Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. I refer the Prime Minister to his comments at a dinner in Perth last week, when he said:

We must broaden the economic base, as China could implode. I studied it, lived there and speak the language. I know China better than anyone here. Its success can swing on one good or bad decision.

Government Members:

Government members interjecting—

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

Order! Those on my right! The Deputy Leader of the Opposition has the call.

Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

Prime Minister, given the budget assumes continuing strong demand for our resources, particularly from China, what would be the impact on the budget of an economic slowdown in China?

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

I welcome the member for Curtin and Deputy Leader of the Opposition returning to the subject of China, because the last time she stood at the dispatch box to talk about China I think it was in defence of China’s human rights record, or was it in defence of Chinese human rights activists? It depended on which day we were talking about. One day we were too hard; the next day we were too soft.

The Deputy Leader of the Opposition refers to my engagement with the business community of Western Australia. Of course I spoke to them about the long-term challenges which we face in North-East Asia. I said that, therefore, broadening the economic base of Australia by making sure that the corporate tax rate was brought down across the country was a sensible course of action on the part of any reforming government. That means that, if you do face a rising Australian dollar which is affecting the international competitiveness of all companies which are exporting, one way this government can assist in enhancing their competitiveness is to bring down the company rate. That is what we have done.

The second thing I would say in response to the Deputy Leader of the Opposition is: when she looks at the question of the government’s assumptions, based on Treasury advice, about the future trajectory of commodity prices, these fall at the conservative end of the spectrum based on what market analysts are saying. There are commentators out there in the marketplace who this morning have affirmed and affirmed again that this falls within the range of what most people analyse to be long-term demand for Australian commodities. In fact, the commodity price projections contained within the budget papers, I recall, also after a period of time come down, as you would expect in any rational analysis of where the price would go over a period of time. Therefore, the Treasury, in putting together this analysis, has been entirely mindful of where these prices will go over time.

For example, I would draw her attention to the fact that the budget forecast when it comes to the terms of trade is up 14¼ per cent in 2010-11 and then down 3¾ per cent in 2011-12 and, for the medium term, there is a decline by 20 per cent over 15 years and a return to just under 2006-07 levels. This is the sort of discipline which the Treasury officials apply. The Treasury officials applied it in their provision of advice to the previous government. The only thing that has changed on this occasion is that that does not suit the political case being advanced by that lion of Chinese human rights, the Deputy Leader of the Opposition, the member the Curtin.