Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Hansard source

I am noting, in effect, the tone and the language that the government used at the time—that this was something that was completely unprecedented, that they had no option but to go into deficit, that they had no option but to spend massively, to waste massively.

But I do contrast that with the Asian financial crisis. We are much more enmeshed in the Asian region than we are enmeshed with Europe or the United States. In the Asian financial crisis—our region, where we are—our major trading partners were in recession. Despite that and without massive fiscal stimulus, without massive waste, we still continued to grow. It is not automatic that recessions elsewhere lead to recession in your own country.

The global financial crisis, yes, was a real event, but Europe and the United States were the genesis and the epicentre of that. It was not automatic that we would go into recession. What saved us from recession was not the economic stimulus. It was the fact that we have a floating exchange rate; it was the fact that we had strong demand from China; it was the fact that we had the world's best prudential regulatory arrangements, courtesy of Mr Costello; it was the fact that the Reserve Bank cut official interest rates. It was the combination of those factors which led to Australia coming through the global financial crisis in good condition. It was not because of this massive fiscal stimulus. It is important to have a look at the contrast between how we fared during the Asian financial crisis and how he fared during the global financial crisis and what the Howard government did at the time of the Asian financial crisis and what the Rudd government did at the time of the global financial crisis.

But it seems that this government just cannot take a break; luck just never goes their way! Even if you accept the thesis of the other side in relation to the global financial crisis and the budgetary situation in the year or two after that, it in no way explains the fiscal situation since then. We have heard time and again those opposite say that the reason that the budget is in deficit year after year after year is because of revenue write-downs. There have been revenue write-downs—I acknowledge that—but, if you look at the budget papers year by year by year under this government, the overwhelming reason that the budget is in deficit year after year after year is not revenue write-downs; it is because of policy decisions. What 'policy decisions' means is spending decisions by the government. That is the overwhelming reason that the budget is in deficit year after year after year. It is because of spending decisions.

Honourable senators interjecting—