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Thursday, 14 February 2008
Page: 415

Mr SWAN (Treasurer) (3:53 PM) —Madam Deputy Speaker Burke, congratulations on the job. The member for Wentworth is acutely embarrassed, most particularly about a number of outrageous and wildly inaccurate statements that he has been making about inflation in the last month or so. What we have seen today from the shadow Treasurer in his discussion of inflation is an attempt simply to fiddle the figures because the truth is too hard for him to digest and too hard for him to comprehend. He spoke before about how proud the member for Higgins was of his economic record—so proud indeed that he could not even attend the House to listen to the member for Wentworth! He would not come, because the record is far from perfect. We are going to have a debate about the size of our inflation problem; we are going to have a debate about its causes, because getting this right is absolutely essential to Australia’s economic future.

If the member for Wentworth were to have his way, there would not be the policies in place that need to address the capacity constraints that we have experienced for years and years in relation to infrastructure and skills. There would not be those policies in place at all because the former government was in denial. We have this wonderful construction and fiddling of the figures because he is so embarrassed, most particularly by his performance on Insiders on Sunday. What did he say on Insiders on Sunday? I will tell you what he said. He said that the underlying inflation rate did not matter—the underlying inflation rate was not the one used by the Reserve Bank—and that the government was wrong to focus on the underlying inflation rate.

The other porky that he told on Insiders on Sunday was that there is no such figure as a 3.6 per cent underlying inflation rate; it does not exist on the Reserve Bank’s website. Wrong again! It is most certainly there. What he has been trying to do is to somehow reanalyse the figures to wash away the inflation that everyone in the community has been feeling, not just for the last two months, three months or six months but for years and years. The reason the member for Wentworth is so embarrassed about this is that he dropped another clanger a couple of weeks ago. Do you know what that clanger was? He said inflation was a fairy story. And perhaps nothing more demonstrated how out of touch the member for Wentworth is than his description of that inflation figure for the December quarter as a fairy story, because working families around this country know about inflation. They do not need the member for Wentworth to fiddle the figures. They have been feeling inflation, because it has been on the march for the last two years—substantially on the march. Of course, the former government was warned.

Opposition members interjecting—

Mr SWAN —They were most certainly warned. Arrogant self-promotion does not pass for serious economic analysis.

Opposition members interjecting—

The DEPUTY SPEAKER (Ms AE Burke)—Order!

Mr SWAN —What we have not had from the member for Wentworth is serious economic analysis. There has been none at all. There are two things he does not really comprehend. The statement on monetary policy which came out from the Reserve Bank earlier this week was very grim news. Of course, if you are going to deal with it, you have to understand its causes. The parting gift from the Liberal Party of Australia and the former Treasurer to the Australian people was this elevated level of inflation—an elevated level of inflation over and above the target band, headline and underlying, for the next two years.

What we get is a redefinition of the figures. What he has been doing out there for the last couple of weeks is somehow trying to redefine away the problem so you cannot be held responsible for your complacency and for your neglect over the last couple of years. That is what is at stake in this debate. This government has put together a comprehensive plan to deal with inflation: a five-point plan, the type of plan that the Liberal Party could not put together at any stage of the last three years.

Mr Keenan —No, we couldn’t come up with those cliches!

Mr SWAN —You certainly could not. You certainly could not come up with a plan. You have denied the problem. The problem we have with the member for Wentworth is that perhaps he is the only member of parliament in the country who could make the member for Higgins look in touch. He is the only member who could possibly do that.

Mr Turnbull —You make Kevin Rudd look numerate.

Mr SWAN —Oh dear. So the member for Wentworth ought to be honest enough to, first of all, admit that underlying inflation has been on the march for a lot longer than the last six months—a lot longer than that.

Mr Keenan —Stop repeating yourself.

The DEPUTY SPEAKER —Order! Stop interjecting.

Mr SWAN —Of course the reason he is so embarrassed is that we had this ridiculous statement from the Leader of the Opposition. He described the Australian economy as being in a first-rate condition. There are some good things in the Australian economy and we discussed them today. The latest employment figures are good. We have had 17 years of growth. That is good. But all of this is now threatened—threatened by an inflation problem that must be brought under control.

Mr Ciobo —By your state Labor governments—$80 billion worth of debt.

Mr SWAN —There we go.

The DEPUTY SPEAKER —Order! The member for Moncrieff.

Mr SWAN —All of this is threatened by an inflation problem which we accepted responsibility for on day one. As I said in the House the other day, we accept responsibility for dealing with this problem. But why don’t you just have the common decency to accept some responsibility for causing it? The notion that inflation just suddenly jumped out of the bottle in the last six months shows how out of touch the opposition is. If you have been out there doing the shopping or going to a childcare centre, if you have been out there paying your bills, you will know that inflation has been elevated for some time. What is the history of this? Why has he started to redefine the figures? Because the member for Wentworth is so acutely embarrassed by this fact.

Mr Dutton interjecting

Mr Debus interjecting

The DEPUTY SPEAKER —Order! The member for Dickson and the Minister for Home Affairs will stop injecting across the table.

Mr SWAN —Last year, around September, the previous Treasurer, the member for Higgins, made the now famous statement that inflation was right where he wanted it. That is what the former Treasurer said: inflation was right where he wanted it. This just demonstrates how you guys in government got this all wrong. And now it falls to us, the Rudd Labor government, to put in place a series of fundamental reforms to address these problems. We are absolutely determined to do that. The first step we are taking is to bring under control your reckless spending spree of the last three or four years. We saw in the last four-year period the biggest increase in federal spending of any other four-year period in the last 15 years, just at a time when the terms of trade were pumping up the economy.

Mr Hockey interjecting

The DEPUTY SPEAKER —Order! The member for North Sydney.

Mr SWAN —What we needed to do was attend to the capacity constraints, as the Reserve Bank advised you to do repeatedly—

Mr Hockey interjecting

Mr SWAN —over the last three years. What we would have done was to take the warnings on inflation very seriously.

Mr Hockey interjecting

The DEPUTY SPEAKER —Order! The member for North Sydney will stop interjecting.

Mr SWAN —Of course, what that means is that the first step that has to be taken is that the federal government itself has to take the lead, has to provide restraint. So it falls to us to cut back your reckless spending spree—and we will, which is why the Prime Minister has made his commitment for a surplus of at least 1.5 per cent of GDP. It is why the Prime Minister made the announcement in the House today about there being the need for restraint—and there is, because those in the opposition do not understand the problem. We have to have some fiscal discipline.

Mr Hockey interjecting

The DEPUTY SPEAKER —The Manager of Opposition Business is already on thin ice.

Mr SWAN —But, secondly, we must attend to the skills crisis in the Australian economy left to us by the Liberals. You cannot go out and talk to anyone in this country, any employer, large or small, anywhere in the country, who does not talk to you about a skills crisis. But nothing was put in place to deal with this precisely at the time when urgent action was required, when inflation was on the march. When inflation was on the march, what were you doing? I know what you were doing, because we talked about it a bit. You were out there playing tag team with Peter Costello. That is what you were doing. That is what the shadow minister was up to.

Mr Turnbull interjecting

Mr SWAN —Yes, you were. You were out there trying to shame him into putting in place some decent tax reform. That is what you were doing. You were not actually looking after the fundamental interests of the Australian economy—and you were not doing anything about the infrastructure bottlenecks. You would come into the House day after day, week after week, playing the blame game—blame the states; do not accept any responsibility for political leadership, which is what the Reserve Bank was advising you to do.

Mr Ciobo —I’ve eaten mousse with more substance than you.

Mr SWAN —And it shows. What is also important is some fundamental tax reform—fundamental tax reform to put incentive in the tax system, so the people who do work hard to make our economy strong get a fair go. Of course, the previous government was content to leave in place the most horrendous effective marginal tax rates, particularly ones which affected second-income earners. You left them there year after year after year after year, and we shamed you into acknowledging the problem. We absolutely shamed you into acknowledging the problem. We did. And we can go back through the record.

We understand that working families deserve not only some tax relief but also a tax system that works for them, and we are determined to put one in place. I am proud to have introduced the bill that came to the House today, along with other measures that the government will bring forward as part of its election commitments. The increase in compensation for out-of-pocket childcare costs, for example, and the education tax rebate are all very important parts of assisting working families—who are under tremendous financial pressure—on the one hand, and, on the other hand, effectively lifting workforce participation, which is so important.

Mr Ciobo —It’s at a record high now.

Mr SWAN —Yes, it is, and it needs to go higher—something that you have not recognised either—because we do live in a situation where there is a terms of trade boom that has fuelled demand and it has to be dealt with. It is part and parcel of our five-point plan.

We on this side of the House recognise the enormity of the challenge that we face—and we are up for it. We will not deny the problem. It was absolutely laughable for the member for Wentworth to claim that our accurately describing the size of the inflation challenge was somehow going to cause inflation. I will tell you what it causes: acute political embarrassment to the opposition, because you should be ashamed of your record. The opposition’s claim to economic competence—

Mr Turnbull interjecting

The DEPUTY SPEAKER —The member for Wentworth!

Mr SWAN —has been blown away completely—

Mr Turnbull —You’ve been warned.

The DEPUTY SPEAKER —You will be warned in a minute.

Mr SWAN —by the statement on monetary policy that was delivered by the Reserve Bank only on Monday and blown away completely by the December CPI number, the inflation for the months of October, November and December—a 16-year high.

Mr Turnbull —On one measure.

Mr SWAN —He is still denying it. The member for Wentworth still denies that it is high. Shadow minister, if you do not understand the problem, you cannot be part of the solution. The sort of grandstanding that we have had from you today and over the last couple of weeks shows how ill prepared you are and how you are not fit to occupy the role that you do. The clangers that you have dropped on program after program have seen you become a figure of fun in economic commentary right around this country—and I have to say that I was surprised to see it. (Time expired)