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Wednesday, 15 May 2002
Page: 1587

Senator WATSON (3:19 PM) —Unfortunately, the Australian Labor Party at a federal level has taken a very narrow view of last night's budget. That narrow view is not shared by the business or economic community; indeed, it is not shared by the rest of the world. After last night we did not see a dip in the Australian exchange rate; in fact, I think it further strengthened. We did not see a great sell-off in shares, because everybody around the world knows of the strength of the Australian economy. It is unfortunate that today in Australia we have had this very narrowly based barrage of criticism from the Australian Labor Party. All free democratic governments have a prime responsibility to protect their borders and their domestic populations, as well as a responsibility to protect their economies. But, following the events in Manhattan on 11 September, security risks around the world have changed forever—for the worse, unfortunately.

The potential threat from that type of terrorist activity requires strong protective action, not only at a domestic level but also at an international level. Proudly, Australia has risen to its responsibilities, as have the United States and other countries such as Britain. We all know that protecting our borders and our citizens and increasing surveillance against terrorist type infiltration and activity come at a great cost, unfortunately. That great cost was reflected in the budget figures presented last night. So, between September and June, costs have been rising, and that is the reason for a temporary move into deficit. The strong predicted recovery from temporary short-term deficit to future surplus reflects the underlying strength of the Australian economy. Reactions from businesspeople at home, from international institutions and from others show their continuing confidence in the economic direction and sound fundamentals of Australia. A recent issue of the Economist magazine states:

Australians are not like the rest of us. Last year, when almost all the rich economies dipped into recession or slowed sharply, Australia continued to boom. What is more, while most big stock markets have fallen by one-third or so from their peaks in early 2000, share prices in Sydney touched a new high this year.

In a sense it was this very strength of the Australian economy that, as a result of certain changes in housing, allowed some flexibility, like an increase in home owners arrangements. It was this very strength that provided this flexibility and allowed us to move into a deficit without a major reaction in terms of what might happen to interest rates, what might happen to inflation and other countries' regard for Australia.

This was a very sound budget. If we look at what has happened, we will notice that most government departments have had significant costs. That comes from Prime Minister and Cabinet down. Very roughly, it looks like Prime Minister and Cabinet are down $24 million; Transport and Regional Services are down significantly, over $50 million; Foreign Affairs and Trade are down about $250 million. It is the same with Environment and Heritage, Finance and Administration and Agricultural, Fisheries and Forestry. So it is not narrowly targeted, as they say; it is across the spectrum, and all areas have to provide their cost. From a superannuation and a savings perspective, the budget certainly contained some very good news. (Time expired)