Dr SOUTHCOTT —My question is addressed to the Prime Minister. Has the Prime Minister seen reports today suggesting that the fairest way of ensuring that younger generations can afford to retire in financial security is to ensure that the federal government produces a balanced budget? Is the government taking action to ensure that it reduces its spending to match its income, or is the government prepared to spend more than it earns and let future generations deal with the problem?

Mr HOWARD —I thank the honourable member for Boothby for his question. My attention has been drawn to a very interesting speech made yesterday by Mr Ian Macfarlane, the Deputy Governor of the Reserve Bank of Australia. Mr Macfarlane assumed his position under the tenure not of this government but of the former government, so he cannot be regarded in any sense as being anything other than a completely neutral spokesman on these matters.

Mr Macfarlane made a number of very interesting observations about the ongoing debate about fiscal policy in this country. I draw the attention of everybody in the House to the following paragraph from his speech, when he had this to say:

Spenders are often seen in the public debate as compassionate and generous people, and those who favour restraint as Scrooge-like accountants. One could, however, equally view it as a contest between those who are willing to take advantage of the next generation and those who wish to protect it.

I repeat this phrase. There is a distinction:

. . . between those who are willing to take advantage of the next generation and those who wish to protect it.

We are the ones who will protect it. This debate, with all of its bluster, will not alter that. This debate about fiscal consolidation concerns whether you are prepared to protect future generations or whether you are prepared to take advantage of them. If the opposition's track record in government is any guide, they belong to the group of people who are prepared to take advantage of future generations and not protect them.

For five years, the Labor Party followed a policy of fiscal laxity. You failed to take advantage of the alleged economic upswing. You allowed public debt to accumulate. You left the fiscal position of this country in a highly vulnerable state. Instead of acknowledging that failure and recognising that you took advantage of future generations of Australians, you have sought refuge in trying to create an atmosphere of fear and loathing about the attempts of this government to achieve fiscal consolidation.

What Ian Macfarlane has done in his speech is expose the essential humbug of what you are about. He made a number of very pertinent observations. He said:

There are a number of ways in which fiscal policy decisions taken by members of this generation—

and that is all members of this parliament—

can impose a burden on future generations. The most obvious case is where recurrent spending runs ahead of taxation.

The Labor Party would know all about that, because that is the inheritance you left to the incoming government. In your craven desire to take advantage of future generations, you allowed recurrent spending to run ahead of taxation. You knew there was a problem, but you took advantage of future generations. You sat on your hands and now you have the gall to insult the Australian people and pretend that there is no problem at all. You are revealed as a humbug and a failure.

An incident having occurred in the gallery—

Mr SPEAKER —Order! On my right, members on my right! I must remind members of the public in the gallery that, whilst they may enjoy the proceedings, their intervention is not appreciated.