Mr TRUSS (3:10 PM) —My question is to the Treasurer and it follows on from the answer just given by the Minister for Finance and Deregulation. Can the Treasurer explain why he believes the massive projected increases in state debt are not inflationary while at the same time he says that federal expenditure must be cut and the federal budget surplus must be increased to deal with inflation? Why is state government expenditure on infrastructure not inflationary but Australian government expenditure on infrastructure is inflationary?

Mr SWAN (Treasurer) —I have a couple of concepts for him. The state general government sector have no net debt but it is true that their trading enterprises do have debt. They are out there investing in the future of the country—putting in place critical economic infrastructure to put downward pressure on inflation and downward pressure on interest rates. If they were not doing that, the country could not operate.