Commonwealth of Australia: January to June 2008

By Wanna, John | The Australian Journal of Politics and History, December 2008 | Go to article overview

Commonwealth of Australia: January to June 2008


Wanna, John, The Australian Journal of Politics and History


An Unsteady Start for the Rudd Government

Grim economic news greeted the incoming Rudd government in early 2008. After a decade of strong economic growth for most of the Coalition's period in office, the prosperity bubble suddenly began to burst in spectacular fashion. Rising petrol prices (over $1.50 per litre), higher inflation (4.3 per cent) and interest rates (7.25 to 9.3 per cent), and a slowing economy (nationally down to just 2.5 per cent growth) haunted the new government even before it settled into office. In the midst of the sub-prime financial crisis, major trading banks also began to lift interest rates independently of the Reserve Bank, as did other mortgage lenders. Local councils were particularly exposed as many had invested public funds in worthless "collateralised debt obligations". The "global financial meltdown" had begun and Australia experienced both a credit squeeze and sharp decline in the share value of companies. The big four banks alone lost market value of $100 billion in just a few months. Media reports labelled the crisis as "carnage", a "mauling" and a "wipeout". Only mining exports appeared immune from the economic shocks, and the labour market remained tight with unemployment at a thirty-three-year low of just 4 per cent.

In response, the government immediately began an extensive series of spending reviews (called "budget reversal"), attempting to cut programs announced by the previous government, mostly in the lead-up to the 2007 election. Between $10 and $18 billion in spending cuts was targeted. Prime Minister Kevin Rudd and his new Treasurer Wayne Swan realised they were in for a nervous baptism. At the start of the year they paid an emergency visit to the Reserve Bank in January to inform them the government intended to hold a tight fiscal line in the upcoming budget, promising no extra spending and producing a higher than forecast surplus. Their visit did not prevent the Reserve Bank lifting interest rates twice (in February and March) to slow inflation (making a total of twelve rises since 2002).

Restraint was now the name of the game; except in the area of financial donations to political parties where audited figures in February indicated the major parties had raised $121 million in the election year, up 50 per cent from 2004 and split $66.3 to Labor and $54.9 to the Coalition. This was in addition to public funding to the main parties of $45 million. To show that everyone had to share the pain of restraint, Rudd froze federal MPs salaries for one year as Parliament got underway.

Parliamentary Apology to the Indigenous "Stolen Generations"

The opening of the forty-second Parliament commenced significantly with a welcome to country and a celebratory Aboriginal dance. On the second day of the new session (13 February) the government suspended standing orders to deliver a parliamentary apology to the Indigenous children "stolen" from their families and communities by white authorities and religious institutions. Hundreds of Indigenous people attended the event in person sitting in the public gallery in Parliament House or standing outside on the forecourt. Many other public gatherings were held across Australia with crowds watching live broadcasts on huge TV screens.

In moving a formal motion of apology, Rudd said "I am sorry" three times. He declared in his speech:

   There comes a time in the history of nations when their peoples
   must become fully reconciled to their past if they are to go
   forward with confidence to embrace their future [...] the time has
   come for all peoples of our great country, for all citizens of our
   great commonwealth, for all Australians--those who are Indigenous
   and those who are not--to come together to reconcile and together
   build a new future for our nation [...] To the Stolen Generations,
   I say the following: as Prime Minister of Australia, I am sorry. On
   behalf of the Government of Australia, I am sorry. … 

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