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Tuesday, 14 October 2008
Page: 8957

Mr KELVIN THOMSON (2:23 PM) —My question is to the Minister for Finance and Deregulation. Will the minister outline how the government is using the budget surplus to safeguard the Australian economy against the global financial crisis? Is the minister aware of any threats to the government’s actions?

Mr TANNER (Minister for Finance and Deregulation) —As the Treasurer and the Prime Minister have outlined, the international financial crisis is moving into a new and more dangerous phase. We are all aware of these circumstances: credit markets being gummed up, share markets falling and major economies either heading towards recession or predicted to be in recession shortly. Australia is much better positioned than almost any other major economy in the world to deal with these circumstances, but we are decidedly not immune. The government has been dealing with the consequences of these problems since the latter part of last year and has taken a number of measures over the course of that time, including building a very strong budget surplus—and I will deal with that question in a minute. The government has also taken action to make available $4 billion through the Australian Office of Financial Management to sustain non-bank mortgage lending, has initiated deposits protection and has, of course, increased the government bond market liquidity.

The circumstances have now changed and even more decisive action has been required. That is why over the past couple of days the government has acted to put in place guarantees of domestic banks’ deposits and also wholesale fundraising. The government has, in addition to that, today announced a $10 billion one-off economic stimulus, an economic strategy to ensure that growth and employment are sustained in the face of very, very strong downward pressures coming from these international circumstances. Those of us who have lived through the previous economic downturn know how quickly an economic downturn can spread and how important it is to take decisive action early to ensure that growth, economic activity and employment continue to survive and prosper.

Even as our economy is slowing, we have the pressures internationally mounting. Although we do have forces pushing back against those pressures—particularly substantial interest rate cuts and the decline in the value of the Australian dollar, both of which have a significant stimulatory effect—and, of course, the so-called automatic stabilisers in the fiscal position will take some effect and therefore push back and stimulate the economy to some degree, the government has reached the conclusion, based on the advice from its advisers in Treasury and other advisers, that that is not going to be enough to sustain growth at a reasonable level in the Australian economy. I emphasise again that the Australian economy remains in fundamentally good shape, and the issues we are dealing with here are issues that are emerging from the international financial crisis. Notwithstanding the strong shape the Australian economy is currently in, we have to take decisive action to ensure that the wellbeing of Australians is maintained and that we do not see Australia head into a serious economic downturn.

Now I would like to turn to this question of the surplus. It appears that the primary contribution of the allegedly bipartisan opposition to the debate on this matter today is going to be a kind of schoolyard assertion that it is actually their surplus—it is not our surplus; it is their surplus. It is the nation’s surplus, and we are engaged in making decisions on behalf of the Australian nation to deal with the very challenging economic circumstances that face Australia. Mr Speaker, perhaps you would like to just think back five or six months and actually contemplate some of the detail of the surplus that was put in place and is now being mobilised to ensure that we can continue to have the Australian economy grow and employment remain strong. We had in the budget $7.3 billion worth of savings measures—in fact, 100 pages more in the main budget statement because of the very large list of savings measures. Those savings measures were designed to tackle things like the fact that the former government spent $457 million in 16 months on government advertising. It spent $350 million in a year on its infamous Work Choices program. It raised the level of spending on government grant programs from $450 million in 2002 to $4.5 billion in 2007. We put in place a very substantial set of savings in order to ensure that the budget surplus would be as strong as it has become and that the Australian nation has an insurance policy, a buffer, for precisely the circumstances that we currently are contemplating.

So I would suggest to the opposition, who have been buzzing around like a bee in a bottle on economic policy all year and who have been unable to land on a single position for any longer than about five minutes: if you are fair dinkum about being bipartisan about these very serious issues facing Australia then let us see you be bipartisan, let us see you change your position in the Senate on the remaining budget measures, which the minor parties and Independents have been responsible enough to deal with seriously, and let us see you understand that giving alcopops manufacturers a free kick is less important than ensuring that Australia’s pensioners and families are well protected in the circumstances that we currently face. If you are fair dinkum about tax cuts then let us reverse your position with respect to the effective tax cut that is involved in increasing the threshold for the Medicare levy surcharge.

Those are the issues that you need to confront if you are fair dinkum about being bipartisan and joining with the government in tackling this very serious international financial crisis and its implications for Australia. Instead of posturing like little kids in a playground about it being your surplus, how about dealing with the issues in the Senate and passing the government’s budget so that the surplus can be used for the purposes for which it was intended.