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

My question is to the Treasurer. Will the Treasurer outline for the House the economic rationale for the stimulus payments that will begin flowing tomorrow, and how they fit into the government’s comprehensive economic strategy?

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

I thank the member for Dawson for his question because he is certainly very interested in these stimulus payments that are flowing through to families in his electorate, where many people will deeply appreciate the additional assistance that they are going to receive.

Families around Australia will begin receiving bonuses of up to $950 as part of our Nation Building and Jobs Plan. Over 1.2 million families across Australia receiving Family Tax Benefit Part A will begin receiving a back-to-school bonus of $950 for each eligible school-age child. That will certainly be very welcome by very many parents in this country, including those in the electorate of Dawson. This will assist something like 2.8 million school-age children with the costs of the 2009 academic year. And from today, over one million families who rely on one main income earner will also begin to receive the single-income family bonus of $900. All families eligible for Family Tax Benefit Part B when we announced the Nation Building and Jobs Plan will receive this bonus. The remaining Centrelink bonuses to eligible farmers and students, which the Prime Minister was talking about before, will begin to be paid on 24 March. And, of course, we have a tax bonus for 8.7 million working Australians, who will be paid from early April.

These bonuses are a key part of our efforts to support jobs by strengthening demand in the economy so that companies can afford to keep on and employ workers because there is sufficient demand in the economy. These payments are not a substitute for other direct government investments. Something like well over two-thirds of our Nation Building and Jobs Plan constitutes investments in schools, roads and houses. But these payments are very important; they are our best way to support jobs and growth until these investments kick in later this year to further stimulate demand in our economy, given what is occurring in the international economy—that sharp contraction of demand. So we have a two-stage process: payments to families to boost demand right now, and investment which flows through the economy to leave a lasting benefit for the nation.

This approach has been endorsed today by Access Economics, who have had this to say:

These measures will lift the spending power of households through 2009, providing important support for retailers against the tide of rising unemployment and consumer caution.

It is the case that businesses are doing it tough and, without these payments, things would of course be even tougher. Of course, that is why the business community is supporting these payments so strongly. You had Greg Smith, the Managing Director of Clive Peeters, say this in February in relation to the Economic Security Strategy:

It was quite phenomenal, really. Our suppliers expected it to be an average Christmas but sales were so strong that it left the industry short of supply.

This is boosting demand. You can see that in the consumer confidence figures today, you can see it in the retail sales figures in December and you can see it again in January. But this is a very important point: our main priority remains direct investment, which is why, for every dollar in cash payments, we are investing more than $2 in schools, roads and houses. That is an investment which is not supported by those opposite. They do not understand the importance, in the face of this global contraction, to support demand, to strengthen demand in our economy. It was not always the case that they had such an approach to this investment.

Back in 2001 the member for Higgins had a lot to say about strengthening demand in the economy. He said this at the International Monetary Fund in 2001:

We must consider the risks that entail from waiting for hard evidence of the magnitude of the global slowdown.

He said:

We are experiencing a synchronised slowdown for the first time since the early 1980s.

And he went on to say this:

Insufficiently vigorous policy may result in a deeper and longer global downturn.

That is what the member for Higgins said in 2001. Of course, it is a different story in 2009.

The case for investment now is clear. It is supported by the IMF; it is supported by the Chairman of the Federal Reserve; it is supported by business in this country. But it is not supported by the Liberal Party, whose only approach is to sit and to wait and to see. Of course, what that will do is impose costs on this country that we can ill afford. We on this side of the House understand the need to support demand and jobs in the Australian community.