Mr SWAN (2:15 PM) —My question without notice is again directed to the Treasurer. I ask whether the Treasurer is aware of comments made last night by the Reserve Bank governor, when he said, `I hope they are not pinning too much faith in monetary policy, because there is a limit to what it can be expected to perform.' Treasurer, isn't this comment intended to highlight the importance of policy matters outside the Reserve Bank's control, in particular, fiscal discipline by the government? Does the Treasurer agree that this constitutes a warning about possible negative consequences from the government's massive $66 billion pre-election spending spree?

Mr COSTELLO (Treasurer) —This is the government that put in place the monetary policy arrangements which apply in Australia, and this is the government that appointed the Reserve Bank governor. We believe that it is important for the Reserve Bank to continue the excellent work that it has been doing over the last 8½ years, and the government will continue the excellent work that it has been doing. If one were worried about fiscal policy, the first thing one would do would be to support either a small deficit or a surplus budget. The second thing one would do, presumably, would be to retire debt rather than to run it up.

In the last five budgets of the Australian Labor Party, there was not one balanced budget, and net debt increased by $80 billion. Under the nine budgets which this government has brought down, we have not borrowed in net terms, we have delivered seven surplus budgets, and we have now retired $73 billion of the Labor Party debt in net terms. When the Labor Party wants to engage in fiscal policy, it will begin seriously supporting this government's policies. We are now two years on from changes to the disability support pension—another test for the member for Lilley as to whether he can get the Labor Party to support those measures. We are the party that announced and fought for the financial sustainability of the Pharmaceutical Benefits Scheme, which the Australian Labor Party said in this parliament it would support and, during the election campaign, walked away from—which is still its policy. If the Australian Labor Party wants to start engaging in credibility on fiscal policy or, indeed credibility on economic policy, I say: there is one test. The test is its ability to support coalition policy. Until that time, it will stand condemned, without the economic credibility which it has lacked over the last eight years.