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Thursday, 29 October 2009
Page: 7685


Senator RYAN (6:04 PM) —I rise tonight to take note of the interim report of the Senate Economic References Committee into the government’s economic stimulus initiatives. I had the privilege of joining this committee for its inquiry and I could not let the comments of another member of the committee, Senator Cameron, from earlier this week go by without responding to some of them.

This report actually outlines how this stimulus package has failed, even against the very low bar which the govenrment sets for it. This has placed an extraordinary debt burden upon future Australians. This debt burden has not been undertaken for productive reasons, and it is a burden on the future of every Australian, as they need to pay back well over $200 billion of debt.

When businesses and people borrow money, they do so after analysing whether it is an investment in a business, in providing housing or in providing for their own personal future. This government has not done any of that. The justification from the government for parts of this report is, ‘We have spent $14 billion on education.’ Building school halls all around the country is not an investment in education. This tries to walk both sides of the street by saying this is an education investment and a stimulus investment. But it fails on both counts.

I do not think that anyone in this building has any doubt that we could find a better way to invest $14 billion in educating young Australians. We could invest it by improving standards or we could improve teacher training. Building a school hall is not going to help one child to read better or to count better. This claim that it is investment in education is a farce. Asserting that something is infrastructure does not make it so. Asserting that something is an investment in education does not make it so.

Earlier this week the Business Council of Australia outlined that many of these projects had not been tested by Infrastructure Australia with a cost-benefit analysis and that many of the projects were not of real economic value. They were simply called ‘infrastructure’ by the government. They had not been examined. They had not been tested to see whether or not they actually provided a stronger economic environment for Australia in the future. Handing out $900 cheques, building school halls and throwing borrowed money around willy-nilly does not improve the future economic capacity of this country. But the most important thing about this so-called economic stimulus plan is its impact on the future economic growth of Australia through interest rates.

The Reserve Bank governor himself admitted to the committee that if this were to be wound back, interest rates would be lower than they will otherwise be under this government’s plans. So every time the interest rates go up in this country every Australian who is paying higher interest rates for their business loan or who is paying higher interest rates on their home mortgage will know who to point the finger at—that is, those opposite. The Reserve Bank governor was asked: if there were $20 billion or $30 billion less of government spending in the forward estimates, would that mean there would be less pressure on interest rates? The Governor of the Reserve Bank said, ‘Yes’. The Governor of the Reserve Bank said that that would mean there was less pressure on interest rates. What we see from this government is a plan that knowingly, wilfully and intentionally will make interest rates higher than they otherwise would be, and that is something the Australian people will hold these people to account for.

Senator Cameron made some comments earlier this week about what he alleged were ‘academic economists’. We were fortunate enough to hear from some of Australia’s most eminent economists, who came before the inquiry. What they, being very well credentialled professors at two of Australia’s universities, outlined was that the model and the assumptions that underpin this government’s ideas—we will call it neo-Keynesianism, because they so favour the word ‘neo’ these days—do not work in a modern economy. The idea that governments can borrow money and pump prime an economy died in the 1970s. It died when our economy opened up. It died when our exchange rate became internationally tradeable. It died when tariffs went down. What we are seeing right now was in fact predicted by one of the economists. Professor Tony Makin from Griffith University outlined exactly how governments borrowing tens of billions of dollars to splash around Australia without any concern for its impact on future economic growth would drive our currency up.

Every exporter in Australia today is living with the consequences of this government’s borrowed money, not just in terms of their interest rates going up but also in terms of lower prices in Australian dollars for everything they sell overseas. And, Senator Marshall, every person who manufactures, every Australian manufacturer who tries to export a product, is actually facing a squeeze because of this rise in our currency. This rise in our currency is being pushed up higher than it otherwise would by the interest rate increases driven by your stimulus package. It has been pushed up higher than it otherwise would be by the policies of your government of borrowing money and splashing it around. That is the reality of a modern internationally tradeable economy. I know that those people opposite do not like it. They refer to it as neo-liberalism or some sort of neo-liberal conspiracy, but that is the reality of modern Australia.


Senator Pratt interjecting—


Senator RYAN —Those opposite like to claim they support jobs. I recall a year ago that they were talking about creating jobs. Now they talk about supporting jobs. Senator Pratt interjected earlier, ‘Two hundred thousand jobs’—200,000 jobs for $200 billion. Is that what you are asserting? If that is what you are asserting, I will be very interested to see what the Australian people consider the value of that particular alleged stimulus package. Australians are going to pay for this for a long time. Not one child is going to come out these school halls being able to read, write or count any better. They are going to have lower employment prospects. If they want to go into an export industry, they are going to have lower employment prospects—less chance at a job. We had people come before us who explained exactly how and the Governor of the Reserve Bank pointed at the elephant in the room and said, ‘Interest rates are going to be higher than they otherwise would be because of this government.’ This government will stand condemned in future years for this.