Senate debates

Wednesday, 4 December 2019

Matters of Public Importance

Monetary Policy

4:48 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | Hansard source

I too would like to contribute to this very important debate today.

I will have to remind Senator Bragg, and perhaps Senator Cormann, that they were elected in 2013. I think the electorate is a little tired of, 'If Labor were in, it'd be worse!' Or, 'If Labor had done this seven years ago it would be worse!' I think a more practical and effective evaluation of the situation would be that we have survived because of China's stimulus and a disaster or two in Brazil, which have kept our exports at a reasonably high level. And we've also had the benefit of a relatively low dollar. These things have protected the economy to a certain extent, but it is very true that consumer confidence is very low. We don't see the headlines we normally see at this time of the year about the retail industry having a tremendous Christmas, with an anticipated spend of hundreds of millions of dollars.

We're not seeing that for the simple reason that people took the tax cut and saved it. They put it on their mortgage. Their income is not increasing. When they look at the world around them, there is no confidence to spend. Confidence will always come from a well-led government. They've had such a period of instability and change. Forget about the prime ministerial changes; the changes in the ministerial portfolios have impacted on their performance. Clearly, without the continuity of a minister for a number of years, departments don't get set in the right place.

I accept some of the things that Senator Bragg has said about paying small business efficiently and on time. It's a cracker of an idea, but I don't see any evidence it's actually happening, as yet. Acting Deputy President Fawcett, with your assistance on the Foreign Affairs, Defence and Trade References Committee, we looked at stimulating regional economies with defence spending. A very good report was produced and the government acted on it—very sensible work. But what we found when we were going around during the inquiry was that other people were better. The mining companies were sometimes better when involved in a spend in a regional economy. The Singaporean spend is also readily discernible in the regional economies. So it's not on to say that if that lot were in charge it would be worse, or that if they hadn't done what they did seven years ago we would be in a worse position. I think the 'protect your surplus at all costs' fetish will have unintended dire consequences.

The Reserve Bank is saying that unconventional means may be necessary to stimulate the economy. At least 13 economists—I have their names here—agree with the Reserve Bank governor. They are saying that there may not be the capacity to do the big-ticket items that Senator Canavan talked about in question time. The big-ticket items may be politically driven. They might be the wrong ones to be doing and they may need long lead-in times. At the moment, we should be doing ongoing augmentation of the infrastructure that is causing a lack of productivity. We should be facilitating a spend on infrastructure right across the country, in every state and territory, to make sure that we increase productivity, because productivity is the central issue in the economy—and the lack thereof has increased. We know that if we can increase productivity we can get wages, profits and tax receipts up. A lot of the decline in productivity may be coming out of it being poorly maintained infrastructure or lacking in improvements. There are people saying, very clearly, that we should be going into infrastructure right across this country and maintaining the roads better, improving the rail and improving the bridges. Take advantage of a quick spend on obvious problems that will increase productivity in places.

I appreciate that we're going to do the bypass for Port Wakefield and duplicate the road to Victor Harbor, and rightly so. As you know, Mr Acting Deputy President, that road is littered with black crosses. Every tree down there has black crosses on it, so the sooner we do that work, the better. But can we get that up and running quickly enough, or should we be looking at smaller projects that would be, in Senator Bragg's estimation, delivering to small business? When people do the work and get paid within five days or 28 days it would be spectacular. That is putting real money into the economy, employing people and turning things around.

At the moment, there are plenty of people saying we're in unusual circumstances. Most times, when there's a global recession we get a haircut. There's a global recession this time but with Chinese stimulus and the disaster in Brazil we got an uplift in iron ore and respective prices. We're in unusual times. Holding onto the surplus at all costs is not going to be a winner for this government. On this side of the chamber we, rightly, have been calling for tax cuts to be advanced earlier, because the last lot disappeared. They didn't appear to give the stimulus they were expected to give. I accept that the honourable Mathias Cormann is probably one of the exemplars in performance terms in the Senate. He does an exemplary political job, and reputation would have it that he does an excellent job as a finance minister, too. I'm sure having to get up and defend the indefensible at times must grind in his guts, so to speak. He would know, and the advice he's getting from all quarters is that we need to move into a bit of stimulus spending. The real trick with stimulus spending is to spend it in improving productivity. But he has political masters, as we all do, and his job is to defend the surplus at all costs.

We'll get the MYEFO in December, and there will be a great trumpet blast of: 'We've achieved! We've delivered on our promise!' But if your promise is inflicting damage on the economy when you should be moving to increasing productivity and spending in the economy, it's a pyrrhic victory. It won't come back and reward you. I know the coalition think they can go to any election and say: 'They're bad spenders. We're savers.' I don't really think that people who are hurting are going to care who spends and who saves. In fact, they may care; they will probably go for the person who's going to spend. Those people on Newstart—there are plenty of people arguing that an increase to Newstart would create a stimulus. It would, because I don't think they could actually go and save that. I don't think they would go and find somewhere to put that extra $25, $35 or $75; it would go directly into their spending. I totally reject Senator Ruston's assertion that it would go to drug dealers and pubs. Most of those people would spend it on food and clothing and shelter. So if that was to be increased, fine.

I have a deep concern about the economy in that we have an unpaid superannuation bill that is enormous. People are not being given their rightful superannuation in this country, and the ATO is so slow at acting upon it that there are funds missing out of the retirement income of people. And if you go directly to the theme of the day, the wage theft, how is it possible that a major company like Woolworths can catastrophically fail in delivering wages to people? If those workers had got their wages in full and on time, those wages would have also gone into the economy and been spent.

These matters continue to challenge everybody in the community and, as they look to the government for a response, they say: 'We're going to save money at all costs. We're going to have a surplus at all costs. At the cost of people on Newstart, at the cost of people having their wages stolen and at the cost of disregarding competent advice from the Reserve Bank governor and up to 13 independent economists.' These economists simply say this: you improve productivity by finding the right projects, augmenting our roads, stopping people dying and being injured on our roads, fixing our rail, fixing our bridges. Don't go grandstanding about these great plans that sound like you're going to win three seats in Western Sydney; put some simple, proper projects in every state and in every territory. Improve the productivity of the nation, contribute effectively to the economy, and that productivity increase will come back in increased tax returns, receipts to the government, and, hopefully, more employment and more disposable income for those people who participate in those projects. My plea to the government is to act now. Don't defend your surplus; act now and stimulate the economy.


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