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

Mr Speaker has received a letter from the honourable member for Curtin proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The worsening impact of the global financial crisis on the Australian economy

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—

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

On Sunday and Tuesday of this week, the Prime Minister made two significant announcements, both in the context of the global financial crisis. The first announcement, an unprecedented step on the part of an Australian government, was to give an unlimited explicit guarantee for all deposits in authorised deposit-taking institutions—Australian banks, building societies and credit unions—and also to give government backing to wholesale term funding of Australian banks. The second announcement, made yesterday, was a $10.4 billion package designed to be a fiscal stimulus for the Australian economy.

The opposition have said in relation to both announcements that we understand the government is seeking to shore up the Australian economy. We understand that the government is addressing the concerns that other governments around the world have expressed in their response to the global financial crisis, and we said we would support these measures. Of course, we expected—and I am sure members of the public would have expected—that the opposition would be given briefings by Treasury and government officials regarding the details, the assumptions and, indeed, the forecasts that have underpinned these significant announcements. This is a reasonable request and I must say that we have had meetings with some Treasury officials and representatives of the government. But today in question time the government’s approach to disclosure, transparency and accountability was there for all to see.

Last night the Prime Minister set the scene. He said he would level with the Australian people. He acknowledged that fear of the unknown is a key factor in the current economic crisis. In fact, many have said that the financial crisis is being driven by a crisis of confidence that is being driven by a crisis of fear. One of the great unknowns at present is the full impact of the global financial crisis on the Australian economy. It is partly unknown because the crisis is still unfolding overseas—governments are reacting and responding to events as they occur—but it is also partly unknown because of the growing list of questions that remain unanswered by this government.

In question time, the opposition sought, on behalf of the Australian public, to ask the government perfectly legitimate and perfectly reasonable questions about the basis for the $10.4 billion package. After all, this is a package which essentially halves the surplus—the buffer that had to be put away for a rainy day—in one fell swoop. The responses that the coalition received to our questions really indicated the government’s uncertainty and incompetence on this issue. For a start, we asked questions about the economic advice that the government had received that caused it to begin considering an economic security strategy. The Prime Minister brushed that off with, ‘Oh well, a couple of weeks ago’ and then, ‘We had a meeting over the weekend’ and that is all we need to know. When we asked questions about the specific economic forecasts that have led the government to believe that a $10.4 billion fiscal stimulus package was necessary, we were told that we can wait for those forecasts. They are not going to provide revised economic forecasts at this time. Yet, if we dare question the basis upon which this strategy was put forward, the indignant response is quite astounding.

We are still waiting for the details of the implementation and the details of the regulation of the bank guarantee scheme; they remain unknown. Specifically, the current forecast for unemployment and growth are still a mystery. Various ministers have said that unemployment will go up, but they refuse to let the Australian people in on the detail of those forecasts. They have refused to let the Australian people know the position in relation to growth. Interestingly, the Treasurer said, ‘You are all going to have to wait for MYEFO,’ the Mid-Year Economic and Fiscal Outlook. Then the Treasurer made the outrageous claim that the coalition, when in government, released the Mid-Year Economic and Fiscal Outlook at 4.30 pm on Christmas Eve. He was obviously trying to infer that, when in government, the coalition mischievously put out the MYEFO at 4.30 pm on Christmas Eve. On not one occasion did the coalition release MYEFO at 4.30 pm on Christmas Eve or at any time on Christmas Eve. Yet, that is what the Treasurer informed the House.

On each occasion, the MYEFO was released within six months of the budget. In fact, it was the coalition who introduced the concept of a Mid-Year Economic and Fiscal Outlook. For our first budget, which, of course, was handed down in August of 1996, the first MYEFO was produced by 28 January the next year, 1997. Thereafter we reverted to May budgets, and on each occasion the MYEFO was released not at 4.30 pm on Christmas Eve as the Treasurer asserted in this House but within six months of the budget. The Treasurer should come back into this House and explain to the Australian people why it is that he accused the coalition of handing down the Mid-Year Economic and Fiscal Outlook at 4.30 pm on Christmas Eve when that was not the case.

The Prime Minister told the House yesterday that the government believes its $10.4 billion Economic Security Strategy is large enough to make a significant contribution to strengthen the Australian economy into the future. So today we asked, quite reasonably, ‘What is the forecast for the growth of the Australian economy over the next 12 months?’ But the response was confected outrage—how dare the opposition ask what forecasts the government is relying upon when it commits $10.4 billion of taxpayers’ funds to an economic stimulus strategy! According to the Prime Minister, the information that the government is relying upon is the World economic outlook of the International Monetary Fund, which projected growth to be 2.2 per cent in 2009, and the Reserve Bank’s forecast of August this year, which forecast growth at 2.25 per cent. So, reasonably, we asked, ‘Is the Prime Minister asserting to the Australian people, through the Australian parliament, that this $10.4 billion package is to stimulate growth that is projected to be positive—that is, at least 2.2 per cent next year?’ The Prime Minister refused to answer that question.

In these extraordinary times, that call for extraordinary action—we have been told by the Prime Minister that these are dangerous times—why will the Prime Minister not release the revised economic forecast so the entire Australian community can understand the basis upon which this government took the action? The opposition has asked for the economic advice that underpins the package to be released. We were told we have to wait. On what basis are we to assume that the government believes that this package is large enough to provide the stimulus that they believe is required? All these questions remain unanswered. What advice have the Treasury and other government officials provided to the government that prompted them to begin considering delivering this large package? Last Wednesday the Prime Minister was saying that our economy was strong, robust and growing and that we were in the best position of virtually every other country to withstand the global financial crisis. Yet by Monday, a $10.4 billion package was being released to the Australian public. What advice did the government receive between, let us say, last Wednesday and Sunday that gave rise to the consideration of such a package? The finance minister told us on Lateline last night that the government had received ‘plenty of advice about where things were heading’.

Perhaps he would like to share that with the Australian public. What is the nature of the advice that the government has received about where things are heading? The Australian public would like to know the basis upon which this package was constructed. That advice has apparently been received from the head of Treasury and other government officials, but what is the nature of the advice?

The finance minister told us on the Lateline program last night that the government had received advice:

… that suggests that absent some serious action by the Government on both fronts, both with respect to the financial system and with respect to stimulating economic activity.

What advice? What advice did the government receive that said absent some serious action there would be consequences? What action was recommended with respect to the financial system? What action was recommended with respect to economic activity? Why are the Australian public not being informed? Why are we being told that we have to wait in these extraordinary times that demand extraordinary action? Why can’t the Treasurer release this information?

What about unemployment growth? We are talking about people’s jobs. We are talking about people’s livelihoods. Government ministers come in here and blithely say, ‘Oh, well, our forecasts on unemployment were wrong and there is going to be an increase in unemployment,’ but refuse to give the Australian people any insight into what that increase might be. There was a forecast in this year’s budget that unemployment would increase by 134,000 and yet has the Minister for Employment and Workplace Relations ever been upfront with the Australian people and admitted that that is the figure contained in the budget papers? No, the minister has not done that. You have to go through and analyse the budget papers to find that figure of 134,000. The minister for employment has refused to admit that the government’s forecast for unemployment was 134,000 job losses within the next 12 months. What is the current forecast? I ask the minister at the table who will be speaking next: will he stand up and tell the Australian public the government’s current advice and current forecast on unemployment?

If you take the people of Australia into your confidence, they can take action themselves. They can recast their priorities. They can do things within their own lives, within their own households and within their own jobs. Businesses can take action and reorder priorities if the government is upfront with them, levels with them and tells them what current information the government has that has caused it to take these unprecedented steps.

We are told by the government that there are going to be tough times ahead. We are told by the Treasurer that there is a rocky road ahead, yet today the government has failed to answer every detailed question about the economic advice it has received about the revised economic forecasts that it currently clearly has. It has refused to take the Australian people into its confidence. The government has refused to level with the Australian people.

As I said at the outset, the financial crisis is now largely being driven by a crisis of confidence. Governments around the world are responding to that crisis of confidence. For example, the stock markets in recent weeks have been driven largely by a loss of confidence that has been fed by a fear of the unknown. In the case of the subprime crisis and its subsequent impact on the global financial system, we know that significant losses have already occurred but we do not accurately know the extent of likely further losses. The government has not told us, for example, the level of exposure of Australia’s banks to credit default swaps. When I asked a question yesterday about whether there is any exposure to taxpayer funds through the government’s guarantees on deposits and term funding, the response once more was outraged indignation—’How dare the opposition ask questions about this government’s handling of Australia’s response to the global financial crisis?’ In fact, the Prime Minister went so far as to suggest that the opposition was acting like the government of Cuba. Is that the kind of language that we should come to expect from the government as they try to instil confidence in the Australian people?

The government must take the Australian people into its confidence. The Prime Minister said he would level with the Australian people. His opportunity to level with the Australian people is to give frank answers to extremely legitimate and reasonable questions asked by the opposition in question time; otherwise, the fear of the unknown will continue to engulf the Australian public. The government must come clean. (Time expired)

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The government and the opposition agree that we are facing extraordinary times which will affect Australia. The extent of the impact, of course, depends on what pans out over coming weeks and months in the international financial scene. It also depends on the response of Australia’s elected government and our independent regulators. As we have said, as the opposition agrees, and as many independent commentators have pointed out, Australia is well placed to get through this crisis. The reasons for this are well known. Our trading links to China and the strength of our terms of trade will see us in a good position, as will the strength of our banks. Of the 20 banks in the world that are AA rated, four are here in Australia. Of the 12 big banks around the world that are AA rated, four are here in Australia—a very high proportion. The World Economic Forum’s Global Competitiveness Report ranked the soundness of our banks as second in the world. And our prudential regulation is well respected. Indeed, our reporting standards have been ranked third in the world.

Of course, the strength of our budget surplus is another reason. It has provided the flexibility for the government to respond to these extraordinary times. Some have argued that the government should not have built up the surplus as high as it did in May and that the Reserve Bank should not have dealt with the inflationary pressures that were apparent earlier in the year. I would submit that that is a misdirected claim.

It is the responsibility of the government of the day, and of the Reserve Bank and other regulators, to deal with the economic challenges of the time; and the Reserve Bank has been satisfied that, because of a range of factors, the unacceptably high inflation is projected to fall to acceptable levels. In the minutes of its last meeting, the Reserve Bank indicated that, due to the obvious international circumstances, that reduction was expected to occur more quickly than they had previously expected, but they had been expressing the view for some time that inflation, which is particularly high—the highest it has been in 16 years—was expected to fall to more acceptable levels.

It is a good thing that the government and the Reserve Bank dealt with inflation. We would not have wanted to go into this crisis with the Reserve Bank concerned about inflation. The government agrees with the Reserve Bank that inflation needs to be tackled whenever it rises. The member for North Sydney has questioned this. He has said in the past that inflation is only a crisis when it reaches Weimar Republic levels, post World War I Germany levels, of 1,000 per cent, for example. He attacked the Reserve Bank for increasing interest rates last year and this year, saying that the Reserve Bank had a case to answer for. Can you imagine, Madam Deputy Speaker, what would have happened if we had gone into this crisis without having dealt with the inflationary pressures on the Australian economy? Inflation eats away at the competitiveness of our economy and, of course, it affects the living standards of Australian families as they deal with increased pressures.

The member for Higgins used to be fond of describing the Australian economy as a highly calibrated racing car. He used to say who was driving the car was very important. He used to say a little mistake can cause a big problem as you are driving such a fast car. And he is right; it is not a bad point to make. What the Prime Minister and Treasurer have shown in recent days and weeks is that they are indeed very good drivers of that racing car. We can all remember the advertisements at the last election and the election before. Remember the ones at the last election, that ‘Labor is full of union officials, full of union thugs’? They said: ‘You wouldn’t put them in charge of the economy; can you imagine what would happen? They are not up to the job.’ I think the Australian public passed judgement on those advertisements then and they will pass judgement on them again when they see the way the Australian government has handled these very difficult international times. Then there were the ads for the election before, which said that interest rates under a Labor government would go up and would always be higher under a Labor government than under a Liberal government. I think the Australian people will pass judgement on that at the next election as well.

But it is not how you handle the good times that is the mark of a good economic manager. How you handle a boom time is not a test of economic management. The true test of a good economic manager is how you handle the difficult times—how you handle the shocks to the Australian economy, how you handle the great influences on the Australian economy that come from the global economic situation. And it is appropriate to recap just how difficult that world situation is. The IMF has said that this is the worst financial crisis since the Great Depression. I note that the Deputy Leader of the Opposition, in an attempt to score political points, criticised the Prime Minister for using those words, when he was in fact quoting the International Monetary Fund. He was quoting the IMF. This is not a time for the Deputy Leader of the Opposition to try and score cheap political points when the Prime Minister is merely quoting a highly respected international economic body. This is the same body which has estimated that losses and write-downs on loans and securitised assets will reach US$1.4 trillion.

There is a great deal of nervousness in financial markets around the world. Banks and financial institutions are very reluctant to lend to each other because, quite frankly, they have no confidence that the institution they lend to will be in a position to repay the money when the time comes. That has consequences for international markets and consequences for Australia. We are seeing a drying-up of credit and we are seeing increased costs of credit, as the spread between official rates and commercial rates increases. We see increased costs around the world and, of course, increased costs here as the banks have passed on those costs. People and organisations that were used to getting credit have found it difficult to obtain. I recently saw one report which said that 25 per cent of businesses in Australia were having difficulty getting credit. That is a very concerning figure: 25 per cent of businesses having difficulty in obtaining the necessary credit to expand their business. They are figures that we have not seen since recessionary times and they are a concern.

That underlines the importance and the appropriateness of the actions taken by the government in recent days and weeks—firstly, guaranteeing Australian deposits and guaranteeing wholesale lending to Australian deposit-taking institutions. Those two actions do two things. First, they assure the Australian people that they can be confident that their deposits are safe. It was Franklin Delano Roosevelt who said:

… the only thing we have to fear is fear itself.

Australians’ fear of losing their deposits could have been a major problem for the Australian economy. If the Australian people had begun to question the security of their savings and taken the obvious action as a result, it would have been very damaging indeed for the Australian economy. So the reaction of the Australian government is designed to reassure Australians that their deposits are safe and guaranteed by the government.

Second, by guaranteeing wholesale lending, Australian financial institutions are now able to compete for credit on a level playing field. Other governments around the world had guaranteed their financial institutions, which gave them an unfair advantage in seeking that credit. We could have seen, if the government had not acted strongly and quickly and decisively, a further drying-up of credit in the Australian market. But that will not be the case now, as the government has ensured that Australian institutions are able to compete on a level playing field.

Of course, the deposit guarantee was first recommended by the royal commission into the collapse of HIH. They recommended a financial claims scheme with guarantees of up to $20,000 back in 2003. I noticed the Leader of the Opposition yesterday claiming that their government would have done it last year, but the member for Higgins was concerned it would scare the markets if they did. That does not really explain why the then government did not do it when it was recommended by a royal commission. A royal commission recommended a financial claims scheme, and the previous government, quite frankly—respectfully—negligently refused to accept that recommendation. I do not want to belabour the point, but the Leader of the Opposition speaks with a forked tongue when he says ‘the previous government was getting around to it’ and ‘the member for Higgins would have done it when the time was right’, when they had a royal commission recommendation from 2003 to introduce a financial claims scheme.

The other action taken by the government yesterday was the very important stimulus package. All the countries in the Group of Seven, the biggest and most developed countries in the world, are forecast to experience zero or negative growth over the coming period. The international circumstances will affect Australia. Despite the fact that Australia is better placed than any other developed country in the world to get through this crisis, we will be affected. So the prudent and responsible thing for the Australian government to do was to take steps to stimulate the economy, to get in front of the game—not to wait until economic growth declined, not to wait until it was too late, not to wait until we needed an emergency retrospective stimulus to the economy, but to make sure that we continue to take actions ahead of the rest of the world, to make sure that we continue to ensure the Australian economy will grow. That was the prudent thing to do. And that is what we did yesterday.

The previous government liked to spend its way out of a boom. They turned Keynes on his head and said, ‘We’ll spend our way out of the good times.’ That was the previous government’s approach. They would let government spending grow by five per cent a year, even in the middle of a boom, and fuel those inflationary expectations. We take a slightly different approach. We take the approach that a government spending stimulus package is appropriate when the economic circumstances warrant it. If the time when the world is going through a downturn is not the time you have a stimulus package, I am not sure when it is. You certainly do not need one when the economy is booming. But that is what the previous government used to do.

Yesterday, we saw that stimulus package receive, we thought, bipartisan support from the opposition. But today and yesterday we saw the Leader of the Opposition authorise a series of questions in the House which questioned that bipartisan support. We have seen the Leader of the National Party in the Senate say that Australian seniors and families should not receive a lump sum, because they might waste it. They do not deserve it; they might waste it. They might spend the money ‘up against a wall’, he said. Or they might spend it on Christmas presents that we will see strewn around the floors of Australian houses with ‘made in China’ on the back of the packets. What an offensive thing to say! That is hardly bipartisan support.

We all know that the Leader of the Opposition is not what we call a conviction politician. We all know that he does not stand up for what he really believes in. We all know that he does not come in here and say: ‘I know this will be unpopular, but here is what I am going to say to the Australian people. I am going to call it as it is.’ We know that he—being a person that used to work in the financial markets—completely understands the funding pressures that the Australian financial sector has been under. But he chose to make a populist attempt to call for the banks to pass on any interest rate reductions, instead of taking the responsible approach that the Prime Minister and Treasurer took saying that ‘as much should be passed on as possible’. But, of course, the Leader of the Opposition chose to take a populist approach, which is particularly irresponsible in these times of an international crisis.

We all know the Leader of the Opposition thinks that cutting the petrol excise is bad policy. He has said, ‘That is bad policy’; but now it is his policy. Now we are seeing the Leader of the opposition make cheap populist points out of this crisis, on the one hand saying that he supports the package and on the other hand criticising the package at every opportunity.

The Australian economy faces difficult times. It faces an international crisis which may get worse before it gets better. The only thing certain about this crisis is its fluidity. Any person who predicts that this crisis has ended or is about to end is taking a huge gamble. The Australian government does not take the view that we can rest on our laurels and that the budget surplus, the actions of the Reserve Bank and our trade links with China will get us through. We take the view that decisive action is necessary and that things like the bank deposit guarantee, the guarantee of wholesale lending and the stimulus package announced yesterday are not only appropriate but the only responsible course of action that can be taken. I call on the opposition to take a similar, responsible and decisive course of action in these very difficult times.

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

In this matter of public importance debate today, I think it is important to first to put on the record what the opposition has actually said about this economic package and that is, as has already been announced and stated, that the opposition supports this government’s package. However, that does not mean that we do not have significant concerns about Australia’s economic outlook. It does not mean that we do not have significant concerns about the continuing economic fallout of the global financial crisis. It does not mean that the opposition cannot ask questions of the government.

What makes our concerns even more worrying is the behaviour of this government and the behaviour in particular of the Prime Minister and the Treasurer. One has to ask the question: why are the Prime Minister and the Treasurer being so evasive with information? One has to ask the question: what is it that they have to hide? Why are they giving the Australian people the impression that they have something to hide?

On the one hand, the Prime Minister says on national television that he wants to level with the Australian people, that he wants to be fair dinkum, that he wants to go into the confidence of the Australian people. But then on the other hand he behaves in a way that is evasive and secretive. He behaves in a way that says: ‘How dare you ask me a question! How dare you ask me to explain the government’s thinking or the government’s rationale!’ You have to ask yourself the question: why would the Prime Minister and the Treasurer be so secretive about information? Today during question time we witnessed a rolled gold example of the way this Prime Minister treats the parliament. We saw firsthand his view of question time. I want to take the opportunity to remind Kevin Rudd, the Prime Minister, that at two o’clock when the parliament sits we have this thing called question time, and in question time it is almost inevitable that the Prime Minister and the government will get questions. That is the purpose of question time.

The Prime Minister needs to get it right in his head. He needs to come to grips with the fact that when he comes into the House at two o’clock he is going to be asked some questions. I know that he is offended by that, but I would ask the Minister for Finance and Deregulation, who is in the chamber and who I have some regard for, if he could please coach the Prime Minister in this regard and speak to the Prime Minister about the need to actually answer the questions. I certainly do not want to see the parliament get to the stage to which it got under Prime Minister Keating, where only on certain days would the Prime Minister actually come into the chamber during question time.

I asked a question: why won’t the Prime Minister release the economic advice he has been given? It is a simple question. Why won’t he answer the question? There are questions like: what forecasts for our economy have the Prime Minister and the government relied on in constructing this $10 billion economic package that they announced yesterday? I think that is a simple, legitimate question that we ask on behalf of the people of Australia: why won’t the Prime Minister release that information? What forecasts has the Prime Minister relied on in formulating the announcement of this package yesterday? Why be evasive? Why be secretive? Why not be fair dinkum with the Australian people?

The key point I want to make today in this MPI is that I think that something is not quite right. There is something not quite right with what this government is saying and what this government is doing. I think that what we are seeing from the government and what we are hearing from the government is not actually what is going on in the government. Something does not quite add up with this government’s behaviour in this government’s announcement. I believe that, in terms of the government’s rationale for this announcement and its underlying thinking, the logic is not quite right. On the one hand, the Prime Minister and the Treasurer are out there in the media today saying that this is the right thing to do, it will not increase inflation, it is economically responsible, they have acted decisively and the budget is going to stay in surplus. In other words, on the one hand this is a package that they have announced in the midst of a crisis, and on the other hand they say, ‘Don’t worry about the crisis because everything is going to be just fine. It’s not going to impact on inflation, it’s not going to impact the surplus and it’s not going to impact any other government spending programs that have been announced. Everything is just going to go along swimmingly.’

What I think is interesting about the government’s logic is that the government would have us believe that everything changed last weekend. This is the point: whilst the Treasurer was swanning around Washington, DC, swanning around and undertaking his various media opportunities, everything changed. Everything changed last weekend. This financial crisis apparently, according to the government, has not been swelling for months and months and months, it has not been on the horizon for months and months and months, because everything changed just last weekend. Two weeks ago in the parliament it was all about keeping a $22 billion surplus locked up, but last weekend everything changed. What I think is interesting is recalling the words of the member for Higgins. The member for Higgins, months and months and months ago, said that there was a financial tsunami coming our way across the globe, but this government only realised that last weekend in Washington, DC. All of a sudden we have got this change.

Remember what I said: the Prime Minister and the Treasurer said there is no impact on inflation and the budget surplus will be fine. Let me read to you what the Prime Minister said in this place on 3 June:

The cornerstone of the government’s fight thus far has been our $22 billion budget surplus. Again I would say to those opposite—

that being the opposition—

that, as they consider their votes in this place and in the other place on the budget measures, if they continue with their proposed plan to conduct a $22 billion raid on the budget surplus, its consequences will be to put upward pressure on inflation and upward pressure on interest rates.

So, on 3 June the Prime Minister said it is very important to lock up the $22 billion budget surplus, for it not to be eroded, for it not to be attacked, because if you do that it will put upward pressure on inflation and upward pressure on interest rates, but yesterday the government took half of its budget surplus away, but that is not going to put upward pressure on inflation. How can the Prime Minister on 3 June talk about keeping the $22 billion wrapped up, keeping it safe from attack and say, on the one hand, that that is the best way to not put pressure on inflation or interest rates and then, in the space of a couple of months, they raid their own budget surplus by over half and say, ‘Don’t worry, that won’t put inflation up; that won’t have any impact on interest rates’? In other words, if the opposition says anything about the use of the budget surplus, that is bad and up goes inflation and up go interest rates, but if the government spends half of it in one year then inflation is fine and interest rates are fine.

On 5 June the Prime Minister said:

The core element of our budget … is a $22 billion surplus. Those opposite stand, by contrast, for a $22 billion raid on the surplus …

He said his logic was simple. He said:

… if you allow public spending to escape, if you allow public spending to run riot—

and this an important point—

… you therefore contribute to public demand—

and up go interest rates again.

Yesterday’s announcement is about increasing public demand, but do not worry, because, according to Wayne Swan, the Treasurer, and Kevin Rudd, the Prime Minister, inflation will be fine, the budget will stay in surplus and everything will be fine. (Time expired)

Jason Clare (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

Former Australian cricket captain Steve Waugh used to say, ‘You can define the moment or let the moment define you,’ and yesterday we saw what real leadership is all about—the sort of leadership that you need to ride out this financial storm. These are serious times. Twenty-five banks around the world have already hit the wall. The US is probably already in recession and countries in Europe are probably on the cusp of recession. The Prime Minister yesterday acted quickly and decisively—and that is what you want from a leader in difficult times—to protect our deposits, to keep banks working and get money into the hands of people who need it to fuel the economy. That was what we saw yesterday.

We did not create this problem—Australia did not create this problem; the problem started in the United States—but we are better prepared than most countries in the world to cope with it, due in part to a budget that we put together in May and due to the work of previous governments over the last 20 years. To give credit where credit is due, decisions like floating the dollar, deregulation of the financial system, competition policy and universal superannuation are, in large part, responsible for the last 15 years of economic growth. This, coupled with decisions of the former government and the mining boom, set us up well. Our banks are amongst the strongest in the world. Our big four banks are amongst the world’s 20 AA rated banks. Our prudential system is the envy of the world.

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

Why?

Jason Clare (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

If you had listened to what I said a minute ago, Joe, you would have heard. Our strong terms of trade, and our biggest trading partner, China, which is expected to grow by more than nine per cent next year, make us well placed. You would not want to be anywhere else in the world, but the problem will affect us. No country in the world is immune. In his address to the nation last night, the Prime Minister said:

In the last few weeks, the global financial crisis has moved into a new and dangerous stage.

And that is its effect on the real economy, on growth and jobs, around the world and here in Australia.

Growth will slow, and unemployment will rise.

That is why this package is important and that is why it is important that we act now. All the advice says that the Australian economy will continue to grow. The IMF report on the state of the global economy that was released last week projects two per cent growth in the next year, and that at a time when the rest of the developed world is expected to go backwards. The report said:

The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s … The major advanced economies—

those of North America, Europe and Japan—

are already in or close to recession …

So we have to act quickly to make sure that we continue to grow and to protect jobs here in Australia. History teaches us that, when an economy slows, responsible governments have to step in and act swiftly and decisively. That is a lesson that governments and central banks have both learnt. That is why, on the weekend, we stepped in to guarantee deposits and bank-to-bank lending to inject confidence into our financial system.

But we also need to give confidence to the people who sit around the dinner tables of Australia—confidence to invest but also confidence to spend; confidence that they will have a job; confidence to buy a house. That is why the Prime Minister announced yesterday a $10.4 billion package to help families, pensioners, carers and first home buyers. The $4.8 billion package for pensioners and carers means singles will receive a $1,400 lump sum payment and couples will receive a $2,100 payment. Carers will also receive $1,000 for each eligible person being cared for.

The important point here is that the package will help all pensioners as well as carers and veterans. There was a fundamental flaw in what the coalition proposed a couple of weeks ago. In my electorate, our package will help 31,000 pensioners and carers. The coalition plan proposed by the former Leader of the Opposition and the current Leader of the Opposition would only have helped 7,000 pensioners in my electorate. Last night I spoke to the president of one of my local senior citizens groups. He told me that the $2,100 will help pay for a very serious operation that he needs to have in the next couple of weeks. He and his wife would not have been covered under the coalition’s plan.

There is another benefit in paying this as a lump sum: by doing this pensioners will get all of the money instead of part of it. If it was part of the base rate, a lot of that money would go to nursing home companies or to housing commissions. I note that on Sydney talkback radio this afternoon, on the Chris Smith program on 2GB, there was a call about this issue. There have been a number of people that have been concerned about this, asking, ‘Will I have access to all the money or will some of the money be sucked out of my account and be given to the place where I live.’ A caller, Vicky, said that her father is a pensioner who has a gold card and currently resides in a hostel. She was concerned that every time her father receives an increase the hostel appears to take more for the cost of his care. Chris Smith praised Justine Elliot, the Minister for Ageing, who he said ‘is the goods’ and ‘has done a lot of things after discussion on talkback programs’.

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

Mr Hockey interjecting

Jason Clare (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I see that the member for North Sydney does not agree with Chris Smith, which is unfortunate. Mr Smith said that Ms Elliot has ‘helped to make nursing home operators behave more in the interests of their clients’ and quoted a press release from Ms Elliott’s office which says that nursing home owners will not be allowed to increase their fees after the federal government’s latest stimulus package. That is a good thing. That is a minister doing what she is supposed to do—protecting the interests of people—and Chris Smith agrees with that.

But this is only the start of pension reform. It is a down payment. Long-term reforms to the budget next year are necessary to provide pensioners with a real sense of security, and that is why it has been endorsed—by every pensioner group in the country—as have the payments to families and the payments for first home buyers. Some 3.9 million children will benefit from a one-off payment of $1,000—payments for families who need it the most; families who are currently on family tax benefit A or families with children receiving the Youth Allowance, Abstudy or Veterans’ Children Education Scheme payments.

The doubling of the first home buyer grant to $14,000 and the tripling of it for first home buyers who buy newly constructed homes will also get first home buyers back into the market and help get the building industry back on its feet. It also has a multiplier effect, creating jobs in retail, manufacturing and elsewhere. All of this will help keep us afloat in rough weather.

In my own electorate the package will help 60,000 families, pensioners, carers and veterans. It will also help create new jobs, with an almost doubling of the job training places. On top of the interest rate cut last week it will help a lot of families keep their heads above water. The cut in interest rate means, for example, that someone who has a mortgage of $300,000—there are many of them in my electorate—will have an extra $164 a month in their pockets, wallets and purses rather than it going to the banks. That equates to an extra $2,000 a year.

There has been a lot of talk about bipartisanship in this place in the last few weeks, and I welcome the comments yesterday of the Leader of the Opposition in support of this package, but talk is cheap. It counts for nothing if it is not backed up by the actions of the party or by the words of the rest of the team. If you are committed to bipartisanship, support what we are trying to do in getting the budget through in the Senate. I am afraid I do not think the opposition will do that, because they are more interested in playing politics. The proof of that can be seen in the petrol excise debate that we had in this parliament only a few months ago. Remember when the former Leader of the Opposition introduced that policy and the current Leader of the Opposition then said that it was good politics but bad policy. When he became Leader of the Opposition he had a chance to change that, but he decided to keep it because he suddenly thought politics was a lot more important than policy. In these uncertain times the job of Prime Minister is to make decisions in the best interests of Australia and the Australian people, not to play politics over policy. That is the core problem here: just at a time when he became Leader of the Opposition, just at one of the most difficult times in global financial markets, he has decided to play politics over policy. They are still doing it in the Senate today.

But it gets worse. It is moments like these in a financial crisis when the opposition show their true colours. The Leader of the Opposition now wants to delay action on climate change. The member for Warringah, interestingly, says that, in these troubled economic times, we should keep Work Choices. This is what he said in his blog in the Daily Telegraph on Friday:

This is not the time for any action that could further hurt business confidence. Workplace relations changes to give unions more power; changes that make workers more expensive to employ; and new environmental imposts might need to be rethought.

That is what the member for Warringah said. Presumably it is endorsed by the Leader of the Opposition. We do not know. He might have an opportunity to get up and make a five-minute contribution to this debate. But I can tell you this: whether it is good times or bad, Work Choices is bad policy and, unless the opposition come in here in a few weeks and vote that legislation out of town, we will know once and for all that they are still the party of Work Choices. The challenge today for the next speaker or anyone who cares to take the microphone in the next few weeks is to disown this statement from the member for Warringah, say that Work Choices is bad policy and get rid of it once and for all.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

There is no disagreement about the need for a fiscal stimulus package, no matter how hard you on the other side have worked to confect any disagreement, as observers have noted today. It is important to have something that is swift and substantial, forward loaded and also targeting the weaker areas of the economy. The question today is why it was so slow in coming. We have had domestic signals showing a slowdown for months. You have had ample opportunity to act. What has become obvious in the last six to nine months is that we have had a leader of the government so concerned about earning the mantle of being a responsible economic manager that he has been prepared to traduce seniors, carers and pensioners for six months. There was a budget back in May, and the cue was not taken.

As I add a postscript to today’s matter of public importance, I think it is timely to go through a chronology of how slow this Prime Minister was to act and react. We became very used to those overseas trips—I think there were 12 or 13 jaunts overseas. They did not give him any forewarning of this. The most frightening image of all was of the Treasurer at his G20 meeting last week wandering through the New York Stock Exchange. It was like shopping centre video of a lost child. No-one wanted to talk to him; no-one wanted to look at him; he did not know where to go. He was looking for a focus group or perhaps an economic adviser to give him a cue on what to say next.

Let us go through the chronology, because if we are going to have global warming as the greatest moral hazard of our generation, as it has been referred to before, we also have an obesity epidemic, a binge-drinking epidemic and all of these other great challenges. Goodness me! You have been crying wolf for nine months and along comes a real one. Is it any surprise that the Australian people are asking a few questions? ‘What do you know?’ ‘What are the figures you base it on?’ ‘Simply provide us some of the economic data.’ It has not been forthcoming, and we are right to ask why. That is a fairly simple question. You spent your whole time confecting moral crises on the other side. ‘By golly,’ Australians think, ‘you’re an unlucky lot in government, aren’t you?’ Here you have a real crisis. It blindsides you despite all of the Prime Minister’s trips overseas and all this great advice which he will not offer to us today.

There was a budget and a budget response in May. There was an opportunity to take some pressure off those who needed it most. There was an opportunity to target some assistance to those who need it most. It was passed up. Then, two days later in the budget response, a $30 a week rise for pensioners was lampooned by the government. All of a sudden, it makes complete sense now, just months later. What came in September was an observation by the Prime Minister that conditions were softer and we were facing tougher economic times. That was only four weeks ago. When it finally looked like interest rates were going to come down and you had a Leader of the Opposition who proposed that it should be more than 25 basis points, wasn’t that reckless! Weren’t you on the other side of this chamber all aghast when someone actually suggested they might reduce interest rates by more than 25 basis points! You lot over in government were trepidatious and nervous. You did not know where to go next. You looked on—

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

The member for Bowman must remember he speaks through the chair.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

They looked on and goaded the RBA into raising interest rates, and they did not know when they were going to come down. Sure enough, there was a 100 basis point drop, and what happened over on the government side of this chamber? The government suddenly started protecting banks and saying there was no need to pass on 100 basis points. The other side of this chamber on the Labor side of politics has spent a generation bagging big banks, but suddenly when this side comes up with the idea that you might have full pass-through of an interest rate cut it is sacrilege. Let us note that that 20 basis point pass-on that was being requested represents probably $2.9 billion out of $23½ billion of bank profit in the last 12 months. That is barely 10 per cent. That was hardly going to bring down the banking sector, and at the same time the government told us that it was working on a bank guarantee. So the banks were going to be safe. How hard would it be to pass on the other 20 basis points? We are dealing with around $700 billion in mortgages around Australia. To pass on the extra 20 basis points would be barely $1.4 billion, barely a drop in bank profits. But here you had the government talking out of both sides of its mouth, saying that it suddenly had to protect the banking sector and it could pass on as little or as much as it chose. That is its chronology, and that is why today there is a certain amount of scepticism when this government gets blindsided by the events from overseas.

What are people asking for? I think they are asking for a confident leader and Treasurer in tough economic times. Of course you cannot guarantee a smooth passage in government, but we think it is time to work toward smoothing the seas where you can. At a time when the government should have been identifying the slowing in the economy, which is the time when you need confidence-building measures, where were they? They were building their reputation as tough economic managers and quite happy to punish pensioners. (Time expired)

Jennie George (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

Listening to the debate this afternoon on the matter of public importance, you have to ask the question: where have members of the opposition been for the last three weeks as the greatest financial challenge facing every country in the world has intensified?

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

Where have you been for the last six years?

Jennie George (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

You can keep asking your questions, but none of those questions alter the fundamental reality that this is a very uncertain and challenging time—the most uncertain and worrying time since the Great Depression. You do not have to convince the average Australian of that fact, because they see it graphically portrayed in their lounge rooms every time they turn the television on and see another bank collapsing or being bailed out and stock markets around the world suffering huge losses. So they do not have to be convinced that this is a very dangerous situation facing the world. Obviously we are not immune from these global developments but, as we have said all along, we are in a much better position, from a variety of actions undertaken by previous governments, to weather this storm than is the case for many other countries. As the Assistant Treasurer outlined in the MPI debate today, we have moved quickly to put in place a range of measures to ensure that our banking and financial institutions remain globally competitive.

But the danger for the community is the fact that fear and a lack of consumer confidence is on the increase. For example, in my region of the Illawarra, the most recent IRIS Research study does point to a slight rebound in consumer sentiment, but it has this to say:

Consumer confidence in the Illawarra improved slightly during the September quarter after the record low of 74 pts in June.

The Consumer Sentiment Index rebounded to 76 pts, up 2 pts since the June quarter.

This was in line with the Australia wide trend.

It is expected however that consumer sentiment will deteriorate in the coming months as a result of the global financial crisis, despite the large October interest rate cut.

So it is in that situation that yesterday we delivered our $10.4 billion economic security package, which is aimed at supporting households, aimed at helping those in greatest need and aimed at boosting economic activity. The opposition cannot have two bob each way on the package. It cannot, on the one hand, pretend that it is offering bipartisan support and then, on every occasion, continue to ask questions that put in doubt that commitment. As the Prime Minister said today in question time, the opposition is walking both sides of the street, or, in my opinion, having two bob each way. It is not as if this crisis has suddenly been discovered. We took prudent action in the budget to ensure that we maintained a strong surplus precisely so that we had a buffer in the event of an economic slowdown. The sensible and responsible thing to now do in light of that slowdown is to use that surplus to provide a fiscal stimulus in a responsible but compassionate manner. As the Assistant Treasurer described in his contribution, it is all about getting in front of the game, and that is precisely what we are doing.

For my electorate the package has many elements, and I want to draw attention to some of the benefits: 17,000 of my constituents on an age pension will get the down payment; nearly 6½ thousand DSP recipients will, for the first time, receive a lump sum payment; 1,420 constituents who receive the carer payment will benefit, receiving $1,000 for each eligible person being cared for; and our deserving veteran pensioners and widow community are rightly recognised in this package. Unlike the Leader of the Opposition’s plea for a $30-a-week increase just for some pensioners—single age pensioners—leaving out the two million others, we have looked after everyone in our package and in fact delivered more than he was calling for one small group. I am pleased, in light of the severe downgrading in the stock market, that eligible self-funded retirees will also be included, as will 11,800 of families on family tax benefit A in my electorate. So, all in all, you can see that our approach in this unprecedented global situation has been to plan ahead, to examine unfolding events, to act early and decisively, and to act responsibly, ensuring an element of compassion in the distribution of the surplus funds. (Time expired)

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

Order! The discussion is now concluded.