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

My question is to the Prime Minister. I refer the Prime Minister to his statement prior to the last election:

… working families have been under financial pressure, whether it’s through mortgage interest rates going up, whether it’s through the impact on rents, whether it’s food and grocery prices, the cost of child care …

As the Reserve Bank governor has indicated that mortgage rates are likely to rise by at least two per cent, house prices and rents are increasing, grocery prices may rise by as much as seven per cent and childcare costs will increase by up to $1,500 per child per year, I ask the Prime Minister: where are the fresh ideas the Prime Minister promised working families to keep the costs of living under control?

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

I thank the honourable member for his question and I would respond in the following terms: over the last period of the Howard government, the cost of living surged, growing by three per cent. The proposition being advanced is that there has been a relative increase relative to the period they were in government. Three per cent under the Howard government in its last year in contrast over the last year here, where inflation has eased with prices increasing by 1.5 per cent. Under this government, clothing and footwear inflation is down, transportation fuel prices are lower, recreation inflation is lower, financial insurance service prices are lower and there are a number of other categories where that applies. The premise upon which the honourable gentleman asked his question is not correct.

The second point I would make goes back to this great question of interest rates. Do those opposite remember how many interest rate rises in a row there were under the previous government? There were 10—10 interest rate rises in a row. Those opposite, through the Leader of the Opposition, come here with the great airbrushing of that fact from their collective memory, as if it never happened.

Extraordinary actions have been undertaken by the Reserve Bank to deal with the global economic crisis. These were the subject of extensive remarks by the Reserve Bank governor in his testimony before the House committee on Friday. The Reserve Bank governor’s remarks reflect the extraordinary circumstances we, and the rest of the world, found ourselves in with the global financial crisis as it unfolded last year. There were unprecedented actions by central banks across the world to bring down interest rates, unprecedented actions by governments across the world—of the classical right, the centre and the left—to inject fiscal stimulus into their economies in order to bring the global economy and national economies and employment back from the brink. These are the courses of action of responsible governments around the world—responsible governments seeking to deal with the realities with which they are confronted rather than engaging in what I can only describe as a very cheap and inexpensive debate here in terms of real policy credibility, advanced by those opposite to suggest what the honourable member has just suggested in terms of prices. Can I suggest that he, instead, familiarise himself with the facts and base his next question on a set of factual propositions rather than the fancy in which he has just engaged.

Julia Irwin (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Will the minister update the House on recent positions that have been expressed about Australia’s responsible borrowing practices?

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

I thank the member for Fowler for her question. As members would be aware, the global recession has knocked a giant hole in projected government revenues in the vicinity of $200 billion over a period of four years. As a result, the government has been obliged to undertake a period of borrowing in order to cover the ensuing deficits, because the alternative would be to crunch the economy into the ground, to devastate the Australian economy, to cause hundreds of thousands of people to lose their jobs and thousands of businesses to close.

In the face of that unprecedented challenge, it is good to see that monetary policy and fiscal policy have been working in tandem to stimulate economic activity, to sustain jobs and to sustain business in the Australian economy in this time of extraordinary challenge. As part of that process, the government is engaging in a modest and responsible borrowing program. It is significant that tonight this has been confirmed by very important players in this process. I would like to quote first the statement by the Governor of the Reserve Bank of Australia, Mr Stephens. In evidence to a parliamentary committee on Friday he stated:

… 15 per cent of GDP is a low number by virtually any other standard. So I do not feel that that debt burden, if that is what happens, is going to seriously impair the country’s economy.

I would like to add to that statements made by the Secretary to the Treasury at a business function earlier today, where he stated:

It does seem clear that the measures taken to date, both the monetary policy response and the fiscal policy response, have had quite an impact in supporting aggregate demand.

In passing, I add the statement of Standard and Poor’s when they were reconfirming Australia’s AAA rating. They stated:

… the deficits and associated borrowings do not alter the sound profile of the country’s public finances.

What you are seeing here is the government standing shoulder to shoulder with the Reserve Bank of Australia and with the Australian Treasury to fight the impact of the global recession and to sustain jobs and business activity under enormous pressure.

There are other positions being adopted on the issue of debt and on the issue of the deficits projected. Although the Reserve Bank’s assessment of the likely impact of the debt on the Australian economy is not shared by the opposition in their rhetoric—and we have all heard the scare stories about debt, deficit and future generations—when it comes to their specific position on issues it is quite a different story. When it comes to actually presenting any savings measures to ameliorate the impact of future deficits—when it comes to their own promises about what they might do in the future—then it is very different story. We note, for example, that the report that Frontier Economics produced with respect to climate change last week, which the opposition sort of endorsed and sort of did not, if it were applied, would lead to a very substantial blow-out in the budget deficit over time because of increased reliance on the purchase of international permits for carbon emissions in order to support the electricity industry—a very substantial blow-out beyond $1 billion a year by 2020. I note also that they are still engaged in blocking important government savings measures, important budget initiatives such as reform of the private health insurance rebate and reform of government assistance to dental programs, in the Senate while at the same time proclaiming the great virtues of lower deficits and of lower debt.

In addition to this I note that we now have some of the would-be leadership contenders in the Liberal Party out there parading their virtues in public. Most significant is the member for Warringah, who put out a book last week, which I applaud—good on him.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

He joined the book club!

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

He joined the book club. It is a bit belated, but I welcome him to the club! In that book he proposed a specific initiative. I could not find any savings initiatives. I could not find any tough, rigorous decisions that would help to get the budget back into surplus. But what he did propose was that the means test on family tax benefits should be abolished and that people who have children under five should get assistance from the government for that, irrespective of their income. I am a bit conflicted on this proposition because I have a daughter who is three years old and I would be one of the people benefiting from the member for Warringah’s proposal. Unfortunately, in my role as Minister for Finance and Deregulation I have a different position, which is that this would be a grotesque waste of taxpayers’ money. Hardworking low- and middle-income earners paying the taxes for high-income earners like me to get a free kick is not my idea of good public policy.

I am waiting for some more books from some of the other would-be contenders on the Liberal Party benches. I am waiting for them, but they are not yet here. Maybe there will be one from the member for North Sydney, but he would probably struggle to get out of bed to write one; maybe from the member for Curtin, but she would have to find somebody else to do it for her; and possibly from the member for Goldstein, but he would struggle to find a publisher who thought his works were interesting. So I am not quite sure who is going to step up to the plate to assist the member for Warringah, but I do know one thing: there is a day of reckoning coming for the opposition, and the interesting thing is that it is a trap that they themselves set with things called the Pre-Election Economic and Fiscal Outlook and the Charter of Budget Honesty, which they implemented in government and which are still in place. What that means is that when we get to an election campaign they have to stand up and say just how they are going to produce a lower deficit and a lower debt and make lots of nice election promises at the same time. We will be watching with great interest as that day of reckoning emerges. You can bet your life the rhetoric will dissolve into the sands faster than you can say boo, because that is what it is: just pure rhetoric.