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Wednesday, 15 May 1985
Page: 1995


Senator Dame MARGARET GUILFOYLE(3.59) —This matter of public importance has been brought forward today by the Opposition as a result of the deception of the mini-Budget introduced by the Government last night. It is not doubted that the objective of that mini-Budget was to give a perception about the economic responsibility of the Hawke Government. Those who have had an opportunity to look at the reaction of financial writers in today's Press will recognise that the perception that the Government had hoped for has not been achieved.

I want to deal with one or two things that were stated by Senator Jack Evans in the speech he has just concluded. He mistakes history if he likens yesterday's statement and the exercise that preceded it to anything that occurred in the period of the Fraser Government. The pruning of Forward Estimates is an exercise that is undertaken by governments as a part of the Budget preparation. It is normally a private exercise that is undertaken between Ministers and the Minister for Finance. Decisions are taken by the Cabinet. What has occurred over recent weeks has been a public exhibition of the normal processes of government budgetary procedure, a public exercise to raise expectations to give an impression of economic responsibility, something that is so sadly lacking in the present Government. The objective that undoubtedly was in the mind of the Government-to give some impression of financial responsibility-makes me think that Senator Evans, when he cited history, should perhaps have likened the situation to 1975 when, following two Whitlam Budgets, the Whitlam Government struggled desperately to give some impression of economic responsibility despite the level of expenditure that had occurred in those two Budgets. It will be recalled that the Budget prepared by Dr Cairns was revised by Mr Hayden to give some impression of economic restraint just as the Hawke Government has tried to do in this exercise preparatory to the Budget.

The Hawke Government has produced two Budgets. It has now embarked on a public exhibition of trying to curb expenditure and the expectations of Ministers in the Forward Estimates. It is quite misleading to compare that in any way with the razor gang or review of government expenditure exercise of the Fraser Government after about five Budgets when it embarked upon a course of looking at government programs that could be removed from the Budget completely. This trimming of Forward Estimates is a normal government procedure. For it to be elevated, as it was last night, to being some restraint on government expenditure ignores completely the fact that it is a necessary procedure to arrive at the figures for the Budget.

Senator Walsh mentioned a number of things in his response to Senator Chaney and I want to touch on three of them. The first thing I mention is the somewhat misleading answer that he gave to Senator Tate about the global figure of $1 billion that has been provided in the Forward Estimates. His answer gave the impression that that figure related entirely to matters concerning State governments to be raised at the forthcoming Premiers Conference, but when pressed further it was found that he could not give any assurances as to the adequacy of that $1 billion to cover new policies including the increases to be given to State governments. So we have in the Forward Estimates a global figure of $1 billion which does not represent increases in State government expenditure or what will be required by the Federal Government for its new Budget policies. It will be recalled that Senator Walsh would give no assurances with regard to new policies. In fact, he tried to turn the situation around by saying that the Opposition was urging that there be no new policies. That was never the question. The question concerned the new policies of the Hawke Government in the forthcoming Budget.

The history of this Government on Forward Estimates or on scrambling into office is that it cuts $1 and then spends $2 on new programs. If we relate the $1,200m-odd that was taken from the Forward Estimates last night to the Government's history we see that we can expect the increase in Budget expenditure for new policies to amount to over $2 billion. It will be very interesting to see whether the Government departs from its recent history and restrains the actual expenditure that is brought forward as Budget items.

There was some discussion between Senator Walsh and other senators with regard to the changes that have been made to entitlements from the Department of Veterans' Affairs. I wonder at the figure that has been given as representing savings in that area arising from the High Court decisions to which Senator Walsh referred and about which he made some rather scathing comments. It is acknowledged that the entitlements under the veterans' affairs legislation are more generous in some aspects than those under the social security legislation, but I think that Senator Walsh, in the examples that he gave, ignored completely the fact that different entitlements were very likely under social security legislation for those who would not be eligible under veterans' affairs legislation because of the changes that have now been made. Therefore, I think the savings figures that have been provided on the grounds that Senator Walsh gave are more than illusory. I think they are very misleading indeed.

The only other item in relation to Senator Walsh's reponse to which I want to refer is the matter of child care. He gave examples of the levels of subsidy and the assistance that is given to parents who use child care centres or the child care program. He reaffirmed the policy promise that a further 20,000 places would be created and yet he said that the average subsidy would be reduced. That is a matter of real disappointment and, in many cases, I would think, real hardship to those single or invalid parents who use child care centres for the essential care of their pre-school age or very young children. The statement that costs are highly variable and that maintenance of the subsidy would require a reduction in standards-that is what he implied in his response on this subject-I think would come as a very great disappointment to those who have worked over the years for quality child care programs and an established long term service for those who require it. I just wonder how the policy advisers in the Office for the Status of Women would feel when they saw what had been done in this exercise to a program which is symbolic to them, a program that essentially affects women's opportunities. I wonder how they would feel about what Senator Walsh has stated as the Government's objective. Reducing the standard of child care while reducing the subsidy and at the same time providing more places can only mean, given the savings that have been claimed in this document before us, that a number of people who have been dependent upon the program will suffer very great hardship.

The Office for the Status of Women, which has led with sex discrimination legislation, must also be disappointed at the participation and equity program in education. The pre-school education program, again a Whitlam program, was established to provide pre-school care for every child in Australia. I think the priority that has been displayed with regard to programs that affect women or the disadvantaged reveals the philosophy of a government. It is understood and accepted that there have to be priorities in expenditure, but the way in which priorities are expressed reveals the philosophy of the Government. I think that what has occurred in this statement shows very clearly that there is some desperation in the Government's mind at the moment about the perception that the people have of it and that it is prepared to reject and abandon the symbols that it had of caring for people and improving people's opportunities either to seek their own independence, or to have support when they are unable to do that for themselves.

The Opposition brought forward this matter today because it believes that there are continuing doubts and uncertainties about key economic issues, particularly about wages policy, and because none of those doubts and uncertainties have been assisted by the statement that was made last night. If there is one thing that industry and the financial markets were looking for in this financial statement it was an assurance about the Government's ability to restore faith in the economy. I think it can be argued quite successfully that the Government has clearly not done that in the statement that was issued last night. One of the reasons why it has not been able to do that is that it chose to link its expenditure cuts with wages policy. Undoubtedly, wages policy is one of the essential elements that cannot be ignored in the context of the Australian economy.

Mr Keating indicated in his statement that the Government has no intention in the short term of seeking to discount the consumer price index to take into account the cost increases resulting from depreciation of the Australian dollar. In other words, full wage indexation is a matter of holy writ. It is written in the prices and incomes accord, and that accord must prevail in spite of economic realities and however much it might hurt either the public's perception of the Australian economy or the capacity of the economy to provide employment for a greater number of people. The consequences for the Australian economy of this surrender to the prices and incomes accord and to Australian Council of Trade Unions' movements will be very serious. I think the Government will feel those consequences in the months that lie ahead of us.

I would have thought that the Government would be prepared to argue in the national interest at the wage hearings that lie ahead of us. I would think that to bring forward a statement on expenditure cuts from the Forward Estimates is a very unconvincing way to show that there is any serious feeling of responsibility for the wages policy. The Government has given no wages policy to deal with the consequences of the greatest depreciation in the Australian dollar for 30 years. This traditionally big-spending Labor Government-and last night's cuts certainly did not assist in removing that quality of government-is spending at a real rate of increase that is still three times the average level for the Fraser years. No one would believe from last night's statement that it is concerned to bring about real reductions in government expenditure.

There is no indication that the Government has learnt from its weakness in regard to money supply. In fact, the Treasurer has further delayed taking the necessary hard decisions on money supply that are required to satisfy the confidence of financial markets. The Government has not taken serious decisions with regard to the level of government spending, and in regard to wages it has certainly shown a weakness in the face of the pressure of the trade union movement. There were various headlines in the newspapers this morning. But the headline of an article by the business editor of the Age, Mr Terry McCrann, was: 'Document that fails to impress'. I think that that was a fair judgment of it. The article states that the Treasurer:

. . . has fluffed his lines-badly. Last night's mini-budget was about as hard as warm butter and twice as slippery. The capital market will not be impressed.

Therefore, this statement which has taken months of work to prepare, will not impress the audience to which it was addressed. It compounded the error by choosing last night explicitly to concede full wage indexation to the ACTU without any discounting of the inflationary impact of the devaluation. Mr McCrann's article continues:

At best, the market might just give Mr Keating a second chance-hoping that he will recoup by hitting the States and delivering in the August budget.

I think that when Mr McCrann reads what Senator Walsh has said today about $1,000m being available to cover the increased revenue that will be given to the States he will see that as a signal that there will not be financial responsibility in dealing with the States. We have been told that that money will be available and we cannot even obtain an assurance that that $1,000m will be enough to cover what goes to the States, plus the new programs.

The Prime Minister (Mr Hawke), on radio programs this morning was asked about his wages policy. His answer was as follows:

What has been made clear by the Treasurer is this. That the movements in real wages in the period ahead must be less than was otherwise expected as manageable and the clear position is that by the September hearing when you will only have the March and June quarters . . .

Mr Hawke said: 'When this is taken into account, there will be very little impact of the depreciation'. It was a very convoluted sentence and I have tried to simplify it. The Prime Minister continued:

What we have said is that the productivity case that is scheduled is certainly appropriate for their taking into account the depreciation effect. What we don't know at this stage no-one knows is what that effect will be.

He was then asked: 'Have you given in to the ACTU?' He answered:

We've certainly not given into the ACTU. Certainly what we haven't given into is the blind ideological stupidity of the Opposition.

What he did not say is that the Government will not argue at the wage case for any discounting of the consumer price index. It has fudged the issue on productivity for its own reasons. Certainly, what was stated last night and today by members of the Government has given no assurance to the Australian people that they have sound economic policies in prospect for the difficulties that need to be overcome.