James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister outline to the House Australia’s need for a new era of responsible economic management?

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

Mr Hockey interjecting

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

Order! The member for North Sydney!

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

I find the interjections from those opposite interesting, given that as they exited office they were sitting on levels of expenditure growth on the part of government which are almost right up there with the Australian Guinness Book of Records: 4.5 per cent real at a time when we needed to be reining it in. Instead those opposite were saying, ‘Here’s another bucket of kerosene. Let’s throw it onto the fires of inflation,’ and, of course, pretending all along that there was no problem with inflation to start with.

As we approach this budget, what this country has been plagued with for far too long has been short-termism: governments delivering one budget after another driven by the short term rather than the long term, one budget after another driven by the electoral cycle rather than by the decade ahead and one budget after another—as we have seen over the last 12 long years—where we have seen repeatedly the triumph of politics over policy.

The mood of the nation and the need of the nation now demand that we change. Therefore, we are about to embark upon a new period of responsible economic management—an era that places the budget squarely in the centre of a framework for long-term economic reform for the nation. This is not simply a budget-eve series of bribes, a series of handouts, all with an eye to the next election but, instead, we are taking seriously the long-term fundamental requirements of economic reform—‘economic reform’: words which barely crossed the lips of those opposite as one budget after another was delivered from this dispatch box.

In framing the budget, the government has confronted difficult economic times: a global financial crisis which is now impacting on real levels of economic growth in North America, across Europe and into our own East Asian hemisphere. While those developments unfold abroad, we are faced also with the challenge of inflation at home. This, however, has not deterred the government from embarking upon an approach to the framing of the budget which has three core pillars—firstly, responsible economic management, given the need to fight inflation; secondly—

Opposition Members:

Opposition members interjecting—

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

They jeer about inflation.

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

Mr Hockey interjecting

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

The member for North Sydney! The member for Goldstein!

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

Inflation is a real challenge for working families dealing with rising mortgage rates—12 rises in a row—dealing with rents going through the roof and dealing with petrol prices, grocery prices and what is happening with childcare costs, and those opposite say that inflation is a fairytale, that it does not exist. They say that inflation is a charade, that it does not exist. Well, we have news for those opposite. We have news for the Liberal Party. Inflation is real not just for businesses; it is real for working families, which demands therefore a responsible approach. That is why as we embark upon this budget our first responsibility is to fight the fight against inflation, and we will not resile from that. We will make sure that those who are impacted by this budget know that the overall long-term wellbeing of this economy is being properly attended to. When we assumed office, we inherited an inflation rate running at 16-year highs.

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

Rubbish!

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

The Leader of the Opposition says ‘rubbish’. Sixteen-year highs—that is in fact the truth. We had in the March 2008 quarter 4.2 per cent inflation. Anyone around the world looking at the emergence of the inflation genie from the bottle has to ensure that they deal with a problem before it becomes much bigger and begins to plague the totality of the economy. That is where responsible economic management lies—and, can I say, the International Monetary Fund is of a similar view. Presumably those opposite, who have a higher wisdom than the IMF, a higher wisdom than most economic commentators in the country, a higher wisdom than the Treasury and others, believe that inflation is purely a fairytale and a charade. The member for Higgins, I am sure, had much to say about this in his intervention in the budget debate today, joining the three-ring circus of the Liberal Party leadership race.

Then we go to the second pillar of this budget strategy. We are fighting the fight against inflation through bringing about a responsible government surplus and attacking government expenditure, despite the fact that those opposite have argued there is no economic case for cutting government expenditure—that is their bottom line, that there is no economic case for cutting government expenditure. We will in fact take, by contrast, a responsible course of action. The second pillar lies in helping working families under financial pressure—about whom those opposite said, ‘Working families have never been better off.’ Those opposite happily supported that proposition. That is how you describe working families, and you add to that by saying that working families do not have an inflation problem. Well, they do have an inflation problem, and our responsibility in the framework of this budget is to ensure that those families get relief through the tax system, get relief through the childcare tax rebate system, get relief when it comes to education costs and health costs endured by families and get relief when it comes to the challenge of housing affordability.

Then there is the third pillar. The third pillar is this area of systemic neglect on the part of those opposite. How do you invest in this nation’s long-term productive potential? What do you do about the enormous backlog in infrastructure, the skills deficit and, right across, the needs of our health and hospital system? Responsible governance, presiding over the revenue windfall that those opposite had off the back of the resources boom over the last half-decade—

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

I rise on a point of order, Mr Speaker. It relates to the use of question time for ministerial statements. It is a fact that Paul Keating once took 20 minutes to answer a question. This seems another record this Prime Minister wants to break.

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

Mr Sidebottom interjecting

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

If the member for Braddon is happy, we will proceed. There was no point of order, but I will make the observation that the level of conversation, particularly on my left but then latterly on my right, is way too high. Really, if this is to be the way that this budget session goes, I do not think that the people that are observing what is going on will be very proud of their representatives.

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

Mr Hockey interjecting

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

The member for North Sydney has a comment, does he? No? Well, come on. If I hear about the tax on the Tarago from the member for North Sydney again, he will get his hour. The member for North Sydney, is this a point of order?

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

Mr Speaker, I just raise a point in relation to your last comment. I think all members endeavour to behave well in the House overall, but I am not sure that the comment from the chair in that situation was fair.

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

As I have learned, often the perception of people not in the chair is different to that of those in the chair, and I accept that. But I think that a fair observer would indicate that there has been a very high level of interjection by many people. In fact, I was actually going to do the reverse and name four or five people that have actually sat through quietly.

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

The third pillar of our approach to economic policy is to deal with these areas of long-term neglect for the future. If you are in receipt, as the previous government has been, of significant revenues flowing from the resources boom, the responsible course of action would be to invest that in the long-term capacity needs of the economy, in infrastructure and in education and also to deal with the chronic problems in our health and hospital system. This, therefore, is a necessary additional discipline which we will apply to the budget and economic policy process.

In framing this budget, these are our three pillars: firstly, responsible economic management—cutting government expenditure and producing sizeable government surpluses to fight inflation; secondly, helping working families under financial pressure; and, thirdly, assisting with the long-term provision which we need to invest in of education, infrastructure, climate change and, of course, health and hospitals.

We were elected on a platform of governing as economic conservatives, and we intend to govern as economic conservatives when it comes to the question of ensuring proper custodianship of public finance. We take seriously the responsibility of producing a sizeable government surplus. Those opposite, apparently, by saying that there is no economic case to cut government expenditure, do not.

On top of that, this government is committed to an activist approach to microeconomic reform policy. We will ensure that the overall task of productivity growth is advanced through the policy instruments available to government. This is the architecture which underpins our approach to the important fiscal document which the Treasurer will release tonight. This underpins and underlines the government’s overall long-term economic strategy—all about the long term, not about the short term.