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

My question is addressed to the Prime Minister. I refer to the Prime Minister’s answer yesterday in which he confirmed that the government relied upon an estimate that growth next year, in the absence of the $10.4 billion stimulus, would be at least two per cent. What impact has the government been advised the stimulus will have on that forecast growth of two per cent?

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

What I said yesterday was that the government had before it the budget forecast, those from the RBA and, of course, those which were also outlined in the IMF’s World Economic Outlook for growth, all of which had a number with a ‘2’ in front of it for calendar 09 or financial 08-09. What I further said was that the government judged it necessary to have a financial stimulus package to provide a buffer for growth into the future because of the difficulties which were arising through recent developments on global financial markets. The government stands by its policy. It has acted prudently, it has acted early and it has acted decisively.

Jodie Campbell (Bass, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister update the House on developments overnight in the international financial system, and Australia’s response?

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

There has been further turmoil overnight on global share markets as US equity markets had their biggest fall since 1987. The Dow Jones industrial average fell 7.9 per cent, the S&P 500 by some nine per cent. We also saw significant falls in the United Kingdom, France and Germany of between seven and six per cent. Falls on share markets and commodities markets reflect a general concern that the global economy is slowing rapidly. In fact, US retail sales fell by 1.2 per cent in September, their biggest monthly drop in three years. These concerns have been added to last night by the Chairman of the Fed, Ben Bernanke, who said:

By restricting flows of credit to households, businesses, and state and local governments, the turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth.

The IMF is now forecasting the slowest growth in advanced economies for over a quarter of a century. In other words, the impact that we have seen in terms of financial market turbulence and instability in recent times has flowed through not just to equities markets but also to the real economy, and that of course has implications for jobs.

This underscores the importance of early and decisive action here in Australia. The Australian government has acted responsibly in this respect. On Sunday the government took action to guarantee all Australian bank deposits to build confidence and stability in our banking system. We also guaranteed term funding arrangements for banks in order to ensure that banks could continue to provide credit to those seeking credit in the real economy, including business and small business as well as households. On top of that, on Tuesday the government acted to strengthen the national economy and support household budgets with the release of the government’s $10.4 billion Economic Security Strategy for the future. The government has acted to give financial support to seniors, to carers, to pensioners, lower and middle-income families and first homebuyers. Furthermore, the Economic Security Strategy will allow greater spending by families and by seniors on consumption, home buying and construction. These all represent vital economic stimulants for the future. At a time when the global economy is going backwards at a pace of knots, this level of stimulus is absolutely necessary and it is responsible, and it should obtain genuine bipartisan support.

The government welcomes the support we have received from the Australian business community on this package. The BCA President, Greig Gailey, said the $10.4 billion package is ‘the right response to the threat of economic slowdown’. He said:

This package contains all three ingredients to have maximum impact. It is well-timed, well-targeted, and temporary.

AiG’s CEO, Heather Ridout, said:

These spending measures will complement the recent interest rate reductions and steps to underwrite confidence in our banking system.

In coming days and weeks we will continue to work with business and industry groups on Australia’s response to the global financial crisis. The Treasurer, the Assistant Treasurer and I will be meeting with business leaders tomorrow in Sydney to discuss the impact of the global financial crisis further with industry leaders and work with business leaders to determine further appropriate collective responses by the government to what is a global financial crisis impacting not just Australian capital markets and equities markets but the real economy as well.

The government remains determined to act, and to act decisively, whenever necessary to respond to the challenges which now present themselves to the Australian economy for the future. We have acted accordingly on the weekend. We have acted accordingly on Tuesday. We will act in the future in relation to infrastructure provision. And we will take whatever further action is necessary to ensure the long-term health of this economy and to help Australian households on the way through.

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

My question is addressed to the Prime Minister. I refer the Prime Minister again to the answer he gave yesterday to a question in which he was asked whether he was telling the House that the growth forecasts upon which the government had relied were not less than the 2.2 per cent forecast by the IMF. The Prime Minister’s response was:

… the most recent data available to the government was about growth with a ‘2’ in front of it …

Did the Prime Minister in formulating the stimulus package rely on growth estimates lower than two per cent and, if so, why did he fail to mention them yesterday?

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

What puzzles me about the opposition’s attack on this is, first of all, that they have given bipartisan support for this package and within 24 hours there is no longer bipartisan support for this package. We have an opposition determined to engage in short-term partisan politics rather than participate in a long-term economic security strategy for the nation. I draw the Leader of the Liberal Party’s attention to the following facts. The first goes to the growth numbers for the Australian economy, which I have referred to before. The second is the real information contained in the IMF’s most recent report on both the global economy and on the developed economies within that. The October IMF report points to a downward revision in the growth projections for 2009 of about one per cent for the global economy. Secondly, it goes to a further revision downwards by about one per cent for the advanced economies. In the case of the global economies, what you had was the fourth downward revision within a year and in the case of the advanced economies a revision down to growth which is practically zero, which would see across the advanced economies a level of growth lower than we have seen for the last 25 years. That is the first set of factors which galvanised the government’s attention.

The second is this: what has happened with growth in the Chinese economy as well? Revisions downward in the Chinese economy in terms of their growth—

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

Mr Speaker, on a point of order: really the Prime Minister is circumnavigating the globe of irrelevance. The Chinese growth forecasts! Really! I have asked him a question about the growth estimates for Australia.

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

The Leader of the Opposition will resume his seat.

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

I find it remarkable that the alternative Prime Minister of Australia says that growth in the Chinese economy is irrelevant to the future growth prospects of the Australian economy. I think it reflects a level of illiteracy about the impacts of growth in the global economy and in one of Australia’s most significant export partners and the most significant demand element out there in the global economy at present. And with one brush of the hand he says, ‘China is not relevant.’ He assumes therefore—

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

Mr Speaker, on a point of order: clearly the Prime Minister is struggling here. He was asked a question about growth rates in Australia. Australia—the country you are Prime Minister of!

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

The member for North Sydney will resume his seat.

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

Too much time in a 747!

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Mr Adams interjecting

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

Order! The member for Lyons is warned. The member for Bowman is warned. The Prime Minister has the call.

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

In the most recent IMF report we have revisions down by one per cent in global growth and revisions down by one per cent in the growth of the most advanced economies. There are also revisions down in Chinese growth, which uniquely the Leader of the Opposition seems to think irrelevant to growth prospects in this economy—a remarkable conclusion. On top of that you should have a close look at what has happened most recently in business and consumer confidence indicators around the world and in Australia. The growth data for Australia is that which was outlined in my answer to the honourable gentleman’s first question—the budget projection for 2008-09 of 2.75, the RBA’s most recent statement of 2.25 and the figure of 2.2 in the IMF’s report. This is the data which is before the government.

What the opposition leader suggests is that what is going on in the global economy in the period ahead is irrelevant to how those growth numbers will be affected in the future. And I say this to the Leader of the Liberal Party: these numbers for the global economy predate the convulsions in global stock markets and capital markets of the last two weeks. Therefore, the logic which flows from this is transparently obvious: if you have a revision down in growth globally of one percentage point, and that is prior to the convulsions in stock markets and capital markets in the last couple of weeks, it is a wise course of action to create a buffer against Australia’s future growth prospects. One per cent of Australian GDP is $10 billion. Therefore if you are seeking to construct a buffer for the future it is within that ballpark that you should be aiming in order to ensure that you are providing a proper buffer for growth in the future.

But let us look carefully at the economic strategy which the Leader of the Opposition is advocating. He is advocating that this government should wait until MYEFO and wait until the new national accounts data emerges to demonstrate what the actual growth numbers for the future will be. I say to those opposite: the response to the global financial crisis is along these lines. You either act early and decisively before there is a problem—

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

Mr Hockey interjecting

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

Mr Speaker, relevance!

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

Order! The Leader of the Opposition did not have the call. He was denied the call because the member for North Sydney is continually interjecting. Does the Leader of the Opposition want the call?

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

I have made the point, Mr Speaker—

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

It is a point of order.

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

It is a simple question; it demands a straightforward answer.

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

Order! The Leader of the Opposition will resume his seat. The Prime Minister will respond to the question.

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

Effectively what the Liberal Party is saying is: ‘Wait for the data to roll in in the future and then decide it is time to act’—by which time it is too late. The advice from the Treasury is that you act early, you act decisively and you act responsibly. This government has done so in order to create a buffer for economic growth for the future. What is remarkable about this intervention by the Leader of the Opposition is that it does go to a question of the character which he deploys in this economic debate—always walking two sides of the street: on one day saying that he gives this package bipartisan support and on the next day seeking to undermine it.

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

Is that the answer?

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

Order! Has the Prime Minister concluded?

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

Yes.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline for the House the ways the government has stayed ahead of the game as it goes about strengthening Australia’s economy in the face of the global financial crisis?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Flynn for his question. In recent weeks the global financial crisis has entered a new and dangerous phase. It is a new and dangerous phase that those opposite do not seem to recognise. But the Rudd government has been acutely aware of the possibility of this global financial crisis deepening.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

We warned you in February, in March and in April. You guys drove up interest rates, and you know it!

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

The member over there just said that the opposition warned us about this in April—is that right? Well, this is what the Leader of the Opposition had to say on 30 September at a press conference:

There is nobody that would have predicted these events a year ago or even a few months ago.

That is what he said. And this is what he said on 1 October:

… as recently as March people felt … the worst had passed. But it has got a lot worse and the events of the last few weeks would not have been predicted a few months ago.

So what did he say last night? What did he say in his address to the nation? This is what he said—

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order on relevance. I listened to the question; I did not hear a request for a rundown on the statements of the Leader of the Opposition. The question, as it must, sought information.

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

The member for O’Connor will resume his seat. The Treasurer will be relevant to the question. The question talked about outlining the measures that kept the government ahead of the game in strengthening the economy.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

The government has been ahead of the game—ahead of the game all year. But this is what the Leader of the Opposition said last night:

… governments should have acted a lot earlier …

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order of relevance. There can be no relevance to the question when the Treasurer is continuing to defy your order, Mr Speaker, to answer the question.

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

The member for O’Connor will resume his seat. I will listen carefully to the Treasurer.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

The point is this, Mr Speaker: the Leader of the Opposition is walking both sides of the street. These are dangerous events and in recent times they have taken a turn for the worse, and what that demands is immediate action—

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

Decisive action?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

decisive and immediate action, and that is what is being delivered by the Rudd government because of the events in recent times. But we have been ahead of the game all year. We have been in discussions with the Reserve Bank, with the Treasury and with our international counterparts since January this year. And, of course, in the May budget we highlighted the risk to this economy from international forces. That was very much highlighted in our argument for a strong surplus. This is why in June this year we strengthened the investment mandate of the AOFM, it is why we introduced a financial claims scheme—

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

That was our idea.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

it is why we moved to crack down on short-selling. We just had an interjection from over there that the Financial Claims Scheme was their idea! It was recommended to them in 2003, after the HIH Royal Commission, and ignored. So we have been ahead of the game from the very beginning. They are walking both sides of the street. They would rather wait for events to overrun us. We will not do that; we will take decisive and strong action.