Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

My question is also to the Treasurer. Why is investing in jobs and running fiscal policy appropriate for the ramp-up in mining investment important? What lessons has the government learnt from the conduct of fiscal policy during mining boom mark 1?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Moreton for that question. We will be out there tonight barracking for the Queenslanders. I know the Leader of the House is a bit upset by this! But on this side of the House, as I was saying before, we understand the importance of strong economic growth to secure communities and to jobs. We understand the importance of the creation of 700,000 jobs and the creation of a further 500,000 jobs in the next two and a bit years. We also understand that investment in our economy is going to 50-year highs. We understand that there is an investment pipeline of something like $380 billion. This is going to support strong growth, particularly strong jobs growth, and rising incomes, and it will boost our export capacity. This is all very good for the security of families in our community.

These are great opportunities ahead for Australia, but we also know there are some pretty hefty challenges as well. We know when this investment kicks in it will cause price pressures in our economy. We also know that it will stretch the capacity of our workforce and place greater demands on infrastructure, which is why we put in place the budget that we did a couple of weeks ago, coming back to surplus in 2012-13 to make sure we do not add to those price pressures, getting a bigger trained workforce, investing in apprenticeships, breaking the cycle of welfare dependence. These are all the objectives we must share so we have a strong economy and security.

Of course, our fiscal policy stands in very stark contrast to the fiscal policy that applied during mining boom mark 1. What we have got in place is very strict fiscal discipline. We have got the lowest rate of expenditure increase—we have got a one per cent increase in expenditure over five years. That stands in stark contrast to those opposite, who let it rip during mining boom mark 1, with expenditure increasing by 3.7 per cent every year for five years. This point has been made very clearly by UBS's Scott Haslem just in the past week. He goes out to compare the fiscal policy during mining boom mark 1 with the fiscal policy during mining boom mark 2, and he says that the contrast could not be starker. He has got this to say:

… in the three years to 2005/06 – through the first phase of the current commodity boom – real government expenditure averaged four per cent per year …

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

Wasn't there a surplus in those days?

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

The member for Cowan!

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

They do not like it, Mr Speaker. They went on a spending spree at the height of mining boom mark 1, and 10 interest rate rises followed. They do not like that at all. But Mr Haslem has blown the whistle on their approach to economic policy and demonstrated how unsuited they are to our current circumstances because, if they were in government, there would be no savings, there would be no return to surplus, there would be no investment in the workforce. And of course if they were there, there would be a great black hole, an $11 billion black hole, in their financial plans. What all this proves is that they are no more qualified to run an economy during mining boom mark 2 than they were during mining boom mark 1.

An opposition member: The black hole's in your brain, Wayne.

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

On the basis that the member for North Sydney blocked my view unfortunately he suffers the penalty but I say to whomever made that interjection they are very lucky. The member for North Sydney now has the call.