Wednesday, 4 December 2019
Matters of Public Importance
A letter has been received from Senator Hanson:
Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:
In light of the comments by The Governor of the Reserve Bank that, under certain circumstances, all options for unconventional monetary policy should be on the table, the need for the Senate to reassure everyday Australians that this will not include negative interest rates or bank bail-ins.
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
At the Australian Business Economists dinner last week, the Governor of the Reserve Bank, Dr Philip Lowe, delivered a speech that officially declared 'unconventional monetary policy was highly unlikely in Australia'. What worries One Nation is that, in the Q&A after his speech, Dr Lowe changed his position and declared: 'If the economic indicators were moving away from the target, I think all options would need to be put on the table.' These options are called 'unconventional monetary policy'. That benign name masks a world of pain for everyday Australians.
The RBA's program would commence with the official interest rate reaching 0.25 per cent. The official interest rate is currently 0.75 per cent and is tipped to fall. We are likely to reach the RBA's trigger point in this term of government. Unconventional monetary policy includes bank bail-ins, where customer deposits are turned into shares in the bank. It includes negative interest rates, where people pay the bank to use their money. It includes quantitative easing, where money is printed and used to pump up the economy.
All of these things only work if people are no longer allowed to keep their money in cash. Cash prevents unconventional monetary policy from working. Suddenly, the Currency (Restrictions on the Use of Cash) Bill takes on a new significance. Is the government planning to introduce these measures or not? The Morrison government must guarantee the Australian people that they will never seek bank bail-ins and negative interest rates in this country. The Morrison government must also drop the cash ban legislation to stop demonising people who choose to use cash.
This is a great opportunity to talk about the role of our government versus the role of the central bank. The central bank is responsible for monetary policy. The Menzies government created a central bank in 1960 and, in the nineties, we made it independent. It is very clear to us on this side of the Senate who is in control of monetary policy, and it is the Reserve Bank of Australia. The Governor of the Reserve Bank recently said on our prospects that we are not in the same situation that has been faced in Europe and Japan. 'Our growth prospects are stronger, our banking system is much better, our demographic profile is better and we have not had a pattern of deflation, so we are in a much stronger position.'
But monetary policy isn't up to the central bank. We don't believe in bank bail-ins. We have had for some years a financial claims scheme, which was tinkered with as part of the Rudd government's panicked and, frankly, bizarre response to the global financial crisis. There's been a bit of revisionism of late, where people have talked about the Rudd government's response to the global financial crisis. People may recall that, initially, there was to be an unlimited bank guarantee, which resulted in a whole lot of market linked investments freezing overnight. Mr Rudd and Mr Swan had to later change that because of the enormous disruption it caused.
Of course, on the fiscal side, Labor panicked drastically in office and not only locked the budget into a fiscal straitjacket of deficits but also wasted enormous amounts of money, which we have spent six years trying to fix. We have spent six years trying to fix the budget. Our focus has been on two things: running our fiscal policy responsibly and trying to create conditions where the private economy can invest and create more jobs. It is not the government that creates more jobs; it is the private economy. Our role in this place as a government is to ensure that the private economy can invest and create new Australian jobs.
On the fiscal side, we have delivered two significant rounds of personal income tax cuts. We have addressed bracket creep. We have given people back more of their money. We've also cut company income tax. Company tax for small businesses will hit 25 per cent in 2025, down from 30 per cent. Perhaps the signature achievement of this government has been to fix the structural deficit. I give great credit to the Leader of the Government in the Senate, Senator Cormann, for grinding expenditure growth down to 1.6 per cent—the lowest level of expenditure growth in 30 years. Getting taxes down on the company side and the personal side whilst getting in control of expenditure has meant that our fiscal position as a nation is greatly enhanced.
The second thing we want to do is promote the growth of the market. We have, I believe, presided over the most successful period of Australian trade policy. When we were elected in 2013, just 26 per cent of our two-way trade was covered by free trade agreements. That is now 70 per cent. Labor, who inherited John Howard's negotiations with China and Japan, spent six long years failing to deliver these trade deals; the unions said they weren't allowed to do trade deals, because the unions are protectionists. Since 2013 we have done trade deals with China, Japan, Korea and Indonesia. We have recently concluded the Trans-Pacific Partnership and the RCEP trade deal. And our plans continue; we are still seeking a trade agreement with India and the European Union. We believe that bigger markets and greater opportunities for Australian exporters will ultimately create more Australian jobs.
On the industrial relations side, there have been significant achievements. The reason we seek to always improve the industrial relations system, the labour laws of this country, is we are interested in a more productive and more collaborative workplace—a workplace where businesses are happy to invest, knowing that it is a good environment to invest in. With capital being so mobile, there is no guarantee that businesses will invest in Australia and create more jobs. That's why, in the last parliament, we reinstated the Australian Building and Construction Commission, to try and rein in some of the lawlessness in the construction sector. That's why we created the Registered Organisations Commission and that's why we're committed to the ensuring integrity reforms, because we believe that wherever there is poor governance, whether in a bank or a union, it is the role of this parliament to legislate to protect people to ensure that the conditions are there so that people are happy to invest and create more jobs.
The consequence of the failure of this parliament to pass the ensuring integrity laws not only shows that the Labor Party are totally in the raptures of the unions; it also shows that the 30 per cent premium on construction in this country will continue to pay for the lawlessness, because the CFMMEU thinks that court fines are speeding tickets. Those opposite continue to defend unions who spend members' money on botox, weight-loss surgery and tattoos. Until we rein that in there will be another drag on the economy, where people will be, frankly, less inclined to invest.
On the small business side, we have unveiled significant policies. We now have the Business Growth Fund, which will invest between $5 million and $15 million of patient capital in SMEs that have a turnover of between $2 million and $100 million. On the procurement side, we have unleashed very practical reforms. Thirty-five per cent of all contracts with the federal government up to $20 million are now delivered by small businesses. The total value of these contracts with SMEs has gone up from $12 billion to $16 billion over the last three years. That's a 29 per cent increase and, again, I pay tribute to the work of our Senate leader in ensuring that the Department of Finance is always looking to create opportunities for small- and medium-sized Australian businesses.
Moreover, we've also reduced the payment times to small businesses. The PM gave a speech to the Business Council just a couple of weeks ago, where he basically talked about the fact that if you were a small business and you were into e-invoicing then you could be paid within five business days—five business days! We all know that cashflow is king if you're running a small business, and we're doing absolutely everything we can as a government to improve the lot of small business.
Of course, the outlook would have been very different and we would not have been talking about stable fiscal policy focused on cutting taxes and expenditure, and also trying to foster the conditions for more private investment, if the Labor Party had won office. We would be looking at $387 billion in new taxes—new taxes as far as the eye could see. There would have been more new taxes than you could poke a stick at, to be frank. The retiree tax would have clobbered people who had saved for their retirements and, of course, the housing tax would have increased rents in places like Sydney, which I represent as a senator for New South Wales, by up to 10 per cent.
The logic behind this policy was—if you can believe this for more than a minute—that they would increase taxes on houses and that would create new houses. That is just absolutely remarkable logic. Of course, we can just fancy the economic result of trying to legislate almost $400 billion of new taxes in this economic environment. We are facing global headwinds and there has been a trade war. There are significant difficulties, but imagine the response of the private economy to these tax policies if the Labor Party had been elected? So this is a good opportunity to debate this question of the role of the central bank.
The central bank is an independent central bank, which the Liberal Party created in 1960. In the 1990s, we made sure that it was independent. We don't make monetary policy: the RBA makes monetary policy. Their decisions are up to them. We're in control of our fiscal policy and we're in control of always trying to foster more and more private investment by cutting taxes, doing trade deals, cutting unnecessary regulation and always trying to strive for better governance in our economy. If a bank goes wrong, we clinch them and if a union goes wrong, we clinch them, because we're not controlled by vested interests. We're only interested in improving the lot of the forgotten people, or the quiet Australians.
I too would like to contribute to this very important debate today.
I will have to remind Senator Bragg, and perhaps Senator Cormann, that they were elected in 2013. I think the electorate is a little tired of, 'If Labor were in, it'd be worse!' Or, 'If Labor had done this seven years ago it would be worse!' I think a more practical and effective evaluation of the situation would be that we have survived because of China's stimulus and a disaster or two in Brazil, which have kept our exports at a reasonably high level. And we've also had the benefit of a relatively low dollar. These things have protected the economy to a certain extent, but it is very true that consumer confidence is very low. We don't see the headlines we normally see at this time of the year about the retail industry having a tremendous Christmas, with an anticipated spend of hundreds of millions of dollars.
We're not seeing that for the simple reason that people took the tax cut and saved it. They put it on their mortgage. Their income is not increasing. When they look at the world around them, there is no confidence to spend. Confidence will always come from a well-led government. They've had such a period of instability and change. Forget about the prime ministerial changes; the changes in the ministerial portfolios have impacted on their performance. Clearly, without the continuity of a minister for a number of years, departments don't get set in the right place.
I accept some of the things that Senator Bragg has said about paying small business efficiently and on time. It's a cracker of an idea, but I don't see any evidence it's actually happening, as yet. Acting Deputy President Fawcett, with your assistance on the Foreign Affairs, Defence and Trade References Committee, we looked at stimulating regional economies with defence spending. A very good report was produced and the government acted on it—very sensible work. But what we found when we were going around during the inquiry was that other people were better. The mining companies were sometimes better when involved in a spend in a regional economy. The Singaporean spend is also readily discernible in the regional economies. So it's not on to say that if that lot were in charge it would be worse, or that if they hadn't done what they did seven years ago we would be in a worse position. I think the 'protect your surplus at all costs' fetish will have unintended dire consequences.
The Reserve Bank is saying that unconventional means may be necessary to stimulate the economy. At least 13 economists—I have their names here—agree with the Reserve Bank governor. They are saying that there may not be the capacity to do the big-ticket items that Senator Canavan talked about in question time. The big-ticket items may be politically driven. They might be the wrong ones to be doing and they may need long lead-in times. At the moment, we should be doing ongoing augmentation of the infrastructure that is causing a lack of productivity. We should be facilitating a spend on infrastructure right across the country, in every state and territory, to make sure that we increase productivity, because productivity is the central issue in the economy—and the lack thereof has increased. We know that if we can increase productivity we can get wages, profits and tax receipts up. A lot of the decline in productivity may be coming out of it being poorly maintained infrastructure or lacking in improvements. There are people saying, very clearly, that we should be going into infrastructure right across this country and maintaining the roads better, improving the rail and improving the bridges. Take advantage of a quick spend on obvious problems that will increase productivity in places.
I appreciate that we're going to do the bypass for Port Wakefield and duplicate the road to Victor Harbor, and rightly so. As you know, Mr Acting Deputy President, that road is littered with black crosses. Every tree down there has black crosses on it, so the sooner we do that work, the better. But can we get that up and running quickly enough, or should we be looking at smaller projects that would be, in Senator Bragg's estimation, delivering to small business? When people do the work and get paid within five days or 28 days it would be spectacular. That is putting real money into the economy, employing people and turning things around.
At the moment, there are plenty of people saying we're in unusual circumstances. Most times, when there's a global recession we get a haircut. There's a global recession this time but with Chinese stimulus and the disaster in Brazil we got an uplift in iron ore and respective prices. We're in unusual times. Holding onto the surplus at all costs is not going to be a winner for this government. On this side of the chamber we, rightly, have been calling for tax cuts to be advanced earlier, because the last lot disappeared. They didn't appear to give the stimulus they were expected to give. I accept that the honourable Mathias Cormann is probably one of the exemplars in performance terms in the Senate. He does an exemplary political job, and reputation would have it that he does an excellent job as a finance minister, too. I'm sure having to get up and defend the indefensible at times must grind in his guts, so to speak. He would know, and the advice he's getting from all quarters is that we need to move into a bit of stimulus spending. The real trick with stimulus spending is to spend it in improving productivity. But he has political masters, as we all do, and his job is to defend the surplus at all costs.
We'll get the MYEFO in December, and there will be a great trumpet blast of: 'We've achieved! We've delivered on our promise!' But if your promise is inflicting damage on the economy when you should be moving to increasing productivity and spending in the economy, it's a pyrrhic victory. It won't come back and reward you. I know the coalition think they can go to any election and say: 'They're bad spenders. We're savers.' I don't really think that people who are hurting are going to care who spends and who saves. In fact, they may care; they will probably go for the person who's going to spend. Those people on Newstart—there are plenty of people arguing that an increase to Newstart would create a stimulus. It would, because I don't think they could actually go and save that. I don't think they would go and find somewhere to put that extra $25, $35 or $75; it would go directly into their spending. I totally reject Senator Ruston's assertion that it would go to drug dealers and pubs. Most of those people would spend it on food and clothing and shelter. So if that was to be increased, fine.
I have a deep concern about the economy in that we have an unpaid superannuation bill that is enormous. People are not being given their rightful superannuation in this country, and the ATO is so slow at acting upon it that there are funds missing out of the retirement income of people. And if you go directly to the theme of the day, the wage theft, how is it possible that a major company like Woolworths can catastrophically fail in delivering wages to people? If those workers had got their wages in full and on time, those wages would have also gone into the economy and been spent.
These matters continue to challenge everybody in the community and, as they look to the government for a response, they say: 'We're going to save money at all costs. We're going to have a surplus at all costs. At the cost of people on Newstart, at the cost of people having their wages stolen and at the cost of disregarding competent advice from the Reserve Bank governor and up to 13 independent economists.' These economists simply say this: you improve productivity by finding the right projects, augmenting our roads, stopping people dying and being injured on our roads, fixing our rail, fixing our bridges. Don't go grandstanding about these great plans that sound like you're going to win three seats in Western Sydney; put some simple, proper projects in every state and in every territory. Improve the productivity of the nation, contribute effectively to the economy, and that productivity increase will come back in increased tax returns, receipts to the government, and, hopefully, more employment and more disposable income for those people who participate in those projects. My plea to the government is to act now. Don't defend your surplus; act now and stimulate the economy.
Senator Whish-Wilson, I was going to ask the consent of the Senate, given it's almost five o'clock, to go to Senator Bernardi's valedictory speech. If the Senate is willing to give me leave, we'll return to this matter immediately afterwards.
Honourable senators interjecting—
It's a very valid point to be making, considering this MPI and the serious academic discussion about the end of the monetary policy era, about what is the role of the government in our lives. Senator Bernardi, if the Greens are a party for having government play a big role in our lives and that makes us socialists, then I plead guilty. And I'd just like to thank One Nation for bringing this forward. People are surprised that One Nation have actually got a lot of socialist policies themselves. They're probably more aptly described as national socialists than as direct socialists. Nevertheless, we share so much in common when it comes to the role of government in our lives.
We're looking at a historic low cash rate of 0.75 per cent. We've got low productivity, we've got low wages growth, we've got an upturn in lending for housing and a downturn in lending for business. We had an excellent presentation today from one of the country's experts on monetary policy and where we go to from here, Dr Josh Ryan-Collins. I recommend his writings to anyone who is interested in this debate.
I seek leave to continue my remarks. Given there's such a large audience here for Senator Bernardi, I don't want to take any more time.
Leave granted; debate interrupted.