Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Minister, why is foreign investment important for job creation and economic development? Further, why is it vital that those seeking to undertake responsibility for managing the Australian economy and government finances maintain confidence in Australia’s economy?

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

I thank the member for Braddon for his question. Foreign investment is very important for Australia’s economy, particularly for creating jobs and generating wealth, and it has always been important for our economy. Foreign investment adds to the pool of investment in our economy, it adds to jobs, it adds to economic activity—it does not displace it—and Australia has always been a major capital importer in order to drive growth and job opportunities.

It is therefore vital that we maintain international confidence in Australia’s economy—absolutely crucial. I note with some pride in Australia—and I would like to think that the people on the other side would join me in this—that the OECD report on Australia’s regulation and economy released last week broadly indicates that Australia is a role model for other countries in this regard.

Unfortunately, not everybody who seeks to manage Australia’s economy and public finances understands the importance of foreign investment and the importance of maintaining confidence in Australia’s economy. This week the shadow finance minister, Senator Joyce, in fact raised doubts publicly about Australia’s ability to repay its foreign debt—essentially private debt contracted to invest in Australia. I am not quite sure that, when he made these comments, he actually knew what he was talking about, because in these comments he referred to a new economic concept, the concept of ‘gross net debt’, which is something that was unknown to the world of economics until the shadow finance minister raised it. For his information, and for any others who are confused about these concepts, ‘gross’ is what I owe and ‘net’ is what I owe minus what I am owed. That is a simple statement for Senator Joyce of the difference between these two concepts. I note that the shadow Treasurer, the member for North Sydney, very quickly distanced himself from this new economic principle that Senator Joyce had announced.

Senator Joyce has, of course, had a rather interesting week. When at the beginning of the week I noted in the House that he appeared to have gone a bit quiet and I joked that maybe he had been abducted by aliens, he felt the need to put out a press release demonstrating that he had not been abducted by aliens. It is a true story. I know it is pretty bizarre, but it is true. In fact, the press release was headed ‘Aliens’. He felt obliged to point out that the evidence to disprove this suggestion was that he had put out two press releases in the last 24-hours and, therefore, the alleged abduction had not occurred. I am prepared to take it at face value that he has not been abducted, but they may have taken over his body!

I note he also described a major government economic policy this week as ‘a farcical, poisonous piece of pathos’. That is a tongue twister to rival all tongue twisters. I am not quite sure yet what it means; nonetheless he is having a go. This drivel may at one level be entertaining, but for Australia it is very serious, because international markets are, as we all know, fragile. The global economy is still fragile. The attitudes that international investors have to Australia’s economy and to the state of our finances, both private and public, are critical to the price of capital that private investors have to pay. They are critical to the value of the Australian dollar. They are critical to generating jobs. They are critical to generating economic growth. Any suggestion that Australia will be unable to pay its foreign debt in the future is simply playing with fire. If such a statement had been made by a finance minister or treasurer, positions that Senator Joyce and the member for North Sydney aspire to hold, the ramifications would have been extremely serious for Australia.

In conclusion, I would like to make several things plain. As the Reserve Bank governor has stated clearly, the Australian government debt is low, it will remain low and the Australian government can comfortably repay that debt in the future. Second, the Australian government is committed to both getting the budget back into surplus as quickly as possible and repaying that debt. Thirdly, Australia’s foreign debt is entirely sustainable and is driving growth and jobs. I remind the opposition that if they want to enter into a debate about our foreign debt they need to recall the fact that the most recently published figure for Australian foreign debt as a percentage of GDP was actually slightly lower than the figure that they left us when they left office. If you want to treat Senator Joyce’s claim seriously then he is attacking the legacy that the Howard government left this government. The truth is that both government debt and foreign debt are entirely sustainable and Senator Joyce is off the planet.