Joyce: “iron ore, coal and wheat saved us from recession”

Speaking at the Tamworth regional airport today, the Deputy Prime Minister and Agriculture and Water Resources Minister was asked if he believed Australia’s AAA credit rating was under threat.

While avoiding a direct answer, Mr Joyce attacked the former Rudd Labor regime’s $100 billion stimulus package that saw $900 cheques given out to Australians to boost spending during the GFC.

Instead, the Nationals leader defended the Coalition’s record of economic management and highlighted wheat exports as a major factor in driving the nation’s economic resilience during the GFC.

“I think what we’ve seen is a government that’s serious about getting the budget turned around,” he said.

“Remember we were left with hundreds of billions of dollars in debt by the previous Labor/Green/Independent administrations.

“We see now that their stimulus package was just garbage - it didn’t work - it just got us into trouble.

“At the time, I said this stimulus package will be spread across the carpet at Christmas time with ‘Made in China’ written on the back - it’s going to do nothing to stimulate Australia.

“School halls and ceiling insulation did not save us from the recession – little red rocks and little black rocks and wheat – iron ore, coal and wheat saved us from recession.

“It had nothing to do with any stimulus that the government put out and it had everything to do with the boom of the economy of China and our capacity to get rural exports onto a ship.”

Mr Joyce said at the time of the GFC, the Labor party came up with a “crazy phrase” of, ‘you’ve got to go hard, go early, go stimulus’.

“Well they went hard, they went early, they went stimulus and they almost went broke and they locked us into crazy contracts which we’re trying to bring some rationality into,” he said.

“They pushed us off the economic building and we’re trying our very best to slow the trajectory, to slow the speed, to get our finances back into shape and to turn this nation around and we’re doing that.”

Mr Joyce’s comments came on the back of a recently released report into the impact of stimulus measures on the national economy that was written by the federal Treasury to promote debate on important and topical policy issues.

The report concluded that the Australian government’s fiscal response to the GFC “subsequently weakened the economy by contributing to the dollar’s strength and by creating pervasive policy uncertainty about how the budget would be repaired”.

It said prolonged overvaluation of the exchange rate “seriously worsened” Australia’s international competitiveness and harmed industries in the tradable sector, especially manufacturing.

“In sum, fiscal stimulus was not primarily responsible for saving the Australian economy from a narrowly defined recession in the March quarter of 2009, but a combination of lower interest rates, a major exchange rate depreciation, strong foreign demand for mining exports, especially from China, and a then more flexible labour market,” the report said.

“Fiscal stimulus later weakened the economy by strengthening the exchange rate and reversing the contribution net exports made to aggregate demand.”

But Shadow Treasurer Chris Bowen today accused Treasurer Scott Morrison of “more pathetic excuses” in “blaming everybody but himself”, to pre-empt what will be a “very bad” mid-year economic update next week and potential downgrade of Australia’s credit rating, at some point in the future.

“Scott Morrison is the Treasurer - he must take responsibility,” he said.

“Scott Morrison is the man who went to the election with an unrealistic set of forecasts and projections.

“Scott Morrison is the man who has presided over budget decisions since the 2015 budget, which by direct result of his own decisions had worsened the budget deficit by $10 billion over the forward estimates.

“Scott Morrison is complaining that the AAA rating is under threat - well what puts the AAA rating under threat as well as everything else is his corporate tax cuts: $50 billion in a giveaway from the budget over the next 10 years.”