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

The latest release of the OECD’s Economic Outlook notes that the current economic situation across the OECD remains particularly unsettled. The OECD’s projection for the global economy also says:

... despite the fact that there is a view that the worst may be behind us in relation to global financial markets, there is still much uncertainty which lies ahead.

There is ‘much uncertainty which lies ahead.’ Of course, the consequences for Australia in the midst of this global uncertainty are acute. That is why the response of the government has been to bring about a budget anchored in this principle: responsible economic management. Therefore, the core of responsible economic management is defending the integrity of a $22-billion budget surplus. The logic is simple: if you allow public spending to escape, if you allow public spending to run riot, if you therefore contribute to public demand, you put upward pressure on inflation and you put upward pressure on interest rates. When that happens, as those opposite know, having been responsible in terms of their fiscal policy settings for these trends to have emerged—and we have seen 12 interest rate rises in a row—the cumulative effect is that it affects long-term economic growth and it affects long-term employment. The logic is clear: indisciplined public spending leads in turn to higher inflation, leads in turn to upward pressure on interest rates, leads in turn to an effect on economic growth in Australia and leads in turn to an effect on employment. That is the core economic discipline we are confronted with here. The core element of our budget orthodoxy is a $22 billion surplus. Those opposite stand, by contrast, for a $22 billion raid on the surplus and, as each day goes by, they add further elements to the raid on the surplus. Day by day new things are added without one savings measure being announced by those opposite to offset their raid on the surplus.

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