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Wednesday, 15 May 1985
Page: 1986


Senator CHANEY (Leader of the Opposition)(3.03) —It is regrettable that on the day after the Government's mini-Budget the Opposition believes that there are such continuing doubts and uncertainties about key economic issues that it is necessary to have this debate. But on the face of the statement which was put down by the Government last night that is the position. I think it is important that those doubts and uncertainties should be aired and we should give the Government some chance to respond to them. Three main areas of doubt are of concern to the Opposition following the statement of the Treasurer, Mr Keating. For a start, we doubt the reality of the cuts which have been announced. We doubt that because of the content of the statement and because of the context of the Budget process in which this statement has been extracted, brought forward and highly publicised. We believe that, given the record of this Government, and indeed of any government, to extract this small part of the Budget process and to say that that proves where we are going economically is to fly in the face of experience.

The second major doubt we have is that any consistency of approach on the part of the Government is reflected in this statement. That is evident from the lack of any sort of intellectual cohesion in the statement which was put down in this place by the Minister for Finance, Senator Walsh, on behalf of the Treasurer. The last area, the area which is referred to specifically in the matter of public importance, concerns the very great uncertainties which continue to exist in the vital area of wages policy. The Government brought that area into the statement which was made last night although it was supposed to be a statement about cuts. That, in itself, is an acknowledgement of the importance of this whole issue for the Government's economic policy. At the end of the statement we are left with the same unsatisfactory situation as applied before the statement was put down.

In expressing some doubt about the reality of the cuts one does not have to go beyond the appearance of the statement itself to look for material. One is entitled to ask whether this is a genuine and meaningful program of expenditure reduction or just some form of routine pre-Budget housekeeping. Of course, it is a part of the standard procedure of preparing for a Budget that the Minister for Finance and the Government have to go through the Forward Estimates and the pruning process of which last night's document is some public evidence. It is not unusual for the Forward Estimates to be reduced by $1 billion or so. The present Government, the Hawke Government, which is, of course, the highest spending government in Australia's history, reduced the Estimates by $1,214m in 1983-84 and by $556m in 1984-85.

The Government has set the precedent for conducting this sort of exercise as part of the normal preparation for a Budget. In doing that it is, of course, following the same sorts of procedures as those which were followed by the preceding Government. The only difference between last night's exercise and what has happened in the past is that now the cutting is being done in public. It is being done for the purpose of publicity and to reassure those people who are doubting the integrity of purpose of the Government in the economic area.

We have had no assurance and the Minister has specifically refused to give us any assurance about what might happen come the Budget. We will not know now until August whether the cuts will still be maintained on Budget night. The fact of the matter is that today the Minister simply refused to commit himself on the extent to which there will be new expenditure commitments by this Government which will rule out or cancel out those parts of the announcement last night which involved cuts and, indeed, which might add to Government expenditure. We are entitled to ask a question on those lines because if we look at the record of this Government over the last two Budgets we find that it added $2 of new expenditure for every dollar it cut from the Forward Estimates. We find that in 1983-84, when the Government cut $1,214m from the Forward Estimates without the fuss and fanfare we have had in Canberra over the last 24 hours, it turned around and added $2,485m in new expenditure. Last year, when the Government cut over $500m from the Forward Estimates, it turned around and added $1,138m. Last night we received no indication of the likely extent of the cost of new policy initiatives. Today when the Minister was asked a question in Question Time he would not and, of course, could not commit himself to the extent of letting us know whether there will be similar increases in the future.

The second aspect of our uncertainty about these cuts is the point which was much discussed at Question Time. The Minister started with a very bold statement, in response to an honourable senator from his own side of the chamber, and suggested that the Opposition was grievously in error in suggesting that later increases in expenditure and, in particular, in payments to the States, would invalidate the figures the Government has put out. But, as Senator Walsh showed in his response to the last question asked in Question Time, the $1,000m to which he referred is a very rubbery figure indeed. Senator Walsh made it quite clear that it was just some sort of broad estimate and that he could not promise or undertake to contain increases within that figure.

As the Minister will be speaking again, I think he might confirm for us whether, if the Government does no more than increase payments to the States by 2 per cent in real terms this year, he will use up $800m of that $1 billion which he was so pleased to have in reserve. He might tell us whether the $300m to $400m in increased costs which will be incurred by the Department of Defence because of the devaluation have been picked up. He might tell us to what extent devaluation will increase the public debt interest bill. He might tell us whether that other great list of expenditures which are set out as being conservative in the document which he tabled so recently are likely to go beyond the $1 billion which he has held in reserve. The fact of the matter is that on the Opposition's assessment it will be very easy to exceed that $1 billion. It is very likely that that $1 billion will be exceeded and, therefore, that the figures put forward by the Government are, in a fundamental sense, invalid.

The Government really needs to come clean on these areas if it is to succeed in its great public relations exercise of reassuring the business community, an attempt which I think the Government has dressed up by taking the odd crack at groups here and there and making a hundred cuts-most of them in small areas-which will give rise to predictable cries of pain and outrage. The fact is that the fundamental figuring is open to doubt.

There is real doubt, too, when one looks at the face of the statement, about the reality of the specific cuts which have been made. With respect to some items the Government has simply deferred expenditure to future Budgets. For example, it has postponed to the following financial year half the expenditure for the participation and equity program in education-Senator Ryan's supposed major effort to help the disadvantaged in Australia. It has postponed construction of the Film and Television School's building. The Government has not said that it will not be built; it has just postponed that for a year. It has deferred maintenance on Commonwealth property to save $11m. One must ask, I think, to what extent that will result in a genuine saving to the Commonwealth, in the light of depreciation and lack of maintenance of its property. Of course, the Government has done something to slow down the building of the new Parliament House, reducing the funds allocated by something like 10 per cent of what had been included in the Forward Estimates. With respect to other items it has simply engaged in sleight of hand. I will be interested to see whether the Minister for Finance is prepared to defend the $35m Telecom saving as a genuine saving or reduction in expenditure. That is simply taking an item off Budget and producing an apparent saving.

Perhaps most significant is the fact that some of these so-called reductions in expenditure are, of course, simply increased taxes and charges. The Senate might recall that, I think a week or so ago, Senator Walsh was asked whether the billion dollars would be a genuine billion dollars of reductions in expenditure or whether this would be a case of tax increases. He said no, these were genuine reductions in government expenditure. I think that those people who are paying that additional $1 patient contribution on a prescription, those people who are making additional payments to the Commonwealth as the holders of various concessions, those people who are paying additional freedom of information charges, those overseas students who are being caught up in the Government's increased charges and those people who privately insure and see a reduction of the assistance they got through the Hospital Benefits Reinsurance Trust Fund will all regard Senator Walsh and the Government as having increased the taxes or charges which they bear. There is, indeed, a whole series of items which I think are more properly regarded as additional imposts on the public than as reductions in government activity and government expenditure.

In addition, many of the items are simply additions to revenue of a one-off nature from the sale of assets. This Government, which so roundly criticised the Fraser Government for wishing to sell some government assets, is saying that it will sell various migrant centres, that it will sell the Belconnen Mall, that it will put the Tuggeranong development into private hands and that it will sell surplus defence land. Indeed, something like $220m worth of items will be tax increases, charge increases or the one-off sale of assets.


Senator Walsh —How much?


Senator CHANEY —About $200m. The Government has inflated its figure by going against the undertaking given in Question Time by Senator Walsh and in fact increasing charges, and it has produced fictitious reductions in expenditure by simply selling off assets.

We also need to note the context in which this statement was brought down. I have already touched on that and will speak on it but briefly. The fact is that, if one looks at the way in which this Government has gone about preparing its Budgets in recent years, one finds a standard pattern which would be the same as the pattern followed by any government in any year. Governments go through the exercise of reducing the Forward Estimates in what is undoubtedly a difficult and painful task of curbing spending programs which have been put forward on a preliminary basis by departments and Ministers. Senator Walsh this year, with all this fanfare, has managed to produce a reduction which is no greater than the reduction effected in the Government's first Budget and which is little more than twice the amount effected in the last Budget. But we have yet to see-and Senator Walsh cannot tell us today-how this will fit into the overall Budget strategy of the Government. He has been unable to give us any undertaking that the expenditure of the Government will not increase in a way which will totally cancel out any savings which have been made, and with this statement in May 1985 we are left quite uncertain until August 1985 of the value of the exercise which has been undertaken.

I want to turn from the doubts that are evident on the face of the statement to the important question of the extent to which the Government has pursued a coherent line in the statement it has put before us-the extent to which it has followed a policy which gives us a clear indication of where the Government is trying to take the economy. I could find only one element of coherence in this document; that is, that the one part of Australia most open to attack was the Northern Territory. It really interested me that in respect of that one electorate, that very remote part of Australia where something over 100,000 people live, definite cuts are to be applied-to the tune of $73m! Had Senator Walsh been as brave in dealing with the other electorates in Australia as he was in dealing with the Northern Territory, this statement would have shown cuts of over $10 billion. That is the extent to which he has been prepared to attack that electorate. It shows that one element of coherence in the Government's thinking and in Senate thinking is that it is much easier to get stuck into people who do not have a Labor member.

I think that there are even more important elements of confusion in what has been put down by Senator Walsh. Let me refer to the part of the statement which purported to say that this was an attempt to restrict expenditure but to protect those most in need. I think all honourable senators would say that if it is necessary to reduce government expenditure-and there now appears to be common ground in this place that it is necessary to reduce government expenditure-one should be most careful to protect those most in need. If one looks at this document put down by Senator Walsh one finds it very clearly stated that the Government set out to target assistance to areas of greatest need. That is on page 7 of the statement. On page 8 the Government says:

In choosing where to make the necessary cuts, concern for the needy and the less well-off has continued to characterise our approach to public spending.

One merely has to turn over three pages and go on to page 11, to the section on child care, to see the incoherence and, I suppose, lack of intellectual integrity really which are evidenced in this document. Under the heading 'Child Care'-an area which has been given great public attention by the Labor Party, in which it is extremely proud that it has set out to create an extra 20,000 places and in which it has played plenty of politics-we find that it has set out to reduce the expenditure. How has it done it? Has it done it by reducing assistance to those in less need in favour of those more in need? Of course it has not. It has carefully preserved the number of child care places but reduced the amount of money available. Quite simply, that means that the amount of subsidy available per child care place is less. That has to mean that there is less assistance for those in need and that the places will be more accessible to those more able to pay. I acknowledge that the Government created more child care places and is in the process of creating yet more. I point out that in changes it is making, in giving priority to protecting the number of places as against protecting those in need, it is flying in the face of its own statements about giving priority to those in need.

I also ask the Government to clarify, since it is very unclear following this statement, where it stands on privatisation. The Labor Party used to attack the Liberal Party and the National Party for urging the sale of such things as the shopping centre which is now part of this Government program. Privatisation used to be regarded as some eccentricity on the part of the then Government parties, the now Opposition parties. Yet in this statement the Government is embracing privatisation in one or two narrow areas. It is going to hand over the important area of defence service homes to the private sector. Of course, the Opposition welcomes that. But we ask the Government what its attitude is to the privatisation of much more substantial corporations which affect life in Australia-corporations such as the Australian Telecommunications Commission, the Australian Postal Commission, the Australian National Line and various other bodies which play such an influential part in the Australian economy and the Australian community and to which the Government has been so committed. On the one hand it is privatising defence service homes and on the other hand it is trying to give another $70m to the Australian National Line.

I ask the Government just what is its attitude to using the government sector for providing things such as defence service homes as against its attitude to providing other services in the community? I ask the Minister for Finance whether this means that the Government accepts the arguments which we have put in respect to privatisation and whether we can expect to see further and considerable reforms in this area? If we can, it is important to note that this Government is busy setting up new statutory corporations. It abolishs them on one hand, while at the same time it has in the Parliament Bills to establish national commissions on occupational health and safety and on sport. There is an absurdity, illogicality and inconsistency in what the Government is doing and what it is saying to the Australian people.

In terms of coherent approach I hope that Senator Walsh also will explain why Mr Dolan, who spoke last night on the economic statement-without knowing what was in it because he was hundreds of miles away and could not be expected to understand that really the statement was consistent with government policy-seemed so happy in a subsequent question to embrace the views of Mr Bob White who, it seems to me, suffered from the same difficulties of being hundreds of miles away, presumably with no more access than Mr Dolan to the views put down by the Government in that statement.

I have only a few minutes left and I want to touch very quickly on the vexed question of wages policy. The Government brought the issue of wages policy into this statement which was supposedly a statement on reductions in government expenditure. The Government has thereby acknowledged just how significant this is in terms of its ability to manage the economy. The Government has stepped back completely from any argument in the next national wage case that we should prevent the flow-on into wages of increases in the cost of living occasioned by the devaluation. This statement exposes the Government because, in it, the Government clearly acknowledges the risk to Australia in allowing those consumer price index increases to flow into the economy and into wages. However, the Government opts out of the option and is not prepared even to argue before the Conciliation and Arbitration Commission that an important consideration at the next wage case is the discounting of those CPI increases. That is an irresponsible stance in respect of this issue. I do not have time to explore it further but I know that my colleague Senator Dame Margaret Guilfoyle will be addressing that aspect of the matter. I say only that it is a final demonstration, when it comes to the crunch, that this Government will not deal with the trade union movement on other than a master-servant relationship, and we know who the master is.