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

On behalf of Senator Parry, I move:

That the Senate notes that Rudd Labor government’s reckless spending.

These are historic times. Yes, there is no doubt that Australia, under the Rudd Labor government is rapidly heading towards new records—new highs and new lows—but the records we are looking to set are not ones that the Prime Minister and those sitting opposite should be proud of. On the contrary, this Labor government should be ashamed of the direction in which it is taking this nation, the future obligations and risks it is placing squarely, firmly and deliberately on the shoulders of all Australians and the fact that many of the decisions it makes are made far more for political expediency than for reasons of good policy.

Sitting right at the front of the government’s historic achievements in this regard is the new record that it is setting as the biggest spending government of all time. That is right. This government took such great delight in accusing the Howard government of being a big taxing, big spending government. I might add that this occurred because the coalition managed the economy so well; we increased economic activity and created increased tax revenue that we consistently gave back to the taxpayers at every opportunity. But, by any measure, this government has in a short period of just over 12 months taken on the mantle of the biggest spending Australian government of all time and, in the time since, it has continued to grow that record.

When Labor is in government the fact is that it spends up big. In the few short years that the Whitlam government was in power, spending increased to such an extent that the Commonwealth share of GDP went from 19 to 24 per cent. The 13 years of Hawke and Keating saw that figure increase to 26 per cent—a figure that was much reduced under John Howard. The Howard years saw the rolling back of the Commonwealth share of GDP, as Costello fought to balance the budget after Labor left us $96 billion in the red. In 2009, under the Rudd Labor government, all of that work has been undone. At $57.6 billion and almost five per cent of GDP, next year’s budget deficit is forecast to be our biggest since World War II—so much for the conga line of then shadow ministers, including the now Prime Minister and his deputy, who all stood before the voting public before the last election and, with hands on hearts, they swore on their mothers’ graves that they were economic conservatives. They might have had their right hands over their hearts when they did it, but there is no doubt that they had their left hands behind their backs with their fingers tightly crossed. I am reminded of that oh so prescient comment by Peter Garrett: ‘Once we get elected we’ll change it all.’

As I mentioned whilst taking note of Minister Sherry’s hopelessly irrelevant and inadequate answers to questions without notice yesterday, the calls for the government to consider winding back their stimulus spending are mounting. Just yesterday three leading economists, Stephen Kirchner, Chris Richardson and Sinclair Davidson, added to those calls, saying that it was time for the government to rethink its spending binge. The economic outlook is improving, and it is almost certain at this point that Australians on the whole will escape the worst of the economic downturn that has afflicted many others in comparable nations like the UK and the USA. The government’s own Treasury modelling looks to be too pessimistic in terms of the depths to which economic performance will fall and the impact on the employment of Australians. The three economists yesterday commented on this and noted that, in their opinion, the shallowness of our downturn highlights how monetary policy may have been able to shoulder a greater burden in minimising the impact of the global crisis in Australia and the significant additional cost and burden on current and future Australian taxpayers. I will comment more about the interplay between current fiscal and monetary settings in a few minutes.

What cost has been and will be placed on taxpayers as a result of the government’s decision to rapidly plough headlong and without proper consideration into committing almost $80 billion to the Australian economy in order to stimulate it? It is money that can only be viewed as the largest pork-barrelling exercise in Australian history. Firstly, there is the obvious and well understood future to be faced by all Australians—a future where every man, woman and child will be shackled with $15,000 of debt. It is a debt that each of them will need to repay through their taxes, together with interest. Of course, there are only two ultimate outcomes that can result when a government takes its people into massive debt. The first is that the government seeks to pay interest and hopefully some principal by taking that money out of the tax revenues that it receives. If it takes this path then it must divert money from its spending on the services that it delivers—services like health, national security and education. That is not an attractive political option and is rarely in the interests of Australians.

The second outcome is that it seeks to raise additional money to pay interest and make debt repayments. The only way it can do this is by raising taxes. Raising taxes is, again, not generally a politically attractive option but one which a socialist Labor government can feel it can get away with, if it only hits the rich. But, given the size of the debt that this government is taking us into, new taxes will have to be far more broad based than just on those very rich people that Labor feels it can safely stigmatise as deserving of higher taxes. This is why Labor’s refusal to rule out new taxes, like a capital gains on homes valued at over $2 million, should be of major concern to the majority of Australians who cannot possibly ever hope to own a home worth that much. But the tax will not stop there. Rest assured, when Labor introduces new taxes to hit the rich, it will end up being the hardworking middle class—those who earn two incomes or who are struggling to feed, clothe, house and educate their family on one income—who will end up being caught by every one of these taxes.

You only have to look at the measures that this government has introduced in the last couple of years when they have played with thresholds to see what level of income they think qualifies a family as being rich. They include measures such as their first wildly criticised, badly botched and mishandled attempt to tighten up taxation arrangements on employee share options—they have fixed it up now to some extent—which classed the rich as earning in the range of $55,000. How many Australians would consider themselves rich if their household income was in the $50,000 range? Not many, I would venture. But, ultimately, as a direct result of this government’s reckless spending and its totally stubborn refusal to divert from the hard and rigid path that it has set for itself, people earning an income in this range may well be staring down the face of new and higher taxes.

Yesterday, I asked Minister Sherry what impact this reckless spending would have on higher taxes and higher interest rates, and he completely failed to address the question. One can only presume that the question was too close to the bone for him to comment on. But the consequences of the government’s reckless and record spending spree extend further than to just what new and higher taxes Australians will have to pay or which hospitals or which schools the government will to have to cut funding to. As noted by the three economists mentioned earlier, there was room for more action to be taken on interest rates that could have helped to foster economic growth. Unlike other countries such as the US, where official interest rates are effectively at zero per cent, Australian official rates have bottomed out at three per cent. This gives the RBA scope to reduce their official rate further. As most Australians know, the level of the official interest rate can be increased to act as a brake on economic activity in circumstances where the RBA assesses that the economy is growing or is likely to grow at a rate higher than it considers desirable to maintain the inflation rate within the target range of two and three per cent.

Similarly, official interest rates can be lowered in order to stimulate the economy when the RBA considers that the economy is not growing fast enough to maintain employment levels. This works either by deliberately removing money from the wallets of Australians in small businesses, thereby lowering economic activity, or conversely by deliberately placing more money into their hands through lower interest rates so that there is more money going around in the economy. It is called monetary policy. The most recent movements of the cash rate have been down. The RBA took decisive action to rapidly reduce that rate, not just to put more money into the economy but also, through the size and speed of those reductions, to send a very strong message to the community as a whole to help promote confidence. However, as noted, that action only took interest rates down to three per cent—a rate certainly lower than the level we normally experience in Australia but much higher than that which currently exists in comparable nations.

So there was scope for the RBA to reduce rates further—underutilised capacity to drive additional economic growth. It appears unlikely that it now will be employed given the recent comments of the Governor of the Reserve Bank of Australia before the House of Representatives Standing Committee on Economics in Sydney last week and as apparent from the minutes of the RBA's last meeting, which were released this week. Both show that interest rates are now on an upward setting.

It is important to note that the use of monetary policy—that is, the manipulation of official interest rates to stimulate the economy—is far more taxpayer friendly than the use of fiscal policy. Think about it: if you seek to stimulate the economy by borrowing money and handing it out in the hope that some of it will be spent in the economy, the end result can only be—even if it works—that taxpayers have to repay the borrowed money with interest. Ultimately, the cost of the measure will be borne in full by the taxpayers of Australia directly out of their pockets together with interest.

Compare this with the use of monetary policy—the reducing of interest rates to leave homebuyers and small businesses with more money in their pockets to stimulate spending, make the economy go around and directly help ensure the viability of small businesses and the security of the people that they employ. The end result of the employment of monetary policy is that taxpayers have more money in their pockets upfront and no long-term debt to repay through their taxes. I would think that anyone would have to agree that monetary policy—that is, reducing interest rates—is a far preferable tool, from the perspective of the taxpayer, than is the use of fiscal policy—that is, borrowing and spending up big. These are the consequences of the decisions made by the government. Their reckless spending spree, a spree that will leave every man, woman and child in Australia with $15,000 of debt, now appears to have been excessive, given that the then complementary and far more taxpayer friendly monetary policy was not fully utilised.

What about the situation looking forward? The government has refused in recent days to consider winding back its unnecessarily large and burdensome stimulus package. But just on Friday, as mentioned, the RBA governor said that we are looking down the barrel of increasing interest rates. Why would this be the case? The only reason the RBA would be looking to increase interest rates would be to avoid the economy, or parts of it, from growing too fast. Let me state that again: we Australians—small businesses, mortgage repayers and homebuyers—are staring down the barrel of having to pay higher interest rates. I can assure you that if official interest rates go up the banks will pass it on in full. We are looking down the barrel of interest rates being increased specifically to slow the economy, to curb economic growth and to maintain that desirable balance. Yet at exactly the same time as the RBA is looking to put up interest rates to slow the economy we have the government continuing its stimulus package to deliberately cause the economy to grow. Consider that: fiscal and monetary policy completely in conflict with each other. Only a few months ago the Treasurer was saying how well they were working together and how complementary fiscal and monetary policies were, and here we are looking in the next few months at the possibility of fiscal policy and monetary policy smashing head on.

Indeed, the RBA have factored in the full impact of the government’s oversized stimulus packages running their full course. The governor said that, in considering where interest rates might have to go, they have taken into account the full impact of the planned continuation of the stimulus package. Given that that is fully factored into the RBA’s consideration, it is probably the case that, if the RBA do increase rates, it would not just be in conflict with, but because of, the government’s continuation of its stimulus package. So those people out there who are buying homes and those small businesses who have loans that they are trying to repay are going to have to suffer higher interest rates. The government is continuing its stimulus package and is showing no sophistication in its approach and no willingness to look at the situation and say, ‘Where is the economy now? Why don’t we just maybe adjust it here and wind things back?’ Why does the government not try to assist Australian taxpayers? Because it has a hard, rigid approach and no sophistication.

It would be interesting to speculate what the IBA would currently be saying—whether it would be on an upward interest rate warning—if the government were actually prepared to say that it would wind back its stimulus package as appropriate, but no—

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

If we went below the band?

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

Senator Conroy raises the band. I assume you are talking about the inflation band. There are a couple of ways that that can be achieved. You could achieve that by spending massively, stimulating the economy and having massively high interest rates to balance the economy and get the inflation rate between two and three per cent. But nobody would want that because, if you did that, you would have to borrow money which taxpayers would have to pay back and, on the other side of the equation, Australian taxpayers, Australian homebuyers and small businesses would be paying hugely high interest rates. But you could achieve that two to three per cent band by doing that. That is where we are heading at the moment.

However, the alternative is to not overstimulate the economy using fiscal policy. Keep the spend down, keep interest rates down and you can still get between the two and three per cent band. That is the preferable place to be. I am sure it is where the RBA governor would prefer to be—

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

Senator Cameron interjecting—

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

but he has to factor in the additional spending by the government, which they are going to keep on doing, and as a result we now have a warning that interest rates are likely to rise. This has to be the ultimate irony, and it comes at the expense of Australian taxpayers, homebuyers and small businesses.

Let me restate the situation: in the next few months, we may be looking at the RBA increasing interest rates, at great cost to Australian homebuyers and small businesses, to directly counter the actions of the government trying to stimulate the economy by borrowing and spending. The losers in all this are Australian taxpayers and homebuyers, our small businesses—

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

Senator Cameron interjecting—

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

and the people they employ—the workers of Australia. And it is also unnecessary. There was a better way, and it is not too late to change. It is not too late for the government to change tack, stop spending and let monetary policy do the heavy lifting.

The other great shame about all of this is that at least some of the pain was unnecessary for another clear and obvious reason, the blame for which again falls squarely on the shoulders of this reckless, selfish and big-spending Labor government. During the election campaign, the then Treasurer—and, might I say, the best Treasurer we have ever had, the Hon. Peter Costello—warned that the problems then becoming evident were going to hit Australia like an economic tsunami. Remember, this was in late 2007, just before the election. At the time, the then Labor opposition castigated Mr Costello for scaremongering, but he held his ground, as he could see clearly that at that point trouble was brewing and it was coming Australia’s way.

Of course, Labor won the election and inherited what was then undoubtedly the best-managed, best-regulated and healthiest economy in the world. Knowing full well that the management of the economy was likely to be their Achilles heel, the government sought to develop an argument that they had inherited something other than such a strong and robust economy. The only thing that they could find that indicated any issues within the economy related to a problem that can only arise when an economy is firing on all cylinders: skills and capacity shortages caused by an economy growing at a pace that was outgrowing its ability to supply labour and imports, which of course leads to inflationary pressures.

I might note at this point, and Senator Cameron will no doubt be interested in this, that these inflationary pressures had to a significant degree been relieved by the increased flexibility built into the industrial relations laws—flexibility that enabled both individual employees and their employers to negotiate arrangements that best delivered high productivity and generally relieved capacity shortages. But, having identified inflationary pressures, what did they do? They went out and spent the next 10 months deliberately talking up inflation, talking about how the ‘inflation genie’ was ‘out of the bottle’ and about the need to cut spending, to reduce demand and to slow the economy—even pretending to slash the budget last year to slow the economy and making a big song and dance about it.

I recall, after that, when we had issues with some of the measures that the government were trying to introduce as part of their slashing of spending, Senator Evans sitting across the table and labelling us economic vandals because we were opposing measures that were going to reduce inflation and slow the economy. It was amazing how smoothly and seamlessly he shifted gear after October last year, calling us economic vandals because we were opposing measures that were going to speed up the economy. It is ironic. They changed so quickly, but the label was still the same. So I would just like to emphasise that we are suffering as a result of Labor’s reckless spending. (Time expired)

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

That must have been the longest 20 minutes of Senator Bushby’s life! I must say it felt pretty long to me. I put a challenge to Senator Bushby: I challenge Senator Bushby to go back to Tasmania tomorrow, get onto the media and tell them that you oppose this so-called reckless spending—that you oppose the government’s education revolution, that you oppose the money that has been spent on 116 schools in Hobart alone, that you are not interested in the education of the kids of Hobart. That is the challenge for Senator Bushby. Go on the radio tomorrow and say that you oppose this so-called reckless spending that is building 15 community infrastructure projects around Tasmania. Tell them that you do not want to spend the money making a better society after 11½ years of neglect under the Howard-Costello government. That is the challenge for Senator Bushby: get on the radio and be honest with the community in Hobart and say that you oppose these initiatives that a Labor government is taking to improve the infrastructure in Hobart, to improve the education facilities in Hobart and to build a better society after 11½ years of neglect by the Howard government.

Get on the radio, Senator Bushby, and tell the Tasmanian public that you oppose the $2 million that will be spent on improved lighting for Bellerive Oval, just down the road from Senator Bushby’s office. Tell them that Bellerive Oval is not to be given any support because it is so-called irresponsible spending. Tell the Hobart public that the quarter of a million dollars that this government is spending in Rosny Park alone on improving public housing through repairs is irresponsible spending. Get on the radio and tell them that should not happen either. That is the challenge for Senator Bushby. Tell them that the social housing that is being built in Rosny Park and Lindisfarne is no longer required, because it is irresponsible spending, and that Tasmania does not need these support facilities because the ideology of Senator Bushby and the Liberal Party is that the government should not intervene to assist the community at the time of the global financial crisis, the biggest crisis since the Great Depression in the thirties.

Senator Bushby has to go down and tell those 43 applicants in Rosny Park that they cannot improve the insulation in their homes, they cannot get any insulation, and it has to be ripped out. He has to tell them, ‘You can freeze in the Hobart winter and you can boil in the Hobart summer because it’s irresponsible to make your home more secure and more insulated through the government’s package.’

That is the challenge for Senator Bushby. That is the challenge for every coalition senator here: stop the rhetoric, go back to your communities and tell them that you are going to oppose it, that the money will not be spent and that your society, your regions and your communities should not be improved through the government’s stimulus package. Senator Bushby should go down to Tasmania and say: ‘We don’t want Tasmania to be at the forefront of the digital revolution. We don’t want the best broadband in the country to be rolled out in Tasmania.’ He should tell every tradesperson, every labourer, every cleaner and every other worker that, because of these stimulation packages, they should not get a job because that would be irresponsible spending. What an absolute nonsense!

When I sit here and listen to the economic incompetence across the chamber, I wonder how they ever managed for 11½ years. Then I think: ‘This is how they did it—they did nothing. They ignored the real issues in building a decent economy.’ All they can do is resort to scare campaigns about debt and terrorism. It will be children overboard writ large again as soon as you get an opportunity. You are built on fear and scare campaigns. That is in your DNA—fear campaigns for the Australian public.

We make no apologies for intervening on behalf of the Australian public when they are faced with the biggest global financial crisis since the Great Depression. What was the coalition’s answer? We know that it was to sit back and do nothing, to do what Peter Costello did for 11½ years—swing in the hammock and hope that the money would keep rolling in from the mining boom. Well, we do not have that sort of luck, so we have to actually manage the economy effectively, decisively and well. That is what a Labor government is all about.

Let’s be clear about what the scare campaign is about. The scare campaign is to try and divert the Australian public from watching the disintegration of the coalition and watching an impotent, incompetent, ineffective leader in the Leader of the Opposition, Malcolm Turnbull.

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

Senator Joyce interjecting—

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

It is no wonder Senator Joyce wants a divorce—absolutely no wonder. Your leadership problems are so big, so great, that you do not have anywhere to go other than scare campaigns. They go into their party room and they fight and squabble. They go onto the floor of the House of Representatives and they fight and squabble. They come here and tell Senator Joyce what to do and he nods his head, saying, ‘What will I do?’ It is just pathetic; it really is. You are a pathetic rabble of an opposition. All you can do is try and deny that there is a global financial crisis and say: ‘Look at the debt. Look at the problems we’re going to have. Look at this irresponsible spending.’

The Australian community know who are handling the economy well, and that is the Rudd Labor government. We are handling the economy in the interests of the community. We are handling this economy, the greatest challenge that any government has ever faced, decisively and well. We make no apology about protecting Australian jobs and communities from the worst financial crisis since the Great Depression. We make no apology for acting quickly, decisively and effectively, and we make no apology for underpinning 210,000 Australian jobs during the financial crisis.

The Liberal and National coalition need to act in the national interest once in a while and start thinking more widely than their party room disruptions and their weak leader. They need to start thinking about what is in the interests of this nation and this community. That is exactly what we have done, to state that neoliberalism has no role—that the community have to be looked after and the government must intervene to ensure that this economy is safeguarded against the financial crisis and has the basis for future growth built in now.

We have a plan and a strategy—something that Howard and Costello never had. You had tax cuts, handouts and money rolling in, but what was your legacy? Your legacy for the Australian community was Work Choices and the GST.

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

Senator Joyce interjecting—

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

Yet what are we doing, Senator Joyce? We are dealing with one of the greatest challenges that any government has to face, a social challenge, an economic challenge and an environmental challenge that we are prepared to take up—something that you did not have the bottle to deal with when you were in opposition.

So what happened to Senator Joyce? The now weak Leader of the Opposition actually had some courage when he was in opposition and he put Senator Joyce in his place. He said, ‘We are going to do something about the environment.’ When Malcolm Turnbull became leader—when the Australian public threw you out on your neck—he decided he had to concede the nonsense that was espoused by Senator Joyce. He had to concede and he had to give in because he is a weak leader, because he shows no courage, no strength and no conviction on behalf of the Australian public.

We make no apology for dealing with the global financial crisis or global warming. We want a sustainable economy. We want a sustainable future for the kids in Australia. We want them to look back at what we have done and say: ‘You did the right thing. You looked after the economy and you looked after what we need, which is a sustainable future.’ That is what the Australian Labor Party is about.

We have also set about supporting the retail sector. No other country in the world has a retail sector with the results that our retail sector has now. Those results are keeping Australians in jobs and are helping families through the assistance that we have given them. We are a government of vision. We are a government of courage. We are a government of conviction. Compare that to the rabble we have over on the other side, a rabble who cannot even keep their people in question time; the Western Australians walked out of question time in the House of Representatives yesterday. Unfortunately they do not have the courage of their convictions in the Senate. I am still waiting for the thank you from the Western Australian senators for the great job that Minister Ferguson has done in delivering the Gorgon project. It is about time you said thank you to the Labor Party for its economic competence and the delivery that we are providing for Australians in this country.

What else have we done? We have assisted pensioners. We have increased the pension—something you would not do, something you have walked away from. In a period when the money was rolling in, you ignored the pensioners of Australia. It took a Labor government to increase the pension to a reasonable level in this country. The problem, under the Howard government, was that they were ignored. The Howard government were too busy looking after the big end of town. They were too busy looking after their mates in big business. They were too busy turning a blind eye to the massive executive salaries, the golden parachutes and the golden hellos. There was more than a decade of absolute incompetence from the coalition.

When we came to government we had to deal with the failures of the coalition government. There was an absolute abject failure to bring investment into this country. You failed to deliver on innovation and industry, the thing that builds productivity and builds wealth for the future. You failed on productivity even though you tried to race to the bottom. Work Choices was your weapon against working people. Even though you were all Work Choices warriors, you do not want to hear the name mentioned anymore. ‘It’s gone; put it behind you,’ they all claim, ‘It’s not there any more, and we won’t go there again.’ The Australian public knows that you are Work Choices warriors and the only way you can deal with the economy is to try and force workers in this country to have lower wages and fewer conditions and give the bosses more profits at the expense of workers and do nothing about reinvesting in the economy. That is the legacy of the Howard-Costello government.

No wonder Peter Costello abandoned you lot. No wonder Peter Costello does not want to have any thing to do with you. He knows that you are a rabble. He knows that you are absolute economic incompetents. He wants to try to get out quick because he does not want another session in a party room that cannot even think about a policy issue. This country failed under the coalition. We lacked competitive advantage. We actually failed. Here we are, with arguments from the other side saying what brilliant economic managers they are. There was a decade of lost opportunities under the Howard government. It was a decade when the money was rolling in. You had the opportunity to build for the future. You had the opportunity to build our schools, to build our skill base, to build our industries and to intervene in the economy with the massive wealth that was flowing in. What did you do? You did nothing. You have left this country ill-prepared for the global financial crisis. It is only Labor that has the courage, the vision and the conviction to deal with the global financial crisis. It is no wonder that when the public thinks of the coalition they think about failure—a number of failed leaders since we have been in government, a failed leader and a failed party room with no policies to deal with the issues that are facing the Australian public.

As we have raised the issue of Work Choices, I just want to place on record my congratulations to the workers at Cochlear who have voted today to be represented by the AMWU, to be represented by a union against all of the intimidation that the company could put in place against those workers. Under Labor, workers now have the right to join a union, to act collectively and to be recognised. Not only are we making all these advances on the economic front; we are making advances on the social front as well.

You must accept that we are doing a fantastic job for Australia. The International Monetary Fund, the IMF, has again commended Australia on its response to the global recession. It notes that Australia has the best performing economy of any developed economy. That is what the IMF is saying. They are saying: ‘You’ve got it right. You’re doing it well.’ And what do we get when this rabble across the chamber come in here? The rabble criticise, carp and are negative—that is what happens. But the IMF have got it right. The IMF know a good government when they see it. They know that the Australian government is a good government, delivering for the Australian economy, delivering for the Australian public and delivering for communities all around Australia. I put the challenge to you again: go back to your states and tell them that the spending should stop, that the money should be ripped out, that the jobs should disappear. You will have even less credibility that you have got to here and you will have even less credibility than your failed leader, Malcolm Turnbull. (Time expired)

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

That was amazing!

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

Thanks.

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

That is the side that talks about their economic credibility, and today was pathos. It was amazing. A simple question was asked of Senator Conroy back on 11 August about what the face value was of Commonwealth government securities outstanding as at 10 August 2009. He took the question on notice. I was a bit worried as to whether he is actually the person who is supposed to be representing the Treasurer, so I checked that out and he is. But it did not really matter; he took the question on notice. At that point in time it was $106 billion, but he did not have a clue—not a clue. His way out of it was to say, ‘It’s not my responsibility.’ Do you know whose responsibility he said it was? He said it was Senator Sherry’s. So today we asked Senator Sherry, and what we got from Senator Sherry was an absolute clanger. We asked the question of the Assistant Treasurer, Nicholas Sherry, and he did not have a clue. He had three goes at answering the question about Australia’s debt as listed by the Australian Office of Financial Management as Commonwealth government securities outstanding. We were asking him how much was financed from overseas. He had not a clue. Then in his clanger of an answer—and this is from the people who are supposed to be able to manage the show—he came out with this:

With respect to debt, foreign debt, which is placed overseas, currently stands at some $678.3 billion …

It is actually $108.135 billion. It’s all right—he is only out by half $1 trillion! He is close: he’s half a trillion dollars away from the answer! And these are the people who are supposed to be telling us that they can manage the country.

It is beyond ridiculous. They just have this desire to wander out aimlessly onto the bond market. It is magic, you see—you just ask the bond market for money and they give you money. They just give it to you, and you do not have to worry about paying it back, you just keep collecting it. You keep taking it and the debt keeps racing up and up and up. On the 30th of the sixth, 2009, it was $101 billion; on the 30th of the seventh, it was $104 billion; on the 12th of the eighth, $107.5 billion. In the last couple of days it has gone up to $108.135 billion. The debt at a federal level keeps racing up, and then they have gone and underwritten their friends in state politics, their Labor Party mates. That is about $230 billion. And our font of knowledge, the Treasurer, tells us that the federal debt is going to go up to about $315 billion.

Let’s put all this money in the corner of the room and have a good hard look at it. We have got about $300 billion at a federal level. Let’s give them a couple of hundred billion dollars, plus some, at the states level. Let’s put a cost of funds, maybe seven per cent, on it. That makes about a $35 billion a year interest bill. We have never ever had a surplus of all the states and the federal government added together, in the best of boom times, that would pay our interest bill. And that is supposed to be Labor Party management.

As an accountant in this show, and unfortunately probably the only accountant in this show, I could tell you what happens next. You go broke. That is what happens when the client comes in and they cannot even get within a bull’s roar of the most basic questions. In this instance, the Labor Party government are being asked questions on behalf of the Australian people. In fact, they cannot even give you an answer. It was completely and utterly pathetic. Senator Sherry stumbled through answering a repeat of the question followed by another repeat of the question, he could not even get close, and then they try to tell you that they are decisive. They use that metaphor, but what does ‘decisive’ mean in their dictionary? Vague apparitions of suggested ideas; stumbling around; economic incompetence—that is what they personified. You can always tell when a client is on the skids, because they lose control of the actual money that they owe and they cannot answer the fundamental questions. This is what has happened here. The next thing that clients that are going broke do is that they start spending money on ridiculous ideas like there is no tomorrow. So we find out that this nation has $3.9 billion of borrowings because they have spent all the dough. They started with $21.6 billion of cash in the bank but they blew that. They blew that in about 10 months—the whole lot, up against the wall; off it went. I remember one day they put about $8.7 billion in cheques in the mail—out it went.

Money is not precious to the Labor Party. Money means nothing—you just toss it around. You see, it is magic stuff; when you run out, you just run out to the bond market and borrow some more. But the day is going to come when you go to the bond market and they say these horrible words to you; like the bank manager, they are going to say: ‘No. You can’t have any more.’

The government are going to spend $3.9 billion on ceiling installation up in the roof for the rats and mice to urinate on. I do not know what we are going to do with that. What are we going to do when we have to pay the money back? Dig the batts back out and send them back to China or wherever they came from? How are we going to deal with this?

Then there is the $890 million spent on boom gates. I do not remember a promise at the election for a boom gate bonanza. These $890 million worth of boom gates must be around somewhere, stuck behind a shed somewhere waiting to be installed by the Labor Party. Then there are the one-off payments—$12.7 billion shovelled out the door in $900 cheques. You are kidding me. And you talk about economic management! That is complete and utter profligacy. That is profligate waste of Australian taxpayers’ money, and now it is just a mountain of debt.

Every time you see one of your marvellous school halls that are being parked around the countryside—they are not going to increase people’s mathematics or English marks—you are going to have to imagine where this money comes from. When you see the school hall, imagine the flag of the Communist People’s Republic of China draped over about a third of it, because I reckon that is where the money is coming from; then imagine another flag from the Middle East draped over about another 10 to 20 per cent of it, because that is where that amount of money is coming from; and then imagine sundry flags from other nations around the world, because it is all borrowed money and it all has to be repaid.

Have they delivered an exit plan of how they are going to repay this money? No—not a smidgen, not a clue. Yet they have the gall to walk in here and talk about themselves as economic managers. Neither the Treasurer, the Assistant Treasurer, the Prime Minister nor anybody else in the cabinet has been able to table even a skerrick of a detail as to how we will pay this money back. They have not got a clue. So how are the Australian people going to pay this money back? The best we can get is two bullet points on, I think, pages 6 and 7 of that wondrous little orange booklet that Treasurer Swan handed out. It basically says, ‘When things get better, we’ll pay the money back.’ I wish it were that easy. If it were, I would try that out on my bank manager: ‘I want to borrow some money.’ ‘How much do you want?’ ‘A couple of lazy mill, if you’ve got it hanging around.’ ‘How are you going to pay it back, Mr Joyce?’ ‘Well, I’m going to say what our Treasurer would say: when things get better, I’ll pay you the money back.’ I just do not think it works that way.

Then we have Senator Sherry, who completely botches an answer. He was out by half a trillion dollars a day; that is correct, but what is half a trillion dollars between a couple of mates? Do not worry about that; just sweep it along. But what is concerning about that is that the lack of detail illustrates their lack of connection to the real problems. What we do know is that back in February we asked Dr Hyden from the Australian Office of Financial Management, ‘When you think this $200 billion facility, this $200 billion worth of debt, will be drawn down?’ He replied, ‘In about 2013-14.’ We asked Dr Hyden the same question two months later, in April. By that time, it was 2011. That is the mad trajectory we are on, but it is going to come unstuck. So Labor have got a cunning plan to get around this—a cunning plan to deal with it. Their cunning plan is called the CPRS—a cunning plan to stop the Australian people from realising that the economy is RS. The way they are going to do it is to bring on a double dissolution before the budget next year so that they can get around the fact that the books are in oblivion. This is the cunning plan of the Labor Party.

So the Labor Party have gone forward. First of all, they spent the money we had. We had $21.6 billion in the bank, and they went and spent that and a heap of provisions. They blew that in about 10 months. Then they spent the money we do not have—that is, they went out on a borrowing frenzy. Recently they have tried to inspire a reduction in interest rates and to get a stimulus going. I will be the prophet for the Labor Party; I can tell you where this will end up: it will end up with a thing called quantitative easing. That is where they are off to—quantitative easing. That is where they print the money. Of course, once we arrive at that point, it is game, set and match for the Australian economy; it is all over. They come in here and say that they are managing the economy. Well, they are managing to flush it down the toilet; that is what they are managing to do.

Sooner or later the penny is going to have to drop: you have to pay this money back. There is somebody somewhere who wants their money back and, if you do not pay it back, they are going to get very upset. But we will look at the trajectory of debt and see how it keeps going up and up and up and we will keep asking you the question. Every day we will ask the question. They have got more myths and fables over there than Aesop. It is incredible. It just goes on. Every day a new myth, a new fable, a new dragon to slay: ‘The Prime Minister’s going to save the world’ and ‘The Prime Minister’s going to cool the planet.’ Is he? No, not a skerrick of a chance. But he is going to devise a whole policy that includes a new tax for the whole of our nation.

If what they say is true—if we are in the middle of a financial crisis and we are to be so concerned—what is their magic bullet that we are going to cop between the eyes? Their magic bullet is an emissions trading scheme. They are the only government that is proposing as the absolute centrepiece of government policy a mechanism to make a bad situation worse. Who in their right mind would suggest a tax on every productive section of the economy that actually pays the bills to pay the debt? Who could possibly do it? Let us pretend that Australia is its own business. The government are going to go around that business and everything that actually produces something, that puts something on a boat and send it overseas, whether it is in the mining industry, the agricultural industry, the aluminium industry—the ones that actually make us money—they are going to tax. The government are going to put an overhead on it that is going to start forcing businesses overseas.

Even today in Rockhampton the cement industry is closing down. Why? One reason is some lunatic government policy that they will solo—by themselves—cool the planet. For that reason people in Rockhampton are now on the street. Working families are losing their jobs. You talk about your advocacy for the working family. I tell you the first thing you have to do for working families: keep them in a job. That is priority No. 1: keep them in a job. There is nothing romantic about being unemployed. That is what the CPRS is going to do. You will say, ‘Oh, that is rhetoric.’ No. That is happening. That is happening today. That is happening now. People are foreshadowing this and seeing it coming towards them. Already businesses are making the decision. They are quitting, running and leaving Australian working families on the street. Later on they will go up to Mackay and do it. Then they will go down to the Illawarra and to the Hunter Valley and do it.

I cannot believe that Mr Combet is going to do that to his own people, to the working families of his own area. He is going to put their jobs under threat. They try to gauge it and get around it and say, ‘When there’s a problem, it’s somebody else’s problem.’ They are actually devising the economic policy that is doing this. They are not only going to do this but doing it right now. It is happening today. It is already happening. What do they put forward? They are the economic managers. We are heading to a position under this crowd where we will not even be able to meet our interest payments. We asked this question back in Senate economics committee hearings. I think it was in estimates. When we cannot pay the interest bill, where are we going to get the money from? Where do you get the money from when you cannot pay the interest bill? Do you know what the Labor Party are going to do? They are going to borrow it. Of course they are going to borrow it. They are going to borrow the money to pay the interest bill. In accountancy parlance, that is called ‘economic palliative care’. It is the last thing that happens.

When you start capitalising your interest, the bank manager calls you into the office and says: ‘Goodnight, Irene. It is all over.’ But they are doing it. They are economic managers. The first thing a good, prudent economic manager does is give you a forecast for how you are going to run off your debt. They give you a peak debt position and say when that is going to occur. Then, as you track to program, you prove your competency. You prove that you have an understanding of the economic paradigm in which you are working. I can assure the Australian people they have no idea of the economic paradigm they are working in. There is not one prediction they have made that they are able to keep to. On the credit paper that the Australian public is borrowing against, via the Labor Party, they have not managed to keep to one condition. Every one of the gates they said they were going to meet in managing their debt they have missed. They have not just missed them but missed them completely.

When one of their senior operatives, the Assistant Treasurer of the Commonwealth of Australia, came into the nation’s Senate he was asked the most basic question. So help me, he got the answer wrong by half a trillion dollars. It is beyond belief that this is happening to us. There is a stunned-mullet look across the front bench, as they stumble around trying to answer the questions. They just do not care about it. They have no concept of repaying money. They have no idea. There is no acumen. There is no study. There is no late-night sitting down, getting out the calculator and the spreadsheets and saying, ‘Let’s work out where this show goes.’ They do not know. The Australian people are blindly going along saying, ‘I think they’ve got it under control.’ The Assistant Treasurer of the Commonwealth of Australia proved today that it is not under control. The good ship Australia is rudderless and out of control, and they are whooping it up on the decks. It is champagne and caviar on the decks, but the ship is heading towards the rocks.

I cannot believe they took on notice questions on some of the most fundamental principles. Even when they were forewarned that the question was going to come, because it was asked the previous week, they blew it again. Who in the Labor Party is running the show? Who in the Labor Party does know what is going on? Who do we refer the questions to? We have tried Senator Conroy and we have tried the Assistant Treasurer of the Commonwealth of Australia. Who do we ask next time? I might give Dougie a crack at it. I would have just as much luck. There is no-one there.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. It is bad enough that the public of Australia have to listen to this mad rant. I do insist that my colleagues are referred to by their correct titles in this chamber, please.

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator, thank you. I was about to do that. Senator Joyce, please refer to the senator as Senator Cameron.

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

I will retract. Senator Cameron is the good senator for working families who insists on an emissions trading scheme that is going to put those working families out of a job. ETS stands for ‘employment termination scheme’. It started terminating their jobs today. It started terminating jobs in Rockhampton. So much for their economic management. The ETS is the ‘extra tax system’. Every family, no matter where they are, is going to have a close relationship with our good Prime Minister. Every power point in the house will be connected to a tax connected to the Labor Party. It will be a new tax. Every shopping trolley will have a new tax in it. We will have the Prime Minister coming to you via your toaster, coming to you via your television set and coming to you via every electrical appliance in the house. If you want to get away from him, you can go and do some shopping, but he will be on every food item. If you just want to get out of the joint and go on holidays, do not worry, as his new tax will be on aviation fuel so he will be on the plane with you. This man is everywhere. He is everywhere but nowhere.

The Australian people should realise the opportunity costs. They are going to spend $3.9 billion on ceiling insulation. We could have built the inland rail. We could have built it all the way from Gladstone down to Melbourne. We could have built a corridor of commerce. It would have removed trucks from the road. It would have reduced carbon emissions, if that was what you wanted. It would have fixed interport connectivity. It would have actually done something. It would have delivered an asset to the nation—an asset which, at a future time, we might have been able to sell to recoup some of our debt. But, no, they did not. They had to spend it on ceiling insulation. They have spent $890 million on boom gates, $40.7 million on school halls and $12.7 million in one-off payments. That encapsulates it. It is so easy to spend and it is so hard to get it back. You do not have a clue. (Time expired)

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

I rise this afternoon to provide a contribution to this debate. Don’t you love it? We enjoy sessions on a Thursday afternoon as the opposition grapple for a topic to put forward in their general business time. It seems that week after week they manage to bat up to us some of the best Dorothy Dixers that we get to deal with in this chamber. The contribution this afternoon from my colleague Senator Cameron provided evidence that we enjoy debating these topics, because they clearly highlight to us the difference between what we are doing as a reformist and can-do government that is going to take this country forward and build the infrastructure, knowledge and health reforms and what happened under the Howard government under which the country languished for 10 or 11 long years.

We are on broadcast this afternoon, which gave Senator Joyce the opportunity to get out there and have a mad, factually deficit rant and to filibuster. Do not worry about the facts when you are putting an argument in this place. If you can puff up and get red in the face—a bit like that big white marshmallow man in Ghostbustersyou can come in here, say whatever you like, rave on as much as you like and not let the facts get in the way.

If people were listening very carefully, they would have noticed that there was not new idea from Senator Joyce—not one new policy idea; not one suggestion about what they would do if they were in government. I had a look at the papers today. If The Nationals broke away from the Liberal Party’s mantra and apron strings, I am not sure that they would ever be in government. But that is what is happening on the other side of the chamber. Day after day, in newspaper article after newspaper article we read about how they cannot get on with each other. The coalition parties in this country cannot seem to line up and have any coherent discussion about policy development, and so there is no policy development—absolutely no policy development.

We saw that today here in this chamber when we discussed the renewable energy bill. We have seen today that they are in absolute disarray over there. The conservatives in this country are too busy fighting and worrying about who is going to lead them. ‘Will it be Mr Sixteen Per Cent or will it be Mr Twenty-Three Per Cent? Will it be Tony Abbott or Mr Hockey this week? Should we go with Mr Malcolm Turnbull? Is he going to get us through to the election? Let’s just put up with it anyway and afterwards we’ll go for a new leader and wipe the slate clean and start again.’ That is what they are all on about. They are all about self-preservation and are scrabbling around trying to find the magical leader who might be acceptable to people in this country as a future Prime Minister.

But each week we see that people have confidence in this government. That is blindingly evident in the way in which this government is received as it goes around the country. When we got into government, we did not anticipate—and nobody could have anticipated—the global economic conditions that we were going to inherit. The other side stood up earlier this year, particularly after we brought down our 2009-10 budget, denying that a global economic recession was happening. They denied that we ought to get on board and be part of an international solution and denied that in fact what we had done was taken sound advice from Treasury officials—who, by the way, would have been the same officials providing very similar advice to those opposite if the result of the last election had been different. What we did was decide to put forward a plan to buffer Australia from that international global crisis.

And we have done extremely well. Nearly 12 months on, the facts and figures are there for us to see. What we decided to do was to invest in this nation to build infrastructure to make up for the years of neglect under the previous coalition federal government. They may well come in here and boast that they were sitting a large chest of money that they had built up as a surplus. But when people look around, they say to me: ‘What about my school classrooms? What about the fact that there were waiting lists for elective surgery? What about the fact that the roads and the infrastructure in this country have not kept up with time? What about the fact that people are still on dial-up in some parts of this country rather than on ADSL?’

So, you can brag all you like about the surplus that you might have achieved, but I can tell that out there in voter land the ordinary, everyday Australian looked around and saw a chronic lack of attention being paid to infrastructure, health, education and telecommunications. There was clearly a feeling out there that this was a country that was not with the program, not getting on board and not keeping up with the demands of the 21st century. The Labor Party went to an election promising to offer reform to this country and people accepted that. We are a government that got elected on the basis of reform, of modernising, of bringing this country into the 21st century.

You can come in here and rave on as much as you like, with no facts and figures and no alternative policies. But until you get some alternative policies, the people listening to this on broadcast will still feel that there is no credibility in the arguments that you put together in this place week after week. They can see no alternative policies and no alternative answers. They cannot even see any cohesion on the other side of this chamber. We have invested in a nation-building infrastructure program. Week after week, we make announcements regarding roads, rail, ports, clean energy and reforming universities. We have given a fair go to pensioners and we have looked at a sustainable pension system, along with a sustainable payment for carers in the budget. We have made the hard choices that are necessary to chart a course back to surplus.

Let me spend a few minutes here getting some facts and figures into this debate this afternoon. People on the other side of the chamber probably do not think that that is relevant. I do. People who are listening ought to clearly understand how we found ourselves in this situation and what we are doing about it. This is the deepest global recession since the Great Depression. There will be people out there who clearly remember the Great Depression. There will be people out there who would say to us, ‘If we’re in a deep global recession and Australia is not feeling the impact of it as much as other countries, then the Rudd government is doing a good job.’ The world economy is expected to contract by 1½ per cent in 2009. Major trading partners are expected to contract by two per cent. This is a worse outcome than during the Asian financial crisis. This is not a little blip in the roadway of world economic management; this is a major crisis, and we have weathered the storm remarkably well. Eight of our top 10 trading partners are expected to contract in 2009 and advanced economies in deep recession will contract by 3¾ per cent in 2009.

Australia’s GDP will contract by half of one per cent in 2009-10. Recovery is expected to gather pace from early 2010. So we have been through the worst and we are hoping that by early next year we will be on the road to recovery, with growth forecast to be 2¼ per cent in 2010-11. Public investment is helping to fill some of the gap, growing at 25 per cent in 2009-10, which is the fastest pace on record.

We have always been honest about the unemployment rate, which is forecast to reach six per cent and 8¼ per cent by June next year. This implies that around 980,000 Australians will be unemployed by the June quarter in 2011. We have always said—and we have always prepared the Australian public for this—that in a global economic recession and a downturn such as this there will be job losses, but we have said we will work incredibly hard to minimise the losses and maximise the opportunities for people so that they do not feel the incredible brunt of what is happening on the international economic stage.

Our terms of trade will fall 13¼ per cent in 2009-10, taking around $35 billion out of the economy. That is a result of what is happening internationally. Nominal GDP will fall 1½ per cent in 2009-10. This is the biggest fall in the postwar era. Inflation will moderate to 1¾ per cent by the June quarter in 2009 and to 1½ per cent by the June quarter in 2011.

If we are going to have a debate about spending in this country, we should put it in the context of what is happening in the international arena. Australia, along with the rest of the world, has faced the most difficult global economic conditions since the Great Depression, as I said. In fact, 29 of the 30 OECD countries are in recession or have experienced negative growth since the onset of the global crisis. This includes eight of Australia’s top 10 trading partners. So what have we done about it?

That is the situation we find ourselves in and all we can get from the other side of the chamber is a rant and a rave about how we are spending too much—‘Don’t spend any money. Don’t try to stimulate the economy to get us out of this situation. Don’t try to ensure that people have cash and jobs and can get on with their lives.’ We as a government take responsibility to buffer the impact of this on people’s individual lives on a day-to-day basis. Their view is: ‘Just don’t spend so much.’ There is no alternative policy for what we might do, how we will manage this crisis and what we will do to save people’s jobs. There is nothing. There is just the rant: ‘Don’t do it.’ There is no alternative offered.

We as a government have decided that we will stand firm and take strong and decisive action to cushion Australia from the worst impacts of the global recession. The Prime Minister, the Deputy Prime Minister, the Treasurer and the executive group clearly made that decision before Christmas of last year. They put in place a stimulus package that will ensure that this country is buffeted from the worst aspects of what is going on around the world.

We stepped in where the private sector is in retreat. We supported jobs and small business. We invested in the nation-building infrastructure that we need for tomorrow. We saw this as an opportunity not only to protect business, jobs and small business but to stimulate the economy and ensure that the infrastructure is there for the time when this country gets back on its feet. We need to get into the 21st century and be a modernised and responsive country.

The government is also using its economic stimulus strategy to build the infrastructure and skills that Australia needs for the recovery, our long-term productivity and growth. Building infrastructure and building skills go hand in hand. The people opposite me spent their whole time in government ripping dollars out of the education system. There was more than $800 million ripped out of the higher education sector. The VET sector was left languishing. They spent their whole time trying to plot—putting dots on a map of this country—where they would set up the exclusive Australian technical colleges, which to date have proven to be very disappointing in terms of their outcomes. Those on that side of the chamber were too busy with self-preservation. They were not stimulating the skills and the education sectors to develop the knowledge and skill base that trade and VET people need to undertake jobs and works. They did not provide input to businesses, provide infrastructure and provide the building competency that we need for the future.

The government has also put in place a fiscal consolidation strategy to return the budget to surplus once the global economy recovers. Recently the government welcomed the modest positive economic growth that was recorded in the first three months of 2009. This result means that Australia has not entered a technical recession. We have not done that. We had positive economic growth for the early months of this year—modest as it was. It is evidence that the government’s stimulus package is working.

Treasury analysis confirmed that, without the government’s cash stimulus payments, Australia would have entered a recession. There are many people listening to the broadcast this afternoon who do not need to be told that; they know it. They have experienced that. They have had the money in the stimulus payments. They can now see that the second and third tranches of the stimulus are being put into infrastructure around the country. It is going into schools, building houses, small businesses, and tradies and their skills knowledge. People have had the personal benefit and now there is that whole-of-country benefit, if you like. It is about stimulating the individual and businesses. At the end of the day schools will benefit, homes will benefit, first home owners will benefit and the homeless will benefit. We will benefit when the basic infrastructure that is needed in this country is built.

The global recession still has a long way to go, though. Growth will be slow and unemployment will rise. We cannot rule out the possibility of negative economic growth in the future. What we have done in the first half of the term of the Rudd Labor government is to start on a path to build a stronger Australia. As my colleague Senator Cameron outlined in his speech, we are on a path to build a fairer Australia, an Australia that is prepared for the challenges of the future. What we have done is to guarantee, for the first time in Australia’s history, an estimated $13 million in deposit holdings. We have delivered $77 billion in the nation building for recovery plan, a plan to stimulate the economy by supporting jobs today and investing in nation-building infrastructure for tomorrow.

We did that in three phases. The first phase was the short-term stimulus that was paid to people in late 2008. We made cash payments to pensioners, carers, veterans and families. That supported 1½ million Australians working in the retail sector. We trebled the first homeowners’ bonus to support the housing industry. In the second phase we looked at medium-term infrastructure. We began the biggest school modernisation program in the nation’s history—a stocktake of our schools, to see what was needed to fix them up, and to build classrooms, libraries and science laboratories so that the kids of today and tomorrow will have modern facilities to learn in. They will have modern school facilities to enjoy and to stimulate their hunger for an education. We are building 20,000 units and repairing 50,000 units of community housing. We have made local government infrastructure investments through the biggest ever national partnership with local government. Our third phase, long-term infrastructure, will start later this year. That is rail, roads and port infrastructure, including the first ever Commonwealth investment in urban rail. There will be large-scale building programs for hospitals, universities and TAFEs. We are also creating the National Broadband Network Co., which will invest $43 billion in the high-speed National Broadband Network that will deliver superfast broadband to 90 per cent of homes, schools and workplaces.

If that is not enough to keep us all busy, we have created a new Jobs and Training Compact. We have established a temporary investment allowance of 30 per cent until June 2009 and then 10 per cent and 50 per cent for general and small businesses respectively until December 2009. That will support their business investment decisions during this recession. We have invested in a new national car plan. We have developed a fiscal sustainability strategy. We have convened a Council of Australian Governments to implement a new national program of microeconomic reform, to produce a single regulatory environment for the Australian economy and to reduce the compliance burden for small business. We have created a new global role for Australia through the G20 summit. We have acted to protect our nation through the defence white paper. We have ensured that we have a new strategy for our Defence Force, particularly in Afghanistan. The defence white paper outlines what will prove to be the largest long-term investment in advanced naval capabilities since World War II.

This is a government that has not sat on its hands. The nation has faced the challenges of a global recession of immense proportions in the last 12 months and we have used our vision as a government. We have used the vision of the Prime Minister and his executive to ensure that the nation rides out this global economic crisis. We have buffered individual Australians and Australian businesses from the impact. We will ensure that the nation faces the challenges of the future. We have ideas, we have reform and we are getting on with the job—unlike my colleagues opposite, who simply want to laugh and filibuster and have no plans and no ideas. Never before in the history of this parliament has there been such a stark contrast.

Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

Imagine Mr Acting Deputy President, that you have just been appointed chief executive of one of Australia’s largest companies. The chief financial officer comes to you and says, ‘Chief Executive, I’ve got good news and I’ve got bad news. The good news is that you have just been appointed chief executive. Congratulations. The bad news is that your predecessor has left you a basket case. Your predecessor fibbed to the market, fibbed to the shareholders and failed to practise full and continuous disclosure. So, Mr Chief Executive, we have an operating loss of $12 billion and the company has a debt of $96 billion. There’s no plan to retire the debt and there are losses forecast as far as the eye can see.’

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

Sounds familiar.

Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

Mr Acting Deputy President, that does indeed sound familiar. It is not hard to recognise that situation. That is the advice that the then Treasury secretary had to tender to incoming Prime Minister Howard and Treasurer Costello in 1996. The Australian Labor Party had lied to the Australian people. They said the budget was in surplus when it was not. There was $96 billion of debt and a $12 billion budget deficit. That situation, as we all know, was not of the coalition’s making, but the coalition resolved to fix it. It was not easy. It was not popular. The easy thing would have been to keep borrowing, but we chose to do the right thing.

What made an already difficult task of balancing the budget and repaying the debt that much harder was the Australian Labor Party. The Australian Labor Party opposed, as we know, each and every measure designed to put the budget back into balance. The hide, the cheek! Labor created the debt and they tried at every step to stop us repaying it. We did not expect Labor to repay the debt; we just wanted them to get out of the way. They refused. It was just cheapjack, opportunistic politics at its worst. Despite the opposition, we balanced the budget and we repaid every cent of Labor’s $96 billion debt—every cent.

That is not all we did. We established an asset position—a future fund, a higher education fund and a health fund. We established the world’s best corporate financial and banking structures and, as a result of that, the best banking and financial culture in the world. On top of that, we gave the Reserve Bank independence. I can remember the then shadow Treasurer, Gareth Evans, threatening to sue the government for taking that step—that was quite extraordinary.

During our time in office we presided over a booming economy with record low unemployment and a dramatic increase in household wealth. That is the legacy of the coalition government. That was the bequest of the coalition to the Australian Labor Party. Upon inheriting office, Labor complained that the coalition had done too well, that the economy was growing too strongly. Can you believe that—the government complaining that the economy was growing too strongly? And who was to blame for that? Who was to blame for the fact that the Australian economy was growing too strongly? It was the coalition. We plead guilty. It was our fault that the Australian economy was booming.

Brett Mason (Queensland, Liberal Party, Shadow Parliamentary Secretary for Education) Share this | Link to this | Hansard source

They put the brakes on!

Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

They sure did. They slammed their foot on the brake pedal. Remember that pesky inflation genie breaking the bonds of its bottle; remember Wayne Swan’s reckless fuelling of inflationary expectations; remember Wayne Swan’s chilled jawboning of the Reserve Bank, egging them on to increase interest rates, which they did? In the process of fuelling inflationary expectations, Mr Swan king-hit business confidence and Mr Swan king-hit consumer confidence. Mr Swan did this in 2008, before the effects of the global financial challenge had reached Australia. At just the time Mr Swan should have been focusing on the strengths of the Australian economy he was fearmongering. Mr Swan caused the Australian economy to slow unnecessarily before the effects of the global financial situation had reached here. That is very important to understand. The problem was, I think, that after watching the coalition’s management of the economy for a decade, Mr Rudd and Mr Swan thought managing an economy was easy. In fact, Mr Rudd thought running the economy was so easy that anyone could do it, even Mr Swan. Labor thought that it did not really matter what it did or said, the economy would just keep on ticking along pretty much as it had been. How do we know that that was Labor’s view? You do not need to look much further than Mr Swan’s first budget speech when he said these interesting words:

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.

This honours and exceeds the 1.5 per cent target we said in January, without relying on revenue windfalls.

He also said in his budget speech:

We have honoured our commitment to deliver a budget surplus of at least 1.5 per cent of GDP—

No, that was not delivering a budget surplus. This government has never delivered a budget surplus; that was a forecast of a budget surplus which has not transpired. Not only has this government never delivered a budget surplus; this government will never deliver a budget surplus. Then came the sting in the tail for Mr Swan in his budget speech:

The previous government forecast a surplus of only 1.2 percent at 2008-09.

Who was the fool? I think it is clear. Poor old Mr Swan have not worked out that you cannot spend more than you bring in in revenue and come out with a surplus. It is a pretty simple equation, but that had eluded Mr Swan. Having trash-talked the economy, killed confidence, slowed growth and started the spend-a-thon, Mr Swan was looking for some cover. He was looking for an excuse and from this point of view he received a godsend. The global financial situation was indeed a godsend for Mr Swan because it provided the cover for the first year of his bungled treasurership. It provided the cover of the reckless new spending and Mr Swan’s irresponsible economic commentary. Seemingly overnight, Mr Rudd and Mr Swan morphed from being fiscal conservatives; they morphed from nudge-nudge, wink-wink ‘economic liberals’ to being great central planners. Overnight, the mark of fiscal virtue was no longer a balanced budget and a surplus; the mark of fiscal virtue became a deficit and the bigger the better. The bigger the deficit, the more virtuous you were. The bigger the deficit, the more you were trying to do good, the more you were seen to be doing good. That is what it was all about—being seen to be doing something, regardless of the effects. That is why Senator Arbib cannot answer how many jobs will be created from the $14 billion being spent on school halls. They cannot answer because they do not know. They do not know because they never asked. They never asked because they were not interested, because the purpose of the spending is to be seen to be doing something. It is there as a cover for a bit of old-fashioned pork-barrelling. Do not tell me, Mr Acting Deputy President—I am sure you wouldn’t—that boom barriers, bike paths and pink batts will a recovery make. This is not productivity-enhancing economic infrastructure.

I think Chris Berg from the Institute of Public Affairs put it very well in an opinion piece in the Age on 21 June. Mr Berg, whom I am sure Senator Mason is a fan of, coined a new definition for the noun ‘stimulus’: ‘a huge sum of money spent on any old crap’. I do not think I have heard a better definition of Labor’s stimulus package than that of Mr Berg. Mr Berg went on to cite a few examples of what justifies his new definition. In his piece, he wrote:

The Commonwealth Government is planning to spend $1.4 million helping a recreation hall in the ACT install iPod docking stations, among other things. Children these days apparently won’t go anywhere if they can’t plug in their MP3 players. And the global economy needs—really, really desperately needs—a couple more iPod docks.

He continues:

It would interesting to find out what proposals the Government thought were bad value for money, if any. If the iPod docking stations got through, what wouldn’t have?

I think that is a very fair question. So much for evidence based policy.

Mr Acting Deputy President, I know that I have been depressing you, so I want to lift the mood. There is some good news. Australia is faring better in the global financial situation than most other nations—that is good news—and the reason for that is that we had a better starting point. We started with no debt. We started with an asset position. We started with the coalition’s $21 billion budget surplus. We started with the world’s best financial infrastructure. None of these are thanks to the Rudd government. All of these are because of the hard work of the coalition. That does explain our relative position compared to other nations.

But there is more good news: our economy is holding up better than forecast at the last budget. As expected, the government is claiming that the anticipated better position is because of—and you guessed it—the stimulus package. But let us look at the facts. The RBA governor’s statement on monetary policy on 4 August makes it clear why we are travelling better than anticipated. He cites five reasons. The first: the strong state of the Australian financial system. Does that have anything to do with the Rudd government? No. The second reason: significant monetary stimulus from the reduced cash rate. Does that have anything at all to do with the Rudd government? The answer is no. The third reason cited by the RBA governor is the depreciation of the exchange rate in 2008. Does that have anything to do with the Rudd government? The answer again is no. The fourth reason the RBA governor cites is China’s strong economic recovery. Does that have anything to do with the Rudd government? The answer is no. The fifth reason cited by the RBA governor is this government’s fiscal stimulus. No doubt the fiscal stimulus had some effect. But the question to ask is: how much effect and at what cost? I would contend that it was at great cost and for very little effect—and I am not alone.

Professor Tony Makin, a respected economist from Griffith University, agrees. Professor Makin, in a piece in the Australian on 14 July—I will quote him because he does make a lot of sense—stated:

In most recent commentary on the state of the economy, it has become routine to credit federal fiscal stimulus, particularly the cash handouts to households, for any positive economic news. Whether it is the avoidance so far of a technical recession, higher than expected retail sales, or other miscellaneous measures of spending, we have been led to believe that things would have been much worse without the unprecedented fiscal activism.

But objective economic analysis based on standard textbook theory suggests that fiscal policy has played a significantly less important role in cushioning the impact of the global financial crisis on the economy as compared with the role played by monetary policy through interest rate reductions and associated exchange rate depreciation.

In other words, since the global financial crisis climaxed last October, dramatically easier monetary policy has probably done more for the Australian economy than fiscal policy.

The next statement by Professor Makin brings together his thoughts and those of the Reserve Bank governor:

A less modest, or perhaps more independent, Reserve Bank would take more credit for this.

I think Professor Makin nailed it. The RBA governor was being polite; he was being modest. The four main factors for our relatively better position have nothing to do with this current government.

I do concede that there was an argument for some stimulus, but I would have argued for a smaller and better targeted stimulus. We have heard the cry time and time again from this government: ‘Go early, go hard’. You would think that you were listening to a coach at a state of origin match rather than to serious economic managers. Rather than go early, go hard and go household, I think we should have gone slow, gone soft and gone business. We should have provided support to small business to continue to employ people. The coalition argued that there should be a tax loss carry-back for small business and that there should be assistance for small business for their super guarantee obligations for their employees. We also argued that there should be some stimulus spending but that it should be much smaller and much better targeted so as to focus on serious economic infrastructure to lift the productive capacity of the nation.

Having blown the budget, now is the time for the government to be honest and to reassess the balance of the stimulus money. When we put that to them, the government posed the question: ‘Why not spend the balance of the stimulus money?’ There are a few good reasons, I think. One is that it will be good money after bad. It will be money that will not do much good. The second reason is that, if that additional stimulus money were not spent, the debt would be less. At the moment we are on track for an interest bill of $17 billion per year. Surely that is something to be avoided if possible. The third reason why I think the government should re-examine the balance of its stimulus spending is interest rates. Again I will quote Professor Makin. Professor Makin, in the same opinion piece in the Australian which I cited earlier, said:

What economics textbooks also tell us is that continued fiscal expansion will limit the extent to which interest rates can be lowered in the future.

There is a warning there: ‘continued fiscal expansion will limit the extent to which interest rates can be lowered in the future’. Here is the kicker:

This is because extra fiscal activity raises the demand for funds, which pushes up long-term interest rates.

The government are pursuing a policy which will rapidly escalate the nation’s debt and not only see us on track for a $17 billion interest bill but also have the nation on track for higher interest rates. These will come just as the economy is recovering. Running the nation’s finances, running the nation’s budget and running an economy are not easy. It is a serious business. It is hard work. While I readily admit that our former Treasurer, Mr Costello, did at times make those tasks look easy, they are not easy. It is time for this government to mature. It is time for this government to get back to what they argued for early in their term—evidence based policy. If the government do get back to evidence based policy, they will review the balance of the stimulus spending and they will at least avert this nation from having a net debt in excess of $200 billion. The government need to think again.

David Feeney (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I have to admit that when I first read the general business notice of motion ‘That the Senate notes the Rudd Labor government’s reckless spending’ I did actually think to myself, ‘Well, hats off to Senator Parry.’ ‘Hats off’ because he is, in his own manful way, trying to evacuate the Liberal Party back to what might be said to be its political high ground after it has spent several weeks languishing in division and languishing in farce as it has tried to come to terms with climate change, with the RET, with Utegate and with the antics of the Leader of the Opposition and our very own Inspector Clouseau, Senator Abetz. Senator Parry remembers that, once upon a time, economic credentials were a brand strength of the Liberal Party. Incredible as that might seem, one might say that economic credibility was a pre-Malcolm attribute of the coalition. This is why Senator Fifield talked to us about the 1990s, because he hearkens back to those glory days, those pre-Malcolm days, when economic credibility was a strength of the coalition.

So how appropriate it is that the opposition has sent in the undertaker, in the shape of Senator Parry, to exhume its economic credentials from the tomb in which the Leader of the Opposition has interred them. When we consider the travails and disasters that the coalition has inflicted upon itself over the last few months, it really is just as well that the coalition has an undertaker on hand and it is just about ready for his professional services.

As the Liberal Party now attempts to re-engage in the economic debate in this country, after having taken a policy sabbatical of several months, it is clear that the coalition still has a long and rocky road ahead of it. The opposition is not seeking to participate in the economic debate in a real way—in a real debate. It is not proposing to make a real contribution. It is not offering a plan to protect Australian jobs or Australian industries. Instead, it is attempting to mount a fear campaign. The opposition seeks to campaign on a fear about taxes, a fear about employment and a fear about interest rates. This week we have seen Mr Turnbull and his frontbench trying to beat up a fear campaign over the Henry review of taxation. Indeed, we have just heard Senator Fifield suggest that the GFC itself is part of a magnificent Labor conspiracy. Perhaps he will do us the honour of showing us the email where this spectacular fact is revealed.

Just as the pre-Malcolm Liberal Party once enjoyed strong economic management credentials, so too did it once have a strong track record of mounting successful fear campaigns. It used to be good at that too. Senator Parry and those opposite will fondly recall the politically devastating fear campaigns mounted by Prime Minister Howard on issues like interest rates, terrorists and immigrants. Alas, it now seems that, in a post-Malcolm Liberal Party, even a half decent fear campaign is beyond them.

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

Order! Senator Feeney, refer to the Leader of the Opposition with his full title. It is not Malcolm.

David Feeney (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

The Leader of the Opposition seems to find that even a half decent fear campaign is beyond him. What the Liberal Party strategists, veteran MPs, pollsters and spin doctors have failed to understand or admit about the GFC is the letter G. This is a global financial crisis and everyone knows it. The government knows it, the markets know it and the people know it.

Every night on our TV sets and every morning in our newspapers we learn of the plight of our trading partners—of Japan, of the US, of the United Kingdom and of European economies like Italy and Spain. The GFC is an international tsunami, spreading from Wall Street and now encompassing the globe. If we briefly look at international net debt figures for the year 2014—and I choose the year 2014 because this is when net debt figures will peak in Australia—we can see that net debt will be 13.8 per cent of GDP for Australia. But also note that it will be 26.8 per cent in Canada, 74.9 per cent in the broader European area, 83 per cent in the United Kingdom and 83.4 per cent in the United States of America. It will be an average of 80.7 per cent of GDP for the 25 largest advanced economies. So, even on a cursory analysis, we can see that by international standards the net debt figures for Australia in 2014 are far lower.

This is where the feeble opposition narrative simply falls apart—like its leader, it simply falls apart. Senator Parry and his colleagues want us to believe that the Rudd government has been engaged in ‘reckless spending’. This is the same line they have been running ever since the global financial crisis began with the collapse of Lehman Brothers nearly a year ago. They simply refuse to acknowledge that there is a global crisis. This global crisis threatens Australian workers, Australian investors, Australian small businesses, Australian farmers and Australian working families. They refuse to accept that it is a crisis of this global kind and on this global scale and it requires immediate and strong government action.

What are the facts about the Rudd government’s spending? As soon as the global crisis broke in September last year, the Rudd government acted. It did not just make stuff up as it went along, as those opposite do these days. Instead it acted firmly, it acted quickly, it acted decisively and it acted on the best advice available—the advice of the Treasury, of the Reserve Bank of Australia and of the International Monetary Fund. The government moved swiftly with a plan. The government did two things immediately: it announced an economic stimulus package, including an increase in pensions, payments to families and $1.5 billion for first home buyers; and it announced that it would guarantee bank deposits. These two measures were designed to stimulate spending, support employment, save small businesses from bankruptcy and prevent a loss of confidence in our financial system—the kind of loss of confidence which has proved so very devastating in the US.

What was Leader of the Opposition’s response to these important measures? When the government’s first stimulus package was announced, the Leader of the Opposition said:

We support these measures and we are particularly pleased about the measure, the payments to pensioners.

When the Prime Minister announced the bank deposit guarantee, Mr Turnbull said:

We welcome this measure, we support it and we will give the Prime Minister every assistance.

But Mr Turnbull soon showed the weakness—the irresolution and the poor judgment which has tragically become a hallmark of his time as opposition leader. He soon changed his mind on the stimulus package and he soon changed his mind on the bank guarantee. He described the stimulus package as reckless spending and the bank guarantee as unnecessary. Apparently, that is the opposition position even today, even though in the year since then there has been abundant evidence, indeed overwhelming evidence, that the government measures were successful in preventing Australia following the US and other international economies down the slippery slope of a long and prolonged recession.

To the great disappointment of those opposite, Australia has had only one quarter of negative growth and has thus, so far, avoided a technical recession, and there is increasing confidence among many economists that we will continue to record positive growth figures. To the great disappointment of those opposite, we have seen only a moderate growth in unemployment, to about 5.8 per cent, which is of course too high but is far lower than the figures in most other countries, far lower than many predicted and far lower than those opposite hoped for. To the great disappointment of those opposite, there has been no financial crisis in Australia, there has been no run on our financial institutions, there has been no wave of bankruptcies and there have been no massive losses for most investors.

What did the Rudd government do this year, when it became apparent that the global financial crisis was turning into a deep and prolonged global recession, the worst economic downturn since the Great Depression? The government launched an aggressive program of countercyclical spending, investing in nation building through infrastructure and particularly through building and renovating schools, the best investment a country can make in its own future. Far from being the reckless ‘cash splash’ that the opposition and its friends in the media like to talk about, the Rudd government’s response to the global recession has been a very responsible investment in this country’s future. Fully 70 per cent of the government’s stimulus spending has been on infrastructure. It is being spent on roads, rail, ports and bridges—investments that will pay for themselves over the coming decade in higher productivity and higher efficiency in our economy. These are investments that should have been made over the past decade had the then government been responsible, but, of course, infrastructure was neglected under the Howard government. That government frittered away the surpluses it gained during the easy years of the resources boom on vote buying, on regional rorts and on middle-class welfare for people who did not need it. That was the real reckless spending, because it was spending without any return—without any real dividend for our country.

To listen to those senators opposite, we would think Australia is the only country which has engaged in countercyclical spending to fend off the worst effects of the global recession. Of course that is nonsense. Most governments have followed this course, some to a far greater extent even than Australia. China is spending nearly $900 billion, the largest government stimulus package in the history of the world. The US has already spent $700 billion, and is now spending a lot more bailing out its auto industry. The European Union spent €300 million. The UK is spending £19 billion and Japan $US18 billion.

Do opposition senators condemn all of these governments for reckless and irresponsible spending? Do Senator Parry and Mr Turnbull have any idea of the scale of the potential disaster which Australia has been facing over the last year? Do they remember the precipice which our economy appeared to be sitting on in September and October last year? As always, it is hard to tell what the Leader of the Opposition, Mr Turnbull, thinks, because he always wants it both ways. He is always walking both sides of the street. Australia can boast that it possesses an opposition leader who may meet himself walking in the door. Thus, in October last year, after the crash of Lehman Brothers, he said that Kevin Rudd had ‘hyped up this so-called financial crisis’. But the very next day he said:

… it is undoubtedly a very grave, the gravest global financial crisis that we’ve seen since the Great Depression …

In September last year he said that nobody could have predicted the financial crisis. Two weeks later he criticised Mr Rudd for ‘missing the warning signs at the beginning of the year’. So the crisis could not be predicted, but Mr Rudd was at fault for not predicting it.

This is a man who is only consistent in being inconsistent, a man who cannot make up his mind about anything, a man whose hallmark has been poor judgment. It seems that the very best attempts of Senator Parry and his colleagues to rescue him are doomed to failure. Mr Turnbull is a man who has changed his mind on every major issue—a man who is for stimulus one day and against it the next; a man who demands increased payments to pensioners, welcomes them when they are announced and then opposes them after the event; a man who describes as reckless and catastrophic measures that he supported when they were announced. He is a man with no credibility and, tragically, no authority within his own party.

The fact is that the Rudd government’s response to the global financial crisis has been completely responsible, completely orthodox and completely consistent with the response of other major economies. Every significant economist, every senior banker and every leading business figure has supported the actions taken by the Rudd Labor government. It is, in fact, the opposition which now sits out of the mainstream of economic thinking.

To support that proposition, I would like to quote at some length an article from March this year by the respected financial journalist Peter Martin, because I think this is an article that exposes the opposition. This is what Peter Martin said:

The International Monetary Fund has given the Australian Government the green light to spend even more to fight recession, taking a swipe at the alternative of tax cuts proposed by the Opposition, declaring its effect “not so dramatic”.

In a detailed analysis released in Washington overnight, IMF staff find that direct government investment of the kind included in the Rudd Government’s stimulus packages can boost the economy by as much as $3 for every $1 spent.

By contrast, income tax cuts of the kind proposed by the Opposition would boost the economy by just 30 cents for each $1 spent.

Direct payments of the kind delivered in December and to be delivered again in April would boost economic activity by about $1 for each $1 spent. Where the payments target low-income earners they can boost the economy by almost $2.

The findings undercut a claim by Opposition Leader Malcolm Turnbull repeated as recently as this week that his alternative of “bringing forward tax cuts to give incentives” would bring about a greater economic boost. Whereas Mr Turnbull attacked the Government ... for scattering around money “like confetti, sending out cheques to left, right and centre” and borrowing “$200 billion from our children” the IMF found that Australia was in a better position to stabilise or repay the debt it was running up than any major country other than Chile.

There we have it. The smaller and more targeted fiscal package that the others now proffer as a fig leaf in this debate has been discredited. It would not have achieved the results our package has achieved and, of course, it is nothing more than a debating device.

Another highly respected journalist is Ross Gittins of the Sydney Morning Herald. Here is his judgment on the Rudd government’s stimulus spending:

The big question is whether our early action yields what I call a significant “stitch-in-time effect”. That is, whether getting in so early and decisively changes the path of the down-turn, making it a lot less severe than it otherwise would have been: whether we get more than our money’s worth—a bigger bang per buck. So far, it’s looking good. There’s pretty clear evidence that the two cash splashes have boosted retail sales and new car sales and that the first-home owners boost, combined with the fall in mortgage interest rates, has significantly lifted new home loan approvals.

Still to come is the effect of the second stage of the fiscal stimulus, spending on “shovel-ready” minor capital works such as school buildings, and the third stage, major infrastructure projects in road, rail, ports and broadband.

          …            …            …

The more the authorities do to preserve confidence, the more effective their efforts to diminish the recession are likely to be. However, economists’ tendency to focus on what can be measured in dollar terms means they often fail to see that the psychological effect of their measures can be just as important as the “real” effect. The most amazing thing about this recession is the rapidity with which consumer confidence has recovered since the dark days of October. It is now back to where it was at the end of 2007. I think this has to be explained mainly by the confidence-boosting effect of the cash splashes and the slashing of mortgage interest rates.

There we have it. We can see that the psychological effects and the economic effects mean that we have in fact introduced a plan to combat the GFC—a plan that has worked, a plan that is working, a plan that will continue to work.

Senator Fifield prided himself on quoting various authorities. Glenn Stevens, head of the Reserve Bank of Australia, speaking recently to a parliamentary committee, said:

On the basis of the information to hand at present, this may well turn out to be one of the shallower recessions Australia has experienced. The chances are now we are not going to get the 8.5 percent peak in unemployment. The economy appears to be weathering a very large storm pretty well and the community’s confidence about the future has improved commensurately. Some of the recent strength in private demand might prove to be temporary. But at the same time, the contribution of public spending to growth in demand is likely to increase over the year ahead.

The fact is that the Leader of the Opposition and Senator Parry are completely wrong when they condemn the Rudd government’s response to the global recession as reckless and irresponsible. Economists, financial journalists and business organisations reject those allegations. The Rudd government’s response has been rapid, well judged, decisive, responsible and absolutely necessary. It has been taken on the best available economic advice, much of it from the people who once advised those opposite—indeed, from some of the people that those opposite appointed, such as Mr Stevens and Dr Henry. The Australian people know this and at the appropriate time will render their judgment on the Leader of the Opposition and the coalition. The weak and vacillating approach they have taken to the global financial crisis is in stark contrast to the behaviour and actions of this government. In the aftermath of this vacillating position advanced by the other side, there will be plenty of work for Senator Parry and his professional colleagues.

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

You can only imagine, can’t you, that the greatest day of the now Prime Minister’s prime ministership must have been the night that he was elected. Not really because he was elected—that would have been a great thing—but because he became the custodian of the almost $22 billion surplus that the coalition government had amassed during its time in office. You can imagine a grubby little Labor Prime Minister who finally had his hands on some money. He must have been like a little child let loose in a lolly shop. Just imagine the new Labor Prime Minister salivating over all the various ways he could spend the $22 billion surplus amassed for the Australian people. He has not disappointed us because from the moment that Mr Rudd was elected he started to make mistakes. Why did he do that? Because Labor have only ever had a political strategy that would get them elected, but they have never had an economic strategy. And that is to the detriment of the Australian people. The sad reality for mums and dads is that because Labor have only ever had a political strategy they are now paying the price for Labor’s reckless spending. Despite the protestations from those on the other side there is no good news in sight. Australians will continue to pay more under Labor.

What must be so disappointing for the mums and dads in Australia is that they are paying more under the leadership of a Labor Prime Minister who told them prior to the 2007 election that he was an economic conservative. He was an economic conservative who had a plan for Australia’s future, and that plan involved budget surpluses. The evidence that we now have, and I will turn to that, shows that the now Prime Minister was little more than just being loose with the truth when he told the Australian people that he was an economic conservative. It begs the question though, doesn’t it? Why would a Labor Prime Minister tell the people of Australia prior to a federal election that he was an economic conservative? The only answer to that question can be: because he wanted the Australian people to believe that he had the same fiscal and economic acuity as his Liberal predecessor, John Howard. Mr Howard was an economic conservative. A $22 billion surplus speaks to that.

Mr Rudd’s claim to be an economic conservative was all just spin, and the Australian people have now been delivered the substance. It cannot be denied: Labor’s pre-election commitment to fiscal conservatism, just like so many of Labor’s other pre-election commitments, was a farce. It was a sham, it was a charade and it was designed to pacify and con the voters into believing that Mr Rudd would be economically and fiscally responsible, just like Mr Howard. If you need any evidence of the farce, the sham that Mr Rudd continues to perpetuate, you only have to look at the fact that this government is following a policy of creating and constructing massive deficits well into the future. In very basic terms, what does this mean for mums and dads in Australia? Unfortunately it is a very simple answer. Mums and dads will continue to pay more for Labor’s reckless spending, and they will pay more through higher taxes and higher interest rates.

That cannot be denied because the facts over the last few days are now being put on the record. Rudd Labor this week have been given every opportunity to categorically rule out any new taxes including taxing mum and dad’s family home. But they refuse to do so. Why? Because they have returned to form. What we have with the economically conservative Rudd Labor government is an old-style, high-taxing, high-spending Labor government. Did the now Prime Minister, who is masquerading as an economic conservative, tell this to the Australian people prior to the 2007 election? Absolutely not. Did he tell the Australian people that they would have to bring in new taxes to pay off their massive spending spree? Absolutely not.

We know that Labor are considering more taxes. In question time yesterday Senator Sherry was given the opportunity and he failed to deny that both the Treasurer and the Minister for Finance and Deregulation agree that Australia should have an inheritance tax and that a deemed capital gains tax on death is yet another option being considered by Rudd Labor. He also failed to rule out that Australians will be slugged with a special tax surcharge on so-called high-income earners.

Then we have the comments from Mr Tanner, which should be read out so the Australian public know exactly what they have now got in voting for Labor. What did Mr Tanner say? He said this:

“We should have an inheritance tax or some tax of that nature. Deemed capital gains tax on death is another option in that regard.”

If they cannot get you while you are living, they will get you once you are dead. The good old Labor mantra of ‘spend, spend, spend and then tax, tax, tax’ is well and truly alive. What do we have with the Henry review? Quite frankly, nothing more than a vehicle to find more revenue to pay for Rudd Labor’s reckless spending. As the Leader of the Opposition, Malcolm Turnbull, so eloquently said:

The biggest brake on Australia’s recovery from this economic downturn is the mountain of debt that the Prime Minister has built for us. He’s talked about this decade being a decade of building. The only thing he’s built so far is a record level of government debt heading to $315 billion and likely to be more …

Labor continue to rewrite history. How soon they forget, or perhaps it is just a repressed memory, that it was the former Howard government, the former coalition government, that bequeathed Rudd Labor no debt, money in the bank and the best regulatory system in the world. Labor can continue to try and rewrite history but the facts remain. Let us look at a little bit of history. On Tuesday, 8 May 2007 the Treasurer of Australia, the Hon. Peter Costello, in delivering the budget address, said the following:

Australia is different to the way it was 10 years ago.

Our economy is about 1½ times larger than it was back in 1996.

We have another 2 million Australians who have found jobs since then. And average wages have increased 20 per cent in real terms.

          …            …            …

Ten years ago the Australian Government owed a net debt of $96 billion. The Government was paying an interest bill of $8.5 billion a year. Today we are debt free in net terms. And our net interest payments are zero. This is saving taxpayers $8.5 billion a year.

Back in 1996 the budget was in deficit. We were living beyond our means. Today we are living within our means. For the 10th time, I am outlining a Budget that will be in surplus.

How times have changed. Shame on the other side for standing in this chamber and trying to tell the coalition that we did not know how to manage the economy. Those are the facts. They speak for themselves. No matter how those opposite try to rewrite history the Australian people are not stupid and they know that through the economic mismanagement of those opposite they are now paying for their reckless spending. What Peter Costello said back then was what a true fiscal conservative sounds like, someone who understands that chronic national debt will have a crippling effect on the economy for generations to come.

It took the coalition government 10 years to pay back $96 billion of Labor debt and we did it during a boom cycle. How long will it take the next coalition government to clean up the filthy mess that Rudd Labor has created to the tune of $315 billion of debt to date? What is worse is that when in good faith the Australian people look to Rudd Labor for leadership and look to Rudd Labor for a way out of this black hole, this is what they see: nothing but darkness. Three hundred and fifteen billion dollars in debt is no laughing matter and Australians know that one day they will have to pay this money back. Increasing debt and a huge deficit—that is now Australia’s reality. Australians face a $58 billion deficit this year, $315 billion worth of gross debt for our children, seven years of budget deficits and a peak gross interest bill of around $17 billion. Without a doubt, actions speak louder than words. In the very short time that those opposite have been in power, they have presided over not only a swift but a disastrous U-turn by the Australian economy. The strong, robust Australian economy that they inherited from the coalition government has been destroyed. It is nothing but a memory. How things have changed for the worst since 2007.

But what is worse for the Australian people is that the $315 billion debt may even be a conservative figure. Perhaps that is what Mr Rudd actually meant when he called himself a ‘fiscal conservative’! So Australians are right to be asking Mr Rudd, ‘What is Rudd Labor going to do to get us out of debt?’ The bad news for Australians is that Rudd Labor does not have a plan. True economic conservatives leave government with a legacy that they can be proud of. The former coalition government left a legacy that it could be proud of. It was a record of no debt—and therefore no interest repayments—an almost $20 billion surplus and historically low unemployment. Australia, under Rudd Labor, is now a nation saddled with increasing debt. A nation saddled with a huge deficit—that is the Rudd Labor record. Rudd Labor has no strategy other than a political strategy. There is no long-term sustainable strategy or sound economic policy to rebuild this country. Australian families are paying the price for Labor’s reckless spending and, as always, it is the coalition who will yet again clean up the filthy mess.

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

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