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

In considering the bills comprising this stimulus package presented by the government of some $10.4 billion, the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and cognate bills, it is necessary to put them in the context of the global financial crisis which has been unfolding around the world for at least the last 12 months. Some have suggested that the global financial crisis has been caused by extreme capitalism—whatever that means—or corporate greed, but that is far too simplistic an analysis of the cause of the global financial crisis. It has come about because of a number of failures—policy failure, regulatory failure and management failure—and the combination has created what one could describe as a perfect storm which has led to a crisis in confidence and a situation where banks have become reluctant to lend to each other—in fact, banks do not trust each other—so the whole flow of credit throughout economies has been frozen.

As we all know, this began with the subprime crisis in the United States. This was a result of some policy decisions. Firstly, money was easy to obtain. Between 2000 and 2003 interest rates in the United States fell from 6.5 per cent to one per cent. Secondly, there were the policies from successive United States administrations for homeownership, particularly among the poorer demographics. When you combined this cheap and easy money with this push to ensure that more people got loans for homeownership the result was that many people whose creditworthiness would not have otherwise entitled them to obtain a loan from a bank were able to obtain credit. This was fine when the housing bubble was increasing and house prices were increasing, but when the bubble burst people were left with loans that were in fact greater in value than the value of their home. These were colloquially known as NINJA loans—no income, no job or no assets loans. People just could not repay the loans. In many states in the United States they were non-recourse loans, which meant that people could effectively walk away from their responsibilities.

The subprime crisis in itself was difficult enough but these subprime loans had been onsold by the lenders to investment banks, which had packaged them up into some of the most complex financial products and then onsold them to the world. Rather presciently Warren Buffett called these ‘financial weapons of mass destruction’. These financial products had at the heart of them subprime loans, toxic loans. Insurance companies insured these loans, investment banks sold these loans and credit-rating agencies rated these loans as being worthy of investment, as investment grade loans.

When this culminated in the collapse of the housing market, the fallout was spectacular. Mortgage brokers, investment banks and insurance companies have all either collapsed or been bailed out by governments not just in the United States but across the world. Governments have struggled to come to terms with how to put liquidity into the markets and get money flowing again while propping up failing institutions. Essentially governments have had three levers on which to draw: monetary policy, and that depended upon the state of monetary policy in each country; fiscal policy, and that depended upon in most instances the state of the budget in each country; and direct government intervention, which in a number of cases has meant governments providing guarantees to bank deposits to prevent flights of money from one institution to another.

Australia is better positioned than most other countries to meet the fallout of the global financial crisis. That is not because of luck but because of the strong economic management of the Howard-Costello government. Those conditions were inherited by the Rudd government on coming to office in November 2007. The Labor government inherited a debt-free economy in terms of net government debt. We had eliminated government debt. So, unlike virtually every other comparable country around the world, the Australian government has zero government debt. The Labor government also inherited successive budget surpluses. The economy was in a very strong position because of the surpluses that had been built up over a number of years, including about $70 billion in national savings in the Future Fund. That is why the Treasurer was able to announce on budget night that there would be $21 billion forecast for the next financial year. The Treasurer has not yet delivered a budget surplus. The only budget surplus that has occurred in the life of the Labor government was the previous government’s surplus, which was delivered at the end of June 2008. The Rudd government was able to forecast a budget surplus of some $21 billion for 2008-09.

The second reason that Australia has been able to and will weather the storm better than most countries is that our banking sector is strong, robust and well capitalised. Our major banks have been reporting and are still reporting record profits. We have not had any of the bailouts that we have seen in the United States where the five great investment banks, for example, have now been reduced to two and they have moved from being investment banks to being retail banks to come under the umbrella of the regulator. We have not seen the collapse of a savings and loans type bank like Washington Mutual, as we have seen in the United States, or Northern Rock in the United Kingdom and elsewhere throughout Europe. Our banking sector is and remains strong.

The third reason is that Australia has a very strong regulatory framework. Prudential regulation in this country is probably second to none. That is a result of decisions of the previous government. It separated the Reserve Bank from prudential responsibilities. The Reserve Bank is an independent authority charged with responsibility for monetary policy and the stability of financial markets. A separate entity—the Australian Prudential Regulation Authority—was set up in 1998 with the specific task of prudential regulation in this country. APRA has performed its task extremely well. So the Labor government inherited very strong economic conditions, a very strong banking sector and a very strong prudential framework.

Over the weekend of 11 and 12 October, there were meetings of a number of cabinet ministers and the Secretary of the Treasury. These meetings have been the subject of considerable discussion in the public domain, but what we know from those meetings is that the government made two decisions. The first was to provide an unlimited bank guarantee to deposits that were held in APRA regulated institutions, the authorised deposit-taking institutions regulated by APRA. There was no analysis provided or made public—certainly no analysis that the government has seen fit to make public. There was certainly no modelling in relation to this unlimited bank guarantee, and the government asked us essentially to take them on trust because, as the Prime Minister indicated, it was done on the specific and explicit advice of the Governor of the Reserve Bank. We now know that our trust was misplaced because, as it has turned out after excruciating questioning of the Prime Minister in question time, the Governor of the Reserve Bank was not even at the meetings over the weekend of 11 and 12 October with the various cabinet ministers. The Reserve Bank governor was not asked for, nor did he give, his direct and explicit advice to the government.

On 14 October the government announced a stimulus package, and it was presented in these terms. In a joint press release, the Prime Minister and the Treasurer stated:

The Rudd Government today announced a $10.4 billion Economic Security Strategy to strengthen the Australian economy in the face of the worst global financial crisis since the Great Depression.

This $10.4 billion strategy will strengthen the national economy and support Australian households, given the risk of a deep and prolonged global economic slowdown.

On that basis, one assumed that the Australian economy would be slowing, and that was the message that the Prime Minister and the Treasurer were trying to present to the Australian public—that, as a result of the global financial crisis, growth in the Australian economy would also slow. The press release went on to say:

The Rudd Government made tough decisions in the May budget to build up a large budget surplus to act as a buffer in tough economic times.

Today those tough economic times have arrived …

In other words, the Australian economy would slow to such an extent that the government believed it was necessary to use the forecast budget surplus to stimulate growth, so it would use the forecast budget surplus in a spending package to stimulate growth. That then raises the question: what was the forecast for growth that the government was relying upon in deciding to spend what has been calculated as about half of the forecast budget surplus in one hit—$10.4 billion in one package? The government had said on many occasions that the budget surplus was being built up as a buffer against the global financial crisis; now it is telling the Australian public it has had to spend half of the budget surplus in order for it to act as a buffer against the global financial crisis. I need not point out, because it is self-evident, that once the surplus is spent you cannot get it back—you cannot spend it again—so this is a significant decision of the government to spend, in one hit, half the forecast budget surplus, which represents about one per cent of GDP.

Quite naturally, the opposition asked questions of the government as to what would be the forecasts that the government was relying upon in order to make such a significant decision to spend half the budget surplus in one hit just weeks before Christmas. We—I would suggest quite appropriately, logically and reasonably—asked questions about the assumptions the government had made about growth in order to put together this package. Yet the government was extremely reluctant—in fact, bordering on outrage—that we would ask these questions on behalf of the Australian public. I think it not unreasonable for the opposition to say to the government, ‘If you’ve said you need to keep the surplus as a buffer against the global financial crisis on one hand, and you say you have to spend the surplus as a buffer against the financial crisis on the other hand, we should know what assumptions have changed.’ So we asked a series of questions on 15 October about the forecasts upon which the government relied in formulating the $10.4 billion package. Essentially, the Prime Minister said that he relied on the IMF forecast of 2.2 per cent and the Reserve Bank of Australia, which had a forecast for growth of 2.25 per cent to 30 June next year. The Prime Minister said:

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

That was the extent of the information that the Prime Minister was willing to give to the Australian public about the government’s own forecasts for growth to justify this package. He said:

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

We asked another question about the formulation of the stimulus package relying on growth estimates and asked if by any chance growth was lower than two per cent—was that a forecast? The Prime Minister replied:

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.

We took the government at face value. It said that the growth had a ‘2’ in front of it, that the IMF said 2.2 and that the RBA estimate was 2.25. On that basis, we made an assumption about the government’s forecasts for growth, because the Prime Minister assured the public that it had a ‘2’ in front of it.

We also asked questions about what modelling or analysis had been done to come up with the figure of $10.4 billion—again, not unreasonable. After all, this is, as I have said, half the forecast budget surplus. In Senate estimates, Senator Joyce asked Treasury representatives:

I want to go back to the $10.4 billion package. Did you do any modelling on the effect of that package, or did anybody in your department do any modelling on the effect of that package?

Dr GruenNo formal modelling was done of that package. Certainly, analysis was done of that package, but it was not formal modelling.

Senator JOYCESo we have spent half of the nation’s surplus without a formal modelling of the package; is that correct? We have spent half of the nation’s surplus without a formal modelling of the effects of the package?

…            …            …

Dr GruenI can confirm that the package was $10.4 billion and that no formal modelling was done. I can confirm that no formal modelling was done.

Members will note that he did say earlier that analysis was done of the package, but I point out that that analysis has not been made public. So once more the government says: ‘Take us on trust. We’re not going to tell you anything more about the growth forecast, other than it has got a “2” in front of it. We’re not going to tell you anything about the analysis that was done; we won’t make that public. We haven’t done any modelling to show the effects of this package.’ In other words, will it work? If we spend $10.4 billion, will it in fact have the effect of stimulating the economy to avoid recession? We are not given any of that information.

The government said all would be revealed in the Mid-Year Economic and Fiscal Outlook. In fact, on a number of occasions in question time the Treasurer said, ‘That information will be contained in the Mid-Year Economic and Fiscal Outlook.’ I point out that in the past the Mid-Year Economic and Fiscal Outlook has always made some technical assumptions in its forecasts on growth. As an example, I will quote from the 2007-08 Mid-Year Economic and Fiscal Outlook. This is a paragraph that appears in previous versions as well. It says:

The domestic economy forecasts are based on several technical assumptions. The exchange rate is assumed to remain around its average level of recent months … Domestic interest rates are assumed to remain unchanged at current levels. World oil prices … are assumed to move in line with market expectations … The farm sector forecasts are based on an assumption of average seasonal conditions in the future …

In other words, there are four assumptions, but exchange rates and interest rates are always assumed to remain unchanged. That has been the experience of all previous Mid-Year Economic and Fiscal Outlooks. This year, the Treasurer called a press conference on what just happened to be the day of the US presidential election, a day when perhaps the public and the media’s attention was on other matters, namely, the likely election of the first African-American as President of the United States—a most historic occasion and a political event of enormous significance. On that day the Treasurer chose to release the 2008 Mid-Year Economic and Fiscal Outlook. I take it that because this document has on the front ‘Statement by the Honourable Wayne Swan MP, Treasurer of the Commonwealth of Australia, and the Honourable Lindsay Tanner MP, Minister for Finance and Deregulation of the Commonwealth of Australia’ they are the authors of this document, they in fact wrote it and this is their work. This is the government’s document. This is not Treasury’s; this is the government’s document. When we turn to the paragraph about the forecast for the Australian economy, we find a change for the first time in the Mid-Year Economic and Fiscal Outlook. It starts off:

The domestic economy forecasts are based on several technical assumptions. The exchange rate is assumed to remain around its average level  …

et cetera. Then it says—and this is a change, this is most unusual:

Interest rates are expected to decline broadly in line with market expectations. This is a departure from the usual assumption of unchanged interest rates, reflecting the fact that markets are forecasting a significant easing in the near term, and it would be unrealistic not to take this into account.

Who decided to change the assumptions that have always been used for forecasting growth? Who decided to take the step of, instead of assuming unchanged interest rates as has always been done, taking into account market expectations on interest rates? Imagine if, in 2007, Treasurer Costello had taken into account market expectations of an interest rate rise during the election and an interest rate rise earlier this year when the Treasurer was egging on the Reserve Bank to put up interest rates to fight public enemy No. 1—inflation.

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

The war on inflation!

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

The war on inflation. There has been a departure from the usual assumptions and the usual practice of forecasting growth. We have had no explanation at all from the Treasurer, but the risk that is now present is that the government is sending a message to the market that the government’s policy is that interest rates will come down significantly. This is the government’s document. The government is represented on the Reserve Bank by the Secretary of the Treasury. This document, the government’s own document, telegraphs that this is the government’s explicit view on monetary policy. The government is predicting and, indeed, taking into account in its forecasts and assuming that there will be a significant easing in the near term and, presumably, in order to come up with a figure of two per cent growth—it has a ‘2’ in front of it; the Australian economy is forecast to grow by two per cent in 2008-09—the government must have made assumptions about interest rate falls. The government is telegraphing to the market that it is the government’s explicit view on monetary policy that interest rates will fall, and will fall by specific amounts, such as to allow them to forecast growth of two per cent in 2008-09. Yet the Treasurer stated yesterday that the government does not make forecasts on monetary policy, that it does not comment on interest rates. That is just not correct. In this very document, the government’s own document, it is forecasting a fall in interest rates. The government is seeking to dictate monetary policy.

In the absence of any explanation from the government this leaves a very unusual precedent. Only a couple of days later the Reserve Bank, which is independent and which does use the usual assumptions, stated in its Statement on monetary policy of 10 November under the heading ‘Domestic activity’:

The forecasts for the domestic economy are based on the technical assumption of a cash rate of 5.25 per cent throughout the forecast period to June quarter 2011 …

That is the usual way that forecasts are done. The Reserve Bank has in accordance with usual practice assumed an unchanged interest rate because, of course, the Reserve Bank would not be telegraphing to the market what movements will be made over the coming months. But, no, the government in its Mid-Year Economic and Fiscal Outlook has informed the market that there will be interest rate cuts. The government is dictating monetary policy

That brings me to this particular package. As I said, it is $10.4 billion. Some of the funding is going directly to pensioners, and we applaud that. After all, the coalition has been calling on the government for months to increase the base rate for pensioners. The Prime Minister, the Deputy Prime Minister and other senior cabinet ministers informed the Australian public that they could not live on the single age pension. They informed the Australian public and every pensioner on the single age pension rate that they could not live on it, yet they expected others to do so. It was on that basis that we called upon the government to increase the base rate for pensioners. The government referred it off to review, as the government is wont to do. It referred it to review and said that pensioners would not be hearing any more from it until the budget in 2009.

After persistent and consistent calls for an increase in funding for pensioners, the government, under the guise of a stimulus package to ward off the global financial crisis, relented and has provided funding to pensioners. The pensioners should have received this support in any event. The pensioners should not just be an afterthought in the Prime Minister’s quest to take on a war against the global financial crisis. The pensioners of Australia deserved an increase to their base rate. The government has said that this is a down payment, so we look forward to receiving some further information from the government on what it proposes to do for pensioners.

The other amounts relate to funding for families, and we support that funding. There is also funding for the first home owners grant and, again, the coalition, having introduced the first home owners grant, support that. We recall somewhat wryly how the now Minister for Housing denigrated the first home owners grant when she was in opposition, but it is a different story now that she is in government and seeks to not only support it but enhance it.

The idea of a stimulus package is to ensure that people spend money and that the economy continues to grow. We have had no modelling or analysis as to whether the government has any idea whether this stimulus package will work—indeed, whether a $5 billion stimulus package might have worked—or whether more will be needed in the future. But the way the government is spending the surplus we are likely to be in deficit next year and Australians will be welcomed back into Labor’s new world of deficit spending. But the news yesterday from the New South Wales state Labor government puts in serious question whether this federal government stimulus package will have any impact at all in New South Wales. In our most populous state the New South Wales government is cutting spending and putting up taxes, including tolls. So any increase in spending by the federal government via payments to pensioners and families could well be wiped out in New South Wales in particular where the state Labor government has cut spending and is putting up taxes. In other states where Labor governments are practising their own brand of economic mismanagement the effect of any stimulus package could well be wiped out by their incompetence. The coalition have grave reservations about the impact of this spending package, but we support the government in any attempt to stimulate the Australian economy. (Time expired)

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Link to this | Hansard source

I just note on behalf of the opposition the Deputy Leader of the Opposition and shadow Treasurer questioning the government’s assumptions in relation to the future growth of the Australian economy. May I sincerely suggest that the members of the opposition tune in to Dr Ken Henry’s address today at the National Press Club for some of the answers that she seems to be seeking. Moreover, there will be an opportunity for the Leader of the Opposition and the Deputy Leader of the Opposition and shadow Treasurer to prosecute those issues which are concerning the opposition here in question time today. I think that the slight and the stain that has been directed at the Secretary of the Treasury and the Governor of the Reserve Bank in recent times by the opposition has been disgraceful. I do not think that there is any doubt, or there has ever been any question before in this place, about the integrity and the honesty of those two great Australian public servants.

I commend to the House the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and the Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009. In the current global financial circumstances, the $10.4 billion stimulus package set forth by the Rudd government is a very important fiscal measure taken to maintain a strong and buoyant economy here in Australia. As other world markets and economies are undoubtedly experiencing turbulent and difficult financial times, the Australian government is taking necessary, decisive action to do everything in its power to protect Australian households from the effects of this crisis. As the Treasurer has stated, the Australian economy is not immune from the fallout from the global financial crisis, but our government is doing everything in its power to help Australians through this crisis.

The amendments in these Economic Security Strategy bills include both short- and long-term benefits for our economy and, indeed, our society. The announcement of the Economic Security Strategy made by the Treasurer on 14 October 2008 was welcomed by thousands of workers, families, pensioners and young citizens in my electorate of Lowe. The Treasurer announced that, as a key component of the Economic Security Strategy, the Rudd government would deliver payments to pensioners, seniors, people with disabilities, carers and veterans. The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 will amend the national security law, the family assistance law, the Veterans’ Entitlements Act 1986 and the tax law to provide for these payments.

The scope of these amendments is indicative of the broader benefits they provide. The legislation enables a lump sum payment of $1,400 for single pension recipients and a combined payment of $2,100 for couples in receipt of a pension. I am very pleased to note that under the bill a much broader group of pensioners are eligible for this payment. For many years I have received complaints, indeed pleadings, from disability support pensioners who have, for far too long, been neglected. So it is noteworthy that this is the first time a lump sum payment has been extended to those on a disability support pension. For those who have raised this inequity with me in the past, I too share your delight not only because of the payment but for the recognition you have now received. The government has answered your call.

Eligible recipients of payments contained in this bill include those in receipt of: age pension; disability support pension; wife pension; widow B pension; service pensions; income support supplement; carer payment; partner payment, widow allowance, bereavement allowance, parenting payment, if a person is of age pension age; special benefit, if a person is of age pension age; Austudy payment, if a person is of age pension age; Abstudy, if a person is of age pension age and receiving a living allowance; Commonwealth seniors health card, assisting many self-funded retirees; and Veterans’ Affairs gold card, if a person is also eligible for seniors concession allowance. I am very pleased to note that also contained in this bill is the provision of a payment for recipients of carer allowance who will receive $1,000 for each person in their care. Also included in the legislation is a provision of a payment to families with dependent children.

As everyone can see, the Rudd government recognises the financial pressures parents face when meeting the living costs of raising children. Whether it is groceries, clothing, educational resources or extracurricular activities, the costs mount up. To assist parents with these costs, under the Economic Security Strategy payments families will receive $1,000 for each child who attracts family tax benefit part A. Families with dependent children in receipt of youth allowance, Abstudy living allowance or an educational allowance under the Veterans’ Children Education Scheme or the Military Rehabilitation and Compensation Act Education and Training Scheme will also receive $1,000 for each eligible child. I also note that the legislation stipulates that if any of the previously mentioned payments for families is shared between two people the Economic Security Strategy payment would also be shared.

Just last week an extremely pleased constituent telephoned my office to clarify that under the bill he and his family will be eligible for $4,000 in payments. He wanted to calculate the sum based on the current provisions in order to consider the best use for the money. If this legislation proceeds through the parliament without amendment I am sure there will be thousands of other constituents in my electorate, and indeed around the country, who will be eagerly awaiting this much needed financial relief. In fact, statistics show that in my electorate of Lowe more than 11,000 age pensioners will benefit from this legislation and more than 7,000 families will benefit from the family tax benefit A payment. There will be more than 27,000 payments will be made to residents in my electorate with these Economic Security Strategy payments. Just think, Mr Deputy Speaker: 27,000 payments in one electorate. Think of the relief, comfort and security to thousands of people who will receive these funds shortly.

The payments under this legislation will be tax free, and no additional forms will need to be lodged to claim these payments. Those eligible for any of the mentioned payments will automatically receive the funds before Christmas. I take this opportunity to commend the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon. Jenny Macklin, for the clear and comprehensive bill put before this House. I trust that this will enable a smooth passage of legislation so that these payments may be made on time for five million-plus seniors, pensioners, carers and families. As the minister stated in the House yesterday, these payments are an immediate down payment on the Rudd government’s long-term pension reform.

Other long-term measures initiated by the Rudd government include those contained in the Appropriation (Economic Security Strategy) bills (No. 1) and (No. 2) which are before the House this morning. The bills seek authority for the funding of the initiatives for 56,000 additional productivity job seeker places, administrative costs in implementing one-off payments and notification of payments, as well as additional costs to be incurred with the increase of the first home owners grant. The Rudd government is committed to improving the skills and productivity of the Australian workforce. Under the Economic Security Strategy the government will invest an extra $187 million to create an additional 56,000 productivity job seeker places in 2008-09. The additional places will almost double the current 57,000 places, to 113,000. These new training places will provide industry with skilled labour and reduce the skills shortages currently experienced in areas such as trades.

The demand for training offered by the Productivity Places Program has been incredibly encouraging. Since the program began in April, more than 50,000 job seekers have enrolled. Ten thousand places will be allocated to provide specific retraining opportunities as well as places for displaced workers. These funds will target the areas where they are most needed. The outstanding response from training institutions and students did not go unnoticed in my electorate of Lowe. Indeed, there were several training institutions in my electorate disappointed that the places went as quickly as they did due to the interest they received from students and industry—they had further opportunity to use those places. I say to those students and institutions: here are another 56,000 possible training and employment opportunities, which the Rudd government recognises as a national priority, and I encourage you to apply. I think it is important to point out that these additional places are part of a long-term $2 billion commitment to the Productivity Places Program, which will provide more than 700,000 training places in the next five years.

In the Appropriation (Economic Security Strategy) Bill (No. 2), the Rudd government has addressed an issue that has long been of concern to constituents in my electorate of Lowe. The issue of housing affordability has been brought to my attention regularly by my constituents over many years through the surveys that I regularly distribute to my electorate, in letters and emails to me, at street meetings or in my mobile offices. That housing affordability is such an important issue for my constituents comes as no surprise—the facts are sobering. One in three households in the inner west has at least 30 per cent of their income swallowed up by a mortgage or by rent payments—that is a fact. Inner west families have larger average levels of debt than ever before and mortgage repayments are consuming more and more of their incomes. A decade ago, the average family home cost four times the annual wage. Today, an average family home costs seven years of average annual wages. With the inner west having one of the highest proportions of households suffering from mortgage and rental stress in Australia, it is no wonder that local first home buyers have struggled to save a deposit for their first home. Put simply, first home buyers cannot save enough money for a deposit while paying exorbitant rents and, often, parents are unable to help because of their own high mortgage repayments and cost-of-living pressures. These pressures are brought to light by a constituent’s response some time ago to an information pamphlet on housing stress:

I’m a single income tenant, my husband has a long term illness which has made him unable to work since the end of 2004. We rent a tiny one bedroom flat in the Inner West for convenience of public transport to enable me to get to work. This one bedroom flat costs me fifty percent of my weekly income.

Not surprisingly, this constituent was unable to purchase her first home. The anxiety of being unable to get out of the rental trap to purchase a home is not confined to first home buyers. Countless parents have told me they are concerned that their children will not be able to realise the dream of homeownership. In light of the current economic climate, many parents genuinely fear that their children will be locked out of the property market for some time.

I can recall the pious and sanctimonious contributions in this House by some members of the former Howard government, blaming all and sundry for the housing affordability problem but not accepting their fair share of the blame. While first home buyers in my electorate of Lowe struggled to raise the necessary deposit for a home, the Howard government sharpened its skills in projection. Rather than engage in cynical political opportunism, the Rudd government has taken swift action by implementing many initiatives—including the first home saver accounts, the Housing Affordability Fund, the National Rental Affordability Scheme and, now, the measures contained in the legislation before the House this morning. Rather than engage in the cynical blame game with state and territory governments, the Rudd government has set itself the task of dealing with the housing affordability issue in a cooperative and constructive manner. This is what every first home buyer, and parent, expects and deserves.

Nowhere is this desire to cooperate with the states more evident than in this bill, which seeks to appropriate around $1.2 billion—in a troubled economic climate—to Treasury, which will, in turn, pay it to the states and territories. Under the measures proposed in the bill, first home buyers who purchase established homes will have their grant doubled from $7,000 to $14,000. First home buyers who purchase a newly constructed home will receive an extra $14,000 to take their grant to $21,000. This is a very important initiative which will stimulate the property market and give first home buyers a real opportunity to enter the housing market.

For the many first home buyers who could not quite raise enough money for a deposit because of spiralling rents, the boost will help them get across the line. For those lending institutions that may waiver on funding first home buyers because of a lack of equity, or the perceived risk in funding some of these buyers, this boost will go a long way towards quelling their concerns. For the economy, which is suffering from the international financial crisis, and for which housing and construction plays such a vital role, this boost will provide a significant stimulatory shot in the arm.

It is refreshing for my constituents to see the Rudd government debating positive actions in this place, rather than it being used as a forum to gratuitously fling mud at state and territory governments. It is also reassuring that in a short period of time the Rudd government is addressing the very matters which the Reserve Bank warned, 10 years ago, would put upward pressure on interest rates. It takes strength and leadership to pursue and address the skills crisis—a crisis which has increased the cost of building a home and put upward pressure on interest rates. It also takes strength and leadership to genuinely commit to a nation-building fund which will address Australia’s chronic infrastructure crisis, which has been the bane of many businesses I have spoken to in my role as Parliamentary Secretary to the Minister for Trade.

The Howard government made much of entering into free trade agreements. It made much of free global trade being a positive for Australian exporters and, through them, being a positive force for economic growth. What the former government would never talk about is the futility of thrusting many of our exporters on the world stage at a time when they did not have the capacity to exploit freer international trade. As any exporter will tell you, they have been forced to take on the world with one hand tied behind their backs, because the previous government failed, for 11½ years, to stick to its end of the bargain because of its underinvestment in skills, infrastructure and other drivers of productivity in Australia.

While the former government dithered on such issues, this government has shown the strength and leadership required to steer Australia through these tough economic times by supporting, amongst others, our pensioners, first home buyers and exporters. The bills before the House today are the formal provisions to deliver the Economic Security Strategy, announced by the Prime Minister on 14 October 2008. The strategy was announced due to the uncertain economic climate to ensure decisive action. The measures will provide relief to families, pensioners, carers and veterans. The measures in the bills are targeted to give financial support to those in most need and simultaneously stimulate the economy for the sake of our country’s national interest. I trust that the bills will be passed without delay so that they may be implemented as they were intended and the recipients will receive their payments after 8 December.

I conclude where I started, for the benefit of my colleague and friend the shadow minister, who will follow me in this debate, by saying that the former speaker, the Deputy Leader of the Opposition and shadow Treasurer, questioned the government’s assumptions in relation to the future growth of the Australian economy. I suggest, in view of the fact that there has been much media in relation to this issue over recent times, that the opposition carefully listen to what Dr Ken Henry says today at the National Press Club.

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

Mr Hockey interjecting

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Link to this | Hansard source

You will have your opportunity, and I will be very glad to hear it. But, Member for North Sydney, equally I will be listening this afternoon at the Press Club to the questions from the opposition and the answers given by the government in the prosecution of this matter, because there will be ample opportunity. I think we are all concerned—and I hope the opposition is concerned—about the reflection on the integrity of Dr Ken Henry particularly and the Governor of the Reserve Bank. I think those two public servants are icons in Australia and their integrity should not be questioned. We will see what Dr Ken Henry has to say today at the National Press Club, and I will certainly note with great interest the questions asked by the opposition today in relation to this matter and the responses given by the government.

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

I do not intend to make this a particularly political speech, but I think it is important to get on the record what has occurred and what may occur in the future. The only point I make is that I remain genuinely disappointed that the Prime Minister has not addressed this parliament on what is the greatest financial crisis of our generation and maybe even beyond. I am at that point because I think someone needs to explain to the Australian people how this all happened. It needs to be explained. How did this all happen?

The starting point is that we have seen the failure of a significant financial product, the subprime mortgage. In the United States, with significant real estate growth in property prices and in supply, we saw that, as prices of real estate were going up, increasingly lax lending practices were being introduced. As that occurred, we found that when inflation was going up, in part as a direct result of rising oil prices and rising food prices, the people who could least afford to repay a mortgage had to choose between their mortgage or putting fuel into their cars and food on the table. As we saw a gradual increase in the default rate in the subprime market around March-April 2007, we saw the first collapse of subprime mortgage lenders in the United States. When the first one went, others followed and, as the market started to collapse, it was pretty obvious by around September 2007 that there was a growing systemic crisis in financial markets.

There is an indicator of the real impact on financial markets, known as the TED spread, which is a measure of credit risk for interbank lending. It is the difference between the three-month LIBOR—LIBOR being the London interbank offered rate, the rate at which banks lend to each other—and the US Treasury bill rate. I would appreciate the opportunity to table a chart, which I will show to the parliamentary secretary at the table in a moment. The TED spread—that is, the gap between the US Treasuries and the rate at which banks were prepared to lend money to each other—grew dramatically in about September 2007, at one point reaching three per cent. This was the moment—in September 2007—when confidence in the financial system collapsed, when the blood flows of the body of financial services suddenly froze up, when banks said to each other, ‘We do not trust you.’ The reason that is so significant is that if banks do not trust each other then banks are not going to trust corporates and they are not going to trust individuals.

The real impact of this crisis is on the poorest people in the community, who are the greatest credit risk. That is where it starts. In part, there was encouragement from the US congress and the President of the United States years ago to lend money to people who were least able to afford the repayments. When that occurred, suddenly the financial system was being used to deliver social policy—that is, housing for poorer people—rather than allowing the financial markets to properly price risk. That is what financial markets do: they supply credit and they price risk. When a government regulatory distortion occurs, it distorts the pricing of risk, it distorts the availability of credit and the net impact is that financial markets seize up.

I read an article by George Soros, ‘The crisis and what to do about it’, which appeared in the 4 December edition of the New York Review of Books. It is a powerful article. Mr Soros recognises:

The crisis was generated by the financial system itself.

The difference between this recessionary outlook and previous recessionary outlooks is that on this occasion it is the banks that have been collapsing. It is the banks that have been in financial distress. In the eighties in Australia we had corporates in financial distress, driven in part by the activities of people like Christopher Skase, Alan Bond and a range of others. This time it is not the satellites that have been falling out of the sky but the mother ships, the mother ships being the banks that keep the blood flowing. When we saw the dramatic collapse of the subprime lenders and then the mortgage insurers—AIG in particular—and when we saw Fannie Mae and Freddie Mac go into significant states of financial distress, we saw the mother ships start to come down, and of course it was going to spread right across the world community. It was going to spread right across the world community as two things occurred. The first was that there was a rapid repricing of credit risk. Despite central banks around the world—apart from Australia, which I will come back to—dramatically dropping the cost of funds, there was still the fact that the markets had to price in risk and, in pricing in risk, there was a massive increase in the TED spread. That in turn had a huge impact on the cost of credit for corporates. Governments had to step in, particularly the government of the United States, which I think was too slow to step in—and the Europeans are still too slow, even though the British moved quickly. As that all occurred, it became clear that bank guarantees were becoming sovereign guarantees and the value of a bank guarantee was equivalent to that of the country from which the bank came or in which it was based.

That comes back to a point which I was going to talk a little bit about earlier—that the financial crisis becomes an economic crisis, which in turn becomes a political crisis, because banks that are based in countries with poor credit risk are going to in turn suffer the same fate as a financial institution or a corporate with poor credit risk. As Mr Soros says:

A deep recession is now inevitable and the possibility of a depression cannot be ruled out. When I predicted earlier this year that we were facing the worst financial crisis since the 1930s, I did not anticipate that conditions would deteriorate so badly.

…            …            …

Usually markets correct their own mistakes.

How true that is, but the challenge is that financial markets are unable to correct their own mistakes when the markets themselves become distorted. I think one of the most important statements that George Soros makes is:

In view of the tremendous losses suffered by the general public, there is a real danger that excessive deregulation will be succeeded by punitive reregulation.

That is a key point. When I was Minister for Financial Services and Regulation a few years ago, we had to get the right amount of regulation—not too much regulation but enough to keep the markets honest and transparent—whilst at the same time having a free and open market that allowed the markets themselves to properly price risk.

There are going to be stabilisers in the system. One of the stabilisers in our system is the fact that we have a very liquid currency, a currency that is very well traded, but a currency that also in recent times has been hammered. If you look at the changes in trade weighted exchange rates between 31 July and 23 October this year, the Australian dollar has fallen by 30.8 per cent, compared with falls in the currencies of Brazil by 25.6 per cent, Korea by 24.2 per cent and the United Kingdom by 2.5 per cent. The yen has gone up by 15.8 per cent and the US dollar by 12.3 per cent. In part that is because there has been a movement from other global currencies towards the yen and the US dollar as a flight to safety. Also, the Australian dollar has become a surrogate currency for the other currencies of the region which are not widely traded or floated. Therefore, the Australian dollar has been punished. There are upsides and downsides to that, of course. One of the challenges with a falling currency is that there is a risk that our imports, being more highly priced, are going to feed into the inflationary challenge. As that occurs, inflation might prove more of a challenge than we expect.

However, the fact of the matter is that Australia is in a better position than most other countries. It is in a better position for two key reasons. Firstly, our financial services regulation is amongst the best in the world—if not the best. It is regulation that we thought very carefully about, beginning with the Wallis review initiated by Peter Costello and further delivered in individual reforms, including my Financial Services Reform Act, which in effect ensured that Australia could not go down the path of the US in delivering credit to people who could not afford to repay it. In doing so, we tried to regulate—or regulate out of existence—low-doc and no-doc loans and we tried to have a greater level of regulation on the provision of credit. In that case I got too much resistance from the states, which wanted to retain control of credit. It was a challenge at the time but we got the balance right.

We got the balance right with the creation of APRA and ASIC and the separation of the three regulators into individual regulators—the central bank, the prudential regulator and the corporate regulator. The relationships are different in the United States and the United Kingdom, but what you get out of having three separate regulators, which we initiated in government, is that that they can focus on the challenges that directly affect them. And so, when HIH collapsed, APRA and ASIC were able to focus on meeting the challenge of what could have been a systemic collapse of the insurance market in Australia, and the RBA continued to focus on its challenge. Rather than having, as is the case in the United States, the prudential regulator and the central bank effectively as one or, as is the case in the United Kingdom, the corporate regulator as a standalone almost private sector operation with the Bank of England focusing on central bank activity, we got the formula right. It is the first great initiative that Australia is reaping the benefit of.

The second initiative is the fact that the budget was in surplus, that the Australian government has no debt and that we have a diverse economy. We have some lag indicators of benefit to the Australian economy. Those lag indicators are continuing benefits of the commodity boom but there is still a significant amount of deleveraging that needs to occur in relation to commodities, and so the assessment that the commodities boom would continue—which was made by the government earlier this year—was just dead wrong. Notwithstanding the fact that China has had a massive injection of fiscal stimulus, the fact is that, if China does not grow at nine per cent per annum, it will not create the 15 to 20 million jobs a year that are needed in that economy. There are economies around the world which are going to suffer dramatically if they do not continue to create the jobs that keep their people employed and, most importantly in developing countries, keep their people fed.

I said on the Sunday program that I am bearish. I cannot hide that fact. I live in hope that we will see this through. I really do. I think we have to have a message of hope but also, if people are going to level with the Australian people, we need to recognise that this is going to be a very challenging time and why. In the first place, if it is bad for individuals to have too much debt and it is bad for corporations to have too much debt, it is going to be bad for countries to have too much debt. Any country that is debt laden and which will potentially default on its repayments is going to suffer the serious pain associated with the global financial crisis. I fear that the United States, the United Kingdom and Europe will not have the appetite to bail out defaulting countries in the way they have in the past.

Secondly, it needs to be recognised that the recession in Europe is even deeper than that in the United States. In part that is a direct result of the fact that Western Europe funded the massive expansion and growth of Eastern Europe over the last few years. The expectation that in some parts of the world there will be economies that will be able to fully withstand the impact of this economic crisis is just dead wrong. As countries in South America and even in Asia and in Europe start to default on their loans, the question is: who is going to give them the money? Will countries like Australia, the United Kingdom, Europe and the United States have the appetite when there is rising unemployment? In the United States’ case three-quarters of a million houses were foreclosed on in the last quarter. People were living in their cars.

You say to yourself, ‘Now is the time more than ever when we need to have money in the kitty not just to help ourselves but importantly to help others because that potentially leads to the political challenges of tomorrow.’ I am sorry I am running out of time on this, but someone at some point needs to call it as it is, to go beyond the spin of tomorrow’s headlines and to say, quite frankly, that these are potentially the most challenging times our people have ever faced. Whilst it started as a financial crisis, it is now an economic crisis. The inevitability is that it will lead to some political crises in our region or around the globe and now is the time when we need to prepare. I seek leave to incorporate the chart in Hansard.

Leave granted.

The chart read as follows—

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

The global financial system is experiencing one of its most significant upheavals in living memory. To that extent, I actually agree with those comments just made by the member for North Sydney. This is a situation of such magnitude that it requires the focus and attention of all decision makers in this country. It is the most serious global shock since the Great Depression. In that respect, and what the member for North Sydney failed to go on to say, it does require not only decisiveness from those who are administering our financial sector but leadership and decisive action from the government.

The Rudd Labor government made tough decisions in its May budget this year. It made a decision to build up its surplus and, Mr Deputy Speaker, you will recall at that stage that the government met with some castigation about building up a $22 billion surplus. It was there to put downward pressure on inflation. More importantly, building up a surplus provides a buffer for more difficult economic times. What we have heard through the course of the debate so far, and no doubt what we will hear through the rest of this day, is that these tough times that people put surpluses aside for have arrived. It was not expected. No-one forecast the actual dynamics of the American position in terms of the subprime crisis and the extent to which it would export that crisis to the rest of the world, but it has happened. These tough times have arrived. It is this government, however, that is now acting decisively to use the surplus that it had the foresight to build to strengthen and underpin the Australian economy. The government’s Economic Security Strategy is a significant economic response to do with the extraordinary economic times that we are now facing.

The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and associated bills before the House today are a key component to introducing the government’s $10.4 billion Economic Security Strategy to strengthen the Australian economy and to support Australian households during this time of global financial crisis. The two supplementary appropriation bills seek to appropriate a total of $1.33 billion. The supplementary Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 seeks total appropriations of $146,054 million for the following initiatives. There will be $117 million to create 56,000 additional productivity job seeker places in 2008-09. This is for the funding of Certificate levels I, II, III and IV in vocational education and training. It will apply over the next two years and provide an additional commitment by this government of over $187 million to develop the skills which are absolutely needed by Australian industry presently. In addition to the 50,000 training positions provided in the budget, this is another 56,000 training positions.

With the slowing of the global economy, the Rudd government is committed to supporting and training job seekers to ensure that all those who can benefit from the extra help have access to those places. Increasing productivity and commitment to the skills agenda is an essential component to this government’s economic platform. These new places will help to maintain the momentum of the program, which has already been generated, and provide the skilled labour to meet the current needs of our industries.

The other initiatives include $17.2 million for the administrative costs in implementing the immediate financial support for the four million pensioners, carers and seniors and around two million low- and middle-income earners who will benefit from the rollout of this package from 8 December this year. There is another $11.5 million for a public information campaign. I should note that this will only be done to ensure that those eligible recipients of the one-off lump sum payments are advised of their entitlements. This is in stark contrast to the taxpayer funded advertising campaign that was associated with the former government’s position to prop up the failed Work Choices scenario, which totalled $137 million of taxpayer funding.

Appropriation (Economic Security Strategy) Bill (No. 2) seeks an additional appropriation to implement the government’s initiatives with respect to the First Home Owner Grant scheme, which will provide around $1.5 billion over two years to introduce the first home owners boost. The boost will be available to those eligible for the first home owners grant who enter into contracts between 14 October 2008 and 30 June 2009. First home buyers who purchase established homes within this time frame will receive an extra $7,000, taking the total grant to $14,000. First home buyers who purchase a newly constructed building will receive an extra $14,000, taking the Commonwealth contribution up to $21,000. In addition, I noticed yesterday that the New South Wales government, as part of their minibudget, has included an extra $3,000 to be attached to the first home owners grant. For people in New South Wales, including those in my electorate, that takes the total grant up to $24,000 for those looking to buy a newly constructed home. These measures will help many aspiring first home buyers around Australia—and, more importantly, as I just indicated, in my electorate of Werriwa in the south-west of Sydney—to enter the housing market.

Over the course of the last couple of weeks I have had the opportunity to speak to many first home owners or those wanting to become first home owners. I have also taken the opportunity to speak to many real estate agents in my electorate. One of the familiar themes in any of these discussions is that this grant is great news for people who are planning or thinking about making that commitment to purchase. Sure it is that, the way this boost is constructed, people who are thinking about it can bring that commitment forward and make it before 30 June next year. This is certainly very good news for helping people into the market. It is also very good news for our domestic or cottage based construction industry, our housing industry. I know only too well the significance of that, having two sons, one a builder and one an electrician. I know the ebbs and flows in that industry. Despite what we have been told over the last number of years, I have seen firsthand in the downturn how my sons have been paid, for instance, in saws or compressors because the people engaging them did not have the money to pay them. So I know what it is like in that industry. But I also know what it is like to bring some hope to that industry to ensure that there is commitment to the move ahead.

This boost for first home buyers tries to funnel in people who are going to plan for and make that decision, but it gives a time constraint. Not only will this boost help those who are moving into the market but also it will help maintain continuity within the housing industry itself—maintaining those skills, maintaining those workers and maintaining those tradesmen. That has got to be good for the economy as well. The first home owners grant as it applies presently will continue to be administered by the states and territories over the next two years. To that extent, $1.2 billion will be transferred by the Department of the Treasury to our state and territory governments for that purpose.

The other legislation before us is the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008. This bill will amend our social security laws, our family assistance law, our Veterans’ Entitlements Act, the appropriate tax law for payments to pensioners, seniors, people with disabilities, carers, veterans and families with dependent children, as announced by the Rudd government on 14 October 2008. This is an absolutely key part of the $10.4 billion Economic Security Strategy. The government’s Economic Security Strategy will provide a lump sum payment of $4.8 billion to provide immediate financial support to pensioners, seniors, people with disabilities, carers, veterans and families with dependent children during this global financial crisis. It builds on the additional support provided to pensioners in the government’s first budget. It also recognises that pensioners and working families are calling for help—they are calling for it now. It will responsibly deliver real and immediate support to the people who, as we in our position say, need it most.

Through this Economic Security Strategy over 5.2 million pensioners, carers and families will receive a one-off payment, commencing on 8 December this year. Only a few weeks ago, the opposition were saying that they wished only to give relief to age pensioners. If we adopted that position, as the Leader of the Opposition was pressing at that time, 4.3 million pensioners, carers and families would have missed out completely. We are not about pitting pensioner groups against others. We are about looking after those who need it most in our society. The Rudd government understands that most pensioners around Australia are doing it tough and we are committed to fixing Australia’s pension system—something our predecessors failed to do in their 12 years in office. We are determined to get it right, and we will get it right for the long term. The payments in this package are intended to provide the additional support in the nine months leading up to when the new system will be introduced come the next financial year.

I would like to spend a little bit of time talking about what this package means for the people in my electorate of Werriwa. My electorate is in the south-west of Sydney and is home to not only lots of residents but also lots of young families. It is an area where people tend to buy their first home. Others, like myself, not only bought their home but stayed there for the next 32 years as well. When you look at the demographics of my electorate, in the south-west of Sydney, you see that we are one of the most culturally, economically, ethnically and religiously diverse electorates. The demographics are such that diversity is, quite frankly, one of the key defining features of Werriwa. It has a solid core of working class housing commission estates, amid intergenerational unemployment and pockets of disadvantaged communities. It is typically an area of young people, with scores of families who are on low to middle incomes and who are under real financial pressure. For instance, of those who are purchasing houses in my electorate, 58 per cent are already under housing stress. For those low- to middle-income earners who are renting or are seeking to rent in the private market, 45 per cent are under housing stress. Housing stress means that more than 30 per cent of household income is going to pay either the mortgage or the rent. The global financial crisis is placing increasing pressure on these constituents in my electorate who already have their budgets stretched by the rising cost of living. The measures in this package are very much welcomed by families in my electorate who are making their family pay packet stretch from one fortnight to the next.

Interestingly, the actual number of people who will be direct beneficiaries of this financial package in my electorate is 38,708. That is quite a significant total. I will just indicate who will actually receive the benefit of these payments come 8 December. They include: 101,000 age pension recipients, 1,755 carer payment recipients, 5,260 disability support pensioners, 722 Commonwealth seniors card holders, 4,312 carer allowance recipients and 112 service pension recipients. But one of the big statistics out in Werriwa is that 16,407 families who are currently on family tax benefit part A will be direct beneficiaries of this package. A payment of $1,400 will be made to single age pensioners or holders of one of these stipulated payments or cards. Age pension couples will receive $2,100. That is quite a significant adjustment to be made just prior to Christmas this year.

Adrian Hart and his wife Patricia are long-time friends of mine. As a matter of fact, I used to work with both of them many years ago. Adrian was speaking only recently at a pensioner forum and said that, as he sees it, pensioners in my electorate, such as he and his wife, will benefit greatly from the $2,100 payment. The Harts have made it very clear that they have had to cut back on a range of things such as visits to family and friends, holidays and that sort of stuff. They certainly singled out as one of their main areas of concern rising petrol prices and living costs, and they have had to cut their costs accordingly. In doing so, they have made numerous adjustments to their lifestyle. He went on to say that this one-off payment will actually mean that, coming up to Christmas this year, they will be able to celebrate with their family and buy presents for their grandkids. That is only one couple, and it is one that I know directly and, as I said, one that I have spent a lot of time working with, but I am sure they reflect the sentiments of many of our age pensioners out there.

For recipients of the carer allowance, a payment of $1,000 will be made for each person who is being cared for. That too will apply from 8 December. I cannot emphasise enough what it is going to mean for people on family tax benefit part A to receive $1,000 per child leading up to Christmas as they are making their plans for next year’s education and other commitments associated with bringing up kids. That is something that is absolutely going to be significant. That will affect over 16,000 families in my electorate alone.

As I said at the outset, these are very challenging times. I agreed with the member for North Sydney about that. But what I went on to say and what I want to emphasise is that it is this government, the Rudd Labor government, which is moving decisively in taking action to address these issues to protect our economy against this global shock of proportions that we have not seen since the Great Depression. (Time expired)

Tony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Housing, Community Services and Indigenous Affairs) Share this | Link to this | Hansard source

It is always a pleasure to follow the member for Werriwa, who is a strong representative of his constituents and is doing his best to defend the government. I have to say that ‘decisive action’ has joined ‘working families’ as the government’s cliche du jour. The fact is: this is belated action, at least insofar as pensioners are concerned, because the opposition has been calling for strong action to help pensioners since very early on in the year when it became clear that prices were skyrocketing, particularly the prices faced by pensioners and others on low incomes.

Along with other opposition members, I do not begrudge families this extra money. I especially do not begrudge pensioners this extra money because, as the member for Werriwa and others have pointed out, yes, they are doing it tough and, yes, they face extremely challenging circumstances, as we all do. Earlier in the year, the Australian Financial Review estimated that families were $30 a week worse off since the election of the Rudd government despite the very large tax cuts provided in the budget—tax cuts which, of course, were a virtual copy of those promised by Peter Costello prior to the election. Families were $30 a week worse off largely thanks to the sustained increase in prices that we saw in the early months of the Rudd government and continuing interest rate rises.

We all know that over the last couple of months petrol prices have fallen somewhat and interest rates have been very significantly reduced. But that has been in response to financial turmoil, financial turmoil which this government has not managed very well. If you look at the economic management record of this government, early in its term it talked up inflation. Early in its term it was waging a war on inflation. That has been joined in more recent times by the war on binge drinking, the war on obesity and the war on unemployment that the Prime Minister declared yesterday. In fact, I thought what we were seeing yesterday was ‘Kevin Rudd’s War on Everything’. I have to say that at times Kevin Rudd’s policies look to have no more coherence than the stunts of the Chasers.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I just remind the member to use the correct titles, as they will with you.

Tony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Housing, Community Services and Indigenous Affairs) Share this | Link to this | Hansard source

I take your point, Mr Deputy Speaker. After they had talked up inflation and almost forced the Reserve Bank to raise interest rates early in the year—which plainly, in retrospect, was a mistake—we then had the government’s ill-considered, incompletely advised unlimited free guarantee of bank deposits, which plainly has made a difficult situation worse, very much worse, for the 250,000 retirees who now have $25 billion worth of savings locked up in nonbanks.

This is a government which has not handled well the economic conditions that it has faced. This is a government which mishandled inflation in its early months and is now mishandling the financial crisis. The latest episode in the government’s response to the financial crisis is this emergency package which we are debating today. What we see is a government which is busily spending the surplus that was accumulated over a decade by Peter Costello and John Howard in order to avoid a recession, a surplus that was painstakingly built, tough decision by tough decision, and is now being spent willy-nilly in order to avoid a recession.

I should point out, given the subject matter of this legislation, that the former government was able to build these very substantial surpluses notwithstanding the additional benefits that were provided to pensioners over the life of the government. Over the life of the former government, there was a 21 per cent real increase in the level of pensions, and pensions were linked to 25 per cent of male total average weekly earnings by legislation for the first time. For the first time there were bonus payments and utility allowances paid to pensioners and, of course, the taper rate for pensioners was eased so that they would keep more of their pension, notwithstanding any other income that they would have.

The former government was able to do more for the vulnerable in our community as well as build up these massive surpluses which the current government is now very rapidly running down because it does not have any better ideas as to handling the current crisis. Not only have we got a $10.4 billion raid on the surplus as a result of the legislation that we are debating now but earlier this week we had an additional $3 billion plus given to the car industry. Again, I support the car industry; I drive an Australian car. Australian cars are good cars, but the trouble with all of this spending is that there does not appear to be any effort on the part of this government to use the spending to drive long-term reform.

Where are the efficiency gains that the car industry needs to achieve in order to finally stand on its own two feet? Where are the additional incentives to try to ensure that working age people on pensions earn more or even go back into the workforce? It would be much easier to be confident that this particular measure is planned and carefully thought through rather than just a panicky reaction to advice that has still not been revealed to the general public if we could see some actual reforms built into the very big spend that we are seeing. In the end, government is not just about spending money and it is not just about throwing money at problems. It is about trying to ensure that this country, collectively and individually, is more capable of earning the money which is the foundation of the government’s revenue in the first place. We cannot spend the money until we have earned it. And we need to be more conscious, even at these times, of the urgency of producing a more efficient economy and a more productive society. There is very little evidence of any of that in these bills before the House.

Again, I do not begrudge the beneficiaries of this measure their money—they are doing it tough—but I cannot let this legislation pass without drawing attention to the double standards of the government introducing it. All year, as I said, the opposition has been saying that pensioners need help. In response to the opposition’s pleadings on behalf of pensioners, the initial plan of the government was to abolish the pensioner and seniors bonus in the budget—a bonus that had been paid for several years by the Howard government. It was only because of this opposition that that bonus was preserved.

Of course, the government then voted against the opposition’s proposal for a $30-a-week increase in the age pension, even though their argument against the lump sum bonus was that it would be better to build increases into the base rate of the pension. They had denounced, up hill and down dale, the whole idea of paying bonuses. The member for Sydney—now the Minister for Housing—regularly attacked the baby bonus as ‘jackpot money’. The member for Lilley—now the Treasurer—notoriously described bonuses paid by the Howard government as ‘not real money’. So we have had this long campaign by members opposite against bonuses, and now what do they do? They now turn to those very bonuses, because they realise that the bonuses have their place, particularly in the sorts of circumstances families find themselves in now.

That is not the only double standard that we have seen from members opposite. At the moment we have the federal Labor government telling us that we face a massive financial crisis that can only be responded to by pump priming and by extra government spending, and we have state Labor governments—most notably the state Labor government of New South Wales—cutting spending and increasing taxes. So on the one hand you have federal Labor saying, ‘Spending is good.’ On the other hand you have state Labor saying, ‘Spending is bad.’ What all of this must be doing is persuading the Australian public that Labor does not know what it is doing—that Labor is essentially making it up as it goes along.

As I said, I do not begrudge the struggling pensioners and the struggling families of this country their extra help. They deserve it. It is a pity, in a sense, that they have had to wait so long for it. It is a pity that the current government, through its inexperience and ill-advised policies, has in many cases made their problems worse. The fact is that these people need the money, and this opposition is certainly not going to stand in the way of them getting it. But I should also point out that the government’s current position is that it is worth going into deficit to avoid a recession. We have government members—ministers and spokesmen—saying: ‘Look, we’re spending the surplus on a good cause. This money is going to save us from a recession.’ Well, I need to point out to the government that it is quite possible to have both a deficit and a recession, and I fear that that is exactly what we will end up with.

I say to members opposite, who have been spruiking this package as some kind of economic panacea, that if in six months time growth has stopped and unemployment has skyrocketed, the people of Australia will not be particularly grateful for a Christmas present this year. By all means let us help struggling families, but what this country needs more than anything is good economic policy, and that is what we are fundamentally lacking at this difficult time for our nation.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

I rise to support the passage of the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008, the Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and the Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009. The last few months have proved to be hard yards for global finance and local confidence. Every economy in the world has been going through a horror stretch, has been brought to a crisis point—there has been HBOS in the UK, Lehman Brothers in the US, Landsbanki in Iceland, Hokkaido-Takushoku in Japan—and has been tormented thereafter by even worse possibilities.

And we are not immune from these devastating aftershocks of the credit crunch—with corporate carelessness, the trashing of communities and threats to neighbourly trust—though I believe we are better placed than most other countries to weather the storm. But we are not safe from the lightning, the hail, the great winds and the turbulence. We are feeling the impacts now, and we will feel them far into the future. Our Prime Minister, Kevin Rudd, has taken decisive early action to protect us from damage, but we must be vigilant because, as in the case of bird flu, if we are not vigilant then we will catch this disease.

More than 25 banks thus far have gone down or have been narrowly bailed out, if only for a time. The US and Europe are on the verge of recession, and even the economic conquering leviathan, China, is now walking with less certain steps. Australia is not safe. We too can be drawn into this awful whirlpool and see our best intentions drowning around us. There are no quick fixes, as the trillions of dollars lately announced around the world to help markets have shown. What is needed to take us out of this maelstrom is that which cannot automatically be commanded, ordered, fabricated or bribed into existence—that is, confidence; the confidence to say in global chorus, ‘Yes, we can.’ For, although we have nothing to fear in the long term, this fear in the short term can be corrosive. China has surprised us, I believe, and done well in the past few days, generously supporting its economy and, indeed, therefore the Australian economy, but whether it is enough remains to be seen.

The Rudd government has committed $10.4 billion through its Economic Security Strategy to help vulnerable pensioners, carers, people with disabilities and struggling low-income families. The bank deposits of all Australians, even the Leader of the Opposition, have been guaranteed by the Economic Security Strategy, whose elements included $4.8 billion as a down payment on long-term pension reform. Single pensioners are to receive a lump sum payment in December of $1,400 and pensioner couples will receive $2,100. Carers are to receive $1,000 for each person they care for—one of the single-largest transfer payments to people with disabilities in the history of Australia’s Federation. There will be $3.9 billion in payments to the families of eligible children under family tax benefit part A. That is $1,000 per eligible child, and we understand there are around 3.8 million eligible children, and their families will receive this valuable assistance before Christmas. This package will double the first home buyers grant to $14,000 and triple it to $21,000 for those who buy a newly constructed home. The number of productivity places will be doubled to 113,000 in this financial year and the government’s nation-building agenda will be brought forward, with new schools and bridges—all of the necessary developments that this nation needs and which were sorely neglected.

The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 delivers immediate financial support to pensioners, seniors, people with disabilities, carers, veterans and families with dependent children. The payments to pensioners are an immediate down payment on long-term pension reform—long term and long overdue. These payments will help them get through the eight months between now and when the reforms will hopefully be in place at the beginning of the next financial year. Our elderly are already suffering and will have to put on brave faces and tighten their belts with this economic crisis, but at least we have a government that is concerned and standing alongside people. That is why we are backing these pensioners up for a period until better times emerge, provided that the self-servers in the coalition allow these measures through the parliament and do not fight them, line by line, as their leader, ‘Rumpole junior’, is wont to do.

Unlike the Leader of the Opposition, we are not going to exclude two million carers, people with a disability and married pensioner couples from this payment—this relief, this minimal mercy ahead of longer term reform. Unlike the opposition, we will not deny the millions of pensioners, carers and distressed families the mitigation of their distress. Unlike the Leader of the Opposition, we are not going to shut the door on needy, pressured, buffeted people who are up against it now as never before.

These payments recognise the additional costs single pensioners face relative to couples. For the first time, lump sum payments are being extended to include disability support pensioners, people I have come to know in my time in the portfolio—decent, strong people who have often been struck down by a fate they did not choose or cause. The Rudd government recognises that many people with disability face barriers in society and are struggling with cost of living pressures during this time of global financial uncertainty. For the first time, lump sum payments are being extended to include more than 700,000 disability support pensioners. Carers will also benefit from these payments. The lump sum payment of $1,400 to single pensioners and $2,100 to pensioner couples will be paid from 8 December 2008—three weeks from now.

We have received positive and glad responses to the announcement of the government’s Economic Security Strategy from the National Seniors Association, Carers Australia, the Combined Pensioners and Superannuants Association, the Fair Go for Pensioners Coalition and National Disability Services. National Disability Services, which is an organisation that represents non-government disability service providers across Australia, expressed its support to this package in its media release of 14 October. As its chief executive, Dr Ken Baker, said in that release:

These increases will help ease the financial pressure on people in receipt of Disability Support Pension or providing care and support for a person with disability, while the Government decides on reforms to pensions.

The Rudd government are staying the course. We will keep the faith in the midst of this most difficult economic maelstrom, roaring planet wide. We are adding $4.8 billion to the $7.5 billion in our first budget to bring $12.3 billion to pensioners, carers and seniors. This improvement will commence on 8 December and will sweeten, however frugally, some Christmases, New Years and family reunions. There will be no need for a claim; the payments will not count as income for social security, family assistance or veterans entitlements purposes; and they will be tax free. Payments will be made to people who are receiving any one of a range of qualifying social security and veterans entitlements payments as at 14 October 2008. These qualifying payments include: age, disability support, wife, widow B and veterans service pensions; income support supplements; carer payments; and partner, widow and bereavement allowances.

People who on 14 October 2008 were receiving the age pension, parenting payment, special benefits or Austudy or Abstudy living allowance will also attract the payment. The payment will also go to self-funded retirees who on 14 October 2008 held a current Commonwealth seniors health card and to holders of the Veterans’ Affairs gold card who were also eligible for the seniors concession allowance on that date.

The Economic Security Strategy for this group of Australians will provide $1,400 for singles or $2,100 for couples if both members receive a qualifying payment and $1,050 if only one of the couple does. People receiving carer allowance as at 14 October 2008 will get a separate $1,000 payment for each eligible person cared for. If the carer allowance for one care receiver is shared between two or more carers, the Economic Security Strategy payment will be similarly shared. Where receipt of one payment of carer allowance depends on the person providing care for two care receivers, the payment will also be $1,000.

Families with dependent children will also get an Economic Security Strategy payment. A payment of $1,000 will be made for each child who attracts family tax benefit part A as of 14 October 2008. The same $1,000 payment will be made for each dependent child who, as on 14 October 2008, either attracts or receives youth allowance, Abstudy living allowance or an education allowance under the Veterans’ Children Education Scheme or the Military Rehabilitation and Compensation Act Education and Training Scheme. If any of these qualifying payments for families is shared between two people under the usual rules for the payment, the Economic Security Strategy payment will be similarly shared. In my electorate of Maribyrnong over 37,000 people will directly benefit from Economic Security Strategy payments. Indeed, my electorate office has had a number of positive calls from relieved constituents who have complimented the Rudd government on their handling of the global economic crisis thus far and in particular on looking after the needs of the most vulnerable—the pensioners and families and first home buyers.

The Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and the Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009 are supplementary estimates bills being introduced as part of the government’s response to the global financial crisis. They seek appropriation authority from parliament for the additional expenditure of money from the Consolidated Revenue Fund to strengthen the national economy and support Australian households. Supplementary Estimates Appropriation Bill (No. 1) seeks a total appropriation of $146.054 million for the following initiatives. Firstly, it seeks an investment of over $117 million to create 56,000 additional productivity job seeker places in 2008-09. This funding for the Department of Education, Employment and Workplace Relations is for Certificate II, III and IV levels and in the next two years this government will provide for a total additional commitment of over $187 million to develop the skills that Australian industry needs.

Secondly, funding of $17.2 million is proposed to cover the administrative costs of implementing a one-off lump sum payment to Australian pensioners and families. The Department of Families, Housing, Community Services and Indigenous Affairs will receive some $16.5 million, with additional funds going to the Department of Veterans’ Affairs. The funding will allow the payment from 8 December of immediate financial support to Australia’s four million pensioners, carers and seniors and around two million low- and middle-income Australian families. The Department of Families, Housing, Community Services and Indigenous Affairs will also receive $11.55 million to conduct a public information campaign to ensure that those eligible to receive the one-off lump sum payment are advised of their entitlement.

Supplementary Estimates Appropriation Bill (No. 2) seeks additional appropriation to implement the government’s initiatives with respect to the first home owners scheme. Under the Economic Security Strategy the government will provide around $1.5 billion over two years to introduce the first home owners boost to stimulate housing activity by assisting more first home buyers to enter the housing market. In addition to the first home owners scheme, first home buyers who purchase established homes will receive an extra $7,000 to take their grant to $14,000 and first home buyers who purchase a newly-constructed home will receive an extra $14,000 to take their grant to $21,000. The first home owners boost will be available to eligible first home buyers who enter into a contract between 14 October 2008 and 30 June 2009. To implement the measure, Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009 proposes an appropriation of some $1.2 billion for the Department of the Treasury to pay to the states and territories. Those payments will cover the increased costs that the states and territories are expected to incur during 2008-09.

This package will provide a boost and a solace and a leg-up and a sigh of relief for pensioners, carers and families in need. It will provide a kick-start to the construction sector and will rekindle the Australian dream of a family home with a veranda and a backyard and a shed. It will provide a kick-start to new job training, new infrastructure and new and stirring dreams in the small towns and the regions of Australia. It will provide a way through the mire of the next few months and a pair of muddy boots in which to continue our journey to that fair go we all strive for. The Rudd government has been quick to act. It has been responsible, equitable and fair and has shown all the hallmarks of traditional Labor values. In times of greatest hardship the Australian people have always been able to put their trust in Labor to deliver. The Rudd government intends to deliver for all Australians, despite the self-serving logic of those opposite, whose mouths are gorged with sour grapes and whose brains teem with a viral ingratitude. The opposition men and women of Australia, unfortunately, will not get it and never will. I commend the bills to the House.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

The coalition takes this package on trust and as the member for Cook I am pleased to support the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and associated bills, as there are those in my electorate who will benefit from this package. But I note that the coalition is taking this package very much on trust. That is what the Australian public expects of the opposition in times such as these. But what they do not expect is for such support to be given blindly. They do not expect such support to be given in a way that seeks not to question the government on any matters. They expect an opposition in this country under our system to hold the government to account on every single occasion, asking the questions that the government, I believe, are not asking of their own officials or others about these matters—that is, questions about the likely impact of this package; questions about the bungling of the government’s unlimited bank guarantees; questions about the impact on growth of these packages; and, more significantly, questions about the impact on future surpluses—or rather whether the budget will go into deficit. The Prime Minister is at the height of arrogance in refusing to answer the very questions that the Australian public expects the opposition to put to the government to ensure accountability and scrutiny through this parliament.

The PM has introduced a new era of what I would call ‘economic McCarthyism’ in this country under the cloak of his confected rhetoric of economic security. The ‘Kevin knows best’ mantra is the prevailing dogma that the Prime Minister seeks to force on economic debate in this country. Frankly, I am not prepared to gamble Australia’s future on that presumption. I am not prepared to gamble the jobs of Australians on the misguided notion that Kevin knows best. The Prime Minister is acting more like, as Glenn Milne recently—

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. I am reluctant to interrupt the member opposite. However, I think it is important that he refers to the Prime Minister by his title.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I remind all members to use the proper protocol in referring to each other in this House, please.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

The Prime Minister is acting more like, as Glenn Milne recently observed, the Sun King or, as the Leader of the Opposition recently remarked, Chairman Kev. This is no way to run a country. It is right to question our government. It is even more important that governments and prime ministers answer those questions.

Today we commit more than half the surplus. This is a surplus that took the coalition government, under John Howard and Peter Costello, more than 10 years to build. The coalition first had to pay back $96 billion in debt, which had it still been around would today be incurring an interest cost of around $15 billion. Were it not for the responsible management of the Howard-Costello government we would already be in deficit. But today we are committing the majority of the surplus—and we cannot spend it twice. This is the point of no return. The government’s forecasts represent the line in the sand. The measure of this package will be whether the growth forecasts, to achieve two per cent as outlined in their forecasts, are met and whether the budget remains in surplus, which those forecasts project. It is now true that the only surplus available to the government for infrastructure spending and matters of that nature is what the Howard and Costello years left behind in the form of the Building Australia Fund.

We need to put the decisions we support today in context. Earlier this year the government declared a war on inflation. They fuelled inflationary expectations earlier this year, egging on the Reserve Bank at every opportunity. The result was a 50 basis point increase in interest rates, due to their irresponsible egging on of the inflation crisis and the inflation war, as they described it, referring to genies and bottles and monsters. They argued for a contractionary budget, which combined with the 50 basis point interest rate rises following their egging-on of the Reserve Bank to put the brakes on the Australian economy just when it needed support. They called it wrong. And, if you are going to be honest and upfront with the Australian people, you are honest when you get it wrong. When you get it wrong, you say you got it wrong—and that is not something we have seen this government do. In many ways the Prime Minister is like the Fonzie of Australian politics: he is unable to announce the word ‘wrong’ at any occasion in relation to himself. Australian homebuyers have paid the price for that with the increase in interest rates earlier this year as a result of those government decisions. The government increased taxes in the budget, including on motor vehicles—another area reeling in the wake of the government’s other ill-considered decision—to introduce an unlimited bank guarantee. In fact, the only genuinely stimulatory component of the federal budget was the measure that was put forward by the member for Higgins in the last election campaign—the tax cuts. That was the only one.

After the war on inflation we had the war on the global financial crisis, where too many Australians have been taken out in the friendly fire of the government’s bungling of the unlimited bank guarantee. Mortgage fund and property fund investors, car retailers, small businesses looking to access and roll over finance, housing developers looking to bring their supply onto the market and unable to raise capital are the victims of the friendly fire from the bungling of the government through this global financial crisis. The wars on inflation and on the global financial crisis have, we learnt yesterday, evolved into a war on unemployment. We note that, according to the government’s forecasts, there will be more than 200,000 casualties of this war by the end of the financial year, up from 134,000 predicted in the May budget.

I fear that the next war will be a war on the deficit that will be created by the government. They have been running around the country preparing the ground to go into deficit. Just this week we have seen a deficit announced by their Labor mates in New South Wales. And what we see in New South Wales in how the New South Wales Labor Party runs the show is what we will ultimately see here in Canberra. What we see in New South Wales is a glimpse of the future for this country under a Labor government. I fear that this war on the deficit will then become a war on debt. It will join all the other wars—the war on alcopops, the war on obesity, the war on homelessness and even the war of the Minister for Youth on fashion, of all things. I think it is time for the war to end all the wars—that is, on the PM’s overblown and confected rhetoric. It is time for the Prime Minister to sue for peace on the Australian economy.

The stimulus package in this bill provides $1.5 billion over two years to increase the first home owners grant to $14,000 for existing dwellings and $21,000 for new dwellings. The coalition introduced the first home owners grant in July 2000, including a differential higher payment at that time of $14,000 for new dwellings. As shadow minister for housing I have expressed particular support for the increase in the first home owners grant for new dwellings due to the need to provide a stimulus to the residential construction industry. The trend for building approvals since September 2000 has fallen by 14.5 per cent. Housing finance figures released just this week show that finance for new dwelling construction has fallen each month for the past 15 months. It is now down 17½ per cent on trends since November last year. Questioning in estimates revealed that no modelling or advice was provided on the likely impact of this stimulus on house prices or rents, in particular from the minister’s department. They have no idea, frankly, of what the potential impact will be, particularly of the first home owners grant increase for established dwellings. The government’s forecasts also reveal that dwelling investment in 2008-09 following the delivery of this package is expected to be not the two per cent that was forecast in the budget but zero per cent. That is the forecast released by the government for increases in dwelling investment.

I have also asked questions about the impact of this package on the increase in the first home owners grant for established dwellings—the impact it will have on rents and on artificially inflating house prices, given the structure of our housing market. These are simple questions and I raise them because these are questions the Minister for Housing should know the answers to. She should know the answers to the questions about what these measures will do to housing affordability, particularly for those who pay rent and for those who are not first home buyers but who are also seeking to pay mortgages or seeking new properties. We need to look at all the housing market, not just those elements that the government seeks to pay particular attention to. These are questions the government needs to know the answers to. As we went through the estimates process I was disturbed to find that there has not been any work done by the department. There does not seem to have been any questions asked and there has been no modelling. The answer is, ‘We simply do not know, but we are going to do it anyway.’ These are the rigorous answers I would expect from a government doing its job, and the simple fact that it has been unable to answer these questions over recent weeks is a matter of concern.

As I have noted and expressed publicly, the first home owners grant changes are welcome, but they do not address longer term issues in the Australian private housing market. This is a package designed to introduce a stimulus to the Australian economy, not to solve the problems of the Australian housing market in the longer term. I am not suggesting in any way that the government is trying to do that with this stimulus initiative—it is a stimulus initiative—but it is timely to reflect as we talk about housing affordability in this country, as many speakers in this debate have, on what the real issues are for housing affordability in the private housing market in Australia. Australia faces a chronic housing undersupply challenge, estimated to reach a shortfall of 200,000 dwellings by 2010. It is the key housing affordability challenge—the road block to Australians seeking to be self-supporting in the private housing market, which must be the ultimate overall objective of all housing policy in this country—to ensure that the maximum number of Australians are able to support themselves in the Australian private housing market.

The mismatch between supply and demand is evident in escalating rental costs, further placing housing affordability out of the reach of more Australians and placing strain on household budgets. Vacancy rates are at between one and two per cent in virtually all capital cities and increases in rents, along with fuel prices earlier this year, were the key drivers of inflation highlighted by the Reserve Bank. We have seen fuel prices come down now, but rents continue to rise. The major causes of undersupply are the failure of state planning, infrastructure and land release policies that have constrained supply. They are what have been driving up rents and home prices around the country. If anyone wants to take the time to read the various reports from the economists and those who make a living out of operating in this market—they know what make it tick—they will tell you that those are the things that have been driving the market for the last five to 10 years at the very least.

The Rudd government has put in place a number of measures which have come through this place already, but these measures do not really address the fundamental points that I have raised. The National Rental Affordability Scheme addresses the social housing sector, not the private housing sector. It is seen as an arm of the social housing policy of this government. The Housing Affordability Fund rewards, rather than seeks to reform, the failure of state governments by simply writing a cheque—direct subsidies for their excessive taxes and charges. As I noted before, the Building Australia Fund, funded by the Howard-Costello surplus, is now only replacing state expenditure on infrastructure, not adding to it, as we saw in the New South Wales state minibudget yesterday. The first home saver accounts are overly complex and have not been taken seriously by the banking sector or depositors alike.

I note that the National Housing Supply Council has not even met yet with Infrastructure Australia, let alone made a submission on infrastructure needs to unlock housing supply. For this government, housing is an island—cut off from economic policy, cut off from infrastructure policy, cut off from environment policy and looking increasingly like a well-intentioned social exercise with little dividend. A comprehensive economic reform plan is needed to address housing supply in this country dealing with capital, land release, infrastructure planning, federal-state reform, to keep a lid on building costs and to understand the impacts of immigration and population pressures on future demand.

To keep Australians in their homes, the Prime Minister must keep Australians in their jobs. The Australian housing market is, as I have said in this place before, in a relatively strong position in comparison with overseas markets. This is due to the already noted undersupply of housing stock, which is completely different to the situation in the United States, where there is a massive oversupply. There is a low level of exposure to subprime mortgages here, with non-conforming loans comprising around one per cent of mortgages in Australia compared to 15 per cent of subprime loans in the US. Our loans are full recourse, so there is not the option for those who are in a position of default to throw their keys in the door and allow the stock to be dumped on the market and have a run made on the housing market. And there is a relatively low level of foreclosure. According to RBA statistics for August, delinquent home loans accounted for 0.4 per cent of banks’ balance sheets in Australia, compared to 2.2 per cent in the US and 1.3 per cent in the UK.

Delinquency in home loans is what this is all about at the end of the day. I note it was significantly greater for Australian banks in the late 1980s and the early 1990s. Even more specifically, it is a third less today than it was in 1996 before the coalition came to office, when Paul Keating was Prime Minister. Why was that? Why was delinquency on mortgages so much higher back then? Because unemployment was so much higher back then. Unemployment is the key thing that underpins the performance of the Australian housing market at the end of the day, and it is unemployment that we need to focus on to ensure that this government does something to generate jobs in this country.

Strong growth in employment was a hallmark of the Howard-Costello years. More than two million jobs were created during that time. Real incomes grew by more than 20 per cent, and that assisted families to be self-supporting in the private housing market. According to the Reserve Bank of Australia, despite strong growth in real house prices over the last 25 years—these are Reserve Bank figures—growth in real disposable incomes of younger Australians in the home-buying cohort, after paying for accommodation, was higher in 2007 than at any other time in their records. The major concerns for Australian banks with respect to the home loan portfolios that they hold are the risks of delinquency from rising unemployment and job insecurity. The government’s new forecasts show that unemployment will hit five per cent and it will put an additional 200,000 and more out of work, up from the 134,000 forecast in the May budget.

So, as we look at this package today, and as the coalition takes the government on trust on this issue, we draw a line in the sand. The global financial crisis and the management of it by the Rudd government are now very much matters of their responsibility and their accountability. The budget must stay in surplus, and that is what is in the government’s own forecast. Failure to deliver that growth and failure to keep the budget in surplus will be seen as a failure of this package. The other thing that must be achieved is this: we need to keep Australians in their jobs, because if we keep Australians in their jobs and put Australians in jobs we will keep Australians in their homes.

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to offer my strong support for the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008, the Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and the Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009. In order to strengthen the national economy and support Australian households the appropriation bills seek authority for the additional expenditure of money from the consolidated revenue fund. The social security and other legislation amendment bill amends various laws to provide payments to pensioners, seniors, people with disabilities, carers, veterans and families with dependent children. These payments will provide immediate financial support during the global financial crisis.

On 14 October the Prime Minister and the Treasurer announced a $10.4 billion Economic Security Strategy to deal with the challenges of the global financial crisis, to support continual positive growth in the Australian economy and to provide practical support for households. The Prime Minister took decisive and early action to protect the Australian economy from the global financial crisis which started in the United States and has rapidly spread throughout the world. The Rudd government prepared well ahead for this set of circumstances by ensuring in the May budget a strong buffer for us for the future. Globally, around 30 banks have failed or been bailed out, with nearly every country in the G7 having recorded negative growth. The downturn is not just confined to the developed economies, with the latest IMF and World Bank information indicating developing economies will also be acutely impacted.

The Australian economy remains sound but we are not immune to the global slowdown and the real possibility of a global recession. There are no easy solutions or quick fixes to the global financial crisis. This is going to be a long, drawn-out crisis which will have a real impact on Australia, leading to slowing economic growth and increased unemployment. That is why the Rudd government is taking decisive and early action to protect the economy and all Australians from this crisis. The ESS will stimulate economic activity and protect vulnerable groups in our society, especially the thousands of pensioners, carers, disabled people and low-income families. This strategy builds on the decision already taken by the government to guarantee the bank deposits of all Australians. This strategy addresses the challenges we face in five key areas.

The first measure is for Australia’s four million pensioners, carers and seniors, who will share in a $4.8 billion immediate down payment on long-term pension reform. The first $4 billion of this will be made available through direct payments of $1,400 to single pensioners and $2,100 to pensioner couples. Australians who are receiving the carers allowance will receive $1,000 for each eligible person they care for. As I have said, these direct payments are a down payment on longer term pension reform while we wait to see the recommendations from the Harmer committee of inquiry. These payments will provide additional financial support in the months between now and the middle of next year. In Solomon we have almost 5,000 pensioners, carers and seniors who have been doing it pretty tough, and I have felt their pain when they have told me about having to cut back on things like food, medicine and trips to the shops. Over the past couple of weeks I have met with pensioners and carers in Darwin and in Palmerston, as well as the President of the Council on the Ageing in the Northern Territory. The feedback I have received regarding this direct payment has been outstanding. It will definitely relieve some of the financial pain our seniors and our carers have been feeling.

The second measure is a $3.9 billion payment that supports low- and middle-income families. The Rudd Labor government will provide a $1,000 payment for each eligible child in their care—that is, for whom they currently receive support through family tax benefit A—and for dependent children who receive youth allowance, ABSTUDY or benefits from the Veterans’ Children Education Scheme payments. That means the families of about 3.8 million Australian children will be eligible for a $1,000 one-off payment. These payments will be made from 8 December this year. These payments are going to those in our community who really need it. In my seat of Solomon that means this payment will benefit over 16,000 kids and over 8,000 families.

I spoke to some friends of mine recently about the payments they will receive. They are pretty typical of a lot of families I know in Darwin. These guys have a couple of kids and they both work hard, and when I asked them to describe their current financial situation they described it as working poor. They struggle with paying bills and the cost of day-to-day living expenses. They do without any luxuries and, like so many people I know, they live from pay packet to pay packet, week to week. I asked them what impact the government’s strategy payment would have for them and they simply said ‘massive’. For them, it will mean the difference between just going through the motions of Christmas and the New Year and being able to buy necessary items for the kids and the family home—things that would otherwise have been well and truly out of their reach. That means money will be spent at local shops around Darwin and Palmerston. I have spoken to some of the small business owners in Solomon and, like so many small businesses in rural and remote Australia, they are doing it tough. Their cash registers have not seen much money passing through them recently, and they are definitely looking forward to seeing their customer numbers increase, particularly over the Christmas period. These payments will mean an injection of cash that will stimulate economic activity.

The third measure is a $1.5 billion investment to help first home buyers purchase a home. Currently first home buyers are eligible for a $7,000 grant. After consultation with industry and others, the government decided to act decisively in the housing sector. Decisive action means that for the duration of 2008-09 the first home owners grant will be increased from $7,000 to $14,000. On top of that, first home buyers who purchase a newly constructed home will receive an extra $7,000 to take that grant to $21,000. In other words there is a doubling of the first home owners grant if you are buying your first home and a tripling of the grant if you are buying a newly constructed home. This is designed to support activity in the housing sector because the housing sector is critical to the overall performance of the economy. This measure is fantastic news for the people in the Territory, with the creation of three new suburbs in Palmerston in the near future as well as the suburb of Bellamack coming to life next year. The assistance will be huge for not only first home buyers purchasing a home but also the businesses associated with the housing industry. In fact, only last week it was reported in the news that the NT’s Housing Industry Association expects a recovery in new home approvals during the next few months—just the news my mates in the building game up in Darwin wanted to hear.

The fourth measure is that the government is going to provide $187 million to create an additional 56,000 new training places in 2008-09. This is great news for both employers and people wanting to get into the workforce. From now till the end of the financial year, the number of productivity training places will double from 57,000 to 113,000. As my son comes to the end of his school years, it is great that he will have opportunities to get some training. It means great opportunities for hundreds of small to medium sized businesses in Solomon which need a skilled labour workforce.

The fifth measure of the ESS brings forward the implementation of the government’s nation-building agenda. Bringing forward the priorities list for both the Building Australia Fund as well as the areas of education, health and hospital areas will bring greater employment opportunities and assistance in stimulating economic activity. Last week’s Mid-Year Economic and Fiscal Outlook showed just how important it was that the government acted decisively with the Economic Security Strategy. Recent figures make it very clear that our economy is crying out for a boost, and that will be provided through the ESS. At the time of the announcement of the ESS, the Leader of the Opposition had this to say:

Well we welcome the Government’s announcement today …

…            …            …

Now this is also a very significant economic stimulus; a significant fiscal stimulus.

…            …            …

But nonetheless we are not going to argue about the composition of the package or quibble about it. It has our support. It will provide a stimulus to the economy, that’s for certain. And above all it gives justice to Australia’s age pensioners in particular, who have been doing it especially tough.

He went on to say:

Well we support it. As I said, we’re not going to argue about the composition of the package.

He went on to say:

The bulk of the money of course has gone to pensioners and to families. So that’s where the bulk of the commitment has gone.

He also went on to say:

… we welcome the whole package. It has our support. We’re not going to, you know, go through it line by line and say if we were in government we would have done this rather than that. It has our support, it has our bipartisan support, but we are particularly pleased that the pensioner issue has been addressed and that pensioners, now the fact of the matter is the pensioners will get this extra money.

He was adamant. He was out there with the shadow Treasurer supporting it on 14 October. This is a very important stimulus. It is a very important package.

I put up a private member’s motion in the Main Committee on Monday night and there were some comments made by those opposite with regard to it, so I went looking around to see what other comments had been made. I was going to have a look in the Age, the Fin Review, the Australian or the Courier-Mail, but I decided just to look up the Liberal Party website because they have all the information there for you. Maybe those opposite should read some of their own leader’s press releases before they make outlandish statements like those that were made in the Main Committee on Monday night. Remember there is a bipartisan approach to this. But on Monday night, in debating my private member’s motion on the Economic Security Strategy, the member for Fadden said:

The fallout from the global economic crisis was seen as long ago as 2006, when $2 trillion of money was lent for residential mortgage backed securities.

…            …            …

The coalition saw it coming. We warned, before the election, of the storm clouds gathering.

Yet, when talking about the international financial crisis, his leader said this in a press conference on Tuesday, 30 September, this year. This is on the Liberal Party website, so you can look it up if you want. He said:

These are very uncharted waters. There is nobody that would have predicted these events a year ago or even a few months ago.

He also said:

There is nothing about this; none of these events would have been forecast as recently as only a few months ago.

He went on to say:

… we’ve got new problems that could not have been foreseen as recently as only a month or a few months ago … So the problem, the global problem has become more and more serious and it’s important to recognise that.

Four times on the website he says there is nobody who would have predicted these events a year ago or even a few months ago. So maybe the member for Fadden, when he found out in 2006 and saw the storm clouds, should have given the now Leader of the Opposition a ring or spoken to the member for Higgins, because that was around the time that they were ignoring warnings from the Reserve Bank that there were problems on the horizon. The member for Fadden did not finish there on Monday night. He started his response to my private member’s motion by saying:

The question must be asked: what is this so-called Economic Security Strategy all about? Is it about helping Australia in the face of a global financial crisis? Is it about assisting struggling families? The member for Solomon’s motion would claim that it is both. The stark reality is that the government’s strategy has not adequately addressed either problem.

Yet the Leader of the Opposition said:

The bulk of the money of course has gone to pensioners and to families. So that’s where the bulk of the commitment has gone.

…            …            …

Well we welcome the Government’s announcement today …

So, while the member for Fadden believes that it has not addressed any problems, the Leader of the Opposition tends to differ from what the member for Fadden is saying.

Then we have the member for Tangney, who made his contribution on Monday night as well. Let us remember what he said back on 20 October. The member for Tangney came in on the doors and said, ‘He hasn’t been doing too bad a job of it.’

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

That’s how some people get in!

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

Some of us sneak in the back door. I will take that interjection. He said, ‘He hasn’t been doing too bad a job of it,’ in response to it, while the voting public has taken a different view, with the latest Nielsen poll showing 56 per cent of people supported Mr Rudd’s response to the crisis. So the Liberal member for Tangney, nice fellow that he is, said that he has not been doing too bad job of it. Yet on 10 November, on Monday night, the member for Tangney said:

The government had an opportunity to prove they could handle the economy. I think that the rushed, uninformed, go-it-alone attempt at their rescue package shows that Australia is in real trouble with these clowns at the wheel.

So some of them come out and speak in support of it. The Leader of the Opposition spoke in support of the package and yet some of his backbenchers in the Main Committee do not. That shows you where they are at with it. They are walking both sides of the street. What do they do then? They thrash around, trying to find some traction: ‘We want to get stuck into this lot over this, but we don’t want to criticise it too much because we know that struggling families, pensioners and carers are in need of this. We know that first home owners are crying out for assistance.’ They pride themselves on fighting for small business, so they have to be really careful how they go about this. They put their heads together in their party room—it would have been an interesting meeting—and they think about how they can come up with a way to discredit the government over this. So what they decide to do is attack Ken Henry.

All of us in public life have to be accountable and Mr Henry is no different. I do not have a problem with that. The problem I have is that the Leader of the Opposition stands in this place and speaks about Mr Henry in glowing terms—terms that he said would make even Mr Henry’s mother blush. He speaks like that but then he lets the attack dogs out the front discredit not only Mr Henry but also his position. They also discredit the Reserve Bank. They have a go at everyone. No-one is immune to it. They do it out the front door, and the Leader of the Opposition should be standing up and calling the attack dogs off. If he really does feel like that about Mr Henry, he should go out the front and do it himself. That is the way it should work. If he has a criticism about what is going on—and I am not saying that Mr Henry is above criticism; of course he is not—the Leader of the Opposition should not come in here and talk about Mr Henry as if he was one of his best mates and say that he has a lot of respect for him, then let some of his members, the attack dog squad, go out the front and discredit him at every opportunity. That is wrong.

If the Leader of the Opposition has got the courage, he should be the one out the front having a go at Mr Henry. They talk about business confidence and all they are doing is undermining it at every opportunity. They are attacking the Reserve Bank. They are attacking the people in the regulatory domain. They are attacking those types of people and they are also undermining the strategy that we have formulated to deal with this financial crisis.

Let us not forget who caused it. Let us not forget that Malcolm, the Leader of the Opposition, is very close to the merchant bankers of the world—some people call him the Merchant of Venice—because they are the ones that started this. And he brings that slippery type of stuff into this parliament—slippery, sly work where he goes in and says one thing in here and then he does something else outside. He says one thing in here and then he sends out the attack dogs, and they get out the front and try to discredit the people who are in here and people that are working towards trying to solve this problem.

If we had not acted decisively, economic growth would have been much weaker than currently forecast, with flow-on impacts for employment. The strategy is expected to result in a boost to the level of real GDP of between half and one per cent. At a time when we need it most, the strategy will immediately improve the lives of thousands of Australians who are finding it really tough at the moment—the pensioners in Darwin, small business operators in Palmerston, farmers and their families in Humpty Doo. When the Prime Minster announced the measures, he said they were ‘an economic security strategy to help underpin positive economic growth into the future and to provide practical support for households’. (Time expired)

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

I am certainly pleased to rise on behalf of the opposition to speak about the government’s Economic Security Strategy or so-called response to the global financial crisis. These are exceptional times that we live in. There is no doubt about it. We have heard now for some months that the world has not faced the kind of global financial crisis that we currently face previously in our lifetimes. There are some who make the connection that this global financial crisis is akin to the Great Depression that was seen in the late 1920s and early 1930s.

The most remarkable aspect that I would like to comment on in response to this package that has been put forward by the government is the radical change in the language of the government. When Kevin Rudd and the Labor Party were first elected in this country, we heard from them on many different occasions the statement that the buck would stop with the Prime Minister, that he was an economic conservative and that Labor had learned its lesson from their bungling of the Australian economy in so many instances in the past.

Labor promised to basically be the Liberal Party in government but with a nice soft underbelly. That is effectively what Kevin Rudd and the Labor Party said to the Australian people. What do we actually know now? What do we know as the circumstances—

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

Madam Deputy Speaker, I rise on a point of order. I apprehend that the member for Moncrieff might be referring to the Prime Minister consistently by his name rather than his title. I would like to ensure that he refers to him by his title as is appropriate under the standing orders.

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

We see the true gravitas of the government on dealing with such weighty matters. Nonetheless, the Prime Minister made comments that the Australian Labor Party were all about ensuring that they were dealing with substantial economic concerns for Australia in a way that was consistent with the past performance of the coalition. Why would the Labor Party not try to emulate the previous coalition government? Let us be clear about the kind of economy that the Australian Labor Party inherited.

When the coalition were first elected in 1996 what we inherited, after 13 years of Labor government, was a $96 billion budget deficit. We inherited a $10 billion budget black hole and we had unemployment at record levels, coming off a peak of 11 per cent of Australians unemployed. That is what the coalition government inherited when we came into office in 1996. But after about 12 years of consistent, responsible, strong economic management the Howard government were able to pay off $96 billion of Labor Party debt, bring our unemployment rate from 11 per cent, where the Labor Party had it, down to a record low of four per cent—in fact, at one stage the coalition got unemployment down to 3.9 per cent—and ensure that we moved the budget from being a $10 billion black hole back into the black. That is what the coalition did with no assistance from the Australian Labor Party, who time after time after time stood in this House and in the Senate steadfastly and resolutely opposed to the very measures the coalition took that put this country back onto the strong economic footing that it had.

That is Labor’s record in opposition, and then they came to the election. The Prime Minister said, ‘You can trust me; it’s okay, I’m an economic conservative.’ We heard that from the Prime Minister in advertisement after advertisement paid for by the $100 million worth of campaign donations that the trade unions made to the Australian Labor Party. If there is one thing we know about the Labor government, it is that they are just puppets on a string. They are puppets controlled by this man, the Parliamentary Secretary for Defence Procurement, at the table, by the ACTU and the trade union mates. The unions are the puppeteers and they control the puppets at the front. That is what we know about the Labor government.

Kevin Rudd, the Prime Minister, made the comment that he would be an economic conservative. But what have we seen? The language of the buck stopping with him, the language of him being an economic conservative, has all radically changed in the past 12 months. Now, when Australia has faced international economic tumult, which is not the first time, we suddenly see the Australian Labor government say: ‘You know what? Everything’s up for grabs. We can’t control the fact that unemployment is anticipated to increase now. We can’t control the fact that the budget is likely to go back into deficit. We can’t control the fact that we as a government are going to start building up debt again.’ The Australian people should not be surprised, because Labor have form.

We do not have to hark back to 13 years ago when Labor were last in power; we can talk about what Labor do at a state level. They have been in power across this country in every state government for about a decade. What is their track record at a state level? This is the same party that controls the economic levers of this country today. I will tell you about Queensland. In that state there is nearly $90 billion of public debt, accumulated by that one state government alone. That is their track record. In New South Wales what is the situation? We know that the forecast for the New South Wales state budget next year is a $1 billion budget deficit. That is Labor’s track record at a state level. In fact, in every state where Labor are in power they have completely mismanaged and destroyed their state economies, so it is no wonder that, in the face of this international economic tumult, we will see the Australian government make the problem worse. We will see this problem continue to get worse and we know that the Prime Minister says—

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

Mr Hale interjecting

Danna Vale (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member is entitled to be heard in silence.

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

We know that the Prime Minister makes comments that it is not his fault. We know now it has suddenly all become the responsibility of the global financial crisis. So much for the end of the blame game. You can take that notion and throw it out the back door, as the Prime Minister is so fond of saying. That notion that the buck stops at the Prime Minister or that the Australian government is in charge of the Australian economy can go straight out of the back door because if there is one thing we hear time and time again from the Prime Minister and from the Treasurer it is that it is all the result of the global financial crisis.

Let me take this opportunity to highlight that it is not all a result of the global financial crisis. The package of measures that we are talking about today incorporates a number of payments—half the budget surplus—that the Australian government is about to spend across the Australian economy. Certainly, the coalition welcome some economic stimulus. Not for one moment does the coalition not believe that there needs to be an economic stimulus. What we are saying and our charge against Kevin Rudd, the Prime Minister, and the Treasurer, Wayne Swan, is that they are taking a bad problem and they are making it so very much worse. In the past when Australia faced, for example, the Asian financial crisis, do you know what happened? Australia actually fared very much better than all of our regional counterparts. But in this circumstance we see the slow massaging of Australian public opinion by the Treasurer, who then turns round and says, ‘Look, the global financial crisis is very bad and it is likely to get a lot worse.’

Let us look at one of the key measures that the government took, which, of course, was the unlimited bank guarantee that the Prime Minister announced. What we know is that the Labor government initially came out and said that they would be seeking to guarantee bank deposits to the amount of $20,000. That was Labor’s policy position in the middle of this year—a $20,000 cap on guaranteed bank deposits. The coalition came out on 10 October and asked for that cap to be $100,000 because that, based on experience of the member for Wentworth, the Leader of the Opposition, seemed to be the appropriate amount consistent with the information coming from the financial markets and with past comments made by our financial regulators. Not to be outdone, the Prime Minister said: ‘Oh no, we won’t have a $100,000 cap; the Labor Party will have an unlimited cap. That’s the Labor Party’s cap—an unlimited guarantee.’ It was important to the Prime Minister and the Treasurer, Wayne Swan, to be seen politically to be outdoing the Leader of the Opposition. So they went out there and said: ‘You know what? We’re going to have an unlimited guarantee. That’s the best course of action for this country.’

What transpired after Labor adopted this position? We saw what was a bad problem in this country get so much worse. That is what we saw transpire. In their recklessness and in their bungled attempt to fix this problem, we saw this bungling Labor government, with very little economic experience, take a bad problem and make it so much worse. What we saw was a rush of funds from those previous market linked investments back into the safe haven of the banks. Because the same risk rating is now in place for building societies and credit unions, they are out there in the marketplace providing very high deposit rates because they can take a riskier profile now that they are government backed. Those are two immediate examples of what we have seen.

The impacts of this government’s bungling are still only just beginning to be felt. Following the decision of GE Money and GMAC to pull out of car financing, as a direct result of this government’s bungled attempt with their unlimited guarantee, the Motor Trades Association of New South Wales has said it anticipates that 40 per cent of all New South Wales car retailers will go to the wall by Christmas. It forecasts that 30,000 jobs will be lost in New South Wales as a result of this government’s bungling of the bank guarantee. The government have the audacity to come into this chamber and claim that they are concerned with economic security. What about job security? Is there any bigger and more important guarantee of economic stability than having a job? That surely has got to be the most significant guarantee that exists.

Under the Labor Party, we know that the forecast for unemployment—in stark contrast to the coalition’s track record of performance—is not for a decrease in unemployment but for an increase in unemployment. That will be the track record of this Labor Party. We know already that the forecasts for unemployment continue to creep higher and higher. The Deputy Prime Minister will not even utter what the forecast is. The words cannot pass her lips. What we know from the forecasts—and there are a range of forecasts—is that unemployment is anticipated to reach six per cent on some forecasts, seven per cent on other forecasts and eight per cent on other forecasts that I have seen in the media—right through to, for example, JP Morgan’s forecast, which is that unemployment in this country will hit 10 per cent. I sincerely hope that that is not the case. But let it be said that there are economists out there forecasting that Australia’s unemployment rate could, sadly, once again, hit 10 per cent—and it is little wonder when we see 30,000 jobs in one industry in one state alone being directly threatened as a result of this government’s bungling of the unlimited guarantee.

Westpac is on board. The CEO, Gail Kelly, came out and said that she supported the Leader of the Opposition’s call for a $100,000 cap on bank guarantees. Had that $100,000 cap been put in place, none of these ramifications that we are now seeing would have taken place. There would not have been the rush of money from the market linked investments into the banks. There would not have been the closure of GE Money and GMAC. These occurrences have all been the result of this government’s bungled introduction of the unlimited guarantee, and that would not have happened if the $100,000 cap had been in place.

As shadow minister for small business can I say that the impacts of this are wide reaching among the small business community as well. Some of the principal drivers and funders of small business credit are market linked investments. Market linked investments provide much of the money that the small business sector use to finance their cash flow. As a consequence of this government’s bungling of the guarantee, we are now seeing that the small business sector do not have anywhere near the same access that they had to small business credit that was provided from those market linked funds. The impact of that is yet to be felt. The beginning of that impact is now emerging, but the true and full extent of that impact is yet to be felt. What we know is that Australia’s 2.2 million small businesses employ around four million Australians. As that credit dries up and as businesses in this country struggle, let me assure you that the unemployment rate will continue to go up. It will not be 400 people in a factory, which seems to be the only pressure that Labor responds to. It will, unfortunately, be one or two people in each of several thousand small businesses across this country, which will drive our unemployment rate up by thousands, if not tens of thousands. That will be Labor’s legacy as a result of their bungling of the government guarantee.

I would like to touch on some other measures as well. This government likes to claim that as a result of its economic stimulus package we will see funding of about $4.8 billion for pensioners, carers, senior health care card holders and veterans; $3.9 billion for families; $1½ billion for first home buyers; and $187 million for training. That might be good for some, but what compassion do we hear from this government, for example, for the many self-funded retirees and partial pensioners who live in my electorate of Moncrieff? These people are relying on their investment income. These are people who are not beneficiaries of this stimulus package that the government is putting forward but people who rely on the interest that has accrued on their investments, which, in the main, are invested in market linked funds. What have we seen? We have seen a record number of these market linked funds frozen as a result of this government’s bungling of the bank guarantee. All of a sudden, partial pensioners and self-funded retirees are having their income and their ability to redeem their cash frozen as a result of this government’s bungled attempt with their bank guarantee.

What did we expect to see from the government? Rightly, we expected to see some compassion, we expected to see some leadership and we expected to see some ‘decisive decision making’—as they are so fond of saying over there. But what did we see? We had the spectacle of the Treasurer of Australia saying to self-funded retirees and partial pensioners, ‘If you can’t access your cash, go to Centrelink.’ That was the response. Labor only made that comment after I questioned the minister in question time in the House. Prior to that they were blissfully unaware there was even a problem. We had market funds left, right and centre freezing redemptions—freezing investment income. The Labor government was completely, blissfully unaware of all this. I raised it in question time. The minister gave absolutely no response at all. Then, two days later, we saw the Treasurer go out and say, ‘Look, if you are doing it tough, go to Centrelink.’ If that is the kind of economic leadership that the Australian people can expect from the Australian Labor Party then our problems are very serious indeed.

But there is more than that. I know the member for Solomon made some comments earlier about this problem all being started by merchant bankers, so I would like to take this opportunity, given that the member for Solomon is still in the chamber, to educate him a little bit about what actually caused this problem. Far from being the Wall Street crowd, it was in fact interventionist, left-of-centre governments that created this whole problem. The proof is very clear.

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

Mr Combet interjecting

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

I will educate the member at the table as well. Let us explore how this actually happened. There was a left-of-centre President of the United States by the name of Bill Clinton, who in 1991 was merrily issuing press releases left, right and centre claiming how wonderful it was that his left-of-centre interventionist government was going to ensure that lower socioeconomic people in American society would be able to access housing credit. They boasted it from the hilltops. The United States President was making sure that Fannie Mae and Freddie Mac would make credit available to those who would not ordinarily be able to get the credit. That is where it all started. Do not blame the Wall Street crowd. If you want to blame anyone, put the blame back where it started, which was the United States President, Bill Clinton, when he instructed Fannie Mae and Freddie Mac to give money to those people who ordinarily would not be able to apply for it. So, if they want to know where the subprime crisis started, let them look a little further, let them dig a little deeper and let them extend their brainpower a little bit further to understand where it actually came from, which was a no doubt well-intentioned, left-of-centre, interventionist government that thought that it knew best.

Any time this left-of-centre crowd starts thinking that they know better than the market, we see the implications of their decisions. The more that we see these interventionists stick their noses into the marketplace, the more we see the long-term consequences of their decisions. It is that same kind of flawed logic where the government thinks that it knows best. It stepped in to ensure that it would fix the bank guarantee problem, and we saw all the consequences flow as a result of that intervention as well.

Increasingly, despite the rhetoric of the Prime Minister, who talks about ‘extreme capitalism’ and ‘extreme greed’ and all of these kinds of things, we actually know that the people the Australian people should be most afraid of are those well-intentioned interventionists from left-of-centre governments who take a bad problem and make it so very much worse. In the same way that that has occurred in the United States, it is now unfortunately occurring here in Australia. The coalition certainly supports the notion of there being an economic stimulus package. I am pleased that there is money going towards pensioners, carers, Commonwealth seniors health card holders, veterans, families and some first home buyers, but what is clear is that, in the same way that this government has form when it comes to making a bad problem much worse—for example, the bank guarantee—this government’s attempts to blow half the budget surplus in one fell swoop with no economic modelling is very likely to make a bad problem much worse. I look forward to hearing what the government’s response will be.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the introduction of the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and cognate bills, which put into place some of the Rudd government’s key measures. If time permits, I will respond to some of the nonsense I have just heard from the member for Moncrieff, but quite frankly I want to put my own case first and then I will see how my time goes. In summary, these measures will deliver $4.8 billion for an immediate down payment on long-term pension reform, $3.9 billion in support payments for low- and middle-income families, $1.5 billion to assist first home buyers and $187 million to create 56,000 new training places in the year 2008-09. The package also brings forward the commencement of investments in nation-building projects to 2009. For pensioners, including age pensioners, veterans, disability support pensioners and carers, the $4.8 billion will from 8 December provide a payment of $1,400 for single pensioners and $2,100 for couples. For people receiving the carer allowance, it means a payment of $1,000. The $3.9 billion family payment package will provide financial support to around two million Australian families, with a one-off payment of $1,000 for each eligible child of families who receive family tax benefit A. The package also includes payment to families of another 220,000 dependent children who received youth allowance, Abstudy or a benefit from the Veterans’ Children Education Scheme.

In my electorate of Makin, the Rudd government’s Economic Security Strategy will benefit over 14,000 age pensioners, around 5,000 disability support pensioners, around 900 self-funded retirees who hold a Commonwealth seniors health card, around 2,000 service pensioners and war widows, almost 3,000 carer allowance recipients, around 800 carer payment recipients and almost 13,000 families who receive family tax benefit A. Contrast this with the proposal that had been put up by the Turnbull led opposition, in which some 2.2 million pensioners would have received nothing. Furthermore, in my electorate, which has a very high proportion of young people, raising the first home assistance grant from $7,000 to $14,000 and to $21,000 for newly constructed homes will bring welcome relief to many young people and to their concerned parents. Not surprisingly, the Rudd government’s Economic Security Strategy has been enthusiastically received by the majority of people I have spoken with.

The financial turmoil we are seeing throughout the world is likely to be a once in a lifetime experience for most of us. As some have already observed, it is a crisis largely brought about by greed—not only the greed of individuals but equally the voracious appetites of corporations to increase their market share by whatever means they could, to the point that many of them acted recklessly and callously. In doing so, they drove the economy to an unsustainable level, which many economists predicted would reach breaking point. Sadly, they were proved right. Consumers and businesses were taking on debt that they could never repay, creating a domino effect which has resulted in the financial shake-out that we may still have not seen the last of.

I want to make two points about the global financial turmoil. The corporate greed and the obscene payments being made to corporate CEOs in recent decades is a matter I briefly referred to in my first speech in this place and a matter which should have been more publicly exposed and on which action should have been taken years ago. I say that because the performance of those CEOs never justified the payments they were receiving. That point has been exposed in recent months. Many of the financial institutions that have crashed in recent times were some of the very corporates that were paying their CEOs and board members more than generous remuneration. It was a combination of negligence, incompetence and recklessness and those responsible were in turn generously remunerated for it. If they had been competent and worth the remuneration they received they would not have allowed their organisations to become vulnerable. In any other situation those same people would have been dismissed or even prosecuted.

The question of prosecution is the second point I wish to make about the global financial turmoil. Many of the actions of these corporations were taken by board members and senior executives who knew they were passing on bad debts to others, who knew they were giving loans to consumers who could not repay them and who knew, or at least should have known, that the nature of their business operations was unsustainable. At best it was moral fraud and at worst it was criminal fraud. Many of the victims have been left shattered, have lost their life savings and have been left emotionally and financially bankrupt. Yet many of the executives responsible have walked away with golden handshakes when they should instead be facing criminal charges.

On that matter I want to quote from an article which appeared in the Australian on Wednesday, 8 October. It is written by Susanne Craig from Washington, and I suspect the article was a take-out from the Wall Street Journal. I quote on the matters of the corporate payments that were being made and on the issue of prosecution. The article says:

Lehman Brothers agreed to pay a total of more than US$23 million … to three executives leaving the securities firm just days before it collapsed.

…            …            …

The disclosure came as a House committee grilled Lehman chief executive Richard Fuld Jr and painted a picture of a financial firm that operated like a casino run by greedy executives.

The article goes on to say:

Meanwhile, lawmakers estimated that Mr Fuld pocketed roughly US$480 million in pay since 2000.

He in turn suggested that it was only US$350 million. That is just one of many examples I could quote where senior executives have been paid ridiculous amounts by the organisations for whom they work when, in fact, the organisations did not perform to the standards expected by their shareholders or by the broader community.

I now turn to another article in the same paper of the same day, written by Amir Efrati and Susan Pulliam, relating to the question of criminal charges. The article says:

At least three US attorney offices are probing whether Lehman Brothers misled investors before its bankruptcy filing, as pressure grows to hold individuals accountable for the financial crisis.

It goes on to say:

… was Lehman saying publicly that its financial condition was sound while acknowledging behind the scenes that its situation was dire?

The article goes on further to say:

The US attorney’s office for New York’s Southern District, in Manhattan, is investigating whether Lehman valued its assets at artificially high levels …

The last quote I will read from the same article is:

The US attorney’s office in New Jersey is investigating whether Lehman misled New Jersey’s pension fund when it provided information about its financial health in connection with a US$6 billion stock offering in June. New Jersey invested US$180 million in the offering. Its loss on the investment is about US$116 million …

In other words, about two-thirds of the money was lost. I quote those articles because I believe they reflect a much wider problem that exists in the corporate world. I am sure that many of those same accusations could be levelled against many of the other firms that have since also crashed. For those reasons I believe the executives and the boards that, through their recklessness, are responsible for those kinds of outcomes which cause hardship, suffering and misery for others should face criminal charges. That would be one of the regulatory responses that world governments should consider in the wake of what has happened because that would be in my view one of the best forms of regulation—to make people accountable for their actions.

Thankfully Australia’s regulatory system, overseen by the Australian Prudential Regulation Authority, has ensured that Australian financial institutions have operated much more responsibly than many of their overseas counterparts. The strength of our key financial institutions, combined with Australia’s strong economy and the Rudd government’s responsible economic strategy and good fiscal policy, has meant that Australia is in a much better position to weather the financial turmoil than many other countries. But when you operate in a global economy, as Australia does, you cannot make your country entirely immune from the overseas financial turmoil. The recently released Mid-Year Economic and Fiscal Outlook confirms that. But what the Rudd government can do and has done is to act decisively with a package of measures directed at stimulating the Australian economy.

The Rudd government has acted decisively to guarantee all deposits held in Australian owned banks, Australian subsidiaries of foreign owned banks, building societies and credit unions. The Rudd government has acted decisively to make available to Australian owned banks, Australian subsidiaries of foreign owned banks, building societies and credit unions a guarantee on eligible wholesale borrowings. The Rudd government has acted decisively and announced the direction to the Australian Office of Financial Management to purchase residential mortgage backed securities from a wide range of Australian lenders in initial tranches totalling $4 billion. The Rudd government has, furthermore, determined that an additional $4 billion of funding is required for the purchase of residential mortgage backed securities from Australian lenders who are not banks, building societies or credit unions. And the Rudd government has acted decisively by providing the $10.4 billion Economic Security Strategy contained in these bills.

At a time of financial turmoil and economic uncertainty right across the world, the response from the Rudd government to calm the nation, to restore confidence in Australia’s financial institutions, to ensure Australia’s economy remains sound and to ensure that Australians can continue to look to the future with optimism should be commended. Not surprisingly, it has been, by most objective commentators and by the majority of the Australian people. This is a response which demonstrates the Rudd government’s sound economic judgement, financial competence, foresight and leadership. It also demonstrates the Rudd government’s understanding of and concern for the needs of all Australians.

It was the Rudd government that framed the May budget and it was the Rudd government that responsibly set funds aside for contingencies. It was the Rudd government that set aside $40 billion into future funds for education, health and infrastructure, and it was the Rudd government that brought in a responsible level of tax cuts for Australian taxpayers. It was the Rudd government that had the foresight to frame a budget which enabled it to release the financial package we are now debating. Had the Rudd government been reckless with its first budget, these measures would now not be possible. It was not luck, as the Deputy Leader of the Opposition implied in an address on an earlier bill; it was good fiscal management by the Rudd government—and the money needed to fund this package would not be there if the opposition members had had their way, because they opposed a number of the tax-raising measures that were proposed in the budget. Had they had their way, they would in fact have wrecked our budget surplus, at a time of great economic difficulty. But, thanks to the Independent senators, the opposition have not been able to totally obstruct the first Rudd government budget.

Governments are elected to deliver the best possible outcomes for the people they were elected to serve. The test of good governments is how they manage that responsibility when times are tough and difficult decisions need to be made. The Rudd government has, through its series of responses to the global economic challenges facing Australia, demonstrated that it has the leadership, the competence and the resolve to steer Australia through these tough times and that it will not be sidetracked by the political stunts of the opposition. In the time I have left, I want to talk briefly about some of those political stunts.

It seems that the opposition, on the one hand, support this economic package but, on the other hand—from listening to the speakers that have debated this matter so far—oppose most of what is in it for one reason or another. They offer support for it in one breath and then criticise it in the next. They offer support for measures one day and then criticise those same measures in the parliament the next day. As the member for Solomon quite rightly pointed out, the Leader of the Opposition, the member for Wentworth, comes into this place and talks about bipartisanship and support for a number of these measures and then sends members of his own party out to do media interviews criticising the package and the people who were behind putting the package together. You cannot have it both ways. I understand why they do that. They do that because they know full well that this is a responsible package. They know full well that it is a package that has been embraced by the Australian people at large. They know full well that it is the kind of package that is required in these very difficult times—and they want to take some credit for it in one way or another. The truth of the matter is that they cannot take credit for it if they are going to criticise it, as they continuously do, and they cannot take credit for it when the fact is that it is a package that was put together under the good economic management of the Rudd Labor government.

I want to talk briefly about that very point, because speaker after speaker from the opposition has come into this place and talked about how this is only possible because of the strong economy that was left to the Rudd government by the previous, coalition government. If the economy that they left to this government was so strong, why did they leave a housing market in crisis? It was in crisis when the Rudd Labor government came to office. Why did they leave a health system in crisis around Australia, why did they leave an education system that was shameful when compared with education systems around the world and why did they leave the infrastructure bottlenecks that this government is now having to fix? If the economy was so strong, why did we have all of those problems? And, if the economy was so strong, why did the Australian people turf out the coalition government in the last election? It is because they understood that those problems were out there in the community and they understood that the previous, coalition government could have done something about them but did not. That is the first point.

The second point is that the opposition come into this place week after week and blame this government for all of those same woes. They talk about the health system, they talk about housing, they talk about education and they talk about infrastructure. If it is good enough for them to accuse the Rudd government of being responsible for all those things after only a few months in office, then they have to be consistent and at least give the Rudd government credit for the budget it set in May. You cannot have it both ways. You cannot criticise the government for the things you want to and then not give the government credit for other things they are also accountable for and responsible for during their term in government.

The truth of the matter is that the Rudd government could have put together a budget in May that would not have allowed any of this funding. We could have spent all of the money that was available to the government and not held back a surplus. The government did not have to put money into infrastructure, education and health funding for the future, but it did. It did so because it is a responsible government, with the full knowledge that it had to act responsibly in ensuring the security of the future for all Australians—and that is what it did.

The other comment that I want to respond to is one that is consistently raised—and it was raised again by the member for Moncrieff just a moment ago—about how this package does little for the businesspeople of Australia and in particular the small business people of Australia. I was a small business person before I came into this parliament. Like most of the other small business people around Australia, I have a family and children. There are children of families in small business who will benefit directly from this package. But, just as importantly, this package is about stimulating the economy. If the economy remains strong then the opportunities for businesses will remain strong. So for members opposite to come in and say that this does nothing for small business is absolute nonsense and shows how little understanding they have when it comes to managing an economy.

I will finish by talking about a couple of other comments. Just before I do, I want to respond to something else that the member for Moncrieff said in comments about bank guarantees and finances under state Labor governments. In terms of the bank guarantees, had the Liberal Party had their way, 40 per cent of deposits in funds would not be guaranteed, and that includes funds owned by those self-funded retirees that the member for Moncrieff was alluding to. I can assure him from my discussions with people in my community that people out there were not happy about having the limit at $100,000 only.

Secondly, he talked about the financial woes of the states. Perhaps the member for Moncrieff is not familiar with South Australia. When the Labor government in South Australia came to office in 2002, the financial situation of our state was not terribly good. It took a Labor government to bring the finances back to a level where the government now has a AAA rating. (Time expired)

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and related bills. The bills will provide for Economic Security Strategy payments to be made to pensioners, seniors, people with a disability, carers and veterans. The bills will also provide for Economic Security Strategy payments for families with dependent children.

While the opposition supports this strategy, it comes after some doubt and concern across the parliament, particularly on the government side, that pensioners would ever get relief from the ever-increasing cost of living, including high fuel prices, increases in the price of food and increasing inflation across all their outlays. At a time when the cost of living has been exacerbated by the ever-developing financial crisis sweeping the world, these payments have been called a one-off. The Treasurer, Wayne Swan, in the past called the Howard government’s one-off child payment in 2004 ‘irresponsible’ and ‘bad social policy’. Entering into government at the last election, this government has found—and the member for Makin may have missed this—that governing is not as easy as it looks to be from opposition.

These pension payments in this package do not include any consideration of the base rate. No doubt pensioners will welcome this payment, but what will happen in the longer term? How will pensioners cope with future cost of living increases? The coalition took steps to address this issue as far back as September with a bill introduced into the Senate. The bill was a first step in a coalition policy regarding pensions, income support, veterans support—and I know, Madam Deputy Speaker Vale, that you are very close to veterans issues—and carers. This was to be developed over time. From the opposition’s point of view, assisting pensioners was an immediate priority—a priority at the time ignored by the Rudd government until it was shamed into it by the circumstances of the day and the urging of the coalition, its leadership and its members across Australia. Over 928,000 pensioners, including 857,000 single age pensioners, 700 widow B pensioners and 70,900 single age service pensioners, would have stood to gain a financial boost from the coalition’s bill had it been taken up by the government.

Australia’s pensioners cannot wait for a Prime Minister who is content in every area to establish yet another review before acting. Being the Prime Minister and being in government mean actually having to make decisions on behalf of the nation, having regard to the best policy outcome that we can get for the funds that are available to us. We say that from little things big things grow. Policy takes time to develop. But the government said that they had a plan. When it comes to implementing their plans to do with our economic wellbeing, it is up to the opposition to at all times take careful account of what the government are doing on a daily basis. Of course we broadly support the government in this financial crisis and with the difficulties that are facing them today, but in turn we must demonstrate our active intention to hold the government to account for all the decisions that they make.

We are going to be talking about another Prime Minister through this week, one who demonstrated a great ability to make decisions, though he was not of my political persuasion. Andrew Fisher, whose 100th anniversary as Prime Minister we celebrate this week, was a former miner from Ayrshire who became the first Prime Minister of a majority government. He left school early to work in the coalmines of Scotland, educating himself at night. He benefited through the miners of the time, who decided that they would give the opportunity to younger, brighter miners to be educated to take on roles that were previously prohibited, examples being engineers, accountants, mine managers and engine drivers—not train engine drivers but mine engine drivers. Andrew Fisher grasped the opportunity, educated himself and achieved great things, as David Day has written in his recent book entitled Andrew Fisher. He served ‘three terms from 1908 as Prime Minister, serving Australia longer than John Curtin, Ben Chifley, Gough Whitlam or Paul Keating’ and ‘he launched a massive nation-building program, which included the establishment of the national capital, the Commonwealth Bank, a transcontinental railway line’ and old age pensions—one of the issues that we are debating today.

And now, as we fast approach the end of the year and our thoughts turn to the celebration of Christmas and all that that encompasses for our families and for the communities we serve and are part of, I realise—of course, it is the realisation of all members of parliament—the great gift that education has bestowed on the generations of our children. As I move around my electorate of McMillan, I cannot fail to recognise the commitment of teachers, the enthusiasm of the students and the ongoing support from parents and families. At this time many families across the world will look forward to celebrating Christmas, but many will not be able to celebrate their children having the education opportunities that we enjoy in Australia. We live in times of financial difficulties and worry, but we must not forget the great advantage of living in this great south land—Australia.

Today I remember the gift of education that empowers our children and, therefore, the nation. The most precious gift we give our children is an education. Nations have successfully evolved, despite opposing forces, by giving the peoples of the world the freedom gained by the provision of a free education. Nations have been empowered, oppressed minorities have been unshackled and the poor have been enriched as education and knowledge release the generations of our youth to a future of hope where there was hopelessness and opportunity where there was none. The barriers to a life of wellbeing, increased wealth and life expectancy are broken by the universal engagement afforded through our education system. Even the opportunity of a minimal education can and has in the lives of many, including the rich and famous alike, ignited the fulfilment of astonishing stories—stories of overcoming deprivation, disadvantage and disability to achieve merited acclaim.

We in this House and we as a nation cannot know, nor can we tell, which students will claim a mantle of success or who will turn a dream into a reality. But there is one thing we can do: we can give each child in our care the basic opportunity to reach their full potential and, in turn, become a gift to this nation. And so I turn to a negative action of the government. I am perplexed and surprised that the Minister for the Environment, Heritage and the Arts, Mr Garrett, has axed the Australian National Academy of Music in Melbourne, removing its funding. It is one of our centres of excellence. Once the Australian National Academy of Music is gone, it is suggested, there will be nowhere for Australian elite musicians to go except overseas—away from this country.

Labor’s decision to axe this funding demonstrates that the Rudd government has no commitment to an elite training institution for classical musicians. It is not distanced from us ordinary members of the public, who will never reach these great heights in a particular field. But we believe that, through our taxes, we can invest in people with amazing talent. Money is being thrown around like confetti by this government at the moment—in my humble opinion, in many areas it is being thrown in the right direction to support people who need support right now and to support organisations that need support—and very difficult decisions have been made. But why, for $2½ million, would you have a crack at a group like this? I can tell you one thing: we would not do it to a sports academy in this country. Shadow minister Steven Ciobo said, ‘Whether they are elite sportspeople or first-class musicians, Australia’s best and brightest deserve an academy of excellence in which to pursue their passion.’

Bob Debus (Macquarie, Australian Labor Party, Minister for Home Affairs) Share this | Link to this | Hansard source

He’s not taking the money away, you know. He’s just rearranging things.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

He is rearranging them out of the area—that is what he is doing. In their first budget, Labor cut funding to both Chamber Music Australia and the Australia on the World Stage program. There is also funding for the Regional Arts Fund. I will interrupt myself here to say, with regard to that interjection, that it is not a matter of just rearranging the funds if you are removing a service from a particular area, which is the outcome of what is happening here. Whether it is an attack on Victoria or whether there is something behind this that I do not know about and that Mr Garrett has yet to explain I do not know, but what I do know is that there are as many on the government side who are discomfited about this issue as there are on this side of the House. So, when ministers or those at the table decide to interject, let us be reasonable and fair about exactly what is happening here. I have been in this place in opposition before today; I have been here in government. I know there can be a dyspeptic relationship between the backbench and the frontbench and those in between. The frontbench can become vastly distanced from the backbench. It is up to both sides’ frontbenches to listen to their backbenches, and I think that, if Mr Garrett spent a bit of time with his backbench, he would find that this $2½ million could be best rearranged and reafforded back to this centre of excellence. They have already cut funding to both Chamber Music Australia and the Australia on the World Stage program. The Regional Arts Fund has been reduced from $16.4 million to just $11.7 million, and in this process we are losing our best.

If you want to talk about losing one of our best programs—I appeal to the frontbench and backbench of the Labor Party on this—then one of the great programs that the Howard government put in place was Investing in Our Schools. I know the current Labor government will say: ‘Look, you were only propping up the states. That’s all you were doing. You were propping up the states who were failing in their processes to fund education properly.’ The Investing in Our Schools Program in McMillan was the best thing that happened to schools in my electorate. Did we make some mistakes? I am sure we did. I am sure there were some schools that were funded and then closed and that a few things went wrong. But basically we took away that burden from parents and school communities to have to raise those funds for the shadecloths and the playgrounds and all those wonderful refurbishments they did at their schools—especially our small country schools.

I come from a rural electorate. The member for Gippsland is in the room and he would know exactly what was provided in Gippsland and in McMillan and the benefit to all of those communities. Everywhere I go, principals are still saying to me: ‘What a great program. I’d love you to come along and have a look at what we’ve done. Have a look at the other money we included to go along with Investing in Our Schools money. It’s a great program.’ The member for Makin may smile, because he is getting the benefit at all of his schools, and it was provided by the Howard government. Go and talk to your schools about the Investing in Our Schools Program and you will find that the benefit to them was not about politics; it was a great opportunity for this government to invest in our children.

I have just been to the opening of the drill hall at Korumburra. The government now has the infrastructure fund, and $200,000 was put into refurbishment of the drill hall. It was promised by the former member for Gippsland, Peter McGauran, and was delivered by the current member for McMillan, Russell Broadbent, but it came from the infrastructure fund. Fifty thousand dollars would finish that drill hall, yet so far the government has not announced one program to which these great people in Korumburra could apply to just finish the kitchen and the meeting rooms in the drill hall. It is a fantastic program. A lot of community work and effort, as well as a lot of in-kind contribution, has gone into that drill hall. It was a great opening the other night. I enjoyed having the first dance with Jennie Deane on the drill hall floor. The Victoria Police Band was there for the opening. It was a gala event for Korumburra, and it was a great investment. I would encourage the government to look closely at how it is going to fund local organisations. I know we have a national crisis on our hands with regard to the finances of this nation. At the same time, the outlays that can help small communities like Korumburra if we invest, say, another $50,000 will make a lot of difference.

I want to address the funding for coordinators of Landcare. Most of them are volunteers. An army of volunteer labour is slowly dissipating. We are losing talented and knowledgeable people because of the lack of money to coordinate this program. It is a most effective and worthwhile program; it is very cheap to run and the results far outweigh the costs. One of the great stories of the Howard government was its investment in the environment through all of the Landcare providers. I have been on a tour just of parts of my electorate where you see magnificent work done. I am sure there is not a member in this House who does not have a good story about Landcare. I think it is something in which the government needs to invest. One of my pets is that one day there will be no ocean outfalls and that one day our investment in trees will continue. We need to regreen this nation. We need to regreen the southern part of the nation.

Regarding the provision of adequate broadband, the lack of government progress on this is causing hardship across a lot of country areas—around rural areas especially. Parts are not serviced by cable or ADSL and still rely on dial-up. It is totally outmoded, and in the most extreme circumstances their only option is to go for satellite, which is subsidised by the government. That was an initiative of the previous government. Even that is suffering, with providers having issues themselves.

Health and ageing is very important. With the financial crisis, there is the deposit guarantee for the holding of bonds of amounts over $1 million. That amount of money is held by aged-care facilities on behalf of their clients. In most cases they will now attract the charge that will come for the prudential arrangements that the government is putting in place—the charge on amounts of funds held over $1 million. This needs to be looked at. Perhaps they can be corralled or provisioned elsewhere. Aged-care homes, even the smallest, would often hold over $1 million in aged-care bonds, so the government needs to look closely at that area and the effect that will have on small, not-for-profit aged-care facilities. We have received an answer back, but there is really no answer as to how the government will respond to that issue.

Pensions are on the long-term agenda. We need to cover the confusion as to when pensioners will get a rise in their pensions. The Rudd government has instead provided for a $4.8 billion one-off payment to the four million pensioners, carers and seniors, and yet a headline in the Age today was about the financial crisis hitting by Christmas. I do not believe that most of these people will be spending this money; they will be paying off debt—they will be paying off accounts and bills that they have not been able to pay at this stage. So, whilst the package for pensioners is important, particularly across my electorate there have been some difficulties. This has been an issue. The day-to-day costs are probably the most difficult.

The May budget, as outlined by the member for Makin, turned out to be wrong on inflation and wrong on interest rates. We were not to know at that stage that we were about to be hit by a financial tsunami. That has hit and it grows. We have to remain positive because Australia was left with a very strong economy by the Howard government. Mr Deputy Speaker Bevis, I want to leave you with this: without the fiscal responsibility of the Howard government, we would not be in the position that Australia is in today in order to face up to the consequences of the financial meltdown.

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

The three bills before the House—the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008, the Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and the Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009deliver the $10.4 billion Economic Security Strategy that was announced by the Prime Minister and the Treasurer last month. The strategy is unashamedly aimed at trying to protect the Australian economy as far as is possible from the impact of the global financial crisis. The government is taking action to strengthen the Australian economy with five key measures contained within these bills. Firstly, there is $4.8 billion for an immediate down payment on long-term pension reform. Secondly, there is $3.9 billion in support payments for low- and middle-income families—the people who need that support the most. Thirdly, there is $1.5 billion in investment to help first home buyers purchase their first home. Fourthly, there is $187 million to create 56,000 new training places in 2008-09—a huge commitment. Finally, there is the acceleration of the implementation of the government’s three nation-building funds and the bringing forward of the commencement of investment in nation-building projects to 2009. That, on any measure, is a significant package of support for the Australian economy, designed to support jobs and economic growth.

The legislation that the House is debating goes to the first four elements of that particular strategy. The fiscal stimulus is clearly needed in these very difficult financial times to ensure that demand in the economy is sustained as strongly as possible. Even though the fundamentals of the Australian economy remain sound, it is inevitable that the loss of confidence and willingness to provide credit that has been caused by the global financial crisis will continue to impact on Australia.

It should be noted, particularly in response to some of the comments I heard from the member for McMillan only a moment ago, that the government is only able to provide this $10.4 billion injection because, in the preparation of the last budget in May, it reintroduced discipline to the budgetary process, whereas the former government had a very poor level of fiscal discipline with unsustainably strong growth in government expenditure. Difficult decisions were made. A $22 billion surplus was delivered in the May budget and it is only because of the hard work that took place in the development of that budget that we are now able to ensure that the government can provide this package in economic security.

The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 will deliver immediate and much needed financial support to pensioners, seniors—including self-funded retirees—people with disabilities, carers, veterans and families with dependent children. The scope and breadth of this package is unprecedented. The financial support to pensioners, carers and seniors is in the form of a $1,400 payment to singles and a $2,100 payment for couples. The payments will be delivered in early December, only several weeks away, easing some of the extra financial demands that occur at this time of year. It is worth noting that the payments to pensioners also constitute an immediate down payment on long-term pension reform, something that the previous government failed in 12 years to deliver. The payments to pensioners will also provide relief until more long-term measures are delivered next year.

In my own electorate of Charlton—and a number of other speakers have commented on the significance of this package to their own electorates, including some of the speakers opposite, who sound as if they oppose the package but welcome the payments—this package means that 25,000 pensioners will enjoy these one-off payments. I think that the member for McMillan, the previous speaker, said that the government was somehow shamed into making these payments and did nothing in the last budget. It is important to recall a couple of things. Firstly, the previous government failed in 12 years to engage in long-term pension reform. Various bonuses were paid but no structural improvements were made to the pension system. They did nothing. It is worth reflecting on the reasons why, after 12 years of the previous government, so many pensioners are doing it so tough. It is because the Liberal Party failed in government to deliver sufficient support for the pensioners in our community. That is the evidence; it is incontrovertible. The evidence is also that in the lead-up to and in the May budget this year this government did support pensioners with the payment of an additional bonus and also committed to a long-term pension review. I will say more about that in a moment.

It is indisputable that working families and other households are being squeezed by higher living costs and by the effects of the global financial crisis. The Economic Security Strategy and especially the social security bill will deliver relief to people. Unlike the previous government, we are committed to supporting working families and pensioners. Furthermore, unlike the opposition, we will, as I said a moment ago, undertake long-term reform of the pension which will be based on a sound analysis of the issues accompanied by rational, thought-out policy prescriptions.

The opposition’s attempts in this field in more recent months have been farcical. At any particular time, there were several different policy proposals flying about. The suggestion that a $30 increase in the pension was not funded and was discriminatory in how it was applied was purely a piece of political theatre. The government, in contrast, is doing the detailed work of looking at long-term pension reform. But the opposition’s policy was also incredibly divisive on the issue of the pension. The opposition’s proposal excluded two million carers, people with a disability and married pensioner couples—a ridiculous position to put forward. Under Labor’s Economic Security Strategy, over 5.2 million pensioners, carers and families will receive one-off payments. In contrast, the coalition’s pension proposal would have excluded over 4.3 million people in the categories that the government is making payments to. 5.2 million people are eligible for payments under our package; 4.3 million of those would be excluded by the coalition’s pension proposal.

Under the government’s package, for the first time the lump sum payments are being extended to include disability support pensioners. This neglected group of pensioners often face pressure as great as if not greater than other recipients of government support. It is lamentable in the extreme that disability support pensioners were ignored under the previous government on a consistent basis. The support for pensioners in this package is worth $4.8 billion and complements the $7.5 billion in support provided in the May budget. Since the election of this government in November last year, there has been no less than $12.3 billion in additional spending on pensioners, seniors and carers. That is extremely strong evidence of the commitment of this government and the values that it represents in supporting people most in need in the community.

Carers are not neglected in the package. People who receive the carer allowance will get a separate $1,000 payment for each eligible person cared for. Self-funded retirees in receipt of a seniors card will receive the $1,400 and $2,100 bonuses for the first time. The member for Moncrieff was carrying on in the chamber earlier on about the alleged exclusion of self-funded retirees from the government’s consideration. I would invite him and his colleagues to have a look at some of the details of the package, because self-funded retirees in receipt of the seniors card are eligible for the bonuses.

Families with dependent children will also be beneficiaries of the Economic Security Strategy package, and a payment of $1,000 will be made for each child who attracts family tax benefit part A. Again, in my own electorate of Charlton almost 12,000 families will be eligible for this important payment. We understand, of course, the financial strain that many working families are experiencing, and this will be of significant benefit. One woman who has three children rang my electorate office after the announcement of the package and her family is eligible under family tax benefit part A. Just imagine how important a $3,000 payment from government is for them and many others. The sociodemographic nature of my electorate means that many families will benefit from this payment in a significant way. The same $1,000 payment will be made for each dependent child who either attracts or receives youth allowance, Abstudy, living allowance or an education allowance under the Veterans’ Children Education Scheme or the Military Rehabilitation and Compensation Act Education and Training Scheme.

I turn to Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009, which is one of the bills before the House. The first appropriation bill seeks a total appropriation of $146 million, $117 million of which will be used to fund the 56,000 additional productivity job seeker places in this financial year. This funding is for training at certificate II, III and IV levels. In the next two years the government will fund an additional commitment of over $187 million to develop skills that Australian industry needs. I know from my own involvement in the defence industry just how absolutely necessary that investment by government is. This commitment doubles the number of productivity places from 57,000 places to 113,000 places this year alone and takes the government’s total investment in training places to more than $400 million since April this year. These, on any analysis, are very significant commitments made by the government to boost the level of training. With a slowing global economy, ensuring that job seekers have access to as much training as possible that is relevant to the labour market is essential to supporting employment.

These new places will help maintain the momentum we have begun in training since the government assumed office almost a year ago. Increasing productivity and investing in skills is also central, of course, to the government’s longer-term economic platform. Almost 1,000 job seekers that were referred to training by employment service providers have already changed jobs under a number of the initiatives taken by the government to date. Included in the 56,000 places are 10,000 places allocated as structural adjustment places. These places will be devoted to providing retraining opportunities and targeted support to displaced workers. This is a very important commitment at times of continuing structural adjustment in the economy as it is inevitable, perhaps, that some industries will come under more competitive pressure due to the global financial crisis than others. In these industries it is vital that any worker who may be displaced be offered as much support as is possible and practical to establish the skills to attain employment in other parts of the economy. The cumulative impact of this measure is to take the Labor government’s commitment to the Productivity Places Program to more than $2 billion in financial commitment, thereby creating a total of 700,000 new training places over the next five years.

Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009 is directed at the third measure in the Economic Security Strategy, which is the extension of the first home owner scheme. This bill will appropriate $1.2 billion to introduce the first home owners boost. The boost will double the $7,000 grant first home buyers receive when they purchase an established home. Importantly, the grant for first home buyers who purchase a newly constructed home will be $21,000. This boost will apply to the end of the financial year and it will implement and perform two vital functions. Firstly, it will increase the affordability of housing for first home buyers in the market. Secondly, it will support demand in the residential housing industry. This is extremely important because, as many members would be aware, the indicators in the housing market are that levels of investment in the development of new construction are under pressure as a result of the credit crisis. Whatever the government can do to support demand in this important sector of the economy is surely an important contribution. Again, although I gather it is welcomed by some of the members opposite—or those I have heard speaking on these bills—you would take from the tenor of the argument that there is somehow some regret about it or indeed some opposition to it.

These are extremely important measures in difficult times like this when credit for the business community is difficult to attain. To sustain investment in the residential construction industry, it is very important that the government provides this form of support. It is estimated that over 150,000 first home buyers will benefit from this scheme. It will be part of the Labor government’s broader initiatives to increase housing affordability, and the policy initiatives on that front continue to include a National Rental Affordability Scheme to build 50,000 new affordable rental properties, a Housing Affordability Fund to reduce the cost of bringing new homes to the market and the first home saver accounts to encourage young people to save for a new home. By the way, these are proving to be popular in the Hunter region, where a number of the mortgage providers and banks are marketing them quite strongly.

Housing affordability is an issue that affects a great number of Australians and yet again the previous government ignored this pressure. The Labor government is committed to reversing that policy neglect and making housing more affordable for Australians. Affordable housing should be considered a right in our community and it demands the attention of government. How you could be in government for 12 years, neglect the rising pressures in the housing market and on housing affordability, see housing rates under such pressure and vacancy rates in the rental sector so low and rents climbing and ignore that as a public policy matter for 12 years escapes me.

At the time the first home owners boost is introduced it will help overcome some of the subdued demand in the housing market. According to the Australian Bureau of Statistics, lending for housing has declined this year by 26 per cent compared to 2007. That is a very worrying figure. The housing market is particularly subdued in the eastern states and is having a significant impact on economic activity. I know that in my home state of New South Wales this is particularly the case.

The global financial crisis will impact on this issue by reducing confidence and by restricting credit available to homebuyers. The first home owners boost will help address this issue—as I have described—as will the decision by the government to support competition in mortgage lending by directing the Australian Office of Financial Management to invest in AAA rated Australian residential mortgage backed securities in two initial tranches of $2 billion each. The residential mortgage backed security market is an extremely important market in the domestic economy in terms of raising funds that assist mortgage providers to make available the lending for people to buy homes. Once that residential mortgage backed securities market comes under pressure, and as a result less credit is available for home lending, it is inevitable that there will be great downward pressure on the level of lending for housing. The initiative by the government to make available two tranches of $2 billion each is already having an effect in restoring confidence in that market and enabling the availability of credit for mortgage lending.

Only by acting in a whole-of-government manner can we overcome these challenges and maintain confidence in the Australian economy. That is relevant to the final measure in the government’s Economic Security Strategy because we must look overall at the measures being taken by the government. The final measure involves the acceleration of the implementation of the three nation-building funds announced in the budget. This will bring forward the commencement of investment in a number of nation-building projects to 2009. At the moment ministers of the government are bringing forward their interim infrastructure reports so that work can commence in 2009 on projects in education and research; health and hospitals; and transport and communications. These nation-building projects will have two purposes, one short term and one long term. In the short term the early commencement of these projects will provide a significant stimulus to the national economy. In the long term these important infrastructure projects will begin to reverse the decade-long neglect of investment in infrastructure that we saw under the previous government. They will help boost the productive potential of the economy and contribute to Australia’s international competitiveness. The societal impacts will also be significant. By reinvesting in hospitals, schools and higher education institutions we will help build the social fabric—the social infrastructure—of the nation. These projects will improve the quality of life of working families, and there can be no higher duty for a government than that.

In conclusion, the Economic Security Strategy will strengthen the economy in the face of the gravest global financial crisis since the Great Depression. It is naive to think that the present crisis can be limited to financial markets. The impact of the financial crisis is already being felt in the real economy, in diverse areas such as a loss of confidence, falling retirement incomes, declining commodity prices and restricted credit for business investment—it is a lengthening list. The Rudd government is acutely aware of the lessons of history. We know that strong, decisive action is required of governments in these circumstances. That is the commitment of this government. The opposition does not demonstrate any understanding of what needs to be done. The government intends getting on with the business.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

I welcome the opportunity to rise and speak on the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008, the Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 and the Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009. It is important to be relevant and to the point in this matter. The government has committed to a $10.4 billion stimulation of the economy. That is about half the forecast surplus of around $21 billion. I wonder what Treasury recommended about this whole package. For some reason, what they specifically recommended has not been broadcast yet. Perhaps when the Prime Minister decides to make himself accountable and make a prime ministerial statement on this matter in this place some clarity will emerge about the matter. But the Prime Minister’s view of accountability has all the clarity of a Beijing day of haze and smog.

Questions to the Prime Minister do not seem to be answered anymore in this place. Indeed, they are met with indignation that the Prime Minister’s personal infallibility should be challenged. It would appear that the Prime Minister’s view is, ‘How dare the opposition attempt to analyse government policy?’ as if that is not an integral part of the parliamentary system. So I ask: why do we call it question time when the Prime Minister does not answer the questions and resents that they are even asked? Why don’t we just move to the Channel 7 option and name the period from two o’clock each day in this place An Audience with the Prime Minister?

What this is all about is an unbridled arrogance and contempt for the institutions of this great democracy by the Prime Minister. Yet, although my comments are highly relevant so far, I will return to this one-off economic stimulation package. I know that $1,400 will be made available to a range of pensioners and to those on various types of payments. For those receiving the carers allowance, a payment of $1,000 will be made for each person cared for. A payment of $1,000 will be made for each dependent child who attracts family tax benefit part A, and there are other payments to specific areas as well. I do not think there is any doubt that these one-off payments will be welcomed by those who receive them. A lot of the money will flow into the economy and I imagine that retail sales for Christmas will be strong. I think, however, that it is a good time to try to buy Australian made products and to keep more of the money moving around our own economy.

I would also reiterate the point made by others that I hope this money is put to good, appropriate and, of course, legal use. By that I mean that I certainly hope that the TABs do not get a boost immediately after the payments are made. Also, I am sure that the Minister for Health and Ageing would join with me in hoping that alcohol sales do not rise more than is usually seen in the festive season. I would also like to think that drug dealers, those evil merchants of death, will not have a good week following these payments.

Consistent with my comments, I think the state governments should keep a careful watch on their lottery bodies to ensure that there is no Saturday, 13 December lotto superdraw—although, considering the dependence of states apart from Western Australia on gambling revenue, perhaps the states will encourage spending of these one-off payments through poker machines. Sadly, there are some people in this country who, unfortunately, hope they can win their way out of adverse situations by buying that lucky ticket.

Having pointed out some of the more negative effects that could come from this one-off outlay from the surplus, I would also state that it is always up to the individual what they spend their money on. Individual responsibility is, of course, always a Liberal Party tenet. Nevertheless, I will make some suggestions about what the money could be spent on. Parents could spend the money on their children—of course, on something which would be positive for the child. People could also pay off debt to help lighten the load of interest after these one-off payments are a distant memory. Pensioners could save the money so they do not have to go without the basics when that next big power or other bill comes in. But, as I said, my view remains that it is always up to the individual. Spend it or save it; if you spend it on goods and services, try to make it count for Australia. But, whatever you do, do not gamble it or spend it on drugs; just make it count in a good and positive way.

I have a personal view on these one-off payments. I think that lightening the load on Australians should have been achieved through tax cuts and reform of pensions and other payments. I reiterate that Treasury advice should have been followed on the amount that should be spent. Sadly, it appears that no modelling was done by Treasury, so the effects of the stimulus package—what impact it will have—remain a mystery in many ways. This is confusing when one considers that over 165 committees, reviews et cetera were set up to analyse policy, yet a decision of this magnitude was made without appropriate analysis of the outcomes.

I also think that the Reserve Bank and the government should have seen this coming. Interest rates should not have been increased by so much at the end of 2007 and earlier this year, when we were already talking about this. Let us face it: at the end of 2007 we were already hearing about the subprime crisis. I also think that the government should not have talked up inflation and named it as their priority target only for it to drop so fast right now. We do know why that was done, however. The Rudd government needed to attack the economic legacy of the Howard government. They needed something to help them rewrite history, something which they could use to persuade Australians that this country was on its knees economically.

The government now continues to gloss over all the hard work and economically responsible policies of the Howard government, which were required to eliminate the $96 billion debt left by the Keating government. This cannot happen overnight, despite all the fairytales spun by the government. The reality is that it was only through the regulatory reforms and the strong budget bottom line that the money was even available for this economic stimulus package.

Getting back to my point, in the name of political manoeuvring the Treasurer and the Prime Minister ended up encouraging the Reserve Bank of Australia to lift interest rates, which then slowed the economy and economic growth. The point is stark: it was a grievous error that highlights that the Rudd government is concerned with politicking before the national interest. Strangely, now even the Treasurer does not know the figure for inflation, ensuring it is buried in his notes so that even he cannot find it, let alone remember it.

Of course, if this were the only limitation the government had, it would be merely embarrassing, but I should mention the interesting circumstances around the Mid-Year Economic and Fiscal Outlook and the growth forecasts. I admit it was the subject of questions in this place in recent days, but the response remains the questionable part. I understand that the growth prediction by Treasury was two per cent. I also understand that the growth prediction from the Reserve Bank was 1.5 per cent. Isn’t that a big difference! The Treasurer noted on Tuesday that these figures are ‘broadly similar’; 0.5 per cent difference between the two leading professional government financial bodies in this country is not broadly similar but rather concerningly different.

Here is the point: apparently for the first time Treasury determined its growth figures by factoring in projected interest rate cuts. So now Treasury is making predictions of monetary policy movements and interest rates are going down. Of course, if it had not factored in those predictions, GDP growth would have been under two per cent. As factual and realistic as that would have been, there was a slight problem: a figure below two per cent would have been inconsistent with the Prime Minister’s response to a question on 15 October. Therefore, another question must be asked: why did the Treasury change the way it makes these assessments? Was it asked to? If so, by whom? The answer is probably obvious, as there is very clearly a motive for the government to direct Treasury to follow a new formula. The other questions are not so clear and are in need of answering. But I will leave that subject there, as I think we will have the answers on another day.

I will, however, move on to speak of another concern about this government’s credibility. I quote from Jennifer Hewett of the Australian, whose column yesterday stated, in respect of the government’s unlimited retail deposit guarantee, that it:

… went much further than almost all other countries despite the relative strength of the major Australian banks. It also caused immediate and massive dislocation …

She went on to say about the fee for deposits above $1 million that it will:

… not resolve the problems in the funds management industry, problems that have been greatly exacerbated by the Government’s “decisive” action.

I think her point is that, while the government may roll out its classic buzzword ‘decisive’, reckless haste is just recklessness that causes harm.

It is at this point that I share with the parliament my theory of why we have got to the point where, in trying to solve problems, the government have proceeded recklessly with either a disregard for the consequences or a blind ignorance of the risks. This is an obvious example of policy on the run. The way I see it is that it is actually Malcolm Turnbull’s fault. I know that the government are used to blaming us for everything, but in this case I think they can blame the Leader of the Opposition. Malcolm has been the cause of great frustration for the government. He has been a step ahead the whole time. He was right about the RBA not increasing interest rates early in the year. He was right about the level of bank deposit guarantees. It is important to realise that official interest rates have been reduced to stop a recession, not because the government has moved to reduce the inflation problem that the Treasurer said was out of control. Preventing a recession is more important to the RBA now than inflation. I think that the RBA made a serious error when they lifted interest rates late last year and early this year—and they now know it. But Malcolm was there first, and he was right.

With regard to the Treasurer, he is simply out of his depth, playing shortstop when he should be ‘left right out’. His continued blundering through this year has not instilled any confidence at all in the Australian economy. Indeed, just this week business confidence fell to yet another low. The problem with being a step ahead is that your opponents get frustrated and feel forced into extreme action as they try to catch up to you. It is a matter of the government trying to go that extra distance to achieve that extra point of definition from Malcolm Turnbull, and I think that is what has happened with these errors by the government. I think this whole business about the Prime Minister’s grandstanding to journalists regarding the conversation with President Bush is not about Malcolm Turnbull; it is about the need to stand out. In that way the Prime Minister’s character is predisposed towards frustration and making mistakes when he cannot keep up with Malcolm Turnbull’s ability and economic—

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order on relevance—

Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

I have been listening quite carefully and I was going to say at the conclusion of the member for Cowan’s speech that he has been extended a good deal of latitude from the chair. His opening comments were clearly not relevant to the bill. The Leader of the Opposition did take a point of order during question time—I think yesterday or the day before—requesting that he be referred to by his proper title, and the member for Cowan may want to take it on board as well. If it is going to be applied, it should be applied from both sides of the chamber. I think that the comments that the member for Cowan is now making are relevant enough to the bill. Had you taken a point of order in the opening couple of minutes, I would have agreed with the member for Bendigo.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. The overall point that I am trying to make here is that frustration, together with a will to comply with the buzzword ‘decisive’, has led this government to its repeated examples of reckless haste. The Prime Minister and his advisers even saw fit to introduce these measures without getting advice from the Treasury.

I will now return to the specifics of this economic stimulus package of $10.4 billion. Of course, this represents more than half the surplus spent in one-off payments. Let me turn to what is in it for the pensioners. In the electorate of Cowan there are over 10,700 age pensioners and about 3,500 disability support pensioners. I know that the $1,400 for single recipients and the $2,100 for couples will be very useful in the home budgets. Yet I note with incredulity that the Minister for Families, Housing, Community Services and Indigenous Affairs stood up yesterday in this place and spoke about how inclusive the $4.8 billion, which applies to pensioners, was of different pensioner and other categories. I found it incredible because before this economic stimulus package was announced the government was sticking to the line that no pensioner was going to get anything more until the next budget. It would seem that memories are very short in the ministerial wing. Yet it is good that the sustained pressure provided by the coalition has been successful, although what was really needed was an increase in the base rate of the pensions. This, however, is not part of this package. What was needed was a longer term solution, and I look forward to that occurring as soon as possible for the benefit of the pensioners in Cowan and in the rest of Australia. The base rate of the pension must be increased, and this is coalition policy.

With regard to dependent children, there will be $1,000 for those families on family tax benefit part A. I am sure that families will appreciate those one-off payments, yet it is again evidence of the short-term memory of the Treasurer, who in 2004 described lump sums as ‘irresponsible’ and ‘bad social policy’. Also, just last year, the now Minister for Housing said that the baby bonus should be paid fortnightly to take out the ‘jackpot effect’. The Treasurer also viewed such one-off payments as ‘not real money’. This is just another example of blatant hypocrisy. Perhaps it does validate the comments by the Minister for the Environment, Heritage and the Arts last year, when he said, ‘Once we get in we’ll change it all.’ What the Labor Party did not change, however, was their policy on hypocrisy.

Yet the fact remains that this appropriation of money will go through for 8 December. $4.8 billion will go to pensioners and $3.8 billion to families. I am certain that those eligible to receive these one-off payments will appreciate them and I reiterate that it is my hope that the money will be appropriately spent for the maximum benefit of the recipients and of this country.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

There is no doubt that the current economic circumstances that we find ourselves in are perhaps the most dire that the world has faced in 100 years—certainly since World War I or World War II—and require a global response and global action. They also require national action here in this country, and that is exactly what has taken place. The Rudd government has moved swiftly and decisively. I know that the opposition may not like to hear those words, but that is simply the case. The case is that we have moved swiftly, we have moved decisively and we have taken appropriate action to ensure that national confidence, the security that we all enjoy in terms of our position in the world of finance, is maintained.

Listening to a number of speakers on the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and the associated bills that are before us, it is interesting to note what their views are on these bills and the view of the opposition in terms of what is required. It becomes very clear to people listening, I think, that the opposition are taking a bet each way saying that they knew this was all going to happen, that they knew about the global financial crisis and that somehow the right honourable Leader of the Opposition, Malcolm Turnbull, knew about—

Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

Just ‘honourable’. I think that I am right when I say that there are no members of the House these days who are ‘right honourable’.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I was just trying to follow the lead of some of the opposition members. The reality is that the opposition are taking a bet each way. They are saying that, yes, pensioners do need support; yes, help is needed. But it is not enough, it is too late, it is of the wrong kind, they knew better or somehow they would have done a better job.

Even worse than that, they are saying that had they still been in government somehow all of this would have been averted because they would have seen it coming and they would have understood the circumstances and, in fact, that the current Leader of the Opposition actually predicted all of this. We just heard that moments ago from the member for Cowan. Nothing could be further from the reality, nothing could be further from the truth and certainly nothing could be further from the government’s commitment to trying to enhance people’s lives and to take some of the sting out of what is happening in the global financial crisis for the ordinary budgets of ordinary people trying to make a go of things.

Let me just detail some of what our package will deliver, and then I will have a look at what I think are just complaints at this stage, rather than comments, by opposition members about our package and the impact it will have. The bills before us will amend the social security law, the family assistance law, the Veterans’ Entitlements Act 1986 and the tax law to provide payments for pensioners, seniors, people with a disability, carers, veterans, and families with dependent children, as was announced by the government on 14 October this year. It is a key part of our $10.4 billion Economic Security Strategy, and I take umbrage at the comments by the opposition that ‘that is all it is’—that it is just $10.4 billion. The reality is that it is much, much more than that. It is not just this $10.4 billion; that is part of a package of more than $55 billion in terms of investing in and stabilising the economy and making sure we can work through what is a global financial problem.

The payments are strategically designed to have a particular impact in relation to the effects of the global financial crisis on ordinary Australians. The payments will be made very shortly, in the fortnight commencing on 8 December. No-one will need to actually put in a claim. The payments will not count as income for social security, family assistance or veterans affairs entitlements purposes, and they will of course be tax free. The bill will also include an administrative scheme to provide the capacity to make payments in circumstances where the regime does not necessarily produce an appropriate result.

Going to the detail of the Economic Security Strategy payment for pensioners, seniors, people with disabilities, carers and veterans, it is a substantial payment of $1,400 for single recipients or holders of one of the stipulated cards. For couples it will be a combined payment of $2,100 under the same conditions. For a couple where one has an entitlement and the other does not, it will be a single payment of just $1,050. The benefits and cards attracting the Economic Security Strategy payment are as follows: age pension, disability support pension, wife pension, widow B pension, service pensions, income support supplement, carer payment, partner allowance, widow allowance, bereavement allowance, parenting payments, special benefits, Austudy payments, Abstudy, Commonwealth seniors health card and veterans affairs gold card. For those on carer allowance there will also be a payment of $1,000, which will generally be made for each person who is cared for.

The reason I have gone to the trouble of listing all of those is, firstly, that it is important for people to understand who is eligible and who is not. I would say that at this stage people do understand whether or not they will be receiving a payment on 8 December. But I also wanted to make the point that it is an extensive package that covers a whole range of people who are in need. I will turn later to some of the comments by the opposition, but if we compare the number of people we cover in our package and what was called for by the opposition—an extra $30 for pensioners—which supposedly led to this package, we can see a huge difference, a massive gap. Under our Economic Security Strategy, more than 5.2 million pensioners, carers and families will receive one-off payments. Under the coalition’s proposal, which I am assuming they still stand by, more than 3.3 million of those pensioners, carers and families would have been given no financial relief whatsoever. I think that is a key point. The opposition tried to make a lot of hay while they believed their sun was shining, taking advantage of what is a global crisis and the impact it is having on ordinary families here to call for increases to pensions and so forth. We understood the hardship, but ours was not a knee-jerk reaction, as the opposition might have you believe. We actually took a considered and measured approach, with a forward strategy. It was not merely a one-off or just about certain pensioners; it included a whole suite of pensioners. We did not want people to be left out, because we understood that the pain was being shared across a whole range of people in receipt of pensions and other benefits and entitlements, unlike the coalition, who thought it was okay for one small slice of people to receive assistance while others completely missed out.

It is also interesting that coalition members have come in here and talked about the package as though it is just a one-off, saying, ‘How dare you as a government use a one-off payment?’ because we have been critical of one-off payments in the past. I would say that they really need to consider the circumstances of one-off payments. I think bonuses and one-off payments simply in the good times, when perhaps they are not so needed and you could be making structural changes and reforms and looking at the basics of the system to see how pensioners are provided for, are wrong in those circumstances. But in the circumstances we find ourselves in today, when there is a need for a boost and for an immediate injection of funds and capital into the economy, there is no better way than a direct one-off payment of a substantial size—as this package is substantial, with $10.4 billion specifically for what I am talking about here, for a broad range of areas. Then it is the right thing to do.

That is the big difference between what we have done—we have done it for the right reasons at the right time—and what the previous government did, which was basically politicking. What they did was give bonuses only before elections and time bonuses for election campaigns. They did not necessarily do it in times of need, because pensioners were certainly in need at that time. The better option at the time the coalition was in government would have been to do the structural reforms, make the necessary baseline changes to pensioner entitlements and measure those out over fortnightly payments to give people a real boost in their income, rather than just doling out cheques. When the coalition members come in here they ought to think a little bit more about just what it is that this package represents, rather than their short-term approach of one-off bonuses which were clearly—to use a better word—just inducements at a time when the money could have been better spent.

I am more than proud to be standing here saying that we are doing the right thing on a whole range of fronts, not only to deal with the impact the global financial crisis is having on ordinary people in Australia—pensioners and families—but with the timing of our bonus, the way it is delivered and the fact that it is a one-off strategic bonus. The Economic Security Strategy we are legislating today does not end here. It is not just about the one-off; it is actually about the reform. That is why we have the pension review on right now, because we believe that we need to do more. We cannot sustain a system by merely topping it up with one-offs. We have to do it properly and structurally, and that is what we have embarked on doing.

Strangely enough, we embarked on doing that very early on. Almost immediately on being elected we began the process of reform while coming under considerable pressure from the opposition, who thought they were very clever by putting pressure on us and whipping up a furore among pensioners about getting some more dollars. They never dealt with the issues at hand about how that would play out strategically in the long term, the structural reforms required or the proper way to deliver income for pensioners. Instead, they just whipped up a bit of a furore and fury out there with pensioners while at the same time ignoring the vast bulk, about 80 per cent, of them. The irony of what they were trying to do was to get in there, whip up the hysteria, promise them an extra $30 but then forget to tell them that 80 per cent of them would not get it.

That is not what we have done. We have actually tackled it on both those fronts: the long-term strategic review—how we improve the retirement incomes of ordinary Australians and how we improve the lot of families—while at the same time delivering an immediate cash bonus to deal with the global financial crisis that we find ourselves in. These payments are intended to provide additional support in the nine months between now and when long-term reforms are introduced from the beginning of the next financial year. We have taken that into consideration. The global financial crisis is placing increasing pressure on budgets already stretched by rising costs of living, and we will be delivering these specific payments to 5.2 million pensioners, carers and families.

We have not just stopped there, and I want to make particular mention of veterans because they are an important group of people. They are an important group of people in my electorate as they are in other electorates as well. I have talked to my veterans and they are certainly very pleased about what we as a government are doing and the way that we have been able to deal with those two interplaying issues of the long term and the immediate circumstances we find ourselves in. They will also benefit from the package that the Rudd Labor government has put forward. From 8 December, payments will be made to all service pensioners, including partner service pensioners; all war widows receiving income support supplement, all gold card holders, including war widows receiving seniors concessions; all those who are above the veteran age, males of 60 years and females of 58.5 years; all disability pensioners at 100 per cent or above who are over veteran pension age; Commonwealth seniors card holders; and a range of others I have already mentioned. We have taken into consideration that they are important people in this as well and we ought to be doing everything that we can for them.

I said at the beginning of my speech that the global financial crisis is probably the most significant upheaval in living memory. The government is taking very decisive action. Not only are we introducing the $10.4 billion Economic Security Strategy to at least tide us over—to bring people through this crisis and to keep the economy going—but we are doing much more than that. We have understood that you need to invest and to ensure that the economy continues to grow or that it slows at a slower rate. We are investing in infrastructure and jobs, and we are making sure that the infrastructure agenda does not fall off the table because times have gotten harder. That is the right course of action. At a time when we know unemployment will rise—it is happening around the world in every Western and developed economy—we cannot for a moment think that somehow we will be isolated from those circumstances. It is important for us to understand that we need to build the drivers of employment, we need to continue our massive infrastructure agenda and we need to work quickly, and that is what we are doing.

We are taking further steps. We recognised that, given the current global circumstances and uncertainty in markets, there was a range of other things that needed to be acted on, and acted on very quickly. One of these was guaranteeing people’s bank deposits. We do not shirk our responsibility in that area or walk away in any way from what we have done, because it was absolutely necessary. If you have a look at the banking sector, all those involved—even those who have not been advantaged as much as others in the measures that we have taken—are supportive because they understand the absolute necessity of what had to be done at that point. This is not a time for dilly-dallying around and waiting to see what happens. It might be okay for the all-seeing, all-prescient Leader of the Opposition who, as we heard from opposition members, knows all. We have one member of the opposition on the Hansard record as saying that the Leader of the Opposition knows all, saw everything, had a crystal ball where he saw everything and then it happened. Those were the words of one of the members of the opposition—it was a beautiful thing to listen to and absolutely incredible.

I have to take some umbrage with words that were spoken by members of the opposition, particularly the last speaker—that is, that in one way it was okay for pensioners to get this extra bonus but only if they spend it on good and legal things. He lectured that pensioners are not to spend it on Lotto, not to spend it on gambling and, particularly, not to spend it on ‘evil drugs’. It is an unbelievable circumstance to hear a member of the opposition coming in here—speaking on behalf of his leader, of course—and saying, ‘You pensioners are going to get some money from the government but don’t go spending it on those evil drugs.’ People would be well served by reading the Hansard to see the words that were said.

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

No, they wouldn’t.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

You are right; they probably would not be well served. It is sad that that is the view of the opposition today, because I can assure you that it was not the view of the opposition when they were in government. When they were in government they thought that, six weeks out from an election, handing out some $500 bonuses was a great idea or that, at consecutive elections or particular periods when the polls were not doing so well, handing out money was a really great idea. Given the circumstances we are in today and the things that we are picking up on after winning government late last year, I say that this package is not only absolutely necessary but absolutely right. It delivers for families and pensioners, and it delivers at the right time, in the right amount and for the right reasons. This is not just a matter of choice. We want to see long-term reform, and that is what we are embarking on. But at the same time you need to make sure that you tide people over through the Christmas period. We need to make sure that families and pensioners are looked after. We have taken on that responsibility. We are in government. We are not going to blame anyone else for the situation and circumstances we find ourselves in as a national economy, but we will make the tough decisions and make the right decisions. (Time expired)

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to provide some very reserved support for the government’s Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and related bills, though I maintain grave reservations concerning the assumptions, the research and the modelling that this package was based on, if indeed it was based on anything. We took the government on trust with the bank guarantee, and we found that this government’s trust is based on shifting and moving quicksand. The last few months have shown that this government is incapable of not making things worse. Thus, whilst reserved support is given, as this is what the nation is looking for, it is done with grave reservations.

If you look back at history it will show the way to the future. In 1996 the Howard government inherited an absolute nightmare. We inherited $96 billion in debt from the previous Labor government—$8 billion in per annum interest payments and a hole of over $60 billion in unfunded liabilities for military and public sector super. We saw unemployment at high rates, and we saw hopelessness endemic. Even the then Minister for Finance, Kim Beazley, said that the budget was balanced when the fact was that it was $10 billion in deficit. The coalition inherited deceit, mismanagement, waste and an economic basket case that would have seen public company directors facing significant penalties. Our response to that level of deceit was acts of parliament like the Charter of Budget Honesty, which requires books to be opened, election promises to be scrutinised and costed, and a mid-year economic and fiscal outlook to be provided.

Twelve years on from that 1996 election, the world-proclaimed economic miracle of the Australian economy under the Howard-Costello years has seen all of those perverse excesses of the Labor government swept away. In November last year, the new federal government, the Rudd government, inherited a great economy. It was debt free. Successive surpluses had been delivered, unemployment lowered to four per cent, over $60 billion in super liabilities catered for and the deceit and the financial cover-ups dispensed with through legislative requirements for disclosure. Furthermore, the strengthening of the independence of the Reserve Bank, the creation of the Australian Prudential Regulation Authority, APRA, in 1998 and the strengthening of ASIC have all ensured that our regulatory environment has coped well with the current global financial crisis. Our banks are sound, though the financial market has been distorted by the Rudd government’s knee-jerk unlimited financial guarantee. Our companies remain profitable and, thankfully, our federal government is, for the time being, debt free and able to deal with issues as they arise.

This government was left a surplus in the 2007-08 year of $18 billion that allowed it quite easily to generate what was a $22 billion surplus for the 2008-09 year. Yet the Rudd government has made a series of errors in response to the global financial crisis that now sees the surplus reduced by over 75 per cent to just over $5 billion, and it appears that, within 18 months, the budget may well be in deficit again. It took the coalition 11½ years to pay off Labor’s debt, get budget surpluses in place and get the government to start saving. It appears that this typical Labor government will reverse it all and put the nation in debt in a little over two years. Warnings about the growing crisis were made from mid-2007 but the new Rudd government ignored these. The former Treasurer, the member for Higgins, warned that the impact of the subprime loan crisis was the main game. He knew, as did many other economic commentators, that even in 2006 up to 25 per cent of the $2 trillion loaned in the United States for people to buy houses was loaned to those with no income, no jobs and no assets. They were NINJA loans. This was always going to come home to roost. You cannot lower interest rates in the States between 2000 and 2003 from six per cent to less than one per cent without having adverse consequences. Yet the Prime Minister and the Treasurer, rather than focusing on the future and looking at this financial tsunami that was cresting the horizon, decided to blatantly attack the economic legacy of the Howard government, claiming emphatically that inflation was out of control. In fact, the Treasurer claimed that the inflation genie was out of the bottle. The Prime Minister backed it up by saying that the inflation monster was wreaking damage across the economy. Clearly this put pressure on the Reserve Bank to raise interest rates at a time when other comparable nations were reducing interest rates because of the concern of the growing financial crisis. In the May budget, whilst other comparable nations were increasing spending and reducing taxes, what did this Treasurer do? He increased tax by $19 billion and cut spending to critical economic institutions like APRA and the Australian Bureau of Statistics. History will judge this Labor government harshly.

On the economic stimulus package, on Tuesday, 14 October the Prime Minister and the Treasurer announced a package of spending totalling $10.4 billion, with $9.65 billion to be spent in the current financial year and the rest in the next financial year. There is $4.8 billion for pensioners, carers, seniors health card holders and veterans; $3.9 billion for families; $1.5 billion for first home buyers; and $187 million for training. This package represented half the forecast budget surplus, yet incredibly the Prime Minister and the Treasurer have admitted after persistent questioning that the government announced this package without any economic analysis from Treasury. There was no modelling, no analysis, no regulatory impact statement and no substantial research on whether this input into the economy would actually meet the stated requirement of stimulating consumption. Indeed, Secretary to the Treasury Ken Henry, when questioned at the National Press Club less than an hour ago about what the likelihood was of people receiving this money and not spending it, indicated that that would most certainly be the case in some areas. Half the forecast surplus has been spent without any modelling, any research or any knowledge of the impact. Ten billion dollars has been spent without any idea of its impact.

The government tell us to take them on faith—to trust them. Well, let us have a look at the basis of this trust and faith. We have a Prime Minister who will not accept any scrutiny of decisions. During the censure motion yesterday he did not even have the courage to stand up at the dispatch box and speak for himself, sending the Minister for Foreign Affairs in his stead. We have a Treasurer who took over two minutes to tell the media what the forecast inflation rate was. Inflation a few months ago was apparently the almighty wrecking monster, the all-powerful menacing genie and the leviathan of the deep. Now it barely rates a mention. In the Treasurer’s case, he could not even remember the core inflation rate. That is like a doctor walking into the operating theatre and saying: ‘I’ve forgotten where the heart is. Scrub nurse, can you let me know what side of the body it’s on?’ and then all of us having to wait two minutes while he figures it out. We have a Prime Minister who cannot even keep confidences when speaking to world leaders and instead lets his ego run riot.

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order on relevance. The member is straying from the text of these particular bills. He has either brought the wrong speech in or is deliberately getting away from the topic. I urge you to bring him back to the text of the bills.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

This is a wide-ranging debate. There has been some accommodation for people in this place over many years to broaden their comments. I ask the member for Fadden to make sure he continues his speech in the context of the bills before the House.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. The government have no modelling, no analysis and no research on $10.4 billion worth of expenditure. They are asking this nation to take them on trust. I am simply pointing out why you cannot trust this Treasurer and this Prime Minister. This Treasurer changes his mind daily. On Wednesday three weeks ago he indicated that a deposit tax would be compulsory over $1 million. The next day he changed his mind and Friday he changed it again. We have a PM that unconditionally guarantees deposits without any modelling, research or analysis, causing 13 of the 20 top cash and property management trusts to freeze redemptions. That has left something like 200,000 Australians without access to their money. And the member for Oxley has the hide, the audacity and the blatant effrontery to walk into this House and say that all Australians are happy with the unconditional guarantee and that even those who it does not affect are happy! Perhaps the member for Oxley should speak to the 200,000 Australians who have redemptions frozen and ask whether they are happy. We have a Treasurer who changed his mind three times regarding covered or naked sells. The trouble with his policy position caused the stock market to delay opening by an hour as the position was worked out. If this is the basis upon which we are called to trust the Prime Minister and Treasurer, forgive me if I do not share that trust.

Labor have always contended that one-off payments are somehow evil, yet here they are spending $8.7 billion on one-off cash payments. Let’s look at their history. Minister Macklin said in 2004 that her No. 1 concern about the baby bonus was that it was being paid as a lump sum. The member for Sydney said in 2007 that the baby bonus should have been paid fortnightly to take out the jackpot effect. The Treasurer called the Howard government’s one-off child payment in 2004 shovelling out cash as an election bribe and said that the lump sum was irresponsible. In 2004 the current Treasurer said that the baby bonus being paid as a lump sum represented bad social policy. On the ABC’s Insiders on 27 June 2004 the now Treasurer made Labor’s disdain for one-off payments clear:

BARRIE CASSIDY: You have a problem clearly with these family allowances and the maternity payments being paid out in a lump sum?

WAYNE SWAN: We certainly do. It’s simply dishonest and irresponsible for the Federal Government to be making lump-sum payments.

I can only assume the Treasurer has had something of an epiphany with respect to lump sum payments. Then there is the more infamous example of the Treasurer denying the Howard government’s family lump sums were being paid, even as they were going into bank accounts. According to Mark Latham’s diary, the now Treasurer was asked how Labor would explain its desire to abolish the payment. His infamous response was simply, ‘Just say that it’s not real money.’ Why not give him a red nose, a funny wig and a funny hat while we are at it! This government is out of its depth. It is drowning and it has shown in the lead-up to the bill through its bank guarantee and the Mid-Year Economic and Fiscal Outlook that it is clearly not up to the job.

Let us focus on this bank guarantee to get a clear view of the moribund decision-making process of this government. It was announced mid-year that it would introduce a government guarantee to cover deposits up to $20,000. On Friday, 10 October, the coalition called on the Rudd government to increase that guarantee to a minimum of $100,000 in response to reports of deposits being moved from second-tier banks, building societies and credit unions to the big four banks. Not to be outdone, though, on 12 October our Prime Minister announced the introduction of an uncapped guarantee for all deposits in Australian banks, building societies and credit unions and in Australian subsidiaries of foreign banks and for wholesale term funding.

The Prime Minister said he had sought the advice of our financial regulators. However, through detailed questioning we later found out the Prime Minister had in fact not received direct advice from the regulator responsible for Australia’s banking system, the Governor of the Reserve Bank. During question time the Prime Minister revealed that the Governor of the Reserve Bank and the head of APRA were not even in the room when the decision was made.

Clearly, this decision has created turmoil within the Australian financial system. Tens of thousands of Australians have had billions of dollars frozen in savings and investment funds, and funds have flooded into the major four banks, straining the market for commercial funding. Major providers of credit to car retailers, such as GE, have withdrawn from the Australian market due to problems accessing commercial funding. The Chief Executive of the Motor Traders Association of New South Wales has said that 40 per cent of all car dealers may go to the wall by Christmas with 30,000 jobs lost if this government does not take action to support the market. Westpac CEO Gail Kelly has called on the government to place a cap of $100,000 on the deposit guarantee.

If we look to the Mid-Year Economic and Fiscal Outlook, the coalition has been calling on the government to release current economic forecasts for more than a month. The Treasurer released the Mid-Year Economic and Fiscal Outlook, the MYEFO, on the day of the United States election. Why would you release the MYEFO on the day of the US election? I look at the member for Eden-Monaro. Why would a government do that? For one reason and for one reason only—to hide it from the Australian people because the evidence of the government’s bungled handling of the economy was so clear to be seen by all. MYEFO revealed there has been a dramatic turnaround in the figures that this government inherited when it came to office in November. At that time all the economic indicators were heading in the right direction, courtesy of the coalition legacy. But now they are heading in the wrong direction, courtesy of the management, leadership and lack of confidence generated by the Rudd government.

The MYEFO has reduced the surplus to a little over $5 billion whereas many commentators and big bankers, as reported in the media, believe the budget may well be in deficit now. Considering the smoke and mirrors in the budget and in the MYEFO, it is fairly hard to disagree. The budget in May for the first time included second round effects, adding an extra $2 billion of income as a second round effect of income due to immigration. If that immigration does not come off, the second round of income will not either. The tax on alcopops will not deliver the targets as, clearly, young people are changing to harder spirits.

The capital gains receipts and company tax receipts will be substantially less. This is backed up by the most recent National Australia Bank index of business confidence, which shows that confidence has hit a new low of negative 29 after a record fall of 21 points in October. The monthly survey has found trading conditions and profits were down in the month and employers are laying off staff. NAB’s chief economist, Alan Oster, says that forward orders are at 1991 levels—and 1991, as we all know, was that great Labor recession that the member for Solomon knows was the recession ‘we had to have’. NAB’s chief economist went on to say:

Forward orders has a long history of being a really good indicator of where we’re going forward and they were at levels that were really surprising …

He says the survey’s readings point to more sharp slowing in the economy. He said:

The mind set very much is they’re scared there’s a recession and when they look at their forward orders they see very sharp deteriorations and that makes them feel even more nervous.

The MYEFO also for the first time changed the way that growth is calculated. As the Secretary of the Treasury said an hour and a half ago at the Press Club, for the first time in living memory they changed the way they take into account potential interest rate cuts. The MYEFO states on page 29:

Interest rates are expected to decline broadly in line with market expectations. This is a departure from the usual assumption of unchanged interest rates …

So this led to the government showing a growth forecast of two per cent, yet the Reserve Bank is saying 1.5 per cent. And the National Australia Bank has not changed its economic forecasts and is still predicting the economy to expand by only 1.25 per cent next year. Furthermore, the Treasurer told Sky News:

There is a difference in terms of the Reserve Bank and the Treasury forecasts because the Treasury forecast does take into account the loosening of monetary policy.

The Rudd Labor government has got to level with the Australian people. It has to stop changing the boundaries and the smoke and mirrors of budgets and MYEFO forecasts. It has to level with the Australian people with its assumptions, with its modelling and with how it is basing its figures. The Australian people deserve to know exactly how the government is reaching and arriving at its decisions, and they deserve to know the direction this government is taking rather than knee-jerk decisions being made on the spur of the moment.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

In the little time available to me I would like people in this House to know that the mob on the other side say they support the stimulus package, this package that will bring relief to Australian people and their families. They do not believe it. They are living in the past. They are going down memory lane, and I have news for them: the Australian people do not support you and will not support you. I hope to return to continue my speech.

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

Order! It being 2 pm, the debate is interrupted. The debate will resume at a later hour this day when the honourable member for Braddon will have a chance to complete his remarks.