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Thursday, 12 February 2009
Page: 1275

Ms JULIE BISHOP (Deputy Leader of the Opposition) (10:21 PM) —The government’s response to the economic conditions facing this country is unravelling at a rate of knots. The government’s response to the economic challenges as a result of the downturn in economic conditions around the world is in tatters, and it is entirely of its own making. The position the government finds itself in tonight is entirely of its own making. Its economic and financial incompetence has been exposed. Its inability to manage this House has been exposed. This government only has itself to blame. It is looking to blame everybody else—blame the coalition, blame the minor parties, blame the Independent senators. But in fact it need look no further than itself, because this government has failed the fundamental economic tests and it has failed to uphold the basic principles of democracy upon which this country was founded.

Everybody agrees that there should be an economic fiscal stimulus. The Leader of the Opposition said that in his first speech in relation to these bills—now the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 [No. 2] and cognate bills—last week. Everyone agrees that there should be boosts to growth, that there should be a package designed to increase productivity, to protect and create jobs and to stimulate the economy. So why is there no stimulus package now in Australia? Because of the incompetence of this government. This government refused to sit down and talk to anybody else, because this government, alone of all governments around the world, thinks that it is the only one with the answers. The arrogance and the hubris of this government are breathtaking. It believes that only this government has the answers and that the Prime Minister, alone of all world leaders, is the only one with the wisdom—the same Prime Minister who is now suggesting that he knows more than Nobel laureates in economics. The Prime Minister alone is the one with the answers and, if anybody dare suggest that there might be an alternative, there might be a better way, they are ridiculed and denigrated.

The government do not care about the personal reputations of renowned economists that they trash, they do not care who they steamroll in their attempt to force this parliament into rubber-stamping everything they put forward. If anybody dares question a line in this package then they are considered to be not worthy of being listened to.

It might be news to the Prime Minister, but 100 per cent of Australians did not vote for him in the last election. It might be news to the Prime Minister, but there are 64 seats in this House that are held by National and Liberal Party members. There are 64 seats across Australia which have an elected representative who deserves to be heard. Yet when the coalition, composed of its 64 members in the House of Representatives, seeks to put forward an alternative view, the government’s response to the coalition is, ‘Get out of the way.’ That is what they say to the people in the electorates represented by coalition members. To the people of Australia, they say, ‘Get out of the way.’ To any economist, any businessperson—anyone who has an alternative way—the government say, ‘Get out of the way.’

That is not what happens in a democracy. In a democracy, people are meant to have freedom of speech and debate. This Prime Minister has shown total contempt for the Australian parliament, total contempt for the Senate, by his refusal to even sit down and discuss with the Leader of the Opposition a number of proposals that we had. The Leader of the Opposition outlined them in his speech to the House last week. But, of course, the Prime Minister has ignored any suggestion that is not his.

I remember at the last election the Prime Minister promised evidence based policy. The Prime Minister said to the Australian people, ‘I will govern on the basis of our policies being evidence based.’ And the Prime Minister suggested that he was a man embracing of ideas. Mr Ideas, Mr 2020 Summit, embraced the ideas and the alternative views from across this country, but now we understand that the only ideas that this Prime Minister is interested in are his own and that anybody else with any other idea is denigrated and told to get out of the way.

This government has proven itself to be adept at political stunts. This government has proven itself to be very good at stage-managed publicity but, when it came to the tough decisions, it was prepared to rely on the inheritance that it received from the former coalition government. It was prepared to accept those low unemployment figures, the growth figures, the low interest rates, the low inflation and the strong economy, but when it had to make tough decisions it failed, because this government has form. When it comes to making strong economic decisions this government has failed. It has a track record of bad decisions that have negatively affected the economy.

Take inflation. Remember the absolutely wrong call on inflation when the government came to office. So desperate was it to blacken the name of the former government that it spoke about inflation in a way that no other comparable economy would have dreamed of doing at that time. The Prime Minister talked about an inflation monster, wreaking havoc across the economy. The Minister for Finance and Deregulation talked about taking a meataxe to the budget to cut government spending. Remember that? The inflation monster had to be attacked with a meataxe to control inflation.

But then of course, when the government had to make a tough decision on a bank guarantee, what did they do? They went further than any other comparable country and, in a moment of blind panic, ignored the Reserve Bank—they did not even pick up the phone to the one person in this country who is charged with the responsibility for financial stability—and introduced an unlimited bank guarantee, the negative consequences of which are still being felt. And when the savings of 200,000 Australians were frozen in funds that were outside this unlimited bank guarantee, what was the response of the heartless, insensitive Treasurer? He said, ‘Well, they can go to Centrelink.’ That was the government’s response to those whose funds had been frozen as a result of the government’s bungled policy.

But that was not the only mistake the government made. Remember the shambles over the ban on short selling? It had four different positions in four days, and it affected the stock market. No other country made such a mess of introducing a ban on short selling. But this government has form. Then of course when we came to the $10 billion spending package of last December, the government said—these are not our words—that the $10 billion cash splash would create 75,000 new jobs. If it did not have the evidence, if it did not have the analysis to back that up, why did it say, so cruelly, to the Australian people that a $10 billion cash splash would create 75,000 new jobs? Of course, we have seen from the labour force figures today that that was not the case. When will the government admit that it was not truthful with the Australian public when it said its cash splash would create 75,000 new jobs?

The Prime Minister has made comments today about our suggestion that Australia’s unemployment figure, while challenging, is something that we should not even speak about. The Prime Minister says unemployment at 4.8 per cent is so dramatic, so dreadful, that he has to take action far in excess of the United States, where unemployment is about 7.6 per cent. He conveniently ignores that the Secretary of the Treasury said in 2007 that unemployment at 4.6 per cent was full employment. The Secretary of the Treasury said that—so, if unemployment is under five per cent, why does the government ignore the economic strengths of this country, continue to talk it down and continue to strike fear into the hearts of every businessperson, investor and consumer in Australia, when in actual fact, by properly managing with prudent, sensible initiatives, we can work to create jobs in this country?

Labour market figures show that the same number of Australians were in jobs in January as were in jobs in December but more Australians are looking for work. That is understandable; of course more people are looking for work. When you have got economic challenges such as those we are facing, people who may have retired and seen their savings cut as a result of the economic downturn say, ‘I will come out of retirement and go back into the workforce.’ Of course there are more people looking for work.

Australia’s unemployment figures, as challenging as they are at 4.8 per cent, do not compare with those of the United States at 7.6 per cent. What is the Prime Minister trying to tell Australians? Is he trying to suggest that he is the President of the United States, that he has to deal with the economic conditions confronting the United States? No, he should be focusing on the strengths of the Australian economy and providing initiatives, plans and strategies for the Australian economy that are right for economic conditions in Australia—and that is precisely what the IMF have recommended. The IMF have not said one size fits all. The IMF have said that the Australian economy is different. They have recognised the strength of the Australian economy. They have highlighted time and time again that this country had zero government debt and that this country had delivered subsequent surpluses, and yet the government is trying to drive us into the same position as other countries. It has set the OECD benchmark of debt at 45 per cent of GDP as something that we should aspire to. This side of politics believes that the lower the debt the better, not the higher the debt.

The government has made a series of wrong calls and yet expects us to accept without question its $42 billion spending package. The government expected—presumed, in its arrogance—that this parliament would just rubber-stamp and would forget the scrutiny and forget the accountability. If it were not for the coalition there would not have been the Senate inquiry. This government wanted to ram through the parliament of Australia $42 billion worth of debt in 48 hours. The Senate inquiry, interestingly and as one would expect, has raised more questions than it has answered, and the government has refused to address any of the serious issues raised by renowned economists including a member of the Reserve Bank board. The size of this package is of concern not only to the coalition but also to experts who gave evidence before the inquiry such as members of the Reserve Bank like Dr Warwick McKibbin, Sinclair Davidson, Tony Makin and others. This government denigrates anyone who suggests that perhaps there is a better way.

The $42 billion, of course, is not the extent of the government’s spending packages. The government is trying to get the Australian people to believe it is only $42 billion. But since October there have been a series of packages of spending that amount to some $74 billion: the $10 billion cash splash; the COAG package of $15 billion; the Nation Building and Jobs Plan that it has introduced, now at $42 billion; and the Rudd bank—let us not forget the Rudd bank—with $2 billion of taxpayer funds that the government wants to use to prop up the balance sheets of the big four banks. At this time, the government wants to use $2 billion, as a minimum, and up to $30 billion, to prop up the commercial property sector prices. The local community infrastructure as well as the infrastructure package is $74 billion. That, Prime Minister, comes to 6.4 per cent of GDP—higher than Britain and higher than Canada. It is a disgrace that this government would seek to put us into debt to the tune of 6.4 per cent of GDP at a time when Australia’s economy is weathering the storm far better than anybody else’s.

The composition of the package has also come under challenge. The $12 billion cash splash will not work, because the $10 billion cash splash did not work. The government is ignoring the lessons of the past. The government is ignoring its own evidence. The government is ignoring Treasury advice. What I think was most instructive from the Senate inquiry was that Treasury were not asked to cost any other package but the Prime Minister’s package. They were not asked to cost a package that included tax cuts. Every other comparable economy has got tax cuts as part of its spending package but this government has refused to consider tax cuts, particularly tax cuts that would stimulate business, stimulate growth and help small business employ more Australians.

Eminent economists around the world have challenged the composition of such packages. I am sure the Prime Minister would love to denigrate yet another Nobel laureate, but Gary Becker, writing with Professor Kevin Murphy, said recently that the multiplier effect of increased government spending is ‘most likely well below one’. I point out that Treasury admitted that they would not even provide the multiplier for the composite parts of this package. So we are not able to ascertain the multiplier for the composite parts of this package because Treasury have not done that. They went on to say:

… the multiplier effect of increased government spending is most likely well below one but such spending is unlikely to be temporary, that much of the spending will be on programs that would not pass a reasonable cost benefit analysis and that the debt caused by the increased spending has to be paid for eventually by higher taxes on households and businesses.

The coalition will not impose unsustainable debt on future generations. The huge debt that this government is burdening Australians with has to be repaid at some stage and this government has provided no plan, no strategy, as to how it will do that. Treasury could not say when they see the budget returning to surplus. Why won’t this government sit down and talk to the coalition about alternative plans? Why does this government believe that it alone in the world has the answers? We will not be bullied into passing legislation that puts a burden on future generations of Australians. This government is a disgrace.