Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source

Like the previous speaker, I rise to first of all express my sincere condolences to the victims of the tragic Victorian bushfires. I understand the deep pain and tragedy bushfires cause. My uncle lost his house in Yanigin Road in Greenhill in the Ash Wednesday fires in 1983. The first year that I lived in my house in Waterfall Gully we had a terrible fire in that area. My thoughts and prayers are with those who have lost loved ones, their homes and their livelihoods in this unfathomable tragedy.

I also rise tonight to speak about the global economic crisis that we face and the fact that this crisis is the most severe since the Great Depression. History tells us that the first signal of economic turmoil is a collapse in the stock market. In the United States the Dow Jones Industrial Average has tumbled from a high of 14,164 points on 9 October 2007 to close last night at 8,280 points, a fall of 41.5 per cent from its peak. In Japan, one of our largest trading partners, the Nikkei 225 index has fallen from 18,262 points on 9 July 2007 to just 7,969 points, a fall of 56.4 per cent. At home the All Ordinaries index has almost halved from a peak of 6,853 points on 1 November 2007 to just 3,445 points at its close yesterday. Falls on the stock market have only been matched by falls in consumer sentiment and business confidence. The Westpac-Melbourne Institute Survey of Consumer Sentiment has declined 32 per cent from the peak level and the NAB business confidence index has fallen 60 per cent from the peak level.

With such overwhelming statistics it is easy to become wrapped up in the sheer enormity of the numbers and forget about the pain that economic turmoil inflicts on working families, particularly those who were never all that well-off to begin with. For kids, when mum or dad loses their job, it is particularly tough. Their parents may try to hide their endless worry and maintain a facade of normality, but the stress and heartbreak of unemployment, the sudden switch from a life of comparative plenty to struggling to get by from day to day, will make a mark on any child’s life. For Labor, a strong economy is not simply about delivering a growing gross domestic product or triple-A credit ratings, though these things are important. For Labor, and social democrats throughout the world, building and protecting a strong and stable economy is about ensuring a dignified life for working people.

This is not the first time that Australia has faced global economic turmoil, and unfortunately it is unlikely to be the last. However, it is important to remember the lessons that can be learned from the darkest hours in Australia’s economic history, to avoid the mistakes made by policymakers and our predecessors in this place and to ensure the economic security of Australians in the weeks, months and years to come. Many of the most important lessons to learn are from the time of the Great Depression.

This evening I seek to draw the attention of the Senate to the legacy of Ted Theodore, known as ‘Red Ted’, the Treasurer for much of the Scullin Labor government. Like many great figures in Australia’s history, Theodore was born in Adelaide—like Senator Birmingham over there. He attended a public school before moving to Queensland. Dissatisfied with the conditions faced by workers in the Chillagoe mines, he became an active trade unionist and went on to become the state president of that great union in your home state, Mr President, the Australian Workers Union, in 1913. Theodore became active in Queensland politics and entered the state parliament, where he was Premier of Queensland between 1919 and 1925, when he attempted to enter federal parliament but lost. However, in 1927 he was successful in winning the inner-Sydney seat of Dalley.

After James Scullin defeated Stanley Bruce, the first PM to lose his seat in parliament, Scullin led Labor to win the October 1929 election. Theodore was elected Deputy Leader of the Federal Parliamentary Labor Party and Treasurer of Australia. I think, as even the most politically partisan member opposite will agree—that is you, Senator Ronaldson—

Simon Birmingham (SA, Liberal Party) Share this | Link to this | Hansard source

We’ll fight for that one!

Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source

Oh, sorry—there are two of you there! I did not see you there!

John Hogg (President) Share this | Link to this | Hansard source

Order!

Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source

Being elected Treasurer in 1929 meant that poor Mr Theodore was handed the most poisoned of poisoned chalices in Australia’s peacetime political history. The Great Depression was an immense challenge for the government and it was a recession the likes of which no-one throughout the world had ever seen. Theodore, a student of John Maynard Keynes—he had a copy of Keynes flown to Australia—and then-recent theories of demand economics, proposed a then-radical scheme encapsulated principally in the Fiduciary Notes Bill 1931. To perhaps oversimplify the operation of the proposed scheme, it proposed that the Commonwealth government reinvest £18 million in the capital markets through a scheme of fiduciary notes to provide ready capital to farmers and small- to medium- sized business operators. It would have had the effect of the government going into deficit in order to pump-prime the economy.

While Keynesian theories on economics are now taught in first year macroeconomics classes, Theodore’s plan was claimed to be radical at the time. Conservatives believed that it would wreak further havoc, and establishment figures like Bank of England director Sir Otto Niemeyer proposed that Australia slash and burn government spending, cutting support to pensioners and the unemployed, plus abolish the industrial arbitration system. Joe Lyons, who quit Labor in 1932 to lead the United Australia Party, described the Fiduciary Notes Bill as one of Theodore’s ‘crazy schemes for the creation of unreal money’. Other people described it as ‘funny money’. Theodore also copped it from his own side of politics, with Jack Lang labelling a him a crony for the capitalists and calling for absurdly oversimplified and short-sighted plans like repudiating Australia’s foreign debt. Eventually, the bill failed in the Senate and the government was forced into following supposedly orthodox economic policies embodied in the Premiers’ Plan agreed at the premiers conference in 1931, including the slashing of Commonwealth expenditure by 20 per cent. There is now almost no doubt that the Premiers’ Plan did nothing to assist the economy and was a likely factor lengthening the depression.

There are many differences between the challenges that we now face and the Great Depression. We live in a much more interconnected world and the crisis of confidence that we currently face is nowhere near as deep yet. Of course, we will not once again see queues along the Hungry Mile in Sydney and there is no chance that Facebook-addicted young people living in Adelaide’s suburbs will be forced to travel from town to town as jackeroos. However, there is one grave factor that the current crisis shares with the turbulence that our nation faced in the early 1930s. The shared factor is that the conservative opposition has stubbornly failed to grasp the magnitude of the problem that our nation faces and refuses to make the sensible decisions that our nation needs to avoid a long-lasting recession.

While I am sure that no senator or member of the other place would will a recession on the Australian people, I fear that many of those opposite are so ideologically attached to radical neoliberalism that they are unable to accept that Australia needs to take immediate and decisive action. I read a piece in yesterday’s Adelaide Advertiser by Mr Alexander Downer, the former foreign minister, describing the government’s economic stimulus package as an ‘extravagance’ and a ‘spending spree’. I have no doubt that this view reaches all the way to the top of the opposition, to the Leader of the Opposition’s office, which is now headed by Mr Downer’s former chief of staff Mr Chris Kenny. That makes it no surprise that the member for Wentworth and the member for Curtin stubbornly fight the old war for the ideas of Milton Friedman and all those other radical right-wing economists who searched for a better justification for lower taxes and less social investment. According to the member for Wentworth, Australians need tax cuts for wealthy Australians and little for everyone else, a tokenistic ‘trickle down’ package which soaks the rich with cash without even making working families, pensioners and students damp. (Time expired)