Julian McGauran (Victoria, National Party) Share this | Hansard source

You cannot rely on Senator Conroy—the original ‘Hollowman’; the original Rob Sitch. Put a phone call in to him; wake him up.

The motion goes on:

(b) the massive collapse in consumer and business confidence since the election of the Rudd Government;

(c) the delivery of a budget that forecasts an increase in unemployment;

(d) the Government’s raising of inflationary expectations and failure to honour its promise to address cost of living pressures; and

(e) the absence of a coherent economic strategy and a focus on presentation rather than policy.

I support that motion—naturally and wholeheartedly—and, as other speakers have said in their addresses from both sides of the chamber, the matter is reinforced by the backdrop of the deteriorating international situation. It is a frightening situation. The dark prediction by the former chairman of the United States Federal Reserve Alan Greenspan puts it in some perspective. He said that this is probably a once-in-a-century crisis. I do not think any of us knew anything about mortgage home loan lenders like Fannie Mae and Freddie Mac until recently, but look at the sheer size of their collapse. And there are organisations like Lehman Brothers, Merrill Lynch and AIG, which is valued at $1 trillion.

These are enormous companies. Some have collapsed, some have gone into bankruptcy, some have been salvaged by their government and some are on the brink. And Australia is not immune. We are feeling the repercussions within our own share market, which has reached a 2½-year low. Leading companies, investment companies, manufacturing companies and banks are all taking huge losses. Some are even on the brink of collapse themselves.

If you want to have a good day, do not look at the financial pages of today’s newspapers. Senator Sherry is in the chamber. He may or may not have read the Herald Sun, but judging from what he said during question time he has not. It is headlined ‘Superannuation takes $100b hit’. So this is a time, more than ever before, that Australia needs economic experience, knowledge, wisdom and wit to steer our economy through very troubled waters. These troubled waters are not a product of the usual boom and bust that was common enough in the fifties, seventies, eighties and nineties. Economic historians can point to the times and to the reasons for these booms and busts. I believe that this is a malaise that will go much deeper and may stretch for much longer. It will cause uncertainty that will directly hit household budgets, retirement plans and unemployment levels. That is the reality of the situation and the backdrop to this debate.

As previous speakers have pointed out, Australia has faced crises before, including the economic crisis of 1997, where our Asian neighbours’ economies collapsed around us. And there was the crisis of 2001, with the September 11 terrorist attack, which created a collapse in confidence, particularly in tourism. We have had those crises before, but nothing of this magnitude. Even though those crises were not of this magnitude we were able to pull through the bad times more quickly because the fundamentals of the economy were sound.

Early in our term of government we gave the Reserve Bank unprecedented independence in monetary policy—and thank goodness we did, because the economic crisis in Asia came very quickly. The decision to do that was a product of the Reserve Bank’s independence being compromised by the previous Labor government. Equally, the previous coalition government, early in its term, introduced the charter of budget honesty to restore the integrity of the government’s financial reporting, which had been lost under the previous Labor government.

In our first term of government, a debt-reduction regime was put into place by way of disciplined surplus budgets and boosted by the sale of government assets. Moreover, we locked in structural reform. We did not stop reforming from our first term to our fourth term. Yet, at every step of the way, the Labor opposition—now in government—opposed those reforms, which they have inherited. No government in the history of Federation has inherited such a fundamentally sound economy—structurally strong and able to meet the challenges of the difficult times ahead—yet the Rudd government are seemingly hell-bent on squandering that advantage, an advantage that the Economist magazine declared unique, calling us the ‘wonder down under’.

Consider the legacy the Rudd government were left and how, in their very first budget, they have squandered it. They walked into office with the government owing zero debt. I do not know of any other country—there would be very few if you had to name them—that has zero debt. In fact, in today’s papers the Governor of the Reserve Bank is quoted as saying:

Most governments would kill for a set of fiscal accounts like the ones we have.

He meant zero debt and budget surpluses to the tune of 1.5 per cent or more of GDP. Interestingly, the debt that we eliminated was $96 billion, which coincides with the very surplus that you, the government, will be inheriting over the next four years. In the forward estimates it will amount to $96 billion. If you do nothing, you are going to have surpluses worth $96 billion. Eerily, that surplus gifted to you is equivalent to the very debt being raised by the state governments over the next four years—around $96 billion.

Time does not permit me—you can give me an extension of time if you like, Mr Acting Deputy President—to go through the previous government’s record, but it is well known. Perhaps the centrepiece of that legacy and that record is the unemployment rate, which was trending to the once unimaginable full employment rate. Yet, in the Labor government’s first budget, they have effortlessly put aside the ambition of full employment and, for the first time in many budgets, predicted an increase in unemployment of some 140,000 people—real people.

I should add that the first budget of any government tells you a lot about the character, the mettle and the leadership of the government; it was so in our case in 1996, when we had to bring down a tough budget, and so it was with the Labor government. They had an extended honeymoon up to their first budget, but even the media, who had given them that extended honeymoon, had the spotlight on them in their first budget. The media wanted to see what direction the government were going to take this country in. Well, on the night we got it. We got what the Treasurer called, in his own words, ‘a classic Labor budget’—and he was right. It was a classic Labor budget of high taxes, new taxes and unannounced taxes that came from left field on the working households of Australia, to the tune of $19 billion.