Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

On this day twelve months ago I announced the launch of an historic nation-building plan. The $42 billion Nation Building Economic Stimulus Plan represents the largest Commonwealth infrastructure project in our nation’s history. The government’s decisive action through our infrastructure stimulus plan is protecting jobs through over 28,000 individual projects nationwide. We are keeping the economy strong and we are supporting working families in the here and now.

The government introduced the plan with two key goals:

• to protect Australia from the worst global recession in three-quarters of a century, and
• to build Australia’s future with investment in long-term infrastructure.

At the time, I said that this plan would support jobs and small businesses in the short term and build schools, energy efficient housing and transport infrastructure in the long term. Today I am reporting back to the parliament and to the Australian people on the progress that we have realised in this plan.

During the past 12 months the Australian economy has received support from the Reserve Bank’s emergency low interest rates and from ongoing growth in the Chinese economy. But let me be absolutely clear. The difference between the strengthening growth in the Australian economy today—and being engulfed by the global recession like eight out of our top ten trading partners—is the government’s economic stimulus strategy. The difference between having generated 112,000 new jobs in the past year—and hundreds of thousands of Australians facing job losses—is the government’s economic stimulus plan. The difference between the increasingly confident business outlook—and small businesses going to the wall in communities across the nation—is the government’s economic stimulus plan.

The Nation Building Economic Stimulus Plan is delivering on what it promised. Jobs for today, and infrastructure for tomorrow.

• Half of the $42 billion stimulus has now been injected into the economy, through businesses, households, state and local government allocations and construction projects.
• Almost three-quarters (71 per cent) of almost 50,000 infrastructure projects have been completed or are underway.

The Nation Building Economic Stimulus Plan is transforming schools, community facilities and neighbourhoods across the nation. And it is building lasting foundations for Australia’s future growth and productivity.

One year ago Australia was facing the most hostile global economic conditions in three-quarters of a century. The collapse of Lehman Brothers in September 2008 and subsequent events on Wall Street had reshaped the landscape of American finance. What had begun as seemingly a patch of bad weather in American financial markets gathered force as the interbank lending markets that turn the wheels of the global financial system effectively shut down.

By the beginning of 2009 a cyclone was sweeping through the entire global economy.

• World trade collapsed by nearly 45 per cent (on an annual basis) in the last three months of 2008.
• Entire banking systems needed to be rescued, recapitalised and, in the case of individual banks in many countries, nationalised.
• Stock markets slumped, many losing more than half of their value.
• Financial institutions that had survived a combination of world wars and world depressions were swept aside.
• Even the finances of nations themselves were threatened—with one nation-state declaring itself to be officially bankrupt.

We were truly looking into the abyss of the total failure of the global financial system, the collapse of global economic growth and the real possibility of a global depression of indefinite severity and duration.

The jobs of hundreds of thousands of Australians were at risk. The Australian government faced a stark choice. Would we simply fold our arms and allow the free market to run its course. Or would we act decisively, by providing a major stimulus to the economy that could cushion Australia from the full force of the global economic recession. We had a very small window of opportunity within which to make that decision. The government weighed the arguments and the evidence of past global economic crises. And we concluded that we must do everything that we reasonably could to cushion Australians from the impact of the recession; to protect jobs, apprentices and businesses and to protect our economy from the full impact of a global economic cyclone, by saving and supporting the jobs of working families around Australia.

The government’s first urgent step was to guarantee deposits and to guarantee wholesale funding for APRA regulated banks, building societies, and credit unions. This was an essential move—without it, credit for major projects would have largely seized up and construction projects across the nation would have stopped in their tracks. In the months that followed, the government rolled out $77 billion in stimulus and investment packages to support the economy across the immediate, medium and long term. The centrepiece of this $77 billion stimulus and investment is the $42 billion Nation Building Economic Stimulus Plan.

The government’s strategy began with immediate stimulus through cash payments, support for first home owners and tax breaks to encourage investment by small business. Our rationale was that these measures would trigger key drivers of growth in the Australian economy, in particular household consumption, at a time when we faced the risk of a freefall in retail spending due to the collapse in consumer confidence. And we all in this place know the concentration of Australian jobs which lies in the retail sector—some 15 per cent of the entire Australian workforce.

The next stage of the strategy was to provide medium-term support for the economy by investing in school modernisation, energy efficiency and social housing. The third stage is investment in major, long-term infrastructure projects in rail, road, ports, education, research, clean energy, and broadband.

From the beginning, the government recognized that if the plan was to be effective, timing was critical. To have the intended effect on the economy, it was essential that funds flowed quickly to support jobs and to support local communities. For this reason, in February 2009 the Council of Australian Governments agreed to ambitious delivery timeframes. This has been a herculean exercise, with Commonwealth, state and territory coordinators-general overseeing the development, approval, construction and completion of around 50,000 major construction projects across Australia. This is virtually unprecedented in our country’s history.

Now—one year since I announced our commitment to the plan—we are well into the delivery phase. The Commonwealth Coordinator-General has reported to me that significant progress has been made, with 71 per cent of the 50,000 approved projects already completed or under way. Half of the $42 billion stimulus has now been injected into the economy, through businesses, households, state and local government allocations and construction projects.

Of the major building and construction projects being rolled out:

• 49,179 projects have been approved;
• 34,853 projects have commenced; and
• 8,339 have been completed.

The rapid delivery of the plan has been critical to its effectiveness. By comparison with other nations, Australia acted early and decisively in implementing the stimulus measures. For example, the United States government currently estimates that only 34 per cent of the stimulus package announced by the US last year has been paid out—that is, $269 billion out of a total of $787 billion.

The Australian government was acutely aware of the need to bring forward the stimulus at the time when economic growth was under acute stress—mindful of the lesson that, in previous downturns, governments have often acted too late to prevent a downward spiral. Unlike other nations, Australia acted before our economy had plunged into the deep downward spiral and before a surge in unemployment. Early and decisive action was critical to the effectiveness of the stimulus plan. That is why the impact of the stimulus peaked in mid-2009, and will continue to phase down as the economy recovers.

I will now outline to the House progress in each component of the Nation Building Economic Stimulus Plan, as at 31 December 2009. The Building the Education Revolution Program represents the single largest school modernisation project in Australian history—and in this chamber I would acknowledge the central role of the Minister for Education and the Deputy Prime Minister of Australia in her oversight of this program:

• 12,467 National School Pride projects are underway and 4,435 have been completed.
• 503 science and language centres are underway and the first three are now finished.
• Of the 10,083 Primary Schools for the 21st Century projects, 5,334 are now at the onsite construction phase and 200 have been completed.

We have also introduced new flexibility into the timing for some P21 projects to help all schools achieve the best value for money. Importantly, these projects are making a difference in classrooms across the country—in classrooms in schools such as Halidon Primary School in the northern suburbs of Perth. The school received $125,000 for painting, replacement guttering, new carpets and vinyl flooring, whiteboards and electrical work. Principal Bill Hunt said he was thrilled with the work, completed in July last year. Bill said,

In terms of incorporating technology in the classroom, this work has lifted a last-century school into the 21st century.

When the school was built in 1986, one double plug was all a teacher needed in a classroom.

These days we run several computers, interactive whiteboards, gas heaters and audiovisual equipment in classrooms so we need many more power and data points.

The next element of the stimulus plan which we outlined concerned social housing, the Commonwealth’s largest ever investment in social housing. I would again acknowledge the critical role of the Minister for Housing for her oversight of this program. Delivery of the social housing initiative is on track.

• Work has been completed on 42,364 of the 70,000 dwellings approved for repairs and maintenance work.
• Some 19,344 dwellings have been approved for construction, with 6,675 underway and 309 completed.

We expect to have 75 per cent of these houses completed by 30 December this year. Further, the average cost per dwelling is now expected to be about $270,000, well under the $300,000 initial estimates. The government’s investment in housing is supporting the residential construction sector in the medium term, while providing long-term secure housing for some of the most disadvantaged Australian households.

I am pleased to report to the House that under this part of the plan 11 new affordable homes will be built in Marysville and Kinglake to help communities recovering from last year’s devastating bushfires.

I will mention to the House an example of one person who will be helped by this investment. Shane Hilder and his three children—Lachlan, 15, and 13 year-old twins Maddison and Kieran—lost their home and all their possessions in the Black Saturday bushfires one year ago. Since then the family have lived with relatives in temporary accommodation. Shane’s greatest wish came true recently when state housing minister Richard Wynne visited Marysville and introduced Shane and his family to members of the Dennis Family Corporation, who are to build a four-bedroom home to be ready for the family to occupy in April.

Work on the other 10 new affordable homes is already underway and residents will be able to move into houses that are fully compliant with the new building standards in Victoria. The homes will generate up to eight jobs in the local construction industry—work for local people in the area was another key element of the overall recovery process.

Our investment in social housing is critical to supporting businesses right across Australia. It is providing jobs for the hundreds and thousands of workers involved—the builders, plumbers, carpenters, electricians, brickies, carpet-layers, kitchen manufacturers and many more in the building and construction industry.

In Tasmania, for example, the state’s largest project for repairs and maintenance of social housing is now nearing completion. Repairs are being made to a 62-unit social housing complex in Bedford Street, New Town, one of Tasmania’s oldest social housing complexes. This complex had been built in the 1970s and was in need of major renovations. Spotless Pty Ltd’s project manager Gary Dwyer says the repairs and maintenance package has been great for the local building and construction workforce. The local Spotless workforce had been able to increase their numbers with, all up, 37 tradespersons and five apprentices engaged for this project. Gary has said: ‘The economic stimulus plan has helped us to provide a new career opportunity for a couple of people and ensure job security for the others.’

Defence Housing Australia is well ahead of schedule against its planned project milestones. Major site works have commenced on 669 houses and 303 houses have been completed. The rest will be completed by 30 June 2011.

The government’s investment in the Energy Efficient Homes package focused on cost-effective measures that households can take to help reduce their greenhouse gas emissions. Over 92,000 homes have claimed solar hot water rebates, and over $146 million has been paid under the program.

The Homeowner Insulation Program has been very successful with more than 915,000 homes insulated, and over $1.2 billion has been paid under the Program. I would acknowledge publicly the role of the Minister for the Environment, Heritage and the Arts in this important program for the government and for the economy and for working families.

We have also recently announced improvements to the insulation program to improve consumer protections, strengthen safety measures and improve value for money. In addition, Australian manufacturers have added shifts to operate around the clock, generating further job opportunities.

The government’s investment in roads, rail and community infrastructure is generating business and employment opportunities now, while building infrastructure for a more productive economy in the future.

• I can report to the House that all 14 major road projects under the plan are now approved and are scheduled to be completed by 30 June 2014.
• Black spots projects are under construction and are on track to be completed by 30 June this year, with 607 projects approved, 480 commenced and 349 of those already completed.
• Of the 17 major ARTC rail projects, 10 projects are underway and three are completed.
• Of the 292 boom gate projects, which include a range of safety measures at rail level crossings around the nation, 155 are underway and 73 projects have already been completed. All projects are on track to be completed by 30 June 2010.

Under the government’s Regional and Local Community Infrastructure Program, we are providing new and upgraded facilities to address the different needs of communities across the nation.

In some places, this means something as simple as upgrading footpaths.

• All of the 3,220 approved projects are under way, with an impressive 2,654 projects completed.
• Of the larger strategic projects, 102 of 137 are underway.

These have provided work for building and construction businesses during the downturn, and they will leave a lasting benefit for communities across the nation.

Taken as a whole, all of these measures constitute the most ambitious nation-building recovery plan in Australian history. Without the stimulus package, Australia would have plunged into a technical recession. Australia’s growth would have been minus two per cent over the year to the September quarter. Instead, Australia now has a stronger rate of economic growth than any of the major advanced economies, growing by 0.6 per cent over the year to September 2009.

The International Monetary Fund (IMF) is now forecasting that the Australian economy will grow faster than it initially expected this year—predicting that the Australian economy will grow by 2.5 per cent this year, up from the two per cent the IMF forecast in October. The IMF says Australia’s economic growth will reach three per cent next year. The latest official forecasts suggest a peak in the unemployment rate of 6.75 per cent in the June quarter 2010, around 1.5 percentage points lower than in the absence of the stimulus. In fact, Australia’s unemployment rate—5.5 per cent in December—is lower than any of the major advanced economies except Japan.

Industry groups such as the Master Builders Association Australia have acknowledged the key role that the stimulus package has played in turning around the economic outlook. Specifically, the MBA has estimated that the stimulus measures are helping to maintain up to 50,000 jobs in non-residential building that would otherwise have been lost. Those 50,000 jobs in turn support hundreds of thousands of Australians in small businesses and working families across the nation.

I want to express my thanks to the Commonwealth Coordinator-General, Commonwealth agencies, state and territory coordinators and the more than 600 local government authorities who have been so committed to delivering these projects on time. The unique coordinator-general delivery model established during the initial phase will be maintained throughout delivery, to ensure consistent reporting and ongoing commitment to driving delivery. There is still a long way to go in the full delivery of the plan.

The economy is still in need of support as we move into economic recovery, as the focus of the stimulus plan shifts to long-term infrastructure projects. Those projects are critical to lifting productivity growth and tackling the long-term economic challenge of an ageing population outlined in the third Intergenerational report released this week. The Nation Building Economic Stimulus Plan has laid a strong foundation for tackling those long-term challenges. And it has cushioned Australia from the greatest economic threat we have faced in our lifetimes. I commend the Coordinator-General’s report to the parliament.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

I ask leave of the House to move a motion to enable the Leader of the Opposition to speak for 20 minutes.

Leave granted.

I thought I was a fair show of getting that one up, Mr Speaker. I move:

That so much of the standing and sessional orders be suspended as would prevent the Leader of the Opposition speaking in reply to the Prime Minister’s statement for a period not exceeding 20 minutes.

Question agreed to.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Let me say that what we have seen from the Prime Minister today is a long sermon of self-congratulation. In that long sermon of self-congratulation he failed to explain the fundamental contradiction at the heart of Australia’s economic policy right now—namely, the fact that we have a government which is still spending like a drunken sailor and we have a Reserve Bank which is desperately trying to restrain spending by consumers. We have, in the words of the Shadow Treasurer, a Treasury which has its foot flat on the accelerator and a Reserve Bank which is desperately pumping the brakes. This is the contradiction at the heart of economic policy in our country right now which the long, self-satisfied sermon that we have had from the Prime Minister failed to explain.

Let me say at the outset of my response that I am pleased that Australia seems thus far to have avoided a recession. A recession would exact a terrible human cost. But I am very disappointed that, thanks to the misguided policies of this government, the price of its policies has been mortgaging our future not just for years but for decades—a price that we did not need to pay. Let me also say to members opposite and to any who are following the proceedings of this chamber: voters do not like governments and prime ministers who look too pleased with themselves, and that is precisely what we saw from this government and this Prime Minister today.

The other thing that voters do not like is governments that are talking about the past rather than the future. They do not like governments that are talking about what they did for voters last year rather than what they might do for voters this year. The trouble with this government is that it is quite happy to talk about last year and all the money it spent and it is quite happy to talk about 2050 and all the things that it would like to do then, but it is not prepared to talk about tough decisions that it is prepared to take in 2010—and 2010 is what the voters of Australia are interested in. The Prime Minister’s focus on last year—a focus that was repeated by every minister answering an opposition question today—suggests very much that this is a Prime Minister who is already conscious of political mortality and that this is a government that is already conscious of the fact that it is past its prime. This is a government whose glory days are gone. The Prime Minister’s speech was very, very redolent of a government already in decline.

Let us be clear about why we have this ministerial statement today from the Prime Minister. We have this statement from the Prime Minister today to cover up for his embarrassment yesterday. Yesterday the government had the worst question time that it has had since coming into office. It had the worst question time that it has had since coming into office, because the Prime Minister is incapable of explaining his climate change policy. He is incapable of explaining why a $120 billion money-go-round is a better policy than a simple and straightforward purchasing of emissions reduction and environmental improvements. There will be a $120 billion impost on consumers, because they will have to pay for the $120 billion worth of permits that business has to buy—the cost of which will flow through to every, single purchase in our economy. That is why we are having this statement—because the Prime Minister was so embarrassed yesterday.

He actually wanted to effectively abolish question time today. What was going to happen today was that we were going to have a prime ministerial self-congratulatory statement at the beginning of question time today. Instead of a major announcement of new policy to meet a crisis, instead of an appropriate announcement of a developing response to some disaster, instead of some commemoration of some tragedy overseas—the sort of thing which might properly have detained the House at the start of question time—the Prime Minister, in his arrogance and in his embarrassment, wanted to deliver his ministerial statement at two o’clock today.

I sought to speak to the Prime Minister to indicate that this was an abuse of parliament. The Manager of Opposition Business spoke to the Leader of the House to make the same point. Mr Speaker, if I may, I want to say to you that the fact that this statement did not go ahead at two o’clock but has more properly taken place after question time is a tribute to your role as the custodian of the traditions of this House. I want to thank you for the work that you have done today to stop this parliament being abused in the way that the Prime Minister proposed to do.

Honourable Members:

Honourable members interjecting—

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Yes, Mr Speaker, enjoy this brief moment of praise, because this is a pretty tough place, a place where you do not get praised too often. I make the point that a government which wants to talk about the past is a government that is frightened of the future. I can understand why this Prime Minister does not want to talk about the future. It is because the future under his policy is price rises for everything—price rises that he does not understand and cannot explain. And did we not have a great example of that today in question time. Yesterday he said that electricity prices would rise under his great big new tax by seven per cent and today he was forced to admit that even the government’s own figures show that it would be 18 per cent.

I will now turn to the substance—if substance it be—of the Prime Minister’s statement today. If we are to take the Prime Minister’s statement today at face value, we are to believe that he—the great helmsman; the great magician of the Australian economy; he who is better than Hawke; he who is greater than Keating; he who is greater than Howard and Costello; he, the greatest genius; better than Ben Chifley, better than John Curtin, better than Ted Theodore, the messiah of economic policy—has saved Australia from all the plagues of the apocalypse. This is what this great genius has done. This Prime Minister of ours, assisted slightly by his frontbench, has saved Australia from this terrible disaster.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

Mr Shorten interjecting

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

The Prime Minister did not acknowledge Parliamentary Secretary Shorten, but I think we will, because we know that he is more talented than most of the people on the front bench, which is why the Prime Minister is keeping him on the middle bench. What this Prime Minister did was spend $53 billion in two stimulus packages in late 2008 and early last year and, coupled with additional spending, the automatic stabilisers under the budget, he ran up a net debt in excess of $200 billion. This economic magician, this former economic conservative, this one-time Christian socialist who became an economic conservative and is now an old-fashioned Social Democrat—and the scourge of economic fundamentalism, but he does believe in fiscal prudence—turned a $20 billion surplus into a $30 billion deficit in a single financial year. He has even bigger deficits in the future.

Opposition Members:

Opposition members interjecting—

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Yes, he is a miracle worker. It takes a true messiah to turn a $20 billion surplus into a $30 billion deficit. Only Saint Kevin of Canberra is capable of this extraordinary miracle of the loaves and fishes in reverse. That is what he has done.

I accept that, thus far at least, Australia has avoided a recession. As I said, I am grateful for that, as are all members on this side of the House. But it is not the government’s stimulus that has saved us. If stimulus spending saved economies from recession why is the United Kingdom, which also had a large stimulus, in serious and prolonged recession? And why is the United States, which had an even bigger stimulus on a proportionate basis, in deep recession and why is their unemployment over 10 per cent?

Australia’s economic strength, which I am grateful for, owes far more to the reforms of the former government than it does to the spending of the current one. It owes far more to Peter Costello and John Howard than it does to Kevin Rudd and Wayne Swan. It also owes, quite honestly, far more to Bob Hawke and Paul Keating, who were tough prime ministers and who were prepared to make hard decisions in a good cause. It owes far more to their work than it does to the work of current frontbenchers.

If the stimulus was designed, as the Prime Minister tells us today, entirely to keep Australia out of recession, why is it continuing now that a recession has plainly been avoided? The crisis is over but the spending is continuing. He just cannot stop. The Prime Minister said today that half of the $42 billion has been injected. In other words, half of it is yet to be spent. That is $20-odd billion that is yet to be spent even though the crisis has passed and the recession has never happened. We know it has never happened because he is congratulating himself for avoiding it and yet he is still spending the money. He is congratulating himself for avoiding something which he is still spending money to avoid. Something weird is happening inside his head.

He boasts that 75 per cent of the houses under the social housing package will be completed by the end of 2010. It is nice that he can actually complete some houses, because the Minister for Families, Housing, Community Services and Indigenous Affairs is incapable of completing houses in the Northern Territory. But these houses will be finished by the end of 2010 to save us from a crisis at the end of 2008. This logic just does not work.

He boasted today that 14 major road projects will be completed by the end of June 2014. Hang on a minute. This is a crisis at the end of 2008 and he is saving us from the crisis at the end of 2008 by finishing roads in 2014. Go figure. This is someone who plainly does not understand economics. He has embarked on the greatest spending spree in Australia’s history and he has dressed it up as a recession-buster. What he has really done in embarking on this spending spree is reveal the real nature of contemporary Labor: they are addicted to spending and they are addicted taxes.

Having spent the surplus that John Howard and Peter Costello so painstakingly accumulated, he now needs a new pot of gold from which to spend on further handouts. That is why he needs his emissions trading scheme. He needs it to raise $120 billion in 10 years. He needs this pot of gold, this cash cow, so he can then engage in politically motivated handouts to the groups he wants to reward and win re-election.

Just for the benefit of the Prime Minister and those who might have been taken in by his statement today, only two per cent of projects under the Primary Schools for the 21st Century program are completed. Only one per cent of projects under the Science and Language Centres for 21st Century Secondary Schools program are completed. Only two per cent of new social housing is currently completed. None of the national road projects are finished and none of the infrastructure program strategic projects are completed.

All of these things that have not been done are supposed to have saved us from a recession. Who does the Prime Minister think he is fooling? Certainly, he has not fooled some—indeed, most—of the economic commentators whose business it is to inquire into these things. Scott Haslem from UBS said late last year:

By the government’s own account, growth—

in 2011—

would be at 4.5 per cent, so why are we still stimulating the economy?

Professor Sinclair Davidson of the Royal Melbourne Institute of Technology said in evidence to the Senate in September last year:

…if people want to argue that the Australian stimulus package has prevented the Australian economy from going into recession, they would also need to explain why those other economies with similar sized … packages to ours have … gone into recession.

This is the problem that he faces. If the stimulus package is what saved Australia, why has the same package not saved other countries? It was not the stimulus package or the spending that saved Australia; it was the reforms that saved Australia—reforms that this government cannot contemplate and in fact are winding back.

I could go through specific elements of this package and talk about how money has been wasted, how money could have been better spent and the inevitable problems in trying to spend in an enormous hurry—money which should have been spent in a much more considered way. I do not have time to do that, but I will go to one point from the Prime Minister’s speech. The Prime Minister, I presume, is trying to put the best possible gloss on his economic record. He told us in his speech that his $42 billion spending package had saved 112,000 jobs. I understand every job is precious. I care about jobs. I was part of a government which created more than two million jobs. I know what it is like to create jobs. Doing the arithmetic on the Prime Minister’s statement, each one of those 112,000 jobs cost about $400,000 to create. I am all in favour of creating, preserving and protecting jobs, but each job should not cost $400,000 to create. A government which can only save jobs at a cost of $400,000 a pop is a government that does not know how to govern. It is a government that cannot manage an economy.

The Prime Minister tried to tell us today that he is Australia’s saviour, in a way that certainly no-one from the opposition could possibly be. He tried to tell us what an effective Prime Minister he has been. The only thing that this Prime Minister has been effective at is spending money and running down the surplus. Creating $200 billion and more in net debt is precisely this Prime Minister’s monument thus far. Two years in government and this is really the only substantial achievement, if that is the word, that he can point to. A Prime Minister who has proven to be much better at spending money than at raising it and much better at running down the economy than at reforming it is not a Prime Minister who has a long-term future at the helm of this country.