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

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

The consequences of the government’s reckless spending for Australian families and small businesses.

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—

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

Five months, one week and one day ago the Treasurer stood at the dispatch box and delivered his second budget. In doing so he embarked, on behalf of the government, on their path of reckless spending, racking up deficits and debt with consequences that will flow for Australian families and small businesses for years to come. We have made that case since budget day; we have made that case here in the parliament and we have made it in the public arena.

I put to the House that the Treasurer himself knows that the path of reckless spending that this government has embarked upon will have very serious consequences indeed. I say that because five months, one week and one day ago, when the Treasurer stood at that dispatch box and delivered the budget speech, in 30 minutes of speaking he deliberately failed to mention the size of the deficit. That was very much publicised at the time. In that same speech he went out of his way not to mention the dollar figure of the peak level of debt.

The press gallery thought it rather strange that a Treasurer could deliver the speech without mentioning the size of the deficit. The day after the budget speech he was asked about it on Radio National, by Fran Kelly: ‘Why didn’t you mention the deficit? Do you want to say now what the deficit is?’ ‘57’, he said. Not 57 billion, just 57. And in case there was any doubt, this was followed by almost a week of verbal gymnastics from the Prime Minister, who went out of his way not to mention the dollar figure of the peak level of debt. It culminated in an extraordinary interview with Tony Jones on the Lateline program. Tony asks:

What’s the peak figure?

The answer? ‘Blah, blah, blah’ then:

… 13.8 per cent of GDP.

Tony asks:

How much of that is in tens of billions or hundreds of billions of dollars; how much is that?

Again, the Prime Minister refuses to answer with a figure. Again Tony Jones asks:

But I’m just asking for one figure.

After more verbal gymnastics from the Prime Minister, Tony Jones finally, exasperated, says:

That figure is $300 billion, is that right?

The PM answers:

As I said before, 13.8 per cent of GDP …

That went on for half the interview.

The reason I go through those is that, whilst we and a number of commentators have made the case about the level of deficit and debt, those two illustrations, the failure to mention the budget deficit in the budget speech and the verbal contortions of the Prime Minister—the evasion, the absolute determination not to mention the peak level of debt in dollar terms to the Australian people—perhaps more than anything else confirm that both the Treasurer and the Prime Minister have a guilty conscience about the level of debt and deficit. The fact they went out of their way not to mention those two figures on budget night and in the days that followed confirms that, in their heart of hearts, they know that the level of deficit and debt is higher than it needed to be. The fact that they would refuse to be up-front with the Australian people is the confirmation of that.

If you have listened to the Treasurer in question time this week, you would know that he would have the public and this House believe that there is absolutely no relationship between the size of net government debt and the effect on monetary policy. He knows that that is not right. We have had economic commentator after economic commentator make the obvious point that the stimulus should be being wound back. A week or so ago on The 7.30 Report, Professor Ross Garnaut was asked about this. His answer was telling. He said:

… once there are signs that the economy is recovering faster than had been anticipated, then it’s appropriate to pull back that stimulus at a faster rate.

The Treasurer ignored that in question time this week. Professor Ross Garnaut said that the stimulus should be wound back ‘at a faster’—or ‘quicker’, or whatever word the Treasurer needs to understand—‘rate’ ‘once there are signs that the economy is recovering faster’. On Monday on Perth radio, Chris Richardson of Access Economics said:

You can now say that the stimulus was too big.

The Treasurer might want to ignore everything the opposition says, but he is now ignoring respected economic commentators who know that there are consequences for families and small business, for all Australians, when government debt is higher than it needs to be, when deficits are higher than they need to be. As I said earlier, I think the Treasurer does understand, in his heart of hearts, that there will be consequences. I am not sure whether the Prime Minister understands that. I am sure the Deputy Prime Minister, the master of disaster, does not understand that. But the consequences are always there at the end of the day for families and small businesses.

When Australia’s net debt peaked at $96 billion in the final year of the Keating government and the first year of the Howard government, it took 10 long years, one month and a few days to pay it off. In fact, 21 April 2006 was debt-free day. The cost of paying off that debt was big for families and small business, for every Australian. At the most obvious level, the interest costs peaked at around $9 billion a year, meaning that $9 billion was being spent on interest payments rather than on important services for the Australian community. It took 10 long years. It has been said that going into debt is as easy as riding down in an elevator but paying it off is like walking back up the stairs. With the magnitude of what this government has done, it is more accurate to say going into debt is like the government abseiling down a mountain and paying it off is like the Australian people having to climb back up.

The consequences for families and small business, for all Australians, really boil down to this: when in our personal lives we incur debt through a mortgage or on a credit card, we pay it back, but, when a Prime Minister and a Treasurer do the same thing at a national level, all Australians pay it back. Many people have talked about the government spending as being like handouts. That is true at one level, but it disguises that all of this debt has to be paid back. The spending is really loans, because it is all paid back. It is not paid back in the same way mortgage and credit card debt is paid back, but it is paid back. It is paid back by the community not having the services they otherwise would have. It is paid back by interest rates being higher than they would otherwise need to be. For those opposite to argue that there is no relationship there is to argue that it would not matter how high debt got—it would not affect interest rates. No self-respecting member of the government would argue that. I doubt the minister at the table would argue that. Of course, ultimately, with Labor governments, when they cannot make things add up they pay back debt with higher taxes. That is where the story always ends with the Labor Party, if they are given a chance.

We have seen in a number of policy areas the Labor Party slowly beginning to emerge from their witness protection watch-house. In the area of private health insurance, we have seen a clear breaking of an election pledge. In the area of superannuation, we have seen a clear breaking of an election pledge. Before the election, the Labor Party pretended to believe in fiscal conservatism. They even believed, at the end of the day, in tax cuts—so they said. But you only need to look back at what the Labor Party said before they entered their witness protection watch-house to know what they really believe. What they really believe is what they will do in the future if they are given a chance to con the Australian people.

Back in 1994, the current Minister for Finance and Deregulation said in this House:

We should have an inheritance tax or some tax of that nature. Deemed capital gains tax on death is another option in that regard. We are one of the few major countries that does not have some form of taxation for those circumstances where tax is the most equitable, the most efficient to collect and—

get this—

the least painful for the individual taxpayer.

I think what he meant was that it was not painful because they were dead—it would not be the least painful; it would not be painful at all. He then went on to say:

… there should be more steps in the income tax scale. For example, there should be a return to the 60c in the dollar tax rate for people earning over $75,000. I point out to members of the opposition that, contrary to the sort of rhetoric we often hear in here, Taiwan, for instance, has its highest marginal rate set at 60c. It also has a total tax take that is now higher than Australia’s. Yet Taiwan is moving ahead in leaps and bounds.

It is quite clear what the minister for finance really thinks: higher taxes, 60 per cent tax rates and a higher total tax take. This is just one example of where the Labor Party will take Australia if they are given the chance.

The consequences for families and small business are very simple: they always pay back the debt and they pay for the cost of that reckless spending all the way through. We have seen reckless spending on so many levels. We have seen it in the education portfolio and we have had yet another example today. But, as I have said, the Labor Party have begun to break their election promises on private health and superannuation. If given the chance, they will do a lot more in the future to pay back the debt that they have racked up. With Labor governments state and federal, it always ends the same way: deficit, debt, higher interest rates, higher unemployment and, ultimately, higher taxes. The cost of Labor and the Labor Party is always too high.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

What a dreary, tired speech from the shadow Assistant Treasurer. People talk about governments getting tired, but here we are not even two years into this parliament and we have a tired opposition. The member for Casey is one of the younger members of the opposition—he was born in 1967. You would think that he would at least fire up. We know there are some more senior citizens in the opposition, but I would have thought that one of the younger members of the opposition would have a little bit of energy and be able to make some compelling arguments. Instead, when he finishes his speech he gets one tired ‘Hear, hear!’ from the member for Groom.

I want to go to the last part of his contribution today because the first part of his contribution was just a rerun of what—

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

What were you yesterday? Danger, danger: Will Robinson approaching!

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

Danger, danger, the member for Riverina!

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

the coalition said after the last budget. There was nothing new in that, just the same tired old rhetoric, but the shadow Assistant Treasurer did make some claims in relation to taxes to which I would like to respond. He asserted that Labor is always the party of higher taxes and higher tax rates.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

Mr Dutton interjecting

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

And here we have the member for Dickson—or I think he is the member for Dickson. He is the current member and, as long as no opportunities arise in Fairfax or Fisher, he will probably confirm that he will be running again for Dickson. Why? Because his options are completely exhausted.

Opposition Members:

Opposition members interjecting—

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

Order!

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Let’s be clear: if he had any option at all he would take it. He would run away—cut and run out of Dickson—but he has run out of options because the LNP has absolutely framed him. He was described yesterday in the Gold Coast Bulletin as ‘the Liberal Party’s poster boy’. Well, a poster boy has just been framed by the Liberal National Party.

Madam Deputy Speaker, I refer you to Budget Paper No. 1 of 2009-10. It shows a historic record of taxes as a share of GDP. I can report that the coalition was the highest taxing government in Australia’s history. Let me repeat that the coalition was the highest taxing government in Australia’s history. The member was talking about misrepresentation. Madam Deputy Speaker, let me take you through the basic figures. In 2000-01, taxation was 24.7 per cent of GDP. In 2002-03 it was 24.6 per cent; in 2003-04 it was 24.5 per cent; in 2004-05 and 2005-06 it was 24.9 per cent; and in 2006-07 and 2007-08 it was 24.6 per cent. So 24 point something high like six, seven, eight or nine is the coalition’s record.

The highest level it ever went to under the previous Labor government was 23.8 per cent, proving conclusively that the coalition is the highest taxing government in Australia’s history. Then the shadow Assistant Treasurer went to the argument of high marginal tax rates. The fact is that when Labor came to office in 1983 the top marginal tax rate was 60 per cent, gifted to the Australian people by the Fraser government whose Treasurer was none other than John Howard. It was a Labor government which reduced the top marginal tax rate from 60 per cent to 49 per cent and further subsequently. So, on both counts of the shadow Assistant Treasurer asserting that Labor is the party of high taxes, he is wrong. The coalition is the party of high taxes.

It is very interesting to go through the whole episode of the stimulus package and the efforts to which this government has gone to support working families in Australia and to support small businesses in Australia. We acted early and we acted decisively to support jobs and to support small businesses. As a consequence of that, we have the strongest growth in the developed world. We are the only country of the major advanced countries that did not go into recession. I say that is good news for working people and that is good news for small businesses. I think that is something of which we can be proud. Indeed, the small business community itself recognises this. The Sensis survey of September 2009 says:

Business confidence among SMEs rebounded during the past quarter recording the strongest rise since the inception of the Sensis® Business Index more than 16 years ago, rising some 20 percentage points during the quarter.

It goes on to say:

This quarter’s strong improvement brought confidence to its highest level since August 2007, before economic conditions started to decline.

And finally:

Support for the Federal Government rose strongly, with small businesses remaining strongly supportive of the economic stimulus package and efforts to get the economy going.

There is the small business community speaking out in support of the stimulus package and yet we have the shadow Assistant Treasurer saying that the stimulus package is too big and that perhaps it should not have occurred at all. What would happen to small business in this country either if the stimulus package had not proceeded—because it is hard to pin those opposite down on exactly their view as to whether or not there should have been any stimulus—or if, indeed, the stimulus was now withdrawn, which is what the shadow Assistant Treasurer just argued?

The consequence of that for working people in this country would be that 100,000 more Australians would have their jobs at risk and small business would be smashed by the reckless, irresponsible policy prescriptions of the coalition saying that the stimulus should be now withdrawn. The fact is that this is nothing more than rank political opportunism on the part of the coalition. They have their self-interests, their personal interests, ahead of the national interests, ahead of the interests of the working people of this country and ahead of the interests of small business people of this country.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Link to this | Hansard source

Mr Ciobo interjecting

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

The member for Moncrieff is a serial interjector in this debate. I will be fascinated to know whether the member for Moncrieff, the shadow small business minister, will make a contribution to this debate which has been initiated by the shadow Assistant Treasurer. The matter of public importance actually refers to the impact on families and small businesses. I look forward to the contribution of the member for Moncrieff. The Gold Coast is small business central. If ever there was a place that was reliant on small businesses and their success it is the Gold Coast, yet this is the man who fell like a stone, who plummeted like a stone, down to 93 and who fell out of the top 100 with the member for Forde rating well above him. He is joined, of course, by the member for Dickson, who went scurrying back to Dickson when he was knocked over by Karen Andrews. That is where the poster boy was framed because the member for McPherson said: ‘Come in spinner. Come down to the Gold Coast; I’ll secure the seat for you.’ Of course, the member for McPherson went on holidays. He made no phone calls, he missed out, he got framed and now he is back in Dickson saying, ‘The real reason I went back to Dickson is that I got 400 emails saying “Please come back to Dickson.”‘ Give us a break. I predict—there is a very good chance—the shadow small business minister will make no contribution to this debate today, but we will see. He still has time to make a contribution. But the fact is that this is an opportunistic opposition. They put their personal interests, their self-interests, ahead of the interests of working families and ahead of the interests of the small businesses of this country. On debt and deficit, they are doing nothing more than running a dishonest scare campaign. Australia has the lowest debt and the lowest deficit of any country in the advanced world.

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

Why is that?

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Let us just acknowledge, for a start, that we have the lowest deficit and the lowest debt of any advanced country, and you are going around with a dishonest scare campaign. What we need to know from the opposition is whether they support any stimulus and whether they ever supported any stimulus. Of course, Malcolm Turnbull, the Leader of the Opposition, said at the outset that the cash payments in December of last year were ‘right’ and he was ‘not going to quibble about them’. The next day he started the quibbling, he started condemning them and he said, ‘This is a cash splash; this is a waste of money.’ But, when the retail sales figures came in showing that we had the strongest retail sales of any country in the developed world, he started to change his tune. Indeed, small business retail sales grew more strongly than the average overall. So the cash payments were very good for small business.

Then the opposition leader changed his tune and said, ‘This is not going to create one job.’ First it was about right, then he said it was too much and then he said it was ineffective. Now they are again saying that it is too much. They are all over the place on this. They do their internal polling to see if they can strike some sort of chord with the Australian people. There is no consistency. They will never strike a chord with the Australian people when they put their self-interest first ahead of the national interest and ahead of the interests of working Australians and small businesses in this country.

Let us have a quick look at the coalition economic team, which has every possible position on an economic argument, depending on the opportunity of the moment. The chief opportunist, the opposition leader, puts his own self-interest before the national interest and shows exceptionally poor judgment. Just go to the fake email affair and you will understand what poor judgment he has. How could you entrust economic policy to the Leader of the Opposition? Then there is the shadow Treasurer, who said that jobs are not his top priority. They were running around saying, ‘Jobs, jobs, jobs: that is what we are really concerned about.’ Then at the first opportunity to change tack, the shadow Treasurer said, ‘No, jobs are not my top priority.’ There is no consistency from the shadow Treasurer at all. Instead of focusing on supporting the jobs of Australian workers during the global recession, he was more interested in focusing on his own job. He said on ABC radio in Melbourne, ‘The jobs we have to focus on—

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

This sounds as though you are reading a script.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Indeed; it is a transcript. He said, ‘The jobs we have to focus on are our own jobs at the moment and in my case the job that I want is Wayne Swan’s job.’ How about that? That is from the shadow Treasury. The only jobs that he is interested in are not the jobs of working Australians and not the jobs in small businesses but his own and Wayne Swan’s job. How crass is that? Then he says that he is not even qualified enough to understand unemployment forecasts. He was asked to comment on the unemployment forecast during the crisis and he said to Leigh Sales, ‘Well, Leigh, you’re asking me to look into numbers that I’m not qualified to look into.’ He is not qualified? That is the truth: the shadow Treasurer is not qualified to run the Treasury of this country and the economic policy of this country.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Link to this | Hansard source

Nor is Swannie.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Right on cue, the shadow spokesman on small business comes in. I cannot wait for his contribution to this debate. He has dropped out of the top 100. It is 510 days today since he last asked me a question in this parliament.

Who else have we got in this economic team? We have the Leader of the National Party, who would be the Deputy Prime Minister of Australia. There was a poll conducted on the Leader of the National Party and also on the Leader of the National Party in the Senate, Barnaby Joyce, and some other National Party identities. They could not find him. No-one knew who the Leader of the National Party was. They dispatched the CSI team to look for a little bit of evidence of his existence; a little bit of DNA here or there. But there was no sign of him. He disappeared without a trace. Anthony LaPaglia could not find him. The CSI team was looking for him. ‘Who is he? Who? No, I don’t know him.’ I have a bit of advice for the Leader of the National Party. He should change his name by deed poll to ‘Don’t Know’. If he changed his name by deed poll to ‘Don’t Know’ then his recognition would go up fourfold, because that was the most popular choice in that poll: ‘Who is the Leader of the National Party? Don’t know.’

People do not know who the Leader of the National Party is and they do not know what the coalition stands for. It is all over the place. It is completely opportunistic. The Liberal Party once presented itself as the party of small business, who Bob Menzies described as the forgotten people. Well, you have forgotten small business. You have betrayed small business. It is only through the active and determined support of the Rudd Labor government that small business has a fighting chance in this country to get through the economic downturn. You should be ashamed of yourselves. (Time expired)

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

I am very pleased to speak on this matter of public importance, because the consequences of the government’s reckless spending are quite straightforward for people who are trying to pay off a home: higher interest rates. There is a very simple question that the government has to answer: do they want to spend more or do they want to keep interest rates low? That is the very simple question that they have before them. They can continue their record spending in today’s economic conditions and put further pressure on interest rates or they can stop their reckless spending, wind it back, get it back to manageable levels and take the pressure off interest rates. They can have one but they cannot have both; they can keep spending money in the way that they are or they can have lower interest rates. This is something that the government seem to struggle to understand in framing their economic policy.

Over the last 12 months the government have completely undervalued the impact of lower interest rates. If you listen to the government, the sun only gets up every morning when the Prime Minister commands it to do so, the only reason that we have an economy of any strength in this place is because of him and history started on 23 November 2007. But the Australian people are awake to this. The Australian people understand that when we entered this crisis the Australian economy was the strongest that it had ever been because of several decades of strong economic management but in particular 13 years of very strong economic management under the Howard government. This record of management has contributed to us being in the position that we are in today. The reason that we have a lower level of debt is because we entered the crisis with no debt.

The government have worked to put debt back on the Australian public’s finance sheet. They have totally underestimated the strength of our economy, which was given great support by having lower interest rates. They would have you think that everything that happened was a result of the money that they spent and that it had nothing to do with what happened in China and nothing to do with what was going on with our export sector—nothing to do with any of these factors. In fact, it all had to do with the money that they gave away. But the truth is that lower interest rates have had an incredibly important role to play over the last 12 months in which we have had an easing policy on interest rates and a reduction in interest rates.

Labor have decided that they would prefer the ongoing support for the Australian economy to exist in the form of them spending more money, and spending more money for a very simple purpose: to promote themselves. That is what you see with the hard hats and the luminous vests; that is what you see if you go to their campaign website, which is actually paid for by the taxpayer. If you go there you will see all these little google icons and all those sorts of things. That is what they want to spend money on.

The reason why the government will not draw back on their spending to take the pressure off interest rates is that they want to keep spending money. They want to keep spending money because they want to keep promoting themselves by using taxpayer money all the way from now until the next election and, I add, beyond. They want to spend beyond then because there is a New South Wales state election in March of 2011 and they want to make sure those signs stay up well until that time so that they can help out their state Labor mates.

So Labor have opted for higher spending to promote themselves rather than contracting that spending, getting that spending under control and taking the pressure off interest rates. The government have sought to justify their decision in several ways. Rather than telling us the truth, which is, ‘We just want to keep spending more money because that’s what we like doing, because we like promoting ourselves,’ they have sought to justify it by saying a couple of things. The first thing they have said is that the stimulus has peaked. They are saying the stimulus has peaked and they are arguing that the contribution of their stimulus spending to GDP has peaked, but it is a tricky statistic. And we are used to tricky statistics from this government when it comes to explaining what is happening in the economy. The Treasurer may argue that case, with the figures that have been provided to him from Treasury, but the figure he will not talk about is how much more money he is going to spend.

There is a difference between the relative contribution of a stimulus to economic growth and how much money, in absolute terms, you are still going to spend. And this money is still going to be spent. It is going to be spent over many more years—out to 2011, 2012 and 2013. Even though money may have been paid off to the states at this point, I know that in my own shadow portfolio of housing the money still has not hit the ground. So when this money is actually finally spent—and the bulk of it is yet to be spent; it is yet to hit the ground—that is when we will see this further stimulus hitting the economy although our economy is already performing, as so many have said, in a manner which is far stronger than the government ever anticipated when they first put these measures in place. So the government’s argument that the stimulus has peaked is absolute rot. It is total spin and it is designed to dissuade the Australian people from thinking that there is so much more money to be spent. ‘It’s all winding down,’ the Treasurer is saying, ‘according to the schedules and the timetables.’ That is simply not true.

The second issue they have spoken about, in justifying their position of spending too much money and forcing interest rates up, is that interest rates are already too low. They say that rates in Australia are already at record lows and that they are very, very low. Interest rates are low by Australian standards. The government know that interest rates are low by Australian standards. The opposition also know that it is true by Australian standards, but what the government fail to acknowledge is that interest rates for Australia compared to interest rates around the world are still high. Only four countries in the OECD have higher interest rates, on a cash rate, than Australia: Poland, Mexico, Iceland and Turkey. This is the club that this government aspires to put us in—to see our interest rates rise to the levels in those countries.

The other thing that has happened with our interest rates is that the government have moved first. They have moved before everybody. It was the New Zealand government that just recently decided—unlike our Reserve Bank—to keep interest rates where they were. Why did they decide to do that? The statement of the Reserve Bank of New Zealand was:

As we have said previously, the forecast recovery in economic activity is based on monetary policy continuing to provide substantial support to the economy. We expect such support will be needed for some time. As a result, we continue to expect to keep the OCR at or below the current level through until the latter part of 2010.

Why can the New Zealand Reserve Bank do that? They can do that because their stimulus was not as big and they are not spending money like this government. So New Zealand have given their Reserve Bank the option of keeping interest rates where they are. This government have decided not to do that. They have decided to keep spending money, which takes that option away from the Reserve Bank governor, puts the pressure on and forces interest rates up.

The other thing they sought to use in their argument was simply to deny reality. Despite the fact that the government are continuing their record spending—which is expansionary and the Reserve Bank has actually decided to raise interest rates, which is contractionary—the Treasurer stood in this place yesterday and denied reality. He said:

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.

Interest rates are going up and monetary policy is contracting. Fiscal policy is expanding and the Treasurer is saying that it is going in the same direction.

I had to think about what sort of picture I could paint if I had to explain it to my young daughter. What does something look like when one is going in one direction and one is going in the other direction? I thought back to my own childhood days and I remembered Dr Dolittle and his pushmi-pullyu. For those who need to remember what the Australian government’s economic policy looks like, I can tell them that it looks like this picture: a pushmi-pullyu. One is going in one direction and one is going in the other direction. Now the Treasurer says that we have both of these things working in tandem. This is the Treasurer’s economic policy; it is a pushmi-pullyu. The government are standing there; they have one foot on the accelerator and the other one on the brake. It is called a burn-out, and that is what they are doing to our economy, time and time again.

But if the government will not listen to the opposition when we tell them what they are doing to interest rates and families trying to pay off mortgages, then why don’t they listen to some of the most eminent economists in this country? Talking about the stimulus, Warwick McKibbin said:

It was too big and wrongly focused. Now is the time to step back and reassess the situation.

What about Professor Garnaut? He said:

But once there are signs that the economy is recovering faster than had been anticipated, then it’s appropriate to pull back that stimulus at a faster rate.

Maybe the Prime Minister will listen to Kochie? Mr Koch said:

The Rudd government was commendably quick with its stimulus package to fight the downturn but now it has to be quick to wind it back or face the prospect of an economy which overheats and forces the Reserve Bank to come to the rescue and raise interest rates.

This is a government that is quite happy for the Reserve Bank of this country to do the heavy lifting of economic reform, to take the hard decisions on economics in this country. This government is happy just to stand back and let that happen without doing the heavy lifting—what they know they need to do in this budget.

They are conflicted. They know that they want to keep spending money all the way from now until the next election. In doing so they are going to make it harder for more than 200,000 people who they have just convinced to go out and buy a new home. Recently I was at Ropes Crossing talking to one such home buyer. They never thought rates would move this quickly. They never thought they would but interest rates will move quickly under this government because this government cannot stop spending. (Time expired)

Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

This is a debate focusing on small business, which is notable for the absence of the shadow minister for small business, who is not entering the debate. Not only will his own team not let him ask a question of the minister during the course of, I think, 510 days, but he cannot get a guernsey in the top three speakers on the other side in an MPI. It is time he hung up his badge and looked for a job somewhere else.

Indeed, watching the performance of the member for Casey in opening this discussion, I would say the same to him. The member for Casey was long renowned for his close relationship with the former Treasurer, the member for Higgins. I used to think that part of his job was to make the member for Higgins look a bit good. Now that the member for Higgins has gone and we see the member for Casey by himself, I have to say that the reflected glory was all the other way. The performance today was truly underwhelming. The member for Casey started by referring, thankfully, to the last budget, and that is where I want to start. I want to talk about what the small business community actually said about the last budget. I imagine that the Council of Small Business Organisations of Australia is a group that those opposite take some heed of. COSBOA said that it welcomed the new initiatives that support small business in the budget and then listed a whole raft of things, including the small business tax break and the small business support line. It went on to say this about that $10 million venture:

The challenges that are now facing small businesses in this recessionary period are serious, and small businesses need the confidence to know that there is someone to turn to when things get tough. Having a dedicated first point of contact for enquiries ranging from problems with access to finance through to retail leasing issues will be an important service to small businesses.

That is what it said about that measure in the budget. It went on about other initiatives in the budget. It said of the small business online program that it was designed to help small businesses participate in the digital economy and enter the world of e-commerce. I would have thought that would have met with some approval from those opposite. It certainly met with approval from the small business community. COSBOA said:

Whether you’re a carpenter or a lawyer, a delicatessen or a pharmacy, more and more people use the internet every day to make their purchasing decisions. Government support for small businesses to enter the online world is very good news.

It knows it is very good news. That was an initiative taken in the last budget that clearly was of benefit to small business. The last one I will mention from its statement is the new R&D tax credits, a very important initiative, Minister. Congratulations to you and your colleagues in the cabinet for re-establishing a decent R&D tax credit which COSBOA acknowledged by saying:

The increased government support for small businesses and other firms who engage in R&D is back to where it should be.

Interesting words: ‘back to where it should be’. Not only did COSBOA think it was good that we did it but they reflected on the fact that for a decade R&D had been ignored and relegated to a third-rate issue by those opposite when they had management of the economy.

That was the budget. We then saw substantial packages to stimulate the economy through what has without doubt been the most stressful economic environment in the world for three-quarters of a century. I can remember going to one of the events in my electorate that was driven by the stimulus package. It was the opening of some new defence housing, part of an 800-house package of new defence houses. I remember talking to the contractors who were there. I can remember very clearly my conversations with the management and with the tradespeople. The management said that at the start of the year they were staring down an abyss. A major fall in the market confronted them. They were actually looking at laying off large numbers of their staff. When we as a government announced the initiatives in the stimulus package they decided to hang on in the hope that they might just be able to keep their valued staff on. Not only have they been able to keep their valued staff but they have expanded their staff. They were there doing great work building houses for the men and women of the Australian Defence Force at Upper Kedron, which are now occupied.

These are real jobs—real people in real jobs who then ensure, through the multiplier effect, through all the things they spend money on at the shops and in entertainment at theatres and other places, that other small businesses are able to maintain their operations. All these things are understood by small business contractors and the families who rely on them. It is understood by people around the world that stimulus packages of this kind were essential in addressing the threats that we collectively confronted as a global economy. But it is not understood, even today, by those opposite.

I am reminded of a meeting just this morning when members of the Joint Standing Committee on Foreign Affairs, Defence and Trade met with an ambassador from one of the countries of Europe. The question came up about his country’s handling of the global financial crisis. He referred to the fact that in his country they had actually had to bail out one of the major banks. They had spent $60 billion to ensure the viability of just one bank because it was central to their economic activity. Every government in the world, every political party in the world, has understood that dynamic. It beggars belief that even now the Liberal Party, led by a merchant banker, cannot comprehend those fundamentals.

I want to make some reference to retail turnover as another indicator of what has been going on over the course of the last year as a result of this government’s stimulus packages. The Minister for Small Business, Independent Contractors and the Service Economy made some reference to this. If you go back to October, just before the crisis, you can see the downturn. Our growth in October in retail sales year on year was down to about two per cent. Historically that is comparatively low, if you look over the last four or five years. In November it had dropped to 1.7 per cent. We, like the rest of the world, were heading for that abyss. The government took very strong, clear, decisive action early on to prevent the worst of that affecting the Australian community. And it has shown up very dramatically in retail sales. In December, retail sales increased year on year by 5.7 per cent. Bear in mind that just a month earlier the increase was only 1.7 per cent. So in December it had jumped to 5.7 per cent, and that higher level of confidence in the retail sector has been maintained since: 6.2 per cent in January and 3.9 per cent in February when, I guess, people were paying off their Christmas credit card bills. It then picked up again in March to 6.1 per cent and has been maintained at around six per cent ever since. That is an enormous endorsement of this government’s strategy. And who does this involve in a real sense? It is not just Myer and David Jones and the big stores of the world. This is very much impacting the mums and dads and small businesses in every suburb of every city and in every town of Australia. Yet it has escaped the comprehension of those opposite.

You know, Mr Deputy Speaker, every now and then something comes along in this place and it is just too good to pass up. And when I saw the MPI here I thought, ‘I’ve got to have a piece of this!’ When someone walks along and pokes their chin out and says, ‘Here, hit me here,’ sometimes you just have to take up the offer. When member for Casey stood up and delivered his opening comments here, I thought, ‘Yep, this is the debate to be in.’ How absurd to stand up in this debate, as the member for Casey did and a couple of others will, to argue the point that somehow the government’s support of the economy, our support of the banking system, our support of the retail sector, our support of the construction sector—all of these things—were misguided, misplaced and we got it all wrong.

Reference has been made to the debt, and this of course has been the big-ticket item for those opposite. They think this is their political nirvana to get them out of jail. We do not have time to debate that here fully. I just want to make some reference to an article in August written by Ross Gittins, well known to all of us in this place, where he spoke about the debt and posed the question: ‘So, how worried should we be about that debt?’ He said:

Much less than Turnbull wants us to be. He is exaggerating the size of the debt, misrepresenting the cause of the debt, exaggerating the difficulty we’ll have repaying it, misrepresenting its effect on our prospects and pretending we’ll end up with little to show for it.

I commend the article to all members to read. It is an excellent article.

These are the simple facts, and the confusion of those opposite. The Liberals have said for the last year that they support our initiatives like building new buildings for every primary school, but they voted against that. They said they support the $950 back-to-school bonus that we gave to families at the start of the year, but they voted against that too. They said they support the $900 tax bonus and, yes, they voted against that. They said they supported the 800 defence houses and they voted against that. They said they support the 20,000 social houses and they voted against that. They said they support the rebate of $1,600 for ceiling insulation and they voted against that. And, indeed, they said they supported the $950 bonus for farmers devastated by drought and, would you believe it, even the cow cockies—(Time expired)

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

I rise to speak about the government’s reckless spending and the severe impact it is having, and will continue to have, on families and small business. In the time available to me I will focus on just three words: value for money. That is what we all look for when we run our household budgets. For those of us who have been involved in small business in the past, it is something we focus on in everything we do. We ring around, we get quotes, we want to make sure we get the right price and the job well done. But judging by this government’s reckless spending over the  past six months, value for money is a concept that it simply does not understand. How else can we explain the $12.7 billion cash splash—the $900 sugar fix that should have been used for investing in projects that deliver real long-term benefits throughout our nation, not on a rush for plasma TVs and poker machines. I have no doubt that the cheques in the mail were particularly popular in the electorate, but they were not in the nation’s long-term interest and they did not deliver value for money in terms of benefits to infrastructure throughout the Australian economy.

We are right in the middle of the Spring Racing Carnival so it is timely to reflect on the biggest punt of all time: the $12.7 billion gamble with borrowed money that delivered no long-term benefit to the future prosperity of our nation. Long after that joy of receiving the cheque in the mail, Australian families will be paying off this debt which that has been accumulated for every man, woman and child.

Gippsland’s share of this reckless cash splash, if you do some rough calculations, was in the vicinity of $90 million. I can assure the House that Gippslanders who have spoken to me ever since have been very critical of the government’s reckless spending spree and stated that they would rather have seen that money spent on worthwhile long-term projects such as safer roads, better health services, upgraded sporting facilities in our community.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Schools?

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

I will get to the schools, minister for small business. The consequences of this reckless spending will be felt for decades to come. We know, and the reports on this have come in already, that the health system needs an overhaul. I am sure the Minister for Health and Ageing, who is in the chamber at the moment, would really like to see some of the $12.7 billion allocated to her health budget. But it is gone now, and Australian families can look forward to increased taxes as they pay off Labor’s debt.

The member for Casey correctly pointed out in his presentation in this debate that all this spending will end in pain for families and small businesses. It will end in higher taxes, and who knows what the Minister for Finance and Deregulation has in store for us in the next budget. Higher income tax? Death duties? They have not even ruled out extra taxes affecting the family home. I refer to a Hansard of 1994 which reflects the minister for finance’s opinions in relation to the tax treatment of the family home. He said:

We should focus on the real issues of tax reform. Overinvestment in housing, which has been chronic in this country, has been contributed to by favourable treatment in the tax system. We should abolish negative gearing and modify the capital gains tax exemption by, for example, applying that exemption only to the unimproved value of houses purchased. In that way, there will be no bias in the tax system which impels people to invest in extensions and the like.

Even the family home is not safe from the minister for finance. We are likely to see cuts to services across the board. Families and small businesses will feel the pain of Labor’s reckless spending. As the member for Cook also highlighted, it is as inevitable as night follows day that higher interest rates will follow Labor’s reckless spending spree.

Those opposite like to claim that the opposition rejected any form of economic stimulus whatsoever. That is a fiction or a fairytale, if you like, that they like to promote to keep themselves warm at night when they reflect on the fact that they have fired every shot in the locker and have nothing left for the next challenge when it inevitably arises. Like the member for Cook with his ‘push me pull you’, I am reminded of another fairytale. It is not the one where the ugly duckling turns into a beautiful swan—with all due respect to the Treasurer. The fairytale I am referring to is The Emperor’s New Clothes. That is the one where the emperor of a prosperous city pays a fortune for a new suit and two conmen tell him that it is invisible to anyone who is either stupid or unfit for his position. The emperor and his ministers refuse to say they cannot see the suit, for fear of appearing too stupid. The emperor parades through his town naked, until a small child cries out, ‘The emperor has no clothes.’ And you can relax, Mr Deputy Speaker, I do not have any props of the emperor with no clothes.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I am pleased!

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

But look around us—no-one opposite would dare to pronounce that Emperor Rudd has no clothes. No, they go along with the fairytale. They nod sagely behind him every day in question time. They trumpet his arrival. They hang on his every word, and repeat them day after day on the doors. Even though they know in their own hearts that this reckless spending spree has frittered away a budget surplus and left our nation facing a decade of debt, they all fall at the feet of Emperor Rudd. The emperor has no clothes—he has no economic credibility. The old maxim is proving true once again: Labor simply cannot manage money.

In the few moments I have left I want to refer to the so-called Building the Education Revolution. Again in their desperation to shovel the money out the door, the government has set unrealistic time frames and is pressuring schools to accept whatever is on offer. There must be greater commitment to value for money. (Time expired)

Amanda Rishworth (Kingston, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to speak on this MPI. I am going to start with the ‘push me, pull me’ animal which the member for Cook displayed. I got a bit confused. I thought it was a diagram of the National and Liberal parties’ position when it comes to climate change. Or perhaps it is a diagram of the Liberal and National parties’ position on the structural separation of Telstra. Or perhaps it is a diagram of the Liberal and National parties’ position on asylum seekers. I am not really sure. I thought it was a diagram of one of those, but it is not.

In this MPI debate, we are thinking about what the consequences would have been for both families and small businesses had the Liberal Party been elected at the last election. The consequences would have been huge—and not in a good way, but in a very bad way. More people would have been out of jobs, there would have been lower business and consumer confidence and more small businesses would have been facing difficulty. Why is that? It is because the Liberal Party and the National Party were completely against any economic stimulus. This is very disappointing because, while the rest of the world were moving towards stimulating their economies, the Liberal and National parties came to this parliament every day arguing against stimulus. We heard the member for Gippsland change his position on this just before. He said they were for some types of stimulus but not other types. But I remember clearly in this House that they voted against our stimulus package which helped small business, families and the Australian economy.

One of those small businesses is Quattro, in my electorate of Kingston, which is in the business of building houses. They were successful in tendering to build some social housing that was part of the economic stimulus package. They told me that things were looking very grim for them. In fact, they were looking at laying off some people because of the severe economic downturn. But, as a result of our economic stimulus package, they put more people on. That was good news not just for Quattro. In fact, they attended my Kingston working forum—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Order! The time allotted for this discussion has now expired.