Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Broadband, Communications and the Digital Economy (Senator Conroy) to questions without notice asked today.

I never thought I would actually feel sorry for Senator Conroy, but I do when I consider Senator Conroy’s performance in the chamber today. Not only has he been mugged by the extravaganza of his broadband process but, on top of that, he seems to be blissfully and totally unaware, as the Minister representing the Treasurer, that the Treasurer said that growth will be slower than forecast just three weeks ago in the Mid-Year Economic and Fiscal Outlook.

What is emerging from the Rudd Labor government’s lazy handling of the economy is that, after just one year, they have run up the white flag. They have pronounced it all too hard and they have declared that Australia is headed for a budget deficit and possibly a recession. If this sounds familiar to Australians—to mums and dads, working families and small businesses—it is because it is, very familiar. The ghost of Labor governments and their extreme failure to run the economy competently is well and truly back with us.

The last time Labor went into a budget deficit, it lasted six long years and saddled Australians with $96 billion worth of debt and, if my memory serves me correctly, unemployment that peaked at nearly 11 per cent. Just three weeks ago, in the MYEFO, the government was projecting growth of two per cent. Remember that Mr Rudd was proclaiming that the growth forecast had a two in front of it? Well, not anymore. The Treasurer, who is understandably a very worried man, yesterday conceded that growth will most probably be slower than he had forecast just three days ago.

If growth is slower then, as night follows day, Labor’s unemployment forecast will also likely be out. The OECD predicted, just overnight, unemployment of six per cent by 2010. What, we might ask, is Labor’s plan for the economy? We have had the events of the last six weeks and the bungled deposit guarantee scheme that lurched along until eventually Labor fell over the line and put in legislation to support the wholesale term funding guarantee that we had suggested they needed six weeks ago. It is clear that, while Labor have a political strategy, they do not have a plan to keep the budget in surplus or to keep the economy strong. In just one year in office, they have galloped through the surplus. They are already predicting a deficit and are now softening up the electorate, softening up the community, for the possibility of a recession.

This is sloppy economic management and it is unjustified. What has changed in the last three days to cause the government to believe that we will go into deficit and a possible recession? We certainly did not get much enlightenment from Senator Conroy’s bumbling performance in question time. The government is already spending one per cent of GDP on a $10.4 billion stimulus package for the economy. It has not even hit the ground yet and Labor have already, in effect, given a vote of no confidence that the stimulus package will work.

The OECD said only yesterday that Australia would avoid a recession. The government has forecast growth of two per cent, with Mr Swan softening a bit on that yesterday. The government has in place the stimulatory package, as I mentioned. The Reserve Bank cash rate is still at 5.25 per cent. There is a lot of room to move, if you are competently managing the economy in terms of monetary policy, to bring interest rates down to stimulate the economy. There is certainly no need for the government to abandon the discipline of keeping the budget in surplus.

Labor’s talk of deficit is nothing less than a vote of no confidence in their own strategy and in their own stimulus package to keep our economy in growth. The hard decision for the Rudd-Swan government is to keep the budget in surplus and the economy in growth. The lazy decision is exactly what they are doing—for the government to run up the white flag on deficit with the economy in growth. Here is a prediction for you, Mr Deputy President: we will not have a temporary deficit; we will have one that lasts for as long as we have a Labor government. (Time expired)

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

If one had to find two words to define the quality of the economic administration of this country in the 12 months since the election of the Rudd Labor government, those words would be ‘flexible’ and ‘responsible’. What do I mean by flexible? It is a very simple proposition. When economic conditions change, when change is imposed on this country from outside, those who are responsible for determining the economic policy settings of this country respond by changing those settings as well. That is how you do it if you are being flexible—you change when the circumstances change.

What does it mean if you are being responsible? In changing those policy settings to respond to the global financial crisis which is being felt in this country, you properly have regard to jobs, inflation, interest rates, the terms of trade and the current account. They are the key drivers of economic policy that any responsible Treasurer and any responsible leader would have regard to when a situation comes upon this country out of the blue, not forecast by one reputable body or economist around the world, which requires a response by the government of the day. You have regard to jobs, inflation, interest rates, the terms of trade and the current account.

What do we know in terms of those five matters? We know that this country has full employment and growth is still around the corner and is of the order of a positive two per cent—unknown in the rest of the Western world. It does not matter whether it is the United States, the United Kingdom, Korea, France, Germany or major powerhouses like China and India; all of those countries have negative job growth and real job declines.

Secondly, in terms of inflation, what is occurring in this country is that inflation is coming down—on every key measure inflation is coming down. Thirdly, in terms of interest rates, there have been record reductions of interest rates—the cost of money to families, the cost of money to business—in this country in the last 12 months, and undoubtedly interest rates will continue to reduce over the next six or 12 months, which will be an incentive required, organised, requested and encouraged by this government to get the economy moving again, to get investment going into business and to get people maintained in employment.

Similarly, in terms of the current account, we do not accept that because, for the first time in over 14 years, for two successive months there has been a significant surplus on the current account, that is enough. All of the things that were outlined by Senator Conroy today in terms of work, a responsible approach to changed circumstances, getting the policy levers right, and the things outlined by Senator Carr in response to questions in terms of getting a new labour market regime by having innovation in science and technology responsive to the demands of a changing economy, will result in the current account remaining in surplus, which in turn will result in investment coming into this country and jobs being maintained.

As Senator Conroy said, they are not just the views of this government. What are the views of reputable outside observers? Senator Conroy, in response to one or two of the questions, made the point that two senior public economists, from Westpac and ANZ, had said that it is necessary when circumstances change that you revisit the need to have a huge surplus or to go into deficit. Senator Conroy was exactly right when he said that there is a current need for a temporary deficit to allow sufficient funds to go into the economy for the government to borrow to keep economic growth active, to keep economic growth going and to keep people and families employed in jobs. He was right to quote Mr Eslake and Mr Evans from those two banks— (Time expired)

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Senator Bishop’s fine oratory cannot hide the facts of the matter. The facts of the matter are simply that this government has no idea what it is doing when it comes to the financial management of our country. That was exemplified today by the answers given by Senator Conroy. I do not want my discussion to be seen as a personal attack on Senator Conroy, who I quite like. I think he is a fine fellow. Not being from the Victorian Left, I guess I can say that. I bear him no personal ill will. But have a look at the answers today: poor Senator Conroy is completely out of his depth.

It is quite clear that Senator Lundy—a person who has had a long involvement in broadband and clearly understands it far better than Senator Conroy, with the mess he has got himself into—should have been the broadband and communications minister and Senator Sherry should be doing the Treasurer’s work. Senator Sherry could not be worse than Wayne Swan, with his appalling position last night on the ABC’s The 7.30 Report, or Lateline, was it, with Kerry O’Brien—Kerry it is, Wayne, not Terry. Poor old Mr Swan could not answer a question. He could not define how long this temporary downturn would be, the temporary deficit that the Labor Party have now admitted the government will have. As Senator Conroy said today, Mr Swan and Senator Conroy were standing by the midyear economic financial outlook projections. But already, two weeks later, they are resiling from them.

As I say, fine words from Senator Bishop, but what are the facts? The Labor Party claim that they are putting big money into this building fund and by spending the building fund that will indeed get the country out of the recession that it is heading towards. But this building fund that he talks about was totally and entirely the work of the previous government. The money came from T3, it came from last year’s surplus and it came from the telecommunications fund—all three funds set up by the previous government. So what the Labor government is now doing is spending the savings of the previous government to try and get the economy going.

I think most Australians were prepared to give Labor a bit of a go. They started off with a $22 billion surplus given by the previous government, but within a year that will disappear and we will be borrowing again. Those of us who have been around for a while sat through the years when Labor borrowed up to $96 billion. It was $96 billion the Labor Party had to borrow to try and keep Australia running. What happened when the coalition took over government? We did not have any fat to deal with. We had to start and pay off Labor’s $96 billion. Over six or seven long years we scrimped and saved, ran the economy well, got the economy into a positive economic outlook, created jobs and paid off Labor’s $96 billion debt. Could you imagine how this government would be today in the face of the economic downturn facing Australia if they had inherited a $96 billion deficit rather than a $22 billion surplus? Can you just imagine the state Australia would be in? When we took over in 1996, Labor left us huge double-digit unemployment and just about double-digit inflation, plus a $96 billion deficit. If they had been left with that in December last year, the country would be just about in ruins at the moment. Unfortunately, and I regret to say this, I, and I think increasingly every other Australian, have absolutely no confidence in Mr Rudd and Mr Swan in managing our economy.

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

I must say that I have been absolutely amazed at the arrogance of the opposition this week in question time. Senator Feeney made the point yesterday: when are the opposition going to deal with the issue of the economy? It is the big issue facing the whole global community, yet question time was being taken up with anything but the economy. We have this born-to-rule arrogance on the other side. I take the view that the opposition are in an absolute time warp. You refused to accept that global warming was a reality, and you are now refusing to accept that the economic crisis that is facing economies all around the world is a reality. You only have to listen to the contributions here today on the issue of a deficit. There is absolute incompetence and absolute denial of the economic factors facing this community.

You really want to hark back to the theories of Friedrich Hayek and Milton Friedman that the government should do nothing. All you want to do is say that the budget should stay in surplus and should stay there forever. That is the argument you are putting up. It does not matter that all other countries in the world facing this problem are setting about stimulating their economies, with decisive government intervention to ensure that their communities, their workforces and their families have a future in terms of some security. This Labor government will not stand by idly and watch while this economy is driven into the ground by government incompetence. We will deal with it fairly, we will deal with it effectively and we will deal with it decisively. We will not repeat the incompetence of the last Liberal government.

You go back and claim this great historic economic credibility. Let me tell you about your economic credibility. Under Menzies you allowed this country to plod along with no major economic intervention or change for the good for decades. You plodded along on the sheep’s back under Menzies. And under Howard we had a decade of lost opportunity, when we had the mining boom to build the future of this economy. And what did you do? You laid back and let the market rip and did nothing in terms of positive intervention to ensure that we built for the future. The Labor government will not do that. We will ensure that in the face of a global economic crisis the government acts decisively, that the government acts responsibly, and we will look after the communities of Australia. We will not argue about some theoretical point about maintaining a budget deficit, which you are arguing here is a great, great evil. If a budget deficit means keeping communities at work and keeping our economy ticking along, then we will take a budget deficit in the interests of this nation.

It is absolute nonsense for you to argue here that there is no economic problem that requires a government to make a change in its economic policy in terms of the budget. In fact, your line is being criticised by some of the economists who you quote all the time, your favourite economists. Look at Chris Richardson of Access Economics on Lateline last night. What did Chris Richardson say? He said:

The debate about deficits is a silly one.

As silly as the performance of the Liberals here today. He went on:

It’s a politicians’ debate. They’re the ones who’ve drawn the line in the sand about deficits being evil. We don’t want deficits to be a habit, but we want them to help and we do need them now.

We need intervention in the economy in the interests of the nation, and yet you sit back with your silly carping views, your born-to-rule arrogance and your arguments that are in the past. You do not accept the reality of the global economic— (Time expired)

Mary Fisher (SA, Liberal Party) Share this | Link to this | Hansard source

The government promised Australians to partner with the private sector to upgrade the existing fibre network to deliver speeds of a minimum of 12 megabits per second to 98 per cent of Australians. That is what the government promised. Not only have they not delivered it; there is no vestige, no remnant, of a prospect that they will. This is tragic for Australians at large, particularly those in currently underserviced areas. The government’s promise is in tatters, as exhibited and writ large by the tender process thus far. Prior to this there have been public comments by tenderers and would-be tenderers about the frustrations that they have experienced in trying to say what they would do to bid to be part of the government’s proposal, while the government has refused to set out what the regulatory environment would be, what the regulatory rules under which a successful bidder would operate would be.

Worse than that, we have essentially seen a stand-off between Telstra and the government, with Telstra wanting one thing and the government refusing to commit to that thing or to something else—or to anything else. And then at the last minute a would-be tenderer effectively puts in a proposal, a proposition, an invitation to treat—we know not what it is. What are the other tenderers who have complied with the government’s rules thus far—as best they can, given that they do not know what they will be, should they be successful—supposed to think of, do with, provide for in respect of a proposal put up by another would-be bidder? The environment is totally uncertain. It is wholly unsatisfactory. And this is a tragedy for Australians.

Debate interrupted.