Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Evans. Will the minister update the Senate on developments in global financial markets and the importance of responsible economic management at this time?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank Senator Hurley for the question, which I think is a very important one at this time. I think everyone would be aware that this week has been a difficult one for global financial markets. Share markets globally have fallen significantly in the past few days and Senator Sherry was explaining the impact that might have on superannuation in the previous question. We have seen the fourth largest investment bank in the US go bankrupt and the third largest bought out by the Bank of America. The world’s largest insurer has required a US$85 billion lifeline from the US Federal Reserve, and the UK’s fifth and sixth largest banks, HBOS and Lloyds, were in merger talks overnight.

We are facing some of the most difficult times in global financial markets in more than 25 years. We will continue to see volatility in those financial markets over the period ahead. Our regulators are closely monitoring events in the United States and elsewhere and remain in close contact with their international counterparts. We are not immune from these global difficulties but I think we are better placed than most countries to weather the storm. The fundamentals of our economy remain strong. As well as having a well-regulated financial system we have record terms of trade, and businesses are confidently investing in the future. Because many of the global challenges are beyond Australia’s control, we are focusing squarely on those things that we can influence, and the government has moved quickly to strengthen our financial system. We delivered a strong budget surplus to provide a buffer against global turmoil and to invest in future growth. We built the strong surplus to make sure we have the flexibility to meet today’s challenges. It is, if you like, our insurance. We made room in the budget to deliver support for families, including $47 billion in tax cuts and additional support for carers and pensioners, and we have laid the foundation for $40 billion worth of responsible investment in nation building and growth for the future.

We are confident that with the right policy settings we will come through these times in a stronger position than many other economies. We think that is the sort of responsible government Australia needs. It is the sort of responsible government the Rudd Labor government is delivering, and we would hope that we got support from the opposition for such an approach. In government, the previous government—the now opposition—supported having strong budget surpluses. They saw the need when they were in government. But since they have gone into opposition they suddenly want to spend, spend, spend and threaten the budget and the surplus. They want to undermine our government’s attempt to keep downward pressure on interest rates, to keep downward pressure on inflation and to provide the stability and confidence that is necessary for families and pensioners so that they are protected from high inflation rates—the high inflation rates we inherited from the former government.

It is important that we have the sort of stability and the sort of leadership that that budget surplus provides. We are anxious to make sure that the budget is passed by this Senate so that the Australian public can be reassured that the benefits of that budget surplus will be shown in the economy. I urge the opposition to pass our budget to allow us to provide the best possible protection for Australian families from the global economic crisis.