Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister update the House on the government’s response to the global recession and how this response has been received?

Opposition Member:

Opposition member interjecting—

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

I take the interjection—I think from the Leader of the National Party—about a presentation last night to the Australian Industry Group about our recovery strategy for the Australian economy: what we have invested, the results which have been produced so far from that and the journey we still have to undertake as a nation, given the impact of the global economic recession.

Those opposite, I think I could say, appear to be a little agitated today in the House. David Speers’s Twitter this morning—I am a bit of a fan of Twitter—says:

Another messy Coalition partyroom. Much debate over tactics on Renewable Energy Target. Nats angry at Hunt flagging Coalition support.

It is always good to see the coalition hard at work at tearing themselves apart. Perhaps that explains the level of agitation we see on behalf of those opposite. Where is Greg Hunt? Has he disappeared? I hope Barnaby has not taken him outside!

Opposition Members:

Opposition members interjecting—

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

Order! The House will come to order!

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

I return to the question that I have just been asked concerning the government’s response to the global economic crisis. I draw the House’s attention to today’s small business survey, which shows some positive news in response to actions taken by the government but also to critical actions taken by small businesses themselves in what has been a very trying time for them. According to the latest ACCI Small Business Survey, small business conditions improved over the June quarter.

Honourable Members:

Honourable members interjecting—

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

Lazarus has returned from the embrace of the National Party! He is very pleased about receiving attention, because he gets no opportunity to ask a question in this place, such is the depth of unity on their side of the chamber on all matters of policy.

When it comes to the ACCI Small Business Survey, what we have, of course, is a reflection of the fact that small business conditions improved over the June quarter, rising three points to 39.8. This is the highest level since November 2008. Further, looking ahead, small business expectations for conditions over the next 12 months have increased, with the index rising from 30.2 per cent to 36.9 per cent. Furthermore, it is quite plain from the survey that there are still many challenges lying ahead, and we should be frank and upfront about the fact that there is still a rocky road to go for small business. That is why the government continues to be in close consultation with that sector through the small business minister.

Questions have been asked in this place about the impact of the government’s nation building for recovery plan. I draw the attention of those opposite and the House in general to the impact of our cash payments, at the end of last year and early this year, through to retail; 1.5 million Australians work in retail and, critically, the overwhelming concentration of Australian small business is in retail, and that, of course, has been of direct consequence for them. In fact, I seem to recall there may have been some reflections at the doors on that this morning from members opposite, but I am sure that will be taken up later in question time today.

Tradies have also benefited from the investment we have made in the nation building for recovery plan in schools, in public housing and, of course, in our energy insulation program as well. On top of that, most critically, I draw the House’s attention to the $3.7 billion small business and general business tax break. This temporary investment allowance has enabled many small businesses to reach forward and to invest in those items of capital equipment they may need to expand their business. This, I believe, has been an important measure which has received a positive response from the sector.

Putting all these things together, what we see is that Australia’s overall economic performance is better than that of most of the other economies around the world, notwithstanding the impact of the global economic recession. Putting these measures together, as of the end of the first quarter we were generating the fastest economic growth in the OECD. Of the major advanced economies, we had the second lowest unemployment rate, the lowest net debt and the lowest deficit of the major advanced economies and were the only one among them not to have gone, so far, into a technical recession.

Why this is important for the House is that it goes to the question of the policy divide which exists within this place on the future direction of economic policy. It also goes to the absolutely wrong and flawed judgement we have had from the Leader of the Opposition on so many questions of policy, including economic policy, in the period that he has occupied that position. It was the Leader of the Opposition who told the House and the country at large that the bank guarantees that we provided as a government last October represented a policy failure. He said that the policy that was announced on 12 October was a failure.

I draw the Leader of the Opposition’s attention to what would have happened were it not for the introduction of those guarantees for deposits and the guarantees for interbank lending, wholesale funding needs for our banking system. And he still maintains this is a policy failure, based on his interjections. On 22 October he said that the policy that was announced on 12 October, which was the policy containing the double guarantee on both elements of our banking system, was a failure. I submit to the House that this represents catastrophically flawed judgement. What would the country have done had he been in the cabinet room on that occasion, responsible for these decisions?

What we have seen is wrong judgement on this. Imagine what would have happened to our deposit holders across the country if they had had no confidence in the banking system on that following Monday, the Monday following what was Black Friday on the stock markets of the world. Secondly, can I also say to those opposite: what would have happened, given that interbank lending had ground to virtually zero in the last months of last year, had we not provided that guarantee for interbank lending? It would have tunnelled straight back into the arteries of capital—that is, the arteries of business—namely, the small business sector as well as the business community more generally.

But that is just one illustration of wrong judgment. A second illustration of wrong judgment goes to the complete and systematic attack which those opposite have launched upon the government’s economic stimulus strategy. Time and time again they have stood up, in this place and outside this place, saying that it would have no effect whatsoever and was a complete waste.

In fact, we had the Leader of the Opposition saying in March this year that the ‘cash splash’, to use his term, had ‘had no discernible impact on our economy’. ‘It hasn’t created a job. It hasn’t stopped us from going backwards in terms of economic growth.’ This is just, again, wrong judgment. Having been confronted—as we were as a government—with the great challenges facing our economy in October last year, and the decisions which needed to be taken in order to put a floor under economic growth, this government took the right decision, based on Treasury advice, to provide support to the economy, to step into the breach which was left by a private sector in retreat. Those opposite argue that we should never have done so—that we should have simply sat on our hands and allowed the economy to crash through the floor, as we saw occur in so many other economies around the world.

The contrast between the government and the opposition on these two most critical areas of policy in response to the global economic recession, (1) the provision of guarantees to the banking system and (2) the injection of our national economic stimulus strategy, both fundamentally opposed by those opposite, both fundamentally supported by the government and implemented by the government, underscores the flawed judgment which was reflected in so much of the policy contribution by the Leader of the Opposition—flawed judgment on this and on so many matters.

The government intends to get on with the business of long-term reform for the Australian economy and, as the Treasurer was saying in his response to the question just posed before, that will include the long-term reform of our taxation system as well, and that is the right thing to do; the long-term reform of our health and hospital system; the long-term reform of our education system; the long-term reform of our industrial relations system—as we have had entrenched through the legislation put into the parliament by the Deputy Prime Minister.

In the prosecution of the tax debate, we will have rolling discussions with the Treasury about what should be done and should not be done. That is the right way to proceed. It is called a rational policy debate. That is what we on this side of the House are engaged in. We do not apologise for one element of it. And can I say to those opposite, returning to David Speers’ observation in Twitter: why don’t you try and get your own act together on just one element of policy and join with us in the constructive business of the nation, and not simply pull apart yourselves and, as a consequence, the country.