Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Hansard source

On behalf of the opposition I am pleased to speak to the review of the Reserve Bank of Australia annual report 2013. I thank the chair of the committee and also acknowledge the presence in the chamber of my colleagues the member for Rankin and the member for Charlton. I echo the sentiments of the chair in expressing gratitude for the time and assistance of the RBA governor and his senior executives who appeared before the committee in December. I also express appreciation for the great work of the committee secretariat.

While the world has managed to avoid the type of collapse feared in the aftermath of the worst economic conditions in nearly eight decades, many countries are still dogged by lower than average growth, stubborn unemployment and, in some cases, having had to cope with double-dip recessions. Since our prosperity can be affected by the health of our trading partners, the RBA's assessment of global economic strength is crucial. Looking to the world stage, the RBA noted in December that there were positive signs emerging from Europe, the US and China. But the tide of perception has started to shift, even since then. In Europe, for instance, anxiety about the future of the European financial system has been replaced by concerns, expressed via the IMF in January, about the signs of potential deflation. In the US, relief surrounding tapering has been muted by concerns—as expressed by new Federal Reserve Chair Janet Yellen—about soft data appearing over the last six weeks pointing to less favourable numbers on jobs, housing, retail sales and industrial production. In China the economy has defied predictions of contraction, but minds are directed towards a continued growth of its shadow banking system and its possible impact within and beyond China.

In the Australian context, we need to be exceptionally mindful of this—especially considering the RBA take on lower-than-trend growth. While keeping an eye on the soft world economy, we should be concerned about the possible impact on our own economy of confused and contradictory decision making. It is taking a long time for this government to respond in an adult way to the reality plaguing governments the world over—subdued economic conditions, sporadic job growth and revenue refusing to lift in the way it did. In many cases it appears that this government's actions could weaken our economy at a time when the world economy remains weak. We have seen a government unable to respond to job shedding occurring under its watch at the rate of one job every three minutes since its election. Retailers now express concerns about the impact of this on discretionary spending at a time when the RBA has observed subdued growth in private domestic demand.

We have seen a government send conflicting signals about fiscal strategy, contemplating contractionary expenditure cuts while planning to levy business to fund an excessive Paid Parental Leave scheme. We have seen a government block access to crucial foreign investment for firms like GrainCorp while seemingly chasing out of the country firms like Holden, but then seeking foreign capital for Qantas. We have also seen the government not only refuse to consider co-investment in firms that are helping boost economic activity in regional Australia, but then pressure these firms to aggressively cut wages and undermine purchasing power of families within those regions. Disturbingly, the RBA governor warned in December that it was:

… difficult to predict the timing and strength of the expected upturn in non-mining investment.

But in the last week we have seen new figures pointing to a sharp contraction in nonmining business investment at a time when it is needed to offset the anticipated slide in mining sector investment.

On top of this, while repeatedly trying to condition the broader public about expenditure cuts, this government's other spending decisions have been extraordinary, most notably its decision to grant the RBA close to $9 billion in government support, as referred to in this report. Although seeking to suggest the RBA was pushing for the grant, it was obvious from our hearings that the Treasurer himself had not only decided the grant should be paid but it was he and he alone that determined that the $8.8 billion in scarce funds should be paid in one lump sun. And while in claiming this money was urgently needed, the Treasurer avoided mentioning that the funds would not be paid immediately but sometime in first half of 2014 and that the RBA would actually be in a position to provide a dividend to the government in the second half of 2014. Most importantly, what is clear is that this money was not necessarily needed to shore up the RBA but that it was used to score political points by the Treasurer made at the expense of families or communities. You only have to scroll through the cuts contained in MYEFO and this becomes painfully clear. I commend the report to the House, but flag the opposition's concern about the excessively generous and ill-considered decision of the Treasurer to replenish the Reserve Bank Reserve Fund in the way that he determined.

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