Mr HOCKEY(4.40 p.m.) —I welcome the opportunity to follow the member for Newcastle (Mr Allan Morris). I look forward to him reporting to the House what the national foreign debt is, given that he accused the member for Lyne (Mr Vaile) of misleading the House about the matter. I think we deserve a correction from the member for Newcastle on the details of the foreign debt.

When speaking in this place it is sometimes easy to forget that there are people out there listening to the radio broadcast of parliament. They may be in their cars, in their lounge rooms, at work or sitting on the beach on a warm sunny Australian afternoon. I know that a few of our mums and dads are listening to the broadcast and I am sure that a very old friend of mine, Otto, is also listening to this debate.

I would like to tell Otto about a fiscal initiative I know he would be very proud of—that is, the charter of budget honesty. At first glance, Otto would say that this charter is long overdue. The charter of budget honesty is what it says—a genuine attempt to be honest about where the budget is at and, most importantly, where it is going.

One of the major initiatives in this bill is to provide for an intergenerational report card. It is somewhat ironic that, in a nation and in a parliament such as this, where we sometimes struggle to deal with the great complexities of our society on such a regular basis, a process of preparing a report card on our fiscal direction is such a simple idea. What a terrific initiative!

Under this proposal at least once every five years, the government will release a report on the long-term sustainability of current government fiscal policies. By `long-term', we mean 40 years into the future. In a sense, for my friend Otto this may be seen as a report card into history. The intergenerational report will project the effects of current fiscal management. It will report on the impact of current revenue and expenditure programs. It is the use of a fairly trendy form of modern accounting known as `intergenerational accounting methodology', where 40-year projections of things such as demographic data, productivity, employment and all the other variables in the nation are considered in the context of current policy.

As my good friend Otto knows only too well, it is always a dangerous ask to predict budget variables into the long term, let alone 40 years hence. Indeed, making assumptions about long-term budgetary outcomes is a hairy business. I am perhaps one of the very few people in this House to have just a touch of sympathy for Treasuries around Australia.

Despite all the moaning words of the opposition, Treasury forecasts should be kept in perspective. For example, a one per cent error margin in a Commonwealth budget of $266 billion is over $5 billion. Even in the most accurate and respectable financial forecasts there is usually a one per cent margin of error allowed for. I might add that, often from a statistical point of view, financial forecasters are relying on more certain information than figures such as inflation, GDP growth and even wages growth may provide.

My generosity to the Treasury does not, however, extend to the opposition. There is little doubt that in this debate there has been quite a deal of revelation about exactly what the previous Prime Minister and the previous Minister for Finance said prior to the election about the state of the Commonwealth budget. But they made a $10 billion miscalculation, a $10 billion mistake.

It is worth reminding the House about some of the words of the previous Prime Minister prior to the March election in 1996. On 30 January 1996 on AM, Paul Keating said:

But again, let me remind you, Fran, we have the Budget in surplus. I mean, how many governments around the world have got a Budget in surplus?

I have a further quote from this program—and it is obviously a program the previous Prime Minister was very fond of. He said:

So I mean, this government has been, certainly in the Western world, in the OECD area, the high priests of budget accountability, and we've remained that. I mean, I don't know why you wasted the time with a question like this.

That is typical Keating aplomb. On 8 February 1996, AAP reported Prime Minister Keating as saying that there is no problem about the portents of the Australian budget. Then on 13 February 1996—so we are inching closer to that budget period—AAP again, the Prime Minister said:

The budget is in surplus. At source, we don't have an underlying problem.

Then we had this beauty, this great Keatingesque charm. In the Australian Financial Review on 14 February—the Valentine's Day massacre, you could argue—Paul Keating says:

The budget, for God's sake, is in surplus for this year in the middle of the year. We have surpluses in prospect for the next three years.

It may be forgivable if it were someone who could claim to be ill-informed or misled about the state of the nation's budget, but the thing is that the Prime Minister at that time, Paul Keating, knew what the state of the budget was. This was verified by the statement from the now Leader of the Opposition (Mr Beazley) on 29 January, when he told the third Australian Pensioners and Investments Conference:

This strategy—

meaning fiscal consolidation—

has led to a small budget surplus in 1995-96 and growing surpluses forecast over our forward estimates period.

So what happened was that both the former Minister for Finance and the former Prime Minister were saying, `No, the budget will be in surplus.' That was a $10 billion miscalculation. I have always been curious since the day of the election to understand how the Australian Labor Party would handle it. Perhaps they would do well, given the recent court case outcome, to ask Mr Alan Bond to give the ALP a line on how to explain away some multibillion dollar miscalculations.

The mistake was significant. It would almost be forgivable to allow for a miscalculation of that proportion if the Australian Labor Party did not have form on this issue, if they did not have good form on the fact that they have always played with rubbery figures. The most obvious example of this—and I refer to the previous speech of the member for Newcastle—was when Tony Cole, the previous Secretary to the Treasury, advised the Australian public that the One Nation figure estimates were prepared not by Treasury, not by the Department of Finance, not even by the Reserve Bank but by the Prime Minister's office. They were rubbery figures—changing the figures to suit the situation.

I am pleased that the intergenerational report will be based on Treasury estimates, not rubbery figures. I am also pleased that the assumptions that will form the basis of the projections in the intergenerational report will be based on a broad range of criteria, including expected demographic changes in Australia. It is fair to expect that if the intergenerational report does include the analysis based on 40-year demographic projections, then it could be a very revealing document.

This is welcomed by the Australian people. It will also undoubtedly be welcomed by the financial markets, who might well be calling for the government to issue 40-year bonds on the basis of these projections—although I would hasten to add that the 40-year bond market would not be a terribly liquid market, given the difficulties in creating a deep and active market in 12-year bonds. However, there is always a chance. The openness of this government is welcomed by the public as well who will be able to see that the fiscal pain, or the fiscal pleasure for that matter, that we are enduring is not going to be a burden for our children.

My friend Otto who is listening to this debate will also warmly welcome this disclosure. Disclosure is the basis for this bill. Apart from entrenching the existing publications—such as the budget economic and fiscal outlook report, the mid-year economic and fiscal outlook report and the final budget outcome report—this bill provides for a fiscal strategy statement, which is a more comprehensive statement of the government's short-term and medium-term fiscal plans and, most importantly, the pre-election report, which obviously sends a shiver through the veins of the opposition, because it will be giving the voting electorate a budget-like report on the state of the nation's books before the election.

Whilst the fiscal strategy statement may well be the document that most excites the financial markets and economic and business purists, it will be the pre-election report which will have the most significant impact on the nation. It will force the political parties to think carefully through and cost conservatively their promises. This document is only about accountability.

It seems to be that coalition governments, whether they be at the federal level or at the state level, are the only ones that seem to be introducing processes of accountability. For example, at the state level, particularly in New South Wales, it was the Greiner government that introduced monthly financial statements. It was the Greiner government that introduced quarterly statements in the government Gazette, which gave a detailed analysis of the overall budget. It was the Greiner government that introduced comprehensive budget papers based on both government financial statistics and budget and non-budget basis. And it was the Greiner government that provided consolidated financial statements which were introduced in New South Wales in 1989 which cover the entire audited public sector—not unaudited accounts, not even a two-page press release, but audited comprehensive financial data.

These coalition initiatives in the 1980s and 1990s at the state level have been extended right around the states of Australia. Who can forget the most significant, the most disastrous, financial transaction in the history of this nation—I am sure, Mr Deputy Speaker Andrew, you will not forget it—and that was the decision of the State Bank of South Australia to open up a subsidiary known as Beneficial Finance. Because there was no comprehensive reporting analysis of the activities of the State Bank of South Australia and because the state of South Australia had no comprehensive reporting mechanism, including the activities of the outer budget, they were allowed to get away with what could only be described, in the saddest terms, as South Australia's financial holocaust. It was an absolute disaster, and all this accountability the coalition governments are introducing is about preventing those sorts of events from occurring in the future. Of course, at the national level, we have seen a $10 billion mistake from the previous ALP government.

Releasing a two-page statement on the budget for the six months to January 1996 compared with our over 100-page report on the state of the budget in January 1997 is the very best example of the difference between the Australian Labor Party and the coalition in their attitudes towards accountability in the public sector.

It is no wonder that the Australian Labor Party are nervous about budget honesty. One interesting effect of this debate has been that over the last few days a few former Australian Labor Party members have been coming up to me and saying they wished that the New South Wales branch of the Australian Labor Party would introduce its own charter of budget honesty—because who can forget the Sussex Street debacle. But I will not labour that point for the moment. As my good friend Otto knows, there are some things that just never change.

Perhaps the Australian Labor Party should seek some of Otto's wise advice, for Otto was a learned man. I will quote from the Times of London about Sir Otto, as he became:

He was for many years one of the most influential figures in the world of high finance, serving first at the Treasury and thereafter at the Bank of England. After working for 20 years at the Treasury and reaching the elevated position of Comptroller of Finance before his fortieth birthday, he joined the Bank of England during the governorship of Montague Norman and played a major part in national and international financial affairs as an executive and director of the bank for another quarter of a century.

He was a very talented man, particularly when it came to his advice to the Australian government. I will quote again from the Times :

The activity which brought Sir Otto most prominently into the public limelight, however, and did in fact give him great responsibilities was when he undertook, at the request of overseas governments, to examine the financial situation of the countries concerned and to advise on financial and economic policy.

At the time, as the Times records, Australia was in extremely difficult financial and economic straits. This was in 1930. Sir Otto was asked to examine Australia's whole economic position and to report to the state and federal governments. His report was one of the most outspoken documents of its kind ever published. He described Australia as being out of budget equilibrium and out of exchange equilibrium and pointed out that Australian credit was lower than any of the other dominions. So perhaps the Australian Labor Party again—and I am giving gratuitous advice—should go and speak to him. Of course you will need something more than the traditional ways to speak with him.

The verdict of most Australians, again from the time, was faithfully reflected in the Melbourne Argus, which wrote at the time that Sir Otto fulfilled his mission with conspicuous tact, placing unpleasant facts on record in a manner that left no sting, and that he left the abiding impression of a kindly, courteous gentleman who has rendered conspicuous service to the Commonwealth. He was a man of outstanding intellect. Probably no finer brain, as the Times says, has been applied to the practical, detailed complexities of 20th century national and international finance.

It is somewhat ironic that, whilst the Australian Labor Party continues to oppose our level of accountability through the charter of budget honesty, their own state government in New South Wales continues to release on a monthly basis something that is known as the Niemeyer report, which is a regular update for the people of New South Wales on the status of the New South Wales budget.

Sir Otto passed away in 1971—and I am sure that he is not using the Parliamentary and News Network to listen to this broadcast—but something that is clear about Sir Otto is that he is listening and he is watching this debate and he is having a little laugh to himself and saying that his friends in the Australian Labor Party should heed his advice and recognise that openness and accountability in the disclosure of public sector finances is something that you should not be afraid of doing.