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Thursday, 28 May 1998
Page: 4196

Mr BARTLETT (11:44 AM) —One of the interesting things to watch in this debate on the Appropriation Bill (No. 1) 1998-99 has been the nitpicking of many in the opposition as they go scratching around for something negative to say. That has been quite a challenge for them because overwhelmingly this is a good budget, a good news budget, and the opposition does not like good news.

I will just refer to something the member for Chifley (Mr Price) said towards the end of his contribution. He spoke about cutbacks to a number of areas. Let me remind him of the figures: health—this budget compared to the last year of Labor—up by $3,640 million; nursing homes, up by $536 million; schools, up by $740 million; and hospitals, up by $1,244 million. These are not cutbacks but, in fact, increases.

In thinking of what to focus on in the few short minutes this morning, it was hard to know where to start because there are so many bright spots in this budget. In fact, even in looking for a succinct media comment, it was difficult to choose because so many of the comments were so positive. Let me quote a couple to sum it up. The editorial in the Financial Review on the day following the budget stated:

Peter Costello should be applauded for a budget that promises to deliver Canberra's first genuine surplus since 1990-1991. Without increasing tax rates, the Howard government has now largely repaired the fiscal blowout of the late Keating years.

The Daily Telegraph editorial on the same day stated:

Peter Costello's third budget is, as promised, a responsible document which lays the ground work for a secure economy in uncertain times.

There is also Steven Kates's economic comment in the Canberra Times of the same day that:

This is a budget which is as good as it gets. In this world of woe, it is seldom that one finds anything that does everything right, but this budget comes awfully close.

We could go on, almost ad infinitum. Much has been said of the three-year switch from the $10.3 billion black hole left by Labor to the $2.7 billion surplus. This is a remarkable achievement. It has been done without increasing taxes. In fact, it has been done while fulfilling the coalition's promised $1 billion family tax reduction package.

What is the impact of this switch from deficit to surplus? It is not just economic theory. It is not just economic rationalism. There are real benefits for the Australian community. We are starting to pay off Labor's debt. We are tearing up Labor's bankcard and lifting the millstone that Labor had put around the necks of our children. In its last five years in government, Commonwealth debt blew out alarmingly from $17 billion to $96 billion, from 4.4 per cent of GDP to 19.5 per cent of GDP. This budget turns the corner and starts the long process of debt reduction.

By the end of this year, this will almost be halved to 11.2 per cent of GDP, with ongoing falls in the years after that. This brings obvious and tangible benefits to the community. This is the whole point of the removal of the deficit, and the whole point of the debt reduction. Four clear benefits stand out to any that want to look at them.

Firstly, instead of taxpayers' money going to pay interest on past extravagance, it can start to be used again to provide essential services. We had reached the ridiculous point under Labor where close to $9 billion a year was going down the drain in interest payments on Labor's accumulated debt. We had reached the point where new borrowing was going largely to pay off the interest on past debt—money that would have been better spent on schools, on hospitals, on roads. I am sure even the member for Chifley would appreciate that. By sorting out Labor's vicious circle of debt and interest, taxpayers' money will at last be able to go again to providing those essential services in greater amounts.

Secondly, it puts downward pressure on domestic interest rates. One of the consequences of Labor's high debt policy was the upward pressure it put on interest rates. In March 1996, the international premium on Australian interest rates, the 10-year bond rate, was 2.16 per cent over the US rate. That is the premium for risk. It is now zero—in fact, slightly less than zero. That two per cent was a premium for risk. A premium because, with Labor, the country's stability was at risk. With Labor, there is always a risk. It was a premium paid by Australian business and paid by Australian home buyers.

The result of this government's fiscal responsibility has been the reduction in interest rates. For home buyers and small business, rates are the lowest that they have been for over 30 years. Small business rates have dropped from 11 per cent two years ago to 7.7 per cent, and mortgage rates from 10.5 per cent to 6.7 per cent. For the average mortgage holder, that 3.8 per cent reduction in interest rates means a monthly saving of around $300—that is, $300 more in their pocket each month because of the policies of the coalition government. I can tell you that the 13,500 home buyers in the electorate of Macquarie are delighted with this good news. They are $300 a month better off under this government than they were under Labor, and far better off than they would be under a return to Labor which would see their interest rates skyrocket once again.

Thirdly, this budget sets the stage for sustainable growth—not built on the boom-bust cycle of Labor, not built on the house of cards of unsustainable borrowing, not built on high interest rates, but built on low interest rates, low inflation and high private sector investment, which will guarantee long-term growth and long-term growth in jobs. This is sustainable growth, which is the key to employment growth. The Australian Financial Review said on 13 May:

The budget has gone a long way towards nailing down sound structural policy on which to grow the economy and to produce more jobs, lower interest rates and higher incomes.

More jobs, lower interest rates and higher incomes will be to the benefit of all in Australia.

Fourthly, having the budget back in surplus has helped protect Australia from the financial turmoil in Asia. Virtually every financial commentator has acknowledged the importance of this. Allow me to give just two examples. Terry McCrann wrote, in the Daily Telegraph the day after the budget:

Eliminating debt will also provide a buffer for Australia against the cold winds that will continue to blow from the rest of the world.

David Barnett wrote in the Australian Financial Review on the same day:

Australians should be grateful that they don't live in South Korea, Malaysia, Thailand, Indonesia or the Philippines or any of the other tiger economies of South East Asia.

They should also be grateful that they no longer live in a country run by Bob Hawke or Paul Keating.

Over the past three years the Coalition government has transformed the Australian economy into one which for the first time in our history is able to withstand an international financial crisis.

Who are the beneficiaries of this careful, sound, responsible management? All Australians and especially the battlers.

This is something the opposition seem to overlook. We have heard much bleating from the other side about there being nothing in this budget for the battlers, yet it is these very people who are most protected by the security, safety and stability this budget brings. Who do the opposition think would be the first to suffer if the Australian dollar was sold down the drain, if interest rates went through the roof or if we were plunged into another recession as we may well have been if Labor still had its hand on the tiller. It is the battlers who would be most vulnerable.

Who would be the first to lose their jobs? Who would be in most danger of remaining out of work, of becoming long-term unemployed? It would be the blue-collar workers. Who would find it hardest to meet the higher mortgage payments? It would be the low income earners. Those opposite can feign all the concern they like, but the harsh reality is that it was their incompetence that threw so many out of work in the worst recession in over 60 years. It was their incompetence which gave us mortgage rates of 17 per cent and cost many battling home buyers their homes. It was their incompetence which sent thousands of small businesses to the wall. And it was their incompetence which would again wreak havoc if they were given half a chance.

In the short remaining time I would like to mention briefly two or three highlights of the budget detail. These are initiatives which are largely aimed at helping the aged in our community. Firstly, the extension of the gold health card to another 50,000 World War II veterans is a most commendable step. At the cost of $500 million over the next four years, this is very appropriate recognition of the sacrifice that these people made for our country and the ill health that many of them have incurred as a result.

Secondly, the $280 million staying at home package provides extra assistance for the frail aged who would rather remain in their own homes than enter residential care. Thirdly, the provision of the seniors health card to an additional 220,000 independent retirees is a just recognition of the efforts that they have made over their life to save for their own retirement. Fourthly, the provision of full indexation of pensions to 25 per cent of male average weekly earnings builds in protection and growth for our pensioner community.

In the budget there is the continuation of many other initiatives that the government has already put in place—the continuation of the terrific new apprenticeship scheme, of national literacy plans, of increased health expenditure, of preventative health measures and of the assault on drugs. Time does not allow me to go through the full list of benefits in this budget.

In conclusion I return to the central theme of what I have said. In addition to the positive impact of many individual programs, the significant benefit of this budget for all Australians is that the country is back on track, that we are now finally living within our means, that we have lifted the vicious cycle of debt and high interest rates from the shoulders of our children.

The job is only partly done. It would be a grave mistake to think that the job is complete. Responsible management is not a dispensable luxury, responsible management is not an occasional nuisance. Responsible management is an ongoing necessity. To even contemplate a return to the economic vandalism of Labor would be unthinkable and would jeopardise the hard fought gains we have won. There is much yet to be done to build the security, safety and stability the country needs, the security, safety and stability for which our children will thank us.