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

My question is to the minister representing the Treasurer, Senator Conroy. Can the minister update the Senate on the recently released Mid-Year Economic and Fiscal Outlook and the implications it has for the government’s approach to economic policy?

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

I thank Senator Lundy for that very thoughtful question. The recently released Mid-Year Economic and Fiscal Outlook, MYEFO, clearly demonstrated that the budget has felt the full force of the global financial crisis. We know that the world faces the most significant upheaval in global financial markets since the Great Depression. The MYEFO figures are a dramatic reminder that, despite the fact that we are better placed than most countries to weather the global conditions, we are not immune. The MYEFO forecasts show an underlying cash surplus for 2008-09 of $5.4 billion, or 0.4 per cent of GDP. At budget, the surplus was $24.7 billion, or 1.8 per cent of GDP. This is a decrease of $16.3 billion since the 2008-09 budget. This decline is mainly due to the impact of the Economic Security Strategy package and the downward revision to tax receipts as a consequence of the global financial crisis.

The underlying cash surpluses for forward years are $3.6 billion in 2009-10, $2.6 billion in 2010-11 and $6.7 billion in 2011-12. Almost all of the decrease in the surplus beyond 2008-09 is due to the significant reduction in revenues associated with the global financial crisis. GDP growth is expected to slow to two per cent in 2008-09, three-quarters of a percentage point lower than we forecast in the May 2008 budget. This is slower but solid growth given the international conditions that we face. Let us remember that all members of the G7 group of advanced economies have now experienced negative growth at some point this year and the world’s major advanced economies are now expected to grow at their lowest rates in more than a quarter of a century.

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

Scaring the children.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Not only the financial markets.

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

That is due to the performance of the opposition that the kids had to watch. The MYEFO figures indicate weaker employment growth, with the unemployment rate expected to rise to five per cent by the June quarter 2009, up slightly from the 4¾ per cent expected at budget. But the unemployment rate is expected to rise to 5¾ per cent by the June quarter 2010.

We know that the global financial crisis has delivered a global recession and budget deficits all around the world. That is why the Rudd government makes no apologies for taking early, responsible and decisive action to protect the Australian economy from global events which are affecting every continent around the world. We have injected $10.4 billion as part of the Economic Security Strategy to stimulate economic activity and protect vulnerable groups in our society, especially pensioners, carers, disabled people and low-income families. We have taken steps to guarantee the bank deposits of all Australians and we have taken a number of additional steps to address the impacts of the global financial crisis on our financial system. (Time expired)