Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. What is the government’s response to the report of the Senate Economics Committee on the government’s stimulus strategy that was tabled earlier this week?

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

I thank the member for Bendigo for his question. Earlier this week the apparently coalition-dominated Senate Economics Committee handed down a report arguing that the government should wind back its stimulus strategy prematurely. This proposition does not come as a complete surprise to the government, given that all along the Liberal Party and the National Party have seriously downplayed the threat of the global financial crisis and the global recession on the Australian economy. They have suggested that really this is all a bit of a minor affair. You may recall the leaflet that I showed the House some months ago—put out by the coalition—about Australia’s economic circumstances, in which the global recession did not get a mention. There was no mention of the global financial crisis. All along the Liberal Party and the National Party have completely downplayed the threat to the Australian economy of the global financial crisis on the recession.

Given that they oppose the government stimulus strategy—and it has become clearer and clearer that that strategy has worked; it has played a critical role in ensuring that growth remains in the positive in Australia and that our economic performance is well ahead of that of comparable developed nations, and thousands of jobs have been saved as a result and businesses have been able to remain open—the opposition has engaged in a desperate scramble for any kind of rationale to justify their position. The most recent version of this is to suggest that the stimulus is excessive, that it is creating inflationary pressures in the Australian economy and that it should be wound back. This position—as it became clear in the evidence put to the committee—is contrary to the position that is adopted by the Australian Chamber of Commerce and Industry, it is contrary to the position that is adopted by the Australian Industry Group, it is contrary to the position adopted by the Western Australian Liberal government, it is contrary to the view of leading economists such as Rory Robertson and Craig James, and of course it is contrary to the view of the Australian Treasury.

I would like to refer to three critical points here. First, although the Australian economy has outperformed comparable countries, economic growth for the financial year that concluded a few months ago was 0.6 per cent. Therefore the economy is still in a very fragile position and growth is well below normal levels. Second, the stimulus strategy that the government put in place is structured in such a way that it will decline gradually over time in any event and by the beginning of next year it will begin to subtract from growth, as the stimulus is gradually withdrawn. So what the opposition is suggesting should occur is actually designed to occur in a timely way.

Thirdly, and most importantly, it is significant that the total amount of stimulus yet to come is roughly three per cent of all projected government spending for that record relevant time. We may well ask ourselves the question, ‘Why is it that the opposition focuses, when talking about the impact of government spending, on the wider Australian economy?’ They focus on three per cent, or thereabouts, of the total spending picture and ignore the remaining 97 per cent. We saw part of that answer in the Senate yesterday and we saw part of it earlier on. That is, they are calling for spending to be reduced at the same time as they are blocking government savings measures in the Senate. They are blocking the government’s attempts to rein in the cost of the private health insurance rebate by imposing a means test on wealthy people benefiting from that rebate, and now they are seeking to line the pockets of wealthy medical specialists by blocking reform of the Medicare rebate with respect to cataract surgery.

The answer to this conundrum is very simple. They do not want to cut government spending; they want to cut government spending that they do not like. That is really what they are on about. They want to cut back on spending that delivers jobs for ordinary working people in this country and they do not want to cut back on spending that delivers money to wealthy medical specialists and helps to subsidise the private health insurance of millionaires like the Leader of the Opposition. That is the true position of the opposition. They do not have a genuine policy position on government spending as it affects the economy. They are just opposed to government spending that helps working people. What they want to do is protect government spending that benefits wealthy people. That is the true position. That is why they are focused purely on the stimulus strategy of the government.

The government rejects the view of the Senate committee. We believe that the stimulus approach is well timed, it is appropriate, it is critical to sustaining the Australian economy and—contrary to the view of the opposition—we believe it is crucial that we sustain jobs in the Australian economy, when it is still under very substantial stress. We believe it is crucial that we repair the damage to the budget in the medium term by getting significant savings measures, such as those being blocked by the opposition, through the parliament without further delay.