are all very important matters.

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