Senator FIFIELD (Victoria) (3.28 p.m.)-For as long as I can remember, Labor has talked down the economy. In 1996 the then shadow Treasurer, Gareth Evans, condemned the then government’s savings measures-our efforts to balance the budget. He likened our efforts to taking a baseball bat to the economy. They were not. In 1998 the then shadow Treasurer, Simon Crean, said that the new tax system tax cuts would overheat the economy. They did not. Around the same time, the then opposition leader, Kim Beazley, said that the GST would king-hit the economy. It did not.
To be fair, you do expect oppositions, particularly Labor oppositions, to be negative. But usually, with a change of government, the parties reverse roles. You would expect that a new government would embrace its role to talk up the economy. But, no, we have seen the bizarre situation where the new government is actually talking the economy down; the bizarre situation where the new government is not seeking to defend consumers. Since Mr Swan has been Treasurer we have witnessed him give the green light to banks increasing mortgage rates independently of Reserve Bank decisions. We have seen him give the green light to banks to increase their mortgage rates over and above Reserve Bank decisions. Even worse, we have seen him, the Treasurer of Australia, fuel inflation expectations by declaring, irresponsibly, that the inflation genie is out of the bottle. Those are not the words of a responsible Treasurer. Those are the words of an economic vandal.
Inflation expectations are, in a sense, self-fulfilling. That is why his comments were so dangerous. If consumers think inflation is going to rise they will more readily pay higher prices for goods and services. And if businesses think inflation is rising they will act by lifting their prices to cover anticipated extra costs. That is not just my view. That is not just the view of economists. It is the view of the Chairman of the US Federal Reserve, Ben Bernanke, who recently said, ‘Undoubtedly, the state of inflation expectations greatly influences actual inflation.’ It is a fact, and it was irresponsible for Wayne Swan to declare the inflation genie is out of the bottle. Also, in talking up inflation, the Treasurer has been increasing the likelihood of further interest rate increases.
Labor cynically want inflation to rise and rates to rise. In Labor’s view, the quicker rates rise the sooner they will fall-they hope before the election. They do not care that rate rises which occur too quickly will kill the economy and cost jobs. There is clear evidence already that their plan is working. The Westpac Melbourne Institute consumer sentiment index, which was released recently, showed that there was a 21 per cent fall during the last three months. It is the biggest quarterly slide since the series began in 1975. And the Sensis consumer report released today found that 24 per cent of households felt they were worse off, due mainly to cost of living concerns. Petrol prices were their main concern-top of the list. So the Labor plan that we are seeing is: let’s talk up inflation, let’s talk up rates, let’s kill the economy and let’s hike up unemployment. High unemployment? Well, that solves the skills crisis. Rates hiked high and fast? Well, there is a chance they might come down before the election. The only price is more jobless.
I have a bit of advice for the Treasurer: accept the role that you have and master your brief. The job of the Treasurer is to defend the economy; it is to point to the positives; it is to build local and international confidence in our economy. I said yesterday in the chamber that, if Mr Swan does not master his brief very shortly, he will go the way of John Kerin, who, we will all remember, delivered just one budget, in 1991, after serving as Treasurer for only six months. I was a junior opposition staffer at the time and I remember being in the queue at the House Table Office waiting to get my budget papers and seeing, two in front of me, the man who the year before had delivered the budget lining up to get his budget papers. If Wayne Swan does not master his brief soon, he will be in that queue next budget and it will be Mr Bowen or Mr Tanner standing at the dispatch box delivering the budget. This government has to stop complaining about the economy and accept the responsibility. They were elected to govern. They were elected to rule for all Australians. (Time expired)