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Wednesday, 25 February 1987
Page: 713

Mr LAMB(3.45) —I wish to make a few points immediately about the manner of the honourable member for Wakefield (Mr Andrew) as much as about the lack of content in his speech. When the honourable member admitted that he was no economist, he spoke for every member of the Opposition. He is certainly no orphan on that side of the House when it comes to a lack of comprehension about matters economic. Later in his remarks he showed a great fascination with the Premier of Queensland, Joh Bjelke-Petersen, when he referred to his own marriage and the fact that after 18 months of wedded bliss the rot with the deficit set in. I suggest that the link there is that there are two arms to the Queensland Premier's policies when it comes to hoodwinking the public. One is low tax, and the other is no sex before marriage-and we got that from the lips of Joh's own son, John. I suggest that the honourable member for Wakefield has been burning the midnight oil closely studying the statements from the mouth from the north.

No wonder he has been studying them closely and not giving attention to his own leaders in the coalition, because last night we heard the tick list of who supports the honourable member for Bennelong (Mr Howard) and who supports the honourable member for Kooyong (Mr Peacock) as an alternative leader. The honourable member for Wakefield is suffering lacerations in the political groin because he is straddling the barbed wire fence with a foot deeply rooted in each camp. He cannot make up his mind. Perhaps he is dwelling so much on it that he is very much like the Deputy Leader of the Opposition (Mr N.A. Brown) who started to go on a doorknock last weekend to find out the fortunes of the coalition, to find out what people thought of its policies. I have been told that he spent three-quarters of an hour doorknocking in one house. The honourable member for Menzies sat down with a constituent in Eltham in his own electorate and discussed two matters. He did not discuss his policy on interest rates, nor the policies the coalition has on the external debt that makes up this matter of public importance; he said nothing about matters economic because he, too, like the honourable member for Wakefield, would admit to being an economic illiterate. What he was talking about were two other matters. One was `Please tell me' he asked the constituent, `how popular is the member for Kooyong and what do you think of him. How does Mr Peacock rate in your mind?' Then he went on to talk about the Joh factor and wanted to know what the constituent thought about that. The obsession with Joh Bjelke-Petersen, the obsession with the rift in the coalition has underlined the absence of policies and of analysis that goes on in matters fiscal, monetary and economic.

I return to the manner of debate adopted by the honourable member for Wakefield. Normally a speaker is expected to speak through you, Mr Deputy Speaker, to honourable members in this House; but no, the honourable member for Wakefield played to the gallery. He directed his whole speech to the honourable ladies and gentlemen in the gallery. Another tool he has taken from Sir Joh Bjelke-Petersen is that one should never give people facts or analysis, but that one should play the populism role; give them what they want to hear, and keep talking snake oil economics. The honourable member says he is no economist, and we have ample proof of that fact in his speech and in every speech made from the Opposition benches.

I must admit, however, that he was fair in talking about the figures. He did not speak purely in billions of dollars. He also spoke of the relative size of the external debt measured in percentage terms of the gross domestic product. I hand it to the honourable member for Wakefield that he was indeed honest in that regard, but I would like to go a little further with the analysis. Opposition members tend to blame the Government for every increase in the external debt. I have selected figures very carefully from the end of June 1980 to the end of June 1986, and clearly they are appropriate because they give three years of the Fraser Government and a rough equivalent of this Government's time in office for purposes of comparison. We find that the gross external debt did increase about three and a half times as regards the percentage of GDP. This Government is greatly concerned about that, and we will not turn our backs on it. I shall shortly outline the policies, fiscal and monetary, that have taken place in the last three years to remedy the seeds that the Opposition sowed in the Fraser years and which led to the burgeoning of the external debt. I will demonstrate quite clearly that it is the private sector more so than the public sector that has contributed to this external debt. A simple ana- lysis, such as any schoolboy could carry out, shows quite clearly that 60 per cent of the external debt is not due to the public sector. It is not due to this Government, State governments, local governments or statutory authorities. It is quite clearly due to the private sector. Forty per cent is due to the public sector, but when one in turn breaks down that figure one finds that this Government has not contributed largely to the growth in the public sector external debt. The Government's contribution has grown less than twice, but when we look at local government and statutory authority borrowings we see an increase that is sevenfold. Let us be dinkum about this and let us examine which part of the public sector contributes to the external debt. That analysis is essential before we can start to build a thorough in-depth analysis of what can be done and what is being done about the external debt.

First, there are the exogenous economic factors-that is, those which are from outside, beyond our control-playing on the balance of payments. Since this Government came to office it is most unfortunate that the prices we are receiving for our exports, compared with the prices we are paying for our imports, have deteriorated by some 14 per cent. That factor alone has added two percentage points to the balance of payments deficit and the external debt factor. Secondly, we must look at the effect of devaluation on the external debt. When the Opposition was in Government it talked about deregulation of the economy and opening up Australia to the realities of the rest of the world, the global economy. But it did nothing about it. Members opposite stayed there in government and propped up the dollar, overvaluing it so that when the crunch came and we deregulated the Australian dollar we found that we suffered a significant devaluation. If honourable members opposite do their sums they will find that the devaluation of the Australian dollar accounts for nearly 30 per cent of the increase in the nominal Australian dollar value of gross debt since June 1980. It also accounts for 45 per cent of the increase in the last 12 months to September 1986.

I said that I would return to where the seeds of our problem were sown. We need go no further back in history than to the early 1980s-the 1982 period when this country was subject to what has become known as the Fraser resources boom. The economy was beaten up and our expectations were such that people were encouraged to invest in our basic resources so that we could capitalise on these export earnings. If that gamble had come off it all would have been very well. As the honourable member for Wakefield said, it would have meant that we would have been able to service our external debt with the income from these increased resource exports. But then, not long after we found that the resources boom bubble had well and truly burst. The reason that gamble did not come off was that it had to be propped up-

Opposition members interjecting-

Mr DEPUTY SPEAKER —Order! The honourable member for Mayo and the honourable member for Dawson both continue to interject, and interject from out of their places. I warn both honourable members that if they interject again in this debate they will be dealt with.

Mr LAMB —That strategy needed to be propped up by continued high prices for primary produce. In particular, it required overwhelmingly a continuing high price for oil because that high price for oil underpinned the high prices we were getting for competitive energies-coal, natural gas and so on. When that bubble burst we were left with the servicing debt on those investments-largely capital investments which were imported. I believe that the Opposition should be honest and come clean. It should accept the responsibility that it has left a legacy with the private sector of servicing an external debt which has its roots in the false resources boom of the early 1980s.

There has also been a substantial shift in the nature of private borrowings away from equity or private investment in Australia to a form of investment whereby we have short term borrowings for takeovers and so on. We have many examples of this. One or two takeovers in our recent history have added $2 billion to our external debt. That was the money required to fund the takeovers and make the capital gains for a few individuals in Australia. When we examine the contribution to the external debt from the public sector we must look closely at the borrowings of statutory authorities and other levels of government. It was the Fraser Government which relaxed the official constraints on overseas borrowings of public non-monetary enterprises. That is a policy which our Government has continued up to now. As I said earlier, this led to a sevenfold increase in the percentage contribution of GDP to our external debt. The Prime Minister (Mr Hawke) has said that he is meeting this head on. He has announced that there will be a May economic statement and he has also indicated that the Premiers Conference will be held earlier this year. Both these matters have been brought forward to tackle the greatest problem that is facing Australia-not the level of interest rates or the performance of this Government, but our poor balance of payments brought on by external factors and the lack of policies laid down in the Fraser years. Our external debt is also a problem being tackled.

In the remaining minutes available to me I will have a quick look at what the Government has been doing. First, the devaluation of the Australian dollar has made this country more competitive than it has been for 15 years. We have kept real labour costs down in that time and we have made Australia the most competitive it has been in the global scene for 15 years. It is imperative that we keep exports up and imports down and thus bring about a reality to the J-curve. If we compare Australia with similar countries we find that the J-curve does not occur overnight. One cannot turn around the mistakes of the past overnight; it will take some five to seven years to do that. But the runs are starting to appear on the board. We have seen a couple of months improvement recently in our balance of payments. The situation is still unsatisfactory but it is getting better. I would have hoped that the Opposition would explain to the people what it intends to do. But it cannot. It has no tax policy. It has no wages policy aimed at keeping cost-push inflation down. It has no interest rates policy. In fact, its only policy on interest rates is total deregulation. If the Opposition did that there would be so much pressure on demand and on the Australian dollar that interest rates would be forced up above 30 and 40 per cent. We would see interest rates go through the roof. Until the Opposition gets its house in order and comes clean with the public the public should not be hoodwinked; it should stay with this Government.

Mr DEPUTY SPEAKER —Order! The honourable member's time has expired.