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

The Speaker has received a letter from the Leader of the Opposition proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The collapse of confidence in the Australian economy and the fact that Australians are worse off since the election of the Government.

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—

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

In November last year, when there was a change of government, the incoming government was given an economy that was described as the envy of the world. The Economist magazine in fact described the Australian economy as ‘the wonder down under’. After 11½ years of solid economic management by the coalition government, real wages, business and consumer confidence and economic growth were all up; interest rates were lower than they had been under the last Labor government; inflation was consistently between two and three per cent—the midpoint of the band given to the Reserve Bank of Australia; and unemployment had reached a 34-year record low. Now, some nine months after the election of the Rudd government, Australians are worse off than they were in 2007.

According to ABN AMRO and also the Reserve Bank of Australia, net household wealth in Australia—in plain language: what each of us is actually worth—dropped five per cent in the first six months of this year. Every Australian is, on average, five per cent less wealthy, less affluent, than he or she was when the Rudd government was elected. In contrast, in 2007, net household wealth increased 11 per cent. In the last year of the coalition government the average Australian increased his or her wealth by 11 per cent. In contrast, in the first six months of the Rudd Labor government their wealth has been cut by five per cent—superannuation savings, superannuation accounts, the value of our homes and the value of the share market. In addition to that there were cost-of-living pressures. At one stage, petrol was more than 40c a litre more expensive than it was when there was a change of government. There were increases in the cost of groceries, cost-of-living pressures in rents and a whole variety of challenges that Australians faced in everyday life.

The reality of it is that in the National Australia Bank survey, and in the Melbourne Institute-Westpac survey, business confidence is now the lowest that it has been since 1991—since the depths of the recession given by the last Labor government, a recession which Australians were told we had to have. Similarly, consumer confidence is the lowest it has been since 1991. In the first six months of this year, retail had the worst start that it has had in 30 years. We had four of the first six months of the year with falling retail sales, and a full one per cent drop in the month of June alone. The rate of growth in business lending in January this year was 24 per cent; by June it was growing at only four per cent. House lending for new homes was 9.9 per cent in June and the lowest it has been in 26 years. Personal lending growth in June, at four per cent, was the lowest it has been since 1992.

When it comes to business and what it actually believes in terms of government policy and the way ahead, I draw the attention of the House to two surveys in particular. The first is the Sensis small business survey of 1,800 small businesses for May. Only 10 per cent of 1,800 small businesses—employing 3.8 million Australians—had confidence in the policies of the Rudd Labor government. The other survey is the Dun and Bradstreet survey of business expectations for the September quarter—in other words, what does business expect; where is business confidence going? The survey shows that business has record lows in confidence for sales, for profits, for employment growth and for capital investment. What that means for average Australians is that the men and women who take risks and who invest in the creation of jobs have a bleak outlook for Australia’s economic future for the next quarter and beyond.

The question is: why are we in this circumstance? In the pre-election year fiscal outlook, the inflation forecast for this year was 2.75 per cent and for the following year it was 2½ per cent. Then, in December last year, we had a quarterly inflation figure of 3.6 per cent. What then happened was that the Prime Minister and the nervous man that is our Treasurer sought to talk up an inflationary crisis. What they endeavoured to do was to provide political cover for increased spending, in the budget delivered in May, to fund election promises. We had the spectacle of the Treasurer of this country, the day before the Reserve Bank had a meeting to consider whether or not it would change interest rates, describing inflation as being ‘a genie out of the bottle’. If the Treasurer of Australia says that, what do you think the Reserve Bank is likely to do? What it did was increase interest rates by 25 basis points. That bullish behaviour from the Reserve Bank, which actually considered a 50 basis point rise—that is half a percentage point—at its February meeting, was encouraged and egged on by the government to tighten monetary policy and increase interest rates.

Now we are in the position where we have had a budget deliver nearly $20 billion in tax increases. The average Australian is not an economist. The average Australian is an economist when it comes to kitchen table economics—trying to feed, clothe and house children, trying to put petrol in the car. But the average Australian does not have to have an economics degree to know that if you increase the taxes on cars, if you increase the tax on alcohol, if you increase the tax on computer software, you are going to increase inflationary pressures. But that is what the government did—a typical Labor government: increase spending and increase taxes at the same time that a $22 billion surplus is going to be delivered, thanks to the good economic management of the previous coalition government.

The situation this country is now in is this: the United States economy is faltering and has significant further challenges with asset devaluation and other things that will emerge over the next six to 12 months. It has been the source of much, but not all, of the global liquidity crisis. The UK economy is slowing sharply—very sharply. A number of the European Union economies are going into recession. Some think that the Chinese economy may well slow more than some analysts think will occur. We have already seen an impact in terms of nickel and zinc in Australia, with 450 jobs to be shed in Broken Hill as a consequence, in part.

Today the Prime Minister said the growth in the Chinese economy and the improvement in the terms of trade were important for Australia’s resources sector and would hold up the Australian economy. So the first thing is that we have a slowing global economy. The second thing is that the government, having described that 3.6 per cent inflation figure for December as a crisis, now has a situation where our headline inflation rate is currently 4.5 per cent—that is after six months of economic management from Mr Rudd and our nervous Treasurer—and the Reserve Bank of Australia is now forecasting inflation for this December to be five per cent. A figure of 3.6 per cent was recklessly and vandalistically described by this government as some sort of inflationary crisis. After not even a year of the government having their hand on the tiller of the $1 trillion Australian economy, the Reserve Bank is now forecasting a five per cent inflation rate for December.

But it is worse, because growth is now slowing. The Reserve Bank is forecasting two per cent growth for December. In other words, the government, which set out to slow the growth in the Australian economy—which we as sound economic managers said in plain language at the start of the year would mean Australians losing their jobs—and the Reserve Bank have slowed the Australian economy to the point where they have completely destroyed business and consumer confidence. And, worse still, we have growing unemployment. These people opposite lecture us about workers’ so-called rights at work. The first right is to have a job. The first right is to be able to get out of bed and be confident you can keep your job. There have been 930 jobs lost from Mitsubishi, 500 jobs from National Parts, 1,500 jobs from Qantas, 600 jobs from Insurance Australia Group, 630 jobs from Don Smallgoods and 685 jobs from Starbucks. You might find it funny but we do not. Those men and women who have lost their jobs will not be able to meet their car loans, meet their mortgages and look after their families. One hundred and eighty jobs have gone from Cadbury and 550 jobs have gone from Boeing—and it goes on and on and on. They are Australians and they deserve better economic management than they have received from this government.

That is the environment that we are now in. The government put $20 billion of taxes in the budget, telling Australians that their No. 1 priority was to fight inflation. And what have we got after a year in government? The Reserve Bank says that the outcome of the government’s policies will be an inflation rate not of 3.6 per cent but of five per cent—a slowing economy. We might have a very hard landing in South Australia, Victoria, Tasmania and New South Wales—and most people know damn well what that means.

Further to that, the government has created those tax increases when it has a $22 billion surplus plus $40 billion channelled into slush funds—with no transparency, no market evaluation that we are likely to see and no market contestability—for bailing out failed Labor states that over the next four years are going to increase their debt by $70 billion. We are lectured here about the importance of a $22 billion surplus—can I remind the government that it is not their money; that money belongs to Australians—and another $40 billion is going into slush funds at the same time the states are increasing debt by $70 billion over the forward estimates. Where is the logic? There is none.

We are opposing these tax increases in the budget for a number of reasons. First, we believe in lowering taxes, not increasing taxes—and that is why we will cut the excise on petrol by 5c a litre. There is no argument for increasing taxes. If you are fighting inflation you do not increase taxes. The second thing, Madam Deputy Speaker Burke, is that the economy is slowing very quickly. There are people in your electorate who will suffer very much as a result of that. People will suffer in all of our electorates, but more so in yours than in mine and more so in the electorates of many of those opposite and many of those sitting behind me. People will lose their jobs as a result of what is happening.

There is a very strong argument that these measures, which we will not support in terms of tax increases, will actually assist the economic environment that we are in. The Reserve Bank is, according to its minutes, about to look at reversing monetary policy, having raised it earlier in the year, to try and stop the slowing of the economy as a consequence of what the government has done. We believe very strongly in solid economic management. We do not believe in higher taxes. We do not believe in reckless, vandalistic talk about inflation. We do not believe in putting pressure on the Reserve Bank to increase interest rates rather than reduce them. It is time, and it is necessary, for there to be an economic statement to give confidence to business and investors in this country about the government’s policy settings for the way ahead. (Time expired)

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

When we hear such sophistry from the Leader of the Opposition, it is little wonder that the confidence of the Australian people in the economic management skills of those opposite has plummeted. Is it any wonder that we have seen the confidence of the Australian people in the economic management skills of the people who up until a short time ago formed the government of this country go through the floor?

We have seen confidence in the Leader of the Opposition sink because, on his watch, he has allowed the economic credibility of his party to be cast asunder. We see a Leader of the Opposition who is determined to blow a hole in the fiscal policy of this government and undermine its efforts to bring government expenditure under control. We have just heard again the sophistry of a Leader of the Opposition who expects the Australian people to agree that it would be responsible to raid the budget surplus by $2 billion a year to deliver $2.50 a week—if all the petrol tax excise cuts were passed on.

We know the member for Wentworth thinks that is sophistry. We know he thinks it is bad policy. We know he is more responsible than the Leader of the Opposition. We know he thinks he would do a better job as the zookeeper than the current person who sits opposite. We know he thinks that he would bring more economic credibility to those opposite. The Leader of the Opposition spent the last 15 minutes desperately trying to convince the House and the Australian people that the decline in Australian consumer confidence is the result of the actions of the Rudd government. That sort of short-term, glib populism will not return his economic credibility.

Across the OECD, consumer confidence has fallen to its lowest level in 30 years. In the United States the Conference Board index, the most prominent measure of consumer confidence, has fallen more than 50 per cent since the global turbulence began and is at its lowest level in 16 years—just as it is in Australia—while an alternative measure, the University of Michigan index, has it at around its lowest level in 28 years. In the United Kingdom, consumer confidence has fallen to its lowest level in 16 years. In New Zealand, consumer confidence has fallen to its lowest level in 17 years.

We are seeing growth slowing around the world. The UK did not grow at all in the three months to June. Japan, Germany, France, Italy and Canada all recorded negative growth in their most recently reported quarters. And the Leader of the Opposition contends, with his usual earnestness, that the decline in consumer and business confidence in Australia is for reasons entirely different to those in the rest of the world. The confidence of the rest of the world has gone down for one reason, and our confidence has gone down for an entirely different reason—it is all due to the election of those horrible socialists on 24 November!

The Leader of the Opposition would have us believe that in the rest of the world confidence has fallen for a very different reason. In Australia it is not because of the financial turbulence, the oil price shock and the increase in food prices around the world. They might be the reasons in the rest of the world, but there is a different reason here in Australia. Either he thinks that or he thinks the Rudd government is responsible for the decline in confidence around the world. Maybe that is his argument. Maybe he thinks that the people of Michigan and Denver have been waking up thinking, ‘I’m not very confident about the state of the world economy because of what Kevin Rudd is doing down in Australia,’ or that the people of Dunedin and Christchurch have been waking up saying, ‘We have the lowest confidence in 17 years because of those terrible decisions that Wayne Swan is making in Australia,’ or that across Europe, Russia and Japan, where confidence has fallen, it is all down to the Rudd government. That is the sort of argument that we might expect from the Leader of the Opposition, who casts around for cheap, populist and glib lines to save his leadership as the zookeeper, to save his hide. That is what we have come to expect.

Is he really serious? He comes into the House and argues that for some reason the Rudd government is responsible for negative returns in superannuation. He does not mention that we have seen global stock market downturns of 20 per cent which have seen pension fund returns down across the world. Again, it is a similar argument: there might be a reason around the world for that but it is a different reason in Australia. Really, how can we take that sort of glib populism seriously? As I said, is it any wonder their economic credibility has gone out the window?

Of course, part of the Leader of the Opposition’s narrative—and we heard it again today—is that everything was rosy until 24 November. Do you remember what it was like before 24 November? Australian working families had never been better off! Interest rates were coming down! The Leader of the Opposition said interest rates were coming down under them, which came as a great shock to Australian mortgage holders, I must say. We had the shadow Treasurer saying interest rate increases were overdramatised, which again came as a shock to those who were paying those increased interest rates; they thought it was quite legitimate to be concerned about them. But, of course, the Westpac consumer sentiment index hit its high point in May 2007. By the time of the November election it had already declined from 124 points to 110. It has continued its decline from then—somewhat unsurprisingly, given world events.

Talking of sophistry, I noticed that the Leader of the Opposition was out and about on the weekend, and he said this:

What are the economic circumstances facing Australians at the moment with falling growth, higher unemployment and it seems higher inflation?

Welcome to the party, Brendan! He has finally worked out that we have heightened inflation in Australia. We had the Treasurer point this out some months ago, and the Leader of the Opposition and the shadow Treasurer were wandering around saying: ‘Isn’t it terrible that the Treasurer talks about inflation? If only he’d stop talking about inflation, the problem would go away.’ Ostrich economics at its worst—stick your head in the sand, do not talk about inflation and we will not have a problem.

The Leader of the Opposition and the shadow Treasurer regularly insult the Governor of the Reserve Bank of Australia. They say to the Governor of the Reserve Bank, ‘You are so stupid that you just increased interest rates because the Treasurer made a statement the day before your board meeting.’ What an insult to one of the finest public servants this nation has! It insults the intelligence of the board of the Reserve Bank, who have done a magnificent job over recent months in the financial turbulence that has been going on in the nation. The Leader of the Opposition and the shadow Treasurer insult the intelligence of the Reserve Bank and the Australian people by engaging in their ostrich economics—‘just stop talking about it and it will go away’.

It seems, the Leader of the Opposition said on the weekend, that we have higher inflation. It only seems like that to him now. We have been pointing that out for months. The light bulb comes on in Brendan’s office: we have higher inflation. Finally they have worked it out: cost-of-living pressures on the Australian people are significant. At least the Leader of the Opposition has at last come to the realisation that inflation is not a charade and not a fairytale but is real and requires government action—that we have the highest inflation in 16 years. That is why the government have brought down a contractionary budget that puts downward pressure on inflation and interest rates, as the Reserve Bank has indicated.

We had the Leader of the Opposition say, ‘This typical Labor government! They just increase spending.’ I do not think he read the budget papers, because we have seen government expenditure reduced to its lowest level since 1989-90, making up for the financial and fiscal irresponsibility of those opposite, the tax-and-spend Liberals who we replaced, the people who let government expenditure increase by 4½ per cent a year, which put upward pressure on interest rates and put upward pressure on inflation, as we heard during question time. They just do not get the message. They continue to attempt from the other place to undermine our budgetary strategy to put downward pressure on interest rates and inflation. That is why we brought down a family relief package in the budget. We recognised the cost-of-living pressures on the Australian people. That is why we increased the utilities allowance for pensioners. That is why we increased the childcare rebate from 30 per cent to 50 per cent.

We know the Leader of the Opposition cannot make up his mind on an issue. We know he has trouble making a decision and sticking to it. We know he has trouble with a narrative. We saw this in the climate change debate. I think the record was seven positions in one day. But we just had four positions in one speech in relation to the world economic slowdown. We had him firstly saying, ‘Australia should be different from the rest of the world. Australia shouldn’t be affected by the consumer confidence decline. Australia shouldn’t be affected by the decline in economic growth.’ He then pointed out the slowdown in the world economy and that confidence had fallen around the world. In one speech he could not hold a narrative. No wonder the Australian people no longer know what those opposite stand for. No wonder the Australian people are wondering what the once-great Liberal Party in this country actually believes in anymore. No wonder the Leader of the Opposition is known as ‘the zookeeper’ by the shadow Treasurer. They just do not stand for anything anymore. They certainly do not stand for responsible economic management.

It has been up to this government to get government expenditure back under control. It has been up to this government to put a package in place to give relief to Australian working families, seniors and carers who are doing it tough. You see, we sit around the cabinet table thinking of ways to give Australians a better chance in times of increased inflation. They sat around the cabinet table thinking of ways to reduce people’s conditions and salaries. They sat around the cabinet table saying, ‘The Australian people have never been better off, and we’re going to rip into their conditions.’ They sat around the cabinet table saying, ‘Let’s think of new ways that we can rip up awards. Let’s think of ways we can reduce people’s ability to go onto collective agreements. Let’s think of ways that we can make life harder for working Australians.’

We sit around the cabinet table thinking of ways to get government expenditure under control and ways to put downward pressure on interest rates and inflation. That is why the Australian people chose us on 24 November. That is the defining difference between our two parties. We actually believe the Australian people deserve more of a hand. Those opposite believe the Australian people deserve less of a hand. The members opposite think that Australian working families have never been better off and, therefore, they should be made to suffer. Those opposite believed that things were so rosy on their watch that it was time to reduce working conditions and salaries. Those members opposite believed that inflation was right where they wanted it, that it was mission accomplished, that there was no more to do so they might as well start ripping into working conditions and they might as well start reducing salaries through Work Choices. That is what they believed. It continues to be a fundamental difference between our two parties, and if they continue to believe that then the Australian people will continue to believe that their economic credibility is non-existent.

We continue to hear sophistry of the like that we have heard from the Leader of the Opposition for 15 minutes—that the world economy is slowing but that should have no impact on Australia; that confidence in Australia has hit its lowest level in 16 years all because of the actions of the Rudd government. Presumably it has hit its lowest level because we have increased the childcare rebate to 50 per cent. Or maybe it is because we have brought down a family relief package. Or maybe it is because we have ripped up Work Choices. Let us have a look at the Sensis report on consumer confidence in Work Choices. The confidence of people in actually getting a fair deal in their workplaces is what has gone up since the election.

The Australian people are not mugs, but they know a mug when they see one and they know the members opposite are mugs because they are treating them like fools. They insult the intelligence of the Governor of the Reserve Bank and the Reserve Bank board, and they insult the intelligence of the Australian people. The Australian people have woken up to those members opposite.

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

The Assistant Treasurer has treated us to a classic tirade of irrelevance. He reminds us of his great performance with Fuelwatch, which is, I think, an emblem of the hopelessness of this government and part of the cause of this incredible collapse in confidence. Whether you look at business confidence or consumer confidence, the measures today are at all-time lows unless you go back to the ‘recession we had to have’ in the late 1980s. Times are not as tough now as they were in 1991. We hope they will not get that tough. But what we have with this government is a crisis of confidence. This is a government that has been in office for eight months, and yet there is only one government in Australia that the Sensis survey tells us business has less confidence in. Do you know which government that is? That is Morris Iemma’s government.

Morris Iemma and his colleagues have been working on hopelessness in government for 13 years. They are practised exponents of hopelessness. The Rudd government has got there in eight months. Consumer confidence and business confidence, by the other measures, are as low now as they were when business interest rates were 21 per cent. Why is that? The answer is a collapse in leadership. All during 2007 we had an outpouring of empathy from the Labor Party. There was not a shopping centre aisle or petrol station forecourt in this country in which you could not find the then Leader of the Opposition, the now Prime Minister, Mr Rudd, draping himself around, filled with sympathy and empathy. He was concerned about rising prices and he was going to fix them. Well, the empathy of Kevin07 has been replaced by the impotence of Kevin08. He has thrown up his hands. He cannot deliver; he cannot perform. That is why confidence has crashed.

The Assistant Treasurer said: ‘It’s all international factors. It’s got nothing to do with the Australian situation. There’s a global credit crisis. Confidence is down in many countries and we are no better or worse off than them.’ That is not true either. ACNielsen, as it happens, conducts a global survey which gauges consumer sentiment across 51 countries consistently. It is true that consumer confidence has fallen around the world. The survey shows that it has fallen by six points in the last six months. That is the largest single drop recorded in the last three years. But the drop in Australia was 11 points—nearly twice the average—and of the 51 countries surveyed only nine had a more negative shift in sentiment than Australia. And yet our economy is stronger than almost every one of those countries surveyed. We are not heading into recession. Economic growth is still positive. Unemployment is still at very low levels. Yes, the economy is slowing, but we are a strong economy nonetheless. Why has confidence collapsed?

At the beginning of this year the government made a very political decision. They decided they would not have any economic strategy; they would simply have a political strategy. They could see, as we all could, the looming problems of the global credit crisis. It was obvious that the collapse of the mortgage market in the United States, the lack of confidence between banks, between financial institutions, was going to put up interest rates and was going to cause lenders to have less confidence in their counterparts. It was going to mean money would be more expensive and harder to obtain—in other words, a credit squeeze.

Australia did not deserve to be hard hit by that credit squeeze. We did not create the subprime crisis. Subprime mortgages are 16 per cent of the US mortgage market. Here they are less than one per cent. Our banks are well capitalised. They are profitable. Our prudential regulation is first class. Our level of mortgage defaults is plainly higher than we would like it to be but it remains low by international standards and even low by historic standards. So we had a strong story to tell. We had a story to tell that should have enabled our markets to get the benefit of the superior economic management this economy had enjoyed over a long period of time.

A strong government, a government of leaders, a government that believes that leadership carries responsibility, would have called from the rooftops that Australia was different, that it was better and that we did not deserve to be tarred with the subprime brush. But instead we had a Treasurer who made headlines around the world when he said, the day before the Reserve Bank of Australia board met, ‘The inflation genie is out of the bottle.’ Then he said it again and again and again. He talked up inflation. He said inflation was out of control. That was the message from the Treasurer of the Commonwealth of Australia.

The Assistant Treasurer says the Reserve Bank board would be stupid to take any notice of the Treasurer. That may well be right. I think the real stupidity was on the part of the Prime Minister in making him the Treasurer in the first place, because words have consequences. The Treasurer is the man in charge of the economic management of the Commonwealth of Australia. His representatives, his secretary, sit on the Reserve Bank board. The idea that his remarks about inflation are just inconsequential political rhetoric, which is what the Assistant Treasurer was suggesting, is wrong. I think the Assistant Treasurer might want to review his remarks when he sits down with his boss a little later today. They are not just rhetoric. They matter and they made headlines around the world.

The Reserve Bank has to cope with inflationary expectations. If you have the Treasurer saying that inflation is out of control, believe me, it will become a self-fulfilling prophecy. That is the great difference. Wayne Swan, the Treasurer, is unique in the whole world. He is the only Treasurer in the world who has been talking up inflation. He was hysterically saying that inflation was out of control and egging on the Reserve Bank to put up rates. I might say that this is the same Treasurer who, now that inflation is, according to the Reserve Bank, heading to five per cent, is nervously begging the commercial banks to lower interest rates. He was egging on the Reserve Bank to put them up at the beginning of the year.

At the time that he was displaying no leadership and pursuing a shabby political strategy to blacken the economic reputation of the Howard government, in the United States, a country facing much graver economic challenges, much higher inflation, higher unemployment and much graver concerns about the stability of its financial system, the Treasurer, Henry Paulson, was doing his job. On the same day that Wayne Swan was saying, ‘The inflation genie is out of the bottle,’ Henry Paulson was saying:

The U.S. economy is diverse and resilient, and our long-term fundamentals are healthy.

…         …         …

While we are in a difficult transition period as markets reassess and re-price risk, I have great confidence in our markets. They have recovered from similar stressful periods in the past, and they will again.

That is real leadership. What we have seen is just political spin. Look at the nonsense we have been treated to today about tax. What about the Treasurer pretending that the budget cuts taxes? His own budget papers reveal that the budget increases taxes by over $19 billion over the forward estimates. How can he seriously suggest that putting up the prices of alcohol, cars, private health insurance and so on is doing anything other than fuelling inflation? This is an old-fashioned Labor government, just like its state colleagues—all spin, no substance, tax and spend, no leadership, politics first and national interest last.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

The French king Louis XV ruled from 1715 to 1774. I doubt that there is anyone in this parliament in this day and age likely to enjoy similar political longevity. It is he who is credited with the expression ‘apres moi le deluge’—‘after me, the flood’. I think it is time that former Prime Minister John Howard put on the wig and donned the silk stockings of Louis XV because his attitude to government was exactly that: ‘apres moi le deluge’—‘after me, the flood’. It is that attitude which has bequeathed to us the economy we have now, the economy that the opposition describes in the matter of public importance before the House as ‘worse off since the election of the government’.

‘After me, the flood’ was John Howard’s attitude to the Liberal succession. We can see it in the absolute paralysis of members opposite while they wait for the member for Higgins to make up his mind: will he stay or will he go? Just last week the member for Higgins said he would not be challenging the Leader of the Opposition for the Liberal Party leadership. He has made a political career out of not challenging for the leadership. In the early 1990s he was not challenging John Hewson for the leadership and then he was not challenging Alexander Downer. He spent the last decade not challenging John Howard and now he is not challenging Dr Nelson. I told a young Labor audience last Friday, ‘If you want to get on in this country, just tell everyone you’re not challenging the leader.’ The Liberal Party’s present leadership vacuum nightmare is absolutely a result of John Howard’s refusal to plan for an orderly Liberal Party leadership succession, his selfish refusal to worry about anything other than the morning’s headlines and anything other than the next election.

‘After me, the flood’ was also the attitude which former Prime Minister Howard took to the economy. He preferred election bribes to long-term spending on education, skills and infrastructure. John Howard’s failure to produce a stronger budget surplus led to 10 successive increases in interest rates. After 12 years of John Howard, what did we inherit? Inflation at a 16-year high and 10 interest rate rises in a row, which gave Australia the second highest level of interest rates in the developed world.

The ‘after me, the flood’ attitude was even more apparent in former Prime Minister Howard’s attitude to climate change and sustainability. The present economic challenge facing Australia is in no small measure due to rising food prices and rising petrol prices, and the Liberal government failed utterly to tackle these issues. It should have been transitioning motorists out of petrol and into alternative fuels like LPG and LNG. It did no such thing. Rising food prices are a direct consequence of falling production and increasing demand.

We have seen the sad fate of the Murray-Darling. What has happened to the Murray lower lakes and to the world-quality wetlands of the Coorong is nothing short of a national disgrace. The Murray-Darling, our nation’s food bowl, is struggling because of a lack of water. That lack of water is a result of two things: reduced water in, caused by drought and exacerbated by global warming; and too much water extracted for irrigation, too much water out. Right through its term, the Howard government sat on its hands instead of taking action to protect the Murray-Darling, and its National Party members actively ran interference on any measures to reduce water from the Murray-Darling. They are still at it; I heard the member for Calare, Shadow Minister Cobb, warning just a few weeks ago against knee-jerk reactions to the plight of the Coorong—knee-jerk! For over 20 years, scientists have been warning about the need for action to protect the Murray-Darling, and while the goose which laid the golden egg has been slowly but irrevocably strangled the member for Calare has said we should not have ‘knee-jerk reactions’. Members opposite still do not get it.

Higher food prices are being driven by climate change and global warming. I have said this to the House before: global warming is the great challenge of our time. It is one of those ‘what did you do during the war?’ types of questions which our children and grandchildren will ask of us. Those opposite, having put the nation behind the eight ball on climate change and having sat on their hands while the Murray-Darling was trashed, are still at it. They sneak around this debate looking for the angle, looking for the hold like some ageing sumo wrestler, looking for the political advantage. You can hear their siren song: jobs will be lost, industries will go offshore and prices will go up. What they do not tell you is that jobs are being lost now and prices are going up now as a consequence of inaction on global warming. They refuse to face up to the conclusion of World Bank economist Nicholas Stern that the cost of inaction on climate change will be greater than the cost of action.

Having left us this legacy, the Liberal Party is no better in opposition. The shadow cabinet has said that the opposition in the Senate will oppose major elements of the government’s 2008 budget. It intends to block Labor’s budget announcements concerning condensate gas, alcopops and the Medicare levy surcharge threshold. It says that Labor did not announce these matters prior to the election and that therefore we do not have a mandate for these measures. But what is their mandate: to be economically irresponsible? Because this is precisely what they are up to in the Senate. They are trying to blow a hole in Labor’s surplus. They are trying to blow a multibillion dollar hole in Labor’s budget. If they succeed, this will put upward pressure on interest rates. The cost of this will be felt by every Australian household with a mortgage and every Australian small business with an overdraft. It is a breathtaking piece of economic vandalism.

The opposition’s attitude to Labor’s measures to tackle teenage binge drinking and our reduction of the tax slug on middle-income earners of the Medicare surcharge, which hits those earning as little as $50,000 a year, is truly remarkable. There is a strong element of personal responsibility for health care inherent in both of these measures: people who look after their own health should not be required to pay and pay and pay for people who do not. We all know that there is a problem with teenage binge drinking. The government is to be commended for seeking to tackle it. What is the Liberal alternative? They talk about a need for education and, yes, there is. But surely there comes a point at which taxpayers who do not binge-drink should not have to pay for the costs incurred by those who do and consequent upon their doing so.

You would think that those in the Liberal Party, which claims to be a party of personal responsibility, which claims to be a party of individual responsibility, would applaud these initiatives. But no, they are beholden to the private health insurance industry. They are beholden to the liquor industry. They are prepared to put sectional interest and corporate interest ahead of the public interest in better health outcomes and ahead of the national interest in a strong surplus and downward pressure on interest rates. Not only are they prepared to engage in economic vandalism, using their numbers in the Senate, but also they put forward no alternative at all. This is nothing short of economic sabotage. I remember something similar going on when I first entered the Victorian parliament. The Liberal-controlled Legislative Council refused to pass any of Labor’s measures to raise revenue, then attacked the Labor government for failing to balance the budget. They interfered in Labor’s attempt to balance the books through asset sales. A community body sprang up opposing asset sales. I assumed at the time that it was a left-of-centre group. After 1992, Jeff Kennett came to office and engaged in asset sales which absolutely dwarfed those of the previous government. I looked around for this community group in vain. It had melted into the night, disappeared without trace. It was just a Liberal Party front, aimed at ringbarking the Victorian economy.

That is what is happening now. Those in the Liberal Party are seeking to sabotage our economic strategy in the Senate. Revealingly, tellingly, the matter of public importance before the House says nothing about what the alleged sins of the Rudd Labor government are; it simply refers to outcomes. Did they produce an alternative in their budget reply? No, they did not. Have they produced an alternative since? No, they have not. It was entertaining to hear the opposition calling for Labor to make an economic statement. We have—it is called the budget. The opposition should pass our measures. Until it does, it will stand condemned by the Australian people for the naked, insincere, cynical opportunism it is showing in this parliament. This matter of public importance should be dismissed for the naked, insincere, cynical opportunism that it is.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

I am delighted to speak on today’s matter of public importance about the collapse of confidence in the Australian economy and the fact that Australians are now worse off. I shall reflect on the housing market and the housing situation in my comments. I was at a debutante ball in Boree Creek on Friday night. Boree Creek is a small town in the Riverina. There having been several years of drought, one of the farmers said to me: ‘Confidence is a very fragile thing; it’s highly desirable. Once it’s lost, it’s very hard to regain.’ He was talking about confidence in the face of drought. He said: ‘We look to our leaders to give us that confidence, to give us hope and to give us a reason to get out of bed in the morning when all else seems impossible.’ I agree entirely with the shadow Treasurer and the Leader of the Opposition. What the Prime Minister and the Treasurer have done is to take away that feeling of hope and confidence from a lot of Australians by continually reinforcing just how bad things are.

I want to raise this interesting point about the surplus and ask the question: at what point do the government increase a surplus to the stage where they are taking too much from the Australian people so that they might in fact exacerbate an economic downturn? I have just had a look at the forward estimates. Over the next five years, the total budget surplus is projected to be $96 billion. That is a figure that resonates with a lot of people because it was the size of the debt that the Howard government inherited when it came to office in 1996.

There are pensioners who are struggling in my electorate and in everyone else’s electorate—yours too, Madam Deputy Speaker. If we are projecting these extremely healthy and fast-growing budget surpluses over the next five years, I reckon those pensioners would want to know at what point the government is going to stop taking their money and squirrelling it away in various funds, deciding that it knows best about what to do with it. This is a classic Labor government ploy: tax, spend and interfere. So, on behalf of the pensioners in my electorate, many of whom are cashing in the equity in their homes, the capital in their homes, in order to meet daily living expenses—it is called a reverse mortgage—I ask the Treasurer: when is enough enough? If he thinks that increasing the price of gas, private health insurance and alcohol is actually going to make a difference, he is wrong. It is going to make things worse, as we have clearly demonstrated. You could ask anybody who has got basic economics knowledge and they could tell you that increasing prices will fuel inflation.

Leading on to inflation, one of the main components of the CPI is rents. As the shadow minister for housing, I am interested in rents. I have seen an unbelievable increase and tightening in the rental housing market. Since the election of the Rudd government, median rents have gone up all over Australia. In Melbourne and Perth they have gone up 17 per cent. One of the reasons for this is a shortage of rentals—but why? People are not confident to enter the housing market. People are losing confidence, so they are staying in their rental accommodation and they are not taking the step to buy their first home. The vacancy rates that we are seeing in our major cities are unbelievable—0.9 per cent in Melbourne.

I have just finished visiting some of our major cities to look at the whole problem of rent and housing. I was horrified to hear of rental auctions, to hear of racketeering and profiteering by people who are renting out rooms in their houses. People are coming to these auctions—they are not official, of course—with six months cash in advance and are saying, ‘Please secure me the house.’ It is okay for those who have got the money, and it is okay for those who might be considering their next investment or their next step, but it is not okay for social housing tenants. This is flowing all the way down the housing market until you get to the people who are most deserving of public housing or social housing—people who cannot get a roof over their heads, who are being exploited, who have been racketeered and who are paying astronomical dollars for one room in one house. It is simply not good enough. It is a function of the housing market, the lack of confidence in the economy and the tightening of the rental market, which relates to interest rate rises. Housing affordability is worse—if I can use that expression—than it has been for a long time. It has decreased for the third straight quarter in a row, with the proportion of family income required to meet monthly loan repayments increasing to 37 per cent in the March quarter. (Time expired)

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Today we heard the Leader of the Opposition—and I am advised that, at last check, he is still the Leader of the Opposition—making unqualified, inaccurate and hypocritical statements about the state of the Australian economy. If he wants to talk about a loss of confidence then let’s talk about a loss of confidence. The greatest loss of confidence happened in November last year when there was an absolute collapse in voters’ confidence in the former Howard government. There was a collapse in the former government’s ability to take this country forward in a fast-changing and challenging world. The voting population said quite simply that the last government—in terms of broadband, workplace laws and climate change—simply were not up to it. That is where we have seen the greatest collapse in confidence in the last 12 months.

We all remember the former Prime Minister, the former member for Bennelong, telling everyone that Australian working families had never been better off. The member for Bradfield, the current opposition leader, was using those tactics again today in the vain hope that people would somehow forget the absolute hubris that was displayed when the Liberal Party were last in government. Those on the other side of the House think that they are the word on economic management and that Australia cannot do without them. The truth is: we can do without them and we are moving ahead confidently without them. Our government are confidently putting into place measures to fight the 16-year high inflation levels left by the Liberal-National coalition. Our budget, which the opposition seeks to hamper and block for the sake of hampering and blocking, contains a raft of actions to strengthen the economy and to adapt it to the fast-changing world. We are putting money into education and making sure we improve our health system and our building infrastructure—something that the former government completely neglected over the last 12 years. These are things that the budget, delivered in May, is all about.

One of the cornerstones of responsible economic management is to have a responsible budget. If we are talking about confidence in the Australian economy, what do you think? Is it a $3.7 billion black hole or is it a $6.1 billion black hole? We are not quite sure where the opposition are at the moment in terms of trying to wreck the responsible budget that was brought down earlier this year. Does the Leader of the Opposition, or perhaps the member for Wentworth, really think that driving a Ferrari through a responsible budget will make our economic position any better? You will never hear us, on this side of the House, say that Australian working families have never been better off. We understand that working families are doing it tough. That is why, in this budget, we put forward a $55 billion package to assist those who are doing it tough—be they pensioners with the utilities allowance, be they working families with tax cuts, or be they people with children in child care. We also made sure that we had a budget surplus of $22 billion, because we on this side of the House recognise that inflation is the real evil. Inflation is the real enemy for working families and for people on fixed incomes, and we need to fight inflation by making sure that we have a responsible budget.

If the opposition think that Australians were better off under Work Choices and under a government that ignored 12 warnings from the Reserve Bank about high inflation, then there are serious problems with delusion on the other side. Attacking working families’ rights does not make for a better Australia. There is a lot of hypocrisy coming from the opposition benches, and we have had three great examples of it this afternoon. The opposition spent all year attacking the government, saying that we were talking down the economy. But what is this MPI about if it is not about attacking the economy and trying to talk it down? We heard last night on Four Corners the member for Wentworth being quoted as saying the Liberal Party has become a zoo. When I look opposite, I can see plenty of mountain goats, maybe a few snakes and the odd zebra. I actually hate to speculate who the head baboon may be, but let me say on behalf of the non-zoo side of parliament: we will continue to run a prosperous economy with the needs and aspirations of working families at the heart of our approach. In a time of global economic uncertainty, we need a measured approach. We need tough decision makers, not grandstanders. We need responsible managers, not irresponsible blockers of budgets.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

Order! The discussion is now concluded.