Senator FIFIELD (Victoria) (5.37 p.m.)-Senator Ludwig has moved today that the Senate note the deterioration in the Australian economy. This is obviously some strange use of the term ‘deterioration’ of which I was not previously aware. To listen to senators opposite, one could be forgiven for thinking that they were describing-with all due respect to Senators Murray and Ellison-the Zimbabwean economy rather than the Australian economy. Those opposite would have us believe that we are living in a high-inflation, high-interest rate, stagnant economy with unimaginable capacity constraints and poor investment by the national government in infrastructure. What are the facts? The Australian economy has been growing steadily for over a decade since ‘the recession that we had to have’. A couple of weeks ago, former Prime Minister Paul Keating and his former chief of staff Don Russell stood by the fact that we needed to have that recession. We have not forgotten who gave us that recession and neither have the Australian people.
Interest rates, which Labor have been talking about ad nauseam over the last few days, still remain at record low levels. Under the previous Labor government-and we should never forget that Mr Beazley was an integral part of the government for every single day of the Hawke-Keating government-the standard variable home loan averaged around 12.75 per cent and the official cash rate peaked at 18.15 per cent in November 1989. The standard variable rate has fallen from 10.5 per cent under Labor to 7.3 per cent since we came to office. Australian families are saving $565 each and every month on the average new mortgage. As we on this side of the chamber have always said, and will continue to say, despite misrepresentation from the other side, interest rates will always be lower under a coalition government than under a Labor government. We have never said they would not move. Interest rates do move; that is what they do. However, they will always be lower under a coalition government than they would be under a Labor government.
We had some fantastic news today. The unemployment rate, according to the ABS statistics, remains unchanged at 5.1 per cent-the lowest level since 1976. Under this government, since March 1996 over 1.5 million jobs have been created-324,900 jobs over just the last year, more than three-quarters of which have been full-time positions. The CPI for the year to December 2004 was comfortably within the inflation target band at 2.6 per cent. Underlying measures of inflation published by the RBA range from two per cent to 2.4 per cent for the period. Inflation has averaged 2.4 per cent since 1996, compared with an average inflation rate of 5.2 per cent for the period that Labor were last in office. We are hearing a lot about capacity constraints and the need to skill workers. The number of Australians doing a new apprenticeship has increased from 141,000 in 1995 to the current level of 394,000. Since September 1996, there has also been an 18 per cent growth in new apprentices in the trades and related occupations-from 126,100 in 1996 to 148,400 in September 2004. Since 1996, there has also been a massive investment by the government in roads, rail and telecommunications, some areas of which are the core responsibility of the states, not the Commonwealth.
For nine years those opposite have been talking the economy down. Today, Senator Sherry and others opposite are continuing their scaremongering. There is absolutely nothing new in this approach. In 1998 when Mr Beazley was in his last incarnation as leader, he said, talking of the government:
… they are not ahead in terms of who’s better to manage the economy and neither should they be. They took a baseball bat to it two years ago to make a political point about us and they left us with a lower level of growth … And the public are not going to thank them for it.
It is very interesting to look back at the pattern of Labor’s comments on the economy. That comment by Mr Beazley is not an isolated one. In the aftermath of the 1997-98 Asian economic crisis, Simon Crean-of whom we do not hear a lot these days from the other side but of whom some of us on this side are still quite fond-said:
In essence, the Treasurer has fireproofed the economic car by taking out the petrol … We do risk an economic crisis of major proportions.
That was during 1997-98. Australia weathered the Asian financial crisis and grew by 4.8 per cent-so much for an economic crisis of major proportions. We survived the Asian downturn, so Labor had to find a new scare campaign. They found the GST. Kim Beazley started to blame interest rate rises on the GST in 2000:
These interest rate rises, along with their predecessors, have one vital set of origins-GST.
Within six months it was the opposite argument and he said:
… these interest rate cuts are a direct result of the Government’s GST mugging the Australian economy …
Back then it was ‘GST puts them up; GST brings them down.’ Labor also thought that the GST would result in the economy growing too quickly. In 2000, Kim Beazley said the tax package:
… runs the risk of fuelling consumption and overheating the economy.
The fiscal stimulus, as we know, came at just the right time, undercutting Labor’s argument. Labor’s assault had to start again. It needed a new angle. Simon Crean said:
… the GST didn’t just mug the economy; it king hit it.
Kim Beazley said in 2001:
This is an Australian homegrown recession …
At the time he said that, the economy was growing at 1.1 per cent. Labor are so brazen that they actually acknowledge that they changed their position. In 2001, Kim Beazley said:
I’ve shifted my position to: I hope there won’t be a recession. That’s my position now. Far from talking down the economy, I’ve been trying to help as far as Opposition Leaders can.
We can do without that help. In 2001 Mr Beazley was at it again, saying:
This is not economic management-it is economic mangling. What we have now are a bunch of economic manglers, not economic managers as they run a budget demolition derby.
Strange, strange, strange. The coalition has always acted in the best way that any government can in order to take pressure off interest rates and that is to reduce government debt. Senators opposite are quite coy about making the link between government debt and pressure on interest rates. We know why: when the coalition came to government we inherited a net government debt of $96 billion-that is a fact despite what Senator Cook might say-and we have reduced that debt from $96 billion, or 19 per cent of GDP, to $25 billion or three per cent of GDP. That is a reduction from $5,200 per Australian to around $1,200 per person. It is no secret why. Labor do not like to talk about the link between foreign debt and the current account deficit and net government debt. It is because Mr Beazley was Minister for Finance in the lead-up to the 1996 election. Often when I stand in the chamber I cannot resist the temptation to bring out what is one of my favourite clips and I know is one of Senator Kemp’s favourite clips, which is from the Age of 1 February 1996:
“We’re in a position where we’ve got no plans to increase taxes,” Mr Beazley said. “Why would we? We’re operating in surplus, and our projections are for surpluses in the future.”
We know the result-a Beazley budget black hole-but since that time the government has not borrowed one dollar in net terms. We enjoy the lowest level of government general net debt in the developed world-lower than Germany, lower than the total OECD, lower than the EU, lower than Japan, lower than the US-and we are committed to maintaining low levels of government net debt. It has been important and it continues to be important to maintain surpluses while consumer confidence is high and people are borrowing and business is investing. We continue, as a government, to add to savings to reduce pressure on interest rates.
Government budgets also, as I have said, have a link to foreign debt. It is another link which senators opposite shy away from mentioning. It does have an effect on foreign debt and the current account deficit: the more governments borrow domestically, the less money there is to borrow and invest in Australia, meaning that people have to borrow overseas. It is a pretty simple equation. Since 1996, the share of net foreign debt owned by the general government sector has fallen from over 17 per cent to under five per cent. Since 1996 the debt-servicing ratio has fallen to around nine per cent. Under the previous Labor government the debt-servicing ratio rose as high as 20 per cent. In 1990, 20 per cent of exports went towards paying the interest on net foreign debt.
If Labor were in office, there would be a much higher level of net government debt, which would have an effect on our foreign debt. What is important is a country’s capacity to service that debt. I would like to quote some authoritative sources on this particular aspect-the capacity of a country to service its foreign debt. I will ask senators to turn their minds to who possibly may have made these comments:
We have always been a country that has been heavily dependent on foreign capital. We are now even more attractive to that capital because we are a well managed economy. Foreign capital does not chase badly managed economies. Get that fairly clear in your head. Foreign capitalists or money lenders do not wander around the place looking for poorly managed places upon which to dump money. That is not their way. They lend money to people who look as though they will be capable of sustaining it. They look at countries like ours and the way that they are managed. They come to the conclusion that we would be capable.
That was Kim Beazley in 1995. Fair enough, but let us not just rely on Kim Beazley:
Debt is not a bad thing as long as you can support the debt, as long as you can repay it, so long as the borrowings are going into the economy and producing productive investment, producing jobs.
That was Nick Sherry in September 1995. Debt is not a bad thing as long as you can service it. The Australian economy has the capacity to service our foreign debt.
Labor have changed their story yet again. The reality in Australia today is we have strong growth, high employment, low unemployment, low inflation and low net government debt. There are indeed some economic challenges in this environment associated with capacity constraints-we do not deny that-and we have been pursuing policies to address that. But we could stand a little help from the other side. If those opposite are serious about pursuing changes to remove constraints on our economy then we would welcome their support for our workplace relations agenda. Perhaps those opposite have forgotten that over 30 workplace relations bills have been blocked by them since the government came to office in 1996.
We have been hearing a great deal from Labor about skills shortages and capacity constraints. I would like to let senators opposite in on a great economic secret, something that is clearly a mystery to the caucus economic committee and Mr Swan: skills shortages will be at their highest in a strong economy with low unemployment. We cannot be too harsh on Labor for not getting that point. Low unemployment and a strong economy is something that senators opposite have no experience with.
Let me explain what happens in a strong economy with low unemployment: you have more jobs chasing fewer people, as opposed to a weak economy with high unemployment, where you have more people chasing fewer jobs. There is something else that senators opposite might not know: there is not just a skilled labour shortage; there is also an unskilled labour shortage. There is a labour shortage in Australia because unemployment is low. This is not a skills issue; it is a labour shortage issue. It is the consequence of a strong economy.
Go to Shepparton-if Labor senators venture that far-go to the fruit picking areas and you will find there is a huge shortage of pickers, a huge demand for unskilled labour. We all know what Labor’s solution is to a labour shortage; it is the easiest one in the world: kill the economy. We saw that under Mr Keating. Kill the economy, and you have plenty of labour. There is plenty of labour of all sorts if you kill the economy-skilled labour, semiskilled labour, unskilled labour-just not many jobs. Labor talk about a failure to invest in skills and trades. Under Labor, year 12 completion and a university degree became the ultimate academic achievement. Under Labor, a stigma actually became attached to undertaking a trade and doing training.
On this side of the Senate, we want a good trade to be as highly valued as a good university degree. That is why we are providing $2.1 billion per year for vocational education and training, which is a real increase of 57.5 per cent in the Australian government’s overall funding to vocational education and training between 1995-96 and 2004-05. The skill shortage is a product of a strong economy, of low unemployment; nevertheless, we are making a massive investment in the skills of Australians.
At the election just past, we announced the establishment of 24 Australian technical colleges to promote pride and excellence in the teaching and acquiring of trade skills. That is a good thing to do. From 1 July 2005 we are extending eligibility for Youth Allowance and Austudy for over-25s to new apprentices. This will benefit up to 93,000 new apprentices by 2008-09 at a cost of $410 million over four years. These are good and practical things that we are doing.
Senator Lundy-You said it was not a problem.
Senator FIFIELD-I never said that it was not a problem. It is a problem; it is a problem of a strong economy. It is a problem we actually want to have-a low unemployment rate. Despite that, we are still doing what we can to increase people’s skills and trades, because we want to give people options between skilled and unskilled work. We want people to have the choice, so we have made massive investment in apprentices.
Labor have also been talking a great deal about the need for infrastructure investment. The Treasurer was accused in the House during question time today of never having spoken about infrastructure in the House of Representatives. The first thing that came to the Treasurer’s mind was AusLink. He has spoken about that a few times. That is certainly infrastructure. He then thought, ‘The Scoresby Freeway is certainly infrastructure. I’ve been talking a great deal about that.’ You only have to turn to the Treasurer’s budget speech for 2004-05 to see a section headed ‘Investing in Australia’s infra-structure’. It talks about AusLink, and the Scoresby Freeway gets a mention, along with the Australian Rail Track Corporation. The government has a strong program of investing in infrastructure, despite the fact that state governments have the prime responsibility for infrastructure.
It is worth remembering on this side, as we like to do, that in 2004-05 all states will receive a windfall gain over the guaranteed minimum amount in the GST annual payments of $1.9 billion. This will grow to around $3.2 billion in 2007-08. So the states are rolling in money. They have absolutely no excuse for failing to invest in infrastructure. The states have learnt the lesson not to have a budget deficit; instead, they have put the money into teacher, nurse and police pay increases, but they have totally neglected infrastructure.
Senators opposite talk about capacity constraints. Let me tell you in four words what the greatest capacity constraint on the Australian economy is: the Australian Labor Party. The Australian public are intelligent. They recognise this and they did something about it at the last election. They voted to give the Senate more coalition senators to remove that constraint on the Australian economy.
We look forward to some policies from the other side of this chamber to address what they have listed in their motion as challenges confronting the Australian economy, but I do not hold out too much hope. Mr Beazley said on 8 March that he was going to:
… hold them-
that is us, the government-
to account. You subject them to a bit of decent questioning, you put up, as the election approaches, a few decent alternatives … from the Labor Party’s point of view, we’re going to find much more focus on the sorts of questions we ask …
The worrying thing is that this comment about putting forward a few decent alternatives is very similar to what Mr Beazley said in July 2000, when he said, ‘You have to present an alternative vision, but only as you get closer to the election.’ So it will be the same old story of carping, criticism and consultation, but will we see a policy? Policies will be promised, the deadlines for them will pass and we will get to the death knock of the election before we see anything remotely resembling a policy. The Australian people recognise what the greatest capacity constraint on Australia is and which party and which government is best placed to look after the Australian economy. Their verdict was that it was this side of the chamber.