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

My question is addressed to the Prime Minister. I refer to the latest ACNielsen Global Consumer Confidence Index, which found that the collapse in consumer confidence in Australia has been twice as severe as that in the rest of the world. When will the Prime Minister take any responsibility for this dramatic decline in consumer confidence?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable gentleman for his question. On the question of responsibility for the economy, as I said before in answer to a question from the Leader of the Opposition, as Prime Minister of the country I accept responsibility for good news and bad news, and I will continue to do that. That is the first point. The second point to address is: what are the contributing factors to the state of the economy in this country and the state of confidence? Firstly, you have the global factors I have referred to on a number of occasions here at the despatch box and the fact that the global financial crisis continues to wash through the global financial system and the real economy. Secondly, here in Australia we have had some other factors, and they are those of a domestic nature—that is, the overhang due to the fact that, at the time we were elected, we had inflation running at 16-year highs. As a result of that, we had 10 interest rate rises in a row—delivering to the people of Australia the second highest interest rates in the developed world. That results in a second, separate Australian factor at work in the overall confidence equation.

Through responsible fiscal policy and through the budget that we announced in May, we have sought to do what we can responsibly through fiscal policy to put downward pressure on inflation and downward pressure on interest rates. Interest rates are a huge factor out there in the real economy and also have an impact on confidence. That is the responsible course of action to address the problem that the previous government left us. The irresponsible response to the problem which the previous government left us is to ignore it and to compound it. That is the strategy that has been recommended by those opposite—in other words, how do you add fuel to the fire? Instead of taking a fiscally conservative position through a robust budget surplus, their response is simply to say, ‘Let’s have a further spending spree.’

On the question of spending sprees, those opposite really should have a long, hard look at themselves. At the time we came into office, government spending was running at between four and five per cent growth on the part of those opposite. We have reduced that to just on one per cent. In fact, had we run spending—and this is a very interesting figure—at the same growth level that those opposite had it running at for the last several years, it would have cost taxpayers an extra $23 billion worth of outlays. If we exhibited the same indiscipline on spending that we inherited from those opposite and kept it running into the future—that is, running at four per cent real—it would have equated to a $23 billion extra bill for taxpayers.

Our response has been through the budget process to instead take a hard look at savings, which is what we did in generating $33 billion in savings, to ensure that our new spending initiatives of $24.7 billion were met by savings. I conclude by saying that, when it comes to the challenges which we face for the future—

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

Dr Nelson interjecting

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The Leader of the Opposition comes in on cue: ‘Tax increases.’ Why is that in terms of tax as a proportion of gross domestic product—

Opposition Members:

Opposition members interjecting—

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

What other measure is there, other than tax as a proportion of gross domestic product? It is called the tax intensity of the economy. What we have done is reduce tax to GDP—

Opposition Members:

Opposition members interjecting—

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

They really do not like this, do they?

Julia Gillard (Lalor, Australian Labor Party, Deputy Prime Minister) Share this | Link to this | Hansard source

No.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Tax to GDP has now been reduced under us to 23.8 per cent of GDP and in the 2007-08 budget to 24.7 per cent of GDP. In 2004-05 it was 24.9 per cent of GDP—quite extraordinary. In fact, had we kept tax as a percentage of GDP at the Liberal Party level, do you know how much more we would have collected in tax? We would have collected $30.5 billion. So, had we maintained the spending discipline that we inherited from those opposite, we would have been hitting taxpayers for another $23 billion worth of outlays. Had we maintained the tax discipline of those opposite—which, frankly, is to tax the billyo out of the community and the business community out there—we would have whacked them with an extra $30.5 billion in tax. I would suggest that those opposite have a long, close, hard look at themselves in terms of their record.

I would again challenge those opposite as they contemplate their mission of economic vandalism in the Senate to instead join with the government in a strategy of responsible economic management to make sure that we, through fiscal policy, maintain the integrity of the budget surplus in order to provide Australia with a decent economic buffer in the uncertain global economic times which we face.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. What are the global economic challenges that we face and what is the government doing to strengthen our economy?

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

I thank the member for his question. The global economy is in a difficult position. We face some of the most difficult global conditions we have seen in very many years. That is the cold, hard reality, no matter how much those opposite want to deny it. The global credit crunch and the oil price shock in the system have had a dramatic impact on the global economy. Of course, it is slowing growth, it is pushing up borrowing costs for both businesses and households, and it is most certainly impacting upon consumer confidence right around the world. Let us just have a look at some of the outcomes around the world, Mr Speaker. Japan’s economy has contracted by 0.6 per cent; Germany’s economy has contracted by 0.5 per cent; France’s economy has contracted by 0.3 per cent; Italy’s economy has contracted by 0.3 per cent; and Canada’s economy has contracted by 0.1 per cent in the March quarter.

The good news is that we are in a far better position than all of these countries because our underlying economic fundamentals are strong. There are some things that we cannot control and there are many things that we can control. Of course, what we can control is a disciplined economic policy and we can put together a very strong surplus—a $22 billion surplus. We can put money into investment funds which can drive the productive capacity of our economy. We can do all of those things. That is why it is so stunning that our surplus should be under attack in the Senate when it is so necessary to put downward pressure on inflation and so necessary to make the necessary investments in education and infrastructure.

This government has an agenda for the future; but of course those opposite have nothing at all, just irresponsible political games. Yesterday in the House there was some confusion in the opposition. We had the Leader of the Opposition in the MPI debate saying that the economy was heading for a hard landing and, of course, we had the Treasury spokesman saying directly the opposite. It is simply extraordinary that the Leader of the Opposition should trash the economy for 15 minutes. And, of course, then we had the Treasury spokesman saying that that is what he should not be doing at all.

What we need from the opposition is some responsibility to pass the budget in the Senate so that we can strengthen our economic foundations. We want some responsibility from the opposition—and we are not getting it.

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Following the Prime Minister’s admission yesterday that Australians are worse off since the election, why has he done nothing to help pensioners meet the rising costs of groceries, rents and petrol?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for his first question in the parliament and I extend to him respect for having stood in the chamber for the first time to ask a question.

On the question of pensioners, if the honourable member had listened to the remarks that I just made at the National Press Club then he would know that I went through the fact that we have provided through the budget $7.5 billion worth of additional allocations to pensioners, carers and those on the disability support pension. The way in which that is being delivered in part is through the utilities allowance—which in the past was paid by the previous government and ran, I think, at something in excess of $100 a year. This is to be increased by a factor of almost $400 to $500 a year, and we have made that now for the first time a consistent annual payment. That represents a large slice of the amount which we paid. Furthermore, there was of course the one-off pensioners bonus that has been the subject of considerable discussion in this place—a bonus which was, on a one-off basis, introduced by the previous government for the two previous budgets, as I understand it, but not prior to that and was never announced as a permanent measure.

The other thing that we have done to assist pensioners is to increase the telephone allowance by some 50 per cent, particularly to assist pensioners with the start-up costs associated with getting an internet connection at home—because often what we find in representations we have received around country is that pensioners, often separated from their kids in this vast country of ours, are looking for a bit of help in getting an internet connection at home, because a lot of correspondence and keeping in touch is conducted that way these days. So that is another practical measure that we have put forward. Also, we have made a separate allocation of funds—from recollection, some $50 million—to various seniors groups and associations around the country to assist them with providing in-house training opportunities for pensioners to assist them with the use of the internet at home.

These are practical measures which we have sought to help with. But, as I have said at this dispatch box on many occasions, we on this side of the House are fully seized of the fact that pensioners need to have their long-term payments put onto a more secure footing. That is why we have commissioned, through the Henry commission of inquiry, a detailed examination of the future of the tax income support and retirement incomes policy. That is due to report in the case of retirement incomes policy, or the pensions component of it, by February of next year.

Again I would draw the honourable gentleman’s attention to the fact that, in the previous 12 years when his own political party were in office, in coalition with the Liberal Party, I do not recall any fundamental, far-reaching reform or examination of the nation’s pension scheme. I just don’t. I would suggest that those opposite who now stand and seek to preach from a high point on this question take a long, cold, hard look at their record on this question. To assume, as the honourable gentleman has in his question, that cost of living pressures for pensioners have emerged in a matter of the last six to eight months is simply not true. They have certainly spiked in recent times because of factors like petrol and groceries that we have referred to in debates in this chamber, but the increased cost impact on the ability of single aged pensioners and married couples who are pensioners to survive on the basis of the age pension has been a challenge for a long, long time. Anyone who contributes honestly to this debate and any member in this parliament who has been in contact with their local seniors groups would know this from years gone by.

There is an inherent dishonesty in the proposition being put by those opposite, which is that this situation has mysteriously emerged in the last few months. It has not. It has been an emerging problem for a long, long time. The difference is that we have commissioned a mechanism to examine this from the ground up, and it will report by February next year, which will be within 12 months of us taking office. My question to those opposite is: what did you do in 12 years? I do not remember them doing anything in 12 years. I would say to them: please get your own house in order on this question before seeking to advance a debate like this, and put forward a concrete policy on the future of the pension. I seem to remember a concrete policy being put forward by the opposition on the pension—I think by the relevant shadow minister. It was in a radio interview some months ago. From memory, it lasted about 42 minutes—maybe it was 43 minutes—before being slapped down by the member for Wentworth. If those opposite wish to credibly engage in the debate on pensions, which is a very important debate for those most vulnerable Australians, then I would suggest they get real and put some policy on the table rather than engaging in simply opportunistic politics.