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Thursday, 12 February 2009
Page: 946

Senator CARR (Minister for Innovation, Industry, Science and Research) (9:34 AM) —Yesterday, we learnt that Australia’s unemployment rate had risen to 4.8 per cent. We got confirmation of just how heavily the global financial recession is bearing down on Australian jobs. We were reminded just how much Australian workers are being hurt by a crisis that is not of their making—a crisis that began far beyond Australia’s shore. Yesterday we learnt that Nylex, a household name in this country, had gone into voluntary administration. We were told that the gearbox manufacturer Drivetrain Systems International has gone the same way.

Since September 2008, when the financial crisis came to a head, overall economic activity has slowed significantly—that is globally and in Australia. This was initially manifested acutely in the financial sector with the availability of finance becoming a significant concern. Subsequently, the main impact on consumers has been a lack of confidence. This in turn has impacted on business through a lack of demand and an increase on cash flow. The Ai Group recently noted that business may be shelving planned expenditure on capital investment and training while there is a focus on contending with falling demand.

What we have seen throughout a series of economic indicators is that the Australian economy is facing a very serious crisis—a crisis which some will say is not as great here as it is internationally, but it is a crisis nonetheless. The latest lease finance data from the Australian Equipment Lessors Association, for instance, which represents more than 90 per cent of leasing activities, shows that lease and equipment finance in the motor industry fell by 14 per cent in December 2008—a 14 per cent drop in one month. In the same period, lease and equipment finance for total business—that is, the non-motor sectors of the economy—fell by 24 per cent. New business in December was 20 per cent lower than it was a year before, or around 2005 levels.

We are facing an acute challenge in this country. Yesterday we were greeted by a National Australia Bank Quarterly Business Survey showing that business conditions continue to deteriorate and that business confidence is at its lowest levels since the early 1990s. And on this day of all days the opposition chose to block the government’s Nation Building and Jobs Plan. They refused to reach out their hands to workers and businesses at risk. They said: ‘Let the market sort it out. Whatever the market decides is fine by us. If market forces try to destroy your job, you must deserve it.’ That was the logic of the position that has been put here: if market forces take away your home, it must be for the best; if market forces undermine your business, you have only yourself to blame. This is essentially the philosophy that has been put to this chamber.

It is a matter of deep concern to me that the opposition do not seem to notice that the market has failed many Australians. They do not seem to appreciate, they do not seem to notice, that their callous neoliberal doctrine has been totally and completely discredited. It is a doctrine that has tripped the global economy into free fall, and Australian workers are now paying the price. The American financial crisis erupted with the global economic crisis when Lehman Brothers collapsed last September. Since that time, 47,000 Australians have lost their jobs. The government has been completely upfront about what impact the meltdown would have on Australian employment. This is a reality this parliament has to face. It just does not follow for us to simply sit back and take whatever the world throws at us. Governments do have the power to intervene in the economy to safeguard their citizens, and the worst failings of the market—and it is a point that seems to be lost on so many senators in this chamber—

Senator O’Brien —On the other side.

Senator CARR —Clearly on the other side, because this government is of the view that we should be using every weapon at our disposal to fight for jobs and prosperity in this country.

We go into that fight with important advantages. Australia is in much better shape than just about any other developed country to ride out the storm that has now engulfed the world. Our economic fundamentals are sound and our financial system is strong. Our unemployment remains well below that of other countries. Unemployment is 6.3 per cent in the United Kingdom, 7.2 per cent in Canada, 7.6 per cent in the United States, eight per cent in the euro area and 14.4 per cent in Spain. But is the response to that situation to do nothing? Do we consign the Australian economy to this accompanied by inaction, which seems to be the proposition that is being put to this chamber by the opposition?

The government has made its position very, very clear. We have to act swiftly and decisively to keep Australians in work. It is impossible to overstate the urgency of the task. There is absolutely no time to waste. It is completely idle to suggest—as the Leader of the Opposition has done—that we should think about stimulating the economy at some undefined time in the future. We need that stimulus now. That is the view of the International Monetary Fund. It is the view of the Australian Treasury and the Reserve Bank. It is the view of the Business Council of Australia and the Australian Industry Group. It is the view of the Australian Chamber of Commerce and Industry. In fact, the chamber has called the opposition’s decision to sabotage the government’s plan ‘a blow to business confidence and investment certainty’. All of these authorities are convinced we need immediate action. I can assure the chamber that it is also the view of the Australian government.

That is why in four short months we have introduced deposit and wholesale funding guarantees; we have invested $4 billion in the residential mortgage market; we have implemented a $10.4 billion Economic Security Strategy to fuel activity and to assist the vulnerable; we have announced a long-term $6.2 billion plan to support the automotive industry; we have invested $300 million in regional and local government infrastructure; we have negotiated a $15.1 billion investment in education, health and housing reform through the Council of Australian Governments; we have provided guarantees for a $2 billion special-purpose vehicle to give car dealerships critical liquidity support; we have brought forward a $4.7 billion nation building package of infrastructure investment and to support capital investment by Australian businesses; and we have established a $4 billion Australian business investment partnership to protect jobs in the commercial property sector. At the same time, the Reserve Bank has cut interest rates from 7.25 per cent to 3.25 per cent. I note that the four big banks have only passed on about half of that for business lenders. We said we would move heaven and earth to keep the Australian economy growing, and we meant it.

All of these actions are designed to address today’s challenges and to make us stronger for the future—and so is the Nation Building and Jobs Plan. This is a plan to boost GDP by half a per cent this financial year and by one per cent in the period 2009-10. It is a plan to support 90,000 jobs over the next two years. It includes the largest single school modernisation program in Australian history; our largest single investment in housing; a massive investment in ceiling insulation to cut energy bills and to reduce carbon emissions; support for individuals and families bearing the brunt of the crisis, in the form of one-off cash payments; and 30 per cent tax breaks for businesses large and small in terms of their investment decisions. It is about an immediate injection of support to lift aggregate demand. It is about ensuring that this country moves through this storm as quickly as possible.

Each of these measures is designed to do two things. One is to deliver enduring social, environmental and economic benefits for Australia. The other, as I say, is to give an immediate boost to jobs and to growth—and we should be very clear about this: unemployment will be higher without this plan. Blocking this plan will put Australians out of work. Delaying this plan will put Australians out of work. Compromising this plan will put Australians out of work. How many jobs will be lost before the Liberals and the Nationals wake up to themselves? How much more hardship do people have to face before those on the other side of the chamber see that their free-market fundamentalism is an ideological dead end? How much danger does Australia have to be in before the Leader of the Opposition stops worrying about the member for Higgins and starts worrying about the national interest?

There is no rational basis for their opposition to this plan. It is not about debt and it is not about deficits. Mr Turnbull is talking about spending $20 billion now—he has discovered the need to spend some money—and saving the second shot, as he puts it, presumably another $20 billion, for later on. The only thing that they really will to change here is that the fiscal position will be much, much worse. Delay will cause a further deterioration in business confidence, will undermine further the levels of investment, will undermine consumer confidence and will cause higher levels of unemployment. All the economists around the world acknowledge this simple proposition.

The IMF has stressed that repeatedly. The need for action is immediate. In a recent paper on fiscal policy for the crisis, the fund described the essential ingredients of any successful stimulus package. The first, they said, is that it has to be timely. It is a pity this chamber does not appreciate the meaning of that word—timely. Second, it has to be large. It must be timely and large—not half-hearted, not half-baked. It has to be timely and it has to be large. The evidence is already coming in that last October’s economic security package actually helped support jobs and economic activity over the last couple of months.

Senator Abetz interjecting—

Senator CARR —Senator Abetz, you should appreciate this. Governments can make a difference, if they are prepared to act quickly and act boldly. But the opposition is offering us the alternative: delay and timidity. The alternative to this government’s plan will only guarantee that Australian workers and businesses feel the full devastating impact of the global recession. It is a recipe for accelerating the decline in government revenues. It is a recipe for escalating the cost of relieving hardship. It is a sure-fire recipe for weakening the national balance sheet.

Of course, their position is not about economic responsibility. I find it incredible that the opposition can turn their backs on what they said was the great Menzies tradition—the tradition of economic responsibility. They have turned their backs on it. That is why we have seen a 20 per cent drop in their ratings in terms of who can manage the economy. That is because the public is beginning to understand that the opposition is economically irresponsible. They are about dogma. They are about petty politics. They are about killing hope for a headline. They are about burning down the house so that they can feel an inner glow.

The government cannot and will not stand back and let this happen. It will fight. It will fight every step of the way to get this plan through. We owe that to Australian workers, we owe it to their families, we owe it to Australian businesses and we owe it to the Australian people. It is their interests that should be paramount at this time. That is why we accepted constructive amendments proposed by the Greens, that is why we are prepared to accept modifications to ensure this package is passed through this chamber and that is why we have created so many measures since October. It is very much along that line of thinking. We have created 10,000 structural adjustment places under the Productivity Places Program to retrain workers displaced as a result of the global meltdown. Labor always stands ready to support the unemployed. But our first priority is to reduce the risk of people losing their jobs in the first place, and that is what this plan is all about. The plan is about maintaining the levels of economic activity to minimise the risks of job losses.

According to the economic orthodoxy that has prevailed for so long in this country, we should not be doing any of this. According to the neoliberal theorists—the views that dominate the position of the Liberal Party—we should entrust our fate to some invisible hand, no matter how long the jobless queues grow, no matter how many businesses go bust, no matter how much wealth is destroyed. The government reject this view, as do economists around the world. They understand the need for timely action.

We do call upon all senators in this chamber to acknowledge that simple fact: we need timely action, urgent action. We believe that there is a central role for government in regulating markets and providing public goods. We believe that we have a moral responsibility to ensure the prosperity of our people. We believe that we have an obligation to pursue this course of action to minimise the level of social hardship, to minimise the job losses, to minimise the levels of economic distress. Governments cannot abdicate their responsibility for maintaining economic stability. It is precisely the failures of governments to discharge this responsibility that has led to this crisis. The first duty of any government is to protect its people and that includes protecting them from the worst excesses of extreme capitalism.

That is what the government are doing. We are about ensuring that this country moves through this storm as quickly as possible. We call upon all senators to acknowledge their responsibility to the Australian people to ensure that we are able to see the timely and urgent action that is required to prevent further economic distress and further harm to this country.