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

I move:

That the Senate condemns the Rudd Government for its reckless management of the Australian economy in a time of global economic challenge, including:

(a)

the Government’s irresponsibility in talking down the Australian economy;

(b)

the massive collapse in consumer and business confidence since the election of the Rudd Government;

(c)

the delivery of a budget that forecasts an increase in unemployment;

(d)

the Government’s raising of inflationary expectations and failure to honour its promise to address cost of living pressures; and

(e)

the absence of a coherent economic strategy and a focus on presentation rather than policy.

There is no doubt that Australia is experiencing challenging economic times. There is significant instability in world financial markets and, in particular, we are experiencing flow-on effects from historically high world oil prices and a credit crisis in the United States. In the case of the United States we have seen the subprime mortgage crisis and the ensuing trouble experienced by large corporate players including Bear Stearns, Fannie Mae, Freddie Mac and, more recently, Lehman Brothers and AIG. We do have an inflation challenge although not the crisis of which the government tried to convince the Australian people. We have a predicted rise in unemployment and we have seen a collapse in confidence of Australian businesses and consumers.

Despite all this, however, Australia’s economy is fundamentally strong. We do have the capacity to withstand these global pressures and to continue growing our economy and building our prosperity. We have done so before and we can do so again. But we will only be able to meet these challenges with strong leadership, a clear plan and careful economic management. The coalition knows this well.

Labor say that the economic slowdown is all due to events outside their control, yet the coalition managed to maintain a strong and growing economy in the face of a number of enormous external challenges: the Asian financial meltdown, SARS, September 11, not to mention an inherited $96 billion debt and a budget deficit, which brought its own challenges. On this side of the chamber we know how to meet economic challenges because we overcame them. We know how to plan and implement a successful economic strategy because we have done so before. We know what it takes to engage in careful, responsible economic management because we have always done so. The coalition’s approach to the economy has always been one that puts Australia’s interests ahead of any other consideration.

Putting Australia first also means taking tough decisions and doing the right thing rather than the popular thing—decisions that are nevertheless in the national interest and for the long-term benefit of the nation. When the coalition was in office we had an economic strategy with clear objectives and we set about meeting them. The first element of any strategy is knowing where you want to go. We wanted a strong and growing economy; an economy in which anyone who wanted a job could get one; an economy that encouraged wealth creation so that all Australians could share in our prosperity; an economy with strong public and private investment; and an economy with a national government free of debt and positioned to meet the challenges of the present and the future.

But knowing where you want to go is one thing. Getting there is an entirely different matter, especially when you find that your starting point is much farther from the finish than you originally anticipated. The coalition certainly found this out when we came to office in 1996. Labor told us that the budget was in surplus, but the budget surplus was not as big as Labor said it would be. In fact, it was not in surplus at all; it was in deficit to the tune of 1.5 per cent of GDP. That is about $16 billion in today’s terms. Through hard work, discipline, tough decisions and responsible management the coalition implemented the economic strategy it had mapped out. This was done in the face of opportunistic Labor opposition.

In the face of that we repaid Labor’s debt, we reformed the tax system, we put a stop to Labor’s deficits and we delivered 10 budget surpluses. We took Australia to a position where our economy was the envy of the developed world; it was described by the Economist as ‘the wonder down under’. I have pointed to the coalition’s economic record in the first instance because we on this side of the chamber are very proud of it. Labor have tried to engage in a dishonest rewriting of economic history in a failed attempt to trash the coalition’s economic credentials. But they will not succeed. The weight of evidence and the facts of history are on our side. They disprove Labor’s claims. But the coalition’s strong economic record is also relevant because it underpins the strength of the budget and the economy, and it provides a stark contrast with the reckless approach to economic mismanagement and the incompetence displayed by the Rudd government.

Let us look at what this government has done. When the Rudd government was elected, they inherited from the coalition an economy in great shape: no net government debt, a Future Fund with savings from surpluses, record low unemployment, inflation at manageable levels and interest rates that were lower than at any time under the previous Labor government. I recently asked my good friend and sparring partner Senator Arbib to nominate which economy he would have preferred to inherit: the one the coalition inherited in 1996 or the one that Labor inherited in 2007. Senator Arbib declined to answer. And no wonder. The coalition handed Labor an economy in top shape with strong fundamentals thanks to more than a decade of careful management and reform.

So, what did Labor do? With the post-1996 election period in the back of their minds they desperately wanted a crisis where there was not one. So they invented one of their own. Labor chose to invent the notion of an inflation crisis. We are very used to Labor’s posturing and we are very used to them being misleading. But Labor need to recognise that they are now actually responsible for the Australian economy. They cannot blame the former government any more. They are in charge. More importantly, now that they are a government in office, what they say and what they do actually does matter; it makes a difference to the Australian economy, for good or for bad. That is why Mr Swan’s comment that ‘the inflation genie is out of the bottle’ was so reckless and so irresponsible. It stoked inflationary expectations, which in turn feed into actual real inflation.

But it is not only inflationary expectations that are on the increase, thanks to Mr Swan. On the subject of the margin between the official cash rate and the mortgage rates of the domestic banks, Mr Swan demonstrated how absolutely and totally out of his depth he is in the Treasury portfolio with his reaction to the flurry of domestic banks’ interest rate increases earlier in the year. Mr Swan gave the green light to the banks not only to increase their rates over and above RBA movements but to do so separately from RBA announcements. When the Treasurer stoked inflationary expectations with his reckless ‘genie’ remark, he egged the Reserve Bank on to increase interest rates. And with his clumsy rhetoric in response to the banks he effectively egged the domestic banks on to raise their interest rates as well. That was a double whammy for Australians with mortgages from this nervous and incompetent Treasurer.

Labor say they want to fight inflation, yet they are setting about increasing a range of taxes. There is the increase in the luxury car tax. There is the tax grab on alcopops, a tax grab dressed up as a health measure—which, as we all know, is a complete con and sham. There is the lifting of the Medicare levy surcharge thresholds, a measure that will result in higher health insurance premiums. And then there is the tax hike on condensate, which will mean higher gas prices for consumers in Western Australia—something which the people of Western Australia recently passed judgement on. Labor are hiking up taxes under the guise of fighting a war on inflation. On this side of the chamber we know something pretty simple: tax rises actually lead to increased prices. These taxes will increase the price of alcohol, private health insurance, domestic gas and passenger vehicles. So on the one hand Labor say they want to fight inflation, but on the other hand their actions will lead directly—not indirectly but directly—to price increases. This is one of the new and bizarre economic approaches we are seeing from Labor.

Then there is Labor’s plan to abolish the Australian Building and Construction Commission. The great debate on the Labor side is not whether or not to abolish the commission; it is whether to do it in 2010 or do it next week. We know that the Labor backbench have been agitating for the abolition of the commission sooner rather than later. The impact of this decision to abolish the ABCC will be devastating for the commercial building sector, and the flow-on effects to the economy will be substantial. A recent analysis by Econtech found that the ABCC’s activities had produced outstanding economic results, including creating a 10 per cent increase in commercial construction labour productivity, a 1.5 per cent gain in GDP, an annual economic welfare gain of more than $5 billion and, importantly, a 1.2 per cent reduction in the CPI. All of these economic impacts are positive and all will be threatened if the Labor agitators and the unions get their way to bring forward the abolition of the ABCC. But it is going to be abolished anyway—sooner or later, but by 2010. The most relevant of those figures I mentioned is the last one, the 1.2 per cent reduction in the CPI. Once again, it is a case of Labor saying one thing but doing another: they say they want to fight inflation, but their actions threaten to send inflation higher.

Then there is a Labor’s record on industrial disputation. Under the economic management of the coalition, industrial disputation fell to its lowest level since records were first kept, in 1913. This was in contrast to the industrial strife that characterised Labor’s last term in office. At its peak in 1993 industrial disputation was estimated to have cost the Australian economy $1.5 billion a year. But this record pales in comparison to the emerging trend we are seeing under the Rudd government. Since its election last year we have seen a massive increase in strike action. In its first six months in office, the number of working days lost to strike action has increased not by eight per cent, not by 80 per cent, but by an extraordinary 800 per cent. As I mentioned earlier, in 1996, before the coalition reformed the construction industry by, amongst other things, establishing the commission, the number of working days lost per 1,000 workers in the construction industry was 335. By 2007 that number had dropped to just seven days. Labor’s plan to abolish the commission threatens a return to the days, which we want to forget, of militant union driven industrial strife. The spike in industrial disputation cannot be explained away, as Ms Gillard attempts to do. This increase in disputation is the result of the unions flexing their muscles. They are seeking a return on the investment that they spent getting Labor elected.

The huge rise in industrial disputation is highly relevant to this debate because industrial strife feeds into inflation. Work stoppages affect supply, inflated wage claims over and above productivity gains increase the cost of doing business, and all of this leads to higher prices for the end consumer. So, despite saying they want to fight inflation, Labor are hiking taxes and presiding over increased industrial disputation. Far from fighting inflation, Labor are stoking it.

Watching Labor’s inept approach to economic management and listening to their rhetoric, it is little wonder that business and consumer confidence in Australia has collapsed. The August Sensis business index, released at the end of last month, reported that business confidence has fallen to its lowest level since 1993, when the survey first started. The attitude of small business to the policies of the Rudd Labor government fell to a net balance of negative 28 per cent. And today we had the release of the ACCI-Westpac survey for the September quarter which showed that 38 per cent of Australian businesses expect business conditions in Australia to further deteriorate in the next six months. Only 16 per cent thought that conditions would actually improve. We now have business confidence collapsing to levels not seen since Labor’s recession in the 1990s—and we are not in a recession.

Business confidence does matter because it is a factor in business decisions to invest, to hire workers, to grant wage increases and to take more risks. Low confidence stifles enterprise, and that is the tragedy that is unfolding. Consumers, too, are rapidly losing confidence in the ability of this government to manage the economy. The latest Westpac-Melbourne Institute consumer sentiment index did show a slight rebound in consumer confidence—which is welcome—but the index is still at a level that is 20.3 per cent below where it was a year ago, when we still had a Treasurer who knew what he was doing.

Consumers are losing confidence for all sorts of reasons, but undoubtedly one of them is the complete failure of the government to keep its promise on cost of living pressures. Before the election Labor talked often about the cost of living facing Australians. The coalition was always acutely aware of these pressures, and that is why we cut taxes for Australian households year after year after year. It is why we introduced the family tax benefit, the baby bonus, the childcare rebate, the utilities allowance, the seniors concession allowance, the carer payment and so on. It is why we changed the indexation of the age pension so that pensioners struggling on low incomes would get some relief. And it is why we cut petrol excise and abolished its indexation, without which petrol would have been much more expensive than it is now.

These measures taken by the coalition to address cost of living pressures were not reviews, were not summits, were not committees, were not inquiries and were not panels. They were decisions. They were what government is elected to take. But this is a government that does not know how to take a decision because it does not know what it is doing. When Australians from all walks of life—from families to pensioners to carers—cry out for help, what does Mr Rudd have to say? Does he say that he will help; that he will act on their concerns? No. This is what Mr Rudd says: ‘We have done as much as we physically can to provide additional help the family budget.’ In other words: ‘Don’t come crying to us. We’ve done enough. We’re not interested in keeping our promise to you.’

Breaking a promise is bad enough, but Labor did something worse: they made a promise to the Australian people that they knew that they could not keep. That is dishonesty. Now, the government will not help pensioners. And this is despite the Prime Minister, the Deputy Prime Minister and the Treasurer—the three most senior ministers in the government—all admitting that they could not survive on the single age pension. Yet they are telling pensioners that they have to wait until yet another review is completed. Instead of real action to address cost of living pressures, such as the coalition plans to increase the single age pension by $30 a week, to introduce a more generous indexation arrangement and to cut petrol excise by 5c a litre, this government is focused on presentation rather than policy.

The two biggest, best and greatest examples of this are Fuelwatch and the ‘grocery watch’ scheme. These are the biggest exercises in spin that we have probably seen in Australian political history: a sham scheme that will increase the overall cost of fuel and a joke of a website which is as useful to grocery shoppers as a dodgy wheel on a shopping trolley. This is not what Australians were expecting when they were told by Mr Rudd that he would do something to help.

But, for at least 134,000 Australians over the course of the next year, the price of groceries will be the least of their problems. This government’s budget is founded on the premise that 134,000 Australians will lose their jobs over the course of the next year. I would ask senators to pause and think about the effect that that will have in individual households. We on this side of the chamber drove unemployment to 33-year lows. We drove it below four per cent. We created millions of new jobs. That was the great human dividend of strong financial management. Labor like to talk about working families. That is all very well, but there is one thing that families need to fit into the category of ‘working families’ and that is work. That is not what we are seeing from the other side. They have based a budget on Australians losing work.

I look forward to a time in the future when treasurers do more than watch; when treasurers are respected—even feared—by the banks; when treasurers speak about economic fundamentals rather than genies and bottles; when the Australian economy is again described as ‘the miracle economy’ and ‘the wonder down under, rather than being on the verge of a Swan dive; and when a show like The Hollowmen is laughed off as satire rather than embraced as a documentary. (Time expired)

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

I must say that listening to Senator Fifield would make you think that the previous government was the greatest thing that ever happened in Australia. Unfortunately for you, the Australian public did not agree with your analysis. You are over there on the backbench where you deserve to be: in opposition. That is where you are as a result of all of the weak arguments that you put up against this government, which is trying to reverse the problems in the economy that you and your previous boss created.

The motion asks the Senate to condemn the government for its management of the Australian economy. That is a bit rich coming from the mates of the Maserati drivers over there; the mates of the big end of town; the mates who simply want to let big business do their own thing; the mates who want to let big business ride roughshod over the workers of this country. The only parties that deserve condemnation in this chamber are the parties sitting over there, the Liberals and the Nationals. They are the ones that mismanaged the economy; they are the ones that lost opportunities for over a decade. The Liberals and Nationals are the budget wreckers, not an economically responsible opposition.

Here we are with an international financial crisis and what do you want to do? You want to stop this government taking the actions that are necessary in both the short term and the long term to build a strong and effective economy. It is rich that we have Senator Fifield, the former senior political adviser to the former Treasurer Mr Costello, lecturing us. It has been said that the former Treasurer spent the 11½ years of the Howard government in a hammock as the laziest, most indolent and most unimaginative Treasurer that we have ever had. It must have been a double hammock, because Senator Fifield was in there swinging gently with the Treasurer for all those years. He was swinging gently in the hammock while the economic problems of this country piled up; the economic problems that we as a Labor government are setting about fixing. All you want to do is back—

Honourable Senators:

Honourable senators interjecting—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! Could we have a little bit of—

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Senator McGauran interjecting—

The Acting Deputy President:

Excuse me, Senator McGauran. I am seeking to call you and your colleagues to order, so do not interrupt me while I am doing that. Senators on my left, please be restrained. Senator Cameron, I draw your attention to the fact that you should direct your remarks through the chair. I know I make that mistake occasionally, but you should still do it.

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

Thank you, Mr Acting Deputy President. It is about time we examined this great economic legacy that Senator Fifield has been talking about. It is time we examined the reality of history. Senator Fifield talks about the facts—we will look at them. The weight of evidence is clear: under the Howard government, under Peter Costello, there was a failure of investment in this country, a failure of innovation, a failure of productivity, a failure of development, a failure of competitiveness, a failure of balance and a failure of sustainability. Under the former government there was a complete failure of national investment in economic infrastructure. Investment stalled in roads, rail, ports and communications and broadband.

The former government presided over a period of private sector underinvestment. When the Howard government took office in 1996, business was reinvesting nearly 75 per cent of their profits back into building productive capacity. After just three years of Howard and Costello, this figure plummeted to the low 60s. There it bumped along until the previous government was defeated in last year’s election.

Despite all the budget surpluses delivered under the Howard government, public sector investment in public utilities and infrastructure fell from 4.25 per cent of GDP to four per cent of GDP. Despite clear evidence of an urgent need to upgrade Australia’s economic infrastructure, the Howard government and Peter Costello did nothing. They squandered the budget surpluses on politically motivated spending on special interest groups and National Party pork-barrelling—rorts under the Regional Partnerships program.

They also failed to innovate. Everyone around the world recognises the need to innovate. What happened under the Howard government? Innovation was completely forgotten. The Howard government actually killed innovation in this country. The former government took the low road to business competitiveness—Work Choices. Did we hear Work Choices pass the lips of Senator Fifield? No, we did not. One of the big so-called economic reforms, Work Choices, Peter Costello would not write about in his book, he would not mention in his book. Senator Fifield would not mention it in his speech. It was a major economic failure of the Howard government. They failed to innovate. Australia was at the bottom of the international ladder on research and development with only 1.65 per cent of GDP being invested in research and development when countries like Finland were investing 3.4 per cent; the USA, 2.6 per cent; and Japan, 3.1 per cent. And under this great economic stewardship of Senator Fifield and the former Treasurer Peter Costello we languished at the bottom of the international field.

We failed in productivity. Australia’s productivity under Howard was woeful. The Howard government again took the low road. Work Choices was the answer to productivity and the Australian public said, ‘Work Choices is not on.’ Annual productivity in Australia during the Howard government was 1.75 per cent per annum. In the three years to 2006 under the Howard government the OECD data shows that Australia grew a miserable annual average of less than 0.4 per cent—so much for this economic miracle that we hear so much about. At the same time in Korea productivity went up 3.8 per cent; Ireland, 3.75 per cent; the USA, 2.4 per cent; the UK, 2.25 per cent; and France, 2.2 per cent. And what was ours? It was 0.4 per cent under the Liberals—economic vandalism under the Howard government.

There was a failure of development under the Howard government. We were increasingly dependent on primary exports, which are historically high, but with falling commodity prices. Because of the former government’s indolence and current favourable terms of trade it will only prove to be temporary. As a proportion of all merchandise exports, elaborately transformed manufactures fell from 25 per cent in 1996 to 17.5 per cent in 2006. ETMs are essential to a modern effective economy. But what did we have under the Howard government? We had a falling in the commodities that actually make the country tick. Australia’s trade deficit in ETMs grew from 7.5 per cent in 1997 to 9.5 per cent of GDP in 2006. That deficit is growing and Labor must do something to fix it. It is another major failure of the Howard and Costello leadership. We turned from a country in which high-valued manufactured exports were growing into one that was consigned to rely on primary exports that are subject to wild fluctuations in commodity prices and speculation.

We used to be competitive. In 1996 Australia’s net foreign investment deficit as a proportion of GDP stood at 50 per cent. After declining to 45 per cent in 2002, the policies of the Howard government in the last two terms saw the net foreign investment deficit climb steeply to 57 per cent of GDP. The Howard government presided over the selling off of 10 per cent of the country in the space of just five years. There was a massive failure of balance in this country. There was a deliberate policy of shifting national income from wage and salary earners to big business.

Senator Fifield would not mention Work Choices but what did Work Choices and the policies of the Howard government do? In 1996 the wage share of national income stood at 44.5 per cent. By 2006 the wage share of national income had fallen to 42.3 per cent. By contrast, profit share of national income rose from 17.5 per cent to 22 per cent of national income. But rather than look at percentages, what does this really mean in monetary terms? It means that under the Howard government, under Mr Costello and Senator Fifield, wage earners lost $30 billion in their share of national income and profits increased by $42 billion.

You can easily stop all industrial disputation and that was done in the history of countries through slavery. What you would have liked, heading down the line under Work Choices, was slavery. You could have stopped all industrial disputation, but we are a democratic country, Senator Fifield. We are a country that values workers’ rights. The public has said to you, ‘We’re not prepared to have our rights stripped away.’ Because of both your economic incompetence and your attacks on ordinary workers, you are in opposition, you are sitting on the backbench and the Labor government has been given the job of fixing this economy.

One of the biggest problems has been the failure of sustainability. The biggest threat to Australia’s economy in the foreseeable future is climate change. What did the previous government do about it? Nothing. They denied it was happening and there are still plenty on the other side of the chamber who would argue that climate change is not happening. We had 11½ years of lost opportunity—a real lost opportunity to do something to build the jobs, the technology and the skills within Australia to be at the forefront of environmental engineering. What did we have under the Howard-Costello government? Nothing; they did nothing. Contrast that with the Labor policies and the Labor approach to building a long-term effective and sustainable economy.

We have inherited a terrible legacy from the coalition government. We are moving to consolidate the budget surplus, which the opposition is trying to raid in the Senate on behalf off their Maserati driving mates. Labor are heeding the clear message from the Reserve Bank that the former government’s reckless tax and spend policies were putting upward pressure on inflation and interest rates. The former Treasurer, lying in his hammock with Senator Fifield, ignored 20 warnings from the Reserve Bank about building inflationary pressure. With inflation at a 16-year high, Mr Costello said inflation was right where he wanted it.

After years of coalition neglect and punitive attacks on the public education system, Labor is putting in place policies to rebuild education in this country. From early childhood education to university education, Labor is going to build a world-class education system that will help lift our efforts on innovation and productivity, the very areas that the Howard government and Senator Fifield failed to deliver on.

After years of the coalition deliberately squeezing working families, Labor is taking the high road on labour market reform, providing the basis for a fair industrial relations system that is essential to the development of high-performance, high-productivity firms that are able to compete globally. After years of a tax and spend coalition government, Labor is undertaking root and branch reform of the tax system. This will encourage investment in high-value, high-skill industries that will boost Australia’s export performance.

Opposition Senators:

Opposition senators interjecting—

The Acting Deputy President:

Order, senators!

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

After years of coalition indifference to the need for innovative industry, Labor is investing heavily in helping industry to meet the challenges of innovation and new technology. Senator Carr is at the forefront of engaging industry to build the industries of the future for this country. What the coalition failed to do in 11½ years absolutely amazes me. We hear people on the other side talking about manufacturing, but for 11½ years they could not spell manufacturing. They did nothing about manufacturing. All they wanted to do was lazily rely on the growth of our export industries, primary produce and commodities.

After years of coalition indifference to innovative industry, the Labor Party will be investing in innovation and new technology for this country. After years of climate change denial from the other side, denial that does still run deep, Labor is acting on climate change. The coalition acts as if they bear none of the responsibility for the very serious challenge that this country faces. They want all the credit for the very little that they did, but no responsibility for the legacy that they actually left this country, a legacy of inactivity, a legacy of declining manufacturing jobs, a legacy of denial on climate change and a legacy of bad economic management. But they want none of the well-deserved blame for the mess that they have left behind.

As a Labor government we will tackle the issues that are so important for this country. We will tackle education, we will tackle innovation, we will build our industries and we will not ignore the need to develop a balanced economy that can produce goods that are manufactured by Australian workers. We will not neglect the schoolchildren of this country. We will make sure that they have a good education, an education that leaves them capable of engaging in both the Australian economy and the global economy. We will not neglect our industries. We will not neglect our nation. We will not neglect our people in this country. The record that the coalition crow about will be looked back on in years to come as a record of lost opportunity, a record of wrecking the opportunities that we had on the basis of economic rationalism and of punishing ordinary workers through Work Choices.

Opposition Senators:

Opposition senators interjecting—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order, Senators! Would you please contain your enthusiasm for interjecting? Senator Cameron has one minute and 45 seconds to go; he should be entitled to finish his speech in silence.

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

I think that the noise that we hear from the other side is simply them trying to deny again all of the facts that are before us today on their economic incompetence over their period in government, an economic incompetence that has left this country ill-prepared for the challenges that we face. And the economic incompetence continues when we see them in action in this chamber trying to deny ordinary Australians access to tax relief through the Medicare levy surcharge, when we see them supporting their mates in the big end of town by trying to stop decent taxation initiatives on the offshore oil industry that are long overdue, and when we see them—when they have stopped fighting among themselves about who is going to leave what where—coming here and simply denying that there is any problem.

Senator Fifield’s speech is a speech of absolutely unbelievable proportions: ‘This is how good we were. This is what we did.’ And what did we find? The Australian public said: ‘We do not believe you. You are going to opposition.’ And Senator Fifield, you are out of your hammock. You are up in the back bench. That is where you deserve to be. You have done nothing for 11½ years. You have done nothing for this country. The Labor Party is the party that will deliver for this country. (Time expired).

Scott Ryan (Victoria, Liberal Party) Share this | Link to this | Hansard source

If, in series 2 of The Hollowmen, we see a fiery senator from New South Wales, we will know what performance it has been modelled on. What we have just heard is like Dorothy from the Wizard of Oz—that if you say something often enough you will make it true. But if there was one thing Senator Cameron did not mention throughout that presentation it was anything about unemployment. While he reeled off a series of statistics from the OECD—all could be misrepresented and twisted in any way—the one thing he did not mention was the 60,000 Australian families that are going to lose a job this year. Ben Chifley would be turning in his grave about a Labor government introducing policies that cost people jobs. The most basic stake in our society is having a job. He talked about the problems of the lack of investments. Who is responsible for the blockages around this country in roads, rail, ports and public sector investment? It is your mates in the state government. Western Australians in this country are going to get a better deal as of this week. They are going to get a government that does something right. But around this country the lack of investment in roads, railways, hospitals and schools has come as the result of state Labor governments blocking it and being held back by, and kowtowing to, sectional interests.

It is a pleasure today to rise following Senator Fifield. I have known him for a while. I too have never seen him given direct credit for the economy but I can now say: ‘Well done. I am a lot better off because of it!” The reality is this government inherited an economic dream: more than a decade of growth, highs of employment and lows of unemployment that were theoretically impossible a decade ago, and inflation over the previous decade that had averaged the dead middle of the band that the Reserve Bank targets. The Reserve Bank, mind you, gets to target this independently because of the independence we gave them, not like a former Treasurer in the other place who said he had the Reserve Bank’s governor in his back pocket and that he would actually make those decisions himself. That independence we gave them is seen in our performance over the last 10 years, along with a government that took its economic responsibility seriously. We had budget surpluses as far as the eye could see. Our government finances were the envy of the world—just as Senator Fifield outlined, we were the ‘wonder down under’ in terms of our economy. But since they came to office, this government have adopted a unique approach: rather than build confidence and rather than try to educate people about the challenges that you have to face daily in an economy, they actually decided to create a myth—a myth that they somehow had it tough.

Along with Senator Fifield, and I am sure most of my colleagues, we find presentations like Senator Cameron’s quite amusing. The reality is the people will never accept it because they know they were better off. This government has refused to accept that when you take office you take responsibility. Government is about making decisions, as Senator Fifield outlined, and it is about being held responsible for them. No-one ever said running a $1 trillion economy was easy. It is tough. It involves difficult decisions. But a government that came to office without any ideas other than returning favours to their union masters and parroting focus-group tested slogans like ‘working families’ has nothing to say for itself. It had no cause in getting here other than to get here itself. Conservative or responsible fiscal policy—as they claim to have—is not about increasing taxes. It is not about increasing taxes on someone who is having a Bundy and Coke. It is not about jumping up taxes on someone who buys a LandCruiser. It is actually about what the Liberal and National coalition did after 1996: applying a bit of rectitude towards government spending, redirecting priorities and taking tough decisions.

This government has done nothing other than talk the economy down. It has tried to create a false purpose, this false purpose being that they were faced with a crisis. In football terms, this Prime Minister and Treasurer ran onto the field at three-quarter time 15 goals ahead in the grand final and started running around telling their colleagues they were in a lot of trouble and could not get it home. The reason this economy is in trouble today is that this government, and this Treasurer and Prime Minister, have been running around telling everyone they are incapable of managing it. We agree with them. When it comes to talking down the economy the Treasurer’s performance has been quite extraordinary.

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

A Swan dive.

Scott Ryan (Victoria, Liberal Party) Share this | Link to this | Hansard source

Senator Fifield has used a line that I was going to use as well—one that is entirely appropriate. In February this year the Treasurer said on the Sky business channel:

There’s no doubt that the former Treasurer, the former Government, let the inflation genie out of the bottle.

At a press conference on 4 February, the day after, he said:

The inflation genie is out of the bottle, it’s been on the march for a couple of years.

This is consistent with them just parroting the line over and over again. If you say it often enough you will allegedly make it true.

I thought it was like watching an episode of I dream of Jeannie, starring the Treasurer as the hapless Major Nelson, always blaming problems on his supernatural partner. But the reality is that there is nothing supernatural about incompetence, and that is what this government and this Treasurer have shown. Incompetence escaped the bottle the moment this government took office and the moment it decided to talk down the economy and start trying to create a false problem.

We had to go to the Reserve Bank governor to clear things up at a hearing of the House of Representatives Standing Committee on Economics. When he was asked, ‘Is the inflation genie out of the bottle?’ Mr Stevens said:

I do not want to comment on colourful things that are said in public debate, but what we have said is inflation has risen and that is a problem. It has to be dealt with and we are dealing with it. We will contain it and it will come down. Is it out of control? No, I have never said that.

What we had at the same time was a Treasurer running around misleading the Australian public and saying that it was out of control. It was the daily challenge of being Treasurer. No-one in the previous government put the economy on ‘set and forget’ in 1996. There were years of difficult decisions. There were ongoing challenges. Tax reform, labour reform, reform of export markets—all of these things are what help keep inflation under control, and it is an ongoing challenge. But going out there and consciously talking inflation up has a serious impact on people’s expectations. Yet when Mr Swan realised that this was actually causing a problem, when Mr Swan realised that his negative talk about the economy was starting to have an impact, he suddenly said, ‘No-one’s allowed to say anything bad about the economy.’ His hypocrisy was shown when he said:

I think that sort of talk—

referring to a recession—

is unhelpful and I don’t think that sort of talk takes into account the underlying strength of the Australian economy.

That was less than six months after he had been talking up the problem of inflation quite irresponsibly.

The simple point we have here is that this government has placed its partisan interests ahead of the nation’s economic interests and the needs of Australian people and families. In a desperate need to find a purpose, and in the fine tradition of its state counterparts, this Labor government seeks to find someone else to blame. This government has attempted to create a myth about the economic situation it inherited, a myth that the Australian people will not fall for. But it has had an impact. Confidence in an economy is critical. People base decisions on investment, which provides jobs, on their confidence and how they think the economy will play out over the coming few years.

Just as inflation is about people’s expectations, all these decisions are based on a hard-to-measure concept of confidence. But we do have quite a lot of measurements coming out, and Senator Fifield went through some of them. The West Australian newspaper reported last month that business confidence had crashed to levels not seen since the terrorist attacks seven years ago. That was a period of trying economic circumstances in which the performance and management of the previous government saw that, while our major trading partners suffered an economic downturn, Australia did not. The August Sensis business index for small and medium enterprises gave the Rudd government a rating of minus 28. This was actually the worst rating of all state and territory Labor governments—which, given the performance of some of them, particularly New South Wales, is not a bad achievement in only 10 months.

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

It’s their only achievement.

Scott Ryan (Victoria, Liberal Party) Share this | Link to this | Hansard source

Their only achievement. An ACCI business survey showed that business confidence had collapsed to its lowest point in 14 years—and those people who were involved in running businesses 14 years ago, particularly in my home state of Victoria, remember just how bad that was.

There have also been similar collapses in consumer confidence. In July the OECD’s standardised consumer confidence indicator showed that Australia experienced the largest collapse in consumer confidence in the OECD and the second lowest level of consumer confidence in the OECD overall, just behind Spain. This result is mirrored by the ACNielsen global consumer index, which reported that in the first half of 2008 Australia had an 11-point collapse in consumer confidence. This fall over the last six months was far worse than the global average of half that, at 5.6 points. And why is all this happening? This is all happening because our Treasurer has been talking the place down. The Chief Economist of Westpac, Bill Evans, was reported as saying recently that confidence was now only slightly above the low point of the recession in 1990. I suppose at some point we will soon hear that this was ‘the crash in confidence we had to have’.

The fact that business and consumer confidence has been in this swan dive for the entire term of the Rudd government is no coincidence. It should come as no surprise, because the Labor Party has form on economic management. The Prime Minister and Treasurer have failed to accept that they are now leaders and have responsibilities. They need to move out of opposition and commentating mode. The coalition left government with solid economic growth, low unemployment, negative net public debt and $96 billion in future surpluses, which beats the hell out of the $96 billion of Kim Beazley’s black hole.

Rather than easing the pressure on working families, this government has failed them. The increase in unemployment forecast in the budget papers, as outlined by Senator Fifield, is of 130,000 fewer jobs. Late last month an analysis in the Sydney Morning Herald came up with the number of 58,000 people actually losing their jobs, and that was described as ‘the number that dare not speak its name’. Quite frankly, that is a number this government should be ashamed of. To introduce policies and forecast an increase in unemployment in the environment they inherited has absolutely no excuse.

Higher interest rates represent a significant increase in living costs for all Australians. As Senator Fifield also outlined, when a government goes out and talks up the prospect of inflation, it is giving the Reserve Bank encouragement and a green light to increase interest rates, which hits every mortgage owner, hits every person who has borrowed money to buy a car and hits farmers and businesses on their overdrafts. This situation is compounded by the fact that we are in a challenging economic environment at the moment—but a challenging economic environment is no excuse for the government’s failures, because the environment is always challenging. The previous government saw off the Asian financial crisis, the dotcom crash, the recession in the United States and terrorist attacks in 2001, yet our economy went through 10 years of constant growth—something our trading partners are jealous of. For this government to be constantly looking for an excuse shows the vacuum that is at its policy core.

Just months into the job, the Prime Minister said he had done everything he could physically do to reduce the pressure on families. In fact, apart from putting prices on the internet and saying, as Senator Fifield outlined, that he had done all he could, he has done nothing. Far from lowering the price of petrol, we know—because independent analysts have looked at the model—that Fuelwatch will force out independent retailers and increase the price of petrol. It is unfathomable, when we are talking about an inflation challenge, that the Labor Party would not consider reducing fuel excise. Cutting fuel excise will cut inflation. GROCERYchoice—and we all know its true name was actually ‘grocery watch’—does nothing other than tell consumers what the prices were a month ago. It will have a negative impact on independent retailers, particularly in smaller communities and in rural areas. Potentially, it will force them out of business because it misrepresents what independent retailers can actually sell their products for, because they are grouped together.

We come to the final point of this motion. We understand that the Rudd government’s economic reform strategy actually has no detail. They are all talk and no action. We hear talk of productivity, but they are introducing an industrial relations system that the Treasury itself has described as less flexible and likely to reduce productivity growth. We hear talk of reform, but there is no reform program. They refuse to release the modelling so we can look at the detail behind the Garnaut report—because it upsets the plan to have a brochure, a sticker and a slogan. Labor’s Building Australia Fund was supposedly designed to provide flexibility in the funding of infrastructure. We have no idea what sorts of things are going to be built, what criteria they are going to be tested on, whether an economic test is going to be applied and whether they are going to be cost-effective. The government have no idea what they intend to build. All they know is that something should be built, but why and for what purpose eludes them. The state Labor governments have squandered the boom that they have experienced and we know that this will be used to cover up federal Labor’s failure.

‘Nation building’ is actually also partly code—and we heard this from Senator Cameron earlier—for picking a lucky industry. I come from Victoria, as I outlined in my first speech the other night. We saw firsthand what happens when a government goes around trying to pick winners. When governments go around and try to pick winners, taxpayers and workers lose out. Having a slush fund for government to do that will only encourage people down that particular path. The government is oblivious to the main drivers of innovation. I am glad Senator Cameron mentioned it, because innovation does not come from government. Innovation comes from small business. Innovation comes from big business. It comes from someone with an interesting idea, and Australia has a fine tradition in it. Innovation is not something that comes out of a 200-page report or something that the government can direct. Innovation comes from people actually running their own businesses, coming up with a good idea and convincing other people to back them.

The coalition’s record over 10 years stands in proud contrast to what this government has achieved over nine months. We paid off Labor’s $96 billion of debt. We put $60 billion away into the Future Fund—away from this government’s fingers, thankfully—to make sure that all the liabilities of government in the future were covered. We put $5 billion in the Higher Education Endowment Fund. We provided Australians with $214 billion in tax relief and made reforms to superannuation to reduce the massive paperwork headache that was forcing everyone at the age of 55 to hire professionals to deal with something that should be a lot simpler.

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

They still are. Nothing’s changed!

Scott Ryan (Victoria, Liberal Party) Share this | Link to this | Hansard source

They have to pay a lot less for it!

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order!

Scott Ryan (Victoria, Liberal Party) Share this | Link to this | Hansard source

Given that the Labor government inherited a strong surplus and zero debt, their performance to this point shows that they are not prepared for the current economic challenges that the country faces. They have a budget that has increased spending. According to Treasury figures, the budget surplus would have been larger in 2007-08 if Mr Swan, rather than increasing expenditure, had done nothing.

When he was speaking to the motion, Senator Fifield outlined the proud record of the coalition government. We have heard from Senator Cameron, but he refused to talk about the great stain on this government’s record at the moment, which is unemployment. I have outlined how we have heard the Treasurer and the Prime Minister talk constantly about the problems facing the economy and how they have refused to tackle them. I thank the Senate for its time.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak about the motion moved by Senator Fifield regarding the apparent ‘reckless management of the Australian economy in a time of global economic challenge’. The claims made in the motion include the government’s alleged ‘irresponsibility in talking down the Australian economy’. May I quickly remind the opposition that the government had not only a decrease in inflation but a strong surplus after taking over from a reckless previous government. The motion condemns:

(b)

the massive collapse in consumer and business confidence since the election of the Rudd Government;

(c)

the delivery of a budget that forecasts an increase in unemployment;

(d)

the Government’s raising of inflationary expectations and failure to honour its promise to address cost of living pressures; and

(e)

the absence of a coherent economic strategy and a focus on presentation rather than policy.

These claims in Senator Fifield’s motion are unfounded. I would be extremely interested—and I am sure other senators would be interested—to see the statistics that prove these ridiculous statements, which, frankly, are wasting the Senate’s time.

I also remind the opposition that the government has passed legislation that does look to the future and does provide for the Australian people. Unfortunately, those opposite abuse their power in the Senate by blocking each and every fiscal bill that is being presented to the chamber.

I was privileged to have the opportunity in the second week of my term as senator to be on the Senate Standing Committee on Economics. That is a committee, I am sure you would understand, that deals with key fiscal objectives of this government—objectives like Fuelwatch, grocery unit pricing, the luxury car tax and the Medicare levy surcharge. I have had the privilege to attend a number of the inquiries into those bills. It would be fair enough to argue that during those inquiries the committee heard of measures and objectives to secure fiscal opportunities for this government and also for this nation. But on the opposite side of the chamber you have those that wish to tear it down. They are reckless when it comes to fiscal management.

I would like to remind the opposition of what the Rudd Labor government has achieved in responsible economic management. The world economy is changing at an astounding rate and Labor’s economic platform is changing with it. This year’s budget ushered in a new era of economic responsibility, delivering a strong budget surplus and reciprocating spending to sustain growth in the long term to ensure that the fiscal policy plays its part in putting downward pressure on inflation and to ensure a strong economy at a time of international economic uncertainty.

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

Do you understand what you’re reading?

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! The previous senator, Senator Ryan, was heard in virtually absolute silence right through his speech and I would ask senators on my left to cease interjecting.

Honourable Senators:

Honourable senators interjecting—

The Acting Deputy President:

Senators, I just asked you to cease! As I said, Senator Ryan was heard in virtually complete silence throughout his speech and I ask that senators on my left extend the same courtesy to Senator Furner and any other speakers.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

This government has achieved savings by cutting back inefficient and wasteful programs, better targeting income support to those who need it most, reducing distortions in the business tax system and making government more efficient. Labor’s budget strengthens Australia’s economic foundations and delivers for working families under pressure. Labor’s budget is a responsible one for our nation’s needs at a time of international turbulence and high inflation at home and is a budget designed to fight inflation and ensure we meet the uncertainties of the future from a position of strength. Labor has budgeted for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade. Those decisions are that of a responsible government, a government that has the prosperity of our nation clearly on its agenda. Even John Howard has had to accept that Labor’s economic record is one of foresight and nation-building.

Although the Australian economy is enjoying its 17th year of growth, productivity growth over the last five years has averaged 1.4 per cent a year, the lowest in 17 years, and capacity constraints have put upward pressure on inflation. When the Labor government came to office, Australia was facing the highest levels of domestic inflation in over 16 years. The previous government left us with high interest rates—interest rates that had gone up 10 times in a row under that government. They went up 10 times in a row under the previous government. The only time they have decreased has been recently, under a Rudd Labor government, in the latest decision by the Reserve Bank. High interest rates and inflation that was on a runaway path left the Labor government with the situation of having to bring down a budget, its first budget, in those economic circumstances.

Now the opposition has the gall to block fiscally responsible legislation like the Tax Laws Amendment (Luxury Car Tax) Bill 2008. We have said that reining in government expenditure is essential if we are to put downward pressure on inflation, and we take the view, unlike the opposition, that the question of the inflationary challenge that this country faces is not a charade. It is not a fairytale, as the opposition would have us believe; it is real and it is hurting working families. While those opposite sit on their hands as inflation climbs to its highest level in 16 years, the Rudd Labor government are determined to act. Inevitably, that—

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

I cannot sit here and listen.

The Acting Deputy President:

Senator Bernardi, do you have a point of order? If you do, give it to me or else sit down.

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

Yes, Senator Furner is absolutely wrong that inflation is at the highest it has been in 16 years.

The Acting Deputy President:

That is not a point of order; it is a frivolous attempt at a point of order.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The clear direction has to be based on responsible economic management, and responsible economic management remains anchored in a $22 billion budget surplus—a buffer for the future. Responsible economic management can only be ensured through bills such as the luxury car tax bill. The luxury car tax was announced to enhance fairness in the tax system. Yes, fairness—something the opposition seem to grapple with. They seem to have difficulty with the comprehension of that word, which is evident through their years of power. We saw that in the likes of their Work Choices and those types of legislation where they could not comprehend what fairness means and how it applies to those who are out there struggling to make a living.

The government has to make tough decisions in these times of economic uncertainty; the government sees infrastructure and helping low-income earners and pensioners as a priority, as do a majority of Australians. To do this the government has had to make tough decisions like the luxury car tax in order to grow Australia into the future. If the government has to raise a tax on luxury cars for those who can most afford it—it looks to the future for everyday Australians—then the government will make that call.

You tell me why an individual such as Malcolm Turnbull, who is estimated to have a net worth of $125 million—that is right: $125 million—has the right to complain about a tax increase that would not even put a dint in his pocket. One must ask who the opposition is actually representing. It seems the opposition are only interested in representing themselves and a small minority of Australians.

Should those opposite continue their irresponsible fiscal destruction and vandalism, this bill, like the luxury car tax bill and others, shall be defeated. We will end up with millions in lost revenue over four years. What is the Liberals’ approach? It is seeing how much the Porsche is going to cost with or without a luxury car tax. The government, however, is looking to the future.

The Labor government wants to invest in the nation’s long-term infrastructure, including its public transport infrastructure. To do that we need money, and we need money from various means to manage the budget. I must ask: what is more important—a short-term political gain or a long-term plan that will ensure Australia has a brighter future? I must also ask: what is more important—a luxury car tax that will increase the cost of a minority of cars, or a reduction in the budget and greater pressure on the families of Australia? Fellow senators, which is more important, advocating for a few or advocating for the many?

It is time the opposition got its priorities right. I plead with those of you who empathise with the average family, who cannot afford the natural things required to sustain a reasonable living standard these days, to not block these legitimate types of legislation, to allow the budget to be sustainable for our future. We are talking about people in need. They need our help. It is our duty as representatives of the Australian public to make tough decisions that will make things a little bit easier, comfortable and more suitable for Australians.

Senators, we have a chance here to make a change for the better. Is that not what we are all about in this chamber? I ask the opposition to seriously consider their position and think about the future of Australian families and the future of Australia’s economic growth.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

I was not expecting that to end as quickly as it did. He just petered out and so I have been caught a little off guard, I have to admit. Who would have thought that Senator Furner, who started with a rage, would end with a whimper?

Opposition Senators:

Opposition senators interjecting—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senator McGauran, resume your seat. I reiterate the comments I made earlier. Previous speakers have been heard in relative silence and I think Senator McGauran should have that same opportunity.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

I want to pick up a few things that previous speakers have said. I do not want to dwell on them too long; it is not worth it. I have a set speech here that I have spent all afternoon preparing and I seek to deliver it, but I would like to pick up on something Senator Furner said. Like previous speakers, but with a little more spite, he introduced the politics of envy. I know it is a cultural fact within the Labor Party, but I want to pick him up on his comments in regard to Mr Turnbull. He asked the question: who are Mr Turnbull and we on this side of the house representing? I would ask the same question of senators on the other side.

Who are they representing, when the member for Lowe, 10 years in this parliament—I would be immediately struck off if I said what I thought of him—raises the matter of the size of a plate of beef stroganoff? He raised that in the parliament. This member represents, in a great proportion of his electorate—a marginal seat which, from time to time, has swung between Labor and Liberal—pensioners, working-class people, working families and the middle class. And this is what he brings to the parliament. Senator Furner dares raise the question of the politics of envy and Mr Turnbull when one of his own members has acted in a way unprecedented in politics. Obviously being in government has gone to this member’s head.

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

Already.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Already the power, joy and privilege of government have gone to his head. They are all the feelings we felt but, I tell you what, I cannot remember any Liberal member, rich or poor, ever standing up in the parliament and raising the issue of the size of a beef stroganoff plate. That is my answer to Senator Furner and his politics of envy.

I have to say that I really cannot distinguish between the lead speaker for the government, Senator Cameron, and his predecessor, former Senator George Campbell; I am having trouble; perhaps time will tell. He ruthlessly knifed his predecessor, and for what? I can barely distinguish between the two of them. They are both from the militant Left. That is obvious from listening to their speeches. They are both very difficult to understand because they speak so loudly.

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

Senator Sherry interjecting—

The Acting Deputy President:

Order, Senators! Senator McGauran, I draw your attention to standing order 193, which you well know. I will do that in advance.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

I am speaking about the lead speaker that the government put up to defend their nine months in government. They put up Senator Cameron—not only a new and inexperienced senator but one who is from the militant Left. They seem to think those are the economic credentials they ought to bring to this place. Of course, he introduced all the elements of the militant Left and the politics of envy. He was riddled with the politics of envy. He was against any sense of privatisation. You need only go back to the Hansard to see that.

Opposition Senators:

Opposition senators interjecting—

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Many on the other side will challenge that proposition, perhaps including yourself, Mr Acting Deputy President Forshaw. The point in regard to privatisation is that Senator Cameron says the previous coalition government privatised—and I do not know if these figures are correct—some 10 per cent, or whatever the figure was, of national wealth. We did, unashamedly. It was our policy, it was our philosophy and it was the foundation stone of returning the country to a surplus budget and zero debt. That is why we undertook privatisation. Senator Cameron has not got a clue. He just ran the philosophical Labor Left line. I cannot tell the difference between him and his predecessor, who he knifed ruthlessly.

I tell you what: Senator Cameron is eerily similar to former Senator George Campbell. They both have over 100,000 unemployed around their necks. We all know the former Prime Minister, Mr Keating, described Senator Cameron’s predecessor, Mr Campbell, as having something like 120,000—

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Campbell.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Senator Campbell—unemployed around his neck, which he achieved outside of the parliament. Senator Cameron is going to achieve it inside the parliament, with 134,000 unemployed around his neck, without a whimper—and he calls himself a defender of the worker! It is in the budget papers and he has accepted it. We did not hear anything at all about that in his speech. I must get in contact with former Senator George Campbell and apologise profusely. We challenged each other many times during general business. I thought he was too extreme, but now his successor has certainly proven me wrong.

Can I bring the debate back to the general business motion—or bring the government’s attention to it? Can I bring the motion to the attention of the next speaker from the government, Senator Pratt? She is furiously making notes at the moment—either to challenge me or to finish writing what she has to say. Why bother? I know that she just has a set piece. Senators Furner and Cameron both had set pieces, using the same lines, the same cliches and the same exaggerations. I have no doubt that the whip has handed Senator Pratt the same set of notes. I do not know why she is bothering to take extra notes unless she wants to challenge something that I am saying. Well, I dare her to. I invite her to.

Senator Fifield spent many years with the former Treasurer and can take credit, and does take credit—in his private moments, I should add; he is not a boastful man—and should take credit for working with the former Treasurer and achieving what they did over the years.

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

A team effort.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

A team effort it is! The difference between the new Senator Ryan, when he got up to speak, and the government senators, was that he was well prepared. He had analysed the subject. His speech was well structured. It had the fire and passion of belief and philosophy—unlike the other speakers. So I am happy to join Senator Fifield and Senator Ryan and my colleagues who follow in this debate. I will read the motion for the record, because it says it all. It says:

That the Senate condemns the Rudd Government for its reckless management of the Australian economy in a time of global economic challenge, including:(a) the Government’s irresponsibility in talking down the Australian economy—

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

What about some arguments?

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Aren’t you supposed to be leaving at around 5 o’clock? Is your replacement a bit late?

Honourable Senators:

Honourable senators interjecting—

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

You cannot rely on Senator Conroy—the original ‘Hollowman’; the original Rob Sitch. Put a phone call in to him; wake him up.

The motion goes on:

(b) the massive collapse in consumer and business confidence since the election of the Rudd Government;

(c) the delivery of a budget that forecasts an increase in unemployment;

(d) the Government’s raising of inflationary expectations and failure to honour its promise to address cost of living pressures; and

(e) the absence of a coherent economic strategy and a focus on presentation rather than policy.

I support that motion—naturally and wholeheartedly—and, as other speakers have said in their addresses from both sides of the chamber, the matter is reinforced by the backdrop of the deteriorating international situation. It is a frightening situation. The dark prediction by the former chairman of the United States Federal Reserve Alan Greenspan puts it in some perspective. He said that this is probably a once-in-a-century crisis. I do not think any of us knew anything about mortgage home loan lenders like Fannie Mae and Freddie Mac until recently, but look at the sheer size of their collapse. And there are organisations like Lehman Brothers, Merrill Lynch and AIG, which is valued at $1 trillion.

These are enormous companies. Some have collapsed, some have gone into bankruptcy, some have been salvaged by their government and some are on the brink. And Australia is not immune. We are feeling the repercussions within our own share market, which has reached a 2½-year low. Leading companies, investment companies, manufacturing companies and banks are all taking huge losses. Some are even on the brink of collapse themselves.

If you want to have a good day, do not look at the financial pages of today’s newspapers. Senator Sherry is in the chamber. He may or may not have read the Herald Sun, but judging from what he said during question time he has not. It is headlined ‘Superannuation takes $100b hit’. So this is a time, more than ever before, that Australia needs economic experience, knowledge, wisdom and wit to steer our economy through very troubled waters. These troubled waters are not a product of the usual boom and bust that was common enough in the fifties, seventies, eighties and nineties. Economic historians can point to the times and to the reasons for these booms and busts. I believe that this is a malaise that will go much deeper and may stretch for much longer. It will cause uncertainty that will directly hit household budgets, retirement plans and unemployment levels. That is the reality of the situation and the backdrop to this debate.

As previous speakers have pointed out, Australia has faced crises before, including the economic crisis of 1997, where our Asian neighbours’ economies collapsed around us. And there was the crisis of 2001, with the September 11 terrorist attack, which created a collapse in confidence, particularly in tourism. We have had those crises before, but nothing of this magnitude. Even though those crises were not of this magnitude we were able to pull through the bad times more quickly because the fundamentals of the economy were sound.

Early in our term of government we gave the Reserve Bank unprecedented independence in monetary policy—and thank goodness we did, because the economic crisis in Asia came very quickly. The decision to do that was a product of the Reserve Bank’s independence being compromised by the previous Labor government. Equally, the previous coalition government, early in its term, introduced the charter of budget honesty to restore the integrity of the government’s financial reporting, which had been lost under the previous Labor government.

In our first term of government, a debt-reduction regime was put into place by way of disciplined surplus budgets and boosted by the sale of government assets. Moreover, we locked in structural reform. We did not stop reforming from our first term to our fourth term. Yet, at every step of the way, the Labor opposition—now in government—opposed those reforms, which they have inherited. No government in the history of Federation has inherited such a fundamentally sound economy—structurally strong and able to meet the challenges of the difficult times ahead—yet the Rudd government are seemingly hell-bent on squandering that advantage, an advantage that the Economist magazine declared unique, calling us the ‘wonder down under’.

Consider the legacy the Rudd government were left and how, in their very first budget, they have squandered it. They walked into office with the government owing zero debt. I do not know of any other country—there would be very few if you had to name them—that has zero debt. In fact, in today’s papers the Governor of the Reserve Bank is quoted as saying:

Most governments would kill for a set of fiscal accounts like the ones we have.

He meant zero debt and budget surpluses to the tune of 1.5 per cent or more of GDP. Interestingly, the debt that we eliminated was $96 billion, which coincides with the very surplus that you, the government, will be inheriting over the next four years. In the forward estimates it will amount to $96 billion. If you do nothing, you are going to have surpluses worth $96 billion. Eerily, that surplus gifted to you is equivalent to the very debt being raised by the state governments over the next four years—around $96 billion.

Time does not permit me—you can give me an extension of time if you like, Mr Acting Deputy President—to go through the previous government’s record, but it is well known. Perhaps the centrepiece of that legacy and that record is the unemployment rate, which was trending to the once unimaginable full employment rate. Yet, in the Labor government’s first budget, they have effortlessly put aside the ambition of full employment and, for the first time in many budgets, predicted an increase in unemployment of some 140,000 people—real people.

I should add that the first budget of any government tells you a lot about the character, the mettle and the leadership of the government; it was so in our case in 1996, when we had to bring down a tough budget, and so it was with the Labor government. They had an extended honeymoon up to their first budget, but even the media, who had given them that extended honeymoon, had the spotlight on them in their first budget. The media wanted to see what direction the government were going to take this country in. Well, on the night we got it. We got what the Treasurer called, in his own words, ‘a classic Labor budget’—and he was right. It was a classic Labor budget of high taxes, new taxes and unannounced taxes that came from left field on the working households of Australia, to the tune of $19 billion.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Taxes by stealth.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

‘Taxes by stealth’ is the interjection by Senator Coonan, and she is right. I do not remember the government going to the election saying, ‘We’re going to lift your taxes by $19 billion,’ nor did I ever hear them say that they were going to increase spending by a net $15 billion—quite the opposite, actually. So from their first budget we now know what their mettle is—an inflation-feeding budget. We now know that this is a classic Labor budget—self confessed—with spending increased by $15 billion and new taxes of $19 billion. That is the make-up of their first budget. That is classic Labor. As I said, perhaps the most disturbing aspect of their first budget is the projected increase in unemployment of 134,000 Australians.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

And it’s already happening.

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

‘And it’s already happening’ is the interjection. I have some of those figures, Senator Bushby. Nine hundred and thirty jobs have been lost at Mitsubishi. Five hundred jobs—all working Australian jobs, not executive jobs and not jobs from Point Piper; these are all down on the factory floor—have been lost at National Parts. Fifteen hundred jobs have been lost at Qantas, 600 from the Insurance Australia Group and 600 from Don Smallgoods, and so it goes on. These are big cuts that are starting to filter through. There is a lag time with the unemployment rate at the moment, but these are figures that will come through.

As the previous speaker said, to that end confidence in Australia has collapsed to record lows. The confidence levels have never been so low since the 1992 recession times, and Australia is not even in a recession. Do not come to me and say that confidence around the world has collapsed. Australia’s confidence has collapsed more than in any other country in the world, and we are one of the only leading economies of the world that do not have a negative growth rate. The confidence is a judgement on this new government within the first nine months of their service. I support Senator Fifield and I commend him for the work he did with the former Treasurer.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

There is indeed one thing we can all agree with Senator Fifield about: that we are facing a time of global economic challenge. But, at least on this side of the house, that is where our agreement with Senator Fifield ends. It is not our budget that is the problem; it is not our strategy that is the problem. The root cause of the challenges we face today is twofold, and neither cause is of this government’s making. The first cause is the state of the global economy. We are all aware of the complex and difficult external economic pressures on the Australian economy resulting from the global credit crunch and oil fluctuations, amongst other things.

But the second cause sits much closer to home: it sits directly opposite. The reality is that this government has inherited an economy which, until late last year, was managed by a government wearing blinkers, a government who during their time in office refused to see the building of inflationary pressure on interest rates and refused to act to head this off—a now former government who failed to act to secure our country’s prosperity by investing to ensure ongoing increases in the productivity of our economy, in things like skills.

Senator Fifield’s motion is no more than a desperate attempt by those opposite to obscure these facts and, in doing so, salvage their economic credentials. That is a big ask, because, while this government has always been and will always be happy to talk up the Australian economy—there is no doubt about the underlying strengths of the Australian economy—you do not secure it by talking about it; you secure it by acting. That is why the government has directed its efforts, in a very fiscally responsible way, to building a budget surplus, a very healthy surplus of more than $20 billion, that will work to shield Australian standards of living against this global economic uncertainty. It is a budget designed to put downward pressure on inflation and interest rates, which will in turn help ease the financial burden on Australian families. This government is shielding our economy by building this surplus and giving Australian families a break from the tremendous financial burden they are under.

The Liberal government ignored the Reserve Bank warnings about the capacity constraints in the Australian economy time and again, allowing inflation to build and build. They put pressure on Australian families, and there were 10 interest rate rises one after the other. Those opposite are responsible for the financial pressure on Australian families resulting from a 16-year-high inflation rate. They allowed that pressure to build and, at the same time, they had the nerve to tell Australians they had never been better off. Well, Australian families knew better. They knew that cost-of-living pressures were building. They knew that interest rates were climbing and climbing—they felt it every month—and that inflation was picking up.

It has been left to Labor to deal with the consequences of this negative legacy, this legacy of inaction. And now we have to deal with these in the context of a difficult global environment. But, unlike our predecessors, we will face up to the challenge. We will not just talk; we will act. The government are tackling this challenge head-on to alleviate the financial burden on Australian families and so that the future prosperity of this country can be assured. The government are working to strengthen the Australian economy so that we can address the inflation challenge and the related challenge of interest rate rises. That is why we brought down a budget with a strong surplus: to shield the Australian economy and to look to the future for all Australians. Unlike the former government, we are acting to secure Australia’s prosperity by investing to ensure ongoing increases in the productivity of our economy. That is very important.

This government are looking to the long term and working to protect Australians even further by investing in our collective future through measures such as the Infrastructure Australia fund. Infrastructure Australia represents a national, long-term approach that will make sure that our country has the infrastructure it needs to get on with the job of building productivity to secure our future prosperity so that we have a vibrant, robust and modern economy that can withstand international economic turbulence—and so that the great state of Western Australia can continue its economic boom, to the country’s benefit. Infrastructure Australia is going to be the blueprint for building our country’s long-term infrastructure needs for things like transport, water, energy and communication. It is a fund that will help our producers get their goods to market in quick and cheap ways, give families and businesses better access to the internet, and make our cities function better and improve the quality of life within our cities and towns. It is by having strong, reliable infrastructure that we can build a strong, reliable economy. We want an economy that is protected from the worst fluctuations of the global economy.

To this end, the government is also looking to secure our future through the Education Investment Fund. This fund, too, is about building a modern economy and a productive Australia so that together we can meet the challenges of the future. The Education Investment Fund will provide for capital expenditure. It will help drive renewal and refurbishment of our universities and vocational institutions, as well as our research facilities and major research institutions. Why? Because we know that first-class education facilities and services, especially teaching, lead to a stronger, growing economy. As the OECD made us all aware in 2006:

Evidence of the public and private benefits of education is growing.

Under the previous government, we were sadly lacking investment in this area. The OECD report continued:

Application of knowledge and skills are at the heart of economic growth, with the OECD attributing half of GDP per capita growth from 1994 to 2004 to rising labour productivity.

So you can see that education is the key.

As I said in my first speech in this place, we must engage the entire Australian community if we are to meet the critical challenges facing our nation. Meeting these challenges will require all Australians to confront change, to make sacrifices, to seize opportunities and to adapt. To do this, Australians need access to a quality education and they need a first-class health system. Put simply, our economy is built on skilled and healthy workers. That is why this government is also investing in our future through the Health and Hospitals Fund. This fund will support health infrastructure priorities into the future. It will invest in health and hospital facilities, in medical technology and equipment, and in major medical research facilities and equipment. These three important funds together will be used to invest $40 billion in nation building, for our long-term future. I think this is an agenda that Labor can be very proud of.

But it is not just about building for the future. As we confront change, as we invest for the future, we must also protect those who are vulnerable now. The government is already easing the financial burden on families brought about by high interest rates and other cost-of-living pressures. The government is doing so through targeted assistance to Australian families, targeted assistance that will provide help now while also helping Australians build the skills they need now and into the future. The government has therefore put together the $55 billion Working Families Support Package. This package is comprehensive and will help Australian families claw their way back out from under the financial burdens placed on them by the previous government.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Do you believe this stuff?

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Absolutely. The package has already started to give a 20 per cent increase in the childcare tax rebate. Of course I believe in this; this is making a very real difference for working families. That is an increase from 30 to 50 per cent so that working families can meet the cost of child care and help balance their family budgets. This is responsible economic management. Also the package is already assisting parents, who will now able to take advantage of the education tax refund for education expenses.

Honourable Senators:

Honourable senators interjecting—

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order! Senators, let us hear Senator Louise Pratt in silence.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

So the government has sound economic plans for both now and the future. But this responsible and sound economic plan is being put at risk by those opposite playing politics and engaging in one-upmanship. Take, for example, the luxury car tax package of bills. Those opposite want to reduce government revenue by more than $6 billion by opposing our budget measures. They want to stop the government investing in Australia’s future. Why? To protect their rapidly declining economic reputation perhaps?

Let us not forget a few things here. This is a not a new tax being introduced. We are simply attempting to change the rate of an existing tax. We are not attempting to tax people who cannot afford it, unlike those opposite in refusing to accept our changes on the Medicare levy. The luxury car tax rate is progressive. It is a tax rate planned to make the tax system fairer. It is not a tax that is going to have a significant impact on working families. Rather than as some people have alleged, it is not going to affect people with disabilities. The tax law already provides exemptions from the luxury car tax for people with a disability so that they can purchase vehicles with the kinds of adaptations that they require. It is scaremongering on the part of those opposite to assert that this measure will hurt working families.

Of the 20 top-selling cars in Australia, less than four per cent of those sold are subject to the luxury car tax and for the lower end the increase is in the order of hundreds, not thousands, of dollars. We do not think it unreasonable that people who have done well in recent years, particularly from government decisions in terms of tax cuts, should pay just a little bit more for a luxury car. If everyone in this country pays their fair share, and we plug the gaps in the system, we can reduce the overall tax burden imposed on working families while maintaining a strong economic surplus and investing in the future productivity of our nation.

So I urge the Senate to reject this motion out of hand. The motion is nothing more than political grandstanding on the part of those opposite. I think this, combined with attempts by the Liberals to hack into the budget surplus, is thoroughly reprehensible because this is all happening at a time when we are facing a difficult global economic situation. Rather than condemning them, we should be congratulating the Rudd government. We should be congratulating them for strengthening the Australian economy through their modernisation strategies; for creating a modern economy so that the inflation challenge brought about by years of blinkered economic mismanagement can be addressed; for creating a modern economy that can withstand international economic turbulence now and into the future; and for delivering now for working families, taking the financial pressure off those most in need. The government have clear strategies for building a strong economy. We are here to fight inflation and to deliver now for working families under financial pressure. I think, for all of those things, the Rudd government should be congratulated.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on Senator Fifield’s motion concerning the state of the economy, particularly the Rudd government’s ‘reckless management of the Australian economy’. I was interested to hear Senator Pratt refer to this as political grandstanding. I wish she was right. I wish this motion was about political grandstanding, but it is not. It is about one of the most frightening prospects facing Australia—the most frightening prospect to have faced it in over 11½ years.

If we want to talk about political grandstanding, the most pure form of political grandstanding, we could look at the advertisement that the now Prime Minister made last year in the lead-up to the election. This ad was in fact funded by the Australian union movement. It was done to tell us all what a wonderful fiscal conservative he was. He was saying to every newspaper and television talk show—anybody, anywhere—‘Don’t look at everything I’ve done in the past nine years as an opposition backbencher. Don’t look at my voting record, opposing every worthwhile economic initiative of the Howard-Costello government. Don’t look at my opportunistic statements.’ Mr Rudd was saying, ‘Please don’t remember my nickname in the Queensland public service, Dr Death,’ a nickname that was well earned for his ability to strangle initiative and to drive good policy and good thinkers out of the system completely, until there was only one view left—his. This is not about political grandstanding; this is about genuine concern about what can happen to this economy with this man and his trainee Treasurer in charge.

The reborn economic conservative Prime Minister definitely does not want you to look at his opposition to the new tax system introduced by the Howard-Costello government in 1998. He claimed then that the new system would create a ‘slow burn’ of the Australian economy. The great economic conservative of today claimed then that the reform of Australia’s tax system was a ‘dark day’ in the fiscal history of Australia. The great economic conservative of today in 1998 opposed tax reform. He said:

In a decade’s time we will look back and wonder why this country did it—why we imposed this burden on jobs, why we imposed the burden on pensioners and why we imposed this burden on the country at large.

When the coalition government left office last year, we bestowed a wonderful economic legacy on Mr Rudd and Treasurer Swan. It does not matter how hard or how long the government attempts to talk down the record of the Howard-Costello government because it cannot be done and it will not be bought. Unemployment was at a 32-year low. There was low inflation, with an average inflation rate of 2.5 per cent over the preceding 11 years. There was solid and sustainable growth in real wages and an economy that was the envy of the developed world and much commented on by the OECD and other international authorities.

That is what Labor started with in November last year. But Mr Rudd’s words of 1999 have proved rather prophetic. It is barely 10 months and Australians are wondering why they did it. They are wondering why they elected Mr ‘let’s have a review of everything’ Rudd and they are certainly wondering about the burden on jobs and the burden on pensioners. They are wondering about the empathise and ignore strategy of the government, who are comfortably prepared to predict drastic and dramatic increases in unemployment as a result of their policies and comfortably happy to predict that one day they will do something for the pensioners—despite the fact that they will agree right this minute, today, that pensioners are doing it tough. They will get round to doing something sometime next year to relieve the burden that was so well prophesised by Mr Rudd.

Australians are mostly wondering how Mr Rudd and his trainee Treasurer have so easily squandered the reputational capital of the Australian economy, an economy, as I said, that was the envy of the world and that elsewhere was regarded as demonstrating a peak of good management and good progress—a wonderful balance between low inflation and low unemployment, something very rarely achieved by any government anywhere. The answer is that Labor were so hell-bent on rewriting history, so hell-bent on rolling up all those fresh pale pink pages that they had into a narrative for us all to listen to, that they have tried to tarnish the economic reputation of the Howard-Costello government, irrespective of what happened.

Senator Pratt claims that the Labor government have a sound economic plan. It is quite interesting to listen to the comments of the newly elected Treasurer, Mr Swan. His idea of beginning this sound economic plan was to declare:

The inflation genie is out of the bottle.

That was a great start to a sound economic plan and to maintaining the reputation of this country at this critical time. Our reputation is one of the important factors in our being able to weather the international maelstrom that we are currently facing.

Last year, Mr Rudd was saying to anyone who would listen that he was an economic conservative. He was like a born-again believer. He was saying: ‘Don’t look at my past. Look at my new-found fiscal faith.’ As the head of the government he had to make good on that. He has had his chance at economic conservatism, and basically all we have seen is that his new-found devotion to economic conservatism is very, very shallow. First of all, we had the Treasurer assisting with his ‘inflation genie out of the bottle’ comment. All they have done ever since is talk down the Australian economy.

What we are seeing in Australia, quite apart from the global uncertainty that surrounds us at the moment, is what always happens when there is a Labor federal government in Australia. Business confidence has slumped, consumer confidence has slumped, foreign debt is forecast to grow again, and inflation continues to be uncontrolled by the government and by interest rates. By their own admission in the budget papers, they are looking at unemployment growing dramatically in the coming 12 months, putting more Australians out of work. We wonder how the famous working families will be and how they will feel about the government and the government’s ability to manage the economy when they are the out-of-work families.

This is a nervous government. We have a Prime Minister and a Treasurer who are too nervous and too inexperienced to make the hard decisions that need to be made. We have a Treasurer who is afraid to act, let alone act decisively. We have non-stop reviews, inquiries and conferences that go on and on. I must admit that I was somewhat unnerved to look back and see the similarities between our current federal Treasurer and another federal Treasurer from Queensland, who guided the economy down, down, down. Just like ‘Red Ted’ Theodore—now there is a name to conjure with—Treasurer Swan is a big player in the Labor Party and he is a key numbers man in the Labor Party. But, when it comes to running an economy, just like ‘Red Ted’ Theodore, he is a total failure.

Why does this always happen when Labor is in power? Why do we see an economic downturn? Why do we see increases in unemployment? The answer of course is that Labor do not know how to run an economy. They know how to run unions and they certainly know how to appeal to special interest groups with irresponsible policies and irresponsible programs. They know how to socially engineer the country so that equality ends up meaning equal opportunity to be unemployed and equal opportunity to watch education be dumbed down, but they do not know how to run an economy.

Mr Rudd’s problem is that there is more to economic conservatism than simply mouthing it as a slogan. Fiscal conservatives do not jeopardise the future of the private health system by taking away the incentive for Australian families to take out private health insurance. Fiscal conservatives do not create an explosion in the cost of public hospitals by taking incentive out of the tax system. Fiscal conservatives do not increase the tax on the family Tarago or on farm vehicles and call it a luxury tax. We are back again to the politics of envy, back again to the equality of opportunity of not having a job, probably losing your house and not worrying about whether you have to pay the luxury car tax because you cannot even afford an ordinary car. Fiscal conservatives do not put our economy at risk over an emissions trading scheme that has not been fully modelled and will put uncontrolled upward pressure on the cost of living for all Australians, in particular those who are most vulnerable—the people on fixed incomes such as age pensioners and those on disability and veterans pensions.

Of course, Mr Rudd also promised Australians that he would stop the blame game between the states and the Commonwealth. He just forgot to mention that he would replace it with the ‘no blame, no accountability and no responsibility game’ instead. So we have lost the blame—that is good; there is no blame between the states and the federal government, but there is no accountability either. It is all now operating behind closed doors. The Labor states spent years trying to pretend it was not their job to build schools, hospitals, roads and other desperately needed infrastructure until even they could not pretend anymore.

The state Labor governments learnt their economic management skills at the same school as the Prime Minister and Treasurer Swan. Did they lift government spending when private sector spending was low? Of course not. The states started their stop-start, unplanned spending when the economy was strong, adding dramatically to inflationary pressures and hoping that they could lay the blame for this on the former federal government.

We need to look today at yet another one of their efforts. The Senate Select Committee on State Government Financial Management report which came out today points out that on a number of occasions the states have double-counted federal money intended for local government. We have the big announcement today by Prime Minister Rudd that he is to have a meeting of all the mayors and all the councils of local government in Australia here on 28 November. The only problem with this is that—just like with his 2020 summit, when he forgot to check what was happening in the Jewish calendar—28 November is the day before the Victorian council elections. If you are a mayor in Victoria, where are you going to be the day before the Victorian council elections? Will you be in Canberra doing a mini 2020 summit on local government with Mr Rudd or will you be in your electorate wards speaking to constituents? Once again, we cannot even get ‘let’s have a big talk and think about it for a long time’ right.

I note that in today’s Financial Review, the Governor of the Reserve Bank, Glenn Stevens, has warned that governments might have to lift spending on capital works even further as risk-averse investors shy away from major infrastructure projects. I was a bit surprised by this characterisation of private investors as risk averse. The private sector is not normally characterised as risk averse. Unlike Mr Rudd and Mr Swan, these are people who are used to putting their own money on the line, so why would they be risk averse now?

The private sector are risk averse because they are worried about this government’s ability to manage the economy. They are worried about interest rates. They are worried about what protection there might be from the global situation, which they were not concerned about, which they felt confident about, under the previous government. There is no confidence in this government’s ability to deal with the current economy or with the economic concerns that arise.

Even after we look at the difficulties with inflation and with spending on infrastructure as a concern, what worries most Australian taxpayers—and certainly all those Australians with a mortgage and certainly most working families—is interest rate increases. Until the election of the Rudd government in November last year our banking institutions had been relatively disciplined. Now it is quite common for banks to raise their variable home loan rates above and beyond and out of association with any increase in the Reserve Bank’s official cash rate.

There was a time not long ago when we had a Liberal government and a Liberal Prime Minister and a Liberal Treasurer and when increases to variable home loan rates were not common except in sync with the Reserve Bank’s official cash rate movement. Again, why is there a difference? What has changed? Why now? The difference between our government, our Treasurer and the Labor lads that are in charge now is discipline—a genuine economically conservative and disciplined approach. We were not sloganeering or mouthing platitudes or pretending to be something that we were not. We had a genuine belief in what we were doing, a genuine strength and a genuine discipline and focus.

The approach of the Howard-Costello government was respected by the banks and by the national business community and, most importantly I think in the current situation, it was respected by the international financial markets. This is not a situation that currently exists with the government we have in control. When the banks are no longer taking notice of Treasury and the central bank you know there is a breakdown in economic confidence and that the government has lost control of the economy. The Australian Bankers Association recently reported that they believed that the current global financial problems will continue for up to two years. Quite honestly, there is not time for this government to not get it right. They need to develop the ability to deal with this economy. They need to look as though they understand what they are doing. They need to stop behaving as though they can change history by attempting to rewrite history. They inherited an extraordinarily strong and robust economy. They need now to do what they can to rebuild the reputation of Australia and its economy that they have squandered so recklessly over the past 10 months.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I would like to support what my friend and colleague Senator Boyce has just said in the chamber. Mr Acting Deputy President, I want to take you back many years to when I first started having a close look at the economy and politics and everything else, and I take you back to 1983 when we saw the election of the Hawke-Keating government. The reason I would like to take you back is because we have got to learn from the past. We have got to learn what was good and what was bad and use that experience to see that we do the right thing for the future generations of this nation. I remember in 1983 the election of the Hawke and Keating government and my friends in South Australia saying after a year or two that this was the best conservative government they had ever seen. The government had addressed a debt of around $32 billion and they had put the budget in surplus and we were quite impressed, I must say.

It was only a few years after that that the importance of winning an election became more important than running the economy and we saw the deficits coming along. As I said in my maiden speech on Monday, if governments build debt what they are effectively doing is mortgaging our children’s future away. We saw the debt grow and I remember when conflict came into the then government of the time, Minister John Kerin was made Treasurer. I think he had budgeted for a deficit of $3 billion for the 12-month period and it actually came in at $10 billion, and of course we then saw the debt soar to a massive $96 billion.

I found it amazing today to hear my friend Senator Pratt talking about the big government surplus and I thought: how long is it since a member of the Labor Party stood in either the House of Representatives or the Senate and talked about a large government surplus when they have been in control. I am sure that it has been many years. I look back on the time when the then Treasurer Mr Keating was trying to balance his budgets, and one of the issues I was most interested in that was coming from the country was the price of fuel. I think it was in 1983 that the federal government’s excise on fuel was 6.3c a litre. By the time they left in 1996 it was a massive 34c a litre. They had introduced indexation on the excise of alcohol, cigarettes and fuel. I must pay tribute to a colleague that is no longer a member of parliament, Stuart St Clair, former member for New England. He was the one who pushed the previous government to do away with the indexation on fuel. The people where I come from need fuel as there is virtually no public transport. They simply have to have fuel to even go to town to do their shopping or take their children to sport in nearby towns or whatever.

Coming back to the management of the economy, the reason I look back on those past years is because we saw that it was mismanaged. Now we have a government that is debt free. What a wonderful thing that is to have. I wonder how many federal governments, leading governments in the world, actually do not owe money. I would say that you would probably count them on one hand. The point I make is this: this government have put themselves in a situation where they can gloat about the government surplus. But we know where it came from. There was a $96 million debt—and what would be the interest bill on that a year? Would it be $7 billion or $8 billion? It would certainly be a huge amount. When that debt was paid off it was paid off in two ways of course. One was by the previous government bringing the budget into surplus and the other was selling off assets. I am not a big fan of selling off assets except on condition that when a people’s asset is sold, surely the proceeds must go to paying off the people’s debt.

That is exactly what happened in Victoria when Mr Kennett was appointed to government many years ago. He faced something like a $60 billion debt. He had to sell off the electricity for $19 billion which was used to retire the government debt in Victoria. They were in one huge mess and he had to financially bail out the state. We are now seeing similar things happening in New South Wales. The previous federal government, with a big push from the National Party I must say, implemented the GST. It was a progressive tax that actually gave decent funding to our states so that they could deliver the services they were supposed to such as law and order, health, education, roads and infrastructure. In New South Wales we see big holes in the budget again to the tune of $1 billion. What do they think the answer is? They want to sell off the electricity. The fallout of that, of course, was that they did not sell off the electricity; they sold off most of the politicians—they jumped off the ship that was taking on water.

In this Senate we can look at how good the government’s budget is and we can remember who brought it about. I have always had the attitude that if you cannot manage the money you cannot manage anything. It is concerning that our new-found fiscal conservatives are now putting increases in taxes. A good example, as several have mentioned today, is the luxury car tax. It was not stated before the election that the luxury car tax was going to happen. There was no signal to the public at all that the luxury car tax rate would be increased from 25 per cent to 33 per cent. It was just something that came out of the blue in May and caused a huge demand for a lot of vehicles; hence the fall-off in sales now. I question how those retailers around Australia, whether they are in city or country areas, are coping with the lack of demand for their product.

We all know the costs of running a business. The ongoing costs never vary—whether they are insurance or rate bills, or superannuation and workers compensation for employees. They are the costs of the general running of the business. We now see that the economy is slowing. There is no question about that and the Reserve Bank acknowledged it a couple of weeks ago with the fall in the interest rate of a quarter of a per cent, which I certainly welcome. Over the last 10 years we have basically had two economies in this country. We have had a vibrant urban economy and we have had a flat rural economy brought about largely through drought, through increased inputs in costs and through increases in things like fuel.

I am well aware that the fuel price, of course, is world driven. It is not solely Australia that has driven up the world price of oil. More than likely it is a result of growing economies such as India and China where they develop themselves. No doubt they buy the resources from Australia and, because we are not capable of value-adding to many of those resources, they take them there and they use their cheap labour. As I said, I have been in the factories in Thailand and watched the people work very hard in what I would call deplorable conditions for a pittance of money then go home and live in very basic accommodation. We have seen the price of fuel slowing our economy as we have the seen the world price go from US$70 a barrel up to a high of around US$147 a barrel. Thank goodness it has come down because, with the falling Australian dollar, if the world oil price was still at $145 a barrel we would be looking at fuel prices a lot higher than they currently are at.

The point I make is about this budget surplus that members of our government gloat about. When the previous government was bringing the books into the black, paying off the debt, what support did they get from the then opposition who are now, of course, the government? The then opposition opposed at all times. They would not agree with the budget surpluses put forward by former Treasurer, Mr Costello. They opposed at every corner and now, to their benefit, they have inherited the great result from the previous government, who could manage the economy and had the courage to make the hard decisions.

I recall the election of 1998—it was 3 October, if my memory serves me right—when it was proposed to bring in a GST. The government then, the Howard-Fischer government, had made the hard decision so hard that they had almost got thrown out in the 1998 election. When you make the hard decisions and it does hurt, then you face the ramifications from the electorate at the next election. Luckily they got through and luckily the financial mismanagers were not put back in control or we would not be in the position we are today. Hence, with the election of the coalition in 1998 with a much reduced margin, they went on to run the economy properly.

It was pleasing to see the unemployment rate fall to the low of four per cent because I can recall that when it was 11 per cent about a million Australians were out of work and it was not much fun. If you want to dismiss the confidence in anyone, put them out of a job. This is my fear now as we go onto these increases in tax: what is going to happen to those who are employed in the motor vehicle industry? It is a worry. No doubt this current government is learning from the good things the previous government did.

However the world scene is changing and it is frightening. We see, once again, financial institutions lending money willy-nilly in the hope that real estate prices in America will go up. It is all good when the jet is on the way up; it is all a boom time. But we all know that the jet has to refuel sometime so it must come down. And the booms do not go on forever—and to think that people in America were lent $400,000 to purchase a house to the value of $400,000 and were given more money for stamp duty and ongoing costs. They would buy a $400,000 house and it would cost them $420,000 to get into that house. They would say: ‘She’ll be right, mate. The house will be worth $450,000 soon.’ But it is not the case because many of those areas have up to 10 per cent oversupply of housing. Hence the market is falling and the equity is gone. There was never equity in the first place and now we see the global fallout as a result. We have seen over the last couple of days the huge disappointment of Lehman Brothers, and what a huge fear that has put into the world financial markets. AIG are now being bailed out to the tune of $85 billion, obviously from borrowed money because very few governments are fortunate to have surpluses like Australia does and to be debt free, thanks to the previous government. Now we are seeing the fallout that— (Time expired)

Debate interrupted.