Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

I thank Senator Webber for her question. The stakes before the Senate in the next two weeks are very, very high in terms of the budget. The budget is designed to combat inflation—that remains a key economic challenge for the Labor government—and one of the central elements in the government’s 2008-09 budget, of which a number of bills are to be presented here in the next fortnight, is our plan to fight inflation. We face a very extended period of elevated inflation. The Reserve Bank has forecast inflation to remain at or above three per cent over the next two years, and that is a legacy left to us by the now Liberal-National Party opposition. The average increase in the Reserve Bank’s measure of underlying inflation was 1.2 per cent for the quarter. That is to be 4.2 per cent higher through the year. That is the highest rate of inflation since 1991, or for 16 years. The government’s five-point plan to tackle inflation is focused on fiscal restraint, fiscal conservatism. That is what we promised; that is what we deliver in this budget. We are also expanding the economy’s productive capacity through addressing skill shortages, addressing infrastructure bottlenecks and raising workforce participation, and the Labor government has built a budget surplus of $22 billion to fight inflation and put downward pressure on interest rates.

This is the budget surplus that Australia needs in the current economic circumstances if we are to fight inflation, which we inherited from the Liberal-National Party senators opposite. They neglected it for so long, and now the fight against inflation has been made worse by a number of global economic factors. One of the threats to fighting inflation is being presented to us by the Liberal-National Party senators opposite, who have decided to oppose several budget measures. Let me give one example of the budget measures that they are threatening to oppose—that is, the condensate measure. As part of the budget surplus measures, we are removing the current exemption of condensate from the crude oil excise. Taxing condensate has no impact on the price of petrol or gas. The measure will increase the return to the Australian community from allowing private interests to extract non-renewable energy resources located in the North West Shelf project area and offshore.

This important inflation-fighting measure, which is contributing to the budget surplus, will have an ongoing net revenue gain of an estimated $2.5 billion over the forward estimates. And it is now being opposed by the Liberal-National Party senators opposite.