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

The President has received a letter from Senator Fifield proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:

The Gillard Government’s failed budget strategy of debt and deficit putting upward pressure on interest rates.

I call upon those senators who approve of the proposed discussion to rise in their places.

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

This is Australia’s 43rd Parliament in our federal history, but some things never change. What has not changed since Federation is this: Labor governments always get Australia further into debt. Every Labor government spends more money than it brings in, every one of them since 1901.

I note that my friend and colleague Senator Fifield’s matter of public importance relates to the Gillard government’s failed budget strategy of debt and deficit, or should I say today the Gillard-Bob Brown government, the red-green coalition. This MPI would have been as relevant in 1995 under Mr Keating. This MPI would have been just as relevant in 1975 under Mr Whitlam. This MPI would have been just as relevant in 1945 under Mr Curtin or Mr Chifley. This MPI would have been just as relevant in 1905 in the aftermath of the first Labor government of John Christian Watson. The one thing that remains the same is debt. Remember this, there is an iron law of Australian politics and it is this: when Labor leaves office, Australia is further in debt. In good times, in bad times, in peace or in war, Labor sends Australia further into debt. It never, ever, ever changes.

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

We won the war, didn’t we?

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

In good times or bad, war or peace, it is always the same, Senator Cameron—more debt. Eleven Labor prime ministers and always more debt. The only common element in Labor Party politics from 1901 is more debt. Sometimes Labor are socialist, sometimes they are social democratic, sometimes they say they are economic conservatives. Sometimes they play up to blue-collar conservative constituencies. Sometimes they play up to the inner-city swingers. They change a bit, but what is the one constant: they always leave more debt. That never changes.

Under Labor, no matter what the era, no matter how trendy, no matter what leader they have, no matter what faction, no matter what gender, no matter what agenda, no matter whether they are committed to the White Australia policy or multiculturalism, no matter whether they are committed to protectionism or to free trade, no matter whether they are pro-Soviet or pro-American, it is always the same with Labor—more debt. That is the one constant in 110 years.

What are the consequences of debt? The cost of money goes up; debt places upward pressure on interest rates. That is the one constant in 110 years of federal government. We will hear this afternoon the Labor Party say: ‘Don’t worry, because this time we promise the debt really is necessary. It has to be done. Going into debt $100 million a day this time really is worth it. This time we have got it right. This time it has to be done.’

So what did Labor do? They had two flagship programs to stop the recession: putting pink batts into the roofs of Australian homes and building school halls. That was their plan to stop the recession. In the end some buildings burned down and others were built. That was what Labor’s policies to stop us from going into recession came down to. That was Labor’s failed recipe to stop us going into recession. We now know that the pink batts program was an absolute fiasco. There were four deaths, 200 house fires, 1,000 electrified roofs and dodgy insulation that is going to cost a further $1 billion to fix. It has also left a trail of ruined businesses throughout Australia. This was their good idea to save Australia from going into recession—putting pink batts into the roofs of Australian homes. Even poor Ms Gillard, the Prime Minister, said there were issues with that program—there were issues, indeed. It was an embarrassing failure and it is going to cost another $1 billion of Australian taxpayers’ money to fix it.

Then of course there was the Building the Education Revolution, one of the greatest infrastructure projects in Australia’s history. It was worth $16 billion. What did it amount to in the end? It amounted to overpriced school halls. They were somewhere between 40 and 60 per cent overpriced. Why? Because the government did not have the oversight mechanisms to determine how much those buildings should have cost. When they asked state governments to spend the money they did not have the oversight mechanisms to determine what was good value for money. As a result, for $16 billion, taxpayers got about $8 billion worth of value; $8 billion was wasted. These were the great projects to save us from recession.

It had nothing to do apparently with having one of the soundest banking systems in the world, courtesy of the Howard-Costello government. It had nothing at all to do with having one of the soundest prudential and financial regulatory systems in the world? It had nothing to do with the fact that we ran surplus budgets for 10 consecutive years? It had nothing to do with the fact that there was no government debt? It had nothing to do with the fact that we had a AAA credit rating? No, it had nothing to do with any of that. The government thinks it kept us out of recession by putting pink batts into the ceilings of Australian homes and building overpriced school halls. It had nothing to do with the fundamental soundness of the Australian economy, which is totally due to the Howard-Costello government?

It was an absolutely embarrassing shambles. If only it were so simple then all President Obama would have had to do was put insulation in roofs and spend some money on school halls and America would not have gone into recession. It would have been the same for Gordon Brown in Britain. This is a joke, an embarrassment and a fiasco. Those schemes are indefensible.

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

Net debt roughly comprises two things: income and expenditure. Income, generally speaking, for the government is a matter of tax. In the last term of the Labor government in response to a campaign promise there was a very significant tax reduction for many Australians. At the same time there was also an increase in the single pension rate. That substantial increase in the single pension rate was much overdue. There was also an increase in the utilities allowance for pensioners. There were some tax increases by the previous government as well. Significantly, there was the alcopops tax and the lifting of a tax exemption for offshore gas industries.

In bringing forward this matter of public importance about the budget strategies and debt I presume the coalition are not proposing to take away the tax reductions that were given to ordinary Australians last term and are not proposing to take back the increase in the pension rate. So what would the coalition have done if they had actually won? They talked much during the election and in the short time since we have been back about tax increases in a Labor government, but what would the coalition actually have done? In the election and subsequently their election promises were shown to be poorly thought out and unable to sustain reasonable analysis. I think Laura Tingle in the Australian Financial Review on 3 September 2010 said it better than I could. She said:

There are two possible explanations for how an opposition presenting itself as an alternative government could end up with an $11 billion hole in the cost of its election commitments.

One is that they are liars, the other is that they are clunkheads. Actually, there is a third explanation: they are liars and clunkheads.

But whatever the combination, they are not fit to govern.

And I think the debate that we have had subsequent to the election illustrates that very well. The opposition policies would not have stood up if they had won the election. They have opposed Labor’s proposed mining tax right from the beginning. They have denied any discussion on it. We have to ask now, when we are discussing the matter of income and expenditure, whether it is reasonable that income from Australia’s non-renewable resources should be used to fund critical nation-building infrastructure and in developing our skills base. Those on the Labor side, and now that is the government side, say, ‘Yes, they should be in some form or another.’ The mining tax as proposed by the former government will be changed significantly after consultation, I suspect. I think the mining industry was indeed expecting a change in the mining tax regime. It does make sense, particularly in the two-speed economy that is so much talked about now, that we do get some return from our non-renewable resources and that we do use that to boost the income side of the equation when we are talking about net debt.

But I will move on to the expenditure side of things. Here again we have the opposition waxing very passionately and long about reducing expenditure. One of their key platforms, apparently, is to freeze the Public Service, so if people leave the Public Service then there is a freeze on that number. That would dramatically reduce services and our skills base in the Public Service.

What are the proposals from the government? What are the actual, real policies that are proposed by the government and that the opposition opposes? We have, principally, the National Broadband Network. We heard Senator Joyce earlier repeat one of the accusations the opposition make about this—that the National Broadband Network is not useful; that it would merely help people to download movies faster. This betrays a very serious lack of understanding of many aspects of the way that the digital system works in our economy. It also betrays from those opposite, who often come in here and lecture this side of politics about their business acumen and experience, a very poor understanding of how business operates in the modern world. My husband is involved in the IT business. I know how important both download and upload speeds are to his business.

The opposition seem to have failed to understand this despite the fact that many of them represent regional areas. We have seen in the recent past many small businesses start to operate from regional bases because they have a reasonable broadband speed that allows them to sell globally on the internet and to download information. Farmers are doing it and small business people are doing it in regional cities and small regional towns. This is why the Independents are supporting a national broadband network and why they believe that that expenditure is worth it. It is critically important in a modern world; and Australia, as I understand, wants to be part of the modern world—even the opposition do.

The second major aspect of criticism is in the area of infrastructure. The inland rail network is coalition policy. The Nationals have made promises, saying, ‘We will invest in critical road and rail infrastructure and stimulate private investment in major infrastructure projects around regional Australia to reduce the burden on the taxpayer.’ That is just the sort of lack of rigorous policy and costings that we have come to expect from the opposition. They speak vaguely about bringing in private investment, and this at a time when private investment is only just starting to recover around the world. By and large this scale of investment, if we are talking about critical road and rail infrastructure, is not able to be supported by Australian investment. Here in this place earlier today Senator Joyce complained about investment coming in from China and the Middle East and having to pay back that money; and yet his party are promising major infrastructure investment from private investors. Does he seriously expect that private investment to come from within Australia? I do not think so. This is fudging and an example of doublespeak from the Nationals.

Again, Senator Joyce said earlier today: ‘You have to pay back that debt. God help you if you can’t pay them back.’ And again that illustrates his lack of understanding about the way that government economies work. I have sat in estimates with Senator Joyce and in other hearings of the Senate Economics Committee and seen Treasury officials and other economists patiently, time after time, try to take him through exactly how the economy works and why the Australian economy has a AAA rating and most of the states have a AAA rating. The net debt that he is talking about does not operate the way a small business does. We are not in danger of imminent default, as he and many others in the opposition keep saying and keep trying to scaremonger on. It is nonsense and this motion is nonsense. I have been in many meetings and had this patiently explained to me, and to others from the opposition. There is now a Treasury paper reconsidering the link between fiscal policy and interest rates in Australia which answers this motion precisely. I will just read from the abstract:

This paper examines the empirical relationship between government debt and the real interest rate margin between Australian and US 10-year government bond yields. Results for the period 1990 to 2009 suggest that Australian general government net debt has no impact on the short-run real interest margin, and has only a small effect on the long run. Further, the estimates suggest that movements in US general government net debt have a considerably larger effect than Australian general government net debt—implying that US influences take greater prominence in explaining the real interest margin.

I know that if he really tries Senator Joyce, and others in the opposition, will understand that. I have no economic background; my interest is limited. But that seems pretty clear to me and should be pretty clear to those in the opposition. I would like to see those in the opposition focus on a genuine debate. God knows, in these difficult economic times there are enough genuine issues of economic policy to focus on, without spurious and deliberately misleading motions like this one.

Let us have a look back, in the couple of minutes I have left, on the coalition record on interest rates. There were 12 consecutive interest rate rises in a row between 2002 and 2008 under the previous Liberal government—interest rate rises that occurred in the teeth of Reserve Bank warnings about an overheating economy and inflation. That is the legacy of the Liberal government: 12 consecutive interest rate rises in that six-year period. And they come in here and try to lecture this government, which has seen Australia safely through a global financial crisis, about interest rates and deliberately ignore Treasury advice. The last Liberal government did not leave us a budget deficit, and senior ministers and Prime Ministers in this government have acknowledged that and have given due credit to the previous government for that.

What the last Liberal government did leave were two very important deficits. They were a skills deficit and an infrastructure deficit. Despite the global financial crisis, this government has decided that those twin deficits cannot be left any longer. They must be addressed, even at the risk of a short-term government deficit, because it is now urgent. If Australia is to take itself out of the boom-bust of renewable resources and set itself up as a modern, productive economy which is lined in with the digital economy, we must take urgent steps now to deal with those infrastructure deficits and skills deficits. That is what this government has been focused on since it has got in and I hope that, despite our minority status, we will be able to take it up with renewed vigour in this new term of government. I hope that we will get some practical support from those opposite and from the other parties and independents in this place.

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

I join my colleagues in speaking to the matter of public importance—that is, that the Gillard government’s failed budget strategy of debt and deficit is putting upward pressure on interest rates. I want to use this opportunity to highlight the fact that it is the coalition that truly understands the correlation between strong economic management and the vitality of the small business sector. It is this sector that is the engine room of the Australian economy and it deserves our practical support and incentive to grow, prosper and employ more people. This is in strong contrast to the platitudes and the rhetoric we continually hear from the government about their so-called management of the Australian economy, and which we have just listened to another mind-numbing 15 minutes of. In fact, it is those on the ground, the small business people who invest their family’s interest and, in so many instances, mortgage their homes to bankroll their businesses, who know otherwise.

Labor offers only more of the same indifference and disinterest that has seen a loss of 300,000 small business jobs since Labor was elected to government. Why is this? It is because on this side of the chamber we know and understand that out of control and escalating spending means increased interest rates. The more any government spends—and in the case of this government, it is expenditure where there is no idea of how to ensure value for money—the more it equates to significant upward pressure on monetary policy, directly impacting the bottom line for small business. It is small business that delivers just under half of the jobs in the Australian workforce—about 40 per cent of private sector economic output and more than one-third of Australia’s exports. Only the coalition recognises that a thriving small business sector is a key contributor to a prosperous Australia, to sustainable economic growth and to community vitality.

The ABS, in June 2006, estimated that there were 1,646,344 small business operators. Of these, 67 per cent worked full-time hours—full time, a definition that those in the union movement do not understand. For those of us who have worked in small business, the notion of a 35-hour week is laughable. I would suggest that those small business operators would work double that time.

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

Senator Cameron interjecting—

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

That is because the financial security of families running small businesses is at stake. They are at the coalface, and any significant economic changes will be immediately felt by these operators. Yet Labor is still making life more expensive for small business. Only this week the Prime Minister has formed a committee for sycophants—or should I call them ‘believers’—who are determined to bring forward a carbon tax and legislate it in this parliament. With energy being a significant input cost, this will immediately increase real costs without any productivity gains for those operators.

The bottom line is the chime of the cash register will be an endangered sound. In fact, small business will become an endangered species under the disgraceful and inept management of this Gillard government—a government that has runs on the board in this regard. The irresponsible approach taken by the government should be no surprise; as of the last government, only 12 senators on their side had any experience in small business. That compares to 50 per cent of them who have union backgrounds and are here through the grace of their factional allies and factional mates. They are here because of their affiliation with the union movement. In the interest of the country, the Gillard government should focus on the real issues concerning Australians rather than spend time on petty political point scoring in the other place.

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I note with interest that Senator Cameron was interjecting on Senator Kroger. Senator Kroger said that Senator Cameron had no experience with small business. That is not true. He has a lot of experience with small business: he used to get big ones and make them considerably smaller! That was his contribution to employment in this country. I noted with interest, as well, that Senator Cameron was again interjecting on Senator Kroger. Where were the likes of Senator Cameron during the debacles surrounding the BER program, the pink batts program and the remarkable waste involved with those programs, which have not single-handedly put upward pressure on interest rats but have been an enormous contributor to it? Where was the Australian Labor Party backbench when they had the opportunity to have some input into this wanton expenditure driven by a political agenda for which there was no excuse?

Where was Senator Cameron? Where were the rest of the backbench when their government was out spending the funds of Australians on building education programs and pink batt programs for which there was no excuse? Senator Cameron knows full well that the figures of waste in relation to those two programs alone were absolutely mind-blowing. Did the government, having been warned about this, do anything—make any attempt to reduce that spending? No, they did not. From recollection, the BER was at least identified as having $1½ billion in wastage and $5 million in overexpenditure—or the other way around.

It is clear that in the Australian Labor Party, if you muck up, you get promoted. The member for Kingsford Smith has been promoted—or was he promoted because he made a mess of this or, as reported by former Senator Richardson, because he said he was going to create a by-election if he was not retained in the cabinet? It is one of two things. You will either get rewarded for economic failure which puts upward pressure on interest rates—you get a boot up the cabinet tree if you make a debacle of a program like this—or you are too precious to sack because, if you get sacked and go to a by-election, there is a very fair chance that in the seat of Kingsford Smith the Australian Labor Party would get rolled. This was a threat. One of those two things has happened.

I want to refer to some articles in today’s paper. I will preface these comments with this comment—

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

Was it the Australian?

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

It was theCanberra Times, actually—unless you are opposed to them as well! Where do they fit? Are they good? You have just attacked the Australian. How does theCanberra Times rate? Give me a hint. We know you hate the Australian. How about the Canberra Times? I am sure a few of them are listening. How do you rate them? Are they good or bad? Are they like the Australian according to you or are they different? I rather suspect that you are a very keen supporter of the Canberra Times, so you will be a little shocked when I read this. But before I get to that I want to say this. Not in some 50 minutes of a speech that, in the defence of the Governor-General, was not written by her—we all know that—was there one word about cutting government expenditure. There was not one single word in a 50-minute government prepared speech about cutting expenditure to ensure that we do not keep this upward pressure on interest rates. Clearly this government has no intention at all of doing anything about reducing the potential impact on Australian families.

Senator Cameron comes, like I do, from a state which is completely different from Western Australia and Queensland. Senator Cameron knows as well as I do that the small business community in New South Wales and Victoria is under enormous pressure. Those in retail in particular are under enormous pressure. I defy anyone in this chamber or the other place to go into a small business, particularly a retail based small business, in Victoria, New South Wales or Tasmania—Senator Barnett is here—and say that that business is not under enormous pressure. They will be under even greater pressure if we see a surge in interest rates on the back of a failure of this government to cut government expenditure.

I notice in the gallery that there is a family with two young children. This family will potentially be the losers, with higher interest rates. I do not know the couple I am looking at with their children; I do not know their circumstances, but I rather suspect that they are probably average Australians, like the people in this chamber, who will be unduly impacted by an increase in interest rates if it is not backed by the sort of economic growth that we should hope to see to try to counter some of those impacts.

I will read from the Canberra Times some comments in an article by David McLennan. He said:

The Government has rejected—

and I am being quite open and transparent with what I am quoting—

a respected forecaster’s prediction that the budget will only briefly return to surplus, but the Opposition has seized on the finding as proof “Australia is facing years and years of budget deficits”.

Access Economics’ latest Budget Monitor predicted the nation’s accounts would fall back into deficit after a brief return to surplus in 2010-13 because of declining commodity prices.

The article goes on:

Opposition treasury spokesman Joe Hockey said the report showed the budget was built on quicksand.

“It’s undeniable now that because the Government is spending all of the proceeds of the mining boom, Australia is facing years and years of budget deficits, which means more and more debt from Labor that will never be repaid,” he said. “Unless Labor pulls back on its spending, Australians are facing higher interest rates and higher taxes.”

Indeed, if you go through all the economic commentary in the last week, you will see another article from David McLennan yesterday titled ‘Commodity boom ‘house of cards’’ and an article from David Uren today in the Australian. I know that Senator Cameron has a passionate hatred of the Australian but I am sure he is not indicating that that is a personal attack on the bona fides of Mr Uren, because I would have thought David Uren is viewed by most people as being a good economic commentator and a reasonable economic commentator—a very reasonable economic commentator. He has indicated the very things that we are talking about. We are just about to venture down a path that this Prime Minister will have no control over. This Prime Minister will have no control over it because this is the same Prime Minister who drove the Building the Education Revolution fiasco. This is the same Prime Minister who was incapable of addressing the pink batts debacle. This is a Prime Minister who quite frankly, I suspect, does not care what the impact of higher interest rates is because this is a Prime Minister who gave to the Governor-General yesterday a 50-minute speech that made no mention of it whatsoever. (Time expired)

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

I must congratulate Senator Ronaldson, the previous speaker, for clearing the gallery. That family with the two kids he mentioned in his speech could not stand the hypocrisy for one minute longer, so off they went. It was a fantastic clearing of the gallery. Well done, Senator Ronaldson.

Let me talk about the budget approach of the government. The budget approach of this government is to make sure that we build the economy, have a strong economy and build a fair society. It is pretty simple. It is about building a fair society. It is about understanding that the market cannot deliver on its own, that there is market failure and that government needs to intervene in the market. That is exactly what the government has done.

If you go back and have a look at the so-called great economic record of the Howard government, what you will see is a record of abject failure. Business investment collapsed under the Howard government. International investment was not made here under the Howard government. There was a failure of innovation that is so important to our economy. We were amongst the lowest spenders on research and development in advanced economies. That is the record of the Howard government: a failure of productivity. Productivity declined under the Howard government. We hear all these lectures about productivity and yet under the Howard government productivity declined. We were amongst the lowest in OECD countries in productivity. And what was their answer to low productivity? It was Work Choices. That was the answer to low productivity. Cut workers’ penalty rates, cut family standards of living, get rid of annual leave loading, get rid of rights on the job and get rid of penalty rates. That was the record of the Howard government. That was your economic policy, an economic policy based on attacking working families in this country. There was a failure of development, a total reliance on the minerals and mining sector for this economy.

Under the Howard government the export share of elaborately transformed manufactures fell from 23½ per cent to 17½ per cent, so the knowledge industry, the manufacturing industry, declined under the Howard government. There was a failure of competitiveness. Our current account deficit continued to rise. There was a failure of balance and what you did with Work Choices was to transfer $30 billion a year of workers’ wages to profits that were then not reinvested. That is what you did. Those profits went into the back pockets of the billionaires and millionaires, and you stood back and applauded that approach.

Your biggest failure was to fail to deal with the issue of long-term sustainability not only of the economy but of the environment. Now we know why you failed to deal with it because all the extremists, the climate change deniers and the climate change sceptics that dominate the Liberal party would not even let John Howard deal with the issue of climate change. Now you have the wrecker in charge—your leader, Mr Tony Abbott, is nothing but a wrecker. That is what you have in your leadership now. He would wreck the economy, he would wreck our chances to try and deal with climate change and he would wreck workers’ rights. You know that is the position because that is where you fundamentally come from. You fundamentally come from a position that says that workers will sacrifice to improve productivity and workers will sacrifice to increase profitability for business. That is where the wreckers are. You are the wreckers.

You demonstrated your total lack of economic competence. In the period that you were in government there was over a decade of lost opportunities when the money was flowing in from the mining boom but the coalition were incapable as a government of actually making the investment for the future. You did not invest in education, you did not invest in skills and you did not invest in the industries that built the knowledge for the future. You were an abject economic failure, an absolute rabble masquerading as competent economic managers. But the game was up for you. There were 10 interest rate rises in a row. You know that you were never competent to run the economy.

We have a coalition that is incapable of actually framing an independent economic agenda. If the Australian ever goes belly up and closes down, you will have no economic agenda because your agenda relies on the commentators in the Australian. This resolution before us today is straight off the front page of the Australian newspaper. That is where it is from. Every question you ask on economics, every position you adopt in economics is straight out of the Australian playbook. That is where you come from. You are incapable of developing decent economic policy for this country. The Australian front page is really the proxy for your economic competence. If you want to know what the Liberals and the coalition are going to be up to, read the front page of the Australian and that is what you get in this place all the time. You do not get any innovation, there are no policies that would support working families.

The proposition that you have put up in this resolution goes to the fundamental difference between Labor and the coalition. You are the wreckers in this parliament. You are clearly the wreckers. We are about building for the future. Your position is to let the market rip. How else could you justify the position that you adopted when we were facing the global financial crisis and your economic spokesperson was saying, ‘We should just wait and see what happens.’ When the International Monetary Fund, the OECD and governments around the world were saying that you must intervene in the economy and take steps to maintain economic activity, what did the coalition do? The coalition said, ‘We should wait and see what happens.’ What an abject failure of economic leadership from this so-called economically brilliant opposition. You are absolute economic phoneys and you know it because you could not deliver on the key factors that build the economy.

You have the cheek to come in here and criticise a Labor government that has underpinned 210,000 jobs and created half a million jobs. When countries around the world are looking to put more investment in to try and create jobs, we are seen as the economy that delivered, the government that delivered. We are the government that made this economy absolutely clear of recession. There was no recession in Australia and recessions in almost every other country in the world. What you wanted to do was to run the line that you got from the economic radicals in New York—the Tea Party. You had the ‘tea party’ out here telling you how you should take up your next political position. You know it is true. You had them out here and you are all about cutting government expenditure. It does not matter if government expenditure is—

Opposition Senators:

Opposition senators interjecting—

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Cameron, I would remind you to address your remarks through the chair. I would also ask senators on my left to abide by standing orders and stop interjecting so that we can have an orderly debate.

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

Thank you, Mr Acting Deputy President. That is a very fair ruling, and I will definitely address the issue through the chair. What the opposition say is that government borrowing is bad, private borrowing is good and the market should just be left to get on and do the job. That is what the tea party extremists are here in Australia telling the Liberals and the coalition now. The tea party message to the Liberals is that government debt is bad, private debt is good and income tax cuts should simply be the answer to everything. That is the proposition that these guys from the coalition are dealing with now. They act as if there was no global financial crisis ever. They are trying to pretend there was no global financial crisis.

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

There was a North Atlantic crisis.

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

You never hear them talking about the global financial crisis. You never hear them having any sympathy or empathy for Australian families who would have had no job and would have been confined to long-term unemployment. You never hear them talk about the industries that would have gone under if the government had not put its fiscal stimulus package in place. You do not hear any of this. They do not have any idea about what a government should do when faced with a global financial crisis. They keep coming up with the same arguments, yet they do not understand how the financial bubbles created this economic crisis. They really do stick to the old adage that greed is good. That is where they come from. They think greed is good. They do not really care about working families. That has clearly been their position over the years.

The budget strategy that the Labor government put in place was dealing with debt in an appropriate way—a timely, targeted and temporary way. We have debt levels that are dramatically lower than in any other advanced country in the world. We have a deficit that is lower than in any other advanced country in the world. All your fear campaigns will be addressed. We will confront your fear campaigns, because the days of you running fear campaigns and getting away with it are over. You have no other strategy than fear. That is the approach you take. The coalition are the economic fundamentalists who are running fear campaigns and are the wreckers of the economy. That is really the position you are in.

It is Labor that will build a strong economy and a good society. It is Labor that cares about working families. You see, we understand that, if government does not step in when the private sector steps out of investment, it is ordinary workers in this country that suffer. It is workers that are made redundant. You see, I actually know what it is like to be made redundant. I have been made redundant as a fitter working in ordinary business. I do not think there are too many on the other side that would know what it is like to come home and tell your family that you have been made redundant and that you have no job, no income and very little chance of getting a job. I do know what that is like. I have been there. You do not know what it is like, because clearly your economic policies would make it worse for ordinary Australians. When you end up in a recession and you have families being wrecked by this laissez-faire economic policy of the coalition, you do not think about the jobs that are lost and the impact that that has on ordinary Australians.

You come here and lecture us about small business. Let me tell you: we are the ones that want to cut tax for small business. We are the ones that want to increase the wealth of ordinary Australians by increasing superannuation. We are the ones that want to increase infrastructure in this country, and you have no plan and no strategy for that. All you want to do is have your mates in the mining industry continue to operate as billionaires and not pay their fair share of taxes. That is not what we are about. We are about making sure that Australians get their fair share, that we have a strong economy and that we have a fair society in this country. That is the difference between Labor and the coalition.

Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Link to this | Hansard source

As always, it has been nothing short of an extraordinary contribution from Senator Cameron. I find it difficult to sit here with a straight face and be told by a member of the Labor Party how bad it would be for workers to be made redundant and how terrible a recession would be, because the last time Australia had one of those it was the one we had to have, where farmers, businesses and homeowners around Australia lost their homes, their businesses and their livelihoods directly because of the actions of that Labor Party. Then the Treasurer had the gall to stand up and say to the Australian people, ‘This is the recession we had to have.’ So much for the million unemployed people! So much for the $90 billion of debt that was built up in those four short years of the nightmare that was Paul Keating! What we did over 11 years was to fix the wreckage that you left the Australian economy in. What Labor is doing today is the same thing.

We could go back through treasurers through 30 years. It could be Costello, Keating, Howard or Hayden. They all spoke about the need to reduce government spending and, in Labor days, to reduce the deficit so as to reduce pressure upon interest rates, because we all know—it is basic economics—that there is a trade-off between the level of government deficit and borrowings and the pressure put on monetary policy. This is a basic principle of economics. This is the challenge that this government has not been able to address, as the previous government did, in its response to what it termed the global financial crisis. As it always does, it tried to contrive and confect some greater excuse, as Senator Bushby interjected earlier when he referred to this as being primarily a North Atlantic crisis. What this government did was to introduce a so-called stimulus that was too much, too quick and way too messy. It was too poorly targeted. You were warned at the Senate inquiries into the stimulus package that the pink batts program would be a fiasco. You were warned throughout the BER program that the system was being rorted, that money was being wasted and that the government, the taxpayers of Australia and the children in those school halls—who are going to have to pay for them for 20 or 30 years—were being overcharged by the system you set up.

The point here is that this government has no claim to economic credibility. As for Senator Cameron’s claims about the 11 years of the Howard government, I only say that the Australian people would look forward to another 11 years of economic management of that quality: unemployment that was among the lowest we had seen in 40 years—the lowest in my lifetime—government debt paid off, and money put in the bank through the Future Fund to pay for the deficits and the liabilities built up under the Hawke and Keating Labor governments. The country could do with a fair bit more of that, so if Senator Cameron is saying that the country could have a bit more of that then I am sure we would agree.

Senator Cameron likes to talk about the last financial crisis. I notice he did not mention the current one. What we are seeing, particularly in Europe and, worryingly, in other parts of the world, is the second one coming. This second one is much more dangerous because it is a sovereign debt crisis. We have countries in Europe that cannot borrow. We have the European Union trying to set up a $500 billion stabilisation fund that the financial press has been reporting in the past few weeks is not succeeding. What is that driven by? It is driven by governments borrowing too much money. Every time the government borrows a dollar, it is asking a future Australian to pay it back with interest. This government inherited a $20 billion surplus. Last week it claimed that somehow the small $2 billion improvement in the deficit, from $56 billion to $54 billion, was a measure of the government’s success. God knows the country cannot afford any more success like that, nor can the children, the future taxpayers of Australia.

We heard in the Senate inquiries into the stimulus—held before and afterwards—from eminent economists that the government borrowing increasing amounts of money, a lot of it offshore, some of it domestically, is putting upward pressure on interest rates. They are higher than they would otherwise be. For a while the government’s excuse was that they were returning to their normal level. But the truth is that now they are going above the normal level. The senior economist at HSBC, a former senior economist at the Reserve Bank of Australia, lifted the veil—and the truth on this government has been exposed—when he predicted last week that we are going to see a 1.25 per cent increase in interest rates by the end of next year. Expectations in the markets are that interest rates are going up. Expectations are in the order of a per cent. This person has predicted 1.25 per cent. That is going to mean hundreds of dollars a month for the average mortgage holder—and many Australians hold mortgages larger than the average—and it is going to mean a significant burden upon small business. I want to turn to this in my last couple of minutes.

It was a great pleasure to be appointed one of the coalition spokespeople in this portfolio last week, because this is the heart and soul not only of our side of politics but of the Australian economy. Senator Cameron was up here talking about how the Labor Party cares about small business. At the moment they are launching an attack on unincorporated small businesses and personal services income to try and drag them into the unionised employee net. Their attacks on small business finance have been numerous. The government guarantee destroyed the non-bank lending to small businesses and medium businesses around Australia. The government guarantee put an end to a lot of the competition in the banking sector. What we see now is that more than ever it is hard for small business to access the finance they need to run and manage their business. With these interest rate increases that are coming, it is going to become not only harder to get but one hell of a lot more expensive.

The truth about this government’s impact on interest rates was made clear by the Treasury itself in the so-called red book when they said that ‘there is also scope for the government to improve the quality of its own spending programs in a way that takes pressure off interest rates and the exchange rate’. There we have it: the Treasury the government so often likes to refer to making it clear what everyone else knows is a basic principle of economics. If the government keeps borrowing and keeps running up debt, we will see higher interest rates than there otherwise needs to be. Just like in 1996, this government is going to pay for increasing this interest rate burden on Australian people and small businesses.