Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

That was quite interesting, going from a perfectly proper discussion about the rise in the price of Meals on Wheels—a basic necessity for older people in our society—to talking about the need to reduce tax on alcopops. I think there is a bit of a disconnect there. I am not quite sure where it was on the road to Damascus that the opposition had the heavens open and they discovered that working families are doing it tough. It is a bit ironic, after 11½ years of neglecting the cost of living pressures, that the opposition should now introduce this matter of urgency. The opposition had 11½ years to address issues that could have helped working families but they signally failed to do so. They did not even seem to realise that working families were doing it tough. In 2006 the member for Wentworth told families that the highest inflation in 16 years was a fairy story and that they were overdramatising interest rate rises, and only last year the former Prime Minister told Australian families that they had never been better off. Only last year the opposition was telling Australian families that they had never been better off! It was Kevin Rudd who was pointing out to the then government that families were doing it tough, that people were feeling cost of living pressures and that the government was ignoring them. The result of that was that people voted Kevin Rudd in as Prime Minister because they saw that he understood that families were finding life difficult with cost of living pressures. It illustrated quite clearly to the electorate that the government was completely out of touch with what was happening in the real world, and they voted the Labor Party into government.

The opposition have made it clear that they did not understand the impacts of higher inflation and interest rates on family budgets and on consumer confidence. They kept ignoring warnings about this. They kept ignoring the pleas of families. But this government understands that many families are doing it tough with interest rates, high global oil prices, high food prices and the effect of the global credit crunch on family budgets. This government does understand it very well and all the opposition can do is to castigate the Prime Minister for recognising this. The fact of the matter is that every economy in the world is facing tough economic conditions—and that is the cold, hard reality of the matter. Working families, working Australians, pensioners and carers are doing it tough, and the cost of living pressures are significant. We know this. We understand this. We are in touch with the community. It is wonderful that now they are in opposition the coalition parties have discovered this fact and want to move this motion. Slower world growth, global financial turbulence and higher interest rates are slowing our economy. One of the most significant pressures we are facing is the high inflation rate that we inherited from the previous government—an inflation rate at a 16-year high—that has pushed up interest rates. The former government, ignoring warnings from the RBA about inflation and spending, had pushed inflation to its highest level in 16 years and we have interest rate rises as a result of that. It is an incontrovertible truth that that is exactly the parting gift that was left to us by the former government, and we have to deal with it. It is a result of their reckless spending and their inaction on important issues like infrastructure.

Those opposite let inflation build. They ignored the warnings from the Reserve Bank of Australia and, despite 11 interest rate rises in a row, told working families that they had never been better off. It should not come as a surprise, then, that consumer confidence has been affected—after eight interest rate rises in the three years following the reckless spending of the previous government, the highest inflation in 16 years, sky-high global oil prices and the ongoing condition of the global financial market. It is important to look at the world situation and at where Australia stands in the current world conditions. The global credit crunch that everybody has been hearing about has sent shockwaves around the world and has affected not only the United States, where it seems to have originated, but also Europe and, of course, Australia and Asia. That global credit crunch, as well as a global oil price shock, has impacted on confidence right around the world—we are not alone. It has pushed up borrowing costs for households and businesses right around the world. Global share markets have fallen by an average of around 20 per cent in developed economies since this turmoil began. Stock markets around the world have also been affected by the global financial crisis and by a slowing world economy. It makes sense. Consumer confidence across the OECD economies has fallen to its lowest level in almost 30 years.

Over the weekend we learned that the UK economy did not grow at all in the three months to June. Japan, Germany, France, Italy and Canada have all recorded negative growth in their most recently reported quarters, and the impact on the US economy is well known. We are hearing time after time of the impacts of the mortgage situation on the housing market over there. So, overall it is likely that economies around the world have not grown, and we should not be surprised that these global difficulties, together with eight official rate rises in three years, are slowing our economy. But we do need to put this in perspective.

Although we confront the most difficult global circumstances in a quarter of a century, the fundamentals of our domestic economy remain strong. That is the important message that our Labor government has been sending—that confidence should be strong because our economy is strong. In response to these difficult world economic conditions, we have built a strong budget surplus. That acts as a buffer and gives us the flexibility we need in difficult global times. The government did warn that it would be a tough budget because we do need that buffer—because we have to withstand the global conditions and the legacy that was left to us by the former government of high inflation and high interest rates. It is very important that we tackle those twin problems.

Developing economies in our region, however, continue to grow and commodity prices are still at generational highs, so we are relatively well placed. We have a strong, well-regulated financial sector and do not face the same problems being experienced in the US housing and subprime mortgage markets. So, while we are not immune to global difficulties, we are far better placed than most countries to withstand the fallout. We are confident that with the right policy settings we will come through difficult global times in a stronger position than other countries. That is what the government set out to do with this budget, with its emphasis on long-term planning.

So, while these global challenges are beyond Australia’s immediate control, the government is focusing squarely on the things that it can influence. We have been responsibly addressing domestic inflation. We inherited it at 16-year highs, and it is now made worse by global factors. That is why we have budgeted for that strong surplus. It gives the Reserve Bank room to move. It will ensure our economy is buffered against the global turmoil. It is a responsible and balanced budget—yet in that tough budget we have made room for a $55 billion package for working families because we do understand that they have been doing it tough. That package includes $47 billion of tax cuts over the next four years. We are helping people to buffer their families against the effects of high inflation and high interest rates as well as looking to Australia’s economy. That is what the government is doing.

Other measures in the budget include the increase in the childcare tax rebate from 30 per cent to 50 per cent—a very important issue for working families with young children. That is what we mean by helping working families. One suspects that sometimes people opposite do not even understand what working families are doing and the kinds of pressures that they are under. But the Rudd government does. We also implemented the education tax refund in the budget. We have removed—or we are trying to remove—a slug on middle-income earners by increasing the Medicare levy surcharge threshold, something which the opposition is opposing. Unlike those opposite, the government is standing up for families, not ripping away their wages and working conditions like those opposite did.