Mr ANDREW THOMSON (Parliamentary Secretary to the Minister for Foreign Affairs)(3.46 p.m.) —I thought there would be a censure motion. In fact, the Prime Minister (Mr Howard) thought there would be a censure motion. In fact, most of our side thought there would be a censure motion this afternoon. I saw the Prime Minister down here at the dispatch box taunting the Leader of the Opposition (Mr Beazley) and asking would he bring the censure motion on immediately or would he wait until after question time. But no—no censure motion. So the week ends not with a bang but with a whimper—a whimper indeed. So much so that, in his wisdom, my esteemed boss, the Minister for Foreign Affairs, the member for Mayo (Mr Downer), has sent me down to defend what is a mere MPI and not a censure motion.

When he answered a question today from one of the members of the opposition, he described this—for the second or third time this week—as a `monumental beat-up'. When you look at the terms of the MPI from the honourable member from Kingsford-Smith (Mr Brereton), you see the adjectival phrase `the enormous damage' arising from the government's decision to abolish the development import finance facility. So we can say that the honourable gentleman has set the high jump bar very high this week.

Mr Melham —Why have you been blushing all week?

Mr DEPUTY SPEAKER (Mr Nehl) —The member for Banks!

Mr ANDREW THOMSON —Indeed, I think it is perhaps the cuckoo from Banks rather than the member for Banks. If that is unparliamentary, I will withdraw it.

Mr Melham —You've been very quiet all week.

Mr ANDREW THOMSON —It is not my job to make noise during question time, such as seems to be your role, my friend. With that said, in paying attention to what the member for Kingsford-Smith said during his speech on this MPI, I note he used another phrase in describing—or misdescribing it—our decision: `extraordinarily bad policy with extremely serious consequences'. As he sat there next to the great bulk of the Leader of the Opposition, that phrase put me in mind of that honourable gentleman. What he could only be describing was what we have christened, and which has had great resonance in the electorate, as Beazley's black hole.

But it is my opinion—and I think it is the opinion of the electorate—that for the honourable gentleman from Kingsford-Smith to describe this decision as causing `enormous damage' is quite ludicrous. In my opinion, it is exaggerated, it is far-fetched and it is nonsense. It is quite true, as the minister has pointed out, that there have been representations from the recipient governments which were to benefit under the DIFF scheme, but to describe it as `enormous damage' is, as I say, quite far-fetched. Furthermore, in asking this week for members on our side to make apologies, it may be more appropriate for our side of the House to ask your side to deliver us an apology for what the Treasurer (Mr Costello) has described as `the intergenerational theft' of Beazley's black hole.

It was the opposition when it was in government that so misspent this country's finances that we have a black hole that we are required to fill. It puts me in mind of a bank robber emerging from a bank pleading victimisation and saying that it was the fault of the depositors who put the money in the bank; or, perhaps more appropriate, the firebug who was caught emerging from the blazing factory to say, `Well, it wasn't my fault that the match was lit. It was your fault for putting the building there.'

But, when you come to ask yourself whether this decision we have made to abolish DIFF will cause the enormous damage to our reputation in this part of the world that the honourable gentleman claimed, you must recall what the Minister for Foreign Affairs said when he pointed out that it is quite false to describe our whole foreign policy in this part of the world as hinging on one aid scheme. He pointed out that the depth of our relationships with the various countries in this region—in particular, the countries that were to benefit under the DIFF scheme—is many and varied. It is deep. It goes from the memories of students who have studied in Australia to the memories of individuals in a poor village in a part of China, Vietnam, the Philippines or Indonesia who were the beneficiaries of a more basic delivery, perhaps by an Australian NGO.

You cannot describe validly the abolition of this scheme as somehow destroying our entire reputation in this region. It is quite ludicrous to imagine that the abolition of just one scheme in our entire aid program—eight per cent of it—should somehow rend asunder all the goodwill that has built up for Australia in this region in the past 40 years since aid has been flowing. What I would like to ask the House to consider is that our decision to abolish this part of the aid budget, and to save thereby eight per cent, was made as a result of priorities that we determined. When we looked at the entire aid budget and when we looked at the sort of aid that was being delivered, we made a decision in opposition—and we hold to it in government—that aid should take on a more humanitarian face.

We pointed this out in the election campaign and in part 18 of the document A confident Australia that deals with development aid. There are a number of bullet points there that I would refer honourable members to, the first of which reads:

.   recognition that the primary purpose of foreign aid is assistance in overcoming humanitarian concerns in terms of outcomes.

The second bullet point reads:

.   an increase in the proportion of aid allocated to humanitarian and poverty reduction purposes.

Hence, when we looked at the entire aid budget and saw how much of it was locked in by legal commitments under treaties and other such things, we found that there was less discretion than we perhaps had first thought. Hence, when we had to set ourselves a set of priorities, we felt that there was nothing wrong with having the altruism to say that we should concentrate more on the basic aid that I know my friends, the member for Chifley (Mr Price) and the member for Reid (Mr Laurie Ferguson), would prefer rather than leave intact a scheme that provided subsidies to business.

I ask the House: is it wrong to have an altruistic thought? Is it wrong for a newly elected government to pursue a healthy financial position for the Commonwealth?

Mr Price —What about a level playing field?

Mr ANDREW THOMSON —Is it wrong to pursue, in the medium and the long term, lower real interest rates? Let me dwell on that for a moment.

Mr Price —Give Aussie firms a break.

Mr DEPUTY SPEAKER —Order! The member for Chifley is not in his seat.

Mr ANDREW THOMSON —What an extraordinary thing. Not only is the member for Chifley not in his usual seat but he is also interjecting in a riotous fashion. Let us look at the sorts of Australian companies this scheme was directed at. In the beginning it went largely to big companies, some subsidiaries in Australia of multinational companies, but lately it is true to say that it was acquiring more of a flavour whereby smaller companies would participate.

Simply saying that such smaller companies were to be the beneficiaries of some of these projects illustrates the fact that there are many other small companies in Australia which were never going to benefit under DIFF or any other scheme that the Commonwealth, or any of the state governments, might provide. So the argument about fairness arises and whether it is fair to single out companies in a specific sector of the Australian economy and provide a subsidy scheme for them to participate in spoiled markets—that is, markets where infrastructure projects are sought after by companies from other countries, as honourable members on the other side pointed out, such as Japan, Germany, France in particular, Finland and some others.

Our problem in this country is that our real interest rates are far too high. This is a result, in particular, of the great dissaving that happens as a result of a series of large government budget deficits. Hence, a problem of premium risk is put on Australian borrowers when they venture into the world's capital markets.

So, in trying to restore some rectitude to the Commonwealth budget, the aim of this—which we seem to be achieving a little sooner than we might have otherwise anticipated through red hot competition among banks—is lower real interest rates. That would deliver a benefit to every borrower within Australia, not simply a few companies whose business, laudable though it is, involves infrastructure projects. We make no apology for pursuing that aim.

Likewise, is it wrong to attack a current account deficit problem? Is there something strange that a government newly elected to office discovering that the cupboard is bare—

Dr Theophanous —Not for breaking agreements.

Mr ANDREW THOMSON —should resort to a policy where it has to reduce the Commonwealth outlays to an extent where the government is no longer a dissaver?

Dr Theophanous —Have a look at your priorities.

Mr ANDREW THOMSON —The member for Calwell has almost reached the heights the member for Banks (Mr Melham) sometimes reaches in his interjections.

Dr Theophanous —I know what I am talking about, and you know that very well.

Mr DEPUTY SPEAKER —The member for Calwell should stop talking.

Mr ANDREW THOMSON —It is wrong to say that we walked away from a host of legal obligations. When we looked at the companies that had received letters from Gordon Bilney, the previous Minister for Development Cooperation and Pacific Island Affairs, as it then was, we found that a number of them had received letters of formal offer and that a lot more had received what are described as letters of advice.

It was our decision at the time, despite legal advice, and much to my surprise, that we as a Commonwealth government were not legally obliged to fund those companies which had received letters of formal offer because an appropriation by the parliament had not yet been made in respect of those letters. Nonetheless, we decided to fund them. But, in being forced to make savings, we had to draw the line somewhere. We found that it was sensible and logical to draw it in between the letters of advice and the letters of offer.

What lies behind this, as I keep pointing out, is fiscal discipline. Budgetary health is a prerequisite for Australia's economic health and for its larger competitiveness in this region. We face problems with high real interest rates, an enormous and persistent current account deficit and a savings ratio that is far too low than is otherwise healthy. We should do what we can to restore fiscal rectitude to the Commonwealth and hence drive those real interest rates down and provide a competitive boost to all borrowers in the economy, not simply to a particular group of companies which sought to pursue their business in infrastructure projects in Asia in what are clearly spoiled markets.

Spoiled markets are those spoiled by subsidies by other countries, as you know. You pointed out in your speech that nations with very aggressive chequebooks are, to put it bluntly, always in there competing for these projects. Hitherto we have been able to compete, until we found that we did not have the financial resources as a government to make it healthy for us to pursue these projects, as the previous government did. It is quite plain that, in choosing within the aid budget a priority with diminished resources, there is nothing wrong with resorting to altruism, as we have done, and seeking out those projects that have a more basic flavour or, if you consider it in a larger perspective, a more immediate flavour.

It is no secret that we as a region are potentially threatened by a further spreading of the HIV virus, especially through parts of South-East Asia. The potential is for that virus to spread through Papua New Guinea and into the Pacific. When I was briefed on the dangers of this sort of epidemic spreading further were there not vigorous measures taken to stop it, it struck me as pretty obvious that the taking of those measures was the sort of thing that ought be at the top of the government's aid priorities. That is of a basic flavour and has immediate benefits for Australians who might otherwise be infected. To neglect this virus as a priority in the aid budget and not put more resources into projects to educate people in these regions about it would be quite wrong of us.

The decision to abolish DIFF has caused, as Mr Downer has pointed out, some complaint among the recipient governments both at working level and at ministerial level. However, from the point of view of an Australian government, trying to remake an aid budget and imbue in it sensible priorities, there is nothing wrong whatsoever with our decision to abolish this facility—(Time expired)