Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

It is just as well there is no standing order that prohibits irony in matters of public importance, because if there was this MPI would be ruled out of order. Even though the date is right this time, even though it has the right title on the letterhead, even though all of that is right, this would have been ruled out of order for reasons of irony. For this opposition to accuse this government of placing political strategy ahead of economic strategy is particularly ironic, because this government has embarked on an economic strategy to get us through some of the most difficult times that this nation, and indeed the world, has seen for several generations. While the opposition has embarked on a political strategy with hypocrisy and sophistry at its centre, we have, on the other hand, embarked on an economic strategy to keep Australia’s growth strong and our unemployment low through this crisis.

It suited the political narrative of the opposition, and we heard it again today, for the opposition to say that we should have ignored the inflationary pressures in the Australian economy. They say the government should have done what they did and put our head in the sand and ignore the problem—ostrich economics, as has been developed by those opposite. Being the people who ignored 20 warnings from the Reserve Bank about inflation during their time in office, they would say that, wouldn’t they? They are the people who left all of the heavy lifting to the Reserve Bank of Australia. And what did we get as a result? Ten interest rate rises in a row under their watch. What did the people of Australia get? What did the mortgagees and the small businesses of Australia get? All honourable members know: 10 interest rate rises in a row.

This is a good opportunity to remind the House of the impact of the former government’s economic management, as has been outlined by Mr Koukoulas of TD Securities. This is important. He said recently:

The current economic circumstances bring into focus the inept, short-sighted and hopelessly misguided handling of the economy in the final years of the Howard and Costello government. In the period from about 2003-04, Howard and Costello were continually surprised by the size of the budget surplus as the economy boomed on the back of a once in a century surge in national income from the staggering strength in commodity prices and remarkable growth in Australia’s major trading partners.

Mr Koukoulas goes on to say:

Instead of saving for a rainy day or building a war chest of money for when this bubble burst, they spent the windfall fiscal gains like drunken sailors, which fuelled a surge in inflation, which in turn caused the RBA to hike rates aggressively, which in turn is one reason why Australia is so vulnerable now to the global slow down. Right now, the near certain collapse of the terms of trade and the risk of a deep recession are not helped by this past profligacy.

That is what TD Securities says. What a damning indictment of the economic management of the former government! That is what you get when you embrace ostrich economics. That is what you get when you put your head in the sand and say, ‘If we don’t talk about this problem, if we just ignore it, it will go away.’

Of course, the developments in the economy have been very significant over recent months and recent weeks. Almost every developed economy in the world is either in recession or heading for a recession. As the OECD has said:

Many OECD economies are in, or are on the verge of, a protracted recession of a magnitude not experienced since the early 1980s.

As a result, the number of unemployed people around the world could rise by eight million over the next two years. Overnight, indeed, there have been further developments. This morning New Zealand cut interest rates by a record 150 basis points to five per cent, while yesterday Thailand cut their interest rates by 100 basis points. Overnight, further fiscal stimulatory packages were proposed in Japan, Russia and Portugal. This includes news that Japan is considering spending ¥10 trillion, or about US$107 billion, over the space of three years to support the job market. Bloomberg is reporting that UK consumer confidence deteriorated in November to its weakest rate in four years.

What is the response from the opposition? They have spent the last week undermining each other. We have had the member for Dickson trawling the press galleries, backgrounding against the shadow Treasurer. We have had this confederacy of dunces positioning themselves to become shadow Treasurer: the member for Dickson, the member for Goldstein, the member for North Sydney and even, some say, the member for Warringah—I could not believe that, but some say the member for Warringah. So that is their response: political strategy and undermining each other. We do not have that luxury. We have been given the mandate by the Australian people to get them through the tough times, and that is what we intend to do.

What is our challenge as the government of the Commonwealth, faced with this sort of situation around the world? It is to do everything possible to keep Australia from following the rest of the world into recession, it is to do everything possible to ensure that not one more Australian than necessary becomes unemployed and it is to do everything possible to keep unemployment low and growth robust. So that is what we have done. That is why we have embarked on the stimulus package that the Prime Minister announced, the same sort of stimulus package that other governments around the world have embarked on—usually after this government. This government was one of the first in the world to embark on a stimulus package, yet we have seen pretty much every other developed nation in the world announce a stimulatory package of similar magnitude since this government did. Again, this government is ahead of the curve.

What does the opposition always say? ‘We should wait a bit longer.’ They say, ‘We should wait until unemployment is up.’ They say, ‘We should wait until growth is down.’ ‘We should wait and see’ is their approach. We have a different approach. We are going to get ahead of the game, as we have done consistently and, dare I say—and they hate to hear it—decisively since this crisis began. We stand ready to do more. We recognise that there will be more to do—they do not—even if that means going into a temporary deficit, because in the circumstances next year that may be the right approach. But, of course, the political strategy of the opposition insists and demands that they oppose a deficit. They will fight for the surplus to the cost of every last Australian job, condemning the government for being honest with the Australian people and for warning that a further stimulus and a possible temporary deficit may be the best way to keep growth robust next year.

We have seen that consistently from the opposition. We have seen the Leader of the Opposition say that deficits are a sign of economic failure. This is what he said at the National Press Club just a couple of weeks ago:

Given the strong public finances Mr Rudd has inherited and the growth forecasts we are relying on for next year, Australians rightly regard the prospect of a deficit budget next year as a failure in economic management …

In doing so, he pitted himself against every credible economic commentator in the nation—pitted himself against the Reserve Bank, pitted himself against the OECD, pitted himself against the IMF and pitted himself against every economist of every major financial institution in Australia. Malcolm Turnbull versus the world! What did the Australian Financial Review have to say about the Leader of the Opposition’s approach? Talk about political strategy in front of economic strategy! This is what the Australian Financial Review had to say about the Leader of the Opposition:

… Mr Turnbull’s opposition to budget deficits is only pandering to opinion polls that show an understandable but ill-considered concern about deficits in the community. He should not be ruling anything out with the economy facing its biggest negative shock in decades.

That is the Australian Financial Review editorial—not one that is often or regularly seen as supporting this side of the House.

One of the hallmarks of putting political strategy in front of economic strategy is that you do not worry too much about consistency—you do not worry too much about making sure that what you say today matches what you said yesterday. That is one of the hallmarks of putting politics in front of economic management. This morning, as she walked into Parliament House, the Deputy Leader of the Opposition held a press conference. I must say in fairness that, as far as opposition doorstops over the last couple of days go, it was one of the better ones, but it is a low bar. It was a bit better than the member for Boothby’s and perhaps a little better than the member for Swan’s. It was not one of the bad ones compared to the member for Boothby’s. She said this in response to a question from a journalist. Mr Street from Channel 9 said: ‘You’re changing your line from last week, when you said that the benchmark of economic failure is going into a deficit. Now you’re putting a caveat on it, saying it is a last resort.’ The Deputy Leader of the Opposition replied, ‘Well, I didn’t say that.’ No, the Leader of the Opposition said it. Not the Deputy Leader of the Opposition but the Leader of the Opposition said it, so that is okay. As long as she does not contradict herself, it is okay to contradict the boss. Walking away from the leader is fine in the view of the Deputy Leader of the Opposition.

Inconsistency is what we have come to expect from the Deputy Leader of the Opposition, sometimes in the course of one interview. I have been watching—it is quite a good show—the new ABC2 morning news program. I am a regular watcher of it. I saw the Deputy Leader of the Opposition on the show on 1 December, which was Monday. The Deputy Leader of the Opposition again criticised the government for daring to utter the deficit word and say that Australia might need to go into a deficit. Then there was a question from a viewer asking the Deputy Leader of the Opposition: ‘What’s your plan for seeing Australia through? What’s your plan for avoiding a recession?’ This is what the Deputy Leader of the Opposition said in response:

There is a whole range of things we can do for business to make it easier to employ people and to ensure that people are kept in their employment and that would include tax cuts and tax cuts that help business. Issues like accelerated depreciation to encourage investment.

It seems to escape the Deputy Leader of the Opposition that tax cuts mean running down the surplus or going into a deficit. When you have a modest surplus, any tax cut of a significant nature means either running down that surplus further or going into a temporary deficit—exactly what the Prime Minister had flagged, to the outrage of the Deputy Leader of the Opposition, a few days before. So, while they continue to squabble and be inconsistent, it falls to us to manage the economy. While they squabble over the spoils of opposition and score points against each other, we will continue to manage the economy.

One of the matters raised in the MPI is of course point-scoring against the Labor Party generally. When it comes to the opposition’s point-scoring, an important part of their strategy is scoring points against state governments. This is a robust chamber and that is fair enough. We are all allowed to criticise other levels of government—that is fine. But their political point-scoring sometimes comes with a cost. When they were in government they made an art form of scoring points against state governments. They engineered the blame game as part of their strategy of putting politics ahead of good policy, to their eternal shame. When they were in government, for example, they played politics with health funding. They said: ‘Here is our cunning political plan. We will reduce the growth in health funding from the Commonwealth. We will pull money out and then we will blame the states for the reduction in health care.’ That was their strategy. That is how they put politics in front of good policy. That is what they did for 12 years.

We have a different approach to the opposition. That is why when COAG met last Saturday we embraced a proper indexation, an indexation which recognises the increase in health costs, which recognises that COAG is not the forum for political point-scoring. There is a time and a place for political point-scoring, but COAG is not it. A meeting of COAG is a time when the people of Australia expect the Prime Minister, the premiers and chief ministers to come together in the national interest and to put their political differences aside. The Australian people now have a process which delivers that. It delivered, for example, indexation of 7.3 per cent, which recognises the increase in health costs, which will return federal funding to an appropriate level of health, after it was ripped out by the previous government at a cost to the Australian people. They come in here and lecture us—they dare to lecture us—on putting politics in front of good policy, when for 12 years they played politics with the states and territories of this nation and the Australian people paid the price with a reduced quality of health care. Shame on them!

They cannot come in here and lecture us in a hypocritical manner about such tactics. We will continue to ignore the hypocrisy, the point-scoring of the opposition, because it changes every day. It is easy to ignore when it is not consistent, because they have one narrative one day and another narrative the next and sometimes different narratives in the same interview. We will continue to ignore that and we will get on with the job. We will work with the regulators and the economic advisers to the government. What we will not do, as they have done, is try to score cheap political points by undermining confidence in Australia’s financial regulators and economic commentators. We will not do it because we did not do it in the 12 years we were in opposition. They have done it consistently in their first year in opposition.

At this time of all times it is important that the Australian people understand that we have some of the best regulators and economic advisers in the world—in fairness, economic regulators and advisers appointed by the previous government. They were good appointments, like Dr Henry and Mr Stevens—people who that side of politics have trashed since. They have trashed their integrity and trashed their competence in such an irresponsible and hypocritical way and in a way that brings the opposition no credit. We will continue to take the opposite approach. We will always put economic management in front of political point-scoring, something they will never be capable of doing. (Time expired)

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