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

The challenges we face as an economy are in part globally driven and are in part a product of some of the economic conditions we inherited. That is just the truth of it. Let’s go to the global conditions. The global economic conditions, which have come off the back of the global financial crisis starting in August of last year, 12 months ago, continue to wash through. We have revisions down for growth forecasts in the United States, across the European Union, in Japan and also in the wider East Asian area as well. The roll-on consequences of that therefore are that we have a lesser pace of economic activity than was projected 12 months ago. That is just the facts as they present themselves. The other factor alive in the global economy is of course global oil prices. We have this significant spike in global oil prices in recent months, the third great oil shock since the two great oil shocks of the 1970s. That in turn has fuelled a further factor in overall global economic conditions which is, of course, the hike in global food prices. These factors combined have brought about significant pressures across the global economy.

That is what has happened globally. Then we go to the factors that we have inherited locally, here in Australia, as of the end of last year. There are three very uncomfortable facts that I would present to those opposite. One is this: when this government assumed office eight months ago after those opposite had spent 12 years in office, we inherited inflation running at a 16-year high. Secondly, we inherited a record from those opposite of 10 interest rate rises in a row. That is what happens when you allow inflation to get out of control; that is what happens when you put all the pressure on monetary policy through a slack fiscal policy—you get 10 interest rate rises in a row. I would say to the Leader of the Opposition, as he begins to lecture the House on economic policy: look carefully into the eyes of Australian mums and dads and those who are seeking to make ends meet out there and ask them about the cumulative impact of 10 interest rate rises in a row. It is significant. Thirdly, at the point at which this government took over, those interest rates were the second highest in the developed world.

There are three facts: firstly, we had inflation running at a 16-year high; secondly, we had 10 interest rate rises in a row; and, thirdly, we had the second highest interest rates in the developed world. Those are the economic conditions that this government inherited, which is why, as we approached the budget this year, having been in office for less than six months, the overall call on us from the country at large was a policy of responsible economic management grounded in a strong budget surplus. We delivered that with a $22 billion surplus. That surplus has subsequently been the subject of, shall we say, an attempted raid by those opposite, and it is going to be very interesting indeed to see where the credibility stakes now hang in this place in terms of those opposite and their behaviour in the Senate as they begin to launch their assault on this nation’s best fiscal preparedness for what will be uncertain global economic times ahead.

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