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

Thank you to Senator Arbib for this very, very important question. The Rudd government today has acted early, decisively and responsibly to provide a significant buffer through a five-part, $10.4 billion stimulus package for the Australian economy in response to the biggest crisis ever confronted by the modern global economy, particularly the financial system. The crisis has entered a major and damaging new and dangerous phase by threatening to impact on the real economy—that is, jobs and growth. It is a global financial situation that we have seen rapidly change and deteriorate over the last six months.

As is well known, more than 25 banks world wide have failed or been merged, nationalised or taken over. There have been a variety of bailouts. The reverberations of what is known as the subprime loans crisis, originating in the United States, caused by the mass mis-marketing and mis-selling of mortgages to millions of US citizens who could not afford to continue paying for them, and the consequential securitisation and lack of effective regulation of those instruments, have had a dramatic effect on world financial markets and financial institutions. It has led to dramatic losses and volatility on world stock markets, it has hurt consumer and investor confidence, and it is contributing to a serious slowdown in the world economy. The International Monetary Fund forecast growth of less one per cent in six of the world’s largest developed economies for next year. That will be the slowest growth for a quarter of a century. These major economies face the slowest growth in 25 years.

The stark fact is that what has happened in terms of the financial crisis on Wall Street in the US is impacting on ‘main street’ in Australia, and we will see the consequences in terms of the economy, jobs and growth. That is why the government has acted decisively—as it has in a number of other areas. It has acted decisively today. Today’s moves are part of the government’s prudent actions, including, last weekend, the safeguarding of the financial system by guaranteeing bank deposits and overseas borrowings by our companies for three years. Separately, a week earlier, we announced the takeover of the entire regulation and financial services in Australia, the transfer of all those powers and responsibilities from the states and territories to the Commonwealth. That in itself is a relative world first in terms of regulation and supervision, compared to the complex and difficult regulatory financial structures that exist in many other countries around the world. And we have today’s decisive action: a $10.4 billion, five-part Economic Security Strategy to be delivered by 8 December.

The stimulus package includes a $4.8 billion down payment on pension reform—well covered by my colleague and leader Senator Evans; $3.9 billion in support payments for low- and middle-income families; $1.5 billion to help first home buyers; and $187 million to fund a doubling of new training places—importantly, funded by a responsible government taking a responsible approach to a budget surplus. We have lifted the budget surplus to $21.7 billion, or 1.8 per cent of GDP. We have lifted the budget surplus well beyond that which the former Liberal government intended. It was important that we did that. It is an important buffer in these difficult times. I notice that Senator Fielding, to his credit, has indicated that he is supporting our budget. It is unfortunate that the Liberal Party is still intent on opposing central elements of our responsible budget. (Time expired)