House of Representatives Speech-Appropriation Bill (No. 3) 2009-2010

I rise today to speak to Appropriation Bill (No. 3) 2009-2010 and Appropriation Bill (No. 4) 2009-2010. These bills appropriate funding for government decisions included in the Mid-Year Economic and Financial Outlook and decisions made since its release. Last Wednesday was the anniversary of the $42 billion Nation Building and Jobs Plan, and I think it is worth reflecting on how our nation has fared over these last 12 months. I think it is also worth reflecting on the very clear delineation of economic policy that the stimulus policy has made stark in Australian politics.

I rise today to speak to Appropriation Bill (No. 3) 2009-2010 and Appropriation Bill (No. 4) 2009-2010. These bills appropriate funding for government decisions included in the Mid-Year Economic and Financial Outlook and decisions made since its release. Last Wednesday was the anniversary of the $42 billion Nation Building and Jobs Plan, and I think it is worth reflecting on how our nation has fared over these last 12 months. I think it is also worth reflecting on the very clear delineation of economic policy that the stimulus policy has made stark in Australian politics.

On the one hand we have the government’s response—to take timely and effective action in the face of the most serious financial and economic crisis that the world has faced in more than 75 years. It is a response by a government that was prepared to use the full range of policy tools at its disposal: fiscal policy, both through transfer payments and government investment in infrastructure; monetary policy; financial regulation and intervention in financial markets; and international trade and finance policies. It is a response that has involved the federal government working with other nations, with the state governments, with local governments and with businesses to craft a response that would protect and strengthen Australia’s economy now and in the future. Fundamentally we have a government that understood that to contain the damage caused by the meltdown in global financial markets we had to maintain confidence in our financial system, encourage households to maintain consumption and provide businesses with the certainty and confidence to continue investing.

On the other hand and in very stark contrast we had the opposition’s reaction. The Liberal and National parties opposed the infrastructure stimulus package at the height of the global financial crisis and have continued to oppose the stimulus package since. We have had the new Leader of the Opposition saying in the last day or two that the stimulus was a waste of money. We have had the new opposition leader saying in the clearest possible terms that it is the intention of the Liberal and National parties to stop the stimulus. That provides the clearest possible contrast. We have an opposition that would, by stopping the stimulus, stop economic policy which is supporting thousands of jobs, supporting tradies and small businesses across Australia and supporting thousands of Australian working families. As I say, the contrast could not have been clearer.

And now, as Australia makes its way through this crisis, we are beginning to see the effects of the government’s response. The response has helped to maintain and rebuild confidence in the Australian financial system, it has helped to sustain consumer and business confidence and the government has made up for the decline in business investment and household consumption by injecting significant government spending into the economy. The Mid-Year Economic and Fiscal Outlook included significant upgrades in economic growth compared to the budget forecast for financial year 2009-10, which improved from negative 0.5 per cent to 1.5 per cent. Forecasts for 2010-11 improved from 2.25 per cent to 2.75 per cent. The fiscal stimulus added around one percentage point to GDP growth in 2008-09 and should add 1.5 per cent to GDP growth in this financial year. According to the Mid-Year Economic and Financial Outlook, private demand will contract by 0.75 per cent rather than the four per cent in the budget forecast.

Australia has managed to avoid a recession through the worst global downturn in more than 75 years. Australia’s economy is the only advanced economy that expanded in the year to June 2009. According to the IMF’s World Economic Outlook update, Australia’s economic growth was positive, and Australia was the only advanced economy to achieve this. No major Australian financial institution collapsed; none required government to take significant shareholdings in return for dealing with toxic debt; nor were any nationalised. This can be contrasted with the situation in the United Kingdom, where the government has nationalised Northern Rock and taken significant shareholdings in Lloyds and the Royal Bank of Scotland.

Most importantly, the government’s response to the global economic crisis has helped to protect hundreds of thousands of Australian jobs. Unemployment is now expected to reach around 6.75 per cent. This is 1.5 per cent lower than it is estimated would have occurred without the stimulus. It is now clear—if there was ever any doubt—that the government’s response has been the correct response. It has left the opposition with no credibility on economic matters.

On 12 October 2008, in the days after the collapse of Lehman Brothers, the Australian government took the first steps to secure Australia’s economic position in the face of a rapidly deteriorating situation in global financial markets. Through the guarantee scheme for large deposits and wholesale funding, and the financial claims scheme, the Australian government made it clear that it would ensure confidence in our financial institutions was maintained. These measures ensured continued consumer confidence in our financial sector and guaranteed that Australian banks would still be able to access global capital markets—in particular, to rollover debt that was falling due. Without the guarantees that the government provided, financing for business investment would have dried up, interest rates would have been higher and we would have seen a sharp contraction in economic activity and a resulting loss of jobs for Australian workers.

The very next day, 13 October 2008, the Prime Minister and the Treasurer announced the $10.4 billion Economic Security Strategy, which would become the first part of the government’s program of economic stimulus. It contained $4.8 billion for immediate financial assistance to Australia’s four million pensioners, carers and seniors; $3.9 billion for low- and middle-income families; $1.5 billion for the first home owners boost; and $187 million to create 56,000 new training places in 2008-09. It also brought forward significant investment in nation-building infrastructure projects to 2009.

This first initial boost to the economy focused significant transfer payments to those most in need and most likely to inject that money straight back into the economy—pensioners, carers, seniors and low- and middle-income families. It provided significant help for the building and construction industry as well as for first home buyers seeking finance in the midst of a drastic credit tightening by Australian banks. It helped to boost economic activity by bringing forward the government’s investment in infrastructure to make up for the failure of the Howard government in dealing with the capacity constraints during the boom.

As the global economic situation deteriorated, the first stimulus the government announced was followed in February 2009 by the Nation Building and Jobs Plan. We had the anniversary of that plan, that infrastructure stimulus, just last week. Key details of this plan included $12.2 billion in one-off cash payments and $29.9 billion in shovel-ready infrastructure projects, including investing $14.7 billion in schools across Australia; $8.5 billion in critical road, rail and port infrastructure; $4.5 billion in the Clean Energy Initiative; $2.6 billion in the Education Investment Fund; and $3.2 billion in the Health and Hospitals Fund. The final element was investing more than $1 billion in the Regional and Local Community Infrastructure Program, which is the largest one-off investment in local infrastructure in Australia’s history.

Locally, in our community, what this infrastructure program has meant is large local council projects. A key example is the complete rebuilding of the Noble Park pool, which is now over 50 years old. That coincides very happily with the centenary of the community of Noble Park. The complete refurbishment of the Noble Park pool is a long overdue local project. The federal government funding is in the order of $7 million, and to that is going to be added a contribution from the City of Greater Dandenong and a contribution from the state government from its Better Pools program. What you see there are the three spheres of government—local, state and federal—working very cooperatively together to produce a community project which has been long awaited and is much needed. The work on that Noble Park pool refurbishment is well underway and will provide very direct benefits to the whole of our local community in Noble Park.

The other major council in my electorate, the City of Kingston, received funding for the refurbishment of the Kingston Heath soccer facility—a project of over $2 million, provided through Commonwealth funding through the Regional and Local Infrastructure Program. Again, the works at Kingston Heath soccer facility are well underway. It is a much used and much valued local facility, used by soccer clubs from across south-east Melbourne, and the refurbishment of it is going to make a very substantial contribution to the sporting facilities in our area.

The two main councils in my electorate, the City of Kingston and the City of Greater Dandenong, as well as the City of Frankston—which is responsible for the Carrum Downs area in the south of the Isaacs electorate—have all embarked on a range of smaller infrastructure projects, which have been funded by the Regional and Local Community Infrastructure Program. Many of those smaller projects have already been completed or are well underway. I could mention a couple: the opening in January of the refurbished Tatterson Park, with a very extensive playground, in Keysborough, which is a City of Greater Dandenong Project; and the extension of bike paths in and to Braeside Park in the City of Kingston—notably, bike paths from Waterways to Braeside Park. Again, these are much needed and much welcomed local projects that the local councils have been able to undertake with the assistance of Commonwealth government funding.

The schools projects, which have been funded by the Building the Education Revolution funding, have produced construction programs in every primary school in my electorate. The projects that have been undertaken at every primary school in my electorate are all welcome. They are all now underway and some of them are on the point of completion. I think the first primary school in my electorate that is going to complete its Building the Education Revolution project will be St Joachim’s in Carrum Downs. They have built a truly excellent school hall, which has already been welcomed by the whole of the school community. It is a facility that St Joachim’s, in the Catholic system, thought that it was never going to be able to build, and it is a hall that is going to provide a terrific facility for not only the school community but the wider local community as well.

Other primary schools have embarked on the construction of classroom complexes. Again, many of the school principals, school council presidents and parents throughout my electorate have said to me over and over again over the last year how pleased they are at the building works being undertaken. They know very directly the support that these building projects at primary schools have provided for local tradies, in the creation of thousands of jobs through this program, and the great benefits which will flow from the construction of classrooms and halls—which primarily is what is being constructed—at each of the primary schools in our electorate. They are in no doubt as to the timeliness of the economic stimulus and the long-term worth of what is being constructed with the Commonwealth government funding.

Returning to the national level, according to the latest Global Economic Prospects from the World Bank, the worst of the global economic crisis is behind us. Although this can provide some confidence, it should not allow complacency. The opposition, having opposed the effective and timely economic response of the government, is now demanding that that response, the stimulus, be withdrawn. That can be contrasted with the comments that have been made by economists across the world. To pick one, notably the International Monetary Fund in the November edition of Cross-Country Fiscal Monitor called for countries to maintain fiscal support but to devise credible exit strategies. That is precisely what the Rudd government has done. In contrast to the opposition—and the contrast could not be greater—the government has a clear and properly communicated strategy to withdraw the stimulus progressively as private demand recovers. As Peter Anderson, Chief Executive of ACCI, has said ‘an in-built scaling down of economic support is preferable to sudden withdrawal’.

There should be no doubt as to how the infrastructure funding provided by the stimulus package has been able to step in to take the place of a downturn in construction activity in a whole range of sectors across Australia. You have only to look at the construction figures in different sectors of the economy to see just what a downturn there was and to readily understand that, if the government had not stepped into the breach and provided this infrastructure funding, there would have been a disaster for the Australian construction industry, with the direct loss of thousands of jobs and the direct removal of support for thousands, if not hundreds of thousands, of Australian working families.

You can contrast the steady, measured and decisive approach of the government with the immense risks to the Australian economy which the opposition presents. It is a contrast between the Rudd government building a stronger economy for Australian working families and an economic team that could best be described as a rabble, an economic team which cannot even agree among themselves—highlighted by the extraordinary statements made by the opposition’s finance spokesman, Senator Joyce, just yesterday. Commenting on debt, Senator Joyce said:

You have got to ask the question, how far into debt do you want to go? We are getting to a point where we can’t repay it.

One can only listen to that kind of comment in amazement and think, ‘What was the shadow minister for finance, the alternative finance minister of this country, thinking in suggesting that Australia lacked a capacity to repay its debt?’ It is a direct attack on confidence in the capacity of our economy. It is a comment that the shadow Treasurer did not waste any time slapping down, saying yesterday and again on radio today—correctly, I have to say: ‘Australia can repay its debt; there is no doubt about that.’

What we have is the shadow Treasurer saying correctly that Australia can repay its debt, in the face of ridiculous comments—and they are not the first we have heard from the shadow finance minister—to the effect that Australia in some way cannot repay its debt. It is to be hoped that Senator Joyce will not much longer continue to occupy a senior position in the opposition’s finance team because—even though, happily, he speaks from opposition—it does no good for the Australian economy to have a person occupying such a senior position making these kinds of ridiculous comments. It is symptomatic of the confusion and uncertainty about economic policy that the opposition presently has. It is symptomatic of the fact that the opposition has not the faintest idea of what to suggest about the course of the Australian economy. And it is symptomatic of the fact that—faced with the government having taken correct, decisive and prompt action in the face of the worst economic downturn that the world has seen in 75 years—the opposition is simply bereft of ideas.