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Wednesday, 1 April 1987
Page: 1842


Mr MacKELLAR(10.47) —The honourable member for Burke (Mr O'Keefe) said one correct thing, and that was that one cannot come into this House and deceive people. But he has tried to do it yet again, I am afraid. The completely specious figure of $9.6 billion deficit has once again been trotted out. The honourable member knows that not to be a fact, and the Government knows it not to be a fact. I only need to say that the present Treasurer (Mr Keating) will not allow the forward Budget projections to be discussed publicly to show just how unreliable that figure is. I will be dealing with this later in the speech, but I point out right at the start, so that anybody reading or hearing the speeches made in this debate will understand it, that yet again this is part of a conscious effort by the Government and its members to implant into the minds of the people a completely false figure to allow the Government to excuse itself for some quite inexcusable policy decisions that it has made since it took office.

Another thing which I think needs some comment was the honourable member's very great praise for the Government in terms of employment generation. I just remind the honourable member, who is leaving the House now, that if he looks at the statistics he will find that one in four young people in Australia under the age of 25 cannot get a job. If he is proud of that statistic, if Government members are proud of their employment generation record, I ask: What are they going to do about the fact that one in four young people under the age of 25 who are seeking a job simply cannot get one?

The Government, and any government for that matter, is in the business of good news, often with exaggeration and, as we have heard today, deception. Equally, I believe, no Opposition can afford the luxury of playing up bad news at the expense of good news, because the ultimate public result of this activity is a loss of direction and a lack of perception about our national problems. Goodness knows, we have enough national problems. This week we find that the news coming out of the United States of America for Australia is good. Yesterday's report from the New York Conference Board has brought a ray of hope. We welcome this news, but it brings with it several aspects which should cause some reflection by the Government.

First, the news has come on the heels of the Government saying to itself, after much urging, that the Opposition and the critics of the Government are right when they point to the desperate need for the Government to tackle the Budget deficit. We know that the problem was caused in the first two years of the Hawke Ministry. They were a disaster, and consciously so. They have been pointed to by my colleague the honourable member for Mackellar (Mr Carlton) in his contribution this morning. Another contributor, Terry McCrann, who is a very much respected commentator, put his concerns this way:

The real total Federal deficit has barely fallen from its 1983-84 peak of $8.4 billion.

He continued:

So much for Mr Keating's fiscal restraint, and whether or not he is prepared to come clean and initiate the policy changes necessary.

As my colleague has pointed out, the May exercise has to pass a few tests. He continued:

The first is that the Government must deliver real cuts in spending-not the essentially phoney process of the last Budget of deferring spending.

I want to emphasise that matter. He continued:

Secondly, there has to be an iron-clad commitment-in May-to no new spending programs in the main August Budget.

Terry McCrann pointed out that in May 1985 the Government knocked off $1.3 billion but that in August it put it back. We, of course, do not want any more tricks like that. When, however hesitatingly, the Government has looked like biting the bullet, the effect has been to improve our international standing. That should be some encouragement to the Government to make real cuts and to do a real job in May, as it unerringly should. Last year I appealed to the Government to take early action. I wrote to the Press, and I am glad to say that the Australian Financial Review actually published my letter, which said, in part:

The basic point is that the Government has placed too much reliance on monetary policy, having left itself with a weak budgetary strategy. Thus the Government has deprived itself of one of the major instruments of effective economic management.

The fact is there has to be a balanced relationship between revenue and expenditure objectives and a mutually supportive relationship between monetary and budgetary policy.

On the expenditure side, the Government has given an excessive priority to conciliating its free-spending supporters as it faced the election of 1984 and important elections that year in Western Australia and last year in South Australia. Research is showing an innovative profligacy in the expenditure of taxpayers' funds. Grants to the Union of Australian Women to produce plastic shopping bags, to the Trades Hall Council in Victoria for an artist in residence, to the People for Nuclear Disarmament for a peace mural at Gympie and to the Humanist Society of Queensland to hold a peace picnic are the tip of the iceberg. In addition, of course, we now have the marvellous example of the grant to produce a female surfboard.

The Government's `sock the rich' taxation policies, propounded in the non-wage income sections of the accord, largely ignored at the time by the business community, have been sustained, but they provide no revenue match for the Government's expenditure blowout. This has incapacitated the Government's fiscal policy and the Government has been forced to place excessive reliance on monetary policy. High interest rates have now prevailed as a major determinant of economic directions. The loss of export income is an added irritant, but, if it is contributory, it is not the fundamental cause of the problems, as the Treasurer and the Prime Minister (Mr Hawke) would seek to suggest. Rather, it is the loss of control over the budgetary instrument which is so fundamental to the crisis in national economic management.

The Government is caught in the cruncher. This bad budgetary policy of running irresponsible deficits has been paid for in a very special and a very sacrificial way. The chief payers have been those who have had large borrowings. We have all seen those dramatic television segments recording the stress to individual farmers, encouraged to borrow and expand land holdings for a more economically viable farm, hit in the middle of the venture by those dreadful interest rates. Those are the people who are paying for the huge deficits used to fund worthless enterprises.

I raised in the House last year the problem of the cost of non-custodial parents passing their responsibilities on to the taxpayer. The Attorney-General (Mr Lionel Bowen) acknowledged the problem publicly for the first time by way of an answer to those comments. To his credit, he has had the Government do some real homework. Today we see the beginnings of the Government's facing up to the problem and putting obligations back on parents-where they belong. Of course, there will be special problems of adjustment; there will be the need for margins for compassion and sensitivity. I thought that the Attorney-General's speech was a good, if belated, start. I mention this because the previous speaker for the Government talked about those people in need in his electorate. We have to get away from the welfare mentality in this country. We have to encourage individuals to accept their personal responsibilities and not just look to the Government at every stage of their lives to provide them with any sort of income whenever they need it. There are those people in the community-and we all know them and we all have compassion for them-but there are also a great number who are bludging on the system.

We know that the Government has passed the cost of its indulgent Budgets on to the home owner. The interest rates in the housing area have been corrosive in their social effects. The banks have been pushed by the Government to subsidise first home owners because of their inability to pay their mortgages. That is the effect of the Government holding first home owners' interest rates down, but opting out of its obligations to contribute to the operations. The banks have to fund the operations and that means passing the costs in the form of higher interest rates on to individual band clients. If honourable members do not think that high interest rates are having a social impact, they should go back to the electorate and talk to the people who are being affected.

I know that the public find it hard to understand the relationship between the excessive Budget deficit and the low dollar. I know that people find it difficult to see how the low dollar contributes to higher interest rates. The Government trades on this understandable ignorance. The Prime Minister is a past master at glossing over the responsibility of the Government as the prime contributor to the problems. The Government has been repeatedly warned by commentators and by economists, but it has been slow to act. Instead, in Question Time, day after day, we have been treated to a diatribe about the so-called Fraser deficit. We on this side of the House were not responsible for the overspending in 1983-84 and in 1984-85 and for the failure of the Government subsequently to institute effective restraints. That is a truth the Government, try as it might, simply cannot shake off.

The potential for economic recovery is considerable. Even the poor terms of trade in the primary sector can be surmounted by effective government policies. The Government knows in all conscience that it was these errors of commission in its first two Budgets which lost it its golden chance to put strength and stability into the Australian economy. Meanwhile, we are not here to say that the situation is without remedy. On the contrary, as recent international figures show, there is a route to economic recovery. The fact is that if the Government did the right thing for Australia the whole country would do well. That is the message coming to us. The fact that our dollar is improving against the United States dollar but not against other currencies is of qualified significance. But as so much of our debt outlay is in United States dollars, the change is important and its value as a boost to our external situation is to be greatly welcomed. But these figures show that the opportunities for Australian improvement, given sensible economic policies, give one some optimism.

The first and the second Hawke Budgets underestimated the problem building up on the international front. Starved of government for seven years, the Hawke Government wanted to spend money to ensure its popularity. Also there was a case for pump-priming the Australian economy-unemployment and particularly the young people needed to be addressed. Here I believe I again need to make the point about an issue which has been the subject of a great deal of justification by the Prime Minister for the strategy he chose. The general prevailing argument is to convince the electorate that the mess we are in today is an inherited mess. We heard the contribution from the honourable member for Burke, the previous speaker, who was fully involved in that issue.

The case rests substantially on this so-called legacy of a $9.6 billion deficit. When the Prime Minister came into office he made a great deal of the phoney $9.6 billion deficit which projections showed could occur if one of the longest droughts in recorded history did not break, if farm income continued to fall, if the farm related business slump was sustained and if no corrective action was taken. The Prime Minister has worked exceedingly hard to create the myth that this figure of $9.6 billion was a real figure. But as we know, and as I have pointed out earlier in this speech, it happens every year that these projections are brought on early in the year in order to lower budget options. The drought at that stage had a massive effect. Fortunately for Labor, and for Australia, it was ended virtually when the Labor Party took office. Farm income and business expectations changed. Drought losses were reduced and the economy turned up. Labor used the issue to ensure that it could go on a spending spree, whereas the Hawke Government, if it had been responsible, would have shown restraint in the Budget deficit and budgeted for a deficit of under $6 billion. In fact, the first Budget deficit of the Labor Party went to virtually $8 billion.

Anybody who looks at the record of the Fraser Government and argues that Fraser would have ended the year with that kind of deficit knows full well that the truth is very severely being tested. This Government tests the truth very severely day after day in this Parliament. It is not only the $9.6 billion deficit myth which has been perpetrated, and has continued to be perpetrated by the Government and its supporters; it is the present myth that it is seeking to perpetrate-the myth about an alleged $16 billion credibility gap from this side of the House. Members of this House and the public must not be allowed to be duped by these figures which under any rational analysis simply cannot be sustained. The Government after four years in office has to accept the responsibilities for its own actions. It simply cannot keep blaming predecessor governments and using mythical figures to sustain its arguments. I guess Australians can be fooled some of the time, but not all of the time. Time is very quickly running out for this Government and its efforts to perpetrate another myth about the alleged spending cuts being put forward by this side of the House. It is a fact that the Government has had four years in office; it is a fact that the country's economy is in a mess, and it is a fact that it is the Government's own responsibility to try to do something about this.