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Wednesday, 15 May 1985
Page: 1975

Senator DURACK —My question is directed to the Minister for Finance. Is it a fact that the Hawke Government in its first two Budgets took policy decisions which reduced Forward Estimates by $1.2 billion and $500m respectively but added, in the final Budget process, $2.5 billion and $1.1 billion in extra spending on new programs? Given this record of the Hawke Government in the past two years and two Budgets, what guarantee can the Minister give that what was cut last night will not be restored twofold in August?

Senator WALSH —I do not know how good Senator Durack's understanding of what was announced last night is. I hope that it is better than the understanding which the Deputy Leader of the Opposition and present shadow Treasurer displayed not just when he appeared on television-therefore could be forgiven for a certain amount of imprecision, implying ignorance-but in a Press statement which he issued, which removed any doubts as to whether there was imprecision and displayed abysmal ignorance.

It is correct that there were reductions in the Forward Estimates of the magnitude-I do not know whether the figures are precisely right-indicated by Senator Durack and that some additional considerable new policy expenditure proposals were adopted in the 1983 and 1984 Budgets. Two major items were adopted in those Budgets. The first home owners assistance scheme replaced the tax expenditure policy of the Fraser Government. The Fraser Government had an interest rate subsidy available to housing loan borrowers-of course it was a scatter-gun approach-which applied right across the field. It was a tax expenditure subsidy for everybody who had a housing loan. This Government decided to scrap that tax expenditure of the previous Government and make a direct payment through the first home owners assistance scheme, which was targeted at the lower income area of potential home buyers. Therefore it was much more cost effective than the scheme of the Fraser Government, which was a scatter-gun, right across the board interest subsidy, and interest subsidy which was skewed in favour of higher income earners. In typical fashion the Fraser Government's policy was deviously hidden away because it was a tax expenditure and not subject to public scrutiny. We replaced that scheme with an outlay.

Likewise there was a Medicare subsidy which, from memory, amount to $600m a year. It was a tax expenditure subsidy for the payment of private health insurance premiums. This Government decided to convert that hidden tax expenditure subsidy of the Fraser Government into an outlay through the Medicare program. In the first year of this Government those two items alone amounted to something like $800m of the new policy to which Senator Durack referred.

The Opposition having been proven to be absolutely wrong, having fallen in the mud on its face, like Sir John Kerr at a country show, in predicting the Government's announcement that at least $1 billion would be cut off the Forward Estimates would not be achieved, I can understand the Opposition being somewhat piqued that not only was the target which I had publicly announced some months ago, and which the Prime Minister and the Treasurer have announced more recently, met but it was in fact exceeded. This is distinct from the feeble exercise which the former Government went through just four years ago when, after months of publicity, after months of beating up the issue, it managed to produce a feeble statement which claimed that there would be ultimate savings in recurrent expenditure of $560m-that is way off in the never-never-most of which, of course, never occurred. The Opposition is, of course, piqued that the target has been met and exceeded. It now believes that it must shift the speculative attack into some other area by saying that there will be massive increases in the funding of new programs in the Budget. There is a possibility of there being some new programs in the Budget but that has yet to be decided. I suggest that Senator Durack wait until the Budget is announced to find out what new programs, if any, are contained in it.

Senator Durack asked for a guarantee. I can give a guarantee that this Government will not behave in the fiscally irresponsible manner in which the previous Government behaved when it left us a legacy of a prospective $10 billion Budget deficit. We all know about the infamous 1977 rubbery figures Budget that was Sir Phillip Lynch's swan-song as Treasurer. What is not so well known is that in every year Mr Howard was Treasurer actual outlays exceeded Budget projections. It is true that in one of those years actual outlays exceeded Budget projections by only $2m but in the other years actual outlays exceeded Budget projections by between $175m and $1,915m. I can guarantee Senator Durack one thing. When the Budget outlays are finally announced they will be honest estimates of outlays, in marked distinction, in contradistinction, to the estimates of outlays which were produced by the Opposition's last Treasurer when it was in government.