House debates

Wednesday, 3 June 2009

Questions without Notice

Economy

2:25 pm

Photo of Chris TrevorChris Trevor (Flynn, Australian Labor Party) Share this | | Hansard source

My question is to the Treasurer. Will the Treasurer outline for the House the national accounts figures released today and what they say about Australia’s performance during this global recession?

Photo of Wayne SwanWayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | | Hansard source

I thank the member for Flynn for his question. The national accounts today show that the Australian economy has outperformed the other advanced economies in the March quarter. I think this is a tribute to the resilience and toughness of the Australian people. It is a very, very clear sign that the government’s efforts to stimulate the economy are working to support jobs, business and growth in our economy. GDP rose by 0.4 per cent in the March quarter and it is also 0.4 per cent higher over the year. To put these positive figures in perspective I think it pays to have a look at these outcomes relative to what is going on elsewhere in the world, because I think what is going on elsewhere in the world shows what a positive tribute these figures are—

Photo of Andrew LamingAndrew Laming (Bowman, Liberal Party) Share this | | Hansard source

Mr Laming interjecting

Photo of Wayne SwanWayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | | Hansard source

to all hardworking Australians. We have a look around the world at what has been happening and we can see all the evidence of the worst global recession—

Photo of Andrew LamingAndrew Laming (Bowman, Liberal Party) Share this | | Hansard source

Banking prices!

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

The member for Bowman!

Photo of Wayne SwanWayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | | Hansard source

in the last 75 years. Japan’s economy contracted by four per cent; the United Kingdom contracted by 1.9 per cent.

Photo of Andrew LamingAndrew Laming (Bowman, Liberal Party) Share this | | Hansard source

Banking prices!

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

The member for Bowman!

Photo of Andrew LamingAndrew Laming (Bowman, Liberal Party) Share this | | Hansard source

Banking prices!

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

The member for Bowman will leave the chamber for one hour under standing order 94A.

Photo of Wayne SwanWayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | | Hansard source

They are glum today, Mr Speaker—they are very glum and cranky.

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

Order! The Treasurer will ignore the interjections.

Photo of Christopher PyneChristopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | | Hansard source

Mr Speaker, I rise on a point of order. I simply ask you, under the standing order which you have just used, why it is that the member for Bowman has been asked to leave the chamber when the member for Solomon was simply warned and not asked to leave the chamber?

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

The only inconsistency I can see in the way that I have treated the member for Bowman is that the member for Sturt gets more favourable treatment. On three occasions he interjected. On two of them I tried to bring it to his attention that I was hearing the interjection and asked him to desist. I think that is a fair cop, because there are some people who are constant interjectors. I repeat: if you look at the standing orders I could actually deal much more savagely with a whole host of people, but I think at the time, in fairness, being the only person interjecting and the person would not desist, I have dealt with him satisfactorily.

Photo of Tony AbbottTony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Housing, Community Services and Indigenous Affairs) Share this | | Hansard source

Would you put me out next time the Prime Minister starts—

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

As I have indicated to the member for Warringah, I am not rewarding him again!

Photo of Wayne SwanWayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | | Hansard source

I was talking about what is happening elsewhere in the world, in other advanced economies—the very deep and sharp and sudden contractions that have occurred across these economies, not only in the December quarter but they have been repeated in the March quarter. Germany in March contracted by 3.8 per cent; France contracted by 1.2 per cent; Canada—only this week the figures came out—contracted by 1.4 per cent. All up, the major advanced economies contracted by 2.2 per cent in the March quarter. So, while every advanced economy is going backwards, Australia is going forwards. It has the strongest growth amongst all of those advanced economies.

Today’s figures do show that economic stimulus payments have helped to cushion Australia from the global recession. Despite the further deterioration in the global economy, household consumption, as the Prime Minister said before, rose by 0.6 per cent in the March quarter. Without the cash stimulus payments which were made to pensioners, which were made to families, which were made to veterans, which were made to carers, Treasury estimate our economy would have contracted by around 0.2 per cent in the quarter. That is the difference that those opposite simply do not understand, because what that means is fewer jobs lost and thousands of families saved from the loss of a breadwinner. To us on this side of the House, that is what counts—supporting working families, supporting business and supporting demand in the economy precisely at the time that the global economy is contracting so sharply.

But of course, as the Prime Minister said before, we are not out of the woods yet. There is a rocky road ahead, and there are figures published today which point to that, so we have to be vigilant and we have to continue with the economic stimulus. We can see from the new business investment figures that new business investment fell by 6.3 per cent in the quarter as businesses have begun to scale back spending in the face of sharp falls in global demand and weaker profits. This reinforces the need for our nation-building investment in roads and rail and ports, clean energy and the shovel-ready projects which are going on now—35,000 right across the country, all supporting jobs, all supporting business, all supporting the Australian community. And, of course, we have got the impact of the collapse of the terms of trade. Global commodity prices have fallen by 7.8 per cent in the quarter. That is the largest quarterly decline in 35 years, and that has hit our export earnings hard. While volumes have held up, export earnings fell by $6 billion in the quarter. That is the third biggest fall on record.

So we know the full impacts of this global recession that has still got some way to run and that will continue to impact on employment at home. It will mean more jobs will be lost because of the global recession. But what we are doing here is putting in place phase 1, phase 2 and phase 3 of the economic stimulus to support employment in the Australian economy. Today’s welcome figures bear that out. What we are doing is addressing the challenges that lie ahead for us by putting in place our battle plan for the economic stimulus, which is supporting Australian families at their time of need.

2:32 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | | Hansard source

My question is addressed to the Prime Minister. Given the contribution of net exports to the March figures, 2.2 per cent, was more than seven times the contribution from household consumption, 0.3 per cent, how can the Prime Minister continue to claim the positive March GDP result was all his own work? Don’t these figures show that his more than $70 billion of spending, including $23 billion in cash splashes, has been too much debt, spent too recklessly and too soon?

Photo of Kevin RuddKevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | | Hansard source

It is quite plain that the strategy of those opposite would be to fiddle while Rome burned. Our strategy as a government was to act, and to act on the front foot, and to take concrete decisions in the economy in order to make a difference. What I still cannot grasp is why this Leader of the Opposition, however temporarily he may be there, is still of the belief that the intelligent thing for him to do, both politically and economically, is to continue to talk the economy down. Why he believes that it is good for sentiment in the economy to run a negative and dishonest scare campaign on debt and deficit leaves me completely mystified because those opposite are abdicating any real level of responsibility.

The first part of the Leader of the Opposition’s question went to the reasons why the Australian economy has maintained positive growth in the first quarter. The Leader of the Opposition is not reflecting on the fact that in the answer I gave to the first question in the House today, and earlier in a press conference and in what the Treasurer said as well, we paid direct tribute to the fact that business, small business, workers, tradies, families, communities, and local government are out there acting, despite the negative sentiment being generated by the global economic recession, and making a difference for Australia. They are being positive, in contrast to what the Leader of the Opposition is doing, which is being negative.

Secondly, on the question of net exports, the Leader of the Opposition should also be familiar with the point just made by the Treasurer about the impact that we face in the future on the terms of trade. It is quite plain that we are under a significant challenge when it comes to changes in the terms of trade and that that will work its way through the economy over time. That is why we must continue to work on all the drivers of economic growth. That is why we have been out there investing in housing, social housing as well as the first home owners boost—one of the big drivers of total final demand. That is why we have been out there investing in consumption through the work that we have put into providing cash payments to carers and to pensioners and to others. That is why we have been out there unveiling a public investment strategy for the future to support infrastructure, because that, too, is one of the drivers of total final demand. That is why the government is acting on all these fronts, including the challenge we face with private fixed capital investment. That is why the government in the budget announced an increase from 30 per cent to 50 per cent in the special investment allowance for small business through to year’s end to encourage small business to get out there and to take on additional plant and equipment in the period ahead. All these are drivers of total final demand in the economy. We are proceeding across multiple fronts.

What I find absolutely extraordinary in the negative attack which continues to be launched by those opposite is that they cannot even agree among themselves. Once again we have the member for North Sydney and the Leader of the Opposition proceeding in different directions. Asked this morning this question about the impact of the government’s economic stimulus strategy, the Leader of the Opposition said, as follows, that there has been:

… no discernible effective positive economic impact—

of what we have done. Everyone else disagrees with the Leader of the Opposition. Everyone else who has been asked about this disagrees with the Leader of the Opposition. But that is what he says: no discernible positive economic impact. The same morning, the member for North Sydney was asked this question: ‘So, Joe, are you saying no job has been saved or protected by government policy in relation to the world economic downturn?’ His response: ‘Of course there have been jobs that have been created.’

So we have the member for North Sydney, the Treasury spokesman, admitting publicly on this day of the national accounts numbers that there has been a direct impact of the government’s measures on jobs and we have the Leader of the Opposition saying that there has been no positive impact whatsoever. I would suggest that those opposite at least got their script together. The member for North Sydney should also reflect on the fact that he did not get the strategy right on the day after the budget, when he said that their strategy was $25 billion less than ours on debt and deficit. He has not got the strategy right today, when he says that our strategy is creating jobs and the Leader of the Opposition says that it is not creating jobs. I draw their attention to comments today from Paul Brennan, the economist at Citigroup, who said this morning, ‘Front-loaded stimulus to households helps avert technical recession.’ Michael Blythe, the chief economist at CommBank, says:

The Q1 readings provide further evidence that the economic policy is gaining traction in Australian.

The economist at the ANZ Banking Group said:

Today’s solid result suggests that fiscal and monetary policy stimulus has overall been effective in softening Australian economic downturn.

Westpac’s economic update said:

The cash transfer from the Commonwealth government to households last December enabled households to boost spending as households largely spent the December cash payment with household savings were able to jump to 6.9 in Q4 fell back to 1.8 per cent.

You have all these third-party economists coming out today, not only welcoming the fact that we have had positive growth in this quarter but directly attributing it to what the government has done by way of supporting the economy through cash payments to households on the way through. Again I say to those opposite: why is it that, on a day when Australia has positive economic news, there are only two Australians—the Leader of the Opposition and his Treasury spokesman—who are unhappy? The reason they are unhappy is that it does not fit with their political script to talk the Australian economy down. Our strategy, National Building for Recovery, is to build the Australian economy up and we will continue to implement that strategy.