Daniel Mulino (Fraser, Australian Labor Party) Share this | Hansard source

In rising to speak on the appropriation bills I want to talk about this government's incompetence in managing the economy. The speaker that preceded me, the member for Lalor, very powerfully set out how this government's inattention and lack of investment to the west of Melbourne is having a very negative effect on people's quality of life. I want to build on that and explain how this government's incompetence over many, many years is now putting this economy in a very parlous situation and making it very susceptible to risks in the global economy.

This government claims that, over recent years, it has performed on the economy in such a way that it has put this economy in a reasonable position to withstand the risks that are arising as a result of the coronavirus, recent fires and the drought. But let's look at what this government has done over seven years. It inherited an economy that was growing strongly, that had wages growth and that had high levels of investment, and what we have now is an economy which, over recent years, has experienced the worst period of wages growth in recorded history; an economy that is experiencing negative labour productivity growth for the first time that records have been kept; and an economy that is experiencing unemployment that is far higher than comparator economies. One can compare our unemployment to unemployment in the United States and the UK—economies which are experiencing unemployment at the lowest level for many decades. Our unemployment is stuck at levels that it shouldn't be, because this government is failing to reform. On measure after measure, our economy has been underperforming for year after year.

Underemployment has been rising for years now. In many parts of our country, underemployment is over 10 per cent of the labour force and underutilisation is approaching nearly 20 per cent in some regional areas. This is a huge number of people who aren't being given the opportunity to join the labour force, to find employment. This is a vast number of people whose skills and talents we aren't taking advantage of. And this is a vast number of people whose living standards are far lower than they should be and whose circumstances are far more precarious than they should be.

This government will trumpet its own success by saying that this or that many jobs have been created or it has invested this or that number of dollars. But when you dig beneath this government's claims—and there aren't many of them—every claim this government makes is built on numbers that are based on population growth. Nothing this government has done is based upon policy reform, productivity growth or sustainable long-term growth. Everything this government bases its economic claims upon is based upon the fact that the number of people in this society is growing. They are hollow claims, and people in Australia's communities are seeing these claims for what they are.

You don't have to look too far with this government's claims to notice that time and time again what they look at are aggregates but every measure that is per capita, every measure that is at the household level, every measure that looks at wages growth or per capita spending and every measure that really affects how people feel in terms of their quality of life or their vulnerability to economic shocks—every measure that actually means anything to people—is going backwards. But this government comes in here time and time again and pats itself on the back, because a few aggregate numbers are going up. Well, people are seeing through that.

The reason that it's important to look back over the last seven years—seven long years; seven inert years; seven years where nothing has happened—is because the government are now in the business of expectations management. They should have been in the business of economic management. The Prime Minister and the Treasurer come in here day after day and say, 'Isn't it amazing; we balanced the budget,' when they've in fact been claiming that the budget was in surplus for months and months. So the government are now in the expectations management game, and what they are trying to do is say, 'Oh, everything is great, but now we have one or two unexpected shocks.'

The reason that this economy is not in a good position to weather shocks is that nothing has happened in relation to economic reform for the past seven years. And people in the community understand that things are going to be a lot worse in our economy than they needed to be, because this government has been sitting on its hands. We are going to face some tough times, but what we need to make absolutely clear is that the times that Australia is going to face over the next six months needn't have been as bad as they will be, because this government has put Australia's economy in a far worse position entering into this period than it needed to be.

The other thing I want to stress about the shocks that this economy is facing—the drought, the season of fires, and now the coronavirus—is that in each of them the government had a period over which it had notice. The drought has been with us for years, but their response to it has been completely inept and heartless. We had questions in question time today showing that there are still farmers who aren't getting a response from the government many, many months after programs were announced by the government and they've been patting themselves on the back.

The fires are a great example of how this government had significant advance notice of risks and sat on its hands. We only need to look at the fact that a large group of ex-commissioners of the fire services from around the country were begging the Prime Minister to meet with them to talk through ways in which the Australian government could invest in strategies to deal with the growing risk of fires, given climate change and other factors. The Prime Minister wouldn't meet with them. Then when the fires occurred—and they occurred over many months—this government was again too slow to act. So we had shocks to the economy that were in fact foreshadowed by many experts, and this government did nothing even when the risks were known far in advance.

Again with coronavirus: it is true that in December, or the middle of last year, we weren't foreshadowing the specifics of how the coronavirus would break out, but we have known now for well over a month that this is a significant risk for the economy. One only needs to go to a whole range of websites that have been tracking the exponential growth of the number of cases of coronavirus in China since the middle of January. We're now almost two months down the track from when this was flagged as a serious issue, and what is the economic response? All we get from the government is coming in here, question time after question time, saying how sober and measured and calm they are. They're so sober and calm and measured at they're not doing anything. The Australian public again is seeing through this.

Let's look at the coronavirus. Let's look at the fact that a number of commentators for some time now have been flagging how serious this could be for the economy. The government has not run through any kind of plan in the public realm, but keeps saying 'wait for the budget'. Let's look at the fact that S&P some weeks ago downgraded its forecast for the Chinese economy significantly—an economy which we of course are highly interdependent with. They foreshadowed that there would be significant impacts on the spending of its tourists and students. Let's look at the comments by Alex Joiner, an economist at IFM Investors, which again alluded to the fact that this was going to have a serious impact on tourism. China's tourists represent 15 to 16 per cent of tourists to Australia but they outspend many other tourists by significant margins. Their spend in Australia is greater than that of American, British, Japanese and New Zealand tourists put together. Let's look at the fact that the education sector was flagged as one. Moody's said a couple of weeks ago that Australian universities will be harder hit than those of any other country.

So there have been people who for some time now have been flagging that this is an emerging issue. It's true that it's impossible to precisely model how this is going to play out, because that depends upon how the health impacts evolve in countries right around the world. But it is absolutely clear that this is going to have a material impact. Those opposite seem to want do nothing for weeks and weeks and months and months, by coming here and patting themselves on the back for being sober and measured.

Top economists at JPMorgan have said that the coronavirus outbreak has completely changed the dynamics of the Chinese economy. That was weeks ago. What do those opposite have to say? If you look at the Treasurer's answers in question time today, they'd almost be verbatim the same as his answers one week ago, two weeks ago and three weeks ago. I say that having had the excruciating displeasure of having to listen to all of them over the last month or more.

I could run through many commentators, here and around the world, who have foreshadowed that action is going to be needed. We see no plan from those opposite, just as we haven't had a plan for the last seven years on productivity. All we have from those opposite is 'We're going to balance the budget.' That's the sole test they give themselves. It's the most narrow and ineffective way in which to view an economy. Time will tell whether they meet their own test. Even if they were to meet their own test, it's a wholly inadequate way in which to look at the long-term challenges this economy faces.

What does the economy need right now? Let's go to the Governor of the Reserve Bank, who has pushed monetary policy to its limits. We'll see tomorrow whether the Reserve Bank feels the need to push interest rates even lower than they are, which is almost a quarter of the level they were at the depths of the GFC. They might go lower still—that's what the markets are guessing. The point is that the Reserve Bank has made it clear that, no matter how low interest rates go, monetary policy cannot do this alone. The governor has said, 'Monetary policy is not the only option.' He said:

We will achieve better outcomes for society as a whole if the various arms of public policy are all pointing in the same direction.

He's a very diplomatic person. He would never presume to tell the government what to do when it comes to fiscal policy, but it's fair to say that when the Governor of the Reserve Bank is using expansionary monetary policy and says that fiscal policies should be pointing in the same direction, that means he believes that fiscal policy should be expansionary at the same time.

So what could fiscal policy look like if it was ambitious, well calibrated and more expansionary than it currently is? As we've said on a number of occasions, as the opposition, we don't have full access to the government's briefing on the exact state of the economy, so it's not for us to give highly calibrated policy responses. But we have said on a number of occasions that we would work with the government to develop policy in a range of areas—and a range of areas that could be fiscally prudent, such as increased infrastructure expenditure, with shovel-ready projects at the local level that could have a real impact.

Another area is to bring forward some of the stage 2 tax cuts, particularly those which would have an effect on effective marginal tax rates where those are discouraging people from entering the workforce and especially those where they would have a positive impact on spending. We saw from the government's first tranche of tax cuts, from evidence given in the House Economics Committee by the banks, that approximately a quarter of it was spent. We need to get money into the hands of people who are going to spend it at a far higher rate.

Another area is Newstart. We have for a long time now said that Newstart needs to be looked at. Raising Newstart would have the double effect of, firstly, being very sound public policy and, secondly, putting money into the hands of people with a high marginal propensity to consume. It's something this economy desperately needs. When it comes to it being sound public policy, I only need to go to the Business Council of Australia's recent submission to the Senate Community Affairs References Committee inquiry into the adequacy of Newstart. Recommendation 2(b) says:

The single rate of Newstart ought to be increased for people who are unlikely to return to sustained work in recognition that as it stands, Newstart is not adequate to live on long-term.

We also of course need a settled energy policy, but that's far too complex a set of failures on the part of those opposite to deal with in 15 minutes. I will simply identify that issue and then move on to something else.

Then there are the tax incentives for investment. As was alluded to, as was identified in question time today, business investment in the last recorded period as announced today has fallen in the last quarter. This is a sign of this economy moving in the wrong direction. This is a sign of business confidence heading in the wrong direction. We need to, as a government, do something proactive that would both be beneficial for the economy in the short term and have very positive long-term benefits.

In summary, our economy is facing some outside challenges, but what is absolutely critical when we look at the predicament the government faces is that we firstly have to hold this government to account for having sat on its hands for seven long years—seven years of failed opportunities. This government has put our economy in a position that is far more vulnerable than it needs to be. Secondly, when it comes to dealing with these external issues, we do have advanced notice to varying degrees. The drought has been with us for years. We had experts tell us we're at increased risk of bushfires. We have had experts for weeks now telling us we need a plan for coronavirus. This government should be doing far more than just waiting for the budget to see if they can scrape a surplus. We need action from this government today in order to get people's wages rising, get people into jobs and raise people's living standards. That's the job of this government, and they're not doing it.

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