Clare O'Neil (Hotham, Australian Labor Party) Share this | Hansard source

Thank you very much for this opportunity to make a contribution to the debate on the Tax Bonus for Working Australians Repeal Bill 2013. I am rising to make some comments on a bill which has, as has been pointed out by some previous speakers, a very limited economic impact. It tidies up the delivery of some of the $900 tax bonuses provided by the Labor government to protect Australia during the global financial crisis and ensures that those bonuses can no longer be distributed now that the crisis has been averted.

I will talk a little bit more about the specifics of the legislation shortly, but I think it is very important that we place this legislation in context, and to that end I want to talk a little bit about Labor's record during the global financial crisis. I got to see the global financial crisis unfold firsthand. I was living in Boston from 2006 to 2008 and remember the first time I read about mortgage defaults. It was on the front page of TheNew York Timesa big story about families in Florida having to put the keys to their house in an envelope and send them back to the bank because the size of their mortgage had exceeded the value of their property.

In the following summer I worked in the Global Corporate Client Group at the New York Stock Exchange. Those of you who are keen observers of financial markets will remember that, during the mid-period of the 2000s, we saw a number of big private equity firms float on the stock exchange with staggering results. In the later period of the decade, we saw them float on the stock market and there were some early rumblings about what we would see flow through those financial markets later. It was really the beginning of what would end up being a devastating lack of confidence running through markets around the world. At that time back in Australia, the Rudd government was putting in place a set of policies that would genuinely—and I really mean this—come to be the envy of Treasury departments and governments around the world.

What was the package that we are referring to? There were two elements to it. The first was that the Rudd government spent about $95 billion trying to stimulate economic demand in the Australian economy over four carefully timed, carefully constructed waves. There was a mix of household stimulus—and the legislation before us today relates to the distribution of that funding—and investment in shovel-ready projects. People who have been members of the House for a long time will have enjoyed the experience of going around to open BER buildings in all their primary schools. That was part of this funding. The second element was the banking deposit guarantee. The government stepped in to guarantee bank deposits up to a million dollars in financial institutions around the country. This was an enormously bold measure. It allowed those financial institutions the confidence to continue to access funding. If that had not happened, lending could have collapsed, leading to all sorts of ramifications across the economy. As consumers, it made us confident that we would be able to continue to access our deposits in those banks.

In retrospect, when we describe those measures in the House today, they seem simple and obvious, but I think we need to take ourselves back to around the period of 2008 and remember that this was very controversial at the time. It encountered massive opposition from the Liberal Party. It is easy for us to forget how scary this period was. At one point, Goldman Sachs stock dropped 50 per cent of its market value in a single morning. In September 2008 we watched Lehman Brothers, a massive global bank, collapse—26,000 employees. I think it is the largest US company to ever go into default.

Governments around the world baulked in the face of this challenge. It was truly a scary time. The papers were full of economists with widely varying views about what should be done. The two measures that were put in place by the Rudd government were the primary elements of what was ultimately lauded as a brilliant strategy. Of course, the member for Lilley was named Finance Minister of the Year in 2011.

What is particularly interesting about this is how unique Australia was in its approach to this. It is not as though all countries around the world were doing the same thing and Australia was following suit. We were actually the pioneers of this strategy. These probably sound like big claims, but you do not have to believe me on this. You do not even have to believe our shadow Treasurer or other Labor members of parliament. You can trust people who do not have a stake in this. We heard a little bit from Joseph Stiglitz this morning. You would find no finer economist. His comments about Australia's reaction to the global financial crisis are pretty well known. Joseph Stiglitz is a Nobel prize winner in economics and a professor of economics at Columbia University. He said:

Most countries would envy Australia's economy. During the global recession, Kevin Rudd's government implemented one of the strongest Keynesian stimulus packages in the world. That package was delivered early, with cash grants that could be spent quickly followed by longer-term investments that buoyed confidence and activity over time. In many other countries, stimulus was too small and arrived too late, after jobs and confidence were already lost.

Not so in Australia. He went on to say:

In Australia the stimulus helped avoid a recession and saved up to 200,000 jobs. And new research shows that stimulus may have also actually reduced government debt over time.

…   …   …

Australia may have successfully dodged the global crisis, but some politicians seem to have missed the lessons it taught the rest of the world. In this election—

referring to the last election—

the conservative side of politics has foreshadowed substantial cuts to the government budget. This would be a grave mistake, especially now.

He said that Labor actually did a fantastic job in saving our country from problems. There we have Joseph Stiglitz, one of the most famous economists in the world, talking with great enthusiasm about how the Rudd government responded to the global financial crisis.

But we did not hear it just from Stiglitz; the IMF made similar comments. The IMF singled Australia out as the developed nation that is furthest ahead of the pack. It said, 'Australia and the newly industrialised Asian economies are off to a strong start and will likely stay in the lead.' In the country report of August 2011 the IMF referred to the ability of Australia to create a second budget stimulus package if there is another global economic collapse, and it also referred to the room to move that we have on interest rates. That report also noted an endorsement of Labor's carbon price policy. One need not wonder what the IMF would report about the coalition's Direct Action Plan, once the details are revealed. Five months after an election, we still we know very little. The cynics amongst us might wonder whether the government knows either. Time will tell.

We also heard some enthusiastic comments from John Howard about the response of the Labor government to the global financial crisis. He said:

When the Prime Minister and the Treasurer—

The member for Lilley at the time—

tell you that the Australian economy is doing better than most, they are right.

Our debt to GDP ratio, the amount of money we owe to the strength of our economy, is still a lot better than most other countries.

I think it is worth pausing on this point about public debt, because we do hear a lot of scaremongering across the chamber about the levels of public debt in Australia.

Let us avoid the rhetoric and look at some of the facts. Where did the last Labor government leave us in terms of debt levels? When Labor left office, Australia's debt per capita was the third lowest of any developed country in the world. When you look at our debt to GDP ratio at August 2013, we were the lowest of any developed country bar Luxembourg. The scare campaigns have no foundation in fact. That does not mean that we should not be vigilant; we are spending taxpayer funds and it is not that we do not need to be concerned about this. We cannot take our eye off the ball. But, by global standards, Labor left Australia's budget in excellent shape.

For all we hear from the other side, it is worth thinking through what we saw when the coalition left office last time. If you look at the ABS figures comparing the full term of the Labor government with the full term of the last coalition government, we can see that average expenditure as a percentage of GDP was 24.1 per cent under the coalition and 25.1 per cent under Labor. The end-of-period net debt as a percentage of GDP was minus 3.8 per cent under the coalition and 11.7 per cent under Labor. So for all the concerns we hear from the other side of the chamber about fiscal issues, I think the facts show that Labor left the budget in excellent shape—especially when we look back at the condition the budget was left in by the last coalition government.

We have talked about debt; I now want to spend some time on something that is perhaps more tangible to ordinary Australians and certainly something that is raised more frequently by my constituents in Hotham, and that is, of course, jobs. We talked about the comments of Joseph Stiglitz, the IMF and John Howard, but another organisation that has recognised the excellence of Labor's package is the OECD. It noted that, through the stimulus package, the Rudd government saved about 200,000 jobs. It is a matter of fact that, across the period of the last Labor government, almost a million jobs were created. The unemployment rate during that period was low—under six per cent.

Let us think about that in a global context. When we look at Europe, in particular, we see some terrible unemployment rates. During the period that we are talking about, the unemployment rate in Spain was 25.8 per cent; in France, 10.8 per cent; in Portugal, 15.4 per cent. This is looking at the population as a whole. When we look at young people, we see much more profound unemployment rates. The youth unemployment rate in Spain was 50 per cent and in Greece it was 60 per cent. It is important to note, especially when we look at youth unemployment, that these are not just 'a moment in time' issues. What we know from lots of studies, particularly in the US and the UK, is that people who graduate into the labour market during a recession—especially those on the lower end of the education or skills scale—will probably never recover the incomes that they would have made had they graduated into a normal economy. In some countries in Europe, unfortunately, we will see young people who will be forever disadvantaged, just because of the timing in which they graduated into the labour market. What chance do these young people have? It is really unfortunate. But we did not see this in Australia, and we should really reflect on that. We could have been in a situation where many more young people in our country left school or university with very few job prospects, and that is just not the case today.

I say it is not the case today, but I think it is opportune to think about what we have seen in the last five months. We saw companies around Australia maintaining their bottom lines and continuing to employ people throughout a global financial crisis, but many of these companies could not survive the first five months of the Abbott government. We know that in the first five months 50,000 Australian jobs have already been lost. We have heard announcements from Holden that 2,900 jobs are to go and, from Toyota, 2,500 jobs are to go. We have seen the collapse of our automotive industry in the medium term, with 250,000 jobs to go. That is people employed directly in the car industry and in components manufacturing. We have seen 1,000 jobs go at Qantas, 500 at Electrolux, 200 at Simplot and 3,000 are on the line at SPC Ardmona.

This is a government that came into power trumpeting this great victory. We were going to have a million new jobs created. That is what was promised to the people who live in Hotham. We heard some pretty disturbing things raised on this subject in the House yesterday. I sat here in my seat, looking at the Prime Minister, and he got up and said, 'Sometimes jobs are lost.' That was his reaction. I just want to make a couple of points on this. It is true that government in general does not create jobs. Most people in Australia are employed in the private sector. But it is not good enough to say, 'Sometimes jobs are lost,' when so many of the incidents that have occurred in the last five months have been a direct consequence of government policy. I am referring there of course to the car industry, where we saw the Abbott government withdraw $500 million worth of support; to SPC, where we saw the same situation, with a refusal to support SPC and so now those jobs are under threat; and to the Rio situation in the Northern Territory. All these job losses directly relate to government decisions. I understand if the Abbott government want to claim they cannot control everything, but these were directly related to decisions that they or related governments made. They told the Australian people they would create a million jobs. The people of Hotham did not buy it; neither do I.

I will conclude with a couple of points. The first is that Australia can be incredibly proud of its performance. It weathered a global financial crisis that buffeted economies around the world and did it in a way that has been lauded by economists, by the International Monetary Fund and other organisations around the world. It was truly an extraordinary achievement. Unemployment and recession were by and large avoided. I am very grateful for that because it would have severely affected the lives of the people I represent in Hotham. This legislation today has given us a chance to celebrate that record. On behalf of the people I represent I would like to associate myself with that success.

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