Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

The situation in Europe remains parlous and the spectre of unmanageable sovereign debt still hangs over financial markets, but this is not new news. Europe is an ongoing slow-motion train wreck. The difficulties will not be resolved quickly, and uncertainty and volatility can be expected to continue for years, perhaps even for decades.

Recent news from the United States, particularly on the labour market, provides hope that the United States might finally be entering a period of a sustainable recovery, although I recognise that it is early days yet.

More relevant to the prospects for Australia, China appears to be engineering a soft landing, against expectations in some quarters that the difficulties in Europe would also derail the Chinese dragon. I also note that there has been a significant shift in the attitude of China towards the IMF, and in part I expect that that is a recognition by China that they are more vulnerable to an economic downturn in Europe than they first thought.

Financial markets can provide a more timely reading of economic health than the official statistics on economic activity, which in part lag, and they are telling us that overall the global environment does not seem to be as parlous as it was in the closing months of 2011. The Reserve Bank notes in its latest monthly statement:

Financial market sentiment, though remaining skittish, has generally improved since early December. Share markets have risen and term funding markets have re-opened, including for Australian banks …

So I am a little surprised that the Treasurer scoffed at my earlier statement, given that he completely contradicts his own Governor of the Reserve Bank.

The Treasurer regularly accuses the coalition of talking down the economy. In this case, however, it is the Treasurer who seems to be putting, very publicly, a gloomy spin on the global situation. I am led to wonder why he would do that. The answer is clear. In his statement, the Treasurer refers to the Australian budget surplus five times—a surplus he has never actually delivered. That is right: this ministerial statement to the House is titled 'Ministerial statement on the global economy', yet the Treasurer manages to work in references to the domestic budget surplus he has never delivered, no less than five times. I can only conclude that he wants to link these two aspects so that if he fails to deliver his promised surplus in 2012-13—which we will find out in September 2013, of course—he can just blame the global environment. He blames everyone else for everything that goes wrong in this world. He never accepts personal responsibility for his own actions.

I note that the Treasurer's original commitment to a surplus remains a determination. However, given that he has been boxed in by his own Prime Minister with a 'we will deliver a budget surplus', I look forward to the $38 billion fiscal consolidation that he is going to achieve in one year. In one year he is going to achieve $38 billion of fiscal consolidation. He talks about $70 billion over four years. He is going to be the miracle man and do it all in one year! We look forward to that fiscal consolidation.

This is why the government makes Australia more vulnerable than it should be. It overpromises and underdelivers. Labor constantly blames the global financial crisis for its economic mismanagement. It seems to think it is the only government that has ever faced economic turmoil. Well, the coalition government did not have it too easy either.

We faced the Asian financial crisis of 1997-98, when most of our major trading partners were in recession or depression, unlike now, when our major trading partners have delivered us the best terms of trade in our economic history. It does have an impact on our economy. At that time—because I was there at that time, I well remember the Asian financial crisis—investors fled the region and fled Australia. There was a widespread expectation that Australia would be sucked into the morass. And of course we had the dot-com bust in the early 2000s, which led to a near recession in the developed world. On top of all of that, we had the worst drought in 100 years. So Australian agriculture was hit, Australian mining exports were hit and our export markets were in recession or depression, and at that time the Australian government continued to keep the Australian economy growing. We guided Australia through those difficult episodes with a sure hand and sound policies that were consistent. And do you know what? We were not biting away at each other on leadership issues the way the Labor Party are.

Mr Shorten interjecting—

How it undermines confidence when we have old Bill here—old Bill wants to go for the job; he is hoping he is the third man. Old Swannie has threatened to resign should the PM go. And where is Kevin? The Labor Party are so committed to the jobs of Australians that they are only worried about their own, while we are worried about the jobs of everyday Australians, the jobs that the Labor Party just do not care about. They are only focused on their own jobs. From our perspective, good governments focus on the challenges to the economy today. They focus on consistency in policies, and that is what matters at a time of global uncertainty. The government cannot keep using everything as an excuse not to get their own house in order and not to have consistent policy. We know global times are tough. As I have said on numerous occasions, they may well be tough, volatile in fact, for the next 20 years. We get that. But we want everyone else to understand that. And the best way to inoculate the Australian economy is to have consistent policies, stable leadership and a focus on inoculating our economy so far as you can against volatility in the rest of the world. A prudent Treasurer would adjust his fiscal settings to take account of this new reality, and he would do that by reducing spending to less than revenue to achieve a solid surplus.

This Treasurer is trying to ride the wave of the best terms of trade in 100 years into a budget surplus. It is not because he is cutting back on expenditure. No, the Public Service has increased by more than 20,000 since Labor was elected here in Canberra. But I say to you, Mr Deputy Speaker, that if you expect Australians to be careful with their money, to be prudent, then the government has to lead. That is hugely important in a range of areas. Let us remind ourselves of what Labor inherited from the coalition: the lowest unemployment rate in a generation. I was the minister for employment that left Labor in February 2008 with an unemployment rate of four per cent, the lowest in at least 20 years. Under Labor the unemployment rate has risen to 5.2 per cent.

As the Treasurer knows, the participation rate is actually falling, which means that if you look at the Roy Morgan research on employment there is going to be over the next few months potentially a significant increase in unemployment. From October 2011 to December 2011 some 37,000 jobs were lost within the Australian economy, leaving the number of people employed in December 2011 slightly less than a year before. That is right—there were no new jobs created in net terms in 2011. This is the first time in 20 years that there has been no net job growth—the first time in 20 years and the government are praising themselves as good economic managers.

Compare this with the record of the coalition. We inherited from Labor an unemployment rate of 8.7 per cent and more than halved it. We increased jobs in every year we were in office, even during the Asian financial crisis. Despite the global travails we faced, we improved the employment prospects for everyday Australians. That is what good governments do.

The Treasurer said he is pleased about the AAA rating. Well, we are pleased about the AAA rating because it is built on our efforts, it is built on our surpluses, it is built on our Future Fund, it is built on our low unemployment, it is built on the productivity in the Australian economy that this mob inherited and they continue to waste away. When it comes to Labor, you need to look carefully at what they do, not what they say. I can say that this is a Treasurer who said he is fiscally prudent. How embarrassing it is for him that at the last budget he said the budget was about jobs, jobs, jobs. He scurried out of the studio with Fran Kelly the other day after saying, 'Well, we are not going to achieve that jobs growth of the last budget, of course we are not. We said there would be 500,000 jobs created. It will be much lower than that.' At the same time he said the budget deficit for this current year would be $22 billion—and, miraculously, it is $37 billion. So he rabbits on about a $70 billion hole. This year alone, in six months, he has deteriorated the budget by $15 billion—in just six months. Not four years; six months, old sunshine. And they are accusing us of fiscal irresponsibility.

Now he says he is going to have the largest fiscal consolidation in Australian history since the early 1950s and he is doing it, he will claim, by cutting back on government expenditure. If he does it he is riding the wave of the best terms of trade in 100 years, but the structural deficit remains. The pain for Australians is down the track because this is a government that is engaged in the greatest waste of taxpayers' money in modern Australian history. Cheques for $900 to dead people, school halls where people did not want them and pink batts in homes where they did not want them or that caused death. This is the waste of Labor. And when it comes to consistency, particularly on the car industry, don't give us a lecture: it was the Labor Party that announced a green fund of over $1 billion and it was the Labor Party that ripped over $800 million out of it. So when it comes to good government you need fiscal consolidation, you need consistency of policy and you need strong leadership. (Time expired)

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