Mark Butler (Port Adelaide, Australian Labor Party) Share this | Hansard source

The pearl of wisdom I was able to derive from that last contribution was that if you think positive thoughts then inflation will come down. Frankly, the opposition has a hide to lecture this side of the House on economic pressures and the cost of living. The opposition has developed a sort of creationist view of the economy—the economy was created on 25 November by some higher being apparently sympathetic to the Labor Party; that higher being created an economy with capacity pressures just to make it difficult for people in Australia; that higher being created an economy with skill shortages, with price pressures. Well, we are realists about the economic situation facing Australian working families and those doing it tough. We have a plan to deal with it. But we are also honest enough to face up to the fact that there are some very serious economic pressures that were not created on 25 November but rather have been building for a very significant period of time.

Some of those pressures are international. As much as the member for Wentworth likes to brush that off, some of them are international—and over which we have limited control. Others are a legacy of the former government’s lackadaisical approach to the capacity constraints that were facing the economy. They are the last people entitled to lecture us. They did nothing about those constraints. They are out of touch. Those things that we do try to do to help working families deal with cost-of-living pressures—such as those that the Treasurer was revealed to have been talking to his community about—are ridiculed by persons opposite like the member for Curtin. What is so ridiculous about advising people to look for specials? The member for Curtin might not need to do that, but most working families do.

This is a familiar position that the Labor Party finds itself in because this is exactly the position it was in in 1983 when it last came to government. This side of the House have done this before. Again we have a comprehensive plan to deal with the economic pressures that we have inherited. The centrepiece of that plan is the budget. What is the opposition’s response to the budget? To try to trash it just to score some political points, to delay the budget at a cost to it of $284 million, thereby creating further upward pressure on inflation and interest rates, and to throw around uncosted promises just to save the leadership of Dr Nelson. They have been throwing around uncosted promises, with no savings proposed to match things like the excise tax proposed by the government.

On this side of the House we know that we have to deal seriously with these pressures. Some are international pressures and we need to face up to the fact that they require, in some part, an international response. Key among them obviously is oil. The price increases are as bad as they have been at any time since the 1970s. We now have an even more challenging situation than we faced in the 1970s, which was essentially a temporary supply side shock. We now have a demand side problem and we need to look at it as such. It is not one that was created on 25 November but is one that has been building for many years. What did the last government do? Nothing on petrol. What have we done? We have done two things at a local level. We have appointed a petrol commissioner to expose those who are profiteering from the oil crisis and we have legislated for Fuelwatch to do all that we can to help consumers find the lowest cost fuel that they can. We have also recognised that, to a very significant degree, this is an international problem that requires international pressure. We are sending our Minister for Resources and Energy to the Jeddah summit to continue the push for OPEC to boost supply that the Prime Minister started last week.

Food again is a significant international price problem. It is not something that is created in Australia but is something that is going to require a structured and international response. The average Chinese person now eats more than twice as much meat as they did 20 years ago. For every extra kilogram of meat that a Chinese person eats, between three and eight extra kilograms of grain is required to feed the animal. We are looking at an increase of more than tenfold in the grain required to go into the extra meat consumption just for China. This is a very significant problem that cannot be dealt with flippantly, as seems to be the case with the opposition.

These are pressures over which we have limited control, but that just makes it even more important to get the economic policies right. Prices did not start climbing because of the election of the Labor government. The ABS stats for the calendar year 2007, over which the member for Higgins essentially presided, showed that rents in that year went up 6.4 per cent, health costs went up by over four per cent, vegetables went up by 8.6 per cent, bread went up by 8.8 per cent, milk went up by 10.1 per cent, education costs went up by over four per cent and transportation went up by 5.6 per cent. What was the previous government’s key policy to boost consumer confidence in the face of those price pressures? Work Choices! Consumers are doing it tough, so let us attack their penalty rates! Consumers are doing it tough, so let us take away their shift loadings and their public holidays! We know that for 10 years the last government argued against every single proposal for a national wage increase for more than two million award wage workers. We also know that, if the government submission to the national wage case over the last 10 years had succeeded, award wages would now be $50 per week lower than they currently are. That was its policy for boosting consumer confidence.

In the face of those pressures, did the previous government use the surpluses that it had been reaping from the resources boom to ease the pressure on low- to middle-income families? No, it did not. If you look at the budgets from 2004 to 2006 you will find that people on an income of $20,000 received a total tax cut over those three budgets of between $7 and $13 per week. People on $150,000 over those same three budgets received a tax cut of $226 per week, as well as significant superannuation benefits that largely went to higher income people. That was the budgetary response to consumer pressures by the former government. What are we doing with tax cuts? As the Assistant Treasurer pointed out very clearly, our tax cuts are weighted to low- and middle-income families who are doing it tough under the current prices pressure. They are weighted to those people who are doing it tough and not weighted to the top end of town.

One of the other key economic pressures facing consumers is in the area of housing. Again this is not something that was created by that higher being on 25 November. This has been building for years and the last government did nothing except maybe inject a bit more froth into the housing bubble. Between 2000 and 2005, the housing market in Australia got to a position where the price-to-rent ratio was some 70 per cent higher than the 25-year average to those years. No wonder rents are climbing at an astronomical rate. What did the previous government do about those pressures facing Australian families? It did nothing. By contrast this government has a comprehensive housing plan. It is looking at supply issues around Commonwealth land and has a serious housing affordability plan. Creating a housing ministry was a very good step that the last government might have thought of, but we have a plan to ease housing pressures as well.

What else is this government doing to deal with these pressures and to try to boost consumer confidence in the face of a very significant economic challenge? We are targeting cost relief for working families. The childcare tax rebate is perhaps the best example of that. We have increased the childcare tax rebate from 30 per cent to 50 per cent and we are paying it on a quarterly basis, not some 18 months after the costs are incurred. We are paying it on a quarterly basis, which is important in making sure that families are not out of pocket for more than a few weeks. We are also making sure that the fiscal settings are in balance. In contrast to the opposition, which seems hell-bent on trying to trash the budgetary position of this government, we thought, as attractive as it might have been to do more spending, it was important for households that 1.5 per cent of the economy be put to surplus in this budget. We have done that. I am sure that it was very tempting for the Treasurer and the cabinet to look at more spending programs to ease these pressures, but in the long term the government did the right thing in making sure that this budget, as the Reserve Bank minutes confirmed yesterday, put downward pressure on inflation, not upward pressure. Australians are being buffeted by some serious international inflationary pressures combined with a legacy of inaction left to us by the previous government. Is it easy? No. Are Australians hurting? Yes. Do we have a plan? Yes. Do those opposite have the right to lecture us on economic responsibility? No way. (Time expired)

See this speech in context