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

I have received a letter from the honourable member for North Sydney proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government’s determination to drive the Budget into a structural deficit and long-term debt

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

I note that the Prime Minister extended the length of question time just then in order to avoid further scrutiny over the next few days about the details of his package. The interesting thing is that we had at least another 30 questions that people were prepared to ask on the details of the package and the bills which we received today. Forty-two billion dollars is asked of the Australian people, and the Labor Party is scurrying out of the chamber after delivering these bills to us today.

The bill that is most alarming is not one of the appropriation bills—even though we are going to vote against them; it is the Commonwealth Inscribed Stock Amendment Bill 2009. The bill itself is less than one page. But that one page is perhaps the most deadly page to the Australian economy and to future generations of Australians that we have ever seen in economic terms, because that one page says that this Commonwealth government can increase the size of its credit card from $75 billion to $200 billion. I did not hear that in the Prime Minister’s speech yesterday. I did not hear it in the press conference. I did not get any early warning about this. But the Minister for Finance and Deregulation introduced this bill this morning to increase the credit card limit of the Commonwealth from $75 billion to $200 billion.

‘Take it or leave it,’ they said. They said: ‘You have to pass this bill. This bill must be passed by the House of Representatives today.’ Even as now scheduled the House of Representatives will sit until at least 10.30 tomorrow morning, because every one of my colleagues will use their right to have a say. The government can threaten the gag at two o’clock or three o’clock or four o’clock in the morning, as they have said they are going to, but we are standing on a matter of principle. It comes down to this one-page bill, which says that the Australian government is prepared to borrow up to $200 billion and wants 24-hour approval from this parliament, without detailed explanation for that massive borrowing binge.

Why $200 billion? That is the first time we have seen a figure of that scale anywhere in the papers or even in this UEFO, the Updated Economic and Fiscal Outlook, copies of which not all members of parliament were able to receive because it was not widely circulated yesterday. The interesting thing is that it does not say anything in here about borrowing $200 billion, but the legislation does. The legislation that we have to pass today and the Senate has to pass tomorrow says ‘borrow $200 billion’. If the government is expecting there to be a default for financial institutions associated with any of its guarantees, it should say so. I have no reason to believe that that is the case. If the government believes that there are going to be some other defaults that will require it to provide emergency funding either to corporates or financial institutions, then they should advise us—if not publicly, then privately.

If they believe, as I suspect is the case, that state governments will continue to have problems raising money in financial markets and that indeed the Commonwealth needs to start issuing bonds to raise money to pay for the states, then they should come clean with the Australian people and certainly they should tell us. Today, question No. 1 from the Leader of the Opposition to the Prime Minister, was: why on earth does this government need to increase the credit card limit of Australia to $200 billion from $75 billion today? And the $75 billion today is not even issued. Even if we are in the debt markets—which we are, even though the previous coalition government paid off government debt—the reason we stayed in those debt markets was to keep some liquidity in the markets and to have a yield curve that would provide some guidance and stability in the markets. That is why we still issue bonds.

The interesting thing is that we did not have $75 billion on issue and we certainly do not understand why this government wants to have a borrowing capacity of $200 billion. The interesting thing is that when you look historically at the underlying cash balance of the Commonwealth as a percentage of GDP—and, naturally enough, the government issues bonds to pay for its deficits—you would say to yourself, ‘Well, of course there are various times when it exceeded the levels that are in the projections contained in UEFO.’ In fact, the Commonwealth has from time to time, particularly under the Whitlam government, gone to 3½ or four per cent of GDP. The largest one, on scant reading, was 1992-93 under Paul Keating when we went to 4.1 per cent of GDP as a deficit.

But in the main economic parameters revealed in the Updated Economic and Fiscal Outlook you can see the government says that in 2009-10 its forecast is for three-quarters of one per cent growth in GDP, and then it is going to go to three per cent the following year and three per cent the year after. I will tell you what: you will want to strap in in 2009-10 for the joyous ride of a massive acceleration in GDP growth! Do you know what? The government is going to have a significant deficit, not just in 2010 but in 2011 as well, which is completely at odds—as the shadow Treasurer said—with its so-called plan to put the budget back into surplus when the economy gets to its average growth rates.

Do you know what the interesting thing is, Madam Deputy Speaker? These figures—particularly projected revenue—are ambitious. The information that I have been able to obtain is scant. It includes the 45-minute briefing from the Treasury for the Leader of the Opposition and the shadow Treasurer—and I might say it was not even from the top officials at Treasury—during which they could not give us the answers to the questions that we were asking—for example, about a $50 billion drop in corporate taxes over the next few years. What is the assumption about the profitability of corporates over the next few years? They could not give us the answer, but do you know what it is, Madam Deputy Speaker? The government’s projections assume that corporates in Australia over the next few years are going to be, on average, more profitable than they have been over the term average of Australian economic history. So they are saying corporates are going to continue to have above-average profits while the Australian economy drops, while unemployment goes to seven per cent, while the terms of trade collapse. They are still projecting in their revenue estimates that corporate tax, which is probably the most volatile of the taxes in terms of estimated revenue—and I think the Minister for Finance and Deregulation would agree—is going to be above average. Go figure.

And do you know what? Under the scenarios that all the economists and global experts are talking about, every dollar spent today may well have a value of $1.50 at a later date. If it is well spent, if it is targeted, it will provide the stimulus to create real and sustainable jobs when there is confidence. When you see economic projections such as these—which are ambitious, if not extremely optimistic—you say to yourself, ‘These guys are not being fair dinkum with the Australian people.’ And yet the government come into this place and they say to us: ‘Approve a credit card limit of $200 billion. Approve immediately the biggest fiscal stimulus in memory, of $42 billion. Approve it now, without question, without demur—and, by the way, we are telling you the whole story.’ Well, they are not telling us the whole story.

I want them to come clean about their fears about the current account deficit. I want them to tell the truth about the great risk that the overseas purchasers of all our minerals and energy are going to default on their contracts. I want them to be fair dinkum with the Australian people. The Prime Minister said last year that he rang up the President of China and got an assurance that China would continue to buy all of our minerals and energy. They gave him an assurance that they would honour the contracts. They did not deliver on those words, if they were in fact the words provided by the President of China. So do you know what happens, Madam Deputy Speaker? Australia faces this unenviable position where the government is being overly optimistic with its projections, it is not being fair dinkum about the risks, but it is asking us to sign off on the biggest spending initiative in Australian history.

I will go one step further. As the Intergenerational report stated at various times—there are various volumes of the Intergenerational reportthere is a danger of a structural deficit for Australia. That structural deficit, by the initiatives of this government, has just got a whole lot worse. It is hard yards to get it back into surplus. The reason why it cuts to our core to see a new government come in and spend money is that we know what you have to do to get back into surplus. It is hard yards. There are thousands of economists out there who will say to you: ‘Spend, spend, spend,’ under these circumstances, but it will be those same economists in 10 years time who will say, ‘Cut Medicare in half, take $50 to $100 off the pension, abolish the family tax benefit, cut the defence budget.’ All the things that will really hurt the fabric of the Australian nation those economists will argue for in good times. And do you know what? They should not be listened to in those good times, just as surely as they should not always be the bible during bad times.

When we start citing economists, I look at Ross Gittins last year, who said the government should dump the Costello tax cuts. I look at Access Economics and Chris Richardson, who said the government should dump the tax cuts because at the end of 2008 they would be awash in so much money they would not know what to do with it. I reflect on the fact that the Prime Minister said that Australia was going too fast at the beginning of last year, that the inflation genie was out of the bottle. And I well remember the Treasurer referring to the ‘inflation monster’. At that time, the then Leader of the Opposition, the member for Bradfield, the then shadow Treasurer, the member for Wentworth, and I were all saying: ‘Guys, look at what is happening to credit markets overseas. There has been a complete meltdown in confidence in credit markets, not just in the United States but around the world. The tsunami will hit Australia.’ And at that time the Prime Minister was urging Australians to rush down to the beach to have a look. What a mistake that was, a dramatic mistake—180 degrees wrong.

And then the Prime Minister talks up the panic. ‘It is going to be bad, really bad,’ he said on 12 October. If there was any confidence left amongst Australian consumers, it was wiped out by the Prime Minister’s words on that weekend: ‘It is going to be bad, really bad.’ You know what? You can put $100 into the hands of someone but if they think for one second that they might not have a job in 12 months time, that they might not be able to feed their kids, that they might not be able to pay the rent, they will be holding on to that $100 because they might need it on a rainy day. When the Prime Minister says that there are graphic storms on the horizon and that they will hold them back, we say the Labor Party are the party of debt and deficit. We say the Labor Party are the party of debt and deficit; that is what they are. That is why today we will not support them with their initiative—because it is bad policy with bad consequences, particularly for our children.

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

Today the Liberal Party and the National Party have taken the astonishing decision to try and run the country from opposition in the middle of a national economic emergency. The government is responding by seeking to stimulate the Australian economy in response to the enormous negative forces that are bearing down on our economy, and the opposition is determined to block the path to recovery, to block the path to defending jobs and to thereby increase the job losses and economic pain that will flow as a result of this global financial and economic crisis.

It is interesting that the member for North Sydney has presented the opposition’s case today. Yesterday we had the Leader of the Opposition. The question that many of us will ask is: where is the member for Curtin? Where is the Deputy Leader of the Opposition and shadow Treasurer? In what is going to be one of the biggest and most important economic debates in this parliament in recent times, there is no sign of the shadow Treasurer. We have the member for North Sydney auditioning for the position and doing a very florid job, I have to say, though a little bit light on content. He made the extraordinary assertion at the commencement of his remarks that the government allowed question time to extend further than usual in order to avoid scrutiny. We were under the impression that question time is actually about scrutiny, and the opposition certainly on many occasions has asserted that.

The government, in pursuing its response to the global financial and economic crisis, is following the advice of the International Monetary Fund and is doing what governments in many other parts of the world are doing. The Liberals are off on their own little planet, in their own little world, fighting dead ideological battles of 20 and 30 years ago. They have lost touch with the reality of what is occurring in the world and what is occurring in ordinary homes, businesses and workplaces around this country.

The package the government has put forward has had a great deal of thought, a great deal of consideration and a great deal of analysis go into it, and naturally extensive advice from Treasury and from the other central agencies. We have sought to achieve a critical balance between short-term stimulus, getting money flowing in the economy, and long-term nation-building, long-term building of productive infrastructure, productive economic capacity and community infrastructure that will benefit our children. The balance that we have pursued is roughly 30:70 or thereabouts—about 30 per cent on short-term tax bonuses and payments and around 70 per cent or so on longer-term infrastructure, much of it flowing very quickly, much of it in smaller or localised infrastructure, much of it to unfold in the next year or two.

I have outlined to the House before that the argument about whether payments are being spent or saved is largely fallacious because the bulk of the payments that may be saved today, because money is interchangeable, will in effect be reflected by increased spending next week, the week after, next month and in the ensuing months thereafter. Some of it will be long-term saved but I would suggest not much, and the retail sales figures today show that the outcome of the stimulus package put forward by the government in December has been overwhelmingly to stimulate spending, to stimulate economic activity, to stimulate the retail sector and, most importantly, to support jobs. The long-term benefit which will flow from the government’s package is that we will rebuild the primary school infrastructure of this nation, which is long overdue. We will further enhance the secondary school infrastructure of the nation. We will add substantially to the social housing stock and indeed 800-odd new defence homes, which is an area where we do require further effort. We will insulate the homes of the nation and, of course, will improve the road and rail infrastructure around the country as well.

The question that people need to ask is what the Liberal Party would be doing on all of these fronts to build the long-term infrastructure of the nation. What would they be doing with respect to our primary schools, our secondary schools, our roads, our rail infrastructure? The answer thus far is virtually nothing.

I want to turn to the substantive accusations by the member for North Sydney about the issues of debt. We will see first that the profile of the collapse in revenue as a result of the global economic slowdown, about $115 billion over four years, is very similar to the projected deficit. In other words, the primary villain in driving the budget into deficit is the fact that tax revenue has collapsed. So much for the accusation that the government is driving the budget into deficit. In fact, it is the collapse of tax revenue that is doing that. It is notable that, as I indicated in question time today, the absent shadow Treasurer is simply unable to add up. The figures put forward by the government in revised estimates of future surpluses in the Mid-Year Economic and Fiscal Outlook papers in November last year showed a surplus this year of $5 billion, about $3 billion next year and about $2 billion the following year. Even against those now out-of-date, those now optimistic figures, she claimed that a Liberal surplus package of $15 billion would not drive the budget into deficit; it would keep it in balance. You do the maths, Madam Deputy Speaker. You subtract that 15 and, even if you put those three years together, they are still not up to 15.

The impact of the government’s position will see the deficit peak at 2.9 per cent of GDP, and that compares with somewhere in the vicinity of six or seven per cent across the developed world and in places like the United States eight to nine per cent. The net debt figure, which is currently in negative—in other words, more is owed to the government than vice versa—will increase to around 5.2 per cent of GDP. That compares with the average across the developed world today of 45 per cent of GDP. The reason that the ceiling on debt raising that has been put forward in the legislation by the government is at $200 billion is that there is already a facility, and already mostly taken up, for $60 billion to $70 billion of debt, which of course is offset by similar assets, mostly in the Future Fund, held by the government. The government has made commitments to enable lending to go to non-bank mortgage brokers, up to $8 billion, and, of course, the Australian Business Investment Partnership, of $2 billion. When you add in the projected deficits, that is where you get the need for a ceiling of that kind.

The strategy the government have put forward to return the budget to surplus is very clear and straightforward. Firstly, we will allow tax receipts to resume their normal growth up to a ceiling, on average, of the tax as a proportion of the total economy we inherited from our predecessors, as we promised at the election. Secondly, we will restrain spending growth to a two per cent real increase per year once growth in the economy has resumed at trend. Thirdly, at that point we will require and have a clear objective that new policy proposals and new spending proposals from within the government will need to be offset with contrasting savings.

I turn briefly by way of explanation to the question of the projections in the later years in the four years. Something that any respectable shadow minister for finance should know is that the first two years you see in a set of budget papers are fully modelled forecasts. The second two years are projections. What those projections consist of is simply the long-term average. If you look at those two years you will see that they are actually identical. The projection of growth is three per cent and three per cent, and the same for the others. It is a completely misleading and ignorant way of presenting these things to suggest that that compares with the projected deficits, which are not projections based on 20 or 30 years of data. This is a completely salacious proposition that has absolutely no meaning.

I think this underlines the point that the member for North Sydney made again today about his respect for economists. He said earlier on today on 2BL: ‘Economists will always go to extremes. Economists will say in downturns, “Spend, spend, spend.”’ I am not quite sure who the government is supposed to turn to for expert advice in the middle of an international economic crisis other than economists. Perhaps we should be asking aromatherapists, astrologers or other such experts. Perhaps we should turn to people who can really look into the future and tell us where things are heading.

Opposition Member:

An opposition member—Numerologists.

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

Numerologists—that is probably not a bad idea! The shadow minister for finance might take you up on that. I understand, as we all do, that you get different perspectives from economists. There are people on both ends of any debate in the economics profession, but you have to take advice and form your own view on that basis. To denigrate them, as the member has done, is simply absurd.

The alternative that is put forward by the Liberal Party is across-the-board, sweeping tax cuts. I quote:

Broad and sweeping tax cuts that will increase the tax base and increase revenues.

That is courtesy of the infamous and much discredited policies of Professor Arthur Laffer, adopted by no less than George Bush Jr—not his father—which have sent the US budget into massive deficit and created a huge problem for the entire nation, not just the Obama administration. It is code for tax cuts for the wealthy, for high-income earners. It is code for: ‘Don’t target the money. Don’t try and get the money into things like construction and retail and all of the parts of the economy that naturally contract very quickly when a downturn occurs. Just spray it everywhere, particularly to the better off.’

It is also notable that part of this formulation referred to increasing the tax base. That, of course, is code for expanding the GST back to where the former government originally wanted it to be, which was on food and virtually everything. They were forced to retreat from that. It is not surprising that the shadow Treasurer has been kept in the box in the ensuing days after this performance. The shadow Treasurer has let the cat out of the bag on what the Liberal Party is really on about.

Finally, on radio a couple of weeks ago the shadow Treasurer said, ‘The first thing we would do in response to the global financial crisis, if we were in government, is revisit these proposed industrial relations laws.’ What is that code for? That is code for bringing back Work Choices. So there is a simple trifecta. The alternative from the Liberal Party to the government’s package is tax cuts for higher income earners, GST expansion and bringing back Work Choices. They are the three pillars of the traditional Liberal Party position. We know what the member for Curtin is talking about when she talks about increasing the tax base. She possibly does not know what she is talking about, but we certainly do know what she is talking about. There is a three-point plan juxtaposed against the government’s package, and that three-point plan is very straightforward. The result of that plan would be massive, indefinite budget deficits, like the United States has had, ever-mounting inequality in Australia and, of course, Your Rights at Work stripped away.

There have been a lot of comparisons made in recent times in commentary between contemporary circumstances and the 1920s and 1930s. You would have to say that the opposition are certainly doing their bit for this because they are seeking to return Australia to the economics of Stanley Melbourne Bruce, the Lord Bruce of Melbourne, and to the days when the natural rulers of the country wore spats, top hats, waistcoats and all those kinds of things. They were blind to human suffering, indifferent to job losses, indifferent to business failures, fixated with the elegant virtues of the free market no matter what the cost and, of course, horrified at the prospect of governments intervening to invest for the future of the nation.

There is no better person to do a latter-day impersonation of Stanley Melbourne Bruce than the Leader of the Opposition. There is no more appropriate person. I think that the ordinary working person in Australia will be asking themselves today: after all the carnage on Wall Street, all the destruction of value and all the people who have lost their jobs and their life savings courtesy of the behaviour of investment bankers, is Australia ready to have an investment banker as Prime Minister? I would say probably not. That may be a question that the Australian people get the chance to decide towards the end of next year, if the member for Wentworth lasts as Liberal leader. If the member for Higgins’s on-again, off-again flirtation with the prospect of Liberal leadership goes into recession yet again, that will be something that we will see in due course.

This is something that I think lies underneath the position that the Liberal Party have taken today. What it means in effect is that we will see the attempted blocking of a government plan that will result, if that blocking succeeds, in more pain for working people of this nation in the face of a giant economic challenge, more people losing their jobs, more people losing their homes and more people losing their businesses. It will mean that there will be no investment in rebuilding our schools across the nation, particularly our primary schools. It will mean that the effort to insulate our homes and to take a big step forward in collectively reducing our carbon footprint and improving our greenhouse gas emission performance will not happen. It will mean that our effort to improve social housing, to reduce homelessness and to build more accommodation will not happen. It will also mean that a vast array of small businesses, retailers and contractors will lose sales, shed staff and, in some cases, go out of business. Of course, in total, it will also mean that there will be less investment, because there will be no investment allowance for large and small businesses to attract further investment.

The government is committed to this plan. We are committed to fighting all the way to get it through the parliament, to get it in action, to get the money moving, to get the investment moving and to do what other governments around the world are doing to protect their citizens, to protect their working people, to support the jobs in their economies and to support the businesses, large and small, that create wealth and jobs—and we are going to stick to that and we are going to fight all the way.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

This is one of the most important matters of public importance to be debated in this parliament. The MPI contrasts the differing approaches of Labor and its profligate spending and the responsible economic management proposed by this opposition. It is an issue of whether we want to manage this country’s financial affairs responsibly or whether we want to go down the path of debt that is running out of control.

The $42 billion economic package introduced into this House today is vintage Labor. It is introduced on the basis of no care and no responsibility. It is Whitlam on steroids. It is a massive package. It is a package that will certainly be welcomed by many in the community. Many of those who receive it will certainly welcome it. But the important question is: is it the best package to achieve the three primary objectives of government in 2009—that is, jobs, jobs and more jobs? We are duty bound in this House to ask whether it is the best use of taxpayer funds. Are there better ways that we can spend this money to achieve those three objectives of jobs, jobs, jobs? Is the quantum of this package the appropriate quantum given the economic circumstances in this country? If it is such an effective strategy to spend such a huge amount of money, why don’t we double it? Why don’t we produce even more jobs by doubling the package? If it is just as easy as spending more money, why don’t we go into more debt and create, as the government alleges, more jobs? The problem is that this package is plunging us into debt which will become unsustainable—debt which will have to be paid by our children; debt which will limit the ability of future governments to deliver services and to deliver tax cuts to the people they will represent.

This government have made the almost Orwellian claim that they built a surplus. Let the Hansard show that they have not built this surplus. They inherited a surplus; they did not build a surplus. And what did they do with the surplus that they inherited? They converted it very quickly and very effectively into a deficit. They converted a $22 billion surplus into a $22.5 billion deficit. The previous coalition government was handed $96 billion in debt by the Labor government that preceded it—a government that went to great lengths to ensure that they concealed a budgetary black hole from the incoming government. That Labor government did not deliver a surplus; they delivered a massive deficit. The question needs to be asked: what debt are this government going to hand on to the next government? What is the black hole that this government are going to hand to the government that follows? More importantly, what impact will that debt have on the children of this country?

The ‘hollowmen’ of spin central in the Prime Minister’s office have created a new economic term. They have created the notion—and it is a new one to me—of a temporary deficit. I cannot imagine that you would find that term defined in Robert Barro’s book Macroeconomics: a modern approach or Taylor and Weerapana’s recent and influential book Principles of macroeconomics. The notion of a temporary deficit has no basis in economics; it is purely more Labor spin. This is not a sound term; it is a term contrived by this Prime Minister and the excuse for a Treasurer we now have to deceive and mislead the Australian people. The people of Australia know that Labor deficits are not temporary deficits; they are permanent deficits. They are a burden on the Australian economy, but they are the Labor Party’s stock and trade.

In this House this morning we saw the introduction of one of the most frightening pieces of legislation that I have seen introduced to this House—that is, the Commonwealth Inscribed Stock Amendment Bill 2009. This is a bill which I believe should strike fear in the heart of anyone who lived through Paul Keating’s recession we had to have and anyone whose taxpayers’ dollars were used to repay the debts of the former Labor government—the result of their previous spending binge. This bill, in one section, increases the potential debt to some $200 billion. It is a frightening increase. It is an increase that should concern all Australians. This sort of debt binge that we are talking about is clearly reminiscent of the Whitlam era. I guess the ghost of Khemlani is stalking the ministerial wing yet again. But the people of Australia do not want financial management Rex Connor style. They know that the electorate must repay the debts of this government, and they should rightly be concerned.

The Prime Minister is asking the people of Australia to take him on trust. But, when we look at the current government’s responses to the problems that they face, we see that their responses have certainly been flawed. Last year we saw the Prime Minister goading the Reserve Bank to push up interest rates. Despite the fact that world markets were already in turmoil, despite the fact that growth was already slowing and despite the fact that growth was in fact collapsing overseas, we had the Prime Minister and the Treasurer goading the Reserve Bank to push up interest rates not for the benefit of this country or for the benefit of taxpayers but for the benefit of Labor’s political ends.

They introduced an unlimited bank guarantee, a rushed decision which threw financial markets into turmoil, with thousands of investors having their funds frozen. Why was that? Why was this flawed plan introduced? It was not introduced because it was good policy. It was introduced because the Prime Minister had a media deadline to meet, and because of that he did not consult the Reserve Bank; he did not take the proper advice. He rushed the decision so that he could meet the media cycle, so that he could keep his spin machine rolling.

We then had the first stimulus package, $10.4 billion—half of the surplus. It was going to save the world. Yet the first stimulus package has virtually disappeared without a trace—$10.4 billion, half the surplus, and it is virtually gone. We have had a government that has misread the economic climate time and time again, and the Prime Minister says: ‘Trust me. This package is going to work.’ That is the message he has given. This is $42 billion, with an ongoing structural deficit being put in place, and he says: ‘Trust me. It’s going to work.’ He is going to run a deficit of $22.5 billion in 2008-09, $35 billion in 2009-10 and $70 billion over the forward estimates and he says: ‘Trust me. It’s only a temporary deficit.’ Based on his form to date I think the Australian people are wise not to trust the Prime Minister. I think the Australian people are wise to listen to the words of the opposition when they show real concern for the future of this country, real concern for the taxpayers, who will have to pay back Labor’s debt, which is being put in place not to benefit the Australian people but to benefit the political needs of the Australian Labor Party, who need to be seen to be doing something, doing anything, in the face of what is a very difficult financial position.

We had a stimulus package put in place in December. We have another stimulus package now. What happens if things do not improve? Are we going to have another $40 billion in three months time and $20 billion three months after that? Where is this going to end? Where is it going to leave the Australian people? The way the government is lurching into deficit really is Labor showing its true colours. We have a stimulus package that enshrines debt as a factor in Australian government and commercial life. We went for years with the notion of surpluses. We went for years with the methodology that the government was repaying debt and was managing responsibly, and that has been replaced by a new paradigm—a paradigm of debt, of put it on the never, never—and a new notion of a temporary deficit, for which there is no plan to repay.

As I said when I started my contribution, this is pure Whitlam—Whitlam on steroids. And steroids, like long-term debt, can have some very serious consequences. They can stunt growth; they can cause baldness. But the financial repercussions of long-term debt, long-term debt out of control, can be far more problematic for our Australian economy. We have to reject Labor’s notion of profligate spending. We have to support the opposition’s plan to have responsible economic management so that this country lives within its means, so that it creates jobs for young people, so that we invest in Australia’s future, not spend for the benefit of the Australian Labor Party.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

We are all very much aware of the significance of the challenges that we are facing right across the globe at the moment, and one of the most challenging aspects of the situation we currently face is that many of the old economic orthodoxies have had to be thrown out the window. In fact, we all know that an over-reliance upon neoclassical economics has at least in part been responsible for the international economic mess that we are all trying to come to terms with. That is a reality that we all confront. The message that is coming across through the many international discussions that are occurring at the moment is that, for the first time, the international economy has faced a massive downturn of this sort in the global era. It is in that global era that we require a global and coordinated policy response to deliver the best possible outcome, to fight against the economic challenges that we face and to try to deliver stronger economies right across the world into the future. That is the challenge—the challenge to work globally. If we are going to have any chance of working globally we need a bit of support and a bit of cooperation locally.

On the issue of debt and deficit I hear those on the other side say that the Labor Party is the party of debt and deficit. Let me make a few points. The first one is that the first budget surplus in Commonwealth history was delivered under a Labor government in the 1980s. Have a look at all the years of government that preceded it and I can tell you, as unfortunate as I think that fact is, that many more years were under conservative rule than were under Labor rule. These are the same people who just a short time ago were telling you that the Labor Party was the party of high interest rates. With interest rates at their lowest point since the 1960s, there has been a slight adjustment in the rhetoric. Those opposite want to call us the party of debt and deficits. They want to accuse us of driving the budget into deficit, as if in the present international economic environment there were some choice. Have a look around. Have a look at all of the developed economies in the world. They are all in deficit, not as a matter of choice but as a matter of economic reality.

When you have $115 billion wiped off your tax revenues, it stands to reason that that is going to have a really big impact on the budget bottom line. That fact is going to trip a budget into deficit. There is no active decision taken on the part of a government to do that. If those on the other side have an answer, a solution, a strategy to combat that, to minimise the loss of $115 billion worth of tax receipts over the forward estimates then I really want to hear it. If they have a solution, it would be in the national interest to put it on the table right now. But they do not have a solution. In fact, the only thing that even resembles a solution that has been put on the table has been what the shadow Treasurer refers to as ‘broad and sweeping tax cuts’. That comes from the very flawed and defective theoretical basis that has underpinned the American economy and led the world into the great disaster that we currently face—Reaganomics and the administration under George W Bush.

What we have seen is this attempt to provide those broad and sweeping tax cuts, and some people hope that that will stimulate the economy. Have a look at the budget deficit and at the debt that the United States’ economy is carrying and tell me that they have not got anything to do with that strategy. If you want to come into this place and complain about debt and deficits, you are going to have to do a little better than come up with broad and sweeping tax cuts as your panacea or your prescription because, frankly, they will not cut it. Those of us throughout the world economy who have listened to those types who have led us down that path are all now saying: ‘You were wrong; you were dead wrong. Not only were you wrong but we are all paying the price now.’ What we say is that we want to be a part of the global effort to bring our nation through this crisis. We know that there are massive challenges but we want to work and draw upon the very best instincts and values of the people in this nation. We want to take advantage of the opportunities that are presented, even in the midst of the great challenges we face. We want to invest in those areas that our nation requires investment in.

For those on the other side, it is almost an acknowledgement of the failing in their time in government. They do not want to talk about it. Frankly, if I were on their side of politics, I would never go into a school because every time I went into a school in my community, the school would tell me about how they needed more resources and that if the Rudd government wanted to deliver an education revolution it would have to do what the Howard government failed so abysmally to do, which was to invest in our nation’s future, to invest in educational opportunity. We are committed and determined to build the education revolution. That is why this second major instalment, this second big stimulus package, the Nation Building and Jobs Plan, is following hot on the heels of the Economic Security Strategy. Those on the other side talk about it not really achieving anything and say that it was a bit of a fizzer. All I can say is: let us just take ourselves back to when we introduced the package. Those on the other side, who at first said they were not going to quibble, then went on and said: ‘Oh, this is too much money; you are blowing all this money in one hit. Surely the economy is not in such dire straits that we need to be spending that sort of money? It is going to drive up inflation, drive up interest rates.’ These were the sorts of things that were being said by those on the other side.

I put this question to the House: where would we be if we had failed as a nation and as a government to take the strong, early and decisive action to put that money into the economy to ensure that the wheels of commerce in this country continue to turn, that small businesses continue to have customers coming through their doors, that people continue to have the opportunity to get up and go to work each day and to provide for their families? All of that has been evidenced in the retail trade figures that were out today. Importantly from my perspective, those figures, apart from showing a 3.8 per cent seasonally adjusted increase in retail trade for December, show a 4.9 per cent increase in New South Wales, the state that I am from.

Those on the other side have to get their story straight. Are they saying that we have done too much or not enough? Do they now say that they were wrong to say that we were spending too much money on this package? Do they acknowledge that the fiscal stimulus provided back then had an impact? Those opposite come into this place and ask questions and say things that really demonstrate they are out of touch with their communities. If they were in their local communities talking to retailers, they would know. They would not have had to wait for the retail trade figures today. Talking to shopkeepers, they would have known that they had been doing it tough and that this really did help.

What is the solution being put forward by those on the other side? Where do we go from here? They say: ‘Let’s sit on our hands. We’ve got all the time in the world.’ I can understand that. When it comes to economic management, they want to claim the mantle of great economic managers. To them, the last decade in office was about operating a cash register. The money was flowing in from corporate tax receipts in particular; the mining boom was providing the windfall that the government needed. That was a great opportunity for the country. The great shame and the great tragedy was that there was very little investment in our nation’s future. That has made the challenge and the job ahead for us even greater, but we are determined to invest in our nation’s future.

If those on the other side want to block the package that is currently before the House, as they have indicated, then they will have to account for it to the Australian people. I simply issue this plea: do not fool yourselves into thinking that this is just about statistics or about finding some cute debating point. People’s lives are at stake—the lives of people in my electorate and people right around the country. There are jobs at stake. This package stands to support up to 90,000 jobs. When you are voting against this package, just think about those people who will not have the opportunity to go to work because money that would otherwise be pumping into the economy, providing more stimulus, has been denied. That is the challenge for those on the other side. You either want to be part of the solution or you want to stand in the way of us and delivering a strong economy in the longer term for the people that we are all meant to be representing.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

We are all aware of the global crisis and we are hearing and reading about many of the issues. In the last day, this parliament has been discussing some of those issues. The point that I make today is not really to get into the debate about the bills but to issue a warning to both sides of parliament that we should not rush this debate. The member for North Sydney made an important point earlier, and the Prime Minister has made the same point: this is a very significant and crucial issue. This nation has never before been where it is at, and the last thing that the people in the community want is the game being played as if it were just another traditional political issue where the two sides face each other and the one with the numbers wins. That is not going to deliver confidence within the community.

Both the Prime Minister and the Leader of the Opposition have talked about confidence and fear, and the contributors to this debate in the last few minutes have talked about those same issues. What this needs is a parliament that actually deliberates on the issues in a constructive sense rather than on the politics of the issues. The country does not need references to Whitlam; it does not need those references back to the seventies. This is a different issue. What it does need is both the Prime Minister and the Leader of the Opposition to look very seriously at what is actually happening here. We all know that the Prime Minister does not have all the answers. We all know that no-one on the globe really knows what is going to happen in terms of this financial collapse. So there will be mistakes made—and I am sure that, in this package that the government is trying to rush through the parliament, there will be some mistakes. On the surface, I will be supportive of the legislation. But there are areas that need proper scrutiny—not political scrutiny and references to debt-ridden and debt-addicted Labor and Whitlam on steroids, or whatever the reference was. I do not think that does anything to enhance confidence within the community about the parliament actually trying to come to grips with solving an issue.

We have two houses of parliament. The government does not control the Senate. But I think it would be in the interests of the government to slow down on this issue and actually have the debate about these critical issues—not in a political sense, where you gag it at three o’clock in the morning because you have got the numbers; that would be the worst thing that could be done in terms of this issue. This is a lot of money. These are, in my view, serious attempts by government to address some of these issues through money going into a whole range of areas—including schools, local government and the community—and obviously the various tax and investment allowances and so on that are built into it. In addition to that, we have got climate change issues. They all send significant signals to the community. But the signal that is coming out of this place now is one not of unity but of ‘the game is the same’.

Everybody is suggesting, and I think the general public feel, that this is an issue that they do not understand. There were a lot of institutions that we trusted globally, a lot of people we trusted globally in terms of their economic theories and the way in which they developed confidence in various policies that governments around the world put in place. Take Alan Greenspan—most of us thought that he knew everything that was going on, but now he has apologised.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

Mr Pyne interjecting

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

Well, the ‘member for Skirt’ mightn’t have—

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

No, we all agree with you.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

but a lot of his colleagues did. But the point I am making is that confidence in a lot of these institutions has been undermined in the general public’s mind. Yet the way in which this debate is developing—even as the gimmickry today at question time, which is supposed to provide scrutiny in terms of the legislative— (Time expired)

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

The opposition’s rejection of a stimulus package that has been designed to bolster Australia’s economy during an unprecedented economic crisis is an irresponsible, obstructive tactic at a time when Australians are looking to their government for responsible leadership and support as they struggle to keep their jobs and their homes.

This package is not just about one-off ‘handouts’. It is about the Australian government providing an immediate stimulus to the economy and, more critically, it is about supporting Australian jobs by bringing forward massive infrastructure programs through which Australians will see immediate and much-needed benefits. Far from being irresponsible, this package strikes the right balance between supporting growth and jobs now, and delivering the lasting investments needed to strengthen the economy for the future. And this is good quality policy.

Nowhere is this commitment more obvious than in the massive $28.2 billion of direct investment in schools, housing, roads and other essential infrastructure. This is not a structural deficit, nor a long-term debt. It is a sensible long-term investment in our future prosperity. In investing in education, we are investing in the future of young Australians. It is these young Australians who will be the future workforce of this country. It is these young Australians who will create our future wealth. It is these young Australians who, through their talents and skills, will be the drivers of our innovation capacity. By investing in our schools through infrastructure and facility upgrades, as this package aims to do, we are equipping these young people with the resources and the tools they need to create our future prosperity and grow our economy.

We often talk about a decline in interest by schoolchildren in the areas of science and maths. My own committee, the House of Representatives Standing Committee on Industry, Science and Innovation, recently released a report called Building Australia’s research capacity, detailing the decline in the numbers of young Australians pursuing a research career. We must heed these alarm bells if we are truly committed to increasing our knowledge and scientific capacity. Building modern science labs is fundamental to reinvigorating young people’s interest in science, and it is critical to our country’s economic future and prosperity. This stimulus package responds to this need. If we accept that we need to develop capability in the areas of science and maths, then we need new science laboratories and we need them now. And if we accept that we need to develop our language capabilities in order to be competitive in a global community, then we need language laboratories and we need them now.

By injecting funds into schools, the government is investing in the nation’s future. For the opposition to obstruct this investment and to try to paint the government as financially irresponsible indicates that they do not see the value of investing in our nation’s future through our schools and that they are in serious denial about what other countries around the world already know—that is, that the effects of the global financial crisis are unfolding before our eyes. Australia is not immune and we must act now.

Is it possible that the opposition just doesn’t get it? If this is the case, can I take the opportunity to inform the opposition that other Australians do get it. I would like to have a look at what others who know a little bit about these things are saying about the government’s stimulus package. Heather Ridout from the Australian Industry Group says:

The nation building and jobs plan announced by the federal government today is simple and substantial, and will provide a big stimulus to help keep the economy moving. Together with the interest rate cut, it has been a big day for monetary and fiscal policy—it’s a case of ‘all hands on deck’

What a pity that the opposition has chosen not to get on board. Ron Silberberg from the Housing Industry Association also says ‘The government’s recovery plan appropriately spends for jobs in the short term and invests for future prosperity.’ Angelo Gavrielatos from the Australian Education Union, who seriously understands the need to invest in our schools and lobbies hard to ensure that this happens, says:

In addition to providing an important economic stimulus, today’s announcement is the most important infrastructure investment the government can make. This investment will provide the opportunity for our schools to engage in urgent upgrades and to develop modern learning environments, which will improve education outcomes for our students…

And finally, Wal King from the Australian Constructors Association says ‘This is a very thoughtful and well-targeted program. This is the right time to invest in Australia to protect the future and the announcements are an important contribution’.

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

Order! The time allotted for this debate has expired.