Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Treasurer. Is the Treasurer aware that, because the Queensland government has just lost its AAA credit rating, the cost of its borrowings may increase by 50 basis points, or up to $370 million a year on its refinanced $74 billion of borrowings? Treasurer, what is the flow-on impact to the other states of the credit downgrade in Queensland? Who is going to pay for the increased cost of borrowings by the states?

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

I thank the shadow Treasurer for his question. This is a serious issue and it deserves a very serious and considered answer because we are in the middle of a global recession which is impacting severely on this country. We have seen European growth contract by 1.5 per cent, we have seen Japan contract by 3.3 per cent in the December quarter and we have seen Taiwan, in recent days, contract by something like six per cent. We have seen the impact of this on the national budget to the tune of something like $115 billion since the last budget, we have also seen the fact that the stock market has lost something like $600 billion in value and, of course, we have seen the impact on the super accounts of Australians. What we are now seeing in Queensland, a resource rich state, is the impact of the global recession and, most particularly, the impact that flows through to this country, including our resource rich states, of the halving of growth in China.

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

Mr Speaker, I rise on a point of order: relevance. The Treasurer was asked a specific question about the flow-on impact to other states and, more importantly, who is going to pay the increased costs of borrowings by the states.

Daryl Melham (Banks, Australian Labor Party) Share this | Link to this | Hansard source

Who won the golf match—you or Cory?

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

The front bench is where you belong.

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

I assume that the member for Sturt is no longer worried about the point of order if he is interjecting across the chair. The Treasurer is aware of the question and will respond to the question.

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

Certainly, Mr Speaker. We have seen, for example, that coal prices have halved in the last six months. All of that has had a dramatic impact on the Queensland budget. We have seen that the Queensland government, along with other state governments, has borrowed in recent years to build critical economic infrastructure. Of course, one of the reasons they have borrowed to build critical economic infrastructure is that those opposite would not make any of those investments precisely at the time they were needed, particularly in the resource rich states. So it is the case that Australian states have borrowed in recent years to finance critical economic infrastructure.

Indeed, the member for Higgins ticked off on much of this when he was in the Treasury position. He, as Chairman of the Loan Council, ticked off on much of this borrowing by state governments in recent years. Something like $13 billion worth of borrowing by state government in recent years was ticked off by the member for Higgins. Of course, the other thing that state governments had to do, particularly in areas like health, was borrow, because the federal government at that time did not come to the party and, instead, seriously cut health funding. So, yes, state governments have been borrowing responsibly to fund critical economic infrastructure, and that was signed off by the previous government through the member for Higgins as Chairman of the Loan Council at that time.

This country, nationally and at a state level, has been hit by a global recession. That, of course, has had a dramatic impact on our budget revenues and on state government budget revenues, and that has led to a decision by a rating agency to downgrade the state of Queensland. It has certainly had that impact, and the cause of that is the global recession. What we see in the House today is a sharp difference between the Rudd government on this side and the Turnbull led opposition on that side, who say: ‘Nothing should be done about that. You should just sit and wait and see.’ On that side of the House, their attitude to this situation is very simple: governments should not act—in our case, have a temporary deficit so we can create jobs and cushion the Australian economy. In the case of the Queensland government, the opposition are saying it should not be borrowing—

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. I ask the Treasurer to answer the question about the flow-on impact to other states.

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

There is no point of order.

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

There is a very sharp contrast. On this side of the House we believe, in the face of a global recession, that governments must act, and our first choice must be to act to support employment. The Liberal and National parties in this House and in Queensland do not support jobs because they are the parties of higher unemployment. In this House, the Liberal and National parties opposed the Nation Building and Jobs Plan, of which $8 billion will go into Queensland to support jobs. Let history record: the Liberal and National parties in Canberra and in Queensland oppose our nation-building plan and the jobs that go with it.

What this government will do with state governments, including the government of Western Australia, is sit down with them through the COAG processes and the Loan Council processes and talk to them about their future needs in this new environment. We will do that in a cooperative way. We will do it with the government of Western Australia and we will do it with the government of Queensland. We will do it in the interests of Australia and in the interests of creating jobs.