Mr HOCKEY (2:12 PM) —My question is to the Minister for Finance and Deregulation. I refer the minister for finance to the statement by the Prime Minister at the Lord Mayor’s Business Breakfast in Perth on 21 January this year, where the Prime Minister said:

Given that the Reserve Bank has indicated that it will unwind its stimulatory monetary policy and given that the Prime Minister insists on spending the government’s stimulus in full, will the minister now confirm that spending and interest rate policies are actually working against each other?

Mr TANNER (Minister for Finance and Deregulation) —To begin with, I cannot confirm the assertion that concluded the member for North Sydney’s question. In fact, the circumstances are such that it is very important for the stimulus to remain in place. Had that stimulus not been there, the June quarter account figures that have just been released would have been negative. The Treasury advice is that, had the government stimulus not been in place, then the Australian economy would have gone backwards by minus 0.3 per cent in the preceding quarter.

The implication in the member for North Sydney’s question is at odds with what in fact the Reserve Bank governor has said. The Reserve Bank governor has simply said that, because the current interest rate settings are at ‘emergency levels’, it is reasonable to anticipate that at some point in the future that would cease to be the case. The member for Sydney is spicing up the Reserve Bank governor’s comments in ways that are not intended and therefore the whole implication in his question is completely wrong. The government do have a strong fiscal position, which is designed to get the budget back into surplus, which is built around savings in order to ensure that the government take strong action to get value for money from the taxpayers’ dollar that is spent on behalf of the Australian people.

But I would remind the member for North Sydney that the government, of which he was a part, the cabinet of which he was a part, in its last four budgets managed to come up with a grand total of savings of roughly zero. So when we came to office we had a pretty big task of cleaning up government spending. We had a very big task of running the ruler over government programs and over government administration. And we have put in place, through a lot of reductions in spending on government processes alone—not on programs but just on the business of government alone—savings that will yield benefits of about $5 billion over a five-year period. That is not to mention major changes to entitlements, including major decisions that were put in place in the budget this year, some of which are being blocked by the opposition in the Senate.

I would conclude by suggesting that if, as they pretend, at least today—tomorrow’s message might be the opposite—the opposition are serious about ensuring that the Australian government has a fiscal position that is as strong as possible and that is putting zero upward pressure on interest rates they will stop blocking government savings initiatives in the Senate. That is precisely what they are doing. They are continuing to block those savings initiatives in the Senate. If they are serious about a strong fiscal position and about maximising the downward pressure on interest rates they will get out of the road and pass those budget measures in the Senate.