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Wednesday, 18 February 1987
Page: 263


Mr KEATING (Treasurer)(3.23) —One would have thought that in this day and age in the Australian Parliament the spokesmen for major political parties-the Opposition in this case-would start to understand some of the rudiments of the economic debates and try to join issue on what may seem to be differences at the margin in some of the causes and effects of a matter such as interest rates and the role they play in the total policy mix, in managing demand and in holding the exchange rate. Rather than that we have cheap tears about housing interest rates as though, in the view of the honourable member for Mackellar (Mr Carlton), they ought to be lower. At the end of his speech he talked about the balance of payments needing to be funded but all the front of his speech was about how much a week extra interest rates were costing families and what a terrible thing that was. He bleated about the loss in disposable income from housing interest rates. He usually gets up-he did not do so in this speech-to say that he would freeze everybody's wages. In other words, he is saying that it is terrible that people are paying a little extra on their home loans, but what he will not say is that the Opposition wants to freeze their wages. He says that in another context; he says that to the business community. One cannot take the Opposition seriously. At the same time as talking about a loss in disposable income from interest rates-a cheap populist comment-in fact, what he is really about is cutting disposable incomes because he thinks there should be a continuing freeze on wages so that the wage share will continue to decline in this country.

He talked about the bill to business from higher interest rates. He did not talk about the offsetting side of the policy-lower real wages costs, which are also part of the policy package. They did not get a mention. There was no reference to them. Neither did he refer to the fact that in 1982-83 when he was in office last there were 105,000 housing starts. People not only did not have mortgages to pay off but also they did not have houses to pay mortgages on. They did not have houses, full stop. By deregulating housing interest rates we will now see the number of starts in the coming year back to about 135,000, which is up from the low point of around 122,000 but not back to the high which the Government had in the previous couple of years of 140,000 to 150,000. There is not much point in the honourable gentleman crying about what somebody is paying on a mortgage. Many people never had a mortgage to pay interest on. They had no house or prospect of getting a roof over their heads. When the honourable gentleman was a Minister, together with the former Treasurer, he could have deregulated housing interest rates. As usual, the Opposition was lacking in the kind of courage which would have been necessary to do that.

He talked about small business. He should look at the increase in the tax payable by unincorporated business over the last three years. I gave him the figures yesterday. It is up dramatically because of the policies of the Government-because of growth in business activity and the general level of activity in the economy. The most any government can give small businesses is a buoyant economy-one which they can take a living from by economic growth. That is what we have done. Even in these difficult times of a current account problem such as we are having, we have still got the Australian economy positively growing, albeit more slowly than two or three years earlier. It is not going into a recession despite the fact that we have a very large terms of trade and current account problem.

The honourable gentleman never mentioned either, when talking about the small business equation, that this year for the first time ever small business in this country will be relieved of the double tax on dividends. We are only the second country in the world outside Germany to remove the double taxation of dividends on small business. That is the biggest tax change in the history of small business but he was not even decent enough to mention that in his remarks about small business.

He went on to make another cheap point by asking why inflation is so high. Inflation declined under this Government to an annual rate of 5.1 per cent for the year to March 1985 and the depreciation which began in February 1985 has now, in the broad, lifted our inflation rate to 9 per cent plus. That is part of the economic adjustment process and it is part of lifting the profitability of the traded goods sector of this economy so that it can draw investment to it and so that we can get a better balance in our external trading accounts. That price lift, which is so important to rebuilding the fabric of our secondary structure, is reflected in inflation. It is reflected there as imports price themselves out of the Australian market. As the fall in the dollar lifts the cost of imports, imports are measured by the consumer price index and therefore the nominal inflation rate rises.

For a government interested in the long term future of this country, the aim of the game is to keep that rise in inflation out of ongoing inflation and hence to keep it out of wages. We have succeeded in doing that in the last three years and our current wage policy will continue to do that. In other words, inflation will track down as the brake between wages and wage indexation becomes real, in terms of its impact upon the economy, and we will have a much more competitive and dynamic economy, one with a much better import competing structure and a low inflation rate. In other words, we will have achieved a major depreciation and made the adjustments on inflation all as part of the package which we have in place. But all those points about why inflation and interest rates are up and about the cost to home owners-he did not mention that the number of housing starts in this country is much higher than it ever was when the Opposition was in office-are just cheap points.

The honourable gentleman talks about the position which the Opposition has. He mentioned at the start of his speech that he has been the Treasury spokesman for a year or so now. The Opposition's tax policies, which I have costed and put before the House today, are an indication of the work he has been doing. Those policies would add to the Commonwealth's deficit enormously and the attendant interest rate structure would also be enormous. The funding of the interest rates would be absolutely enormous. The funding of the shortfall in revenue from the Opposition's announced policies would be catastrophic for Australia.

Rather than the honourable member for Mackellar saying that he has been the Opposition's Treasury spokesman for a year, I thought he would be hiding under one of the green cushions. He has been no help to the honourable member for Bennelong (Mr Howard), who is now on the nose with the National Party of Australia and his own Party. The honourable member for Mackellar has the job of shadow Treasurer, but he has muffed it. He has been no help to the Leader of the Opposition, who is struggling along trying to hold his leadership, yet the shadow Treasurer is sitting here with a couple of bits of paper and a giggle. Where is the structure of the Opposition's monetary, fiscal and wages policies? It does not exist. We just have this schoolboy stuff, with the Opposition raising matters of public importance, and making a few cheap points about interest rates, but raising no serious issues.

Opposition members interjecting-


Mr DEPUTY SPEAKER (Mr Leo McLeay) —Order! The honourable member for O'Connor, the honourable member for Mackellar and the honourable member for Bradfield will cease interjecting. The honourable member for Mackellar was heard in silence; the Treasurer also will be heard in silence.


Mr KEATING —In the context of the Opposition's view of the world, there was a position available to it on fiscal policy-not one I would have had or supported-and a position on wages policy. It could have had an alternative. Where are its policies? Its fiscal policy, its supposed tax policy, is now a sham. The Opposition has a $14 billion problem in terms of funding that.

The fact of the matter is that, instead of the Opposition using the past two years to develop a coherent, rational alternative-instead of the honourable member for Mackellar using the past two years or so to think about an alternative-here is the Opposition, a year away from the expiry of this Parliament, with its fiscal and tax policies in tatters, a wages policy which is simply a joke, a laughing stock, and without any credibility whatsoever on economic policy. I do not know what else there is for me to say. Basically, the Opposition is without any policy framework.


Mr Connolly —You have no defence.


Mr DEPUTY SPEAKER —Order! I warn the honourable member for Bradfield.


Mr KEATING —One of the things that amused me lately was a quotation which someone put under my nose, from the address by the honourable member for Mackellar to the National Press Club. He said:

Perhaps I should remind this audience that during my days as a line manager in industry I specialised in turnaround situations, where it was necessary to ensure survival.

That is what the Opposition needs now; a line manager specialist in turnaround situations-the Wichita lineman, the old rhinestone cowboy. What the Opposition really needs is a big turnaround situation to ensure its survival. If the best the honourable member for Mackellar can do is to make some cheap points about interest rates, when he knows the cause of our interest rate structure, and cheap points about supposed costs to business without looking at offsets, all I can say, as I normally say, is that we will let the public be the judge.