Mark Arbib (NSW, Australian Labor Party) Share this | Hansard source

Thank you, Mr Chairman. I also thank senators on the opposite side of the chamber. They actually illustrated the point that I was trying to put forward. To return to the quote from President Obama:

We have inherited an economic crisis as deep and as dire as any since the Great Depression. Economists from across the spectrum have warned that if we don’t act immediately, millions more jobs will disappear … More people will lose their homes and their health care. And our nation will sink into a crisis that, at some point, will be much tougher to reverse.

That was what President Obama said, and I am happy to announce that today the United States Senate approved an $838 billion stimulus package. Three Republicans crossed the floor to vote with the President to try to stimulate the economy.

This is not just happening in the United States. Countries across the globe are taking action to stimulate their economies using monetary policy and fiscal policy to try to protect and support jobs and maintain economic growth. The IMF recently put out a report which I found most helpful in understanding the scale of the economic crisis and also a way forward for governments. The IMF report notes that the global recession has dramatically intensified: ‘The global economy is in the midst of a deep downturn, with the financial crisis driving an abrupt slump in the real economy. All major advanced economies are in recession.’ The report notes, ‘Merchandise exports have fallen globally by 30 to 40 per cent.’ Commodity prices, so important to our country, have collapsed over the last three months. Metal prices are 50 per cent below their peaks of March last year and global growth is forecast to fall to just 0.5 per cent in 2009. That is how deep this global recession is and how big an issue it is for this chamber. Both the IMF and the OECD have urged governments of all persuasions to do everything they can to stimulate their economies.

On Thursday last week I was lucky enough sit in on the hearing of the Senate Standing Committee on Finance and Public Administration inquiry into the stimulus package and to hear from the Secretary to the Treasury, Dr Ken Henry. Anyone who has ever listened to Ken Henry has had a real economics lesson. I learnt a great deal from it. I would like to put on record a couple of things he said, because they go to the importance of what the government is doing with this package. Dr Henry told senators:

… the global circumstances confronting Australia are simply unprecedented.

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The forecast growth for our major trading partners is as weak as we have seen quite possibly since the 1930s.

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… there is a clear case for a very substantial fiscal stimulus and for that to be delivered to the Australian economy before unemployment starts to increase. From our history and also from the experience of other countries, the evidence is that the earlier a macroeconomic policy response is taken, the better the prospects for the macroeconomy going forward.

That is what Dr Henry put forward to senators during the inquiry.

Our position is to take action now. What is the position of senators on the other side of the chamber? The best way to understand their position is to look at the words of their shadow Treasurer, Julie Bishop. The shadow Treasurer has put forward her plan for government policy to deal with the global recession: let’s wait and see. Let’s wait and see how bad it gets before we take action to stimulate the economy. Almost every developed country is now in recession. The Liberals say: let’s wait and see. Six of our top 10 trading partners, including China, the United States, Britain, Singapore and Germany, are all in recession. What is the Liberals’ plan? Let’s wait and see. Yesterday the National Australia Bank released some awful figures showing the depth to which business confidence has fallen in our economy. The Liberals’ response? Let’s wait and see how bad it gets.

The government are not waiting to see how bad it gets; we are taking action now. This global crisis, this global recession, is like a cyclone. It started in the United States, wreaking havoc on the domestic economy, wreaking havoc on financial markets, on financial institutions, on the banks. It then moved to Europe, wreaking havoc on their economy, with most of the EU now in recession. The hope was that it would not spread to the developing world, that they would be able to withstand the drop in the United States and Europe and continue to create growth. Unfortunately, the cyclone was too strong, and now we are seeing growth in the developing world slowing dramatically. Growth in China has slowed dramatically, from 13 per cent down to six per cent. In Korea there has been a huge drop in their economic growth. In Japan they are talking about a serious recession that it will take them years to recover from. The cyclone has been too strong. It is on its way to our shores. This is not a time to wait and see how bad it gets. This is the time to take action.