Posted on Monday, 1 December, 2008
The financial crisis which is sweeping the world is of great concern to all of us. We are in unprecedented times. Not since the 1930s have we seen the kind of meltdown in global markets that we have seen in the last six months. However, many of these changes were largely telegraphed. In fact, Peter Costello said in launching the Liberal Party campaign last year that the biggest concern facing the Australian economy was the subprime meltdown in the American market.
As the election result became a reality and we installed the Rudd government, in the very first days of the parliament, when I came to Canberra to sit in my first parliament, it became obvious that the government were intent on finding fault with the previous government—a government that had paid off $96 billion worth of debt, saved $60 billion and left us with a $20 billion surplus. The new government focused on the problem of interest rates. They said that that was the thing that the Costello treasurership and the Howard prime ministership had left behind that showed that Australia was in such poor health. They picked wrong. They made a bad mistake. They tightened spending. They increased government taxes and we had a two per cent blow-out of interest rates at a time when there was no need to do so at all. It would appear now that the best advisers in the country also got it wrong. The Reserve Bank had made an error and the government were only too happy to go along with them. Rather than actually resisting the push to raise interest rates, they agreed.
The government has become a government of its time. The times suit Labor. Labor have a reputation for spending every time they get into office. Labor have a reputation for running up deficits. Labor are very good at what they have been doing in the last six months. Since the tabling of the budget in May we have seen the total erosion of a $22 billion surplus. A $22 billion surplus is completely gone in six months. One would have to wonder just whether we can keep on doing this. I guess that is the question we have to ask ourselves. What happens with the next six months and the six months after that? At this rate, if the government keep spending $22 billion worth of savings every six months, in 18 months the $60 billion that was squirrelled away by the former Treasurer and by the former government will be completely eroded and not only will we have a deficit but Australia will also have a net debt again.