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Thursday, 3 February 1994
Page: 343

Mr DOWNER (3.18 p.m.) —Firstly, I would draw the attention of the House to the fact that the Treasurer (Mr Willis) is not here for this discussion. In the time that I have occupied the position of shadow Treasurer—nine months or so—there has been only one occasion when the Treasurer, that is, the present Treasurer or his predecessor, the honourable member for Fremantle (Mr Dawkins), has actually been prepared to debate economic policy in this chamber. The former Treasurer spoke in this House when he delivered his budget—and no other occasion. Other than in question time, neither the present Treasurer nor his predecessor has debated economic policy in this House. On one occasion only has a Treasurer been prepared to take part in a discussion of a matter of public importance.

  This is symbolic of the standards of government and the lack of respect for government which is a hallmark of the Keating government. Although his predecessor had no substantial experience of the House of Representatives—I think he had three years—before he became the Prime Minister of this country, he showed much greater respect for this chamber and the democratic institution of parliament than the present Prime Minister (Mr Keating), who has been here since 1969. So it is a matter of contempt for democracy that Labor ministers, under the Keating government, simply have refused to participate in matters of public importance.

Mr Atkinson —Ah, here he is.

Mr DOWNER —At long last, after making an issue of it, we see the Treasurer finally emerge and, with the greatest of optimism, we hope that in those circumstances the Treasurer will be prepared to participate in debate. If he does, it will be only the second time in a year's worth of parliamentary sittings that that has happened.

  There is a cartoon in today's Australian newspaper, an organ I do not always agree with, about the Australian economy. It shows a family motor vehicle, a hatchback, with a picnic beside it. The picnic basket has written on it the words `the economy'. There is a nice little meal set out on a rug and a happy little family, which is the Keating family. The Prime Minister is standing with his family, looking out into the bush. In the bush there is, not surprisingly, a feral pig. That very large pig, one of those Danish pigs that Danpork specialises in, has in its arms a grandmother. The pig has written on its side the words `foreign debt'. Does the Treasurer remember foreign debt? It is a bit of a problem under Labor. It has grown year by year.

Mr Peacock —A swine of a problem.

Mr Howard —You are wallowing in it.

Mr DOWNER —As the honourable member for Kooyong says, it is a swine of a problem and, as his friend the honourable member for Bennelong says, the government is wallowing in it. This feral pig has written on its side the words `foreign debt'. The Prime Minister is saying to his family, `Okay, so grandma got taken by a feral pig—let's try to not have it spoil our whole day'.

  That just about sums up the whole issue of Labor's management of the Australian economy. During the cyclical upturn in the economy, there have been some positive economic figures. We have been, I think quite appropriately, welcoming good news as good news has come forward. People in this country are desperate for the economy to get out of the hole that Labor and in particular the Prime Minister have dug for Australia. Any sign of a recovery is something they welcome. The degree of enthusiasm for recovery is reflected in the very substantial increase in consumer confidence.

  The problem is that in the euphoria in the recovery and the euphoria aided and abetted by boasting from the Labor Party, as if it has anything to do with it—not that the public would believe that—the government is deliberately hiding the underlying problems and weaknesses of our economy. Yesterday's balance of payments figures, however, sent a warning shot across the bows of the country and brought the government back to earth that the fundamental structural problems that reside in our economy are still there.

  One of the characteristics of the nearly 11 years of Labor federal government's economic management has been the boom-bust cycle. When Labor came into power, the economy was recovering. It had turned that recovery into a massive boom, which was followed by a substantial downturn in 1986. That was the time of the banana republic statement that everybody would remember. That was followed by the enormous boom of the late 1980s and that, in turn, was followed by the recession deliberately engineered by the Prime Minister of this country.

  Everybody in Australia has good reason to believe that, despite all the enthusiastic rhetoric of the government, we still run a very real risk of turning this recovery into a boom and then a bust. The great challenge for this country—and even the government could make a positive contribution to meeting this challenge, instead of making challenges for us more difficult—is to ensure that this recovery lasts and does not end up in tears like the last one did.

  But yesterday's balance of payments figures remind us of why the present Prime Minister, the former Treasurer, put the country into recession. It was done deliberately because from 1988 to 1989 we developed a balance of payments crisis and an associated foreign debt crisis. Balance of payments deficits, if we go back through the records, in 1988-89 eventually blew out at their peak to a bit over $2 billion a month. Now remember that figure because for December our balance of payments deficit was $1.7 billion or $1.76 billion, sometimes reported in the media as being nearly $1.8 billion for that month. The fact is that it is not falling far short of the record deficits that were reached during the late 1980s which led to the now Prime Minister, supported by the existing Treasurer, shoving up interest rates and plunging this country into the worse recession it has had for 60 years.

  A million people went out of work and most of those people are not back in work again, an enormous number of small businesses and even larger businesses collapsed and massive pain was imposed on this country because the government had allowed the balance of payments and foreign debt positions to get totally out of control in the late 1980s. The risk is—and let us hope it does not happen—that we will see a repeat of that cycle.

  Yesterday's figures were for just one month and it would be unwise and foolhardy to draw hard and fast conclusions from just one month's figures. Next month's figures, let us hope and pray, will be very much better. The Treasurer looked at me wryly and I assume by that he means that he does not expect them to be better. As a matter of fact, I do think they might be better—I hope they are.

  But when we look at the government's rhetoric, how sincere is it about the risks and concerns that exist in Treasury, the Reserve Bank and amongst private sector economists? To what extent is the Labor Party levelling with the Australian people? Remember when the Prime Minister became the Prime Minister in December 1991, he held a press conference and promised a whole lot of things. Of course, those promises were all torn up and destroyed. But one of the things he promised was—and I will use the phrase he used—`I will not gild the lily'. Of course, he has done nothing but gild the lily ever since.

  We had the present Treasurer, who has been the Treasurer before at one stage—he has beaten his 18 days already; that was his previous record as Treasurer—say that our economic statistics are the best for 30 years. That got a good run in the media. That was part and parcel of the government talking up the economy, but creating unrealistic expectations and avoiding giving people the warnings that they deserve.

  Back in 1988, just before he plunged the country into recession, the now Prime Minister said, `Australia has never really had a balance of growth this good'. On economic reform he said in 1988, `Frankly, we are at the point where there is nothing left to reform'. He was saying that all the reform was finished in 1988.

  In 1990 he said, `In three years time there will be no government debt, domestic or external'. That is what he promised in three years time. He also said in 1990, `That is my expectation that we will stabilise the debt at the end of this current term. We will get enough net exports to take the current account to the debt stabilisation point'. That is what he said in 1990 and, of course, the current account deficit remained at very high levels and foreign debt just continued to accumulate.

  So do not believe a word the government says. Do not believe anything it says. For heaven's sake—and I think Australians must do this—take a more sanguine and balanced look at the whole process of economic management. The definition of recovery will be whether jobs are created and, in particular—to quote the Prime Minister's words—`Whether the rate of unemployment actually comes down'.

  In the revised forecast announced by the Treasurer a couple of days ago, he forecast that unemployment would remain at its current unacceptable level for the rest of this financial year. So, for all the talk of a recovery—and where the statistics show that, we warmly welcome it—at the end of the day the unemployment rate is not going to come down. That rate tells us the percentage of people who want jobs but who are not able to get them. For this country to have a 10.7 per cent unemployment rate and to expect that unemployment rate to remain at that level for the rest of this financial year when countries like the United States have an unemployment rate a little more than half that rate is a national disgrace. Even with a recovery, the government cannot get unemployment down.

  We have a cyclical upturn in the economy and—God forbid—if we did not, what a shocking circumstance that would be. That upturn has been brought on by a couple of things. The inevitability of the economic cycle is that when any economy goes into recession it will inevitably make some sort of cyclical recovery. That has always happened. We are going through that process. Some of the state governments have done a magnificent job rebuilding confidence in their states. If we go around Victoria and talk to small businesses and business people generally, we can tell that their optimism about their state has risen sky high because of the change of state government. Exactly the same phenomenon is being experienced in Perth and South Australia.

  So we have those advantages, which the government should be capitalising on, not undermining with tax increases. There is an upturn in the American economy—the biggest economy in the world. There is an upturn in the British economy and there is very strong growth in countries in our region, which is of special importance. Yet, despite all of those advantages, the Labor government in Canberra is doing its best, through its tax and spend policies and through its almost manic determination to turn its back on labour market and micro-economic reform, to keep our recovery this time around at about the slowest rate it has been in living memory.

  The tragedy of it is that we have a slow recovery and already the balance of payments deficit is starting to blow out. We have a slow recovery off a massive base of foreign debt. We have a slow recovery with 10.7 per cent of the work force still unemployed and we are already running the risk of a balance of payments crisis. In other words, from a slow recovery—slow by historic standards—held back by the Labor Party's tax and spend policies, in this cycle we are already running the risk of a balance of payments crisis and a return to the policies of the late 1980s and early 1990s.

  The government has to make changes to economic policy. It has to increase savings by working much harder on fiscal policy and reducing spending. It has to provide tax incentives for people to save instead of penalising savings. It has to start doing something about labour market reform and micro-economic reform. If it does not do those things then, whatever the statistics show, the unemployed, the people who really matter in this argument, will not get the jobs they deserve. (Time expired)