Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that as the world emerges from the Global Financial Crisis:

(a) in Australia unemployment of 5 per cent is low by international standards; and

(b) the Australian Government's Debt to GDP ratio is lower and its fiscal consolidation faster, than in most comparable countries; and

(2) agrees that the Gillard Government's fiscal strategy to assist business and communities to recover from this crisis while managing inflation and removing the structural deficits from the Federal Budget is the right course of action for Australia's long term economic prosperity.

As the financial year draws to a close, it is timely to remind ourselves that while our economy is recovering and our finances are in good shape, this is not the case for the rest of the world. Had it not been for the decisive action of the Labor government, things could have been very different. Our economy would be different and our recent budget would be very different.

In 2008 Lehman Brothers collapsed and the world stood on the precipice of an economic collapse. Australia, almost alone in the world, avoided the worst of this and is now in better shape than almost any other country in the world. It is good news that many economies are now emerging from the global financial crisis and that unemployment in many countries is slowly edging downwards. In Australia, in responding to the global financial crisis, the Labor government unashamedly put jobs first. We did this by injecting $42 billion into the economy. We injected cash and confidence into the economy in 2008 to ensure that the retail sector did not collapse. We guaranteed bank deposits and assisted financial institutions to access funds to ensure confidence and a line of credit so that the doors of businesses were kept open.

We invested in our schools, in our communities, and in our roads, rail and ports to ensure that jobs were protected and that productive capacity was built so that when the economy did recover we would be well placed to capitalise on it. By putting jobs first we have seen the creation of over 300,000 new jobs in the last year alone and over 37,800 new jobs created in April this year. There will be an additional 550,000 jobs created over the next three years. While the world shed 30 million jobs through the global financial crisis, in Australia over the last four years we have created in excess of 700,000 new jobs. What this means is that we now have record numbers of Australians at work and that is something that all members in this place should be very pleased with.

There was, of course, an alternative which was preferred by the coalition: to do nothing. Indeed, in 2008-09 they appeared to be a lot more fond of markets than they are today because their answer back then was to leave it to the market to sort itself out. Their answer was to say to hundreds of thousands of Australian workers and thousands of small businesses that it was more important for the government to balance its books than for them to balance their books. The coalition's answer was to say that they would rather have people out of work or out of business than lose some political advantage in saying, 'We have achieved a surplus at the end of this financial year.' If we followed that advice we would be in the same position as those countries whose unemployment today is double that of ours and there would be hundreds of thousands of Australians out of work. So when those opposite talk about debt and deficit what they are actually saying is that they would prefer higher unemployment over Australians having jobs.

Let us talk about debt. There has been a bit of a contagion running through the coalition over the last 20 years—that is, that debt is always a bad thing. They have not had a monopoly on that. A number of state governments have had the same disease and the net result of that has been a rundown in our public and social infrastructure. Let us say a few things about our debt. Sometimes going into debt is the most economically responsible thing for a person, a business or a government to do, particularly when that debt is funding investment in something that will create value over the long term or when that debt is managing a cash flow that is certain to pick up some time down the track. We believe that our strategy of going into debt to ensure that Australians were kept in jobs and that the doors of businesses were kept open was the responsible thing to do.

You cannot be a Keynesian while the economy is on the way down and not be one when the economy is on the way up again. So we have taken steps in this budget to bring the budget back into surplus. The steps that we have taken to give priority to jobs were the right things to do but now, as the economy is picking up, we need to bring the budget back into surplus. We need to do this in a way that acknowledges that we have a patchwork economy and that not all areas are doing so well, and this budget achieves that balance. We are doing this by imposing real spending restraints and this is going to be the fastest fiscal consolidation seen in this country since the 1960s. This has been achieved despite significant revenue weaknesses from the legacy of effects of the GFC, with revenue write-downs in 2010-11 and 2011-12 of $16.3 billion, and the natural disasters that have had such social and economic impacts in our country over the last nine months.

By contrast, the last five Costello budgets delivered an average of 3.7 per cent growth in spending per annum, while our fiscal strategy sets a cap on real spending growth of two per cent per annum. This budget delivers spending growth across the forward estimates at an average of one percent per year—the lowest in decades. To put this in context, this is the lowest real growth rate in government spending over five years since the 1980s. The budget outlines $22 billion of savings measures which continue this government's work in repairing the long-term structural position of the budget. I have not heard any suggestions in the speeches of those opposite during the debate on the appropriation bills, but we have heard many lectures on how to manage the economy. I have to say it is a bit hard for members on this side of the House to accept lectures on financial management from those opposite, who presided over the national disgrace that was the $1 billion wasted in fattening up Telstra for privatisation, the $250 million wasted in the Networking the Nation rort and the absolute national disgrace of IT outsourcing that we are having to unpick month by month and year by year—because it has been nothing but a rort. While we are talking about rorts, what about the regional rorts program, which the Australian National Audit Office just gave up on. The Audit Office absolutely gave up on it. The members opposite do not like the fact, and feel some embarrassment, that the same government that presided over the IT outsourcing and the regional rorts presided over the AWB scandal, the $2 billion in advertising over their term in government to promote such things as the Howard government's Work Choices legislation. While we are on it, they also are embarrassed by their misplaced priorities and their incapacity to find savings or long-term revenue.

Let us look at their confused position on mining taxes. Apparently, it is all right for a tory government in Western Australia to tax mining companies—to increase royalties on mining companies—but it is not all right for the federal government to try and get a fair share of the return on our minerals wealth to do things such as reduce the tax impost on small businesses, increase superannuation savings for ordinary working Australians and fund much-needed regional infrastructure. So it is a bit hard for us on this side of the House to cop lectures on fiscal restraint from those on that side of the House after we have looked at their record—the greatest rate of growth in spending in two decades, rort after rort, scandal after scandal, waste after waste. Look at the over $46 billion in infrastructure deficit.

Members opposite seem to think that a surplus is a thing in and of itself. They do not understand that a surplus is not an end in itself. A surplus does have a purpose at the right point in the economic cycle—it is not an end in itself. Debt is not always evil. Sometimes going into debt is the most responsible thing for a government to do. If those opposite could take home those economic lessons and we could get some bipartisan support on these issues, then the state of our national finances would be in a better condition and we would not be having to deal with the horrible deficit that we have had in infrastructure spending, skills and education that this government is proud to be dealing with.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I second the motion. Unfortunately, this motion is a sad reflection on how hopelessly out of touch this government is as they wallow in dangerous self-delusion. Let us dissect this motion line by line to demonstrate how hopelessly and out of the touch the member for Throsby is and how he is part of the most incompetent and untrustworthy government in living memory.

This motion makes reference to the global financial crisis. Now one thing about the global financial crisis is that it was not global. The main drivers of growth in our region are the economies of China and India and during the peak of the financial crisis in North America and Europe, China continued to grow strongly with quarterly growth rates of 6.8 per cent and 6.2 per cent. Likewise, India also continued to grow strongly during this period with quarterly growth rates of 6.1 per cent and 5.8 per cent. That is why many respected commentators refer to the period as the 'North Atlantic Financial Crisis'. Therefore, with the strong growth of China and India, the prudential reforms to our banking sector implemented by the Howard government, together with the Howard government leaving a healthy budget surplus, many sectors of the Australian economy were shielded from the worst of the financial crisis.

This motion talks about unemployment. A fortnight ago we had the Treasurer, when handing down one of the most uninspiring budgets ever delivered in this House—a budget that was all about debt, debt and more debt—blabbering on about jobs, jobs and jobs. But even before the ink, the very red ink, was dry on the last budget the Bureau of Statistics released figures showing 49,100 full-time jobs were lost in April and even the participation rate fell as many simply gave up looking for a job. This comes at a time when this motion states that many countries are emerging from the recent financial crisis. Yet, in April, Australia went backwards with 49,100 jobs lost.

While on unemployment, one would think that the member moving this motion would be fighting against the high of rate unemployment in his local area. The member represents a region where youth unemployment stands at over 33 per cent and, further, has one of the worst overall unemployment rates in New South Wales and a disturbingly low participation rate. So we would expect the member for Throsby to come into this chamber and stand up and fight for his constituents. That is what he was elected for. We would like to see you in here with a motion calling the House's attention to the shocking rate of unemployment in the seat of Throsby, stamping your fist on the table and demanding action. Instead, not only do you snub your nose at your constituents and serve up this dribble but, even worse, you want to punish them with a job-destroying carbon tax.

This motion makes the claim that the Australian unemployment rate is low by international standards. To make any meaningful comparison we need to compare Australia with countries in our region. And the majority of countries in our region have substantially lower unemployment rates than Australia. For example, Singapore has an unemployment rate of 1.9 per cent, Malaysia 2.8 per cent, Hong Kong 4.6 per cent, Taiwan 4.5 per cent and Japan 4.6 per cent. They are all countries in our region that have substantially lower unemployment rates than Australia. Even further afield, countries such as Norway at 3.2 per cent, Switzerland at 3.4 per cent, Denmark at four per cent and Austria at 4.3 per cent also all have significantly lower unemployment rates than Australia.

Although there is much media attention to the headline 'Unemployment rate', a more accurate measure of the performance of the economy is the underemployment rate. In February this year there were 886,000 underemployed workers across our nation in addition to the 583,000 unemployed workers. So, combined, we have over 1.4 million Australians either unemployed or underemployed at a rate of 12.8 per cent—hardly something to get excited about.

This motion refers to the Australian government's debt to GDP ratio and implies that it is not a problem by making comparisons with comparable countries. Such rationalisation is highly concerning as, not only is it delusional, it fosters a very dangerous complacency that says it is okay for this government to continue on its reckless spending spree, adding to our national debt mountain by $135 million every day. The rationalisation that it is okay to indulge in a reckless spending spree because other countries have greater debt levels is the same type of a rationalisation used by an alcoholic who drinks 10 schooners a day and thinks he does not a problem because he compares himself with someone that drinks a 10 bottles of whisky a day. If we are going to make a meaningful comparison of debt to GDP ratio we should be comparing Australia with countries that are similarly bestowed with natural resources and are major mineral exporters. When we look at countries such as Chile, Sweden, Norway and Finland they are all running comfortable budget surpluses.

This motion likes to talk about international financial comparisons. Unsurprisingly, the member for Throsby does not talk about international comparisons of interest rates. Simply, this is because we have the highest interest rates in the developed world. I have a list of all the developed countries of the world and interest rates, and Australia is dead last of all the developed countries. That means Australian families make higher mortgage repayments and Australian small businesses are placed at an internationally competitive disadvantage, all due to this government's mismanagement of the economy.

This motions talks about fiscal consolidation, but what fiscal consolidation? There has been no fiscal consolidation. We have had the exact opposite. Under this government Australia has gone from a $20 billion surplus to a massive $50 billion deficit. This year alone the deficit has blown out by a further $8 billion. In 2011-12 there is already a forecast of a further blow-out of $10 billion.

Let us take a quick look at the Gillard government's fiscal strategy that this motion refers to. Thanks to the Gillard government's fiscal strategy after inheriting a surplus, Australia now faces debt-servicing costs that are headed towards $7.5 billion a year or $20 million a day. To borrow a phrase from the member for Wentworth, the only way to describe the Gillard government's so-called fiscal strategy is an orgy of frenzied spending and borrowing, a strategy of live for the day, spend everything that comes in and more, say whatever it takes to cling to power, and the future be damned.

Now let us have a look at how the Gillard government is managing inflation to which this motion refers. For the year to March the headline inflation is running at 3.3 per cent, which is well above the RBA's target band, risking further interest rates increases. This is at a time when the surging dollar should be making just about everything that gets imported into the country cheaper. However, the inflation situation for many Australians is much worse than the official figures as each household has different expenditure patterns. For example, pensioners are likely to allocate a greater proportion of their weekly expenditure on food and health services. Therefore, while the official increase in headline inflation is 3.3 per cent over the year to March, the cost of living experienced by families has increased significantly higher at 4.9 per cent. For pensioners the increase was 4.1 per cent and for other welfare recipients it was 5.1 per cent. The Gillard government's management of inflation is only going to further deteriorate when the government pushes ahead, punishing families with a carbon tax.

Finally, this motion concludes with talking about the right course of action for Australia's long-term economic prosperity. It is now almost a year since the Prime Minister admitted, in a rare moment of honesty, that this Labor government had lost its way, but since then the Prime Minister has taken us further off course. Never, not even since the dying days of the Whitlam government and their dealings with Khemlani, has our nation's long-term economic prosperity been threatened by such irrational and incompetent economic policies. The only way to get our great nation back on track and on the right course and to secure our long-term economic prosperity is to change the government.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the motion moved by the member for Throsby, and I do agree with him that the global financial crisis was and is widely recognised as the most severe economic downturn since the Great Depression—one of the worst economic events to hit us in about 75 years. Three years after this crisis first impacted on the United States and then spread through the world some nations are still struggling to salvage their economies. Some economists are doubtful that the world has come through the worst of the recession. Australia fared better than most. If only all the world economies were able to boast the unemployment rates that we have and the economic growth that we have in the shadow, as I said before, of one of the worst economic events in 75 years. Through the course of this debate and whenever we talk about the GFC, there are two things that stand out from the opposition. One is claiming ownership of the surplus and that this helped us through. I do remember the way that surplus was built up. That surplus was built up by the highest taxing government in Australian history. As I said in this place earlier today, we ensured that tax as a share of GDP was at or below the level we inherited—on average 23½ per cent. This year we are at 21.8 per cent. Those opposite always tell us how they got their surplus but the previous government was the highest taxing government of all time, peaking at 24.1 per cent of GDP in 2004-05 and 2005-06. They cut spending by seeing childcare spots go. People in my neck of the woods who were trying to get childcare could not get it. They lowered funding for schools, especially government schools. They strangled TAFE funding and we saw the miraculous event of the them duplicating the TAFE system by setting up the Australian Traineeship System in direct competition with TAFE. GP bulk-billing rates were drying up before our eyes. Hospital funding was cut by $1 billion. Now, in one of these cute rewritings of history that we see, they are attempting to say that they had some sort of crystal ball that gave them some inkling about the financial crisis and that this helped shield us from what we experienced. In actual fact it was their underspend on social spending that put us in the position where we had the surplus at the level that we did.

The second thing we get is comments from those opposite, particularly those in leadership positions, saying that we should have done what other countries did. I noticed that what was absent from the member for Hughes's walk around the grounds, so to speak, was that he never mentioned New Zealand. I am intrigued as to why he did not mention it, because the Leader of the Opposition had a lot of good things to say about New Zealand last year when he was quizzed on The 7.30 Report by the shrinking Chris Uhlmann, who is doing a great job of transforming himself. He said:

CHRIS UHLMANN: But you would have spent money as well. The Coalition actually backed the first stimulus package, didn't it?

TONY ABBOTT: Yes, which was about a quarter the size of the second stimulus package, which we opposed.

CHRIS UHLMANN: But certainly that money was necessary and it appears to have done the trick.

TONY ABBOTT: But at high price. And if you look across the Tasman, New Zealand has done just as well it seems as Australia without going into anything like the same level of debt and deficit that we have.

Gee did that provoke a response! You had a whole bunch of people come out saying 'What is Tony Abbott on?' For example, Laurie Oakes said that he did very little to refute allegations of economic ignorance by making that reference—Australia without going into anything like the same level of debt. The truth was that New Zealand had 15 months of economic contraction during the GFC, not three, and an unemployment rate, which was the same as Australia's at 4.3 per cent before the GFC, now at a 10-year high. The National Business Review said in 2009:

Since 2003 New Zealand's rate has generally been around a percentage point lower than Australia's but New Zealand has now been in recession for well over a year while recession hasn't arrived across the Tasman.

In fact, John Key looked at a model to improve the New Zealand economy and he said, 'Our vision is to close the gap with Australia by 2025.' Tony Abbott is pointing to New Zealand as a model for getting us through the GFC when in actual fact— (Time expired)

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

When it comes to matters of economic management, this government's capacity for self-congratulation is apparently limitless. We have this loyal apparatchik, the member for Throsby, putting forward this motion congratulating in extravagant terms his colleagues on their economic management. I was reminded of Winston Smith, the protagonist in Nineteen Eighty-Four, who in the late stages of that novel, after he has been broken, sits there cheering the fact that they are at war with Oceania—or was it Eurasia—and running the party line. That is what we have got this evening. We have got this government's relentless capacity to congratulate itself on economic achievements which have not yet been achieved. Day after day the Treasurer comes into this chamber and congratulates himself on a return to surplus which has not happened and shows no indication of happening for at least the next year and we are supposed to believe it is going to happen the following year.

It puts me in mind in Stephen Holland. Remember Stephen Holland, the Superfish, who was going to win the gold medal in the 1,500 metres in 1976? I remember being trouped down in primary school to watch this one event in the 1976 Olympics that Australia was going to win. On the Wayne Swan model, Stephen Holland, the Superfish, would have been congratulating himself for several years that he had won the gold medal. But he did not win it; he won the bronze medal. On the Wayne Swan model where you congratulate yourself for your achievement before you actually deliver it, Mr Dewey, the presidential candidate who was famously shown in the Chicago Tribune headline as having won the presidential election against Truman, would have been congratulating himself for several years—'I've won. I am the president.' But in fact he had not won. Yet on the Wayne Swan model you congratulate yourself on the surplus before you actually deliver it. Who can forget Mr Scott, who thought he was going to be the first to the South Pole. But he wasn't; he did not get to the South Pole first because Mr Amundsen the Norwegian got there first. Mr Scott never got to the South Pole first. Of course, on the Wayne Swan model, he would have been congratulating himself—'I got to the South Pole first.'

We have a government here which has a track record of congratulating itself on economic performance without actually delivering the performance. I am also reminded of the prayer of Saint Augustine: Lord make me pure, but not just yet. What could better summarise the approach of Wayne Swan to deficits? Wayne Swan tells us: 'I know deficits are bad; unfortunately in 2008-09 we had a deficit. I know deficits are bad; unfortunately in 2009-10 we had a deficit. I know deficits are bad; unfortunately in 2010-11 we have got a deficit. Lord make me pure, but not just yet. I will not be pure in 2011-12 either, but in 2012-13 I will be pure. I will deliver a surplus.' It is this self-congratulatory approach to economic management, quite unsubstantiated by performance, quite unsubstantiated by the facts, which is replete in this motion this evening. This motion is about as pure an example of a non sequitur as you will ever see. We are told, firstly, that Australia has unemployment of five per cent—premise No. 1. We are told that Australia's debt-to-GDP ratio is low—premise No. 2. And then we are given the conclusion that this is because of the marvellous economic management of Julia Gillard and Wayne Swan. That is a textbook example of a non sequitur. A non sequitur is a rhetorical structure in which the conclusion does not follow from the premise. And I will tell you one thing: it certainly does not follow as a conclusion that the reason we have a low debt-to-GDP ratio is that Wayne Swan and Julia Gillard have their hands on the economic levers. We have a low debt-to-GDP for one reason and one reason only: John Howard and Peter Costello were managing the economy of this country for 11 years and in 2006-07 they handed over an economy that was in fantastic and world-beating shape. Unfortunately, the vandals are inside the gate and they have been remorselessly trashing the economy ever since.

Debate adjourned.