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Thursday, 12 February 2009
Page: 940


Senator SHERRY (Minister for Superannuation and Corporate Law) (9:34 AM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

APPROPRIATION (NATION BUILDING AND JOBS) BILL (No. 1) 2008-2009 [No. 2]

Up until now, Australia has been partly insulated from the full impact of the global economic recession, but things are about to get more difficult—much more difficult.

The unemployment figures released today show that unemployment is now on the rise. It is a sign of what is to come. This global economic recession is the equivalent of an economic cyclone, spreading from country to country, continent to continent, leaving wreckage in its wake, devastating economies, devastating jobs, and crushing the dreams and the livelihoods of families across the world. The cyclone started in the United States, moved to Europe and then hit our major trading partners: China, Japan, Korea and India.

Now it is heading in our direction.

When you know an economic cyclone is coming, there are two things that you can do. You can follow the Liberal Party plan and do nothing; you can do nothing, just sit tight and hope that it simply passes you by—because, remember, the Liberals have already said that the global financial crisis has been overhyped. The alternative is decisive action, and this government stands for decisive action—to do everything possible, to do everything in our power to prepare for it while there is still time. That is what this government’s Nation Building and Jobs Plan is all about: supporting our jobs and small businesses before the brunt of the global economic recession hits Australia’s shores. It is not a silver bullet—there is no magic medicine available to cure all the ills of the global economic recession—but every responsible government around the world must play its part to reduce the impact of this global recession and to help our people.

Almost every government in the developed world is going into deficit to stimulate their economy in the face of the global economic recession. As the Australian Chamber of Commerce and Industry has noted this afternoon:

“No other nation’s parliament has refused a major stimulus package in the current environment of unprecedented global economic downturn.”

No other country’s parliament—except this parliament, led by this opposition. What the opposition has done by this act of economic sabotage in the Senate is to threaten the jobs, the livelihoods and the businesses of nearly 100,000 Australians.

All around the world, governments are taking unprecedented action to support their economies in the face of virtually unprecedented challenges. Yesterday in the United States they agreed on a planned fiscal stimulus of in excess of $1 trillion.

Yesterday the United States committed $2 trillion to a further rescue of its banking system. The United States is responding to a crisis which has claimed more than half a million jobs each month since September. So are all governments around the world; so are all parliaments around the world—except the Australian parliament, with an opposition led by the Liberal Party and its vote against a plan to support nearly 100,000 Australian jobs.

Here at home, sobering unemployment data was released today. The unemployment rate increased substantially from 4.5 per cent to 4.8 per cent in January, the largest monthly increase since October 2001.

The number of unemployed persons increased by 36,800 to 540,200 persons. The Deputy Leader of the Opposition and Treasury spokesperson for the Liberal Party described this jobs result as strong:

Today’s data clearly demonstrate the strength of the Australian labour market despite a worsening international economy. This supports the Coalition position that the Government’s $42 billion spending spree is simply too big … The Liberal Party is demonstrably out of touch. It is demonstrably out of touch with the challenges facing the Australian economy now and the challenges facing those 36,800 Australians who, in the most recent jobs data, have lost their jobs. The Australian Chamber of Commerce and Industry today described today’s jobs data in very different terms to those employed by the Liberal Party.

The Australian Chamber of Commerce and Industry said today:

“Today’s employment data is the latest evidence of the need for urgency. The decision by the Senate this afternoon to not pass the Australian government’s Nation Building and Jobs Plan is a blow to business confidence and investment certainty.”

That is from the Australian Chamber of Commerce and Industry.

How does the quantum of the stimulus package proposed by the Australian government compare with those which are being recommended elsewhere? The Leader of the Opposition today described the government’s plan as too large, a package of spending that represents an enormous percentage of GDP. The size of the stimulus package is entirely appropriate to the challenges we face.

This package delivers 1.1 per cent of GDP in 2008-09 and 1.4 per cent of GDP in 2009-10, for a total of 3.4 per cent of GDP over the forward estimates, two per cent being delivered in calendar year 2009.

The size of this plan is also modest in relation to what other governments are doing abroad. For the benefit of the House, President Obama’s stimulus package is six per cent of GDP, Italy’s package is 5.2 per cent of GDP, Canada’s package is 3.7 per cent of GDP, Korea’s package is 8.4 per cent of GDP, Germany’s packages come to 3.4 per cent of GDP, Japan’s packages total 2.3 per cent of GDP; and, again, that which is contained within the Australian package translates into two per cent of GDP in calendar year 2009.

The Leader of the Opposition has also argued, as has the Liberal Party more broadly, that this $42 billion stimulus plan advanced by the government will result in too much borrowing. Average net debt across the OECD is estimated to be 45 per cent of GDP in 2010.

In 2009, net public debt in the following countries is expected to be as follows: 50 per cent of GDP in the United States, 48 per cent of GDP in the United Kingdom, 24 per cent of GDP in Canada, 44 per cent of GDP for the Euro area and, I repeat, 45 per cent on average across the entire OECD.

As a consequence of the government’s proposed package and dealing with the borrowing requirement which comes from the collapse in revenues occasioned by the global economic recession, the Australian package and the borrowing associated with it for this collapse in revenues will result in five per cent of GDP as net debt. The OECD average, therefore, is nearly 10 times that of the Australian proposed average. Let us put that into context.

Secondly, let us go to the argument about debt in general and examine the Liberal Party’s hypocrisy on the question of debt. Prior to 1996—and some honourable members will recall this—the Liberals said that they would reduce foreign debt. I quote the former Prime Minister, Mr Howard, who said, ‘I can promise you we will follow policies which will bring down the foreign debt.’ Let us examine the factual record. In 1996, foreign debt stood at $193 billion or 37.9 per cent of GDP.

When the Liberals lost office in December 2007, foreign debt stood at $603 billion or 55.5 per cent of GDP. Under the Liberal government’s economic management—and bearing in mind the promise they solemnly made to the Australian people—foreign debt exploded by more than 200 per cent. The Liberal Party’s hypocrisy on the question of debt is a matter of documentary record.

The Liberals say that a $42 billion stimulus package is too big. I have just contrasted the size of that package as a percentage of GDP with all of the stimulus packages of those major economies that I have just referred to. How does the quantum of this package therefore sit with what is being said by responsible economic organisations in Australia?

The Liberal Party say it is too much, but the International Monetary Fund, the Reserve Bank of Australia, the Treasury of Australia, the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Council of Small Business Organisations of Australia all disagree. They all disagree with the Liberal Party’s position. The International Monetary Fund, the Reserve Bank of Australia, the Commonwealth Treasury, ACCI, the AIG and the council of small business are not units of the Labor Party. They are independent organisations which speak with an independent voice, and they say as one that an economic stimulus package of this size is right.

So let us be clear: those organisations, led by the International Monetary Fund, the Reserve Bank, the Treasury and the peak industry bodies, say that this quantum of stimulus is right and the Liberal Party alone says it is wrong. The International Monetary Fund has said:

What we need is more than 1 percent—of GDP—we certainly need at least 2 percent …

The Reserve Bank of Australia confirmed a 100-basis point cut in interest rates on the very day and following the government’s announcement of its fiscal stimulus package, because the Reserve Bank noted the importance of aggressive, simultaneous action of fiscal and monetary policy. The Secretary of the Treasury said in Senate testimony:

These are highly unusual circumstances, and we have advised … that there was a need for fiscal policy action and that it was quite urgent.

He went on to say that with a smaller package:

… there would be some point at which GDP growth in 2009-

10 in particular might well have been negative.

Let us turn to the remarks of the Australian Chamber of Commerce and Industry. Mr Evans said:

“Such is the scope of our current economic difficulties that this package, combined with monetary easing, is absolutely essential.”

He said it was ‘absolutely essential’. He continued:

The size of the package at two per cent of GDP in 2009 is appropriate and in line with our own estimate—referring to ACCI’s estimate— … of what is required. We recognise and accept that a temporary deficit is required to fund the program. The Australian Chamber of Commerce and Industry

continued:

“… we consider it is in the national interest for those measures to be passed, and passed quickly, to avoid uncertainty and to promote confidence.”

The Australian Industry Group said:

“The nation building and jobs plan announced by the Federal Government today is simple and substantial, and will provide a big stimulus to help keep the economy moving.”

Further: “The package targets consumer spending, which is absolutely critical—“ I repeat: ‘absolutely critical’—

… to our near-term economic prospects, and boosts capital expenditure—looming as one of the real casualties of the downturn.

The Council of Small Business Organisations of Australia said the following: “The worst thing we can do is not to do anything. I think half-hearted action is not required as well. We want someone to get out there and do something big, and this is big.” So says the voice of small business.

Then we come to that well-known other front of the Australian Labor Party, the Liberal government of Western Australia, who through its Treasurer Buswell said: “That type of stimulus—whether it impacts on consumption, expenditure or investment—is something that the state government of Western Australia welcomes.”

There you have the IMF, the Treasury, ACCI, AIG, the WA Liberal government—not exactly left-wing radicals. What they see is the unfolding impact of a global economic recession, and they see the need to act.

The Liberals today and in recent days have claimed they have not been consulted. I would say to the Leader of the Opposition as follows. The Leader of the Opposition less than 24 hours after the release of the government’s Nation Building and Jobs Plan, before he had seen the legislation, before the Senate committee had even begun, said on 4 February:

“The opposition will vote against this package in the House and in the Senate.”

How is it logically sustainable to argue that you should be consulted when on day one you say to the parliament and the nation that in the Senate you will vote against this plan? This is absolute disingenuousness.

Furthermore, the Liberals have fundamentally attacked the quantum of the package, against the advice that I have just referred to about the necessity of such a quantum. 

Furthermore, the Liberal Party have attacked every element of the package as well. On the question, for example, of the tax bonuses proposed: the Leader of the Opposition ruled out supporting these on day one, saying, ‘We do not support a further round of cash handouts,’ even though such measures in support of consumption have been directly supported by the IMF.

On the schools question, the Liberals have opposed the $14.7 billion school measures. The Leader of the Opposition rejected the government’s proposal on day one. He said:

“… what we’ve said—[referring to the Liberal Party]— is that the $14 billion is a very large amount of money to be focused largely on, as you know, primary school assembly halls and libraries.”

Furthermore, the Leader of the Liberal Party and the Liberal Party more broadly challenged whether schools and education were in fact a top infrastructure priority.

Let them eat their words as each of the members who have voted against this measure in the House of Representatives in the days ahead speak to each of their P&Cs, each of their P&Fs and each of their primary school principals and secondary school principals and say to them that their schools do not need this investment, that their primary schools do not need any further investment in either modern libraries or school assembly halls, that their secondary schools have no need for a modern science block or a language centre or that their P&Cs and P&Fs do not need an extra injection of funds to help with much-needed maintenance and repairs.

Then, on the question of small business, the Leader of the Opposition rejected the government’s proposal, saying it would not help small business. He said: “What he—[that is, the Prime Minister]—has proposed is a 30 per cent depreciation upfront, depreciation for purchases of new equipment by small business. Now, if you are a small business which has seen your cash flow decline, or if you don’t need any new equipment, that’s of no benefit to you at all.”

The small businesses of Australia, through their peak bodies, have welcomed this measure. Again, we find the Liberal Party out of touch with schools, out of touch with school communities and out of touch with small business.

On insulation, the Leader of the Opposition rejected the government’s proposal on day one by saying:

We would support an insulation subsidy of a lower amount, and I would suggest for the government’s consideration one that is, for example, $500 for all houses, increasing to $1,000 subject to a means test.

Again, on each of the individual measures, quite apart from the quantum, quite apart from the overall rationale for the stimulus package, the Liberal Party asks why they haven’t been consulted. They ruled out any support for this package from day one. They have undermined the need for the quantum of the stimulus from day one. And they have attacked every measure contained within it from day one. These facts speak for themselves in terms of the position that has been adopted by the Liberal Party.

Let us go, therefore, to all these Liberal claims in their aggregation. The Liberal Party say that unemployment is not a problem. We say it is. The Liberal Party say we should wait and see. We say we must act now and act decisively. The Liberal Party say the government’s plan is too big, when the IMF, the Reserve Bank, Treasury and all peak business organisations say the size is right for our current economic challenges.

The Liberal Party say that we will borrow too much. With this plan our net public debt will be about one tenth of the OECD average. They say they have been willing to negotiate, yet how can you negotiate when their leader says from day one that they will vote against the package? This, therefore, represents in aggregate the bona fides of those opposite on the question of this overall nation-building plan.

So we are left to ponder what actually is the operational strategy of the Liberal Party in this entire debate. The Liberal Party’s is not an economic strategy; it is a political strategy. It is a political strategy in three steps.

Step 1 from the Liberal Party is to do nothing or to do as little as possible.

Step 2 is to hope like hell that the global economic recession hits the Australian economy amidships, and therefore that it overwhelms the Australian economy in the course of the year ahead.

Step 3 is to turn around later next and simply say this: ‘I told you so.’ That is what this political strategy is all about. That is what the member for Wentworth, the Leader of the Opposition, knows full well. That is what those who have advised within their party room know full well. This is a strategy driven by the politics of that as well the internal politics of the Liberal Party itself. 

We know something of the debate that occurred within the Liberal Party when these matters were deliberated on. We know something of the intervention from the former Treasurer, the member for Higgins, whose passionate engagement on matters of national economic policy warrants his participation in this debate tonight—apparently not. What we have instead is not an economic strategy from those opposite but a political strategy pure and simple—a political strategy which is out of touch with the needs of the Australian economy; a political strategy which is only in touch with the political needs of the Liberal Party and its leader. That is what is at stake here.

It is for these reasons, therefore, that the government will continue to negotiate with the minor parties in relation to the government’s nation-building plan for the future. This government will get on with the business of acting in the national economic interest. This government has advanced a plan in the national economic interest. This government has advanced a nation building plan aimed at reducing the impact of a global economic recession on Australia. This government will get on with the business of acting decisively in Australia’s national interest.


APPROPRIATION (NATION BUILDING AND JOBS) BILL (No. 2) 2008-2009 [No. 2]

We are reintroducing this bill due to Senate obstruction and I refer to the Minister’s previous second reading speech on this bill.

This bill provides for the appropriation of funds to various measures announced as part of the Government’s Nation Building and Jobs Plan.

Full details of the measures in this bill are contained in the Explanatory Memorandum.


HOUSEHOLD STIMULUS PACKAGE BILL (No. 2) 2009

We are reintroducing this bill due to Senate obstruction and I refer to the Minister’s previous second reading speech on this bill.

This bill provides for amendments to various Acts to deliver the Household Stimulus Package contained in the Government’s Nation Building and Jobs Plan.

The Household Stimulus Package includes key bonuses:

  • Single Income Family Bonus of $900 to eligible recipients
  • Back to School Bonus of $950 to eligible recipients
  • Training and Learning Bonus of $950 to eligible recipients
  • Farmer’s Hardship Bonus of $950 to eligible recipients

These one-off bonuses are necessary to provide an immediate stimulus to the economy given the severity of the global downturn. It is a critical part of the Government’s National Building and Jobs Plan.

Full details of the measures in this bill are contained in the Explanatory Memorandum.


TAX BONUS FOR WORKING AUSTRALIANS BILL (No. 2) 2009

We are reintroducing this bill due to Senate obstruction and I refer to the Minister’s previous second reading speech on this bill.

This bill provides for amendments to various Acts in relation to the tax bonus payment provided for in the Tax Bonus for Working Australians Bill (No.2) 2009.

The Tax Bonus for Working Australians will be paid to resident individual taxpayers who had taxable income of up to $100,000 and who paid income tax for the 2007-08 financial year, after taking into account any tax offsets and imputation credits.

A payment of $900 will be paid to those who had a taxable income of up to and including $80,000 for the 2007-08 income year.

A payment of $600 will be paid to those who had a taxable income exceeding $80,000 to $90,000.

A payment of $250 will be paid to those who had a taxable income exceeding $90,000 up to and including $100,000.

Full details of the measures in this bill are contained in the Explanatory Memorandum.


TAX BONUS FOR WORKING AUSTRALIANS (CONSEQUENTIAL AMENDMENTS) BILL (No. 2) 2009

We are reintroducing this bill due to Senate obstruction and I refer to the Minister’s previous second reading speech on this bill.

This bill provides for consequential amendments to various Acts in relation to the tax bonus payment provided for in the Tax Bonus for Working Australians Bill (No.2) 2009.

Full details of the measures in this bill are contained in the Explanatory Memorandum.


COMMONWEALTH INSCRIBED STOCK AMENDMENT BILL 2009 [No. 2]

We are reintroducing this bill due to Senate obstruction and I refer to the Minister’s previous second reading speech on this bill.

This bill will ensure that the Government can raise the funds required to meet this temporary deficit resulting from the global recession, which has wiped out $115 billion of tax receipts across the forward estimates and moved the budget into temporary deficit.

Full details of the measures in this bill are contained in the Explanatory Memorandum.