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Tuesday, 16 August 2011
Page: 8143

Economy


Ms SMYTH (La Trobe) (14:38): My question is to the Treasurer. Will the Treasurer please outline for the House the importance of responsible economic and fiscal management? How has this approach been received and what is the government's response?


Mr SWAN (LilleyDeputy Prime Minister and Treasurer) (14:38): I thank the member for La Trobe for that very important question. As I indicated to the House earlier we are facing uncertainty and turbulence in global financial markets. I made the point earlier that there is a long and painful adjustment to take place both in Europe and in the United States and therefore we are not going to see for some time strong growth in either of those areas. All of that makes it much more important that we put in place very strict fiscal policy, predictable fiscal policy, in this country.

We have many things going for us in this environment, as the Prime Minister was saying before. We have lower debt than major advanced economies. One of the reasons our debt is lower is we put in place a responsible fiscal stimulus and therefore we avoided the capital destruction and the very high levels of unemployment that are now being experienced in many other countries around the world. But when we moved to put that stimulus in place we also put in place our fiscal rules and were determined to come back to surplus as soon as was responsibly possible. We have been applying those rules from the time that we put that stimulus in place in February 2009.

The consequence of that is we did get a very big tick for our economic management from the IMF when they were here recently. They gave the economy a very big tick and said it had been very well run in very difficult circumstances and that we had handled the global recession in one of the most responsible ways of just about any other developed economy in the world. We realised when we put those strict fiscal rules in place that we would have to restrain spending growth and that we would have to put in place responsible savings and that is what we are doing. We are putting in place that fiscal policy. I will quote from the IMF report of only a week or two ago:

On fiscal policy, we commend the authorities for remaining committed to returning the Commonwealth budget to surplus by 2012/13 … This consolidation is faster than in many other advanced economies and is more ambitious than earlier envisaged …

This discipline, this commitment, stands in stark contrast to the position taken by those opposite. It was only one year ago when the Treasury and the department of finance found there was an $11 billion black hole in their election commitments.

Mr Pyne: Mr Speaker, on a point of order: the Treasurer was not asked about alternative policies and therefore he is now straying beyond the question he was asked. I would ask you to either draw him back to the question or sit him down.

The SPEAKER: Order! The Treasurer has the call. I will listen very carefully to ensure that he is being directly relevant to the question.

Mr SWAN: I was making the point that, given the global uncertainty, fiscal discipline is absolutely critical in the environment we are in and that the IMF has made the point that the government has been putting in place that fiscal discipline, that it has been showing expenditure restraint, that it has been putting in place responsible savings in its budget. I also made the point that the global conditions do make all that more difficult, but the government is determined to return to surplus. I make this point because it stands in sharp contrast to the bungling and irresponsibility of those opposite: an $11 billion black hole one year ago which has now blown out to $70 billion—

The SPEAKER: Order! The Treasurer must directly relate his remarks—

Mr SWAN: Seventy billion dollars is a lot of money. I say this to the shadow Treasurer: with bungling like that you will not have the confidence of markets.

Honourable members interjecting

The SPEAKER: Order! A lesson that the House might learn is nobody can hear anything that is going on if you are all shouting at once. The Treasurer will directly relate his remarks to the question.

Mr SWAN: Mr Speaker, I was pointing out that the fiscal stance of those opposite is a risk to the economy.

The SPEAKER: Order! The Treasurer is overly debating the question.

Mr SWAN: A $70 billion savings ambition is the equivalent of all Medicare payments for four years.

Mr Pyne interjecting

The SPEAKER: Order! The Manager of Opposition Business will resume his seat! He is one who shouts at me while, at the same time, I am trying to direct other people. It makes it very hard. I have just indicated that the Treasurer is overly debating the question. He will not do that.

Mr SWAN: The government is committed to returning the budget to surplus despite global difficulties. We are committed to putting a price on carbon. We are committed to investing in skills and infrastructure and we are committed to a responsible fiscal policy, unlike those opposite who want to take $70 billion from the budget.

The SPEAKER: Order! The Treasurer will resume his place. The Treasurer has not got the call. The member for Deakin will resume his place unless he has some point of order he has found from the Manager of Opposition Business's play book, but I doubt whether that would happen. The member for North Sydney has the call.