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Wednesday, 30 November 1983
Page: 3057


Mr LUSHER —I direct my question to the Treasurer. I remind the Treasurer of his frequent assurances that as private sector activity recovers there will be an offsetting winding back of public sector activity and, particularly, of the public sector borrowing requirement, which is currently the highest for a quarter of a century, in order to prevent crowding out and the grave economic consequences warned of in Budget Statement No. 2. In view of the Treasurer's claims yesterday about the extent of private sector economic recovery so far this financial year, will the Treasurer now reveal in what areas and to what extent public sector activity will be curbed?


Mr KEATING —I wonder who wrote this question for the honourable gentleman. I doubt whether he understands even one rudimentary fact, like most of his colleagues on the front bench of the Opposition. When it comes to talking about the structural Budget deficit, honourable members opposite and the Leader of the Opposition are the people who are running around suggesting that we ought to scrap the assets test, scrap the changes to superannuation, scrap the indexation of excises and do all of the very things the honourable gentleman has implied in his question. There would be no attempts to rein in the size of the structural component of the Budget deficit at a time when the economy is starting to pick up. That is the basic fiscal inconsistency in the ratbaggery which is now being trumpeted by the Leader of the Opposition as a substitute for policy. So, in terms of fiscal policy simply, this Government has made a judgment about the time when we will see a sufficient uptake of private sector investment. Our judgment is that it is not inconsistent with our monetary policy and our capacity to fund the Budget deficit in 1983-84. On that basis, as yesterday's bond tender revealed, we are seeing a fall in interest rates with the financing of a substantial public sector deficit. We will be looking with interest at the Leader of the Opposition, his Deputy and the other new converts to economic rationalism on the other side of the House to see how they believe they would bring in the Budget deficit, how they would constrain the structural components of the Budget deficit and how they would run an economy in which they saw a pick -up in private sector investment, which this Government will have. When we believe it is appropriate we will pull back the size of the public sector to make sure that, indeed, we will see that pick-up in private investment.


Mr Peacock —It is not appropriate.


Mr KEATING —No, it is not appropriate now because in 1983-84 we have seen that we have lifted public sector activity to make up for the fall in private sector investment because of the collapse of the economy occasioned by the policies of the previous Government.