David Feeney (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister—

Honourable Senators:

Honourable senators interjecting—

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

Order! Resume your seat, Senator Feeney. Senator Abetz and Senator Sterle, it is not possible to hear the question when you two are having a banter across the chamber.

David Feeney (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Evans. Can the minister outline to the Senate current global economic challenges and their impact upon our economy?

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

I thank Senator Feeney for what I think is a very important question. As we saw on the news last night, we continue to see volatility on global financial markets, with Wall Street falling 3½ per cent. These global financial difficulties will continue to impact on confidence and share markets around the world and are slowing the global economy. The world’s largest developed economies are struggling to grow. The UK, Japan, Germany, France and Italy all recorded zero or negative growth in the three months to June this year, so we should not be surprised that these global problems, together with the 10 interest rate rises that we experienced under the previous government, are slowing our economy.

From the beginning, this government has been very upfront and honest about that. In our May budget we recognised that the combination of slower global growth, tighter credit conditions and high interest rates would slow growth and that this slower growth would have flow-through effects to the labour market. The budget forecast at that time, that employment growth was slow and that the unemployment rate would rise to 4¾ per cent by June 2009, was contained, as I said, in the budget. We are not immune to these global difficulties, but we are better placed than most countries to deal with the impact. We do have a strong, well regulated financial sector. I think across the parliament people accept that. Our banks are well capitalised and well regulated and do not face the nature and depth of the problems of their US counterparts.

In Australia, subprime mortgages account for only one per cent of the mortgage market, compared with around 15 per cent in the US. That is one per cent of subprime mortgages here and 15 per cent in the US—a quite different situation. Our default rates are nowhere near those being experienced in the US. The prices for our commodity exports are of course at generational highs, and that obviously assists. Businesses are investing in the future with confidence, planning for a record $100 billion in additional investment in 2008-09. Part of the reason that we are better prepared than many other economies is that we have a strong budget surplus to help buffer us against this global turmoil. That strong budget surplus is important to protect Australian families and to buffer our economy.

I am very concerned that the opposition seem to argue that we can just spend the surplus and all will be okay. I see that Senator Joyce was quoted saying that today, saying: ‘Just spend the surplus. Don’t worry about it. It is all okay.’ We actually think you need to be more responsible than that.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. I request, if I may, that Senator Evans table the transcript in which I actually said, ‘Spend the surplus.’

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

There is no point of order.

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

Mr President, on the point of order, what we now—

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

I have ruled on the point of order, Senator Ludwig.

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

I withdraw the point of order I made.

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

There was no point of order.

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

Thank you, Mr President. I am sorry if that is not right and Senator Joyce has been misquoted on the wires, but certainly the reporting seems to indicate that he thought we did not need the surplus.

Certainly, as we know, the opposition have said they can cut the rate of petrol, pay $30 a week in pensions and prevent any extra taxation revenue, and that we need not worry about the economic pressures on our economy. We ought not worry about the international impacts. Somehow we can do all these things and we do not need the budget surplus. Well, we say we do. And we say to the opposition: pass the budget, act responsibly and allow us to provide the sort of economic stability and responsibility that Australia needs. Join us in making sure we act responsibly, rather than taking the path of economic irresponsibility and trashing your economic credentials. If you want to talk about bipartisanship, pass the budget and allow us to maintain the surplus. (Time expired)