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Wednesday, 17 June 2009
Page: 6370


Mr CHEESEMAN (6:29 PM) —I rise to speak on the Guarantee of State and Territory Borrowing Appropriation Bill 2009. This is another example of a government acting with foresight. This is another bill that shows we are acting appropriately and in a timely way to address potential issues that flow as a result of the global financial crisis. This bill is about guaranteeing potential claims made under the government’s guarantee of state and territory borrowings. The bill appropriates funds to enable claims to be paid under the deed of guarantee in accordance with the scheme rules. The bill also provides a borrowing power should there be insufficient funds in the Consolidated Revenue Fund at the time claims are to be paid. As I said, this is about being ahead of the game. It is about anticipating what may be ahead, even as a remote possibility, and putting in place the machinery to deal with it. This shows the Australian government is dealing with the global financial crisis admirably.

What a tremendous effort it was to see the figures last month, to see Australia avoid a recession. Only a few countries in the world can boast this today. When countries around the world are seeing negative growth, Australia is growing. That is a great result. In the context of a worldwide recession, it is a truly great result. According to the IMF, world output is projected to decline by 1.3 per cent in 2009 as a whole. The IMF said in a recent bulletin that the advanced economies experienced an unprecedented 7½ per cent decline in real GDP during the fourth quarter of 2008. Emerging economies too are suffering badly and have contracted by four per cent in the fourth quarter on an aggregate basis. Whilst all this mayhem in world trade and world markets was happening, Australia still managed to grow. That is a fantastic thing.

During the worst financial crisis since the Second World War, in the three months leading to 31 March gross domestic product rose 0.4 per cent. That is a testament to the management of the Australian economy by the Rudd Labor government. The only conclusion that I can draw is that the Rudd Labor government have got things spot on in terms of economic management. As economic managers, the plain facts tell us that we have done better than nearly every other country in the world. This bill is another piece in building the wall that is holding back the tide of world economic recession in Australia.

The global recession has severely constricted liquidity in semi-government bond markets. Our government, through this bill, is supporting and underpinning liquidity in these markets. It is very important to maintain the capacity of state and territory governments to deliver on nation-building investments. Pulling back on critical nation-building infrastructure investment now would hinder a recovery from the global recession, resulting in slower growth and of course higher unemployment into the future. The bill will provide investors with the assurance that Australian states and territories are, in their borrowings, supported by an Australian government guarantee and that the payment of any potential claim under that guarantee will be timely.

In defending Australia against economic recession the Australian government will leave no stone unturned. We are looking at every aspect of government, making sure we are secure in all areas so that confidence is maintained in our financial system. And confidence is now slowly returning to our economy. Confidence is returning precisely because the Australian people recognise that we have a very competent and decisive government to steer the ship through these difficult economic times. Australian exports and consumer spending increased recently and many stocks are rising as a consequence. That was a vote of confidence in the Rudd Labor government. The Australian currency also rose to its highest level in eight months against the US dollar. These figures have been achieved, as I said, in the deepest post World War II recession that we have seen to date.

These growth figures have been achieved at a time when output per capita is projected to decline in countries representing three-quarters of the global economy. What do you conclude from this, Madam Deputy Speaker? That we are providing a little bit of inspiration to the rest of the world is my conclusion. I think that, with decisive leadership and good policy settings, we can beat this recession and provide some inspiration to the rest of the world along the way.

An important aspect of this bill is the security it provides to the states and territories in these very difficult times. The ability of the government to make timely payments of potential claims is an important consideration of ratings agencies and investors in assessing the efficacy of the guarantee. The guarantee of state and territory borrowings will be established through a deed of guarantee and the supporting scheme rules attached to it. Expenditure would arise under the deed of guarantee only in the unlikely event that a state or territory fails to meet its obligations with respect to a commitment that is subject to the deed of guarantee, and of course the deed of guarantee is called upon. In this case, the government is likely to be able to recover any such expenditure through a claim on the relevant state or territory. The impact on the government’s budget would depend on the extent of the state or territory’s default and its ability to meet the government’s claim.

In simple layman’s terms this bill joins together state, territory and federal governments in a united front in the war on the recession. We recognise that should a state or territory become exposed it will reflect in a crisis of confidence for the whole system of government in this country. So the Rudd government is backing up the state and territory governments through this bill.

I want to mention a couple of aspects of federal government policy that I think have been absolutely critical in terms of Australia’s good economic performance. Firstly, of course, there is the decisiveness with which the Prime Minister and his cabinet have acted. The world and Australians have watched with some awe at the scale, speed and nature of the stimulus packages that we have rolled out. The schools packages provide infrastructure for the future and are providing jobs for tradies today. Millions of mums and dads and tradies have recognised that this is first class economic management and a major overhaul of public policy. It provides job security for tradies and an education for our youth for the future. It is great public policy, I contend.

Also, the first home buyers grant has been rolled out. It also is great public policy as it enables many people to access the property market for the first time, and it puts a floor in real estate prices. It is giving young families a unique opportunity to own their own home and, again, it is helping to shore up our vital building industry and providing spin-offs for retailers and manufacturers across Australia. Then there are the Community Infrastructure Program building projects: local sports fields, community building upgrades, walking trails and tourism infrastructure. It has all helped to keep Australians working and to keep Australia’s economy ticking along.

This bill pulls together both federal and state governments at the highest economic levels to help counter the economic recession. But we should not forget the contribution of local government and people working in our state and federal bureaucracies at all levels in fighting the economic recession. At the local level and at the state and federal bureaucracy level I have been amazed at how everybody has put their shoulder to the wheel to get these projects up and running and create employment to keep the economy going. I reckon more red tape has been cut in the last six months under Labor than probably in the last 60 years, and that is a very good thing. I would like to put on record my thanks to all those people who have worked and who are working in local, state and territory governments and the federal government to get these projects up and running.

In conclusion, whilst this bill will provide some further confidence in the Australian economy and whilst I am upbeat about the policies of the Rudd Labor government and the recent economic outcomes, we have a long way to go and we are clearly not out of the woods yet. We know that recovery in Australia and worldwide will be a slow and difficult process. We know that there will be hiccups and economic potholes along the way. But we can have confidence that we have a government that is decisive, that is hard-working and that is on the ball and creative. We will continue to look at all areas of government into the future to make sure we are doing our very best to keep Australia working and to keep the Australian economy strong. I commend the bill to the House.