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Thursday, 25 February 2010
Page: 1913

Mr GEORGANAS (2:37 PM) —My question is to the Treasurer. What do this week’s data releases say about the Australian economy and how do they relate to what key economic commentators are saying about the state of the recovery?

Mr SWAN (Treasurer) —I thank the member for Hindmarsh for his question, because there is more evidence this week in the economic data that economic stimulus has played a role in supporting jobs and, in particular, in supporting small business through this global recession. Yesterday’s data on construction work done showed that the government’s infrastructure stimulus was helping to offset the weakness in private activity. Everybody on this side of the House acknowledges the role that the stimulus is playing in supporting small businesses in their suburbs, in their towns and in their regions. It is terribly important at the moment because private non-residential construction activity fell by more than 20 per cent over the past year. But that has been offset by an increase of 42 per cent in public construction activity. That is what is so important at the moment, that is what is underpinning confidence and, of course, that is what is opposed by those opposite.

If they had their way there would be tens of thousands of tradies out of work, and tens of thousands of small businesses would hit the wall. That is what these figures today show, because it is these shovel-ready projects that are supporting employment in small business. This is what the Commonwealth Bank economist James McIntyre had to say today, and it is a very important point:

The public sector construction component of the stimulus package was designed to kick in with a lag as private sector construction activity fell away in response to the confidence shock of the global financial crisis. The timing and effectiveness of that design is evident in the fourth quarter of 2009. Effective public sector stimulus has kept overall activity from declining significantly.

That is very important, but it is not understood by those on that side of the House and not understood by the Leader of the Opposition, who finds economics boring.

Today we have also had the capex figures. They show that stimulus, again, is promoting activity. Private sector investment in equipment, plant and machinery rose by 12.4 per cent in the December quarter—again, welcomed on this side of the House. But most importantly, the ABS specifically pointed to the positive impact of the government’s small business tax break in today’s figures, noting that a large number of businesses reported they had taken up the scheme—further evidence of the importance of stimulus.

Of course in the last week we have had the IMF, the OECD and the World Bank all supporting the government’s position on stimulus and, of course, all of them have rejected the position of the opposition. So the shadow Treasurer has got it wrong, and has been proven wrong, by those three organisations this week.

It is pretty true to say that the coalition economic team have had a shocker this week. This was demonstrated by a media release put out by the shadow Treasurer a couple of days ago. It really warmed my heart, because the lead paragraph referred to his fairy name, Tinkerbell. Thanks for reminding everybody in the country, Shadow Treasurer! Thanks for reminding us of that.

In that press release, the member for North Sydney quotes me accurately—as it appears—pointing out that the RBA governor has clearly rejected any link between current spending and interest rates, and he has. That is denied by those opposite. But he then goes on to claim, and quotes me from some time ago, where he says I denounced excessive spending in the latter years of the Howard government, as if there were some contradiction. The problem here is that the shadow Treasurer and those opposite do not understand the difference between spending in a global recession when rates are at 50-year lows, and spending at the height of a boom when rates are 350 basis points higher. How economically illiterate can you get?

The position put by those opposite has been repudiated by the Reserve Bank governor. He said this last Friday:

This is a normal experience in an economic expansion: as economic activity normalises interest rates do the same …

So why is it that we are getting such erratic behaviour from those opposite? I think we got a clue on ABC Sydney 702 this morning. We got a rare insight into the shadow Treasurer. There was a call to the program of Adam Spencer:

Spencer: Helen’s on the line. How are you, Helen?

Helen: I’m very well, Adam, how are you?

Spencer: I’m very well, thanks. What would you like to ask?

Helen: I’m sure the champion bogong moth eater at St Aloysius was none other than Joe Hockey.

I think we know why he is so erratic. He has been eating too many bogong moths. This is what the CSIRO—

Mr Randall —Mr Speaker, I rise on a point of order. My point of order is relevance: how can eating bogong moths be relevant to an economic debate?

The SPEAKER —It is a very good question. The Treasurer has the call, but he will conclude his answer.

Mr SWAN —It is yet another example which demonstrates why we have got the worst opposition frontbench in Australian history. This is what the CSIRO says about bogongs:

They prepare for summer by building fat reserves (up to 60 per cent of their bodyweight).