Mr BOWEN (McMahon) (16:34): I thank the Treasurer for his ministerial statement. It is of course appropriate that he represents Australia at the G20 finance ministers meeting, as he does in this office in many different international forums. The burden of international engagement for a modern day Treasurer is a significant one, taking him away from the country and from his family at much more regular intervals than I am sure he would like. I do note that and thank him for his engagement in the G20, in the tradition of modern treasurers. That is as far as my level of agreement with the Treasurer goes in this contribution, but it is a sincere one with which I start these remarks. I will deal with some of the matters the Treasurer dealt with in his contribution—confidence, growth, jobs and the budget—and I will touch on the situation in China as I conclude. The Treasurer has dealt with the matter of confidence, but I am afraid the Treasurer has perhaps misled us in relation to the causes of the decline of confidence. It is not accurate for the Treasurer to say that the cause of the decline in consumer and business confidence has been recent international volatility, because the decline in consumer and business confidence has been happening for two years. The Westpac index, which is out today, did show a decline, but it is 15 per cent below where it was at the time of the last election, and all indexes of business and consumer confidence are on the decline. The Treasurer said during question time today that there are many indexes of confidence—and he is right—and they all are showing a decline, and all have been showing a decline for a substantial period of time. In fact, as Westpac themselves said today: This print on the Index now marks the 17th out of the last 19 months that the Index has been below 100. A level of the Index below 100 indicates that pessimists outnumber optimists. After acknowledging some volatility in the series the underlying picture is that confidence has been little changed over the last year—firmly stuck below 100 and averaging around 96. The Treasurer's preferred figure—the one that he has indicated previously that he has the most confidence in—the ANZ weekly confidence figures, were 5.8 per cent down last week. Of course, as I mentioned during question time, the NAB Monthly Business Survey confidence figures are at just plus one. The Treasurer, again during question time, said plus one was not a bad result. It was plus 12 at the time of the last federal election. So far from the adrenalin rush of confidence that the Prime Minister and the Treasurer promised the Australian people before the last election to turbo charge the Australian economy, what we have is quite the contrary. Frankly, for the Treasurer to blame international volatility is an excuse from a government in which we were promised no excuses and no surprises—and we have seen many of those two things. In relation to growth, which is vital to reducing unemployment and creating jobs necessary to see unemployment come down, the picture is not an encouraging one. Again, the Treasurer was quick to claim credit last quarter for 0.9 per cent growth. He said: … the Australian economy grew at 0.9 of one per cent, which is a strong figure. The momentum is there in the Australian economy. The best friend of the Australian economy is the coalition government. He said this growth is broad based. He said: Growth in exports, household spending, services and new dwellings confirms that the Government’s economic plan is working. If it is the economic plan that is responsible for 0.9 per cent growth you would expect the Treasurer to come out at 0.2 per cent growth and also link it to his economic plan, such that it is. That is not what we have seen. What we have seen, instead, is the Treasurer taking some solace in the fact that the Australian economy is growing faster than Brazil's. This is not a country with which we are normally compared, in economic terms, but it is the one the Treasurer has grabbed, in his desperation to find countries that we are doing better than. Mr Hockey: What about Canada? Mr BOWEN: He points out Canada. We are growing more slowly than the United States, the United Kingdom, Europe, Greece, Belgium, Germany, Portugal, Hungary, Mexico, Slovenia— Mr Hockey: That's not actually right. Mr BOWEN: The United Kingdom was growing at 0.7 per cent in the June quarter, compared to 0.2 per cent. Mr Hockey: What's year on year? Mr BOWEN: The Treasurer was very keen to quote the quarterly figures last quarter. Now he says don't worry about the quarterly figures, just look at the annual figure and average it. Do not take year to year, just average it, he says, in desperation to find a figure that suits him. We are growing slower than Estonia, the Slovak Republic, Greece—0.9, Poland, the United States—0.9, the Czech Republic, Spain—an economy that has had considerable difficulties—growing at one per cent, and Sweden. It is not a story that the Treasurer or the government can be proud of, when it comes to economic growth, or they can boast about. Every figure I have quoted is correct. I invite the Treasurer to correct any of them, if he can, and I do not believe he will be able to. Mr Fitzgibbon: You should table them. Mr BOWEN: I am sure I will not get to table them so I am not going to try. What we have seen is the impact of this combination of a decline in confidence and declining growth. Annual growth has declined in every quarter since the Treasurer's first disastrous budget. And there is causality here. When you see annual growth— Mr Hockey: That's not right either. Mr BOWEN: You asked me to quote annual growth, and I am happy to. The Treasurer asked us to speak about annual growth and I am happy to do it. I am happy to talk about the decline in annual growth on his watch. There is a causality because, when you have a Treasurer who introduces a budget that attacks the family budgets and the budgets of Australian pensioners, you are going to see an impact on confidence, as we have seen, and we see an impact on economic activity. The Treasurer is, again, quick to blame international economic circumstances but it was not that long ago that he was claiming credit for international economic growth. Remember the rather ambitious claims of the Treasurer at the G20 meeting in Brisbane? He had convinced all the world's finance ministers to add to economic growth. Mr Hockey: True. Mr BOWEN: He said it is true. They had not thought of it until they came to Australia. They had the Treasurer of Australia tell them, 'Listen, it's a good idea for you to boost economic growth.' They said, 'We're glad we came all this way down to Brisbane to be told by Joe Hockey, the Australian Treasurer, to boost economic growth.' Since then, all we have seen is downgrades in global growth projections. I pay the Treasurer credit for going to Turkey as he should. I recognise he is away more than he would like to be, and it is a burden on him and his family. In Turkey he said, 'It would have been so much worse, the world economy, if we had not convinced them in Brisbane to add to economic growth.' He said, 'It would be so much worse if it were not for little ol' me, the Treasurer of Australia.' The Treasurer should care more and take some responsibility for Australian economic growth instead of trying to claim credit for global growth, which is on the decline as well. We have seen unemployment increase from 5.7 to 6.3 per cent—a 13-year high. It is the first time in 20 years that more than 800,000 Australians have been out of work. Mr Hockey: You forecast 6.3! Mr BOWEN: The Treasurer said when he was shadow Treasurer how concerning unemployment of 700,000 people was. On his watch we are seeing 800,000 Australians out of work. Consumer sentiment is down. Mr Hockey: In the PEFO. Mr BOWEN: I'll get to PEFO in a minute. You have been very naughty, again—not you, Mr Deputy Speaker. The Treasurer has been very naughty again in quoting his figures. I said new taxes and charges, and the budget deficit has doubled in just 12 months. That is the story when it comes to economic growth and confidence. Then we move to the budget. Again, the Treasury is quoting PEFO. He does not like quoting PEFO in other circumstances, because even in his remarks just a moment ago he asserted, incorrectly, that he inherited a budget deficit of $48 billion. Mr Hockey: True. Mr BOWEN: He is nodding. When he does that, he is, in effect, questioning the veracity of the Treasury and the Department of Finance and their respective then secretaries. He is nodding. He is questioning the veracity of the Treasury and the Department of Finance in the pre-election economic forecast. Mr Hockey: What was the deficit? Mr BOWEN: As the Treasurer knows, the pre-election economic forecast is not delivered by the Treasurer of the day. The Treasurer of the day reads about it with every other Australian. It is delivered by the Secretary of the Treasury and the Secretary of the Department of Finance. I am happy to inform the Treasurer that the PEFO showed a deficit of $30 billion. Mr Hockey: But what was it? What did it turn out to be? Mr BOWEN: I said $30 billion, if you were listening, which is not $48 billion. There is a big difference. The Treasurer should stop undermining the Charter of Budget Honesty. The Charter of Budget Honesty is a proud achievement of his Liberal predecessor. I have freely given credit to Peter Costello for introducing the Charter of Budget Honesty. It is a good reform. It was continued by Labor in office. But when they Treasurer goes around questioning the veracity of the then secretaries of the Treasury and Finance—and I acknowledge that the Treasurer did not want the Secretary of Treasury sacked; that was done by the Prime Minister, against his wishes—I am sure the Treasurer argued, as he should, that the secretary should not have been sacked. Incoming governments should not sack Treasury secretaries. It is the first time it has happened in 114 years. I acknowledge that was not his decision, but he should not go around questioning the veracity of two very fine Australian public servants. Mr Fitzgibbon: That wasn't the Treasurer's idea. Mr BOWEN: It was not the Treasurer's idea, and I do not blame him for that decision. The decision to sack the Secretary of the Treasury was made by others in the Prime Minister's circle and, ultimately, the Prime Minister himself. When it comes to the government's economic record—whether it be confidence, growth or the state of the budget—the rhetoric simply does not live up to the reality. The Treasurer makes false claims about the size of the budget deficit he inherited. He falsely claims that confidence and growth are primarily on the decline because of international volatility when, in fact, it is his own economic mismanagement which is ultimately responsible. I want to end with a little more agreement with the Treasurer. I said the bipartisanship finished in my opening remarks, but there is actually a little bit more—and this comes to China. Where I do agree with the Treasurer is that, fundamentally, Australians should not be alarmed by recent developments in China. I have publicly agreed with the Treasurer—and I have always tried to be extremely responsible in these remarks—that the Australian people should be reassured about the fundamentals. China is going through a transition. It is a very important transition and, in some regards, it is a painful transition. It is probably the largest economic transition we have seen in a very long time around the world. It is very important that the Australian people acknowledge and understand that the decline in the Chinese stock market is against a backdrop of very significant increases over recent years—180 per cent in recent times. It is also important to understand that the Chinese stock market is not as systemically important to the Chinese economy as it is to many western nations. The property market in China is much more important. If there was a property market decline, that would be a very serious development. But the stock market is more tightly held in China than in many other countries, including our own. A decline in the stock market does not affect the living standards and consumption ability of most Chinese households—and that will continue. Chinese will continue to increase consumption and, in my view, that will continue to feed positively into the Australian economy. Yes, China may well not grow as quickly as it has done in the past. But we need to remember that even lower economic growth from China adds more as an increment to the world economy and the Australian economy than it did just a few years ago because it is off a much higher base. So growth of even six per cent in China can add more to the world economy— Mr Turnbull: It won't be anywhere near six. Mr BOWEN: Well, I am making the point in a bipartisan fashion. If the Minister for Communications wants to talk down the economy, he can; but I choose not to. Even growth of six per cent— Mr Turnbull interjecting— Mr BOWEN: To talk down the economy. Mr Hockey interjecting— Mr BOWEN: I am trying to be helpful to the Treasurer here. I am trying to reassure the Australian people, in a bipartisan fashion, that even growth of six per cent in China would add more to the world economy than growth of 14 per cent in China in 2007 because the Chinese economy is now so much bigger than it was at that point. That will continue to impact positively on the world economy and the Australian economy. The important risk for the Australian economy is a contagion to confidence in a further event. That is why I have taken a decision to regularly make similar remarks to the Treasurer as to the impact of the Chinese economy on the Australian economy and the fundamentals of the Chinese economy not being impacted by the recent volatility in China. Of course, there are risks on the downside going forward. A further liberalisation of the Chinese currency would be a positive development but it would create uncertainty and volatility as it happens, and that would have an impact. The economic record of the Treasurer is not a good one, it is not one that the government can be proud of. There is a yawning gap between their pre-election rhetoric and the post-election reality. There is a yawning gap in economic management on this Treasurer's management. As I have said previously, speculation that the Treasurer will be removed and replaced by the Minister for Communications or the Minister for Social Services is very unhelpful to confidence. I am not the Treasurer's biggest fan but I do acknowledge that uncertainty about the tenure of the Treasurer is not good for the Australian economy. Hence I have pointed out that he should remain Treasurer until the next election, when he will be replaced by a Labor Treasurer.