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Tuesday, 8 August 2006
Page: 29

Dr SOUTHCOTT (4:07 PM) —In his address, the Leader of the Opposition mentioned one constituent. In speaking to this debate I remember a conversation I had with a constituent just before the 2004 election. This constituent phoned me and we had a conversation. He said that his father had told him that he would be quite happy with a Labor government except that they were no good on finance and on foreign affairs. I thought, ‘That is extraordinary.’ I asked: ‘When did your father say this?’ He said, ‘He died in 1951.’ It has been a very long strand in Australia that the Labor Party is not seen as a party that can be trusted on the economy or on national security. I looked at the latest Newspoll on the economy, interest rates and inflation, and it is remarkably consistent across all three questions and across a period of time. Very roughly, 60 per cent of respondents say that the Liberal-National coalition would best handle the issue of the economy, interest rates and inflation, 20 per cent say the Labor Party would be best and 20 per cent are uncommitted. So if you go walking in a shopping centre, you would find that of every five people, three would say that the Liberal and National parties are best, one would say that the Labor Party are best and one would be uncommitted.

This MPI is an attempt by the Labor Party to get more than 20 per cent. They are trying to get off the floor and are trying to show that they do have some credibility on economic matters. This MPI, let us not forget, mentions the government’s ‘failure to put in place the policy settings needed to keep downward pressure on inflation’. I waited 15 minutes while the Leader of the Opposition spoke and 10 minutes while the shadow Treasurer spoke to hear what the alternative Labor Party policies are. I thought that perhaps the RBA statement on conduct of monetary policy that we introduced in 1996, whereby through an exchange of letters it was agreed that the Reserve Bank would keep an inflation target of two to three per cent, was one of the settings they had in mind. No. Perhaps they were talking about the way the government had repaired the budget—the $11 billion Beazley black hole that was left to us in 1996—which helped fireproof the Australian economy through the Asian financial crisis. But, no; that was one thing they could have mentioned, but they did not. Let us not forget that the steps we took then, with the Reserve Bank and the role it played—and it played a fantastic role—were very important for the Australian economy in seeing that we came through the Asian financial crisis when most of our trading partners went into a very deep recession. The United States had an economic downturn in 2001. With the old Australian economy, it used to be the case that when America sneezed we caught a cold. But we saw that the Australian economy came through 2001 and through the 2002-03 drought—again, due to the good economic management of Prime Minister John Howard and Treasurer Peter Costello but also the whole team, which is very much focused on the management of the economy.

If you look at the 2004 election campaign you will see that it really came down to the central question of: who do you trust to manage the economy? Our position was that it takes a lot of discipline and a lot of experience to manage an $800 billion economy—it is now a $1 trillion economy. What we have seen is that, every time there has been a hard decision, this government has put the interests of workers—jobs and the economy—ahead of small, narrow interests, and this is something that is beyond the Labor Party. Workers picked up on that. When we saw the timber workers in Tasmania applauding the Prime Minister, blue-collar workers right across Australia picked up on it. In fact, they were very scared about Mark Latham.

We mentioned a bit about the interest rates. I seem to remember Mr Latham signing a pledge card, as well, that he would keep interest rates low. The fact of the matter is that interest rates will go up and interest rates will go down, and to not have interest rates moving at all is, according to the outgoing Reserve Bank governor, Ian Macfarlane, a very unstable environment to have. The important thing is that we have a very credible independent Reserve Bank that keeps inflation between two and three per cent, which it has done over the period of the Howard government. When you compare our performance on inflation with Labor’s performance on inflation, I would take our performance any day. Over 10 years, our average on inflation has been 2½ per cent. It is half what it was under Labor—and similarly with interest rates and so on. The approach we have taken has been to reform the economy—and Work Choices is part of this—to ensure that we have prosperity in the future. Reform today for prosperity tomorrow.

When we look at inflation, one of the things the Leader of the Opposition mentioned as one of his policy responses was capacity constraints. Part of the reason for capacity constraints is that the economy has been growing at over three per cent for 10 years. Unemployment now is the lowest it has been since 1976; it is 4.9 per cent. In the most recent monthly figures since Work Choices was introduced, we saw the unemployment rate fall at the same time as the participation rate rose. More people were entering the workforce and still the unemployment rate fell. We saw something like 53,000 new jobs created in a month, and 38,000 of those new jobs were for women.

When we look at interest rates, again, I would take this government’s performance any day over Labor’s performance—in fact, over any Labor government performance you choose to mention. If we look back over a very long historical period, we see that interest rates have been higher under Labor governments than under coalition governments. Who can forget when interest rates reached 17 per cent? They were up at 17 per cent from mid-1989 till early 1990. The rates that farmers were paying were 21 per cent. If we look at the Labor Party’s record over that 13 years, we see that it was interest rates of almost 13 per cent that people paid over the whole 13 years. In the 10 years under this government, they have been a little bit over seven per cent.

There are a couple of points to make on the issue of petrol. First of all, we took a number of decisions early in 2001: we removed 1½c from the excise, we also removed indexation and previously we had removed 6.7c to compensate for the introduction of the GST. The excise at the moment sits at 38c a litre. Had we not taken those three decisions, it would now be 59c a litre: it would be more than 20c a litre more expensive than it is now. On the issue of the ACCC, the Leader of the Opposition’s one contribution was that we should have more monitoring. Some have suggested that the ACCC does not have enough power in this area. There actually have been a number of cases of price-fixing in recent times: one in the Ballarat area; one in the Geelong area. Last of all, something that has been presented to the current Senate inquiry looking at petrol is that the non-tax price of petrol is remarkably similar across OECD countries—what makes the difference is the tax portion. We see amongst all the OECD countries that Australia has the fourth lowest tax. It is only Mexico, the United States and Canada that have lower taxation than we do.

In conclusion, this MPI is a very limp attempt by the Labor Party to demonstrate that they do have some economic credibility. I would have appreciated hearing some solutions and some alternative policies. They do not have any. They cannot demonstrate how they would have performed better than the Howard government. The current settings are as good as they can be. (Time expired)

The DEPUTY SPEAKER (Mr Jenkins)—Order! The discussion is concluded.