David Hawker (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Brand proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government’s breach of trust on interest rates and its failure to put in place the policy settings needed to keep downward pressure on inflation, petrol prices and mortgage repayments.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Kim Beazley (Brand, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

This government cannot manage the economy in the interests of ordinary working Australians—Middle Australia—effectively anymore. This government cannot manage the economy in the interests of Middle Australia anymore, and that was absolutely eminently evidenced by the way in which the Prime Minister and the Treasurer conducted themselves in this place in question time. This government has failed to protect hardworking Australians from the consequences of rising interest rates and from the consequences of skyrocketing petrol prices. It has failed to keep interest rates at what it promised in the last election campaign would be record lows. It has failed to do that by failing to keep inflation under control. It has been crying crocodile tears over petrol over the course of the last 18 months and has been doing absolutely nothing about it, instead denying that you can do anything and absolutely refusing to exercise the authority that is in its hands to ensure that petrol prices are properly monitored in this country—by both the oil companies and the retailers having the firm hand of the ACCC riding them at this very difficult time—and absolutely refusing to contemplate alternative fuels to protect us in the long term from our excessive dependence on Middle East oil.

The government is terminally out of touch. The government is terminally arrogant. The relationship between the Prime Minister and the Treasurer is terminal too. What they have said about each other over the course of the last four weeks cannot be suppressed. One described the other as being guilty of hubris and the other described the accuser as being a liar. The combination of those two positions, whilst we absolutely agree that they have correctly characterised each other, is small comfort to ordinary Australians, who wish to be assured that they have a government that is devoted to their interests and not to the interests of each other in the government. In fact, for a considerable period of time now the concerns, the fears, the hopes and the opportunities of Middle Australians have been the furthest thing from the Prime Minister’s mind and the Treasurer’s mind.

I doubt whether they were ever there in the Treasurer’s mind, but the Prime Minister at least some years ago attempted to effect a concern for what was happening to Middle Australia. Everywhere I go—and I have been many places around this country in the course of the last six weeks—if I am told once, I am told 10 times, as I meet people in shopping centres, at coffee mornings, in airports and in the highways and byways of this nation, that the Prime Minister has changed. What they mean about the Prime Minister changing is that they once thought the Prime Minister was on their side; now they think the Prime Minister is on the side of the big end of town and is no longer concerned about them. As some evidence of this, he permits his parliamentary secretary, without rebuke, to go around describing the sorts of people who are complaining about the circumstances in which they now find themselves, the circumstances which are leading to this judgement about the character of the Prime Minister, as guilty of overdramatisation. That is what Mr Turnbull said of constituents such as the lady whom we referred to in the course of question time, Debbie Bridgman. He described the remarks she made as overdramatisation.

Let me read them again because this is the authentic voice of Western Sydney, of Middle Australia and of those now experiencing considerable difficulties in handling their mortgages. This is what she said in reference to what was said by the Liberal Party during the last election campaign:

When someone says that—

and by ‘that’ she meant keep interest rates at record lows—

you put your trust in them and feel a certain level of security. We started plans [for the extension] a year and a half ago, knowing we could afford to do that without expecting interest rates to continue to rise.

Ordinary people in this country are not tricky, they are not dodgy and they are not used to dealing day by day with weasel words. They are used to dealing with each other in their family situations and in their social relationships with integrity. They are not there for the smart political point; they are there to make personal judgements about the things they need to do in their lives that will enhance their families, increase their opportunities and ensure their security. They actually weigh the words of politicians in ways that we in this chamber never would. We in this chamber who are participants in the day-to-day political process are highly sceptical of each other. The public is not. The public in fact places a very high value on what is said to them by senior figures in this country and undertakings that they get at election time. When they see things like ‘keep interest rates at record lows’, they not only vote for people they believe will do that but also act on the assumption that when they said those things to them they were telling the truth.

This government has got form in this regard. Many people have borrowed up to their eyeballs over the last couple of years on the basis of these sorts of statements which still sit on the Liberal Party website. ‘Keep interest rates at record lows’ sits, as we speak, on the Liberal Party website. They have taken decisions based on that to mortgage themselves to the eyeballs in confident expectation they can calculate the future. The simple fact of the matter is that they cannot. The government has form. It did that with the privatisation of Telstra. T2 will live in infamy in the way ministers went about the place selling Telstra 2 as a massive opportunity, encouraging people into it, bidding up the price to blazes. And haven’t the mums and dads who followed government advice on that occasion suffered from that? They are now suffering from following the advice of the Prime Minister on this.

I could not believe what happened when we asked the question in this place about the blatant Liberal Party advertising. If this darned advertisement appeared once, it appeared 1,000 times around this country and still sits proudly on the website. What did the Prime Minister do? He was not apologetic at that stage. He became apologetic subsequently when he used the words he did about the actions of the Reserve Bank. But at that point the Prime Minister said, ‘I went to Mr Mitchell and made a comment to Mr Mitchell.’ The look of cunning on the Prime Minister’s face did not fool us. The cunning grin on the Prime Minister’s face was directed at Middle Australia.

Let me tell the House what Mr Mitchell had to say about what he thought his conversations with the Prime Minister amounted to during the election campaign, because I think it bears some repeating here:

I would accept the mean and tricky bit, and the dodgy language, but I chased him around and around in circles, time after time again before the election saying “would you guarantee to keep interest rates at this rate or lower” and he said no. Well, he didn’t say, no but he said exactly that answer that Robert’s making the point about and it is dodgy language but it’s political language and you both do it I’m sure. He said “I will do better than Latham”, “I will keep them lower than Latham” and time and time again I tried to get him to say otherwise and he wouldn’t. So I’d say he hasn’t lied, but he’s been dodgy.

Fair dinkum. Debbie Bridgman, confronting his dodginess, is now experiencing extreme financial difficulty which the Prime Minister’s parliamentary secretary says is somewhat overdramatised. I suppose you do get rather dramatic if you think your family is going broke. I suppose you do get a bit overdramatic if it means that you think that you can no longer afford private health insurance. I suppose you do get a bit overdramatic if you think that there is a question mark over whether or not you can pay your bills at the private school you want to send your kid to. I suppose you do get a bit overdramatic if you think that the logical consequence of all of this is that the bank might call in your mortgage. You might get pretty dramatic when that is the circumstance you confront—a circumstance that will never be confronted by the member for Wentworth and the Prime Minister or any of his chortling, hooning members, that gibbering array of pathological exhibits that sit on the front bench opposite us, because frankly—

Tony Abbott (Warringah, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker: even by the Leader of the Opposition’s current standards I think that is offensive language and it should be withdrawn.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

The honourable member will withdraw.

Kim Beazley (Brand, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

I withdraw. There are two standards in this place and I will observe the standard that applies to us, so therefore I withdraw. The Prime Minister then gave an answer to another question. You could see his handling of this issue in the current circumstances in which he finds himself because he knows he is going to be confronting a great deal of suffering amongst the Middle Australians he has so fundamentally betrayed. What he had to say in his remarks then was that the Reserve Bank had acted in a timely fashion, that the Reserve Bank needed to do what it did because of the circumstances it confronted in managing this economy.

The Reserve Bank has had an awful lot to say, which is why over the weekend we in the opposition suggested there needed to be a mini-budget here. The Reserve Bank has been quite explicit for some considerable time now about the reasons. It has said there is pressure on interest rates, and the thing that it is talking about is not the state of international markets and not the state of international oil prices. It has talked about explicit capacity constraints in the Australian economy, the resolution of which is in the gift of the government. That is what the Reserve Bank has been talking about. I will cite a few examples:

The clearest indication of emerging pressures on capacity has been in the disappointing performance of exports to date, which has been associated with a widening of Australia’s current account deficit.

…         …         …

… supply constraints, including much-publicised capacity constraints in rail and port infrastructure, have begun to hamper export growth.

…         …         …

Sharp increases in wages have also been reported in localised parts of the business services sector where skill shortages are particularly acute.

That was February 2005. March 2005:

Over recent months, it has become increasingly clear that remaining spare capacity in the labour and goods markets is becoming … limited.

May 2005:

… labour shortages are becoming increasingly broad-based across industries and skill levels.

I can go through another 10 quotes on that, bringing them right up to this last month, and through about three interest rate rises while they have been doing that. The simple fact of the matter is this, and we have been driving this point home to the Australian people over the course of the last 18 months: this government disinvested in critical areas of public investment over the course of 10 years, which has now severely jeopardised the Australian economy and is forcing interest rates up. In the area of public investment in higher education and in TAFE training, the figure is minus eight per cent.

Jenny Macklin (Jagajaga, Australian Labor Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

According to the OECD.

Kim Beazley (Brand, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

According to the OECD. The percentage in the average nation equivalent to us in the same period of time is plus 38 per cent. The extraordinary thing is, and you can see it in the ministers opposite—the Minister for Health and Ageing and the Minister for Human Services—they do not know that. They do not understand that. They do not know what they have done, and that is all part of being massively out of touch, massively arrogant and massively uncaring about the people whom they pretended to be supportive of: Middle Australia. Just as they have mounted a savage assault on how they earn their money in the industrial relations system, so they have now on their capacity to pay their mortgages—and they will pay the penalty for it. (Time expired)

Tony Abbott (Warringah, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

Let me say to members on this side and on the other side that no borrower likes interest rate rises. No motorist likes petrol price increases. But the test of a politician is not his or her ability to complain about things which no-one likes; the test of politician is his or her ability to actually make a difference to the things complained about. The easiest thing in politics is to complain; the hard thing is to actually make a difference to the fundamental economic issues that our country faces.

All we could really make out today from the Leader of the Opposition’s lengthy harangue is that he is against interest rate rises and he is against petrol price increases. So say all of us. We are all against these things. None of us likes these things. The question is: what will he do to bring about the happy outcomes that he says he is in favour of? I have to say it: yet again, the Leader of the Opposition has illustrated the truth of his predecessor’s statement that ‘a big bellowing cow in this parliament will never persuade the Australian public’. Let’s not forget for a second that, when members opposite had a choice between the former member for Werriwa and the current Leader of the Opposition, they voted for the former member for Werriwa, because at least the former member for Werriwa—

Anthony Albanese (Grayndler, Australian Labor Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Albanese interjecting

Tony Abbott (Warringah, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

And he had a thing for you, if I may say to the member for Grayndler; and his quote about the member for Grayndler—‘a habitual liar’—is well worth repeating in this place.

Anthony Albanese (Grayndler, Australian Labor Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Deputy Speaker—

Tony Abbott (Warringah, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

I withdraw that quote from the former member for Werriwa if it pleases the member for Grayndler.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Is the honourable member for Grayndler satisfied that the member has withdrawn?

Anthony Albanese (Grayndler, Australian Labor Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I don’t even have to say it!

Tony Abbott (Warringah, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

The fundamental point is this: there is no evidence whatsoever that the Leader of the Opposition has the slightest inkling of how to address those matters which he constantly runs around this country complaining about. There are things that government can control; there are things that government cannot control but can influence. I would say that, when it comes to the things that government can control, this government has delivered benefit after benefit to the people of Australia. When it comes to things which government cannot control but can influence, this government has put the policies in place to try to deliver the right outcomes for the Australian people.

Mr Deputy Speaker, the fundamental thing which governments can control is the tax that they expect the Australian people to pay. And let me remind the chatterboxes opposite that in the last budget a single income earner on $40,000 a year, with three dependent children, received a tax cut of over $40 a week. That is $40 in the pockets of average Australians, which will enable them to meet, when they occur, the higher prices which sometimes regrettably they face. And over the life of this government a single income earner on average weekly earnings, with two dependent children, is better off in real terms to the tune of 36 per cent.

This is a government which wants to govern for Middle Australia. This is a government which wants to be known as doing the right thing by the battlers of this country. I do not say for a second that everything this government has done has been applauded by everyone. I do not say that this government can protect everyone from the thousand shocks which inevitably we are prone to in this mortal life, but I do say that when it comes to putting more money in people’s pockets, and when it comes to delivering more real benefits to the ordinary people of Australia, this government is the best friend the battlers have ever had.

Let us look at some real things that this government has delivered. Over the life of the former government average mortgage interest rates were 13 per cent. Over the life of this government average mortgage interest rates have been just seven per cent. In 1996 the real household wealth of this country was $2,000 billion. Ten years later the household wealth of this country has more than doubled to $4,500 billion. And if you look at the statistics published by the OECD you will see that our standard of living, which did rank 13th in the world, is now eighth in the world, thanks in large measure to the sensible policies pursued by this government.

We had, from the Leader of the Opposition, a series of bland assertions that this government cannot manage the economy. Who would you believe: a Leader of the Opposition who was, just a few short weeks ago, in danger of losing his job, who was making a self-interested and self-serving plea, or the most reputable financial newspaper on the planet, the Financial Times of London, which said—as the Treasurer reminded us earlier today—that the Australian economy is ‘a textbook case of good policy, well executed’?

Who would you believe: a Leader of the Opposition, a failed former finance minister, a former employment minister who gave us unemployment rates of over 11 per cent—almost a professional failure when it comes to his former ministerial record—or the Financial Times, which said that Australia’s economic report card is straight As, and further pointed out that Australia had higher living standards now, after 10 years of the Howard government, than all of the G7 economies except the United States?

Now, again, let me make it crystal clear: no borrower likes interest rate increases; no motorist likes petrol price rises. We like them less than anyone else because we know that we will be blamed for them—unfairly or not, we will be blamed for them—but this government has done more than any government in the Western world to try to ensure that the Australian public are protected against these eventualities that they dislike so much.

We heard the now standard slag-off of the Prime Minister and the Treasurer. The Leader of the Opposition, who was once widely respected as being a decent bloke, cannot seem to stand up in public these days without using a series of nasty personal smears and sneers at the Prime Minister and the Treasurer, even stooping, today, to a fairly pathetic parody of the Prime Minister’s speaking style. But this is a good, strong partnership on this side of the House, and whatever may have been thought—or whatever may have been implied about all sorts of things on this side of the House over the last few weeks—it pales into insignificance compared to what the Leader of the Opposition has said recently about his predecessor but one, whom he claims to be able to work with should the member for Hotham become the president of the Australian Labor Party. When it comes to passionate hatred it is difficult to quote the former Leader of the Opposition—the man whom members opposite wanted to make Prime Minister of this country 18 months ago. It is difficult to quote him in this House without an absolute barrage of caterwauling interjections and points of order.

This Prime Minister has not changed, in the marrow of his bones, in his concern for the ordinary people of this country. My fear is that the Leader of the Opposition has changed—and he has changed for the worse. While his capacity to make decisions is as deficient and as defective as always, that decency which was once attributed to him is no longer in much evidence.

This MPI claimed to be about poor policy settings which, according to the Leader of the Opposition, were contributing to higher interest rates and higher petrol prices. Perhaps the shadow Treasurer, who I presume is going to follow in this debate, might have some answers here. I ask members opposite: what are their policy settings to keep interest rates low? Were they going to scrap the tax cuts perhaps—is that their policy? What spending might they cut? Is it going to be health spending? Is it going to be education spending? They constantly say that we are not spending enough in this area, so I ask the shadow Treasurer exactly what will he do to try to ensure that interest rates stay low.

We heard from the Leader of the Opposition today that part of the problem was bottlenecks in rail and port infrastructure. Perhaps the shadow Treasurer will tell us what he has been saying to the state Labor premiers about their rail systems. What has he been saying to the state Labor premiers about their port authorities? If these are problems, and the Leader of the Opposition says they are, what has he said to the people who control them? What has he said to his ideological brothers and sisters in arms on these issues? We heard from the Leader of the Opposition that there were problems in our labour market. The Leader of the Opposition does not want to make our labour market more flexible, more free and more fair; the Leader of the Opposition wants to send our labour market back to the 1980s, the 1970s or the 1960s—and we all know that they were the dark days for Australian productivity and Australian competitiveness. Not only am I appalled by the Leader of the Opposition’s Jurassic Park attitude on workplace relations but I quote from the Sydney Morning Herald of Saturday, 17 June this year. One shadow minister, speaking of the Leader of the Opposition, described his policy on AWAs by saying:

‘This is a gutless rollover to appease a mob of gangsters in Sydney,’ ...

This is what the Leader of the Opposition is doing. What difference is that going to make to interest rates? If anything, the Leader of the Opposition’s policies in all of these areas are going to make a situation, which just at the moment is somewhat stressful for Australian families, infinitely worse.

On petrol prices, what is the Leader of the Opposition going to do? He is not going to reduce excise. He told us that on the weekend—a skerrick of economic responsibility from the Leader of the Opposition—but perhaps the shadow Treasurer could give us some plan. We had plenty of rhetoric from the Leader of the Opposition; let us have a plan from the shadow Treasurer actually to bring petrol prices down. All we got from the Leader of the Opposition was something about monitoring. Monitoring is all very well; several thousands of petrol stations are monitored on a daily basis by the ACCC. The question is: what do you do, having monitored? If the shadow Treasurer and the opposition are to be taken seriously, let us have a clear, precise, detailed plan. Suppose all this monitoring shows that prices are going up? What will the opposition do to make a difference? If they cannot tell us what they would do to make a difference then, yet again, we have a pathetic attempt to scare the Australian public without offering anything at all as a solution. Let me again quote the former leader, the former member for Werriwa, the man whom members opposite preferred to the current leader at the only time they had to vote between them:

The Beazley culture is scab-lifting—see an issue, a public sore, and try to lift the scab without offering your own remedy.

It is not good enough. It was not good enough the first two times the Leader of the Opposition contested an election and it certainly will not be good enough for a third time, if the Leader of the Opposition gets that far. He was the finance minister who gave us the $11 billion black hole. He was the employment minister who gave us 11 per cent unemployment, the defence minister who gave us the dud subs that we have spent 10 years fixing. He was the communications minister who gave us the $4 billion cable duplication. He might have been a nice bloke but he was a total failure as a minister and I do not think he is ever going to be Prime Minister.

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Treasurer has dodged this debate. He has scurried off with his tail between his legs back to the chicken coop. It is just another repeat of what we had last week when he did not have the courage to take on the Prime Minister. Just as he did not have the courage to take on the Prime Minister, he does not have the courage to take on this debate. Of course, the Prime Minister has not had the courage to take on this debate. This is something which is so important to the living standards of average Australians: rising interest rates in an environment where Australians were promised record low interest rates by this Prime Minister. Adversity is a test of character and it is a test that this Treasurer has failed. He failed it last week and it is a test that he has failed again today. The hollow man in here in question time today had no answers on interest rates at all, yet it is his actions and the actions of the government that are putting Australian families under such tremendous financial pressure.

Now the Treasurer may not have any numbers in the party room—that is pretty clear—but he cannot be allowed to ignore the numbers presented in this House that demonstrate that the percentage of income being paid by people with housing mortgages is the highest in our history. It will no longer be sufficient for him to walk into this House and say, ‘Blame Keating.’ They can blame Howard and they can blame Costello because the percentage is now higher than it has ever been. Interest rates have been going up and up and up and up and up and up and up because we have had seven rises in a row, but we have had three rises since John Howard went to the Australian people at the last election and promised record low interest rates. What does that really mean? Think about it for a minute. What it actually means is that John Howard himself in his advertising was taking personal responsibility for interest rates. There was the ad: record low interest rates. What that advertising says is, ‘I, John Howard, take personal responsibility for what happens with interest rates over the next three years.’ As we well know, interest rates are going up—three times since he made that promise—and record interest repayments are putting Australian families under financial pressure.

But John Howard does not understand a word of that, because he has been living at Kirribilli for 10 years. He really does not have to pay the freight, and neither do many of the ministers in this government, or many of those sitting behind them, who live fairly privileged lifestyles. All MPs live privileged lifestyles but, when you are so out of touch that you do not understand the financial pressure on Australian families—

Joe Hockey (North Sydney, Liberal Party, Minister for Human Services) Share this | Link to this | Hansard source

Mr Hockey interjecting

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

you should give it away, Minister. You should absolutely give it away, because you don’t get it. You absolutely don’t get it: a 7.8 per cent variable interest rate is not low.

Joe Hockey (North Sydney, Liberal Party, Minister for Human Services) Share this | Link to this | Hansard source

Mr Hockey interjecting

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

You don’t get it. The explosion of household debt has changed the interest rate equation in this country forever. It has changed forever, because the percentage of household income required to service a mortgage is at a record high. People are paying more in monetary terms and more as a percentage of income than ever before. But, of course, John Howard and Peter Costello still think they are low. This is what Peter Costello said on the Sunday program: ‘If you see a single digit in front of your interest rate, that’s low.’ This has now been airbrushed from the Treasurer’s website; you cannot find it on the Treasurer’s website. We know why: he is so embarrassed. Do you know why? Because the data has been there in the Reserve Bank report on monetary policy from last Friday. Data from the Reserve Bank shows that mortgage interest paid as a share of household disposable income was 6.1 per cent in September 1989. What was it in March 2006? It was 8.7 per cent. That is the figure they do not get: people are paying an increasing percentage of their incomes.

We have had two more interest rate rises since these figures were collected. These three interest rate increases have cost the average new mortgage holder $108 a month. And that doesn’t matter? We had the Prime Minister out there suggesting that it was not very much; it was only a little bit. We had the Treasurer out there suggesting the same. But let me tell you what those last three increases are worth: in the electorate of Greenway, they have cost $241 a month; in the electorate of Aston, $169 a month; in the electorate of Dickson, $210 a month. So what was the PM’s response in here today? He suggested that somehow households can pay their mortgage by selling their equity—that, if you are having problems paying your mortgage, you front up to the bank manager and say, ‘Look, I can’t pay the mortgage, but my house is worth a lot more.’

The point I am making is that this government does not understand the financial pressures that families are under. Somehow, through the commentary of the Prime Minister last week, was this notion that Australians had overextended themselves by borrowing more. Why had they done that? Because he encouraged them to. As Mrs Bridgman said in the Sydney Morning Herald, she went out and borrowed more—she felt she could do so because the Prime Minister told her. Now the Prime Minister says, ‘You’ve probably been out there borrowing more to go on a holiday, buy champagne, buy caviar.’ The truth is, Minister, that may be okay for some, but for most people it is the necessities of life that they actually have to put together to make sure they can get by. They are not out there borrowing for any reason other than to have a roof over their head and to provide the necessities of life.

In the middle of all this comes Malcolm in the Middle. Malcolm blunders in and says: ‘There’s nothing dramatic about this; it’s okay. I don’t have a problem with my $10 million, $20 million mortgage’—or whatever he has, if he has one at all. No problem for Malcolm at all. The backdrop to this is both the Treasurer and the Prime Minister saying interest rates are low. It is a pity the payments are so high. I do not think that we will hear a lot more from this government with their drumbeat of saying how high they were 10, 13 or 14 years ago, because now they are the highest ever.

So, why are we having this debate today? And why did question time begin as it did today? Why did it begin by discussing electoral advertising? As I said before, with that advertising the Prime Minister took personal responsibility for interest rates. This was a sleazy path to win the last election—nothing more, nothing less. It was absolutely sleazy. The Prime Minister’s desperate opportunism has been now compounded by his failure to listen to six alarm bells, which have been rung by the Reserve Bank since the last election—his refusal to heed their warnings about the need to invest in skills, to do something about training skilled workers, to do something about training doctors, to do something about training skilled workers in the traditional trades and so on, to do something about our infrastructure. In two budgets he has ignored those six warnings and he has sold the country short. The result has been rising core inflation and rising interest rates. When he gets confronted with rising core inflation, who does he blame?

Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Childcare) Share this | Link to this | Hansard source

Bananas!

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

Bananas! Do you know what? The Australian electorate picked that right away. They knew the Prime Minister and the Treasurer had gone bananas. It was a crooked defence, it was a shady defence and it was a sleazy defence—and it was an insult to the Australian electorate, who are being hit by rising prices across the full range of food items in the supermarket and across health and education, and they did not fall for it.

Then we had the Reserve Bank alibi. The week before last they were out there saying, ‘It’ll be the Reserve Bank’s responsibility; nothing to do with us.’ Pity about that advertising. Then of course we had the prosperity excuse. At one stage the Prime Minister and the Treasurer were out there saying, ‘They’re going up because we’re so good.’ And they expect the public to clap. They certainly were not clapping. Then we had to blame the homeowner, which of course was what he was doing to Mrs Bridgman. They picked his course there.

This government have to accept some responsibility. They were always out there claiming credit when the figures were good. They said it was their magnificent economic effort that produced a low inflation, low interest rate environment. Suddenly, when it turns into a high interest rate, high inflation environment, it has nothing to do with them at all. I think that says so much about this government. We have the worst Prime Minister in 60 years—that is what we have. And we have one of the worst Treasurers in our history. We have a Prime Minister who bequeathed to this country his record: 21 per cent interest rates. They cannot speak with any credibility on interest rates anymore. (Time expired)

Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

In his address, the Leader of the Opposition mentioned one constituent. In speaking to this debate I remember a conversation I had with a constituent just before the 2004 election. This constituent phoned me and we had a conversation. He said that his father had told him that he would be quite happy with a Labor government except that they were no good on finance and on foreign affairs. I thought, ‘That is extraordinary.’ I asked: ‘When did your father say this?’ He said, ‘He died in 1951.’ It has been a very long strand in Australia that the Labor Party is not seen as a party that can be trusted on the economy or on national security. I looked at the latest Newspoll on the economy, interest rates and inflation, and it is remarkably consistent across all three questions and across a period of time. Very roughly, 60 per cent of respondents say that the Liberal-National coalition would best handle the issue of the economy, interest rates and inflation, 20 per cent say the Labor Party would be best and 20 per cent are uncommitted. So if you go walking in a shopping centre, you would find that of every five people, three would say that the Liberal and National parties are best, one would say that the Labor Party are best and one would be uncommitted.

This MPI is an attempt by the Labor Party to get more than 20 per cent. They are trying to get off the floor and are trying to show that they do have some credibility on economic matters. This MPI, let us not forget, mentions the government’s ‘failure to put in place the policy settings needed to keep downward pressure on inflation’. I waited 15 minutes while the Leader of the Opposition spoke and 10 minutes while the shadow Treasurer spoke to hear what the alternative Labor Party policies are. I thought that perhaps the RBA statement on conduct of monetary policy that we introduced in 1996, whereby through an exchange of letters it was agreed that the Reserve Bank would keep an inflation target of two to three per cent, was one of the settings they had in mind. No. Perhaps they were talking about the way the government had repaired the budget—the $11 billion Beazley black hole that was left to us in 1996—which helped fireproof the Australian economy through the Asian financial crisis. But, no; that was one thing they could have mentioned, but they did not. Let us not forget that the steps we took then, with the Reserve Bank and the role it played—and it played a fantastic role—were very important for the Australian economy in seeing that we came through the Asian financial crisis when most of our trading partners went into a very deep recession. The United States had an economic downturn in 2001. With the old Australian economy, it used to be the case that when America sneezed we caught a cold. But we saw that the Australian economy came through 2001 and through the 2002-03 drought—again, due to the good economic management of Prime Minister John Howard and Treasurer Peter Costello but also the whole team, which is very much focused on the management of the economy.

If you look at the 2004 election campaign you will see that it really came down to the central question of: who do you trust to manage the economy? Our position was that it takes a lot of discipline and a lot of experience to manage an $800 billion economy—it is now a $1 trillion economy. What we have seen is that, every time there has been a hard decision, this government has put the interests of workers—jobs and the economy—ahead of small, narrow interests, and this is something that is beyond the Labor Party. Workers picked up on that. When we saw the timber workers in Tasmania applauding the Prime Minister, blue-collar workers right across Australia picked up on it. In fact, they were very scared about Mark Latham.

We mentioned a bit about the interest rates. I seem to remember Mr Latham signing a pledge card, as well, that he would keep interest rates low. The fact of the matter is that interest rates will go up and interest rates will go down, and to not have interest rates moving at all is, according to the outgoing Reserve Bank governor, Ian Macfarlane, a very unstable environment to have. The important thing is that we have a very credible independent Reserve Bank that keeps inflation between two and three per cent, which it has done over the period of the Howard government. When you compare our performance on inflation with Labor’s performance on inflation, I would take our performance any day. Over 10 years, our average on inflation has been 2½ per cent. It is half what it was under Labor—and similarly with interest rates and so on. The approach we have taken has been to reform the economy—and Work Choices is part of this—to ensure that we have prosperity in the future. Reform today for prosperity tomorrow.

When we look at inflation, one of the things the Leader of the Opposition mentioned as one of his policy responses was capacity constraints. Part of the reason for capacity constraints is that the economy has been growing at over three per cent for 10 years. Unemployment now is the lowest it has been since 1976; it is 4.9 per cent. In the most recent monthly figures since Work Choices was introduced, we saw the unemployment rate fall at the same time as the participation rate rose. More people were entering the workforce and still the unemployment rate fell. We saw something like 53,000 new jobs created in a month, and 38,000 of those new jobs were for women.

When we look at interest rates, again, I would take this government’s performance any day over Labor’s performance—in fact, over any Labor government performance you choose to mention. If we look back over a very long historical period, we see that interest rates have been higher under Labor governments than under coalition governments. Who can forget when interest rates reached 17 per cent? They were up at 17 per cent from mid-1989 till early 1990. The rates that farmers were paying were 21 per cent. If we look at the Labor Party’s record over that 13 years, we see that it was interest rates of almost 13 per cent that people paid over the whole 13 years. In the 10 years under this government, they have been a little bit over seven per cent.

There are a couple of points to make on the issue of petrol. First of all, we took a number of decisions early in 2001: we removed 1½c from the excise, we also removed indexation and previously we had removed 6.7c to compensate for the introduction of the GST. The excise at the moment sits at 38c a litre. Had we not taken those three decisions, it would now be 59c a litre: it would be more than 20c a litre more expensive than it is now. On the issue of the ACCC, the Leader of the Opposition’s one contribution was that we should have more monitoring. Some have suggested that the ACCC does not have enough power in this area. There actually have been a number of cases of price-fixing in recent times: one in the Ballarat area; one in the Geelong area. Last of all, something that has been presented to the current Senate inquiry looking at petrol is that the non-tax price of petrol is remarkably similar across OECD countries—what makes the difference is the tax portion. We see amongst all the OECD countries that Australia has the fourth lowest tax. It is only Mexico, the United States and Canada that have lower taxation than we do.

In conclusion, this MPI is a very limp attempt by the Labor Party to demonstrate that they do have some economic credibility. I would have appreciated hearing some solutions and some alternative policies. They do not have any. They cannot demonstrate how they would have performed better than the Howard government. The current settings are as good as they can be. (Time expired)

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

Order! The discussion is concluded.