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Thursday, 5 February 2009
Page: 516

Senator BUSHBY (6:16 PM) —I rise to speak on this package of bills that is before us today to fund a $42 billion stimulus package because I believe it is my duty, not only as an Australian and a member of the Senate but also as a father, to vehemently oppose this economic threat to the next generation, our children, and to their children. I have an email that I believe another colleague of mine may already have read out today, but I would like to read it out again because I think it states things very well. It is an email I received earlier today from an extremely concerned constituent. She says:

I do not make it a habit to write to elected members of parliament, but in this case I feel compelled to.

The federal government has recently forwarded a bill that it has labelled as a ‘stimulus plan’ for the country. It is nothing more than an insane political stunt that threatens the very welfare and prosperity of all Australians for generations to come.

Borrowing money to give cash handouts is in no way going to turn the Australian economy around. For every $1000 given out it is likely that the government will need to raise $2000 or more in taxes to pay for the handout. This taxation will deter future job growth. Many of their other spending initiatives will not create genuine wealth either, as they do not focus on greater productivity; productivity is the heart of employment. There is no long-term value in this radically irresponsible proposal.

I urge you as a fellow decent Australian to reject the government’s ‘stimulus plan’. Please do not try and second-guess what may be popular—this plan is utter madness. If this proposal is passed by the senate we are on the path towards complete destruction of future economic prosperity for generations to come.

The Australian people, as demonstrated by that email and many more that all senators on this side of the house have received, are genuinely concerned about this government’s reckless and risky plan, a plan with absolutely no guarantee of success. And so they should be.

At the last federal election just 16 months ago, Australians faced a choice between two political parties. The first was clearly acknowledged by all as having delivered strong economic management and guiding the nation through many challenging times. Back then, the future looked rosy for all Australians. The 11.5 years of hard work by that first party, the coalition, had eliminated the $96 billion debt accumulated through a series of ‘temporary deficits’ under the Hawke and Keating governments. We were consistently running surplus deficits. Our strongly growing economy was naturally increasing tax revenue to such an extent that we were able to put away billions of dollars for future needs, such as in the Future Fund and in the Communications Fund, which has now been disgracefully raided, and to provide billions of dollars in tax cuts to Australians. On that point, I would like to note that I have some concerns about where the government are going with the Future Fund. If they are going to find $42 billion to fund this, going $200 billion into debt, how long is it going to be before they get in and raid that trust fund as well? It is disgraceful.

As I said, 16 months ago we had a strongly growing economy which led to record low unemployment. Things were good. So much so that the current government were also keen to associate themselves with the economic approach of the then government—to ensure that voters felt comfortable about abandoning the coalition and coming to them, because economically Labor would approach things just the same as the coalition had. But here we are in February 2009 facing a vastly different scenario which exposes the misleading nature of what they were trying to present at the election.

It is incredible that we are standing here today looking at going back into debt—and not just in a small way. We are looking at going massively back into debt. As part of this package of bills, we have a request before us today to permit the government to expand the limit on its credit card from $75 billion—to lift it by an amazingly large amount, an additional $125 billion—to $200 billion. That is just astounding. As any Australian knows, once you get into the debt interest trap of a large loan it is very hard to pay it off and the debt load spirals.

So what is the government proposing in this package, given that it is going to impose such a large debt burden on future generations? Is it a package that addresses the single biggest potential threat to Australians from the effect of the global financial crisis, which is of course the loss of jobs? Does it contain measures to directly address the cost of employing people? Well, no, there is nothing in here that directly addresses the cost of employing people. Where is the money for new hospitals and improving the health system? It is not there. Where is the money to help those who have been most affected by the crisis—the self-funded retirees who have seen the impact on their share portfolios, on the money that they have squirrelled away over many years as they have looked after themselves and never asked anything of the taxpayers of Australia? There is nothing in there to help them. I have looked closely through this package and in all of these areas there is nothing. There is nothing for aged care. We saw in Tasmania recently that less than half the available beds offered in the latest aged-care approvals round were actually taken up because aged-care providers do not have the money to build the facilities to put the beds into. So where is the money for infrastructure to ensure that those most vulnerable Australians, the aged and the frail, actually have appropriate care in their older years? There is nothing in there.

I have heard a number of government senators in this place talk about how this package will help Australians deal with the impact of the global financial crisis. Quite clearly they are not going to be addressing those areas I have mentioned, but there is no doubt that all Australians who under this package are about to receive a cash handout will welcome it. Who would not welcome a cheque in the mail for $950 or multiple cheques for $950? What I have not heard is what the impact on most of those Australians will be. How has the global crisis that we currently face in the economic world impacted on many of these Australians who are looking at getting a cheque in the mail? If you still have a job or if you receive a government support payment of some type, I would suggest that there has been very little impact on you at this point. This is not to say that people with secure incomes are not struggling—there are many out there who are—but the struggle that they face is not a consequence of the financial crisis if they have a secure income. On the contrary, most Australians with a stable income are better off at the moment as a result of falling interest rates and petrol prices.

There is a well-accepted economic proposition that deficit finance should only be used to fund long-term infrastructure that will provide direct benefits to those who will be paying for it through taxes to cover interest and principal repayments. Despite the rhetoric and spin of the government, there is nothing in this package that provides such long-term benefits. What benefits will my children and their children receive for the taxes that they will be paying for many years, if not decades, to cover this massive exercise in political pork-barrelling? I contend that there are no benefits for them.

This package contains nothing to build future productive capacity; it is all one-off spending. Sure, it will temporarily boost economic activity figures, as we see in the retail figures that the government is so proudly touting, showing that there was a spike in retail activity last December. It is not surprising as there was $10.4 billion put out into the economy. The spike does not go anywhere near being a $10.4 billion spike; it is probably about one-quarter of that. It is not surprising, of course. If you put the money out there, it will increase the economic figures. It will show that there is a spike. But what will happen afterwards? What is the long-term benefit? Where is the long-term advantage in that spend? All it has done is cause a one-off increase in economic activity.

The package contains nothing to build future productive capacity. It will not jump-start any ongoing or lasting future economic activity. Rather, it places the burden of interest and principal payments on our children and grandchildren in order to fund one-off cash splashes. I contend that this is both irresponsible and inequitable.

Even worse, and as mentioned, this package is seeking authorisation to increase borrowings by an additional $125 billion from their current authorisation of $75 billion up to $200 billion. As I noted yesterday, Australians will best understand this as Mr Rudd asking whether he can extend the limit on his credit card from $75 billion to $200 billion. But, unlike the rest of us, he is not the person who will have to pay back the debt. That is right, there is no obligation on Mr Rudd to pay back the debt. He goes out and racks up $200 billion on his credit card and he does not have to worry because he never has to pay it back. On the contrary, it is a debt that he is incurring that will have to be paid back by taxpayers, particularly future taxpayers; our children and our grandchildren.

It is important to note as well that we are talking about up to $200 billion of debt. That works out at about $9,500 of debt for every man, woman and child in this country. I would think that any thinking Australian faced with the chance to get $950 upfront in return for a debt of $9,500 plus interest would reject the offer. But the Prime Minister does not have to concern himself with who will bear the heavy obligation of this debt. He does not have to plan or state how he intends to pay it back. He does not have to worry about that as it will not be him who retires the debt he wants to create today.

Then there is the interest on all this debt. The Prime Minister has not told the Australian people what services he will have to cut back on to pay the interest on the credit card which, if he takes it to its new limit, will be about $20 billion in interest per annum. What healthcare, education or defence spending programs will he cut so that he can pay the interest of up to $20 billion a year? All you can conclude from a package like this is that the Prime Minister is concerned with delaying the pain of this economic crisis, delaying it for just long enough for the full impact of the crisis to be masked, to be hidden from voters, so that he and Labor can be elected again. But of course in doing so he is condemning current and future taxpayers to far greater pain, condemning our young people and future governments to the challenge of finding $200 billion plus interest to put us back in the black. As mentioned, even if Mr Rudd remains Prime Minister for a number of terms, there is almost no chance he will have to make the hard decisions required to pay off the credit card.

This ill-considered and irresponsible spend of $42 billion is the latest instalment in what can only be termed a comedy of economic errors. It would be a comedy if it was not such a serious economic policy blunder—a blunder with ramifications that not only will leave future generations saddled with unprecedented levels of debt but will inevitably result in higher taxes in the medium and long term. Even the Prime Minister, the grand architect of this economic vandalism, this gross fiscal irresponsibility, this blatant abuse and misuse of taxpayers’ money, has clearly spelled out to us that it might not even work. What is becoming increasingly apparent is that this is a government in panic mode, this is a government that is making up policy on the run and this is a government that is completely lost at sea when it comes to the responsible economic management of this nation.

It is interesting to note the commentary in today’s media by former Labor leader Mark Latham on this government’s spending habits, using such terms as ‘profligacy’ and ‘fiscal carnage’. This is the same Mark Latham that many in the Labor Party abandoned after the 2004 election because he was too radical, yet here is the too-radical Mark Latham telling us that this government is leading the Australian economy into economic oblivion. I am sure it will not be too long before Australians will wish that Mark Latham was still the leader of the Labor Party because, incredibly, he would have been a more responsible economic manager than Kevin Rudd.

Even more worrying is that the illustrious overseer of the recession we had to have, former Labor Prime Minister Paul Keating, has come out from under his rock to congratulate Kevin Rudd on his plan to plunge Australia into debt of epic proportions. It is a $200 billion millstone around the necks of the Australian people, whose interests we are bound, by solemn oath, to faithfully represent in this chamber. That is from Paul Keating, the last Prime Minister to send us into the debt shackles, the last Prime Minister to deliver more than one million unemployed and a man with totally disproven economic credentials. It took 10 years for the coalition to fix the economy after his time in office. Australians should be shivering in their boots at the thought of this government taking advice from and accepting the plaudits of Paul Keating. The only more worrying event would be the same from the man who oversaw the dismantling of our economy in the 1970s, Gough Whitlam. It took 20 years for the economy to recover after his efforts.

Here we are staring down the face of a $200 billion  debt, a full $9,500 debt for every single Australian. This is what the Prime Minister has arrogantly asked the opposition to obediently agree to, without question and without scrutiny. But this we will not do. It is time to make a stand for ordinary Australians, to draw a line in the sand and to say no to the man whose spending plans for this country utterly dwarf those of the previous government that he accused of spending like a drunken sailor when he was in opposition.

The government continually repeats the phrase that they are taking swift and decisive action. It obviously tests well in focus groups. I will tell you that there is a very important element missing in that phrase, and that is that the action must be the right action. It must be correct and it must be appropriate for addressing the challenges. It is not enough to simply say, ‘We are taking swift and decisive action,’ if it is the wrong action.

In circumstances such as we face, where we are staring down the barrel of a sustained period of economic difficulty, it is incumbent on us making decisions in this place to ensure that we make the right decisions. We have to look at these issues in detail and ensure a proper, full and considered decision. If this takes time, then it has to take that time; otherwise, the consequences of the crisis will be much worse for all Australians.

It has been suggested that, because of the severity of the crisis, we on this side in this place should sit down and get out of the way. It is said that this is not the time for us to delay and obfuscate necessary measures for fixing the economy. On the contrary, I very strongly believe. Given the severity of the potential consequences of failure, it is precisely in circumstances such as these that the opposition has its strongest duty to ensure that measures such as this package are fully and properly scrutinised and rejected if they do not measure up. The consequences are too great to get it wrong in this place. And I contend that clearly this is not the package that this nation needs today.

With breathtaking hypocrisy and not a small amount of self-indulgent, ideological navel-gazing this Prime Minister and his government have, with the greatest of ease, performed one of the most spectacular U-turns in Australian political history. The term ‘U-turn’ has most famously been applied to Ted Heath, British Prime Minister during the early seventies, who, in a similar fit of mind to the one we are seeing here in Australia today, abandoned the Conservative Party’s core principles of economic liberalism to disastrous effect in the UK.

But back to the comedy of errors. Back in 2007, as the signs began to appear, warnings of an impending crisis were given, most notably by the then Treasurer, Peter Costello. I think he even warned, while still in government and still Treasurer, of the impending economic tsunami that Australia was facing as a result of the global financial situation. But rather than heed the warnings so prudently given by those of us who actually understand economic matters—those on this side of this place—the Prime Minister and the Treasurer instead chose to engage in an ill-advised strategy of talking the economy down, characterised by their widely cited references to a fairytale menagerie of inflation creatures.

This led to an enormous amount of pressure on the Reserve Bank of Australia, the RBA, to increase interest rates, which was a disastrous outcome for an economy about to experience its biggest downturn since early last century. Despite central banks in comparable nations around the globe reducing interest rates during that period in an effort to stave off the crisis, the penny just did not drop for our esteemed Labor friends. In 2008 business and consumer confidence fell away in Australia, and the Australian Chamber of Commerce and Industry business confidence survey showed the lowest level ever of business confidence in the 14-year history of the survey. Still the Labor government continued to talk down the economy.

I also find it very interesting to note that, around the time of releasing the first economic stimulus package late last year, the Treasurer started talking about how he had been planning it with the Secretary of Treasury since February of last year. If he was aware of the need to stimulate the economy in February of last year, why did he persist in talking down the economy for another seven months with interest rate rises and other negative consequences for Australians? The only conclusion that I can draw is that the government saw a political need to attack the reality and strength of the coalition’s economic credentials and saw talking up inflation as the only option they had, as misleading as it was. If we were in the US such a scenario would lead to the commencement of an impeachment process.

Having failed to act appropriately or in the interests of the Australian people during the initial stages of the effects of the global financial crisis on this country, the government—by this stage in a state of panic—decided to devise and implement some of the most disastrous economic policies we have seen in many, many years, which brings me to the bungled bank guarantee. Yes, the bungled bank guarantee that resulted in the freezing of the investment savings of a quarter of a million Australians. Where in the package is something to help them? A quarter of a million Australians were then advised by Treasurer Wayne Swan to ‘go to Centrelink’. This was truly bad policy. It was an initially uncapped—and I stress ‘uncapped’—bank guarantee for all deposits in certain Australian banks and financial institutions, but not all financial institutions, and for wholesale term funding. Not surprisingly, financial markets are still suffering from the disarticulation caused by that policy. (Time expired)