Senator FIFIELD (Victoria) (3.43 p.m.)-I move:
That the Senate condemns the Rudd Government for its reckless management of the Australian economy in a time of global economic challenge, including:
(a) the Government’s irresponsibility in talking down the Australian economy;
(b) the massive collapse in consumer and business confidence since the election of the Rudd Government;
(c) the delivery of a budget that forecasts an increase in unemployment;
(d) the Government’s raising of inflationary expectations and failure to honour its promise to address cost of living pressures; and
(e) the absence of a coherent economic strategy and a focus on presentation rather than policy.
There is no doubt that Australia is experiencing challenging economic times. There is significant instability in world financial markets and, in particular, we are experiencing flow-on effects from historically high world oil prices and a credit crisis in the United States. In the case of the United States we have seen the subprime mortgage crisis and the ensuing trouble experienced by large corporate players including Bear Stearns, Fannie Mae, Freddie Mac and, more recently, Lehman Brothers and AIG. We do have an inflation challenge although not the crisis of which the government tried to convince the Australian people. We have a predicted rise in unemployment and we have seen a collapse in confidence of Australian businesses and consumers.
Despite all this, however, Australia’s economy is fundamentally strong. We do have the capacity to withstand these global pressures and to continue growing our economy and building our prosperity. We have done so before and we can do so again. But we will only be able to meet these challenges with strong leadership, a clear plan and careful economic management. The coalition knows this well.
Labor say that the economic slowdown is all due to events outside their control, yet the coalition managed to maintain a strong and growing economy in the face of a number of enormous external challenges: the Asian financial meltdown, SARS, September 11, not to mention an inherited $96 billion debt and a budget deficit, which brought its own challenges. On this side of the chamber we know how to meet economic challenges because we overcame them. We know how to plan and implement a successful economic strategy because we have done so before. We know what it takes to engage in careful, responsible economic management because we have always done so. The coalition’s approach to the economy has always been one that puts Australia’s interests ahead of any other consideration.
Putting Australia first also means taking tough decisions and doing the right thing rather than the popular thing-decisions that are nevertheless in the national interest and for the long-term benefit of the nation. When the coalition was in office we had an economic strategy with clear objectives and we set about meeting them. The first element of any strategy is knowing where you want to go. We wanted a strong and growing economy; an economy in which anyone who wanted a job could get one; an economy that encouraged wealth creation so that all Australians could share in our prosperity; an economy with strong public and private investment; and an economy with a national government free of debt and positioned to meet the challenges of the present and the future.
But knowing where you want to go is one thing. Getting there is an entirely different matter, especially when you find that your starting point is much farther from the finish than you originally anticipated. The coalition certainly found this out when we came to office in 1996. Labor told us that the budget was in surplus, but the budget surplus was not as big as Labor said it would be. In fact, it was not in surplus at all; it was in deficit to the tune of 1.5 per cent of GDP. That is about $16 billion in today’s terms. Through hard work, discipline, tough decisions and responsible management the coalition implemented the economic strategy it had mapped out. This was done in the face of opportunistic Labor opposition.
In the face of that we repaid Labor’s debt, we reformed the tax system, we put a stop to Labor’s deficits and we delivered 10 budget surpluses. We took Australia to a position where our economy was the envy of the developed world; it was described by the Economist as ‘the wonder down under’. I have pointed to the coalition’s economic record in the first instance because we on this side of the chamber are very proud of it. Labor have tried to engage in a dishonest rewriting of economic history in a failed attempt to trash the coalition’s economic credentials. But they will not succeed. The weight of evidence and the facts of history are on our side. They disprove Labor’s claims. But the coalition’s strong economic record is also relevant because it underpins the strength of the budget and the economy, and it provides a stark contrast with the reckless approach to economic mismanagement and the incompetence displayed by the Rudd government.
Let us look at what this government has done. When the Rudd government was elected, they inherited from the coalition an economy in great shape: no net government debt, a Future Fund with savings from surpluses, record low unemployment, inflation at manageable levels and interest rates that were lower than at any time under the previous Labor government. I recently asked my good friend and sparring partner Senator Arbib to nominate which economy he would have preferred to inherit: the one the coalition inherited in 1996 or the one that Labor inherited in 2007. Senator Arbib declined to answer. And no wonder. The coalition handed Labor an economy in top shape with strong fundamentals thanks to more than a decade of careful management and reform.
So, what did Labor do? With the post-1996 election period in the back of their minds they desperately wanted a crisis where there was not one. So they invented one of their own. Labor chose to invent the notion of an inflation crisis. We are very used to Labor’s posturing and we are very used to them being misleading. But Labor need to recognise that they are now actually responsible for the Australian economy. They cannot blame the former government any more. They are in charge. More importantly, now that they are a government in office, what they say and what they do actually does matter; it makes a difference to the Australian economy, for good or for bad. That is why Mr Swan’s comment that ‘the inflation genie is out of the bottle’ was so reckless and so irresponsible. It stoked inflationary expectations, which in turn feed into actual real inflation.
But it is not only inflationary expectations that are on the increase, thanks to Mr Swan. On the subject of the margin between the official cash rate and the mortgage rates of the domestic banks, Mr Swan demonstrated how absolutely and totally out of his depth he is in the Treasury portfolio with his reaction to the flurry of domestic banks’ interest rate increases earlier in the year. Mr Swan gave the green light to the banks not only to increase their rates over and above RBA movements but to do so separately from RBA announcements. When the Treasurer stoked inflationary expectations with his reckless ‘genie’ remark, he egged the Reserve Bank on to increase interest rates. And with his clumsy rhetoric in response to the banks he effectively egged the domestic banks on to raise their interest rates as well. That was a double whammy for Australians with mortgages from this nervous and incompetent Treasurer.
Labor say they want to fight inflation, yet they are setting about increasing a range of taxes. There is the increase in the luxury car tax. There is the tax grab on alcopops, a tax grab dressed up as a health measure-which, as we all know, is a complete con and sham. There is the lifting of the Medicare levy surcharge thresholds, a measure that will result in higher health insurance premiums. And then there is the tax hike on condensate, which will mean higher gas prices for consumers in Western Australia-something which the people of Western Australia recently passed judgement on. Labor are hiking up taxes under the guise of fighting a war on inflation. On this side of the chamber we know something pretty simple: tax rises actually lead to increased prices. These taxes will increase the price of alcohol, private health insurance, domestic gas and passenger vehicles. So on the one hand Labor say they want to fight inflation, but on the other hand their actions will lead directly-not indirectly but directly-to price increases. This is one of the new and bizarre economic approaches we are seeing from Labor.
Then there is Labor’s plan to abolish the Australian Building and Construction Commission. The great debate on the Labor side is not whether or not to abolish the commission; it is whether to do it in 2010 or do it next week. We know that the Labor backbench have been agitating for the abolition of the commission sooner rather than later. The impact of this decision to abolish the ABCC will be devastating for the commercial building sector, and the flow-on effects to the economy will be substantial. A recent analysis by Econtech found that the ABCC’s activities had produced outstanding economic results, including creating a 10 per cent increase in commercial construction labour productivity, a 1.5 per cent gain in GDP, an annual economic welfare gain of more than $5 billion and, importantly, a 1.2 per cent reduction in the CPI. All of these economic impacts are positive and all will be threatened if the Labor agitators and the unions get their way to bring forward the abolition of the ABCC. But it is going to be abolished anyway-sooner or later, but by 2010. The most relevant of those figures I mentioned is the last one, the 1.2 per cent reduction in the CPI. Once again, it is a case of Labor saying one thing but doing another: they say they want to fight inflation, but their actions threaten to send inflation higher.
Then there is a Labor’s record on industrial disputation. Under the economic management of the coalition, industrial disputation fell to its lowest level since records were first kept, in 1913. This was in contrast to the industrial strife that characterised Labor’s last term in office. At its peak in 1993 industrial disputation was estimated to have cost the Australian economy $1.5 billion a year. But this record pales in comparison to the emerging trend we are seeing under the Rudd government. Since its election last year we have seen a massive increase in strike action. In its first six months in office, the number of working days lost to strike action has increased not by eight per cent, not by 80 per cent, but by an extraordinary 800 per cent. As I mentioned earlier, in 1996, before the coalition reformed the construction industry by, amongst other things, establishing the commission, the number of working days lost per 1,000 workers in the construction industry was 335. By 2007 that number had dropped to just seven days. Labor’s plan to abolish the commission threatens a return to the days, which we want to forget, of militant union driven industrial strife. The spike in industrial disputation cannot be explained away, as Ms Gillard attempts to do. This increase in disputation is the result of the unions flexing their muscles. They are seeking a return on the investment that they spent getting Labor elected.
The huge rise in industrial disputation is highly relevant to this debate because industrial strife feeds into inflation. Work stoppages affect supply, inflated wage claims over and above productivity gains increase the cost of doing business, and all of this leads to higher prices for the end consumer. So, despite saying they want to fight inflation, Labor are hiking taxes and presiding over increased industrial disputation. Far from fighting inflation, Labor are stoking it.
Watching Labor’s inept approach to economic management and listening to their rhetoric, it is little wonder that business and consumer confidence in Australia has collapsed. The August Sensis business index, released at the end of last month, reported that business confidence has fallen to its lowest level since 1993, when the survey first started. The attitude of small business to the policies of the Rudd Labor government fell to a net balance of negative 28 per cent. And today we had the release of the ACCI-Westpac survey for the September quarter which showed that 38 per cent of Australian businesses expect business conditions in Australia to further deteriorate in the next six months. Only 16 per cent thought that conditions would actually improve. We now have business confidence collapsing to levels not seen since Labor’s recession in the 1990s-and we are not in a recession.
Business confidence does matter because it is a factor in business decisions to invest, to hire workers, to grant wage increases and to take more risks. Low confidence stifles enterprise, and that is the tragedy that is unfolding. Consumers, too, are rapidly losing confidence in the ability of this government to manage the economy. The latest Westpac-Melbourne Institute consumer sentiment index did show a slight rebound in consumer confidence-which is welcome-but the index is still at a level that is 20.3 per cent below where it was a year ago, when we still had a Treasurer who knew what he was doing.
Consumers are losing confidence for all sorts of reasons, but undoubtedly one of them is the complete failure of the government to keep its promise on cost of living pressures. Before the election Labor talked often about the cost of living facing Australians. The coalition was always acutely aware of these pressures, and that is why we cut taxes for Australian households year after year after year. It is why we introduced the family tax benefit, the baby bonus, the childcare rebate, the utilities allowance, the seniors concession allowance, the carer payment and so on. It is why we changed the indexation of the age pension so that pensioners struggling on low incomes would get some relief. And it is why we cut petrol excise and abolished its indexation, without which petrol would have been much more expensive than it is now.
These measures taken by the coalition to address cost of living pressures were not reviews, were not summits, were not committees, were not inquiries and were not panels. They were decisions. They were what government is elected to take. But this is a government that does not know how to take a decision because it does not know what it is doing. When Australians from all walks of life-from families to pensioners to carers-cry out for help, what does Mr Rudd have to say? Does he say that he will help; that he will act on their concerns? No. This is what Mr Rudd says: ‘We have done as much as we physically can to provide additional help the family budget.’ In other words: ‘Don’t come crying to us. We’ve done enough. We’re not interested in keeping our promise to you.’
Breaking a promise is bad enough, but Labor did something worse: they made a promise to the Australian people that they knew that they could not keep. That is dishonesty. Now, the government will not help pensioners. And this is despite the Prime Minister, the Deputy Prime Minister and the Treasurer-the three most senior ministers in the government-all admitting that they could not survive on the single age pension. Yet they are telling pensioners that they have to wait until yet another review is completed. Instead of real action to address cost of living pressures, such as the coalition plans to increase the single age pension by $30 a week, to introduce a more generous indexation arrangement and to cut petrol excise by 5c a litre, this government is focused on presentation rather than policy.
The two biggest, best and greatest examples of this are Fuelwatch and the ‘grocery watch’ scheme. These are the biggest exercises in spin that we have probably seen in Australian political history: a sham scheme that will increase the overall cost of fuel and a joke of a website which is as useful to grocery shoppers as a dodgy wheel on a shopping trolley. This is not what Australians were expecting when they were told by Mr Rudd that he would do something to help.
But, for at least 134,000 Australians over the course of the next year, the price of groceries will be the least of their problems. This government’s budget is founded on the premise that 134,000 Australians will lose their jobs over the course of the next year. I would ask senators to pause and think about the effect that that will have in individual households. We on this side of the chamber drove unemployment to 33-year lows. We drove it below four per cent. We created millions of new jobs. That was the great human dividend of strong financial management. Labor like to talk about working families. That is all very well, but there is one thing that families need to fit into the category of ‘working families’ and that is work. That is not what we are seeing from the other side. They have based a budget on Australians losing work.
I look forward to a time in the future when treasurers do more than watch; when treasurers are respected-even feared-by the banks; when treasurers speak about economic fundamentals rather than genies and bottles; when the Australian economy is again described as ‘the miracle economy’ and ‘the wonder down under, rather than being on the verge of a Swan dive; and when a show like The Hollowmen is laughed off as satire rather than embraced as a documentary. (Time expired)