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Thursday, 12 March 2009
Page: 2520

Ms REA (2:04 PM) —My question is to the Prime Minister. Will the Prime Minister update the parliament on developments in the global economy and its impact on unemployment in Australia?

Mr RUDD (Prime Minister) —I thank the honourable member for Bonner for her question. If we look at the release of further economic data from around the world, it paints a fuller picture of the extent of the global economic recession and the contributing elements to it. Yesterday it was announced that China’s trade surplus narrowed to $4.8 billion in February, approximately one-eighth of the previous month’s surplus.

Mr Hockey —What about Australia?

Mr RUDD —In 2007-08, China was Australia’s largest trading partner and Australia’s second largest export partner behind Japan. The shadow Treasurer interjected before, ‘What about Australia?’ If I am talking about the state of the Chinese economy and the state of Chinese demand for imports from around the world, and if Australia has as its second largest export market the People’s Republic of China, I would have thought that even the shadow Treasurer could have concluded it was of some material relevance to jobs in Australia. But, again, that does not suit his political strategy.

Service exports to Australia have grown at around 26 per cent since the start of the decade, as one simple indication of the significance of the Chinese economy to employment in our country. Furthermore, we have seen reports of a fall in Australia’s thermal coal prices, with prices down 44 per cent on last year. Again, I would draw the shadow Treasurer’s attention—given that he regards this matter as irrelevant to jobs in Australia—to the following possibility: as a result of that, earnings from coal and iron exports could decline by up to $35 billion from 2008-09 to 2009-10. That is sucking out $35 billion from the Australian economy. Therefore, you are faced with a very clear alternative: either you sit back, watch, wait and see, do nothing and seek to take political advantage from a global economic crisis—which is the political strategy of those opposite—or you engage in an economic strategy to reduce the impact on Australia. This government’s resolve is to engage in such a strategy.

Of course, other governments around the world are engaged in similar strategies. Again, I would draw the House’s attention to the statement on Thursday of last week by the Chinese government that it had announced a projected deficit in its budget of 950 billion renminbi for 2009, a deficit of some three per cent of GDP for 2008. This is the highest fiscal deficit since 1979, including the deficit following the Asian financial crisis.

These are the global economic realities with which every government around the world, including Australia, has to contend. Our strategy is straightforward: firstly, to stabilise Australian financial markets through the provision of our bank guarantees; secondly, the immediate stimulus through the provision of payments to pensioners, carers, farmers and others who need support, and through that the provision of support for the retail sector in Australia and the 1.5 million Australians who are employed in the retail sector; and, thirdly, longer term economic stimulus. That is the government’s strategy; that is the one that we are embarked upon.

I would simply say this to those opposite as they ask one politically driven set of questions after another: why do they have any problem with such a basic proposition that, as the rest of the world goes into recession, Australia is somehow not immune from world events, that it will affect Australia? Believe me, it will. How could they possibly disagree with a basic proposition like that? There will be an impact here in Australia and there will be an impact around the world. Therefore, that underpins the necessity for us prosecuting a strategy to deal with these circumstances.

In recent times we had a statement to this effect—and I quote the member for Higgins because he is a person of some relevance to recent debates within the Liberal Party. In 2002, the member for Higgins said:

But the idea that somehow Australia is immune from world events, that the rest of the world can go into recession and it won’t affect Australia, believe me it does.

That was the member for Higgins as Treasurer of Australia in 2002. Let us just look at what was happening in the world in 2002. What was world growth in 2002 when the member for Higgins was Treasurer and saying that Australia could not be immune from world events as the rest of the world goes into recession? World growth was 2.8 per cent in 2002 whereas, today, according to the IMF and the World Bank, growth in the world will be less than zero.

Mr Pyne —Mr Speaker, I rise on a point of order. In terms of the management of the House, yesterday the Prime Minister broke his own world record on the length of his answers—

The SPEAKER —The member for Sturt will resume his seat.

Mr Pyne —by his12 minutes and nine seconds answer to a question—

The SPEAKER —The member for Sturt will resume his seat.

Mr Pyne interjecting

The SPEAKER —The member for Sturt is warned!

Mr RUDD —It seems that the member for Sturt and all those opposite are simply provoked by a presentation of the truth, because the truth to which I refer was uttered by none other than the member for Higgins, the Leader of the Opposition in waiting. In the events of 2002, the member for Higgins said that Australia could not be immune from global economic developments as the world goes into a recession. He said so when global growth was at 2.8 per cent. These days, it is running at less than zero, according to the World Bank. He said so when US GDP growth was running at 1.3 per cent in the June quarter of 2002. US GDP growth is now running at minus 1.6 per cent. He said so when unemployment in the United States was running at 5.8 per cent in May 2002. These days, it is running at 8.1 per cent.

Under those circumstances, which were considerably less stressed globally than they are today, the member for Higgins, on behalf of the Liberal government at the time, said, ‘The idea that Australia was somehow immune from these world events, that is just fanciful.’ I would draw those opposite to a close and careful study of the member for Higgins’ observations in times when we did not have a synchronised global economic recession, the great recession which we are now presented with the challenge to deal with. This government is getting on with the job. We have a strategy in place to reduce the impact on Australia. Those opposite have a political strategy, instead, just to take political advantage from the crisis. The contrast to the Australian people is absolutely clear.