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Wednesday, 15 May 1985
Page: 1998


Senator RICHARDSON(4.14) —I begin my contribution to this matter of public importance by referring to Senator Jack Evans's speech which he made a few moments ago. His typically platitudinous contribution to the debate added nothing to it. Unfortunately, the Australian Democrats still suffer, I would have thought badly, from the habit of wanting to appeal to every single distinct interest group around the nation. While espousing the cause of cuts in government expenditure, they are still prepared to oppose each and every cut that is announced in an attempt to add to their shrinking and diminishing constituency. I would have thought that a bit of responsibility might have been shown on this occasion. The Democrats might at least have had the courage to announce that there was a cut that they supported. Even the Liberal Party must acknowledge that cuts in government expenditure are desirable. At least, from what I have gathered in the last 24 hours, the Deputy Leader of the Liberal Party, Mr Howard, acknowledges that cuts are desirable and thinks that we did not cut enough. The Leader of the Opposition, Mr Peacock, said that we cut too much. Perhaps over the next few weeks, months or years in opposition they will sort out those differences.

Last night the Treasurer (Mr Keating) outlined cuts, as we all know, of $1,259m. They were real cuts in government expenditure. They went right across the whole range of government departments. It was a serious attack on reducing the deficit and the national debt. It was not done by increasing taxation. It was done by trimming some of the fat, and some of the excesses of expenditure. The measures announced last night were, of course, in line with the Government's commitment to the trilogy. I remind honourable senators what that commitment was. It was a commitment to reduce the Budget deficit. Obviously, last night's statement went a long way towards doing so. It was a commitment that there be no increase in the overall burden of taxation and that there would be no increases in government expenditure greater than growth in the gross domestic product.

There has been expectation in the community that the Government will stick to those three promises. Last night the Government went a great deal of the way towards doing just that. That is what the Opposition is so upset about. When this Government makes up its mind to cut government expenditure, to do something we all acknowledge should be done, it is the first post-war government to have the courage to live up to its promise and keep a promise just for a change. In the previous seven years, we heard lots of talk about cutting expenditure, but saw no action whatsoever.

We should look at the business response-what we would call the heartland of the Liberal Party and the National Party; the area from which they are supposed to draw all their support-and contrast that response with the response we have heard today from Senator Chaney and Senator Dame Margaret Guilfoyle. First, I refer to an article in the Age this morning by Mr Brian Powell, the Chief Executive of the Australian Chamber of Manufactures-not, one would imagine, an Australian Labor Party stooge or a rabid trade union socialist. He said that he was surprised by the breadth and depth of the $1,259m cuts in the Treasurer's statement. The article states:

They have taken a harder look than any government in the last five to seven years. Other governments have found it harder to cope with the harder decisions.

Mr Powell said the extensive savings had 'cut flesh as well as fat, which is a very brave thing. Sure, the Government is going to be under a lot of pressure to back down, but I believe Keating has the guts to stand by it. . .

Mr Powell said the Treasurer's speech had 'provided a good opportunity for a meaningful tax summit'.

From what has been said by a leading business figure, I would have thought it would have been very hard to claim, as is claimed in this matter of public importance, that there is any continuing doubt or uncertainty about key economic issues. But Mr Powell was not Robinson Crusoe in the business community in praising what the Treasurer announced last night. The President of the Australian Chamber of Commerce, Mr Ken Court, stated:

The economic statement in many respects amounts to a concerted first attack on waste and inefficiency in federal public spending. This is to be . . . applauded.

Also, when one listens to the dreary rhetoric of years coming from the Opposition, one knows that it always says: 'Look, the market can tell. It knows if things are good or bad, it knows if the actions of government are to be applauded or jeered'. In an article in this morning's Sydney Morning Herald, Stephen Hutcheon stated:

Hours before the Federal Government's mini-budget, Australian share and money markets yesterday had one of their strongest trading days so far this year.

Analysts and dealers said the mini-budget was an important factor behind the rises because it demonstrated the Government's concern to come to grips with the country's economic problems.

That has, of course, been reflected today in the Australia dollar's performance all around the world. It is not just here in Australia that the business community and the markets are realising that this Government has the economy under control; it is all over the world-in New York, Paris, London, Hong Kong and Tokyo. The people of the world are now understanding that this Government knows what it is about. The editorial in this morning's Sydney Morning Herald states:

. . . the Hawke Government has carved $1.26 billion out of its forward estimates to reduce its spending growth in 1985-86 to about 2 per cent in real terms.. . . .

The cuts should ensure that the Government can meet its 'trilogy' of Budget promises-no increase in spending and taxation and a reduction in the deficit, all measured as a proportion of gross domestic product, during the Government's current term.

That was the message that the Treasurer gave last night to the people and to the markets. It is a message that by and large has already been accepted.

On the other hand, if one looks at the Opposition's response, I suppose that first one has to search for alternative proposals. It will not take me long to go through the Opposition's alternative proposals because it does not have any. It has been searching and scratching around in the dust for 2 1/2 years in opposition and has still failed to come up with any definite announcements as to where it, if it were in government, would make any cuts at all. John Howard, last night on the Australian Broadcasting Corporation, did not specifically object to any of the proposed cuts. All he could do was offer two suggestions. One was to scrap Medicare. That would be an excessively brilliant idea! I would have thought that all that could do would be to promote uncertainty and confusion in the minds of the people, just as happened when the present Opposition changed our basic health care schemes seven times in seven years-or was it eight-and completely destroyed the confidence of the people in any form of health care. I would have thought that that suggestion should be treated as the joke that it is.

What is more, Mr Howard suggested that there should be a 5 per cent real cut to the States. I am sure that Premiers Bjelke-Petersen and Robin Gray would be delighted with that. I am sure that there was plenty of partying in Brisbane and Hobart last night at this news. All that that would mean, of course, is that savage cuts would be made in areas where people could be directly hurt and affected. That is what the Government avoided doing. It made cuts in areas of excess, not in areas of need.

It is not as if the Opposition has not had time enough to come up with some alternative proposals. But as long as we have waited, the Opposition has not found any proposals. Look at the response that the Opposition made to the 1984-85 Budget when it had the big chance to show us the lead. An editorial in the Sydney Morning Herald of 24 August 1984, commenting upon Andrew Peacock's long awaited response to Paul Keating's Budget, stated:

In places Mr Peacock's attack on the Government's economic policy is blatantly dishonest.

It also stated:

. . . nowhere in his notably vague reply to the Treasurer's Budget Speech is there any indication of what programs would be cut to reduce the deficit and accommodate his promises.

I would have thought that the people of Australia have had plenty of opportunities to hear from the Opposition as to exactly what it will do. But they have not, and they will not. They will not because this Opposition does not have the guts to announce a cut anywhere. In fact, all it could do in the 1984 election campaign was announce promises that would have added somewhere between $4 billion and $7 billion to the deficit. That is all that the Opposition has to propose as a remedy for Australia's economic ills. I would have thought that we have listened to the Opposition for long enough.

Let me refer to just a part of the coalition's record when it was in government and how it helped to undermine confidence and certainty, which are the words used in the matter of public importance. Who can forget the advertisement in the election campaign that the Liberal-National Party Government would give us that fantastic fistful of dollars? How did it finance those tax cuts? Did it do so by reducing expenditure? No. Did it do so by increasing growth? No. It did so by announcing a few months later, in May, that it was taking back all those cuts plus a little bit more. That was the sort of recipe that we got from the Fraser Government.

Of course, we have only to hark back to the now infamous Lynch razor gang that was going to do so much. We were trumpeted up to the hilt that it proposed to make cuts of $500m not $1,300m as we saw last night. What happened to that $500m? The National Party-the tail that wags the Liberal dog-would not cop it. As usual, when the National Party will not cop what the Liberals want, the Liberals cave in like a pack of cards. All we saw in the end was a whimpish proposal for $200m in cuts which was worth nothing to anybody.

The most scandalous exercise that the coalition engaged in while it was in government, while it had the chance and while the people had given it the opportunity, was the hiding until the Labor Party came to government of just what the coalition had done with the deficit. These people now talk about tough policies and how they will keep deficits down. It is only 2 1/2 years ago that we walked in to find that we had a deficit of not $6 billion, as the coalition had been promising, but $9.6 billion. This was something that would have ruined the economy for years to come. It is just as well that at that very moment in our history the reins of government were given over to Hawke and Keating to sort out the shocking mess in which the rabble on the other side of the chamber had left our nation.

I turn also to wages policy because while the matter of public importance contains the words 'particularly wages policy', no one on the coalition side has said much about this subject. Senator Chaney remembered it 90 seconds before he sat down. I think we got two or three minutes of it from Senator Dame Margaret Guilfoyle. Mr Acting Deputy President, I would like to take your mind back to the record of the Opposition when it had the chance to do something when it came to wages policy. John Howard has stated publicly that the real failure of the Fraser Government was that it never had a wages policy. In opposition the coalition still does not have any sort of wages policy. It is not a policy to announce that one simply wants to have a free market situation for wages. If we cast our minds back, it is not too long to the time when the coalition Government attempted deregulation of wages. They said: 'Look, we are not going to have any more of these Conciliation and Arbitration Commission decisions. We will let everyone sort it out for themselves'. What happened was that in 1981 we had a 17 per cent rise in wages. This was catastrophic to the economy. Indeed, the economy ran out of control not because the coalition Government at that time had a policy but because it opted out of its responsibility, as it will always do when given the opportunity.

I would also like to make a point about the effect of last night's statement on the dollar. We really cannot come to decisions too early about discounting or anything else in terms of the effect of the recent devaluation. The value of the dollar is, of course, shooting up and we do not know precisely what the improvement will be. Obviously, this argument has been greatly exaggerated by those opposite anyhow. When one talks about the excessive wages policy, one also has to look at its effects and how it flows on. With the notable exception of Queensland, where rotten legislation has been introduced to try to trample upon people's rights, we have had the lowest level of industrial disputes in years. The reason for this is that even though we have slowed down wages growth workers and employers accept that the Government has got the economy by the reins and that it is doing the right thing.

Let us look at what the Treasurer said last night about wages policy. He said that the productivity case scheduled for the September quarter should be deferred until the size and price effects of the depreciation are clear. As I said, we should not jump too early. He said that the September quarter wage case should proceed under the principles, that the case relates to the March and June consumer price index, that March had little depreciation effect and that June was not expected to have much either. He also said that principles do not rule out discounting; nor has the Government, but it will look at it if and when it needs to. That was all that was said last night. It is quite possible, given the way that the Australian dollar is going, that when the crunch comes we will be able to handle this matter through the productivity case.

This Government is trying to create an environment in which business can recover its confidence, where investment can rise and where inflation will fall. The Government's record and its runs on the board are there. Last night was one more step in the actions that this Government is taking to turn this economy around. I have no doubt that, given the next two years, the result will be a greater majority for the Hawke Government when it is elected for its third term.