Australia's Economic Performance

I spoke in parliament yesterday about Australia's economic performance.
Appropriation Bill (No. 3) 2011-2012, Appropriation Bill (No. 4) 2011-2012
14 February 2012

It is with great pleasure that I rise today to speak on these appropriation bills—important legislation to support the reforms that this government is implementing. The Gillard government's economic reforms take place in a context in which the performance of Australia's economy among the best in the world. Jorg Decressin of the IMF said last month:

'There is no advanced economy—or maybe there are one or two—that is as well placed as Australia in order to combat a deeper slow down, were such a slowdown to materialise, and that's because you still have room to cut interest rates if that was necessary and you also have a very strong fiscal position.'

Anoop Singh of the IMF said, on 2 February 2012, that 'despite the global slowdown, Australia is facing good times'. The IMF's article IV analysis of Australia in October 2011 described our performance since the onset of the global financial crisis as enviable.

Australia's fiscal position is no accident. It is the result of a timely, targeted and temporary response to the global financial downturn—a response that is very different from what those opposite would have put in place. Those opposite have been very clear over recent weeks that they would not have allowed the Commonwealth budget to go into deficit when the global financial downturn hit.

So we are talking about two very different perspectives. Ours is that it was appropriate to take on a small debt load. Less than 10 per cent is where Australia's debt will peak—about the amount a typical household would take on to buy a small car, for example. But those opposite would not have taken on that debt. Those opposite are of the firm view that they would not have allowed the Commonwealth budget to go into deficit. That would have meant that as the revenues fell—and let us remember that the main reason for the Commonwealth debt is revenue downgrades, not spending increases—those opposite would have cut government spending. While our fiscal stimulus saved a couple of hundred thousand jobs and tens of thousands of small businesses, those opposite not only would have failed to put a stimulus in place but also would have instituted cuts. We have a precedent for that. It is what Herbert Hoover did in the teeth of the Great Depression. It is what caused the Great Depression to take a decade rather than a couple of years. And that is the economic recipe of those opposite.

Those opposite continue to maintain their policy of economic vandalism. They oppose a carbon price and suggest again a policy of direct action, a policy that finds no support among a single credible economist in Australia. Their policy of direct action will amount to a new tax—$1,300 a household—that goes straight for polluters. Under our scheme, nine out of 10 families will get assistance; under theirs there will be no assistance for households. Theirs is of course a non-market-based scheme, one of picking winners and in which there are no incentives for innovation. Ours is a market based scheme, because that is what the experts tell us is going to be the most effective and efficient way of reducing Australia's carbon pollution. It will achieve the targets, cutting carbon pollution by five per cent by 2020 and achieving an 80 per cent cut by 2050. Those opposite have an expensive and inefficient scheme, with no idea of what they will do past 2020.

At the same time, we on this side of the House are continuing to invest in the productivity-boosting reforms that are essential for Australia's future prosperity. Productivity is an ugly word, but ultimately that is what underlines increases in living standards. It is why Australian's real living standards have more than doubled since I was born, and I hope will more than double again in the generation to come. Those productivity-enhancing investments are things like more education and higher quality education. Our investments in schools, backed by the transparency of the My School website, My School 2.0, now opposed by those opposite, will ensure that Australian kids learn more in every year of school.

We are building trades training centres, which will ensure that when children are at high school, looking and casting around and thinking about maybe taking on a trade, they can dip their toe in the water. They can engage in trades training within the comfort of the school environment. We are investing also in universities. More Australians are attending university this year than ever in the history of this great nation. We are doing that because the one certainty of the labour market of the future is that is going to be different from the labour market of today. The right investments in productivity are investments in the human capital of future generations. They are investments that ensure that young Australians have the skills to adapt to a changing labour market. This is recognised by the IMF article IV analysis of Australia. They have recognised Labor's investment in skills and participation.

At the same time we are investing in infrastructure. We have doubled the roads budget and increased tenfold the rail budget. We have put more into urban public transport than all the other federal governments since Federation put together. We are building a National Broadband Network. I noticed the member for Hasluck has one complaint about the National Broadband Network, and that is because it is not happening fast enough. I understand that objection. That is an objection that I hear in my mobile offices and community forums. My constituents in the electorate of Fraser want the NBN. I do not blame them for wanting it faster. But it is pretty rich for those opposite to walk in here with their string and tin cans alternative to the NBN, suggesting that the Labor government is somehow to blame for not bringing on the NBN fast enough.

In schools, we have invested in the Building the Education Revolution program. It is a program which is not just about providing better school halls—although they are sometimes needed—but is about providing better classrooms too. Amaroo Primary School, in my electorate of Fraser, now has classrooms with dividers that can be opened up between them that allow teachers to team teach together. You can have a teacher who is great at literacy paired with a teacher who is great at numeracy. They can learn from one another. I have seen a new school hall in Black Mountain Special School in my electorate. It now has ramps that lead up to the stage that allow children who are in wheelchairs to go up on the stage and receive their awards in the same place as students who are not in wheelchairs.

In speaking to the appropriations legislation, I do want to rebut some suggestions that have been made by the member for Goldstein in this parliament and which have been announced over recent weeks. The member for Goldstein suggested that government accruing very low net debt—as I have mentioned, it will peak at less than 10 per cent of GDP; that is less than a tenth of the average of major advanced economies—will influence the interest rate that Australian businesses pay. Nothing could be further from the truth.

Opposition members interjecting—

Dr LEIGH: Those opposite are now denying this suggestion? That is interesting. If those opposite would like to stand up and rebut the member for Goldstein, you would be more than welcome to. God knows, there have been plenty of your colleagues that have disagreed with the member for Goldstein. Indeed, the member for North Sydney has disagreed many a time with the member for Goldstein on the issue of the coalition's black hole. But let me take him to task on this issue of interest rates. It is simply not the case that government borrowing in Australia drives up the interest rate. The interest rate is set by a combination of factors including the world interest rate. In a small, open economy we typically think of world savings as driving the price of funds and it being driven by the independent central bank. But the suggestion that a modest level of government borrowing affects the interest rate for small businesses is wrong and scurrilous, and it continues as part of a scare campaign run by those opposite.

Those opposite seem to be happiest when they are talking down the Australian economy, when they are trying to reduce consumer confidence in this country. But they cannot change the simple facts. In Australia unemployment is 5.2 per cent, in the US it is 8.3 per cent and in Europe it is now over 10 per cent. Our economy has grown to seven per cent since the GFC. Others have just recovered, lost ground or are struggling to recover.

I notice that members opposite would like to make comparisons with the past. Well, let us do so. When we came to office we faced higher inflation, higher interest rates and higher income taxes than we have today, but we now have a gold plated AAA credit rating from all three major agencies.

Mr Baldwin interjecting—

Dr LEIGH: And, yes, we have debt, because we know the alternative to taking on debt. The alternative to taking on that debt would have meant hundreds of thousands of Australians thrown on the scrap heap of unemployment. We on this side of the House know what unemployment means, and we will fight to prevent that unemployment. You on that side of the House are clearly happy to have more unemployment in Australia if it means that you can refuse to take on a skerrick of debt. Those on the other side of the House are like a family who, as the floodwaters are rising, say, 'Oh, no, we couldn't possibly put a lifeboat on the credit card; we don't want to take up any credit card debt; let's just let the floodwaters rise.'

When the Leader of the Opposition went to London, he said, 'Australia has serious bragging rights. Compared to most developed countries, our economic circumstances are enviable.' If you want to hear from a more economically literate member of the opposition team, you could have the member for Wentworth speaking to a Liberal Party convention about 'the current success and strength of our economy against the troubles of so many others'. Our economy stands head and shoulders above other developed countries, and it is about time that those opposite stop trash-talking the Australian economy and began to speak honestly with the Australian people about the strength of the Australian economy. It is about time they began to speak honestly about the benefits for Australians and about good economic policies like a profits based tax on mining. A profits based tax on mining is economically sensible, because it recognises that, as mineral prices rise, mining companies ought to be able to afford more taxes going back to the people of Australia. Those mining resources can be dug up only once, and the Australian people are right to demand their fair share of the mineral resources that are theirs. So, yes, we are putting in place a profits based tax on minerals and we are putting in place a price on carbon pollution. These are key economic reforms laying the foundation for Australia's prosperity.

We are raising the compulsory superannuation contribution rate from nine per cent to 12 per cent. Those opposite are going to vote against it, as they voted against the introduction of compulsory superannuation. History proved them wrong then; history will prove them wrong again. At least they have a sense that they are going to be on the wrong side of history with this one, because they have said they will not try to wind it back if they were to win office. They have admitted that the increase in compulsory superannuation is good for Australian workers. It recognises that more Australians should be able to retire in dignity, and higher compulsory superannuation will allow them to do so. These appropriation bills are good economic management, part of the strong economic management that is the hallmark of this government.

In closing, I am pleased to note that the House of Representatives Standing Committee on Economics yesterday discharged the reference of the appropriation bills to our committee, an utterly bizarre reference. I am not sure, in the history of this parliament, whether the appropriation bills have ever been referred to the House economics committee, but those opposite decided that they wanted to play their political games, and the House economics committee has sent back that reference. What would an inquiry look like? Perhaps the member for Wright can enlighten us as to what such an inquiry would have looked like if the coalition had gone ahead with it. Thankfully, cooler heads have prevailed. I commend the bills to the House.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.