Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Will the minister advise the Senate whether the government or its agencies, including government superannuation and other funds, are exposed as a result of the collapse of Lehman Brothers and other developments in world financial markets? If so, to what extent?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

It is very appropriate that Senator Fifield ask a question today, as his former employer was at the Press Club today, where we saw yet another attempt by those opposite to rewrite history.

Opposition Senators:

Opposition senators interjecting—

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

Order! Resume you seat, Senator Conroy. When the chamber is ready, we will proceed with question time.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

When it comes to the economic legacy of the former Treasurer, I would rather take the advice of the IMF and Treasury. What they say is that his reckless spending left Australia with a legacy of high inflation and high interest rates. In June 2007, the IMF revealed that the former Treasurer’s last two budgets—

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Mr President, on a point of order: this actually was a serious question. The world is facing very serious financial strife. Lehman Brothers has collapsed, and the other banks have been sold out. This is a serious question. Can the minister answer a serious question rather than immediately indulging in party-political propaganda? The people of Australia want to hear the answer to the question about what is going on in global financial markets and the impact on Australia. Mr President, I would ask you to ask the minister to answer the question.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Mr President, on the point of order—although I do acknowledge that Senator Minchin indicated this is the first serious question they have asked for a fair while—I make the point that Senator Minchin wants to debate the issues. Senator Conroy is attempting to deal with a question about the Australian economy. He is putting that in context, and it is a perfectly appropriate response. While the opposition may not like it, the reality is that it is in order for Senator Conroy to answer the question this way.

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

There is no point of order, as I cannot instruct or tell a minister how to answer a question. But I draw the minister’s attention to the question and the issue of relevance.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

We are facing one of the most difficult times in global financial markets in more than 20 years.

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

We know that.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Yesterday you were laughing at it. Yesterday every time those on this side of the chamber—

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

Order! Senator Conroy, resume your seat. Your comments should be directed to the chair and not across the chamber.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I accept your admonishment; I should not react to the interjections. But those opposite continued even as late as yesterday, at the mention of the global financial situation, to break into peals of laughter. How embarrassed they look today when their new Leader of the Opposition, Mr Turnbull, described it:

We are presently facing, probably, the gravest economic crisis globally in any of our lifetimes.

That demonstrates how out of touch those in this chamber on the opposite side have been. The global financial crisis is buffeting confidence and share markets around the world and slowing the economy. Five of the world’s seven largest developed economies recorded zero or negative growth in the three months to June this year. Global stock markets have fallen by around 20 per cent since the turmoil began and consumer confidence in economies across the whole OECD has fallen to its lowest point in almost 30 years.

Recently the IMF First Deputy Managing Director, John Lipsky, had this to say:

The global economy is facing its most difficult situation in many years as we grapple with the financial crisis that erupted last August—

that is, August 2007. We continue to see the consequences of these developments which have their origin in the US subprime market. As has already been mentioned, overnight Lehman Brothers, formerly the fourth largest US investment bank, filed for bankruptcy in the US. It has also been announced that the Bank of America has agreed to buy Merrill Lynch, the world’s largest brokerage firm, and concerns have also been expressed for the financial health of AIG, the world’s largest insurer. The government has been briefed on developments by Treasury and the relevant regulators following yesterday’s quarterly meeting of the Council of Financial Regulators. The regulators are continuing to closely monitor events in the US and remain in close contact with their international counterparts. It is clear that we are not immune to these global difficulties. We are, however, better placed than most countries to weather the storm. The fundamentals of our economy remain strong. (Time expired)

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I invite Senator Conroy to treat these matters with the gravity they deserve. Given that global financial uncertainty has been building all year, why, since being elected, has the government deliberately talked down confidence in the economy and talked up inflation?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Unbelievable! Let us be clear. From day one we have been upfront and honest about the global challenges that we face, unlike those opposite, who have engaged in economic vandalism on the surplus that this government has delivered—a surplus that was larger than the one proposed by those opposite, a surplus that reached 1.8 per cent rather than 1.5 per cent.

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

Senator Fifield interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Fifield keeps interjecting. Whatever happens in the rest of the week, when it comes to the frontbench appointments, whatever you do, do not back Senator Fifield. He backed the former Treasurer all the way against the former Prime Minister. He backed Mr Turnbull all the way against Mr Nelson, and today he backed Mr Nelson all the way against Mr Turnbull. What do we get there? Three strikes and he is out. So let us not take interjections from Senator Fifield at all seriously. (Time expired)

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Evans. Can the minister inform the Senate what the government is doing at home to respond to the impacts of the slowing global economy?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank Senator Sterle for the question because the government acknowledges that the events overnight have reinforced the concern about global economic conditions and the pressure that that will place on the Australian economy as well as on all other nations’ economies. As we know, these events have had their origin in the US subprime market problems of some time ago. But the overnight filing of bankruptcy by Lehman Brothers reinforces how serious this situation is, and there are a range of other companies that seem to be under enormous pressure. We know that Australia will not be immune from these pressures.

We confront very difficult times. Global stock markets have fallen by around 20 per cent since the turmoil began; consumer confidence across the OECD economies has fallen to its lowest point in 30 years. So it is not a question of this government talking down confidence. This is a worldwide reality. Five of the world’s seven largest developed economies recorded zero or negative growth in the three months to June this year. All the economies of this world are facing tough economic conditions and we are no different. But we are confident that with the right policy settings Australia will come through these difficult times in a stronger position than other economies.

The global credit crunch and oil price shock have buffeted confidence in share markets, and there is slowing global growth. Despite all this, we think there is cause for optimism in Australia. We have a very strong surplus, record terms of trade and businesses that are investing in the future with confidence. As the Australian government, we are focusing on the things that we think we can influence. We have built a strong surplus—for good reason. We say the surplus that the opposition say is too large is absolutely necessary to help buffer us against these global pressures and give us the flexibility we need to meet today’s challenges.

We make no apology. We think the surplus that we delivered in our first budget is absolutely necessary to protect Australian families, Australian pensioners and Australian people generally from these pressures. We made room in the budget, though, to deliver support to those families with the $46 billion in tax cuts and the additional support for carers and seniors. We laid the foundation for $40 billion of responsible investment in nation building and growth for the future. We are still investing in our capacity and investing in our growth for the future as well as providing that relief for families.

There are some encouraging signs. The recent unemployment figures were encouraging. You do not want to set too much store by one month’s numbers, but unemployment fell to 4.1 per cent and that was obviously good news. We know that 159,000 jobs have been created since November 2007, almost 55,000 in the last three months. We think there is some room for optimism despite these pressures.

What is clear, though, is that we need a strong surplus to help buffer the economy against these international forces. We need a strong surplus. That is why we delivered a $22 billion surplus. I would urge the opposition and minor parties and Independents to support our budget, to support the surplus and to help us to protect Australian families against the problems that are confronting us from international pressures. Help us deliver the surplus that will put downward pressure on inflation and downward pressure on interest rates. (Time expired)