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Tuesday, 10 February 2009
Page: 638

Senator SCULLION (4:17 PM) —I rise to speak to the so-called stimulus package, the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and related bills. Even the name ‘stimulus package’ is a name that is usually used historically. You use ‘package’ to describe something that has actually worked. You say that something has been a stimulus package rather than just apply the name in a very hopeful way. I do not support, and the coalition do not support, the passage of this package of bills. There are two principal reasons for that. The first is that it will not work. We will look back historically and we will not call it a stimulus package; we will call it a spending spree. If we are going to put a bit of a badge on it, I think that is a pretty good place to start. The second principal opposition we have to this is that, in this place, we always look to ways that we can make Australia a better place. People ask us, ‘What do you do?’ Well, in those quieter moments when we think about what we do in this place, we think we provide a legislative framework that ensures that future generations of Australians can enjoy a better Australia with more opportunities than were provided to us.

I will not support a spending spree that leaves a legacy of huge debt to future generations of Australians and I will not support a spending spree that is based on a political strategy rather than an economic one. We know of the importance of good economic strategy because we have actually had a bit of experience in that matter. The previous coalition government, as has been articulated many times in this place, had a great deal of experience of managing an economy that, when we inherited it, was in complete tatters. It was in complete tatters because, I suspect, those who were in charge of the economy before us slipped into the political strategy which they appear to be embarking on again in this place.

It was not by mistake that the Labor government inherited a $20 billion surplus and $70 billion in savings. The great irony of the savings is that that was a planned legacy for areas like communication and particularly for young Australians in education. It was set aside, and how proud we were in government at that time. We thought that our economic legacy, through an economic strategy, was going to leave Australia a better place with more opportunities, particularly for young Australians.

Let’s have a look at the economic environment that we left. Australia had a world-class banking system. We had a well-capitalised banking and financial sector. It was very profitable and very well regulated. It was well regulated to such an extent that, by and large, we did not use the credit processes and lending processes that were used around the world, and particularly in the United States, that led not only the United States but the rest of the world into these very perilous economic circumstances. When the trend towards using so-called low-doc loans started to happen, the previous Treasurer, the member for Higgins, Peter Costello, made some substantive changes that were without precedent in the world. We had APRA, the Australian Prudential Regulation Authority, which went out and ensured that the sorts of loans that banks and financial institutions were giving were ones that people had the capacity to repay. There were very tight regulatory circumstances. This insulated Australia very much from any of the huge downturn that we have seen and the huge lack of confidence in the financial sector.

Australia was also debt free, and of course that came from the work of genuine economic conservatives. Unemployment was the lowest in 30 years, and I do not like to see it as unemployment being low; opportunities for young Australians were at their highest for 30 years. We had inflation at historically low levels and, ironically, the credit rating that will allow this government to take this country into record levels of deficit was provided by the previous government. The credit rating is back to a AAA credit rating, after it went down under both the Hawke and the Keating governments.

But it was not all clear sailing when we provided this economic guidance. There were SARS, the Asian meltdown and 9/11. The difference between us and those on the government benches is that we did not have a political strategy—we had an economic strategy. We should not be duped by all the cries from the other side: ‘We are fiscal conservatives.’ They say, ‘Support this package; it’s all going to be okay.’ Senator Conroy will be summing up later tonight, and he will be saying, ‘The future of the children is in our hands; you can trust us.’ But do not be duped. The only guarantee that the government can give the children of Australia is that they will be paying $27 million every day just dealing with the interest bill. We can guarantee that. That is absolutely set in stone. But it is probably the only legacy set in stone in this place. This is because from the first day that the Rudd government got into this place they have pursued a political strategy.

Warnings of the crisis in 2007 were ignored. Why? Because the government had a political task at hand—to burn down the Howard legacy of being good economic managers. We spent a bit of time ignoring the opportunity to implement an economic strategy and focused on the political. The inflation genie was out of the bottle, the inflation monster was there writ large, and so we did everything short of forcing the Reserve Bank to put up interest rates. They were certainly encouraged. They were under a great deal of pressure. And what did that do? At a time when the rest of the world was wrestling with a slowdown in their economies, we had the handbrake locked on hard. The next thing we did was to ignore the collapse in business confidence—the lowest in 14 years as a consequence of those activities—and just move straight on to a bank guarantee. Hairy-chestedness appeared to be the thought of the day, so we needed a completely uncapped bank guarantee. Economic conservatives on this side advised, ‘No, steady; you want to be careful about that because there could be some unintended consequences’—and of course there were. Against our advice, they moved that way. There are 250,000 Australians who now cannot get access to their frozen investment funds. The advice we had from the other side was to sneak off to Centrelink.

The next piece of economic genius was the $10.4 billion cash splash. On Thursday, 14 October 2008, we were promised that 75,000 jobs would be created by the $10.4 billion handout before Christmas. We have had assessments from Treasury and all over the place, though there is no assessment that says this handout worked, that this provided a substantial and sustaining injection of growth into the economy. It has almost been a blink in time, and we have the next tranche. We are now proposing a $42 billion spending spree. I can recall the other day the Treasurer saying: ‘What’s wrong with you in the coalition? The congress in the United States has just passed an $800 billion package. That’s in the national interest. Why couldn’t you just get on with it? Stop standing in the way.’

It is interesting to see the difference between what is happening in the United States and here. We have a Treasurer here who has completely panicked. The United States waited 12 months. I think it was on the 13th of this month a year ago that President Bush made an announcement to spend $168 billion. We had 12 months to see how that went. Many aspects of that were effectively handouts. They looked carefully at it and recognised that it did not work, so in the next policy that part was left out. Here we had in December a decision to spend $10.4 billion. We still do not know exactly what has happened. We have a fair idea that it has not worked. In the following quarter we have rushed to put out another one, and we have had no assessment of how the previous one is going. The timing could not be more cynical. I think the fact that there have been announcements two quarters in a row shows that some of the pundits who are saying that this is just a cynical political strategy to ensure that the growth figures are kept slightly in the positive are spot on. One would hope this means that we can look forward to a brand-new political strategy in this area every quarter. We will all look out for that.

We know that handouts do not stimulate the economy in hard times. Australians, as do many on this side of the parliament, in hard economic times go back to the old values of thrift. We save. We put aside. In the first so-called stimulus package, people did not rush out and spend the money—these are hard times. They retired debt and they saved two-thirds of it. As an economic stimulus, this did nothing. I think one of the members of the Reserve Bank said there was probably a return of value of 10 per cent—hardly something I or anyone in the business world would call an investment. The handouts in the new package total about $12.7 billion, which is not going to provide an economic stimulus, as we know. It is a bit like a company providing a dividend that they have borrowed. They have not actually made a profit but need to provide a dividend, so they go out and borrow it. It is economic lunacy.

Then we have the $4.7 billion for school halls. Again, because it is a political strategy, it is going to be wildly popular. We have had people in Canberra and in schools around Australia saying: ‘What a fantastic thing. Great stuff. Can’t have enough halls and gymnasiums.’ And who would knock that? It is like trying to knock motherhood. But, if this is what people see as an economic investment in long-term infrastructure to ensure that we move into growth in this country, they are sadly misguided.

If you are going to provide schools with these sorts of initiatives, you would have thought that you would have been able to provide them in a way that was flexible enough for schools to be able to use them. Ross Park Primary School in Alice Springs, for example, has as normal days the sorts of days that we have been recently sweltering in in the southern parts of Australia, and they are trying to learn in those conditions with ‘swampies’—what we call the old types of air conditioners. They do not need a new gymnasium or hall. They want split-unit air conditioning, but this package is not sophisticated enough to allow all of those schools to genuinely get on the bandwagon and get some genuine benefits.

It is now claimed that this package will support 90,000 jobs, and it has been great to see in this place that people have not missed the cynical rhetoric change where it is not actually ‘creating’ jobs. The first package said that we would ‘create’ 75,000 jobs. The stamp has gone ‘brrr—failed’. The new package says that we are going to ‘support’ 90,000 jobs, so I suppose no-one can ever say that it has failed, because we will never be able to show how many jobs have been supported. I do not know what sorts of statistics or benchmark you could actually put on ‘supporting’ jobs. But even supporting these jobs is a cost of $400,000 a job. However, the most important question, of course, is for how long? Where is the sustainability index in all of this? How can we have confidence that these numbers are going to be sustained for some time?

We should be very conscious in this place to support legislation that supplies a legacy of a better Australia. This spending spree is not one of those pieces of legislation. Going into so-called temporary deficit in the past has not been particularly temporary. It has led to some of the hardest times, particularly for young Australians, that this country has seen. How long are we going to go into deficit? No-one seems to know. But I know this for sure: what the government is asking us to do is to provide a debt for future generations of $27 million a day just in interest. Basic arithmetic will do the rest for you—grab a calculator and frighten yourself. It is $189 million a week on just the interest. That sort of debt is frightening.

It is not that it is horrifying that you will have to pay it back; it is what you will have to forgo. Can you imagine the science we are going to miss out on? Can you imagine the building of schools every week, the hospitals and the wonderful innovation in Australia that we are going to miss out on? We are going to miss out on all of that. We will not be the ones to miss out; it is our sons and daughters and our grandchildren that will miss out on this wonderful legacy of being able to continue to look at savings that have been put aside for them rather than an impost of $189 million a week.

Anyone who believes that this package is going to move us away from a recession into growth is wrong. It is only going to provide half a per cent growth and it is going to cost us over $40 billion. It is going to be taking us into deficit and debt. That is not in anyone’s interest and it is not in Australia’s interest. That is why we will not be supporting this legislation.