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Monday, 1 December 2008
Page: 12029

Mr IRONS (5:02 PM) —I rise to speak about Australia’s response to the global financial crisis. I must admit that this subject has the potential to be difficult to address. You may well ask: what could be difficult about this subject? The difficulty is associated with the word ‘response’. I will first have to decide which is the definition of ‘response’ by the Rudd-Swan government from the following options: is the Rudd-Swan government responding as an economic conservative to the GFC or is this blind, rudderless panic with no direction because there is no economic or fiscal capacity within the Rudd-Swan government? Unfortunately, I will have to choose the second option. The member for Leichhardt is next to speak and he is in the chamber as well. I say to him that there is no ‘double happiness’ in this so-called response by the government to the GFC—none at all. The member for Deakin threw the ‘double happiness’ line at me in the main chamber last week during the MPI on jobs. I am sure that he understands that the Australian people are not feeling any happiness at all, whether it be single, double or triple, with the response by this government to the GFC.

I will endeavour to show why the government have not responded satisfactorily and why they continue to prove to the Australian people that they have no idea or direction. The government have no direction or future ideas about how to handle the Australian end of the GFC. In the House today the Treasurer, Mr Swan, said it would be irresponsible to rule out a deficit. He is clearly out of his depth. Our Treasurer, Mr Swan, said last week that he did not know what was going to happen next week. This is tantamount to saying: ‘We the government do not have a clue and we cannot help you any further. We are just going to sit here and wait for it all to happen. When we do make a decision, we will hope it is the right one.’ Early in his term, the Prime Minister said he had done all he physically could to help the Australian people on petrol prices, grocery prices and inflation. He gave up. Giving up and guessing that you are going to make the right decision is just not a good enough response to the GFC. This is a government with no control or direction. The opposition has always had the right, and in fact has a duty, to question the actions of the government of the day. Those on the other side might be interested to hear that I have support from the Prime Minister on this. As Leader of the Opposition, on 27 September last year, he said:

… the function of the parliament is to provide the executive with the opportunity to answer questions put to it by the opposition.

…            …            …

… the job of the parliament is to get an answer back from the executive …

I was therefore deeply concerned when the Treasurer told the House that the opposition was completely irrelevant, while the Deputy Prime Minister said the opposition should just ‘get out of the way’. With statements like that, one could say that arrogance is creeping into the government by the bucketload. The member for Braddon also stated in a speech recently that we are just ‘nitpicking’—while we are fulfilling our duty to the Australian people in our opposition role as recommended by the Prime Minister, trying to get answers from the executive. Given the Prime Minister’s statement last week that Australia is set to go into deficit, I say this to the member for Braddon: the opposition has never been more important, and the economic advice of the coalition opposition should not be ignored. The key message in the Prime Minister’s statement to the House last week was the following:

If global growth continues to deteriorate in the period ahead, consistent with the economic data that is emerging during November, then there will be a further slowing of growth in the Australian economy—as surely as night follows day.

If Australian economic growth slows further because of a further deepening of the global financial crisis, then it follows that the Australian government revenues will reduce further. Under those circumstances, it would be responsible to draw further from the surplus and, if necessary, to use a temporary deficit to begin investing in our future infrastructure needs including hospitals, schools, TAFEs, universities, ports, roads, urban rail and high-speed broadband.

I want to reiterate what the Leader of the Opposition said in reply to the Prime Minister:

Experience and history tell us that Labor deficits are never temporary.

I want to make it clear that, given the historically strong economic position which this government inherited, there should be no reason for this government to take the economy into deficit. This government has not even seen the effect of its stimulus package, which is due to be delivered on 8 December, but already it is telling us it needs to do more. That tells me that its first stimulus package is not going to work; it has already declared it a failure. Last week, the member for Brisbane was telling us about the achievements that were coming from the government’s economic stimulus package, and I reminded him that the government had achieved nothing as yet. He agreed with that. This is a government of contradiction. It saves the world and the globe one day and then says we are in a desperate state the next day. This government has eschewed responsible economic government and instead chosen populist political policies. A basic knowledge of governments around the world shows that populist political policies do not equate to strong economic management.

By dispelling a number of myths that the Rudd-Swan government would have us believe, I will explain to the House how the Prime Minister has mismanaged the economy. The first is that the government took swift action in anticipating the global financial crisis. The Prime Minister in his statement last week suggested this; however, we know that this is simply not true. The government devoted all its energy in its first months in power attempting to besmirch the previous coalition government’s reputation for strong economic management. All members will recall the government’s line of attack: ‘The inflation genie is out of the bottle,’ said the Treasurer, Mr Swan. Well, the often-besmirched genie has morphed into an elephant, and the government have no way of getting it back into the bottle, whatever form they want to say it is in this week. This rhetoric about the genie put undue pressure on the Reserve Bank to increase interest rates, which it duly did. This seems a perverse way of anticipating a global financial crisis. In early February, when the government should have been encouraging economic growth, they were instead talking down the economy, threatening business and consumer confidence and growth. Meanwhile, the opposition was talking up the economy and, given the poor global economic data, warning about the potential impact of a global financial crisis.

This is a government of contradiction. The Prime Minister last week used the D-word, but on 11 May 2008 he said, ‘Budget surpluses are essential for economic security.’ He also said on 4 September:

Can I say to all those opposite: if you are going to prosecute a policy of responsible economic management, it means ensuring that you deliver a responsible surplus outcome.

On 5 September, he said:

The cornerstone of responsible economic management is to have a strong Budget surplus …

The decision making of the government has been poor, if not pathetic, but not unexpected. The confusion and indecision surrounding the government’s unlimited deposit guarantee scheme led to 270,000 Australians having their savings, mortgage funds, cash management trusts and similar investment institution funds frozen to redemptions. It has since been suspected that the government stumbled through this decision in an anticonsultative manner. When, within a few days, the massive distortion resulting from this policy became apparent, the Treasurer did nothing. As the Leader of the Opposition said yesterday, the Treasurer did nothing until a letter between the Reserve Bank and the Treasury secretary found its way into the media. We learnt the Reserve Bank governor himself recommended a cap just a few days after the policy had been announced. Indecision often leads to inconsistency. The Rudd-Swan government have demonstrated inconsistency particularly aptly during this financial crisis.

The Treasurer, the man who spent a minute fumbling around for his inflation figures, said as recently as Monday last week that a deficit would not be necessary. Yet later in the week the Prime Minister told us we were going towards a deficit. What has changed? The implications of inconsistency and indecision are significant for business confidence. Indicators have suggested a recent collapse in business confidence. Part of this is due to the global financial crisis. However, the Prime Minister, with his language of despair and hopelessness, is exacerbating this.

Two weeks ago I had the pleasure of welcoming the Leader of the Opposition to my electorate. The purpose of his visit was to assess the state of business confidence in the midst of the global financial crisis. The member for Wentworth and I visited several local small businesses before addressing a gathering of small businesses in my electorate office in the dynamic suburb of East Victoria Park. Firms expressed some concern about the global financial crisis but also reported that business was good and steady. If businesses are operating at the moment and—as we are led to believe by the Prime Minister—Australia is in a strong position to withstand the effects of the GFC, why should the Rudd government be talking down the economy? The reason is that, over the last 12 months, the Rudd-Swan government has mismanaged the economy and is now trying to blame its mistakes on the global problem.

We should of course have been talking up our economy and inspiring business confidence at this time and providing positive, pragmatic policies. Only last week the Governor of the Reserve Bank warned that the biggest mistake we could make would be to talk ourselves into an unnecessary weakness. However, I fear the Rudd government’s poor management is on the verge of taking us over the precipice. Labor deficits are not short-lived.

At every juncture, the government has rejected bipartisan support. Where around the world governments are working together, in Australia our centralising Prime Minister has made all the decisions himself. If he had listened to the opposition from the start, he would have passed an appropriation law earlier to ensure the wholesale term funding guarantee was practicable. Mr Rudd has backflipped on bipartisanship. Only last year he said:

On the day the Prime Minister announced his intention to intervene to protect the children in the Northern Territory I said that we would offer our … bipartisan support. Let us be blunt: this emergency plan is far from perfect. We are, however, prepared on this side of the House to give it a go and we commend the proposals we have put to the government by way of amendment …

Mr Rudd could not have put the meaning of bipartisanship better. However, whilst our proposals are being ignored by the Rudd government, bipartisanship is non-existent.

The government’s supply of spin has expired. During the debate on the Economic Security Strategy legislation, which was cut short, there was continuous whining from that side of the House about the opposition not supporting the bill. The theme from the other side of the House virtually was that we had no right, as an opposition, to question the details of the legislation, that we should just accept it on trust. Why should we accept it on trust? Is it because the font of all knowledge, the Prime Minister, has been prancing around the globe and saying that this is the solution to the GFC? Is it because the Prime Minister and the Treasurer, who made a fool of himself when he could not find that graph that would tell him the inflation forecast, have done their Tweedledee and Tweedledum act around the country trying to convince everyone they are economic conservatives? Must this bill work because the Prime Minister has his sleeves rolled up for a camera shoot? As the member for Solomon would know, you only roll up your sleeves when you raise a sweat or whilst drinking a Darwin stubby in that well-known place called the Cage. I did not see one drop of sweat on the Prime Minister’s brow. For that matter, I did not see one Darwin stubby either.

The Australian public are only going to swallow this spin for so long. They will see the arrogance of the Prime Minister sooner rather than later. The good news is that the IMF has forecast positive growth in the Australian economy. The government should go out there with a positive message to the Australian people that we have a growing economy and a built-in culture that will see us fight our way out of perceived threats to our families and lifestyle. We are a country that survived economic threats over the 11 years of a strong coalition government. We survived such things as the Asian meltdown, the SARS crisis and the pilot strike. We have a nation of people who, with a strong government and sound economic and fiscal policies, will see us through the toughest of times. We are a nation of people with substance. We need our government to be positive, to take this nation forward and to lead us back to a strong economy that can withstand outside negative influences. We can only hope that this government is up to the job. I noticed the Prime Minister said in his speech last week:

The impact of the global financial crisis on our economy will be real. Its impact on our businesses will be real. Its impact on our families will be real. Its impact on our workers will be real. Its impact on our country will be real.

I am glad not only that our Prime Minister has the capacity to comprehend these obvious effects but that he actually walked into the House and enlightened honourable members and the Australian community with his wisdom. I would say to the Prime Minister: when are you going to get real?