Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Hansard source

In considering the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and cognate bills, I was reminded of the poem The road not taken by Robert Frost. That is clearly where we find ourselves now as a nation and as an economy. We find ourselves faced with two divergent paths. One has the appearance of a nice, evenly laid road, clear of debris and sure of foot. The other one is on a slight incline; it is harder going, there are a few rocks and the footing is far less sure. But one of these roads leads to a higher peak. It is worth getting over the obstacles in order to achieve a better view, if you like, or a stronger base from which to climb even higher. The other one spirals down into a valley of darkness, a valley of debt and a valley of despair.

I specifically mention debt, because debt is what has got the global economy into the problem that it faces today. Australia is not immune to that problem (1) because we engage in the global economy and some of our major trading partners are experiencing very tough economic times and (2) because Australia has struggled with debt problems of its own. Thankfully those debt problems have not resided at the government level. I say ‘thankfully’ because over a decade of good economic management there was prudent management of the economy and the prudent and judicious use of surplus funds to repay $96 billion of Labor’s debt from the last time they were in the office, which saved us around $8 billion a year in interest payments. The coalition achieved that through good, buoyant economic times. We prepared for the future because we knew—like every family knows, like every small business owner knows and like every long-term economic manager knows—you cannot spend your way to continued prosperity. You have to pay back that which is borrowed; you have to repay the debts.

The debt that has befallen the Australian economy has largely been in the consumer end of the market, where people have aspired to have things and have bought them on credit. Credit was readily available in this country, principally because of very low lending requirements and benchmark returns that were available internationally. A case in point is the United States, which is perhaps suffering the most in this global economic crisis. It made funds available at one or two per cent for very long periods of time. You could get a 30-year mortgage in America at three per cent or thereabouts, and mortgages, debts and loans were being made to people who had no prospect of repaying them. That is why we are in this mess: because people who had no income, no assets and no jobs were given vast amounts of money in the hope that that would create a better society and greater home ownership in society. But none of this money had any recourse to it.

In America, if you borrow money and you have a mortgage, you can walk away from it and it is then the mortgagee’s problem. There is no recourse to pursue the debt. This is not the same for government. Governments, when they borrow money, are taking it from the taxpayer. They are either spending tax money that they have got or spending tax money they have not got and they are borrowing from someone else. They are doing that and they continue to put that money into the economy in the hope of sustaining what sometimes is not a sustainable position. This is what has happened in America. It is what has happened in England. It is what has happened in Japan. The great fortune for Japan is that they have had a massive surplus, and they have been able to inject that money into the economy. And yet it has not made a skerrick of difference. Japan has been in and out of recession for the last 10 or so years, with very low interest rates, very loose monetary policy and very aggressive fiscal policy, and recession still has not worked its way out of the system.

I say this to the people of Australia: I think we have to understand that whenever there is what I have described as malinvestment—Alan Greenspan said it was ‘irrational exuberance’ in investment markets, or in any other market, quite frankly—taking place and people get carried away doing things they should not do, there is always a time when it has to work its way out of the system. People know they should not do it, that they should not get into that malinvestment, but they do it because they fear not participating in a boom or they fear missing out. The results are painful, it hurts, and sometimes there are some very difficult decisions that people have to make. They have to make tough personal decisions and they have to make tough business decisions on behalf of their employees, and sometimes governments have to make these tough decisions too. But they have to always take the long-term view about what is going to be to the benefit of the country over the longer term. That is what I fear this government has not done, and it is the reason why, in considering this package, it is very hard to subscribe to.

This government is hell-bent on avoiding a recession. No-one wants to see a contraction in the Australian economy. I do not want to see a contraction in the Australian economy. I want to see people kept in their jobs as long as they possibly can. I want to see people prepared to build a stronger base from which Australia can go forward, but building a stronger base means laying the right foundation. An empire is not built on a mountain of debt. You cannot build the Australian economy and make it prosper in the longer term if a foundation of unsustainable borrowing has been laid by the government just to avoid a bit of short-term pain. There is going to be pain in our economy. There is no question about that. I empathise with every Australian who is facing tough choices right now about what they can and cannot purchase, who they can employ or how they can sustain their businesses and look after the people that are with them.

The government has a very key role in this. It has a role to take prudent measures, but the emphasis here is on ‘prudent’. This package that has been put forward was cobbled together not only at very short notice—obviously after Mr Rudd had written his 8,000 word treatise on what is wrong with the world and how only he has the answers to it—but also with no real thought for the future. Injecting $42 billion into the economy, asking people to take their $950 handout and to go out and spend it, is not the right thing to do now. The people of Australia know it, but why would they say, ‘No, we don’t want your money even though we desperately need it’? If there is a party and someone is handing out free drinks, most people will accept one—and sometimes they might accept more than they should, even though they know the consequences will be felt tomorrow. The Australian people know the consequences of this judgment that the Rudd government is rendering to the people of Australia.