Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Hansard source

What we have witnessed so far in this matter of public importance are silly fantasies from the opposition and arguments that demonstrate a triumph of politics over policy, of politics over rational economic analysis. In fact, the most sound economic argument that you could perhaps admit has been made by the two opposition speakers so far is a Daily Telegraph cartoon. That is about as sophisticated as it has been so far. It has been ridiculous fantasy and opportunist politics, and this is in the midst of the most significant and serious financial crisis since the Great Depression. And what do we have? We have the opposition playing politics and, worse than that, undermining confidence at a time of crisis in the Australian economy.

Around the financial community there is shock at the politics that are being played out by the Liberal Party at this time: attacks on the Treasury Secretary and opportunist politics about the deposit guarantees and the initiatives that have been taken by the government to restore confidence. We see the Liberal Party intent on undermining confidence at a time of crisis. This MPI today—it is really quite extraordinary, the submission that has been made—only demonstrates the terrible hypocrisy of the opposition and the leadership that it has at the moment. They try to attack the Rudd government’s economic record over the last 12 months, but we should have a look at the economic record of the coalition government over the 12 years that they were in office.

Let us not forget that what was inherited when the Rudd government took office was underlying inflation at a 16-year high. Only a short time ago the shadow Treasurer was still making the case that, even in these circumstances of a 16-year high in underlying inflation, in order to take the measures that it was doing the government was spin doctoring—I think that was her terminology. We might remember the opposition leader thought the inflation crisis was a fairytale. I think the former leader, Brendan Nelson, made the case that it was a charade—underlying inflation at a 16-year high! This MPI itself tries to imply that it was unnecessary for the government to endeavour to address it. We inherited an expansion in fiscal policy in real terms running at four to five per cent. In real terms, it was growth in expenditure of four to five per cent. Their profligacy in fiscal policy was driving inflationary pressure. That is the inheritance that we received in winning government.

Not only that, they had an expansionary fiscal policy and, running counter to it, the Reserve Bank had to increase interest rates. We had fiscal policy and monetary policy running counter to each other. They did not know what they were doing, economically, in the last years of that government. They are demonstrating that they have not learnt from it and they have not developed much of a thesis of how to deal with it yet. Not only that absurd situation with fiscal and monetary policy running counter to each other, after 12 years they failed to invest in infrastructure. Everyone knew—the parrot in the pet shop knew—that there were infrastructure constraints in this economy for many years, in skills and in infrastructure, that were leading to inflationary pressures. The result of all that on the part of the Howard government was 12 consecutive interest rate rises. But that is all called spin doctoring, or ridiculous, and a fairytale.

Until the coalition learns the failures of its economic performance after 12 years in government they cannot pretend to come in here and lecture the government about the measures that we are taking. Just take the issue of infrastructure. According to the Business Council of Australia, an organisation that one would assume the Liberal Party has a dialogue with from time to time, the total infrastructure deficit in our economy stands at more than $100 billion. If we fixed the current bottlenecks in the economy—this is the BCA’s analysis—we could boost economic growth by $20 billion per year. This is a terrible indictment on the performance of the Howard government that the Business Council of Australia was making clear at the time they were in government. The problem was ignored. It constrained economic growth, it constrained jobs growth and it helped drive productivity down to zero towards the end of their term in government. It is little wonder that we have inherited a position where it is necessary to invest significantly in transport, roads, rail and ports to address some of those infrastructure constraints; to sort out the water problems that they failed to address; to invest in a National Broadband Network and to address issues like climate change in order to try and lift the economy out of the torpor in which it was left by the Liberal Party.

I mentioned that productivity had fallen to zero towards the end of the time that the Liberal Party was in government. The cornerstone of the economic strategy in the final term of the Howard government, of course, was Work Choices. We have heard a fair bit about that this week with the introduction of the Rudd government’s Fair Work Bill. Work Choices, as an economic strategy, was a strategy to let wages fall, to try and stimulate economic activity by allowing things like penalty rates to be cut and take-home pay to fall—particularly for the most vulnerable employees. It was not a strategy to boost productivity. They relied during their time in office on domestic consumption and debt to fuel growth. We saw as a result a massive expansion in credit card debt and a massive expansion in the ratio of household debt to income from 68 to 160 per cent between 1996 and 2007. It is little wonder there was a bit of sensitivity to interest rates after a performance like that.

Their performance on trade was appalling, with 70 consecutive months of goods and services trade deficits. They failed to invest in skills. Our national investment in early childhood education was well below the OECD average. Since 1998, more than 300,000 people were turned away from TAFE, and in the decade since 1995 Australia was the only OECD country to effectively cut public investment. It is little wonder that the depiction of the former Prime Minister, Paul Keating, of the member for Higgins swinging in a hammock so much caught the attention of the community, because that is exactly what it was. If you look at their economic record, they stand proudly on the GST. That is a 12-year performance coupled with all of the negative performance that I have highlighted.

This MPI is endeavouring to make some argument that the government puts political strategy before economic strategy. Let us put that in a bit of context by quoting the Leader of the Opposition from 8 November this year. He said:

I place a very high premium on consistency and integrity in politics.

He said that in theAustralian, but let us have a look at some of the performance. As has been said many times, the Leader of the Opposition has got two positions—they are usually inconsistent and he walks both sides of the street. On the supposed support for the government’s plan to guarantee all deposits, Mr Turnbull, the Leader of the Opposition, said on 12 October this year:

The opposition welcomes the decisions taken by the Prime Minister today to provide a guarantee for all deposits for Australian deposit taking institutions, banks, credit unions, building societies and so forth. That’s a very important step and we will undertake to give the Government every assistance in ensuring that the necessary legislation is passed through the parliament promptly.

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