David Bushby (Tasmania, Liberal Party) Share this | Hansard source

Freedom is what that was all about. In a policy speech at the 1949 election, at which the party was first elected to government, Robert Menzies said:

You cannot have a controlled economy without controlling human beings, who are still the greatest of all economic factors. You cannot socialise the means of production without socialising men and women.

As the founding father of the Liberal Party, Menzies very clearly articulated the link between economic freedom and political freedom that goes to the very core of the political philosophy of classical liberalism. Indeed the advent of the Liberal Party signalled a re-emergence of classical liberalism in Australia, following the long period of lagging economic growth and high levels of taxation and debt across the globe which followed the failure of Keynesian expansionism to adequately address the latter years of the post-Depression recovery. I must say that I feel we are heading towards very similar circumstances in the way that this government is going.

By the late 1970s and early 1980s this revival was in full swing, with the likes of Margaret Thatcher and Ronald Reagan at the helm. In his work Capitalism and Freedom, Milton Friedman very succinctly summed up what it is about the free market that has brought about the unprecedented prosperity and freedom of the past few decades:

Economic arrangements play a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.

The spread of capitalism on a global scale has brought about spectacular improvements in the quality of life of billions of people the world over. In 1820, 85 per cent of the world’s population lived on today’s equivalent of less than a dollar a day. By 1950 this had fallen from 85 per cent to 50 per cent, and today it has diminished to less than 20 per cent.

It is a simple fact that global poverty has plummeted over the last 50 years, more so than in the 500 years preceding. The spread of capitalism has also brought with it increased life expectancy and a greater scope for the pursuit of leisure and freedom from the burden of back-breaking physical labour, which, ironically, has allowed for the emergence of an educated class who may make a career out of criticising capitalism if they wish.

Intellectuals’ distaste for capitalism was best described by Friedrich Hayek in The Fatal Conceit. It was his belief that capitalism offends intellectual self-importance in its distrust of evolved systems which seem to function effectively without intelligent direction. Simply put, capitalism did not require any planning from anyone and it does not need anyone to run it, rendering those poor socialist intellectuals redundant.

Contemporarily, this criticism has engendered a broad range of adherents, with many who claim the moral high ground on such things as ‘greed’ and ‘materialism’. Of more economic relevance is the current blame game being played around the causes of the global financial crisis. As has often been said, capitalism was doing just fine until politicians and bureaucrats decided that they could do a better job. The now-infamous taxpayer funded Fannie Mae and Freddie Mac were created by the United States government to do what the free market would never have done: provide subprime mortgage finance, or finance to those who would not otherwise have qualified for a loan.

Fannie Mae’s status as a government business enterprise gave a false impression to the market that it was somehow guaranteed, leading to risk-taking behaviour on a massive scale. To cut a long story short, when the bubble finally burst the result was global financial chaos—what our Prime Minister in his glib bureaucratic fashion likes to call the ‘GFC’. Yes, there was risk-taking; yes, there was excessive greed; and, yes, there was regulatory failure, but in no way can it be said that capitalism is to blame. It is the socialist adherence to the notion that somehow politicians and bureaucrats can improve upon the interactions of individuals in a free market that is largely responsible for this debacle.

And what of our fortunes in all of this? The International Monetary Fund says that Australia is in a comparatively strong financial position. But this strong position we find ourselves in did not just happen. No, our current good fortune relative to comparable nations comes as a direct result of 11½ years of responsible and prudent economic management under John Howard and Peter Costello. Under a coalition government we saw a dramatic increase in the number of Australians in work; consistently lower interest rates; an increase in the average wage of 20 per cent greater than the increase in the cost of living; and, very importantly, the repayment of the $96 billion debt so very generously endowed upon us by the last Labor government, resulting in a massive annual interest bill saving of $8.8 billion a year and every year. The situation that Australia would be in under the current economic circumstances had this debt remained does not bear thinking about.

Worryingly, given this government’s clear willingness to head us back into deep debt, we are staring down massive deficits for many years to come. What benefits will my children and their children receive for the taxes they will be paying for many years to cover this massive exercise in political pork-barrelling that we see today? I contend there will be none. There is very little, if anything, in this new package—or in the last one late last year, for that matter—that builds future productive capacity. It is all one-off spending that, sure, will temporarily boost economic activity and will show up in the figures but will not jump-start any ongoing or lasting future economic activity.

There is a generally accepted rule that a government should only go into deficit to fund activities that will benefit those who will have to repay that deficit—for example, to fund major infrastructure that will have a life of 20, 30, 40 or 50 years and will deliver ongoing benefits to taxpayers throughout that period. But to place the burden of interest and principal payments on our children and grandchildren to fund one-off cash splashes that will only increase economic activity in the periods in which they are spent is both irresponsible and inequitable. To make things worse, the bills tabled in the House today include one seeking authorisation to increase borrowings by an amazing $125 billion—from their current authorisation of up to $75 billion to an astounding $200 billion.