Harry Jenkins (Speaker) Share this | Link to this | Hansard source

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

The Government’s inconsistent and reckless approach to economic management.

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—

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Treasurer was asked yesterday a very straightforward question in the House about the appointment of Mr Steve Bracks, the former Victorian Premier, to head a review of Australia’s car industry. He said that he knew nothing of it. He said he was not able to confirm the appointment at all.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

Is this the MPI?

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Yes, this is the MPI.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

Have you read it yet?

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Yes, I have read the MPI—absolutely. The Treasurer had the opportunity to be straight and forthright with this House. Instead he denied everything and then today relied on the claim—and no doubt further enquiries and investigations will see how much validity there is in this claim—that the decision had only been taken last night, notwithstanding that we know Treasury had provided him and the government with advice that the Productivity Commission should conduct that inquiry. There is no body in Australia better qualified to look into industry matters of this kind than the Productivity Commission itself—after all, it started off as the Tariff Board and then became the Industry Assistance Commission and the Industry Commission. This is the most distinguished independent economic think tank in Australia. It has years of expertise in looking into these industry matters and so, naturally, Treasury recommended that it would be the appropriate body. That advice was rejected. A political group was assembled, headed by a former Labor Premier aided by a number of trade union officials, and instead the Productivity Commission was reduced to a minor role to do some economic modelling.

When the Rudd opposition were seeking to become the Rudd government, they contended that they were fiscal conservatives, economic conservatives. I recall the Prime Minister saying, shortly after the election, that he wanted the Treasury brought:

... to the centre stage of what this Government does in the future. We cannot afford to fall behind when it comes to national economic reform and I intend to harness the full resources and capabilities of the Treasury in so doing.

We have a vital manufacturing industry in Australia under great pressure, for which the best economic insights and the most objective and clear-headed advice is needed. Treasury says the Productivity Commission is the right body to provide it—and so it was—and that advice is ignored and we have jobs for the boys. What we have here is the wrong job for the wrong boy. If ever there were an appointment that was a political fix, a job for the boys, to get a predetermined outcome, it would be this one, and all of those people who believed that Kevin Rudd and Wayne Swan were going to be economic conservatives now realise that they are only interested in jobs for the boys.

Throughout his term as Treasurer, the Treasurer has acted in a way which is uniquely reckless. When we speak about economic matters and when we speak about inflation, it is vital that we speak about them moderately and objectively. It is particularly vital that treasurers and, indeed, central bank governors do so as well. We need facts. We need sober assessment. But what have we had from Wayne Swan? This is a man who said he was dripping with empathy, concerned about the price of groceries, concerned about the struggles of ordinary Australians sitting at their kitchen table, and worried about the impact that interest rate rises would have on them. And what did he say the day before the Reserve Bank met to consider a rise in interest rates that most commentators regarded as likely or very likely? He said:

The inflation genie is out of the bottle.

There was nothing he could have said which would have been more likely, more certainly calculated, to ensure that that interest rate rise would occur. It was a rhetorical flourish, it was a headline-grabbing flourish, and it reminds me of Paul Keating’s much lamented and much criticised remark that Australia was heading towards a ‘banana republic’, which produced a whole series of economic consequences—because when a Treasurer speaks, the world listens, the whole economy listens, the whole global economy listens, and what he says will inevitably have a consequence as to the way our economy is viewed.

One of the other reckless things the Treasurer has done is run down the Australian economy. We have to recognise that we have problems in our economy; we always will. As I said before, a treasurer complaining about economic challenges is like a firefighter complaining about fires. It is the job of the Treasurer to deal with economic challenges. That is the job description. But, when you for politically partisan purposes create a false impression of the Australian economy, you undermine the living standards of all Australians because it impacts on the regard, the rating, the credibility and the credit of our country. So it is vital to be accurate. To be fair, not everybody in the government is as reckless as the Treasurer. The Assistant Treasurer, Mr Bowen, who I see sitting opposite, said on 22 January, ‘The evidence of a serious inflation problem has only begun to mount over the last six months or so.’ I beg your pardon—that was the finance minister on 5 February. But the Assistant Treasurer said on 22 January, ‘Inflation has been low in Australia over the last few years.’ Those two ministers were correct; they were absolutely correct. The Treasurer has said that inflation has been on the march for a couple of years. He is trying to create the impression that inflation has been ramping up consistently for a couple of years, that the Reserve Bank has been there, warning the former government, and that the former government ignored all those warnings.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

That’s right.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Assistant Treasurer said, ‘That’s right.’ It is completely untrue. In fact, as recently as 14 June last year the Reserve Bank Governor, Glenn Stevens, said in a speech where he considered the whole economic outlook that inflation was actually moderating. He said:

Inflation did pick up in Australia during the middle years of the current decade ... That peak in the CPI inflation rate was affected by some temporary factors, which have now reversed.

He went on to say:

The most recent data for inflation ... showed a more welcome trend, with underlying measures of inflation running at a reduced pace and the CPI rate on its way down as well.

Opposition Member:

When was that?

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

That was June 2007. The reality is that it was not until the last half of last year that signs developed to demonstrate that the governor’s outlook or forecast was wrong. The forecasts of the Reserve Bank became more troubling, for those who are concerned about inflation, in November and particularly in February.

The reality is that we do have an inflation challenge here in Australia, and the opposition take it very seriously indeed. But we take it so seriously that we do not tell falsehoods about it. The reality is that as far as the numbers indicated, be they the headline CPI or the numerous measures of underlying CPI, inflation was coming down in the first half of this year, following—and no doubt as a consequence of—the three rate rises in 2006. In other words, it appeared that monetary policy was doing its job. Inflation had been going up, the Reserve Bank tightened the screws—that is their job—and put rates up 75 basis points over that year, and inflation started to come down. The signs that inflation was not behaving as the governor had suggested in June 2007 only started to become apparent—and, of course, not everybody was as convinced as everybody else—in the June numbers, when they were released in the second half of 2007. It is very important to recognise that, throughout the 47 quarters of the Howard government, inflation, whether you measure it as the headline rate or use any of the underlying measures, was managed within the target band. The objective of inflation targeting, which the Treasurer signed off on in December 2007, in essentially the same form as it had been for some years, is to maintain inflation—and inflation is consumer price inflation or the headline CPI—within the band of two to three per cent on average over the cycle. It is expressly stated that it will not be within that band in every quarter. It is designed to allow for fluctuations above and below the band. The focus is on the average. The record is there. If you take headline CPI, it is between two and three per cent; it is 2½ per cent. You can take the underlying measure that is calculated on an exclusion basis by eliminating volatiles, and it is around 2½ per cent. You can take the weighted median, another underlying measure, and it is 2½ per cent. The trimmed mean is 2½ per cent.

That was the test that was set in the objectives of monetary policy agreed to by Peter Costello in 1996 and restated a number of times, most recently by the Treasurer. And it was met. Yet, if you listened to the Treasurer’s rhetoric, you would think the economy had been left in a mess. This is an economy with unemployment at a 35-year low and there are more Australians in work than ever before. I see a new member, a former secretary of the Australian Workers Union, opposite me. I wonder what he thinks about being a member of a government that has no regard for employment. There was no thrill of excitement, no delight expressed from the government benches, at the unemployment figure today. It was down to 4.1 per cent. When we were in government and new employment numbers came out, Peter Costello was on his feet, filled with pride that there were more jobs. What has gone wrong with the Labor Party? I remember Neville Wran used to say, ‘Jobs, jobs, jobs.’

What is the economic objective of the new Rudd government? The truth is that the objectives of monetary policy are not just to deal with inflation; they are to maintain medium-term price stability and that means handling inflation. We are all committed to that. But equally important is maintaining full employment. Yet we seem now to have a government that has no interest in maintaining full employment.

When we talk about Reserve Bank warnings, we hear about these 20 warnings. This is the most selective list. It is a long list. They are invariably quotations from Reserve Bank documents taken dramatically out of context. One of the documents is the one I just mentioned from June 2007, where, in fact, far from warning the government that inflation was going up, the Reserve Bank governor said: ‘Don’t worry. We’ve got everything under control. It is heading down. Things are looking good.’ I just quoted it. That is exactly what they said.

Inflation is a huge challenge. Managing Australia’s economy is a huge challenge. But it has to be done responsibly. It has to be done with language that is moderate, objective and above all accurate. At the moment, the Treasurer, far from taking on economic challenges, is creating economic problems himself.

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

Madam Deputy Speaker Burke, congratulations on the job. The member for Wentworth is acutely embarrassed, most particularly about a number of outrageous and wildly inaccurate statements that he has been making about inflation in the last month or so. What we have seen today from the shadow Treasurer in his discussion of inflation is an attempt simply to fiddle the figures because the truth is too hard for him to digest and too hard for him to comprehend. He spoke before about how proud the member for Higgins was of his economic record—so proud indeed that he could not even attend the House to listen to the member for Wentworth! He would not come, because the record is far from perfect. We are going to have a debate about the size of our inflation problem; we are going to have a debate about its causes, because getting this right is absolutely essential to Australia’s economic future.

If the member for Wentworth were to have his way, there would not be the policies in place that need to address the capacity constraints that we have experienced for years and years in relation to infrastructure and skills. There would not be those policies in place at all because the former government was in denial. We have this wonderful construction and fiddling of the figures because he is so embarrassed, most particularly by his performance on Insiders on Sunday. What did he say on Insiders on Sunday? I will tell you what he said. He said that the underlying inflation rate did not matter—the underlying inflation rate was not the one used by the Reserve Bank—and that the government was wrong to focus on the underlying inflation rate.

The other porky that he told on Insiders on Sunday was that there is no such figure as a 3.6 per cent underlying inflation rate; it does not exist on the Reserve Bank’s website. Wrong again! It is most certainly there. What he has been trying to do is to somehow reanalyse the figures to wash away the inflation that everyone in the community has been feeling, not just for the last two months, three months or six months but for years and years. The reason the member for Wentworth is so embarrassed about this is that he dropped another clanger a couple of weeks ago. Do you know what that clanger was? He said inflation was a fairy story. And perhaps nothing more demonstrated how out of touch the member for Wentworth is than his description of that inflation figure for the December quarter as a fairy story, because working families around this country know about inflation. They do not need the member for Wentworth to fiddle the figures. They have been feeling inflation, because it has been on the march for the last two years—substantially on the march. Of course, the former government was warned.

Opposition Members:

Opposition members interjecting—

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

They were most certainly warned. Arrogant self-promotion does not pass for serious economic analysis.

Opposition Members:

Opposition members interjecting—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order!

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

What we have not had from the member for Wentworth is serious economic analysis. There has been none at all. There are two things he does not really comprehend. The statement on monetary policy which came out from the Reserve Bank earlier this week was very grim news. Of course, if you are going to deal with it, you have to understand its causes. The parting gift from the Liberal Party of Australia and the former Treasurer to the Australian people was this elevated level of inflation—an elevated level of inflation over and above the target band, headline and underlying, for the next two years.

What we get is a redefinition of the figures. What he has been doing out there for the last couple of weeks is somehow trying to redefine away the problem so you cannot be held responsible for your complacency and for your neglect over the last couple of years. That is what is at stake in this debate. This government has put together a comprehensive plan to deal with inflation: a five-point plan, the type of plan that the Liberal Party could not put together at any stage of the last three years.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

No, we couldn’t come up with those cliches!

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

You certainly could not. You certainly could not come up with a plan. You have denied the problem. The problem we have with the member for Wentworth is that perhaps he is the only member of parliament in the country who could make the member for Higgins look in touch. He is the only member who could possibly do that.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

You make Kevin Rudd look numerate.

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

Oh dear. So the member for Wentworth ought to be honest enough to, first of all, admit that underlying inflation has been on the march for a lot longer than the last six months—a lot longer than that.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Stop repeating yourself.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! Stop interjecting.

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

Of course the reason he is so embarrassed is that we had this ridiculous statement from the Leader of the Opposition. He described the Australian economy as being in a first-rate condition. There are some good things in the Australian economy and we discussed them today. The latest employment figures are good. We have had 17 years of growth. That is good. But all of this is now threatened—threatened by an inflation problem that must be brought under control.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Link to this | Hansard source

By your state Labor governments—$80 billion worth of debt.

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

There we go.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for Moncrieff.

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

All of this is threatened by an inflation problem which we accepted responsibility for on day one. As I said in the House the other day, we accept responsibility for dealing with this problem. But why don’t you just have the common decency to accept some responsibility for causing it? The notion that inflation just suddenly jumped out of the bottle in the last six months shows how out of touch the opposition is. If you have been out there doing the shopping or going to a childcare centre, if you have been out there paying your bills, you will know that inflation has been elevated for some time. What is the history of this? Why has he started to redefine the figures? Because the member for Wentworth is so acutely embarrassed by this fact.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

Mr Dutton interjecting

Bob Debus (Macquarie, Australian Labor Party, Minister for Home Affairs) Share this | Link to this | Hansard source

Mr Debus interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for Dickson and the Minister for Home Affairs will stop injecting across the table.

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

Last year, around September, the previous Treasurer, the member for Higgins, made the now famous statement that inflation was right where he wanted it. That is what the former Treasurer said: inflation was right where he wanted it. This just demonstrates how you guys in government got this all wrong. And now it falls to us, the Rudd Labor government, to put in place a series of fundamental reforms to address these problems. We are absolutely determined to do that. The first step we are taking is to bring under control your reckless spending spree of the last three or four years. We saw in the last four-year period the biggest increase in federal spending of any other four-year period in the last 15 years, just at a time when the terms of trade were pumping up the economy.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Hockey interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for North Sydney.

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

What we needed to do was attend to the capacity constraints, as the Reserve Bank advised you to do repeatedly—

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Hockey interjecting

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

over the last three years. What we would have done was to take the warnings on inflation very seriously.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Hockey interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for North Sydney will stop interjecting.

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

Of course, what that means is that the first step that has to be taken is that the federal government itself has to take the lead, has to provide restraint. So it falls to us to cut back your reckless spending spree—and we will, which is why the Prime Minister has made his commitment for a surplus of at least 1.5 per cent of GDP. It is why the Prime Minister made the announcement in the House today about there being the need for restraint—and there is, because those in the opposition do not understand the problem. We have to have some fiscal discipline.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Hockey interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The Manager of Opposition Business is already on thin ice.

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

But, secondly, we must attend to the skills crisis in the Australian economy left to us by the Liberals. You cannot go out and talk to anyone in this country, any employer, large or small, anywhere in the country, who does not talk to you about a skills crisis. But nothing was put in place to deal with this precisely at the time when urgent action was required, when inflation was on the march. When inflation was on the march, what were you doing? I know what you were doing, because we talked about it a bit. You were out there playing tag team with Peter Costello. That is what you were doing. That is what the shadow minister was up to.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Turnbull interjecting

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

Yes, you were. You were out there trying to shame him into putting in place some decent tax reform. That is what you were doing. You were not actually looking after the fundamental interests of the Australian economy—and you were not doing anything about the infrastructure bottlenecks. You would come into the House day after day, week after week, playing the blame game—blame the states; do not accept any responsibility for political leadership, which is what the Reserve Bank was advising you to do.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Link to this | Hansard source

I’ve eaten mousse with more substance than you.

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

And it shows. What is also important is some fundamental tax reform—fundamental tax reform to put incentive in the tax system, so the people who do work hard to make our economy strong get a fair go. Of course, the previous government was content to leave in place the most horrendous effective marginal tax rates, particularly ones which affected second-income earners. You left them there year after year after year after year, and we shamed you into acknowledging the problem. We absolutely shamed you into acknowledging the problem. We did. And we can go back through the record.

We understand that working families deserve not only some tax relief but also a tax system that works for them, and we are determined to put one in place. I am proud to have introduced the bill that came to the House today, along with other measures that the government will bring forward as part of its election commitments. The increase in compensation for out-of-pocket childcare costs, for example, and the education tax rebate are all very important parts of assisting working families—who are under tremendous financial pressure—on the one hand, and, on the other hand, effectively lifting workforce participation, which is so important.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Link to this | Hansard source

It’s at a record high now.

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

Yes, it is, and it needs to go higher—something that you have not recognised either—because we do live in a situation where there is a terms of trade boom that has fuelled demand and it has to be dealt with. It is part and parcel of our five-point plan.

We on this side of the House recognise the enormity of the challenge that we face—and we are up for it. We will not deny the problem. It was absolutely laughable for the member for Wentworth to claim that our accurately describing the size of the inflation challenge was somehow going to cause inflation. I will tell you what it causes: acute political embarrassment to the opposition, because you should be ashamed of your record. The opposition’s claim to economic competence—

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Turnbull interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wentworth!

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

has been blown away completely—

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

You’ve been warned.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

You will be warned in a minute.

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

by the statement on monetary policy that was delivered by the Reserve Bank only on Monday and blown away completely by the December CPI number, the inflation for the months of October, November and December—a 16-year high.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

On one measure.

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

He is still denying it. The member for Wentworth still denies that it is high. Shadow minister, if you do not understand the problem, you cannot be part of the solution. The sort of grandstanding that we have had from you today and over the last couple of weeks shows how ill prepared you are and how you are not fit to occupy the role that you do. The clangers that you have dropped on program after program have seen you become a figure of fun in economic commentary right around this country—and I have to say that I was surprised to see it. (Time expired)

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

I would say that that is the worst performance by a Treasurer in well over 12 years. Today Australian people listening to the debate going on in this chamber and people who have been listening to this Treasurer over the last several months really must cringe. The Australian people, small business, and big business at the moment, have been sapped of their confidence. This is an arrangement that cannot continue. This bloke is completely and utterly out of his depth. Businesses out there at the moment really are concerned about whether to put on extra staff and they are concerned about whether they will make extra investment. That is all because the economic circumstances in this country have changed very quickly. If the confidence goes from the marketplace in this country, unemployment will go up and we will see a fall in investment—and that will be bad for the long-term economic situation facing our country.

The reality is that, when the coalition came into government in 1996, it inherited a debt from the Labor Party of close to $100 billion. It was off the back of Australian families paying 17 per cent for interest rates on their homes—it was over 20 per cent for people who were in small business or who owned farms. All Australians know that, over the last 12 years, our economy was transformed into one of the best in the world. All of that is in the process of being undone. All of that will be undone by a bloke who is completely out of his depth and is fast becoming the laughing-stock of financial markets right around the world.

What has happened so far over the last couple of months is that, because this bloke, this Treasurer, is out of his depth, he is going about a process of rewriting history. He is out there telling people that he inherited a poor-performing economy. He is out there rewriting figures. He is out there fabricating stories about the way in which the member for Wentworth has presented the difficulties in relation to inflation. This bloke thinks, as he did during the election campaign, that if he repeats a line long enough and often enough it will become a truth. The reality, of course, is quite the opposite, because the Australian people know that this is a Treasurer who, in the history of Australia, is the most unqualified person to be running a $1.1 trillion economy and he is thoroughly demonstrating that fact.

This is a bloke who has never run a business. He has never employed staff. Outside of running some hack organisation in Queensland, he has not had any experience in economic management. I say to Australian families and small businesses right now: watch this space very closely, because this is a concerning time in this country’s history. The reality is that most people are worried. Most people are worried about a return to 17 per cent interest rates. If we have a wages blowout in this country, they are worried about a return to high interest rates under a Labor government. They are concerned about returning to high unemployment. High unemployment, of course, was the other hallmark of the former Labor government and it is fast becoming a concern for this country. Good employment figures were released today, but really what will happen is that, if the inflation difficulty is not reined in by this government, if it does not face up to the economic realities, those difficulties will be delivered to the Australian people.

For the record and for all Australian people, the reality is that, when Labor came into government on 24 November, the Australian economy had been run well for the last dozen years. Madam Deputy Speaker, we have heard from the Prime Minister and the Treasurer about how they will rein in this inflation difficulty they talk of. They talk about a five-point plan. Do you know that one of the points of that plan is to address the issue of home loan affordability? They want to create a greater environment for people to be able to buy a house. That is all admirable. However, what they have tried to do in rewriting history over the last few months, particularly the history of inflation, is to say that, through the five-point plan and their policy on home loan affordability, they will reduce the pressure on inflation.

Do you know what that plan promised? That plan promised to deliver to national savings about $3 billion to $4 billion over the estimates, over a four-year period. This is a $1.1 trillion economy. The Treasurer of this nation is asking economists to believe that adding between $3 billion and $4 billion to national savings—adding to national savings is a good thing; nobody questions that—over a four-year period in a $1.1 trillion economy, where the government itself spends $1 billion a day, will put some downward pressure on inflation.

That shows the shallowness of this bloke. It shows the deception and the fraud that he is engaging in at the moment, and it is again a demonstration of the old-style union politics. He is out there with these shallow, weak arguments, and he is not convincing anybody at the moment. He has no economic credibility whatsoever. He has no capacity to carry an economic argument, and he has no ability whatsoever to convince financial markets that he is on top of his brief any time soon. This bloke was spooked from day one, when the banks stared him down, when they increased their interest rates beyond what they should have, beyond what the expectation from Australian families was. His performance in question time this week has been nothing short of embarrassing. It has been embarrassing not just for him but for the people behind him—you see them laughing behind him during question time. You see the gallery laughing when this bloke gets up to answer a question.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member will refer to the minister by his appropriate title.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

Well, this bloke, the member for Lilley.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

No. The member will refer to the Treasurer by his appropriate title.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

Well, the Treasurer is a bloke who is out of his depth. The Treasurer is a bloke who is the laughing-stock at the moment of economists, of the press gallery, of his colleagues and ultimately of the Australian people. The difficulty and the most important point to make out of all of this—which I opened with—is that this is undermining confidence. This really is undermining confidence in the Australian economy. Talking it down, talking about the inflation genie getting out of the bottle—that is all very difficult.

The other aspect of the Labor Party plan at the moment is to slash government spending. The point I made before was that this government spends about $1 billion a day. This is a big, international economy, a $1.1 trillion economy, with a Treasurer who does not have the capacity to manage it. The other day there was an announcement from the Minister for Finance and Deregulation talking about some spending cuts of just over $600 million, which to the average Australian—to all of us—is an enormous amount of money. But the way in which the Labor Party couched this spending cut was that it was going to be part of bringing down pressure on inflation. It is not going to have any impact on reducing inflationary pressures in this country. That is why people from the Reserve Bank governor down are laughing at the contribution of this Treasurer at the moment. To suggest that, in a $1,100 billion per annum economy, this is going to bring down inflation—that it will put a downward pressure on inflation—really just goes to the laughing-stock demonstration that this guy is putting forward.

When the Labor Party talks about government spending under the Howard government, it is talking about spending in areas like family tax benefit, to help families. It is talking about areas like child care, where there was increased expenditure under the Howard government. It is talking about tax cuts. It is talking about all of these issues. There is no proposal on the table at the moment that I am aware of to trim billions of dollars from those measures. It is really quite amazing when you look at how shallow this argument is. Nothing has been more startling than the revelation by this Treasurer—to underscore his economic inability—when he said that the $31 billion of tax cuts were okay this year because they were a Labor Party election promise and they would not add to inflationary pressures, but tax cuts in the out years would not be allowed because they would be inflationary. That is how shallow and inept this Treasurer is. The Australian people at the moment are laughing at this bloke. (Time expired)

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I am happy to talk about recklessness and inconsistency in economic policy, because we have heard plenty of that from the honourable gentlemen opposite in the last half an hour. As the Treasurer said, we have seen the shadow Treasurer grappling, struggling, with the issue of inflation since he became shadow Treasurer. We have seen him desperately searching for the right sound grab. He has tried to claim that inflation was not a problem. He has tried to deny that it was at a 16-year high. And, as the Treasurer said, he had a shocker on Insiders. It was a woeful performance. He should have stayed in bed. The country would have been better off, and he certainly would have been better off. We saw him say on Insiders:

The other measurers of inflation, so-called “underlying inflations”, which are statistical adjustments are … none of them were 3.6 per cent, not one. So, where the 3.6 per cent comes from, I could make a guess but it is not one that was published by the RBA.

That was the shadow Treasurer on the Insiders program on Sunday. I am happy to table the RBA February statement, which was released the next day: underlying inflation, you guessed it, of 3.6 per cent. No wonder he is having trouble.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Turnbull interjecting

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

It is an average, he says. He is having real trouble with the inflation figure. But the best has been his solution. He is full of advice for the Treasurer on how you can fix inflation. He has a plan. It is a cunning plan. It is very smart: ignore it and it will go away. ‘Stop talking about it,’ he says, ‘and it will go away. Don’t talk about inflation, because you put it up.’ So when I saw the Reserve Bank’s statement on monetary policy I thought: ‘Oh well, they’re going to say that the cause of inflation is the Treasurer’s comments. They’re going to say there’s too much inflationary expectation in the economy, so that’s what’s causing inflation.’ But what did the Reserve Bank say? They said:

Given the current strength of domestic demand and pressures on capacity, a significant moderation in demand will be needed if inflation is to be satisfactorily reduced over time.

They said nothing about inflationary expectations, nothing about the Treasurer’s comments. They recognise that the causes of high inflation are the supply-side constraints in the economy and the roaring demand throughout the economy. But the shadow Treasurer has, in just two short months, developed a new economic paradigm. He says: ‘Ignore it and it will go away. Put your head in the sand.’ Ostrich economics, that is his solution! Give me Swan economics any time over ostrich economics, because that is his solution. His solution is to ignore it and it will go away.

What a joke! That is his plan as Treasurer. ‘Make me Treasurer,’ he says, ‘and I’ll ignore it. It will go away; everything will be okay.’ What a plan! There you go—the shadow Treasurer’s alternative approach. His fresh idea for Australia is to ignore it and it will all go away. The Baldrick of Australian politics, with his cunning plan, better do something better than that because the Australian economy needs a better plan than that. That is why we have a different plan. That is why we have a five-point plan. Now, what is point 1? It is to put fiscal policy to work and have a budget surplus at least 1.5 per cent of GDP. Why is this important? I will share with the House some quotes. They are not from me. They are not from the Treasurer. They are not from anybody on this side of the House. They are from well-respected economic commentators Access Economics. What did they have to say about fiscal policy under the previous government? Cop a load of this:

Although it is usual for bad spending decisions to cumulate over the life of a government, the quality of spending decisions in recent years has deteriorated even more than usual as the previous government found itself the recipient of a China driven boom in revenues … the spending decisions flying out of Canberra in recent years proved positive Whitlamesque.

Now, we love Gough on this side of the House, but I do not think Access Economics meant it as a compliment. They were not talking about how great it was that government spending was out of a control under the member for Higgins and the previous government.

From 2002, the previous government pumped an extra $40 billion a year into the economy. We are facing inflationary pressures because they have pumped money into the economy which we have to fix. We have to impose the cuts and there will be some tests for members opposite. We will see how serious they are about inflation. We will see how serious they are when we put out our budget, when we put out our cuts and when we put out our expenditure review process. Let us see where they stand on inflation. Let us see how serious they are. Do they go for the cheap political ‘keep the fishing hall of fame’ line or do they support the cuts? There will be some tests for the opposition as we go along in the process. We will see how they go.

The other quote is from the Reserve Bank. What did they say about government revenue and expenditure in their November board minutes? They said:

New expenditure and revenue measures announced since the budget and in the early part of the election campaign had since reduced the projected surplus to around 1 per cent of GDP. This meant that fiscal policy was roughly neutral in its overall effect on growth as conventionally measured, the recent initiatives having offset the ‘automatic fiscal stabilisers’.

You will recall that, when the Prime Minister announced that the budget surplus would be taken to 1.5 per cent of GDP, the shadow Treasurer raced out and said: ‘That would have happened anyway. The government is not doing anything.’ But the Reserve Bank begs to differ with Professor Turnbull. The Reserve Bank points out that the projection was for the budget surplus to be one per cent of GDP and in their words, not mine, effectively neutral. When you have an inflationary economy, you cannot afford to have budgetary policy and fiscal policy effectively neutral. You need a different approach, and that is our approach. There are other elements, of course, to our plan on inflation. We will be examining options to improve private savings. We will be tackling the skills shortage with 450,000 training places over four years. We will be dealing with infrastructure bottlenecks and workforce participation. These are all medium- to long-term solutions. They will not bring down inflation overnight. We have been bequeathed high inflation by the members opposite.

Talking about inconsistency, I was intrigued to hear the shadow minister for finance, the member for Dickson, say that it has been a problem that the Treasurer has not been able to stop the banks from increasing their interest rates over and above the Reserve Bank cash rate. He conveniently ignores that that started while they were in office. The Adelaide Bank increased its interest rates over the Reserve Bank cash rate while they were in office. I do not recall the member for Higgins—the then Treasurer—calling in the Adelaide Bank and having a stern conversation. What is their solution? They are going to use moral suasion. They are going to convince the banks to be good corporate citizens. They are going to call them in and have a very stern chat to them. That is their solution. Their solution to inflation is on the one hand to ignore it and on the other hand to have the Treasurer of the day call in the banks and say: ‘You have been very naughty boys. Don’t do it again!’ They seem to think that will have some effect. Either they are going to reregulate interest rates or they are not. What is your policy? Would you change the law so that the Treasurer sets bank interest rates or not? If you would not then your words are hollow and your policy is an excuse for failure. They are a joke. They have no consistency. They ignored 20 warnings from the Reserve Bank on inflation. Over 12 years, they ignored 20 warnings from the Reserve Bank, as tabled by the Treasurer in question time.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Turnbull interjecting

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

They will be questioning about them! Time is short, but we have a series of plans to deal with inflation. You shrugged your shoulders when you were in office and said: ‘Australian working people have never been better off and therefore there is nothing we can do. There is nothing we can do about grocery prices. There is nothing we can do about petrol prices. We will just let the market reign. We won’t care about competition.’ We believe in competition on this side of the House. You do not, but we believe in competition. That is why we have given the ACCC real teeth. That is why we are getting the ACCC to ensure that there is competition in the grocery market. That is why we are giving the ACCC the job of standing up for Australian consumers. You shrugged your shoulders and said that there was nothing you could do about the fact that grocery prices have gone up 43.6 per cent over the last 12 years, a rate double that of comparable countries. You thought it was fine. Well, we do not. We have a different approach. We believe that competition can play a role in reducing inflation. We believe that competition is how consumers win. That is why we have given the ACCC real teeth and that is why the ACCC has used the powers that we have given to it.

The shadow Treasurer really needs to think carefully the next time he goes on a Sunday current affairs program. He might be better off staying in bed. At the least, he should read the Reserve Bank statement before he goes on and understand that inflation is not caused by the Treasurer saying that inflation is a problem. There is a difference between cause and effect. Inflation going up causes the Treasurer to say that inflation is a problem. The Treasurer saying that does not affect inflation. (Time expired)

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I will say this for the Assistant Treasurer: he is a lot of wattage on the bottom of the Labor economics ticket. That was probably one of the most impressive job applications that we have ever seen in this place. But let me dispense with some of the snake oil that we are getting from the government about the state of our tremendous economy, the economy that has been called by the economists ‘the wonder down under’. Let us have a look at the economy that this government inherited, because no government in the history of Federation has inherited an economy of this strength. The Howard government delivered record low unemployment. Real household wealth doubled under the period of the Howard government. The Labor Party inherited no debt.

Debate interrupted.