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Tuesday, 7 May 1985
Page: 1417


Senator MAGUIRE —My question is directed to the Minister for Finance. I refer to the economic statement to be brought down next Tuesday evening which is aimed at reducing Government expenditure by around $1,000m annually. Compared with the proposed $1,000m reduction in expenditures, how effective was the previous Government in reducing government expenditure?


Senator WALSH —I do not know how effective the previous Government was in taking expenditure off the Forward Estimates of expenditure because, to my knowledge, the former Government never published those Forward Estimates. It certainly did not publish them in advance of the Budget. However, I do know the degree to which the former Government failed to estimate accurately its expenditure in a current financial year, that is, with the presentation of the Budget. Indeed, in all of the years that the discredited former Treasurer was the Treasurer of Australia, it was not just a question of error, it was a question that in every one of those years the actual outlays were in excess of the forward estimate of outlays.

In 1978-79, Mr Howard's first Budget, the outlays were $175m over the Budget estimates, as distinct from the Forward Estimates. The next year he almost got it right; they were only $2m over. In the following year actual expenditure was $244m higher than the Budget estimates of expenditure. In the following year, 1981-82, it almost doubled to $463m. Then there was the spectacular blow out in the discredited former Treasurer's final Budget, when actual expenditure was $1,915m above the estimates he produced in his Budget.

The former Treasurer was almost equally inaccurate in estimating unemployment benefit payments in all of his Budgets. Unemployment benefit payments are a fairly reliable indicator of the level of economic activity. In the last Budget produced by Mr Lynch-the Budget that had the notorious rubbery figures in it, to use Mr Lynch's own terms-actual unemployment benefit outlays were 20 per cent higher than the Budget estimate. Everybody knew that there were rubbery figures in that Budget. In other words, that Budget was concocted for presentation purposes prior to an election and the estimates were not honest estimates. Everybody knows that. What is not so well known is that in the first Howard Budget unemployment benefit payments were 14 per cent above estimates. In 1979-80 they were 7 per cent lower, and that was the zenith, I suppose one could say, of the estimating accuracy of the former Treasurer. In 1980-81 unemployment benefit payments had grown to 4 per cent above his estimates. In 1981-82 they were 12 per cent above his estimates. In his final spectacular year, payments in unemployment benefits were 44 per cent higher than had been estimated in his Budget.

It is also worth noting that in addition to the former Treasurer's failure to control outlays or to present accurate estimates of outlays in a financial year, throughout his period in government there was a consistent reduction in the percentage of Budget payments for capital outlays. Indeed, throughout the years 1976-77 to 1982-83-for five of those seven years Mr Howard was the Treasurer-there was a real decline in capital expenditure each year of 8.4 per cent. So, although the former Treasurer was sending a bill for the future by reducing the capital outlays component of Budget expenditure, he still failed quite miserably to control overall outlays. I can understand the frustration, or perhaps pique, of some members of the Opposition that this Government has actually done and is continuing to do the things that the former Treasurer talked about doing, but on which he never delivered.