Mr GEORGIOU (12:07 PM) —Two weeks ago, Peter Costello handed down the Howard government's third budget and delivered Australia's first budget surplus in almost a decade. The magnitude of this achievement cannot be overstated. When the coalition was elected to office in March 1996, the budget was $10.3 billion in deficit. Over the last five years of Labor's term in office, from 1991-92 to 1995-96, Labor had run deficits of $11.5 billion, $17 billion, $17.1 billion, $13.2 billion and $10.3 billion, deficits amounting in total to almost $70 billion.

In less than three years, this government has turned the situation around completely. Today we are in surplus to the tune of $2.7 billion with increasing surpluses projected into the future. By the end of financial year 1998-99, we will have paid back $31 billion of Labor's debt. Taking into account the proposed sale of Telstra, Commonwealth general government net debt is expected to fall to around 1.5 per cent of GDP by 2000-01, which is a far cry from the almost 20 per cent of GDP which the coalition inherited in March 1996.

Of course, governments cannot control everything—sometimes I think it is just as well. Never has there been such a stark reminder of this fact as in the Asian economic meltdown. Governments do, however, have a responsibility to put their own affairs in order, to protect the country from risk and to lay the foundation for sustainable economic and employment growth. I believe the government has done this.

When the coalition came to office, its strategy was straightforward. The budget deficit had to be addressed to make a positive contribution to national savings, relieving pressure on the current account, inflation and interest rates; to reduce government debt and insulate Australia from adverse international economic shocks; and to give the government some scope for future policy flexibility.

Subsequent events in Asia—which were totally unexpected at the time the budget strategy was laid out—have highlighted the importance of our approach. We still do not know what the full impact on Australia will be of the events in Asia. What we do know is that the measures taken in the first two coalition budgets will have reduced this impact, and these have been further built upon by the third budget.

Moreover, the government's budget strategy has underpinned a number of fundamental economic positives. Inflation and interest rates are at their lowest levels in a generation. There are now more Australians in work than ever before. Unemployment, while still too high, has fallen to its lowest level since 1990. The OECD has predicted that economic growth in Australia over the coming year will be stronger than in any of the other major OECD economies. The achievements of the budget are quite clear and transparent.

What is rather more complex is the response of the opposition. As a humble backbencher, I listen to the speeches of the Leader of the Opposition (Mr Beazley) reasonably intently. Actually, it is not a big ask because he tends to give interesting speeches. His reply to the budget was as interesting as any. In the limited time available to me, I want to focus on two of its elements: its dominant motif and his comments on Telstra.

The motif of the Leader of the Opposition is, I think, expressed by him right at the beginning of his speech when he says, `We all have our sustaining fantasies.' Perhaps we do, but what is certain is that the Leader of the Opposition must have an extremely rich fantasy life in order to declare that:

We need surpluses of the kind that Labor delivered four years in a row . . . surpluses built on jobs and growth.

When I heard that, I did not quite remember those years in the same glowing way. So I went back over the budget papers starting in 1990-91, the last year in which Labor ran a surplus. Labor's budget in 1990-91 predicted an $8 billion surplus, which was to be accompanied by economic growth and an increase in employment. It was supposed to produce, in the ringing phrase of the then Treasurer, Mr Keating, `the outcome the government was seeking delivered without the misery and despair of high unemployment and a savage recession'.

Unfortunately, the last of the fabled Labor surpluses, surpluses which the Leader of the Opposition tells us were `built on jobs and growth', were actually built on the opposite; they were built on high unemployment and a savage recession in 1990-91. Unemployment rocketed. Employment, far from picking up, actually went into reverse. There were 200,000 fewer jobs at the end of 1990-91 than there had been at the beginning. Far from growing, the economy went negative. Australia went into recession. But there was still a surplus—it came in at $400 million.

The Australian people will not forget—even though the Labor Party is apparently desperately trying to—the last fabled year of Labor's surpluses. Paul Keating engraved it in their memories by coining that most brutal and unforgettable phrase `the recession Australia had to have'. We may criticise Paul, usually fairly, but you have to give it to him: he did have a way with words—`the banana republic', `the J-curve', `Placido Domingo', and `this is as good as it gets'.

What is sad about the sustaining fantasy of the Leader of the Opposition is not just that it transforms 1990-91—the year so clearly remembered by Australia as the year of the recession that we had to have—into a year in which there was a surplus built on jobs and growth; it also distorts the reality of the previous three years. Those years were based on an economic fraud which could not be sustained and which inevitably tumbled into recession. In fairness, since we are all politicians, you do not have to take my word on this. Let me quote fully what Paul Keating as Treasurer said in November 1990, after the economy that he had spoken of so glowingly just a few months beforehand had fallen in a heap:

This is a recession Australia had to have. The Government would not have inflicted this pain on itself or on the community unnecessarily. The unsustainability of spending in the economy over the past couple of years had to be slowed.

It is interesting that the concern about the pain inflicted on the government preceded the pain inflicted on the community. But, leaving that aside, the lesson of all this is that sustaining fantasies may have their place but they should not be taken out of the closet and presented as truth.

The other observation I would like to make about the reply by the Leader of the Opposition to the budget relates to the privatisation of Telstra. When the Prime Minister (Mr Howard) first announced that the government would move to sell the remaining two-thirds of Telstra, the Leader of the Opposition made this unequivocal declaration: `We will not be privatising the other two-thirds of Telstra; end of story.' Listening to his reply to the budget, however, I noted that the declaration by the Leader of the Opposition was not repeated in that speech. I heard reservations about the full privatisation of Telstra in the fashion proposed by the government, but what was absent was any statement of commitment that Labor would not sell off more of Telstra in one form or another.

I was a bit puzzled about this and I thought it might be an oversight, so I followed it up by reading his two subsequent speeches—the first to the New South Wales Chamber of Commerce on the Friday after the budget reply, and the second to the Victorian ALP's conference on Sunday. In both of these speeches he did raise criticisms of the government's decision to privatise Telstra. In neither of these speeches did he rule out the possibility that Labor would sell off more of Telstra.

There are two possible explanations for this. The first is that the Leader of the Opposition does not believe that he has the credibility to convince Australians that Labor will not sell more of Telstra, so he does not bring the issue to a point. If this is the case, he is entirely right; in government, the Leader of the Opposition was Labor's great privatiser, and the Australian people simply do not believe him on Telstra. They did not believe him or Labor at the last election; they will not believe him or Labor at the next election.

But there is an alternative explanation for the Leader of the Opposition's studied ambiguity. The explanation is that Labor is currently secretly considering selling more of Telstra in some fashion other than that proposed by the government. If that is the case, I think that the Leader of the Opposition should come straight out and tell Australians what Labor's true intentions are. Mr Deputy Speaker, I believe that this is an exceptionally good budget and I commend it to the House.