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Thursday, 5 February 2009
Page: 610

Mr JOHN COBB (4:24 PM) —Last night, this House passed a bill, which will now go to the Senate, which not only contains provisions for the government to spend $42 billion but also allows them to go into debt of up to $200 billion. That is $9½ thousand dollars—nearly $10,000—for every man, woman and child in Australia. It will be our children and their children who will have to pay that back. With regard to the $42 billion, this is not job creating. Anybody who has been reading what informed economists—rather than political commentators—are saying, will realise that.

If you want to create opportunities, if you want to get a bang for your buck, you could look at what the new President of America, Mr Obama, and the Democrats are putting up. They are getting somewhere between a dollar-for-dollar return and 1.7. By the Treasury’s own figures, we are looking at something like a 30c return for every dollar of that $42 billion. If you want return in terms of jobs, it needs to be spent on infrastructure—not of a social nature but of an ongoing nature—like transport. It needs to be spent on what will help productivity, what will help employers know that they will get a faster delivery and fewer impediments in their productive cycle. That is what we need to do. Rather than putting money into a stimulus package, a social package, we need to put money into productivity, into creating jobs, into knowing that what we are doing is ongoing—in other words, that it will produce. At a time like this, when we are looking at not just a few months but a long period of tough economic times, we need to produce taxes and GST in the future, because it will have to be paid back.

The last time the Labor Party took these sorts of steps, we ended up owing $96 billion. That took 10 years—a full decade—of very hard and very good economic management to pay off. Just imagine if, during that decade of hard, tough growth that it took to pay off that $96 billion, we did not have to pay the interest on it let alone repay the capital. The interest alone paid on the $96 billion would have built a new four-lane highway over the Blue Mountains, joining the eastern seaboard with western New South Wales. It would have put a dual highway across the entire length of the Pacific Highway, built the inland railway link between Melbourne and Brisbane, fixed our ports, blacktopped thousands of kilometres of road, provided new classrooms and amenities for schools and built new hospitals in regional Australia. Instead, the coalition had to make incredibly hard political and economic decisions to pay back not just the interest but the capital as well.

Regional Australia is still scarred by the last Labor ‘recession we had to have’. I had friends who were paying 23 and 24 per cent interest rates in small business and agriculture. I guess we had a debt burden that resulted in government investment in job-creating infrastructure being curtailed. A $200 billion debt, which by the Treasurer’s own admission we are going to go to or exceed, will have an effect on everything. It is going to have an enormous effect because not only will the debt have to be paid back but the government, when we get through this very tough economic time, will have to pay the interest. It is going to have to repay the money. While the effect on interest rates of government getting into debt to this extent will not necessarily push them up in the immediate sense—in a recession we would normally expect to have low interest rates—when the corner is turned and productivity and growth start to increase again, having $200 billion of government debt putting government in competition with farmers, small business, homeowners and home builders is going to have an incredible effect. When we look back to the pressures last time that interest rates went through the roof, government competition had an enormous effect.

Farmers in small business in regional Australia do know about debt; they understand it; they deal with it. It is an industry which, because it is so capital intensive, is also very debt intensive. It is a well-known fact. A few years ago, 80 per cent of most of the debt in regional or rural Australia also produced about 80 per cent of the production. It is a strange thing, but I guess if you owe money you have got a good impetus to produce.

Debate interrupted; adjournment proposed and negatived.

Mr JOHN COBB —An article in today’s Financial Review sums up an awful lot of what is involved in this $42 billion proposal. It says:

The Rudd government’s stimulus package provides little bang for the buck.

I believe the Financial Review is right when it states:

Of more concern is the heavy weighting of the infrastructure spending towards social infrastructure such as school buildings and public housing, which has low and distant returns, and the negligible investment in higher-yielding economic infrastructure.

As I said before, instead of a 1.7 return we are looking at a 30c return on a dollar. You do not have to be that smart to know that to come out of a recession as quickly as possible, as the Leader of the Opposition has said, it is about jobs, jobs, jobs. Without doubt, regional Australia took the brunt of the high unemployment during the last Labor credit card binge. We know about unemployment and we know about the pain it causes. We need an economic stimulus that provides job-creating infrastructure not just now but also into the future. When the member for Gippsland made his remarks, he was certainly talking about infrastructure. He was talking about job-creating infrastructure. He was talking about roads. He was talking about things that have an ongoing ability to stimulate and keep regional Australia positive about jobs.

As I said before, what is going on with the Rudd government’s $42 billion package is that it has a very low return, because it is investing in those things which do not have ongoing returns in terms of jobs, in terms of tax and in terms of GST—which might help get the Treasurer’s mates off the hook in the future. If we have to go into debt to provide an economic stimulus, it should go towards building infrastructure that helps business to be more productive so that they can employ people and so that employers can keep people on and put more people on.

We already have additional cost burdens in regional Australia because of the tyranny of distance and the need to compete. Obviously, because the options are fewer, we need the stimulus more than most places do. The options are far fewer in regional Australia. A headline in the Sydney Morning Herald yesterday sums up, without doubt, many of the feelings of people in regional Australia: ‘Thanks for the help, but it could be better spent.’ The article quotes a Mirrool farmer, Buster Fairman:

‘I think [Prime Minister Kevin Rudd] should sit on some of this money until times get really tough… The financial crisis has only just begun.’

The article continues:

Mr Fairman, 56, will be putting his $950 aside for a rainy day.

Quite obviously, that is what has already happened with the $8.5 billion. No more than 20 per cent of that has been spent. People are not silly. The Prime Minister walked around the whole of December saying, ‘Spend, spend, spend,’ and then he walked around the whole of January telling everybody how terrible things are. Let us remember that all of this is exacerbated in regional Australia. People are not silly. Of course they put it in their pockets. Some spending went up, but less than 20 per cent of that $8.5 billion was spent. People are not stupid. Yes, they do want infrastructure spending, but they want it on things which are going to be ongoing and produce jobs, not just on things which have an end period and which are way out in the future in terms of return to the nation.

In regional Australia we have real health issues. In New South Wales in particular, we have health issues that you would not know about. I take my hat off to the Minister for Health and Ageing for acknowledging in question time today the state of health in western New South Wales. On Tuesday evening I related an incident about just how bad and how biased things are in New South Wales west of the Blue Mountains. Going into debt to the tune of $2 billion, and just getting warmed up with $42 billion is going to leave regional Australia in the most awful position as far as ongoing money in the future for health and for education. In the hard years we went through from 1996 on, paying back that $10 billion, it was a long time before we could put serious money into roads, health and education in regional Australia, because of what we were left with last time. Last year the government used the excuse of the inflation genie being out of the bottle to cut billions of dollars out of services and infrastructure in regional Australia. In fact, I well remember that the very first act of the Minister for Finance and Deregulation was to slash $640 million out of services and programs around Australia, and guess where three-quarters of that came from? It did not come from Wollongong or Newcastle; it came from regional Australia. It was not Sydney or Melbourne that lost that.

This should be about jobs. In my electorate of Calare, we have lost well over a thousand jobs in the last four months. There is nothing in the mining industry. There is nothing in this package which is going to help reinstate those people or find alternative employment for them. In fact, most of them were on over $50,000 so they would probably not even be eligible for the $950, because I think that was as of the end of June last year, on the last financial year’s return. So they are not going to do terribly well out of that. If the government were to just take a look at what is going on around the place, instead of stripping all the water out of the Murray-Darling Basin and making things even worse, they could put money into some infrastructure which would help efficiencies, help production, help the diversity of the irrigation industry and pay that money back in the future—which it would—and there would be jobs to go with it.

The Minister for Agriculture, Fisheries and Forestry was scathing a minute ago because, as I said earlier, the member for Gippsland said that we wanted infrastructure. We do want infrastructure, but we want to spend on infrastructure which is going to do things. Out of $42 billion there is a bit for the investment allowance, but people are not going to invest all that much in the current situation. They are going to go on about the $860 million that they are putting into various forms and classes. Well, $500 million of that—half a billion—is going to councils, once again to be spent on social infrastructure which does not have those ongoings. This is about keeping people in a job here and now and over the next few years while we get through this crisis.

It staggers me every time I hear the Treasurer get up and say that we just do not get the point. We do get the point. Regional Australia has been there before. We were there before when we had to deal with the $96 billion and, like the rest of Australia, we had to deal with what it took for those who were in government in 1996 to pay it back. We had to wait before we could get a few programs to get some seed money into regional Australia to get going again. If it took that long—a decade—to pay back $96 billion, what is going to happen when they get up over, in the Treasurer’s words, $200 billion, especially if we happen to still have a government who do not give a damn about that part of Australia? As I said, we have been there before with 23 and 24 per cent interest rates, no money for roads and no money for health or schools in regional Australia. All that money was going towards paying the cost of federal and state government debts at the time instead of putting a highway through the Blue Mountains, instead of putting roads out— (Time expired)