Lisa Chesters (Bendigo, Australian Labor Party) Share this | Hansard source

In my remarks today I want to reflect on some of the contributions that have been made to date in this debate and say that I am alarmed at what is being suggested by those who are members of the government. It sounds like their plan for the next three years whilst they are the government is to introduce austerity measures. They may call the exercise the 'commission of cuts', they may call it trying to get the budget back in the black, they may talk about how this is important for taxpayers, but what they are really talking about is austerity. They are talking about cutting vital government funding in key areas of our community to try to get the budget back. What we have seen of this crisis in the last three to five years as it has rolled out in other economies around the world is that austerity does not work.

When the global financial crisis hit in Australia, whether we were representatives, in business or local constituents, we had the right to be a little bit miffed, a little bit frustrated by developments because we were going along wel

As a country we were doing well and overseas factors—a financial system in the United States—triggered the global financial crisis. So at the time the government of the day, the Labor government, really had three choices. They could take on a Keynesian economic approach, which was to spend and to stimulate, and that is exactly what they did. They could do nothing—just sit back and wait to see how the markets reacted. That would have seen job losses and businesses close in the private enterprise sector, and that would have put pressure on the community. But that chain reaction of job losses and of businesses closing would have been slower than what we would have seen if austerity were introduced, which is what a number of countries around the world did. When the global financial crisis hit, governments around the world—not ours but others—cut government spending. What that did was purely and simply to deepen the recession.

Our economy is robust, but it does have a cause and effect nature. If you take money out of one section of the economy it will have an effect on the other. Our economy is made up of a mix of public and private; we cannot ignore the fact that governments are a major part of our economy. I am always of the view, and it is a Keynesian view, that when private enterprise stumbles, when there is a problem overseas that affects our economy, government needs to step in. A short debt, a short spend or a stimulus package can stop businesses and industries closing and stop people losing their jobs. It is not a bandaid solution; it is an investment to ensure that our economy, robust and delicate at the same time, can survive and chart its way through this course.

We heard the government—and they did this when they were in opposition, quite often popping up in my electorate—trash talking the economy, saying that debt was bad, in front of the very businesses that owed their survival to the stimulus package that Labor introduced. They were standing out the front saying, 'This business is under threat because of government debt.' It could not be further from the truth. The businesses that Joe Hockey stood out the front of and countless opposition shadow ministers stood out the front of kept their doors open because people had money to spend. They had money. They had stimulus. They had cheques that those opposite are so concerned about to spend in these stores.

The other criticism that we have heard about the program that was introduced is that in some very few cases the cheques went to the wrong people. Some mistakes were made. I find it quite hypocritical for those opposite to suggest that this idea of sending cheques out to be spent was a really bad Labor idea. Sadly, Labor did not invent it. The previous government, the Howard government, quite famously sent cheques out to people and said, 'Spend—go forth!' But there was no criticism from those opposite that maybe a few people accidentally got the wrong cheque. No program is perfect. There are always going to be those rare examples. But the benefit of the stimulus package at the time it arrived—the idea or the principle behind it—saved Australia from falling into recession, as we saw elsewhere.

The difference between what the Howard government did and what the Gillard-Rudd governments did was the timing. I strongly believe that in times of boom a government should pull back its injection of funding into the economy. It needs to be sustainable funding. I will never argue against that. In times of boom we need sustainable, long-term funding programs, but you do not send out cheques for people to spend when the economy is doing well. That is the time to save and the time to bank. But when our economy hits a downturn like a global financial crisis, that is the time you need your government to step in and send these cheques out to get instant injections of funding into the economy.

It may sound like $900 here and $900 there, as though it does not have a big effect, but it does. When I was out in my local community talking to people about how these cheques helped them and what they were able to do with them, the cost-of-living pressures were something we often talked about. It is not unusual in my electorate to talk about cost-of-living pressures and how support from the government has helped. Roughly 30 per cent of households in the Bendigo electorate are surviving on less than $600 a week, a further 20 per cent less than $800 a week. These are the working poor and we know that when you give working people and people on low incomes extra money in their pocket they go out and spend it. It could be on anything but they spend it locally. One of the big campaigns that everybody seems to be in agreement on is 'buy local'. Buying local supports local business and that is exactly what this stimulus program was designed to do.

I was talking to Fiona from Eaglehawk who works in the community sector. She works with the Eaglehawk Community House and she stated that every cent went towards helping those most in need. It was really valuable to families in the area. Some used it to pay off that bill, which meant that they then had some money to spend on other items, other needs that they had. Some bought schoolbooks that they needed for their children. Some went out and bought a luxury item that they had not had for years. And where did they buy them but from their local businesses, keeping people employed in small businesses in our community.

Kate is 41, a single mum with three children. She had recently separated from her partner and had to move into a rental property and this stimulus package allowed her to get the extra items she needed. It allowed her to set up a house. And where did she buy these things? Again, from local scores in our local community, keeping people employed in small businesses. Carmel, a pensioner from Bendigo, says she was going downhill. She is surviving on a pension. She tried her best to save money for a rainy day when she got sick. The fact is that on the pension you cannot and Carmel did get sick. But then the stimulus cheque arrived and she went, 'Wow, I can pay my medical bills.' Barry from Golden Square used it to pay for the necessities to get through. Using these payments, as I have said, does help people pay off the bills. It did help them get the things they needed to get through day-to-day life. It allowed them to get back up on their feet and then spend what disposable income they had in their local businesses and stores. Another angle where this stimulus package was needed was not just the economy but also the social and economic advantage and how it helped people get through a tough period.

The knock-on effect that it had helped Bendigo businesses and industry get through a tough period, and then our place in the Australian economy helped Australia get through a tough period. Small businesses in the electorate talked about how they had an increase in sales when these stimulus cheques arrived. People bought the things they otherwise could not afford. We all talk about how small business is the backbone of this economy and the major employer today, and this package helped them stay alive. This package meant that we spent our dollars locally, whether it was on hardware, books or going out for a meal. All of these small businesses were able to survive. It was not the plasma screen TVs; they were bought during the Howard era. With this stimulus package people were able to spend dollars in the Australian economy, thus keeping jobs here in Australia.

We have heard other speakers, particularly on this side of the House, speak to the merits of spending and the merits of getting in there early and stimulating the economy to make sure we buffer ourselves against what is happening globally. That is what a smart, sensible government does when it is not fearful of the word 'debt'.

And let us focus on debt because over and over again over the last five years those in the Liberal Party and in the coalition have tried to beat us up about the word 'debt'. Debt is only a problem when your economy is booming. Debt is not a problem when there is no boom going on in the economy. Spending now to ensure that industry survives for later is smart business. Talk to anybody in business. They invest in themselves, and it is the same principle for the Australian government. Whether it be through infrastructure or an early stimulus program like this, government should invest in the Australian economy, in Australian businesses and in ourselves. Debt is not a bad word. It shows that we are actually investing. Everybody has a mortgage. Everybody spends to then pay it back. Every business, if it wants to grow, will spend and get itself into debt. The payback plan is what matters.

When you look at the debt level of Australia, our debt compared to other nations is low. That is the critical thing about the fear campaign of the other side. They are not being honest about the debt levels in Australia compared to other countries in the OECD. When I say that debt is not a bad word, we have to understand the intricate involvement of the word 'debt'. If you want to invest and grow the economy like we saw under the previous Labor government, you actually need to invest and work out the program, working with business and industry to ensure that, as the economy and receipts grow, debt is paid down.

The alternative to not stimulating the economy and instead doing nothing is, as I have flagged, austerity. Austerity is a problem. Cutting government spending does not solve debt. It does not solve growth problems. These cuts actually compound a recession that has been caused by the private sector. We know that austerity is on the way. All the talk from this government is that they are going to cut and cut everywhere. Whether it be school funding or small business support, when there are fewer dollars in the economy, the private sector will start to fail. We are not through this global financial crisis yet. The short-term, three- or five-year headline 'We got the country out of debt' is just not going to happen. We know that from what we have seen elsewhere. The obsession with getting Australia out of debt has become a fixation of the government and this fixation will see further pain in our community. I know that, if the cuts they are proposing around education or the changes to small business come in, it will cause big problems for my community. I am concerned about the austerity plan ahead.

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