Sharryn Jackson (Hasluck, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. How does the budget provide for future generations and what challenges does the government face in maintaining its budget position?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The Rudd government is committed to building a modern Australia—to building for Australia’s long-term future. The 2008-09 budget makes provision for a total of $76 billion for long-term infrastructure investment in road, in rail, in ports, in water infrastructure, in broadband, in universities and in hospitals. Infrastructure is the sinew, the muscle, of our economy. If it is allowed to run down, the economy cannot run as fast. And run-down is precisely what infrastructure has been over the past decade. On 20 occasions the Reserve Bank warned that infrastructure incapacities and constraints were holding back the Australian economy. As a result, when we took office inflation was at a 16-year high and Australia had suffered 10 interest rate increases in a row. I would like to reiterate the quote that the Treasurer made from the statement that has just been released by the Reserve Bank Governor today; it makes very interesting reading. I quote:

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

You could not get a clearer, simpler statement about the economic circumstances that prevailed in Australia at the time this government took office, because what that refers to is infrastructure bottlenecks and rapidly growing government spending putting upward pressure on interest rates and inflation. It is a clear statement of the circumstances that prevailed in the Australian economy at that time.

The purpose of infrastructure investment is to deliver long-term prosperity—not short-term vote buying, like the previous government engaged in, but long-term prosperity. Infrastructure investment is a key determinant of growth, it is a key determinant of living standards and it is critical to attracting foreign investment into this country. It is a really important element in the competitive advantage of the Australian economy when both Australian businesses and international businesses are making decisions about where to invest.

Along with many other members of the House, I was fortunate enough to grow up in country Australia in the 1960s and early 1970s. It was a period of great investment in infrastructure, particularly by state governments—both Labor and Liberal—but also, in some instances, by federal governments. I saw electricity, gas and sewerage being extended to small country towns like the town that I grew up in, and the long-term prosperity that was enjoyed by Australia in that era had a lot to do with the infrastructure investment that was contributed by governments of both political persuasions. Sadly, in recent times the view on the other side of politics about infrastructure has changed significantly, and we are yet to hear a significant statement from the Leader of the Opposition, from the member for Wentworth or, indeed, from the putative leader of the opposition, the member for Higgins, about the significance of infrastructure investment for Australia’s economy—or, indeed, about what they in government would do to invest for the future. For too long Australia has been cruising on the back of the mining boom, failing to invest in infrastructure for the future.

Over the past five to seven years, you have been able to see the consequences of this in the export data. You can see the consequences of this in high current account deficits and in the inflation problem that this government inherited when we took office. The Rudd government are committed to tackling these infrastructure issues. We are committed to investing for the long-term future prosperity of this nation. We are committed to ensuring that future generations of Australians can enjoy the same kind of prosperity that I and so many others of my generation enjoyed off the back of infrastructure investment in the 1960s.