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Wednesday, 19 August 2009
Page: 5411

Senator EGGLESTON (3:12 PM) —We have just heard Senator Bishop claim that the resilience of the Australian economy has been due to the stimulus package put in place by the Rudd government. This morning on ABC radio, the Assistant Treasurer, Nick Sherry, also claimed that the current strength of the Australian economy in comparison to others around the world was due solely to the ALP’s action in delivering the various fiscal stimulus packages and that those packages had minimised the impact of the global financial crisis on Australia. That is a very interesting thing for both of them to say, because Ken Henry, the head of the Treasury, was also quoted on ABC radio this morning as saying, ‘Nobody really understands the reasons behind Australia’s strong economic performance.’ That is a very interesting comment from a very respected and independent observer of the economy.

Rather than ascribing that economic resilience to the stimulus packages instituted by the Rudd government, I would suggest we have to look at some underlying factors. The most important underlying factor is the legacy of economic strength and good economic management left by the Howard and Costello government. That, more than anything else, explains why Australia has come through this global economic crisis in such a robust way. During the time of the Howard-Costello government—and may I add in our current leader in the Senate, Nick Minchin, who was the Minister for Finance and Administration for much of that government—Australia was said to have one of the best managed economies in the OECD. In other words, this economy, under the Howard-Costello government, was regarded as being one of the strongest and best managed economies in the world. That underlying bedrock, I would suggest, is the more relevant reason why Australia has come through this global financial crisis so much better than so many of our neighbouring countries and countries like the United States and Great Britain, which have come through it very badly.

We have to look at the key factors which might underlie what I am saying—the factors which provided the bedrock for the Australian economy to be so strong in the face of this challenge. The first one was obviously the surplus which the Howard-Costello government left after paying off the Keating government’s debt of $94 billion or thereabouts. It took 10 years to pay off that debt. One can only wonder how long it is going to take to pay off the $300 billion-plus debt incurred already by the Rudd government. Who knows what that debt will be at the end of their term in office.

Another key factor underlying the strength of the Australian economy was the strength of our banking system. In fact, Australia has four of the eight AA rated banks in the world—a very remarkable achievement for this small country. Why is this the case? Because when he was the federal Treasurer, Peter Costello put in place a very effective regulatory system of the financial markets and set up APRA. So, whereas in other countries banks were not so well regulated, in this country they were very well controlled. Under the Howard government we had record low unemployment. We now have unemployment of 5.8 per cent.

The strength of our trading relationship with Asia is quoted as a reason for our strong economy. That is due to the fact that under Liberal governments—Western Australia in particular—great resource projects were developed which brought in billions and billions of dollars of revenue for the federal government.

So, where are we now? Let us have a look at the record of the Rudd government, which Senator Sherry claimed on radio this morning had come through the global financial crisis fairly well. As I said, we are at least $300 billion in debt and we have unemployment up to 5.8 per cent. None of this can be regarded as a good record.