Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Small Business, Independent Contractors and the Service Economy. In light of today’s national accounts figures, will the minister advise the House of the importance for business, especially small business, of maintaining responsible fiscal policy?

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

I thank the member for Robertson for her question. She is a very strong supporter and advocate of the local small business community on the Central Coast of New South Wales. The national accounts released today are reassuring news at a time of global uncertainty in an economic downturn, but they also confirm that the fight against inflation here in Australia is far from over. Members opposite will be aware that, when the Rudd government was formed, we inherited an inflation rate at a 16-year high. This is despite 12 interest rate rises in a row. We know that high interest rates are public enemy No. 1, but they are especially the enemy of small business.

There have been several small business surveys that have confirmed that businesses are identifying high interest rates as a key factor affecting business confidence and their business planning decisions. I will refer to three of them. One is the National Australia Bank’s quarterly business survey, which says:

… the combination of much tighter financial conditions, falling global equity markets and the global credit crunch has produced a sharp fall in business confidence.

The Dun and Bradstreet National Business Expectations Survey says:

… the combination of high interest rates and market turmoil has fuelled executive concerns regarding the impact of the credit market on operations.

And, finally, an SAI Global/ACCI survey on investor confidence was released and in relation to that ACCI said:

The survey shows that interest rates and ongoing financial sector turmoil has significantly dented business confidence.

The point is that interest rates are having an effect on business confidence and on business planning decisions.

The budget, however, is designed to help put downward pressure on interest rates through putting downward pressure on inflation. It is a contractionary budget, Malcolm, with a surplus of almost $22 billion or 1.8 per cent of GDP. It cuts spending growth from five per cent in the current financial year down to one per cent. I am reminded that, at the time of the release of the former Prime Minister’s biography, the member for Higgins was prompted to say about the then Prime Minister, ‘In formulating budget policy, I showed him the menu and he took the entree, the main course, the dessert and the vegetarian option.’ It was an unprecedented spending spree and we are now reining in that irresponsible government spending.

Indeed, the budget cuts spending as a share of gross domestic product goes from 24.4 per cent to 23.4 per cent. That is a full one percentage point reduction in government spending as a share of GDP in a single year. That is a very big achievement for the Treasurer, for the Minister for Finance and Deregulation, the Prime Minister, for everyone involved in formulating that budget—bringing in a budget surplus of $22 billion, 1.8 per cent of GDP, and a very, very substantial reduction in government spending as a share of GDP. And that is why it is vital in this fight against inflation that this budget is passed by the Senate, so that it can do its work and help put that downward pressure on inflation and downward pressure on interest rates. The last thing small businesses in Australia need is a $22 billion raid on the surplus, which is being orchestrated by the coalition. That would be very bad news for small business and very bad news for the Australian economy.

The budget also helps ease the capacity constraints, which were identified again yesterday by the Reserve Bank in its statement announcing that it was keeping interest rates on hold. There was some dispute about this. The infrastructure minister was pointing this out. He was asserting that the Reserve Bank did identify capacity constraints. Members opposite do not seem to believe there are any. But the Reserve Bank does say, from that statement yesterday:

Inflation in Australia has been high over the past year and in an environment of limited spare capacity and earlier strong growth in demand.

So there you have it, Mr Speaker: yet again, on top of the 20 warnings, another warning yesterday saying that the problem is—

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

That’s a lie! That’s a complete lie!

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

we have capacity constraints. The budget provides $1.9 billion over five years to create 630,000 training places. This is very important for small business in easing the skills crisis—

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

That’s a lie!

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

and investing very heavily in infrastructure.

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

Order! The minister will resume his seat. The member for Moncrieff will withdraw.

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

Mr Speaker, it is a lie that there were 20 warnings. I am stating the truth; it is incorrect.

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

The member for Moncrieff will continue to the door for one hour under standing order 94(a).

The member for Moncrieff then left the chamber.

The minister will respond to the question.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

The Rudd government is building a strong surplus for a strong economy, capable of meeting the challenges of the 21st century for the working people of Australia and for Australia’s 1.9 million small businesses.