Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister update the Senate on the global economic challenges Australia is currently facing? Is the minister aware of any contributing factors to inflation in recent years?

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

I thank Senator Lundy for her question. At the present time every country in the world—I emphasise ‘every country in the world’—is facing some significantly tougher economic questions. What is known as the global credit crunch has come about as a result of the massive housing crisis that has occurred in the US. The mis-selling, to millions of Americans, of mortgage products which they could not repay and the passing on of securitised investment instruments for the US and mainly European economies have caused a massive global credit crunch. That has pushed up borrowing costs here and abroad.

The global stock markets have fallen by some 20 per cent since this turmoil began. Consumer confidence across advanced economies has fallen to its lowest point in almost 30 years—and Australia is no exception—as a consequence of this fallout that continues to occur. Global difficulties are slowing economic growth around the world. To highlight this, five out of the seven most advanced economies have recorded zero or negative growth in the three months to June this year.

I noticed that the Liberal opposition laughed and scoffed earlier to the reference Senator Conroy made to what is happening in the United States today. Yet another major bank, Lehman Brothers, may not exist at the end of the day—again, a consequence of the global credit crunch and the housing crisis in the United States.

Opposition Senators:

Opposition senators interjecting—

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

Apparently those opposite interjecting do not appear to understand that this crisis has had a very significant impact right around the world, including in Australia. On top of that, of course, we had 10 interest rate increases in a row under the former Liberal government as a consequence of a slowing of our economy and an increase in inflation. And we are not immune to these global difficulties—the slowing of growth—but there are some actions we can take to control circumstances where we have an ability to minimise these impacts. We have a strong, well-regulated financial sector, which we are modernising in a number of areas, and I will have more to say about that in coming weeks. We have prices for our commodity exports, minerals, at generational highs, and businesses are investing in the future with confidence. But, importantly, the Labor government is focused squarely on these global challenges. One area where we can make a very significant difference and which we do control is our budget surplus. We can build up a major budget surplus—in this case $22 billion—as a buffer in these times of global turmoil. It is necessary to have a substantial buffer in these times. We have listened to Treasury, we have listened to the International Monetary Fund and we have listened to the Reserve Bank of Australia.

I can say that unlike those opposite, who seem to be focused on leadership and forthcoming book reviews that we are going to see, we have addressed the issue of the surplus in a highly responsible way: some $22 billion we want to see delivered to provide a strong buffer in these times of global uncertainty. As I said earlier, yet another example is another bank in the United States, which may not exist by the end of today: Lehman Brothers. And what is the attitude of those opposite? Well, they are totally reckless and irresponsible—fiscally reckless—trying to wreck the budget surplus of $22 billion, which is so necessary in these uncertain times. (Time expired)

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. What are the alternative approaches to managing the economy and the budget in such challenging international circumstances?

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

As I said, those opposite are focusing on book reviews. I hope they read the review by Mr Paul Cleary in last week’s Financial Review on the fiscal irresponsibility and fiscal recklessness over the last three years of the former Liberal government. He said:

The result of this outbreak of bad policy in the last years of the Howard government is likely to be a long period of inflation and weak economic growth, and it may take some considerable time, and pain, to get the balance back in the right order.

And this is without taking into account the impact at that time of the global credit crunch that the world economies, including that of Australia, faced. We had a legacy left to us by the former Liberal government: reckless spending; inflation at a 16-year high; 10 interest rate rises in a row; Senator Minchin, the then Minister for Finance and Administration, missing on the job—

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Families and Community Services) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. Senator Sherry has just misled the Senate. Inflation was not at a 16-year high when they came to government. This is simply an untruth the Labor government continue to repeat.

John Hogg (President) Share this | Link to this | Hansard source

It is not a debating point.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. If there are matters that have been raised where there are issues, then the Senate knows and the Liberals know, and I am sure Senator Bernardi knows, that there is an appropriate time to raise those corrections, and it is not during question time. He is entitled to make points of order. That, I humbly submit, is not a point of order.

John Hogg (President) Share this | Link to this | Hansard source

There was no point of order.

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

Treasury, back in 2005, prior to former Treasurer Mr Costello’s third-last budget, warned of this excessive spending— (Time expired)