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

My question is addressed to the Prime Minister. Why has the quarterly rate of economic growth halved since the election of your government?

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

Again, if you go to the budget forecasts, we indicated quite clearly that there would be a moderation of economic growth down to 2.75 per cent in the 2008-09 period, recovering to three per cent in the 2009-10 period. That is a fact. We acknowledge it and we said so at budget time. That is quite clear. The real debate here is what has caused it and what do you now do about it? Two sets of factors have caused it: one over which we have very little control—the state of the global economy. I went through those factors at some length in my earlier answers today in question time. The other set of factors is the cumulative effect of 10 interest rate rises in a row. Those opposite throw their hands in the air as if 10 interest rate rises in a row did not happen or they had nothing whatsoever to do with it. The member for Higgins is smirking up there, second from the back. He says, ‘Nothing to do with me.’ He would only claim responsibility for a good thing that happened and never claim responsibility for anything bad thing that may have happened. I say to the member for Higgins and those who have inherited his economic legacy on this question of interest rates: if you have bequeathed the people of Australia, working families, a $400 a month interest rate hike, that is not just a bit of loose change. That really affects your ability to balance the family budget. Costello’s $400 a month interest rate hike, the Liberals’ $400 a month interest rate hike, has a real effect not just on the cost of living but on the real economy over time. It actually slows the economy down. That is what has been happening. Interest rates went up year after year in the period that they were in office but without any clear strategy for creating the circumstances to enable the Reserve Bank to start heading in the other direction.

That is why I say to the member for Higgins, following his very enjoyable evening last Friday, and the member for Wentworth, with whom he has such a convivial relationship, and the Leader of the Opposition, with whom they both have such a convivial relationship that the key thing is: do you have a strategy to deal with this challenge in the long term? In January this year we said, ‘Here is our five-point plan of attack on inflation. Here is our attitude to public demand in the economy. Here is our plan of attack on skills. Here is our plan of attack on the question of infrastructure.’ Each step of the way those opposite have ridiculed each element of this strategy.

Those opposite gave us 10 interest rate rises in a row and now say they had nothing to do with it. We, the government, having been in for eight to nine months, have said, ‘Here is a strategy for dealing with these challenges for the long term.’ Again I say to the Leader of the Opposition and those who would support him, and even those on the benches opposite who do not support him: get with the government’s program in the Senate and allow the passage of the government’s financial bills so that not only will the budget surplus remain intact but we will have the capacity to make the investments in this government’s $76 billion national infrastructure plan, which is so much a part and parcel of dealing with the inflation challenge and dealing with Australia’s long-term productivity growth.