ALP National Conference 2011 - Chapter 2: A strong economy for all Australians

02 December 2011

We are going back into surplus not as a stunt, not as a way of saying this is one in the eye for you, Joe Hockey, do better if you can, and show us your figures, not as an act of triumphalist masochism, to show we can be brutal too.

We are doing it to show our Triple A rating was well earned, and we, unlike any other nation are equipped and prepared to keep it. With that rating it costs us less than other nations to borrow money and spend it on the many things we need to do.

We're doing it to wind back for a bit the massive public expenditure we needed to get us through the GFC, now when we are nearly at the end of the tunnel and approaching the light, and back to something like normal in the management of our bruised but unbroken economy.

We're doing it to send a message to the world that, unlike a hundred less well-managed economies, we navigated the shoals and the high seas and the typhoons that unprecedentedly roared and raged through other countries, ruining tens of millions of lives. We came through, and we're well placed, unlike almost anybody else, to grow and, in our modest way, prevail in the region and in the larger polity.

The Triple A rating from all three global ratings agencies this week is outstanding proof of Labor’s fiscal management, which means unlike our friends in Europe, it costs us less to borrow money from overseas.

We know that as the economy grows post-GFC, the Government needs to allow a bit more room for the private sector to grow and recalibrate our approach taken during the global financial crisis. We need to reduce our fiscal stimulus type spending.

And we are now pulling back, as the economy grows, which helps reduce inflationary pressures.

What we are doing is sending a very strong message to the world about our strong economic fundamentals and our strong budget position. The recent turbulence in global markets has been created by governments around the world failing to set out and stick to credible paths back to surplus, unlike Australia.

We can't change the mining tax because it was built with pain on a hard-gotten consensus we will not get back if we change the rules now, in the last quarter of the game. We can't change it because we got the balance right, and iron ore, coal and petroleum add up to two thirds of the resources we send overseas, and after crediting royalties the amount we'd get from the other minerals wouldn't add up to much, except a mess of trouble in the courts and the airwaves at a time when we need it least.

Because there isn't just uranium down there, or gold down there. It's mixed in with a lot of other minerals, and a miner claiming deductions for one part of what's on his shovel and wearing a tax on the rest of it is too hard and complex a task, I think,  to impose on anyone at this time.

And we can't, or we won't, pick up the financial transaction tax because it's really bad idea. It works only if every country does it, which they won't. And when they won't it puts us at what is euphemistically called a competitive disadvantage; which a genteel way of saying we lose the game.

In fact the IMF has recommended against the introduction of such a tax, meaning other countries are even less likely to introduce it.

Other countries that do it -- in Europe in particular -- are doing it only to plug holes in their emergency budgets, to stop the bleeding for a month or two while the pumping heart is weakening and fading, and the whole show is going to hell, going inch by inch into a fiery furnace they will not survive.

British Prime Minister Gordon Brown thought the concept had some merit in principle, it was sometimes tagged a Robin Hood tax over there, but he understood the City of London would be hollowed out if only UK implemented such a tax without rest of Europe and rest of the world.

The ongoing, strong growth of the services economy in Australia means we need to nourish and encourage growth of sub sectors like financial services, not stifle it through more taxes, even if such taxes are based upon a principle of some decency. We need to be optimistic about public policy but also realistic.

Many of the 750 thousand jobs Labor have created since 2007 are in the services industry, so we are well placed to service the rising 3.3 billion Asian middle class by 2030 - we can help manage their wealth, which is good for our economy in the long term.

Labor Governments get it. We’re here to create jobs and look after those less fortunate, those skating on the thin ice of our society. We kept Australians in jobs during the global financial crisis.

We’re keeping them in jobs now the mining boom is in full swing, but when other parts of our economy aren’t doing so well.

When our opponents are threatening to cut services and cut jobs, now is the time Labor must stand firm and stick up for working people by making sensible decisions for the future of our country.