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Wednesday, 25 February 1987
Page: 717

Mr PRICE(4.10) —I want to thank the honourable member for Wide Bay (Mr Millar) for his contribution. No one on the Government side has ever underestimated the seriousness of the economic challenges facing Australia. Indeed, I think the honourable member for Wide Bay suggested that there is a degree of unanimity about that. However, the opposite side of the House certainly does not accept the need for joint action to solve this problem. The only bipartisan initiative from the Opposition benches has come from the Deputy Leader of the National Party of Australia, the honourable member for Gwydir (Mr Hunt), who suggested the establishment of an all-party delegation to go to the United States of America to try to talk to the Americans about their subsidy schemes that will wreck the traditional markets of our wheat growers. I commend him for it. If the honourable member for Wide Bay is suggesting that we need more such initiatives of a bipartisan nature, I agree with him.

I think it is not being honest with Australians to dwell on just our international debt. I do not think it is helpful to dwell, as has been done today, merely on people's mortgages. We have to deal with a complex integration of economic factors. I can agree with the honourable member for Wide Bay that traditionally there have been faults on both sides of government. But as a very young back bench member of this Government I am satisfied that we have tried to tackle some very difficult tasks. Let us consider why Australia, the lucky country, is in the present situation. Traditionally, we have depended, overly depended in my view, on the farmers of Australia. We have depended on the sale of coal, wheat and wool. We have depended on our mineral exports. Those products will always be an important part of our trade mix. But we have been overly dependent on them.

What has happened? Let me quote a few figures to you, Mr Deputy Speaker. In 1980-81 coal was sold for $48.40 a tonne. In 1985-86 it was sold for $40.32 a tonne. Now it is selling for $36.35 a tonne. It is suggested that the price will go down even further. Wheat sold for $190 a tonne in 1980-81; it sold for $129 a tonne in 1985-86; and it sells for $99 a tonne at present. All of our traditional wheat markets are under threat. But I want to make the point that they are not under threat because our farmers are inefficient. They are under threat because of agricultural policies in the United States and Europe that are really wrecking the world agricultural scene. This point should be made time and again: We can slash the costs of farm inputs in relation to outputs, but we will not be able to sell an extra tonne of wheat on overseas markets because Australia, as a small country, can never afford to indulge in the stupidity of the European Economic Community and the United States in terms of what they are doing to agriculture.

In 1980-81 iron ore sold for $17.30 a tonne; in 1985-86 it sold for $16.23 a tonne; and now it is selling for $15.76 a tonne. The pressures on the price are downward. In 1980-81 barley sold for $176.40 a tonne; in 1985-86 it sold for $90 a tonne; and now it is selling for $71.86 a tonne.

There has been a massive decline in Australia's terms of trade. I think this is one of the aspects to which the honourable member for Wide Bay was referring. I agree that this poses an enormous problem. No one from either side of the House is going to claim a miracle solution-a six-months solution, a 12-months solution or, indeed, a two-year solution. But we have to be sure that everything is in place to enable us to work our way through this problem.

Let me turn to our debt. As the honourable member for Streeton (Mr Lamb) has mentioned, the public sector debt was $7 billion in 1980. It has grown now to $40.5 billion. The private sector debt was $6.5 billion in 1980. It has now grown to $60.7 billion. It is interesting to note the ratios of borrowings. Sixty per cent of this money has been borrowed by private enterprise countries overseas--

Mr Lee —How much?

Mr PRICE —Sixty per cent. Forty per cent is government debt. As a percentage of gross domestic product, government debt has increased from 5.9 per cent of GDP to 17.2 per cent of GDP. On the private side, the debt has increased from 5.5 per cent of GDP to 25.7 per cent. A lot of people on the Government side of the House are very concerned about the level of private borrowing. Indeed, there have been suggestions that we ought to legislate it away. While ever we have such a terms of trade difficulty, we should remember that in last year's Budget there was a 10 per cent factoring in of decline in export prices. This year an 8 per cent decline has been factored into the Budget. While ever that is happening and there is a projected $14 billion deficit on our current account, clearly we have to borrow overseas. If we are asking overseas investors, not Australians, to pay for that debt, those investors have to have confidence in the Australian dollar. Opposition speakers, including the honourable member for Wakefield (Mr Andrew), often say that we should let the dollar fall even lower. Overseas investors are greatly concerned about insuring against not upward pressure on the dollar-that is, the dollar rising in value from its current rate-but downward pressure. The recent intervention of the Reserve Bank of Australia to put a bottom under the dollar was criticised, but I think it was right. If we want to attract overseas investment in Australia, the investors have to have confidence in the dollar and in its current basic range. I make that point in relation to our national debt.

Let us look at some of the Opposition's policies. Is the Opposition saying that the floating of the dollar was a mistake, that it is something that we should not have done and that we should rescind it? Basically, I do not think the honourable member for Wakefield would argue in this way, because no doubt that decision has given a breathing space to our agricultural exporters and a real incentive to our manufacturing exporters, to manufacturing for import replacement, and to export activity. That is an initiative of this Government.

We have also deregulated the financial institutions and this has been seen as a good thing. This Government has put in place some policies which have been tough and which have laid the ground work. I refer in this respect to the depreciation of the dollar and the deregulation of the financial markets. But these policies are not going to work overnight. There are signs that they are working, but we face a long term problem. Would the Opposition do what the Government has done? I am sure that the Australian people know what the policies of this Government are and what actions we have taken. However, it is very difficult to understand exactly what the Opposition is proposing.

We are going to have another May statement which will deal with expenditure cuts. The public will know what is involved. But what expenditure cuts would the Opposition propose to bolster our economy and save our younger people from the problems they are experiencing with mortgage repayments? Is the Opposition prepared to outline where it sees the painful decisions should be taken? Can we take a bipartisan view? It is very hard to take a bipartisan view if one does not know what the other's view will be. It is very hard to get public support if one is not prepared to tell.

The situation is the same in respect of taxation. As a government and as a party, we have been through the pains of taxation reform. I suggest, with a little degree of respect, that the Opposition is going through a similar exercise as well. But at least the public knows what our position is. It knows that fairness and equity are the basis of our taxation policy. People know what the benefits are and they know how our policy is going to be paid for. I suggest that the Opposition has a responsibility to do that.

The Government has also had a role to play in respect of agriculture and minerals. This Government has tried to revamp the Department of Trade by setting up Austrade. We have established an industry policy. Some honourable members on this side of the House might say that we have not gone far enough. However, as the Prime Minister (Mr Hawke) has indicated, the car plan, the steel plan, the heavy manufacturing industry plan, and decisions made in respect of plastics, chemicals, communications, information and software are all Government initiatives to get manufacturing going again, if not in the export area-and mostly that has been the orientation-at least in terms of import replacement.

The Government has had a wages policy. We have asked the Australian people to accept lower wages in the interests of future generations, job creation and getting this country on its feet. It has been very painful and very difficult to explain, but at least we have been out there saying it. What is the Opposition's wages policy? Will it freeze wages or will it slash wages? I think people have a right to know.

Mr DEPUTY SPEAKER (Mr Mildren) — Order! The honourable member's time has expired. The debate is concluded.