Sue Boyce (Queensland, Liberal Party) Share this | Hansard source

I rise to speak on Senator Fifield’s motion concerning the state of the economy, particularly the Rudd government’s ‘reckless management of the Australian economy’. I was interested to hear Senator Pratt refer to this as political grandstanding. I wish she was right. I wish this motion was about political grandstanding, but it is not. It is about one of the most frightening prospects facing Australia—the most frightening prospect to have faced it in over 11½ years.

If we want to talk about political grandstanding, the most pure form of political grandstanding, we could look at the advertisement that the now Prime Minister made last year in the lead-up to the election. This ad was in fact funded by the Australian union movement. It was done to tell us all what a wonderful fiscal conservative he was. He was saying to every newspaper and television talk show—anybody, anywhere—‘Don’t look at everything I’ve done in the past nine years as an opposition backbencher. Don’t look at my voting record, opposing every worthwhile economic initiative of the Howard-Costello government. Don’t look at my opportunistic statements.’ Mr Rudd was saying, ‘Please don’t remember my nickname in the Queensland public service, Dr Death,’ a nickname that was well earned for his ability to strangle initiative and to drive good policy and good thinkers out of the system completely, until there was only one view left—his. This is not about political grandstanding; this is about genuine concern about what can happen to this economy with this man and his trainee Treasurer in charge.

The reborn economic conservative Prime Minister definitely does not want you to look at his opposition to the new tax system introduced by the Howard-Costello government in 1998. He claimed then that the new system would create a ‘slow burn’ of the Australian economy. The great economic conservative of today claimed then that the reform of Australia’s tax system was a ‘dark day’ in the fiscal history of Australia. The great economic conservative of today in 1998 opposed tax reform. He said:

In a decade’s time we will look back and wonder why this country did it—why we imposed this burden on jobs, why we imposed the burden on pensioners and why we imposed this burden on the country at large.

When the coalition government left office last year, we bestowed a wonderful economic legacy on Mr Rudd and Treasurer Swan. It does not matter how hard or how long the government attempts to talk down the record of the Howard-Costello government because it cannot be done and it will not be bought. Unemployment was at a 32-year low. There was low inflation, with an average inflation rate of 2.5 per cent over the preceding 11 years. There was solid and sustainable growth in real wages and an economy that was the envy of the developed world and much commented on by the OECD and other international authorities.

That is what Labor started with in November last year. But Mr Rudd’s words of 1999 have proved rather prophetic. It is barely 10 months and Australians are wondering why they did it. They are wondering why they elected Mr ‘let’s have a review of everything’ Rudd and they are certainly wondering about the burden on jobs and the burden on pensioners. They are wondering about the empathise and ignore strategy of the government, who are comfortably prepared to predict drastic and dramatic increases in unemployment as a result of their policies and comfortably happy to predict that one day they will do something for the pensioners—despite the fact that they will agree right this minute, today, that pensioners are doing it tough. They will get round to doing something sometime next year to relieve the burden that was so well prophesised by Mr Rudd.

Australians are mostly wondering how Mr Rudd and his trainee Treasurer have so easily squandered the reputational capital of the Australian economy, an economy, as I said, that was the envy of the world and that elsewhere was regarded as demonstrating a peak of good management and good progress—a wonderful balance between low inflation and low unemployment, something very rarely achieved by any government anywhere. The answer is that Labor were so hell-bent on rewriting history, so hell-bent on rolling up all those fresh pale pink pages that they had into a narrative for us all to listen to, that they have tried to tarnish the economic reputation of the Howard-Costello government, irrespective of what happened.

Senator Pratt claims that the Labor government have a sound economic plan. It is quite interesting to listen to the comments of the newly elected Treasurer, Mr Swan. His idea of beginning this sound economic plan was to declare:

The inflation genie is out of the bottle.

That was a great start to a sound economic plan and to maintaining the reputation of this country at this critical time. Our reputation is one of the important factors in our being able to weather the international maelstrom that we are currently facing.

Last year, Mr Rudd was saying to anyone who would listen that he was an economic conservative. He was like a born-again believer. He was saying: ‘Don’t look at my past. Look at my new-found fiscal faith.’ As the head of the government he had to make good on that. He has had his chance at economic conservatism, and basically all we have seen is that his new-found devotion to economic conservatism is very, very shallow. First of all, we had the Treasurer assisting with his ‘inflation genie out of the bottle’ comment. All they have done ever since is talk down the Australian economy.

What we are seeing in Australia, quite apart from the global uncertainty that surrounds us at the moment, is what always happens when there is a Labor federal government in Australia. Business confidence has slumped, consumer confidence has slumped, foreign debt is forecast to grow again, and inflation continues to be uncontrolled by the government and by interest rates. By their own admission in the budget papers, they are looking at unemployment growing dramatically in the coming 12 months, putting more Australians out of work. We wonder how the famous working families will be and how they will feel about the government and the government’s ability to manage the economy when they are the out-of-work families.

This is a nervous government. We have a Prime Minister and a Treasurer who are too nervous and too inexperienced to make the hard decisions that need to be made. We have a Treasurer who is afraid to act, let alone act decisively. We have non-stop reviews, inquiries and conferences that go on and on. I must admit that I was somewhat unnerved to look back and see the similarities between our current federal Treasurer and another federal Treasurer from Queensland, who guided the economy down, down, down. Just like ‘Red Ted’ Theodore—now there is a name to conjure with—Treasurer Swan is a big player in the Labor Party and he is a key numbers man in the Labor Party. But, when it comes to running an economy, just like ‘Red Ted’ Theodore, he is a total failure.

Why does this always happen when Labor is in power? Why do we see an economic downturn? Why do we see increases in unemployment? The answer of course is that Labor do not know how to run an economy. They know how to run unions and they certainly know how to appeal to special interest groups with irresponsible policies and irresponsible programs. They know how to socially engineer the country so that equality ends up meaning equal opportunity to be unemployed and equal opportunity to watch education be dumbed down, but they do not know how to run an economy.

Mr Rudd’s problem is that there is more to economic conservatism than simply mouthing it as a slogan. Fiscal conservatives do not jeopardise the future of the private health system by taking away the incentive for Australian families to take out private health insurance. Fiscal conservatives do not create an explosion in the cost of public hospitals by taking incentive out of the tax system. Fiscal conservatives do not increase the tax on the family Tarago or on farm vehicles and call it a luxury tax. We are back again to the politics of envy, back again to the equality of opportunity of not having a job, probably losing your house and not worrying about whether you have to pay the luxury car tax because you cannot even afford an ordinary car. Fiscal conservatives do not put our economy at risk over an emissions trading scheme that has not been fully modelled and will put uncontrolled upward pressure on the cost of living for all Australians, in particular those who are most vulnerable—the people on fixed incomes such as age pensioners and those on disability and veterans pensions.

Of course, Mr Rudd also promised Australians that he would stop the blame game between the states and the Commonwealth. He just forgot to mention that he would replace it with the ‘no blame, no accountability and no responsibility game’ instead. So we have lost the blame—that is good; there is no blame between the states and the federal government, but there is no accountability either. It is all now operating behind closed doors. The Labor states spent years trying to pretend it was not their job to build schools, hospitals, roads and other desperately needed infrastructure until even they could not pretend anymore.

The state Labor governments learnt their economic management skills at the same school as the Prime Minister and Treasurer Swan. Did they lift government spending when private sector spending was low? Of course not. The states started their stop-start, unplanned spending when the economy was strong, adding dramatically to inflationary pressures and hoping that they could lay the blame for this on the former federal government.

We need to look today at yet another one of their efforts. The Senate Select Committee on State Government Financial Management report which came out today points out that on a number of occasions the states have double-counted federal money intended for local government. We have the big announcement today by Prime Minister Rudd that he is to have a meeting of all the mayors and all the councils of local government in Australia here on 28 November. The only problem with this is that—just like with his 2020 summit, when he forgot to check what was happening in the Jewish calendar—28 November is the day before the Victorian council elections. If you are a mayor in Victoria, where are you going to be the day before the Victorian council elections? Will you be in Canberra doing a mini 2020 summit on local government with Mr Rudd or will you be in your electorate wards speaking to constituents? Once again, we cannot even get ‘let’s have a big talk and think about it for a long time’ right.

I note that in today’s Financial Review, the Governor of the Reserve Bank, Glenn Stevens, has warned that governments might have to lift spending on capital works even further as risk-averse investors shy away from major infrastructure projects. I was a bit surprised by this characterisation of private investors as risk averse. The private sector is not normally characterised as risk averse. Unlike Mr Rudd and Mr Swan, these are people who are used to putting their own money on the line, so why would they be risk averse now?

The private sector are risk averse because they are worried about this government’s ability to manage the economy. They are worried about interest rates. They are worried about what protection there might be from the global situation, which they were not concerned about, which they felt confident about, under the previous government. There is no confidence in this government’s ability to deal with the current economy or with the economic concerns that arise.

Even after we look at the difficulties with inflation and with spending on infrastructure as a concern, what worries most Australian taxpayers—and certainly all those Australians with a mortgage and certainly most working families—is interest rate increases. Until the election of the Rudd government in November last year our banking institutions had been relatively disciplined. Now it is quite common for banks to raise their variable home loan rates above and beyond and out of association with any increase in the Reserve Bank’s official cash rate.

There was a time not long ago when we had a Liberal government and a Liberal Prime Minister and a Liberal Treasurer and when increases to variable home loan rates were not common except in sync with the Reserve Bank’s official cash rate movement. Again, why is there a difference? What has changed? Why now? The difference between our government, our Treasurer and the Labor lads that are in charge now is discipline—a genuine economically conservative and disciplined approach. We were not sloganeering or mouthing platitudes or pretending to be something that we were not. We had a genuine belief in what we were doing, a genuine strength and a genuine discipline and focus.

The approach of the Howard-Costello government was respected by the banks and by the national business community and, most importantly I think in the current situation, it was respected by the international financial markets. This is not a situation that currently exists with the government we have in control. When the banks are no longer taking notice of Treasury and the central bank you know there is a breakdown in economic confidence and that the government has lost control of the economy. The Australian Bankers Association recently reported that they believed that the current global financial problems will continue for up to two years. Quite honestly, there is not time for this government to not get it right. They need to develop the ability to deal with this economy. They need to look as though they understand what they are doing. They need to stop behaving as though they can change history by attempting to rewrite history. They inherited an extraordinarily strong and robust economy. They need now to do what they can to rebuild the reputation of Australia and its economy that they have squandered so recklessly over the past 10 months.