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Wednesday, 19 August 2009
Page: 5413

Senator BUSHBY (3:22 PM) —I also rise to take note of answers from Minister Sherry. It has been interesting to hear the comments of the Labor speakers that have come before me and the comments of the minister during question time. In particular, Senators Bishop and Senator McLucas both spoke about the ‘kite flying’, as Senator McLucas called it, in respect of new taxes and basically dismissed it, saying, ‘It’s all part of the options.’ It is nice to hear that at least those two senators are willing to admit that they are options that are being considered, but the really interesting thing is that neither those senators nor the minister would rule it out. So long as it is not ruled out and so long as there are discussion papers suggesting that these new taxes are on the cards, the reality is that Australian taxpayers may well be looking, in the near future, at new taxes that slug them in all sorts of ways.

The other interesting thing that nobody, including the minister, even mentioned was the response to my question about how the government stimulus packages would lead to both higher taxes and higher interest rates. That has not been touched on. I will deal with that a bit more in a few minutes.

Today we hear that leading economists are saying that it is time for the government to rethink its spending binge. The fact is—and this has also been touched on by a number of speakers today—that the economic outlook is improving. It is almost certain that the economy and, as a result, Australian taxpayers will not suffer as badly as the government’s modelling predicted only a few months ago in the budget.

Why is this? The government will try and tell you that the reason things are not looking so bad is all the wise and decisive actions that they have taken. But there are a number of reasons for this, and the first and foremost is that the Australian economy entered this downturn in better shape than any other country in the world. The fact is that, thanks to the Howard-Costello government and the excellent economic management that we experienced in this country between 1996 and 2007, when the Labor government came in we handed over an economy that had no debt. In fact, there were tens of billions of dollars sitting in the bank, stowed away for appropriate measures. Most of that money has been raided by this government.

In addition to that, we went into the downturn with record low unemployment. Unemployment was so low that it was actually putting constraints on the economy. One of the reasons unemployment has not been as severely affected by this downturn as it might otherwise have been is that, prior to the downturn, employers went through a period of years where they found it so hard to attract skilled staff that, during the downturn, they were very reluctant to let them go. As a result, one of the characteristics of this downturn that we have seen is that, rather than shedding staff, employers are reducing the hours that staff work so that they can hang on to them until things come good. I really do not see how the government can claim credit for unemployment not going up when employers are hanging onto staff because they found it so hard to get them in the first place.

Of course, the other characteristic of the economy that this government inherited was consistent surplus budgets. Year after year we had delivered surplus budgets, which had enabled us to pay off the $96 billion of debt that the coalition government inherited in 1996 and to put that money in the bank, as I have referred to.

All of this provided the Labor government with far greater flexibility and far more money to spend to address the problems of the downturn than any comparable nation in the world. The Labor government was absolutely the luckiest in the world when it came in, given the resources it had at its disposal to address the global financial crisis when it occurred. Moreover, we started so much higher and in such better shape that, even though we did fall as part of the global financial crisis, we had started from so high that we did not hit the bottom. A lot of the reason we never made it into a recession was that we had such a strong economy in the first place. Things went backwards, but they did not go so far backwards as to go into the negative. They still went a long way backwards, though.

Of course, the government’s stimulatory packages have also contributed to the fact that we have come out of this better than we otherwise would have. It would be churlish not to acknowledge this. If you put $80 billion into the economy it has to have an effect, even if it delivers very, very poor returns for the dollars spent. But what price do we have to pay for the stimulus package, for the little bit of positive news that we might have got out of spending that $80 billion? A future shackled with debt, paying taxes to cover interest— (Time expired)

Question agreed to.