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Wednesday, 18 September 1996
Page: 4555

Mr ROCHER —Is the Treasurer aware of a proposal that the government authorise the issue of redeemable preference shares in Telstra? Does the proposal require that the proceeds of $8 billion be then paid to the government and out of that $7 billion be applied to retire government debt? Are the interest rates on government borrowings likely to be lower than those on preference shares? If so, does it strike the Treasurer as being a less than businesslike proposition?

Mr COSTELLO —I thank the honourable member for Curtin for his question and his interest in these matters. I have heard suggestions that Telstra should issue $8 billion in redeemable preference shares. May I say that proposal holds no attraction for the government. Redeemable preference shares are essentially a financing transaction by which you would raise $8 billion which would be redeemable at the option of the person who issues them. It essentially amounts to a financing transaction. It essentially would be borrowing off the back of a Telstra security.

If the government is to borrow, it would prefer to borrow on its own account with its own credit rating. The differential would be lower and there would be no basis whatsoever for not being able to raise the required funds in the bond markets with Treasury bonds. This holds no attraction for the government. May I say that the government, of course, is determined at the moment, by and large, to stabilise its debt. We came into office off the back of a government that had run up $70 billion in accumulated deficits over five years—$70,000 million!

The member for Curtin will know what that means. If you think of $1 million, the Labor Party ran up 70,000 of them over five years—70,000 of them in accumulated deficits over five years. You had mortgaged Australia's future. You had taken Commonwealth debt to 20 per cent of GDP, and you had no plan to stabilise it this decade or this century. It was Labor's policy to run deficit and debt to the next century. If the Labor Party has its way it will defeat measures to balance the budget.

Mr Beazley —On a point of order: is it relevant to discuss the third lowest public debt in the OECD in this fashion, Mr Acting Speaker?

Mr ACTING SPEAKER —There is no point of order.

Mr COSTELLO —If the Labor Party has its way with the measures that it has announced, its plan is to stop Australia balancing its accounts this century. That is its policy. If you had your way that would be your policy. It is not enough to run up five years of deficit, but to want to do it for another three!

Mr Beazley —I have a point of order on relevance: is it relevant for the Treasurer to continue in this fashion when he opposed $10 billion worth of budget tightening when they were in opposition?

Mr ACTING SPEAKER —There is no point of order. Oh, the Deputy Leader, as well—

Mr Gareth Evans —On a point of order: the Treasurer continues to accuse you of having your wicked way in these matters. I ask you to remind him again of standing order 59.

Mr ACTING SPEAKER —Yes, I know. Treasurer, please reduce the number of points of order by addressing the chair.

Mr COSTELLO —Yes, of course. We always feel glad when we see the tag team come up here to the dispatch box. The task of the Deputy Leader of the Opposition is to make his leader look good, and he does. He does it unintentionally, but he does it. That is his task.

Let me say that the objective of this government is to stabilise and reduce debt. We will not be out there on the markets borrowing new money. We want to get out there on the markets and retire debt. We want to free future generations from the legacy of debt of Labor. We want to give them a future. We want to give them opportunities. We want to make sure that we put aside those past failures. That is why we say in relation to Telstra that we will be retiring debt. With $1 billion of that we will be setting up the most exciting environment fund that this country has ever seen.

Where do we find the Labor Party? They are against the environment. This is newfound opposition to the Telstra privatisation. The member for Curtin would know that if, by some trick, Prime Minister Keating had snuck back there would now be national ALP conferences, because they would have discovered the need to privatise Telstra. Frank Blount belled the cat on this one, wink, wink, nod, nod. A frontbencher still active in politics said, `We'll privatise Telstra.' We have got a pretty fair idea who it is, haven't we?

Let me say in response to the member for Curtin that this government will manage its debt portfolio in the most prudent way. That proposal for redeemable preference shares does not hold attractions for the reasons that he adverted to. In relation to the government's policy—the policy that it put to the election, the policy that the Australian public endorsed on 2 March—we will be implementing it.