Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

I thank the member for Fowler for her question. As members would be aware, the global recession has knocked a giant hole in projected government revenues in the vicinity of $200 billion over a period of four years. As a result, the government has been obliged to undertake a period of borrowing in order to cover the ensuing deficits, because the alternative would be to crunch the economy into the ground, to devastate the Australian economy, to cause hundreds of thousands of people to lose their jobs and thousands of businesses to close.

In the face of that unprecedented challenge, it is good to see that monetary policy and fiscal policy have been working in tandem to stimulate economic activity, to sustain jobs and to sustain business in the Australian economy in this time of extraordinary challenge. As part of that process, the government is engaging in a modest and responsible borrowing program. It is significant that tonight this has been confirmed by very important players in this process. I would like to quote first the statement by the Governor of the Reserve Bank of Australia, Mr Stephens. In evidence to a parliamentary committee on Friday he stated:

… 15 per cent of GDP is a low number by virtually any other standard. So I do not feel that that debt burden, if that is what happens, is going to seriously impair the country’s economy.

I would like to add to that statements made by the Secretary to the Treasury at a business function earlier today, where he stated:

It does seem clear that the measures taken to date, both the monetary policy response and the fiscal policy response, have had quite an impact in supporting aggregate demand.

In passing, I add the statement of Standard and Poor’s when they were reconfirming Australia’s AAA rating. They stated:

… the deficits and associated borrowings do not alter the sound profile of the country’s public finances.

What you are seeing here is the government standing shoulder to shoulder with the Reserve Bank of Australia and with the Australian Treasury to fight the impact of the global recession and to sustain jobs and business activity under enormous pressure.

There are other positions being adopted on the issue of debt and on the issue of the deficits projected. Although the Reserve Bank’s assessment of the likely impact of the debt on the Australian economy is not shared by the opposition in their rhetoric—and we have all heard the scare stories about debt, deficit and future generations—when it comes to their specific position on issues it is quite a different story. When it comes to actually presenting any savings measures to ameliorate the impact of future deficits—when it comes to their own promises about what they might do in the future—then it is very different story. We note, for example, that the report that Frontier Economics produced with respect to climate change last week, which the opposition sort of endorsed and sort of did not, if it were applied, would lead to a very substantial blow-out in the budget deficit over time because of increased reliance on the purchase of international permits for carbon emissions in order to support the electricity industry—a very substantial blow-out beyond $1 billion a year by 2020. I note also that they are still engaged in blocking important government savings measures, important budget initiatives such as reform of the private health insurance rebate and reform of government assistance to dental programs, in the Senate while at the same time proclaiming the great virtues of lower deficits and of lower debt.

In addition to this I note that we now have some of the would-be leadership contenders in the Liberal Party out there parading their virtues in public. Most significant is the member for Warringah, who put out a book last week, which I applaud—good on him.

See this speech in context