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

My question is to the Acting Prime Minister. At a time when the Australian government has net debt of $107 billion and a deficit approaching $50 billion, why is the government planning to provide money it does not have to prop up the Eurozone, which is the world's largest economy?

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

I am quite disappointed in that question from the Leader of the Opposition. Firstly, the implication in the question is completely inaccurate; we have come to expect that. But what we have seen in the last 24 hours, particularly from the shadow Treasurer, is that the bipartisan support for the IMF that has spanned conservative and Labor governments over something like 60 years has now been broken. How low will they go? They should know, because this was the practice when they were in government, that any loans made to the IMF are repaid with interest. That was the situation under conservative governments and it is the situation under this government.

Secondly, and this is more important, the government is not proposing to put any money into a European rescue fund. That is just false—completely false. What we have seen is a xenophobic approach, particularly in the last 24 hours, by the shadow Treasurer, who has been out there blowing the dog whistle that somehow Australia was going to be propping up Greece. Well, we are not. But what we are going to proudly do is meet our commitments to the IMF, as governments of both political persuasions have done for over 60 years.

There is a very serious situation in the global economy at the moment. Whilst our fundamentals are strong, Australia is not immune from the fallout of these events in Europe and also in the United States. It is a difficult situation when two of the big global groupings in the economy are misfiring. That does have consequences for Australia. What we have said and what other G20 finance ministers have said—and I am sure other G20 leaders are saying it as we meet today—is that the world will meet its obligations through the IMF to ensure that the IMF has the capacity in the future to deal with greater global volatility which flows from Europe.

Around the world, conservative governments favour that approach, governments of our persuasion favour that approach and governments of the persuasion of those opposite have favoured that approach: giving the IMF the resources that it needs. The IMF does not have the capacity to contribute directly to any European fund, but what I have said and what the Prime Minister has said is that the IMF must be properly resourced for the future because we are entering into a period of great volatility which brings threats to the global economy and Australia is not immune from those threats. We will pay our fair share through the IMF, as we have always done, but that will be by way of loans, which are repaid with interest.

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

Mr Speaker, I ask a supplementary question. Is the Acting Prime Minister confident that Europe in general and Greece in particular have put their economic houses in order? If not, isn't the contribution that the government proposes to make throwing good money after bad?

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

What is really disturbing is that there is a falsehood at the heart of this question. That falsehood is this: that we support the IMF with loans, which are always repaid with interest. The Leader of the Opposition asked me if I was confident that the Europeans were going to solve their problems. I have been to G20 finance ministers meetings, I have been to the IMF and World Bank meetings, I have been back to G20 finance ministers meetings in the past month, and that is because we have been so worried about the consequences for the global economy of a meltdown in the European economy. What offends me by those questions from the Leader of the Opposition is he has not got the wit to understand what a threat that is to global living standards and what a flow-on effect that will have to our economy and to living standards in this country. He is so bereft of economic knowledge he fails to understand that basic economic fact.

What he wants to do is to go for cheap populism and somehow claim that we are going to be throwing good money after bad in Europe. We are not going to be doing that, but what we will do is meet our obligations to the international community, as we met the obligations to the international community during the global financial crisis and as we met the obligations to our own citizens during the global financial crisis. There would have been hundreds of thousands of Australians unemployed if the Liberal Party had had their way during the global financial crisis, but we supported our economy and the consequence of that is that we have one of the strongest developed economies in the world. Really, what he is saying now is that he goes for the scorched earth approach in economics; he does not care if demand falls off a cliff and hundreds of thousands of people are unemployed. Globally now there are over 200 million people unemployed and, if these events in Europe take a turn for the worse, there will be many more. We know in this country that we have the economic strength to handle the fallout and we have the moral strength to say that we will put our hand up for the international institutions that can make a difference. We will support the IMF, as we will support multilateral institutions as governments of their persuasions used to do.