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Friday, 10 May 1985
Page: 1755

Senator MAGUIRE —Does the Minister for Finance have any information on the growth of public debt in Australia in the late 1970s and early 1980s? If so, what is the estimated addition to the annual interest bill of the growth in the public debt in that period when government operated on the time payment plan? Is the growth in the public debt in the late 1970s and early 1980s now restricting the expenditure priorities of the current Government?

Senator WALSH —There are no figures available which give the growth of the Commonwealth public debt between November 1975 and March 1983. However, figures are available on a financial year basis. As the purpose of Senator Maguire's question is to identify what happened when the Liberal Party dog was being wagged by the Country Party tail and both parties were in government, one can go to either side of the period when they were in government to get the figures on a financial year basis. I will go both ways. Between 30 June 1975 and 30 June 1982 total Commonwealth public debt increased from marginally under $6 billion to marginally under $18 billion. However, the Liberal and Country parties were not in government for all of that period, so I will select, alternatively, a shorter period. In the shorter time period between June 1976 and June 1982, the total Commonwealth public debt increased from $9 billion to again marginally under $18 billion. Of course, that occurred entirely during the period the Liberal and Country parties were in office. I add that during that same period they changed the capital funding arrangements for Telecom Australia. Had that not been done there would have been a higher increase in that figure.

As for interest liability, the annual interest bill paid by the Commonwealth was $568m in June 1976. It had grown to $1,635m in June of 1982. That is almost a three-fold increase in the interest payments on Commonwealth debt. That, of course, was by no means the end of the story. In the financial year ended June 1983 there was a further very substantial accumulation of Commonwealth debt because of the irresponsible Budget that the discredited former Treasurer had produced just before he left office. At the end of June 1983 the total interest paid on Commonwealth debt was almost $4 billion. That $4 billion represents more than 6 per cent of total present Commonwealth outlays and over 7 per cent of Commonwealth outlays at that time.

It follows from that, logically and inescapably, of course, that the escalation in interest payments on Commonwealth debt, which occurred during the periods the previous Government was in office, has significantly reduced the flexibility in outlays of future governments. Before Senator Chaney says how much Commonwealth debt has increased since, I say that yes, it has continued to increase since at a very substantial rate, partly because of the prospective $10 billion deficit which we inherited from the discredited former Government by courtesy of the discredited former Treasurer, and also because it follows inevitably that when an economy is in the depths of recession, as this economy was when this Government came to office, it cannot be turned around overnight. Outlays automatically increase substantially and receipts automatically fall substantially when an economy is deep in recession. In the period we have been in government we have in each year reduced the deficit in money terms, let alone in real terms. We have the same commitment to do so in this financial year.