Mr TICEHURST (2:13 PM) —My question is addressed to the Treasurer. Can the Treasurer explain how the government uses the proceeds of privatisation? Are there alternative practices?

Mr COSTELLO (Treasurer) —I thank the honourable member for Dobell for his question. I can inform the honourable member for Dobell that the proceeds of privatisation which have been received under the administration of this government have been used to retire Labor Party debt—that is, the capital sum has been offset by a reduction in capital liability. When this government was elected the Commonwealth debt was $96 billion. By the end of the financial year just past, this government had reduced Commonwealth debt in net terms by $80 billion.

There is no difference between the government and the opposition on privatisation policy. Just to prove the point, I will table the Canberra Times of 25 August 1994, which has this headline: ‘Privatisation vital: Beazley’ The article says:

The Labor Party do not actually oppose privatisation. In fact, they used to give spirited defences of the practice. But there is a big difference between the privatisation practised by the Labor Party and that practised by this government. When the Labor Party engaged in privatisation—and I was reminded of this by the member for Melbourne yesterday—they spent the entire proceeds in the year of receipt.

Let me give you an example. In October 1993, under Labor the first tranche of the Commonwealth Bank was sold off for $1.7 billion. The Australian Labor Party government spent the full $1.7 billion in October 1993 and then, after they had spent the full $1.7 billion, borrowed another $15 billion to actually finance their budget. Let me give you another example. In July 1995 the Australian Labor Party government privatised Qantas and received $1.5 billion. In the year of receipt, which was 1995-96, they spent the lot so that by the end of the financial year they had no shares and no proceeds and, after spending the lot, borrowed another $12.3 billion to finance their budget.

In relation to all of the privatisation conducted by the Australian Labor Party, they sold the shares, spent the money, ran the budget in deficit and borrowed to fund it as a consequence. There is not one dollar in either asset or reduced debt to show for Labor Party privatisation. In fact, during those privatisations net debt ran up to $96 billion. This government has a very different view. This government has always applied the proceeds of privatisation to the reduction of debt. Net debt, as I said, has been reduced under this government by $80 billion. With the proceeds of the privatisation of Telstra, this Commonwealth government will become debt free in net terms. What a legacy that will be for future generations—not paying back Labor’s debt but building a financial position.