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Wednesday, 23 May 2012
Page: 5379


Mr GIBBONS (Bendigo) (10:44): For the entire time we have been in government, the opposition, aided and abetted by the right-wing media and commentariat, have pursued an agenda of maliciously discrediting Labor's economic management. At times the nature and scale of the misinformation coming from the other side has been such as to make any independent observer wonder if they are actually talking about the same economy as the rest of us. Today, as we debate the current Treasurer's fifth budget, I want to take some time to set the record straight about the federal Labor Party's economic record.

First let's look at some longer term trends. Since 1984 Australians have benefited from economic performance that has been better than that of most other major countries in the world. Using one very basic measure, according to the OECD, our gross domestic product increased 133 per cent between 1984 and 2011, compared to an average increase for the seven largest OECD economies of just 78 per cent. In 1983-84, again according to the OECD figures, our unemployment rate was 9.6 per cent, compared to an average for the seven major OECD countries of 7.3 per cent. By 2010-11, our rate had dropped substantially to 5.1 per cent, below the seven-country OECD average of 7.9 per cent.

These are just a couple of indicators of an impressive economic performance over the past 28 years. Of course, for 17 of those 28 years Labor treasurers were custodians of our economy. During that time, two of those treasurers were independently recognised as the world's best, winning Euromoney magazine's prestigious Treasurer of the Year Award—Paul Keating in 1984 and the current Treasurer, the member for Lilley, in 2011. Those opposite like to designate the former member for Higgins as the greatest Treasurer this country has ever had. The trouble is that is only their opinion. It is clearly not one shared by Euromoney, which never saw fit to bestow its Treasurer of the Year Award on Mr Costello. As I have said, two Labor treasurers have been the recipients of this highly respected award, but no Liberal or coalition Treasurer has ever warranted this recognition by one of the world's leading financial journals. Those opposite also like to anoint Mr Costello as the longest-serving Treasurer in Australian history, but we all know longevity of service is not necessarily a measure of competence or ability. After all, Colonel Gaddafi was the longest serving Libyan head of state, Hosni Mubarak was the longest serving Egyptian head of state in 150 years and Robert Mugabe is the longest serving president of Zimbabwe and still in office.

Mr Neville: They were all bad, though.

Mr GIBBONS: Yes. But of course there are exceptions, I remind the member for Hinkler—not least the current member for Bendigo! But I digress from my main point, which is that the only two Australian treasurers who have been independently recognised for their achievements in managing this nation's economy are from the Labor Party.

I turn now to some more recent comparisons. Despite all the claims from the opposition, real interest rates have been lower under Labor since 2007 than they were under the coalition. According to the analysis of the Australian Bureau of Statistics and figures from the Parliamentary Library, real housing interest rates averaged 4.6 per cent during the term of the Howard government, compared to 4.2 per cent since 2007 under Labor. Big business is paying less under Labor as well. The real interest rate for large business loans has fallen from 4.6 per cent to 3.5 per cent.

The number of people unemployed increased during the 11 years of the former Howard government by an average of 6.3 per cent a year, but it has fallen by five per cent a year since Labor came to office in 2007. Within those figures, the increase in the number of long-term unemployed fell from 25.1 per cent a year to 17.3 per cent. Under Labor, the increase in the notoriously difficult categories of young and mature age unemployed has seen a modest but welcome slowing down. Teenage unemployment under the Howard government increased at an average of 22.8 per cent, and this has fallen to 21.6 per cent under Labor, while the increase in mature age unemployed has slowed from 4.1 per cent to 3.1 per cent.

To be fair for a moment, there is no doubt that Australia's economy did improve in the latter years of the Howard government—indeed, dare I say it, while Mr Costello was Treasurer. But it is hard not to preside over a flourishing economy when you are riding on the back of a commodities boom. There is no escaping the fact that it was Paul Keating's stewardship of the economy that laid the foundation for the relatively good economic conditions Australia experienced under the latter half of the former Howard government.

Speaking of commodities, what did the country's longest serving Treasurer do with the proceeds of the previous resources boom? He squandered them—he squandered them away on tax cuts and handouts that were so big that the International Monetary Fund warned him that his last budgets were fuelling inflation and the Reserve Bank of Australia had to raise interest rates 10 times to try to contain the damage. According to respected Australian economist Saul Eslake, the last four Costello budgets were a lost opportunity in nation building. Mr Eslake told the ABC in 2008:

It also would have been possible to set funds aside for future tax reform, for rebuilding the nation's water supply, dealing with the Murray-Darling Basin problems, dealing with climate change and the like, as well as for spending on infrastructure and education and hospitals.

Mr Costello likes to take personal credit for establishing Australia's Future Fund. We must of course acknowledge his hand in this, but the purpose of that fund has nothing to do with nation building. It is specifically earmarked to pay for the unfunded superannuation of federal civil servants that will become due in coming years. In fact there is an argument that the money to meet these superannuation liabilities should not be in the Future Fund at all but should have been invested through the various Australian government superannuation schemes that have the liabilities. Nonetheless Mr Costello did set up the Future Fund structured in 2006, but it took a Labor government and a Labor Treasurer to set aside money for future nation building.

In 2008, in the midst of the developing global financial crisis, Labor Treasurer Wayne Swan established three funds which are now under the stewardship of the Future Fund: the Building Australia Fund to improve and develop major infrastructure such as roads, rail, ports and broadband; the Health and Hospitals Fund to provide increasing spending on hospitals, medical equipment and other health facilities; and the Education Investment Fund to provide capital investment in higher education and vocational education and training. At the end of March this year the values of these funds were $6.7 billion for the Building Australia Fund, $3.9 billion for the Health and Hospitals Fund and $4.6 billion for the Education Investment Fund. These funds represent a substantial allocation of current government income to investment in this country's future and its future infrastructure and it was a Labor government that followed the advice of economists like Saul Eslake in funding these nation building initiatives.

When the worst economic crisis in more than 80 years hit in 2008, it was a Labor government that took early and decisive action to mitigate its worse effects. It was the unwillingness of governments to take effective action that contributed to the severity of the global recession in the 1930s, but the investment spending by Labor from 2008 stimulated economic activity and kept firms in business and people in jobs. The results are clear to see. We have the lowest debt and deficit of all major advanced economies; we have the lowest unemployment rate of all major advanced economies; we are the only major advanced economy to avoid a recession. Labor's response to the crisis was endorsed by international bodies such as the International Monetary Fund, the OECD and countless economic experts such as Nobel prize winning Professor Joseph Stiglitz. He told ABC's 7.30 Report :

... what your government did was exactly right. So Australia had the shortest and shallowest of the downturns of the advanced industrial countries.

The opposition—aided and abetted by a partisan right-wing media—are still desperately trying to make out that Australia has a runaway debt problem. How much you can borrow responsibly can depend on how much you earn and your ability to pay the interest and repay the loan—just like when you take out a mortgage to buy your own home. Australia has borrowed a very small amount compared to its annual income and compared to major economies such as the United States and the United Kingdom—who are borrowing 60 to 70 per cent of their annual income—and Japan, who is borrowing even more.

If there was any concern about Australia's level of debt, our credit rating would have been downgraded like that of Greece, France and other European countries. This has not happened and Australia is still a AAA-rated credit risk. After this year's budget statement all three major rating agencies reconfirmed our AAA status with a stable outlook for the future. We are now one of just eight countries in the world with such a rating. I would remind the House that the opposition voted against Labor's stimulus package and against virtually every other piece of economic legislation in the past five years. Let us recall some of the forecasts from the opposition's leadership team. In February 2009, the Leader of the Opposition said, 'I think what we're going to get is massive debt and a deep recession.' In April 2009, the member for Goldstein said, 'The recession will be deeper and longer because of the misguided spending.' And Senator Joyce's prediction in March 2009, 'We're heading towards a recession,' was about as accurate as former IBM chairman Tom Watson's forecast:

I think there is a world market for maybe five computers.

There can be no doubt that, if the opposition had been in charge of Australia's economy over the past five years, we would have been in a downward spiral of lower incomes, lost jobs and reduced services.

This year's budget will ensure Australia retains its status as one of the world's strongest economies; it embodies everything that I and many of my colleagues on this side of the House entered politics for. It will spread the benefits of the current resources boom by delivering much-needed new financial relief to families and businesses under pressure. It will return to a surplus, as promised, to provide a buffer in the face of uncertain global conditions, and it will give the Reserve Bank room to cut interest rates further if it needs to. It will protect low- and middle-income Australians and our community's most vulnerable with reforms like the historic first steps towards the National Disability Insurance Scheme, aged-care reform and a blitz on dental waiting lists. It delivers a surplus through targeted and responsible savings, while still protecting the front-line services Australians rely on, as well as helping less well off families with cost-of-living pressures.

The budget will deliver much-needed cost-of-living relief to thousands of central Victorian households in my electorate of Bendigo. For many of my constituents—as in other areas of the country—electricity, rent, mortgages and the cost of groceries and petrol are putting serious pressure on household budgets. Among those to benefit are 12,000 local families who will receive an increase of up to $600 in family tax benefit part A payments from 1 July 2013. More than 10,000 families in central Victoria are expected to share automatically in a total of $10.6 million of assistance through the new schoolkids bonus payments, without the need to keep receipts and submit claims. And about 11,000 local young people, single parents and the unemployed who currently receive allowances to meet the costs of essential services like electricity, gas and water will receive a new supplementary allowance of $210 for singles and $350 for couples. In addition, from 2012-13, there will be tax cuts for all taxpayers earning up to $80,000, including a tripling of the tax-free threshold and increases in the pension.

These new measures are good for families, for students and for low-income Australians because they will help them make ends meet and get ahead in their lives. They are good for the central Victorian economy because people will have more to spend on local retail, manufacturing and other businesses that risk being left behind because of the high dollar.

In summary, this is yet another responsible budget from a first-class Labor Treasurer, and it follows the heritage of world-class, responsible economic management that the Labor Party has delivered to this country over the past three decades. I commend it to the House.