Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by ministers to questions without notice asked today.

In particular, I would like to make some comments about the answer given by Senator Sherry to my question. The most that can be said of Senator Sherry’s maiden voyage representing the Treasurer in question time is that his performance was a minuscule improvement on that of Senator Conroy, who, unsurprisingly, has been dumped from this very important role. But Senator Sherry’s attempts to explain the principles of causation were, quite frankly, embarrassing. His answers showed just how comprehensively the Rudd Labor government has lost control of the nation’s finances.

Australia’s largest home lender is putting up interest rates because of the increased cost of funds due in part to Mr Rudd’s massive spending spree and the need to borrow funds to fund the spending. Australian householders will face increased mortgage payments, in part because the government is out in the bond market borrowing around $3 billion per week. For Senator Sherry to claim that this has no impact on the cost of funds for home lenders is simply flying a kite. Australia, as we all know, is in deep debt, with the Rudd Labor government now admitting that debt will peak at $315 billion, and that is before we have the farcical broadband plan—another $43 billion—and Ruddbank, yet another $28 billion. This is all borrowed money, borrowed to fund poorly thought out policy choices, examples of which are now bubbling to the fore.

As if it is not enough that every man, woman and child is now in hock to the tune of $9,000 for Labor’s reckless spending, there is nothing concrete or permanent to show for the $95 billion ploughed into the so-called stimulus packages. Just take the farce that is the so-called education revolution, which the ministers failed to clear up this afternoon in question time. Not content to have computers sitting in boxes becoming obsolete, unused, no use to anyone, Ms Gillard’s latest botched job is to spray money at schools slated for demolition or slated for amalgamation. Media reports have identified 21 schools due for closure that have been allocated funds from the $14.2 billion Building the Education Revolution fund. As I say, the answers given in question time today as to where these funds have gone and whether or not there will be value for money for the allocation were very unconvincing. You certainly cannot put much faith in a program name that of course helps with photo shoots, hard hat opportunities and stunts but where, when it comes to the crunch, there is money going to schools that, so far as we know, are to be closed and money going to schools for buildings they do not need and have not asked for. This shambles is yet another example of a Labor government great at talking and absolutely hopeless at delivering anything.

These examples merely reinforce Labor’s incompetence, spending $40 million in stimulus cheques to 16,000 deceased estates and 27,000 people overseas. I think on any view, Mr Deputy President, you would have to admit that these people would be highly unlikely to be spending the money in Australia as intended. Obviously this denotes haste, it denotes panic and it denotes a government so desperate to react to what it perceives as a crisis that it could not take time to simply get it right. Australians have every right to question why Australia is now in deep debt—at least $315 billion—and why there is a need to pay interest of $12 billion per annum for such massive borrowings. What we see is reckless spending with nothing concrete to show for it, nothing permanent, millions and millions wasted. Eighteen months ago Australia had no debt and cash in the bank. Now Labor has plunged Australia back onto the debt treadmill. (Time expired)

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Not only are the opposition climate change deniers; they are also global financial crisis deniers. They do not want to recognise that the financial markets are in turmoil, that there is a global financial crisis plunging other major nations into huge debt and massive restructuring of their financial markets. No, they want to do nothing. They want to sit back on their past glories, fuelled by the resource boom, and do nothing. They want to do nothing when there has been a write-down in revenues in Australia of $210 billion, which is the most extensive write-down confronted by an Australian government since 1931. They would sit back and do nothing in the face of that, and the Australian economy would go down the tube with them. So it is a very happy circumstance that at the last election the Australian population voted in a Labor government that is able to take the strong, necessary and decisive measures to ensure that our economy holds up well in the face of the global financial crisis.

The opposition come in here, deny that there is a financial crisis and do not put up any solutions to what might happen, but instead want to nitpick and try and find every single small problem. They are saying that nothing needs to be done, that the Labor government is spending billions on nothing. Nothing? What we are doing is putting in place in a tiered system through which that first tranche of money went to short-term payments to people and helped prop up the retail sector, the economy and jobs. The intermediate tier is happening right now. That decisive action by the government has allowed, in a short space of time, for those jobs to be rolled out and for those funds to be put into schools. I think Senator Coonan said they were ‘buildings they don’t need’. Schools were neglected for nearly 12 years by the Howard government. They are desperate for funding, desperate for buildings and desperate for upgrades. They are very grateful for this money that is coming into their system at last—at long last. How can you say that schools do not need science and language centres? How can you say that they do not need that money put in? No school that I have been to would say: ‘We do not need any money for buildings. Our local communities do not need jobs in putting up these buildings.’

Finally, there is the funding for long-term infrastructure that was also neglected under the Howard government. It is for roads, rail and ports—the infrastructure that, in opposition, Labor were crying out for during the Howard government’s term and which was ignored. That is what we will spend billions of dollars on. It will not only support jobs and our economy but also build infrastructure for the future that will assist productivity, which went down, down, down during the Howard government’s term. That is what we are doing. What would the opposition do? Probably what Senator McGauran has advised in respect of the wholesale funding guarantee. Against the strong and ongoing advice of the regional banks, who are using the guarantee widely, Senator McGauran’s advice is that the markets will sort it out. That is what he said to the Courier Mail today. He said, ‘Oh, let the market sort it out.’ That is exactly why the popularity of the Rudd Labor government is holding up. It is because people see that the Liberal opposition have no solution whatsoever. They would stand back and let the financial turmoil happening overseas infect Australia. Instead, we have an economy that is now looking forward to a future in which jobs are holding up and in which growth is a possibility—instead of a recession and the kinds of deficits that are hitting major industrialised countries elsewhere. (Time expired)

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I would like to contribute to this debate on interest rates and say how extremely disappointed I am about what has happened since September 2008, when we have seen a 2.4 per cent reduction in official rates by the Reserve Bank. We know that times are tough, especially in rural and regional areas of Australia. We know that drought has been around in many areas since January 2002. I find it very alarming that we now see upward pressure on interest rates and I believe, from a good source of knowledge, that tomorrow Westpac will announce a rise in their home loan interest rates, following on from the Commonwealth Bank today. But the most disappointing thing I have seen is that, no doubt, the government has put a lot of pressure on the banks to lower interest rates for home loan borrowers. I was privileged to talk to David Bell, who represents the Australian Bankers Association, and we discussed this very issue. He made it quite clear that the government has put a lot of pressure on the banks to pass on those reductions in interest rates over those months—as I said, from last September being the big falls.

The question is: what pressure did the government put on the banks to reduce interest rates for small business and farmers? The answer to that is none. I talk to farmers who are paying 11.5 per cent on overdrafts totally secured with real assets, as in land. How can these people recover from the tough times that they are going through, from the drought to the high input cost to many farmers and the way that those reductions in moneys affect the regional communities, where the small businesses suffer as their sales are down? Yet they are paying high interest rates because the government has failed to put the same pressure on our banks to pass those rates onto small business and farmers. This is a very alarming situation, when we see official rates of three per cent and we see people in business trying to survive, many of them competing on world markets—such as our agricultural producers, our farmers, do—and relying on exports of food. They are paying 10, 11 and 12 per cent interest rates. I think that is just an utter disgrace.

The government are great at beating their chests about how they are doing this, that and everything else to stimulate the economy, but the real stimulation should be directed at those in the private sector. As I have said before, it is the private sector that drives the nation’s wealth. It is small business, including the farm sector, that is paying through the nose on interest rates today. The government have failed dismally to put any pressure on the banks to forward those reductions—in other words, the banks are surviving on the high interest rates to the people they lend to.

I touch on the underwriting of the bank investments that Senator Hurley referred to a minute ago. It has been very obvious that the credit unions are now calling for the removal of the bank guarantee. Those small institutions are paying more for their premiums to have that guarantee. Here is a problem in itself where the competition simply cannot be put in place. It is unfair because we have smaller competitors such as our credit unions, which are out there in many rural and regional areas, doing the best they can but failing to compete against the big banks, who are obviously paying smaller premiums for the underwriting of their investments. This again is a huge problem, because we see the big boy at the big end of town with an advantage over the small one at the small end of town. As a National I am very proud to represent and bat for the small business people—the people who battled through all sorts of tight conditions and tough times, the people who worked long hours, often for low wages, no superannuation and very few holidays. They are the people who are battling now and they are the people whom this government has failed to look after.

As I said, they have not put any downward pressure on interest rates for the banks to do that for small businesses and farmers. It is a disgrace. It is holding the economy back. The more these small businesses and farmers have to pay in interest, the less money they have to keep people employed. The government wonders why unemployment is on the rise. We are looking at more than a million Australians unemployed next year. That is in the budget forecast of the government. They should do something positive and pass on a strong message that those interest rate reductions should be passed on to small business and farmers, not just to home borrowers. But brace yourself: the government is swamped in debt and there is more bad news to come.

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

I rise to participate in this debate on taking note of answers. I note at the outset that a number of issues were canvassed during question time. I want to touch on a couple of them, but I begin with the issue of interest rates, which Senator Williams has just spoken about. I respect Senator Williams. I think he is a person with genuine concern for the rural constituency, but I have to say that the speech he has just made was one that could have been made—and, I am sure, was made—by members of the Labor Party in opposition in the last 12 months of the Howard government. Why do I say that? Let’s remember. The opposition sits here today and lectures us about interest rates because the Commonwealth Bank has just announced an increase in their mortgage rates, but it was under the Howard government that there were eight increases in interest rates in a row. The situation that we inherited when we came to office in November 2007 was a treadmill of interest rate rises; every couple of months they were going up again as a result of the decisions of the Reserve Bank being followed by the banks.

Those eight interest rises were the opposition’s legacy to us. There was even one during the election campaign—something that was unheard of—because it was clear that at that time the Reserve Bank saw no alternative but to raise interest rates again. We had to confront that reality in the first few months of our term of office. After the first few months that we were in office, interest rates declined. They have steadily throughout most of the period that we have been in government. To say that the Labor government is pushing up interest rates is completely incorrect. Senator Coonan asked this question initially, and I recall Senator Coonan interjecting, saying, ‘What are we doing about it? What are we doing about it?’ I find this argument from the opposition somewhat strange because, as was quoted by Senator Hurley, it is Senator McGauran who has the view—no doubt reflecting the view of the vast majority, if not all, of that Liberal Party—that the market should decide. In other words, government should stay out of trying to inject activity into the economy to deal with the global financial crisis. The Liberal Party view is that you do not need a stimulus package; you just let the market decide. But over in cockies corner the National Party has a different view, which is that government should hop in wherever it can to prop up their sector—which I acknowledge is doing it tough.

The other point I make is that throughout the period of the Howard-Costello government the current opposition constantly pointed to their economic record of removing debt and so on. What happened with private debt in this country? It exploded. It increased and increased as more and more people built up debt at high interest rates of 17 and 18 per cent on their MasterCards, Visa cards, Amex cards and all the other cards. That was the real debt that was incurred by the Australian people. While you can wax lyrical about government debt, the real debt that was crippling a lot of people in this country was on credit cards. That legacy remains. Then the opposition have the hide to criticise our economic stimulus package because some people might have used it to pay off part of their credit card. There are a lot of other issues. We had Senator Fisher raising award modernisation. Frankly, that is a joke. The record of the National Farmers Federation, which Senator Fisher worked for, as I recall, is one that opposed even superannuation for farm workers. They did not want farm workers to have access to superannuation. Fortunately, that was a fight that we won. On all of these issues and many more you are just— (Time expired)

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Parliamentary Secretary for Immigration and Shadow Parliamentary Secretary Assisting the Leader in the Senate) Share this | Link to this | Hansard source

I rise to support Senator Coonan’s motion. Today we are seeing Australian families paying a very, very high price for Kevin Rudd and Labor’s reckless spending.

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

Order! You must refer to the Prime Minister by his proper title.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Parliamentary Secretary for Immigration and Shadow Parliamentary Secretary Assisting the Leader in the Senate) Share this | Link to this | Hansard source

They are paying for the Prime Minister and his Labor government’s reckless spending and rapidly rising debt. Labor’s budget is the first in a decade to increase the burden on Australian families, with a record debt of $315 billion—and, of course, that does not include the potential extra debt that could be created by the Ruddbank and Labor’s $43 billion broadband excursion—and a record $58 billion deficit. We also will have one million unemployed by 2010-11, private health insurance rebates being attacked—meaning longer waiting lists and higher costs for all Australians—and the cutting by a third of the superannuation co-contribution scheme, which bolstered the retirement savings of low and middle income earners. Australians will need to work much longer to pay off all this debt. This reckless economic mismanagement will hurt Australian families. This budget reveals the high price that will be paid.

Labor are doing what they always do best, which is racking up debt and splashing the red ink about. They certainly are doing it at a record rate. With this debt to surge to $315 billion, the Rudd government will make even the Gough Whitlam and Paul Keating governments look fiscally responsible. Two-thirds of net public debt will be due to spending decisions taken by the Rudd government over the past 18 months. Since the November 2007 election, Labor have announced new spending of $124 billion, an average of $225 million per spending day. It took the coalition $9 billion worth of interest and about eight years to pay off $96 billion of Labor’s debt. Just think how long it is going to take for us to pay off $315 billion. And that is assuming it stays at $315 billion. Knowing the track record of Labor governments, that $315 billion is only the starting point; it is going to get higher and higher.

We have had the feigned outrage of Mr Swan and Mr Rudd in their complaints about the interest rate increase, but they are directly responsible for it. If this government is going to go out and borrow $3 billion a week, it is inevitably going to put upward pressure on interest rates. The decision by the Commonwealth Bank was just the beginning. The government is borrowing record amounts of money in competition with the major banks and as a result the cost of money is inevitably going to rise. You cannot continue with low interest rates while the Australian government is borrowing billions of dollars a week in order to hand out the $900 cheques. Senator Hurley was talking about the so-called spending in Australia. Might I remind her that there are about 514,000 nonresidents who are also eligible to get the $900, and millions of dollars just left these shores because Centrelink could not be bothered asking the Department of Immigration and Citizenship who these people were and thereby at least saving us some money on that front. Mr Rudd and Mr Swan will voice their displeasure yet what are they going to do about it? Absolutely nothing.

Before I conclude, I would like to say a couple of things about New South Wales. New South Wales was plundered and pillaged and, of course, the architects of that plundering and pillaging were Senator Arbib and all his New South Wales Right mates. They have abandoned ship in New South Wales and are going to do federally what they did to New South Wales, which is to send it into a record state debt that is going to cost a staggering $30,000 per household—an absolute and utter disgrace. (Time expired)

Question agreed to.