Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

My question is to the Treasurer. I refer the Treasurer to the recent statement by the Reserve Bank governor:

… the downside risks to which the Board was responding earlier have not materialised.

Given that this is the case and that the Reserve Bank is now increasing interest rates, why are the government continuing to pursue their record spending, which will only put further pressure on interest rates, especially for the more than 200,000 Australians they have just convinced to buy a new home?

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

Of course, the question is based on a fundamental miscalculation, a fundamental misrepresentation and a fundamental lack of judgement by all of those opposite. The fact is that both fiscal policy and monetary policy are both working and going in the same direction, just as they did when we were responding to the crisis. As the economy has begun to grow, monetary policy is gradually going to be withdrawn.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order on relevance. I made reference to interest rates increasing and increased spending—

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

Order! The member for Cook will resume his seat. The Treasurer is responding to the question.

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

Is it the shadow minister’s proposition that interest rates at 50-year lows could remain there forever? Is that the proposition he is putting forward—yes or no? I think the Australian people have a lot more common sense when it comes to this issue than those who are sitting opposite. They understand. They understand that interest rates could not stay at 50-year lows forever. They absolutely understand that. They understand that adjustments will be made. They also understand that the government put in place our economic stimulus at a time when this country was in dire need and under threat from a global financial crisis and a global recession. The consequence of that has been the best performance of any advanced economy.

That is really what gets up their nose—that in this situation the government has been effective, the government has been competent and the government has put to the forefront of all of its actions protecting the jobs, the families and the small businesses of this country. To score a political point, because they voted against that and they have been embarrassed about it, they are now calling for the complete withdrawal of all fiscal stimulus. That is the proposition that they have been putting forward, which would push unemployment back through the roof. If he really believes what he said, he is really saying that he is in favour of putting builders and tradies out of work. That is where they are.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order on relevance. My simple question was: why are you continuing to pursue the record spending—future tense?

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

Order! The member for Cook will resume his seat. The Treasurer is responding to the question.

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

The economic stimulus that we put in place, responsibly, had its peak impact in the June quarter of this year. In each quarter after June it is withdrawn. For every quarter of next year it will subtract from growth. So the economic stimulus is being withdrawn. It was designed to have its maximum impact at the time that it was really required, in our hour of need, and of course that was in February this year, when those opposite walked into the parliament and voted against the Nation Building and Jobs Plan—one of the most effective economic stimuluses put in place by any government anywhere in the world. Following the advice of the International Monetary Fund and others, we said it would be timely, temporary and targeted. We designed it to be gradually withdrawn so that, as the private sector gradually recovered, the public sector would gradually withdraw.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Mr Laming interjecting

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

That is how it has been done and how it has been designed. The shadow minister just interjected. I want every builder in the country to know what he just said: ‘We’re crowding them out.’ That is what he said. He is pretending there is no spare capacity in Australia’s construction industry. This is unbelievable. How out of touch are this mob? How out of touch is their housing minister, who is in here pretending there is no spare capacity in the Australian construction industry? How out of touch can they all be? They simply do not walk in the same shopping aisles as the average Australian.

We understand that there is a need to continue to provide some support because there is spare capacity in the Australian economy and because unemployment will continue to rise. We understand that many people out there, although employed, are working far fewer hours than they would like to work. In fact, all of those reduced hours add up to something like 200,000 full-time jobs, over and above the increase in unemployment that has occurred in this country that the Acting Prime Minister was talking about earlier. So there is still substantial spare capacity in the Australian economy, which is why it does require support. But it is also why, as the private sector growth returns, the monetary policy response from the Reserve Bank will be wound down, as indeed our fiscal stimulus was designed to be wound down. But the opposition want to continue a fiction which no-one else in Australia believes. It demonstrates just how incompetent and how unfit for government they are that they could walk into this House and claim that interest rates could stay at 50-year lows forever and pretend that they are not four per cent below the peak that they were only a short time ago—which has of course been of enormous benefit to an enormous number of people in this community.

What we have to do is sensibly manage the recovery, and that is what we are doing. That is why we designed the economic stimulus, the fiscal stimulus, the way we did: to support Australian families, to support employment and to support vulnerable sectors of the economy until private demand returned. The Acting Prime Minister before referred to the fact that the outlook internationally is uncertain, so in the middle of this we have to be very careful in the way in which we manage the recovery, in the way in which we withdraw our stimulus and in the way in which we continue to support the economy. The livelihoods of tens of thousands of families and businesses depend upon it. It is a pity that those opposite do not realise that.