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

I have received a letter from the honourable member for Wentworth proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government’s failure to address cost of living and other economic pressures faced by Australians and the consequent collapse in consumer and business confidence

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

Right at the heart of this government is an emptiness, a gulf, a void, a vacuum, between the rhetoric and the reality and between empathy and action. For all of last year, the Prime Minister wandered around Australia, around petrol stations, supermarkets and hospitals, expressing his great concern for rising prices and for hospital waiting lists. When he was not doing that, he was being followed by the member for Kingsford Smith, now his Minister for the Environment and Heritage, with a couple of solar panels strapped to his back, ready to set them up in any park to give a lecture on climate change. What have we seen since election day? We have seen a million people driven out of public hospital insurance onto public hospital waiting lists. We have seen the solar photovoltaic industry destroyed in one stroke. The props that Peter Garrett took around the country have been abandoned. Their use has passed. Now the government can show its real character. We have seen again and again its total impotence in dealing with rising prices and the economic challenges of our times.

Today we had one excuse after another from the government. Why has business confidence collapsed? Why is consumer confidence at record lows? The Treasurer and the Prime Minister stood up and said: ‘It is because of international factors. It is the international shock of rising oil prices.’ Let us look at an international shock. Let us look at 9-11. Following the September 11 terrorist attacks in New York when the two mightiest buildings in the centre of the world’s financial markets were destroyed, when we in the West appeared to be facing an existential threat from terrorism, the Westpac consumer sentiment index fell from 107.6 to 99.5. But by the next month it had rebounded and by January it was 110. That was an international shock; that was a blow and an existential threat to our existence which challenged financial markets and communities. We felt we were no longer safe, and again and again politicians and commentators said, ‘The world changed forever.’

The confidence of Australians changed forever too in November last year. Since the Rudd government came to office, that selfsame consumer sentiment index has dropped by 23.3 per cent. It is now at its lowest level since December 1992. The Rudd government has done more damage to Australian consumer confidence than the 9-11 attacks in New York in 2001. Why is that so? It is because of a lack of leadership. Confidence has to be based on consistency and competence. Yet what we see from the new government is a void, a vacuum. Where is the substance? Where is the consistency? Where is the predictability? We have a Treasurer who for six months in the lead-up to the budget said he was going to make sweeping cuts to expenditure. He was going to reduce aggregate demand dramatically and drive down inflation. He said he was going to deliver a budget that would deliver pain. He said it would be good for us, but that it was going to be a budget that would hurt. Instead, he delivered a budget which increased spending and increased taxes. He wimped out. He could not do it. He could not take the heat. The reality could not match his rhetoric because he did not have the courage of his own convictions. So it was that Goldman Sachs said, which the Treasurer cited as an endorsement and it was faint praise indeed, ‘The best thing that can be said about this budget is that it does not make inflation any worse.’ That was one of the kindest things said about it.

But it was not the only example of this yawning gap between rhetoric and reality, between the empathy that the government portrayed when it was in opposition and the action today. Last year petrol price rises were John Howard’s fault. They were all John Howard’s fault, according to the Prime Minister, Mr Rudd. This year it is international factors. Last year there was not a petrol station forecourt which he did not drape himself over, weeping tears of compassion for the embattled motorists. He would fix it all. He was not just going to deal with macroeconomic policy. He was not just going to deal with inflation. He was going to stop petrol going up—and not just petrol but groceries as well. He went around and around the country citing long lists of prices. But we do not hear about them today. No, we do not, because what we have had today is nothing—the gap, the nothingness, the emptiness, the lack of principle, the lack of substance, the lack of policy.

We have had Fuelwatch—an extraordinary contradiction of principle. We have a Prime Minister who said that he would put the advice of Treasury front and centre in his work in government. The mandarins of Canberra, a class from which he comes himself—he is a public servant—would give the advice to the government and it would be heeded, and yet what do we know? That every single department with any expertise in this matter, including his own, told the government: ‘Don’t do it. It will put prices up. It will reduce competition. It will make things worse.’ And the best they can wheel out is Graeme Samuel, who himself does not say it will reduce prices. No, Graeme Samuel says it is all about the website. It is so people can find out where the cheapest petrol is. Of course, you have to fix the prices; otherwise, by the time people get to the petrol station they might have moved. This is a weak, insipid justification for an extraordinary intervention in the free market. This comes from a Prime Minister who claimed to be developing policy based on evidence, and yet what we found was a policy that was based on nothing more than a desperate desire to be seen to do something.

How oversold, how betrayed do Australian motorists feel? They know that this man positioned himself as the person who could reduce petrol prices, and instead he does nothing. Like Chauncey Gardiner in Being There, he likes to watch. This is the Prime Minister that likes to watch. Indeed, it is all about being there, and Peter Sellers is an inspiration for the Prime Minister. One wonders what the role of Dr Strangelove in the nuclear proliferation initiative might have been. But I think the real model is Chauncey Gardiner, just sitting there, watching and talking, talking about problems. When these great challenges of living standards and prices and battles with ever-rising prices and pressures are brought to bear, what does the Prime Minister do? He talks about the problem. He is a watcher of problems. He is not a doer and he has betrayed the Australian people by his inaction. This inert nothingness at the centre of his government is the reason why we have seen all of these indices of consumer confidence and business confidence collapse.

But it is not all bad for the government. Things could be worse. The latest Sensis business index, which surveys small and medium enterprises, shows that there is one government in Australia in which small and medium enterprises have less confidence than the Rudd government. It is, of course, Morris Iemma’s government in New South Wales. So things could be worse. He could have slipped down below Morris Iemma. Having said that, Morris Iemma has been at it for a long time and is ably assisted by his many colleagues, including Mr Della Bosca.

But we have to go back and look at the cynicism of the Prime Minister. He went to speak at Melbourne’s Cranbourne Secondary College on 11 July last year and he talked about the CPI for a while. He said:

A cursory look at the CPI, however, indicates that much of this data is captured by the statisticians but that it often gets diluted when we focus on the aggregate CPI figure of a typical basket of goods and services.

He said:

It is clear that our families don’t go out each week and purchase a car, computer, or a plasma TV—for which prices have generally been falling—but they do buy their milk, bread, cereals, vegetables, fruit, and drinks every week—for which prices generally have been rising faster than the general CPI.

So he delivered the very clear message that he was going to be able to do something about this. He would act, just as he would act with petrol. Yet what have we seen? In March 2008 the CPI release showed that the price of milk had risen by 2.4 per cent in the quarter, cheese 3.4 per cent, bread four per cent, poultry nearly five per cent, electricity six per cent, child care four per cent, automotive fuel 5.4 per cent, and preschool and primary education nearly six per cent. All of these prices are rising and rising, and yet all we have in the Lodge is Chauncey Gardiner, watching away, being there. He has got there. He has got into that position and all he can do is watch.

This country desperately needs leadership. Confidence has collapsed not because of international shocks. We have had them in the past. Could there be a worse international shock than 9-11? If you think about it, the single most horrific shock we have had to our system since the Second World War was this existential threat from terrorism, because suddenly we feared that there could be buildings coming down in Sydney or Melbourne and bombs, dirty bombs. Terrorism was at our doorstep, and then we Australians felt it ourselves in Bali. It is an existential threat to Western society—and yet that threat itself did not impact upon consumer confidence, upon the confidence of Australians in their economic circumstances, as much as has the advent of the Rudd government. That is because, in 2001, John Howard was Prime Minister. In those days we had a government of substance, where the Treasurer spoke about what was going to be in the budget and he delivered. It was a government where there was consistency, clarity and coherence.

Instead, what we have now is a confusing void and these extraordinary thought bubbles. What are we to say about a Prime Minister who stands up in front of an enormous audience in the Great Hall of this parliament and says that he wants to have an Asia-Pacific union and then compares it to the European Union? He does say that it will not be an identikit to the European Union but he gives the clear impression, in everything he says, that we should be heading in that direction—to some form of political union: open borders, common currency and shared political institutions. It is an extraordinary leap. It was derided and laughed at the following day by his Labor predecessors, Bob Hawke and Paul Keating. It was genuinely unhinged.

Then we learnt that the man he had sent off to lead the negotiations to bring this great vision—this thought bubble of his—into reality had only been told about this the previous day. So what does that say to us about the substance, the principle and the competence of the government? These confidence ratings—this plummeting business and consumer confidence—are a vote of no confidence in this government. It reminds us that confidence is a fragile thing, and once it has been thrown away it is very hard to regain. (Time expired)

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I regret to say the honourable member for Wentworth has reached new heights of sophistry. We heard all about consumer prices and about how badly consumer confidence has fallen. Presumably it has fallen spontaneously since 25 November! It has fallen spontaneously in Australia against international trends.

We heard from the shadow Treasurer that the fall in consumer confidence in his view has nothing to do with international trends, the subprime crisis, global financial turbulence or the oil-price shock that is being experienced around the world. He said that this is all down to the new government.

Of course, the budget predicted a slowdown in global growth. The budget predicted tighter credit conditions and that significantly higher interest rates would be expected to impact on Australian growth and therefore on Australian consumer confidence. That is what this government’s budget predicted would happen. But if you listened to the member for Wentworth you would think two things. Firstly, you would think that everything was rosy—just dandy—on 24 November. Secondly, you would think that the rest of the world is going along just fine. If you listened to the member for Wentworth you would think consumer confidence was rising just before 24 November. You would think interest rates were falling. In fact, the Leader of the Opposition thinks interest rates were falling before 24 November. That is what he said at the dispatch box a few days ago—that interest rates were coming down. That comes as a great shock to the many millions of Australian mortgage holders.

If you listened to the member for Wentworth, you would think that the opposition thought inflation was falling just before 24 November. That is why the honourable member for Wentworth said that in his view under the Howard government inflation was ‘mission accomplished’. That is why the member for Higgins, the former Treasurer—said that we had inflation just where we wanted it. That is why the former Prime Minister said that Australian working families had never been better off. And that is why the member for Mayo said yesterday, in an interjection—I am not sure if it is reflected in Hansard, and I am not sure that all members heard it, but I heard it—that the Howard years were a golden era.

Opposition Members:

Opposition members interjecting—

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I am sure he will not deny it. He said that the Howard years were a golden era in terms of economic management. The opposition have engaged in a collective delusion that everything was going along just fine and dandy, that Australian working families had never been better off and that if they had been re-elected on 24 November consumer confidence would have continued to increase. There are a few inconvenient facts for those opposite. The consumer index in relation to confidence started to fall in May 2007, from 123.9 points to 110. That did not happen on 25 November but in May 2007. So the fall had begun under the previous government.

Was it all their fault? No. Oil was going up, petrol was going up and there was starting to be some international economic turbulence—not anything like what we have considered over the last few months.

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

Mr Deputy Speaker, I rise on a point of order. Can the Assistant Treasurer table that? The document I have shows consumer confidence peaking in November 2007.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

There is no point of order. The Assistant Treasurer has the call.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Confirmation! Everything was rosy, they think. Everything was fine just before 24 November.

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

Mr Deputy Speaker, I seek leave to table the Sensis Consumer Report from June 2008, which shows confidence trends over the past five quarters.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

You can try to table that document at the end of the speech.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I am trying to prove the point that those opposite think everything was going along just dandy. The other suggestion from the honourable member for Wentworth was that consumer confidence has nothing to do with international trends. You would therefore expect that Australia would be the only country which had experienced these types of falls in consumer confidence over the last few months. That is the logical conclusion from the honourable member for Wentworth. Well, let us check the facts. What has happened to consumer confidence in the United States of America? We have heard much from the member for Wentworth about how bad it is that consumer confidence is at the lowest level since 1992. And the Deputy Leader of the Opposition interjected to say that ‘it’s extraordinary’ that it is at the lowest levels it has been since 1992. Well, where do you think United States consumer confidence is at the moment? It is at the lowest level since 1992. Isn’t that amazing? Consumer confidence has fallen to the lowest level since 1992.

Consumer confidence is down in Europe, down in the United Kingdom and down in New Zealand, and it is all due, apparently, to the Rudd government! The people of Brussels, The Hague and Lucerne have been waking up saying, ‘I’m very worried about Wayne Swan and Kevin Rudd and what they’re doing to the international economy.’ The people of Auckland and Wellington have simultaneously been rising up and saying, ‘I wish Kevin Rudd would get petrol prices under control.’ The people of Minnesota and Connecticut have all been concerned, as they read the Daily Telegraph online, about what is happening in the Australian economy, and it has been affecting their consumer confidence! That is the proposition the honourable member for Wentworth seriously puts before the House today—that this has nothing to do with international trends, nothing to do with the international shock; it is all the fault of the Rudd Labor government. We are good but we are not quite that good, I must confess to the House!

In all seriousness, governments are looked to by their people to make a difference. We have seen oil prices at record levels throughout the world. I think the member for Wentworth would acknowledge that oil prices are at the highest level that they have been; they are at a record high. I think the member for Wentworth would acknowledge that those oil prices have flowed through to prices in Australia, Europe, the United States and every other comparable country in the world. I think the member for Wentworth would acknowledge that there are cost-of-living pressures in every country in the world at the moment. I think he would acknowledge that, or maybe he would suggest that inflation is a fairytale or a charade—I am not sure. I think he does acknowledge that inflation is high around the world. What do people do? They look to their government for leadership. They look to their government to put downward pressure on inflation. They look to their government to rein in public spending. They look to their government to get public spending under control.

It is a well-known economic principle that when you are in recession governments should spend more, and when you are booming governments should reduce their expenditure. But the previous government had the determined policy to spend their way out of the boom. That was their policy: ‘We’ll just keep spending through the boom.’ There were increases in government spending of 4½ per cent a year, on average, for the past five years—that was their policy. We have a different policy. We have got government spending back under control. We have reduced government spending as a percentage of GDP to its lowest level since 1989-90. What does the Reserve Bank think about that? We heard yesterday that the Reserve Bank board minutes—the official record of the central bank of Australia—note that, since their last meeting when considering what to do with interest rates, the federal government had brought down a budget which was ‘mildly contractionary’, contrary to the suggestion made by the honourable gentleman opposite.

The other thing that the Reserve Bank Governor said in a speech last week was that this government was letting fiscal policy assist monetary policy, that this government was allowing the automatic stabilisers in the economy to work. In his words, he said, ‘That was helpful’—the Australian government is finally getting fiscal policy to help monetary policy; the federal government is finally getting the budgetary process to put downward pressure on interest rates and downward pressure on inflation. Those guys opposite had been determined to spend their way out of the boom. They knew how to get out of the boom: ‘We’ll just keep throwing money at it,’ they said. That was their policy.

We have a slightly more rigorous approach. We have a policy of reducing government spending as a percentage of GDP to put downward pressure on inflation. They still just do not seem to get it. In the other house, as we speak, they are still trying to increase government expenditure. They are still trying to reduce government revenue, reduce the budget surplus and put more upward pressure on interest rates, perhaps to deliver another 25 basis point increase. The honourable member for Wentworth, based on his previous experience, would no doubt say that the impact on the community has been overdramatised: ‘It’s not that bad an increase in interest rates. It doesn’t have that much of an effect,’ he says, ‘It’s all overdramatised.’ The mortgage holders of Western Sydney do not think it is overdramatised. Small businesses struggling with debt to run their business do not think it is overdramatised when you have an interest rate increase, when a government in this nation does not support the Reserve Bank, does not give the Reserve Bank the assistance it needs and does not get fiscal policy actually moving in the same direction as monetary policy.

The other important thing that this government has done is provide some relief to the people doing it tough. That is why we have had low- and middle-income tax cuts. But there was relief not just for them. There was the introduction of the education tax rebate; the increase in the childcare rebate from 30 per cent to 50 per cent—a very significant reform, helping families with kids at childcare centres, which is one of the biggest costs facing families; the introduction of the first home saver accounts to help young couples in particular save the money for their first home; and the increase in the utilities allowance for pensioners to help pensioners who are doing it tough. A typical family with a couple of kids will be $52 a week better off after 1 July as a result of this budget. Or, for example, a couple on $58,000 with two children aged 10 and 13 who are not in child care would increase their income over a year by $2,775. That is real assistance for working families, that is real assistance for people doing it tough, as opposed to—and this is something we did not hear about from the member for Wentworth; I cannot possibly think why—a 5c a litre petrol cut which would result in about $2.50 a week at a cost of $2 billion. No wonder they have lost the mantle as Australia’s responsible managers of the economy; no wonder the Australian people have come to the conclusion that those guys opposite cannot run an economy. They did not just come to that conclusion on 24 November; they have confirmed it. Talking about consumer confidence, what about confidence in their economic management? That is what has gone through the floor since the honourable member for Wentworth has sat in this place as the alternative Treasurer of the nation. That is what has plummeted; that is what has really gone down.

We have seen a massive turnaround in economic management. Who is respected as the economic managers of this nation? They know. The honourable member for Wentworth just criticised us for it. He said, ‘You hear a lot of empathy from this government. You hear a lot of empathy for people doing it tough.’ Well, I acknowledge that you did not hear much about that from the previous government. I acknowledge that what you heard from the previous government was a Prime Minister who said Australian working families have never been better off. That was their official policy: Australian working families have never been better off, so while we are at it let’s attack their working conditions.

There are some things we have not heard about the Sensis report that was released today. We have not heard any quotes from the opposition about what the Australian people think about Work Choices, how they are more confident in the workplace and how they now think that their working conditions are better protected. We have heard no quotes from the member for Wentworth or from the member for Curtin because that is not very comfortable reading for those opposite. We have heard all about the Sensis report but nothing about what the Sensis report says about Australia’s working conditions, nothing about what the Sensis report says about what the Australian people thought about Work Choices and what they think about this government’s response. This government’s response is to say that Australian people deserve some protection in the workplace—that Australian families that are doing it tough deserve to have their penalty rates, their working conditions and their salaries protected; that Australian working families deserve a bit of help from the government in the workplace; that this is not a government which sits around the cabinet table trying to think of ways to attack their working conditions but a government which sits around the cabinet table actually debating ways to help them. That is the difference that the Australian people have and that is what is recognised in the comments in the Sensis report about Work Choices and workplace relations. It is a ringing endorsement of this government’s approach when it comes to workplace relations.

The honourable members opposite did nothing about cost-of-living pressures when they sat on these benches because they did not recognise they had a problem. They had a mindset which said Australian working families had never been better off. They had a mindset which said it was ‘a golden era’. They had a mindset which said: ‘We do not care about interest rate increases, because they are overdramatised.’ They had a mindset which said it is mission accomplished about inflation. And what is inflation? It is an impact on Australian working families and cost of living. They had a mindset that said: ‘We just don’t care.’ They say we are being too empathetic. They say we are hearing too much empathy from the Australian government. Well, we make no apologies for it, because it stands in stark contrast to those who preceded us. It stands in stark contrast to the arrogant approach that we had from the former Prime Minister, the member for Higgins and the member for Wentworth. It stands in stark contrast and it will continue to, because we will continue to stand up for Australian working families.

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

Mr Deputy Speaker, I seek leave to tender the Sensis Consumer Report of June 2008, which shows that consumer confidence was at net 61 per cent in November and has fallen ever since.

Leave not granted.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

The member for Prospect keeps referring back to the previous government. I wonder whether he forgets that he is actually in government now and this is what the Australian people are looking for—for him to provide some leadership and head them in a direction to regain consumer confidence.

On 11 June, the Westpac-Melbourne Institute Consumer Sentiment Survey results were released. It showed that the level of the index fell by 5.6 per cent in May from a figure of 89.9 down to a figure of 84.7 in June. This is the lowest level this index has been since December 1992, coincidentally when Labor were last in office. This is also the fifth straight month it has come in at below 100, which, also coincidentally, is a time frame falling within the Rudd government’s current term in office. This index is an indicator that the government should be taking notice of. It is an indicator of their economic performance and an indicator of the Australian public’s confidence in what they are doing. In this House yesterday I heard the member for Wakefield repeatedly trying to bring the Newspoll results to the attention of the opposition leader. Maybe the member for Wakefield should be more concerned about recognised economic indicators than about a poll that changes on a daily basis. This index has been kept since September 1974 and is recognised throughout Australia in the business sector, and companies make decisions affecting their directions based on this index.

In this House yesterday I saw some amazing events, and one of them was when the Prime Minister left the chamber during question time to check his Oxford or Macquarie dictionary. He came back to the chamber and, in his most charming schoolmasterly manner, he proceeded to tell us the meaning of the words ‘pattern’, ‘behaviour’ and ‘unacceptable’. It is good to see he likes to get his facts correct and, as he was kind enough to enlighten the members of the opposition with the meanings of his words in Japan, I would like to take the opportunity to enlighten the government members on a few words and their meanings. The first word is ‘consumer’ and a definition of that is: ‘a person or organisation that uses a commodity or service’. I guess the Treasurer would know all about consumers as he gives them advice in his newsletter on how to save money with the so-called ‘Pricewatch: Top 10 tips’ segment.

The ripper in all that was the No. 7 tip, which tells the consumer to ‘ask for products not on the shelf’. Doesn’t that just inspire us with some consumer confidence: the federal Treasurer giving tips on shopping and then telling consumers to try and buy things that are not there? This brings me to the next word I would define for the government members and that is ‘confidence’. The dictionary states: ‘trust or faith in a person or thing’. The latest index figures show that this government, only six months after the election, has lost the confidence of the electorate. So when did the consumers of Australia start to lose this confidence? It was not six months after the election but only two months. In October 2007, the index was 115.3. By January 2008, it had dropped to 103.1 and then dipped below 100 in February for the first time in over 12 months.

During the election campaign Mr Rudd and Mr Swan told everyone they were economic conservatives and that the expectations of the electorate and consumers of Australia were that grocery prices were going to go down, fuel prices were going to go down, housing affordability was going to be fixed and the cost of child care would be reduced. The 2008-09 federal budget has done nothing to address these platforms upon which the Rudd government keeps saying that they were elected. Instead, six months into his term as Prime Minister, Kevin Rudd capitulated and announced on 22 May 2008 that he has done all he can do to address the problems he promised to fix and that, under federal Labor, prices will continue to rise. Mr. Rudd said:

We have done as much as we physically can to provide additional help to the family budget, recognising that the cost of everything is still going through the roof: cost of food, cost of petrol, cost of rents, cost of childcare.

It is little wonder the consumer confidence index has plummeted. In my time as a football coach, I spent many years convincing teams and the team players of their abilities and providing them with a confident outlook on their game plans, skills and futures, both as players and in their lives. Never in my time as a coach did I talk down their abilities or give them negative thoughts. You may well ask why I never spoke negatively. The answer is easy: you will get the result that you set through the tone of your dialogue. If you talk positively, that is what you will get. If you talk negatively, that is the mindset that is adopted by the players and that is what you will get: a negative result. This government from day one has adopted this negative mindset. In particular, the Treasurer went about talking down the economy, talking about an inflation genie, talking about infrastructure bottlenecks and talking about interest rate rises; it was like the sky was falling in. And just on interest rate rises, it appears as though John Howard was correct when he stated:

... interest rates would always be lower under a coalition government.

There is nothing I or the Australian public have seen to indicate anything else.

The Rudd government was so intent on creating a doom-and-gloom mindset in the electorate, just so it could point the finger at the previous government, that it inadvertently created a downward spiral effect on consumer confidence that it could never have foreseen. The Treasurer never saw the effect of his talking down the economy and the consequences he would create by blindly pursuing cheap political gain. This collapse of consumer confidence lies squarely at the feet of our Treasurer and the government. As the Treasurer and as a leader he needs to create an environment of positive attitude for the consumers of Australia, both domestically and commercially, to turn this collapse of confidence around.

The Rudd government released its first budget on 13 May this year and squandered an enormous opportunity. It was an opportunity for the Rudd government and federal Labor to finally prove they were the economic conservatives they claimed to be in the lead-up to the 2007 federal election. Instead, the Rudd government delivered a stereotypical Labor budget that was high-taxing and high-spending, yet tried to win a few brownie points by playing on the politics of class envy. It is now undeniable that, under the Rudd government, the cost of living has risen and is continuing to rise, and with this the consumer confidence of ordinary Australians has plummeted to levels our nation has not seen in more than a decade.

There have been numerous opportunities to lift consumer confidence over the past months but it just has not happened. Why not? First of all the budget inspired no consumer confidence. Then our Prime Minister heads to Japan and announces a hastily put together deal with Toyota. It was so hasty that Toyota had no idea about the funding they were going to receive. The Prime Minister gives away $35 million of federal taxpayers’ money (a) to a company that did not need the money to do the deal and does not know what to do with the money and (b) to import old technology while the rest of the world will be getting the newer version of the imported motor. That sort of deal will create no consumer confidence, and most of the people in business who I have discussed this with thought it was a joke. To quote one of them: ‘Well, this is what happens when you put a bureaucrat in charge of a trillion dollar economy. Where do I line up to do a deal with the Prime Minister?’ Until the government understand that they are dealing with an educated electorate, it does not matter how much spin they put on even poor commercial deals, the Australian public will see through that spin and we will continue to see the collapse of consumer confidence in this government.

In May this year, the Prime Minister visited Western Australia and had a photo opportunity with a local kids’ football team. The local community newspaper, the Southern Gazette, reported that the Prime Minister’s visit ‘brought with it reassurance for local families struggling with the housing affordability crisis’. Just like prior to the election, in the article the Prime Minister uses carefully managed words to give the impression that his government is doing something to fix the housing affordability problem in Western Australia. Yet, if you read the article carefully, nowhere is there mention of what the Prime Minister and his Labor team actually plan to do to fix the problem.

We have a Prime Minister who continually tries to fool the Australian people and whose every word has to be carefully read and re-read to see where the deception lies. In the article the Prime Minister says, ‘During this period of great economic growth in WA it’s important that families are not left behind in the rush but are given support, such as through the provision of affordable housing.’ He went on to say, ‘The federal government, in partnership with government at all levels, wants to help keep the cost of community infrastructure down and as a flow-on effect also keep down the cost to homebuyers.’

It is all well and good for the Prime Minister to recognise that there are major challenges facing community infrastructure and to want to keep the costs down to make housing more affordable. However, what the people of Australia are looking for from this government is not recognition that there is a problem with high costs of living but rather an actual plan to be formulated and put into action. There is nothing in what this government is doing to inspire confidence in the domestic or commercial sectors. I for one fail to see how the Prime Minister tossing a football around with a local high school team, as he did for the community news article in my electorate, and pretending to empathise with people suffering under the crisis, is in any way helping to actually redress the housing affordability crisis affecting Western Australians and constituents in my electorate of Swan.

In summary, the government have contributed to the collapse of consumer confidence by talking up doom and gloom. This collapse in confidence can only be blamed on the Rudd government. When elected to office the Rudd Labor government gave the impression that they had a plan for easing the cost-of-living pressures for working Australians. We were led to believe that grocery prices, inflation, fuel costs and housing prices would all fall under Labor. We are not even a year into the Rudd government’s first term in office and already the Australian people have lost confidence in this government’s ability to run the national economy. The reports are out. Consumer confidence has fallen to levels this nation has not seen since December 1992, and for the fifth straight month the figures have come in below 100. The Australian people’s lack of confidence in the Rudd government’s ability to run our economy and live up to their election promises is fostering a national economy where consumers have lost confidence, and, in turn, so have our businesses. The Australian public expects and should get more.

Mark Butler (Port Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

The pearl of wisdom I was able to derive from that last contribution was that if you think positive thoughts then inflation will come down. Frankly, the opposition has a hide to lecture this side of the House on economic pressures and the cost of living. The opposition has developed a sort of creationist view of the economy—the economy was created on 25 November by some higher being apparently sympathetic to the Labor Party; that higher being created an economy with capacity pressures just to make it difficult for people in Australia; that higher being created an economy with skill shortages, with price pressures. Well, we are realists about the economic situation facing Australian working families and those doing it tough. We have a plan to deal with it. But we are also honest enough to face up to the fact that there are some very serious economic pressures that were not created on 25 November but rather have been building for a very significant period of time.

Some of those pressures are international. As much as the member for Wentworth likes to brush that off, some of them are international—and over which we have limited control. Others are a legacy of the former government’s lackadaisical approach to the capacity constraints that were facing the economy. They are the last people entitled to lecture us. They did nothing about those constraints. They are out of touch. Those things that we do try to do to help working families deal with cost-of-living pressures—such as those that the Treasurer was revealed to have been talking to his community about—are ridiculed by persons opposite like the member for Curtin. What is so ridiculous about advising people to look for specials? The member for Curtin might not need to do that, but most working families do.

This is a familiar position that the Labor Party finds itself in because this is exactly the position it was in in 1983 when it last came to government. This side of the House have done this before. Again we have a comprehensive plan to deal with the economic pressures that we have inherited. The centrepiece of that plan is the budget. What is the opposition’s response to the budget? To try to trash it just to score some political points, to delay the budget at a cost to it of $284 million, thereby creating further upward pressure on inflation and interest rates, and to throw around uncosted promises just to save the leadership of Dr Nelson. They have been throwing around uncosted promises, with no savings proposed to match things like the excise tax proposed by the government.

On this side of the House we know that we have to deal seriously with these pressures. Some are international pressures and we need to face up to the fact that they require, in some part, an international response. Key among them obviously is oil. The price increases are as bad as they have been at any time since the 1970s. We now have an even more challenging situation than we faced in the 1970s, which was essentially a temporary supply side shock. We now have a demand side problem and we need to look at it as such. It is not one that was created on 25 November but is one that has been building for many years. What did the last government do? Nothing on petrol. What have we done? We have done two things at a local level. We have appointed a petrol commissioner to expose those who are profiteering from the oil crisis and we have legislated for Fuelwatch to do all that we can to help consumers find the lowest cost fuel that they can. We have also recognised that, to a very significant degree, this is an international problem that requires international pressure. We are sending our Minister for Resources and Energy to the Jeddah summit to continue the push for OPEC to boost supply that the Prime Minister started last week.

Food again is a significant international price problem. It is not something that is created in Australia but is something that is going to require a structured and international response. The average Chinese person now eats more than twice as much meat as they did 20 years ago. For every extra kilogram of meat that a Chinese person eats, between three and eight extra kilograms of grain is required to feed the animal. We are looking at an increase of more than tenfold in the grain required to go into the extra meat consumption just for China. This is a very significant problem that cannot be dealt with flippantly, as seems to be the case with the opposition.

These are pressures over which we have limited control, but that just makes it even more important to get the economic policies right. Prices did not start climbing because of the election of the Labor government. The ABS stats for the calendar year 2007, over which the member for Higgins essentially presided, showed that rents in that year went up 6.4 per cent, health costs went up by over four per cent, vegetables went up by 8.6 per cent, bread went up by 8.8 per cent, milk went up by 10.1 per cent, education costs went up by over four per cent and transportation went up by 5.6 per cent. What was the previous government’s key policy to boost consumer confidence in the face of those price pressures? Work Choices! Consumers are doing it tough, so let us attack their penalty rates! Consumers are doing it tough, so let us take away their shift loadings and their public holidays! We know that for 10 years the last government argued against every single proposal for a national wage increase for more than two million award wage workers. We also know that, if the government submission to the national wage case over the last 10 years had succeeded, award wages would now be $50 per week lower than they currently are. That was its policy for boosting consumer confidence.

In the face of those pressures, did the previous government use the surpluses that it had been reaping from the resources boom to ease the pressure on low- to middle-income families? No, it did not. If you look at the budgets from 2004 to 2006 you will find that people on an income of $20,000 received a total tax cut over those three budgets of between $7 and $13 per week. People on $150,000 over those same three budgets received a tax cut of $226 per week, as well as significant superannuation benefits that largely went to higher income people. That was the budgetary response to consumer pressures by the former government. What are we doing with tax cuts? As the Assistant Treasurer pointed out very clearly, our tax cuts are weighted to low- and middle-income families who are doing it tough under the current prices pressure. They are weighted to those people who are doing it tough and not weighted to the top end of town.

One of the other key economic pressures facing consumers is in the area of housing. Again this is not something that was created by that higher being on 25 November. This has been building for years and the last government did nothing except maybe inject a bit more froth into the housing bubble. Between 2000 and 2005, the housing market in Australia got to a position where the price-to-rent ratio was some 70 per cent higher than the 25-year average to those years. No wonder rents are climbing at an astronomical rate. What did the previous government do about those pressures facing Australian families? It did nothing. By contrast this government has a comprehensive housing plan. It is looking at supply issues around Commonwealth land and has a serious housing affordability plan. Creating a housing ministry was a very good step that the last government might have thought of, but we have a plan to ease housing pressures as well.

What else is this government doing to deal with these pressures and to try to boost consumer confidence in the face of a very significant economic challenge? We are targeting cost relief for working families. The childcare tax rebate is perhaps the best example of that. We have increased the childcare tax rebate from 30 per cent to 50 per cent and we are paying it on a quarterly basis, not some 18 months after the costs are incurred. We are paying it on a quarterly basis, which is important in making sure that families are not out of pocket for more than a few weeks. We are also making sure that the fiscal settings are in balance. In contrast to the opposition, which seems hell-bent on trying to trash the budgetary position of this government, we thought, as attractive as it might have been to do more spending, it was important for households that 1.5 per cent of the economy be put to surplus in this budget. We have done that. I am sure that it was very tempting for the Treasurer and the cabinet to look at more spending programs to ease these pressures, but in the long term the government did the right thing in making sure that this budget, as the Reserve Bank minutes confirmed yesterday, put downward pressure on inflation, not upward pressure. Australians are being buffeted by some serious international inflationary pressures combined with a legacy of inaction left to us by the previous government. Is it easy? No. Are Australians hurting? Yes. Do we have a plan? Yes. Do those opposite have the right to lecture us on economic responsibility? No way. (Time expired)

John Cobb (Calare, National Party, Shadow Minister for Regional Development) Share this | Link to this | Hansard source

We are discussing the cost-of-living pressures and the economic issues that face Australia at the moment, or more particularly the fact that the current government is not addressing them. When you talk about the cost-of-living pressures and what goes with them, nothing is more at the heart of or more central to them than the cost of fresh food and, more particularly, the ability of Australia’s farmers to produce that fresh food, and food and water security. I do not think there is any doubt that food and water security—whether treated either as one issue or as two separate issues—are two of the defining global issues of the 21st century. The world’s major food-producing regions have been hit with climatic issues over the past year, with the ever-present threat of disease and everything that goes with that affecting the major agricultural producers. There are also global food shortages. These are all happening now. In fact, our Prime Minister has been demanding action from the global community on the issue of food security and yet, at the same time, he and his ministers, his government, are doing anything but ensuring our long-term food security, particularly our long-term fresh food security.

We are faced at the present time with the drought. Over the last six to eight months this has led to a spiralling of food prices, particularly fresh food prices. There is a very real danger that with the government’s water and agricultural policy, or lack of one, we will go from a natural drought—that is, once it does rain, there is water—to a man-made drought. We are facing the very real prospect of a man-made drought along the Murray-Darling system and, as a consequence of that, we could have permanently increased fresh food prices in Australia, because most of that fresh food, as you would be aware, Mr Deputy Speaker Scott, is produced along the Murray-Darling Basin. If anyone thinks that it is out of order to suggest that bad government policy can lead to drastic food shortages or spiralling prices in the supermarket, then you only have to look at what happened to a lot of African countries. It has also happened in South America in the past and it could happen in Australia if we continue to treat Australia’s farmers and Australia’s water as though they were simply a political intellectual exercise.

In talking about the cost-of-living pressures and about fresh food prices, I have to talk about the Murray-Darling Basin. I have to talk about the National Plan for Water Security. We had a plan which was going to guarantee the nation’s food security and lead to sustainability in the basin. What the new government and in particular the new minister, Senator Wong, seem to be looking at is only one aspect of that—that is, pulling water out. At the moment she is buying water without putting a drop of water back into the system.

When you look at the policies being pursued, you see that, yes, obviously the drought is the main reason for spiralling food prices in Australia over the past six to 12 months. But that situation is going to be incredibly worsened because, on one hand, Senator Wong just spent $50 million—or we assume she did—on buying water. I would be very surprised if that $50 million or the water that was bought with it is anything but air space, because if anybody who had an allocation at the time—and apart from high security that has not been used, no-one does—needed money that badly, they would sell the temporary transfer rights for almost as much as the licence is worth in this time of shortage and still have the allocation or the licence. On the other hand, at the same time that Senator Wong is doing that without putting any water back in the river, she is quite happy to give Victoria— (Time expired)

Julie Collins (Franklin, Australian Labor Party) Share this | Link to this | Hansard source

If we are going to discuss government failure to address the cost-of-living and other economic pressures faced by Australians, we really need to be talking about those opposite, because they, as the previous government, are the only ones who have failed to deal with the costs of living. They received warnings on inflation from the RBA. While the RBA was trying to act responsibly in trying to put downward pressure on inflation, the response we had from those opposite in the lead-up to the last federal election campaign was to throw money at electorates they thought they could win. They went on a spend, spend, spend campaign and that was their response to economic pressures faced by Australians.

But as a previous speaker said, the most appalling thing that they did was introduce Work Choices. Work Choices stripped away the basic entitlements and conditions of workers. This really showed just how out of touch they were. Their failure to address these pressures faced by Australians resulted in their loss on 24 November. They seem to think the troubles that people are experiencing and the rising prices magically appeared the day after the federal election—they did not. Apparently, now even the drought appeared on 25 November, but who is to know?

To members who sit on this side of the House now, and to anyone paying attention, it was obvious that a string of interest rate rises would have a devastating impact on the lives of Australians. However, the federal government at the time just were not interested in dealing with the problem. Instead, they were making promises they could not keep. They were throwing money at electorates that they thought they could win, without any fiscal consequences whatsoever. We also had the Assistant Treasurer remind us of what another of the former government’s responses was to this—to say that working families have never been better off.

In stark contrast, federal Labor was in touch with local communities. We were in touch with the issues facing Australians and our response was delivered in our election commitments and the federal budget. It was a $55 billion families package that included $46.7 billion in tax relief directed at low- and middle-income families, the people who need it most. The federal budget delivered an increase in the childcare tax rebate from 30 per cent to 50 per cent, also increasing the cap from just under $4½ thousand to $7,000 per child per year and, for the first time, we are paying it quarterly rather than making the families wait for reimbursement of the money that they have already spent. We have also recognised that families need more support with education costs. We have introduced the education tax refund. This will help with the education expenses of those in families that are currently receiving the family tax refund. It will provide up to $375 for each child in primary school and $750 for each child in secondary school.

As further acknowledgement of cost-of-living pressures, this government is also doing something to help those who are doing it tough. We are extending the eligibility criteria for the utilities allowance to now cover carers and disability pensioners as well as those who are already in receipt of the payment. Not only did we expand the eligibility criteria; we also increased the amount paid to people. We have quadrupled it, in fact, to $500 a year. To further help with regular bills, we are now paying this allowance in quarterly instalments also. We are giving people, those who are doing it tough, more in this one quarterly instalment than those opposite offered them for a whole year.

This government has acted and will continue to act to ensure that working families, working Australians and those doing it tough are assisted. It is recognition that people are dealing with rising prices, rising interest rates and rising inflation. Federal Labor are prepared to act and we have acted. To combat rising fuel prices, we have proposed the Fuelwatch scheme. It is a scheme that offers greater transparency in the often murky world of petrol pricing. I note that Mr Greg Goodman, the chief executive of the RACT, or the Royal Automobile Club of Tasmania—which is the peak motoring body in my home state—says, in reference to Fuelwatch:

My own view is that the proposed fuel watch program will empower motorists in Tasmania by giving them information on which they can make informed choices.

That is right. It will give consumers the information they need to make informed choices. It will give the consumers the same information that the oil companies already have. What is so wrong with that?

What are the opposition doing? They are blocking it. The Liberal Party in the Senate is also blocking other legislation designed to help those needing assistance. This government has been working within the constraints of the current world economic situation to ensure that those needing assistance are given it and it is also giving Australians an economically responsible budget to put downward pressure on inflation and downward pressure—

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The time for the discussion has expired.