David Hawker (Wannon, Liberal Party) Share this | Hansard source

I think that we have just heard the most incredible amount of confected indignation and humbug. The Assistant Treasurer set about to trivialise what is a very significant matter of public importance, and I remind all honourable members of the matter. It is all about the government’s decision to put political strategy before economic strategy, resulting in a war on inflation that exacerbated the economic slowdown, and its active consideration of plunging the Commonwealth into debt to bail out incompetent state governments.

I would have thought that this is a very serious matter. It is one that certainly is causing considerable concern right throughout the community, and if you look at the front pages of the newspapers today I think you can see just how important this issue really is. We listened to the Assistant Treasurer trivialising the issue with the usual sort of spin—and personal attacks where he thought it was appropriate—and diversions and rhetoric, and so he went on. We can talk about his own track record, on the matter of diversions. This is the architect of Fuelwatch. I do not know what happened to that—it has gone, I think. There was GrocerWatch—and I think that has just about gone. It cost us a few million dollars but I think that consumers woke up pretty quickly and saw that that was just another one of their little efforts.

Then the Assistant Treasurer tried to attack the former government’s record. I think that you ought to have a look at the former government’s record. I think that it is a pretty impressive record. First of all, the former government set about getting rid of deficits. It worked hard to get rid of $96 billion of debt that was racked up by the previous Hawke-Keating government and it got the budget into surplus. It got unemployment to the lowest level in more than 30 years. The strike level was the lowest since records began. The economy was in a very strong position. But as the member for Curtin and shadow Treasurer pointed out, the Labor government had to cast around for something to find fault with. ‘Inflation!’ they thought. ‘We will latch onto inflation and we will blow this up as the big issue.’

What Labor had not thought through was that emphasising inflation had consequences, because people were listening. People in the business community were listening and starting to make decisions accordingly. They were saying, ‘If inflation is going up, maybe we had better spend some money now rather than waiting until the prices of things go up.’ The Reserve Bank was listening and they thought that if the government was saying that and people were listening then they had better do something too. So they put on the interest rate brake and started pushing interest rates up. So the government played a direct role, with the Treasurer talking about the inflation genie coming out of the bottle the day before the Reserve Bank board was meeting, just to make sure that the Reserve Bank was absolutely clear what the government were expecting of them. Well—surprise, surprise!—up went interest rates. It has become very clear now, if you look at the papers today, that somebody misread the economy very badly. We have since seen, as the member for Curtin pointed out, a three per cent fall in interest rates in three months. Coming from 7¼ per cent official rates, that is a massive cut.

The government is trying to make falling interest rates a virtue. At any other time, people would say that that is a sign that there is a serious problem. To hit the interest rate button like that is a sign that there is a serious problem. I do not think that it has ever happened before, even back in the bad days of the Keating ‘recession we had to have’. It may have dropped in actual terms by that much, but of course it was coming from a very much higher level and in relative terms it was nowhere near as significant in the short-term.

Now the Assistant Treasurer talks about it being a virtue for us to have a temporary deficit. There may be a case for deficits over the cycle. The Reserve Bank has made that point for many, many years. But the word ‘temporary’ ought to be setting off some alarm bells, because the last time a Labor government started off with a temporary deficit, seven years later we were still running a deficit. By that stage government debt had hit $96 billion—a huge amount—and the cost on the budget each year in interest payments alone was massive. In respect of the Assistant Treasurer to trying to trash the previous government’s record, it took a fair bit of hard work by the government to get rid of that debt. He says that they did not do anything—well, they did a hell of a lot just in getting rid of that. It allows the current government to reap some of the rewards. We do not have the big annual interest bill, for one thing, and that allows governments to invest money, and hopefully they choose to invest it wisely.

What we have heard today shows real fear in the government. While they may have the argument about the blame game, we sure have some real problems with our state governments—and here is the Assistant Treasurer saying that he would not blame the state governments for anything. Coming from New South Wales, I guess he could not, despite how bad that government is. Even he must cringe at what an appalling state government the Labor Party are running in New South Wales. Some of the other ones are not much better, but that one in particular is a shocker. As the member for Curtin pointed out, according to today’s Daily Telegraph there is now a little secret thing starting up about how to get around the problems and to get some money. As today’s headline in the Sydney Morning Herald puts it: ‘States forced to rely on RuddBank’. The article states:

THE Federal Government is considering borrowing billions of dollars and passing it on to NSW and other states to help them fund infrastructure projects.

That is a nice little euphemism for saying ‘trying to help them with their massive debts that they have run up’. The origins of this are also interesting. The article also states:

The Herald understands the idea began at a secret meeting between the state Labor treasurers in Sydney on November 14—

and goes on to state that the nation’s only Liberal Treasurer, from Western Australia, was excluded. Surprise, surprise! They did not want anyone to know about that one, did they?

We can see what is being hatched, and now that it has been exposed it has the whiff of Whitlam. When we talk about the whiff of Whitlam, I think people ought to realise that economically it was a disaster, despite what those who want to rewrite history say about the Whitlam government. We had some of the worst inflation we had had for decades under the Whitlam government. We saw budget deficits the likes of which had not been seen before and probably have not been seen since. It ran the country seriously into debt and caused massive problems which took years for the country to recover from. That government, as we have learnt today, had a similar little program with Mr Khemlani. It was for $4 billion which, of course, in today’s terms is a lot of money. But it was all funny money, and some of the big financiers in Australia warned at the time, saying: ‘Look, we get these sorts of calls every week from people who say they can bring us petrodollars. We tend to treat them as a little bit of a joke.’ But it seemed that the Whitlam government thought they were serious and actually went as far as to entertain raising money. Now, apparently, we have this new form of this kind of money, and the Prime Minister is already planning to take some of the business community along with him on a trip to the Middle East to see if some of this money can be arranged.

Very significantly, one of the other newspaper reports in the Daily Telegraph today made a point which comes back to the whole question of this MPI and about political strategy. The article states:

The banking process would help avoid the need to send the federal Budget into deficit to fund projects.

Liabilities would, technically, have to be carried by the state borrowers.

That is a nice little sleight of hand if I ever saw one. It was fascinating to watch the Treasurer today as he faced four questions and, again and again, had to try and obfuscate. If ever I heard confirmation that the so-called ‘infrastructure bank’ is coming, the decisive refusal to answer by the Treasurer was a demonstration that there is certainly something in the wind. As he admitted, there is some plan to help the states, and it is obvious that this news story is pretty near the mark. It shows already, after the first 12 months of the Rudd government, that the states are starting to wag the dog.

When we talk about the way the states have approached the management of their economies and the political strategy in favouring an economic strategy, we only have to look at how the cartoons see it. On 23 October in the Herald Sun there is a very good cartoon which shows a little car really staggering. There are a couple of learners in it, Mr Rudd and Mr Swan, and a big L-plate on it. Mr Rudd is saying to Mr Swan, ‘The economy is going too fast … put the brakes on’. In the next panel he says, ‘Too slow … Put your foot down. It’s going into recession!’ The next panel shows Mr Swan saying, ‘Hang on … the temp gauge says inflation is 5 per cent!’ and hitting the brakes again. The comment by one of the observers in the next panel is: ‘Must be a learner.’ I think that really sums up the way particularly the Treasurer is approaching his—(Time expired)

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