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Tuesday, 7 May 1985
Page: 1418

Senator CHANEY —My question is addressed to the Minister for Finance and follows the answer he has just given. As he has taken the trouble to bring out the figures showing the difference between the Forward Estimates under Liberal governments and the Budget outlays, does he have the same figures for the first two years of the Hawke Government? If he does not have those figures, would he agree that in the first year of the Hawke Government-in the first Budget-Forward Estimates were reduced by over $1 billion but outlays were increased by approximately $2.5 billion? That would suggest that there was a discrepancy, not of a few hundred million dollars, which is the figure he described for Mr Howard, but of something like $1,200m. In other words, can he give us the equivalent figures and demonstrate that, in fact, this Labor Government has shown a far looser attitude towards expenditure which has in fact resulted in far greater increases in expenditure in the Forward Estimates than was the case with the previous Government? Further, I ask the Minister whether he can confirm that the average increase in expenditure in real terms under the Fraser Government was approximately 2 per cent and under the Hawke Government it is approximately 7 per cent?

Senator WALSH —Senator Chaney's question is misconceived in that he refers to changes from forward estimates of expenditure, whereas the figures I was citing about the discredited former Treasurer were variations not from the forward estimates of expenditure but from the estimates of expenditure for the current financial year which were presented with the Budget. After all the policy decisions had ostensibly been made, six months later, when much more up to date and obviously much more relevant economic data was available, on supposedly honest estimates by the previous Government of outlays presented with its Budget, in every year Mr Howard was Treasurer the actual expenditure varied between $2 million and almost $2 billion above that estimate. That is a quite different thing to reductions off forward estimates of expenditure.

Senator Chaney also referred to the $2.5 billion-I think that was the figure he cited-which was a gross figure, he claimed, added to outlays in 1983-84. I do not recall precisely what that figure was. Certainly significant new programs were introduced. One of the reasons for that was that the tax expenditures of the discredited former Government were converted into outlays by this Government. The discredited former Government, when producing its last and desperate Budget, had no economic strategy. It had simply a political strategy the purpose of which was to buy off and bribe a sufficient number of pressure groups to patch together a shaky coalition until the premature election which it planned to call and which it eventually did, to its cost. The bill for those massive increases in tax expenditures contained in that Budget was sent to this Government and paid for by this Government because there is a year lag in paying for tax expenditures. This Government, in the one Budget year, the one full financial year in which it has been in government, achieved an actual outcome-a deficit-which was significantly below that which had been forecast at Budget time, in marked contrast again, if I may say so, to the record of the discredited former Treasurer. In his first Budget the deficit was $665m higher than he estimated it would be when he brought the Budget down. In his second last Budget, in 1981-82, it was $452m higher than he estimated or said it would be at the time he brought the Budget down. In his final Budget, despite having pushed the bill for the tax expenditures off into the next financial year-that was a bill this Government had to pay and not the previous Government-there was a massive blowout in the deficit, of $2,799m.

That is the sorry record of the discredited former Government and the discredited former Treasurer. In every year actual outlays were in excess of his projections. Throughout the period he was Treasurer capital expenditure in real terms declined; in other words, capital expenditure was neglected, there was a large blowout in the deficit in three of the five Budgets he presented, culminating in an almost $3 billion blowout, and of course in most of the Budgets he presented there was also a gross under-estimate of payments for unemployment benefits and therefore of the numbers of people unemployed.

Senator CHANEY —Mr President, I ask a supplementary question. The Minister omitted mention of the last part of my question, which related to asking him whether he agrees that the expenditure increases under the Fraser Government averaged about 2 per cent in real terms, and under his Government have averaged around 7 per cent in real terms.

Senator WALSH —Senator Chaney should have listened more carefully. I do not remember what the average of the Fraser Government was, but the figure presented was lower than the real figure because, as I said, of the propensity of the Fraser Government to hide the true level of expenditure by going down the tax expenditure route instead of the outlays route, and in the first year we were in government we were lumbered with the bill-the deferred bill-for the tax expenditures of the Fraser Government in its last year. So in that year we had to pay in terms of the deficit for the bill that was sent to us by the former discredited Treasurer and discredited former Government, and we also increased outlays because those tax expenditure programs to a significant extent were converted to outlays. It follows, of course, that, our having inherited the worst economic recession which Australia has seen for 50 years from the discredited former Treasurer and the discredited former Government, it was inevitable that some quite significant Commonwealth outlays would grow unless there were massive policy changes. If the Liberal Party of Australia had still been in government, perhaps it would have been quite happy to withdraw unemployment benefits for the 600,000-odd people who had become unemployed because of its economic mismanagement. This Government was not happy to do that, and therefore there was a very significant increase in outlays attributable solely to unemployment benefits.