Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. How has Australia benefited from past economic reforms? How is the government continuing to pursue economic reform and address the challenges of the future?

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Robertson for her question. It is not that long ago, a few decades but not that long ago, that we in this country used to talk about the tyranny of distance and our economic debate was dominated by the fact that we felt remote from the markets that we most wanted to trade with. In response to that we lived behind high tariff walls with all the implications that had for real wages. It reduced the real wages available to working people over time with all the implications that had for suppressing innovation in our economy. Our economy changed as we moved away from such a tyranny of distance model and we opened our economy up to the world. We commenced the economic reforms that were necessary to change a closed insular economy into a great trading economy. Australians can be rightly proud of the economy that we have built together, a great trading economy and an economy that has come out of the global financial crisis strong, not having gone into recession and not having seen the sharply rising unemployment we have seen in other countries around the world, where millions and millions of people have lost their jobs.

What was that tyranny of distance is now an opportunity for us, a huge opportunity. We are in the region of the world that is continuing to grow strongly and we are prospering from that growth. Three-quarters of Australia's goods exports go to Asia—a quarter of them to China alone. These are important statistics. We continue to have a prosperous future trading with the economies of our region, which are continuing to grow.

As we are in the right region of the world, we bring to this task the right economic fundamentals. We have low unemployment. We have strong prospects for growth, with $430 billion of projects in the pipeline in the resources sector alone. We have strong public finances. We have a strong banking system. This is important and is a standout in comparison to the positions of nations overseas that are coming to the economic challenges of today with high unemployment, high debt and institutional weakness.

Consequently, we are here with a huge opportunity, a huge opportunity that we can seize by keeping our economy strong today and by engaging today in the reforms that our economy will need to keep it modern and strong tomorrow—that is, we have to bring the same national character and characteristics to today's reform challenges as past generations brought to the reform challenges that confronted them. That is why, to manage today's economy, we are determined to invest in skills, to invest in infrastructure, to better tax our mineral wealth and to spread those benefits through the cutting of company tax, through the growth of our pool of national savings and through special breaks for small business. Over the medium to longer term we are determined to keep investing in our productive capacity and to grow our productivity by investing in education, by investing in skills, by rolling out the NBN, by seizing the opportunities that come from a clean energy future and by bringing our reform tools to health and education.

We stand in a country with strong economic fundamentals and a huge opportunity for the future. It is an economy we have built together, and we should be proud of it.

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 to the forecast by former Department of the Prime Minister and Cabinet economist Su-Lin Ong that the budget will be in deficit in 2012-13 by an amount of $5 billion. Does the Prime Minister stand by her commitment that, when it comes to delivering a surplus:

Failure is not an option.

And:

… no ifs no buts it will happen.

Or will that commitment end up on the same scrap heap as her claims:

The Labor Party is the party of truth telling.

And:

There will be no carbon tax under the government I lead.

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I possibly should have studied that new shadow ministerial list that the Leader of the Opposition tabled earlier, but I do thank the Deputy Leader of the Opposition for her question. In answer to her question I would repeat the answer that I gave to the House yesterday, which is that we have a clear plan to bring the budget to surplus, we have strong fiscal rules and we are determined to bring the budget to surplus.

In coming to this task of bringing the budget to surplus in 2012-13, we will build on what we have achieved in the May budget. We have been determined to look for savings. We did that in the May budget, and of course we did that in the election campaign prior to the May budget. We do not bring to this task the $70 billion black hole which the opposition built up through their own fiscal incompetence. We are determined to bring the budget to surplus in 2012-13.

The Treasurer gave an economic statement about this matter yesterday. We have been explaining to people the turbulence in global markets. We have also been explaining to people that our economy has strong fundamentals and that as a nation we should be proud of those strong fundamentals because we built them together. We particularly ensured those strong fundamentals were held during the global financial crisis, where we had the combination of the reforms that this nation has engaged in over a number of decades, the decisive action of the government in providing economic stimulus and attending to banking issues, and the hard work of employers and employees and trade unions in the community. Through that national spirit and combined national work, we came out of the global financial crisis without going into recession—something we should all be very proud of.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer please update the House on the economic outlook for Australia and the importance of delivering on reforms for the future, and what are the risks to the government's economic reforms agenda?

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

I thank the member for Page for her question. Yesterday I reported to the House on the changing global economic conditions, and overnight we have seen further broad based weakness in the euro area. There has been some improvement in the US figures overnight but we are still going to face very substantial economic headwinds in the global economy as we go forward.

In Australia we do have every reason to be confident about our fundamental economic strength. As the Prime Minister said, we avoided recession. Virtually alone amongst developed economies we avoided recession. We have low unemployment, we have low debt, we have low deficits and we are located, as the Prime Minister said, in the right part of the world at the right time.

But we cannot take all of this for granted. What we have to do is put in place the fundamental long-term economic reforms that will ensure our continued economic strength. Where would Australia be today without the far-sighted reforms of the Hawke and Keating governments? I will tell you where we would be: we would have a really high tariff wall, we would have an old, rickety, fixed exchange rate, and of course we would not have the national savings that we have got through national superannuation. What we would have is an economy stuck back in the 1970s. This indicates the importance of putting in place these long-term reforms for the future, the importance of putting in place a price on carbon. You cannot be a First World, first-rate economy in the 21st century unless you are powered substantially by clean energy.

We do need to boost productivity, and of course we have the NBN, a very substantial boost to productivity and a very important long-term reform. And of course we need reforms when it comes to the taxation system, bringing down taxes for small business so that they can grow. The patchwork nature of our economy makes these long-term reforms all the more important.

Those opposite want to go around the country talking our economy down. Shame on them for talking this economy down the way they do, day in, day out. They go wandering around telling people anything they want to hear and suddenly turn round and find out there is a $70 billion black hole in their budget.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. Clearly the Treasurer is at it again. He was not asked about us. He should be answering the question he was asked, not talking about reforms that happened 30 years ago.

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

The Manager of Opposition Business will resume his seat. There is only one point of order. The Treasurer knows his responsibility to relate his material directly to the question.

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

On this side of the House we are getting the big economic calls right and building on our strengths. What that has meant is low unemployment. We have a proven capacity to deal with global economic uncertainty. We have faced up to the big challenges of the future. Those on that side of the House cannot get their story right. On Friday the member for North Sydney said there was a $70 billion black hole in their budget estimates, and on 7:30 last night he said, 'I didn't say it.' He has developed amnesia.

They are all over the place when it comes to fiscal policy. They would rather see the country fail than the government succeed.