Doug Cameron (NSW, Australian Labor Party) Share this | Hansard source

I must say I am not disappointed by the approach that has been taken by the opposition senators on this issue. They have run this argument about recalibration on a number of occasions. What ‘recalibration’ means is reducing the stimulus and forcing more Australians into unemployment. When I say I am not disappointed I mean I am not disappointed because the Australian public now see that any argument that the opposition have any economic credentials at all is swept away once and for all.

I go back to have a look at what this government was facing in terms of the global financial crisis. From the middle of 2007, the financial markets were showing signs of considerable turmoil. The realities of trade in exotic financial derivatives and the explosion in subprime lending that had characterised the finance market boom became clear. Inadequate regulation and greed on the part of the financial market players would set in train a sequence of events in the US, the UK and Europe that would culminate in the collapse, nationalisation or government bailout of major banks, insurers and credit providers. The list of failed financial institutions reads like a who’s who of those who only months earlier would have considered themselves the masters of the universe; as we now know, these emperors had no clothes.

Following the collapse of Lehman Brothers, it was clear that the whole financial system was on the brink of collapse. Share markets experienced the steepest and most rapid falls in stock prices in nearly 80 years. Major currencies around the world, Australia’s included, came under abnormally heavy selling pressure. Market confidence crashed, creating the conditions for unprecedented falls in global trade, production and investment. It was clear that without government intervention every advanced economy was heading for a deep and protracted recession. Governments the world over put in place fiscal stimulus packages while central banks added monetary stimulus by reducing official interest rates to unprecedented lows.

The consequences of the global financial crisis have been pervasive. Since October 2008, there have been nearly 50 government sponsored bailouts of major banks around the world. Financial institutions have suffered losses and asset write-downs totalling around $1.9 trillion. The global financial crisis quickly developed into a global crisis of employment. In the United States alone almost six million jobs have been lost since September 2008, and the International Labour Organisation estimates that 60 million jobs will have been lost by the end of this year as a result of the global economic downturn.

The human impact of the global financial crisis has been severe, and it is not something that you see discussed or debated in the coalition report. There is no discussion about the human crisis, no discussion about the implications for families and no discussion about the implications for communities—only some esoteric economic analysis of Keynesianism versus laissez-faire economic policies. That is the level of the debate from the coalition senators on this issue. The government was determined not to enter into any esoteric debate. We determined to cushion Australians from the worst impact of the crisis. Protracted downturns result in permanent dislocation from the labour market, and skills atrophy and risk creating an entire generation of unemployed. We were not going to stand by idly and watch that happen. We were not going to ‘wait and see’, as was the proposal from the coalition senators.

If we had not moved, viable businesses would have been destroyed and productive investments foregone. Capital and skills destruction can permanently reduce an economy’s long-term capacity, to say nothing of the scarring effects of unemployment to the individuals involved. The government response was a coordinated one. It was coordinated nationally and internationally. The Secretary of the Treasury told the Senate Economics Committee inquiry into the government’s economic stimulus initiatives:

I think the international consensus, including the OECD and the International Monetary Fund, is that Australia’s policy settings, at least to date, have been quite consistent with what is generally regarded as an appropriate stance, including in respect of timeliness and being temporary and well targeted.

So these academic economists who gave evidence—these blackboard economists who gave us lectures about Say’s law, who gave us lectures about crowding out, who were absolutely horrified that government would play any role in the economy—were wrong, absolutely wrong. The IMF say they were wrong, the OECD say they were wrong, the ACCI in Australia say they were wrong, the Australian Industry Group say they were wrong, other economists say they were wrong, and the Treasury and the Reserve Bank say they were wrong.

Yet what do we see? We see the opposition senators, on the basis of their dogma and with their view that this hidden, unseen hand will solve the problems, saying, ‘Let the market rip and everything will be okay.’ You have produced a report that has got no reality about what is facing this economy and facing the community in this country. There is no mention about what is happening to ordinary workers in your report, just this esoteric debate based on submissions from the academic, blackboard economists that you grab because you are sinking in a sea of irrelevance in terms of your economic credentials. You have no economic credentials—absolutely none on these issues. The Australian government has determined that we will take strong action and intervene on behalf of the Australian community, and that intervention has underpinned 210,000 jobs in the economy. What is clear is that the Secretary of the Treasury, Dr Henry, indicated that your argument to remove the stimulus would mean that immediately 100,000 jobs would be lost in the economy.

I am proud to be part of a government that has ensured that Australia is the only advanced economy to register positive economic growth. We have the second lowest unemployment rate of a major advanced economy. We have the lowest budget deficit of major advanced economies at 4.9 per cent, with the average deficit being 10.1 per cent of GDP in other advanced economies. We have the lowest debt of all major advanced economies. Government net debt as a share of GDP for the major advanced economies is to increase to 93.4 per cent. Australia’s debt will be 13.8 per cent of GDP by 2013 and will then decline. We are the only advanced economy not to go into recession, and if this stimulus had not been implemented, one million Australians would have been unemployed. That is our record against your theoretical, academic, blackboard economist analysis of the economy. It is no wonder you have no credibility with the Australian public, because you have no policies on the key issues that affect Australians in this country. You have just abandoned the Australian community in relation to your economic dogma. You did that with Work Choices. You are now doing it on economics, and you will pay a price for that. (Time expired)