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Thursday, 5 February 2009
Page: 463

Senator TROOD (3:28 PM) —We all know when a government is in trouble, because it suspends rationality. It suspends trying to make a credible case for its policies. It suspends the capacity to make an argument. That was on display during question time this very day, as it was on display in question time towards the end of last year and earlier this week. From the government during question time, especially from Senators Conroy and Carr, we had polemic and we had rhetoric. We had a series of charges of a kind which we have heard before.

These charges are not new. They are of things like economic illiteracy and economic vandalism. These kinds of prescriptions, argued and directed at the opposition, have been made consistently over weeks, and certainly during this particular question time. And these are serious charges. Economic vandalism is a serious charge. Economic illiteracy is a serious charge, but we would be delinquent if we allowed them to stick because we are being lectured by a government whose capacity for economic vandalism knows very few bounds considering the time it has been in office.

Consider this. A few months ago the Australian people were being presented with the threat that the economy was under serious danger of increased inflation. The consequence of that was that the government spent hours, days, weeks, months trying to drive the so-called inflation genie back into the bottle. The government virtually intimidated the Reserve Bank into increasing interest rates and, having done so, caused great pain in the Australian economy and to the Australian people.

And then suddenly the government discovered that the threat was not inflation. Suddenly the government discovered that the dangers to the economy were elsewhere. So no longer were we worried about inflation. Increasingly we were unworried about saving or preserving; increasingly we were worried about the jobs which were now under threat from a deteriorating international economy. So what we got was not an injunction to save nor an injunction to increase surpluses but an injunction to spend. So towards the end of last year we had a $10 billion stimulus package, or thereabouts—the results of which were argued to be the delivery of tens of thousands of new jobs to the Australian economy, none of which have been delivered. What in fact has been delivered is a series of deteriorating job numbers. The economy is losing full-time jobs.

So, having failed with that stimulus package, what does the government do? It comes into the parliament early this week and tells us that we need yet another stimulus package. In blind panic—as the economy slows, as jobs disappear from the economy, as equity markets bounce around with no clear bottom, as companies announce decreasing profits—the government decides something has to be done. What do they do in this situation? Lemming-like, they reach for the solution that governments around the world are seeking. They reach for the stimulus package to spend money. They will spend a large amount of money. They will spend as much money as they think the Australian people will stand, in the hope that that will redress the dangers to the global economy.

This is an interesting proposition because it rests on an assumption. It rests on the assumption that stimulus packages actually make a difference. It rests on the assumption that you can spend your way out of problems. It rests on Keynesian economics. In that context I refer the Senate to an article that appeared in the Australian this morning headed ‘New Deal prolonged the Great Depression’ because all of these economic nostrums grow out of the experience of the Depression. That article by two eminent professors tells us that that is not the case. (Time expired)

Question agreed to.