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Monday, 24 February 2014
Page: 517

Mr HUSIC (Chifley) (12:01): This is, on so many levels, an embarrassing bill. The bill itself is 10 pages long while the explanatory memorandum, for those sitting in the gallery, is 17 pages. It takes more to explain how little this bill actually does than the bill itself. When you look at the bill you see how little this is supposed to save. We have had a whole lot of claims being made through the course of this debate, but in actual fact this bill represents an absence of substance in the extreme. They concocted a reasoning or justification for the bill, but you have to go through what it does, especially in the context of how it has been brought to the parliament.

We have had those opposite say that there has been a budget emergency—that we need to find savings, that we need to be much more frugal with our spending. This is from those opposite who actually handed over to the Reserve Bank $9 billion in one hit. It did not even meet the need for that to happen. The Reserve Bank in a public hearing before the Economics Committee—a committee of which I am a member—said that they had no view about whether it had to be delivered all at once or spread out over time. But those opposite, when they talk about a budget emergency, provide the Reserve Bank $9 billion. Mind you, under questioning it became clear that it is not going to be paid now; it is likely going to be paid through the course of the next few months. We are told we have to give all this money to the Reserve Bank; they get the money and guess what happens? They provide us with a dividend in August—straightaway. This is from a mob that says we have to be frugal with our spending, we have to be wise with what we do. They can just hand that over. They have handed over $9 billion. What did they do to offset that? Well, they have brought this piece of legislation forward to the House, which will save a grand total of $0.25 million over four years. It will save over the four years $250,000. This is what they are putting forward. They are saying that this is what is required to help bring the budget to surplus.

They said all sorts of things. They said that the debt was out of control; it was not. In actual fact, when we were in office we got AAA ratings not from one agency, not from two, but from three agencies. On any other measure, when you look at other countries and compare where we were at to where they are at, we did remarkably well. We were told the economy was underperforming; it was not. In actual fact, it was one of the few advanced economies to grow. If you look at the economies that we look at—the US, Japan and even our neighbour across the Tasman—our economy actually grew. We were one of three out of 34 advanced economies to actually sidestep the GFC and a recession. By the way, those opposite try to airbrush away the existence of the GFC. They will always tell you about the Asian financial crisis—the one that was the worst in 75 years; the one that they still deliver lectures on in various universities across the globe and talk about financial markets and the impact it had on world economies. But you will never hear about the GFC from our Prime Minister or our Treasurer.

We are told we need to create more jobs. They have actually done the opposite. They have managed in their short time in office to see one job go every three minutes. The coalition encouraged a tepid, lukewarm response to the GFC. The now Prime Minister suggested we should spend in line with what New Zealand did. New Zealand had economic growth that was lower and had trouble holding onto jobs—and we were told we needed to copy them.

On the basis of the model put forward by Labor in government, we were one of three out of 34 advanced economies to sidestep the GFC. The now Prime Minister suggested we follow the New Zealand model. In fact, they just wanted the country to stumble along; for them, it was easy to put out that prescription that we just do what New Zealand did, because it is all care, no responsibility. They are not the ones forced to consider the devastating impact of unemployment not just on families but on communities across the country. Particularly in Western Sydney, we are always mindful of the impact of job losses on the people that we represent. But, again, it is all care, no responsibility from those opposite.

We also need to bear in mind their own record. The IMF absolutely scorched the Howard government when they looked at the level of spending of governments from 1960 through to 2013, outside of the GFC. In their report the IMF labelled the Howard government as the most profligate. They looked at all the spending that had occurred and it was clear that spending was out of whack when those who now occupy the treasury bench were last in government. We inherited a tax system where tax to GDP stood at 23.7 per cent and we were able to get that down to 22.1 per cent, so tax was lower as a proportion of GDP. They bragged about surpluses—you will get that a lot from those opposite. They conveniently forget that they spent less on health, they spent less on education, they spent less on infrastructure—the things that matter to the people who depend on government to work effectively.

The previous speaker in this debate said that this bill formed part of an economic response that was reflective of waste, but this payment that was extended to people through the course of the GFC was designed primarily to inject money into the system at a point in time when what was missing within financial markets was the element of trust as subprime mortgages and the scandal that ensued started to bring down longstanding financial institutions. As that unravelled before our eyes through 2007-08 there was a genuine concern that the whole financial system would freeze. Ensuring that we did not head for recession depended on government being able to inject money into the system quickly. I remind people that, as a result of the types of things that we put in place, we were one of only three advanced economies out of 34 that sidestepped recession. What did we have? We had people who looked at what Australia did, and I want to quote again a comment that was quoted by the shadow Treasurer in his contribution in this debate because it is important to reinforce it. Joseph Stiglitz, Nobel prize winning economist, said:

You were lucky to have, probably, the best designed stimulus package of any of the countries, advanced industrial countries, both in size and in design, timing and how it was spent—and I think it served Australia well.

During the global recession, Kevin Rudd's government implemented one of the strongest Keynesian stimulus packages in the world.

Stiglitz went on to say the package:

… was delivered early, with cash grants that could be spent quickly, followed by longer term investments that buoyed confidence and activity over time. In many other countries stimulus was simply too small and arrived too late, after jobs and confidence were already lost.

I want to reflect on that point because that is the point at which this type of investment by government needs to occur. There is no point after the horse has bolted. We have seen that in economic contractions in time past, when you spend too late and the effects of the long-term unemployed mean that the amount of money that has to be spent to bring them out that situation is much larger. It is better to keep people in jobs to ensure that their skills are maintained and that the overall economic activity is maintained as well. That is an important point. Mr Stiglitz goes on to say:

In Australia the stimulus helped avoid a recession and saved up to 200,000 jobs. And new research shows that stimulus may have actually reduced government debt over time. Evidence from the crisis suggests that when the economy is weak, the long-run tax revenue benefits of keeping businesses afloat and people in work can be greater than the short-run expenditure on stimulus measures. That means that a well-targeted fiscal stimulus might actually reduce public debt in the long run.

This from a person who is Nobel prize-winning economist. And these are important things to recognise.

Previous speakers have said that this was part of a wasteful period of spending, when in fact it helped save the economy. We also have the explanatory memorandum making a reflection in part on this in justifying what is being done. That is the explanatory memorandum of 17 pages for a bill that is 10 pages. The explanatory memorandum says:

Given that stimulus to the economy is no longer required the government considers that further payments are not warranted and represent an opportunity to remove government waste.

That is $250,000 that they describe as waste. I ask the question: do they really think that the economy will not require stimulus? Look at what this government has managed to achieve in a short space of time: one job lost every three minutes. It makes decisions that refuse to allow investment in this country. The biggest example of that was the refusal to allow investment in GrainCorp, which GrainCorp wanted. The government said, 'We don't want it.' The government said to the car manufacturers, 'We're not going to work with you, you're on your own,' and they shut. The government said to SPC food-processing workers that they are not going to invest with them. I reflected earlier on the remarks of Joseph Stiglitz that there is sometime benefit in being able to move quickly on things, and there is an element there that can be considered in the context of these closures, particularly in regional areas.

Any regional member of the government who thinks it is a great idea not to work with business to stimulate economic activity in their regions has to ask themselves what they are doing to stand up for people in their regions. There is value both for people who live in cities and for people who live in regional areas to see economic activity lift outside of the cities. A modest investment can ensure people do not get stuck in the rut of long-term unemployment that will require more government spending over the longer term. It is important that economic activity occurs in the regions so that people who feel there are no economic opportunities in regional Australia do not have to move to the cities to chase a job, because that puts pressure on infrastructure and services that, more often than not, those opposite have a track record of failing to support.

There are a whole range of things. For example, if people are not in work, they are not contributing to the national savings pool through their superannuation. There are a whole range of reasons why it is smart to co-invest with businesses. But since this government have come in they have been willing to block money coming into the country and they have been willing to stop money from staying in the country by pushing it out through the jobs that they are willing to see go.

They are talking now of massively contracting spending in this economy. We can see it from what has been flagged with the Commission of Audit, which they sit on and refuse to release—approximately 900 pages worth of cuts that they are refusing to show to the general public. They are building us up for a budget in May that is likely to cut spending further, and you wonder what will happen to the economy.

They know what is going to happen. They say in MYEFO, the Mid-Year Economic and Fiscal Outlook, that unemployment will go to 6.25 per cent and stay there for a while. Bear in mind that through the entire GFC we did not hit that level of unemployment, not once. While other countries were going into double-digit unemployment—Spain at 22 per cent, the United States getting close to 10 per cent and other parts of the world completely slowing down—and people were wondering what would happen in the eurozone and in particular were looking at what would happen in Greece, we were able to sidestep it.

This bill is a make-work excuse for this government. They claim that they are making savĀ­ings when in fact the reality says something completely different. It says two things: firstly, this is not a fair dinkum bill; and, secondly, it speaks more to their inability to be able to move with the economic times when they were in opposition and now that they are in government.