QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS
Economy
Senator FIFIELD (Victoria) (3.01 pm)-I move: That the Senate take note of the answers given by the Minister for Broadband, Communications and the Digital Economy (Senator Conroy) to questions without notice asked by Senator Fifield and the Leader of The Nationals in the Senate (Senator Joyce) today relating to the economy.
This government is truly blessed-truly blessed because nothing is ever its fault. More people-smuggler boats? It is not due to any change in policy; it is all because of push factors, apparently. The AMA releases a report slamming the performance of public hospitals? It is not the government’s fault. Just ignore the PM’s promise to fix hospitals or take them over-it is not
this government’s fault. Record deficits and ballooning debt? It is all the fault of the GFC. It is nothing to do with the government, nothing to do with cash splashes, nothing to do with reckless political spending, nothing to do with their outrageous pork-barrelling, nothing to do with the money they have wasted on bicycle paths, nothing to do with the money they have wasted on pink batts-no, absolutely nothing to do with this government.
Rising inflation and rising interest rates: are they the fault of this government? Not on your life. Again, nothing to do with this government. Rising inflation is apparently all the fault of electricity retailers increasing
prices in some states.
But there is a real problem. I cite Mr Michael Stutchbury, the Economics Editor of the Australian if you do not take my word for it. I almost hesitate to do this because I know how much the government likes the Australian. It would be fair to say that the government has declared something of a jihad against the
Australian newspaper and possibly even a fatwa against some of its journalists, but I shall persist despite that. In the Australian today Mr Stutchbury said: At 3.5 per cent, core inflation remains above the Reserve
Bank’s 2-3 per cent target, partly because of domestic price pressures that will be intensified by the looming emissions trading scheme-
That is an interesting one. On this basis, inflation is not “subdued”, as Wayne Swan suggested yesterday, even though headline inflation has slipped to 1.5 per cent. Backing his budget stimulus, the Treasurer again preferred to emphasise the economy’s negatives. Once upon a time, treasurers used to focus on the strength of the Australian economy, on our economic fundamentals. But not this Treasurer. He always prefers to focus on the negatives.
You may recall that this government once upon a time talked a little bit more about inflation. They used to talk about inflation genies escaping bottles and
things of that sort. So concerned were they that they once had a five-point plan to tackle inflation. The first point was to run strong budget surpluses. Fail! That is no longer part of this government’s strategy. The second was to encourage private savings. I am not too sure there has been massive success there. Another was to fix chronic skills shortages. I guess when an economy takes a bit of a dip they tend to sort themselves out.
Infrastructure bottlenecks? We know, courtesy of the BCA, that only 14 per cent of this massive stimulus spending is actually going on serious economic infrastructure. The other thing was to lift workforce participation, which is a funny thing to do when you are reregulating the labour market. There is a bit of a problem with inflation and a bit of a problem with upward pressure on interest rates.
On 7 October this year interest rates went up from three per cent to 3.25 per cent. Possibly on Cup Day we may see another increase in interest rates. We certainly hope that we do not. Clearly, this government needs to reexamine the balance of its stimulus spending. Professor Tony Makin of Griffith University tells us what we know, which is:
… economics textbooks also tell us is that continued fiscal expansion will limit the extent to which interest rates can be lowered in the future.
And that is what we are seeing. But do not take my word for it; take the word of Prime Minister Rudd, who in his five-point plan said:
Fiscal policy should not complicate the task of monetary policy. It should make the job of the Reserve Bank easier, not harder.
I think they are very wise words. They should be followed and this stimulus spending should be wound back. There is a way to take pressure off interest rates.
It is to wind back the stimulus spending now.