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Thursday, 2 April 1987
Page: 1727

Senator CHANEY —My question is addressed to the Minister for Finance and follows a number of statements he has made over a long period about privatisation and, in particular, his concern that the Opposition's privatisation policy would involve flogging off public assets and burning the money in current consumption. I preface my question by saying that I agree with him that it would be the wrong thing to do to sell capital assets for the purpose of funding current consumption. In light of reports of present Government interest in widespread privatisation, can the Minister give an unequivocal assurance to the Senate that the proceeds of any sales of government assets will be used to reduce accumulated debt and not to finance current consumption?

Senator WALSH —When this Government was elected we faced a prospective deficit of $9.6 billion. An amount of $9.6 billion was the fiscal legacy which John Howard left this Government. We were failing to raise revenue to fund current consumption to the extent of $9.6 billion. Ever since that time this Government, both in absolute terms and even more so as a proportion of gross domestic product, has been clawing back the deficit. On present indications-and I put in that qualification because we are still more than four months from actually presenting a Budget-that clawing back of the deficit will continue in the 1987-88 financial year.

Senator Chaney referred to previous comments that I had made on the question of privatisation. The most comprehensive statement that I can recall making on this subject was in a speech which I made in February of last year at the Australian Financial Review seminar in which I identified very clearly those publicly-owned authorities which I believe should remain in the public sector for functional and economic reasons. Those authorities included Telecom and Australia Post. I also expressed opinions about other publicly-owned authorities to which the particular conditions which apply to Telecom and Australia Post do not apply. I expressed the view that they should be considered on a case by case basis.

The Thatcher Government has embarked on a campaign of privatisation, so-called, and sim- ultaneously has increased the degree of regulation. It is very clear that the object of that exercise is not a more efficiently functioning economy but a once-off windfall revenue gain to be used by the Thatcher Government for so-called tax cuts in an attempt to ensure its re-election. That was exactly the same policy as the Leader of the Liberal Party Opposition in South Australia attempted in 1985. It is the sort of policy which is contemplated by the present Opposition today.

In respect of Australia Post-this is by no means the only reason why I believe this organisation should remain in the public sector-it is an accepted precept, I think, that we should have a national communications system, and in providing that system there is a substantial amount of cross-subsidy within Telecom's internal accounts. If that function were transferred to the private sector, there is no way that a private sector company operating on market principles would provide a universal telephone service.

As for Senator Chaney's specific attempts, I suppose, to get specific commitments out of me regarding Budget discussions or likely Budget outcomes or May statement outcomes, I repeat what I have said before: I will not be drawn into either quantitative or qualitative speculation about the matters which are currently being considered by the Government.

Senator CHANEY —I ask a supplementary question. I note that the Minister actually dealt with my question in about the last 10 seconds of his response. He raised a whole series of issues, effectively debating the question, and I point out that the Opposition has made it clear that it believes that the fundamental principle that underlies privatisation is the increase in competition. We are not talking about privatising monopolies and all of the issues that the Minister has raised. Will the Minister, consistent with the statements that he has made in the past, give an unequivocal assurance that if this Government is going to proceed to dispose of public assets, it will not, to use his terms, be flogging off the family silver simply to finance current consumption but, rather, that any moneys obtained will be used to reduce the accumulated debt which, I point out to him, includes at least $20,000m of public debt accumulated under the Hawke Government?

Senator WALSH —Is the honourable senator talking about foreign debt or domestic debt in the context of total public sector indebtedness in Australia?

Senator Chaney —I am talking about debt, general debt.

Senator WALSH —Outstanding Commonwealth Government debt. The phrase `flogging off the family silver' came from the late Harold Macmillan, not from me. If I remember correctly, I quoted it at that Australian Financial Review seminar. My comments about flogging off the family silver to give ephemeral tax cuts for the most cynical political reasons were explicitly put in the context of what the Thatcher Government is doing. I am pleased, and I would like it noted for the record, that Senator Chaney is repudiating, in the question he has asked and the qualifications he has put on it, Thatcher's policy. I am pleased to hear that.

The honourable senator referred also to increased competition. Again it should be noted, because there is a lot of confusion and misrepresentation about this area, that the things that the Thatcher Government is doing will not lead to any increase in competition. Indeed, on balance, they lead to an increase in regulation, which demonstrates the essentially fraudulent nature of the exercise in which the Thatcher Government is involved. That, of course, was the central point that I was making in that section of my Australian Financial Review speech. In respect of the rest of the question-Senator Chaney's attempts to get qualitative or quantitative denials or confirmation from me about likely outcomes of the May statement and the Budget-I draw his attention to what I said before.