Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker, it is a pleasure to see you in the chair. I would like to take this opportunity in the adjournment debate to reflect on the decisions made by the Australian government following the global financial crisis compared to those made by the New Zealand government. I say this in the context that I am aware that there is a lot of discussion around allegiance to New Zealand at the moment. I do not seek to fan it, and, just to be clear, I have no forebears who were born in that country and there are no issues around my allegiance. But sometimes we can reflect on decisions that have been made in the past to help us inform decisions for ourselves in the future. The frank reality is that it gives me no joy to say this, but it has become increasingly clear that their decisions were much wiser than ours, particularly those taken by the then Rudd government. We are now paying the price, with inflated asset prices, sluggish growth and unrestrained public debt as a consequence of decisions made then, which have been very difficult to unwind since.

At the time of the financial crisis, our economy featured a robust banking system, floating exchange rates and openness to international trade, most notably our mineral exports to Asia, but also the opportunities presented from a growing service based economy throughout the world. So we have enormous bounty and opportunity, both in human capital and physical capital, as well as our manufacturing sector. The evidence now shows that our safety from technical recession at the critical juncture in the 2008-09 period was due principally to lower interest rates because of the flexibility the Reserve Bank had at the time, the huge drop in exchange rates, a more flexible labour market and continuing demand for our mining resources. It was not—I need to stress this again—due to high household consumption off the back of cash transfers and largely unproductive government spending, championed by the previous government. And we shouldn't be afraid to say it. I know some members opposite will provide a rallying cry in defence, but unfortunately it is not true, and the narrative they have set in is false.

We should never be afraid to stand up and say that the previous government's $100 billion fiscal stimulus has done more harm than good, by simply entrenching spending and entrenching costs we continue to live with today. In the aftermath of such decisions, we all have to look at ourselves and make judgements about what we are doing to fix this situation. One of the things about which the Turnbull government can be proud is that it has tried to address that. Unfortunately, the intransigence of the Labor opposition has made it very difficult to be able to do so. In the end, they would rather trade off the benefits of the people they can sell votes to today than protect Australians in the long term.

The stimulus helped heighten the exchange rate, which reversed the contribution of net exports to aggregate demand. The uncertainty that mounting public debt creates has stalled business confidence, inflated asset prices—particularly for young Australians who want to get into the property market—and left future generations to pick up the bill—a shameful act. On top of that, quantitative easing from the Federal Reserve and Bank of England has also hindered our competitiveness, at the same time as adding to asset inflation, making housing even more expensive, again to the detriment of future generations.

New Zealand's approach was much different. They embraced tax relief and supply side reform to meet the challenges of the crisis they faced. Investment in productive infrastructure was boosted, income taxes were lowered and restrictive business regulation was reduced. Unsurprisingly, it had a good effect. New Zealand has now managed to return to a per capita growth rate comparable to pre-2007 levels. Business profits are boosting tax revenue, and unemployment recently fell to one of its lowest levels in years. The New Zealand National Party's budget discipline is truly admirable, with no net new spending and limited new spending envelopes. I hope, as I am sure everybody in this House does, that, when it comes to New Zealand's election shortly, that discipline will be rewarded, because they are a reformist government and focused on the task at hand.

The New Zealand government's surplus is almost $1 billion ahead of forecast. Compare that to the situation we now face, where public debt has continued to grow and we have done everything we can to try to stifle and limit it, despite the obstruction we have faced from those opposite. We have failed to return to trend growth, despite the assumptions made at the time of the stimulus spending. Two-thirds of our public debt is now owned by foreign entities. The servicing of this debt is depriving national income. Tragically, it will mostly be incurred and repaid by future generations. Our annual GDP growth per capita has been halved compared to the pre-GFC years, from over two per cent in the five years preceding the crisis to around one per cent. And there should be no cause for pride for how we handled the GFC.

We have let Australians down, particularly young people. At the very least, they remain locked out of the inflated housing market, which fiscal stimulus did nothing but entrench. If we do not address this handbrake on growth now, we are letting millions of young Australians down. That requires serious tax reform; it means dealing directly with the challenges of housing affordability and creating economic opportunity for every Australian.