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Thursday, 5 February 2009
Page: 508

Senator MASON (5:37 PM) —I rise to speak on the Appropriation (Nation Building and Jobs) Bill (No. 1) 2008-2009 and cognate bills. The blinding obscenity about this package is not that it will not actually work. That is obscene but that is not the blinding obscenity. It is not even the fact that future generations will be placed in debt for who knows how long. That is obscene but that is not the blinding obscenity. Even Labor’s financial incompetence is no longer obscene because that is part of Australia’s political folklore—we know the history of Labor governments, particularly federal Labor governments, and we are used to it. The blinding obscenity is that this government and Mr Rudd propose to push through the largest expenditure package, outside of budgets, in Australia’s history without parliamentary oversight. That is what he proposes to do and that is the blinding obscenity of this government.

If you want to know how significant that is—I am not very good with numbers but I did a quick calculation upstairs—we are talking about 42 thousand million dollars. There are, I think, 21 million Australians, so for every man, woman and child in this nation the debt immediately will be $2,000. And for every taxpayer—there are around 9,200,000 taxpayers—the contribution will be $4,565.22. The obscenity is that that debt was going to be placed on every man, woman and child and every taxpayer without proper parliamentary oversight. That is the blinding obscenity of this government. They have been in power for 15 months and already they are pushing through $42 billion without proper parliamentary oversight. That is a disgrace.

But politics is funny—it is an interesting profession. There are those who know the Labor Party well and know how they operate. Mr Latham, a former Labor leader, wrote today in the Australian Financial Review that Mr Rudd and Mr Swan:

… have jumped all over the financial crisis, not with a clear economic strategy in mind but with an urgent sense of the political opportunity it presents.

The stimulus package is about politics much more than it is about economics. Mr Latham knows that, the opposition knows that and Mr Rudd knows that, and that is a disgrace.

The problem—and my colleagues have touched on this eloquently throughout the day—is this: we now have a government that does not believe in anything. One of my favourite topics—and I will get onto this later—is that embarrassing essay from Mr Rudd. The problem is this: the Labor Party now no longer has any coherent ideology or framework.

Senator Boyce —They have Ruddbank.

Senator MASON —Yes, they have Ruddbank. They used to believe in socialism. That failed universally—it has been dropped. Then they developed the Third Way. Remember the Third Way? Mr Blair developed it—and Mr Hawke and Mr Keating. Mr Rudd has just dumped it. And what does he propose to replace it with? Nothing at all. I have read the essay twice. It is pathetic in its sparseness. It is funny when I think of it; the Labor Party used to be a grand party of ideas. I always opposed them. When the Maoists used to run around at university I opposed them. Now of course all they believe in is opportunism and ‘me-too-ism’. So in my lifetime they have gone from Maoism to ‘me-too-ism’. And what a pathetic downhill ride it has been.

I think it was Dostoyevsky who said that the problem is that someone who believes in nothing in the end will do anything. That is the problem with the stimulus package. It is all about politics and has very little to do with economics.

My colleagues have all said eloquently that the cardinal rule of stimulus packages is this: make sure they are properly targeted and that you get bang for your buck. It is all about bang for your buck with stimulus packages. Unfortunately, this $42 billion extravaganza fails that test.

One of the centrepieces of the package is the handouts to many Australians. Sure, it is attractive superficially—we all accept that. Many people will think it is terrific. But will it actually make a difference on the ground? Every poll I have seen published says this: most of that money will be used to pay off mortgages and credit cards—to retire debt—and the other part of it will be used for savings and will not be used to spend and to stimulate the economy. That is the problem. Again, there is no bang for your buck. In short, this is a package directed towards social infrastructure rather than economic infrastructure, and that nub is the nub of the failure of this package.

I accept that building libraries and sports halls might be laudable. Even if you put aside the fact, as my friend Senator Nash said, that that is of course a state responsibility—but I am a generous man so let us put that aside—what sort of bang do you get for your buck and what return do you get from the stimulus package? The same could be asked of community housing, ceiling insulation or indeed all of the financial handouts to taxpayers: what sort of bang do you get for your buck? What return do you get on the money you spend?

It is estimated that parts of President Obama’s proposed stimulus package in the United States will generate a multiplier as high as about 1.7 to one—that is, every dollar that the US congress votes to spend will generate about $1.70 in the next 12 months. As my colleagues have said, eloquently, that is because the money is being spent on physical infrastructure projects like highways, railways and bridges, which generate jobs during construction and then produce benefits to the economy through reduced transportation costs. In other words, when the orgy is over something still remains. When the orgy is over, there is something for the morning after.

There were a couple of good articles today in the Australian Financial Review. Michael Knox, an analyst from ABN AMRO Morgans, analysed Kevin Rudd’s package. ‘What sort of return,’ he asked, ‘will this country get?’ What return will Australia get from Mr Rudd’s stimulus package? Michael Knox said:

The economic impact of the plan is that GDP growth is expected to be around half a per cent higher than in 2008-09 and about 0.75 to 1 per cent higher in 2009-10.

In 2008-09 we are spending 1.7 per cent of GDP in stimulus to get an increase in GDP of 0.5 per cent. This means we are spending $1 in stimulus to get only 30c in GDP. This is a multiplier of just 0.3—very low by international comparison.

He concluded by saying:

By emphasising social over economic infrastructure, the bang for the buck is so soft it might better be described as a dull thud.

So even within the terms of the government’s own reference this is a very poor package—no bang for the buck.

What about the other objectives? My friend Senator Boyce has raised the issue of jobs. Clearly, the opposition is all about jobs, jobs, jobs. Mr Turnbull has spoken about it relentlessly over the last few days.

Senator Boyce —And eloquently.

Senator MASON —And eloquently! After the debacle of last year’s $10 billion package, where it would seem very few of the promised 75,000 jobs have materialised, the government is now rather more modestly promising that the $42 billion will ‘support’ up to 90,000 jobs. We do not know what ‘support’ means. I am like Senator Boyce; I do not know what ‘support’ means, but presumably it does not mean to create or to maintain.

I go to a quick bit of arithmetic, Mr Acting Deputy President Hutchins, and I am not good at this so you may have to help me. That is 90,000 jobs at the cost of $42 billion, which comes out at $400,000 per job. And those are not new jobs; those are the supported jobs. At $400,000 a job, what a wonderful package! As Mr Costello said in the House yesterday about the government’s new policy to borrow and to splurge, we are reversing 10 years of hard work and we are doing it to support 90,000 jobs at more than $400,000 per job. What a fiasco! That is the Labor arithmetic, and it is not very pretty.

Rather than trying to remake capitalism, which Mr Rudd has tried to do with his sad little essay, he should perhaps do something to ameliorate the pain that ordinary Australians are feeling. I thought it was the job of governments in recessions to help those in pain, rather than to try to remake the economic system, which is Mr Rudd’s preoccupation.

Who are the principal people who should be benefiting from Mr Rudd’s concerns? The unemployed. They are the people at the bottom of the social heap. And what is Mr Rudd doing for the unemployed in this package? This is from a party that supposedly believes in social justice! The government is doing absolutely nothing for the unemployed. Do you know what? Within the next year there are going to be a lot more people who are unemployed. So perhaps the new social democracy that Mr Rudd talks about in this frightful little essay has nothing to do with social justice. The new social democracy is not about social justice at all. There is no concern for the unemployed at all. It is increasingly obscene.

Tim Colebatch wrote in today’s Age:

Those who need it are the poor people who bear the cost of the recession on behalf of the rest of us: workers who lose their jobs, apprentices laid off, youngsters who can’t even get into the labour market, and businesses and self-employed people who go broke. There is nothing in this package for them.

So much for new Labor! So much for a party trying to rediscover a new direction! So much for a sad, new social democrat who does not believe in social justice!

The worst thing, however—and my colleagues have spoken about this forcefully and with passion—is the tremendous cost to the economy for future generations. It is about sizing up debt for years and years to come, for our children and potentially our grandchildren. Others have spoken at length today about the government’s reckless policies that in just over a year have managed to turn a $22 billion surplus into a $20 billion budget deficit and have sent Australia back on the road to government debt. That is the problem. What is worse, judging by the legislation introduced by the government, is that we can expect it to get even worse.

What has the government done? It has given itself plenty of wriggle room. It is going to allow itself to borrow up to—

Senator Fierravanti-Wells —$200 billion.

Senator Fisher —$200 billion.

Senator MASON —‘$200 billion,’ is the chorus from the opposition. What worries me—what worries the opposition—is this: when we came into government in 1996 the budget deficit was about half that; it was about $96 billion. It took us about a decade to pay that off. I hate to think how long it will take to pay off if it is $200 billion. It could take an entire generation to pay off a debt like that. It would become in a sense systemic—as it has become in the United States and in western Europe. In fact, 10 per cent of the budget could be paying for budget deficits of previous years. Government debt can so overburden budgets that governments are crippled. And who pays the debt? Taxpayers in future generations. The worst thing that could happen to this country, sir, is this: like the United States and like western Europe we get used to living with—

Senator Brandis —Structural.

Senator MASON —structural debt that gets written into the budget each year and cripples us. That is the long-term problem.

You will recall that Mr Costello years ago commissioned the Intergenerational report. You will recall his concern about intergenerational equity. This is another matter of social justice, I might add. The opposition is raising another matter of social justice. Who will bear the burden of today’s splurge? The point of intergenerational equity is, as Mr Costello pointed out, this: the changing demography of Australia means that with an ageing population there will be fewer taxpayers over the next generation to foot the bill. That is the problem. So the systemic, structural debt that Senator Brandis mentioned in his excellent address today is not just some sort of myth; it is highly likely. That is what petrifies the opposition.

Senator Brandis —And no Labor government will even start paying off.

Senator MASON —That is right. In the end, as always, it will be the coalition that has to pay the debt off. Some might think that I have a boring life. Perhaps I do. But I read with morbid curiosity Mr Rudd’s essay, ‘The global financial crisis’. To those people in the gallery: I suggest that you do not bother.

The ACTING DEPUTY PRESIDENT (Senator Forshaw)—Senator Mason, I suggest that you direct your remarks through the chair.

Senator MASON —Thank you. I suggest to you, Mr Acting Deputy President Forshaw, that you do not read it either. Let me point out the salient parts. Right towards the end of this embarrassing essay, Mr Rudd quotes President Sarkozy of France, who said, ‘Laissez faire, c’est fini.’ It is the end of laissez faire and the end of liberalism. For a start, as my colleagues know, France never adopted free market economics. That is why they have had 10 per cent unemployment for the last 20 years. Even worse, the irony is perhaps lost on Mr Rudd of something that I read in Monday’s edition of the International Herald Tribune. It was:

Prime Minister François Fillon on Monday rejected demands that the French government seek to stimulate consumer spending, rather than follow his plan to stimulate corporate and infrastructure investment, to lift France out of its economic slump.

He rejected demands; France rejected it. The article went on:

“It would be irresponsible to chose another policy, which would increase our country’s indebtedness without having more infrastructure and increased competitiveness in the end,” Fillon said in a speech in Lyon.

If the French can get it right, why can’t this government? Even Mr Rudd’s continental idols do not agree with him. Even the French are spending their money on roads, buildings, ports and railways and renovating infrastructure.

I suppose it comes down to this in the end with that embarrassing little essay: there are three policy prescriptions in this essay. They are: spend, spend and spend. There are no other ideas in it at all. And that is the problem with the Labor Party today, you see: they actually do not believe in anything except opportunism. That is at the heart of the problem in the debate in this parliament and the problem with Mr Rudd. Dostoyevsky was right: if you believe in nothing, you will do anything to survive politically, even if you have to mortgage the country in so doing and even if you have to mortgage future generations. That will be on Mr Rudd’s head and on the head of this government. (Time expired)