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

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

The Government’s failure to control Australia’s public finances.

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—

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

It is said there few certainties in life, death and taxes being two of them, but another certainty is that when a government runs up a large amount of debt it will mean higher interest rates and higher taxes in the future. For two days running we have asked the Prime Minister to confirm that the $315 billion of debt into which he is plunging our nation will put upward pressure on interest rates. He has refused to answer that because he knows he dare not because he would then have to admit that his reckless spending, and his reckless borrowing to fund that reckless spending, is going to impose real financial hardship on Australians for many years to come. For many years, decades, we will be paying higher interest rates and higher taxes to pay off this enormous burden of debt.

The government of course seeks to spin its way out of this debt splurge that it has taken us into. We had during the budget week the extraordinary performance of a Treasurer who could not to say what the deficit was. There was an apology for him in a column last Saturday which suggested that it was not his fault; it was just due to a typographical error. Dear, dear, poor Wayne—a line was left out and he overlooked it. How credible is that?

Then we had the even more bizarre week when the Prime Minister and the Treasurer were not prepared to actually say the figure of debt they were taking Australia into. The Prime Minister would say in answer to the question, after a few excruciating exchanges, ‘The number is 300,’ without wanting to say it was $300 billion and it would have to be paid back by Australians. This is all part of a government of spin—a government that has recklessly spent and borrowed its way into a position where Australia is heading towards the highest debt, and it already has the highest deficit it has ever had in its history. And all of this has happened in 18 months. The Prime Minister has tried to justify this by spending on infrastructure, even though he has spent very little on infrastructure and the bulk of the money he has borrowed so far has been given away in cash handouts.

So for weeks he goes around the countryside appearing in a hard hat. We do not know whether he is seeking to impersonate Bob the Builder or audition for a part in the Village People—it is hard to say. But, whatever it is, he pops up there in his hard hat. And this process of impersonation is obviously appealing to him because today he decided to impersonate somebody else. He turned up in the press conference for his ‘Mission Accomplished’ moment. All he needed was a bomber jacket and an aircraft carrier and he would have been impersonating the former President of the United States. But I have to draw the House’s attention to probably one of the most deluded statements by this most delusional Prime Minister.

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

That’s a big call!

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

The deputy leader is right, it is a big call, but I am going to make it. He said today:

Australia has the lowest debt and deficit of all the major advanced economies. And Australia is the only advanced economy as of today not in recession.

Then he went on to say:

The second point which I think we should emphasise is how this has come about.

Fair enough. So I thought: we will hear how it has come about. He will talk about the fact that when he came into government there was no government debt; the government had negative net debt—cash at the bank, in other words. Not a word of that. There is page after page of self-serving self-adulation, but not a word to credit the fact that the reason we have the lowest debt of the major developed countries in the world is because when he became Prime Minister we had no debt at all. That is the reason. It is a tribute to the previous government that we are in the strong position we are today. All of this debt is entirely on the Prime Minister’s head. It is his debt. He spent the cash in the bank and now he is out there borrowing billions a week—borrowing wildly and spending, as we have said, like Paris Hilton on a shopping spree.

He commented today on the figures in the national accounts, which we welcome. The shadow treasurer and I, at our press conference shortly after that of the Prime Minister and the Treasurer, welcomed that positive figure. It was very, very good to see. But, again, we see a government of spin, because it is beyond argument that the overwhelming contributor to the positive GDP figure was the contribution of net exports. At the risk of being accused of using props, Madam Deputy Speaker, we can see here the final GDP figure in black, slightly positive, and the various contributions. Overwhelmingly, the positive contribution is from net exports; that is 2.2 per cent. The final result was 0.4 per cent, and 2.2 per cent was from net exports. So exports were up and imports were down. That was the result.

That has absolutely nothing to do with any policy of the government. It has nothing to do with the cash splashes. It has nothing to do with any of their other measures. This is entirely a function of the strength of the Australian economy, a function of a flexible exchange rate. The Aussie dollar depreciated and that contributed to that very positive net export figure. So you would think that a Prime Minister and a Treasurer who were prepared to confront and discuss our economic challenges honestly and accurately would talk about that. But here we have the transcript of the press conference, and the Prime Minister has the chutzpah to take all of the credit for the positive outcome in the March quarter. There is no reference in his remarks at all to net exports. It is a great word, chutzpah, and it is personified, in fact, by the Prime Minister. I will remind the House of the definition of chutzpah. It is defined as being the action of a man who kills his parents and then flings himself on the mercy of the court on the grounds that he is an orphan. A ‘rare audacity’ is what it describes. But there it is: the great result in the March quarter has been contributed by the private sector, by the export industries—that has been their contribution: good on them; well done—and what do we hear about the private sector from the Prime Minister? Simply, that the private sector is in retreat and government has to come to the fore; government, he says, should be at the centre of the economy.

The reality is that the domestic economy still faces very serious challenges. Private capital expenditure fell by 5.3 per cent. Expenditure on machinery and equipment fell by 9.6 per cent. Public capital expenditure by government fell by 2½ per cent. Indeed, capital expenditure by the national government fell by eight per cent. All told, domestic final demand showed a fall of one per cent. So the driver, as I have said, is in net exports. Exports rose by 2.7 per cent and, more importantly, imports fell by seven per cent. That was the answer to the question of why we had a good result in March. Overwhelmingly, it was because of the performance of the export sector. The Prime Minister has said we had a positive contribution from household consumption, and so we did. But, according to the ABS, the contribution to that final result of 0.4 per cent was 0.3 from household consumption, versus 2.2—more than seven times higher—from net exports.

There was no mention of that in the Prime Minister’s remarks today at all. This is a government that depends simply on spin. Part of their spin is to say that anybody that does not agree with them either has no policy or, worse still, is talking down the economy. If you ask the Prime Minister the most innocent question about the relationship of debt to interest rates or of debt to the sustainability of the budget, or any other straightforward economic question, the immediate answer is: you are talking down the economy. What we see there is the essentially totalitarian personality of the Prime Minister. He reminds me of a dictator who regards any critic of the regime as a traitor.

The fact of the matter is we have a debate about debt and deficit in this country. The Prime Minister is not concerned about the high levels of debt. He says it is not a problem. He says it is not high compared to other countries. That is his point of view; he is entitled to put that. When we challenge that point of view, when we ask a question as to what we have actually got for all this debt, when we remind him of the pristine set of public finances he inherited from the previous government and when we have expressed concern about the heavy interest costs that Australians will have to pay in the future as a consequence of this debt and the heavy taxes they will have to pay and the impact that will have on us recovering from this downturn—when we raise these questions—we are accused of being little short of unpatriotic. That underlines the totalitarian nature of the Prime Minister.

We have this extraordinary confusion in the way he seeks to characterise the opposition. One minute he says the opposition is in favour of doing nothing at all and then he says we are actually secretly in favour of doing everything he has just done. He cannot have it both ways. The truth is, as everyone in the House knows, that when the $42 billion stimulus was presented we were critical of both the size and the composition of the package. We felt it was too big and that it was poorly targeted and we proposed a different set of measures which would have had a net cost of less than half that proposed by the government. So, far from having no policy or the same policy, we have a different policy—one that is focused on growth, one that is focused on small business and one that above all recognises the great danger of imposing on this country a massive level of debt.

We know, and we certainly recognised when we were in government, the consequences of an ageing population. The percentage of Australians over 65, or over 85 for that matter, is going to dramatically increase and that will impose heavier and heavier burdens on government. We all recognise that. That is why in the previous government the member for Higgins, as Treasurer, was assiduous in paying off debt, putting money aside, putting money in the Future Fund and taking burdens off future generations so that they were better able to deal with these intergenerational challenges of an ageing population. That was our approach. What we have instead here today is a government that is recklessly throwing debt onto the shoulders of future generations, heedless of the consequences of this demographic transition.

At the same time, when we ask the Prime Minister, ‘When will the debt be paid off?’—hardly an unreasonable question—we are told, breezily, ‘2022’. Fair enough. That is a long way away. That is a lot of debt to repay. So we ask: ‘What are your assumptions there? What are the surpluses going to be? What are you assuming about growth, about inflation?’ The proposition that all of that debt will be paid off must be based on some assumptions. There must be a spreadsheet somewhere which explains how this can be done. It seems a lot of money to repay in not very many years. We get no answer at all. We are met with the accusation of talking down the economy: how dare the opposition challenge the government. How dare the opposition ask the government to explain how it is going to pay off $315 billion of debt. That is outrageous according to this Prime Minister, and we are accused of talking down the economy.

Let us talk about who talks down the economy. This Prime Minister said only two days ago, ‘This is the worst recession this country has seen in three-quarters of a century.’ In the 1990s we had five quarters of negative growth and three years of unemployment over 10 per cent. He says we are talking down the economy. He said in this House on Monday, ‘This current economic episode is the worst in 75 years,’ and yet, when we put that question to him squarely today, once again we get a speech about how he is for everything and anybody who does not agree with him is for nothing, and once again he refuses to address the deterioration in the public finances of this nation. (Time expired)

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

That was the weakest performance from an opposition member we have seen in an MPI in the last 18 months. It must have been an interesting opposition tactics committee meeting this morning. The national accounts figures came out at 11.30. At 12 o’clock the opposition had to lodge their submission for an MPI. The national accounts figures show that Australia is the fastest-growing developed economy in the world and that the government’s stimulus packages have played a role in cushioning the impact of the global recession. So what does some bright spark in the Leader of the Opposition’s office say? ‘Let’s lodge an MPI on the economy. This would be a good day for it.’ What is worse, the Leader of the Opposition says, ‘Good idea.’ Perhaps if they could have waited for the excruciating joint press conference between the Leader of the Opposition and the shadow Treasurer before confirming their decision they might have come to a different conclusion. So desperate was the Leader of the Opposition to find a coherent line that he changed his view halfway through the press conference. He said at the beginning that there was no impact from the government’s stimulus plan on the nation’s economy and then he said, ‘Well, of course there’s been some impact.’ As a result of that we see their weakest performance of any we have seen in the last 18 months. The member for Bradfield would have done much better in that MPI than what we have just seen from the member for Wentworth.

Let us remind ourselves of the economic narrative from the opposition, as much as there has been one—well, there have been lots. Let us remind ourselves of the economic narrative as best they have been able to settle on it. They say the government’s economic strategy is not working. They say that the stimulus packages have not fed into growth and jobs. They say, and they have said on several occasions—the honourable gentleman the member for North Sydney said it; his leader has said it—that there is nothing to show for the stimulus packages. They say we have gone into debt and deficit and there is nothing to show for it. Well, their entire argument lies in tatters today, mugged by the facts.

The Australian Bureau of Statistics has announced today that Australia grew by 0.4 per cent in the March quarter. Let us put that in context. In the same quarter the United States contracted by 1.5 per cent, Japan by four per cent, Germany by 3.8 per cent, France by 1.2 per cent, the United Kingdom by 1.9 per cent, Italy by 2.4 per cent and the OECD, on average, by 2.1 per cent. In our own region, in Asia, Malaysia has contracted by 4.4 per cent, Hong Kong by 4.3 per cent, Singapore by 3.9 per cent and Taiwan by 1.1 per cent. Of the 22 nations in the OECD that have reported for the March quarter, 20 have reported negative growth.

There are a number of factors involved in the positive growth in Australia, and exports have of course played their part. But also of vital importance has been the government’s economic management and economic stimulus. Household consumption expenditure increased by 0.6 per cent in seasonally adjusted terms. The opposition, which have spent the last 12 months ignoring the global financial crisis and saying it has no impact on Australia, now say the only reason we had positive growth was the global economy and exports. They ignore the global economy for 12 months but today, as they cast around, flail around, looking for a coherent line of defence, they say, ‘Ah! It’s the world economy.’

The Leader of the Opposition, this morning, in his excruciatingly embarrassing press conference—I actually had some sympathy for the Leader of the Opposition, trying to defend the indefensible this morning; it was excruciating—said: ‘The fact is that every economist, every economic writer in this country, will be making the same observation that Joe and I have made here today, which is that the biggest factor has been the overwhelming contribution from net exports.’

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

It’s true.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The shadow Treasurer says, ‘It’s true.’ Let us see how they are going. He said that a couple of hours ago. Let us see how that prediction is coming along. Michael Blythe, Chief Economist at the Commonwealth Bank, said:

This reflects the strength of consumption in the first quarter, helped by the government stimulus packages and the net exports gain also contributing strongly.

So, a balanced view: net exports and the government’s stimulus package. Craig James, Chief Economist at CommSec, said:

Much of the credit—

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

Mr Hockey interjecting

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The shadow Treasurer says, ‘Oh, CommSec!’ What would they know!

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

They want people to buy shares. That is what they want.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Craig James said:

Much of the credit for Australia’s resilience must be given to the swift actions of the Reserve Bank and government in stimulating our economy.

Apparently CommSec is not an independent commentator! Those socialists down at CommSec, you have got to watch them! Rory Robertson from Macquarie Bank—now there is a bunch of socialists for you!—said:

But the general story is the Australian economy has held up very well in the face of the most savage downturn in a generation, and the reasons for that are (1) the Reserve Bank has taken interest rates to a generational low, (2) the government has been more aggressive than ever in supporting the economy through expansion.

So that is Macquarie Bank. Then we have Su-Lin Ong, from RBC Capital Markets, who said:

So it clearly looks like the fiscal stimulus and the monetary stimulus have boosted disposable income and helped growth in the quarter.

So we had the Leader of the Opposition a few hours ago saying, ‘Every economist, every economic writer in the country is going to agree with us.’ That prediction was wrong before he had said it, but it was certainly shot out of the water within hours of him saying it. Again we see the Leader of the Opposition’s economic credibility in tatters.

Here is a fact: without the economic stimulus packages of the government, it is estimated that the GDP growth in the last quarter would have been minus 0.02 per cent. So, if the Leader of the Opposition and the shadow Treasurer were in charge, Australia would be in official recession. Well done, Joe! Australia would be in official recession. The opposition want us to believe, on the one hand, that it is all down to the world economy, that the government’s actions have had absolutely no impact on economic growth over the last quarter, but, on the other hand, when it suits them, they say, ‘Australia, of course, should be doing much better than the rest of the world’—and of course we should and of course we are.

The opposition have chosen to throw their economic credibility to the wind. They have chosen to run a campaign based on cheap sophistry. They have chosen to run a cheap scare campaign on debts, and they interchange the figures of gross and net debt when it suits them. They refer to net debt when the Howard government was in office, but they refer to gross debt when the Rudd government is in office. What a ridiculous approach to take, to treat the Australian people like mugs, to say to the Australian people: ‘You can’t understand these complex economic equations. You can’t understand the reason for Australia needing to go into deficit, you wouldn’t understand the fact that revenues have been written down, so we will engage in a cheap scare campaign.’

The problem with that is that it does not stand up to a skerrick of analysis, and the threadbare nature of this argument was made particularly clear, I thought, in a very good opinion piece today in the Financial Review. You might say: ‘Who wrote it—who wrote this opinion piece? Which individual wrote it?’ Well, there was no individual. It was, if you like, an open letter from some of the most credible and respected economists in Australia, people like Fred Argy, Tony Cole, Saul Eslake, Bernie Fraser, John Freebairn, Stephen Koukoulas, Andrew Leigh, John Quiggin, Glenn Withers, the list goes on—all names honourable members would be familiar with as very eminent Australian economists. Does the shadow Treasurer disagree that these are eminent economists?

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

Bernie Fraser?

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

He says ‘Bernie Fraser’. The former Governor of the Reserve Bank and the former Secretary of the Treasury, what would he know! So it is a list of probably 20 economists—I have not counted them—and the shadow Treasurer says ‘Bernie Fraser’. What would he know! They are probably the 20-odd most credible economists in the country. This is what they had to say:

There is no more effective way to stimulate the Australian economy quickly.

They are referring to the government’s actions:

There is no more effective way to stimulate the Australian economy quickly. The success of this measure can be seen in the relative strength of Australian retail sales compared with almost any of our peers. In addition the government plans to spend many billions more on infrastructure.

That was before today’s figures, before they were aware of today’s figures. That was just based on retail trade figures. Now, they are further supported by the economic growth figures. They conclude by saying this:

Deploying our strong balance sheet to use otherwise idle resources—or to put it more compellingly, deserted factories and unemployed workers—to build assets that improve our lives and our economy in the future, seems much more appealing; much more commonsensical than retreating into phobias.

What an eloquent way of putting it—not only putting the argument in a very sound economic framework but putting it in a human framework, pointing out that unless the Australian government acted and stimulated the economy we would have deserted factories and we would have more households affected by an unemployment rate much higher than it is. The opposition are fond of saying, ‘It’s not your money; you’re spending money that’s not yours.’ Well, these are not our jobs we are protecting, either; they are the jobs of our constituents.

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

Oh, come on!

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

These are the jobs of the people who rely on us to see us through this global crisis. They are not your jobs and they are not our jobs; they are the jobs of the Australian people. They are the people who are relying on us to see it through. They are the people who are relying on us to say that the global recession is the worst in 75 years but we will see it through; we will do whatever it takes to stimulate the economy to ensure that we will protect jobs. And in a fleeting flicker of honesty this morning the shadow Treasurer admitted that the government’s actions have supported jobs.

There are more tough times to come. We are not through this. This is not the end of the global recession. Today’s figures are not a cause for celebration across the land, but they are an indication that we are getting through. They are an indication that we are seeing the worst of the global crisis and we are getting through better than anybody else. There are tougher times to come. We do unfortunately expect unemployment to rise more. But Australia is better positioned to get us through these tough times, with a government that is prepared to take action. We are better off with a government that is prepared to engage in a conversation with the Australian people about the challenges facing us. We are better off with a government that is prepared to say, ‘We need a deficit, and we do not apologise for protecting and supporting jobs.’ We are better off with a government that is prepared to take the tough decisions, rather than with the cheap opportunists who sit opposite, who have thrown away all the economic credibility that they would say they built up over 11 years—thrown it away in a cheap attempt to score political points in the face of the gravest economic crisis facing the nation.

The Australian people know that they are better off with a government of realists rather than a government of opportunists. Not only do the Australian people know it; every economic commentator knows it, to paraphrase the Leader of the Opposition. Every credible economist and economic writer in the country knows that the opposition’s argument is laid threadbare for all to see and that their credibility lies in tatters. For 12 months they have flailed around trying to find a coherent economic argument. For 12 months they have changed from position to position. They said, to start with, ‘We support the first economic stimulus package,’ and then they said, ‘Oh, it’s not working; we’re seeing unemployment go up, we’re seeing economic growth go down—we now oppose it.’ Then we had the second economic stimulus package and they said, ‘We don’t support that; we support tax cuts instead.’ The shadow Treasurer’s predecessor said, ‘We support broad and sweeping tax cuts which will reduce the deficit’—just before she got dumped as shadow Treasurer, unsurprisingly; but it is a view from which the current Treasurer has not dissociated himself. They actually support broad and sweeping tax cuts which would increase the deficit and increase debt. And now they have settled on the argument that the debt and deficit are too high. They have settled on the cheap argument that Australia is in too much debt—’We’ll ignore Australia’s debt levels compared to the rest of the world; we’ll ignore the size of the deficit compared to those of the rest of the world; we’ll ignore the fact that the government has brought down a deficit of less than five per cent of GDP when the average for advanced countries around the world is nine per cent—we’ll ignore all that; we’ll just run this cheap argument.’ In these difficult times the Australian people look not only to the government for leadership; they look to this parliament for leadership. What they see from our side is leadership. What they see from that side is cheap opportunism.

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

From the very beginning of the major economic downturn, when we had the collapse of Lehman’s, the government has sought to define this as the worst financial crisis in 75 years. And that argument morphed into a domestic threat, rather than it being an external threat which needed to be dealt with. I cannot help but reflect on two things: firstly, the economic data which was released today; and, secondly, the broader issues relating to the direction of the economy.

Firstly, there was some interesting data that was released today, apart from the headline GDP figure. I want to draw the attention of the House to page 9 of the national accounts, which has a table reflecting the terms of trade. What you will note is that the terms of trade actually continued to grow over 2008 to record levels—so much so that, as of today, the terms of trade are far more favourable to the Australian economy than at any time during the so-called mining boom during the years of the Howard-Costello government. The terms of trade today, on this graph, are more favourable to the Australian economy than at any other time under the previous government. That is today. And that, of course, has helped cushion the Australian economy from the full impact of the global economic downturn.

Secondly, the Australian financial system does not have major financial institutions in distress—in fact, all four of the major Australian authorised deposit-taking institutions are in the top 12 of the world’s performing banks. That is something that has not been achieved before. It would have been extraordinary to suggest that Australian financial institutions would have a bigger market capitalisation than the 800-pound gorilla Citigroup, which has over 300,000 employees and a balance sheet of enormous scale. It would have been extraordinary to believe that the Australian banks would be larger than Citi, but that is what the global financial meltdown has done—it has changed the dynamics. So (1) Australia has had incredibly favourable terms of trade; and (2) it has had extremely well performing financial institutions. And, when it comes to the public finances, it was the coalition that left this government in the very best shape directly as a result of getting the budget into surplus, with hard yards all the way along but particularly in the 1996 budget—which many of us well remember.

Thirdly, this government inherited an economy with strong fundamentals such as low unemployment, even though it has risen dramatically from four per cent to trend unemployment of 5.5 per cent, and they have inherited a vibrant small business economy.

So when the results came out today it was perfectly clear that the government, through its massive cash splash, has not only put Australia into a level of debt that we have not experienced since World War II, but the government may have bought itself a little bit of time to claim that it can get through a technical definition of a recession. But when you actually look at the details of the figures you can identify that even though on this occasion Australia, thankfully, has avoided the technical definition—more the media definition—of a recession the fact of the matter is that there are some fundamental issues that are of concern.

The government has been quoting a number of economists. There are only two economists who, two weeks ago, were predicting that this would be a positive quarter: Barclays and Deutsche Bank. I declare an interest with Deutsche Bank, although I do not often agree with Tony Meare. The interesting assessment from Tony Meare at Deutsche Bank today is:

The things that matter—demand and income—were exceedingly weak in quarter one as the table presented below suggests. While the absence of two consecutive quarters of negative GDP growth will confound the media’s simplistic technical definition of a recession, the detail of the report clearly reveals the progression of Australia’s recession that commenced in the third quarter 2008 and is continuing into mid-2009 as the corporate sector increasingly retrenches.

It is a very interesting piece. To add to it, take UBS, another major global bank. UBS said:

However, the weak state of the economy in early 2009 is evident when extracting the external sector, which added 2.2 per cent to GDP in the quarter. Domestic demand fell one per cent. Non-residential construction was down 4.3 per cent. Housing investment fell 5.6 per cent. Equipment investment was down 9.6 per cent.

The government says that everything is okay—mission accomplished, they have done it all. Yet the fundamentals behind the headline figures are a major ongoing concern.

JP Morgan, another not inconsequential major global bank, said that business investment tumbled 6.1 per cent and that the seven per cent slump in import volumes in the March quarter contributed, as did the overall net export figure, to the very significant improvement in the GDP. The most interesting detail in the JP Morgan advice is that the details of the GDP report painted a rather gloomy picture.

Economists will argue, but the fundamental point is that we are now all arguing today about how deep the hole will be. There is a hole and it is deep and someone is going to have to help Australians to get out of the hole. The only way you can get Australia out of this hole is if you have the capacity to lift people out of adversity when it really matters. It is perfectly true, I think, from this data to now recognise that our economic destiny is closely linked—even more closely linked—to Asia than it is to Europe and the United States. This is the interesting thing that comes out of today’s data. You can have an extreme economic meltdown in Europe and even in Japan and the United States, but Australia’s economic future is very closely linked with our Asian neighbours.

The fundamental point we are arguing about debt rests on our capacity as a nation to come out of this downturn. What we cannot discount under any circumstances is that our friends and our neighbours in Asia, who are both our clients and our competition, will throw everything at the economic recovery: lower wages than anything paid in Australia and lower taxes than anything charged in Australia. They will stimulate their economies aggressively to come out of this economic downturn, and the Australian government will not have any juice in the tank to be able to compete in our region with our clients and our neighbours. Why? Because Australia is a massive importer of capital, and, given that the world got into these troubles by borrowing too much money, it simply defies logic to believe that when governments borrow too much money there is not a consequence. Yet the government here expects us to believe that. There will be a cost. The greatest cost—the consistent cost—the cost that no economic data can wave away is the debt that this government is accruing. The repayment of that debt is the greatest economic challenge over the next few years because we need to have the capacity to repay that debt whilst preserving the jobs that are going to keep Australian families with growing personal wealth.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

I must admit I am completely flabbergasted with the proposition in this matter of public importance. When I first read it, I have to confess that I thought it was referring to the Howard government and that we were missing a word there because of the extraordinary record of mishandling of public finance by the Howard government. But no, it turns out the opposition are talking about the Rudd government. It is just another example of the depths of hypocrisy to which they continue to sink to in avoidance of a real, fair dinkum debate about the economy, demonstrating their continuing progress towards irrelevance on this essential economic debate.

It is worth while examining their credibility in the administration of public finances. It is quite an interesting story when we look at their track record in this respect. It seems that not a week passes without another ANAO report coming out which refers to yet some more interesting statistics and information about the Howard government’s administration of public finances. I recall that just recently there was a report released on the Howard government’s advertising expenditure. It makes very interesting reading and is particularly interesting for me because it related to the role of the Special Minister of State, as he was then, in administration of those matters. I remind the House that that report highlighted that between July 1995 and November 2007 more than $1.8 billion was spent on government advertising and nearly half of those outlays occurred in the last four years. In 2007, government departments and agencies spent $254 million on campaign advertising. I remind the House that in 2008 under the Rudd government that expenditure was slashed to $86.6 million. That is a saving of close to $170 million.

But I do not want the House to listen to me on this. I think we should go to a more independent commentator on that Australian National Audit Office report. On 13 March this year, Bernard Keane had some interesting comments to make on the ANAO report and in particular on the Ministerial Committee on Government Communications, which was chaired by the Special Minister of State. The audit report really focused on that mechanism because, in reality, the MCGC was not supposed to have the authority to spend money on advertising. That was supposed to lie with individual ministers and department officials with delegated powers to spend money. But the MCGC made many decisions about advertising campaigns, often overriding advice from the departments. This is what the ANAO focused on. The MCGC was spending money with no authorisation. This was a matter on which the ANAO received explicit advice from the Australian Government Solicitor. They received comments from the former Special Minister of State, who said that, because the relevant portfolio ministers attended each meeting of the MCGC, in effect it ensured the decision was being made by someone with authorisation to do so. The ANAO very politely, as Bernard Keane commented, said in a footnote that as part of the audit they examined the complete records of 63 of 66 MCGC meetings held about the campaigns and extracts of the records of the remaining three meetings. The ANAO found no evidence that portfolio ministers attended MCGC meetings.

It was very interesting that the ANAO were interested in the Work Choices advertising campaign. We all remember that Work Choices campaign. What a wonderful expenditure of government money! I show exhibit A just to remind us of that wonderful investment of public money. We must remind ourselves that $120 million was wasted on that campaign. Bernard Keane pointed out that the MCGC ensured that the Liberal Party’s closest friends in the advertising industry got in on the action. None of the tenders for the Work Choices campaigns was put to the market, Bernard said. He said they were either offered by invitation or given directly to a firm without tendering and that only one of the eight major contracts was the subject of a proper assessment as is required under the web of accountability. It is also interesting to note the comments that Bernard made—

Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Who’s Bernard?

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

Bernard Keane, the journalist, also highlighted that anybody who reads those 200 pages of the ANAO report on government advertising will never again refer to any credibility on the part of the Howard government on the management of finances. It is important to remember also that Lindsay Tanner and John Faulkner, the successive ministers, got rid of the MCGC when we got into government.

Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: as uncharacteristic as it may seem I must defend the ministers. He should refer to them by their proper titles.

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

The parliamentary secretary will refer to members by their seats or their title.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

The Minister for Finance and Deregulation and the Special Minister of State got rid of the MCGC when we got into government and handed control of advertising back to the Department of Finance and Deregulation instead of PM&C. They also put in place arrangements for the Auditor-General to vet ad campaigns to determine if they are partisan. As Bernard Keane said, the accountability of this government is light years ahead of its appalling predecessor.

There was another ANAO report which referred to and dealt with the Regional Partnerships scheme. What a wonderful example of the administration of public finance that was. I had a particular interest in the record of that program because in the course of the campaign in 2007 over 100 promises were made under Regional Partnerships in Eden-Monaro alone. Flagrant promises were made to people who had not made applications for funding. Promises were made to people that money was available when it absolutely was not. Many councils and organisations went out and began expending moneys on programs when no process had been applied to those programs or applications, and we were left with an incredible mess to clean up under the Regional Partnerships program. Many of those programs breached the program’s guidelines or lacked required documentation. They were reviewed against the coalition’s own Regional Partnerships program guidelines and found mostly not to conform; nor were they costed and budgeted with the same rigour that was applied to our 2007 election undertakings.

The ANAO report’s scathing condemnation of the Howard government was summarised in the line that they fell short of acceptable standards of public administration. That is a clear condemnation. But, more than that, we found that $110 million or a third of the program’s funds were pumped into just 10 coalition seats. Contrast that with this government’s record on allocations of infrastructure expenditure around the country. We also know that $2 million of that Regional Partnerships money went to Bondi. What a suffering, difficult region Bondi must be. The only cows I have ever seen in Bondi are cash cows. It was gross misexpenditure of a fund that was meant to support regional Australia.

Let us have a look at the record of this crew in relation to the largest strategic management of public finances. ‘Those Howard years were characterised by a failure to align fiscal and monetary policy.’ Those are not my words; they were the subject of a great deal of commentary by the former Treasurer, the member for Higgins, who had a lot to say about his failure to reign in the former Prime Minister and line up fiscal and monetary policy. What was the outcome of that failure? Ten interest rate rises in a row. The income of the family household was chewed up by those interest rates. Let us refer to the record of this government in lining up fiscal and monetary policy since we came into office.

I would like to highlight their record in relation to the Regional Partnerships program through some examples. These examples will show how the Howard government had no idea of how to invest public finances to deal with a strategic situation. A couple of examples from Eden-Monaro illustrate this. There was one private business in particular, a bakery in Eden, for which funding was provided. That business went bankrupt and the workers were dudded. The government, under the Special Minister for State, received another application from the same businessmen, who wanted to set up a bakery in Nimmitabel. Unfortunately, that bakery went bankrupt as well—two bankruptcies in a row. (Time expired)

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

Fiscal failure, deficit and debt are simply parts of Labor’s DNA. Labor’s failure in public finance has not just started recently. We can trace it right back to the last election—notwithstanding the $96 billion debt under the former Keating Labor government. In November 2007, Prime Minister Rudd was elected with some fanfare. Indeed, people had some hope, albeit misplaced. In the May budget of 2008, they proudly stood there and told of a $20 billion surplus. Yet the underlying elements in the budget showed $15 billion of coalition spending axed but $30 billion of new Labor spending starting. And here the fiscal indiscipline began.

The out years in the forward estimates showed expenditure rising by 2009-10 to 5.5 per cent of GDP, the highest out year expenditure in modern history. Yet sneakily they changed the deflator to look at what the growth would be in real terms away from non-farm GDP to CPI so that the growth would not look as large. How is that for being upfront and honest with the Australian people? Yet within 12 months, by December 2008, the government were $14 billion in debt—in 12 months. We all knew that Labor like to spend; we all knew that a debt position was an inevitable outcome—it is in their DNA; it is programmed into who they are. But in 12 months; in 52 weeks? How do you take a country into such horrendous debt, $14 billion, by that month alone?

The May budget this year showed that indeed the deficit for this financial year—when a surplus of $20 billion was so proudly hallmarked—will now be $32 billion. The out years will show another $188 billion, for a combined $220 billion in the next four years plus the current financial year, with deficits through to 2016-17 and a peak debt of a staggering $315 billion. When you add in the ill-thought-through and ill-conceived ideas of Ruddnet and Ruddbank, you are quickly approaching $400 billion. The Prime Minister had no ticker for the truth and could not say the word billion, and will now have to confront the Australian people and say, ‘I’m putting you into hock for over a third of a trillion dollars.’ The numbers are staggering.

To pay back the debt by 2022—which was the year that the Prime Minister proudly stated here in the chamber—would require eight years of growth at something like 4.5 per cent of GDP and a minimum of six years of growth at 1.5 per cent of trend. Six years of such growth is something that has never been seen before in the history of the nation and years like that have occurred only twice in the last 30 years and not once in the last 10 to 11 years of economic sunshine.

Indeed, the failure of the government’s ability to control funds and their failure to control public finances can be seen by the fact that since the government were elected and through this financial year and over the forward estimates there is $124 billion in new Labor expenditure. That means that from election night the Prime Minister has been spending new Labor expenditure at $10 million an hour. Can you see it? The Prime Minister goes to sleep in the Lodge for his eight hours or he is on a plane flying somewhere—he has spent a quarter of the time overseas. He gets in the plane, has something to eat, he abuses a stewardess and then goes to sleep for eight hours and in those eight hours he racks up $80 million of debt.

Anthony Byrne (Holt, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I do not know what personal reflections on the Prime Minister have to do with the argument about debt. They are inappropriate and I would ask the member to speak about the matter that is being debated.

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

That is not a point of order. It has been a very wide-ranging debate on both sides.

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

Following his tirade, the Prime Minister wakes up after eight hours sleep. In those eight hours, while has he been thinking of the food that he wished that he had had, he has racked up $80 million of new Labor debt. I can only imagine what the debt position would be if indeed a hairdryer was not available on the plane. Labor cannot help but spend. It is in their DNA; it is who they are. They have no intention of paying the debt off. Their move is to go into structural deficit. (Time expired)

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

The coalition enjoys slandering the Australian economy, as we have just seen. But the latest economic data shows that, despite a global recession, our economy remains comparatively strong. Let’s look at the national accounts March quarter 2009 figures. In the face of the worst global recession in a lifetime, Australia recorded 0.4 per cent GDP growth for the March quarter—against all the odds and to the surprise of most of the economic commentariat. In these worst of times, today’s result is off the charts compared to other economies. Of the 22 OECD economies that have reported March quarter outcomes, 20 have contracted. G7 economies slowed by an average of 2.2 per cent. The unemployment rate decreased by 0.3 per cent to 5.4 per cent and retail sales rose 0.3 per cent in April. Household consumption spending rose 0.6 per cent in the March quarter.

Without the household stimulus payments, which the opposition leader and those opposite opposed—and continue to denigrate, as demonstrated in this House today—Treasury estimates the Australian economy would have shrunk 0.2 per cent in March. In other words, if we had followed the advice of the Leader of the Opposition, Australia would be in recession right now. Indeed, looking at the glum faces and the slouched body language of those opposite today, you would think they were disappointed we were not in recession and our economy was not worse off—no denying it. Have a look at the TV pictures tonight on the news and look at your body language. You are so, so disappointed.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

I was happy!

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

Indeed you are happy. You are happy because the economy was indeed in growth. So I am glad you support it. I would like to hear you speak about it a bit more often.

So I ask: who indeed is out of control in this place? We have a Leader of the Opposition whose party is totally out of control on climate change. We have an opposition caucus which is out of control, if you go by the fisticuffs in the caucus room—

Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

We don’t have a caucus.

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

the coalition party room, with an opposition leader who cannot control his own mob. If you cannot control your own party, you cannot control the nation’s finances.

Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Mr Anthony Smith interjecting

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

If you cannot govern yourselves on the other side, you cannot govern the country, and no amount of shouting by the member opposite is going to change it. The opposition leader’s ‘sit on your hands’ approach to leadership and to the economy is just not right for Australia. The Leader of the Opposition has totally lost control of his own party, and he is desperate to blame others for his own leadership problems. He knows that every day he delays the government’s Carbon Pollution Reduction Scheme he is costing taxpayers in the long run. Every day he delays on climate change he is putting at risk billion-dollar industries like agriculture, tourism and public health. The school and community infrastructure projects he and those opposite have opposed are all about jobs, jobs and more jobs. And the member for Riverina, of course, says she is happy—happy to oppose jobs and more jobs—

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

Mrs Hull interjecting

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

Meanwhile, the Leader of the Opposition and all those that support him, like the member for Riverina, continue to crow about the government debt. At the same time they oppose fair and reasonable savings measures like changes to the private health insurance rebate and the seniors health card. What level of debt he and they would incur of course remains unanswered.

Well, you cannot have it both ways. Tough economic times require that responsible governments make tough economic decisions, and that is exactly what the Rudd Labor government is all about. Today’s figures demonstrate that we are indeed doing the right thing by this economy. That is why we have the good and positive growth figures that we have today. We are very proud of that, but there is a lot more work to do.