Mrs DE-ANNE KELLY(12.23 p.m.) —I rise today to speak on the Charter of Budget Honesty Bill 1996. This was another election commitment made by the coalition which we kept. Before I address the bill, I would like to pick up on a few comments made by the previous speaker, the member for Werriwa (Mr Latham).

Mr DEPUTY SPEAKER (Hon. N.B. Reid) —Order! I think the honourable member should address the bill.

Mrs DE-ANNE KELLY —May I ask you a question, Mr Deputy Speaker?

Mr DEPUTY SPEAKER —Order! I have just said that the honourable member shall address the bill and not the member.

Mrs DE-ANNE KELLY —Very well; I just note, though, that the member for Werriwa mentioned in his address my electorate and a number of disadvantages in that electorate, which allegations are untrue, and he was not called to account. However, I will continue. This bill requires government to adhere to sound fiscal management and to prepare the following: a fiscal strategy statement at the time of the government's first budget and each subsequent budget; a budget economic and fiscal outlook report at the time of each budget; a mid-year economic and fiscal outlook report by the end of January each year or six months after the budget; a final budget outcome report for each financial year, no later than three months after the end of the financial year; an intergenerational report every five years; a pre-election economic and fiscal outlook report prepared by the Secretary to the Department of the Treasury and the Secretary to the Department of Finance which gives the Australian people a clear picture of the economic and fiscal management of their government; and costing of the election commitments of both the government and opposition on request by the departments of Treasury and Finance.

Here we have the first mid-year economic and fiscal outlook 1996-97 put out by the Treasurer (Mr Costello). It covers a range of matters. In fact, I comment on what Michelle Grattan had to say about this. The heading to the article was `Opinion—there is a price, but honesty will pay off'. Absolutely right; honesty will pay off. She has read through the report and noted policy decisions taken since the budget. I notice one decision of the Attorney-General's Department and the legal costs relating to Dr Lawrence, and a host of other matters that will be of great interest. Michelle Grattan said:

The government will find it harder to hide the economic dark clouds between elections but the most dramatic impact will be at election time.

There is a barometer on government performance. The government can use the figures for its own purposes to lay the groundwork for tough decisions. They also make it more accountable. There is a wealth of material for the expert critics.

I think Michelle Grattan has taken a very sound overview of the first mid-year economic and fiscal outlook report from our Treasurer. And, as a government which keeps its promises, I would have to say that the ones which give me certainly the greatest amount of hope are the intergenerational accounting reports.

I would just like to mention briefly why we need a Charter of Budget Honesty Bill. The simple answer is: because the previous government deceived the Australian people most repeatedly but most notably at the last election. I would now like to quote another economic journalist, Terry McCrann. He has this to say:

Last year—

and this was obviously written in 1996—

Ralph `epistles to Jeff' Willis told us the Budget would be in surplus to the tune of $718 million.

The fine print—and it really was smaller print—told us it was actually . . .

And it went on to say it was $8.3 billion in the red—a plain reason why we need accountability in government. The previous member mentioned the high priestess of accountability, Ruth Richardson. I just say that the window dressing that we have seen and the curtains that were pulled across the previous government's financial statements to the Australian people frankly would never have received the plaudits of Ruth Richardson.

In fact, it is because the previous government was just so sleazy that we need now to be accountable. They had a lemon of a record; they turned the odometer back on their budget deficit from $8.23 billion—in fact, $10 million, as we later found—to a surplus $718 million. They said that the Australian people would not notice. They got Paul's Polyfilla in all those rust holes in their promises and they said that the Australian people would not notice. They retreaded their lemon with the vision thing and they said that the Australian people would not notice. The Australian people did notice. They did not vote for a worn out lemon of a government. They have asked for a new government and they have asked for one that is accountable to them that gives a clear indication of the economic and fiscal management of their country.

I would now like to turn to that aspect of the bill which, particularly as the mother of a young child, I find the most significant, and that is the intergenerational report which is to be prepared within five years and then every five years thereafter. I certainly commend the Treasurer and so should every other parent who is concerned about the financial future for their children and grandchildren. What do we think of parents who run up a debt and leave it to their children to pay? What do we think of communities that fail the environment, that use up their resources and leave it to the next generation to fix? We rightly think very poorly of them. We do not approve of mortgaging the future to pay for the present. Selfishness is an unpleasant trait in a human being; in a government it is reprehensible. Yet Labor was happy to leave this debt. In 1983 the net foreign debt was $23 billion; in the 1990s it had climbed to $180 billion.

So what exactly is intergenerational reporting, and what sorts of figures should it contain for us? The bill has said that it will assess the long-term sustainability of current policies over the 40 years following the report and must take account of the financial implications of demographic change.

I now want to refer to a paper by Auerbach, Gokhale and Kotlikoff entitled `Generational accounting: a meaningful way to evaluate fiscal policy'. They define generational accounts as a present day value of net taxes—that is, the taxes that are paid less the benefits received—that each generation can expect to pay now and in the future. They will show how much of our government bills future generations will have to pay if our generation is unable or unwilling to pay our bills. As well as looking at the present value of future taxes and benefits, generational accounting could enable us to compare the burden of different generations. We could finally know, at least in financial terms, whether it really was harder or better in the old days.

Generational accounts can be very revealing. Regrettably, the only available figures at present are those for the Americans. If we take generational accounts for a base year of 1991, a 30-year-old American male could expect to pay $258,500 in tax and receive a mere $53,000 in benefits, making a net taxation payment over his lifetime of $205,500. By contrast, older Americans can expect to pay less in tax and be a net beneficiary from government.

A male American aged 60 in 1991 could expect to pay $112,100 in tax and receive benefits of $135,100, making a net tax payment of minus $23,000. In other words, he is a beneficiary from government. These figures are similar for females. It is plain that, for young and middle-aged Americans, the future taxes to be paid will far exceed the benefits that they will receive. These calculations can also show the net amount that future generations of American men and women will have to pay to balance the government's budget constraints.

We have to accept that equity and fairness require that our great-grandchildren, our grandchildren and children should not pay more of their lifetime incomes in tax than we pay today. Sadly, for the figures available in America, this is not the case. Depending on the discount rates and productivity—and certainly there are some unknowns in generational accounting—while today's new born children will pay net tax rates over their lifetime of 34 per cent, future generations will not be so fortunate. They can expect to pay a net tax rate over their lifetime of 71 per cent.

If that is the case for America, it will be very interesting to see the generational accounts in Australia. Quite plainly, in other developed countries there is an enormous financial burden for future generations which could well prove to be a similar fiscal alba tross for our grandchildren and great-grandchildren.

Properly prepared, the generational accounts for Australia will be very revealing. They will show very clearly whether we have been selfish and have mortgaged the future of our children, our grandchildren and our great-grandchildren for our own benefit or whether we have been mature, financially responsible people. Generational accounting, as I have said, is regularly used in the United States as well as in Japan, Italy and Norway. I certainly welcome and will look forward to, as will many others, the generational accounting report that will be prepared in Australia.

I will now mention very briefly a matter raised by the previous speaker, the member for Werriwa. He referred to it as `Costello's crater'. I would like to talk a little about that. In fact, I would like to refer to an article in the Australian written by Glenn Milne entitled `Why budget facts play second fiddle'. He referred to the difficulties that arose with the recent shortfall in tax. This is what he had to say about what the previous government would have done:

In previous years, however, the mistake would have been glossed over in the mid-year review, then fixed during the Expenditure Review Committee process, finally appearing as an unremarkable line item in the Budget documents.

In other words, we would have seen more of the obfuscation and deceit that we have become accustomed to from the previous government. That did not happen with the Treasurer. I again quote from Glenn Milne's article:

What must not be forgotten here is that it was an entirely discretionary decision on Costello's part to reveal the company tax shortfall.

In other words, the Treasurer did not have to reveal that. He could have been as deceptive as the previous government had been, but he was not.

A charter of budget honesty is not simply about reports; it is about developing trust between a government and the Australian people. I am very pleased that our Treasurer chose to be perfectly honest and open in what, in financial terms, will amount to a small error. I look forward now to budget honesty, as I am sure do the Australian people, including my electorate of Dawson. I welcome this bill.