Kerry Rea (Bonner, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister please outline the government’s continued response to the impact of the global financial crisis?

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

I thank the honourable member for Bonner for her question. It goes to the national accounts and it goes to important data for the future direction of the national economy. As the Treasurer outlined in his answer to the House before, the Australian economy grew by 0.1 per cent in the September quarter and 1.9 per cent through the year. It is important in the midst of a global financial crisis to place this performance in context. That is, if we look at that figure of 1.9 per cent growth across the year, it demonstrates that the Australian economy grew more rapidly than any of the G7 major economies. I draw the attention of honourable members to these facts: the US grew by 0.7 per cent through the year to September; Japan grew by zero per cent in the year to September; Germany grew by 0.8 per cent; France grew by 0.6 per cent; the UK grew by 0.3; Italy grew by minus 0.9; and Canada grew by 0.5.

If you also go to the current state of economies generally around the world, you find that, while this economy in difficult global circumstances has continued to generate positive growth despite the challenges, we have a large number of economies around the world which have already fallen into recession: the United States, Japan, Germany, Italy, Sweden, Singapore, Hong Kong and New Zealand. Beyond that again, if you were to add those economies which have generated negative growth in the September quarter, you would see that occurring not only in the US, the UK, Germany, Italy and Japan but also in other economies. In fact, a large number of economies in addition to those have had at least one-quarter of economic growth registering negative during the course of the most recent period, including the economies of France and Canada.

The reason I draw attention to these figures is to put in context the performance of the Australian economy at a difficult time. We have a huge contraction in global economic growth across the world on the back of an unfolding global economic recession and the Australian economy is still managing to generate positive economic growth. I would say, however, that the challenge which lies ahead will be difficult for the Australian economy, because the roll-on impact of contracting economic growth around the world on real growth and jobs growth in Australia will be very difficult in the year which lies ahead.

I would also draw the attention of honourable members to recent statements by the President of China, Hu Jintao, about the challenges that they are now facing with a slowing of growth within the Chinese economy. We have noted carefully in this House before the statement of economic stimulus delivered by the Chinese government a month or so ago, but it becomes plain that China will continue to do more by way of monetary policy and other measures to continue to support growth into the future.

The member for Bonner also asked the question: what is the government doing to respond to the challenges which arise from the most recent national accounts data? It is simply this: the government’s strategy for the future will be to continue to rely on fiscal policy operating in harmony with monetary policy. Through fiscal policy we have delivered a $10.4 billion stimulus package, referred to by the Treasurer. But beyond that we have also delivered our support to local government, our support to the car industry and, through our $15.1 billion package, our support to the states—necessary for reform but also providing stimulus on the way through. If you aggregate these numbers, it is worth while considering the dimensions. That aggregates to about $32 billion. That equates to some three per cent of GDP.

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

Over how many years—20 years?

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

Plainly not all of that is delivered in one financial year but, for the period ahead, I would draw to the attention of honourable members, including to the most voluminous interventions by the member for North Sydney, that for the year ahead we are looking at about $15 billion, or a figure approaching that, in terms of additional injection. If you take the Economic Security Strategy stimulus package announced in October, together with the one-year tranche of funding coming out of the COAG funding arrangements agreed last Saturday here in Canberra, this is necessary stimulus to be ahead of the curve for the challenges which we face for the period ahead.

I say to those opposite that the reason the government acted when it did—not just in providing guarantees to bank deposits and not just in delivering the economic stimulus strategy, which has been so robustly attacked by many members opposite, but also in continuing with our funding of reform programs with the states and territories—was to provide necessary stimulus in what will be a very difficult year, 2009. We did it to provide that additional one to 1.5 per cent of GDP injection into the economy—necessary action—on top of the now 300 basis point reduction in interest rates we have seen by the Reserve Bank over recent months. Of course, the bulk of those Reserve Bank interest rate cuts, together with the stimulus packages that we have announced, do not come into effect for some time, but we believe this is a necessary course of action to prepare for the difficulties which lie ahead.

I say to the House and to the opposition that the government’s strategy on stimulating the Australian economy and providing support for families and jobs ahead is clear cut. It is based on the national interest. I urge those opposite, rather than act consistently in their own political self-interest, to on a bipartisan basis get behind the measures which the government has embraced. It is the right course for the nation. It is what we need in what will be a very difficult year in 2009, when our growth numbers, employment growth and unemployment will be challenged and under severe duress.