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Thursday, 5 February 2009
Page: 603


Mr HOCKEY (3:55 PM) —My question is to the Prime Minister. I refer to the Prime Minister’s statement on 24 January that his new fifty-fifty $4 billion partnership, the Australian Business Investment Partnership, known as ‘Ruddbank’, has the capacity to borrow a further $30 billion for expansion into the commercial property sector. Prime Minister, is it prudent to have these special purpose vehicles borrowing more money in addition to the $200 billion the government has already sought and yet not fully disclosing it as more Commonwealth government debt? Prime Minister, how much debt are you piling on to the next generation of Australians?


Mr RUDD (Prime Minister) —The member for North Sydney, the Manager of Opposition Business, has asked me a question about the Australian Business Investment Partnership. This investment partnership was put together with the cooperation of the major banks and the support of the property sector across the country for one very good reason. It is not just the employment intensity within that sector, some 150,000 people; it goes to what happens to the value of property assets across this nation if there is a retreat from this nation of foreign bank syndication of current Australian bank loans to that sector. The consequence for the whole economy of a collapse in asset values in this sector would be catastrophic. The quantum of the refinancing due in 2009 across the Australian economy—and there are varying estimates of this—is somewhere in the range of $50 billion to $75 billion. The question arises: what is the proportion of that represented by existing bank syndication from abroad which could be withdrawn, as you see evidence around the world of that happening? The answer to that flows into the category of some tens of billions of dollars. Therefore, you have two courses of action. The Liberal Party is saying let the free market rip—


Mr Hockey —Mr Speaker, I rise on a point of order. To assist the Prime Minister, yesterday the Prime Minister asked for $200 billion. I referred to a fifty-fifty partnership which has the capacity to borrow $30 billion. What is the status of the additional debt in these special purpose vehicles?


The SPEAKER —Order! The Manager of Opposition Business will resume his seat. The Prime Minister is responding to the question.


Mr RUDD —I will return to what I was saying before, because the honourable member raises an important question: why have we embarked on this course of action and what are the consequences that flow from it and the consequences that would flow from not doing it? If you have a withdrawal of foreign bank syndication, what would happen therefore is that there would be a further factor fuelling the collapse of asset prices in this country. If that occurred—and all serious economists and economic writers are concerned about this—the flow-on effect to the general economy would be huge. That is why, based on the advice we received, this was the most prudent course of action.

I say to the honourable member that when the joint vehicle, the Australian Business Investment Partnership, is activated, of course it will involve the Commonwealth in the acquisition of assets. Therefore, assets will appear on the Commonwealth government’s overall ledger. That is a key point that he should bear in mind. The further point I make is this: as the Liberal Party embarks upon what is plainly its political strategy, which is about deficit and debt, those opposite think that they are onto a real political winner. Their political strategy is clear for all to see. They do not care about the consequences on the property sector in Australia, they do not care about the consequences for families who are struggling with the impact of the financial crisis—


Mr Simpkins interjecting


The SPEAKER —The member for Cowan is warned!


Mr RUDD —and they do not care about the collapse in construction, which we seek to deal with through the construction program that will come off the back of the primary schools investment program. They do not care about any of that, because they are driven by a political strategy that is all about deficit and debt. Those opposite need to reflect on this in a moment of intellectual honesty, which is getting harder and harder for them to do.

Firstly, as the Treasurer indicated, there has been a $125 billion collapse in government revenues. Given that that has occurred and that it is a global phenomenon, I ask those opposite if they would borrow to fill that gap? If you say you would not borrow to fill that gap, there are two courses of action available to you: to cut government expenditure by that equivalent amount—that is, $125 billion—or to increase taxes by an equivalent amount. Which is it—you can borrow it, you can increase taxes or you can cut expenditure? Those opposite refuse to provide an honest intellectual answer. If you are going to balance your budget, every government in the world has those three options in these economic circumstances.


Mr Turnbull —Mr Speaker, I rise on a point of order. The Prime Minister seeks compliance from the opposition in all things and I am very happy to provide him here with the answer that he has so earnestly sought.


The SPEAKER —Order! There is no point of order. The Leader of the Opposition will resume his seat.


Mr RUDD —This is quite critical to where we are going. The first huge impact in terms of the borrowing requirements of the Commonwealth was the collapse in Commonwealth government revenues—$125 billion. We have said how that has occurred; we have detailed the tax categories. That is happening right across the world. Is Mr Turnbull, the Leader of the Opposition, going to say that he would not borrow for that?


Mr Turnbull —I would be delighted to answer the Prime Minister’s question.


The SPEAKER —Order! The Leader of the Opposition will resume his seat. The Prime Minister will address the question.


Mr RUDD —I would be very keen to see an unequivocal statement in writing from the Leader of the Opposition as to whether he would do that or not. That goes to the core of the intellectual fraudulence of the substantive case that they are arguing. Secondly, what further addition is there to government borrowing? Further additions occur as a result of having an increase in social security payments, which are a consequence of people becoming unemployed. That also affects the forward estimates and therefore that becomes a second area of unanticipated expenditure. Then you come to the third area. The third area goes to the quantum of the stimulus. We have said upfront what the quantum of our stimulus is. We have said that it is $42 billion. That is what we regard as being necessary to support the economy now.

Opposition members interjecting—


Mr RUDD —I hear again the avalanche of intellectual honesty coming from those opposite! How much stimulus do they support? One moment they say that it is about $15 billion, then at a different moment they say it might be $20 billion. I looked at the member for Aston’s statement earlier today where he talked about $20 billion plus, because that is Treasury’s estimate of the cost of the proposal that he has put forward. His proposal is for small business not to pay the superannuation guarantee levy for two years. That would therefore be met by the taxpayer. Therefore, when you put all of their costed stimulus packages together—


Mr Schultz interjecting


The SPEAKER —The member for Hume will withdraw that remark.


Mr Schultz —Mr Speaker, I withdraw.


Mr Hockey —Mr Speaker, I rise on a point of order. I bring the Prime Minister back to the question; how many of these special purpose vehicles are going to be set up; where are they being set up; and how much debt—


The SPEAKER —The member for North Sydney will resume his seat. The Prime Minister knows the question and will address the question. On this occasion I suggest that he bring his answer to a conclusion.


Mr RUDD —The question asked by the Manager of Opposition Business goes to the question of debt. What I have sought to do in going through this in some detail is to expose the intellectual fraudulence of their argument. There are three components here: (1) will they borrow in order to meet the collapse in Commonwealth government revenue—that is, a $125 billion collapse, most recently added to by the quantum of $75 billion; (2) there are other unanticipated expenses which arise from social security payments; and (3) there is the quantum of the stimulus package. Those opposite call for a stimulus of about $20 billion, more depending on whether you listen to the member for Aston or not. We say $42 billion. What is the difference in the overall quantum? It is something in the order of $20 billion. What I would like to see is some intellectually honest accounting from those opposite about what they would support by way of borrowing or otherwise. Instead, they have embarked upon a political strategy.

I conclude my remarks with those that I began question time with today—that is, this is all directed by the leader of the Liberal Party against his uncertainty about the member for Higgins. It is politics pure and simple.