Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

He says, ‘Yes, absolutely.’ The Liberal Party blames someone else when the news is bad and takes the credit when the news is good. What we are seeing is the Liberal Party in blame game. When interest rates go up it is someone else’s fault—bananas or the states. ‘It’s the states,’ is the most common excuse, but it could be bananas, world oil prices or anything—anything but the Liberal government taking responsibility for any economic bad news. The Liberal government just will not take responsibility. The government is out of touch and arrogant. We see a continual arrogance from this out-of-touch government, particularly since it has had a majority in the Senate.

As I said, inflation has been rising. As at September 2006, it was 3.9 per cent. The headline rate has increased significantly, as has the core rate, in the last 12 to 18 months—contributing to some of the difficulties that Australian families are having to grapple with at the present time. If you go to the supermarket and do the shopping, you see that, as a component of the inflation rate, food prices in the year to September rose by almost 10 per cent—and it was not bananas, I have to say.

So increasing inflation—which the government has lost control of—has obviously fed into higher prices. Food is an obvious and unfortunate example that has a significant impact on households in Australia, particularly low- to middle-income households. At the same time, inflation is feeding into higher interest rates. Of course, for many Australian families, that has a severe impact because they are having to make higher repayments—after the latest rise, approximately another $50 a month. So a real double whammy is being suffered.

I remind people who are listening to this debate that this is a government that still has on its website ‘Keeping inflation under control’ and ‘Keeping interest rates at record lows’. Again, I see the Liberal and National party senators nodding. How can you claim that you have kept interest rates at record lows when there have been eight increases in the last couple of years—and four increases since the election? Clearly, interest rates are not at record lows. The Liberal Party continues to mislead—and I have to say that I am using relatively gentle language; I would not use the word ‘lie’—the Australian community about its recent very poor record in keeping interest rates low and keeping inflation under control. I would not be surprised if its website is adjusted. It should be pulled down or readjusted to read ‘Allowing inflation to increase’ and ‘Eight interest rate increases in a row since the election’. That is the sort of adjustment that should be made to the website. Indeed, at the bottom there should be an apology from the Prime Minister, Mr Howard, for having misled the Australian people.

But inflation feeding into higher interest rates and impacting on families and their ability to pay the bills are just some of the more important poor recent economic indicators. I want to turn to a couple of other areas. One is productivity performance and productivity growth, which has declined significantly over the last two years as well. Productivity growth is important because it is fundamental to maintaining growth in real wages and fundamental to growing employment. If productivity growth starts to decline, and it has declined significantly in the last two years, that has a significant economic impact. The government, because of its arrogance and because it is out of touch, has failed to deal with a number of important issues in respect to labour market demand, other labour market issues and productivity generally—for example, there should be a much greater focus on education and training issues. Because of its neglect in the area of productivity, we have seen a significant increase in the number of foreign workers coming into this country to try and redress the economic issues around labour market demand. It should be Australians first. Because of this government’s neglect, there is an increasing reliance on foreign workers. That should not be the preferred approach of any government. The government has taken its eye off the ball in regard to elements of productivity.

There are some other worrying signs as well. Look at debt levels, both national debt and personal debt. At the moment, Australia’s foreign debt is approximately $500 billion. We heard a lot about Australia’s debt levels when the current government was in opposition, but over the last 10 years under this Liberal government foreign debt levels have increased some 2½ times, to $500 billion. That equates to a foreign debt level of approximately $25,000 for every man, woman and child in this country. If you took the debt truck that the Liberal Party has parked for the last 10 years in the garage and brought it out, you would have a B-double. The size of Australia’s debt has grown. This is very important, because this impacts on interest rates as well.

If you look at Australia’s interest rates by world comparison, if you have growing foreign debt and problems with your current account exports and imports—those economic difficulties—then there will be upward pressure on interest rates. Because the government has paid insufficient attention to growing foreign debt and to ensuring that our exports are stronger—for example, in the areas of services and manufacturing, where they have been slipping; mining is doing well, but manufacturing and services are declining—that means that you have to attract capital into the country. That is one of the reasons why interest rates are higher than they otherwise would be. As of today, Australia has the second-highest interest rates of all advanced Western European style economies. Only New Zealand has a higher interest rate. Australia’s interest rate has been very high by international comparisons for some years. That is because of that neglect of the issues of foreign debt and our current account exports and imports. As we have seen recently, and which is again reflected in today’s decision, there has also been neglect of inflation. (Time expired)