Senator COONAN (2:10 PM) —Mr President, I formally congratulate you on your appointment, and I also congratulate Senator Ferguson. I think we are very well served by senators of the calibre that we have elected today.

I ask a question of the Minister representing the Treasurer, Senator Conroy. Does the government agree that, as a general rule, price increases fuel inflationary pressures?

Senator CONROY (Minister for Broadband, Communications and the Digital Economy) —I add my congratulations, Senator Hogg, on your elevation to President. The government has a very simple approach to trying to rein in inflation, unlike those opposite. This is a government that has inherited the highest level of inflation in 16 years. Those opposite remain in denial about the legacy that they have left ordinary Australians. Those opposite’s solution in the fight against inflation is to irresponsibly blow holes in the budget surplus. That budget surplus has helped the Reserve Bank to indicate that interest rates will possibly be reduced in the future. The Reserve Bank have done that because they have confidence that they have a government that is not asleep at the wheel. They are confident that they have a government that is up to the challenge of tackling interest rates and inflation. They are confident that they have a government that has introduced a responsible budget surplus that has taken some of the pressure off inflation and off interest rate increases. That is why they have given an indication that the interest rate environment is softening in this country. That is because of the responsible economic management adopted by those on this side of the chamber, not the cheap and populist panderings that are going on on the other side from those who have completely walked away from any pretence that they were responsible economic managers. I appreciate that, given that they had allowed the interest rates and inflation to grow and grow and grow—

Senator Ian Macdonald —Now can you answer the question?

Senator CONROY —The question, I understood, was about inflationary pressures. That is what I understood that the question was about. So let me be clear about this: the Reserve Bank have acknowledged in their recent statements that there is a softening in the interest rate environment because they are confident that they have a government that is facing up to the challenge of the highest inflation rate in 16 years, left to this country by those opposite. So the Reserve Bank have indicated that they agree with the budgetary outcome. Let those opposite, at their peril, decide that they want to blow holes in the budget surplus, because they will then once again be responsible.

Senator Coonan —Mr President, on a point of order: the question that Senator Conroy was asked, which he has not addressed at all, was about the impact of price increases on inflation. He has not come to that yet and, given the length of time that has elapsed since the question, his answer is so far not material. Could you direct him to the question.

The PRESIDENT —I will follow the traditional ruling in this chamber. It is not possible for the President to instruct a minister to answer a question in a specific way, and I will adhere to that. I draw the question to the attention of Senator Conroy. There is no point of order at this stage. Senator Conroy, continue to answer the question.

Opposition senators interjecting—

Senator CONROY (Minister for Broadband, Communications and the Digital Economy) —It is not online. I know you continue to think this. It is actually just a document holder. I am saying that just because you seem to be confused by this, Senator McGauran. It is actually not online—never has been.

The PRESIDENT —Senator Conroy, address your comments through the chair.

Senator CONROY —I return to the issue of inflationary pressures, which is at the heart of the question. This is an opposition that has abandoned any pretence of economic responsibility. It is adopting any cheap, populist line it thinks might harvest votes out there in the broader community. The Australian public will not be fooled by those seeking to make short-term political gains at the expense of the longer term interests of all of Australia and Australians. They recognise and support a government that made some hard choices in the last budget, that put forward to this country a responsible budget which has assisted to take the pressure— (Time expired)

The PRESIDENT —Senator Coonan, before I ask you for the supplementary question that I believe will come, I say to those on my left that it will assist the chamber immeasurably if they will be quiet during the answers that are being given. You might not like the answer, but that is not what question time is about. If you want to hear an answer you can get one from the minister.

Senator COONAN —Mr President, I ask a supplementary question. I listened carefully to the answer. Given that the minister has not disagreed that price increases fuel inflationary pressures as a general rule, can the minister explain why increasing the tax on and hence the prices of alcopops, cars and gas is not inflationary?

Senator CONROY (Minister for Broadband, Communications and the Digital Economy) —Economics 101 will indicate to those opposite that it is the total size of the budgetary surplus that impacts on inflation. It is those issues. If those opposite want to irresponsibly talk about blocking the ready-to-drinks, the luxury car tax—

Honourable senators interjecting—

The PRESIDENT —Senator Conroy, resume your seat. I know people get a little bit excited on the first day back, but I would like a bit of quiet time when Senator Conroy is answering this question.

Senator CONROY —As I was saying, for those opposite to try to suggest that the ready-to-drink tax, the luxury car tax, the crude oil excise on condensate and the Medicare levy surcharge threshold can be wantonly opposed in the Senate without having an inflationary impact just shows the level of economic illiteracy of the rabble that is in opposition. You cannot blow out the size of the surplus, have it massively reduced and not actually put pressure on and cause the Reserve Bank to start to revise its thinking, because that is what this chamber is faced with. Does it actually want— (Time expired)