Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Hansard source

Isn’t it marvellous? I thank Senator Abetz for moving the motion to take note of answers in the way that he did, because it allows me to deal with the range of questions asked by the opposition in question time today. The elephant in the room—the question of the economy; the issue that the coalition claimed was their issue—was absent from their questions list today. Indeed, they were offended by the truths that were put by Senator Evans in answer to a question which was put to him today. We actually expected that the opposition would try and defend their record from when they were in government. But they were not game to do that today. They avoided the question of the economy because they knew that everything that Senator Evans said in answer to his question today was correct. Inflation is our most pressing domestic challenge. It is an inescapable fact that, under the coalition, our rate of underlying inflation grew and grew to the point where for the first time in an election campaign we saw the Reserve Bank increase interest rates, such was the pressure on the economy from growing inflation—inflation which was, in effect, caused by the inaction of the coalition when in government in relation to capacity constraints on the economy. There were 20 occasions on which the Reserve Bank warned their government that those pressures were leading to problems in the economy.

We saw the December CPI data released in January, showing underlying inflation at 3.6 per cent—well over the danger threshold so far as the Reserve Bank was concerned. That is the highest underlying inflation in 16 years. Right through the coalition’s time in government and for a substantial part of the time of the previous government, that rate of underlying inflation had not been reached. But the pressures in the economy under the stewardship of the coalition had grown to a point where it is now clear that we have seen not only an increase in interest rates and pressures from outside our economy increasing interest rates but also the probability of an additional interest rate rise predicted at 70 per cent. They are the challenges that the Labor government now faces in taking the reins of this economy. The fact that the coalition were not prepared to ask one question on the economy today—their first opportunity in this chamber—indicates that they realise they made a shambles of the economic management of this country. Under their stewardship they ignored the warnings from the Reserve Bank—20 warnings about capacity constraints—and we are now paying the price. Unfortunately, home owners and those with credit cards and other debts are likely to pay the price for some time to come. It will take some time for this government to manage the economy and to get it back under control after this opposition, when in government, allowed it to escape their control to the point where the Reserve Bank, as I said, for the first time in history increased interest rates during an election campaign—such was the nature of the pressure that the Reserve Bank felt was coming on this economy.

Let there be no doubt that Labor, in government, has a steely determination to win the war on inflation. We will take responsibility for fixing the problem, a problem that Labor did not create. That is why Prime Minister Rudd has outlined the decisive action we will take by implementing his plan to fight the inflation legacy that we have inherited. We have noted that the opposition now deny that the highest underlying inflation in 16 years is a problem. Frankly, if they cannot see it is a problem, it is no surprise that they allowed the problem to get out of control when in government. As I said, the fact is that home owners, credit card holders and anyone with a debt in this country, except those who were fortunately enough or wily enough to lock in interest rates in the past, will now pay a price in the immediate future and perhaps for some time to come on the mortgages and the credit card debts that they have. They will have the coalition government, the Howard government, to thank for the pressures that they are facing. (Time expired)