Senator SHERRY (2:00 PM) —My question is to Senator Minchin, the Minister representing the Treasurer. Is the minister aware that Australia sent $21 billion overseas over the last year to pay the interest on foreign debt? Is the minister further aware that $2 out of every $3 generated in the Australian economy is owed to foreigners? Does the minister agree with both the OECD and the IMF that spiralling foreign debt is a serious issue for Australia, even if it is driven by the private sector? Will the minister acknowledge that record foreign debt is a looming problem? What credible reasons can the government have for having done absolutely nothing about Australia’s foreign debt over the past nine years?

Senator MINCHIN (Minister for Finance and Administration) —Senator Sherry is desperately trying to support the equally desperate campaign by the failed opposition leader, Mr Beazley, to get away from the debacle of the last five weeks. The likes of Senator Conroy convinced Mr Beazley to spend five weeks trying to stop Australians getting a tax cut on 1 July. We are grateful to the Senate and to the minor parties for agreeing that Australians should get a tax cut on 1 July, and we are still waiting to see if the ALP is going to move a disallowance motion.

Having wasted those five weeks, the Labor Party now thinks that it can resurrect its position by running some sort of campaign on foreign debt over the winter recess. I regret to say that nobody will be listening. Nevertheless, I refer Senator Sherry to the answer I gave yesterday. None other than Mr Beazley indicated back in 1995 why the foreign debt question in Australia must be kept in perspective and must be considered on the basis of the ratio of government to private sector debt and, equally, the ratio of exports required to service the debt. On both measures, Australia is in a considerably better position than it was when Labor left office.

Senator Conroy —Do you know what the IMF stands for?

Senator MINCHIN —As I also said yesterday, the fact is that this is a country that will always rely on foreign funds to provide the requisite difference between our savings and our investment requirements. In Australia’s existence, there will probably always be that gap between savings and investment, which will need to be filled by foreign funds. One of the most important things for any government and, indeed, for an opposition is to ensure that Australia remains attractive to foreign investors so that we can continue to attract the foreign investment funds needed. Once those investments are made, there are obviously dividend earnings from those investments that do go overseas. For 200 years, Australia has needed that foreign investment, which must be serviced. Given that reality about Australia, what you have to ensure is that we continue to have as efficient and globally competitive an economy as we possible can to ensure that we can properly service the level of debt that we have.

Senator Conroy —So the IMF is just irrelevant?

Senator MINCHIN —I keep reminding the opposition that we are talking about private commercial transactions. The government have some 4.5 per cent of that, because we have gross debt out there. We have said that we will keep gross debt out there.

Senator Conroy —So you’re right and the IMF is wrong?

Senator MINCHIN —It is essentially a function of the private sector making commercial decisions to borrow, to invest in Australia, to develop this country and then service those borrowings by way of transactions internationally. We are satisfied that Australia’s capacity to service its position is very good. It is particularly assisted by the fact that we have taken the necessary measures on our part to eliminate government debt so that we are a net saver. That is the great difference between our period in government and what we had under the opposition. We are a net saver, and we have done that despite the opposition trying to stop us on every occasion. We have brought the government budget under control and fixed the problem that they created for us. To the extent that we have a current account deficit and foreign debt, it is a function of private sector transactions. The servicing ratio is 9.7 per cent, compared with 20 per cent under the Labor Party.

Senator SHERRY —Mr President, I ask a supplementary question. Isn’t it a fact, Minister, that Australia as a totality is not a net saver? Doesn’t your complacent attitude run contrary to the views expressed by both the OECD and the IMF, who are increasingly concerned about our record level of foreign debt? Is the minister aware that, with the current account deficit running at a record level of over seven per cent of GDP, which is far in excess of economic growth, foreign debt will continue to spiral upwards? Will the government finally admit that the ballooning foreign debt is a serious problem and do something about it before Australia pays the price through higher interest rates?

Senator MINCHIN (Minister for Finance and Administration) —That is a nonsense to link it to interest rates. I quote a professor of economics, Professor Tony Makin, on this very subject of the extent to which, if any, there is an issue here. Professor Makin’s article, which was in the press recently, said:

He went on to say:

We want to ensure that foreigners do remain confident in the Australian economy. That is why we want to reform Australia’s industrial relations system. We invite the ALP to get on board.

The PRESIDENT —Senator Conroy, in that first question and supplementary question, you interjected 15 times. I ask you to cease.