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Thursday, 19 February 1987
Page: 262

Senator Dame MARGARET GUILFOYLE — My question, which I direct to the Leader of the Government in the Senate, concerns yesterday's disclosure that Australia's gross foreign debt now exceeds $100 billion. Can the Minister confirm that this figure has trebled since the Hawke Government came to office? Is it a fact that almost 20 per cent of Australia's export earnings now have to be devoted to just paying off the interest on the money Australia owes to overseas lenders? Does the Minister agree with the Chairman of the Business Council of Australia, Sir Roderick Carnegie, who last week described the level of debt as alarming and said that there was no end in sight to the deteriorating situation?

Senator BUTTON —I have not examined this, but it may be correct to say that the level of debt has trebled since the Hawke Government came to power. I think that the level of borrowings has continued at the same level in real terms and that 62 per cent of that increase in debt is due to the devaluation effect. I also make the point in passing that the highest level of increase in overseas borrowings has been in respect of State and local government and that the private sector increase is consistent with the level of government borrowings-the private sector increase between 1983-84 and the September quarter 1986 being $34 billion and the growth in public sector borrowings in the same period being $23 billion. Having said that, again I have not made the calculations as to whether 20 per cent of Australia's export earnings will pay interest on foreign debt. Not having made that calculation myself, it does not sound dramatically wrong to me. I neither accept nor deny that calculation; I believe that it would be reasonably accurate.

I did see that Sir Roderick Carnegie had described the level of foreign debt as `alarming' and had said that there was `no end in sight'. I do not know what he means by using the expression `no end in sight'. I note that a recent Economic Planning Advisory Council paper, which was generally regarded as a considered paper, put the end in sight as being something like four or five years in which the external debt could be stabilised at a relatively respectable level of gross domestic product. I do not have the EPAC paper in front of me; I am just referring to it because I think it has a slightly different emphasis from the statement made by Sir Roderick Carnegie, which might quite correctly be interpreted as `no end in sight in the next few years'. And if that is what he is saying, I think he is probably right.