I rise today to speak on the matter of public importance put forward by the opposition. I would like to start by thanking the opposition for bringing this matter to attention of the Senate today. Why do I say that? I say that because I always find the attempts by the opposition to rewrite history entertaining. We just heard from Senator Fifield not a mention of global financial crisis, just a rewriting of history, airbrushing it out—
Senator Fifield: Mr Acting Deputy President, I rise on a point of order. Senator Bilyk is coming perilously close to misleading the Senate. I spent quite a bit of time in the debate talking about the global financial crisis.
The ACTING DEPUTY PRESIDENT ( Senator Ludlam ): Senator Fifield, that is not a point of order.
Senator BILYK: As I was saying, I find the attempts by the opposition at rewriting history and crystal ball gazing into the future always to be entertaining. We can always count on them to be entertaining.
The recent mid-year review shows that the Gillard government is on track to return the budget to surplus and it shows that the fundamentals of the Australian economy are strong despite global turmoil. We have just delivered a Mid-Year Economic and Fiscal Outlook with billions of dollars in savings to return the budget to surplus, and we are on track to deliver it. Unlike the doom merchants on the other side of the chamber who constantly talk down the Australian economy, we should all take pride in what the country has achieved in the face of very challenging global financial conditions and structural change here at home. We have completed a remarkable 21 years of economic growth—a stunning achievement unmatched by any other advanced economy to date. We have got an enviable combination of solid growth, low unemployment, contained inflation, strong public finances, solid consumption and an investment outlook that is still strong. At 3.25 per cent, we have got lower official interest rates than at any time during the last coalition government. That is helping millions of families and small businesses. And while we have only the 51st largest population, Australia has overtaken Spain to be the 12th largest economy in the world, after overtaking Mexico and South Korea since the government came to office.
The Australian economy is the envy of the developed world. The exaggeration and spin of the opposition should be tempered by these hard facts. This government is committed to strong economic discipline. Our strict fiscal discipline has already helped give the RBA room to deliver the equivalent of six interest rate cuts over the last year. Australians will not ever forget that interest rates went up 10 times under the last Liberal government because inflation was not contained. Because of these interest rate cuts, Australians on a $300,000 mortgage are now paying around $4,500 less interest per year than they were when the Howard government left office. This is obviously a significant saving to the family budget.
The opposition distrust the numbers in MYEFO. Of course they do because the opposition only trust numbers that confirm their pre-conceived bias, or that they have made up themselves. These numbers were produced by Treasury—the same Treasury that produced the forecasts for the entire period of the Howard government and the same Treasury that forecast the effects of the GST when those opposite introduced it. On this side of the chamber, we have full confidence in Treasury’s forecasts, which are broadly consistent with many major forecasters, including many private sector economists.
It is really disappointing that the opposition wish to impugn the abilities of an organisation of highly skilled individuals who work solely for the public benefit. But, what would we expect? In fact, many economists in the private sector have explicitly made the point that the growth outlook contained in MYEFO is reasonable and in line with their own forecasts. Westpac’s Chief Economist Bill Evans said on 22 October:
They’ve cut their growth forecasts by a quarter of a per cent. That’s now in line with our own forecast and we of course support that view.
UBS Chief Economist Scott Haslem also stated on 22 October:
The government’s growth forecasts seem reasonable.
Finally, HSBC Chief Economist Paul Bloxham also stated:
I think these numbers look fairly sensible in the scheme of things.
The government has been upfront about the weaker global outlook, which has weighed more heavily on parts of our economy, including some resource projects. This has contributed to a downgrade of our GDP forecast for 2012-13, although, like many major forecasters, we are still expecting growth around trend. Like most private sector forecasters, we have significantly downgraded our terms of trade forecast for 2012-13, given the unexpected sharp decline in non-rural commodity prices that occurred recently.
The fact is we are still expecting growth around trend, low unemployment and contained inflation—an enviable combination that continues to put the Australian economy in a league of its own. Australia holds a AAA credit rating with a stable outlook from all three rating agencies, one of only seven countries that does so. This is a feat that was never achieved under the coalition.
The Australian economy is fundamentally strong. Mining capital expenditure is expected to increase by a staggering 45 per cent in 2012-13, following growth of 75 per cent in 2011-12. This is underpinned by a substantial pipeline of investment, with $260 billion at an advanced stage, so it is largely locked in. New business investment is expected to reach 50-year record highs at the end of the forecast period, supported by a still strong outlook for resource investment. As the investment phase passes its peak, this should coincide with a ramp up in the production phase, so the resources sector will still be making a positive contribution to growth overall. We expect non-rural commodity export volumes to grow by 15 per cent over the forecast period alone. We also expect that lower interest rates and rising incomes will support modest growth in dwelling investment and non-mining investment towards the end of the forecast period. We have a proven track record of putting in place the fiscal settings appropriate for the economy and for jobs.
In the face of the worst global recession in 80 years, we stepped in to support the economy and jobs. This government did that. This ensured that we avoided recession and avoided having hundreds of thousands of Australian jobs hit the wall. The Australian people will never forget that those opposite came into this place and voted against Australian jobs and the economy. They will not forget that. As we stepped in to support our economy, we put in place the strict fiscal rules that have us returning to surplus faster than every major advanced economy. We have put in place over $150 billion in savings to ensure our budget is on track to return to surplus.
It is cute that those opposite talk about surplus but then fail to come into this place and support the savings to return us to surplus. They puff out their chests and rage over a so-called ‘age of entitlement’ but then fail to come into this place and to support the savings that make our budget sustainable. It is no wonder that those opposite have a $70 billion crater in their budget bottom line, as announced by Mr Joe Hockey.
It is disappointing to be lectured about a surplus by those opposite when their shadow Treasurer does not appear to understand MYEFO. For example, Mr Hockey claimed the Murray-Darling Basin plan was not in MYEFO. Mr Hockey said: ‘Well, the Prime Minister announced $1.7 billion for the Murray-Darling Basin. Not a single dollar of that was contained in a statement just made a few days earlier.’ But, as the Prime Minister and Minister Burke had previously announced, it was in MYEFO. Mr Hockey also claimed that our economy was ‘flatlining’, saying: ‘In a week when the budget has collapsed, the mining tax has collapsed and the economy is flatlining, I just don’t think these are the most significant issues.’
In fact, Australia’s economy has been growing for 21 consecutive years, as I said previously, and the most recent figures show us growing at 3.7 per cent through the year. On top of this, the International Monetary Fund forecasts Australia will be the fastest growing advanced economy this year and next. Another thing Mr Hockey claimed was that there was no lost revenue. He said Wayne Swan kept talking about lost revenue when there was no lost revenue. This is despite undisputed evidence that the global financial crisis wiped $160 billion from government revenue.
It is disappointing that the opposition continues to seek to talk down the Australian economy. It is disappointing that they cry crocodile tears about a surplus, yet will not commit to savings measures. I also find it disappointing that they come into this place and question the competence of an organisation—that being Treasury—whose expertise they relied upon without question while in government. Finally, it is really disappointing the hypocrisy those opposite show when their shadow Treasurer and their economic team do not understand the MYEFO, do not understand the budget and do not understand the $70 billion black hole that their own shadow Treasurer admits they have.