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Tuesday, 23 April 1985
Page: 1361


Senator CHANEY (Leader of the Opposition)(3.09) —I move:

That in the opinion of the Senate the following is a matter of urgency:

The need for the Government to provide adequate information to enable proper judgment to be made of its economic policies.

The Opposition brings forward this matter of urgency because it believes that it is quite apparent that there is a serious situation facing Australia in the lack of confidence that has developed in the policies of this Government. We think it is serious that the Government is not addressing these problems in an honest and direct way that is likely to provide a solution. We had the extraordinary situation that yesterday the Prime Minister (Mr Hawke) took the trouble to make a statement that was indicated as being important, to hold a Press conference, and to have something of a media blitz on the proposition that the Government was going to move to present a major statement on expenditure to the Parliament in May. The Prime Minister's statement says that the statement will cover major expenditure savings decisions contributing to a reduction of at least $1 billion in 1985-86 Commonwealth outlays. The uncertainty with which the Prime Minister has expressed the meaning of his intentions and the inability of the Prime Minister to be specific about precisely what this undertaking means has done nothing but add to the uncertainty that surrounds the future of this Government. In a way today's Question Time brought out the difficulties that are faced by the Government in convincing a sceptical and ever more sceptical financial community that it is serious and that it is being honest in its dealings with the public and the Australian community generally.

All this fuss is about a purported reduction of $1 billion in 1985-86 Commonwealth outlays. The Minister for Finance, Senator Walsh, made it quite clear today that we are talking about a $1 billion reduction in the forward estimates of expenditure. It is also apparent from the questions that were asked today, if not from the answers, that what is being puffed up is no more than the normal budgetary preparation which goes on each year and which results in the Government pruning the initial estimates that departments have laid out for the following financial year.

In Question Time today the Opposition quoted from the Budget Papers of previous years, and let me do so again. In 1983-84, the first year of the Hawke Government, that Government set about precisely the task which it is currently undertaking and which is the subject of the announcement that we are to have in May. The fact of the matter is that in that year, according to the Budget Papers, the Government made decisions to reduce expenditure by $1,214m; in other words, nearly 25 per cent more than the $1 billion about which the Prime Minister made such a fuss yesterday. In the following year the Government went through the same exercise and managed an even greater reduction-a reduction which, on the face of the Budget Papers, was $1,315m. It was going through exactly the same process as it is going through at the moment. Of course, it is a process that the Fraser Government went through and it is a process which any government necessarily goes through.

Senator Walsh tried to make some virtue out of the cumulative effect of the saving efforts of this Government. That was a pathetic and, in my view, dishonest attempt to find virtue where there is none and a rather pathetic attempt to obscure the facts. It is typical of why I believe that the financial community-the international community in particular-is losing confidence in this Government. Senator Walsh was saying that it becomes harder each time to prune, that each time one prunes one gets into harder wood. He ignored the fact that, under this Government, there have been very substantial rises in expenditure. He ignored the fact that, in the first Budget, discretionary decisions by the new Government increased outlays by $2,485m and he ignored the fact that there was a massive increase in outlays last year. It is simply rubbish to assert that, in some way, this Government has been cutting back on expenditure when we have currently a Budget which is the highest spending Budget in Australia's history. What has happened is important for Australia and it is also important for this Government. What has happened is that the credibility of the Government is crumbling. That is affecting Australia's standing internationally, and that is affecting our currency. Senator Walsh tried today to blackmail the Opposition out of making any comment about the deficiencies in the Government's performance. He accused us of acting in a way which was disloyal to Australia. I can only say, in response to that, that it is the duty of this Opposition to point out to the Government the error of its ways and to endeavour to get the Government to behave in a way which is more consistent with Australia's interests.

There are two broad areas where this Government's credibility is crumbling. It is crumbling with respect to the perception of its having any ability to control expenditure. It is rather nice that, in this debate, we actually have two Ministers in the chamber. We have Senator Walsh and sitting next to him is his colleague the Minister for Education, Senator Ryan. Of course, Senator Walsh has good cause to know that Senator Ryan has been a major contributor to that growing uncertainty about the Government's capacity to control expenditure. Her resort to Caucus to get the reversal of a decision on university fees was, of course--


Senator Ryan —Get your facts right. You are absolutely wrong.


Senator CHANEY —Perhaps the Minister can enter into this debate later and give us the facts. The fact of the matter is that Caucus made it clear that it was not going to have any truck with Senator Walsh's proposal. We had the spectre of the bad old days of the Whitlam Labor Government being raised by many people and waved around the heads of members of this Government. But in any event it is good to know that Senator Ryan is, unusually, in the chamber and will participate in the debate. I look forward to her participation.

Mr Deputy President, that really touches on the second area of great uncertainty, and that is the uncertainty as to whether this Government still has the ability to govern at all. Of course that is a related issue because we know of the factionalism in the Australian Labor Party, the factionalism that poor Senator Walsh tries to find repeated in our Party. His pathetic attempts to do that are again an example of the intellectual dishonesty that is beginning to afflict the Government. The fact of the matter is that we have a faction-ridden Labor Party which last weekend saw its major State conference in Victoria reduced to a bout of fisticuffs. We have a situation where the ability of the Government to act is totally circumscribed by its relationship with the Australian Council of Trade Unions and a situation where on major issues of economic management the agreement which has been made by the Government with the trade union movement is at odds with the decisions which this Government knows it should be taking in the national interest.

We have here a situation of great uncertainty. This uncertainty is damaging to Australia and there is a need for this Government to address those areas of uncertainty and find remedies. We have recently had floating around this chamber allegations of intellectual dishonesty. It was suggested by Mr Duncan that Senator Walsh had engaged in arguments which could not be said to have been intellectually honest. Senator Walsh responded vigorously to that in this chamber last Friday. I believe that it is time Senator Walsh, as the Acting Treasurer and as the Minister for Finance, pondered the reality of the Government of which he is part because I believe the fundamental lack of any showing of intellectual honesty at the moment is at the heart of the problems that it has with the financial community. The reality is that it is the lack of intellectual honesty in the statements being made by the Prime Minister, in particular, but also by Senator Walsh as one of the senior spokesmen for this Government, that is eroding the confidence of the community in this Government. To some extent Senator Walsh cannot be blamed as he is as much a prisoner as a master of the system; but it is also true that he is a major contributor to some of the canards that are run by this Government and, in particular, his dishonest trumpeting of the argument about the $9.6 billion deficit, which I will come to a little later, is one of the contributing factors to the discrediting of the Government of which he is part.

We know that the Government cannot deal honestly with the reality of devaluation-it cannot do so because of the ACTU-and so it temporises, stumbles, fumbles and mumbles and simply refuses to face up to the economic realities that the community is waiting for it to face up to. One simple line would fix the uncertainties about the effects of devaluation on the Australian economy. All that this Government has to say is that it will urge the Australian Conciliation and Arbitration Commission to discount wage rises to the extent that devaluation-induced consumer price index increases occur. That is all that is required. But the sad fact of the matter is that the ACTU has this Government in its thrall and it is simply not open to Senator Walsh or the Prime Minister to get on their feet and make that simple statement. Instead we get generalisations about preventing the deleterious flow-on of price increases which are caused by devaluation. The Government is simply incapable of facing up to that simple central statement which is required of it.

The Government cannot deal honestly with questions of expenditure, and I draw the Senate's attention again to the Prime Minister's statement of yesterday. The Government has made a big deal out of nothing and it will be seen to have made a big deal out of nothing. The usual procedure followed by governments every year-a procedure over which my colleague Senator Dame Margaret Guilfoyle presided for the years she was Minister for Finance-is that they prune the forward estimates. Look at the existing commitments this Government has made-the commitments of the trilogy, the commitments that the Prime Minister keeps repeating as his demonstration of his bona fides in the economic field. We do not find in the statement of yesterday that the Government is claiming that it will be able to better the commitments it has made on previous occasions; all we find is that the Government is saying that the May statement will allow the Government to meet its trilogy commitments for 1985-86. There is nothing new in that. The Prime Minister has been saying that over and over again since last November, and the trumpeting of yesterday advances us no further down that track. What we have is the same tired repetition of the Government's failure to come to grips with the central problem that arises from depreciation. If I may again quote the statement, the Prime Minister says:

The recent depreciation provides Australia with a great opportunity to boost production and employment in export and import competing industries.

We would say amen to that, Mr Deputy President. He goes on to say:

To seize this opportunity we must avoid the dissipation of our improved competitiveness through a new inflationary cycle.

That could be done if the Government grasped the nettle I have referred to, but instead it refused to do so. This Government is continuing to try to mislead, to shade the facts and to hide the facts. I ask the Senate to look at the first answer that the Prime Minister gave in this Press conference yesterday, when he said:

From day one we moved to cut government expenditures in a way which would enable the deficit to be brought down.

That is simply untrue. It is untrue that this Government moved from day one to cut expenditure so that the deficit would be brought down. It is untrue that this Government brought the expenditure down. I have already quoted from the Budget Papers which this Government produced and it cut expenditure by $1.2 billion and then increased expenditure by $2.5 billion. The Prime Minister misled Australia again at his Press conference. He cannot tell the truth on economic matters and that is why the markets are so doubtful about the Government.

This brings me to the point at which Senator Walsh is so much at fault. Senator Walsh is one of those who has gone around trying to spread the impression that the Fraser Government had a deficit of $9.6 billion. Let me read what the deficits were under the Fraser Government. In its first Budget it was $2.7 billion. In the second Budget it was $3.3 billion. In its third Budget it was $3.4 billion. In its fourth Budget it was $2 billion. In its fifth Budget it was $1.1 billion. In its sixth Budget it was $548 million; its highest deficit in its last year was $4.4 billion. There has been no $9.6 billion deficit. It has been a dishonest argument put forward by this Government that there has been. The fact is that the forward estimates which this Government will not release, and has not released since 1983-84, suggested expenditure which would have given rise to a $9.6 billion deficit in the first year of the Labor Government. Of course, this Labor Government did not accept that. It set about an expenditure pruning operation and, notwithstanding the fact that it also increased discretionary expenditures, its deficit was not $9.6 billion but $7.9 billion. The fact of the matter is that this Government was able to increase its programs, to institute new expenditure and still reduce the deficit to more than $1.6 billion less than that fictional $9.6 billion figure.

I simply want to say to Senator Walsh that for so long as he persists in using dishonest arguments in this chamber and elsewhere, the international financial community will continue to hold in contempt the public statements of this Government which are not statements on which anybody can rely. The reality is that the $9.6 billion deficit figure is a hoax, and it is as much a hoax as the figure which the Prime Minister put before us yesterday when he suggested there was something new in the normal $1 billion pruning that has gone on over recent months. There are plenty of statements from Australian Labor Party people, from members of this Government, which indicate that Senator Walsh and others have been peddling a lie in this area. Mr Keating was reported in the Sydney Morning Herald on 2 July 1984 as saying:

If Mr. Fraser had remained in power their Budget deficit would have been about $6.5 billion.

Mr Hurford is quoted in Hansard on 2 April 1984 as saying:

They-

that is, the members of the Liberal Party of Australia-

would have had a deficit of $2 billion to $3 billion less than we have been prepared to have.

Of course, the final proof is that when this Government was asked to do no more than produce the same forward estimates in 1984-85 that it produced in 1983-84, it refused, because we were told by Mr Hawke and Mr Dawkins that those figures were unreliable, illusory and so on. It is a shame that a Minister such as Senator Walsh, who is prone to give us all lectures on economic probity and who reacted so sharply to the suggestion that he had been guilty of intellectual dishonesty, should lend himself to this sort of activity, which is so destructive of the Government of which he is a part and of the country he is seeking to serve.

A whole series of questions has to be answered-no doubt we will not get answers until next May-about this so-called $1 billion saving. However, it certainly appears from the information we have now that what hard-working Minister Walsh has been able to achieve is something less than was achieved in the last two Budgets in terms of reductions in the forward estimates. It appears-we do not know whether it is because of the Caucus, because of Senator Ryan, or for whatever reason-that the cuts which are to be announced are less than the cuts which were effected to programs in the first two years. Yet Senator Walsh has been working with a current Budget which presents the highest expenditure in Australia's history. So he cannot claim that he is not cutting into a fat beast. He is cutting into the fattest beast in Australia's history and he has produced the smallest result of recent years. We will want to know from this Government and, perhaps more importantly, the general community and the financial community will want to know, what is the base from which this $1 billion is being cut. What are the forward estimates figures? The sooner the forward estimates figures are released the sooner there will be some certainty in this area.

Not a lot of time is left to me in this debate, but I wish to make a couple of other points. We have the problem of lies, damned lies, and statistics. Senator Walsh is very keen in these debates to stress the lack of resolve of previous governments, particularly previous Liberal governments. He is very fond of pointing to the efforts of his own Government as showing a much better style and class. I say only that I hope Senator Walsh will not hide the fact that in terms of Budget deficits and of increases in government expenditure, the results of the Government of which he is a part have been grievously in excess of any of the results achieved by the Fraser Government. In other words, in those negative senses, we find that the Hawke Government is running Budget deficits which average 3.8 per cent of gross domestic product as against Mr Fraser's 2.3 per cent. We find that expenditure under the Hawke Government is growing by about 7 per cent per annum in real terms on average, compared with growth under the Fraser Government of around 2 per cent.

The real cause of this Government's difficulties was Mr Hawke's insistence on a pre-election Budget last year. I believe that the 1982 Budget brought down by Mr Fraser was correctly reflationary in a period when there was a great drop in private expenditure. There was no similar reason for the sort of Budget which was brought down last year. Indeed, the difficulties the Government now faces are the direct result of its irresponsible Budget last year. It made large increases in discretionary expenditure. It squandered the one-off surge in tax collections and maintained a fiscal stance at recession levels instead of coming back to earth. The Government stands condemned. Only if it becomes honest in its pronouncements on economic matters will Australia get back on course and people respect us.