Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. I refer the Treasurer to the statement of the Reserve Bank Governor, Glenn Stevens, on 11 December last year when he said:

When people expect prices to rise rapidly, they bring forward purchases, put up their own prices, demand higher wages and so on. That helps to create the very inflation they expect.

Does the Treasurer accept that his statement the day before the Reserve Bank met in February that ‘the inflation genie is out of the bottle’ served to fuel inflationary expectations? Does the Treasurer really understand what he is doing to the Australian economy?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for his question. No, I do not accept that at all. I absolutely do not accept that. We have a plan to modernise this economy. We have a plan to deal with the legacy that was left to this government by the previous government—the highest inflation in 16 years. Inflation just did not suddenly commence at 9 am on 26 November, as the member opposite would pretend. There is an inflationary problem in this country and, when we see a problem, we have to correctly identify that problem and we have to deal with it, and that is what this government has been doing. We have been dealing with the inflationary problem left to us by those opposite by putting in place our five-point plan, by reining in reckless expenditure. We had the report from the Treasury the other day which identified the fastest increase in spending in any four years in the past 16 years. Of course, the member for Wentworth, as usual, went into denial. The member for Wentworth is in denial about the inflation rate. He cannot agree with the ABS. He cannot agree with the RBA.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. I ask the Treasurer to table that report from the Treasury, which he knows is not a Treasury report at all.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! There is no point of order.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Table it!

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Does the member for Wentworth wish to allow us to proceed now, or is he above it?

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Speaker, I think that comment was uncalled for.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Regrettably, if it takes those sorts of comments to get members of the chamber to respect the chamber, even if people are offended, that might be the problem.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Mr Adams interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Lyons is not helping.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

This country does face serious challenges—the highest underlying inflation in 16 years, and predicted by the Reserve Bank to stay there for two years. This government will not stick its head in the sand like those opposite. We had the member for Wentworth some weeks ago say that inflation was a fairy story. Tell that to the people who have had eight interest rate rises in the last three years. It is not a fairy story. Last year we had the member for Wentworth say that interest rate rises had been overdramatised. He does not have a clue about what life is like around the kitchen table—because inflation is the enemy of working Australians; it erodes their savings and it erodes their living standards.

This government has put its hand up from day one to tackle the inflation challenge that was left to us by the member for Wentworth and the member for Higgins. The member for Higgins said in July last year that inflation was right where he wanted it. Well, heaven help us if inflation was right where he wanted it. It was at a near 16-year high, as it turns out, when he made that statement. So we have put up our hand to accept responsibility. Everyone on this side of the House accepts responsibility for dealing with the inflation legacy left to us by those opposite. We have put up our hand to accept responsibility; why won’t they just put up their hand and accept responsibility for creating it?

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on the latest labour market figures released today and the government’s plans for sustainable jobs growth?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for his question, because the jobs figures today are good figures.

Opposition Members:

Opposition members interjecting—

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

Everybody on this side of the House celebrates the jobs figures today, but they cannot understand why the member for Wentworth and the member for North Sydney have been talking about a recession. We say that these figures are certainly welcome.

Opposition Members:

Opposition members interjecting—

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

We are getting the ‘me too’. Will you put up your hand for the highest inflation in 16 years? Will you put up your hand for the worst productivity performance in 16 years?

Opposition Members:

Opposition members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The House will come to order.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

The figures are good news, particularly for those Australians who have good jobs. We all celebrate that. We are the party of jobs. It goes to the very core of our existence. We would never do what those opposite do, which is put in place legislation like Work Choices, which ripped away wages and working conditions. We on this side of the House have some core beliefs—unlike those on that side of the House, who have no core beliefs anymore. So we celebrate. We celebrate the jobs figures today. An extra 36,700 jobs were created in February—a very solid increase in full-time employment and very good as well in the states of New South Wales, South Australia and Victoria. We celebrate those outcomes.

But there are challenges. If we want to continue to have strong jobs growth we have got to control inflation; we have got to lift our productivity. We can have strong growth if we can lift our productivity and control inflation—and that is what we on this side of the House are doing. It means fighting inflation, it means investing in the productive drivers of growth and it means dealing with the skill shortages.

Only yesterday we had the member for Wentworth give a speech—a spectacular speech. There were 4,000 words in that speech but not one positive alternative policy or solution—not one. There were 4,000 words in that speech, but he could not come up with one positive policy alternative—and we know why: he does not have a plan to control inflation. He has not got his eye on what is going on with inflation. He has not got his eye on what is going on with productivity. He has not got his eye on anything. He has one plan. It is a plan for the Leader of the Opposition—a question of when. Put him out of his misery and take him out.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer will put down the sign he is holding up.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

My question is to the Prime Minister. Is the Prime Minister aware that consumer confidence in our economy is plummeting, with the March Westpac-Melbourne Institute survey showing the lowest level of consumer confidence since 1993 and the March Sensis consumer survey showing the biggest fall in consumer confidence in the history of the survey? Given that the government has inherited the strongest economy in a generation, does the Prime Minister really understand what he is doing to consumer confidence in our country?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

As I said in response to a question in the House yesterday, the government is entirely mindful of the most recent findings in the consumer confidence index. I referred to that extensively yesterday and to the contributive factors to it, one of which of course is the rolling impact of what we have across the global economy, and Australia is not immune from that impact. The subprime crisis is unfolding in terms of consumer credit. It has had ramifications in revisions downwards in growth in the United States, in the United Kingdom, in the rest of Europe and in part in Japan, and Australia is not immune from that in terms of overall economic consequences and, flowing through that, consumer confidence as well. Of course there is a second factor driving all that as well, and that is the rolling impact of having inherited very high inflation rates vis-a-vis the last 16 years, and the second highest interest rates in the world. If consumers therefore have to pay 12 interest rate rises in a row, it has an effect on the way consumers feel. That is a consequence of previous policy settings, which this government inherited.

The question, however, is: what do we do about it? As I have said before, we need to embrace a program of action for the future which is robust in terms of the proper management of public finances, is designed to enhance private savings and is intended to invest in proper skills formation across the economy to deal with capacity constraints in the economy and to invest also in infrastructure bottlenecks—which have been the subject of 20 separate warnings from the Reserve Bank over time, ignored by all those opposite in the period in which they occupied the Treasury benches—as well as to boost participation in the workforce. This is a framework of action, but, if you look at each subset of that as it has been applied over the last 12 years by those who preceded us, you see instead inaction and inertia on every count.

We have been in office for three months, to identify where precisely the previous government took the capital available to them from the public revenue—hundreds of billions of dollars over time—and where that money was landed. It was not landed in investment in skills. It was not landed in investment in infrastructure. It was not invested in the long-term productive capacity of the economy. Instead, that government effectively pushed it to one side into various forms of consumption. That is no evidence of any forward planning at all.

What we intend to do is to take the responsibility of national economic management seriously and realise that we simply should not reside here as beneficiaries of a terms of trade boom, coming off factors which we nationally have no control of in the future, but instead should carve out a long-term future for the Australian economy based on productivity growth, based on improving our infrastructure and based also on what we do to boost workforce participation. That is a strategy for this country’s economic future, rather than standing or sitting idly by, carping from the sides and pretending that somehow, as a consequence of that, something materially changes.

I remind all those opposite that they had 12 long years to act on this—12 long years to act on these fundamental capacity constraints in the economy, 12 long years therefore to act on what turned out to be cumulative pressures on inflation, 12 long years to act on how that impacts on rates and how in turn it impacts on consumer sentiment. Instead, they sat on their hands and did nothing.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline for the House the challenges confronting the domestic economy and what the government is doing to meet them?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for her question, because the Rudd government has set about modernising the economy, increasing its capacity so it can meet the challenges that lie ahead, including international turbulence. Despite the welcome job figures today, the economy is shackled by very poor productivity performance. It is also shackled by high inflation. But of course all of those over there are in denial. If you cannot acknowledge the size of a problem, you cannot be part of the solution. The member for Wentworth wants to stick his head in the sand. It is a dangerous and very risky attitude. Do you want to know why? Because it has produced eight interest rate rises in a row, and that has put Australian families under tremendous financial pressure.

We on this side of the House acknowledge the enormity of the challenge. We have put up our hand to tackle it, and we are working very hard at it. But those on the other side of the House will not acknowledge the problem. The member for Wentworth disagrees with the Australian Bureau of Statistics. He disagrees with the fact that their inflation figure is so high. He disagrees with the RBA when they have their measurements of underlying inflation. He disagrees with the Treasury when it analyses the reckless spending spree that the previous government went on. He disagrees with the Business Council of Australia when it comes to their criticisms of the previous government’s failure to invest. And, of course, he disagrees with the Australian Industry Group as well. Everyone else is wrong, and the only person right about these basic economic facts is the member for Wentworth. Everybody else is wrong. His uncontrollable arrogance is a risky thing for this country—to have such an irresponsible opposition, in denial about the basic facts of economics. We on this side of the House take our responsibilities very, very seriously, and we will put in place a modern agenda to drive productivity, to bring down inflation, to create wealth and to create jobs.