Katy Gallagher (ACT, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Cormann. I refer to the RBA's decision to cut the cash rate to a new record low of 0.75 per cent. Last Friday the Australian Financial Review reported:

Finance Minister Mathias Cormann has welcomed further interest rate cuts …

Given that former Treasurer Joe Hockey once described an official cash rate more than three times as high, under Labor, as being 'beyond emergency levels', how does the minister describe the current cash rate?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I'm pleased: not only do we have the great senator from New South Wales reading the talking points of the Prime Minister's office, we have Senator Gallagher reading what I say in the Australian Financial Review. That is really good.

In relation to the official cash rate, what I said in the interview that was quoted—and I stand by that—is that decisions on monetary policy are entirely a matter for the Reserve Bank, to make assessments independently as they consider is appropriate. You've obviously got to consider the international context, and that is obviously part of the judgement the Reserve Bank has made, if you listen to what the Reserve Bank has said in recent times. The Reserve Bank governor has actually said exactly this: you've got to consider what is happening in a structural sense to global interest rate settings.

If the interest rate, the official cash rate, in Australia was materially higher than in other parts of the world—as it turned out under Labor, when you put in massive fiscal stimulus—then the value of our currency would go up and our exporting businesses would be less competitive internationally. It would hurt our agricultural sector. It would hurt our resources sector. It would hurt our manufacturing sector. So the Reserve Bank makes these judgements, independently as they see fit, and I have indeed welcomed the decisions the Reserve Bank has made. Indeed, monetary policy and fiscal policy are working in the same direction, helping to ensure that our economy can continue to strengthen into the future in the context of very difficult global economic conditions.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Gallagher, a supplementary question?

Katy Gallagher (ACT, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Mr Hockey said of the RBA's decision to cut interest rates to 2½ per cent in August 2013—and there were a few global headwinds then, too—

They're not cutting interest rates because the economy is doing well. Interest rates are being cut to 50-year lows because the economy is struggling.

Why is the economy performing so badly? And who in the government is responsible?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

The Australian economy continues to grow. We're into our 28th year of continuous growth. We are one of 10 economies that are AAA-rated by the three major credit rating agencies, with more than 1.4 million new jobs and the highest workforce participation on record. Earlier I was asked a question about wages growth. Real wages grew by 0.7 per cent through the year to the June quarter—above the 20-year average of 0.6 per cent and above the rate of 0.4 per cent through-the-year growth when Labor left office. So, let me say again: wages growth today is stronger than it was when Labor left office. Real wages growth today is stronger than the long-term average.

We are continuing to work to build the strongest-possible economy in the context of very difficult conditions globally and domestically. You say that you had difficult conditions back in 2012-13. Let me tell you: you either had the— (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Gallagher, a final supplementary question?

Katy Gallagher (ACT, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Interest rates are now at record lows and, according to the Reserve Bank, growth is weaker than expected, employment growth is likely to slow, wages growth remains subdued and there is little upward pressure at present. When will the government finally take responsibility and lay out a plan to support the economy?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I don't think Senator Gallagher listened to my previous answer. Wages growth through the year is actually above the 20-year average of 0.6 per cent and above the rate of 0.4 per cent through-the-year growth when Labor left office. I'm just telling you the facts. I also know what the RBA governor said very recently—that he expects the economy to gradually strengthen on the back of lower interest rates, lower taxes, continued high investment in infrastructure, a pick-up in the resources sector and stabilisation of the property market. The government are continuing to do everything we can to build a stronger economy through our ambitious infrastructure investment program and our ambitious free trade agenda, helping our exporting businesses sell more Australian products and services all around the world, as well as our deregulation agenda and our plans to bring the cost of energy down. We will continue to do the right thing by the Australian people, and we'll leave the sniping to you.