Pat Conroy (Charlton, Australian Labor Party) Share this | Hansard source

I am pleased to contribute to this debate on the Tax Bonus for Working Australians Repeal Bill 2013 and to support the second reading amendment moved by the member for McMahon. Those opposite like to pretend that the global financial crisis did not happen, or, on the rare occasion they admit it did happen, they say that we were saved in that time by everyone but Labor—it was the mining industry or the Chinese 'stimulus package' that saved us, not the Australian stimulus package. Nothing could be further from the truth.

The GFC occurred, and the facts are these. The global financial crisis was the biggest worldwide economic crisis since the Great Depression. The Labor government successfully implemented an economic stimulus plan and, because of these actions, Australia was one of the very few developed nations that avoided a recession. This last point is vitally important. Because of the stimulus plan—opposed by the coalition, some of whom slept through the votes—the Australian economy continued to grow during this period, over 200,000 jobs were saved and, during this period of the Labor government, one million jobs were created. I have seen mass unemployment, and it is a scourge. It is a cancer on society. The last Labor government took decisive action to avoid it.

There is significant independent recognition of Labor's response to the GFC. The OECD has stated that Australia has been one of the most successful OECD countries in weathering the global financial crisis, and the IMF identified our decisive policy responses as enabling Australia to weather the GFC better than many other developed economies. Nobel laureate in economics and former Chief Economist at the World Bank Joseph Stiglitz has also praised the response of the Labor government, identifying it as one of the best designed stimulus packages of all advanced industrial countries:

While other countries fell into the global recession, Australia maintained strong economic growth, low government debt and a triple-A credit rating.

This is something that those on the other side are opposed to. In earlier contributions, the contribution of Joseph Stiglitz was derided and mocked. I find it incredibly ironic that we should take the word of those opposite, rather than that of a Nobel laureate economist. Importantly, Professor Stiglitz also said:

In many other countries, stimulus was too small and arrived too late, after jobs and confidence were already lost.

This is incredibly significant because that description of what happened in other countries was exactly what would have happened under the coalition if they had been in government. We would have seen the loss of hundreds of thousands of jobs, and we would have seen a very significant recession.

Professor Stiglitz went on to make the point that new research shows that the stimulus package:

… may have also … reduced government debt over time. Evidence from the crisis suggests that, when the economy is weak, the long-run tax revenue benefits of keeping businesses afloat and people in work can be greater than the short-run expenditure on stimulus measures. That means that a well-targeted fiscal stimulus might actually reduce public debt in the long run.

This is a very important point. We are seeing the converse of this in Europe, where countries that have embraced very significant austerity measures are seeing a run-up of government debt, something that would have been negated if they had taken effective stimulus action.

It is also very important to note that 50 eminent economists in Australia have also supported the stimulus package. In an open letter, they said:

We the undersigned economists are convinced by the evidence that the coordinated policies of the Australian Labor Government have prevented the Australian economy from a deep recession and prevented a massive increase in unemployment. Unlike most OECD economies we have come out of the Global Financial Crisis and the subsequent world recession with only one quarter of negative GDP growth and a smaller increase in unemployment.

They went on to say:

The performance of the Australian economy has been outstanding: the International Monetary Fund (IMF) and the Organisation for the Economic Cooperation and Development (OECD) have show-cased Australia as a model economy.

'A model economy'—also ignored by those opposite.

I want to address briefly some of the myths that have been perpetuated in this debate, most notably by those opposite and including the last speaker, the member for Ryan, that somehow the mining industry saved Australia—that it was the mining industry that saved us from a recession during the GFC. This is patently false and was comprehensively rebutted by Dr Ken Henry, the Secretary of the Treasury appointed by Peter Costello. He was appointed by your Chairman of the Future Fund. Dr Henry said the following during Senate estimates:

I have heard it said on a number of occasions, in fact I have lost count of the number of times I have heard people say, including senior commentators, that the mining industry saved Australia from recession … These statements are not supported by the facts I would have to say. …

In the first six months of 2009, in the immediate aftermath of the shock waves occasioned by the collapse of Lehman Brothers, the Australian mining industry shed 15.2 per cent of its employees. Had every industry in Australia behaved in the same way, our unemployment rate would have increased from 4.6 per cent to 19 per cent in six months.

Let me repeat that: if the rest of the economy had followed the lead of the mining industry, as those opposite would have wanted to do, we would have seen an unemployment rate of 19 per cent in 2009. That is attested to by Dr Ken Henry, the Treasury secretary appointed by Peter Costello.

The fact remains that the stimulus package was timely, temporary and targeted. It included $28.8 billion in direct government investment in schools, housing, energy efficiency, community infrastructure, roads and support for small business. It included $12.7 billion in payments to low- and middle-income Australians.

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