Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on recent contributions to the debate about the magnitude and nature of the inflation challenge in the Australian economy?

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

I thank the member for his question, because inflation is one of our most pressing domestic challenges. It hurts working families, it puts upward pressure on interest rates, it erodes living standards and it threatens future growth and job creation. In order to fix the problem you need to be up-front and honest about it. As the Prime Minister has indicated again today, inflation is at a 16-year high—and, of course, the member for Higgins last week accepted full responsibility for that 16-year high. These inflationary pressures have been building in our economy for some time. They are the product of a lack of investment in capacity and the product of a previous government that was engaging in reckless spending.

Last week in Canberra the Governor of the Reserve Bank of Australia gave a very important speech about inflation to Treasury officials. He made three very important points. First, he repeated the bank’s view about inflation being elevated and that it will remain elevated for a considerable period of time. That was point No. 1. Second—point No. 2—he said that inflationary pressures were broad based. Third, he made the very important point that the surest way to higher average interest rates is to accept higher inflation.

Of course, not everybody agrees with the Governor of the Reserve Bank—most notably the member for Wentworth. He is so out of touch with Australians he does not think that there is an inflation problem in this country. He does not have a clue what life is like around the kitchen table. The pretender from Point Piper does not understand that inflationary pressures are eroding the living standards of working families. Last year, he said inflation and interest rates were overdramatised—that was simultaneously with him supporting Work Choices, which was ripping away the wages and working conditions of many people in our community.

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

Mr Speaker, I rise on a point of order. The Treasurer was asked a question about the current economy; he was not asked about alternative views and he was not asked to give an opinion on other members of the parliament.

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

The Treasurer was asked about recent contributions to the debate.

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

Mr Speaker, I am talking about the contribution to inflation from the reckless spending of those opposite. In fact, the member for Wentworth admitted last week that he multiplied a grant application by a factor of five, from $2 million to $10 million—yet another example of reckless spending. There are numerous examples of reckless spending, as the Treasury pointed out only last week. Last week the member for Wentworth gave a 4,000-word speech arguing against fighting inflation. He argued against it. He also denied that we had a skills crisis in the economy. He went on to say that we were heading for a recession and then accused this side of the House of talking down the economy. What a record! Of course, he was then severely embarrassed when he claimed the Treasury had recommended a figure to the government when it came to the minimum wage. He was severely embarrassed about that and, when he was repudiated by the head of Treasury, he attacked the integrity of the head of Treasury. You cannot believe anything the member for Wentworth says. He never lets the truth get in the way of his political ambition. He will say and do anything. Thankfully, this side of the House understands the size of the inflationary problem and the need to deal with it. Those on that side of the House are the best friends that inflation ever had.

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

My question is addressed to the Treasurer. I refer to the answer he gave just a moment ago in which he discussed the speech made by the Gov-ernor of the Reserve Bank of Australia last week. He described that speech as a com-prehensive speech about inflation—and so it was. How does the Treasurer explain that the governor, in this comprehensive discussion of inflation and its causes, did not refer to any of the Treasurer’s claimed causes of inflation, such as a chronic skills crisis and infrastructure bottlenecks, let alone the reckless spending of the previous government? Who is right: the Treasurer or the governor?

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

The governor is comprehensively right and the member for Wentworth is comprehensively wrong, because what the governor talked about was elevated inflation—pushing up interest rates. The approach of the member for Wentworth is very simple—if people put their heads in the sand about elevated inflation, they condemn this country and householders with a mortgage to permanently higher interest rates. That is the recipe of the member for Wentworth. He has an approach which is dangerous. He has an approach which will condemn people to paying permanently higher interest rates because he will not deal with the causes of inflation and has no program to do so.

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

Mr Speaker, I seek leave to table the speech by the Governor of the Reserve Bank.

Leave not granted.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

My question is directed to the Minister for Finance and Deregulation. What steps is the government taking to reduce the burden of red tape on businesses?

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

The government has inherited economic circumstances that are challenging. We have a major inflation problem in this country—upward pressure on interest rates and government spending that is growing currently at 4½ per cent in real terms. The government is committed to tackling the inflation challenge both in the short term and in the medium term. The critical part of the medium-term attack on inflation is getting better productivity—getting it up from near to zero, where we have inherited it—and ensuring that we have greater pressure on red tape, which will get deregulation moving in this economy so that businesses are unbound and able to create more jobs, greater wealth and higher economic growth. The attack on red tape is a critical part of the government’s agenda to bear down on inflation in the medium term.

Red tape imposes costs on business, it reduces innovation and, in some cases, it is designed to protect individual businesses against prospective competitors, against innovation and against attacks from outsiders. There are a number of things the government plans to do. Some of these are already in train. The first and perhaps most obvious is that the government has appointed a minister in the cabinet—me—as Minister for Finance and Deregulation. This was a recommendation from the former government’s Banks inquiry, which it chose not to proceed with. We have also appointed Dr Emerson, the member for Rankin, as the assisting minister. Secondly, we have established a working group as part of the COAG process to accelerate and intensify the process of pursuing harmonisation of regulatory arrangements across the states and territories. There was an agreement on this at COAG last year but, unfortunately, there has not been a huge amount of progress in the intervening time. We have turbocharged that process in order to get some outcomes, and that will be reported at the COAG meeting later this month. We are also pursuing internal red tape within the bureaucracy. My department is chairing a working group within the federal bureaucracy which is designed to deliver cuts in red tape within Commonwealth processes, which will indirectly benefit business and the wider community.

Finally, we are developing a culture of continuous improvement in regulation. We should not need to have reviews once every 10 years like the former government did. We should not need to have a Banks inquiry or a Bell inquiry into red tape, because our regulatory system should be delivering feedback all the time so that we can build in a process of continuous improvement. This is crucial to reviving productivity in the Australian economy. I am pleased to see that a number of early decisions have been taken by this government to unleash business and to unleash competition. For example, the government decided to get rid of the monopoly wheat export marketing arrangements that we inherited from the previous government—and the opposition still cannot make up its mind whether or not it supports the government’s initiative—and to liberalise arrangements in aviation between Australia and the United States in order to provide greater competition and greater opportunities for business in the United States.

The previous government talked a lot about removing red tape. It talked a lot about reducing the burden on business. It said when it took office it would cut red tape by 50 per cent. Does anybody believe that red tape was even reduced, let alone by 50 per cent? The answer of course is that very little was achieved—just two reviews, one of which disappeared without a trace, and with the second we are doing our best to follow through with some of the recommendations.

I note that the Business Council of Australia is about to release another report which, amongst other things, will deal with these issues. I would commend that report and the views of the Business Council to the members of this parliament. The Business Council has played a very important role in putting pressure on governments on these issues, and I applaud its efforts. I hope that the opposition’s response to this report is a little more intelligent than its response to the most recent Business Council report about government spending. The member for Wentworth, in response to the Business Council’s claim that there is serious excessive spending and that the government needs to reduce spending, said, ‘They are just the voice of the big end of town.’ I have news for you Malcolm: you are the big end of town! And the big end of town does not even agree with you. You cannot even get your own mates to agree with you.

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

Order! The minister will address his remarks through the chair and refer to members by their titles, and not expand the question too far.

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

I apologise, Mr Speaker. The government are serious about pursuing economic reform and we applaud the contribution to the debate of organisations like the Business Council. Deregulation is central to our agenda—tackling inflation problems, tackling productivity and tackling the barriers to greater wealth creation, greater job creation and greater innovation in our economy. The former government talked a lot about doing something about red tape, but they did very little. We are not on about wild promises; we are on about delivering some outcomes. We are rolling up our sleeves and getting down to work.

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. I refer to reports that the Minister for the Environment, Heritage and the Arts has confirmed that the government is considering a new tax on plastic shopping bags. I also refer the Prime Minister to the new increased road user charge for trucks agreed between state and federal Labor governments. Does the Prime Minister really understand the impact on grocery prices for all Australian families of new Labor taxes on plastic shopping bags and road transport?

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

I thank the Leader of the Opposition for his question. The Environment Protection and Heritage Council, including all state and territory governments, previously committed to the phase-out of free single-use plastic shopping bags by 1 January 2009. This commitment was made by the previous Howard government, and that position has been supported by this government. Voluntary measures have been trialled but have not been as successful as governments of both persuasions had hoped. This government is still working with states and territories to analyse options for phasing out plastic bags. The Environment Protection and Heritage Council expects to discuss this issue at its upcoming meeting on 17 April 2008. The government has not decided on its preferred option, but let me tell you this: we will not be imposing a Commonwealth levy on plastic bags. Action on plastic bags should not be used as a government revenue raiser. On the broader question of the impact on working families’ budgets, the best thing that we can all do to improve the lot of working families is to get rid of Work Choices. The best thing we can do to help working families is to make sure that their penalty rates cannot be ripped off them, that their overtime rates cannot be ripped off them and that their basic, most elementary payments cannot be ripped off them. That is a set of laws that you imposed on working families, and you still stand by them.