24 September 2008
G’day, over the past few weeks, a number of commentators have been criticising the Rudd Government for supposedly not having a narrative. A narrative is of course the dominant theme of the Government’s policies; it’s the thing that binds all of what we’re doing together into a single story that people cast judgment on particularly when they come to vote.
I think this is a completely misconceived suggestion, in fact there is a very straight forward narrative that’s at the heart of pretty well everything the Rudd Government is doing, particularly on the domestic front. And that narrative can be summed up in three simple words, long-term sustainable growth. Whether it’s our infrastructure funds, whether it’s the national broadband network, education revolution, investing in schools, tackling our water crisis or indeed introducing a carbon pollution reduction scheme, or many other things that are currently on the Government’s agenda. The long term sustainable growth objective is very much at the heart of what we’re on about as a government.
But of course, the rock on which all of this is built is a very strong budget surplus. In this year’s budget we’ve projected for a $21.7 billion dollar surplus and that of course serves a couple of crucial functions. People tend to see the budget surplus as if it were some abstraction, something that’s just a pile of money sitting there that maybe could be put to better use. Well, nothing could be further from the truth. In fact the budget surplus both puts downward pressure on inflation and interest rates because if we reduce the surplus, if we put more Government spending into circulation that means more money chasing the same goods and services which tends to increase the price and therefore kick inflation off and of course higher inflation in turn means higher interest rates.
But also the strong surplus is going to be channelled into long term investment through three big infrastructure funds. The Building Australia Fund, for hard infrastructure like road and rail and ports and broadband. The Education Investment Fund for higher education, technical education, and of course the Health and Hospitals Fund for health infrastructure. Those investments are not all going to be rolled out at the same time obviously, they will be staggered over an extended period of time. This is a long-term strategy, but the money that’s involved in the surplus is to be directed into those funds for that long-term investment. That’s why it’s so important that the opposition passes the budget.
For the last couple of months the Liberal opposition has been sniping away in the Senate trying to knock over a number of key Budget initiatives and therefore shoot a big hole in the surplus. Now this isn’t just some kind of political game, if they’re successful in shooting a hole in the surplus of that kind - and we’re talking billions of dollars here - that will mean that we have weaker downward pressure on inflation and interest rates, so the risk of higher inflation higher interest rates will increase and it will also mean that there’s less money available for those big infrastructure funds. So our goal as a Government is pretty straight forward. It is long term sustainable growth for Australia.
The economy we inherited was not growing sustainably, it was growing quickly, that Government spending was fuelling that growth, inflation had reached a sixteen year high and we’d had ten interest rate increases in a row. Plus of course the huge environmental challenges of climate change and water not being adequately addressed. We’re committed to getting all of those things on a sustainable trajectory so that we can have long-term sustainable growth for Australia.
