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

My question is to the Minister for Finance and Deregulation. How have the government’s stimulus measures helped to support the Australian economy and why is it important for these measures to receive broad support from all parts of the community?

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

I think the member for Lindsay for his question. Could I also wish the member for Higgins well on his departure. It is always a sad day when parliament loses a dedicated Essendon supporter, although the Minister for Trade may not agree with that, and I wish him well. The government has put in place an economic strategy built around stimulating economic activity in various sections of the economy in order to take up the slack being left by the global contraction that is hitting the entire world. In doing so, we are sustaining approximately 210,000 jobs and countless businesses that otherwise would go under as a result of the global recession. That stimulus is going through payments as to maintenance of school buildings, construction of new school buildings, construction of new homes and construction of new road, rail and other projects. That stimulus strategy has received widespread support throughout the community including from most sections of the business community. But, sadly, that support has not been universal. It is particularly disappointing that the opposition not only has refused to support the government’s economic stimulus strategy but has continued to snipe at it in an even more hysterical and unfounded way.

But last Friday the shadow Treasurer, the member for North Sydney, broke his own previous world record for silliness when he blamed the Commonwealth Bank’s increase of 0.1 per cent in its interest rates on the government’s stimulus package. I note that this was coming from a former cabinet minister from a party that when in government promised to keep interest rates at record lows and then delivered 10 interest rate increases in a row. I note also that a respected economics commentator and member of the press gallery described these claims as ‘bizarre garbage’. I think that is a very apt description of the accusation that the shadow Treasurer made.

The factor that has been driving the separation of market interest rates from official Reserve Bank of Australia interest rates over the past 12 months or so is universally acknowledged as the turbulence on international financial markets, on global financial markets. That is certainly the reason that the Commonwealth Bank has advanced for the position that it has taken with respect to its market interest rates: the higher cost of wholesale funding flowing through from international financial markets into market interest rates in Australia. In effect, the position being taken by the shadow Treasurer and being endorsed implicitly by the Leader of the Opposition today says that projected Australian government borrowing, the vast bulk of which has yet to occur, is pushing up interest rates in global financial markets and that is crowding out private sector activity in global financial markets. Any examination of the facts will demonstrate that this cannot be the case because the Australian proportion of total global government borrowing is extremely small, as the Prime Minister outlined before, and Australia has the lowest projected debt profile of all of the major developed economies in the world.

It is interesting to note, if you want to follow their arguments and if you want to follow through the logic of some of their statements, and also it is always worth referring back to what the opposition said a little while ago. In effect, what they are saying at the moment is that the government is borrowing in order to finance stimulus payments and that that borrowing is crowding out the ability of Australia’s banks to finance lending and as a result they have to push up interest rates. It is not that long ago that an opposition member stood here telling us that those same payments were not going to be spent. They were going to be saved. They were going to end up with the banks. They were going to end up in people’s bank accounts. So somehow or other the banks are losing money as a result of borrowing for the stimulus payments which are ending up with the banks, according to the position of the opposition. The same person has also said that, should the opposition be elected and were it in office tomorrow, it would maintain the government’s stimulus strategy. With Laurie Oakes eight days ago, when asked about this issue, the shadow Treasurer, the member for North Sydney, said that it was hard to unscramble the egg and that the opposition, were it to become the government tomorrow, would maintain the government’s stimulus strategy. The shadow Treasurer has a habit, unfortunately, of saying whatever pops into his head irrespective of substance, rigour and any kind of content.

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

What am I thinking now? What am I thinking now, Lindsay?

Julia Gillard (Lalor, Australian Labor Party, Deputy Prime Minister) Share this | Link to this | Hansard source

’When’s Malcolm Turnbull retiring?’—that’s what you’re thinking.

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

That is right. There are two people who are very glad you are going, Peter, and they are both on that side. In the same interview with Laurie Oakes eight days ago, the member for North Sydney accused the government of ‘spending record levels on advertising’. I thought I had entered a parallel universe on that Sunday morning. It was early in the morning and I was a bit concerned about my state of mind. I thought I had better check the facts. The facts are these: in calendar 2007 total spending on government campaign advertising, $254 million; in the 2008 calendar year total spending on government campaign advertising, $87 million—in other words, barely a third of the record level set by the former government of which the shadow Treasurer was a member.

In conclusion, I would like to draw the House’s attention to the shadow Treasurer’s solution to the problem that he believes is there with government spending and borrowing crowding out the private sector. He says, ‘The government should spend less money.’ Now, there is a slight problem with that. There is something of a problem as those opposite have yet to nominate a single savings proposal in 18 months—not one. They say they would continue with the government’s stimulus payments were they in office tomorrow. They continue to block government savings initiatives in the Senate and, of course, they keep dropping out expensive new promises on top of that. So for them, as the opposition, to suggest that the government should be spending less money would be slightly more credible were they to actually act in opposition in the same way as we did and put forward savings proposals, as the Prime Minister, the Treasurer and I did in opposition prior to the 2007 election. It is time that the opposition put the shadow Treasurer out of his misery. I used to think it was crook that they had a shadow Treasurer who nicked other people’s lines. I have now worked out there is one thing even worse. That is someone who makes up his own.