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

I have received a letter from the honourable member for Wentworth, the Leader of the Opposition, proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The need for responsible economic principles to be applied to guide Australia through the current financial crisis.

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—

Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

As the recent developments in the United States and Europe have shown us, it is vital during these difficult economic times that political leaders work together to ensure economic stability. We are confronted with extraordinary economic circumstances. None of the events of the last months would have been predicted six months ago by even the most apocalyptically minded. There is a great deal of uncertainty in the business community, and anxiety in the community overall.

In times like these it is the duty of both governments and oppositions to try to promote stability and certainty to the greatest extent possible. In a free society leaders must do their utmost to restore confidence, but without intervening needlessly or inappropriately. Decisions that are taken by governments must be carefully explained, and they must be based on firm principles. They cannot be put together at the last minute or be announced with the proviso that details will follow. The last thing the private sector, businesses and families need in a situation like this is governments that intervene in an ad hoc fashion—governments that intervene when they are not anchored to a set of guiding principles.

Those principles are very important. It is vital that Australian businesses and households understand exactly what measures are being taken, why they are being undertaken and the principles that are guiding those measures. Principles provide assurance, and that is why I wrote to the Prime Minister yesterday offering him the opportunity for the whole of the House to send a clear message to the Australian community as to the relative strength of our economy and our commitment to work together to ensure domestic stability and to play our part in contributing to international stability. I presented the Prime Minister with a motion regarding those principles that could guide us through the current crisis and offered to discuss these and other matters relating to the global financial situation. This followed my earlier calls, dating back several weeks now, for a bipartisan approach to the response to this crisis. The Prime Minister rejected my offer, but I will read the motion to the House. The motion read:

That:

(1)

the Australian Parliament affirms that the Australian economy is better positioned than that of most other countries to withstand the current global financial crisis due to:

(a)

Our sound public balance sheet and low levels of public debt;

(b)

Our low unemployment and flexible labour market;

(c)

Our sound corporate and prudential regulation;

(d)

Australia’s diverse, productive and dynamic economy; and

(e)

Above all, the enterprise, optimism and the energy of 21 million Australians.

The motion went on:

(2)

That the Australian Parliament also reaffirms its confidence in the private sector’s ability to provide broad financial services to consumers and businesses – large and small; and

(3)

Moreover, that the Australian Parliament believes that the Government’s intervention in financial markets necessitated by the extraordinary global economic crisis must:

(a)

Recognise the need for an urgent and coordinated international approach to the current financial crisis;

(b)

Be temporary until such time as confidence has been restored in global financial markets;

(c)

Not facilitate imprudent behaviour that may disadvantage Australian business and Australian consumers;

(d)

Not diminish competition in the provision of financial services to businesses and consumers across Australia; and

(e)

Not facilitate a transfer of losses from the private sector to the taxpayer.

That was the motion that I sent to the Prime Minister in a spirit of bipartisanship, as a draft that he could consider and, if agreed, we could move together in the House. I repeat that offer to him. I think it would provide real leadership and real confidence if both sides of politics were to unite in setting out the principles that should guide us through these difficult times.

In question time yesterday, we asked a number of questions relating to the government’s proposal to guarantee wholesale term funding. The questions that we asked were directed at precisely the set of principles that we had called on the Prime Minister to endorse earlier in the day. He did not answer the questions. He did not distinguish between the cost of providing a Commonwealth government guarantee to a bank or another authorised deposit-taking institution and the prudential supervision of that institution itself. That is a vital issue because it is vital—critical—that in these circumstances government intervention not facilitate a transfer of losses from the private sector to the taxpayer.

Other countries have been quite explicit in the way they have approached this. In the United Kingdom the government has been very clear that banks seeking the benefit of guarantees of this kind must put up extra capital. No such requirement has been canvassed or articulated in any way by this government. All we have heard is that the Australian Prudential Regulation Authority will look into it. It is not good enough for the government to outsource the Commonwealth’s balance sheet like this to APRA. It has to provide clear principles and clear leadership, because what the government is talking about now is asking APRA to do a very different job. At the moment APRA is responsible for prudential supervision, but a bank’s financial risk is undertaken by its shareholders and ultimately its creditors. What we are talking about here is the government providing guarantees, very likely in very, very substantial sums. Therefore the protection of the taxpayer is absolutely vital.

It is not good enough for the Prime Minister simply to wave his hand, indignant that questions could be asked, and say, ‘How dare the opposition ask questions about protecting the Commonwealth’s balance sheet, the funds of taxpayers and the results of all those surpluses that were accumulated during the coalition’s time in government.’ Indignation is no substitute for information. We need clear information on this matter.

The Minister for Finance and Deregulation, who I see is in the House, seems to understand the key issue here. On the Sky News Sunday Agenda program the finance minister was asked about the possibility of a deposit guarantee being increased in the way we had proposed. He said: ‘Putting in place guarantees of this kind changes behaviour.’ In the current circumstance, that is what is occurring in other major economies and it is occurring for very good reasons. But the change in behaviour, the change in what people make decisions about and how they decide where their money is going, is something that has to be considered very seriously, as do the boundaries and the detail of any proposition that is put in place. So what we have been seeking to do is far from criticising the proposal, far from failing to give it support. We have given it complete support. What we are seeking to do is ensure that the government puts in place the boundaries and the details of this proposition because it is vital in terms of protecting the interests of the taxpayer.

We have put forward a series of concrete, constructive and practical methods to help address this current financial crisis. Honourable members will recall that three weeks ago we raised the possibility that the Treasurer should direct the Australian Office of Financial Management to invest in investment grade, residential mortgage backed securities. Since last year, as we know, this market has been all but completely shut in Australia. It does not deserve to be. In the United States, 15 per cent of mortgages are subprime; in Australia that figure is less than one per cent. Our residential mortgages are of high quality overall, with relatively low levels of default. So it was appropriate for the government, consistent with its investment mandate, to provide some additional liquidity.

This suggestion was initially ridiculed by Mr Swan as ‘a monumental gaffe’. Well, five days later he adopted it, committing $4 billion, and then on Sunday added another $4 billion to it, as we had suggested. In the bipartisan tone that we are filled with today, I can only observe that the adoption of our suggestion was as gratifying as Mr Swan’s backflip has been baffling.

Earlier this year, the government also announced a scheme to provide a guarantee of deposits up to $20,000. Deposit insurance is commonplace in other countries. Indeed, most comparable countries have deposit insurance and, of course, it is becoming more common nowadays—almost universal. Australia historically did not see a great need for it given the priority the Banking Act gives depositors over other creditors and our high standards of regulation and prudential supervision.

However, the absence of an explicit guarantee can be interpreted as meaning there is an implicit guarantee of all deposits, so the argument has always run—and it is a good argument—that it is better to have an explicit limited guarantee than an implicit unlimited one. We supported the $20,000 proposal. In fact, we would have announced it last year other than for the circumstances at the time. The Treasurer at the time, the member for Higgins, took the view—correctly—that to announce it may have created more uncertainty than it allayed. So it was essentially a timing issue. We considered that this cap was too low and we recommended last week that the government increase the level of protection to at least $100,000. The government has taken that up and set up an unlimited guarantee, and we strongly support that. However, we are acutely aware of the point that I think the Minister for Finance and Deregulation and I absolutely agree on of the potential additional moral hazard from the introduction of such a scheme. So we have proposed that its effectiveness and efficiency be reviewed by the Productivity Commission not later than three years after the scheme’s commencement and we certainly commend that suggestion to the government.

Let me conclude my remarks in terms of principles and prudence on the subject of the emissions trading scheme. We on this side of the House are completely committed to an effective environmental response to the challenge of climate change. Under our policies Australia will meet its Kyoto target. We have established some of the world’s best initiatives in tackling climate change—the National Plan for Water Security is unique in the world in terms of its scale and its ambition to tackle water scarcity. The Global Initiative on Forests and Climate, which we undertook with neighbouring countries, is again a world first in tackling the big challenge of deforestation. So we are very committed to this.

Indeed, last year we committed to an emissions trading scheme with a start date targeted for 2011 or not later than 2012. Those dates were very significant because we know that establishing an emissions trading scheme is very complex—extremely difficult. It will impose very substantial costs right across the economy. It has the potential to do considerable damage to Australian export industries and for no environmental benefit. If we impose a heavy carbon cost on our export industries and they become uncompetitive and we see the production move offshore we will have exported both the emissions and the jobs. In other words, the world will keep getting warmer and we will start getting a lot poorer. There is a lot at stake here and design is vital. All of us, including Professor Garnaut, including the members of the government, recognise that whatever Australia does is going to be immaterial in terms of emissions reduction or dealing with climate change unless there is effective global action, which is the key objective. And we share that objective. But we should not be finalising our ETS in Australia until we know what the shape of the post-Kyoto world is going to look like, until we know what comes out of the Copenhagen meeting at the end of 2009, until we know what the new US President will do. This election year flourish of the Prime Minister of a start date in 2010 is unwise, it is dangerous and it runs the risk of us establishing an emissions trading scheme in the dark and ill-informed. Australia deserves to design its emissions trading scheme when we are fully informed, and we cannot do that until after 2009.

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

Over the past three days the government has announced two very major economic initiatives to enable Australia to deal with the very serious international financial circumstances that we now confront. The first of these was a set of guarantees with respect to domestic bank and financial institution deposits—deposits that are held by approved deposit-taking institutions. That guarantee came on top of the proposal that was being developed to guarantee deposits up to a level of $20,000 and has indeed been incorporated into that proposal and will stay in place for three years and then be reviewed. The second is the guarantee for wholesale bank funding, borrowing offshore in particular, to ensure that Australian banks are not disadvantaged relative to other major financial institutions around the world in dealing with what is a very challenging market, particularly given that Australia is very dependent on accessing that borrowing in order to cover our current account deficit, to maintain economic activity and, in particular, to maintain competition and activity within the mortgage market. Thirdly, there is an additional $4 billion to be invested in the mortgage market by providing that to non-approved deposit-taking institutions in order to enable them to continue financing mortgages and therefore maintain vibrant competition in circumstances where competition has been impeded or diminished somewhat as a result of the sources of finance available to these major organisations internationally.

The second major announcement today was the Economic Security Strategy package of over $10 billion, mobilising the budget surplus in order to stimulate economic activity, in order to enable households to spend and in order to push back very strongly against the very powerful downward pressures that are being felt by the Australian economy already as a result of the US and international financial crisis. I will quickly remind the House of the details of that package. There is $4.8 billion in an immediate down payment to pensioners as part of long-term pension reform. Of course that extends not just to age pensioners but also to disability pensioners, veterans and people who qualify for the seniors health card, so it is a very broad package of support for pensioners and others in similar circumstances.

Second, there is $3.9 billion in one-off payments to families caring for children—essentially low- and middle-income families—based around family tax benefit part A. Third, there is $1½ billion worth of investment in additional incentives for first home buyers—an additional $7,000 for first home buyers buying an existing home and an additional $14,000 for first home buyers buying a new home. Then there is an additional $187 million to create a further 56,000 training places in the current financial year. Of course, there is also an acceleration of the Infrastructure Australia process associated with the government’s nation-building agenda and the three major infrastructure funds in order to ensure that, in the medium term, all of the activity, the employment and the increase in economic capacity that is generated by the infrastructure-building agenda of the government can be accelerated.

We should note, of course, that these initiatives do not occur against a blank backdrop. In fact, in the course of the entire year the government has been obliged to deal with the gathering storm on international financial markets and has had to take specific decisions at certain times very much with those circumstances in mind. I referred to a couple of them in question time. We had previously taken a decision to invest $4 billion in mortgage backed securities of high quality in order to maintain competition in the mortgage lending market. We had taken a decision to increase liquidity in the bond market. We had taken a decision some time ago to guarantee bank deposits up to $20,000. Most importantly, of course, with one eye on the possibility of the circumstances that are now emerging, we had resolved to remain firmly committed to the tax cuts in the budget which we had committed to in the election campaign and which many commentators had urged us to modify or abandon because of the economic circumstances at the time. Of course, we had also resolved to develop a very substantial budget surplus dependent on major spending cuts in a variety of areas, which I have referred to before, and put in place serious plans for investment in skills and infrastructure into the future. So the government has been dealing with these issues pretty well all year, but inevitably we have had to respond to these matters as they have unfolded and to keep in front of the situation as it has been developing, with one eye on what is occurring internationally as a crucial element in framing our policy.

Australia is linked to the global economy. We are critically linked through our financial services sector. That is a crucial connecting point through the funds we access to fund the current account deficit and to fund borrowing for Australian home buyers and others. That has been very much underlined by recent events. We are also connected via the stock market. Australians own stocks in foreign countries, foreigners own stocks in Australia, and therefore it is not a coincidence that the recent gyrations on stock markets around the world have been broadly reflected in the Australian stock market. Most significantly, of course, we are connected by confidence. One of the key elements in the current international circumstance has been a collapse of confidence—a collapse of confidence in the security and stability of financial systems and a collapse of confidence in regulators in major countries. Australia has not had that collapse of confidence in our own arrangements, but inevitably that confidence collapse in other countries such as the United States and in Europe has had a ripple-on effect in Australia.

The government has taken decisive action to deal with these issues, particularly to protect the stability and security of the financial system, and also to stimulate economic activity. That is what today’s package is all about. It is ensuring that, as we have very powerful downward pressures on economic activity and we have to revise our projections for growth and for employment, we are pushing back up in a very strong way with the force that is available to us through that very strong budget surplus in order to ensure that we can sustain growth and long-term economic development, that we protect employment and that economic activity continues at a reasonable level.

History tells us that if you wait too long in circumstances such as those we are facing you will inevitably end up having to do much more in much more difficult circumstances. We can all remember the circumstances of the last major economic downturn in this country, where the ultimate outcomes were very painful for large proportions of the community. By the time action was taken, in some respects it was a bit belated, and that meant that we had an outcome with respect to economic growth and jobs that we all remember with some dismay.

We should note that the devaluation of the Australian dollar that has occurred in recent times will have a significant stimulatory effect. We cannot predict where the currency markets will head. Of course, part of that change has been driven by changes with respect to the American dollar—it is not all a one-way process. That will have a significant stimulatory effect and will be helpful to a lot of businesses that are exporters or that are import exposed. Many of them have been squeezed a good deal by the very high level of the Australian dollar recently. Similarly, interest rate reductions will also have a stimulatory effect. Of course, the work of the automatic stabilisers—namely, the fact that, as a result of growth slowing, receipts will slow a bit, so taxes will automatically slow a bit and payments will increase a little bit—will have a stimulatory effect on the economy. But it is our judgement that, by themselves, they will not have sufficient effect to sustain growth at a reasonable level, given the very powerful pressures that are prevailing in the international climate.

I turn finally to the position being adopted by the opposition on all of these issues. I note that the Leader of the Opposition, in his contribution to this debate, once again put forward a facade of bipartisanship, where the aura of the statesman, the aura of the dignified leader, was adopted. It was all about seeking to join with the government in the interests of the nation, to take bipartisan action for the future of the country and all those kinds of things. I have a pretty basic take on these things. Bipartisan is as bipartisan does. If you act like you speak, we will treat you seriously. We need to just think back over the last few weeks—in fact, maybe even the last week would do—to the behaviour of the opposition to see how much faith we can place in this pitch for bipartisanship. We have seen them consistently seeking to block major budget initiatives and to undermine the budget surplus, and they are still doing it. At the same time as they are here preaching bipartisanship to the government they are still seeking to punch big holes in the budget surplus. It is also the very time when the government is seeking to use that surplus for the very purpose for which it was always available—that is, in circumstances where it is needed to stimulate the economy.

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

Mr Ciobo interjecting

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

I notice that the member for Moncrieff is referring to higher taxes. In fact, one of the two key initiatives that the opposition are seeking to knock over is actually lower taxes on middle-income families who currently get taxed if they do not take out private health insurance. Because the tax regime that was put in place by the former government for people who were supposedly rich—people who were supposedly well-off—was never changed, gradually over time, as incomes have risen and as inflation has risen, middle-income earners are now hit by this tax. We are seeking to give them relief from this tax.

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

Mr Ciobo interjecting

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

Order! Everything was going well until the member for Moncrieff reappeared!

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

First, the Liberal opposition say that they are for low taxes, but it would appear that some taxes are more equal than others. They are in favour of tax relief when some taxes are under consideration but not other taxes. Taxes that pay for subsidies to the private health insurance sector clearly have a different status to other kinds of taxes when it comes to their attitude to tax relief. Second, we have seen the Liberal opposition attack the Reserve Bank. So much for Reserve Bank independence which, when they were in government, they loudly trumpeted. Now it is open season on the Reserve Bank at a time of great international turmoil and great economic difficulty for Australia.

Third, the opposition have been very happy to spread fear and uncertainty, asking questions, for example, about the financial stability and strength of Medibank Private and of private health insurance—all without any evidence of anything wrong or without any basis for claiming that there was something fundamentally wrong with the balance sheets or the circumstances of those organisations. Fourth, and perhaps most bizarrely of all, they have claimed credit for interest rate reductions. It is as if they have not lost the election. They still have not quite got out of that mode of promising interest rates at record lows; they have never quite left that zone. Now they are claiming credit when interest rates are actually reduced. They have not worked out that they have actually swapped sides; they are now the opposition.

I note that the member for North Sydney was the main culprit in this regard. I note that he, in the same breath as doing this, was triumphantly pointing out to people that in March he warned of a recession and he has now been vindicated. That was the thrust of his comments the other day. It kind of reminded me, for those of you who are as old as me, of the famous incident in, I think, the 1966 grand final, with broadcaster Mike Williamson saying: ‘I tipped this, Butch! I tipped this!’ The member for North Sydney is now triumphantly parading around saying: ‘Oh, it looks like there’s going to be a recession. I was right!’ I think he is getting a little bit ahead of himself and I think it is a little bit distasteful for leading figures in the opposition to in effect be claiming that they were right that Australia is going to have a recession. I think it illustrates how thin, how threadbare, the claims to bipartisanship are that he is looking to score points in that regard.

Finally, I turn to the comments made in the moving speech by the Leader of the Opposition. I notice that he claimed—and this claim has been made before—that the government, in its first tranche of $4 billion of investment through the Australian Office of Financial Management, was adopting an idea put forward by him which we had claimed was a gaffe. In fact, he is actually verballing himself because, in his interview with Laurie Oakes, he did not quite say what he is now pretending he said. In fact, he suggested we do what the authorities in the United States had been doing, which was in effect to buy up existing dud mortgages. We of course rejected this proposition, and gradually he moved his view away from that in the ensuing days when he realised what a gaffe he had made.

Secondly, I note that the Leader of the Opposition had the hide to suggest that the former government would have acted on deposit guarantees last year but they decided that it would have sent the wrong signal. So, in other words, they did not do it but now, retrospectively, they are telling us: ‘We would have done it, but we thought it was all a bit hard.’ Finally, Terry McCrann, probably the premier business journalist in Australia, who is by no means a left-wing or pro-Labor commentator, made observations on the Leader of the Opposition in respect of interest rates in an article on 8 October:

OK, I’ll take Malcolm Turnbull at his word. The Opposition Leader really is an idiot and doesn’t understand how financial markets work.

…            …            …

There’s a bigger worry than Turnbull just making an idiot of himself. Again, he apparently doesn’t understand that we are living in extremely—

(Time expired)

Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

The events of recent weeks have been quite extraordinary and the steps taken by countries around the world have, in many instances, been unprecedented. In response to the global financial crisis governments have had to resort to essentially three lines of defence: in monetary policy, in fiscal policy and, in many instances, direct government intervention. At each stage, the state of the various economies is the indication as to whether or not these defences will be successful. In many countries their options are quite limited because of the state of their economies.

The Australian government has taken some reasonable decisions in the last few days, some of which substantially adopt policies advocated by the coalition. The coalition has supported the decisions taken by the government. They have been in step and in line with decisions taken by other governments around the world. The government has been able to introduce initiatives, for example, to stimulate the economy because Australia is better prepared than most other economies to withstand the difficult pressures from this financial crisis.

Australia’s position today is not the result of luck, not the result of any particular effort on the part of the Rudd government, but it reflects the application of responsible economic and financial principles for over 10 years by the previous government. Our public sector balance sheet is strong. We have net assets of about $43 billion, or 3.8 per cent of GDP, according to the final budget outcome as at 30 June 2008. This compares starkly with most other developed economies around the world, which have net debt of 30 per cent or more of GDP. So it is thanks to the coalition’s work in paying off debt and building up surpluses that our budget is in a strong surplus position. The members opposite mock this. It is this very surplus that enables the Rudd government to afford its fiscal stimulus package today.

I am puzzled as to why the Prime Minister finds it virtually impossible to acknowledge the state of the economy that he inherited. Is it that he will feel diminished if he has to acknowledge that, because of the economic management of the coalition, this combination of no debt and strong surpluses has provided Australia with the important buffer against the effects of the financial crisis? Is that why the Prime Minister cannot bring himself to acknowledge the efforts of the coalition? The buffer provides the present government with the ability to respond to the financial crisis through fiscal policy without placing undue pressures on the macroeconomy, and this is a benefit that so many other advanced economies just do not enjoy.

Our economy also has strong prudential regulation, and we hear the Prime Minister and the Treasurer take credit for the strong prudential regulation framework of this country. The fact is that this has come about particularly as a result of the reforms introduced in 1998 upon the recommendations of the Wallis inquiry. As a result of the reforms introduced by the Howard government, we are well served by our institutions at times such as this.

These institutions include the Reserve Bank, which the coalition determined should be independent. Members will recall that the Labor Party, in opposition, sought to prevent the coalition making the Reserve Bank independent. They threatened to take the Treasurer to the High Court to prevent him from introducing legislation that would determine the independence of the Reserve Bank, but now the Reserve Bank is keeping inflation low and stable and providing systemic stability to the entire financial system. The Australian Prudential Regulation Authority was set up as an independent regulator by the coalition, and this was to ensure that there would be intense supervision of systemically important institutions such as deposit-taking institutions and insurance companies. It has been important in recent weeks that we have in place an independent regulatory authority—such prescience on the part of the Howard government! The Australian Securities and Investments Commission, of course, has careful oversight of corporate law, and the Australian Treasury has oversight of policy. Together these four institutions, in close liaison through the Council of Financial Regulators, have ensured the close coordination and consistency of their activities, although obviously they have different mandates and objectives. To this mix I add the ACCC, the Australian Competition and Consumer Commission, which is promoting competition policy and enhancing competition, which is essential for the provision of the best quality goods and services at the lowest prices. The point is that these institutions were either created or had their existing mandates strengthened by the coalition when it was in government, yet the Prime Minister seems to choke even on having to admit that the regulatory framework in place is as a result of reforms over the past 10 years. It will not diminish him to at least acknowledge that there was a government before November 2007.

Our economy is as well prepared for the crisis as it could be. We also have a flexible labour market and dynamic, productive, highly skilled and educated Australians who are innovative and will be the key to the strength of our economy. Yet we are not immune to the crisis. The events of the past week have called for extraordinary responses across the globe, and that is why the measures announced by the government have been supported by the opposition, but Australia must have in place some important principles to underpin this extraordinary intervention.

The provision of government guarantees to the financial sector does have the potential to expose taxpayers to costs which are as yet unquantifiable. Taxpayer support should never be provided lightly and should have the highest level of risk management in place. In answer to questions yesterday, the Prime Minister was unwilling or unable to talk about the risk management practices that are going to be put in place; there was no five-point plan to reassure the taxpayers. So, in exchange for the measures announced on Sunday, the government needs to devise and announce publicly a credible exit strategy. These measures should only exist for a short time, until the crisis recedes, and we are yet to hear from the government on that. These measures should be provided to banks at a proper price and should not be used to prop up banks which might engage in imprudent actions. The government needs to be cognisant that the measures will create new incentives and may well alter behaviours, including potentially encouraging excessively risky action by imprudent management.

That is why more intensive supervision by APRA is necessary, and hence why we asked today why the Treasurer had cut APRA’s funding in the last budget by $6 million. This is not the time to be cutting APRA’s budget. The taxpayer has a reasonable expectation that the activities of the banks will be monitored closely to ensure that the impact of any possible poor decisions by the banks will not be borne by the taxpayers. That is what the Australian public need to hear. That is why these new measures ought to be reviewed by the Productivity Commission. We are yet to hear this from the government.

Similar standards of prudence and careful analysis of course should be applied across all areas of government, and that leads me to the government’s proposed infrastructure program, which is a prime example. If the government treats this program as a means of propping up incompetent state Labor governments or funding poorly conceived projects that turn out to be white elephants, public money that could have been put to productive alternative uses will have been squandered. As former Minister for Finance Peter Walsh once said, opportunity cost is the most important economic concept, and that is something that most of the present Labor frontbench fail to understand. It is to be hoped that the infrastructure program is not in the same vein as the computers in schools debacle, which has shown a government unable or unwilling to apply sound principles for costing and implementing government projects. Fuelwatch, GroceryWatch and the tax on ready-to-drink beverages similarly showed poor analysis, an ignoring of advice and a disregard for evidence. As the government approaches its first year, it is to be hoped that the people of Australia can get better government from the Rudd Labor government.

Gary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | Link to this | Hansard source

What we have here is another multipurpose motion for an matter of public importance from the Leader of the Opposition. It is a life support system for not much more than banter and bluster. We have had these motions parliamentary sitting day after parliamentary sitting day. The truth of it is that they are merely about creating a media opportunity for an opposition leader who only lives from media opportunity to media opportunity. The international banking crisis is seen merely as a chance to get his face up on TV and an opportunity for the opposition leader to pretend that he knows something about that of which he knows nothing.

Unfortunately, the Minister for Finance and Deregulation, when he concluded his excellent contribution to this afternoon’s debate, was cut short in his quote from Terry McCrann in the Herald Sun. Terry McCrann, as the finance minister said, is not a noted Labor supporter; I doubt that he has ever voted Labor in his life. But here is what he said on 8 October:

OK, I’ll take Malcolm Turnbull at his word. The Opposition Leader really is an idiot and doesn’t understand how financial markets work.

…            …            …

There’s a bigger worry than Turnbull just making an idiot of himself. Again, he apparently doesn’t understand that we are living in extremely dangerous times.

…            …            …

It is the height of irresponsibility for an opposition leader to go blundering around in matters he doesn’t understand.

It’s not just a case of the boy playing with matches in the dried-out forest; apparently this boy doesn’t even know he’s got matches in his hand.

I suspect very strongly that Malcolm Turnbull does know what he is doing. I suspect that the opposition leader is acutely aware that he is placing the highest priority on a media grab and the lowest priority on meaningful commentary, meaningful debate and a meaningful bipartisan approach to assist our nation work its way through the immense global crisis that is faced by our banking sector. Almost certainly, the opposition leader is well placed to understand elements of that crisis.

The question that we have before us relates to decision making in government. What did decision making look like in the years when the Leader of the Opposition was firstly a parliamentary secretary and then a minister? We can only conclude that they were sloppy, self-serving and poll driven. They were poor decisions. I looked at the record. When I was asked to speak in today’s debate I was really pleased because it allowed me to have a look at a couple of things on the public record. I went back and considered the role played by the opposition leader when he was a parliamentary secretary. I thought that I would read for you a quote from the Financial Review:

Key federal departments, including Treasury, Finance and Environment, were cut out of the process of formulating the Prime Minister’s $10 billion Murray-Darling water package, triggering concerns about the fiscal impact of the package.

I remind members of the House that this debate is about government decision making. This debate is about how governments understand the challenges before them, how governments marshal their forces and how governments make decisions that are in the national interest. The article goes on to say:

The lack of consultation has also raised questions about the level of detailed work undertaken on the government’s first major election year policy statement.

…            …            …

… the government has not indicated when the $10 billion would be spent—

or how it would be spent or how it would affect the budget over the next few years. Fiscal responsibility was allegedly an area in which the former government had the upper hand. The article goes on to say:

The package—likely to be one of the biggest single spending initiatives of the election year—was not subject to federal cabinet consideration …

That means that it was not subject to any kind of meaningful departmental consideration that would have made it a package that had integrity or resilience or, for that matter, even met the most basic requirements of public administration.

I looked at another report on the very same water plan. This report said:

On Friday, November 3, John Howard gathered a small group of bureaucrats and advisers in his parliamentary suite. It was just days before the Melbourne Cup Day summit with the premiers, convened to discuss the crisis in the Murray-Darling Basin.

I will jump through the rest of the article to protect the innocent:

Another key figure in Howard’s suite was Malcolm Turnbull, the parliamentary secretary on water who had been hearing first-hand from irrigators about the devastating effect of the drought on rural communities.

The article goes on to talk about how the detail of the $10 billion package was kept secret. It goes on to talk about how the many federal public servants who may have had some insight to bring to that decision were excluded from the decision and kept in the dark. I remind members that this is a debate about how governments make decisions and about why governments make decisions.

We have had many debates in this place about the Australian National Audit Office’s critique of government decision making. We have been through in great detail the grotesque chaos of the $350 million advertising splurge to try and sell the Australian Work Choices legislation of the former government. More importantly than anything else, we have seen the repeated decisions of those opposite that seek to do nothing more than to damage the budget of our nation at a time when everyone should be working as hard as possible to keep the financial integrity of our government as high as it can possibly be.

They have opposed measures that total $7 billion. And they have done that by supporting big oil companies, big insurers and other big companies. They have ignored both the national interest and the interests of Australian families. Those opposite come in here and talk about extending the hand of bipartisanship to the government in order to assist our nation through the current global financial crisis. Yet in this place and in the place across the hallway there they oppose responsible measures that both reduce taxes on families and build a budget surplus. They have opposed the alcopops measures.

They have opposed the changes to the Medicare levy surcharge thresholds, which is an interesting one. I thought to myself, ‘I’ll have a look at the decision-making process’—and remember that this debate is about decision-making processes—‘that underpinned how that surcharge was put in place.’ It was introduced in 1997 with the stated goal of targeting high-income earners and driving them into the private health insurance system, with thresholds of $50,000 for singles and $100,000 for couples or a family.

One might wonder how the former government arrived at those thresholds. We discovered the answer to that just recently. The thresholds were not developed through a scientific or empirical methodology. No, the former health minister Michael Wooldridge admitted they were negotiated with Senator Harradine over a bottle of Jameson whiskey. Several things come to mind about that. Firstly, it is the offhand, light-hearted way in which a minister would describe how public policy is made. Secondly, it is the harsh reality that they did not care about the integrity of that measure. All they cared about was introducing a tax in order to drive a herd of families into an insurance system they did not need and which they could not afford lest it be for fear of paying a massively increased tax.

We see those opposite standing up for big oil companies—a matter about which I know more than most—and the removal of the exemption of the crude oil excise on condensate from the North West Shelf. Those members opposite lined up to support a $2.4 billion tax advantage for one corporate operation. There was no consideration at all for the interests of other producers that might be operating in Darwin or other producers that might want to bring their oil and gas onshore not sharing the same obscene advantage—an obscene advantage created by those opposite when they were in government. I am appalled to consider that government decision making over the course of the last 12 years not only ignored the national interest wherever it could; it ignored Australia’s families; it ignored those in need; and now it turns up in this place masquerading as a life-support system for a media appearance this afternoon in a debate which the opposition knows it cannot win.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

On the day that the Prime Minister has unveiled a package to stimulate the economy it is particularly appropriate that we recognise why we are able to undertake this response today. The government—almost every senior figure—has been boasting that Australia is better placed than most other nations to respond to the global crisis. And they are right. But we could never have responded in this way if we had not had a coalition government for the last 11½ years. There would have been no Future Fund. There would have been no surplus to be spent. There would be no international reputation for credit reliability. There would have been no capacity for Australia to take any kind of leadership response to what is happening in the world.

Remember under the Keating government Australia’s credit rating was downgraded time and time again. Under the Keating government there was a $96 billion debt. You could not have stimulated this economy in the way that has happened today if you were carrying $96 billion of debt. Indeed, if Labor had been in office for the last 10 years and they had kept on spending the way they were, that debt would have been half a trillion dollars by now and the country would be weighed down by that enormous burden. There would have been no capacity for this country to respond. If there had been a Labor government over the past decade we would have had no surplus. There would have been no Future Fund and therefore no capacity to respond.

The very notion of responsible economic principles is one that is really new to the Labor Party. Even Labor Party backbenchers are well and truly aware of how wasteful Labor is in government. In fact I just point to the words this morning of the member for Lindsay who was asked when he arrived in parliament this morning: what could be done to help Australians deal with the current financial crisis? He replied with the following words: ‘It would be a unique situation to accuse somebody in the Labor Party of not knowing how to spend money.’ They are experts at it. They spend money they do not have. They leave debt to future generations. They come now into office and pretend to be economic managers because they have had at their disposal the good management, the skills, the reserves built up by years of coalition government. If Labor had been in office this would simply not have been possible.

Just ask some of the states, the Labor governments that are actually in office. Queensland, the resource state, the state that has had enormous earning potential over recent times, is currently heading towards a $65 billion debt. What is happening in New South Wales? The state is virtually insolvent after years of Labor incompetence. And there was the $96 billion of federal debt when Labor left office in 1996. Labor has been guilty of economic vandalism of the highest order. It was Labor’s incompetence over the years that led our country to face the crisis that we faced when we came to office. We had to restore an economy and restore confidence, and we were able to do something then to help Australia through tough times. We did not do that during easy economic circumstances.

This is not the first time that there has been a problem in the world’s financial system. It is not the first time there have been crises that had to be dealt with. Remember the extreme economic stress that the globe went through after September 11. Remember the Asian economic crisis. Remember the tech wreck, the SARS outbreak. There were all incidents that had an enormous impact internationally and which the coalition government dealt with. We dealt with them without a recession and at the same time we were able to balance budgets and build up reserves.

Labor are telling us that one of the things we have to do to resolve this issue is to spend more on infrastructure. Since Labor have come to office, in spite of trumpeting the suggestion that we should be spending more on infrastructure, they are actually going to spend less than the previous, coalition government committed. They have delayed the broadband rollout by at least a year. Who knows whether it will ever happen? Road construction projects have been slowed or axed. Many projects which could have been underway now, including the F3 to Branxton in the Hunter Valley, have been delayed by Labor. They have slowed infrastructure expenditure. Their comments are about needing to do more on infrastructure to build our nation’s resources—the initiative was to fight inflation and now it is to fight recession—but the reality is they have failed to deliver and their record is appalling. (Time expired)

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I have a little bit of a reputation in this House for understanding literature, so I wanted to correct the record. The member for Wentworth was unfairly, I think, called the ‘Merchant of Venice’ but for those that know that work by Shakespeare he is not like Antonio or Bassanio or any of those characters. I think from his performance today we need to turn to Macbeth, the Scottish king who murdered the former king, Duncan. Today I am just going to read a little bit of Macbeth’s soliloquy where he said:

Life’s but a walking shadow, a poor player,

That struts and frets his hour upon the stage,

And then is heard no more. It is a tale

Told by an idiot, full of sound and fury,

Signifying nothing.

The member for Wentworth is really full of unsound bytes and fear. In his 20-minute speech he went straight for the fear factor. He totally forgot that earlier in the day he had talked about bipartisanship and instead cultivated a bit of fear in the markets and then, obviously, the good old one, turned to the Carbon Pollution Reduction Scheme and talked about the fact that this is going to be a dangerous thing. He does not understand how to build a future. That is the fundamental flaw with the MPI from the member for Wentworth. I could comment on what the member for Curtin put to the parliament; however, it was almost as though she was reading from the ‘Slumber Street Journal’. It was quite amazing. I will not touch on the comments of member for Wide Bay; as a good old agrarian socialist I will support him and leave him right alone.

Rather than go to the words from the member for Wentworth what I thought I would do in talking about responsible economic principles is turn to the comments of real Australians, the people outside this House, and see what they have said. Let us look at that. The Combined Pensioners and Superannuants Association said:

“Pensioners and Carers across the country are overwhelmed by the bonuses announced today by the Federal Government” said Charmaine Crowe, Policy Coordinator at the Combined Pensioners and Superannuants Association.

“Pensioners and Carers will be in receipt of a wonderful Christmas present, which will go a long way to help pensioners make ends meet.”

Then there is the Australian Retailers Association, which is a $292 billion sector, as I am sure the members opposite would recognise, with 5,000 members and 1.2 million employees. Their Executive Director, Richard Evans, said, ‘Retailers welcome Rudd’s early Christmas present.’ These are the third-party endorsements that we have here. The Fair Go for Pensioners Coalition said that it was very welcome news to build confidence and security among pensioners and seniors in this two-part announcement by the Prime Minister. National Disability Services said:

National Disability Services welcomes the Australian Government’s announcement today of additional payments to recipients of Disability Support Pension and Carer Payment.

National Seniors Australia said:

Older Australians have warmly welcomed the federal government’s move to provide generous lump sum payments to pensioners and low income self funded retirees in time for Christmas.

…            …            …

National Seniors Australia chief executive, Michael O’Neill, said the government had clearly recognised the pressure older Australians are under.

These are the people we should be turning to in assessing the performance of the Rudd government. I think the members opposite should take the advice of my Mum, which is basically, ‘If you can’t say anything nice then don’t say anything.’ They have been sitting there like flogged dogs all day since this announcement. What they should do is just sit there quietly or go back to their offices and take the calls from pensioners. They should take the calls from the seniors that are phoning their offices. To quote one pensioner, all they said was, ‘Woo hoo!’ They are over-the-moon happy with what the Rudd government is doing in managing the economy sensibly. This is responsible economic management. I just remind the people opposite that is what government does: you support the vulnerable, you invest in the future, you assist small business to grow and you put downward pressure on inflation while promoting growth. That is what responsible government does.

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

Order! The discussion has concluded.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Haven’t you got any more Shakespeare for us?

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

The Leader of the Nationals was heard in silence and I think should show the same courtesy to others.