Senate debates

Wednesday, 15 October 2008

Matters of Public Importance

Economy

4:23 pm

Photo of Michael RonaldsonMichael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Hansard source

I do not normally like to talk about colleagues who are not in the chamber, but Senator Hurley has left, and I must say that I am disappointed with her speech. She is someone who I actually have a fair bit of time for and I respect. But her speech today was utterly churlish. I can only assume that she was given her marching orders and her riding instructions in relation to how this matter was going to be dealt with, because in her 10 minutes there was not even the remotest acknowledgement of the fact that the Australian Labor Party was left with a strong economy. Let us argue at the margins about things like the signing of Kyoto; let us argue about things like Work Choices. But for goodness sake let us just have one scintilla of acknowledgement that the Labor Party inherited one of the strongest economies in the world. In this apparent era of bipartisanship, where demands have been made on us to accept at face value a package, which we have done, do you think the Australian Labor Party could just once utter the fact that they inherited a strong economy—that this was an economy that allowed the present government to do what we agree needs to be done? There was not one single word of acknowledgement. How is that for so-called bipartisanship?

The Leader of the Opposition wrote to the Prime Minister on Monday and again offered bipartisanship. The Leader of the Opposition wrote to the Prime Minister a couple of weeks ago and said, ‘How about we have a bipartisan approach to this issue?’ Well, that letter was not responded to, but as soon as bipartisanship was formerly requested of us in relation to this package it was given with no strings attached. Quite frankly, the Australian community will judge this bipartisanship by the speech that we heard from Senator Hurley today and the speeches we will hear—I have no doubt, with their riding instructions—from the next Labor Party speakers.

Let us look at some of those things. I am not going to talk about the debt we inherited and all of those other things. Senator Abetz has talked about that and everyone knows what the state of the economy was when we were elected in 1996. I am not going to talk about that again. What I am going to talk about are the approaches that were taken by the former government to make sure that we did deliver a strong economy to the incoming government. The one thing that immediately comes to mind is the reform of the taxation system. What did this new-found fiscal conservative, Prime Minister Rudd, say about the complete reform of the taxation system when it was introduced? ‘Injustice day’ was what he said when giving a second reading speech in the other place. Where does the GST appear when you look at the ‘root and branch reform’ of the taxation system—another review announced by this Prime Minister? I cannot find it. It is not there. All of a sudden, GST injustice day has disappeared off the face of the policy map.

I now turn to the events that occurred at the start of this year and the outcomes they led to in the economy and the interesting role played by the hollow men in the Prime Minister’s office. We have a couple of them in the chamber today—perhaps three—who may well fit into that hollow man category, but I am not going to make any references to that. What did they do in early January after they had finished their Christmas turkey and pudding? They got back and realised they had a very significant political problem: the utter incompetence of Treasurer Wayne Swan. They had to do something and do something quickly to address the situation of his incompetence. They were not worried, of course, about whether it was true or not—they were just worried about the perception of whether it was true. So what did the hollow men come up with? They sat around a table over at the PMO and they came up with the phrase ‘the inflation genie’. This was the contribution of the hollow men to the political and economic debate. They pushed it and they pushed it hard. We had Treasurer Swan and the Prime Minister out there talking about the inflation genie getting out of the bottle. In the run-up to the February meeting of the Reserve Bank of Australia they were egging them on to put interest rates up again. They all but challenged the Reserve Bank of Australia to put another interest rate rise in place because it suited their cheap political imperatives to ensure that ‘the inflation genie’ was well and truly in the community’s mind.

But what a difference six months made after the May budget. I want to go back to the West Australian of 3 February. Under the headline ‘Australia has serious inflation problems: Swan’, the Treasurer said:

...there is an enormous inflation challenge ... the former government let the inflation genie out of the bottle.

In the Treasurer’s budget speech on 13 May, he said the government would:

... do our bit to ease inflationary pressures in the economy.

Then all of a sudden, less than six months later, here we go: in the Australian, under the headline ‘Treasurer claims victory over rising prices’, it stated:

The inflation genie is back in the bottle, with Wayne Swan declaring the economic threat from rising prices has passed.

The absolute reality was that this was a political problem for the Labor Party; it was certainly not an economic problem. If you look at the commentary back then from the now Leader of the Opposition on this matter, he said to you that you were playing the wrong political game with your egging on of the Reserve Bank to raise interest rates. I am reading from the transcript of Leader of the Opposition’s, the member for Wentworth’s, press commentary:

Our better judgement was—and I think it’s been proved better by subsequent events—that the sub-prime crisis, the economic crisis was going to have a slowing effect, a significant effect on the global economy and that those rate rises earlier in the year—it would have been better if they hadn’t occurred. But they have now been reversed ...

Back in February and January the then shadow Treasurer was saying quite clearly that the inflation genie was a political slogan and not an economic reality. He said then that if you keep on pushing this, the result of it will be an extraordinary slowing of the economy. (Time expired)

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