Mark Bishop (WA, Australian Labor Party) Share this | Hansard source

If one had to find two words to define the quality of the economic administration of this country in the 12 months since the election of the Rudd Labor government, those words would be ‘flexible’ and ‘responsible’. What do I mean by flexible? It is a very simple proposition. When economic conditions change, when change is imposed on this country from outside, those who are responsible for determining the economic policy settings of this country respond by changing those settings as well. That is how you do it if you are being flexible—you change when the circumstances change.

What does it mean if you are being responsible? In changing those policy settings to respond to the global financial crisis which is being felt in this country, you properly have regard to jobs, inflation, interest rates, the terms of trade and the current account. They are the key drivers of economic policy that any responsible Treasurer and any responsible leader would have regard to when a situation comes upon this country out of the blue, not forecast by one reputable body or economist around the world, which requires a response by the government of the day. You have regard to jobs, inflation, interest rates, the terms of trade and the current account.

What do we know in terms of those five matters? We know that this country has full employment and growth is still around the corner and is of the order of a positive two per cent—unknown in the rest of the Western world. It does not matter whether it is the United States, the United Kingdom, Korea, France, Germany or major powerhouses like China and India; all of those countries have negative job growth and real job declines.

Secondly, in terms of inflation, what is occurring in this country is that inflation is coming down—on every key measure inflation is coming down. Thirdly, in terms of interest rates, there have been record reductions of interest rates—the cost of money to families, the cost of money to business—in this country in the last 12 months, and undoubtedly interest rates will continue to reduce over the next six or 12 months, which will be an incentive required, organised, requested and encouraged by this government to get the economy moving again, to get investment going into business and to get people maintained in employment.

Similarly, in terms of the current account, we do not accept that because, for the first time in over 14 years, for two successive months there has been a significant surplus on the current account, that is enough. All of the things that were outlined by Senator Conroy today in terms of work, a responsible approach to changed circumstances, getting the policy levers right, and the things outlined by Senator Carr in response to questions in terms of getting a new labour market regime by having innovation in science and technology responsive to the demands of a changing economy, will result in the current account remaining in surplus, which in turn will result in investment coming into this country and jobs being maintained.

As Senator Conroy said, they are not just the views of this government. What are the views of reputable outside observers? Senator Conroy, in response to one or two of the questions, made the point that two senior public economists, from Westpac and ANZ, had said that it is necessary when circumstances change that you revisit the need to have a huge surplus or to go into deficit. Senator Conroy was exactly right when he said that there is a current need for a temporary deficit to allow sufficient funds to go into the economy for the government to borrow to keep economic growth active, to keep economic growth going and to keep people and families employed in jobs. He was right to quote Mr Eslake and Mr Evans from those two banks— (Time expired)