Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation and I refer to the minister’s previous answer. I refer the minister to his previous comments on the ABC, when he said in relation to the first home owners grant:

… simply throwing subsidies at people, like increasing the first home owners grant, would tend to feed straight into prices and be counter productive.

I also refer to similar comments of the Minister for Housing on Meet the Press:

We don’t want to start handing out more lump sums because in the past that has had an inflationary effect and we don’t want to make the patient worse with the medicine we give.

…            …            …

… very soon after the first home owners grant was introduced, within a couple of years, house prices had in fact doubled. So, I guess you could argue that it wasn’t much use at all …

Does the Minister for Finance and Deregulation still believe that increasing the first home owners grant would be counterproductive and feed straight into higher house prices?

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

Frankly I am astonished by this question, because had you perhaps asked me at the time that those words were spoken, ‘Should there be an injection of $10 billion of additional government spending into the Australian economy?’ I would have said no to that as well. Why? Because the economic circumstances were dramatically different at the time. I suggest to you that, if you would actually like to be a contender for one of the senior economic ministries in this place, you might learn something about economics.

One of the reasons why you have variable positioning of government spending and different initiatives is that they are designed to deal with the macroeconomic circumstances that the government confronts at the time, which means that if you inherit an overheating economy with government spending running at five per cent in real terms, putting upward pressure on inflation, then you cut spending. It is as simple as that, because you seek to counteract the inflationary pressures that your predecessors, like the member for Higgins, have left for you to deal with. But if, as a result of international pressures, as a result of the global financial crisis, you have very substantial downward pressure on economic activity, which includes downward pressure on activity in the housing sector and housing prices, then it is good policy, whether in housing or across the board, to push back up again. So perhaps before you purport to be shadow finance minister you should take some economic lessons.