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 relating to the proposed economic stimulus package.

In particular, I want to mention Senator Conroy’s abject failure to come to grips with how long the budget will remain in deficit as a result of this enormous package of $42 billion, and, critically, how many years Australia’s children, our children and grandchildren—

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

Senator Conroy interjecting—

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

and Senator Conroy’s children will be saddled with this new Labor debt, which will see every Australian slugged $9,500 as we have to live with the consequences of this reckless and poorly thought out package.

The coalition, of course, as disciplined and responsible economic managers, are not unmindful of the economic circumstances that do call for a careful, thoughtful and well-targeted stimulus. And we do accept that there is a good case for a stimulatory package. Our concern about the $42 billion spend is at least threefold. Firstly, it is simply too big, and the government has failed to establish why $42 billion is the appropriate figure. Why is it $42 billion as opposed to $41 billion, $30 billion or $24 billion for that matter? There is a whiff of panic, a whiff of the knee-jerk about the size of this package, with absolutely no guarantee that it will work. In fact, the Prime Minister very carefully said that he did not know whether it would work. He said that there was no silver bullet. It appears that the only silver bullet is pointed at the coalition’s head unless we suddenly agree to this hysterical need advocated by Labor to pass this enormous package within 24 hours.

We know that the downturn may be very long lasting and Australia simply cannot afford to spend larger and larger sums like this every quarter. Let me illustrate: one per cent of GDP was already spent in an ineffectual cash splash of $10.4 billion in the December quarter and there will be another one per cent of GDP in just cash handouts alone from this package in the March quarter. The Prime Minister has already admitted that he does not know if this will work. Committing to $42 billion when you simply do not know what the future holds is shooting in the dark.

The second concern is the very poor quality of this spend. This will obviously take us some time to work through, but we believe that our main focus should of course be jobs, jobs and jobs. We have been saying that since last year and we have been consistently saying it, and Labor has now caught up and started talking about the impact on jobs. Disappointingly, even with reckless cash handouts and massive debt fuelled spending, the Prime Minister’s package predicts unemployment will top seven per cent in just over one year. That is another 300,000 out of work when we are looking down the barrel of another $42 billion stimulatory spend. And where are the 70,000 jobs promised by the government as a result of the $10.4 billion cash splash? They did not eventuate. And we know that the most that they will now say is that this package will support jobs. We have heard the weasel words that have now morphed from one package with which we were supposed to be looking at the creation of jobs to another with which we are simply ‘supporting’ jobs with a vastly increased spend. It adds to the fear and to the perception that this is a government that does not know what it is doing.

Thirdly, we believe that there are far more targeted responses that will do more for jobs, for employment creation, for small business, for the economy and for Australian families than those that have been contemplated in this package. What we have seen from Labor over the past couple of days is nothing short of manufactured hysteria over the timing of this package. We believe very clearly that it is our duty to carefully scrutinise the package and to discuss more effective ways to achieve a stimulus.

We know that our decision to oppose the package will not be a popular decision; it is a hard decision. We know that the Prime Minister has never taken a tough decision, but we have and we know all about standing up for the rights of Australians and being careful fiscal managers. We understand what debt means, we understand that debt needs to be repaid and we understand the burden on Australian families.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

As many people have been saying, including Senator Conroy in his contributions, we are in truly exceptional times. The evidence is out there. There is nothing that can be hidden because of media coverage putting out information on all parts of the issue of the economy across the world. This is not just an issue that Australia is facing. We are looking at a global financial crisis. The really important thing is that this is not just something that we are just discussing around the table in this place. People in the community have now got information that clarifies just how deeply in debt and how deeply in crisis the world economy is. Amongst the people across this country there is deep concern.

So when we hear people from the opposition talking in terms of ‘manufactured hysteria’, that actually devalues the knowledge and the concerns that the people of Australia have, and it is real concern. What this government is planning to do—and it is a tough decision—is to put forward a package to respond to the needs of our community and to protect jobs. Indeed, I take Senator Coonan’s point about jobs, jobs, jobs and the need to protect those jobs and to boost the economy, because what we are talking about is our economy within the midst of the global economy. And, most importantly, there is a need to support Australian families and Australian citizens who are working through their own concerns about what is happening to their lives and to their economy. That is the fear and that is the challenge. Those are the issues that the government is putting forward a package to respond to.

It is not a matter of hiding the issues or pretending that any single way is going to provide the full answer, and nor is it a matter of finding some mystical silver bullet. It is actually a matter of carefully and with full intent putting forward a package that looks particularly at individual needs. We see in this process a number of packages that are looking at tax relief for individual taxpayers. It is a matter of looking at some immediate relief for those people, some of whom will be facing the loss of their jobs. We have seen over the last few months the beginning of job losses in our country as a result of international companies pulling back, our trading situation being affected by the international crisis and our resources markets not being able to be boosted because our trading partners are not taking what they used to. These are real situations.

So we are looking at immediate support to families. We are looking at support for families who are working now at getting their kids back to school. We are giving people an immediate payment for that. More importantly, the input of funding into infrastructure in our schools is something that is necessary. We will respond immediately to the jobs, jobs, jobs issue with effective construction planning and administrative work to do the large range of infrastructure projects in schools presented in this package. I know that schools right across my state—independent and government schools—are all looking at these packages and saying how they can best be used for them and their communities. For families with school-age children there is something real in this package that can be held on to and, most importantly, it will give people hope.

Time is much too short to look at the whole package because as we all know this is a large response to a large issue, but I want to make a note of my particular favour of the infrastructure program that deals with homelessness. We are bringing forward the kinds of plans that we talked about in this place quite recently concerning the real need for immediate infrastructure to address the homelessness issue across the country. The package looks at that and how we can once again use construction and our infrastructure needs and use a real stimulus to respond to a real issue. Again, this is not manufactured hysteria. These are real problems in our community and the package put before this place by the government needs support. It needs people to look at how we can work together rather than put up barriers and try to play games.

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

We are in difficult economic times. That Australia would face an economic challenge in the wake of the US subprime crisis was inevitable. It was also inevitable that Australia would be better placed than any other nation to handle this economic challenge. Why? Because in November 2007, thanks to the coalition, we had a budget in surplus. We had no government debt. We had world-class financial institutions and world-class prudential regulation. We had a booming economy, and strong business and consumer confidence. But what was not inevitable was the undermining of these very strengths by this government.

There is no doubt that the economic downturn will be deeper and longer than it needed to be as a direct result of decisions by this government. Consumer and business confidence were slammed into the wall by a government talking up inflationary expectations. Interest rates rose in response to government jawboning. These two points were part of a deliberate political strategy which was motivated by an attempt to undermine the record of the previous government. The resulting slowing of growth? Well, for this government, that was just collateral damage. Non-bank institutions were undermined by the bank deposit guarantee, which was bungled, and we have a situation where a budget has been completely undermined.

It is here, in the Commonwealth budget position, where we see the con in the stimulus sham. I think we all remember Mr Swan’s budget speech, where he gleefully declared, ‘We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.’ Fast-forward to last Sunday when Mr Swan declared to Mr Oakes that ‘one consequence of the global recession, the unwinding of the mining boom, will be a temporary budget deficit’. That is just not true. The Commonwealth budget is not going into deficit this year as a result of falling revenues; the budget is going into deficit because of policy decisions by this government.

I put this to Senator Arbib on Sky on Monday, before the UEFO came out, and Senator Arbib scoffed—but just look at the second paragraph on page 42 of the UEFO. It is there in black and white. For 2008-09, there will be a decrease of revenue of $9.3 billion. Now, my maths might not be that good, but that does not equate to a $22 billion surplus. This government is fibbing about the genesis of the budget hole. This fiscal stimulus is predicated on inverting the political and fiscal debate. The measure of economic virtue is now the size of your deficit—bigger is now better. Labor has the view that there is such a thing as cost-free borrowing, but every dollar that is borrowed must be repaid, and it must be repaid with interest and it must be repaid by the taxpayer. Every dollar that is paid in interest becomes a dollar that cannot be spent on schools, hospitals or pensioners. I found it quite amusing when Senator Conroy said before that they were going to return the budget to surplus. You cannot return a budget to a place you have never had it. This government has never delivered a surplus and is unlikely to.

On this side, we are really careful because we know this is taxpayer money we are talking about. There is, of course, a need for some measure of government action in the current environment. Indeed, there is more of a need because of this government’s handling of the economy in 2007 and 2008. But there is no justification other than the political for a spend of such poor quality. A lot of this package is, it must be said, junk spending. As an opposition, how can we be complicit in taking the budget further into deficit for spending of such dubious economic benefit? On this side of the chamber, we quibble with the motive, the magnitude and the make-up of this package. The easy path, the opportunistic path, for the opposition would have been for us to wave through the $42 billion package. But, on this side of the chamber, we choose to do what is right. We know it will not necessarily be popular, but we know it is the right thing for Australian taxpayers and it is the right thing for the Australian economy. We will propose our own alternative.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to rise to speak in this debate to take note of answers. For a number of weeks now, the Prime Minister has been asking the Leader of the Opposition to stand up and tell us what he believes in, to stand up and tell us his policies for the country. It has taken a while, but I am happy to say that today the member for Wentworth stood up. Now we know where he stands. Now we know whose side he is really on. His decision today to block the $42 billion stimulus package shows he is completely out of touch with the state of Australia’s economy, with the state of the global economy and, most importantly, with the suffering that Australian families, workers and small businesses are experiencing because of the global recession. They will continue to suffer in the future because of his decision.

The only plan that the Leader of the Opposition has for the global recession is to leave it to the market. The solution for Malcolm Turnbull and merchant bankers is: ‘Don’t intervene; let the market decide. Let’s wait and see how far the stock market will crash, what bargains will be available for the scavenger funds and what portfolios merchant bankers might pick up on the cheap.’ This is what Malcolm Turnbull, the Leader of the Opposition, stands for. He has never stood for working families. He has never stood for small businesses. He stands for greed and his own ego.

It has been very interesting to hear today senators on the opposite side of the chamber talk about the October stimulus package. The Leader of the Opposition today mentioned the first stimulus package and called it a ‘cash splash’. It is now a cash splash. I thought I remembered the Leader of the Opposition and senators on the other side of the chamber supporting the stimulus package. I took a bit of time and went to the Liberal Party website. I do not spend too much time there, but I enjoyed it today. I found that on Tuesday, 14 October, at a Turnbull press conference, he talked about the so-called ‘cash splash’. He said:

… we welcome the Government’s announcement today, especially for Australia’s age pensioners.

…            …            …

But nonetheless we are not going to argue about the composition of the package or quibble about it. It has our support. It will provide a stimulus to the economy, that’s for certain.

That is not the Prime Minister saying that; it is the Leader of the Opposition. And today it is a cash splash. That just proves who and what Malcolm Turnbull really is. I am very happy that when he got up today the real Malcolm Turnbull stood up. Finally, Australians will see what kind of a leader he is.

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

Senator Arbib, you must refer to the Leader of the Opposition by his proper title.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy President. The government has taken action to protect families and workers during this unprecedented global recession. This $42 billion package will provide a direct stimulus to employment and activity. The challenge for the Leader of the Opposition and for the Liberal senators on the other side of the chamber is that, if they are going to oppose the stimulus, they have to go out and explain to workers why they may lose their jobs. They have to go out and explain to small businesses why they may have to close their doors—because the economy continues to slow. The proof is there that the first so-called cash splash worked. Look at the sales figures today—a huge jump. (Time expired)

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

During your speech, Senator Arbib, you made reference to the Leader of the Opposition standing for greed. That is an allegation of improper motives, and I must ask you to withdraw that statement.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I withdraw.

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

Who would have thought before the election just 16 months ago that we would be standing in this place today taking note of answers to questions about a proposal to deficit finance a package of $42 billion to jumpstart an ailing economy? Back then, the future looked rosy: 11.5 years of hard work by the coalition government had eliminated the $96 billion of debt accumulated through a series of ‘temporary deficits’ under the Hawke and Keating governments. We were consistently running surpluses, with an economy and tax revenues growing to such an extent that we were able both to put away billions of dollars for future needs and to provide billions of dollars in tax cuts to Australians. Employment was at a record low, and the only economic issues that we faced were those occasioned by growing pains as demand for goods, services and skilled labour outstripped supply.

But here we are in February 2009 facing a vastly different scenario. Sure, the international economic crisis has put an end to the good times, with many consequences for Australians. Even government revenues have been affected. According to the most recent Treasury outlook, a drop of $9 billion is predicted, and here we are looking at going back into debt—and not just in a small way but massively going into debt. We have a request to permit the government to expand the limit on its credit card from $75 billion to an enormous $200 billion. As any Australian knows, once you get into the debt interest trap of a large credit card limit, it is very hard to pay it off.

I do not have time to look at the causes of the crisis, but what we must look at is the government’s approach to this issue as set out by ministers in this place today. Where is the money to decrease the cost of employing people? Where in this package do you go to small business and say, ‘We want you to employ more people, so we’re going to make it easier and cheaper for you’? There is nothing. Where is the money for new hospitals or for improving the health system? What have we heard around this country for the last three or four years? The biggest government funding problem facing Australians is the lack of finance in the health industry. There is nothing in this package—not a cent. There are no new hospitals, nothing to improve the health system, no new doctors and no new nurses. Where is the money to help those who have been most affected by the crisis. Self-funded retirees, people who have been carefully putting aside money in superannuation and share portfolios for the whole of their working lives and never asked anything of government, are finding that all their careful planning and the sacrifices they have made throughout their working lives have been completely undermined by this crisis through no fault of their own. Where is the assistance for them, the people who really need it?

I have heard a lot of government senators in this place today talk about how this package will help Australians deal with the impact of the global financial crisis. If Australians are suffering negative impacts, it is a good thing to look after them. There is no doubt that all Australians who receive some money from this package, if it goes through, will appreciate it. Who would not appreciate getting a cheque for $950 in the mail? They are all going to take it, and they will enjoy it.

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

Except it’s going to cost you 10,000 down the road.

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

Thank you, Senator Cormann; I am getting to that. Not all Australians have been negatively impacted by the crisis at this point. If you have a stable income and your job and income are not threatened, in recent months you have enjoyed lower interest rates and lower petrol prices. You probably have more disposable cash in your pocket than you had before. Giving you an extra $950, as welcome as it is—and I do not begrudge people getting it—is not really necessary to offset the negative impacts of the global financial crisis.

There is a well-accepted economic proposition that deficit finance should only be used to fund long-term infrastructure that will provide direct benefits to those who will be paying for it, through taxes to cover interest and principal repayments. Despite the rhetoric and spin of the government, there is nothing in this package that provides such long-term benefits. What benefits will my children and their children receive for the taxes that they will be paying for many, many years to come to cover this massive exercise in political pork-barrelling? I contend that they will receive absolutely no benefits but they will be paying taxes for years if not decades to come to cover the costs. It is simply inequitable to place the burden of interest and principal payments on people who will not receive the direct benefits. This package will only increase economic activity in the period in which it is spent. (Time expired)

Question agreed to.