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Wednesday, 4 February 2009
Page: 402

Mr DUTTON (2:46 AM) — I rise to speak on the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and cognate bills. It is almost three o’clock in the morning and members of parliament have been making their respective contributions in what is a remarkable debate and, in many ways, a historic debate because today is the day that the Labor Party put into debt the future generation of Australian children. Of course, this is a territory not unfamiliar to the Labor Party, and anyone who follows the Labor Party and understands the way in which they have managed the economy over decades in previous administrations would recognise it as very much the way of Labor into the future.

We thought these days were in fact behind us; we thought the lessons about plunging this country into significant debt had been learnt by the Labor Party, but clearly they have not. When we were in government over the last 11 years we recognised that one of the principal priorities from day one—from the first budget in the first term—was to pay down the $96 billion of debt that we had inherited when we came into government. We did that because we wanted to make sure that we removed that burden from future generations. We knew that an interest bill of, at that time, $8 billion per year would be unmanageable for Australians into the future if we did not take the opportunity to pay the debt down, to make difficult decisions to cut spending in certain areas. People will recall that at the time these were difficult decisions taken by a freshly elected government that had a difficult task to perform, and perform it it did. It is quite a tragedy for the nation at the moment that the government would undo all of that 11 years of work essentially in their first 11 months.

To put this into perspective, the Australian public understands that when the Rudd government were elected they spent the first 12 months running around and, for their own political purposes, talking up the issue of inflation to the Australian people. This point is a very important part of the debate—that is, to look at the first period of the Rudd government and the way in which they handled the economy for their own political purposes, recognising as they do, with their media spin operation, that the strength of economic management still quite rightly and appropriately rested with the coalition. They believed that they needed to neutralise that strength. They believed that if they could discredit the coalition, despite the credible record we had when we were in government, it would serve their own political purposes well, not just over this term of government but, most importantly, at the start of the next election campaign.

So they talked up the prospect of inflation, the threat of inflation. The Treasurer—Australia’s worst-ever Treasurer—the Hon. Wayne Swan, at that stage said, ‘This is about letting the inflation genie out of the bottle.’ That was his famous, or infamous, remark. It suggested that when the coalition were in government we had let the ‘inflation genie’ out of the bottle. The Treasurer, in charge of this nation’s books, talking in those terms, sending a message to the Reserve Bank of Australia, ultimately resulted in an overcooking of that monetary policy. It resulted in interest rates going up higher than they should have gone, and that is why corrective action has been taken in recent months.

But that claim that inflation was essentially out of control was not made because of any substantive economic reason; it was made for political reasons by the Labor Party. So the first decisions taken by the government in relation to economic management were not based on good economic principles; they were based on what was going to get them through a media cycle and what was going to get them through the next election. It is important to understand that that was their modus operandi from day one, and it remains the way in which they conduct themselves to this very day.

Make no mistake: this $42 billion spending package is designed more with politics in mind than with trying to provide some economic outcome. The reality is that the Australian people, I think, are now starting to see through exactly what this government is proposing and its reasons for it. I think the Australian public is starting to understand that this is a government that spent about $12.4 billion in December last year but now, barely two months later, is asking for an extra $41.53 billion—almost $42 billion—to spend on a stimulus, as the government describes it. People are starting to wonder what the next two months will hold: will this Australian Labor Party, under Prime Minister Rudd, be back in this chamber asking Australians to go into debt for another $10 billion, $20 billion, $30 billion or $40 billion in a couple of months time?

This is the point that the Leader of the Opposition has been trying to make—that, if you are going to act in a prudent way, if you recognise that these are difficult economic times and we need to deal with the times as they roll, why would you expose yourself to potentially even direr times ahead by spending all the money available, and more, in the opening stages of what is predicted to be a very long economic downturn? Why would the Prime Minister spend all the money and run this country from a healthy surplus into a deficit in the first few months of this economic crisis? Why would this Prime Minister panic? Why would he, with his Treasurer, decide that it is good policy to plunge future generations into debt?

This is a Prime Minister who does not have a good track record in relation to economic management. I outlined briefly the reasons why this government’s economic management in its opening months was deficient and flawed, and that is part of the reason why I think most Australians are very concerned. I will tell you, Mr Deputy Speaker, of one Australian who is particularly concerned, and I will quote from a newspaper column today:

IT wouldn’t have mattered what the Prime Minister announced in his fiscal stimulus package—it won’t be sufficient to counter the impacts of the current global economic difficulties. Kevin Rudd should stop talking down the economy. Yes, we do have problems but we are well-positioned to see our way through.

Constant exaggerated and negative commentary creates uncertainty among investors and consumers.

What is the point of providing a $10 billion fiscal stimulus and then scaring the recipients? Is it any wonder many people chose to save their portion of the stimulus.

Rudd is talking up fiscal policy because it enables the Government to appear to be doing something. The truth is monetary policy, interest rates, remains the key economic driver at this stage of the cycle.

This is why the Reserve Bank’s mishandling of monetary policy in the last half of 2007 was so damaging to the economy.

A one-off fiscal stimulus, depending on size and form, will only take the edge off bad economic numbers in the short-term. It will do nothing to resolve the underlying structural problems in the economy. It is a political strategy more than an economic one.

Australia is better positioned than most major economies to see out the current difficulties. Our problems are not as severe.

The article goes on for a little bit. It was written by Michael Costa and appeared in the press today. Michael Costa is not known to be a friend of the Liberal Party or as a great neo-liberal; nonetheless, he is a former Labor Treasurer who has surely at least some credibility in relation to matters economic. He sums up, I think quite well, what the government is on about, some of the failings that they have realised already and some of their motivation for the way in which they are conducting themselves.

The most important part of this is whether or not spending $42 billion of money that you do not have is going to provide assistance to Australians who are at the moment scared witless about whether or not they are secure in their employment and whether their families are going to be able to retain their home. People in this country at the moment, people who considered themselves in very stable employment, are worried about whether or not they will be the next to go.

This is a government which will not guarantee the creation of one single job. In a $42 billion spend it did not guarantee one single job. In fact it is quite amazing that the rhetoric has changed. This again shows the impact of the hollow men in the Rudd government. They have changed the terminology from ‘creating employment’ to ‘supporting employment’. They are not creating jobs but supporting jobs. It is a telling nuance of words because this is a government that out of a $42 billion spend cannot look one Australian in the eye and say, ‘We are going to protect your job’ or ‘We are going to create new jobs.’ I think that is a damning indictment of the failure of this package.

It does not serve to provide security to Australian families and it certainly does not provide security to Australian small businesses which already had great difficulty in securing credit. I have had some email me in the last few hours disgusted with this package. Small business is suffering at the moment and yet this package provides no tangible support to those businesses to help them with their ongoing cash flow. This government made an announcement in it, package in relation to accelerated depreciation for purchases of assets but that is of course no benefit to small businesses who are struggling to pay their GST bill, their wages bill, other suppliers to their business or whatever the case might be. These were people who were expecting, as part of a $42 billion package, some assistance to allow them the greatest capacity to keep people employed. Small businesses want to retain staff.

Only 12 months ago we were talking about gross shortages of well-qualified staff. People in small business were screaming out for good people to join their business and to help grow their business. Now the first period of the Rudd government, after spending not just $42 billion but the money in the December quarter as well, still provides no certainty to small business. There was nothing in this package which said to Australian small business, ‘We will help you to defray some of the employment costs so that you can be best placed to keep on staff.’ It is an opportunity that this government has squandered to be able to say to small business, as the opposition leader has said, ‘Let’s look at whether or not the federal government could provide assistance to small business to pay part of their superannuation guarantee levy.’ That could provide some cash flow assistance to small business people to make sure that they had every possibility of retaining the staff that they have on their books at the moment. But there was nothing in this package for small business.

When you look at the figures over the estimates, it is quite telling. The government puts out that this is a package of infrastructure to stave off negative growth in future quarters. But look at many of the commitments, particularly in relation to the infrastructure spend around social housing—the insulation measures, for argument’s sake. Insulation is a very interesting one. Out of the hundreds of millions of dollars that the government commits to social housing, about $39 million in this current financial year will go to pay for that package. So most of the expense in these packages, particularly the infrastructure packages and those spends outside the cash handouts, will not come into effect until the next financial year anyway. The immediacy of the problem is with us here and now and the government argues that to stave off a quarter of negative growth and to provide some sort of stimulus it is important to do it here and now. But the government does not deliver that through this package—even on what it proposes.

That is the absurdity of the Prime Minister standing up in question time today to somehow try to con the Australian people into believing that this is going to be a good positive outcome for them. This is a government which I think will be judged harshly at the next election because it has not addressed areas of urgency, including health and aged care, which we highlighted today. And, I might say, this was not an argument to extend the stimulus package spend by any stretch of the imagination. The point was that the government sent a message today that out of national infrastructure priorities not one dollar should be prioritised to health and aged care—aged care is an industry in crisis at the moment. That shows the empty rhetoric from this government over recent years.

The coalition have taken a difficult and unpopular but necessary decision. We understand that Australians, when they read about it in the newspapers in the coming hours, will see that this is not the most popular stance that we could have taken, but it is the appropriate stance. It is important that we explain to the Australian people the reason we have taken this stance. Firstly, we do not believe that the quantum of the package is necessary. We believe that spending all the money—money that the government does not have—and plunging yourself into $40 billion of additional debt is not appropriate at this time. It is not appropriate for a number of reasons but primarily because we do not know how much longer this downturn has to play out. If the government is proposing to put out packages of $40 billion or $50 billion each quarter then we will run into significant debt very quickly and perhaps not with anywhere near the outcome that the government intends.

Secondly, we have taken the decision that we have taken because we believe this money could be better targeted to provide the stimulus which is required but in more appropriate ways to get a better spend for taxpayers’ dollars. We have suggested somewhere between 1.5 per cent and two per cent GDP, or in the order of $15 billion to $20 billion, would be appropriate. That, on the limited advice that we have at the moment, could be made up in package form to provide support to the Australian business community.

I say to Australian families who believe that cash payouts are appropriate at the moment: consider the longer term implications of such a policy. I ask Australian families to consider whether, if it were their own household budget, they would plunge themselves into considerable debt to enjoy the benefit of the cash and what it brings today only to see themselves having to pay it off for decades to come. Think about this in terms of the way in which you operate your small business. Would you plunge yourself into considerable debt? Would you extend yourself as far as the banks would lend on day 1 of an economic downturn? That is exactly what this government has done.

This government has taken a reckless course. Whilst in the interim the position of opposition taken by the coalition may not be popular, my honest view is that our position will be vindicated in the longer term because at the end of the day we are charged in this parliament to take responsibility for the appropriation of taxpayers’ dollars and we do not believe by any reasonable standard that this government has appropriately spent taxpayers’ dollars. That is why the coalition has taken a difficult, necessary step and we will continue to fight for good economic management as we always have in this country to make sure we set up this nation for the decades ahead.