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

I want to make a contribution to this committee stage discussion. I can reasonably anticipate that we are drawing to a conclusion. I know there are a number of senators who wish to make a statement, and I understand they will be making those shortly. I just want to make a couple of points because the Senate over the last week, in this chamber and its committees, has been thoroughly debating and analysing the government’s $42 billion fiscal stimulus package. There has been very significant debate and consideration by this chamber and its committees of the Rudd Labor government’s fiscal stimulus package.

By way of background, we have seen over the last year the development of the world’s worst financial and economic crisis since the Great Depression. It has been rapidly unfolding, initially in the financial markets from its origins in the United States, spreading rapidly into Europe and now, in turn, spreading into Asia and some of our major trading partners, such as India and particularly China. It has moved from financial markets, where we have seen massive dislocation and a shrivelling of the ability to provide credit to businesses around the globe. It has also seen the collapse of some 30 banks and, in various ways, quite extraordinary policy—necessary policy—for the nationalisation of banks in the UK and Europe and, in the US, the forced merger of banks in an attempt to stabilise the financial system. There were the unprecedented actions of providing not just guarantees to financial institutions such as banks but guarantees to ensure interbank lending so that we can minimise counterparty risk and keep the financial system operating.

In terms of the financial system in Australia, the Labor government has acted decisively. It has provided a guarantee not just for banks but for building societies and credit unions. This decisive action was necessary to maintain stability and confidence in the financial system. If you do not have a banking system that is operating with confidence to provide the necessary finance to business and consumers, frankly you do not have an economy. The Labor government acted decisively in this regard.

As I mentioned, we now face the greatest economic crisis since the Depression, and, frankly, I do not think anyone is arguing we do not face a significant economic crisis. This crisis is beginning to have devastating impacts around the world. Many comparable countries are now in recession, and deeply in recession, and have moved rapidly into recession. In the last three months alone the US economy has shed half a million jobs. This is unprecedented. We have not seen this level of job shedding since the Great Depression.

We are not immune from this. We saw in yesterday’s labour force figures an increase in unemployment from 4.5 to 4.8 per cent. These sorts of terrible outcomes in the US and Europe underscore the need for a major government stimulus package—the Nation Building and Jobs Plan—so that we can support business, jobs and growth in our economy. We cannot ignore the virtually unanimous advice and evidence from right around the world from expert bodies like the International Monetary Fund. All of the major experts and international institutions are urging major stimulus packages, and many countries have acted in this regard.

Unfortunately, due to that vote yesterday, Australia was faced with being the only country in the world not to have a major stimulus package. Our advice is: you have to act now or we will have even higher unemployment and slower growth for longer. As the International Monetary Fund’s chief economist, Olivier Blanchard, has said:

Above all, adopt clear policies and act decisively … Delays in financial packages have cost a lot already. Further rounds of debate will stoke uncertainty and make things worse.

This is directly contrary to the Liberal-National Party’s position, which is just to sit and wait and see. But the costs of sitting and waiting and seeing can be severe, and we saw the costs of sitting and waiting and seeing in the Great Depression. None of us literally saw it, but we know from commentary and analysis of what occurred in the Great Depression that you have to act early, you have to act substantially and you have to act decisively. The Labor government’s plan has been shaped by the need to support jobs, by the need for fiscal stimulus, by the need to cushion Australians from the worst the world can throw at us—the worst circumstances we have seen in the last 80 years—and by the need for confidence. The package must pass in order to ensure and underlie confidence. That is particularly important in the current circumstances.

In formulating its package, the government has been through an exhaustive process. We have taken the best advice from Treasury and we have taken the best advice from international experts and Australian experts. Above all, we have had regard to the lessons of history, to the lessons of that Great Depression. So, with respect, the argument that we do not listen to others just does not bear scrutiny. The plan has support from all parts of the country—community, business, unions and across the political spectrum. There have been numerous endorsements from organisations who do not traditionally support a Labor government. We have had support from the ACCI, the Australian Industry Group and numerous other business groups. Given the unfortunate circumstances of yesterday, these business groups have again come out and explained the need for this package to be passed. It is necessary at this time and there is a need for certainty.

This Labor government believes in supporting jobs, but unfortunately the Liberal-National Party has voted against jobs. That is what we saw yesterday. They declared their position last week: vote no and do nothing. That is the Liberal-National Party’s position—do nothing. Wait and see. That is not appropriate, given the seriousness of the circumstances we face. We have heard a lot about deficits, but the opposition has already admitted that a deficit is inevitable because of the projected slowing of growth in Australia. Revenues will be down because of the decline in the Chinese economy. Because of what has happened in Europe and North America, the Chinese economy is rapidly slowing down. That impacts on Australia. It means less demand for our minerals, the ending of the mineral boom and less revenue to government. We announced earlier the decline in government revenue of some $115 billion, so we do need to act now.

I just want to conclude by making this point. I find above all else the position of the National Party particularly strange. The National Party purports to represent rural and regional Australia. The fact is that, whilst everyone faces a very significant economic and social challenge, it will be rural and regional Australia that suffers significantly more. My own home state of Tasmania, which is predominantly low and low to middle income and regional, is a good example. These areas in rural and regional Australia suffer significantly more in these types of circumstances. So I do find it somewhat odd that we have the National Party opposing this package.

On the issue of debt, I point out that under the former Liberal and National Party government, up until December 2007 when they lost the election, the country’s national debt—and we should not just focus on government debt; we should look at accrued national debt—