Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

As I said in response to a question in the House yesterday, the government is entirely mindful of the most recent findings in the consumer confidence index. I referred to that extensively yesterday and to the contributive factors to it, one of which of course is the rolling impact of what we have across the global economy, and Australia is not immune from that impact. The subprime crisis is unfolding in terms of consumer credit. It has had ramifications in revisions downwards in growth in the United States, in the United Kingdom, in the rest of Europe and in part in Japan, and Australia is not immune from that in terms of overall economic consequences and, flowing through that, consumer confidence as well. Of course there is a second factor driving all that as well, and that is the rolling impact of having inherited very high inflation rates vis-a-vis the last 16 years, and the second highest interest rates in the world. If consumers therefore have to pay 12 interest rate rises in a row, it has an effect on the way consumers feel. That is a consequence of previous policy settings, which this government inherited.

The question, however, is: what do we do about it? As I have said before, we need to embrace a program of action for the future which is robust in terms of the proper management of public finances, is designed to enhance private savings and is intended to invest in proper skills formation across the economy to deal with capacity constraints in the economy and to invest also in infrastructure bottlenecks—which have been the subject of 20 separate warnings from the Reserve Bank over time, ignored by all those opposite in the period in which they occupied the Treasury benches—as well as to boost participation in the workforce. This is a framework of action, but, if you look at each subset of that as it has been applied over the last 12 years by those who preceded us, you see instead inaction and inertia on every count.

We have been in office for three months, to identify where precisely the previous government took the capital available to them from the public revenue—hundreds of billions of dollars over time—and where that money was landed. It was not landed in investment in skills. It was not landed in investment in infrastructure. It was not invested in the long-term productive capacity of the economy. Instead, that government effectively pushed it to one side into various forms of consumption. That is no evidence of any forward planning at all.

What we intend to do is to take the responsibility of national economic management seriously and realise that we simply should not reside here as beneficiaries of a terms of trade boom, coming off factors which we nationally have no control of in the future, but instead should carve out a long-term future for the Australian economy based on productivity growth, based on improving our infrastructure and based also on what we do to boost workforce participation. That is a strategy for this country’s economic future, rather than standing or sitting idly by, carping from the sides and pretending that somehow, as a consequence of that, something materially changes.

I remind all those opposite that they had 12 long years to act on this—12 long years to act on these fundamental capacity constraints in the economy, 12 long years therefore to act on what turned out to be cumulative pressures on inflation, 12 long years to act on how that impacts on rates and how in turn it impacts on consumer sentiment. Instead, they sat on their hands and did nothing.

See this speech in context