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Monday, 30 March 1987
Page: 1437


Senator MESSNER —I address my question to the Minister for Finance. I refer the Minister to the statement of Commonwealth Government financial transactions for February 1987 released last Friday, too late to reach the newspapers for the weekend. Specifically, I refer him to the public debt interest component of actual outlays for the eight months to February 1987. Did that statement reveal that the cumulative outlay to February 1987 on public debt interest increased by a massive 15.8 per cent over the corresponding period last year compared with a Budget forecast of only 6.5 per cent? In view of the fact that this extraordinary increase in public debt is a direct consequence of the deliberate high interest rate policy followed by the Government which formed an integral part of its Budget strategy, can the Minister explain why a more accurate forecast or estimate of public debt interest growth was not calculated in the 1986-87 Budget?


Senator WALSH —I do not have the Commonwealth financial transactions statement with me, but the figures that Senator Messner refers to sound to me to be credible, and I presume he has worked them out correctly. For at least the last two, and possibly the last four, monthly CFTs it has been stated that outlays on public debt interest are likely to be greater than those forecast in the Budget. I do not know why Senator Messner is bothering to ask a question about it now. I do not know whether, for the first time, he has actually got round to reading the CFTs and associated Press releases, or whether this is seen by the Opposition to be a slack day for questions and it therefore has decided to ask questions about matters it could have asked about several months ago had it been sufficiently diligent to read authorised releases or to show an interest in them.

One of the major reasons for the PDI being higher than anticipated is that the interest being paid on government debt is somewhat higher than had been expected at the time, and of course interest rates are higher than any sensible person would like them to be. If anybody is really concerned about interest rates now, let me just say that they are inconsequential compared to the horrendous interest rates which would apply if the Opposition were to be elected to government and to implement its policies-as vetoed and modified by the National Party of Australia, of course-and come in with a $16 billion deficit, as the present Leader of the Opposition plans to do. Under those circumstances, interest rates could be expected to hit 30 or 40 per cent.


Senator MESSNER —Mr President, I ask a supplementary question. The Minister did not attempt to address that part of the question in which I sought his explanation as to why there was no more accurate assessment of public debt interest at an earlier stage. I might interpolate that it was clear from Budget Papers that there was a very heavy roll-over period in the first part of the financial year, and for that reason the question was not raised until eight months had gone by.


Senator WALSH —Senator Messner has asserted that I did not address that part of the question and asked for the reason why. That is not correct. I said that a major factor in that is that the interest rate is higher than had been anticipated at Budget time. If Senator Messner wants to get a more comprehensive explanation than that, I will look at it and see whether there is anything further that is worth reporting.