Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation, Senator Wong. Can the minister advise the Senate on the OECD report into Australia’s economic performance? How does Australia compare internationally on key indicators such as economic growth?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am very pleased to update the Senate on the OECD economic survey released yesterday, which overwhelmingly supports this government’s economic strategy. It is a report which provides yet another strong endorsement of this government’s approach to economic management. It attests to the strength of the Australian economy relative to other advanced economies in particular. It endorses the government’s disciplined fiscal strategy and strict fiscal rules, which will see the budget return to surplus more rapidly than any of the other major advanced economies, and supports the government’s policies to deal with the challenges of managing the second commodity boom, including taxation and superannuation reform and critical investments in skills and infrastructure.

This survey is timely. It reminds all of us that the Australian economy is one of the strongest and most resilient in the world. The OECD survey also backs the government’s stimulus package. It says:

The stimulus package was among the most effective in the OECD …

I remind senators that this was the stimulus package that the opposition did not believe we needed. Let us remember also that the OECD indicates that this helped Australia to avoid recession during what we know was the worst economic crisis in over half a century. We also know that that stimulus contributed to Australia’s currently low unemployment rate. Since this government came to office, more than 650,000 jobs have been created. I notice they are very silent on the other side. More than 650,000 jobs have been created. (Time expired)

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I ask a supplementary question. In light of the OECD report, can the minister inform the Senate of the midyear budget update released last week?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As the OECD remarked:

The stimulus was wisely accompanied by a well-designed fiscal exit strategy.

Opposition Senators:

Opposition senators interjecting—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

A well-designed fiscal exit strategy. They do not like to hear it, Mr President. But when we handed down the Mid-Year Economic and Fiscal Outlook—the budget update—it demonstrated that the government is on track to deliver this disciplined fiscal strategy: a budget on track to return to surplus in 2012-13, well ahead of any other major advanced economy, despite the high dollar hitting government revenue; strong growth; falling unemployment; and the fastest, largest turnaround in government finances in more than 40 years. We on this side of the chamber understand the importance of delivering on this fiscal strategy, just as we understood the importance of backing jobs, standing for jobs. That is the difference in this chamber between that side and this side.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a second supplementary question. Can the minister outline to the Senate what the OECD’s assessment and the midyear budget update tell us about the Australian government’s fiscal strategy; and are there any alternative approaches to this strategy?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

This government will continue to get on with the job: tackle the challenges that were identified in the OECD survey; continue to put forward policies that build a stronger, broader, more competitive economy; and continue to invest in skills, in infrastructure, in boosting participation and in delivering our fiscal strategy to ensure we return to surplus through complying with some very strict fiscal rules.

The reality is that those opposite like to talk about fiscal responsibility, but we know who their economic team is. Their economic team is a shadow Treasurer who did not bother to check the costings and a shadow finance minister who got his costings wrong—who delivered a $10.6 billion black hole. We on this side stand for jobs. We supported a stimulus. You opposed it. You made the wrong call. We on this side understand the importance of fiscal discipline. You have got a black hole. (Time expired)

Marise Payne (NSW, Liberal Party, Shadow Minister for COAG) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation, Senator Wong. Given that the budget bottom line has deteriorated over the forward estimates, with next year’s deficit to be $1.9 billion higher, putting further pressure on inflation and the cost of living for homeowners and renters, when will the government concede that it has failed to deliver on its promise to relieve these cost-of-living pressures for genuine Australian families?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I have not met many non-genuine Australian families, Senator! But I am happy to talk about what we have delivered for Australian families. We have delivered three rounds of tax cuts. We have reduced the tax burden on families.

Opposition Senators:

Opposition senators interjecting—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

We have increased the childcare rebate. We have introduced the education tax refund—

Opposition Senators:

Opposition senators interjecting—

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

Senator Wong, please resume your seat. When there is silence, we will proceed. Senator Wong.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I was saying we have increased the childcare rebate, we have introduced the education tax refund, we have increased the pension—all of this delivered within our tough fiscal rules. We are increasing family tax benefit part A and extending the education tax refund as part of our election policies. We also understand the importance of delivering a sound fiscal strategy.

The senator refers to the Mid-Year Economic and Fiscal Outlook, which I also referred to in answer to the first question from Senator Cameron, and I would make this point: the high dollar has hit government revenue—some $10 billion wiped off government revenue over the forward estimates. Notwithstanding that, this government remains on track to deliver a surplus. So the senator can criticise all she likes but the reality is we made the decision, both during the election campaign and in the context of the MYEFO budget update, to ensure that we offset new spending to deliver savings to hold the bottom line in the face of a substantial write-down in government revenue as a consequence of a high dollar.

I would just remind the senator that, for example, Australia’s net debt as a percentage of GDP in 2010 is about 5.7 per cent. The average for the G7 is 74.4 per cent, and the peak net debt for major advanced economies is projected to be about 90 per cent of GDP in 2015. Ours will be 6.4 per cent.

Marise Payne (NSW, Liberal Party, Shadow Minister for COAG) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Given that interest rates rose this month and are expected to rise further in coming months, when will the government actually cut back on its stimulus spending in order to ease the pressure on inflation and help provide some relief for homeowners and renters?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

If the senator looked at the figures, she would know that this government is on track to deliver the largest, fastest return to surplus since at least the 1960s. So when she says ‘cutting back on spending’ I would say to her that we are. We are, and we know we are already seeing stimulus subtracting from growth now, and it will continue to subtract from growth as it is wound back. We will deliver about a 4½ per cent—about 4.4 per cent of GDP—fiscal consolidation over three years. So the government is acutely aware of the importance of complying with its fiscal strategy. That is why we have handed down a MYEFO which ensures that we remain on track to deliver the surplus. That is why we have far stricter fiscal rules than were applied by Mr Costello in his last five budgets. (Time expired)

Marise Payne (NSW, Liberal Party, Shadow Minister for COAG) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Why is the government continuing to stimulate the economy and put pressure on inflation and mortgage interest rates, when the Reserve Bank is tackling inflation by increasing rates?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Senator Payne is one of the people I have more regard for on that side, but she clearly wrote that supplementary before she listened to the first answer. The reality is—

Opposition Senators:

Opposition senators interjecting—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

That is true, Senator Payne. I regret to say it. The fact is—

Honourable Senators:

Honourable senators interjecting—

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

Senator Wong, just resume your seat. The time to debate this is at the end of question time. Senator Wong.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The reality is that we are winding back the stimulus and we are delivering the largest, fastest return to surplus since the 1960s. We have already seen Treasury say quite clearly that the government is subtracting growth from GDP in 2010. This is the problem with the opposition’s questions: they ignore these facts. They ignore the fact that stimulus is being wound back, that we are already subtracting from GDP growth in 2010 and that we are delivering the largest, fastest return to surplus since the 1960s. All of these facts are ignored by the opposition. (Time expired)