Senate debates

Wednesday, 4 December 2019

Matters of Public Importance

Monetary Policy

4:38 pm

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | Hansard source

This is a great opportunity to talk about the role of our government versus the role of the central bank. The central bank is responsible for monetary policy. The Menzies government created a central bank in 1960 and, in the nineties, we made it independent. It is very clear to us on this side of the Senate who is in control of monetary policy, and it is the Reserve Bank of Australia. The Governor of the Reserve Bank recently said on our prospects that we are not in the same situation that has been faced in Europe and Japan. 'Our growth prospects are stronger, our banking system is much better, our demographic profile is better and we have not had a pattern of deflation, so we are in a much stronger position.'

But monetary policy isn't up to the central bank. We don't believe in bank bail-ins. We have had for some years a financial claims scheme, which was tinkered with as part of the Rudd government's panicked and, frankly, bizarre response to the global financial crisis. There's been a bit of revisionism of late, where people have talked about the Rudd government's response to the global financial crisis. People may recall that, initially, there was to be an unlimited bank guarantee, which resulted in a whole lot of market linked investments freezing overnight. Mr Rudd and Mr Swan had to later change that because of the enormous disruption it caused.

Of course, on the fiscal side, Labor panicked drastically in office and not only locked the budget into a fiscal straitjacket of deficits but also wasted enormous amounts of money, which we have spent six years trying to fix. We have spent six years trying to fix the budget. Our focus has been on two things: running our fiscal policy responsibly and trying to create conditions where the private economy can invest and create more jobs. It is not the government that creates more jobs; it is the private economy. Our role in this place as a government is to ensure that the private economy can invest and create new Australian jobs.

On the fiscal side, we have delivered two significant rounds of personal income tax cuts. We have addressed bracket creep. We have given people back more of their money. We've also cut company income tax. Company tax for small businesses will hit 25 per cent in 2025, down from 30 per cent. Perhaps the signature achievement of this government has been to fix the structural deficit. I give great credit to the Leader of the Government in the Senate, Senator Cormann, for grinding expenditure growth down to 1.6 per cent—the lowest level of expenditure growth in 30 years. Getting taxes down on the company side and the personal side whilst getting in control of expenditure has meant that our fiscal position as a nation is greatly enhanced.

The second thing we want to do is promote the growth of the market. We have, I believe, presided over the most successful period of Australian trade policy. When we were elected in 2013, just 26 per cent of our two-way trade was covered by free trade agreements. That is now 70 per cent. Labor, who inherited John Howard's negotiations with China and Japan, spent six long years failing to deliver these trade deals; the unions said they weren't allowed to do trade deals, because the unions are protectionists. Since 2013 we have done trade deals with China, Japan, Korea and Indonesia. We have recently concluded the Trans-Pacific Partnership and the RCEP trade deal. And our plans continue; we are still seeking a trade agreement with India and the European Union. We believe that bigger markets and greater opportunities for Australian exporters will ultimately create more Australian jobs.

On the industrial relations side, there have been significant achievements. The reason we seek to always improve the industrial relations system, the labour laws of this country, is we are interested in a more productive and more collaborative workplace—a workplace where businesses are happy to invest, knowing that it is a good environment to invest in. With capital being so mobile, there is no guarantee that businesses will invest in Australia and create more jobs. That's why, in the last parliament, we reinstated the Australian Building and Construction Commission, to try and rein in some of the lawlessness in the construction sector. That's why we created the Registered Organisations Commission and that's why we're committed to the ensuring integrity reforms, because we believe that wherever there is poor governance, whether in a bank or a union, it is the role of this parliament to legislate to protect people to ensure that the conditions are there so that people are happy to invest and create more jobs.

The consequence of the failure of this parliament to pass the ensuring integrity laws not only shows that the Labor Party are totally in the raptures of the unions; it also shows that the 30 per cent premium on construction in this country will continue to pay for the lawlessness, because the CFMMEU thinks that court fines are speeding tickets. Those opposite continue to defend unions who spend members' money on botox, weight-loss surgery and tattoos. Until we rein that in there will be another drag on the economy, where people will be, frankly, less inclined to invest.

On the small business side, we have unveiled significant policies. We now have the Business Growth Fund, which will invest between $5 million and $15 million of patient capital in SMEs that have a turnover of between $2 million and $100 million. On the procurement side, we have unleashed very practical reforms. Thirty-five per cent of all contracts with the federal government up to $20 million are now delivered by small businesses. The total value of these contracts with SMEs has gone up from $12 billion to $16 billion over the last three years. That's a 29 per cent increase and, again, I pay tribute to the work of our Senate leader in ensuring that the Department of Finance is always looking to create opportunities for small- and medium-sized Australian businesses.

Moreover, we've also reduced the payment times to small businesses. The PM gave a speech to the Business Council just a couple of weeks ago, where he basically talked about the fact that if you were a small business and you were into e-invoicing then you could be paid within five business days—five business days! We all know that cashflow is king if you're running a small business, and we're doing absolutely everything we can as a government to improve the lot of small business.

Of course, the outlook would have been very different and we would not have been talking about stable fiscal policy focused on cutting taxes and expenditure, and also trying to foster the conditions for more private investment, if the Labor Party had won office. We would be looking at $387 billion in new taxes—new taxes as far as the eye could see. There would have been more new taxes than you could poke a stick at, to be frank. The retiree tax would have clobbered people who had saved for their retirements and, of course, the housing tax would have increased rents in places like Sydney, which I represent as a senator for New South Wales, by up to 10 per cent.

The logic behind this policy was—if you can believe this for more than a minute—that they would increase taxes on houses and that would create new houses. That is just absolutely remarkable logic. Of course, we can just fancy the economic result of trying to legislate almost $400 billion of new taxes in this economic environment. We are facing global headwinds and there has been a trade war. There are significant difficulties, but imagine the response of the private economy to these tax policies if the Labor Party had been elected? So this is a good opportunity to debate this question of the role of the central bank.

The central bank is an independent central bank, which the Liberal Party created in 1960. In the 1990s, we made sure that it was independent. We don't make monetary policy: the RBA makes monetary policy. Their decisions are up to them. We're in control of our fiscal policy and we're in control of always trying to foster more and more private investment by cutting taxes, doing trade deals, cutting unnecessary regulation and always trying to strive for better governance in our economy. If a bank goes wrong, we clinch them and if a union goes wrong, we clinch them, because we're not controlled by vested interests. We're only interested in improving the lot of the forgotten people, or the quiet Australians.

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