Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 3 December 2003
Page: 23637

Mr HOCKEY (Minister for Small Business and Tourism) (3:42 PM) —That effort from the member for Fraser was a little disappointing, a little lame. There was not a lot of passion and not much enthusiasm, but there was a whole lot of political rhetoric that means little to not only the 1.1 million small businesses out there but also, significantly, the many self-funded retirees, home owners and a range of others—

The DEPUTY SPEAKER (Hon. I.R. Causley)—The member for Batman has already been warned.

Mr HOCKEY —Christmas is coming. It might have come yesterday for us—and I will give the reasons for that in a minute when I refer to the member for Werriwa's comments on rising interest rates, the impact of debt and so on. I want to read into the Hansard today's statement by the Governor of the Reserve Bank. He said:

In Australia, the indications are that the economy has strengthened considerably since mid year. The pace of consumer spending has accelerated sharply, business confidence is high, and the labour market has firmed over recent months.

... notwithstanding some early signs of a change in sentiment in the housing market, the overall prospects are for strong growth of the Australian economy.

He went on to say:

Monetary policy is continuing to have a stimulatory effect on the economy through domestic credit expansion.

That basically means that Australians continue to borrow considerable amounts of money. Further, he said:

The growth of credit remains rapid and indeed has picked up further in the past few months. The prevailing level of the cash rate after the November increase was still below neutral, and interest rates of financial intermediaries remained low by the standards of recent years.

That final comment is so true: interest rates today are considerably lower than they have been for the last 30 years and are certainly much lower than they were under the Labor Party.

Why are interest rates still low by comparison with previous years? It is due to a combination of factors. There is the fact that the government is running surplus budgets and does not have to go into the marketplace and compete with home borrowers for the same limited pool of money that is available to be borrowed, which means that, without competition in that marketplace, interest rates are lower. With the government running a fiscal surplus not only are we able to avoid borrowing but, importantly, we are able to buy back some of the debt that was out there. This effectively means that we are freeing up more cash to be made available to potential borrowers, which reduces the margin in the marketplace, making borrowing more affordable for so many Australians.

The second point is this: Australia has an extremely strong economy. The member for Fraser was keen to quote the Economist. I refer the member for Fraser to the economic growth forecast in the Economist—and this is even with the rapid improvement in the state of the American economy. All of these economies are off a low base, so you would expect them to have high growth coming out of either recession or significant economic downturn. Taking all that into account—and even taking into account the fact that the Australian economy did not dip into recession in the last few years but in fact remained one of the strongest economies in the developed world during the period when so many of our trading partners were in recession or depression—it remains a fact that, even on the Economist's own forecast, the fastest growing economies in the world in 2005, in order, are Ireland, Australia, Finland, the United States, Canada, Spain, Britain, Belgium, Sweden and Portugal.

That says that the Australian economy is extremely strong. It means that for all those small business people out there who may have higher interest rates as a result of the independent Reserve Bank decision today the key ingredient to the growth of any small business is customers coming through the door, and those customers are coming through the door in bucket loads. That is not just reflected in the growth indicators of the Economist; I refer to the Sensis business index, which is the old Yellow Pages index, where after surveying 1,200 small businesses they found that confidence among small businesses is now at its highest level since 1994.

What about the ACCI small business survey? It says that the ACCI small business barometer has risen significantly in the last quarter. This represents the fourth highest level since the series began. How about the Dunn and Bradstreet business index released in October this year, which says:

Sales growth was above expectations. Profits were just above expectations. Capital investment eased slightly but remains greater than expected.

And importantly, it states:

92 per cent of businesses indicated that an increase in bank lending rates as a result of a rise in official rates would either have no effect or a moderately negative effect on their business.

In that time since that survey came out, there has been improved economic growth—well beyond the expectations of even the government—and, as the statement by the Governor of the Reserve Bank clearly indicates, the economy is stronger than even we had predicted.

It is no time for complacency. The member for Fraser focused today on the fact that—he claims—people are paying more in dollar terms in repayments to banks than they might have done a few years ago. That is the claim of the member for Fraser. We can always claim that. We can claim that today we are paying more for our cars than we might have done in 1950, because they might have been 4,000 in those days and cars are about $12,000 now. Do you know what? I do not need to shoot down the member for Fraser; I just refer to the words of the member for Werriwa. He will do it. I quote him—and this is April 2002, not 10 or 15 years ago. This is the now Leader of the Opposition in April 2002 saying to the Sydney Morning Herald—and I want the member for Fraser to listen to this: `Debt is always relative to assets.' He says that in the mid-1980s Australians held $4 in assets for every $1 in household income—today they hold $6.50 in assets for every $1. That is not Joe Hockey or Peter Costello or the Governor of the Reserve Bank or anyone else; that is the member for Werriwa. You elected him leader—well, you did not do it, but your colleagues elected him leader yesterday.

The DEPUTY SPEAKER —The minister will address his comments through the chair.

Mr HOCKEY —The leader of the Labor Party has stated unequivocally that debt is always relative to assets. Over the last few years there has been a massive growth in the assets of Australians and therefore they have chosen to borrow more money. But do you know what? This government believes in safety nets. We think it is appropriate to be there to help those people who may want—and may need, more importantly—a bit of a hand. That is why we introduced the home owners grant. That is why we introduced a $7,000 grant to people who are buying their first home. That is something that the Labor Party could only have ever dreamed of.

The DEPUTY SPEAKER —The member for Fraser has had his opportunity to speak.

Mr HOCKEY —We introduced that because we wanted to help people to get into homes, and now we have record levels of home ownership in Australia. I would also like to point out that the member for Werriwa is on record saying he wants to provide tax disincentives for people in Western Sydney to own their own homes. Do you know what he wants? He wants a growth levy; he wants to put a tax on homes in Western Sydney. The Leader of the Opposition wants to put a tax on homes in Western Sydney to dissuade people from living there. That is bizarre economics—voodoo economics.

The member for Fraser asks how is this going to affect families. I ask the member for Fraser: why did the Labor Party oppose the baby bonus? That helps families—$170 million a year—and the Labor Party wants to abolish the baby bonus.

Mr Sidebottom —It was a bit of a disaster, wasn't it?

Mr HOCKEY —What did you say?

Mr Sidebottom —It's a bit of a disaster that one, Joe, don't you think?

Mr HOCKEY —Okay; the member for Braddon says the baby bonus is a bit of a disaster—

Mr Sidebottom —Yes.

Mr HOCKEY —and confirms that the Labor Party is going to abolish it. Is that right, Sid?

Mr Sidebottom —No, I did not say that.

Mr HOCKEY —It is a disaster, but they are not going to abolish it.

Mr Sidebottom —You will end up doing that.

The DEPUTY SPEAKER —The member for Braddon!

Mr Sidebottom —He asked me a question.

The DEPUTY SPEAKER —The member for Braddon is warned!

Mr HOCKEY —He needs help. The family tax benefit: in nominal terms, the government has increased expenditure on family assistance by $2,000 million a year.

Mr Hartsuyker —By how much?

Mr HOCKEY —By $2,000 million a year! Why did the Labor Party oppose that? Why did the Labor Party oppose us helping families? What about child care? The government has spent more than $7,000 million on child care in its first six years in office. That is a 70 per cent increase in real terms; a 70—seven zero—per cent increase on the Labor Party. Why does the Labor Party oppose that? Even our financial counselling program—$2.3 million—the Labor Party opposes.

So let us get this right: the Labor Party opposed the abolition of provisional tax; the Labor Party opposed the abolition of wholesale sales tax; the Labor Party opposed our cuts in income tax where we reduced income tax on individuals so that 80 per cent of Australians pay no more than 30 cents in the dollar; the Labor Party opposed the abolition of FID; and the Labor Party opposed the abolition of bank accounts debit tax. And do you know what? That is the tip of the iceberg. The Labor Party opposed those initiatives, and now they have elected a Leader of the Opposition who supports taking the capital gains tax to the family home, who believes you should have growth levies on homes in Western Sydney and who wants to abolish negative gearing.

What sort of picture are we getting here? That picture is pretty clear: it is that the Labor Party believes in higher tax; the Labor Party believes, therefore, in higher interest rates; the Labor Party believes in hurting families—not trying to help them—because every initiative that we have put in place that helps families, the Labor Party has opposed. Here we are doing the hard yards on economic reform, undertaking budget reform, trying to undertake industrial relations reform and undertaking significant macro and micro economic reform that deliver real benefits to Australia—delivering stronger economies even in the face of the most difficult trading environment Australia has probably faced in a decade, if not longer—and the Labor Party has opposed us every single step of the way.

If we truly believe in doing the right thing by the Australian people—and we do—then we call on the Labor Party to join us on the journey. We call on the Labor Party to join us in implementing real reform that is going to deliver real benefits for Australian families and not go down the path that the Labor Party wants to go down of increasing tax on families, increasing interest rates for families and small businesses, and putting in place speed humps and impediments that are only going to slow the Australian economy and, at the end of the day, worsen the standard of living for far too many Australians.