Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

I rise to support the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008. This bill provides some welcome relief to families and pensioners who are doing it tough at this time of global economic uncertainty. This bill, along with the associated appropriation bills Nos 1 and 2, appropriates $10.4 billion from consolidated general revenue for the purpose of the government’s economic stimulus package. The coalition support using part of the surplus to stimulate aggregate demand, but we quite rightly question the details of the policy implementation, as well as how Labor’s failed leadership has put us in the situation that we now need to rush through legislation to spend half the nation’s surplus to prop up an economy that only last year was described as being the ‘wonder down under’.

There has been a lot of reflection today about the first anniversary of the Rudd government’s election. Lots of commentators and, indeed, many member of the public have been thinking about the effectiveness of Labor’s first year in office. Unfortunately for the good citizens of Australia, Labor’s performance in the last year has been seen to be severely lacking. The last year has seen a bumbling and inept government launch 168 reviews, commissions and inquiries whilst also simultaneously watching prices rise. I was truly baffled when I read the Daily Telegraph today and saw their list of all the reviews and inquiries. It really is quite worrying when you have a government that has spent its first year reviewing everything, including bean bags, trolley jacks, form letters and Taiwanese preserved eggs. Yes, in its first year the government really has hit the ground reviewing!

The last year has seen the Prime Minister, Kevin 747, spend two months of the year overseas whilst Australians at home continue to struggle with the consequences of a collapse in consumer confidence. In the business sector it is down some 18 per cent. This is in large part from the government’s loose rhetoric of doom and gloom. How the Prime Minister thinks it is appropriate to spend two months of the year overseas, away from the country that he was elected to govern, is beyond me. I fully support a Prime Minister spending time overseas, but I think most Australians would join me in saying that 69 days out of the country, particularly at this time of economic uncertainty, is quite excessive.

I was reminded today of a website that appeared recently that sells Kevin Rudd merchandise and memorabilia. At Ruddshop.com, you can purchase an assortment of Rudd merchandise representing the government’s first year in office, including a number of books, portraits, DVDs, toys and watches. My particular favourites were the three designer watches: ‘fuel watch’, ‘grocery watch’ and ‘bank watch’—rolled gold, I am told! These are so popular that the website now insists they are sold out at the moment. But perhaps this is not such a flippant matter. It is absolutely embarrassing that this government’s greatest contribution to microeconomic reform is to sit back and watch prices rise. If spending $13 million on a website that tells you the average cost of goods in a geographic area a month ago is ‘New Leadership’, then most Australians would say, ‘We want a refund.’

Nowhere has this lacklustre government been more exposed than in economic policy and its incompetent response to the unfolding global crisis. In responding to that crisis, the government has a political strategy and not an economic strategy. At this moment, when the people of Australia desperately need good leadership, I think many would consider that last year they bought a lemon.

These bills we are considering today appropriate $10.4 billion to boost the economy and domestic demand. It is a stimulatory fiscal policy, only six months after the May budget, which had a fiscally contractionary policy. When the 2007 December quarter inflation figure came out and it was revealed that the CPI was three per cent, Labor clearly saw a political opportunity to trash the economic reputation of the former government. Even though Labor had inherited a large budget surplus, no debt, low unemployment and strong growth, they chose to proceed in declaring a calamity because of the slightly higher than anticipated inflation figure. In a rage earlier this year, as we can all recall, they furiously decried the supposed major economic threat of inflation. They constantly talked the economy down and spent half the year scaring people. They constantly talked the economy down in an effort to simply make a political point. Nothing could have been further away from good economic policy. I think we all know that now.

The anticipated fallout from the subprime crisis in the United States was well known and forecast last year. On 12 November 2007 the member for Higgins, the then Treasurer, warned of the impact of the US subprime collapse and the consequential ‘reverberations around the world’. The member for Higgins stressed the need to monitor these developments. Twelve days out from the election one would have thought that Labor would have taken notice of somebody with such an esteemed history in managing our economy, but unfortunately that was not the case.

Labor cannot wriggle out of the consequences of their own actions. The May budget, the first Labor budget, cut spending and increased taxes. You could not have got it worse in terms of action and you could not have got it worse in terms of timing. In the weeks leading up to the budget, Labor attacked the coalition because of our call for restraint. Labor accused us of being spendthrifts. They attacked our opposition to spending cuts. Well, look what happened—now they want to spend half the surplus in just one hit.

Had Labor stoped playing politics for a moment and actually paid attention to world economic events, then the shock of the financial crisis would not have hit us as hard. We would not have had to rush through a $10.4 billion stimulus package had the government monitored more closely the subprime crisis earlier this year instead of talking about genies out of bottles and inflation monsters. The collapse in consumer confidence that the spending in this legislation is trying to correct would not have been as severe had the government not ramped up their rhetoric around the time of the budget. Quite simply, Labor, by their actions, have made the financial crisis worse. The budget surplus will have virtually vanished in trying to correct their mistake. This is the legacy of Labor’s first year in government.

One of the more pleasing aspects of this legislation will be the extra support that pensioners will finally receive. This legislation is particularly welcome because it finally addresses the problems that pensioners have been facing from the increasing cost of living. In late September Senator Coonan introduced a bill into the Senate to increase the single age pension by $30 a week, in recognition of the significantly increased cost-of-living pressures. Yet how did Labor respond at the time? We got a torrent of abuse. The senators opposite were not interested in helping pensioners back in September. They made all the excuses under the sun as to why they could not help pensioners. They said ‘Oh, we’ll help them next year.’ They said, ‘We can’t afford it this year.’ They tried to argue that the coalition’s bill did not go far enough—I thought that was pretty amazing—despite the fact that they were refusing to help anybody.

Whilst the coalition went in to bat for single age pensioners, Labor stood by and said that they will have to wait until next year’s budget. It is truly sad that it took a global financial crisis for them to finally step up to the plate and deliver the urgent relief for single age pensioners now. Labor could have supported our bill and delivered relief back in September—relief that will finally hit the pockets of pensioners on 8 December. My question to every Labor senator who will stand up to speak on this legislation is: will you apologise to single age pensioners for making them wait almost three months for relief from rising prices and the increased cost of living? Will the Labor senators apologise for attacking the coalition’s pension bill back in September? Will they now acknowledge that the coalition were absolutely spot on in this matter and the government were plain wrong?

We will support this legislation because of the well-recognised need for a fiscal stimulus to make amends for Labor’s trashing of confidence in the economy in the first half of this year. Fiscal stimulus is needed to help shield Australians from a recession. But Labor seems to be divided on economic policy at the moment. On the one hand you have federal Labor increasing spending by $10.4 billion—the appropriation that we are discussing here today—but on the other hand New South Wales Labor are raising taxes by $3.6 billion. So are Labor actually interested in stimulating or slowing the economy? It seems that the incompetence of Labor in New South Wales is causing severe problems for Australia federally. The Prime Minister needs to get onto the phone to his New South Wales mates to get this mess sorted out. There is no point providing a fiscal stimulus package in this place for $10.4 billion when their mates down the road are just increasing taxes and taking these adjustments in completely the wrong direction.

One very legitimate question that we are entitled to ask about this bill is: what will be its macroeconomic impact? After all, $10.4 billion is an absolute bucket of money. In Senate estimates, it was revealed recently that the macroeconomic effects of this bill have not in fact been modelled. On 22 October 2008, during estimates, we heard this excellent question from Senator Joyce:

So we have spent half of the nation’s surplus without a formal modelling of the package, is that correct? We have spent half of the nation’s surplus without a formal modelling of the effects of the package?

And the answer from Dr Gruen was:

I can confirm that the package was $10.4 billion and that no formal modelling was done. I can confirm that no formal modelling was done.

So, basically, the effects of this bill have not been formally modelled. Again, we support the bill, as we recognise the need for stimulus. But I ask the minister: what research do you have that suggests that $10.4 billion is the right size? Is that too much? Is it too little? Is this a social package that deals with the needs of pensioners and others? Is this something that deals fundamentally with the crisis that is approaching? Will this be another rushed and bungled policy like your last little saviour, the bank guarantee? The bank guarantee bungle is clear evidence that this government does not know what it is doing and is incapable of managing our economy. All of a sudden deciding to spend half of the nation’s surplus without even inquiring as to the effect that this would have on economic growth—again, if that is ‘New Leadership’, Australians will want their money back.

We are told that we need to take government on trust—’Trust me’ is their age-old cry—despite the fact that there has been absolutely no modelling. And yet we are talking about spending one per cent of our nation’s GDP in one hit. We are told that we should have confidence in the government’s abilities as economic managers. Well, most Australians can recall the Treasurer’s recent performance at the press conference when he released the Mid-Year Economic and Fiscal Outlook, and if that is anything to go by then we are in for a seriously bumpy ride. The Treasurer says, ‘Trust me,’ after giving one of his most incredibly weak performances—spending a significant portion of the year talking about genies out of bottles and inflation monsters, frightening our children unnecessarily. The same bloke, after talking about inflation all year, could not remember the inflation forecast that was in MYEFO during his press conference on that matter. Not only was that hugely embarrassing—we went through a 90-second silence as Australians watched the Treasurer fumbling through his notes—but also this is not a bloke for whom, when he says ‘Trust me,’ I feel the need to leap into the gulf saying, ‘No worries, mate.’ This is a bloke who does not give me or any other Australian confidence.

So, in light of the incompetence of the Treasurer, I ask the minister opposite, Minister Sherry: how can we in the coalition, and Australians more generally, be confident that this $10.4 billion spend will, in fact, have the desired effect? How can we be confident that this is what is needed at this exact point in time? If the Treasurer did not even know the inflation forecast offhand last month, how can we have confidence that he has even considered the inflationary consequences of this bill?

The coalition, as we have already said, support this bill because we recognise that a fiscal stimulus is necessary and we acknowledge that there are many groups out there, particularly vulnerable pensioners, who are doing it tough and need assistance. The coalition have led the economic debate all year and we have been generally making the correct calls on what should be prudent economic decisions. Sadly, the fact that this bill has been rushed through—or, furthermore, that it is even considered necessary—is purely a consequence of the government’s economic failure. The Labor government should be appalled with its lack of results on this first anniversary of its election. This bill will pass with coalition support, but it would never have been necessary but for the incompetence of the current Labor government.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens also support this legislation, though I have a second reading amendment which I will speak to in a moment. In the face of the economic downturn, the package seeks to bolster growth in the Australian economy by promoting increased consumer expenditure. Our proposal for fiscal stimulus is to spend on improving the energy efficiency of all Australian homes, thereby creating employment right across the country, including in rural and regional Australia, and new training opportunities and economic stimulus while achieving important structural responses to the challenge of climate change. That would be a big step in the direction of a green economy when such a great opportunity is here.

Nonetheless, we welcome the one-off payment to many recipients of social security payments, because many of these Australians are struggling to live on very, very low incomes. The additional income for those people will make a substantial difference to their lives, even if only in the short term. We particularly welcome the payment to age pensioners—it equates to about $30 a week for single age pensioners—because that is something we have been advocating as a minimum since the last months of the previous Howard government. I look forward to pension reform that will see that increase made permanent.

I listened as Senator Scullion challenged Labor, saying that it had stood by while the coalition went in to bat for pensioners in September this year. Well, it is a pity that the coalition did not go in to bat for pensioners in the 12 years in which it was in office but instead left them languishing at the bottom of the pile and, comparatively, in a worse position than pensioners in Australia have been in for many decades. His challenge to Labor senators to apologise for making pensioners wait three months has, written into it, a very big challenge: to have the coalition apologise for making them wait 12 years.

While pensioners and others on income support need additional assistance, they need it on an ongoing basis to improve their daily quality of life, rather than as a one-off lump sum, pre-Christmas—intended to be spent in very short order—as we have in this bill. Yet over a million people on income support payments, many of them on lower rates than aged pensioners, are equally vulnerable to economic downturn and have not received a payment, or any explanation for their exclusion. These include people on Newstart allowance; there are 417,793 of them, according to last year’s figures. They also include people on the parenting payment—that is, those below the age pension age—539,922 of whom were in receipt of this payment in 2006-07.

Before dinner I was enumerating the groups excluded from this package, and I will continue. In 2006-07 there were 7,624 people on sickness allowance, 28,269 Australians on Austudy and 34,134 on Abstudy. Then there were 331,955 people receiving the youth allowance, 5,032 receiving the mature age allowance and 6,244 getting the special benefit. We Greens believe that a more equitable approach would be for the government to provide payments to all people who were in receipt of any income support payment on 14 October last. All these people are doing it tough and could use extra assistance. For example, unemployed Australians on Newstart allowance receive $224.65 each week. They would be equally likely to spend the money in the near future and provide the economic boost the government is aiming for were they to have received the increase.

Our estimation is that expanding the payment to all eligible income payment recipients would increase the size of the economic strategy that we are looking at here by approximately $1.9 billion. This additional expenditure would have had the dual advantage of increasing consumer spending in the short term, which the government has deemed the best response to the fiscal situation, and creating a fairer and more equitable package, which is our aim. The measures that the Greens are proposing in our amendment would increase the funds available for this and other measures by fiscal responses in the future. Our proposal is consistent with the Prime Minister’s concerns to end ‘extreme capitalism’ and rein in ‘excessive executive remuneration’.

I move Greens amendment on sheet 5636 in my name:

At the end of the motion add:

                          but the Senate calls on the Government to introduce a new top marginal tax rate of 50 percent for earnings over one million dollars.

The idea of a top marginal tax rate of 50c in the dollar was, of course, first flagged by the Australia Institute last month. Its report, The case for a new top marginal tax rate, argued that the current top tax rate of 45 per cent, which applies to incomes of over $180,000 per year, is inadequate in a corporate environment where some CEOs are paid excessive salaries. Well, indeed. For example, figures for 2006-07 show that Mr Alan Moss, who is a banking executive, got $33.9 million in that one year. This tax would have cost him an extra $1.645 million—a very modest contribution to the greater Australian welfare. Mr Phil Green, who is also in banking, got $17 million, and the tax would have recouped $800,000 just from him. Mr Greg Gailey, who is a mining executive, got $16.7 million. The 50c in the dollar tax would have recouped an extra $785,000 from him. Sol Trujillo, who heads up Telstra, got $11.8 million the year before last, and this tax would have recouped $540,000 from him. And so it goes on.

The Australia Institute points out that only 5,605 people in 2006-07 declared incomes in excess of $1 million and that their combined income was more than $10.7 billion, or an average of more than $1.9 million each. The chart from the Australia Institute also shows that the total tax payable by those earning over $1 million per year was just $2.15 billion, or less than 20 per cent of the money they took home. The Australia Institute’s report says:

The creation of an additional tax bracket with a tax rate of 50 per cent would enhance the equity, and progressivity—

There’s a good word!—

of the Australian tax system while, at the same time, raising a significant amount of revenue. Although in the current macroeconomic climate the contractionary effects of an increase in taxation are unwarranted, this could easily be overcome by increasing expenditure on a range of other measures, which would inject money into the communities that need it most.

I commend the Greens motion to the Senate. It would, of course, be a call to the government as the Senate cannot directly increase or impose a tax. It is a very worthwhile motion and shows how the Greens would recoup a component of the money to extend the increased benefits beyond age pensioners to all the groups that I listed after the dinner break.

The Greens support this legislation. We have put up a proposal to make it better and to provide the money to make it apply to hundreds of thousands of Australians who have missed out. We would have improved the legislation by having the payment made in the recipients’ fortnightly income packet, not in a lump sum just before Christmas, but it is certainly better than the entreaties to increase the pension we made to the last government—entreaties which fell on deaf ears. I support the legislation, I call for support for the amendment and I look forward to the rest of this debate.

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

I rise today in support of the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008. It gives me great pleasure to support these bills today, because, during such unstable times for the national and international economy, this $10.4 billion strategy will strengthen our economy and give much-needed support to Australian households. When I walked in, Senator Williams asked me if I was going to talk about the last 11½ years. That is an invitation that I just cannot resist! But I will not spend too much time on the last 11½ years when, after listening to Senator Scullion for a short period of time, I see that they really have not learned much from them. They ended up with the Australian public turfing them out on their ears.

They still seem to think that the money that is in government coffers should be kept there regardless of the needs of the community, regardless of the needs of individual families and regardless of what is good for our economy. For 11½ years it was really ‘let the market rip’. That was the catch-cry of the Liberal-National coalition, and we saw what that did. It left us ill equipped to face this huge economic crisis that has devastated countries around the world and has seen many banks go to the wall. I will come back to the economic issues that the Liberals have left us for the future, and I thank Senator Williams for giving me the offer to talk about that.

While our economy is strong because we have had a strong national government, a government that is decisive, we still need to understand this global financial crisis. Decisive action is needed to ensure our economy remains strong. These bills are just what is needed for these difficult economic times. The global financial crisis is placing increasing pressures on budgets already stretched by the rising cost of living, and this is impacting millions of Australians. We need to act now in order to reassure Australians that we recognise their concerns and that we recognise that they are struggling financially. This government will act responsibly and confidently.

The Economic Security Strategy is a discretionary fiscal stimulus package that is overwhelmingly focused on the first half of 2009 and is tightly targeted at key aspects of the economy: household consumption and dwelling investment. The strategy provides relief to those people in the community who have been struggling to meet rising costs for housing, petrol and food in the last couple of years, particularly those on low incomes or with children and other family members to support. The payments under this legislation are part of a long-term financial strategy. They are intended to provide additional support over the next nine months, between now and when long-term reforms are introduced from the beginning of the next financial year. This government is not about short-termism; this government is about dealing with the immediate problems and building a long-term strategy in the interest of the Australian community. These payments will provide immediate financial support to the Australians who are most in need of assistance: working families who the Liberal and National parties had forgotten about. We are going to support pensioners, seniors and people with disabilities, carers and veterans—the ordinary Australians who were forgotten about under the Howard government, the ordinary Australians who are struggling to keep their heads above water.

The Economic Security Strategy provides critical economic support and stimulation. It recognises the impact of the global financial crisis and it recognises the impact the crisis is having on the budgets of seniors, pensioners, carers and families. We are not going to take the stunt approach that the Liberal and National parties used when they called for an increase in the pension without any long-term strategy for the future, when for 11½ years they had ignored pensioners, when for 11½ years they wanted to let the market rip and not worry about how individuals suffered under the Howard government. This government understands the needs of Australian families, and the Economic Security Strategy means $3.9 billion in immediate financial support. Around two million families will be eligible for a $1,000 bonus payment for each child. The bonus payment is recognition that many Australian families are doing it particularly tough as the global financial crisis comes off the back of rising living costs. Through this bill, the government is moving decisively to make the already-strong Australian economy more resilient. At the same time, we are supporting pensioners and families through the global financial crisis.

Under the government’s Economic Security Strategy, over 5.2 million pensioners, carers and families will receive one-off payments. We do not agree with what we have heard from the other side about what this will result in. Labor do not believe that the majority of Australian families will go down to the pub and spend this in the pub or on the pokies, because we understand the real needs of Australian families. The real need of Australian families now is support for their weekly budgets to ensure that they get food on the table and that they can meet their bills. That will be the priority for Australian families—not, as we have heard from the other side, going down the pub and blowing their money on booze and pokies. I think that is an absolute insult to Australian families, and the opposition should reject that view tonight. You have an opportunity to respect Australian families and to move away from that noxious view you have about ordinary working Australians and their incapacity to deal with the financial situation that they face at the moment.

This package is also recognition of the additional costs single pensioners face relative to couples. For the first time, lump-sum payments are being extended to include disability support pensioners. There was not a word about these pensioners in the Liberal Party’s bleating and rhetoric that we heard earlier in the year. All that they wanted was their short-term political grab on the front page of the Australian; if they got that, they were happy. They really did not care about pensioners. They just wanted a carping view to be put forward in relation to the government’s performance. The Australian public know about this government’s performance. The Australian government is well-respected and the Prime Minister is highly respected in terms of our response to this global economic situation that we are facing. The public are the litmus test of how well we are performing, not the carping that we hear almost on a daily basis from the opposition.

Under the coalition’s proposal, which now seems to have sunk without a trace, over 4.3 million of these pensioners, carers and families would have received no financial relief—not a cent for these ordinary Australians who are facing significant economic stress. Not one cent! It is clear that our proposal will provide more support and relief to the people of Australia most in need of assistance. For families with dependent children, from 8 December 2008, a payment of $1,000 will be made for each child for whom family tax benefit A was payable at 14 October 2008. Similarly, a $1,000 payment will be made for each dependent child who, as at 14 October 2008, either attracts or receives youth allowance, Abstudy living allowance, or an education allowance under the Veterans Children Education Scheme or the Military Rehabilitation and Compensation Act Education and Training Scheme. We have not forgotten these people, but the Liberals and the National Party had forgotten about them when they engaged in their earlier stunt on an increase for pensioners.

Our package and these benefits will assist around two million Australian families at an investment of $3.9 billion. These payments will arrive in time for the Christmas holiday period, so people will have this extra assistance to help relieve the pressure of the additional costs of Christmas. I know what it is like for a family trying to deal with Christmas on a modest income. I know what it is like trying to make sure that your kids are looked after during the Christmas period. Having to do the extra things that you need at Christmas places on families not only financial pressure but also huge stress to try to meet society’s expectations over the holiday period.

In addition to this, a Christmas bonus will reinvigorate the retail industry. This is welcome news for retailers, who have been hit hard by the months of reduced consumer demand. It will also save thousands of jobs. This is a package that is not just targeted at giving money away. It is targeted at reinvigorating the economy. It is targeted at ensuring that the jobs of ordinary Australian workers will be more secure because of government intervention and because of government strategy and direction—something that was missing for 11½ years under the Howard government. This package is clear evidence that the government is supportive of middle-income earners who work hard and pay their taxes. We are not out there to look after the Maserati drivers that the Howard government looked after and from whom this coalition still yearns for a pat on the top of the head. We are looking after ordinary Australian families. We are also looking after farmers who are doing it tough over that period of time as well.

The Australians who are being looked after are those Australians who make an invaluable contribution to the economic well-being of Australia, and we have not forgotten them like the Liberals and the National Party did for 11½ years. The government’s strategy is decisive and forward thinking, and it will have a far-reaching, positive impact on the Australian economy. Our package is becoming a model for governments around the world. We have been at the forefront of dealing with this economic crisis, and all we have heard from the opposition is carping and uninformed free-market rhetoric that means nothing to ordinary Australians—and it is the reason why they were dumped at the last election.

Our package will ensure that cost-of-living pressures on older Australians become a matter of social justice, not just some bottom line on the budget. It is a matter of social justice. Older, working-class pensioners are more likely to be amongst the significant number of older Australians experiencing poverty and social exclusion. Poverty rates amongst older persons in Australia are amongst the highest in the developed world. This is unacceptable, and it has taken a Labor government to deal with this matter in a comprehensive manner, both in the short, medium and long term. An inadequate pension base and infrequent and insufficient increases in the pension, which the coalition allowed to continue for 12 years, are fundamental reasons that the cost of living impacts so extensively on age pensioners of this country.

The $4.8 billion in this package for pensioners builds on the $7.5 billion in support provided in the government’s first budget, bringing new spending on carers, pensioners and seniors to $12.3 billion in the 12 months since the election. This government has delivered for the pensioners of Australia. People who, as at 14 October, were of age pension age and were receiving parenting payment, special benefit, Austudy payment or Abstudy living allowance will receive a payment under this legislation. None of those groups were ever mentioned in the absolutely feeble attack that has been launched on the government from the opposition benches over the 12 months. The payment will also go to self-funded retirees who hold a current Commonwealth seniors health card and to holders of a Veterans’ Affairs gold card.

The Economic Security Strategy payment for this group of Australians will be $1,400 for singles and $2,100 combined, if both members of a couple receive a qualifying payment, and $1,050 if only one of the couple does so. This is, again, an example of how far-reaching the impact of these bills will be. Providing further financial support to pensioners will result in a boost to the local economy. It will also provide single age pensioners, who often barely scrape by, with the financial capabilities to enjoy themselves in a bit better fashion than they have done in the last 11½ years under the coalition government, where pensioners struggled to keep their heads above water. Under these bills, a much broader group of pensioners will be receiving the support they have been unfairly missing out on for years.

The total additional appropriation being sought through supplementary estimates bills Nos 1 and 2 is $1.33 billion. This is a significant and decisive economic response to deal with these extraordinary economic times. The tough decision made in the May budget to build up a surplus was a decision that we can applaud, as we now have a significant buffer to help us through this period of financial stress.

Supplementary estimates Appropriation Bill (No.1) seeks a total appropriation of $146.054 million for initiatives to assist Australians in their education, their housing and their general cost of living. Over $117 million will be invested in 56,000 additional productivity job seeker places in 2008-09. This funding for the Department of Education, Employment and Workplace Relations is for certificate 2, 3 and 4 levels.

In the next two years, this government will make a total additional commitment of over $187 million to help develop the skills that Australian industry really needs. We are determined not to take the easy way out on skills. We are determined to ensure that never again will there be a crisis of skills in this country that weakens the economic capacity of the nation—a legacy of the Howard government, to depend on 456 and 457 visas to provide the skill base for the economy. The Howard government abysmally failed to deal with the skills issue in this country. The opposition parade around trying to pretend they were good economic managers—when they failed the economy, they failed the country and they failed the nation on this key economic issue. By expanding our approach to skills we will develop a stronger economy, an economy that can withstand international economic shocks in a way that the Liberal Party could never, ever dream of. (Time expired)

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate Senator Xenophon’s speech.

Leave granted.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

The incorporated speech read as follows

I wish to indicate my support for these three bills.

The nature of the current global financial crisis has been well documented in the media, and is being overviewed thoroughly in this chamber.

I do not wish to take up the time of the Senate by replicating that which has been already stated. However, I do wish to make several brief comments in relation to the Government’s handling of these bills.

Firstly, I would like to acknowledge the Government’s efforts to respond quickly to the recent resolutions of the G20 summit.

I note that the G20 called on Governments to act swiftly to implement ‘appropriate’ fiscal and monetary policy to provide financial stimulus to domestic demand and economic growth.

So on the surface, it would seem that calls from the G20 have vindicated the Government’s response.

However, I note the G20’s reference to ‘appropriate policy’ and wish to indicate that I have some concerns that the speed with which these bills have been developed and introduced has resulted in a lack of consultation, limited economic modelling and little consideration of unintended consequences.

More specifically, I am concerned by the rush in relation to the Nation Building funds, but I will reserve my comments in relation to this until the National Building Funds bills are before the Senate next week.

However, these bills are important because they are aimed at boosting confidence in our economy and providing much needed stimulation for the economy.

We must remember that the Australian economy is strong, perhaps amongst the most resilient in these difficult times, and we should not give in to those who peddle doom and gloom, predict the bottom will drop out of the markets or the sky will fall on our heads.

I would echo the words of Reserve bank Governor, Glenn Stevens, when last week he urged for calm and argued that ‘about the biggest mistake we could make would be to talk ourselves into unnecessary economic weakness’.

He warned of the potential destabilising effect of Governments pulling away from worthwhile initiatives that are healthy for the economy due to the deterioration of budget balances.

I would urge the Government to be cautious in its claims that it will not allow the Budget to go into manageable deficit in the short term.

What is the purpose of long periods of economic growth and surplus after surplus, but to provide a buffer to the inevitable losses in tougher times?

We must remember that it is a principle of Keynesian economics that one of the main roles of Governments in the economy in difficult times is to foster confidence through prudent spending.

I note the recent debate which has emerged about whether or not the government should take the budget into deficit in order to stimulate the economy and stave off a recession.

I believe any sensible government would neither rule this option in or out. The truth is we are facing the most volatile markets since the great depression, and it is foolish to be picking a cure without knowing the extent of the problem.

Thirdly, I wish to put on record my concerns about the timing and nature of the Governments Economic Security Strategy.

In relation to timing, why has the Government decided to make the pensioner and family payments just before Christmas?

I can see the popular attraction that a financial gift from the Government just before Christmas might present, but is this the best for economic stimulus?

Why were the payments not split, one before Christmas, and another to stimulate the economy in the post Christmas sales slump?

There is also the real risk that, to use the words of WA Premier Colin Barnett, that these welfare payments will be boozed and gambled away.

While Mr Barnett’s comments were made in relation to indigenous communities, they do raise important broader questions for the Government.

If the ‘Government is serious about controlling binge drinking across the entire community, is a cash handout just before the Christmas season the best strategy to do this?

And if the Government is serious in its concerns about problem gambling, how can it be sure that this payment will be spent on presents, not pokies?

The Commonwealth has already displayed a shameful unwillingness to tackle the scourge of poker machines in our society, as witnessed by the majority report of the Community Affairs Committee in relation to the three poker machine Bills it considered.

The Federal Government has the power to help the states kick their addictions to poker machine revenue.

But I worry that by failing to act, poker machine venues around the country may see significant increases in revenue thanks to these payments.

If the Government is serious about stimulating the economy, why didn’t it split the payments before and after Christmas, or reduce the size of payments to allow for more money into infrastructure that will lead to the long term growth of our economy.

The rush that has underpinned the development and introduction of these bills has left these questions unexplored and unanswered.

And that is a great pity. To paraphrase National’s Senate Leader Senator Barnaby Joyce, before you blow half the surplus, wouldn’t you do some economic modelling?

Acting Deputy President, while I appreciate the broad intent of these bills, and the arguments for haste, I also believe it is important to put these concerns on record.

That said, and noting that these are Appropriation bills, I support the passing of these bills through second and third reading stages.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise tonight to make a few comments on the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and related bills. This legislation consists of a social security package, a $1.5 billion increase to the first home owners grant and $187 million to create 56,000 new training places in the Productivity Places Program for 2008-09. I remember not so long ago making a budget reply speech in 2006. The newspapers of the day had headlines, ‘Manna from heaven; rivers of gold’. They had huge photographs of the then Treasurer smiling—nothing could be wrong, everything was fabulous. I made the Greens’ budget reply speech and said that the Australian economy was more vulnerable than ever, much to the hoo-ha on the government benches. I said we were more vulnerable than ever because, under the Howard years, Australia had been taken back to an economy largely the same as it was in the early 19th century when we rode on the sheep’s back.

In my budget reply speech in 2006 I said that Australia had been taken back to being a quarry for the rest of the world. The manufacturing sector had been hollowed out and the jobs had gone overseas. Essentially, our budget position was entirely the result of a resource based economy, where the tax from corporate profits was actually driving the so-called wellbeing. Not only had we hollowed out the manufacturing sector, but we had also underfunded education, training and innovation, so that our skills base had been completely hollowed out as well. I indicated then that, with the twin challenges of climate change and peak oil, it would not be very long before the façade of economic wellbeing in Australia would collapse. I argued at the time that the silver lining of climate change and peak oil is that, in finding solutions to those issues, we address the vulnerabilities in the Australian economy in terms of rebuilding the manufacturing sector, investing in education and training and rolling out the renewable energy and environmental technologies that would create the jobs and solve the problems.

At the time, very few people were listening, but it is now clear that many people recognise that we are in fact in a position of overshoot. The same problem that has caused the financial meltdown has caused the ecological crisis, and that is excess debt. We have been in excess debt, which has caused the global financial crisis; and we are in excess ecological debt, which has caused the ecological meltdown which is climate change. And we are seeing it everywhere around Australia, from the collapse of the Murray-Darling system to the extreme weather events—which are not natural events; they are exacerbated by climate change. Yes, we have always had storms, floods and fires in Australia, but we are now having them more frequently and in more extreme terms. We have been told for some time that it will rain less often but, when it does rain, it will rain in a more extreme way and we should change our infrastructure so that we can cope with the changed circumstances. That has not happened, and we are seeing the consequences of that from Victoria right through to Queensland as we stand here in this Senate this evening.

It was obvious for some time that we should have been spending on mitigation, on adaptation to climate change, on rolling out energy efficiency and renewables and investing in education but, instead of this, we had both Liberal and Labor committed to $31 billion worth of tax cuts. And now we look at it and say, ‘Was that money well spent?’ I would argue that it was not. We needed to spend that money on infrastructure, to rebuild the nation in order to be able to cope with the future in terms of resource depletion and moving from a resource based to a low-carbon and eventually a net carbon zero economy.

I argued in the last budget that we should have been spending the money on retrofitting the nation’s houses. Instead of spending $31 billion on tax cuts, we could have spent $22 billion and retrofitted all of Australia’s 7.4 million houses with solar hot water and full insulation. Had we done that in the way that the Greens proposed, in which case 90 per cent of the households would have paid that money back over a further 10 years, the government would have actually got the money back. It would have been a serious investment in future infrastructure plus an investment in reduced emissions, plus an investment in socioeconomic equity. We know that when we put a price on carbon, energy bills will increase and we are going to have to see compensation to households. And there is no better way to compensate people than to permanently reduce their costs.

My concern about this legislation is that it is called an economic security strategy, but there is no strategy in a one-off payment. I agree that it is necessary to look at the payments for people in the social security system and to recognise that those payments are inadequate. But they were inadequate when both sides of this house thought it was appropriate to give away $31 billion in tax cuts and not improve the pension, not improve the payments to carers and not improve the payments to all of the people who will now be getting a one-off payment this Christmas. Yes, it will stimulate consumer spending and that may stimulate the economy to some extent, but to what end? What about next Christmas and the Christmas after that? What about when the energy bills come in in the middle of next year and people do not have the money to pay for them? What then? We use the word ‘strategy’, but a strategic response is actually spending money in a way that gets a long-term change or shift. This is actually buying time to see what happens, and I think the money could have been a lot better directed and spent.

Let me now go to the training places. We had only recently the CSIRO report Growing the green collar economy: skills and labour challenges in reducing our greenhouse emissions and national environmental footprinting. In the estimates just a few weeks ago, it was very clear that, apart from the upfront capital cost of energy efficiency and renewable energy for households, one of the main constraints to rolling out the technology is the lack of skilled tradesmen able to actually install a solar hot water system or to come in and do the kinds of work that are necessary to transform a home—whether it is installing a grey water system or installing some other energy efficient or water efficient technology. We should have been directing this series of training initiatives to looking at where the gaps are and where we need to direct the reskilling and upskilling of Australia’s population so that we meet the needs of the transition to a low-carbon economy. But it is not there. It is just a scattergun approach across the board. Hopefully some of this training package will go in the direction that I am outlining, but it will be hit and miss, rather than a strategic direction.

I introduced to this Senate a proposal for a national gross feed-in tariff. The government has said that it is not supporting that national gross feed-in tariff because it will increase the cost of energy to the extent of two or three cups of coffee a year per household. So it is not a great deal of money, but it would have created thousands of new jobs in the renewable energy sector and it would have reduced demand for coal-fired power. It would have accelerated the shift to the low-carbon economy. But, no, instead of that, we are going to stick to this occasional one-off payment. Would it not be better to have a permanent increase in the level of these payments so that people can budget? When it comes in as a one-off bonus, it is spent as a one-off bonus. I have no doubt that in many households it will be extremely well spent, but that does not alter the fact that it does not provide for a pattern of changed behaviour to enable people to save themselves money in the longer term.

I would say that the approach that we have in Australia is not a strategic approach. It is strategic only to the extent that in an economic crisis the government needs to drive a stimulus into the economy and therefore we will unload this $10.5 billion into the economy in the hope that it will stave off a worsening crisis. Wouldn’t it have been better to direct that stimulus to those things that are necessary to address the vulnerabilities of climate change, peak oil, resource dependence, lack of education and the hollowing out of the manufacturing sector? Wouldn’t it have been better to direct the stimulus in that kind of way? At the same time as this is happening in Australia, just this week in the United States president-elect Obama signed a memorandum of understanding with the Chinese to work on major investments in the clean energy revolution. He knows exactly what needs to happen in the United States, which has lost its competitiveness with the rest of the world in manufacturing. He knows that he needs to drive a stimulus package that will drive the clean energy revolution and get back some competitive advantage in the United States. At the same time, he has said quite clearly that he intends to create 2½ million jobs in the next two years in the green energy economy, and he is going to spend on roads, bridges, windmills and solar panels. What are we spending our money on, apart from driving a consumer spending package prior to Christmas? A very tiny percentage is going into training places and some money is going into housing construction. But the housing construction is not accompanied by the innovation of setting much higher standards for new buildings which would require those buildings to meet energy efficiency standards and new sustainability standards in building materials—or in retraining builders, plumbers, architects and so on in the basic principles of sustainability.

In the United States, they now have someone in the presidency who sees clearly where the future is, where the competitive advantage lies, and how working with China will deliver it for the US. In Australia we have no such strategy. I would like to ask: where was Rupert Murdoch in 2006, when the rivers of gold and the manna from heaven were falling from the Treasury based on a resource-based economy? Why wasn’t he telling us how bad the education system was in Australia and about the need for an education revolution? I do not recall Rupert Murdoch ever making a single criticism of the hollowing out of manufacturing, of the underfunding of education, or of this complete disaster of economic management and the billions and billions of dollars worth of tax cuts. When he says that the Australian education system is a disaster, let’s have him specifically tell us what it is that is so disastrous about the education system we have. It is all very well to now decide that maybe more money should have been spent on infrastructure, on education, but where was he at the time? It was not fashionable or popular then to be saying that riding on the quarry was not in the best interests of Australia. The problem is that we are still stuck in a quarry mentality. That is where we are going to be left behind, and that is where this economic stimulus package goes wrong, in my view.

With the rest of the world moving rapidly on the green new deal and recognising that with climate change and peak oil there is a need for an economic stimulus to go into the technologies that will drive a low-carbon economy—everything from electric vehicles through to renewable energy and massive investment in innovation—what have we got? Nothing except a strategy to put more holes in the ground, an unstrategic look at the education sector in terms of these training places and a consumer stimulus package that is not designed to drive any particular behavioural outcomes in the Australian population.

We have got this strategy on carbon capture and storage, and everybody else in the world is very happy for Australia to spend its money on a technology which is going nowhere while they spend their money on a technology which is going everywhere. To highlight this, just last week BP Solar announced it was closing its factory in Sydney and going offshore, and 200 skilled jobs were to be lost. Was there a peep out of anyone? Not at all. The Greens were out there, but nobody else was saying anything. If 200 jobs had been lost in a coalmine or if 200 jobs had been lost from logging in Tasmania, there would have been a scream for a rescue package to make sure that those resource based jobs stayed. But when it comes to manufacturing jobs in the new economy, it seems that we are happy to let those go offshore. Let me tell you that with the signal that Barack Obama has given in the last few days about the stimulus package in the US being designed to drive the green energy revolution, the green new deal, we will see the US becoming the hub of renewable energy, with China and with Europe, and we will see yet more skilled, educated, incredibly brilliant people leaving the country and going to the US. That is not what a clever country ought to be doing. It is not what an innovative economy ought to be doing.

Whilst the Greens are not opposing this economic stimulus package, I think it is an incredible lost opportunity. I think it is a lost opportunity in terms of a strategic response to the global financial crisis. I would have liked to have seen a much more targeted response leading to long-term investments in areas where we could build competitive advantage, rebuild manufacturing, get off our resource-based dependence, and invest in education and a more sophisticated, happier and healthier future.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate Senator Carol Brown’s speech.

Leave granted.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I rise in support of the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and related bills—the legislation that delivers on the Government’s $10.4 Billion Economic Security Strategy announced by the Prime Minister and the Treasurer on the 14 October this year.

The $10.4 Billion package is designed to strengthen the national economy, stimulate ongoing investment, and consumer confidence and support Australian families in light of the recent global economic slowdown.

Back in May this year, the Government delivered what has been widely described as an economically responsible budget, boasting a $21 billion surplus, which the Prime Minster at the time stated would act as a buffer to secure the Nation in economically hard times.

Unforeseeably since that time, unfortunately those economic hard times have arisen.

Indeed in what is a little over six months since the Government handed down the budget in May, Australia now finds itself in serious and uncertain economic times, confronted by a global financial crisis which is being billed as the worst since the Great Depression.

While the Australian economy remains better placed that most to endure the current downturn, it has become increasingly apparent that we are by no means immune from the global financial crisis.

Indeed, few could have predicted the scale and ferocity of what has occurred in the six short months since the Government handed down the budget in May.

The decline in global markets has generated a renewed need for Government leadership both on a national and international level—as people look to their Government for surety and certainty in what are undoubtedly tough financial times.

Indeed, several nations including Australia, have answered that call by announcing initiatives to secure the economy and protect the interests of people—both at home and abroad.

Since the news of the crisis first hit, the Government has announced a number of measures, specifically designed to stabilise the Australian economy and secure the nation’s future in the immediate as well as long term.

Indeed the Prime Minster has said that any action in light of the global economic crisis must take place on two fronts—securing the stability of the Australian financial markets and actions which underpin growth in the Australian economy.

The Government has committed to guaranteeing all depositors and all deposits on term funding in all Australian banks, building societies and credit unions, for the next three years.

Importantly it has also announced a number of other significant investment initiatives designed to stimulate productivity and ensure the health of the national economy now and in the long term.

Just briefly these include:

• The announcement on the 10th November by the Government of a 13 year $6.2 billion investment in a New Car Plan for a Greener Future and;
• More recently the announcement of the $466 million to go to local councils and shires across the nation.

These recent announcements come on top of the Governments budget commitment to pursuing a nation building agenda, inclusive of $26 billion in three new Building Australia Funds which include:

• The Building Australia Fund for transport and communications infrastructure,
• The Education Investment Fund for education and infrastructure; and;
• The Health and Hospitals fund for improved health infrastructure.

These payments are intended to provide additional support in the months between now and long-term reforms are introduced in the next financial year.

All of these measures combined with those contained in the bills currently before us add up to the actions of a Government which is committed and more than capable of steering Australia through these tough economic times.

The Government’s $10.4 billion economic security strategy to be enacted by these bills contains five key elements, each designed to stimulate the economy and to provide security and support Australian households, particularly those that have been doing it tough.

The bills deliver immediate financial relief to pensioners, seniors, carers, people with a disability, and families with dependent children in the form of a direct payment which are due to begin in a fortnights time—the week beginning the 8th December.

These measures will benefit over 5.2 million Australian families who will receive assistance in the form of a one-off payment.

This stands in stark contrast to the short-sighted and limited proposal made previously by the opposition, which would have ignored over 4.3 million of these people.

This includes a $4.8 billion worth of direct and immediate payments to pensioners and older Australians. Under the measures contained in this bill all Australians in receipt of the aged pension, disability support pension, carer payment, wife pension, widow B pension, service pension or income support supplement, or who had a Commonwealth senior’s health card as of the 14 October will receive a payment of $1,400 for singles or $2,100 couples.

This payment represents an intermediate down payment to provide additional support in the nine months between now and the long term reforms due to be introduced at the beginning of the next financial year.

This measure has received positive responses from the National Seniors Association, Carers Australia, the combined Pensioners and Superannuates Association and National Disability Services amongst others.

These measures also contain $3.9 billion worth of financial support payments to low to middle income families. It is estimated that this will provide direct assistance to around 2 million Australian families and 3.9 million Australian children.

This immediate payment once again comes on top of a number of other measures designed to provide some relief to the families during the May budget including tax cuts for working families and low income earners, the 50% childcare rebate and the education tax refund.

These payments will no doubt go some way to assisting families, as budgets tighten and with Christmas fast approaching.

Through these payments to families and pensioners the Government has sought to provide some immediate financial support to assist them through the current economic downturn.

However. the strategy also includes a number of other initiatives aimed at assisting Australians in the longer term and stimulating ongoing productivity, investment and economic growth.

As a testament to this the Government announced $1.5 billion worth of additional assistance for first home buyers. Under this initiative first home buyers will be eligible for grants up to $21,000 to assist them to purchase their first home.

It is estimated that more than 150,000 first home buyers around the country will directly benefit from scheme which will see those first home buyers who purchase established homes receive a grant of $14,000—double the $7,000 previously available.

Further, first home buyers who purchase a newly constructed home will be eligible for a $21,000 grant—gaining an extra $14,000 on what was previously available.

This measure accompanied with previously announced housing initiatives such as the National Rental Affordability Scheme have received praise from the industry, as they promise not only to provide first home buyers and renters with viable housing solutions, they also offer an obvious boost to the industry, and stimulate ongoing activity in the area in the face of the wider economic down turn.

Importantly the strategy also includes a boost to training, with the Government announcing as part of the package that it will invest a further $187 million to create an additional 56,000 new training places in 2008-09.

This funding injection will:

• Effectively double the productivity places program from 57,000 to 113,000 in 2008-09 and;
• Take the government total investment in training places since April to more than $400 million.

This is a welcome and necessary investment in human capital and infrastructure, and will offer a boast in an area significantly underfunded and ignored by the previous government.

Indeed under the previous Government it was estimated that over 325,000 people were actually turned away from TAFE because of their chronic underfunding of training places. This led the Australian Industry Group to estimate just last year that we require an additional 270,000 more trained people to fill the current skills shortage in Australia.

The Government recognises that if the economy is to remain stable now and in the long term, more needs to be done to invest in human and essential infrastructure.

That is why the final feature of the government strategy is an undertaking by the government to fast-track its national building agenda to help fortify the nation from the global economic crisis.

As a result the Government will accelerate the implementation of each of its three previously mentioned infrastructure funds, so that work on key projects under the funds can begin next year.

In all the Government’s economic security strategy contained in this bill represents decisive action and an investment in the nation’s immediate as well as long term future.

It represents a commitment by the Government to assist and support those Australians most likely to be suffering as a result of the global economic downturn.

It represents a commitment to do what it can to boost consumer confidence and encourage continued investment.

It also represents a genuine commitment to industry and the private sector that it is now dealing with a Government that is willing to take a leadership role and is determined to pursue a nation-building agenda to secure the nation’s future for the long term.

Therefore the measures contained in this bill represent a $10.4 billion down payment to Australian pensioners and their families, and industry and the private sector in light of the global economic crisis.

I, along with I am sure many other Australians, welcome the package and commend it to the Senate.

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

I rise tonight to talk about the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and related bills. Right from the word go, I think I have been consistent—and I speak on behalf of some of my colleagues—in saying that I do not agree with this package. I think it is badly put together. It is a bad idea. Its outcomes will have little or no efficacy. Unfortunately, it will not be the subject of conjecture because there will be a result to this argument. Either my position will be right and the government will be wrong, or they will be able to claim success as the whole world turns a corner by reason of Mr Rudd’s stimulus package.

Economically, this is a very bad package. It is badly put together. There is no thought behind it. It was absolutely amazing to sit through Treasury’s evidence at estimates and find out that the figure of $10.4 billion—half our nation’s surplus—was just plucked out of thin air. After years of saving and all the privations that the Australian people have had to go through in putting that money aside, the money is now being basically squandered, with $8.7 billion of it being spent in one night.

Socially, this package is very, very bad. Socially, this package will have huge ramifications in certain areas. When large amounts of money turn up on 8 December there will be certain hotels throughout our nation where it will be like Guy Fawkes Night and the Fourth of July all rolled into one. That is the ramification when you drop large amounts of money. I draw on my experiences from working for the St Vincent de Paul Society for about 20 years. When large amounts of money line up in bank accounts on one night, that money turns into alcohol and drugs. The result is people getting beaten up, sexually assaulted and a whole range of things that flow one after the other. You should have thought about that. You should have thought about the way you delivered this package. It is a ridiculous concept.

People who have some serious concerns may put the money in the bank, but of course if they put it in the bank the fiscal multiplier is zero. It will have no effect. If they go out and spend it, like you want them to, do you have any semblance of a clue as to what will happen next and what will happen to the people that that happens to? It just seems to have gone straight through to the keeper. Apart from anything else, I find that highly irresponsible and peculiar.

Politically, unfortunately, this is going to be a great kick in front of the post for us. This will come to a point where we will be able to turn around and say, ‘It worked. Therefore you are right and we are wrong.’ You will take the political accolades and laurels for that. But if you are wrong we will be able to take this to the next election, because Australians will gripe about it. That is because, as we go into deficit, we will have to borrow back the money that you wasted through a program that did not work. That is where you are heading: straight into deficit. We will have to go to the world market, where there is so much insecurity, to borrow those funds, or borrow them domestically. Either way, the effect will be to push up interest rates and that will go home to every household as they have to pay for your lack of prudence and your stupidity.

This comes from a group that, before the election, lauded themselves as economic conservatives. You cannot be economic conservatives on the one hand and on the other never even bother to go to Treasury to get the modelling to spend half the nation’s surplus. It is just oxymoronic that you can live with both these claims: ‘I’m an economic conservative who spends half the nation’s surplus without doing any modelling.’ Where did the number of $10.4 billion come from? Where did it arrive from? Who was the genius who came up with that amount? Where does that person reside? They are the questions that are going to be asked by so many Australians.

Let us look at exactly what is going to happen. Suppose this money goes into retail spending, especially on electronic goods. The fiscal multiplier for that is zero unless people have to put on staff on overtime. In a retail area which is already established, all the shops are already there; all the mechanisms are already there. There is no reason to expand the economy. If this money is spent on buying imported goods, unless you are going to work late at night and you have to put on staff on overtime, there is basically no real reason for the economy to move at all. So the economy goes nowhere by reason of this stimulus package—either on the one hand, where people are putting the money in the bank, or on the other hand, where the money is basically disappearing or being squandered.

So why did we do it? For anybody who gets money in their bank account, yes, there is going to be a sense of elation, without a shadow of a doubt. But everyone who does not will remember you. Everyone who does not, who sees their money being squandered in a hotel, being squandered on gambling or having no effect—where we still end up in the recession we were in—will hold you to account for that. They will hold you to account for the opportunity cost, for what might have been. They will hold you to account when they go to a public hospital and it is not able to provide a service because the money was not there to build another hospital. They will say, ‘That money was in that surplus that you wasted.’ They will hold you to account when they see that they cannot get certain treatments that they wanted on the PBS. They will say, ‘That was the money you wasted.’ They will hold you to account because the infrastructure to build such things as inland rail or to beef up our ports will be lost. They will say, ‘Our nation could have had an asset which at a later stage it would have been able to sell and recoup some funds from to be used for other issues, but we will not be to do it because you have squandered the money.’ They will hold you to account for that.

We have brought up the issue of renewable energy. We have heard that the Renewable Fuels Association is now looking at second-generation biorenewable fuel so that people can actually eat the grain and, through lignocellulose transfer, create fuel out of chaff. That is an all-round win. People will be inspired to grow more grain, feed the world and, at the same time, create fuel. But we cannot invest in that because we have wasted the money. We have the Australian Navy home for Christmas because we have run out of money, because the Prime Minister has wasted the funds.

These are the sorts of decisions which will come home to the Australian people in terms of the veracity and efficacy of this package. You will not be able to fob it off by saying it is somewhere else. This whole package is based on the conceit that Australia, with about 1½ per cent of the world’s GDP, can change the world economy around. It cannot. We have had out there for so long the myth about the decoupling of the world economy—that we live in some sort of nirvana that separates us from the driver of the world economy, the United States of America, which has about 26 per cent of the world’s GDP. But the United States of America is the cockpit of the plane and, no matter where you are on that plane, you are going in the same direction.

What we had before you spent the money was the capacity to put money aside to deal with all the factors that are coming down the track towards us, such as unemployment and infrastructure spending. We have lost funds, through your choices and actions, that would be invested in such things as the Infrastructure Fund to make up for gaps that will become apparent. These funds are lost because we no longer have money put aside. You talk about the Keynesian idea—and I am a great follower of John Maynard Keynes—of a balance through the cycle. What cycle? You are only at the start of your cycle. You have only just kicked off. You have only just made the first year and you are already responsible for spending virtually the whole surplus. Surely someone is going to pick up on this. Labor has been in government for 12 months and the surplus is gone.

What we have been seeing on the TV with the depression in the stock market is an indicator of the problem to come; it is not the problem that is here at the moment. It is the harbinger of what is coming. It is the harbinger of where the real grief will happen when people really are out of work. But what is Australia going to do? It is going to put $8.7 billion in people’s bank accounts in some vain belief that buying flat-screen televisions and a whole range of other consumer items is somehow going to stimulate the Chinese economy or the US economy and reboot the whole show. I do not believe for one second that Treasury ever gave you any advice like that. We know that this was done with no modelling. I do not know if you have done modelling already. Maybe that is a question that can be asked later on. Have you ever done any modelling on this package or is it still out there in never-never land as a marvellous idea? This is going to cause immense conjecture among the Australia people about exactly what you are up to.

What I do want to know is: what is your turn of the cycle? You are at the start of your government and you have already spent the surplus. We are heading into what we know is going to be a decisive and traumatic economic period. Where do you see the cycle at? What is your forecast for when we start to get unemployment at six or seven per cent? How are you going to handle that and where is the money going to turn up from? How are you going to deal with the matter-of-fact, day-to-day occurrences of an economy which I think costs about $1 trillion a year to run? Where are these funds going to come from? In spending this money are you going to look at more cuts in other areas? Are the amorphous and nebulous efficiency dividends suddenly going to appear again at Senate estimates? Will they turn into other new and fantastic amounts which no-one has a clue how we are going to meet?

This is the form of Labor government management. It follows a path from the Fuelwatch scheme and the ridiculous 36-hour scenario. Everyone is charging around in frantic anticipation of delivering a package when they do not have a clue what it is going to do—and, when they actually deliver it, it does absolutely nothing and has to be parked away in a cupboard. Fuelwatch was a precursor of what was about to come with GroceryWatch, with the Royal Australian Navy being parked over Christmas and with the government spending half the surplus in one fell swoop. This is starting to show a consistency in exactly what this government is. At the same time, we have the Prime Minister’s overseas travels. Everyone understands that the Prime Minister has to travel but, my gosh, does he have to travel this much? Is he ever here? This all starts to show a sense of disjunction, of distraction, of running away from a problem. You should do the hard yards at home before you go visiting people overseas. It is of great concern in terms of exactly where this nation is going.

It was peculiar to go through the fiscal multiplier of this. For those who are still listening to this, the fiscal multiplier means the dollar return in the economy from every dollar you spend. Does a dollar spent equal another dollar? At the very best, Mr Gruen tells us, it is dollar for dollar. But that premise does not work because people are buying imported goods in a retail infrastructure that is already present. It does not work because certain people might actually put the money in the bank, in which case it will have no effect. It does not work if someone just squanders it in one fell swoop, by reason of social conditioning, which unfortunately causes the exploitation of people who line up with money in their bank accounts.

I would happily take Labor Party members who wish to go on a journey, a little trip, around a few places to see exactly how this money will be spent, if they are honest enough to recognise it. I plead with them: even if you are going to go forward with this package, please break it up into smaller components over a period of time because, if you do not, those who are vulnerable will spend it, but they will not spend it in the form of the economy that you anticipated.

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

Senator Conroy interjecting—

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

I do not know why you have that fascinated look on your face, Senator Conroy. You know that is the case. It was you, Senator Conroy, who said during Senate estimates that this decision was a government decision. So it is a government decision, and the government will have to accept the responsibility for what happens next. The surplus is gone. The ramifications economically are zero. The social impacts in some areas are going to be atrocious. The political benefit ultimately will fall into our laps, because the thing will not work. And what is going to be the response then? Is that when we will get the change of Treasurer that everyone is anticipating? Is that when that will happen? Are we going to load poor old Mr Swan up with this and send him over the cliff as the scapegoat on this issue?

Why couldn’t we have foreshadowed the stimulus through certain things as infrastructure, certain things that we can inspire the Australian nation with—a future cashflow, so that people can load up and start preparing for a future cashflow? You do not even have a clue at this point in time about what your contingent liability is on your banking guarantee. Ultimately, if you have to borrow money because you have squandered the money, people are going to ask the question: what sort of contingent liabilities are out there for them when they lend money to the Australian people? You do not have a clue what it is. What is the value of your guarantee? How much does it cost? Does anyone know? They will be the questions that the people who lend you the credit will be asking you, and that will be what affects your margin on the money they lend you.

And they will be lending us money. They will be lending us money, I predict, within 12 months because we will have run this nation into a deficit. And, if this plays out the way the world perceives it will, that will not even be the start of a period of great financial hardship throughout the world. I hope and pray that it is not. I hope and pray that we get out and that it finishes as quickly as possible, but it is going to be harder for Australia than it should have been, because what we built up over such a long period of time and the condition in which we gave the nation to the next government have been completely squandered within 12 months.

This is going to be a real test for the Labor Party, first, of whether they have the courage to change the form in which this payment turns up. They must acknowledge that the form in which it turns up in so many areas is going to be a social disaster. Do they have the courage at least to mitigate that effect, or do they pretend that they have an excuse for why certain families and certain households—certain working families—deserve that sort of blight to be brought home to them on 8 December? Do they have the honesty to come into the chamber and tell us what the long-term plan is because this money has gone—where they are going to be borrowing the money from, how much it is going to cost us and what the effect is on the Australian people by reason of other decisions that the government have made? Do they have the strength to politically stand behind their decision in the long term, or will they be looking for an out clause, an excuse, a reason as to why it was not their fault and it is someone else’s fault now? Will they have some other nebulous, nefarious reason why they are no longer at the helm of the economy and they are just another passenger on their own train to destitution?

It is always the way. I come from the state of Queensland, where they are heading now towards a debt of $65 billion, and in New South Wales it is a fiasco. This form of Labor Party management unfortunately is now coming to rest back on a federal level. It is not management at all; it is just ad hocery, and this ad hocery is going to cost Australia dearly.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

There is a phrase that Senator Milne used a short while ago in her comments, which is ‘missed opportunity’. I just rise briefly tonight to speak on the First Home Owner Grant component of the package, which has been described as a fairly blunt and problematic instrument. As it presently operates, we do not believe that it is the ideal destination for another $1½ billion worth of public funds. The First Home Owner Grant for existing homes increases demand in a market that is already experiencing a critical shortage of supply. It has been described as inflationary, and it is pushing house prices even further beyond the reach of many Australians. It is also of fairly limited use as an economic stimulus when it is spent on existing housing stock, because it does not drive greater construction or do anything to relieve the supply shortages. It does not improve employment in the same way as it would if it were spent on new homes.

The government paid to some heed to that reality by providing for a greater increase in the First Home Owner Grant for new homes than existing homes, but that does not explain why the First Home Owner Grant for existing homes is being increased at all. This two-tiered approach to the grant, with more money available to purchasers of new homes, will bring its own set of problems, and these were drawn out by Senator Rachel Siewert’s additional comments in the report of the inquiry into housing affordability last year. Essentially, it will encourage homebuyers with limited means to purchase cheaper new homes on the fringes of cities where people struggle with limited access to services and employment and much higher transport costs, and it will unfairly privilege wealthier first home buyers who can afford to contemplate purchasing a new home in a more central location with access to better services.

That leads to the key issue with the First Home Owner Grant: it is not means tested. With so many people homeless and with so many low-income households struggling to meet the cost of rental accommodation with no hope of contemplating purchasing a home, it is very difficult to think of justification for spending limited public resources helping people who do not need it. This issue was raised earlier this year with the first home saver accounts, on which the government also refused to support Greens amendments as to means testing. I simply do not understand, given the scarce resources in the Commonwealth housing budget in particular, why we would be targeting resources to people who do not actually need assistance. The First Home Owner Grant should be means tested. It should be single tiered. It should be designed to assist people to purchase affordable, centrally located first homes under circumstances where they would not be able to achieve that outcome unaided. The Greens are not in complete opposition to the First Home Owner Grant. We just believe that it should be properly targeted to make use of our scarce resources. The money thus saved by not spending money through this grant on people who do not actually need it could be used to boost the economy in other ways, principally, we would suggest, by spending it on housing solutions for people who are really doing it tough, such as the homeless.

Another worthy alternative, as Senator Milne indicated earlier, would be directing the money to upgrade the energy efficiency of Australia’s housing stock, which would lower living costs, create employment, stimulate the economy and reduce carbon emissions, all at the same time. Instead we have a blunt, untargeted increase in the First Home Owner Grant to people who do not necessarily need it in the first place, which we believe will prove inflationary. So I go back to Senator Milne’s earlier phrase which we could perhaps apply to this stimulus package overall: ‘a missed opportunity’.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 along with its companion legislation. These bills seek additional appropriations for one great purpose, to strengthen our economy and support households through the current global financial economic crisis. Looking back to the election of the Rudd government in November last year, we see that clearly the world was a very different place. But, as we know, nothing stays the same. Today we are in the midst of great global financial turmoil, the likes of which has not been experienced by my generation. The crisis is real and it is impacting on economies right around the world. It needs to be addressed through determined, coordinated and positive action in the critical months and years that lie ahead.

As we know, our economy is fundamentally sound because it is underpinned by a world-class regulatory framework, the foundation of which was constructed during Labor’s last term of government between 1983 and 1996. It must be conceded, however, that we are not immune from international events. The economies of the world are increasingly interconnected. They will become more and more connected and dependent on each other as we move through the decades ahead. And the current credit crunch, it must be said, is indeed sending out ripples.

The mid-year economic forecast predicts weaker GDP growth. It also predicts a rise in unemployment levels over the May budget forecast. Indeed, taken together these are times of serious challenges and our government is in the midst of properly responding to those challenges. It has responded to changed international circumstances. We are taking early, appropriate and decisive action. We have moved quickly to guarantee the bank deposits of all Australians. We did this to reassure Australians that their hard-earned savings are safe and are not going to be dissipated. We have moved quickly to guarantee wholesale funding to authorised deposit-taking institutions. We have moved quickly to implement the $10.4 billion Economic Security Strategy, a strategy that will, if it does nothing else, stimulate economic activity and protect the weakest and the most vulnerable in our community. In parallel, the Reserve Bank of Australia has announced a series of interest rate cuts. Interest rates have been cut by 100 basis points in October and by a further 75 basis points in November.

Australia is not alone. Countries around the world are implementing a range of fiscal stimulus packages in response to the crisis.

The US has announced with much fanfare a $750 billion package. China’s package totals US$585 billion. Japan’s totals $68 billion and South Korea’s totals $11 billion. In committing to the packages, it is important to remember that, along with other members of the G20, these developed and emerging economies account for 80 per cent of world trade, 85 per cent of the world’s banking system and 85 per cent of gross national product around the world. The packages enunciated in each of those different countries emphasises a common understanding, an understanding that targeted and timely fiscal measures remain an important tool for governments to use to guarantee and support economic growth. It is where fiscal and monetary policy work in tandem to strengthen the economy and protect households during this current global financial crisis.

While the government is acting decisively in response to the global financial crisis, it is important that we do not lose concentration and focus on the future. This stimulus package will kick-start our economy while we continue to look at long-term reform of our taxation and pension systems. The measures contained in these bills provide payments to those in our community who are most vulnerable. The payments to be made, as we all know, after 8 December are a payment of $1,400 for single pensioners, seniors and veterans; a payment of $2,100 for pensioner couples; $1,000 for those in receipt of a carer allowance; and, most importantly for younger families, $1,000 for each dependent child for families eligible for family tax benefit part A.

It is important to note that, for the first time, disability support pensioners will be included in the package outlined by the government to protect the most needy in our community. What does this mean to pensioners in my home state? I would like to talk about its impact on one elderly lady who has been to see me in recent times in my office. I have no doubt Gloria will not mind me speaking about her circumstances. She was widowed some 30 years ago and today is a great-great-grandmother. I will not mention her age except to say that Gloria has survived on the age pension for a considerable period of time.

As a single pensioner, Gloria currently receives $281.05 per week. She has a lovely pensioner unit provided by state housing, and her passion is her courtyard garden. She has never complained about pension rates and is happy and content in her community. But on that figure of $281.05 life is tough. After paying for rent, electricity, telephone, water, prescriptions and, of course, food, there is not a great deal left over. As a single pensioner, Gloria does not have a car or medical insurance. Content insurance for her home is also an unaffordable luxury.

For many years, Gloria has been fortunate that her family helps provide her with what many consider necessities, such as clothing, linen and other household items. By being assisted in this way, Gloria has a degree of independence and, most importantly, dignity—the independence to buy a birthday gift for a grandchild without worrying about ‘robbing Peter to pay Paul’. The payment in December will give peace of mind to Gloria at what is arguably a very difficult time for pensioners.

Gloria is not alone—Christmas is a difficult time for most low-income families and households. I have been told that Gloria and her friends at their seniors club are pleased, very encouraged, that they will receive the payment. It will help with Christmas presents and maybe a new outfit. For Christmas, the government has given single pensioners—and indeed all the others that I outlined—a degree of peace of mind. But it is our commitment to long-term pension reform that is most welcome.

The government recognises always that much more needs to be done. Further measures in the Economic Security Strategy include an increase in the first home owners scheme from $7,000 to $14,000 for the purchase of an established home or $21,000 for a newly constructed home. The increase to the first home owners scheme will provide an added incentive for first home buyers to enter the housing market and establish their way forward over the coming decades. It builds on the Rudd government’s commitment to helping young people get a start to get into their own home.

We now have the $1.1 billion First Home Saver Accounts, to encourage savings for homeownership, and the Housing Affordability Fund, which will deliver more homes more quickly, at less cost, and set up thousands and thousands of young people to move into independence and start their own way of life. Legislation has also been introduced this week for the National Rental Affordability Scheme. This scheme will provide significant funds to build 50,000 new rental properties. A further $100 million has been allocated for the construction of new homes for the homeless.

These initiatives address both the demand and supply problems that currently exist within our communities. This package of incentives is a comprehensive start in addressing housing affordability and accessibility. Importantly, in these difficult times, these measures will also strengthen our housing and construction industry.

A third component to the Economic Security Strategy is funding for an additional 56,000 places in the Productivity Places Program. The program aims to increase the skills of job seekers, providing pathways to gaining worthwhile, permanent and recognisable qualifications. The additional places are available in this financial year.

Australia is well placed to weather the economic storm clouds that are coming to our shores. As the Governor of the Reserve Bank recently said, ‘We should be quietly confident about the future.’ These bills are a key component in the government’s $10.4 billion Economic Security Strategy and will deliver immediate financial assistance to almost 75 per cent of families with dependent children. Think about that: almost 75 per cent of families with dependent children will receive immediate, recognisable, significant financial assistance. These payments also constitute a down payment on long-term pension reform for seniors and veterans and will provide assistance between now and when reforms are introduced post next year’s May budget.

We know the global financial crisis is placing increased pressure on family and home budgets—budgets already much stretched by the rising cost of living. That is why the Rudd government are taking decisive action. Unlike those opposite, the government will not pit pensioner groups one against another. Under our plan, two million carers, people with disabilities and pensioner couples have not been excluded. They are first and foremost in our minds. This Economic Security Strategy will deliver assistance to four million pensioners and two million families. Under the opposition’s plan, one-quarter of that number would have received some degree of financial relief. I commend the bills to the Senate.

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

We are debating here this evening the Labor Party’s so-called economic stimulus. It is also, as other speakers have mentioned, now 12 months to the day since the Labor Party were elected to government. Symbolically the Prime Minister is not here today. He is overseas on one of his trips. The APEC meeting is probably a significant trip in itself, but when you add up all his trips, nothing could be more symbolic than his not being here at work.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Yes—at work, 24 hours a day.

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

Order!

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

You see, the interjection here—

The Acting Deputy President:

Order! Senator McGauran, would you please resume your seat.

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

The truth of the—

The Acting Deputy President:

Excuse me, Senator McGauran: I have asked you to resume your seat. Please do not talk over me when I am calling the chamber to order. Senator Bishop, you were heard in, I think, complete silence. I think that Senator McGauran should be given the same recognition.

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

Senator Sterle interjecting—

The Acting Deputy President:

Senator Sterle! Order! Senators, please do not start a conversation or a match across the chamber just after I have called the chamber to order, please.

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

I commend you on your actions, because—

The Acting Deputy President:

Senator McGauran, I would just like you to speak to the bills before the chamber.

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

Is it any wonder that the government are looking around in their budget for replacement aeroplanes for the 737, worn out as it is? But it is very significant that the Prime Minister has gone overseas or has been to some 18-plus countries within the first 12 months of his government. Some of those meetings have been necessary and significant—like the one that he is at now, ironically. The interjections from the other side were saying that they were all worthwhile. Well, they were not all worthwhile. I think your own side would admit there was a bit of indulgence in many of the trips he took. Who would want to be foreign affairs minister in this government? They are the real menservants on these trips.

The Acting Deputy President:

Senator McGauran, I hate to interrupt your speech so early, but, while I know that we accept a substantial degree of latitude, we are actually debating the bills before the chamber—the social security and other legislation amendment bill and the appropriation bills. I draw that to your attention.

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

Okay. I would like to run a report card on the first 12 months of the government—in the context of these financial bills, of course.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Don’t do that to me, Julian!

The Acting Deputy President:

Order! Senator Bishop, would you please restrain yourself to allow Senator McGauran to actually get started on his speech.

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

It is worthy to note that no government—not even the Whitlam government, I would venture to say—has come into office with such high expectations on them as have the Rudd government, because the people put their trust in them before the last election. Mr Rudd promised the people so much. Let us go through the things he did promise them before the election and what has been delivered post the election, in the first 12 months. There has been plenty of time to have delivered on the promises that he made prior to the election.

First of all, of course, he promised that he would fix petrol prices. He came up with the Fuelwatch scheme. Luckily for the government, the Senate voted the Fuelwatch scheme down. Not even their first appointed fuel commissioner could stay on the job. He could see there was no work to be done—certainly not meaningful work—and he quit the post. You see, the whole idea behind the Fuelwatch scheme was classic Labor price-fixing; that is all it was. It was just an old-fashioned price-fixing scheme. It was never going to work, and it was going to put out of business the independent operators that keep competition in the market. So the Fuelwatch scheme within the first 12 months went by the by.

Even more absurd and unworkable than the Fuelwatch scheme is the GroceryWatch website—and that is all it amounts to: a website. It does not work. I see that the figures now show that people are not using it anymore. There was initial interest. There were a significant number of hits in its early stages—as you would expect, since the government promoted it so that people would go onto this website. But when they got there—what a disappointment. It just names a region. It is only ever updated once a month. And it is a ‘basket’ of goods and you do not even know what is in the basket. It is a farce and a fallacy, and it is costing the taxpayers money—millions of dollars a year. So I dare say that eventually the government will put that in cold storage, too.

Take the education revolution, that we heard about in question time today. That was another commitment, a big commitment: a computer for every student between years 9 and 12. That was the election promise. And what have we got? We heard Senator Carr today talk about less than one per cent of students having received a computer. And we are not even sure whether those computers are plugged in, because the state governments will not meet the extra costs. The revolution never came about.

The blame game was another big promise prior to the election. Twelve months on, what have we got? I think we misunderstood what the blame game was. It was in fact that the states and the federal government were not going to blame each other for lifting taxes! As soon as the Labor Party came into government federally they lifted transport taxes, user charges and truck registrations. That was your first job—in cooperation with the states, I should add. I see that Mr Brumby has got his hand out for more money. And he is critical of the federal government. He is already floating the idea that the GST is just not enough—floating the idea that perhaps a rise is in the wind.

Another great commitment of Mr Rudd, as he looked down the barrel during the election period, was that he was going to tell it straight to the Australian people. Mr Rudd was going to tell it straight. Anyone who has been in politics long enough knows what a fake commitment that was, particularly from the Prime Minister. Nevertheless, the Australian people put their trust in him. That is something, Senator Sherry, you ought to cherish.

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

And they were right.

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

Well, the report card is very poor.

The Acting Deputy President:

Order! Would you please cease interjecting, Senator Sherry.

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:

Senator Sherry! And, Senator McGauran, you should direct your remarks through the chair and you should not have conversations directly across the chamber.

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

Mr Acting Deputy President, I do not think the Prime Minister has told it straight as he promised he would. As recently as the last few weeks, he had a private conversation with Mr Bush and that conversation leaked out. What was leaked was false; nevertheless, it leaked out. And we all know exactly—as President Bush, I should add, knows exactly—who did the talking, who did the boasting at the dinner party with the editor of the Australian. It is as clear as a bell. He does not tell it straight. It is all about Mr Rudd.

Mr Rudd did not tell it straight when he made one of the biggest financial decisions in the midst of this crisis, that of guaranteeing bank fund deposits. That had the cascading effect of freezing non-bank funds. People had their money frozen. Did anyone ever think that in this country you could not access your savings or the funds that you need when they were with organisations such as AMP and AXA? That is what has happened, and it happened because of a Prime Minister who never told it straight to the Australian people and who made a knee-jerk decision in reaction to Mr Turnbull’s suggestion. Mr Rudd did not consult the Reserve Bank, as he told us that he did.

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

Mr Deputy President, having to sit through this is cruelty to dumb animals.

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

You might get him to withdraw that. No? Okay.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

I am sorry, Senator McGauran, are you taking a point of order or are you standing on your feet continuing?

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

No, I will let it go. I mean, talk about dumb animals.

The Prime Minister does not shoot straight. His own side knows that. They know the vainglorious manner of this Prime Minister. When he first ran for leader of their party, Mr Rudd got one vote and that was his own. Of course, circumstances, fortune and fate came together and he is now Prime Minister. Yes, Senator Sterle, you may be connected to the man but there are a lot of people on your side, particularly in the ministry, who are not connected to this centralist Prime Minister who, after 12 months, holds all power and decisions within his own department. That is no way to run a government. He fails on that score. That is the report card to date. But before I get on to the economic report card, I should add that the Australian people are waking up to the all talk, no substance, no action spin. You will get a committee, you will get a green paper, you will get a white paper and you will get a draft. You will get an interim report and a final report. There are discussion papers, scoping studies and summits out there. What happened to the 2020 summit? What a farce that was. They will always set up an inquiry for you and commissions with commissioners, bodies to oversee and bodies to advise, but there will never be much action on the ground.

The Prime Minister is always declaring war, either on drugs—it is all big talk on drugs—on cancer, on inflation, on unemployment or on global unemployment. He has declared war on whalers—whatever came of that? Nothing. Aboriginal disadvantage—

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

Do you want to talk about poker machines?

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

He has declared war on poker machines, on porn, on doping in sport and on bankers’ salaries. He is fighting everyone but there is no action. That is the type of government we have running our economy, and it is really starting to show. The bungles are all there, and they came very early. Mr Rudd claims that Gough Whitlam is his political hero and that he models himself on him. Well, he is doing a fine job, because there has not been a worse bungler since Gough Whitlam.

Mr Rudd’s first mistake was to make Mr Swan, his old classmate, the Treasurer. This is the man who, when people had their life savings frozen indefinitely—and they are still frozen—notoriously made the comment that they should go to Centrelink. That is the Treasurer we have up there, who we all know is out of his depth. In the first months of this government they launched a political attack on the previous government. For sheer political reasons and with no interest in running the economy soundly or taking up the reins of national responsibility, they talked up inflation. To that end, the Reserve Bank reacted. The government egged the Reserve Bank on to lift interest rates. Within the first three months, by February, interest rates were going up and working families were being hurt badly. It was around February-March that consumer and business confidence plunged. That was prior to the major effects of the global subprime crisis hitting our shores. We already had a crisis in consumer confidence. We already had interest rates notching up and inflation being talked up. That was their second mistake.

Let us go through their bungles: they appointed the wrong treasurer and then they started to talk the economy down and inflation up. And they got the reaction that hurt the very working families they said that they represented. What were the immortal words of the Treasurer when their first budget came along? He said, ‘This is a classic Labor budget.’ All of a sudden we saw about $19 billion of taxes that were not talked about before the election. I do not remember them being talked about before the election. They did not say that they were going to lift taxes by $19 billion. They called their first budget a classic Labor budget, and that is what the Australian people got—taxes on alcopops, luxury cars, condensate and passenger movement. A whole array of taxes, unannounced prior to the election. That is a classic Labor budget, and then consumer and business confidence plunged even more.

Post budget, the full effect of the subprime crash hit our shores. Before I get on to the—

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

To the bill!

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

This is all about the bill. Before I get onto that issue yet again, what really benchmarks the incompetence of the first 12 months of this government is the blanket guarantee of bank deposits. I see Senator Sherry sitting there. He has some responsibility in this, but I would say that more than anyone it finds its way back to the Treasurer and the Prime Minister. Before that decision was made, a decision to ban short selling—

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

Senator Sherry interjecting—

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

Another knee-jerk reaction—the first point, Senator Sherry—was made over a weekend. The rules were changed about three times on Friday, Saturday and Sunday. By Monday the stock market had no idea what the rules were, and for the first time in its history the Australian stock market, which was already red raw, did not open its doors until the afternoon. In the morning, it was shut.

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

Rubbish!

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

It did not open up on time, Senator Sherry. That has never happened in Australia before. So not only do we have a stock market that does not understand the instructions handed down by the regulators—via the government, I should add, who are in constant contact with the regulators; and you have some responsibility in that—but we have never had the stock exchange be late in opening. It happens under a Labor government. But, worse than that, as I said, the real benchmark in the first 12 months of this government, the real effect upon hundreds of thousands of Australians, is in fact the knee-jerk reaction in placing a blanket guarantee over bank deposits. Blind Freddy could have seen, with bells and whistles, what was going to happen once you made that decision—and it did happen. Of course people moved, or attempted to move, their own savings and deposits into the more secure deposits, the banks. The non-bank sector was severely affected and had to bring down a freeze. I do not know how long that freeze is going to last, or what legality there is behind that freeze lasting anything more than 12 months. And once it is lifted we do not know what the reaction is going to be. But what we do know is that the decision was a mistake and it ought to be adjusted. It should have been adjusted within days, but it still stands today because of the pride of the Prime Minister. Senator Sherry ought to march in there and say, ‘The damage this decision—’. No, of course you would not; of course you are laughing. It is an absurd suggestion to think you would ever have that sort of courage. You would not get past the receptionist, Senator Sherry. But someone with courage, someone in the caucus, someone in the party room, ought to have that decision reversed, because hundreds of thousands of Australians cannot access their property, their rights. What right has a government to cause that sort of effect? Of course, the banks themselves have made the suggestion to the government that the guarantee ought to be capped. The Reserve Bank gave advice that the guarantee ought to be capped. But we have a Prime Minister determined to stick to the decision he made, come what may, whatever the cancerous effect that it is having in the financial world.

And we have the mid-year review. Who is believing that? No-one. It is already out of date. It was fiddled with so as to give a two per cent growth rate that not even the IMF, the OECD or the Reserve Bank could agree with. Only the government would come up with that figure, produced by Treasury, and we already know it is a fallacy and is not to be believed. You cannot work off that figure, but the government is working off it. We all know—Access Economics on the 7.30 Report tonight were quite adamant—that this is a budget that is going to plunge into deficit. So, within the first 12 months of this government, there goes the surplus—blown. Blown on what? On this bill that has no modelling at all. It is just a knee-jerk reaction to throw money out there—and they call themselves economic conservatives. I guess that was another commitment that the government made, that they were economic conservatives. They are far from being economic conservatives. This is classic Labor after 12 months. I had no idea you would rush to being such a Labor Party within the first 12 months. This is quite stunning. I would have thought that maybe by the third year we would have seen you reveal yourselves as Labor being Labor. But nothing has become more sure in 12 months than that this is a Labor government, incompetent in their management, who have made a bad world economic situation worse. Yet they came in with a legacy that other governments would kill for. That is actually a quote from the Reserve Bank governor. He said other countries would kill for the fundamentals that Australia has. Labor has failed the report card. (Time expired)

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

It has been a long time coming, but finally Australia’s four million pensioners, carers and seniors will get some help they so desperately need. Family First supports the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008, which provides a $10.4 billion stimulus to the Australian economy by giving Australia’s pensioners, carers and seniors and two million families bonus lump-sum payments early next month. Pensioners receiving one of the range of payments like age pension, disability support pension, carers payment and others will receive $1,400 for those on single payment and $2,100 for couples. Families receiving family tax benefit part A will receive $1,000 for each eligible child. People receiving carer allowance will receive $1,000 for each person they care for. It is crazy to think it has taken a global financial crisis to put a rocket under the Rudd government to give pensioners a fair go. Pensioners have been overlooked for too long. This pension bonus is an important first step, but the government is on notice that it must follow through and provide Australian pensioners with enough to live on to allow for a reasonable quality of life and the dignity they so deserve. Put simply, they need a fairer go.

It is not good enough that pensioners have to live on a bag of rice for a week, mixed in with a can of baked beans. They deserve better. And do not forget that this bonus payment works nicely for the government. The government is only giving pensioners extra money because it will stimulate the Australian economy and lessen the impact of the world economic downturn; at the same time, the government is trying to appease a vocal bunch of very unhappy pensioners, angry that their incomes have fallen behind and that they have to struggle fortnight to fortnight. The government’s hope, of course, is that pensioners and families spend this money sensibly and quickly to give a boost to the economy. Family First hopes that happens too. But Family First is also calling on those looking to spend this bonus to consider turbocharging the effect of their spending on the local economy by buying Australian-made goods and produce wherever possible.

Buying Australian made supports local employment and gives a boost to businesses—especially small businesses—maximising the benefit for Australians. Buying Australian is an investment in Australia’s economic future. During this time of economic strife, the federal government should also consider changing its procurement policies so that preference is given to Australian-made goods when they are of equal quality to goods made elsewhere. This would maximise the impact of federal government spending in shoring up our economy in times of financial crisis and lead the way for others to spend these bonus payments on Australian-made goods where they can. People don’t want a government that acts like a company, spending just to get the best deal but not caring where the purchase comes from. They want a government that cares about local jobs and acts accordingly, commanding respect, loyalty and pride.

The question remains, though, whether the Australians who receive the $10.4 billion in bonuses will spend the money or save it. Many pensioners find lump-sum payments useful as it helps them to buy larger items they would otherwise have difficulty saving for with their limited means—items like a new fridge or washing machine to replace ones continually breaking down. Because of the increasing cost of living, families too often find it difficult to scrape together a lump sum of cash for work around the house or to replace the failing fridge. But no-one would blame pensioners and families for using the money to pay off debt or for putting it aside to save it for a rainy day.

I want to take a moment to consider how we have got to this point where the world is in a financial crisis and we need to spend half the budget surplus on a massive stimulus package. It is easy to point to a lot of dodgy home loans in the United States, where people were lent money they could not possibly afford to pay back. But underlying this is a broader cultural change. Like the United States, we have moved to an economy characterised much more by consumption than by production. In my first speech in this chamber, I made the comment that the free-market mantra of choice, competition and consumerism is in conflict with family and community. The $10.4 billion plan recognises the change in our economy towards consumerism and asks pensioners and families to spend to save the economy. It is based on encouraging consumerism rather than production.

That reflects changes in our economy over the past 10, 20 or more years, where the emphasis has been on spending and consumerism rather than on the more traditional approach of saving up for purchases. Today, if we want it, we buy it and put it on the never-never. That is a very big change from past years and one that has contributed to our current situation. In 1990, Australian household debt as a proportion of average household disposable income was about 50 per cent. Today, it is more than triple that amount: 160 per cent. Over the past 10 years, the ratio of interest payments on housing and other personal debt as a proportion of household gross disposable income has doubled. We need to think about reclaiming a savings culture so we can avoid these problems reoccurring in the future. We should refocus on living within our means. But a savings culture means a drop in consumer spending, so it has to be a gradual adjustment.

One of the difficulties of economics today is that it tends to dominate and define our culture rather than our cultural values dominating and defining the economy. In our market-driven world, we are constantly told we are individuals and that we have choices. We are told that we make rational decisions in our own interests. Consumerism is accompanied by and encouraged by a belief in the individual and autonomy rather than in family and community. We should aspire to more than consuming. I do not claim to be immune from this bug that we have all caught, but we do need to realise that consuming in itself is not the way to a fulfilling life. Fulfilment comes from family and children, from creating a supportive and encouraging community of Australians who look beyond what they can buy to instead focus on who they are and what they want their country to be: a country that recognises the work of its older citizens and ensures they live a life of dignity—not one of scrimping to pay for their next meal.

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

I am summing up on behalf of the Rudd Labor government the package of legislation, known as the Economic Security Strategy, that the Senate has before it. It is traditional in these appropriation debates to range far and wide, and I am going to respond to a couple of points that Senator McGauran in particular made. He ranged so far and wide that he did not speak from his own seat. I will get to some specific contributions shortly.

However, I do want to congratulate Senator Fielding. I think he made a very thoughtful contribution. It went to one of the underlying causes of the credit crisis that we have seen—known colloquially as the US subprime housing crisis—and the importance of ensuring that we have a responsible lending regime, unlike the US. That was the base cause of the US economic crisis that now confronts the global community. It is in response to that economic crisis, which has its cause in the United States—about which I have spoken on a number of occasions in this place—that the government has taken a range of decisive actions, and the appropriations legislation we are considering is one of those decisive actions. It delivers a $10.4 billion Economic Security Strategy to strengthen the Australian economy and to support Australians through these difficult times.

The Economic Security Strategy provides relief to those in the community who have been struggling in the past couple of years to meet rising costs of housing, petrol and food, particularly those on low incomes or with children and other family members to support, and I think very deservedly so, not as Senator McGauran described, ‘They’re throwing money at these people.’ It was a particularly derogatory description, Senator McGauran, of people who really do it tough at the best of times and who, in the current economic turmoil facing the world, deserve priority consideration. I appreciate that, in debates such as this, that there is a wide-ranging contribution on all manner of issues, but I thought your reference to people in that almost sneering throwaway line that they were not deserving of support was particularly unfortunate.

The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 will assist some four million pensioners and two million families, Senator McGauran—I am glad you are here to hear just who is being assisted. The bill will deliver a $4.8 billion down payment to pensioners, leading up to comprehensive reform of the pension system. Effectively, this is additional support before essential long-term reforms are made by this Labor government in the context of the 2009-10 budget.

Essential reforms to our pension system, Senator McGauran and members of the Liberal-National Party, that were not carried out in your almost 12 long years of office. You did nothing for pensioners. And I will get to one of the claims that you made, and this is where you really did lose touch—

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

Senator Sherry, I remind you to address your remarks through the chair.

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

Through you, Mr Acting Deputy President, the argument is made by members of the former Liberal-National Party government that they introduced indexation of the aged pension to MTAWE—male total average weekly earnings. Firstly, Senator McGauran, I would suggest if you are going to use jargon, use jargon that the general population can understand. This is a real example just how out of touch those opposite became in those almost 12 long years. The indexation of the aged pension to male total average weekly earnings rather than to the old CPI, the lesser value index consumer price index, was introduced by the Hawke Labor government. That was one of the first actions it took in 1983 when it took office. It introduced it then, Senator McGauran, through you, Mr Acting Deputy President. The Liberal-National Party thought it was some magnificent coup to enshrine this policy in law and it did that, but that did not increase the indexation pension at all. You enshrined it in law, but it was actually the Hawke Labor government which introduced the policy. It delivered the extra money.

The Liberal-National Party kid themselves and fool themselves into believing—unfortunately, they probably got convinced by either the former Prime Minister or the Treasurer—that they had actually done something real for pensioners, when in fact the legislation itself did not deliver one cent extra to pensioners. It had already been delivered. They believe that they made some major monetary improvement for aged pensioners when in fact they had not delivered the action or the money increase—they delivered the legislation. I just think that is another typical example of how out of touch they became, convincing themselves that they had actually done something meaningful.

The social security bill provides a further $3.9 billion, targeted at Australian families whose family budgets are already stretched by financial pressures flowing from the current global economic difficulties. The package of payments provided by the bill to pensioners and families will be made over the fortnight starting on 8 December and most payments will be made automatically. People who received one of a range of social security and veterans entitlements qualifying payments on 14 October 2008 will receive these economic security strategy payments. These include people—and these are the sorts of people that Senator McGauran referred to in such a derogatory fashion—receiving age, disability support, wife, widow B and veterans service pensions; income support supplement; carer payment; and partner, widow and bereavement allowances. I hope Senator McGauran, in particular, is taking note of just who these payments are to go to. For the first time, disability support pensioners, along with other customer groups, will receive a lump sum payment. The government recognises that disability support pensioners are just as much under financial pressure as other pensioners.

Other Australians who will also receive an economic security strategy payment include those who, on 14 October 2008, were of age pension age and received parenting payment, special benefit, Austudy payment or Abstudy living allowance. Self-funded retirees who, on 14 October 2008, held a current Commonwealth seniors health card and holders of a Veterans’ Affairs gold card who were eligible for seniors’ concession allowance on that date will not miss out. They will also be eligible for an economic security strategy payment.

If any pensioners and seniors were not actually receiving a qualifying payment on 14 October 2008, but had claimed the qualifying payment by that date and later had their qualifying payment backdated to cover that date, they will still get the economic security strategy payment. Similar backdating arrangements will apply for qualifying card holders.

Senator McGauran, in one part of his contribution, derided the current Treasurer, Wayne Swan, for suggesting that individuals should check their entitlements with Centrelink. These are the same entitlements that the Treasurer, Mr Swan, was drawing their attention to—and rightly so. I am a little taken aback by the criticism levelled by members of the Liberal and National parties with respect to retired individuals—retirees, part-pensioners—who are actually entitled to a part-pension payment or may become entitled to a full pension payment if their financial circumstances have changed. Members of the Liberal and National parties seem to think that they should not claim it. They paid their taxes and they are perfectly entitled, and it should be publicly drawn to their attention to go and check on their entitlements. And, as I understand, many have done so—hundreds of thousands. How dare Senator McGauran, on behalf of the Liberal and National parties, suggest that the Treasurer, Mr Swan, was wrong in drawing this to the attention of people who have paid their taxes and retired and suggest that they should not inquire as to their eligibility for payments. Just how out of touch is Senator McGauran?

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

You’re being kind; I could think of a lot of other words.

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

I am being kind, am I? I have only just started. The Economic Security Strategy payment—

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

Madam Acting Deputy President, I rise on a point of order. Littered—and I mean ‘littered’—throughout the whole speech of Senator Sherry has been two points that he has made with regard to my presentation.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

What is the point of order, Senator McGauran?

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

Utter, complete, comprehensive, deliberate, outrageous, mischievous misrepresentation.

The Acting Deputy President:

That is not a point of order.

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

Through you, Madam Acting Deputy President, if that is the case, Senator McGauran, I do not know what your contribution represented to the debate before the chamber. The Economic Security Strategy payment for this group of Australians will be $1,400 for singles, $2,100 combined if both members of a couple receive a qualifying payment and $1,050 if only one of the couple does.

There will be a special Economic Security Strategy payment for people receiving a non-means-tested social security income supplement—carer allowance. People who were receiving a carer allowance on 14 October 2008 will be paid $1,000 for each eligible person in their care. If the carer allowance for one care receiver is shared between two or more carers, the Economic Security Strategy payment will be shared on a similar basis. People who were receiving the carer allowance on 14 October 2008 will be paid $1,000 for each eligible person they care for. If the carer allowance for one care receiver is shared between two or more carers, the Economic Security Strategy payment will be similarly shared.

The Economic Security Strategy payments provided by the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 will also give immediate financial support to around two million Australian families with dependent children. A payment of $1,000 will be made for each child eligible for family tax benefit part A at 14 October 2008. In addition, $1,000 will also be paid for each dependent child who, at 14 October 2008, was either eligible for or received youth allowance, Abstudy living allowance or an education allowance under the Veterans’ Children Education Scheme or the Military Rehabilitation and Compensation Act. If any of these qualifying payments for families is shared between two people under the usual rules for that payment, the payment will be similarly shared. Families will receive these payments even if the qualifying payment is not actually being received on 14 October 2008 but is later backdated to cover that date. For example, the small number of families who claim their family tax benefit part A annually as a lump sum will receive their Economic Security Strategy payment when their 2008-09 income assessment has been finalised and their family tax benefit lump sum is paid.

The payments made under the bill will not generally need to be claimed. They will not count as income for social security, family assistance and veteran entitlements purposes and will be tax free. The bill also provides for relevant ministers to establish, by legislative instrument, administrative schemes to provide payments in circumstances where the statutory regime does not produce an appropriate result.

The Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009 provides for an investment of over $117 million to create 56,000 additional productivity job seeker places in 2008-09. This funding will effectively double the places from 57,000 to 113,000 in 2008-09. These new places will take the Rudd government’s total commitment to the program to more than $2 billion, with over 700,000 new training places created over five years. By expanding the Productivity Places Program, the government is building on a program that has already proved its worth. This bill also provides funding to the Department of Veterans’ Affairs to facilitate payments under the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008. Funding will also be provided to conduct a public information campaign to ensure that those eligible recipients for the Economic Security Strategy payment and the first home owners boost are advised about their entitlement.

Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009 will strengthen the Australian housing market by providing $1.5 billion over two years through the first home owners boost. In addition to the first home owners grant, first home owner-buyers who purchase established homes will receive an extra $7,000 to take their grant to $14,000. First home buyers who purchase a newly-constructed home will receive an extra $14,000 to take their grant to $21,000. The first home owners boost will be available to eligible first home buyers who enter into a contract between 14 October 2008 and 30 June 2009.

The Economic Security Strategy and the measures in these bills show this government’s determination to strengthen the Australian economy and support Australian pensioners and families through the global financial crisis. The Economic Security Strategy will provide a substantial increase in skills and training places, build a stronger Australian housing market and make home ownership accessible to more Australians. I do not think I heard anyone from the Liberal-National Party specifically oppose any of these measures, although it was often very difficult to work out in their contributions whether they were supporting or opposing the appropriation, given the tenor of their comments on this particular legislation. As has been mentioned, we face the most significant financial crisis since the 1920s and 1930s.

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

You made it worse.

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

Senator McGauran interjects again. For Senator McGauran—through you, Madam Acting Deputy President—we have seen the collapse of some 30 banks. I do not know what has happened to Citibank; they are in the process of being bailed out. Around the world, some 30 banks have been nationalised, force-merged and bailed out, principally in the US and Europe. No banks collapsed in Australia. For students of economic history, it was not the collapse of the equities market in the 1920s—the great crash of 1929—that caused the world depression. It was the collapse of banks and the collapse in faith that business and individuals had in the banking system that led to the economic collapse. This government makes no apologies for acting decisively with our bank guarantee and wholesale guarantee. We make no apologies for that.

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

You ought to.

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

We needed to act decisively—to members of the Liberal-National opposition. In these sorts of circumstances, you need to get in there, recognise there is a serious problem and attempt to head the problem off with decisive action. Again, there are a number of governments around the world which are taking similar actions to our economic stimulus package. Unfortunately they are not in the same budget position as this government is, after its fiscally responsible, indeed conservative, budget was handed down in May. It was a very strong budget with a strong surplus that we built up. I must say that, unfortunately, the now Liberal-National Party opposition has been very negative. They have opposed bill after bill in this Senate chamber and have not recognised the seriousness of this economic crisis and the necessity of ensuring that we had a substantial fiscal surplus as a buffer in these turbulent economic times.

A number of speakers opposite have referred to the number of inquiries. Yes, we have had inquiries, but we have taken action. I will give a couple of examples. Under the former Liberal-National Party government, there were five inquiries to transfer the regulation of financial services from the states and territories to the national government, creating one national financial regulator—all the more important because of what has happened in the US. They had five inquiries in 12 years, and the former Liberal-National Party did nothing. They did not act on those five inquiries. We have had one inquiry and we have acted. We decided: one single national standard financial market regulation and supervision in Australia. That is one example of a positive outcome from the cooperation between the states and the Commonwealth. It is not the bleak picture that Senator McGauran and others opposite have painted. This stimulus package is appropriately targeted to help those who need help most in the current environment. (Time expired)

Question put:

That the amendment (Senator Bob Brown’s) be agreed to.