Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

My question is to Senator Cormann, the Minister representing the Treasurer. Can the minister please update the Senate on the economic outlook for Australia?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Edwards for that very important question. I am pleased to advise the Senate that the government is optimistic about the economic outlook for Australia. The Australian economy is in its 25th year of continuous growth. Our economy continues to grow, despite the biggest fall in our terms of trade in about 50 years. Where other commodity based economies like Canada and Brazil are in recession, Australia continues to grow.

Why is that so? There are a range of reasons. Partly it is because of the important structural reforms pursued by previous governments. We have an independent Reserve Bank, which means that we have independent monetary policy decisions. We have a floating exchange rate, which helps to cushion the effect of significant falls in our terms of trade—as increases in production volumes and export volumes, including through our resources sector, of course, have helped to cushion some of the effects of significant falls in key commodity prices.

But it is very important that we continue to work as a country to ensure that we are the most productive we can be and the most competitive and the most innovative. That is, of course, where the Turnbull government is dedicating all of its policy focus at present. Our very ambitious free trade agenda is all about making sure that Australian exporting businesses are the most successful they can be in getting access to key markets in our region. The reasons we are pursuing free trade agreements like the China-Australia Free Trade Agreement are all about making sure that Australian export businesses are able to grow their business into those markets beyond resources exports, moving forward. We are an open, commodity based trading economy. It is very important in that context that we prepare ourselves for the inevitable future shocks that will come our way and that we prepare for the new future opportunities to grow. (Time expired)

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister please explain to the Senate why it is important for our economic growth that we continue to repair this nation's budget?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Deficits to fund recurrent expenditure are a drag on future economic growth. Budget repair helps us to strengthen the growth because it helps us to get the fiscal room for important reform of our tax system to drive productivity and competitiveness improvements, and it also helps to make us more resilient in the context of inevitable future economic shocks. I know that the worst finance minister in the history of the Commonwealth does not like to hear this, because we are still dealing with the unsustainable, unaffordable spending growth that the previous finance minister locked Australia into. The reason we are pursuing budget repair—the very important reason on top of the focus on stronger growth—is to ensure that the important benefits and services provided by government, the important social safety net provided by government, remain sustainable in the future. (Time expired)

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister advise the Senate whether there are any risks to the government's efforts to strengthen growth and opportunity in the Australian economy?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

One of the biggest risks that we are facing as a country is the fact that the Labor Party has not learned from its past mistakes. The Labor Party has not learned from its past mistakes. People across Australia intuitively know that Labor cannot manage money. People across Australia know that, whenever Labor gets into government, it makes a mess of it, and it is important for the coalition to get back in to sort out Labor's fiscal mess—and so it is, of course, this time. Labor put Australia on an unsustainable, unaffordable, spending growth trajectory, taking government spending as a share of GDP to in excess of 30 per cent—in excess of an unprecedented 30 per cent.

This government is making the decisions necessary to get spending growth under control, and what is the Labor Party doing? The Labor Party, under the leadership of Bill Shorten, is still making unfunded promises. It is still making unfunded promises to the tune of about $57 billion. If Labor were in government right now, under policy settings that Bill Shorten has announced, the budget would be about $57 billion worse off. (Time expired)