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Monday, 24 November 2008
Page: 19


Senator SCULLION (6:12 PM) —I rise to support the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008. This bill provides some welcome relief to families and pensioners who are doing it tough at this time of global economic uncertainty. This bill, along with the associated appropriation bills Nos 1 and 2, appropriates $10.4 billion from consolidated general revenue for the purpose of the government’s economic stimulus package. The coalition support using part of the surplus to stimulate aggregate demand, but we quite rightly question the details of the policy implementation, as well as how Labor’s failed leadership has put us in the situation that we now need to rush through legislation to spend half the nation’s surplus to prop up an economy that only last year was described as being the ‘wonder down under’.

There has been a lot of reflection today about the first anniversary of the Rudd government’s election. Lots of commentators and, indeed, many member of the public have been thinking about the effectiveness of Labor’s first year in office. Unfortunately for the good citizens of Australia, Labor’s performance in the last year has been seen to be severely lacking. The last year has seen a bumbling and inept government launch 168 reviews, commissions and inquiries whilst also simultaneously watching prices rise. I was truly baffled when I read the Daily Telegraph today and saw their list of all the reviews and inquiries. It really is quite worrying when you have a government that has spent its first year reviewing everything, including bean bags, trolley jacks, form letters and Taiwanese preserved eggs. Yes, in its first year the government really has hit the ground reviewing!

The last year has seen the Prime Minister, Kevin 747, spend two months of the year overseas whilst Australians at home continue to struggle with the consequences of a collapse in consumer confidence. In the business sector it is down some 18 per cent. This is in large part from the government’s loose rhetoric of doom and gloom. How the Prime Minister thinks it is appropriate to spend two months of the year overseas, away from the country that he was elected to govern, is beyond me. I fully support a Prime Minister spending time overseas, but I think most Australians would join me in saying that 69 days out of the country, particularly at this time of economic uncertainty, is quite excessive.

I was reminded today of a website that appeared recently that sells Kevin Rudd merchandise and memorabilia. At Ruddshop.com, you can purchase an assortment of Rudd merchandise representing the government’s first year in office, including a number of books, portraits, DVDs, toys and watches. My particular favourites were the three designer watches: ‘fuel watch’, ‘grocery watch’ and ‘bank watch’—rolled gold, I am told! These are so popular that the website now insists they are sold out at the moment. But perhaps this is not such a flippant matter. It is absolutely embarrassing that this government’s greatest contribution to microeconomic reform is to sit back and watch prices rise. If spending $13 million on a website that tells you the average cost of goods in a geographic area a month ago is ‘New Leadership’, then most Australians would say, ‘We want a refund.’

Nowhere has this lacklustre government been more exposed than in economic policy and its incompetent response to the unfolding global crisis. In responding to that crisis, the government has a political strategy and not an economic strategy. At this moment, when the people of Australia desperately need good leadership, I think many would consider that last year they bought a lemon.

These bills we are considering today appropriate $10.4 billion to boost the economy and domestic demand. It is a stimulatory fiscal policy, only six months after the May budget, which had a fiscally contractionary policy. When the 2007 December quarter inflation figure came out and it was revealed that the CPI was three per cent, Labor clearly saw a political opportunity to trash the economic reputation of the former government. Even though Labor had inherited a large budget surplus, no debt, low unemployment and strong growth, they chose to proceed in declaring a calamity because of the slightly higher than anticipated inflation figure. In a rage earlier this year, as we can all recall, they furiously decried the supposed major economic threat of inflation. They constantly talked the economy down and spent half the year scaring people. They constantly talked the economy down in an effort to simply make a political point. Nothing could have been further away from good economic policy. I think we all know that now.

The anticipated fallout from the subprime crisis in the United States was well known and forecast last year. On 12 November 2007 the member for Higgins, the then Treasurer, warned of the impact of the US subprime collapse and the consequential ‘reverberations around the world’. The member for Higgins stressed the need to monitor these developments. Twelve days out from the election one would have thought that Labor would have taken notice of somebody with such an esteemed history in managing our economy, but unfortunately that was not the case.

Labor cannot wriggle out of the consequences of their own actions. The May budget, the first Labor budget, cut spending and increased taxes. You could not have got it worse in terms of action and you could not have got it worse in terms of timing. In the weeks leading up to the budget, Labor attacked the coalition because of our call for restraint. Labor accused us of being spendthrifts. They attacked our opposition to spending cuts. Well, look what happened—now they want to spend half the surplus in just one hit.

Had Labor stoped playing politics for a moment and actually paid attention to world economic events, then the shock of the financial crisis would not have hit us as hard. We would not have had to rush through a $10.4 billion stimulus package had the government monitored more closely the subprime crisis earlier this year instead of talking about genies out of bottles and inflation monsters. The collapse in consumer confidence that the spending in this legislation is trying to correct would not have been as severe had the government not ramped up their rhetoric around the time of the budget. Quite simply, Labor, by their actions, have made the financial crisis worse. The budget surplus will have virtually vanished in trying to correct their mistake. This is the legacy of Labor’s first year in government.

One of the more pleasing aspects of this legislation will be the extra support that pensioners will finally receive. This legislation is particularly welcome because it finally addresses the problems that pensioners have been facing from the increasing cost of living. In late September Senator Coonan introduced a bill into the Senate to increase the single age pension by $30 a week, in recognition of the significantly increased cost-of-living pressures. Yet how did Labor respond at the time? We got a torrent of abuse. The senators opposite were not interested in helping pensioners back in September. They made all the excuses under the sun as to why they could not help pensioners. They said ‘Oh, we’ll help them next year.’ They said, ‘We can’t afford it this year.’ They tried to argue that the coalition’s bill did not go far enough—I thought that was pretty amazing—despite the fact that they were refusing to help anybody.

Whilst the coalition went in to bat for single age pensioners, Labor stood by and said that they will have to wait until next year’s budget. It is truly sad that it took a global financial crisis for them to finally step up to the plate and deliver the urgent relief for single age pensioners now. Labor could have supported our bill and delivered relief back in September—relief that will finally hit the pockets of pensioners on 8 December. My question to every Labor senator who will stand up to speak on this legislation is: will you apologise to single age pensioners for making them wait almost three months for relief from rising prices and the increased cost of living? Will the Labor senators apologise for attacking the coalition’s pension bill back in September? Will they now acknowledge that the coalition were absolutely spot on in this matter and the government were plain wrong?

We will support this legislation because of the well-recognised need for a fiscal stimulus to make amends for Labor’s trashing of confidence in the economy in the first half of this year. Fiscal stimulus is needed to help shield Australians from a recession. But Labor seems to be divided on economic policy at the moment. On the one hand you have federal Labor increasing spending by $10.4 billion—the appropriation that we are discussing here today—but on the other hand New South Wales Labor are raising taxes by $3.6 billion. So are Labor actually interested in stimulating or slowing the economy? It seems that the incompetence of Labor in New South Wales is causing severe problems for Australia federally. The Prime Minister needs to get onto the phone to his New South Wales mates to get this mess sorted out. There is no point providing a fiscal stimulus package in this place for $10.4 billion when their mates down the road are just increasing taxes and taking these adjustments in completely the wrong direction.

One very legitimate question that we are entitled to ask about this bill is: what will be its macroeconomic impact? After all, $10.4 billion is an absolute bucket of money. In Senate estimates, it was revealed recently that the macroeconomic effects of this bill have not in fact been modelled. On 22 October 2008, during estimates, we heard this excellent question from Senator Joyce:

So we have spent half of the nation’s surplus without a formal modelling of the package, is that correct? We have spent half of the nation’s surplus without a formal modelling of the effects of the package?

And the answer from Dr Gruen was:

I can confirm that the package was $10.4 billion and that no formal modelling was done. I can confirm that no formal modelling was done.

So, basically, the effects of this bill have not been formally modelled. Again, we support the bill, as we recognise the need for stimulus. But I ask the minister: what research do you have that suggests that $10.4 billion is the right size? Is that too much? Is it too little? Is this a social package that deals with the needs of pensioners and others? Is this something that deals fundamentally with the crisis that is approaching? Will this be another rushed and bungled policy like your last little saviour, the bank guarantee? The bank guarantee bungle is clear evidence that this government does not know what it is doing and is incapable of managing our economy. All of a sudden deciding to spend half of the nation’s surplus without even inquiring as to the effect that this would have on economic growth—again, if that is ‘New Leadership’, Australians will want their money back.

We are told that we need to take government on trust—’Trust me’ is their age-old cry—despite the fact that there has been absolutely no modelling. And yet we are talking about spending one per cent of our nation’s GDP in one hit. We are told that we should have confidence in the government’s abilities as economic managers. Well, most Australians can recall the Treasurer’s recent performance at the press conference when he released the Mid-Year Economic and Fiscal Outlook, and if that is anything to go by then we are in for a seriously bumpy ride. The Treasurer says, ‘Trust me,’ after giving one of his most incredibly weak performances—spending a significant portion of the year talking about genies out of bottles and inflation monsters, frightening our children unnecessarily. The same bloke, after talking about inflation all year, could not remember the inflation forecast that was in MYEFO during his press conference on that matter. Not only was that hugely embarrassing—we went through a 90-second silence as Australians watched the Treasurer fumbling through his notes—but also this is not a bloke for whom, when he says ‘Trust me,’ I feel the need to leap into the gulf saying, ‘No worries, mate.’ This is a bloke who does not give me or any other Australian confidence.

So, in light of the incompetence of the Treasurer, I ask the minister opposite, Minister Sherry: how can we in the coalition, and Australians more generally, be confident that this $10.4 billion spend will, in fact, have the desired effect? How can we be confident that this is what is needed at this exact point in time? If the Treasurer did not even know the inflation forecast offhand last month, how can we have confidence that he has even considered the inflationary consequences of this bill?

The coalition, as we have already said, support this bill because we recognise that a fiscal stimulus is necessary and we acknowledge that there are many groups out there, particularly vulnerable pensioners, who are doing it tough and need assistance. The coalition have led the economic debate all year and we have been generally making the correct calls on what should be prudent economic decisions. Sadly, the fact that this bill has been rushed through—or, furthermore, that it is even considered necessary—is purely a consequence of the government’s economic failure. The Labor government should be appalled with its lack of results on this first anniversary of its election. This bill will pass with coalition support, but it would never have been necessary but for the incompetence of the current Labor government.