Senator COOK —My question is to Senator Hill in his capacity as Minister representing the Minister for Trade. Can the minister inform the Senate precisely what contribution the following government measures have made to Australia's disastrous second successive record monthly trade deficit: the government's $359 million budget cuts to our trade programs; the government's 30 per cent cut to the Austrade budget over the last three years compared with the previous three years; and the government's 25 per cent cut to the Export Market Development Grants Scheme?

Senator HILL (Environment and Heritage) —The trade figures reflect the fact that we have such a strong domestic economy with the background of basically a weak external situation. To some extent, therefore, our trade figures are not as good as we might like, because of the fact that we have done so well as a government and have put in place the conditions under which the Australian economy is booming in the way it is now. It was interesting last night to hear the deputy editor of the Economist referring to the miracle economy of Australia and saying how extraordinary it is with the background of the very weak circumstances existing in Asia at the moment.

Of course, it is not a miracle at all; it has occurred through sound economic management, taking hard but difficult decisions that have enabled expenditure to be significantly cut, interest rates to be reduced to their lowest level in 30 years, inflation to be at a record low level, and jobs to be increased in this country. That is the circumstance that has led to a very powerful domestic economy with growth of over four per cent; and that is tending to suck in exports, not surprisingly, whilst at the same time our export markets are weak because of the weakness of our partner economies. That is particularly reflected in relation to figures for commodities at the moment. They are the facts of the matter.

What is comforting is that, because of its strong domestic economy, Australia can withstand difficult external accounts much better than it was able to under Labor. I guess that is just another reason why this government should be applauded for taking those hard decisions, most of which were opposed by the Labor Party.

Senator COOK —Of course, the structural strength of the economy is due to the reforms made during the Labor government, and the problem with the current account deficit is that we are not exporting enough. Madam President, I ask a supplementary question. Minister, won't you acknowledge that the government's ill-conceived and short-sighted cuts to these trade programs have at the very least contributed to making a difficult trade situation worse? Won't you acknowledge that fact? Can you guarantee that the government will rectify those cuts to our export incentive programs in the coming budget?

Senator HILL (Environment and Heritage) —I will not concede that; but what I do say is that the answer for the future is to strengthen the domestic economy even further—and the way to do that is with further reform and, in particular, taxation reform. We have been able to reform our expenditure and industrial relations, but what we badly need is to complement that with taxation reform, to introduce an efficient, contemporary taxation system that encourages exports. And what system will encourage exports more than one which has a GST but has no GST on exports? If you are seriously interested in the external accounts, Senator Cook, you should support the government—

Senator Cook interjecting—

The PRESIDENT —Order, Senator Hill. Senator Cook, it is your question and your supplementary question, and you have been interjecting persistently throughout. There is an appropriate time to debate this matter and it is after question time.

Senator HILL —If the Labor Party were serious about external accounts, the first thing they would do would be to support the coalition government in passing tax reform. The opportunity is before the Senate at the moment. The test is in the hands of the Labor Party. Come on board and at last be relevant. This is a chance for Labor to be relevant—just one chance. (Time expired)