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Wednesday, 19 August 2009
Page: 5398

Senator BUSHBY (2:16 PM) —My question is to the Minister representing the Treasurer, Senator Sherry. Aren’t economists such as Chris Richardson, Stephen Kirchner and Sinclair Davidson right when they say that the government spent too much too fast and should have instead allowed the RBA to take more of the burden by further cutting interest rates?

Senator SHERRY (Assistant Treasurer) —I notice there are a variety of views about the impact of the stimulus, including from those opposite. Senator Xenophon is not here—I was going to refer to a criticism that he made. What we do know is that the stimulus package this Labor government has developed has cushioned the Australian economy against the worst impacts of the worldwide financial and economic recession. At a time when world economies are shrinking, Australia, I think, is now one of two, out of some 30 advanced economies, not to have gone into recession. That is as a consequence of a range of policy initiatives, in particular a consequence of the short-term impact of the stimulus package and also, of course, the actions of the Reserve Bank in reducing interest rates to lows not seen in 50 years.

As I have said, advanced economies are expected to contract by a massive 3.8 per cent in 2009. Against this background of uncertainty in some economies, particularly in the United States—yesterday I referred to yet another bank collapse in the United States, in the state of Alabama, where another substantial bank collapsed—and given the uncertainty with respect to very close to double-digit unemployment in the United States and the collapse of consumption in the United States, I would point out to the opposition that, in terms of the impact that the question marks over the US economy—and it is the world’s largest economy—will have in, say, China on the recent— (Time expired)

Senator BUSHBY —Mr President, I ask a supplementary question. Is it a fact that excessive government spending of the sort being undertaken by the government—the sort that is being labelled ‘fiscally irresponsible’ in media reports today—will inevitably result in higher taxes and higher interest rates?

Senator SHERRY (Assistant Treasurer) —As I was saying, I enjoy these questions, and it is about time that the Liberal opposition started to focus a little more on these particular issues. There have been a wide range of welcoming and congratulatory statements in support of the Labor Party’s decisive action in delivering the fiscal stimulus, including from the International Monetary Fund and from the head of the Australian Treasury, Dr Henry. He has pointed out the importance of that decisive action in the stimulus package in cushioning the Australian economy in the worst circumstances we have seen since the Great Depression, some 75 years ago, and of the vital role it has played, for example, in the retail sector—I think I outlined yesterday that retail sales in Australia are five per cent higher than they were in November last year—cushioning the Australian economy and protecting Australian jobs. We make absolutely no apologies for this approach. (Time expired)

Senator BUSHBY —Mr President, I ask a further supplementary question. Given that the economic downturn is not proving as severe as the government forecast in its own figures, why does the government continue to insist on racking up hundreds of billions of dollars of unnecessary debt and deficit spending?

Senator SHERRY (Assistant Treasurer) —It is interesting to reflect. When we look back at when the budget was delivered, those opposite were criticising Treasury and the government for delivering a budget that was too optimistic, arguing that unemployment should have been forecast to be higher and that we were being too conservative in terms of the economic downturn. Here we are, four months later, and they do a total U-turn and start criticising us because we should have been more optimistic. You cannot win with the Liberal opposition. This is typical of their flip-flopping and lack of any particular policy. What we do know about the criticisms coming from the Liberal opposition and their claims that the stimulus should be wound down is that it is a bit like them heading off to the post-game drinks session at half-time. That is the sort of position that the opposition are adopting. There is still a significant degree of uncertainty in the world economy. (Time expired)