Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Can the minister update the Senate on the challenges facing the Australian economy in light of recent global developments? Can the minister advise what steps the government is taking in response to events in global financial markets?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank Senator Arbib for his question. Every economy in the world is facing tough economic conditions, and at this stage yesterday the interjections and the laughter from those opposite ran around the chamber. Today they have discovered the true extent of conditions of the global credit crunch and the global oil price shock slowing the world economy at the moment—as we have already debated in this chamber. Global stock markets have fallen by around 20 per cent since the turmoil began. Consumer confidence, as we said, has fallen across the OECD to its lowest point in 30 years, and five of the world’s seven largest developed economies recorded zero or negative growth in the three months to June last year. As we have already noted in the chamber, overnight Lehman Brothers, the fourth largest investment bank, filed for bankruptcy in the US. It has also been announced that the Bank of America has agreed to what has been described as a shotgun marriage with Merrill Lynch, the world’s largest brokerage firm, and there are serious concerns about the financial health of AIG, the world’s largest insurer. I saw one commentator describe this as the eighteenth-largest company in the world.

So we should not be surprised that these global problems, together with 10 consecutive official rate rises under those opposite, have slowed the economy. From the beginning, we have been up-front and honest about that. But we need to put this into perspective: though we confront the most difficult global circumstances in a quarter of a century, the fundamentals of our domestic economy remain strong. We welcome the commentary of Mr Turnbull, the new Leader of the Opposition, on that this morning, because at least one of those opposite has finally stopped laughing about it and started to address the seriousness of it. While we are not immune from the global difficulties which are slowing the world economy, we are better placed than most countries to withstand them. We have built a strong $22 billion budget surplus, which acts as a buffer against global turmoil. The prices of our commodity exports are at generational highs, businesses are investing in our economy with confidence and we have a strong, well-regulated financial sector.

The recently released national accounts show that, despite the global financial crisis and the slowing global economy, the Australian economy continues to grow solidly. Real GDP rose by 0.3 per cent in the June quarter and 2.7 per cent over the year. The non-farm economy rose by 0.5 per cent in that quarter. These are solid numbers, especially considering the global challenges we are facing and what is happening to other developed economies. As I have said, five of the world’s seven largest developed economies recorded zero or negative growth in the June quarter. So, while the growth in the world’s largest developed economies has stalled or gone backwards, Australia has continued to grow. In fact, over the past year, our economy has grown more strongly than the US, the UK, Japan, Germany, France, Italy and Canada, and more strongly than the whole of the G7, G3 and the euro area economies. (Time expired)

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister outline the implications that recent global developments have for our approach to domestic economic policy?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

We are facing one of the most difficult times in global financial markets in more than 20 years—

Opposition Senators:

Opposition senators interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

We should not be taking it as flippantly as those opposite, who continue to interject. The new opposition leader, as I have said, has described it as facing probably the greatest economic crisis of our lifetime. I look forward to those opposite actually behaving in that way. Global financial markets are slowing and confidence rates are down, but what we are seeing from those opposite is a continued attempt to vandalise the budget surplus—just blow $6 billion out here, spend a few billion dollars there on pensions!

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Senator Minchin interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

What we are seeing from a failed finance minister known as ‘Dr Yes’, who is interjecting at the moment, is yet again that he has lost touch. (Time expired)