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Tuesday, 10 September 1996
Page: 3894

Mr VAILE(9.55 p.m.) —It certainly is an honour to speak this evening on Appropriation Bill (No. 1), which is a budget bill for the first conservative coalition budget for 13 or 14 years and certainly a historical document. It was interesting to listen to the previous speaker, the member for Canberra (Mr McMullan), talk about the collective good of Australia as a nation. When you talk to people in the community about the direction the former government were taking the collective nation of Australia as far as the national debt was concerned, you find that is what really did concern a lot of people and ultimately cost the Labor government the last election. They had had 13 years to deal with the chronic unemployment problem, they had had 13 years to deal with debt, they had had 13 years to deal with the deficit and bad balance of payments figures and they failed.

When we talk about the common good of the Commonwealth of Australia and the people who live here, particularly the children, the Australians of the future, what better system can we leave them than a debt-free nation rather than saddling them with the debt and the spending habits of our generation and previous generations. So it has been interesting to listen to members from the Labor Party speak on this debate.

The point that must continually be made in this debate and in looking at the decisions that the coalition government has had to take is that the problem was not of our making. We did not create the budget deficit. The budget brought down in 1995 was supposed to produce a $700 million-odd surplus—I cannot remember the exact figure. That, of course, factored in asset sales, some of which have not materialised for one reason or another—but that is a side issue. There was supposed to be a $700 million surplus. Not only did that not materialise; after the election it seemed as though the outcome would be more like an $8 billion deficit and then, by the time we got the accurate figure at the end of the financial year, it was higher still.

They are the sorts of rubbery figures we have had to deal with. That is building on the government's overdraft, on the Commonwealth's overdraft, all the time. We are servicing that debt. The cost of servicing that debt is around $10 billion a year. Ten billion dollars of taxpayers' money is paid in interest—dead money. That is the interest bill on the $96 billion worth of federal government debt built up by Labor.

Mr Hollis —It is not federal government debt.

Mr VAILE —It is. That is what we are trying to service. Gross foreign debt is $180 billion to $190 billion. I know some of that belongs to the private sector, but the government is responsible for $96 billion of it. That was built up to a large extent over the last 13 years of the previous administration.

The problem was not of our making, but we are prepared to fix it. This government came to power on the basis that it was going to sort out the structural problems with our economy, and that is what it is going to do. That is what this budget is all about and that is what the majority of commentators throughout the length and breadth of Australia have acknowledged—that at least this government, the Howard-Fischer government, has been honest with the people of Australia from day one on all policy areas. There were no smokescreens and no mirrors in the election campaign. It was all laid out very clearly.

Admittedly, a lot of the policy objectives that we laid out we had to base on the figures that were available from the 1995-96 budget that the previous government brought down. Why? Because nobody was prepared to let anybody else have a look at the books prior to the election campaign. The former Prime Minister, the former Treasurer and the former finance minister said nobody was allowed to look at the books and nobody was allowed to talk to Treasury or Finance about what the real situation was in the lead-up to the 2 March election this year.

We came into government and found ourselves in this diabolical situation with a massive budget deficit. We have been running high balance of payment deficits for the last couple of years and high current account deficits. It was just unacceptable. The previous speaker said that we had one of the best current account figures in the OECD. There was only one country with a higher current account deficit than us, and that was Mexico, all through the last 12 or 18 months. That was what we were confronted with.

The people of Australia are not stupid. They might be conservative about change, but not about politics. They need to understand and be confident about the changes that are going to take place. It was accepted by the people of Australia that this government was going to sort out the budgetary problems and the financial problems that this country was in. They knew before the election in March that there were going to have to be some tough decisions made. But they recognised that those decisions were fair, and that was the headline the day after budget day: `A fair go'.

Mr Hollis —Oh!

Mr VAILE —It was; it was a fair go. And that newspaper is not sympathetic to the coalition in a lot of cases. But the budget was recognised as being a fair go because the people in the majority of the different sectors in our community recognised that we needed to address a lot of the endemic problems that we inherited from the former Labor administration in the management of our economy.

We have just heard the usual Labor Party mantra about Keynesian policies: `We have to spend, the public sector has to spend here, there and everywhere, otherwise you withdraw out of the economy and it will collapse.' But what happened was that it just dismantled any element of public saving with the spending programs. Surely the programs that the former administration ran for so many years during its term in office must have proved to it that the programs were unsuccessful, but the government kept on ploughing more money into them.

It was money that we did not have to spend; it was money on the national bankcard. That is why total federal government debt is about $96 billion; we were spending money we had to borrow. The former speaker, the member for Canberra, wants to bequeath a debt like that to future Australians. We do not. We want to bequeath to future Australians a healthy economy—an economy in which people can operate, in which business can thrive and in which people can get jobs and the like.

This budget we are debating tonight is a clear indication of the plan and vision that the coalition government has for the future of Australia. The fundamental objective of the government's fiscal strategy is to improve the level of national saving by raising public saving. This will raise long-term growth and take pressure off interest rates over time, which will benefit families and small business. That is the section of mainstream Australia that every member in this House should be concerned about. That is what we are trying to achieve with this budget.

But what do we say about the opposition? What is the Gareth alternative? We have our plan out in the public arena, but where is Labor's plan? We have not seen one yet, apart from some massive cuts to and the hacking away at the deficit reduction strategy that we want to put together.

Last week the ALP announced that they would oppose $7 billion worth of budget measures over four years. But the truth is that the figure is much higher; it amounts to about $19 billion over four years if you include ATSIC, the ABC and labour market programs. If you add the ALP's opposition to the one-third sale of Telstra, you find that it amounts to a total of $27 billion over four years. They want to rack up another $30 billion in debt over the next four years. That is the Labor Party's plan.

They took us down this path over the last 13 years until we got to the situation we are in now. Their plan, as the alternative government of Australia, is to take us further out—another $30 billion worth of debt. They want to play with the future of young Australians by building up debt. Future Australians and the children of today will be paying for that. The only policy that the Labor Party have at the moment is more deficit and more debt into the turn of the century. That is where they want to take Australia.

This budget we are debating tonight, the coalition's first budget in 13-odd years, seeks to turn around the ALP's pathway to deficit and debt. We want to give young Australians something to look forward to—a better Australia freed from the chains of deficit and debt that Labor still endorses by its opposition to this budget.

What goes hand in hand with that is high interest rates—the high interest rates that we have experienced for so long under the Labor regime in this country; the high interest rates that developed out of the recession we had to have when the former Prime Minister was the Treasurer. We had to have the recession! Many small businesses were sent packing, many farmers were sent off their farms and families were sent out of their homes because of the high interest rate regime that was run by the former administration. They are the sorts of things we want to turn around by reducing debt, eliminating the budget deficit, increasing national savings and putting this nation on a lot stronger economic footing where we will experience and enjoy a much more stable interest rate regime for the benefit of small business, for the benefit of farmers, for the benefit of families and, most importantly, for the benefit of the children of the future.

In the lead-up and the hype to the announcement of the budget there was a lot of comment made by the shadow Treasurer and former Minister for Foreign Affairs, the honourable member for Holt (Mr Gareth Evans), with regard to what would be a good idea. He was saying that we should not try to knock this deficit out in two years in two budgets but that we should ease the pain a little bit and take it out over three years.

What has happened? That is exactly what the Treasurer has released. The underlying budget deficit is estimated at $5.6 billion in 1996-97, $1.5 billion in 1997-98 and, bingo, in the third year out it is balanced—exactly what Gareth was talking about. Since the release of the budget, Gareth has come out with a completely different story, a story where you are going to add $30 billion worth of debt over four years to the debt we already have.

I go back to the point I was making a while ago with regard to the situation we walked straight into after the election. Prior to the election the Prime Minister (Mr Howard), the then opposition leader, challenged the then Prime Minister, the then Treasurer and the then Minister for Finance. He said, `Give us the true and accurate state of Australia's economy.' Treasury and Finance could have easily done it.

I will guarantee that the former Prime Minister and the former Treasurer had it. I will guarantee that they had it just before the election; but they were not prepared to release it. They were more interested in playing politics with those figures. They thought, `If we lose the election, we'll have something to argue about with these blokes because we maintain they won't be able to introduce their entire platform from the election.'

One of the key elements that absolutely struck a chord with the people across the length and breadth of Australia was the proposition of the charter of budget honesty. It has happened in other countries around the world, it has been spoken about in states in Australia and it is going to happen in the Commonwealth. Prior to forthcoming elections, there will be a statement of account as to where the Commonwealth's economy is up to. It will not be signed off on by the government or politicians of the day but signed off on by the heads of Treasury and Finance—the independent bureaucrats in charge of those departments.

So the opposition of the day, whoever that may be in the future, can be assured that they will be setting the parameters for their policies going into an election campaign based on accurate figures of where we are running in this country. We have never seen that before—and we certainly did not see it under the last 13 years of Labor. That is something that we promised to deliver to the people of Australia in our election campaign in March—not only so all the so-called experts in this place and all the economists out there in the private sector can understand it but also so all the people in mainstream Australia, the average punter out there who is trying to work out whom he is going to vote for, who over the years has been cajoled by the promises that governments will throw a few dollars here and throw a few dollars there, can compare how this government has performed with the previous one and compare the track record of this government with the previous one.

That will be in place so that all those people in mainstream Australia, in middle Australia, who really want to understand how their parliament and the government of their country is performing, what is happening to the economy of their country, will be able to. They will not have to put up with all the nonsense they have had to put up with in the past and be mushroomed with the economic information and jargon that comes out.

I can assure you, Mr Deputy Speaker, that the promise to implement that struck a chord with Australians because they want to see some honesty and integrity in this place. That is why they voted a coalition government into power on 2 March. They knew that we would have the backbone to address the economic failings that had been perpetrated by Labor for 13 years on this country, that we would address those structural problems that the previous administration was not prepared to or going to address. In a lot of cases, the previous administration knew where the problems were, they knew what they had to do, but either they did not have the backbone to do it or they were not allowed to do it by their industrial wing.

The previous speaker, the member for Canberra, as I said, spent 20 minutes speaking about some of the old antiquated Labor mantra from the past and how the economy of this country should be run. I just point out to him that a senior member of his party who was in charge of this country for 13 years got it to where it is today. They had the opportunity to try all their policies, try all the stuff he was talking about tonight and failed.

I have already pointed out one of the most descriptive headlines that appeared in the Daily Telegraph the day after the budget was brought down. What did some of the peak bodies around the place have to say? These are not just peak bodies that the coalition quotes but peak bodies that the Labor Party have quoted from many times. In the last three years that I spent in opposition in this place, I heard the Labor Party quote from a lot of these bodies. The Australian Chamber of Commerce and Industry said:

The Federal Government has delivered on its promise to eliminate the deficit and put the Australian economy onto a solid foundation for sustainable non-inflationary growth.

The National Farmers Federation said:

. . . tonight's Budget is likely to boost business confidence, support lower interest rates and provide the foundations for ongoing inflationary growth.

The Housing Industry Association said:

The first Coalition Government Budget shares the pain to make gains on national savings and interest rates.

The Real Estate Institute of Australia said:

. . . tonight's Federal Budget has returned long overdue control to Government spending. By cutting its deficit and refocusing its spending there is now greater chance of sustainably lower real interest rates. Lower interest rates will benefit business investment, employment and borrowers.

The Australian Society of Certified Practising Accountants said:

The first Howard Budget will do much to responsibly repair Australia's sick economy . . .

The Minerals Council of Australia said:

By focusing on economic fundamentals the first Howard Budget has, in the opinion of the Minerals Council of Australia, established a secure basis for Australia's future economic success.

The State Chamber of Commerce in New South Wales said:

The Howard Government has come good on its promise to support the small and medium sized business sector. Business will largely welcome the Federal Budget and applaud the implementation of long overdue cuts to government spending.

I might just go on to a few that might interest opposition members. The Council on the Ageing, when talking about residential care financial contributions, said:

This money will benefit those nursing homes which have upgraded their buildings and meet quality standards.

The Australian Catholic Social Welfare Commission said:

Measures which the Government should be congratulated on are the introduction of a national strategy to prevent the incidence of child abuse; greater funding for marriage and relationship education; greater recognition of the role of those who care for the frail aged and the disabled; and initiatives to improve rural health services.

That is exactly what the Prime Minister was talking about in question time today—a focus on preventative activity in the breakdown in marriage in Australia and not trying to deal with it after the event. The RSL said:

The first Howard Budget largely honoured the Government's commitment to Australian war veterans and their families.

The government has recognised the special needs of the veterans . . .

So this budget has been roundly received across the length and breadth of Australia. It has been extremely well received. A lot of those peak bodies were here earlier this week to give it a vote of confidence. As was pointed out in this place earlier this week, they did not have to break down the front doors of this place to get in here and give us their message; they walked in and delivered it in a sensible way.

I go back to where I started at the opening of my address. The problem we inherited was not of our making. It took Labor 13 years to create the problem, but we have the backbone to fix it. We made the constructive decision right from the start to fix it. We told the people of Australia on 2 March that we would fix it and we are going to keep on that line from here until we square this away and we end up in surplus. (Time expired)