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 failure of the Government to act decisively to set out clear economic strategy which addresses the cost of living pressures on Australian families.

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 key test that the Rudd government set for itself in this budget was whether it would strengthen the Australian economy and put maximum downward pressure on inflation and interest rates. The government, and in particular the Treasurer, has failed miserably on both counts. Most importantly, the government has failed to act decisively. It has not set out a clear economic strategy which addresses the cost of living pressures on Australian families.

The first budget of the Rudd government is not an inflation-fighting budget. It is not a budget that lifts a single finger to help Australians battling with the rising costs of living—petrol, groceries, private health insurance and home interest rates. The only bright light in which we can all take comfort is the strength of the Australian economy and the cuts in personal income tax, which are all courtesy of the previous coalition government.

The Rudd government has inherited the strongest, most flexible and dynamic economy in our nation’s history. It could not have inherited a better fiscal situation. The substantial surplus is a tribute to strong economic management over many years. Remember that when the coalition was elected in 1996 interest expense was two per cent of GDP, a two per cent cost to the budget. If that were still the case, this budget would be in deficit and substantially. Instead, today the Commonwealth is a net lender and interest next year, at over $6 billion, is more than one-half of one per cent of GDP to the revenue account, and that does not include the income from the Future Fund.

Australians had high hopes for this government. We were told that the Rudd government would provide new leadership. We were told the buck would stop with Mr Rudd. But they were just empty slogans. It is time to look behind all the spin and the rhetoric. The reality is that the budget is a missed opportunity. The Treasurer failed to seize the moment and do what was right for the future. In truth, we have the same old Labor Party budget.

In January Mr Rudd unveiled his five-point plan to tackle inflation. What happened to it? Where has it gone? There was no mention of it at all in the speech last night. The government’s five-point plan has been the key focus of this government over the last few months. We were told that spending would be reduced and maximum downward pressure would be placed on inflation and interest rates. Back on 23 January the Treasurer said:

… we have said from day one, that we have got to deal with the inflation problem that we have inherited … This is urgent. We haven’t got a minute to lose. It is a big challenge but we are up to it.

What happened to the urgency? Was the Treasurer so fearful and inexperienced that he could not take the hard and courageous decisions that were needed?

It is clear from last night’s budget that the Treasurer thinks that increasing spending is cutting spending, that increasing taxes reduces inflation and that fiscal profligacy is fiscal rectitude. Australian families will be scratching their heads today. The effect of this government’s policy decisions will be that spending will go up and tax revenues will increase. Where is the five-point plan?

Australians will be reading today’s newspapers thinking they are back in the late 1980s and that this is the same old Labor Party, and they would be right. The budget reveals that this government is wedded to the same old Labor way of managing the economy—higher spending, higher taxes, higher unemployment and lower economic growth. That is what the budget forecasts, and there is no clear economic strategy to address any of these issues. It is an ad hoc set of measures, none of which will strengthen the economy or put downward pressure on inflation.

The coalition left the Australian economy in the best shape it has ever been in. Real wages increased by more than 20 per cent. Real GDP per capita grew by 32 per cent. The unemployment rate was halved and is now at a 34-year low. More Australians are now in work than ever before. Labor’s $96 billion debt was eliminated and there was no net debt. Inflation was kept at 2½ per cent, on average, over the cycle. That did not happen by accident. It was the result of sound economic management by the coalition. The one thing Australians knew about Peter Costello’s budgets was that they were decisive. The coalition took strong decisions and took action. There was a coherent economic strategy and the dividend was a strong and resilient economy that increased living standards for all Australians.

With results like these there was good reason for Australians to remain optimistic and confident about our economic future. But since the Rudd government came to office that optimism about our economic future has faded. Business confidence and consumer confidence have plummeted. Nothing in the budget will do anything to lift that confidence. The Treasurer does not inspire confidence at all. He exudes weakness, nervousness and uncertainty. He is not even prepared to sit here and engage in the MPI debate about his own budget. He is hiding in his office and he sends his junior minister along to front. What a gutless wonder. His anxiety and inexperience are written all over the budget documents. He does not know what he is doing.

Time and again the Treasurer has gone around the country saying: ‘Government spending will be cut—massive cuts.’ And so has the Minister for Finance and Deregulation, who said on 11 April:

We will have substantial spending cuts … They will involve some pain, spread pretty widely across much of the community. That’s part of getting the budget back under control …

That was the story—big cuts and big downward pressure on inflation, because aggregate demand would be reduced by big cuts in government expenditure. And we believed them. We thought they might go too far. Obviously, any cut in net spending that was less than half a per cent of GDP would not make any difference, so we assumed that they would be true to their word. But what have they done?

As the budget papers show, as a result of the policy decisions taken by this government, spending will increase by $14.9 billion over the four years of the forward estimates, and that does not include the extra spending of $3.1 billion as a result of policy decisions taken in this financial year. How is that cutting spending? We know what he actually meant when he said he was going to cut spending. The Treasurer seems to think that, if you cut $15 billion in planned coalition spending and replace it with $30 billion of Labor spending, you are still cutting spending. So the only spending he believes in cutting is coalition programs.

There we have it. The Treasurer seems to think that when you increase net spending you are really cutting it. Can you believe it? Is that what we can expect from the Rudd government during the rest of its term—that when you spend more you are actually spending less? How will that kind of economic logic strengthen our economy? Under Mr Swan’s new accounting rules, spending more means spending less. What hope is there of putting downward pressure on inflation and interest rates? Is that what the Prime Minister meant when he talked about new leadership? Well, it is certainly new economics. It is voodoo economics. It is unbelievable economics from an unbelievable Treasurer.

Here is another example. The Treasurer is directly increasing the price of cars and alcohol in this budget by increasing taxes on those goods. The budget papers clearly show the government expects people to drop out of private health insurance, which, as the Prime Minister conceded today, would put upward pressure on premiums and private health insurance premiums will go up. What Australian families are entitled to know is: how does increasing the price of goods and services reduce inflation? I asked that question of the Treasurer in question time. He could not answer it; there was no answer. It is just part of the voodoo economics. You do not have to provide answers. What on earth is he thinking? What on earth are they thinking, imagining that we can be conned, that this country can be conned, with the claim that the increased tax on alcopops is actually going to reduce consumption. And yet we know from their own budget papers, Budget Paper No. 2, that the revenue from that increase in excise will go from $600-odd million in the first year to over $800 million in the fourth year. How can that happen unless there is more consumption—unless there are more alcopops drunk and more excise paid? And yet we have the health minister saying, in blindness to what was in the budget, it will reduce consumption.

Here is another example. The big anti-inflationary so-called trump card in this budget was supposedly, after a big surplus was generated—no thanks to the Treasurer or his colleagues—to take money out of that surplus and put it away in several new funds. Let there be no mistake. What the Treasurer has done with the Building Australia Fund is nothing at all like the coalition’s Future Fund. When the coalition introduced the Future Fund, it put in place a strong governance structure with an independent investment manager with a responsible investment mandate. The Future Fund’s earnings were quarantined and reinvested in the Future Fund. We never claimed the fund’s earnings as part of the fiscal surplus. There was no confusion about what the Future Fund was designed to do. It was designed to deal with the unfunded obligations to Public Service pensions and take the burden off future generations. It was very clear, very accountable and very transparent.

What has Labor done? It has put $20 billion into a Building Australia Fund; a Labor Party slush fund paid for with the savings of Australians. What rate of return will investment proposals have to achieve? There is no investment structure, no governance structure and, most importantly, no guarantee that the money will be spent wisely. We will not know what financial or economic return the fund is required to seek. You could not raise $20 for infrastructure in the public markets with that lack of detail, but this Treasurer—this absent and gutless Treasurer who will not stand in the House to debate his own budget—believes he has the right to draw a cheque payable to himself with the savings of Australians without providing any of the details that are owed to Australians as to how their savings are going to be dealt with.

Compare that to our commitment of $10 billion under the National Plan for Water Security—real money for real infrastructure needs. We made it very clear precisely where that money was to be invested. We made it clear what return we would seek in terms of shared water savings. Everything was laid out and the commitment of the funds was set out in the budget papers. Everything was transparent. Nothing, not one dollar of these investments from the infrastructure fund, has been dealt with in the budget papers—not a dollar. We do not know when it is going to be spent, how it is going to be spent, what the return is going to be or how it is going to be managed. It is just a bank account with ‘infrastructure’ written on it, and that is all we know.

While Labor inherited the strongest budget in our nation’s history, the strongest surplus courtesy of decisions taken by the coalition, it is now sowing the seeds for wasteful spending, leading inexorably to budget deficits and debt in the future. A responsible and decisive Treasurer could have taken action today and put his foot down. He could have insisted that the taxpayers’ money in this fund be quarantined and the funds spent wisely. He could have laid down some conditions and parameters. There are plenty of precedents for it, but he chose to do nothing. He lacked the courage and the guts to do it. Instead, all we have is a series of vague suggestions, a blank cheque drawn by the Treasurer to himself.

The budget also does nothing to secure the economic future of Australian families. We know that one of the great challenges we face is the challenge of declining birth rates. Indeed, a few years ago, you could not find a demographer in this country or anywhere that would say that Australia’s birth rate was not inexorably destined to go down to 1.6 and keep falling. But, instead, it has gone up. The reason it has gone up, alone in the developed world, is that the coalition made a commitment to send a strong social message, to send a statement that children are a social good and that all of us have a vested interest in each other’s children. Part of that strong social message was the universal availability of the baby bonus, and now the Labor Party proposes to means test it. That means test, which is clumsily designed and will create many disincentives, will save $70 million a year out of a $1.5 billion program—a sum of money which is tiny in contrast to the budget. It is $70 million paid to achieve one thing: a headline entitled ‘Soak the rich’—an appeal to Labor’s divisive envy politics. (Time expired)

Opposition Members:

Opposition members interjecting—

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 remove himself under standing order 94(a). The member for Prospect will be heard in silence as the member for Wentworth was.

The member for North Sydney then left the chamber.

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

This MPI is quite encouraging. At long last it appears the opposition now accepts that there are cost of living pressures on Australian families. At long last it seems that they finally accept that ‘Australian working families have never been better off’ was a false premise. At long last they accept that inflation is a problem. This MPI is about cost of living pressures on Australian families. What are cost of living pressures? Cost of living pressures are price rises. What are price rises? Price rises are inflation. So the proposition being put to us by honourable members opposite today is that last night’s budget did not do enough about inflation—not enough about the cost of living. Last week inflation was a charade! The Leader of the Opposition said:

The inflation crisis is a complete charade.

The honourable member for Wentworth has said:

We have heard a lot of fairy stories about the important challenges of inflation ...

So last week it was a charade and a fairy story; tonight he says that we did not do enough. The view of the opposition is that they would like us to do more about the charade. They would very much like us to deal with the fairy story. That is the position they are putting to the Australian people. They have been trying to convince us that the inflation problem is overblown or, as the shadow Treasurer might say, ‘overdramatised’—as he has said about interest rate increases in the past.

On 6 February he even penned an op ed. He sat down at his desk and wrote an article for the Australian, claiming that the government was wrong when they said that inflation is higher in Australia than generally in the OECD. And to support his argument he pointed out that inflation was actually higher than Australia in China, India and Singapore. But those countries are not in the OECD—a slight technical problem for the shadow Treasurer! His answer to inflation being higher in Australia than it is in the OECD is to put more countries into the OECD. Next he is going to be coming in here and saying, ‘Inflation is not much of a problem in Australia because it is actually higher in Zimbabwe.’ That is his solution to inflation in this country. That is his solution to the cost of living pressures on Australian families.

There are three things the government can do to deal with inflation: we can get government spending under control, we can deal with the infrastructure crisis in Australia and we can deal with the skills problems in Australia—the three things that the Reserve Bank has pointed out have led to inflation.

Let us deal with getting government spending under control. I have to say that there are people who can explain this better than I can. I would like to share with the House an article from the Sydney Morning Herald by Stephen Anthony, a former very senior official in the Treasury and department of finance. This is what he had to say about the tax-and-spend Liberals who sit opposite. He said this:

Unfortunately, the Howard government lost its way from 2004. When the China boom arrived with soaring commodity prices there was no offsetting tightening in fiscal settings to “bank” windfall revenue gains from mining. The drunken sailors pillaged the budget for political expediency and produced a structural deterioration in the bottom line.

Those are not my words; they are the words of a former senior official in the Treasury and the department of finance. He went on:

The huge spending injection coincided with the further upturn in the business cycle. Blind Freddy knew inflation would be the result.

That is what Stephen Anthony has said. He has told us of the lie in what the shadow Treasurer has just put before the House. They say they had government spending under control. Well, if hypocrisy were a crime the shadow Treasurer would be doing life, because they had government spending completely out of control and it has been up to us to put downward pressure on inflation by getting government spending back under control.

We have reduced government spending as a percentage of GDP by a full percentage point to make it the lowest it has been since 1989-90—that is real spending cuts and real responsible economic management, which the former government could not achieve. The increase in government spending of 1.1 per cent is exactly a quarter of the average over the last four years. That is what responsible economic management is all about. That is what being serious about inflation is all about—when you go through an ERC process and put a ruler over every single item of government expenditure, which they became too lazy to do.

They became too lazy to do that, because they did not think inflation was a problem. The previous Treasurer, the member for Higgins, said, ‘Inflation is right where we want it.’ That is what they really thought about inflation. Now it is ‘a charade and a fairytale, but we’d like you to do more about it, thank you very much’! No wonder the opposition has lost all economic credibility with the Australian people. The other focus to this budget is on helping working families—helping families deal with the cost of living pressures. You can put downward pressure on inflation by getting government spending under control but you also need to put measures in place to help working families.

Now the shadow Treasurer—I was almost going to call him the Leader of the Opposition; I am getting slightly ahead of myself—has become the John Cleese of Australian politics. You can just imagine him. He says to the Australian people, ‘What does this budget do for Australian families?’ They say, ‘Well, it delivers tax cuts for lower-middle income earners.’ And he says, ‘Yes, but apart from tax cuts for lower and middle income earners, what does it do for the Australian people?’ They say, ‘It increases the childcare rebate from 30 per cent to 50 per cent.’ And he says, ‘Well, apart from the tax cuts and increasing the childcare rebate what does it do for Australian families?’ And they say, ‘It introduces an education tax rebate.’ He says, ‘Well, okay, apart from the education tax rebate, the increase in the childcare rebate and the tax cuts for working families, what does it do for us?’ They say, ‘Well, it increases the utilities allowance for pensioners.’ And he says, ‘Okay, apart from the increase in utilities allowance, and the increase in the childcare cash rebate, the introduction of the education rebate, and the tax cuts, what have they ever done for us?’ They say, ‘Well, they got government spending under control, which you never did.’ And he says, ‘Okay, apart from getting government spending under control, the childcare cash rebate, the education rebate and the tax cuts, what’s this government ever done for us?’ At least John Cleese was trying to be funny. The shadow Treasurer is just a joke and a laughing stock. No wonder the Australian people have passed their judgement on this mob, who no longer stand for anything but make cheap political points.

I agree with the comments of several commentators on the complete lack of responsibility that the shadow Treasurer has shown over the last few weeks. Let’s have a look at what some of them have said. The shadow Treasurer said, ‘Inflation is a fairytale,’ whereas Chris Richardson from Access Economics says, ‘You have an inflation time bomb.’ Chris Caton, Chief Economist of BT Financial, said he was ‘not so much surprised as amused at the coalition’s attacks on Labor’s cut in government spending’. Saul Eslake said:

The last two terms of the Howard government featured wasteful and misdirected spending that needs to be corrected.

He said:

Turnbull is advocating a do-nothing budget. He is all about politics and not about economics.

He is all about the leadership of the Liberal Party, trying to make himself look better, and not about economics. Economic credibility is actually important in this country, and you no longer have any. You have completely bankrupted yourselves and sold yourselves out.

When we are talking about cost of living pressures we also need to talk about the pressures on the Australian people from things like grocery prices and petrol prices. Our old friend the member for Dickson has been talking about those. He has been making certain commitments on behalf of the opposition. This is what he said on 14 May:

I think Brendan Nelson would have a greater capacity to deliver lower petrol prices for families and lower grocery prices.

Oh, really! This was the promise by the shadow minister for finance. He said that they will reduce grocery prices and petrol prices. Let’s talk about petrol prices. Why don’t you give motorists a fair go? Why don’t you get on the side of motorists for a change and back our FuelWatch scheme? The ACCC did an analysis of FuelWatch and found that it puts downward pressure on prices by 2c a litre. Why don’t you accept the offer of a briefing from the ACCC? The ACCC has offered you a briefing on the modelling and you have declined it. What have you got to hide? Why don’t you accept the offer of a briefing from the ACCC? Members opposite do not need to take my word for it. They can listen to one of their own, our old friend the leader of the Liberal Party in New South Wales, Mr O’Farrell, who said that FuelWatch:

... will ease the burden on families and pensioners by helping drive down petrol prices.

That was not from a Labor leader; it was from a Liberal leader. He went on to say:

This is about putting the interests of motorists’ wallets ahead of oil company profits.

Which side are they on? They have a choice. They are either on the side of motorists or they are against them. They have chosen to take the evidence of people with a vested interest ahead of the evidence of the people’s watchdog, the ACCC. Shame on them. They have outsourced policy development to the oil companies and to people with a vested interest and they are putting motorists last. This government will not do it. We will proceed with FuelWatch and we will put it through the parliament.

If the opposition blocks FuelWatch in the other place, they will have some talking and explaining to do. When prices go up at the end of the week and in the lead-up to a long weekend by 10c or 15c a litre and people have no notice of that and FuelWatch is not in operation because the opposition blocked it, they will have to explain why they stood in the way of this reform, which will give motorists more information about where to find the cheapest petrol and 24 hours notice of increases in petrol prices so that they can get ahead and buy the petrol before the price goes up.

On any given day in any capital city the difference between the price of petrol at the cheapest petrol station and the most expensive one can be as high as 10c or 15c a litre. How can people find it at the moment? They have to drive around. They have to drive around and use a lot of petrol to find it. Under FuelWatch they will be able to log on and find where to get the cheapest petrol. But those opposite will stop it. They will stop this happening and they will not do anything about the price volatility.

The government will take FuelWatch to this House, where I expect it might pass, and we will take it to the other house, where crossbenchers have indicated support. But it would be a lot easier with the support of the opposition. You have to decide: are you with motorists or against them? Are you with the vested interests or are you against them? You come in here and lecture us about the cost of living. You can do something about petrol prices. You can do something about giving consumers more information about where they can get the cheapest petrol by backing our plan. You have said that you could reduce petrol prices. The member for Dickson said it in his endorsement of the Leader of the Opposition against the member for Wentworth. He said, ‘Brendan Nelson could do a better job than Kevin Rudd about bringing down petrol prices and grocery prices.’ Where is your plan? Either back our plan or come up with your own. If you cannot come up with your own then back ours and do something about it.

It will hang around your head if you stand in the way of this important reform. At last you say that Australian people are doing it tough. For a long time you said that Australian working families have never been better off. The opposition has said, ‘Australian working families were never better off than under the Howard government.’ At last now they recognise that the price of non-discretionary expenses—groceries and petrol—is putting working families under pressure. But what they have to do is back up their promise with a plan, or they have to back ours. They have to back our spending cuts, back our reduction in government expenditure as a percentage of GDP and stop going along with emotional claptrap about every mother loving their baby to justify millionaires getting the baby bonus. You have got to become serious about economic credibility in this country. You have got to become serious about getting inflation under control. You have got to become serious about getting government expenditure under control. You have got to become serious about putting more transparency in the petrol market and more competition into the grocery market.

The government announced a modest reform freeing up foreign investment rules to encourage more foreign owned grocery retailers and supermarkets into this county, to get more competition. All the evidence shows that when you have more competition you have more downward pressure on grocery prices. Do you know what the opposition said? They said, ‘You should not support foreign grocers and supermarkets.’ They engaged in Hansonesque xenophobia instead of putting Australian consumers first. That is what they said. They have completely bankrupted their policy development by refusing to back Labor’s practical and sensible plans to put downward pressure on prices wherever we can and to get more transparency and competition into the market.

We have a choice. You can have a government which says: ‘Working families are doing it tough and we will do what we can to help where we can. We will get government expenditure under control. We will increase the childcare rebate. We will introduce an education rebate. We will have tax cuts for low- and middle-income earners. We will put more transparency and competition into the petrol market. We will put more competition into the grocery market, and we will do what we can where we can to help.’ We have an opposition that says, ‘We thought Australian families had never been better off.’ It seems they now accept that they were wrong, but they say: ‘We are not sure what we can do about it. We are going to oppose everything the government puts up to do with it.’ No wonder you are a joke; you are pathetic, and the Australian people have come to that conclusion.

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

That was a dreadful contribution by the Assistant Treasurer, otherwise known from this side of the dispatch box as ‘Cygnet’. ‘Daddy Swan’ could not come down, so he sent baby along and baby went on with the usual rubbish that he continues on with. It is good enough for the Treasurer to send down his advisers to the dispatch box, to send advice down to ‘Cygnet’, but it is not good enough for the Treasurer to come down and contribute to part of this debate, because that man is completely and utterly out of his depth.

It is a joke when you listen to the rhetoric of the government on the cost of living pressures. They promised the Australian people at the last election that they would bring downward pressure on interest rates; they promised Australian families that they would bring downward pressure on groceries; they promised the Australian people that they would bring downward pressure on petrol prices. They have had six months in government to come up with a plan to deliver on that promise and they have done nothing on this, their major piece of policy announcement since they were elected. The budget that was discussed last night delivered no support to Australian families.

The Australian people will shortly start to understand that this is a government full of style, full of bravado, full of spin but very, very short on substance. They have no substance. The Australian people, when they go to the bowsers this week to fill up and see petrol prices at record highs, will realise that Mr Rudd promised at the last election but in this budget failed to deliver any measure targeted at reducing that petrol price. When the Australian people go to do their grocery shopping at the supermarket shops this week, when they pay higher prices at the checkout, they should recognise that Mr Rudd promised at the last election that he would bring grocery prices down, and he did nothing in this budget to deliver on that promise.

The interesting part to examine is the rhetoric and the debate that took place in the run-up to the budget announcement last night—the period between November last year and the budget announcement last night. When we have seen ‘Daddy Swan’ out and ably assisted on many occasion by ‘Cygnet’, when we have seen the two of them out talking to—

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

The member will refer to ministers by their proper titles.

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

the Australian people, they have been talking up the issue of inflation. They have said that this budget would be about bringing the cost of living pressures down by bringing inflation down. They have said to the Australian people on a constant basis that they need to bring inflation down because that is the biggest scourge in the Australian economy at the moment. When you look at the facts, though, and when you go beyond the media spin that really is the front of this government, you realise how hollow their rhetoric is and you realise what  considerable damage the Treasurer has done to this economy over the last six months. He has belted the hell out of confidence, not just for consumers but for business as well in this country over the last six months. It has been a great demonstration of the way in which a Treasurer—as Treasurer of probably the greatest nation on earth—should never, ever conduct himself or herself. It has been an appalling display and it goes completely to political motive and has nothing to do with economic responsibility and certainly nothing to do with economic conservatism.

I just want to point to how confused the Labor Party is on the issue of inflation. It was the Assistant Treasurer himself who, on 22 January this year at a press conference—and this is the Assistant Treasurer whose contribution we have just heard—in his own words said: ‘Inflation has been low in Australia over the last few years.’ How do you reconcile that statement at his press conference in January this year with his contribution today, because it shows him, like the Treasurer, to be a liar on the issue of inflation, and that is a—

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

The member will withdraw that.

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

I withdraw. But the point that I make is that they have been running around deceiving the Australian people on the issue of inflation. They have no consistency because they do not have any fundamental understanding of running an international economy, and this is a real problem into the future for this country. We have had people like Wayne Swan, the Treasurer of this country, at a time when there are international pressures on our economy, when there are domestic pressures on our economy, out there saying:

... I say it to everyone; we’ve got a difficult fight on our hands as a nation. The inflation genie is out of the bottle, it’s been on the march for a couple of years.

That was a message that was sent to the Reserve Bank Governor and to the Australian business community—that, in the Treasurer’s opinion, inflation was out of control. That is what the Treasurer was out there saying to the markets in this country and then he wondered why inflation tracked up afterwards. The markets hang off every word that that man has to say. The markets depend on every word that that man has to say. He is an irresponsible person and he is incapable of managing the Australian economy. The Reserve Bank Governor has dismissed basically as rubbish the contribution of the Treasurer in relation to that statement, when he said that the genie was out of the bottle in terms of inflation. He has been slapped down, in essence, by not just the Reserve Bank Governor but many business leaders in this country.

The fact is that, in relation to inflation, the Reserve Bank had provided advice to the last government. The PEFO—which is the most recent document of the last government that I can point to—offered advice in October 2007 to the Howard government in relation to inflation along these lines, and I will quote from the document. This is PEFO—not signed off by Peter Costello, John Howard, Nick Minchin or anybody else but signed off by Ken Henry, the Secretary of the Treasury, and Ian Watt, the Secretary of Finance. Their independent advice in October 2007 to the government was that their forecast for inflation in 2007-08 was 2¾ per cent. In 2008-09 it would be 2¾ per cent. Their projection for 2009-10 was that it would be at 2½ per cent, and their projection for 2010-11 was that it would remain at 2.5 per cent. That is the advice that the government had from Treasury and Finance in October last year.

Nobody doubts that inflation is an issue which, for any developed economy, is a constant that has to be dealt with. The previous coalition government was able to deal with the issue of inflation. We were able to deal with inflation at the same time that we continued to have significant economic growth. We were able to deal with and contain inflation at the same time that we cut spending, we cut taxes and we lifted the workforce participation rate—we had record lows in unemployment. We were able to manage all of those economic outcomes while at the same time keeping inflation within the bandwidth set by the Reserve Bank governor.

This debate goes to not just inflationary pressures but specifically the issue of cost pressures on Australian families. As I said in my opening remarks, at the last election the government promised that they would bring down grocery prices and petrol prices and make homes more affordable. This budget, as has been clearly demonstrated, does none of that. In relation to petrol, there is $20 million provided in this budget to prop up the failed FuelWatch scheme, a scheme which has operated in Western Australia, which is a market that has incredibly high petrol prices. The reality is—

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

Mr Bowen interjecting

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

And I will take the interjection from the Assistant Treasurer, saying that Grant Samuel is one of us, to quote him, which is an irresponsible statement from an Assistant Treasurer.

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

Mr Bowen interjecting

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

No, you said he was one of us. We will check the Hansard, because you are a fraud. You are a fraud, my friend.

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

Madam Deputy Speaker, I rise on a point of order—

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

Check the Hansard.

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

The member for Dickson will withdraw.

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

I will acknowledge two things, Madam Deputy Speaker. I withdraw, and at the same time I will say that what I said was an exact quote of the Assistant Treasurer, and it is shameful. It is shameful because it shows the class warfare and the rubbish that goes on in the Labor Party. This is a party that has promised a failed FuelWatch scheme to get it through a political difficulty in relation to petrol. Petrol prices are at an all-time high, and the Rudd government is going to do nothing about it. They have promised $20 million to put fuel prices up on a website somewhere. It has not worked in Western Australia; it will not work for the rest of Australia. (Time expired)

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

This matter of public importance moved by the member for Wentworth is further evidence that those on the other side of this chamber know no bounds when it comes to sheer hypocrisy—those who, just a short time ago, issued that great clarion call that ‘working families have never been better off’, a clarion call that was denounced by people throughout this country. Hardworking people in communities right across this country stood up to be counted at the last election. They were not going to take the fact that they were under enormous financial pressures, many of those pressures created by the profligate spending and continual pork-barrelling by those on the other side, using budgets year after year to win votes rather than invest in our nation’s long-term future. The result of that, their legacy, is the highest inflation in 16 years—the highest inflation, stripping away the living standards of working people across this country and eroding the value of the money in their pockets.

This is the great challenge, a challenge that we as a government are ready to confront head on. That is why in this budget we have reduced government spending. We have brought to an end the rapid increases in government spending that occurred consistently throughout the period of the previous government.

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

Mr Keenan interjecting

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

Under a government more concerned with pork-barrelling in marginal seats than investing in their long-term future, working families across this country saw their costs, whether they were child care, fuel, education, mortgage or rental costs, spiralling out of control and leading to that 16-year high in inflation. It is a massive challenge and one that we are prepared to confront.

The opposition leader says that it is a charade. Go and talk to the working families right across this country who are seeing the money in their pocket eroded, ripped away, by the scourge of inflation. Go and tell them it is a charade.

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

Mr Keenan interjecting

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

The member for Stirling is warned!

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

Perhaps one or two people in the course of the opposition leader’s so-called listening tour through this country might have pointed it out. I can tell you that in my electorate they consistently point it out, because it is having a real impact. I want to address this issue by making some reference to my local community.

There have been suggestions that we should ignore inflation or that we should not confront it—and we can go back and look at the record to see the many comments that have been made by those on the other side, including the member for Wentworth, as recently as 9 February. Asked if inflation was out of the target band, Mr Turnbull on Friday said it was not. On 28 April 2008 he said:

I think the Treasurer’s got to be very careful not to be too Scrooge-like with the Federal Budget …

He said:

… I’m saying there is a lot of grief coming in from outside Australia—

well, that is a revelation!—

and this is a time for us here in economic management to be cautious. We shouldn’t be rushing in to measures be they monetary or fiscal, that could in effect, overdo the downward pressure on economic activity that is coming from the rest of the world.

It seems a far cry from what we are now hearing. Our budget, the Treasurer’s budget, this government’s budget, did not go far enough. But back then—it was not that long ago—we had to be ‘cautious’. We had to demonstrate the sort of caution that the member for Wentworth was calling for.

The very expenditure cuts that we have announced, in particular the means-testing of the baby bonus, is a case in point when it comes to the absolute failure of those on the other side in their time in office to recognise that government revenue, tax dollars, is money contributed by hardworking Australians throughout this country. To hoard it and try and funnel it back as a bribe to those who are less deserving has consequences, and one of those consequences has been that inflation has run out of control. People in my electorate who are absolutely stretched to the verge of bankruptcy in many cases now find that, because inflation is out of control, the Reserve Bank, using the only instrument available to it, is having to increase interest rates—putting more and more pressure on those people who are on the edge.

This is all occurring because those on the other side failed to act. They failed to rein in government expenditure. If this government does the same and fails to do that, it is going to impact even more on people in my community than in some others. We have expenditure cuts that are targeted. They are targeted to the people who can absorb those cuts, because if we do not do that then the people who cannot absorb further increases in interest rates are going to be the victims. That is why it is imperative that we run a tighter budget, and that is why this government has risen to that challenge. Economic commentators right across this country acknowledge that—even Goldman Sachs. Either the quality of advice that they offer has deteriorated somewhat or, some might suggest, it has improved! But, notwithstanding the credentials of a firm of that nature, even they can see the merits of the budget that we have brought down.

Let me quote Peter Anderson from the Australian Chamber of Commerce and Industry in relation to the budget:

It’s good on infrastructure, it’s good on workforce skills and it makes good progress on reducing the size of government expenditure.

Those on the other side say there are no reductions in government expenditure. Well, Peter Anderson seems to believe that there are. He has read the budget papers. He focuses on workforce skills and infrastructure, key elements of our five-point plan. You come into this place and talk about a lack of a strategy. What is your strategy? We have a five-point plan, and it is not just rhetoric; we are delivering on it. The budget delivered last night delivers on each and every one of those five points in the plan.

The first point, ensuring that we have a surplus of over 1.5 per cent of GDP, was delivered. 1.8 per cent of GDP was the surplus handed down last night. The second point is investing in skills and education. We have had over 20 warnings from the Reserve Bank—and I have to say to the Leader of the Opposition, who thinks that inflation is a charade, that he is clearly not looking at the gestures coming from the Reserve Bank, because they have been very clearly articulating their stance with over 20 warnings about infrastructure blockages, skills shortages and the risk of inflation. All of those cautions and those warnings were not acted upon. But we are delivering on the education and skills front—$2.5 billion to trades training centres in schools around this country, delivering access to the skills that our economy needs in the school. These are significant changes and measures that we are introducing, including 630,000 additional training places. That is a significant measure that will have a significant impact. Whilst those on the other side sat on their hands and ignored those warnings, we are acting decisively. The suggestion that we do not have a plan and have not implemented it decisively really does defy any credibility and raises the question: what were those people over there doing over the last 12 years?

In terms of investing in skills and training, there are a raft of other measures, including delivering relief to families through the education tax refund. This will make a real impact for hardworking families trying to give their kids the best start in life and trying to make sure that when they go to school each day they have access to the resources that they need to do their homework, to be prepared and to be able to compete with those million-dollar babies that the people on the other side are so determined to protect. At some point those on the other side need to recognise that we need to target government expenditure to areas of need and not throw it around in order to continue to curry favour with those constituencies that may happen to be their supporters.

Our third point is investing in infrastructure. Our Building Australia Fund, our investment in housing and the National Rental Affordability Scheme are real measures attacking the infrastructure problems. We are boosting workforce participation with the low-income tax offset and tax cuts targeted to middle- and low-income earners. We are boosting national savings through our first home owners saving scheme. This is the five-point plan. This is our strategy. We have acted decisively, and we will now see over the coming period results that you would never have seen if those people on the other side, who sat on their hands for 12 years, were still on this side and in control of the treasury bench.

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

Late last year there was a change of government in this country, and I suspect that the people of Australia have been sitting around waiting to see what the nature of this new government is. Six months later, they have their answer. Quite frankly, this is all there is. The government’s first budget has been delivered under the most fortuitous circumstances for any new government in the history of this country, and this is all that we get from the new Rudd government.

The previous speaker asked what we were doing when we were in government, so I would like to take an opportunity to remind him of what we were doing, because it goes to the heart of the favourable circumstances that have faced this government since they came into office. What were we doing when we were in office? Paying off Labor’s debt, creating two million jobs, keeping inflation low and keeping interest rates low. We halved the rate of long-term unemployed. We doubled net household wealth. That is a pretty good record, and this is the economy that the Labor Party has now inherited. Wayne Swan is the luckiest incoming Treasurer in the history of Australia, and that is a fact.

What we have seen from this government—and we saw it prior to when they were elected—is claims that they were going to put grocery prices, petrol prices and our mortgages at the heart of what they do. This was going to be ‘core business’, as the Prime Minister always says. In fact, in the Australian this year the Prime Minister said that, when it comes to grocery prices and food prices, ‘The buck stops with me’. His Treasurer said very similar things. In fact, apparently the Treasurer has been conducting grocery price watches in his own electorate since 1993.

So we have a new Prime Minister, we have a new Treasurer, and at the heart of what they are going to do for the Australian people is controlling the cost of living. So in their first big policy document that they have brought down in this place for the Australian people, what do we have about easing cost-of-living pressures—this core business of the new Rudd government? We have three lines in the budget speech. What they say is that there are legitimate community concerns about the increasing price of groceries and petrol—we all know that; this Prime Minister has a habit of stating the absolute obvious. Then they say they will have the ACCC look at it and they will introduce a failed FuelWatch scheme. That is line number two. Line number three in this budget document about controlling cost-of-living pressures is that they are going to expand financial counselling services to help families better manage their finances. That is three lines from the main policy document of this new government about something that they have been telling the Australian people is core business.

What would help Australians control their budgets is for the new government to do something about rising grocery prices and rising petrol prices that works. Instead what we get is a budget that will drive up inflation. We get a budget that is increasing taxes and we get a budget that is going to be a record spend for any Australian government. They are increasing the cost of air travel in this budget. They are increasing the cost of the passenger movement charge. They are increasing the cost of passports. They are increasing the cost of alcohol. They are increasing the cost of motor vehicles. All of these will drive up inflation. Somebody obviously has not told the Treasurer that raising prices will drive up inflation. And worse, there are measures within this budget that will go to the heart of this conversation today: the core business that the government believes that it is engaged in of controlling petrol prices and controlling grocery prices. Last night they slapped an extra tax on condensates, which will feed directly into the price of petrol.

If you want to know the nature of this new government, this budget document says everything about it. What they are prepared to do about any substantial issue is to strike a pose that they care about it and then come up with some stunt about it. Then they will blithely move onto the next thing without ever achieving any results on what they have set themselves to do. A high taxing, high spending, old-fashioned Labor budget will not help—(Time expired)

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I am delighted to have this opportunity to speak today on the Rudd government’s first budget, delivered last night. I want to start by congratulating the Treasurer, Wayne Swan, for his magnificent work in creating a budget that delivers on each and every one of Labor’s election commitments and sets Australia on the path to meet the challenges of the future. In my electorate we have welcomed significant investments in our local sporting infrastructure and health services, just to name a few of the budget initiatives. Each of the election commitments for Capricornia has been honoured in full.

We also set out in this budget to relieve financial pressure on families, on workers and those on low incomes such as pensioners and carers. We did that because we know that many Australians are struggling with the legacy of the previous government—12 interest rate hikes in a row and the highest inflation this country has seen for 16 years. It is absolutely ironic therefore that the opposition should choose today’s topic for the MPI. Here they are accusing the government of failing to address the cost-of-living pressures on Australian families. How can they say that with a straight face? Members of the opposition have shown time and time again that they have no idea about the financial pressures Australian families are under and certainly no intention of doing anything to help alleviate those pressures. Let us not forget that until a few weeks ago the opposition’s answer to Australians’ financial pressures was Work Choices. According to them the answer to financial pressure was job insecurity and AWAs that stripped away basic entitlements and reduced take home pay.

As we have heard from previous speakers, the budget is full of measures that go directly to relieving the cost-of-living pressures on Australian families. There are the tax cuts, of course; there is increased assistance for childcare costs; there is important help with education expenses and additional measures for seniors and carers. And of course these measures will all be delivered within an overall budget framework of cuts to government spending and investment in things like education, training and infrastructure—all aimed at reducing the capacity constraints and inflationary pressures that the previous government ignored for so long.

In the time I have left I want to commend the government for one set of measures announced in last night’s budget that will address a problem of particular concern in my electorate and one which has a huge impact on household budgets. I am talking about housing affordability. This is something else that the opposition completely ignored during its time in office. Who could forget the interview on 30 July last year when the then Treasurer was asked:

Do you concede that there is a housing crisis, housing affordability crisis in Australia at the moment?

The then Treasurer and member for Higgins waffled on, but when pressed by the journalist saying, ‘So is there a crisis, Treasurer?’ the member for Higgins replied, ‘Well, no.’ Try as they did to convince the Australian people that there was not a housing crisis in Australia, in November last year the Australian people told members opposite that yes, there is a housing crisis and, in so doing, removed many of them from this House. In fact, one might say that the Liberal Party, which in 2007 denied that we had a housing crisis, was justifiably evicted from this House not only for its failure to do something about the problem but also for its failure to even acknowledge the existence of the housing problem. It was just a sign of how out of touch and arrogant the opposition had become after 12 years in office.

The cost of houses and the high cost of renting are impossible to ignore in my electorate where the coal boom has brought many opportunities but many pressures as well, particularly for those people not directly employed in the industry. The issue of access to affordable housing is especially critical in the mining towns themselves, where a three-bedroom house could cost as much as $800 to $1,000 per week to rent. But we have seen the flow-on effect in nearby cities such as Rockhampton and Mackay. Not all people are earning mining town wages, but they are all paying mining town rent. It is impossible for a postie, a baker, a nurse, a council worker in many parts of central Queensland to survive.

The previous government was happy to pocket the proceeds of the mining boom but could not care less about the living conditions of the men and women actually making the boom happen. In contrast, this government not only recognises that there is a problem, but in its budget last night, also set about tackling housing affordability and homelessness with a budget housing package investing $2.2 billion over the next four years on boosting rental stocks, helping people save for their first home and building new homes for the homeless.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The time for the discussion is now concluded.